ADvTECH Limited (ADH) Earnings Call Transcript & Summary

All right, good afternoon, and welcome to our annual financial presentation. I think you can all appreciate that the circumstances were somewhat different when we first sat down to prepare for this presentation. And in fact, they've changed several times since we started to prepare, not least of which is in the last 12 hours as well. So knowing that the COVID-19 issue and pandemic is in fact going to be top of mind, we have shifted the agenda. We'll do a brief overview of our financial performance. We'll talk specifically about the impact of COVID-19 on our business as best we can assess and the preparations and plans that we've put into place to deal with the immediate effects before we move on into the more detailed discussion about our results for the year 2019. If I could just also advise you: We will be taking questions, but in terms of the fact that we're on a webcast, what we're going to do is record the questions and answer them at the end of the presentation, as opposed to dealing with as we go through. So if you do have questions, please do submit them, and we will do our best to answer all of those questions at the end of the presentation. Okay, I think, first and foremost, we have been operating in an incredibly difficult environment. I'm sure everybody who is listening in today is appreciative and understands that circumstance, very low GDP growth not only in the past year but for the past 5 to 8 years, in fact in South Africa a significant underperformance of our economy, compounded by the effects of load shedding which have become more apparent more recently. We have in fact also had high levels and growing levels of unemployment that have impacted in terms of our business, certainly in affordability of our parents, our students. We've also had the effect in the last few years of emigration, high levels of emigration, from South Africa; and that has certainly had an impact on some of our schools businesses. And now of course, we are going to be dealing with the impact of COVID-19. And we have in fact taken some very specific actions already, but what the longer-term or the medium-term implications of COVID-19 will be in our business are yet to be defined. And of course, needless to say, business confidence is, of course, at one of the lowest levels recorded. So it has been an incredibly tough operating environment. And I think, under the circumstances, we're particularly proud of the performance that we've been able to deliver, showing again the resilience of education. We've spoken in the past as to how education has been a good defensive stock. We've been through a period where it's seen as a great growth stock, but I think our performance under the circumstances and the environment that we're operating is -- does bear witness to the resilience of the sector; and the fact that, even in very difficult economic circumstances, parents and individuals will do the very best they can in seeking out quality education offerings that give them the best chance of succeeding in such a tough environment. So we are pleased. Our revenue has continued to grow strongly at 16%, our operating profit up 8%, profit for the year 18%, HEPS up 20% and our normalized earnings per share up 8%, a continuous performance of growth that we have experienced over the past few years. Our student enrollment numbers: The 10% growth for all total students going forward is the 2020 forecast, and that has been particularly pleasing to us. We will speak about it in a little bit more detail later on, but we're encouraged by the strong organic growth in our business, which we believe is as a direct result of a number of the initiatives that we've been putting into place over the last few years. And it's very encouraging to see such a strong organic growth performance in such a tough environment. Some highlights. I -- first and foremost, I think, is the fact that we are really growing strongly in rest of Africa. We've seen significant revenue growth, 55%, from our African businesses. And the other key feature of this year is the success that we've had in growing our mid-fee sector. We've had some very successful openings of new schools. We've had some successful repositionings. And our existing mid-fee schools have continued to show strong growth. So we've always been dominant in the premium sector. And it really is encouraging to see us building a strong portfolio of mid-fee brands, and the market reaction to those brands is very encouraging for us. I've spoken about the 5% -- or the student growth, 5% at schools, which is one of the best performances we've had in the last few years. And that is in spite of continuing high levels of exclusion for financial hardship; and also the continuing trend of emigration, which whilst it hasn't grown in the year of 2019, certainly hasn't abated at any rate either. So emigration has remained a key and a principal reason for departures from our system, so to achieve a 5% organic growth level from our schools business this year in 2020 is particularly pleasing. Our tertiary division continues to deliver outstanding results. And in fact, their enrollment growth of 13% is also encouraging, testament to the quality of the offering. Our retention rates are exceptional. And the positioning of our brands is obviously still strong and appealing to the target market. I think we've had some very good results. And we're starting to see the benefits of the efficiency initiatives that we have put into place. Our focus on our brand proposition and concentrating on the relevant target market is certainly starting to bear fruit for us. And of course, our resourcing business has operated in possibly some of the worst economic circumstances, job losses, a really underperforming economy. That is a sector which is fully exposed to those kind of environments, those kind of factors. And it's pleasing to see how well our resourcing teams have managed the business under such circumstances. And also the fact that the strategies we've adopted to look at other markets and other geographies, particularly with HR Africa. Our Mauritian-based businesses looking into Africa has stood us in good stead in these tough times in the South African market. So the coronavirus and COVID-19 and its impact. I think it's fair to say that we are not yet certain of what the final result or outcome or impact on our business will be, but suffice to say we have taken immediate and very specific and well-directed action to try and deal with the crisis. Of course, our schools closed, in line with the government's dictate on March 18. And I must say that one of the factors that's come out of this exercise for us has been just to see how much progress we have made in our online capability, which is investments that we've made over the last few years. And it is very pleasing to see how well prepared we are to be able to deal with a crisis of this nature and to support our quality academic offerings online and for our students in this kind of a situation. So it has been very useful for us, and I must say we are pleased. We are well prepared. We have, of course, followed all of the guidelines of the World Health Organization and the National Institute for Communicable Diseases. And we have implemented those immediately. We've communicated thoroughly with our business in terms of what's happening. The safety and security of both our staff and our students is very much at the top of mind, and that is a priority for us, but also is the continuation of quality education offering. We realize the disruption that's going to be caused, but we are determined to try and make sure that we do everything within our power to continue to deliver quality education using the technology and the systems that we have invested with -- in over the last few years. So we've been putting into place those initiatives. Since the closure of our schools, our staff have been working hard on lesson plan preparation; on understanding and -- the technology required; getting familiar with the systems; and making sure that we are able to deliver online, full online, curricular support, with effect from the 14th of April, when we have anticipated that schools will reopen. So we've taken the immediate action required. We are well prepared. And we are in fact quite encouraged by our capability to continue to support the academic offering. We've established an incident support team. We have immediately rearranged the calendar. With the closure of schools on the 18th of March, there were around 8 academic days lost prior to when the schools were anticipating going on their vacation break. In any event, we have rearranged the calendar so that those days will be catched up -- will be caught up. All of our schools, whether they were on 3 term or 4 term, will move to a 4-term arrangement. And we have shifted the calendar such that we anticipate not losing any of the academic days, and hopefully, that will be the case. The testing has been done. As I say, the preparation we've been involved in, in the past week and 10 days has gone very well. There are some exciting developments. I have a few, some bits to show you that -- of the progress we're making. And we have tried as best we can to communicate thoroughly, comprehensively; and stay in touch with parents, students and, of course, staff at the same time. I think some of those activities have been very well received. You will see here some of the events that took place in the planning and the preparation, some of the communication to staff and to students and parents. And we've had very positive response. You can understand this is a time of high uncertainty. When we make a shift like this in such a short notice period, people are anxious to understand what plans we put into place, how they will be supported. And I must say it's been very encouraging to see the response from parents, from students, in response, as I said, to all of the work that has gone in from our staff. So I think we're well positioned to try and support as best we can. I've included here a brief video of the kind of MS Teams delivery system that we have. [Presentation]

Just a short example of the capability; the sharing of documentations; the interaction between students, the teachers, the material; the ability to use whiteboards online and support the entire academic [ proposal letters ] from Glenwood High School in George. And is an indication of the state of readiness and preparedness that we're in. In the tertiary division, equally so, we are well positioned. We invested in the learning management system Blackboard some years ago. We have for many years now -- all of the qualifications that we developed are accredited for both face-to-face and also online distanced application. So the vast majority of all of our material is already available on our learning management system. And the transition into an online teaching and supporting of the academic delivery is well in hand, well prepared. In fact, we were ready to go effective from Wednesday, the 18th of March, in the tertiary division, but we decided to delay as a result of [indiscernible] announcements of the public system closure and their preparedness. They needed 2 weeks to be able to get their systems up online. And we felt it was appropriate to align ourselves to that, which we have done, but in the tertiary division we have equally, in fact, and very well positioned given the work that we have done over the last few years. So that's encouraging. So from a point of view of supporting the academic delivery and our students and our parents, which of course is absolutely mission critical for us and we take very seriously, in addition to that, there are going to be the financial impacts on the business, which of course at this stage are still difficult to quantify, but we have discussed and we have given consideration to what immediate actions we need to take in order to secure the business and to make sure that we are being prudent and until such time as the situation evolves and we can make better informed decisions in terms of what we need to do, what we have to do or when in fact, we will hope, the situation returns to normal. I want to stress we have announced that the Board gave careful consideration to the dividend. And in the circumstances with the high levels of uncertainty, we have decided to defer the decision on a dividend. And I want to be clear: We have not decided not to pay a dividend. We have deferred the decision on whether we pay the dividend or not until we have greater clarity, okay? We think that's prudent. I'm sure you would agree. We've also given extensive consideration to the CapEx plans that we have. And we have really reorganized the CapEx plan. We've scheduled it into priorities and those that we can actually delay indefinitely, but we have in fact taken the decision not to spend any CapEx immediately until we are absolutely at a time limit as to when we might have to. And hopefully, what we will then have is more information with regards to the impact, extent and duration of the disruption that we're about to face. So we have put that into place and immediately action decisions around any imminent or potential CapEx in the business. We do expect there to be a revenue impact. Obviously, it was important for us to make sure that our academic offering was up and available so that we can continue to support, but there are certain costs associated, aftercare, for example, quite obviously in the situation we're in now with the lockdown and people not being at our schools or institutions. Aftercare falls away, and therefore rightly so the costs of aftercare should fall away. Transportation and a variety of other extramural activities, those kinds of revenue generations will clearly fall away. And there is an impact. Our aftercare is probably in the order of around 20 million. And it depends how long the disruption or interruption as a consequence of COVID-19, what are -- the impact will be on that. However, I think it is quite obvious that parents and fee payers are going to be extremely anxious in this time of uncertainty. There is going to be an economic impact as a result of the interventions that are absolutely necessary and have been taken, and we will have to wait and see how that manifests itself. Didier and his team have been doing various sensitivity analyses in terms of understanding if there are levels of reductions in terms of fee payments, the impact on our organization. And I think we have a handle. We understand what our tolerances will be. We'll have to wait and see how things pan out. I can give you an indication. For example is that, last week, we had collections in the order of ZAR 85 million, which in itself was encouraging. If we compare that to the same week last year, we collected ZAR 89 million in the same week last year, so there is already a ZAR 4 million kind of reduction. And by the way, prior to that, our fee collections for the year were ahead of prior year. So there is a drop off immediately. What level that will continue at, will it accelerate, we are obviously monitoring closely. We will look at collections every single week. We will look at what the impact on the organization is, and we will obviously have to make those decisions. At this point in time, we are supporting people. We are supporting parents. We're supporting staff. The most important thing that we can do is to make sure that we do deliver a quality academic product. And we will have to engage with parents in an empathetic manner and a sense of understanding the circumstances. Quite clearly, a lot of people are going to be under some severe financial distress. And we need to look at how we manage that, and it probably will have to be on a case-by-case basis. We have briefed our managing directors, our brand teams accordingly. And I can only say to you that we will monitor very closely, stay on top of the situation. And we will make the decisions that are appropriate and necessary when that information reveals itself. And I think that's probably what I need to say about COVID-19 at this point in time. I'm sure you might have some more detailed questions, which we'll deal with later. Okay, just quickly a review of the education sector and the markets that we operate in. I think the key features really are is -- that in the public sector there has been a reduction in the number of schools as the public sector struggles to provide quality education. There's been rationalization, certain school closures. However, the population, the student population, in the public sector has grown. And we're looking at a period from 2000 to 2018. So over that period, the number of schools is reduced by about 13%, but the school population in the public sector has grown by 5%, adding to the problem of overcrowding and the stretching of resources in that sector. At the same time, the number of private schools has risen dramatically. And I do hasten to add here that not all of these schools would be comparable with our offering. Some of these are relatively small private schools that have opened up in response to the -- perhaps the crisis in the public sector, but nevertheless there has been a significant growth in the number of private schools. And I'm quite sure that you're all familiar with the fact that the private sector has expanded quite rapidly over a period of time. And it's in response to the fact that the number of students in the private sector has more than doubled over that same period, still represents a very small portion of the total market, but the growth rates in the private sector have been strong, underpinning our growth as we've experienced over the last few years. I beg your pardon. We jump to -- sorry. Okay. In the tertiary sector, we see similar. The number of students in the public universities has grown by 11% over the period 2011 to 2017 but not nearly at the same rate as has grown in the private sector, the private sector again seeing strong growth -- I'm sorry. I jump forward from the slide -- as a result of the fact that the number of school leavers has grown quite dramatically over the period. So from 300,000 to 440,000, a 32% growth in the number of students qualifying for higher education studies, has grown quite significantly over the time period. The number absorbed into the public sector hasn't grown anything like that. And we've actually seen the first year enrollments in the public sector growing by some 15%. Okay, interestingly enough, this year, we did see the public institutions taking on a greater number of students than they had in the year prior. Our estimate -- it's not an exact measure by any stretch of the imagination, but our estimate is that there were some additional 6,000 students taken in, in the 2020 year than perhaps there were in the 2018 year. I say that is information or statistics that need to be verified, but I think it is a response that the publics are feeling to the pressures that they're under. And obviously, if they can increase their student base, it helps them in terms of their cost structures as well, but it is also going to add to the overcrowding situation because it is, to all intents and purposes, the public system is full. So the growth in the number of students available is opportunity for us, and we've certainly seen the private higher education sector growing over this period. That's reflected in our strong growth over the years. We have a compounded growth rate of our students, both schools and tertiary combined, of 10% per annum over the last 5 years; as I've said, this year, 10% growth, 13% in our tertiary and 5% in our schools and continuing the trend. And we believe that will continue to be the case. So despite the very tough economic times, despite the massive pressures that the consumer is feeling under these circumstances, there is still a demand for quality education. That, of course, is reflected. Our revenue has grown strongly over the years. We've had 18% compounded revenue growth. We've had similarly an 18% compounded operating profit growth over the last 5 years, demonstrating the consistency and the strong position of our business. Just to give you an idea. Our operating margin at these levels, it has bounced around, but of course, we've also been in a period of significant expansion. And we have added to our portfolio not only in schools with a number of acquisitions and also opening of greenfield sites to add to our portfolio but also in the tertiary section and, as a result, our margin, but if you look at the underlying margin -- and what I've done here is to exclude the MSA acquisition, which we were integrating into our business during the course of 2019; our Crawford International School in Nairobi, which also came on-stream in September of 2018 so this is 2019 is the first full financial year of operation; and the Makini, which we acquired as well. And if we strip out those -- we have been involved in restructuring and investment programs and looked at the underlying margin of our group. We're seeing a continuing growing trend. Our HEPS has grown [ consistent ] 14%, and our normalized earnings per share 12% compounded. So we do have a history of continual growth in the organization on the basis of good market opportunity or realizing that, good growth in terms of our [ solid ] student numbers. And that has translated into increased revenue and increased profitability for the organization. Key feature of our education business, of course, is our strong cash generation. And that trend does continue. You can see compounded growth in our cash flow generation of 21%, resulting in what -- we have a very, very sound balance sheet backed up by a disciplined approach to capital allocation. We have a rigorous system of decision-making around our investments. We do anticipate that, after this period, these last 5 years or so where we really have expanded very rapidly, of slowing on CapEx. And our CapEx will be directed towards existing assets, to the buildout to complete and realize the full potential of those assets that we have at the moment. So we anticipate the level of spend slowing down in the years ahead as we focus on improving the return on those investments over the last few years. Our debtors have been very well managed. We've had a very high level of focus given the environment we operate in and the importance of collections to us. And I am pleased to say there is actually evidence of an improved performance in our debt collection as a result of some of the initiatives we put into place like group shared services. So that's going well for us. And then finally, just to point out, our borrowings are well within our covenants, the bank covenant of 3.5x and versus our own internal covenant at 3x. And just to give you an idea in terms of our CapEx spend: Although it has grown significantly over the years, that has been matched by the growth in our cash generation. And you can see it in terms of our cover has really stayed very much at the same levels. So our balance sheet is very sound, okay, well within the covenants. 3.5x is the bank covenant and 3x is our own internal guideline, and we're well within those levels. So we're in a very strong position. We've been able to afford significant investments to grow our capacity. That in itself has helped us to grow student numbers and increase the critical mass of our business. And I think, now that we anticipate a period perhaps of slower CapEx spend focused on the existing set of assets, our returns on those funds employed will actually significantly improve. Just to give you an idea as to where we spent the CapEx this year. It was ZAR 320 million, of course, was for the acquisition of Monash South Africa, MSA; nearly ZAR 170 million on new school campuses. We opened 3 new schools and, in addition, repositioned 2 and had significant CapEx spends in that area. Existing site, additions to existing sites would be included in that. Furniture, fittings and IT is always a significant component of the fit-out and also an ongoing CapEx requirement for us. And so essentially, on the CapEx projects, nearly ZAR 700 million in CapEx, together with the ZAR 320 million that we spent on MSA. All right, our schools division in terms of just to give you an idea of the capacity. Our capacity utilization of existing -- this is existing built capacity. Because of the new schools that we've opened and some extensions that we did to existing campuses such as Founders Hill, Copperleaf, which had actually hit capacities and we needed to do the second and third phases of those expansions, the capacity utilization at this point in time is down, 79%, but means that we have now ample space in which to actually grow. And you can understand why if we pull back on CapEx now and enjoy good organic growth, and the utilization of built capacity will extend. And of course, we still have ultimately a greater level of capacity for future expansions, but this is just built capacity, okay? We're running probably at around about 65% of total capacity, site capacity. This is -- this figure is of built capacity. Just to give you an indication on a segmental basis of our revenue contribution 2018, 43% of the revenue from the schools division; and 39% from tertiary; 15% from our resourcing division, which of course is perhaps adversely skewing -- positively skewed in the revenue line by HR Africa and the nature of that business; and 3% from Africa. And you can see in 2019 how that's shifting, strong performance from our tertiary business again. So revenue is now 42% versus schools at 40%. A declining impact of resourcing as our education business grows, and a pleasing growth in Africa. If we look at the profit contributions from 2018 and 2019, again a reflection of the very good year in tertiary from 51% to 57% of our business, our total -- or South African schools [indiscernible], negative return on profit from Africa, but we'll talk about the position, the investment position, that we're in there. And we're very encouraged and excited by the opportunity that those assets represent for us, particularly in 2020 year and going ahead. And then the resourcing contribution in profit is relatively small. So schools division. I think it's suffice to say. And I have been talking to you about a number of initiatives that we've put in to the school business to improve the performance and the market positioning of our portfolio. We enjoy a very strong portfolio of brands. And we've been working on that portfolio to make sure that it is effectively positioned and that the target market is accurately defined and that we're optimizing our position in the sense of that portfolio of brands. Our student numbers have increased by around 128% in our schools division over the last 5 years. So that reflect the significant growth that we've had. Okay, we've improved the operational effectiveness and efficiency by creating the brand groups, group shared services; investment in IT support structures to enable us to change systems and processes and extract savings, efficiencies and benefits out of that schools division. Historically it was structured in a very decentralized and site-by-site basis, which was inefficient from a point of view of transaction processing, optimizing our systems and processes. And over the last few years, we have spent and we have done a lot of work in improving the structure, processes and systems that support our schools business. As I said to you, we have sharpened our focus on the brand proposition. We've always had good, strong brands in Crawford and Trinity, but I think some of our acquisitions were a little less clear in the sense of the role that those would play. Over the last few years, we have been redefining that value proposition of these brand groups to ensure that they understand what role they play in our portfolio of brands and focusing in terms of the brand group's efforts in this area, and it's starting to pay us good dividends. We have had the opportunity. We're dominant in the premium sector, and that continues to date. And we still believe firmly in that premium sector. We have a very good example that I'll talk about a little later in Trinity Glenvista and the fact that there is still very much a role for those premium brands in the market, but the opportunity for us was to migrate more into that mid-fee sector, which we have done, I think, very effectively over the last few years. And we've built that portfolio of brands to where it is now quite significant and contributing well to our group and our group offering. And then of course, we've had to shift our emphasis on customer focus. There certainly was a time, I think, in the private school sector where then demand way exceeded supply. Waiting list was the name of the game. And in such an environment, I argue that it doesn't really breed the best of customer service, the best focus on your customers. It's a question of, "Don't call us. We'll call you." Well, those times are no longer. And I think anybody who actually drives down the road these days and sees just about every single private school entity advertising on street poles and the likes emphasizes how much more competitive it has become. And despite the fact that there has been good growth from student enrollments, the number of schools, the number of competitive offerings in this area has also risen dramatically, so it was really important that we shift our processes and practices. And we've been doing a lot of work, particularly on digital marketing, to support the brand's proposition; on sales training, identifying who it is that's actually interacting with our customers, our prospects; and making sure that we are a responsible organization. And the work that we've done in that area has really paid dividends; and I think, is primarily responsible for the fact that, today in 2020, we've seen such an encouraging and positive turn in our organic enrollment at 5%, really bodes well for us. And prior to the COVID-19, I was looking forward to standing in front of you and talking about the fact that we were encouraged by the prospects for 2020. I think a lot of that is up in the air and we will have to wait and see what happens, but from -- I think the pleasing factor is that our business is so much better structured. It is so much more robust. I think we're all feeling very confident that our systems, processes and organizational structures are supporting our organization to a much greater extent. And the evidence for us is in the fact that the organic enrollments this year have been particularly good. That's pleasing. As I said to you, we've been in a period of good expansion, and our revenue growth has been good. Equally, we have improved our profit, perhaps not at the levels that we might wanted, but I do believe that the reorganization, the restructuring, the investments, the acquisitions that we've made have built a business of some critical mass and scale that will really allow us to now optimize and to maximize. So I think we're well positioned. And we have delivered position profit results despite all of the activities and the investment that we have made. And I think our schools business is sitting at an exciting stage. Talking about Africa. We did decide that we wanted to look at Africa. The demographics of the continent are, I think, obvious: a very young population; growing economies, albeit off small bases; high levels of urbanization; and a thirst for education; and governments that traditionally struggled to provide quality educational offerings. So we believe that all of the factors in Africa are appropriate and attractive, and we've actually made some really good progress in terms of growing our presence in Africa. We are still in the J curve. Crawford International and Makini are new investments which we are, in fact, getting behind and making sure that we have the correct offering. And that is certainly being rewarded in terms of our enrollment numbers. So if you look at Africa. We've come from where we had the school in Botswana. Gaborone International School was virtually our only entity. And we had about 3% of our revenue from Africa. We've grown that to 10% of our revenue contribution. Just to give you an idea in terms of the enrollment, you can see now we are now at nearly 6,000 students in Africa and the rest of Africa outside of South Africa; and very strong enrollment growth, Crawford International now over 400 students. And what's exciting is that, a mere 15 months after our opening -- and it was a significant CapEx, being new into the market, taking the Crawford brand into that market. We wanted to make a statement. We felt it was important to actually be convincing to consumers in that market that we were here and that we were here to stay. And so we actually made a significant investment. So the J curve is deep, but what is so exciting is that, with the enrollment numbers that have far exceeded our expectation, we will be out of that J curve some 15 months after opening and it will be making a positive contribution to our business. And that's an outstanding success. It has proven to us that in the Crawford brand we have an entity that can cross borders and that we can in fact internationalize, and that's exciting. So we've got a very positive response. At Makini, you will recall this is a school with a 40-year history in Nairobi built by Mary Okelo, but in the later years, it certainly had become perhaps a little tired, as Mary was looking towards her legacy. And the opportunity for us too is acquire a well-positioned, well-established school with a reputation but to inject some new lifeblood into that. And that's what we've been doing. I must say that in fact, in the last couple of years that Mary had that school, the volume and -- the number of students was in slight decline. And since we've taken it over and improved the academic offering, the facilities; and made some investments in terms of rejuvenating that school, the enrollment growth that we are seeing both in Nairobi and also in Kisumu which is in the West of the country has been very encouraging. And we are excited about the future of Makini. It gives us a very good presence in the Kenyan market with Crawford International, our premium offering; and Makini Schools in that mid-fee sector. So revenue in Africa is up by 55%. And having made the investments, we are looking forward to a really positive year in 2020 from Africa. And we think we will see a significant swing in the profitability of those operations in the year ahead. Locally we've been doing a lot of work. And I have a brief video clip here which will show some of the exciting developments that we have brought to market in 2020. [Presentation]

So just an idea in terms of the new schools that we have brought to market, a significant build plan during last year. And I need to take a moment to congratulate our property team, who delivered 3 new schools, 2 significant CapEx expansions and developments on existing schools, all on time, in budget. And I'm sure you'll agree, just briefly looking at some of those video clips, the schools look magnificent. And we are able to say, no, not only do they look magnificent, but quite clearly there has been strong appeal in terms of the way that we have exceeded our enrollment growth numbers that we set for ourselves on these projects. So it is very exciting. The first one that you saw in that video clip is in fact Trinityhouse in Glenvista. And as I've said to you, whilst we've been building our mid-fee sector very much and that's been our priority perhaps, there is still space. And we are still very confident about the premium sector. And this just goes to show that, if we get the parameters correct, the location correct, there is definitely a market for premium schools. Trinityhouse Glenvista will open with over 430 -- I'm looking at [ Mike ] -- over 430 students at opening. It is certainly our most successful opening for a premium school and has been absolutely fantastic, exceeded our expectations by just on -- nearly on 100% of -- more than we had anticipated or budgeted for in the CapEx plan. So that has been fantastic. And quite honestly, it will actually -- it won't even have a J curve. It will make a positive contribution in this first year of operation. And that is an outstanding feature and a testament into the success of opening that school in the South. You saw it. It is a magnificent-looking school with a great location. Our property team did a terrific job. And our brand management group, they had a full year to market the school. It started off, I can tell you, with a lot of objections from the local community. They did an outstanding job as a team of getting that community onboard, to the extent that it is now strongly supported. I think, as the building continued, people saw that it was truly adding value to the area. And it's now been taken on in full embrace; and the numbers are very, very exciting. So a fantastic opening. And it's congratulations to all of the brand teams and the property group on putting that together. Likewise, Pinnacle College in Linden. We took the old Salvation Army site which was pretty run down. And I must admit that, when I visited that site, I was actually taken away with the development we've done. You have a magnificent vista of sort of 3/4 of Johannesburg. The buildings are magnificent. We've integrated the old protected buildings into new, modern facilities. And the school has a wonderful look and feel. And again clearly the market are -- or the -- pardon, are in -- agree with us. We exceeded our enrollment target there by 80%. Pinnacle College in Waterfall was the old SAB training center which we acquired and, again, renovated with some wonderful features. And we've had a very successful opening there, where we've exceeded our enrollment targets by some 25%. So really encouraging new school openings building on the portfolio in mid-fee that we've set ourselves to do but confirming the potential or the promise that we still have in premium schools, which is encouraging. Here we go. It -- I hope it was apparent from the video, where you saw Kyalami, the old Summit College, the new buildings, which includes, I might add, hostels. So we are following a boarding strategy, weekly boarding. And boarding on that site, I think, is really exciting. It's a phenomenal development, a significant investment. And again we have had enrollments that have exceeded our target for that, so it's a very encouraging response from the market. And likewise at Rynfield, where we've taken the old Kathstan school, which was a bit of a mixed message to the market, and some very poor facilities; repositioned that with a significant CapEx expansion program. And the market response has been positive. There we've actually met our enrollment target. I think we still have some work to do, but it's encouraging. And I think it's going to add well to the portfolio. But not only in terms of these sorts of capital projects, what we've actually done is looked at the portfolio and made changes to align the brand portfolio: firstly, Abbotts College Century Gate is a site that we have had -- I'm looking at Didier and I probably -- what, for 8 years -- about 8 years. It has never really delivered. We gave it one last shot with the management team to see if they could actually turn it. It didn't work, and we made the decision to close that site down. We've merged the students. And a significant number of those students have in fact gone to Abbotts College in Claremont. [ Mike ], I'm looking at you. And I think it's probably in the order of 80% of those students transferred over. I -- about 70%. [ I may be a little bit puzzled ], but about 70% of them transferred to the Claremont site. So what we have done is we've taken out a cost structure and consolidated, and that will improve the performance in the Cape Town area. This is an exciting development where we've rebranded the Maragon Ruimsig school, which is a premium-based school with magnificent facilities. The history here is that as ADvTECH we actually built Trinity Little Falls to compete with Maragon Ruimsig. And then of course, in the acquisition of the Maragon group, we now have 2 schools with very similar offering within close proximity to [ one another ] within 3 kilometers. We were wrangling with what we would do with the school because it made no sense to have schools of both exactly the same kind of brand positioning within such close proximity. And our thoughts were along perhaps including it into the Trinityhouse group, when in fact the team themselves on the ground who were actually involved in the discussions, thinking about their future, what their value proposition and what their meaning to their target market was, came up with the concept and the idea that they really felt that, given the facilities, it would be much better marketed as a Crawford school. And that was a very exciting suggestion for us because now, of course, in that West Rand we have a Trinity which fulfills the role of the traditional English public school with school uniforms, a whole line of offering, versus the positioning of Crawford which is focused on academic excellence. And now we have -- are now able to take to market 2 distinct value propositions. The team on the ground there have really embraced that challenge and are doing a fantastic job. And we're looking forward to having a much more positive and exciting future from the Crawford Ruimsig Maragon brand there. We've also taken some action on underperforming entities. We had junior colleges in Sandton; Tiny Town, which is a really small, little junior colleges; Crawford Village. The area around Rivonia where Crawford Village was has changed the demographic quite significantly, and its numbers were under pressure. And we've consolidated all of those into Crawford International in Bryanston, which become a feeder into our Sandton site which is a very successful site. So we've taken a lot of action within the business to reposition, realign and put behind the right kind of wherewithal to have the correct offering aligned to the target market; and that's delivering good results for us. Our initiatives on efficiencies and effectiveness extend beyond looking at the school structures, the brand groups, the rationalization that took place there in terms of rationalizing our schools head office and focusing in on the brand groups so that the management effort was very clear on the performance of the entities. Our group shared services is a key initiative to take all transaction processing out of the schools; and consolidate, rationalize and achieve significant savings. And we're starting to make very good progress in this area. An idea: our debt, which you can appreciate, under the circumstances, collections are very, very difficult. And most people are probably reflecting how much more difficult this area is. We're seeing improvements in the performance of our debt collection as a result of the consolidation and rationalization. So a much more efficient structure, dropping our debt-to-revenue ratio from 5.6% to 4.6%. We've seen significant efficiency improvements, for example, in the consolidation of payments and vendors. We're able to leverage and to negotiate better purchasing power and also simply to reduce transaction processing and transaction costs. We've increased the productivity of the staff in that area as a result of those consolidations. This, the consolidation of our financial systems, will pay big dividends as we go forward. You will appreciate, I think I've spoken about this before, that every single school, and that includes even a school on a multiple-school campus, had a different chart of accounts, a separate bank account, its own financial structures dedicated towards that entity. We have rationalized that. The first step, of course, was an information system that could accommodate those changes. We have now standardized the chart of accounts. We collapsed the trial balances [ onto ] campus sites and we're migrating into a single database. So if we have 100 schools in the group, you can understand how we've been able to reduce the complexity of our processes and systems, and that's driving value for us. And also, quite simply [ put is ] we can reduce the number of bank accounts and the number of actual legal entities, which simplifies everything from a financial management perspective. And we'll drive benefits from that. So good progress in this area, and we really are starting to see the benefit. I spoke about the importance of customer service, of becoming a much more market-orientated entity. Where we need to compete, we need to be able to communicate clearly what our propositions are. And we need to support inquiries. Well, really good progress has been made here from the bottom, up. We have trained every single person that might be customer-facing [ in our entity ]. Anybody who would come into contact with parents, with lead generation, they have been through a significant and comprehensive training program, which includes, I might add, what we call mystery calling to test what level of service these people are providing. So every single month, a mystery call is made to all of the people in our schools who have been identified as involved in lead generation or the engagement in student enrollment process. And they are assessed, marked; and the feedback is provided to the brand groups. We've done a huge amount of work in digital marketing; improved our website significantly as marketing tools, as information conveying. And what you can see here is that -- the results of these efforts; our STASY system, the new system we put into place to be able to track and monitor leads to -- from a customer service perspective, but also our student admin system. Leads are up a staggering 623%. In addition to that, the costs of generating those leads are down quite substantially despite an increased level of marketing spend. And you can see the kind of level of traffic and interest that we are attracting. So again, significant effort made here. And all of these efforts have been leading towards our growth in organic enrollments. So our schools division looks fundamentally different to what it used to a few years ago. [ Always where -- we were ] really positioned and focused in the premium sector. We are still very proud, and we have some outstanding brands in this area. We're sharpening their market focus all the time and their relevance and customer service. So essentially we're driving operational efficiencies, teacher-to-pupil ratios, salaries and wages-to-revenue ratios. We're rationalizing the portfolio to make sure that each of the schools aligns itself to our brand offering. We have some 67 schools and nearly 21,000 -- that's the core and that's the heart. That's the traditional sector of our business. We've been building this mid-fee sector. And with the greenfield developments; the repositioning that we've spoken about; some acquisitions in terms Glenwood and Maragon, for example, we now have some 29 schools in this category and nearly 6,000 students, okay? And again demonstrating the progress that we're making in Africa, where we -- our original investment was in Botswana but now we have Crawford International and Makini; some 13 schools now; and again, 6,000 students in East Africa -- sorry, in Africa, Botswana and Kenya. So I think that, this portfolio, this is what we've been building. This is how we've been working on the initiatives that we've put into place. We've grown revenue. We've grown profitability. And we are now really well positioned to start actually driving the returns from our schools division, yes, so very exciting. Of course, the most critical element of this is our academic offering. That is at the heart of our strategy, and we pay specific attention to making sure that we deliver the best-quality academic offering that we can. We have a very comprehensive approach to our academic offering, a comprehensive curricula, whether it be the IEB, the department of education's National Senior Certificate; whether it's Cambridge; or International Baccalaureate. We have capability and competence in all of those curricula, and we use them in terms of the brands and their brand positioning. We are focused on, of course, digital literacy and ensuring that our students are familiar with the digital world and are competent and capable in that area. And then of course, we align to these global competencies and global citizenship. So it's a comprehensive approach to our academic rigor. We benchmark at grades 3 and 6 and 8 and 9 to make sure -- and we use that at different levels internally and against external benchmarks internationally at grade 9 to make sure that our qualification is relevant internationally. So it is a very rigorous and thorough approach to academic excellence, which is at the heart of our strategy. And I am pleased to tell you that we have continued the trend of improved academic performance with over 1,500, nearly 1,600, matriculants; and nearly 3,000 distinctions. We had a 100% pass rate to the IEB and a 96% bachelor pass rate. So over the last 4 years, our bachelor pass rate has increased from 81% at (sic) [ to ] 89% in terms of our performance in that area. And we are very, very serious, determined and committed to academic excellence. Without that, we realize, our schools and our schools and our education business in general really doesn't have the solid foundation that is necessary. So this is very important to us, and it's good to see us delivering in such a significant manner. Okay. We -- in CapEx. We will have a reduced level of CapEx going forward. Obviously, this year, we had -- the MSA acquisition was a significant amount, but we have also opened, as you've seen, a significant number of new schools and repositioned schools. As we said, we anticipate pulling back on our levels of CapEx spend. CapEx will be geared towards only existing sites and building out facilities so that we can actually realize the full potential where it's appropriate, okay? We have no new schools planned for 2021. I think we've done well over the last couple of years in school openings, so it is a year where we were hoping we would really enjoy the benefits of the investments we've made and optimize some of the capacity utilizations. We'll have to wait and see what COVID-19 holds in store for us, but we're very happy with where the schools business is at this point in time. And we're looking forward to a really encouraging and promising 2020. Our tertiary division, well, another stellar performance, revenue up 25%. We've had enrollment growth for 2020 of 13%, which again is very encouraging; and a good combination of both new students and also retention. You can imagine how important retention rates are to us. And I must say that the brands are delivering on that element, which again is testimony to the academic offering and the quality of the education provided. So we are doing very well. We are constantly recognized for our work-ready graduates. We have really good industry reputations. Vega is a shining example of that, where it is recognized as being the leading institute in creative brand marketing and marketing communication. And it's important to us as -- in our applied institutions. So the brands are very clear as to what their role is, what their proposition is to the marketplace. And we do have very efficient operational structures and a high level of delivery. The Independent Institute of Education is undoubtedly South Africa's leading private university. We have a 15-year track record of academic excellence and [ support here ]. We have over 197 accredited courses which are delivered on 33 campuses. We support multichannel modes of delivery in full time, part time, online and blended learning, so we cover the entire spectrum of tertiary education offering. Any time, anywhere and any place of the student's choosing is what we subscribe to. And we have success in these areas. We're at almost -- I was really hoping. I was trying to recruit 25 more students because we have 44,975 signed up as at February. I wish we could have made the 25 to say 45,000, but I hope you'll bear with me that we're almost 45,000, okay? And we do benchmark our qualifications internationally. They are endorsed and accredited by the British accrediting council in terms of our qualifications. So a track record of great revenue growth and significant profit growth over the last 5 years. We have improved the margin performance in the tertiary business year-on-year. Some people are referring to the fact we might be slowing down. Well, actually, if we were to exclude the impact of Monash South Africa -- and which, of course, we have been spending some significant integrating, rationalizing and incorporating into our own business. And you will know the history of Monash. It was owned by Monash South Africa. It was bought by Laureate. Both of those international entities divested [indiscernible]. We have been involved in a significant rationalization. It didn't perform anywhere near the level of our traditional businesses. If we excluded the impact of Monash this year, our margin would have been at 25.3%, okay? So we have signaled that we think a margin level at around this area is a really good and long-term sustainable performance, but the tertiary business continues to perform at an excellent level, very exciting. I think it's more than just our financial performance. The issue with regards to the IIE's law degree, I think, is really quite a significant landmark in private higher education. You might recall we were challenged by the KwaZulu-Natal Law Society, who said that they would not accept IIE law graduates as candidate attorneys because they had not been to a university, little "U," as written in the Legal Practitioners Act. We felt that, that was a completely incorrect decision. As you all know, there is a standard unitary accrediting authority in terms of confirming degrees in South Africa or the accrediting of degrees in South Africa and you have to comply. So whether a law degree is offered at the Independent Institute of Education's campuses or whether it's at UCT or Stellenbosch, it carries exactly the same criteria and weighting in terms of SAQA qualifications and its recognition through the CHE and the department of education. So we challenged it in the court. And the high court confirmed our decision that in fact our law qualification was the equivalent and equal to. Simply because we're not allowed to call ourselves a university according to the Higher Education Act did not make any difference to the level of qualification that the student had undertaken. It was accredited, recognized and registered as such. And that decision was confirmed in the constitutional court, so an endorsing, an overwhelming endorsement, for our qualification. And what it does, more importantly, is it sends a very clear message of the equivalency and the standard of our qualification versus any public. And simply because we're not at this point in time allowed to call ourselves a university, the university of what or whatever it is, it sends a strong signal to all of the professional bodies that our qualifications are the equivalent of those in the public sector, which is an important perceptual issue for the South African market. So we are very pleased to have been the trendsetters in that area. If you look at our faculties. We have 6 faculties. And the progress that we are making in these faculties, I think, particularly pleasing in what we'd call the professional qualifications, if you look our law faculty. In 2017, it's grown by 95%. And at 3,000 law students, I'm looking at Felicity here, it is one of the largest law faculties in the country. Am I correct? Felicity is confirming that. Perhaps -- yes, which I think is a fantastic acknowledgment. Our educational qualifications, nearly 6,000 students in our education faculties; accounting, 342% in terms of these -- and engineering. And this is real engineering. This is mechanical and electrical, electronic engineering qualifications that came to -- we acquired with MSA. And we're looking forward to really building on that; as well as IT, which is in strong demand and, you can see, has grown over this period. So we're seeing good growth in what we call these really core hard qualifications, these professional qualifications. And it bodes well for our reputation. We can see that we are being recognized and acknowledged as a place that offers genuine, worthwhile qualifications in professional areas. Our competitiveness, if we just look. It's amazing that, as the -- pressure on the public system, I think we were always considered to be a very extensive option. Well, that's not necessarily the case. We are very competitive with the public offerings in a variety of ways. And it is important to remember that we do this without subsidy, okay? Every one of these institutions in the public sector receives somewhere between about ZAR 21,000 and ZAR 28,000 of subsidy per student. And in addition to that, students can actually qualify for or apply for and qualify for an NSFAS funding. If they come to our private institutions, that funding is not available to them. So the fact that we are now competitive and able to offer qualifications that compete with the publics on price when we are not funded and where there is no [ ground ] finance available is really testimony to the competitive position that we have in the marketplace. And again we are able to do that because we have very efficient operations, excellence in terms of execution. And we pay specific attention to the value and the quality of the offering. So exciting for our business. We've grown our online business significantly over the last few years. As I said to you earlier on, one of the reasons we're in such good position from a point of view of the challenges of COVID-19 is because we have been investing in our technology. And we have been investing in making sure that our qualifications are available online as support for face-to-face tuition or in blended learning environments or indeed to be handled on a complete online basis. So we're actually in good shape, and you can see how our number of online students has been growing. Just shy of 10% of our total population is in online, okay, to supplement and complement our face-to-face and blended learning businesses. We're opening new campuses, and we have over the last few years. We have been -- whilst we've been improving the margin and the profitability of the division, we have been adding campuses and expanding and absorbing the capital costs of those expansions. 2020 was -- we opened up a new -- digitally enabled our blended learning operation in Port Elizabeth and had a very good response, 310 students at the opening. We've opened a new mega campus in Cape Town, where we had 470 student, opening, exceeding our target expectations. And we are very encouraged by that, our first move down into that Cape Town area. Varsity College has also grown at -- our flagship brand, and performs exceptionally well in every respect. It is now starting to hit some capacity -- our Pretoria side, for example. We've been operating on that site with temporary classrooms for some years now, and we really need to kind of expand on that. Cape Town, likewise, we've been in premises that we have rapidly outgrown. So we have new leased premises. This is a development which has been done at the back of a Newlands complex that has been purposed, designed and built for us, but we lease it, so the capital outlay there is really around furniture, fixtures, fittings and IT's; limited amount of CapEx; and will have us in new premises in Cape Town. Likewise, I've said, in Pretoria, where we've been based on the St Alban's site with a very great -- with an excellent rental, we now need to expand this because we've had temporary accommodation for our students there for far too long and we need to actually make the commitment. So we have a CapEx plan for that. Again I've mentioned to you our recognition for academic excellence is acknowledged and accepted by the kind of organizations where our graduates are employed. We've placed a significant number of those. And we have over 71% -- or 71% of our graduates employed after 6 months of graduating, which again quality of our offering. We win awards, Vega in particular highly recognized and valued in terms of the creative industries as producing the best-quality students. We were pleased to be ranked by the Loeries awards in 2019 as the best tertiary brand in branding, marketing and communication. And everywhere we go, we look for those kinds of endorsements and recognitions of the quality of our offering. As I mentioned to you, it's not a question of the fact that we are now going to embark upon expansion in the tertiary business. We've been doing this over the years, so as we've improved, the student -- or the student growth has been fantastic. The profitability is enhanced. The margin has grown. And we've been doing it all against the backdrop of increasing the number of CapEx -- number of sites that we had. We've been investing in those. So our tertiary business is well positioned, and looking forward to continuing that trend. The resourcing business. Well, I think everybody can appreciate just how tough the South African market has been. And I must say that, under the circumstances, the resourcing team have delivered a really solid result. I think fair to say the market has been shrinking rapidly. I referred to the fact that our team probably grew market share in a declining market, and we can ask our team to do no more than that. I think what we also have to acknowledge and recognize and give them credit for is their strategy to move into Africa; and to look for different markets, HR Africa doing payroll and contracting for large employers and the balance of Africa. And that has certainly come to their risk. If we look at the performance and the revenue. You can see the South African contribution, in green, in terms of revenue. You'll appreciate that the Mauritian-based HR Africa business is a different business. We run payrolls and have to recognize that revenue. So the revenue is particularly high, but of course, you can see the level of contribution has declined in South Africa because of the economic circumstances. But the fact that we've moved [ offshore and into ] Africa and through Mauritius and those operations has helped the resourcing business to weather some pretty heavy storms, okay? So corporate responsibility, our ESG focus. I think we as an organization are meticulous in terms of our governance. We comply with King. We -- the Board are determined to be as compliant as possible and take those roles very, very seriously. We provide structures. We're working on a combined assurance frame. I think the biggest benefit is in our social impact. There is just no doubt about it that in ADvTECH we have a business that makes a significant impact into society, whether in fact it's through our schools and our pass rates at 100%. It's the graduates and their employment into our societies. We actually make substantial contribution in terms of bursaries, ZAR 194 million worth of bursaries into our institutions, in addition to the CSI projects which we focus around environmental issues. All of our campuses and our property division, again, do a very good job here making sure that we are energy and water efficient. We involve ourselves in those community projects around the environment, and so as an ESG investment, I think we are probably right up in the top area. And that helps from an investment strategy. Case for us, of course, we have clearly defined. This is a diagram that I have showed on several occasions. It is a diagram that I am very pleased to say we use extensively in the business. Whenever I have the opportunity to talk to whatever forum in the organization, I invariably start my presentation with reference to this slide, yes, so that it is well communicated throughout the organization. At the heart and what we feature and underline the whole time is our commitment to academic excellence. And then of course, we do believe that we have good growth opportunities, and that can be coming through organic. It can come through acquisitive. It can come through different modes and routes to market. It can come through product extension. It can come through segment growth. And it can come from geographic expansion. And all of those, we have a track record and a history on delivering, which has led and underpinned our growth over the last 5 years. Specifically, Africa, we've identified as opportunity, and these are the things that we are focused on. We want to make sure that -- we are capital intensive in many instances, but that capital is productive and generates the levels of returns. And I think we're really well poised. In our tertiary business, we've been delivering substantially over the last few years. Our schools business is now well structured. We are the epitome of a people's business. Our intellectual property is in our people. And actually making sure that we are productively structured and resourced is critical to the success of our business. That's one of the initiatives that we've been putting into place in our schools division over the last few years as we benchmarked and examined our level of productivity and human capital. And it's paying dividends for us. We want to focus on educational productivity. It's an area that we think is an opportunity. We talk about our markets in particular. Demand is not the problem. Affordability is the issue. Therefore, if we can work at becoming more and more productive in the delivery of educational offerings, that helps us to achieve and to realize more and more of share of market. So this is an initiative that we're putting into place to benchmark, question, test; ask ourselves how we can do it more effectively in a more efficient manner so that we can actually keep the costs of quality education at a reasonable level. It is always likely to be expensive, but the truth is, if we can pay attention to this area, it opens up significant areas of opportunity for us. Customer focus, I think I've mentioned to you very specifically. And hopefully, you can see how some of those initiatives are starting to pay handsome dividends. In the past, I don't think as an organization we were particularly focused on the customer. That whole, "Fill-in the form. We've got a waiting list. Don't call us. We will call you," we've turned that on its head in our schools business. And I think we are starting to see some great returns and benefits from initiatives in this area. And we believe in specialized and focused and data-driven decision-making. So that slide encapsulates our strategy. I do find it very useful when I'm talking to the organization. I ask people to challenge me. And if they can think of an initiative or something that we ought to be doing and it can't be expressed in terms of the strategy, then we should question and challenge and see if we need to add something. And today, people have been comfortable that this represents a reasonable document for us in which to guide our decision-making and our priorities. Africa. I've mentioned why I believe it's such a great opportunity, young population, okay? The quantum, the size of these markets are going to be huge. The fact that there is the emerging middle class. I acknowledge and I accept that it may be at relatively lower levels in comparative countries in other parts of the world, but it is growing. It is expanding, okay? Urbanization is definitely a key feature of the African population, where so many new mega cities are predicted to be in Africa. And the fact that it is a growing young population. So all of these dynamics, I think, make it a very attractive market. And why is ADvTECH well positioned to take advantage of that? Well, our commitment to academic excellence. We have a track record. We have the IIE, which has got a 15-year track record. We have excellent academic delivery. We can point and prove to how this is something that we live, more than actually as just a statement, our results in that area, where we have for example a 100% pass rate at IEB matric, okay? 6 faculties, 197 qualifications in our tertiary offerings; a portfolio of brands that we can take. And we've seen how we can actually internationalize the Crawford brand with the success we've had at Crawford International in Nairobi, okay? World-class teaching and practices, that is the thrust and the focus for us. That's what we do, teaching and learning. A lot of other institutions, tertiary institutions, universities are involved in a plethora of research and other activities. We are focused single-mindedly on teaching and learning. And we can extend that into our organization through our schools as well as our tertiary institutions. So I think we're well positioned to be a leader on the continent. I think we've made a good start and we are learning how to operate in these geographies. There are lessons to be learned. You probably don't get it right the first time, but we are very excited about our investments into the continent and the potential that they have. Again. Probably I've repeated a lot of this, our track record: strong cash generation, good balance sheet, diverse revenue streams. And I think we are well poised to grow [indiscernible]. Again just coming back to the dividend issue and to stress that we have not made a decision not to pay a dividend. We have simply deferred the decision. And I do think that that's prudent, and I think it's the correct decision under the circumstances. The Board will review that. And we will come back to the market and advise once we have a clearer understanding as to where the COVID-19 issue is going, okay? I think the future, to an extent, is uncertain. We cannot control the variables that are outside in -- our environment, but we certainly can control our own operations. And I think there we're well positioned. Our business has proven it in terms of our response to the challenge of providing continued education online. I -- personally I've been really delighted to see how easy we've been able to take such a huge and complex task, and we've been able to manage it in a relatively short space of time. And I do think that's testimony to the work that has been done in our schools and tertiary division over the last few years, preparing ourselves with technology and enabling technologies that we can now kind of transition into this environment. So I'm quite enthused and quite excited. I don't for 1 minute believe it's going to be seamless and without problem. I think -- but it does give us an opportunity to really explore and to test and to understand the online delivery on this kind of a scale. And what I am confident about is our team's ability to react to whatever problems we identify as we navigate this new territory, okay? And I just -- we do want to signal that, in light of the share price at the moment, which has been a disappointment, we are also giving consideration to a share buyback. It's something else that is being considered and is being debated. There are no decisions, but at this level we do believe that, that is something that should be on the table for consideration. And the Board will continue to apply its mind to those issues, okay? So prospects. We've been through a period of rapid and significant growth. We're now focused on we have the portfolio. We have the structures. We have the systems now where we probably want them, and our focus is on making sure that they deliver. We're excited by that organic growth in the schools business but -- in our organization as a whole with 10% overall organic growth. And I think we will continue this. We -- the work is not done on the efficiency and the effective initiatives, but we're [ certainly ] starting to see demonstrable progress, measurable progress in those areas, so we'll continue those initiatives. And I do think that they will -- their contribution to our performance will grow and grow. And therefore, whilst we are and have taken the actions that we believe are appropriate and necessary and within our own control, reasonably positioned, I think we have to wait and see what the broader impact is as a result of the COVID-19 pandemic and crisis in the country. So that concludes my presentation. And now what we'll try to do is to take some questions. Didier, have you -- do you want to comment? Perhaps you can read them out.

Yes. [indiscernible] some questions. [ Just is my mic on ]?

Yes.

Okay. The first question is the schools enrollment waterfall was not given this year. What were the emigration numbers for 2019...

Yes, okay. We did not include the waterfall this year. I can tell you that we had 928 students that left us as a result of emigration, which is fairly similar to last year. Last year, we were just over the 1,000. [ Mike ], can you remember exactly how many? But it was just over 1,000. It's 928 this year. And we had -- again the other key area for exclusions or departures from our systems is financial hardship. And there we had just over 1,000. So those two continue to be, by far, the majority of reasons for exclusion. And as I say, we're probably seeing the emigration plateauing, not declining to any great extent, but at least it hasn't grown. So 928 as a result of emigration.

Okay, the next question is, are there any plans or considerations to add a layer of lower-fee schools below the mid-fee ones?

No, not at this point in time. We are constantly scanning the environment. I can tell you that Dr. Felicity Coughlan and John Luis from our academic department did make a visit to Peru to examine a model of low-fee schools. So it is always on our radar. We are always analyzing, scanning. However, we do not yet and we have not found a way in which we can deliver a low-cost school that generates the level of return without a high level of risk, so our focus at this point in time is on our mid-fee segment, where we've made significant progress. We'll probably look to continue to expand and see where the opportunities might be there. It does not mean that we will not go [ to low ], but what we are trying to make sure is that -- if we do pursue a low-fee model, that we are very certain we can generate the right level of return from such a model. And in our minds, it's still -- that's a tricky prospect.

So the next question: Are there any time targets for Africa breakeven, or is the plan to continue investing?

We believe that we will be positive in this 2020 year, in a sense. So we're expecting a large turnaround. I have to say COVID-19 and the implications and impact that, that has on our organization, but we believe, as I said to you, Crawford will now be through the J curve. Makini, we've actually -- I think, the rationalization activities, the investment activities, they're past. And we're looking toward to a positive contribution from that. And Botswana has been positive for some time now, so we are looking for a good swing from our Africa investments in 2020. And the only precursor to that is what happens with regards to COVID-19.

Okay, then a question regarding MSA. It's actually 2 questions: some comment on the progress of the integration and plans to get margins in line with the other IIE brands. Then the second bit, have you noticed any weakness in the application trend as a result of dealing and -- of the deal and rebranding?

Okay, the integration has gone very well. It has been thorough. It has been comprehensive. And certainly the management teams have dealt with a number of issues as we bring those 2 entities together. I am very comfortable that, in terms of the level of saving and rationalization, restructure that we anticipated in the acquisition plan, that has been delivered and probably more so. I think we found several areas of opportunity, so we are very comfortable, in a sense, of the work that has been done and the savings and restructuring that has been completed. So we do believe that we will then get that site to perform in line with the expectation of our other tertiary models and businesses. There's no reason why it shouldn't, in fact, and we're very confident that it will. It has some 3,000 students. And a site of some 3,000 students, we expect to be making a significant contribution in the margin level to our group. And we will -- I believe we will deliver that in a reasonably short time period. In terms of the enrollment, yes. The enrollments have been somewhat less than we had hoped. I believe that that's probably more on to the fact the student acquisition and enrollment processes that we inherited were to some extent disrupted by the integration processes. So the enrollment numbers, the top line numbers are somewhat below what we had anticipated, but at this stage I am more than comfortable with the rationalization; and the restructuring; and the fact that we are on track, in line with our expectation to integrate MSA into our operations. And I am very comfortable that the acquisition will prove to be a good one for us in the future, yes.

Okay. Next question: Are you able to provide more detail on the progress of the restructuring/rationalization of the schools division? What have been the annual cost savings achieved to date?

Okay. We -- the restructuring has been, of course, in the consolidation and the establishment of the group shared services, which was the extraction of those kinds of activities and processes and systems from our schools business into GSS. We have looked also at the efficiencies and effectivities of our school operations. We did undertake restructuring and retrenchments during the course of last year. We retrenched some 100 people, probably just over 100 people from our schools division last year as part of that process. And those restructuring costs were incurred in the 2019 financial year. So we have looked at the benchmarks going forward in terms of teacher-pupil ratios, in terms of salaries and wages-to-revenue ratios. And we've made good progress in the vast majority of our schools, so that progress is significant. In terms of the actual level of cost saving, well, there are a variety of activities. And I haven't actually got a bottom line figure and a sense that would come from each of those activities, but they're significant. And that's why we're confident and positive about the future for the schools division going forward.

Okay, the next question has to do with the repayment of the ZAR 1.8 million of debt, which I'll deal with it. That loan has got 3 tranches and it's got 3 different repayment terms. So the first 1/3, first ZAR 600 million, is due for repayment in September of 2021; and then the next tranche a year later; and the final tranche a year thereafter. And we're comfortable that, one, we will be able to refinance it and depending on the -- how the economy plays out and that we may even be in a position where we choose not to refund that full facility. That will just depend on how we see growth prospects going forward, okay? Then the next question. Would you be considering allowing fee payments to be deferred for a period of time as financial pressures increase? How many school -- and then how many school leavers did you have in 2019 due to financial pressures?

Okay, I think I've answered that one on financial pressures. It's probably just over 1,000, to repeat that answer. In terms of will we be prepared to allow discounts, was it, or...

Deferred...

Deferred payment.

Deferred payment. Look. I think, at this point in time, we are looking at the impact on society, on our community and our parents and our students. This is going to be, I think, very difficult. And undoubtedly, there are going to be financial impacts on individuals, those involved in hotel, hospitality, catering, transport, just right off the top of our head. Those who are working, perhaps, and have a significant level of commission structured to their remuneration packages are obviously going to be adversely affected. So the impact on individuals and families is undoubtedly going to be real. What we need to do is be able -- is engage and deal with individuals on an individual basis. It's the way that we have managed debt in the past. So for example, in the last few years, we -- financial hardships have been significant and very real. We have sat down with individuals and made specific payment plans. It obviously depends on their relationship with us. Didier often uses the example that, if we have people who have come into our school in their first term and start to fall behind on their payment schedule, obviously the discussion is relatively short, but if we've had families who have 3 kids through our system and fall upon some difficult times as a result of the economy and through no real fault of their own, we're much more likely to try and engage and find some solution in how we deal with [ their areas ]. So it's impossible for us to give a blanket solution as to this is what we are going to do. We are obviously very fee sensitive. We have a high level of fixed cost in this business. We have teachers that will be expected to be paid and lecturers dependent upon us and the likes, so we're going to have to take a very careful and cautious and considered approach. I don't think it's appropriate to give a one-size-fits-all answer. I can say that we do have the wherewithal. We do have the ability at our various, different schools or institutions to engage with families to understand the extent of the problem and to make specific and unique arrangements. And at this point in time, that's the approach that we're adopting. I think it's very early, we are acknowledging, and undoubtedly there will be added financial pressure and hardship on individuals. We're going to have to treat those at a case-by-case basis and see what we do. That's our position at the moment. I think we really are in these uncharted waters. As each day goes past, things might become clearer and perhaps we can take more informed decisions, but our approach will be to engage on an individual, family-by-family basis to see what is the most appropriate decision.

All right, the next question is, how much CapEx is planned in the tertiary space given the capacity issue you are now facing? I can deal with it. So we've got the move to leased premises in Cape Town for Varsity College, which will create quite significant additional capacity for Varsity College at relatively small capital cost because a leased building [ is you just have ] to fit out. So we're talking of about 20 million or 30 million maybe for that building. Then the 2 big projects are the 2 CapExes in Pretoria for Rosebank and for Varsity College. The 2 together will be just less than 300 million, which we would probably do over 2 years. And that would see through the capacity requirement for a number of years forward. Again, on the Rosebank College one, it would also be taking a leased premise, so there will be some savings with -- related to that site merger. And it's also -- it's not so much more -- such a much higher number than we've spent in the past in terms of the other projects that we've put in. So it's only a marginal uptick in the CapEx that we're spending in the tertiary division over the next couple of years.

And I might add just as a -- both of those CapExes at the Rosebank and Pretoria, we are, as a result of COVID-19, looking at what alternative arrangements could be made. We could enter into a lease and buy later in terms of deferring the CapEx expenditure, the CapEx commitment required. Certainly under normal circumstances and pre COVID-19, the best investment case was to purchase the building, but we may change our minds based on the circumstances, and likewise with Varsity College. I think we would all be quite heartsore and disappointed, but we could, of course, delay that CapEx completely and continue to operate in temporary capacity if it were absolutely essential and COVID-19 impact being that decider. It's not what we would want to do, but it remains an option. So I think, even under the circumstances of that CapEx being potentially 300 million or so over 2 years, there are -- still are some options that we're giving consideration to in the light of COVID-19.

Okay, next question: Which other countries would you consider in the rest of Africa going forward? Will it be an east -- will it be an East African concentration?

No. I think, when you're looking at Africa, you do have what I'd call the usual suspects. East Africa is an attractive market, Kenya in particular. We are looking at West Africa. There are some very attractive markets from a point of view of size, scope, scale of those markets, but there are also some particularly scary operating factors and so we've -- we would do so under certain circumstances. I'll remind you that the IFC is a shareholder of ours and has extensive experience on the continent. And we do work closely with them in terms of opportunities that we're exploring, but there are opportunities in West Africa. And then there are also some very exciting opportunities in North Africa which we would give consideration to as well, again under guidance. And we are prudent. We're careful, but these markets are attractive in many instances. So we are scanning those horizons and looking at them and we'll make decisions appropriately.

All right. Any plans to divest out of the resourcing asset? The cash can be deployed to expand the tertiary business.

I think we've always understood that time goes on. We are more and more of an educational business. On the other hand, we do not want to destroy any shareholder value. Our response to this question has always been consistent. At this time, it's unlikely that we would find any organizations that may be interested in acquiring our resourcing business. And it is likely that we would -- if we were to -- just single-mindedly pursue an alternative for the resourcing business, that we would end up destroying shareholder value. Our management team has done an outstanding job on managing an incredibly tough environment. Their focus has been to look at alternatives, to build alternative geographies. It has not required significant resource in the part of our organization which they needed to be diverted from other priorities. They've managed that particularly effectively. And so for this point in time and until circumstances change, we are comfortable that it remains a part of the ADvTECH group. And we will continue to make sure that we do the best for its future without impacting significantly on the plans that we have in the education side.

[ All right ]. Is it only public entities that qualify for NSFAS?

I beg your pardon...

NSFAS...

Yes, it is only public entities. We -- most unfortunately. Because I can tell you that particularly the Rosebank College guys constantly say how excited they would be if NSFAS funding was applicable to their institution. And we do get a number of students approaching us and saying, "I have NSFAS funding. Please, can I register?" but we are -- we turn them away. They are not allowed -- we are not allowed to take on students -- NSFAS funding does not apply to private institutions. It's one of the areas that we'd love to engage government on, but I do think that -- given the commitments that government has, the problems that they have, that it's highly unlikely. And at this point in time, it is for public institutions only.

Okay. Then what is the approach to parents, students [ being in ] terms of communication regarding fee collection in the lockdown period? I understand that you will say it is assessed on a case-by-case basis, but in a general stance that fees are expected to be paid even given the digital solution you are providing, has this been communicated to your customers?

Yes, it has. We've indicated that obviously our priority at this point in time has been to make sure that we have a quality educational offering that sustains educational delivery. That's our first and foremost challenge. We want to make sure that we are effective. Our engagement with parents at this point in time has been, look, fees are due. When things return to normal, and we all hope they're going to return to normal -- we believe they're going to return to normal. The question is how long that will take. Then people are going to expect their educational institutions to be able to pick up where they left off and to continue to deliver the kind of quality education we have. To do that, we're going to need to retain our academic staff, our support staff so that our operations are not interrupted. We're having those kinds of conversations and discussions, but our priority at this point in time is to be -- make sure that we are able to offer quality academic support and tuition under these revised circumstances. So that's the point of engagement. We do understand that the question has been asked. We do understand that people are fearful, but they're looking at their immediate future, and their sources of income are likely to be impacted. This is a time for us to focus, I think, on making sure we are delivering a quality product. And we will engage with people in the course of time on the payment of fees, but we are -- the stance we're taking is that we expect fees to be paid because we will get past this. If you take it: We had a shutdown, and essentially all we've done is rearrange [ the term ]. Students were due to go on holiday around this time, in any event. Those holiday periods have been brought forward. You still pay school fees during holiday time [ and ] normal terms. When the 14th day will -- comes around, we will be able to support you with academic programs. And by the way, it is -- actually is online classes. It is you'll be expected to attend. We're going to have registers, for example, that people are in fact attending during those hours. Work will be assigned. Work will be marked. Feedback will be given. It's going to be classes as usual. So that's the engagement and we think it's important that we get up. And then think we can engage the parents. And you are still receiving quality education in a different format. And when it returns to normal, you will expect the school to pick up. Felicity, is there anything else I can add on?

Just following the timetable. Every day, we'll follow the timetable [indiscernible] schools.

Right. So is -- so we are literally going to follow the timetables that were established in the face-to-face instruction. So the intention is to have that offering. And we will be engaging parents on that basis and saying, as a result, the fees are due.

Okay. What proportion of your school properties are leased versus owned? I think it's -- by far, the majority are owned. It will be over 80% and almost all of the really big sites and strategic sites. And where they are not owned, they are typically on very long leases. [ Mike ], I think, our shortest leases, they got about 12 years to run. And others are literally evergreen. So they're 99-year leases, with us having the option to renew them; and a few in-between. But tenure is very important to us, so whether we own them or lease them, we make sure that we've got them secured for long terms. Then any acquisitions planned in the next 2 years?

None planned in the next 2 years, certainly not -- none that we are anticipating specific, but then acquisitions can also be opportunistic. And as we scan other markets and other environments, there may well be something but not that we -- none that we have planned at this point in time.

Okay. Then did the premium part of the schools business grow volumes organically in 2020? And pre COVID-19, what were near- to medium-term expectations of organic growth in premium schools given all the good work done in strengthening marketing?

Yes, they did. The Trinityhouse group in particular grew in a number of areas. We resolved some problems, some capacity constraints at Heritage Hill; and we enjoyed good enrollment growth there. Little Falls grew. We saw good growth in our Abbotts, where we -- in fact a number of our core sites saw good organic growth, Joburg south, Northcliff. And we also conducted quite an exciting experiment in Centurion at Abbotts, which delivered outstanding results. And what we'll do now is concentrate on rolling out the experiment that we trialed in that area and grow volumes substantially into the rest of the Abbotts brand. And there are some exciting developments taking place. We still have some areas where we're concerned. I spoke about the repositioning of Crawford Ruimsig, for example. That change came too late in the year. In fact, we really only started that change around September, October, [ Mike ], if I'm not correct; and really to reposition it for 2020, but it was far too late to have any impact on the enrollment cycle for 2020. So we will be looking to the 2021 period to see the benefit of that repositioning and the work that the team have put into place. Other schools we -- that have been problematic for us in certain areas: Crawford North Coast, for example, is a school where we've struggled and continues to battle. I think again one can understand if one looks at that market in particular and the environment around that area, but we saw some good progress in some of the other schools where we have had historical problems and some of the initiatives we've put into place are starting to turn corners and deliver benefit. So the premium schools did grow. I think the question was what did we expect and...

What -- and if you take out the COVID effect, what was our near- and longer-term expectations of growth?

Okay. Look, I think we're quite excited by the 5% enrollment growth. If we can repeat that next year and build on that base, I think we would be very pleased. So that's excluding the impact of COVID-19. If we could deliver that level of 5% organic growth on a consistent basis, we'd be pleased.

All right. "What is your target EBITDA margin for [ a mature school ], premium and then for mid-fee?" Yes. I think, for both premium and mid-fee, we would aim for a similar margin. We believe that both schools, if you -- the school on its own, so excluding the head office cost or the allocated costs, can get very close and even exceed 40% EBITDA margin. We have schools already at that level. The premium schools obviously has a higher fee, but it also has a higher cost base. The -- in the mid-fee sector, it's a narrower subject choice, lesser facilities, bigger class sizes, more kids. The pupil-to-teacher ratios are higher. And on that basis, we believe we can get very similar margins. And already some of our earlier mid-fee schools are starting to move towards those kind of margins. Just one more question: Is unbundling the schools and tertiary divisions an option? So separating them, I guess.

No. It is not under consideration at this point in time. I think not to say that it isn't something for [ consideration ], but at this point in time we have had great success with our centralized academic team has added real value across our organization. We've seen the benefits, in our schools division, of the consolidation, integration into our centralized academic team. As I said, our thrust and focus is on teaching and learning. And teaching and learning is applicable not only in tertiary institutions but, of course, obviously in schools. So the discipline and the rigor; the benchmark; the testing across our schools groups at those grade I've mentioned, 3, 6, 8 and 9, in order to be able to set clear targets and objectives for each of the school brand groups, as different as they are and their target market positioning, has delivered great value to us. We've also spoken about the fact that demand is not the problem. Affordability is the issue. In centralizing our academic delivery; in centralizing our information systems, our measurement and monitoring, we believe that, that actually is again driving rationalization and cost-saving benefits for us across both the schools and the tertiary business. Our STASY system, our student information system, for example, we started it into schools. We're going to be migrating it into our tertiary business, where our existing system is now a number of years old but where we have extensive experience in a student information system, so it will be a -- less of a new implementation as it was in schools. We're really upgrading the caliber and quality of their information systems, but we'll have a standardized system across both businesses. So whilst we recognize and accept it's -- it may be not necessarily a unique model but a model where we have a presence in both markets, in Africa we think it delivers great value to us. We -- the issue is around the affordability of quality academic offering. And by centralizing and across both our schools and tertiary, we believe we're able to deliver on that promise, which is an added competitive advantage to us versus if we were 2 separate groups, okay?

There's no further questions.

Great. I think -- thank you very much. It's been extensive. I hope we've answered all the questions comprehensively. Of course, if there are any further questions, obviously please do get in touch with us, and we will do our best to answer those as best we can. And I think just one last word is that we are certainly in uncharted territory. What I can say to you is, as a business and the things that are within our control, I'm feeling [ comfortable that ] I think we've set into place the right structure, systems and processes to manage and to respond, but of course, to a very large extent we are at the mercy of what happens and how things develop. We will do our level best. I think we've applied our minds. I'm very comfortable and very pleased with the way the teams have responded to date and, I think, will continue to, but it is a period of uncertainty and we will do our best to manage under those circumstances. So thanks very much for your participation today.