ADvTECH Limited (ADH) Earnings Call Transcript & Summary

Good afternoon. And welcome to our interim results presentation. Thank you for joining us. [Operator Instructions] So I'm very pleased to be able to present, I think, a very solid and robust set of results during this year, particularly given the circumstances that we're operating under, the continued disruption obviously from the pandemic and the tough economic times that we are, in fact, experiencing. So it is very pleasing to have a set of results that we can share with you today. And I'm going to try to unpack what we think are some of the key drivers as the achievement behind these results. And probably the first question that one might have is with regards to the revenue, which, at only 1%, seems a bit muted when we've delivered a solid performance on the rest of the parameters, and I will unpack that in some detail as we go through. As I said, I'm going to try and cover off what I understand to be kind of the fundamentals of what's working well for us, what we focused on and what has been the foundation of us, our ability to deliver these results today. Starting off with the market. And it's, I think interesting, when I was putting this slide together, that a lot of the factors that we'll talk about in the sense of the market we're operating in, would, at first glance, appear to be quite negative in assets. And yet, we are able to still perform well and deliver a good result. I think what is well known to everybody and certainly undisputed in sense is that we have been operating under suboptimal economic conditions for quite some time in South Africa, very muted growth, loss of employment, no job creation, declining levels of disposable income, and all of those actually are certainly negative in a sense of the environment that we're operating in and, in that case, probably makes our volume growth even more remarkable and quite a significant feature of these results. I was looking at this slide, and I'm afraid I've actually made a mistake because it says positive factors affecting demand. What it should be is factors that affect demand positively as opposed to positive factors. Because, in fact, when you look at them, they're all rather negative. What we're talking about is a public sector which really is battling and declining under huge pressure. And primarily one of the reasons why we believe people are seeking out private education is because the public sector is certainly underperforming and failing to deliver against the expectations of parents. It continues in a sense of -- it's really not, if you like, for the lack of funds and resources. In fact, quite honestly, as we've said previously, the government has recommended for the allocation of resources to education. It's more around the execution. But nevertheless, the amount of money that's going into the public sector is not just bringing around the kind of results that one might expect with the level of expenditure and resources. But even so, it's -- the pressure is starting to toll. So despite the fact that there are significant allocations, it's been under pressure and declining. Subsidies have increased. And NSFAS, interesting enough, now represents some 31% of the monies that are actually extended in terms of the education system. And the average NFSAS grant at ZAR 50,000, interesting that, that actually is in excess of what it will cost you to do a degree in Rosebank College, one of our offerings. So our competitive position in the market is certainly, I think, becoming a feature, and we do believe that we are able to offer real value. If you look at BCom at Varsity College at some ZAR 78,000, I think it compares quite favorably these days with some of the public system. Likewise, if you look at Bachelor of Education, we are very well positioned, better business administration. And that excludes, of course, the public sector is funded to a very large extent. In fact, for every student in the system, the government is spending around about ZAR 110,000 over and above the fees that are charged, which then makes our offering look incredibly competitive. So as I said, not for the lack of financial resources that the system is struggling. And it is disappointing that despite the amount of money being spent on education in this country, we're not really improving the performance, the results or indeed the capacity that's available because at ZAR 110,000 per student, the capacity in the public sector hasn't really increased that much either, and that has been another significant driver for us. So the bottom line, actually, despite these unusual circumstances that are influencing the market and that we're actually saying, we are successful despite the tough economic times, and we are successful primarily probably as a result of a lot of the problems experienced in the public sector. The private education market has been growing quite strongly. The number of schools in the public sectors declined. At the same time, the number of private schools has increased dramatically. Now a number of those are obviously small operations, probably not quite comparable to our kind of area of operation. But nevertheless, it's an indication of how the consumer is seeking out alternatives to a public system that is, in fact, under massive pressure. The number of scholars in the public system has grown at 8%. That's over 2 decades, so it's not excessive. Whereas the number of scholars in a private system have actually grown quite significantly. And in higher education, we see exactly the same sort of trend. So that's the market that we're operating in, tough economic times, consumer under massive pressure and yet forced to look for alternatives. And we have, in fact, been enjoying the benefit of some of that. If we look at the rest of the continent, the situation is actually somewhat different. Here, we have really good economic growth in the majority of the countries across the continent, certainly better than we're experiencing in South Africa. And in fact, if you looked at the globe and decided where would you like to run an education business? Quite honestly, in terms of the demographics and the economics, there probably aren't many better places to look than in Africa. One might look at Southeast Asia or perhaps even China, but I think they have their own challenges with some of the regulatory spaces we've seen this week as well. And therefore, Africa really does represent one of the finest opportunities for an education business to be seeking out opportunities. The growth rates are predicted to continue to do well, certainly in excess of what we experience here in South Africa or forecast to be experienced here in South Africa. The population is growing quite significantly. By 2050, Africa will probably have the largest population on the planet. Increased urbanization, household income is expected to grow. If we look at the table of per capita growth, lower than South Africa at the moment, one looks at the forecast growth rates and also historic growth rates and on both parameters these economies are performing -- outperforming South Africa, and you have emerging middle classes, consumers who are wealthy, faced with the same kind of challenges that we have here in South Africa, where governments are generally battling to provide quality education on a scale. And again, quite attractive size of populations and all of which are actually very young in terms of their profile. So again, Africa represents good opportunity and certainly a different set of dynamics to perhaps what we're experiencing here in South Africa. So those are the market conditions and circumstances under which we're operating, what we believe are the issues that are driving our success and our ability to post the kind of results that we've had today, and which is a continuation of the good results, I think, that we've been able to post in the last few years. Well, at the heart of our strategy, and we've said on many occasions, is our commitment to academic excellence. That is our product. That is our promise to consumers. And we are all well aware in ADvTECH, and we have a very clear focus that the delivery of academic excellence in expectations of the consumers' requirements is at the heart of what we do. And if we do that and we do that well, then our reputation will grow and educational institutions are very much dependent on their reputations, okay. So we have, I think, some significant advantages. We have a significant investment in the Independent Institute of Education, our centralized academic team, which has enabled us to develop curricula. It is a specialist. We certainly strive to be a specialist and to constantly improve in the understanding of teaching and learning and then to be able to implement that through our organization, whether it is in schools or in tertiary. We can run teacher development programs. We have a centralized quality control. We can benchmark across our organization. And we can use our resources to understand what the latest developments are and to make sure that those are transferred into all of our learning institutions. So this is a significant advantage to us. And of course, what we're able to do is to operate across a multitude of channels of delivery. We have the ability. Face-to-face, we have an incredible infrastructure of schools, brands, institutions that are well established and have a good -- a known presence in the market. We have blended learning. We have online learning. We have distance learning. And so we really have the market covered in terms of however the student or the parents wish to choose to consume that education requirement, and that I think is a significant advantage. We have invested significantly in systems and technological capability. We have had an LMS system in our business now for how many years, Felicity? At least 10 years. All of our programs are registered and accredited for distance, online and in face-to-face. And any new programs that we do, we are exactly -- we do exactly the same. We have them registered and accredited for those different modes of delivery. More recently, we've been upgrading and enhancing our integrated student information system. And this, we believe, is again going to help us to develop a significant competitive advantage. The idea behind that tool is that we were able to track, measure, monitor individual student progress right the way through our system and, more importantly, provide meaningful feedback to students and to parents with regards to both the potential and the progress that their children are making within our system. And that we think is a fundamental underpin of delivering on the promise of academic excellence. We are working hard at developing, as I say, sophisticated reporting techniques that would go far beyond what parents and students of today are used to and what has experienced. And it is a clear focus for us to continue to invest in that area so that we can have, as I say, a significant advantage and a meaningful differentiation in our products as we deliver on the promise of academic excellence. We use benchmarking extensively, not only within our own organization, but internationally, to ensure that our students are getting a globally competitive education. And we are starting to look and to develop innovative remuneration packages. I'm sure you probably are all quite familiar. Teaching and the teaching profession is well established, structured, geared, often takes its lead from the dominant public sector in terms of rates of pay and the manner and mechanism which teachers and lectures are awarded. What we're wanting to do is understanding the importance of academic excellence, understanding the important role that teachers and lectures play in the establishment and enhancement of our reputation. We are looking to try and develop more innovative remuneration systems that will closely align what teachers and lecturers do in terms of delivery and their promise to our students and linking that to remuneration and to reward. And if the business is successful, we want to share those benefits together with our academic teams and educators. So that's another area where we see ourselves building significant advantage. So at the heart and fundamental and well understood through our business is our commitment to academic excellence. This enables us to deliver on comprehensive curricula that are so much more than just the subject matter and the material itself. We have a clear understanding of how we're trying to assist students to develop in terms of becoming global citizens, digitally literate, understanding the importance of collaboration, communication, respect, diversity, inclusion. And what's more, particularly with regards to tertiary is making sure that their qualification and their experience and their capability is work-ready and work-relevant because, ultimately, they undertake a qualification in order to be able to have an enhanced career opportunity. And we're making sure that our qualifications are well aligned to delivering in that respect. So academic excellence underpins our business, and we think that actually we have a number of initiatives, programs and, probably more important, a very clear focus on what we have to do and why it is important to the success of our organization. The second pillar that we are really working hard on and emphasizing to a much greater extent than we have before is value, okay, is delivering value. It's fine to say that we are outstanding in terms of our academic capability, but the truth of the matter is and particularly under the economic circumstances at the moment, this focus on value becomes even more critical. Private education, by very definition, will be expensive. We look to employ the best resources we can. We want to be able to conduct research. We want to bring the right kind of a circumstance and assets to bear and the delivery of that, but we have to do it in an equation that is meaningful to the consumer, that they see the value in that delivery. And fundamental to delivering value is having our brand portfolio. This is something that over the last few years we've been working at making sure we have the right propositions, the right assets, the right mix and that people understand clearly within our organization what our promise is to consumers in these various market segments that we've identified and which we've aligned our brand performance to, okay. So more recently, the structural changes that we've been through in the organization have been creating dedicated brand teams with specific leadership who are focused on the delivery of the promise and the performance of that brand alone. They understand what the promise is to the consumer, and they make sure that everything within that organization is aligned to the delivery of that promise. And this has worked quite successfully for us. Obviously, we've had in our portfolio for quite some time, our Crawford brand and the Trinityhouse, you can see the extent to which we've invested over the last few years. We'll touch on that a little later on. Our Pinnacle brand, really growing our mid-fee presence. But we have specialist academic offerings, early childhood development. And our most recent addition to our portfolio is our online home schooling, Evolve. Likewise, in the tertiary side, equally, clearly defined, very distinguished brands that make specific promises to students as to what they can expect. Our Varsity College, our leading brand in terms of its -- the premium offering, our value brand, our industry experts and then, of course, online distance, short-learning programs, professional development. So we do try to cover a spectrum from adult learning all the way -- right the way through to those that are seeking tertiary qualifications and undergraduate degrees through to masters and doctorates. Okay. So a comprehensive brand portfolio that's clearly understood with dedicated teams supporting it. The most -- and the third element that is critical and one of the reasons why we've attributed our success over the last few years is the importance of volume growth. Education is a high fixed cost business, volume is extremely important. But more than that, we actually look at volume as being an indicator and, in fact, the acid test _______ as to whether we're delivering on our promise of academic excellence and value. That is the one measure that none of us can run away from. We can explain, we can have fancy stories, we can describe what our proposition is. The acid test, and something that we always talk to our business about, is whether, in fact, we're seeing volume growth, because volume growth is the indicator as to whether that value proposition is meaningful to the consumer, who is the most important. And if we're not seeing volume growth, then we often reflect and try to question and understand what's missing in our proposition. If we see volume growth, we can be comfortable and we can use other measures in the sense of whether that is in line with our expectation. But volume growth is really important to us. And how we performed on that? Well, over the years, I think, as I said, that's been one of the fundamental success factors of our business, and the progress we've been able to make is that we have consistent good volume growth despite the tough economic times that we've been experiencing. And this year, again, another pleasing performance, particularly given the disruption with the pandemic, but 5% enrollment growth on our normal measure that we do, which is the February, at the end of the enrollment cycle versus the February prior year. That was impossible for us to do in the tertiary. It's normally how we report in a sense. But obviously, the enrollment cycle at tertiary was significantly delayed by the delayed metric results following the disruption of the pandemic. So what we've had to do is to use a June figure for tertiary, which gives an indication. But essentially, our figures, you can see that we've continued to grow in our schools business, are now at 6%. And our tertiary enrollment is up 5%. So total group enrollments, up 6%. Under the circumstances, given the prevailing economic conditions, we think that, that's a very good performance and a strong indication that our value proposition and our brand strategy is delivering. Okay. I think the obvious question that you would have is, given that kind of level of volume growth, why only 1% revenue growth? And there are some extraneous and unusual circumstances around the result this year as to why that's happened. First and foremost, I think it's important to remember that understanding and acknowledging the difficulties that the consumers had through the pandemic and the tough economic circumstances, we elected not to take a price increase in our schools business. We were confident of the initiatives that we put into place to drive efficiency and productivity improvements and cost savings across our business, that we'll talk a little bit about later and you probably are familiar with, that we felt there was the opportunity to forego a price increase in acknowledgment to the difficulties that are being experienced. And I'm pleased to say that the results have indicated that we were well able to do that. The other issues are not really -- are less related to our operational performance and more to industries and to circumstance. And first of all, the irony is that in this reporting period, the rand has actually strengthened versus the U.S. dollar and other currencies. And therefore, some of the foreign exchange, when we convert currencies into local rands, we've lost in the order of ZAR 45 million at that level. And then there's been a change in our resourcing business, which you know has very successfully explored other markets and other geographies in Africa. And in terms of the payroll contractors that they run, the IFRS regulations require us to actually recognize the entire payroll as revenue, which you know it does tend to skew the margin performance. But what the resourcing business has been doing is switching from some of their direct contracts into some agency agreements. And as a result, they're not required to report the full payroll, and that's had an impact on the revenue line. So just those alone account for what would have otherwise been around a 7% increase in revenue. And then we have had some other factors that have affected us. In examining the value proposition of the Abbotts brand, and Abbotts, we remind you, is an academic assist brand to those students who are struggling within a normal school environment and are underperforming in terms of their results who wish to rewrite some of their metric exams, Abbotts is a dedicated specialist academic assist brand that does some incredible work. However, it is a limited offering. We can run an Abbotts from an office park, quite honestly. We don't have the extramural sports facilities, halls, swimming pools that are all associated with a full stream school. And when we looked at the pricing of Abbotts, we said that, that value equation was somewhat skewed. And we've taken the decision to reprice. And I must say that, that has been, in fact, very successful at assisting the volumes of Abbotts to grow. We grew student enrollment numbers by something like, I think, 15%. It was unfortunate that we did that experiment perhaps in the year of -- well, not the experiment, we took that formula to market in a year when the metric results were so delayed because that's a key component of Abbotts' market. And of course, that was severely disrupted in the state. So we're quite confident that repricing and repositioning of Abbotts is going to be successful in the long term and we're waiting to see the 2022 enrollment cycle. And nobody more specifically than Chris, who's really waiting to see how the enrollment cycle goes. But we do expect it to deliver the results based on the evidence that we've had so far. But repositioning that pricing obviously had an impact on the overall revenue growth. After care and extramural activities are not back at the level that they were pre-COVID, and that has impacted on the revenue line as well. And then in addition, we have seen some mix change. You've noticed that we now have some 38 schools in our Pinnacle mid-fee brand. That's grown quite significantly over the last few years. And obviously, the market pyramid is broader in the middle than it is at the top. And as we build our presence in that market, there is obviously an element of the impact. But you'll see the margin performance is still extremely positive. So those are the factors that have affected revenue. And therefore, we're very comfortable with the fundamentals of the business and with the volume growth of around 6% for schools and 5% for tertiary, we feel that, that underlying volume growth fundamental which is critical to the business, is very sound and we're comfortable with the portfolio's performance. If we look at the individual divisions now, we look at schools in South Africa, you can see the muted growth in 2021 primarily is effect of no fee increase. I've spoken about the impact that the Abbotts brand has. Perhaps one of the other issues is there has been quite a high level of financial exclusion. One of the consequences of our improved information systems and centralized control of debtors, greater visibility, is that we certainly, I think, have been much stricter on the exclusion of those parents, students who cannot afford the offering. And as a result, you would have also seen, and we'll talk about it a little later, the quality and the health of our debtors and the performance in that area. But we certainly probably have been much more effective at identifying those that are in financial difficulty and cannot afford the offering. And we effected quite a lot of exclusions at the beginning of this year, more so perhaps than in the past. So I think all in all that's whilst unfortunate and one of the negative consequences of the economic environment, it's extremely important from our business perspective that we manage this effectively. You can see the growth in our Pinnacle brand. Over the last 5 years, we've added some 13 schools, and that is -- those are all performing extremely well. Most of the schools that we've invested in and corrected the asset base and launched are performing ahead of our expectations. So we're very pleased with the performance of the Pinnacle brand. Rest of Africa has made an extremely good recovery after the difficulties of the pandemic. Our Botswana school continues to perform incredibly well with very strong demand. And I'm very pleased to say that the Makini Schools have also bounced right back after a difficult time. You'll be familiar with and aware of the fact that the Kenyan Government closed down schools completely and that was a difficult environment for us to manage. But we have bounced back extremely well now, good demand, good volume growth. And in fact, the revenue line for the rest of Africa would be even better if it were not for the exchange rate, the negative impact of the exchange rate. In fact, our growth in the rest of Africa would have been around 21% in like currency comparison. So again, indicating the very strong recovery from the Africa business which is particularly pleasing. Crawford is out of the J-curve. It's our third year of operation. And to be out of the J-curve at this stage, I think, is a phenomenal performance and shows the strong level of demand and the way that, that brand has been received. So we're very excited about that. I know Yeka would tell me that actually it would have been out of the J-curve in year 2 were it not for the COVID pandemic. And I think it's probably only beaten by Trinity Glenvista which is probably really also Yeka quite a lot that he had this very successful school somewhat beaten by Trinity. But nevertheless, Trinity didn't even have a J-curve, did it, Mike? Yes, so that's a success. Okay. So we're very pleased, and I think we were hoping last year that we will be able to demonstrate the potential that we believe these African investments have. That was delayed 1 year, but I think it's now very evident that the potential that we've seen in these markets is starting to deliver to ADvTECH. So overall, I think, an extremely good performance from the schools division. And particularly, when one looks at the underlying fundamentals, we're very comfortable with our brands and how our operations are performing in this area. Tertiary is the continuation of another really solid performance. We did take below inflationary increases. We looked at pricing strategies across our product offering to optimize. And again, acknowledging and understanding the pressure that the consumers were under, we were very mindful of what price increase we would be taking. So that's one of the reasons why the volume -- the revenue growth is a little muted in that area. But we also, much to our surprise I might add, we had a very successful enrollment season at Rosebank College, which, as you will appreciate, is our value brand. And that was really encouraging. I think we all expected that the Rosebank College market would probably be more adversely affected than any others, those are individuals who probably are most exposed to the economic hardships and find it most difficult. So to see the volume growth coming through in Rosebank College was indeed very encouraging. It did have a negative effect in terms of our mix, where the growth in our premium brands was a little more muted. And of course, what we also saw was quite a significant continuum growth in our online and distance as one would expect. The disruption of the pandemic, often it became a safer choice for students to say, "Well, I'm not quite sure what's going to be happening and whether I can or can't attend" and elected to pursue online options. As I've said, the beauty and the benefit of the ADvTECH system is that we have all modes of delivery. Ours is not to dictate to the consumer how they wish to participate in their education. Ours is to simply ensure that we have the means and the wherewithal to deliver quality education in whatever mode or format that actually suits them. And the strength of our business, despite the fact that we have a significant face-to-face presence, is that we're able to easily and seamlessly transition into online. And I would like to just take this opportunity to thank all of the people, both in our schools and our tertiary business, for the flexibility, responsiveness that they've shown during this disruptive period. I know that it has come at a significant cost to individuals. They have worked extremely hard. It has put added burden on them as we switched between modes and provided hybrid options. And I'm very appreciative of the efforts that our teams have made in terms of delivering on our promise to students such that we haven't lost any academic days at all and have delivered a good performance in that area. So all in all, the tertiary division, again, another very satisfactory performance and underpinned, as I say, very importantly, by continued volume growth. Our resourcing business has bounced back. And again, acknowledgment to Lenn and his team, this is the area of our business that was most adversely affected and probably had the harshest experience in terms of the pandemic. Whereas education we were able to seamlessly transition and to continue delivery and placements in South Africa came to an absolute grinding halt. Lenn and his team had to take the quickest and harshest action in terms of the preservation and sustaining that organization's future. So I appreciate the fact -- the actions they took. And now we are starting to see activity back in the market here in South Africa. It's not yet at the levels that we've experienced pre-COVID. Not that those levels were particularly exciting in any event, given the history of our resourcing business in the past, but at least there is a level of activity coming back. And what has happened within our resourcing business is that they have never stood still, they have constantly evaluated, and they have taken whatever decisions they can to add productivity improvements, reduce their cost base and make themselves altogether more lean and efficient. And they've delivered an outstanding result in some really tough times. The rest of Africa almost continued unabated. And certainly, we did not feel the level of disruption from the COVID pandemic that we felt elsewhere in our organization. It was almost as if COVID didn't happen for that payroll and contracting-type business. The decline that you can see, this is the exchange rate issue, together with the agency and principal contracts change that I've explained. So that's where quite a significant impact comes, of course, in terms of a disproportionate level of revenue versus the size of the resourcing business in the overall ADvTECH group because we have to recognize the entire payroll. So when that impact has shifted or changed as a result of the ForEx or the business practice change, it had quite a difference on both the resourcing division's revenue line and also impact on the ADvTECH group. But overall, an extremely good performance from the resourcing business that has now bounced back. So group revenue, that's the explanation of a muted 1%. But what we do believe is that the fundamentals, which underpin the success of the ADvTECH organization, primarily our volume growth is all very sound. Our brands are performing well and meeting the expectations that we have. And I think we feel very comfortable about the organization's performance. So then we've actually seen, I think, very encouraging improvements in profitability. And as I said, this comes from our focus and obsession on efficiencies and productivity. It's not something that you would often hear educational businesses talk about. In fact, if you cast your mind back to recent history, education inflation was 2 percentage points above inflation, a figure that I've often quoted. Why? Well, the real rude awakening is probably because it could. I think those days are long past. The consumer is under such pressure and private education has become incredibly expensive by any means or measure. It doesn't matter which wealth bracket you sit in, private education is incredibly expensive. We have to strive to look for ways where we are truly delivering value, and that's why we are obsessed with efficiencies and productivity. Often say we almost have 3 pillars on which the business is built. One is our academic delivery. And there, we want to invest in the best possible resources we can. We want to have the best, and that will naturally cost us money. We have to invest in selling and marketing to communicate to our audience what our benefits, what the advantages are in the system. That can become a virtuous circle. If we deliver on our academic promise, our reputation will grow. That reputation will help us in the market in any event, and it's a virtuous circle. But in between is this thing called administration. And we are quite administratively-intensive. We have to have exceptional recordkeeping. We have to have confidentiality. We obviously have to have financial controls of a quite a wide base, and administration is important, but in itself doesn't necessarily add any value. And what we want to do is to drive administration costs of our business and certainly to the lowest possible level. And that's why we are obsessed with efficiencies and productivity. And that translates into value for our consumers. So we've been very successful on this road, I think, in terms of driving out the administration costs, standardizing of transactional processing and systems and processing, leveraging through group shared services. And what we've done is create specific teams that understand their operational environment and the benchmarks to assess themselves as to how they're performing and targets. And that is something that we have put very effectively into the business, and I think is helping to drive the value equation and the results are coming through an improved profitability for us. So we can forego price increases and yet retain the profitability and enhance the margin performance of the business. So this is a very successful issue for us. And if we have a look at the operating profits, you can see schools on limited revenue growth, but still improving the profitability. Africa bouncing back very strongly in our schools division, posting an overall very pleasing 15% improvement in operating profit. In terms of tertiary, continuing the trend. We now have a 16% compounded growth rate in terms of operating profit for the last 5 years and excellent performance. Again, muted revenue growth but a strong performance in terms of the operating profit. And resourcing, coming back from what was a really terrible year for them, resourcing in Africa continuing to deliver and resourcing group recovering and making a good contribution to the performance of our business this year. So group operating profit, up 16%. And under the circumstances, we're delighted with that result. Also pleasing is the margin in schools division, and this is really -- we're a year -- we would have loved to have done this previous year. But COVID, I'm afraid, interrupted the plan. I think that result to deliver the margin of 16% at schools under the COVID year was exceptional and showed the kind of progress that we were on. We've now continued this journey. And as we've indicated to you, we expect to continue to improve this margin and getting it closer to the level where our tertiary division operates, for example. You can see tertiary, impact of COVID, but well on its way back to recovery. So we've, I think, got past the COVID issue quite well, and this is a pleasing performance, okay. Resourcing, again, you can see the impact of COVID and starting to come back again. So our segmental overview, if we look at revenue, you can see the disproportionate kind of contribution of revenue that the resourcing division makes because of that feature of the payrolls that we run. But a nice balance between our education divisions, tertiary and schools. We've always said, we're agnostic, we believe there is huge potential in both tertiary and in schools, and we will continue to pursue the opportunities between them both. And if you look at the profit performance, our schools business coming back. There's the resourcing business, of course, recovering too, although you can see how the revenue is disproportionate. But a nice balance between the 2. All our divisions contributing well to the result in the 6 months. Okay. I've spoken about our obsession with efficiency and productivity, but we've also done an outstanding job in terms of just managing the costs as a result. And if you look at our total expenses, a 2% lift in expenses year-on-year. But if you add back the savings that were directly attributable to the COVID pandemic, then, in fact, our cost base year-on-year has been flat. And again, testament to the work that's been done in the business, the awareness and the drive to create value for our consumers, the productivity improvements, the analysis of our business, our business structures, the changes that we've made are allowing us to really hone in on our cost base and to become truly efficient and to pass that value on to the consumers. Debtors, an exceptionally good performance. Of course, last year, I think it was a worrying feature. The impact that the disruption would have, it's always an issue for the education business, how well are we managing our debtors. And again, the advantage and the performance that we've got here now is a direct consequence of the revised structures, where the brands are taking real ownership. It's as a result of the information systems that we've invested in because what that has done is given us fantastic visibility and we're able to actually manage on a much better basis. And our move to group shared services where we have dedicated specialists whose focus on the area of debt management, debt collection has been outstanding. I stand under correction, but if we're not, we are pretty close to the best ever performance in terms of the business, below 2018 levels. And if you take into account the current economic circumstances, where one would expect with consumers under such pressure, I think that's an exceptional performance. And again, is evidence of the fact that the work, the systems, the structures we put into place are truly delivering value for us. Okay. Unpacking it again, you can see how our receivables have come down. And in fact, we've managed through more than half of our loss allowances. So it's an excellent performance. And I think investors can take great heart that the business is well in control and being managed very effectively in this area. So we've often spoken about the fact that one of the key features of our business is the very strong cash generation, our negative working capital cycle. And of course, but what's more important is how well we manage the balance sheet because, of course, we have, over the past year, made some significant investments and increased some of it. Well, we've continued that trend of strong cash generation, up 12% this year. And what that's allowed us to do, of course, is to significantly reduce borrowings quite substantially. And if you look at our borrowing to cash generation ratio, it's now below 1, with a significant improvement in that area. So strong performance. And if you look at the balance sheet, our EBITDA to borrowings ratio at 1.9. Reminder, our bank covenants are 3.5. We have tougher internal covenants, but that's the kind of headroom and comfort that we have. And our gearing, I think, is a comfortable 60%. So we still are -- we're still getting operating leverage, in a sense, from the balance sheet, but it's very sound, very comfortable, and I think also should be a great comfort to investors, because under these difficult economic circumstances with the disruptive environment we've had, a balance sheet which is as healthy as that is obviously a significant advantage. So all of that, I think, leads to a really sound investment case. Our earnings per share has consistently performed. It's outstripped inflation. And I think if you look at ADvTECH, we make an incredibly strong and sound investment case. There is inherent underlying demand for quality education despite the very tough economic circumstances here in South Africa. It may be as a result of a rather perverse situation of a public sector unable to perform and deliver, but parents naturally seek out the best quality education that they can for their children in any environment. And if we are true to that promise of academic excellence, which is well entrenched into the business, which we've committed significant resource; if we drive to offer real value, okay, and we don't kid ourselves about that but look for the acid test, which is the volume growth, then we actually do believe that there will be an underlying demand for quality education. And across Africa, we're excited. If you -- I don't think there can be a finer place, as I said, to have an education business than in Africa. Young populations, growing economies, urbanization, emerging middle classes, I understand that GDP per capita levels are relatively low compared to global averages, but these economies are growing. And these parents do understand the finest way out of the poverty trap and for their children to have a better life is of quality education. So I think that represents opportunity for us. I think what's more is we've proven that we have a robust and flexible business model. To many instance, I think we've actually surprised ourselves with the responsiveness and the agility that we've been able to show and how we've been able to switch our business rather seamlessly between the various different modes of delivery, face-to-face, blended learning, flexible -- sorry, hybrid, in the sense of accommodating the disruptions of the pandemic. So we are, undoubtedly, I think, a very flexible, agile organization. We have the ability to leverage scale. We have a significant asset investment. We've demonstrated that before in the tertiary business. We spent some time with our schools portfolio, I think it's very well established now. Our level of capital expenditure will be more muted, more conservative, as we just support the demand where it occurs. And we're looking forward to really growing the ROFE significantly and substantially getting back to where it ought to, with a well-balanced and well-established business. We really do have significant capability. The people in ADvTECH, the systems capability and the intellectual property, I think, makes a formidable operator in the education space. We're a quality asset base. We've got a well-established brand portfolio, strong cash generation, really good, sound balance sheet and I think improving strong financial controls and processes and systems. And what's more is we're an outstanding ESG investment as well, which is something that is becoming more relevant and more important throughout the investment community. So I think we make an outstanding investment case. And I think we are quite confident. Fortunately, the market seems to be agreeing with us. We've had good share price recovery. I think it was really unfortunate that we appeared to be seen in the same light as a lot of the retail stocks and I think the pressure that people understood consumers were under, perhaps there wasn't the appreciation for the resilience of the education sector. I seem to remember that in times past, they used to say education was a good defensive stock in tough times. I think we've proven. Not only are we a good defensive stock with the kind of results we've delivered in the environment, but we're a good growth stock too, that underlying volume growth that I've spoken about. And the market seems to be recognizing and accepting that case and we're confident. I think it would be amiss not to have a word about COVID and, again, to congratulate all in the business that have really applied themselves and taken this threat very seriously. Obviously, right above all else and foremost in our minds was the health, safety of our students, our employees and all stakeholders within our group. And we moved quickly to put into place world-class practices that were recommended and specified. We really did also, at the same time, as having that as a priority, want to make sure that we continue the academic offering. This is this pandemic, and it's probably been here longer than most of us would have wanted, but it is still hopefully transient. Education is permanent and long-lasting. When you were young, you have one crack at getting an education. You don't want to disrupt it, and we've really applied ourselves to try and to make sure that we can continue providing education uninterrupted despite the challenges of the environment and we delivered on that, okay? And of course, equally, there were some fairly serious economic challenges to the business. And I think we've managed to navigate that extremely well and ensure the sustainability of our organization. So I think we've done a good job. I think we can talk about it as ourselves. I'm often quoting and saying we must be very careful about believing our own PR. And I think the statistics are quite evident. Our rate of infection in terms of it is 1.5% versus the national average of 3.3%, I think, is testimony to the fact that we did implement effective, good procedures and took the pandemic seriously and did our level best to protect all of our stakeholders. Incidentally, the student rate is much low, but I don't think that's a fair comparison because younger people were perhaps less affected by the pandemic than those in older age brackets, such as myself. So I think 1.5% is the right comparison, if we look across the business, okay? Our prospects, I think we remain confident about ADvTECH's ability. I think, as I've said to you, the fundamentals in our business are sound. Most importantly, that volume growth that we've experienced under difficult circumstances leads us to believe that we can have some confidence. Our brand portfolio is well established. I think our brand groups, our teams understand exactly what they have to do. They're focused on the right priorities and they're working hard at making sure that they're optimizing their position in the marketplace. So I think we're comfortable. Our financial controls, our structures and systems are supporting the business endeavors. And so we feel confident about our ability as the organization. We are concerned about particularly the South African economic environment and the massive pressure that the consumers are under. Yes, people are coming to us, primarily probably because of the public sector difficulties, the recognition and management of our quality education. We do see more opportunity in Africa. We've made a good bridge head and a good start into exploring opportunities in that market. We continue to look for other opportunities. And I hesitate, we will be careful, we will be prudent, we will carefully evaluate what opportunities arise, but we do see that there are some good factors driving demand on the rest of Africa. But our commitment to academic excellence, our obsession with offering value and the inherent underlying demand in this space, I think, leads us to be confident in terms of the future. And with that, so to the Board, who have seen fit to declare the dividend of ZAR 0.19, I think we all believe that we must be cautious about the economy. I think the uncertainty of the pandemic is not yet completely past by any stretch of the imagination and, therefore, we are somewhat cautious. However, we have confidence in our own ability and certainly in the affordability, and I think it's very pleasing to see the level of dividend that has been declared. So with that, I think we're on to questions. Didier, have you got some questions for us?

Okay. Just firstly, the presentation will be on our website. If it's not on already, it will be on in a couple of minutes. I think that either we're about to get a flood of questions now or you've dealt with everything because we only have a couple of questions at this stage. So the first is, how do we identify the best teachers, lecturers contrast to what someone would find at the public South African school?

Okay. Thank you. Yes, I'm often asked this question. I think given our commitment to academic excellence, given our reputation for quality education, we actually find that we are an employer of choice. And that's fortunate. I think our reputation precedes us. Our brands are well known. We are within the education sector as a whole. I think it is well understood that we are truly committed and dedicated to academic excellence. And that actually attracts professionals who would then like to obviously work for us in a sense. So we're quite comfortable. As I said, we're working hard trying to create, and Vanessa has this particularly to as one of her briefs, to create a more innovative, reward and remuneration cycle that really truly recognizes outstanding educators, rewards them accordingly in terms of their total contribution, not just delivery in the classroom, but the reputation of the school as a whole and to the compliance with our productivity ratios as well. And we really want to try and share that. So I think we don't really, we haven't had a problem, in attracting the highest caliber of educators. And we have, to date, I talked about innovative remuneration schemes, we've always run quite comprehensive appraisal programs where we assess individuals and provide feedback. We're looking to enhance and to improve that the whole time. So the recruitment of the best quality teachers, I think, comes as part of our reputation and our strong brands in the market as being dedicated and committed to academic excellence. And as a result, top teachers want to be in our system, and that's proven to be the case so far. Mike, Chris, have you got any kind of comment on that?

[Technical Difficulty]

Okay. Sorry, I forgot, of course, the microphone. But I think that's fine. We'll pick it up the next time. Mike agrees, that's all important. That's it. Next question?

Now the technical colleges have been decimated throughout the last 2 decades, do we see this as a gap in the market?

Yes. And again a good question, because we have looked at vocational, technical colleges and we constantly do and we continue to look. We do believe that there ought to be a market opportunity there for us. Unfortunately, we have not yet been able to find a sustainable business model that we believe sufficiently is going to be robust enough for us to invest in yet. And it is quite interesting. Some of my investigations into this area, I've looked globally as to where are the successful vocational technical kind of training models. And quite often, actually, around the world, that area appears to be the preserve of government and industry. It's almost -- it's quite strange, but people are prepared to invest in higher education, tertiary university education for themselves. But when it comes to vocational skills, the best in the world are usually strongly supported by the government initiatives or very strong trade industry influencers. And perhaps that's why it's difficult to find a commercially sustainable model. However, we continue to look and explore. We look very specifically at -- if you looked at our schools portfolio, for example, we've also investigated on several occasions the opportunity of perhaps introducing a technical stroke vacation-orientated school. And the same answer applies. We haven't yet convinced ourselves of a commercially sustainable model in which we're prepared to invest. But we will continue to scan the horizon.

Okay. Next question. What is the strategic advantage of keeping the resourcing division when it contributes so little to the group's profits?

The issue is we do understand that as time goes, we are an education business, and it is more likely that we are. However, we have said on several occasions, the resourcing business represents value to ADvTECH. And at this point in time, we are not prepared to destroy value. The market, as you can appreciate, given the kind of economic circumstances, is not exactly attractive. And the kind of multiple we might be able to achieve if we were to sell the business would not compensate for the contribution it makes to our business. And at this point in time, it is very well managed. It has proven to be able to navigate very difficult circumstances with great flexibility and responsiveness, and it's continued to contribute in a positive way to the ADvTECH Group. So until such time as we find a natural home which will ensure the sustainability and the long-term survival of that organization and realize value for ADvTECH shareholders, and it's part of our group, and we're quite comfortable that it is.

Okay. Next question. I've got 2 parts to it. Expansion into Africa, would it be more asset-light? Or would we seek to own properties? And then the second part of the question is building 1 or 2 schools in a country, does it provide sufficient scale to get operating efficiencies?

Yes. Okay. We are completely flexible on the asset model that we will adopt. In fact, Kenya is a good example. On the one hand, we have invested in the Crawford School because that made good financial and commercial sense to us, so we procured the property and we've built. Whereas the Makini, actually, we rent the building and the land, and we are comfortable. What's important for us are the strategic components of that decision. One of the most critical element is the long-term tenure that we have. Schools are long-term investments. And we want to make sure that we have secured tenure of the asset in which we're investing, in which we're building reputation. With regards to the model, we're agnostic whether it's capital-intensive or capital-light, it depends what makes the most sense for us when we evaluate the opportunity. So that's the case. The answer about scale in terms of the investment, actually, the beauty of our group shared services model is that we intend to leverage off the group scale. And with technology and the capability that we have, we don't need to have significant presence in each market, although, obviously, we're building that kind of a capability. We have quite a significant number of people in the Kenyan market now. What do we have over, 4,000 students there? Is it 3.5 with Makini and 500 -- more than 500, it must be, am I right? Yes? It's more than 4,000, I think, is it? 4,500 students in Kenya. And that's getting to some scale and we see further opportunities. But what we will leverage scale off, we will leverage off the group scale. So the group shared services has been set up, it is being planned and our systems decisions are all designed to be able to support our investments across the continent. And the technology today allows us to do that. So that's the answer to that. Yes.

Okay. Next question. Please give us an idea of the number of tertiary students outside of South Africa? I'm not sure if it's referring to our students or the market as a whole. And is there some kind of accreditation for tertiary offerings in other African markets?

Okay. That's a complex question. We -- if the question is how many do ADvTECH have outside? It's relatively limited. We have a number of foreign students in our institutions here, and we have a number of foreign students who are on online programs. But it is, in comparison to the total number of tertiary students we have, limited. We've been more successful at finding school opportunities than we have in tertiary opportunities to date, where we have explored a few. But that doesn't mean that we don't see that there will be opportunity. It's simply the ones that we have discovered and investigated to date have been in that schools environment and we've tended to walk away from some of the tertiary ones. So that would be the answer to that. How many tertiary students in Africa? If that's the question, the answer to that is, as I use internally, a lot. But I think it's fine. In terms of the accreditation, yes, each different jurisdiction would probably have its unique requirements with regards to accreditation. I'm looking at Felicity the whole time to give a nod and to confirm that what I'm saying is absolutely true. However, it's also fair to say that a number of the African countries have tended to look at South Africa and our systems and processes and accreditations as being a benchmark model which can be easily adopted and adapted. So we're quite comfortable that the experience that we have in navigating regulatory accrediting space here is going to stand us in reasonable stead, depending on what nuances there would be in foreign jurisdictions. Would that be fair, Felicity? Yes. Okay.

Okay. You mentioned that you'd like to see the schools division's margins closer to those of tertiary. What levers do you think are available to achieve this?

I think our brand portfolio continue to be highly relevant and enhancing its reputation all of the time will give volume growth. As we get volume growth, we're going to get rehab capacity, spare capacity available. And whilst we will still be making investments to ensure that we can meet all of the demand that comes, we actually can benefit quite extensively from capacity utilization, that's still an opportunity for us. And then furthermore, we've said that our journey in terms of driving efficiencies, leveraging the advantages of consolidated transaction process and group shared services, we believe still has more mileage in which we can enhance the performance of the division.

Then on the tertiary side, study have been registering similar qualifications to us. How do we view competition for available enrollments going forward?

Always will be. We think that competition is excellent. We think it improves the product and the offering from a consumer perspective. Competition keeps us all sharp and on our toes and striving to do better. It avoids complacency. Competition is the essence of a free market enterprise and we're delighted that there's competition. Yes, we're not afraid of a challenge at all. We think we have a very significant powerful asset base. We think we have incredibly capable people, significant intellectual property. And we think that competition for the market is good.

What is the medium-term operating profit margin outlook for the tertiary division?

I think sustaining our current levels, we believe, is our goal and our desire. We think that our business is delivering good healthy margins. And we want to have a sustainable business that we move into the future, allowing us to make enhancements, investments in product and offering and assets, in research, into the offering as a whole. So we're comfortable with the margin in the tertiary business.

Okay. Then several questions coming from one. So I'll try and deal with it one by one. Overall, the group-wide credit loss as a percentage of revenue is right where it was in June 2019. Would you regard current levels as normal? Or is there scope for further improvement? And I would like you to deal with that one. I do think there is scope for further improvement. I mean, we're still in a very tough trading environment, but I think that the processes that we have in place will continue to drive the credit losses down over time. A large part of our credit losses still relate to inactive students over -- that have deregistered over the last couple of years. And I think as we work those out and the benefits of our -- the longer-term benefits of our current structures and processes takes effect, I think that it will help us drive that down even further. Next question. It looks like a material part of the margin recovery in tertiary was driven by a reduction in credit losses, that very little or none from operating leverage gains given 5% volume growth. We're operating leverage gains used to fund the subinflation increase or other things at play?

I think we've covered off, there was an element of mix issues in terms of the revenue, but the margin enhancement means we're getting similar margins from our mid-fee schools as our premium-based schools as well. So I think it's a combination of performance in all areas. Yes, certainly, foregoing a price increase put added pressure onto the business. But cost savings, operating leverage, efficiency and productivity improvements have all contributed to improved margin and we're well positioned.

How did the company managed to keep like-for-like cost increases at north when inflation and some costs are above average? For example, electricity and municipal rates and such. Okay. I think that, firstly, I think a lot has been made about electricity and municipal rates. And while it's obviously an expense that we don't like to see going up, it's really a very, very small part of the overall cost. I think the rates and taxes is less than 1% of our cost base. And if you take all utilities included with the rates and taxes, it's less than 2%. So yes, we have seen cost increases in those areas. But in terms of the efficiencies, as we change our structures, improve our structures, use systems, improve our processes, fine tune our timetabling and all the other initiatives in that regard, we have managed to keep the costs down. I think we must also remember that with additional student numbers, you would -- even if you don't have increases, inflationary increases in your costs, you would expect to have additional expenditure, and we've managed to absorb that as well. So I think it's across the board, the teams driving the value equation, as Roy keeps referring to. And I think we still have opportunity to continue to achieve further efficiencies. No more questions at this point. Just pause for a second, if anybody's got a question that they are busy typing.

Well, I think what we are -- what we can do is that any further questions that come through, we've undertaken, we will respond directly to those questions. I think, rather than keeping people on with a pregnant pause, we'll rather wrap it up and answer the questions that come in later. Okay. Thank you very much. Thank you for joining us. I hope you found that useful. And as we've said, we would be happy to answer any specific questions that anybody may have. Please contact us. We'll do our best to get back to you and to answer as soon as we can. And for those of the team here today, thank you very much for joining. It's been nice to present these results. Thank you.