ADvTECH Limited (ADH) Earnings Call Transcript & Summary

Good afternoon. Welcome. Thank you very much for joining us here today for the half year results. Just a few housekeeping issues as usual. All questions, we will deal with at the end. For those online, you may submit your questions and anybody in the auditorium who is here today and wishes to ask questions, we'll handle questions right at the end then. Secondly, the presentation, I understand, will be available on the website online immediately after the presentation, and the webcast will also be available later on today. So straight into the presentation. And by now, I'm sure majority of you would have seen our results, which we are extremely proud to present today. We think a really good set of results. On the back of our trend of consistent good performance over the last few years. So we are delighted. I think first and foremost, we would say that these results, the strong underpin is, of course, our enrollment figures, and we've been very pleased that, in fact, every single division has contributed to the set of results. So if you look at that enrollments, again, as I mentioned, it's really another set of good results on the back of a consistent performance in this area in both our schools and tertiary divisions and where we have now some 88,600 students. But I think what's also important to remember is if you take into account vocational qualification, short learning programs, skills courses that we also run, we never include those in our full-time student numbers. Then actually, the ADvTECH System is reaching in excess of 100,000 students. So it is really quite significant and provides additional opportunity to us that we don't actually report. And it is really the bedrock of our business. So, it is very pleasing to see that in each of our divisions, we'll just unpack that a little bit Schools South Africa at 6% enrollment growth given the environment that we're operating in, I think was really encouraging. Schools rest of Africa. This is where we are expecting to be able to realize significant growth. And again, on the trend of a consistent level of around about 10%, 11% growth in Africa, another 10% growth is really quite encouraging for us. Schools division in total then up 7%, and our tertiary business, which has achieved a significant level of critical mass and scale continues to deliver and 4% enrollment growth on that score. So overall, enrollment up just over 5%. And that certainly is underpinning these results. I think in addition to that, we've obviously been focusing on taking moderate price increases. Our strategy is very much understanding the pressure on disposable income and consumers, particularly in South Africa, but it applies across the continent, quite honestly, where the phrase that we always use as demand is not the problem, affordability is the issue. So for us, we really are applying our minds and our efforts to try and ensure that we can focus on delivering quality education at affordable prices. So a lot of our efforts are going into efficiencies, effectiveness, eliminating waste and duplication, which is probably something that you'll hear me repeat during the course of this presentation. It's very much at the top of our minds. But given that underlying enrollment growth I think it's so pleasing to see the margin improvements that we've had. If we look at our schools in South Africa, I think I would really hope that you will be able to see the schools business now is on a really good trajectory and performing well for us. We've had another percentage point growth in margin at the Schools South Africa. A really significant 6 -- over 6% margin growth in the rest of Africa. And the tertiary business, I think we have touched 25% once before, DDF, if I'm not mistaken, but back up to that 25% level. And the guidance that we always give is that we would like to see our educational businesses in that early 20s up to 25%, and the progress, I think, is really encouraging. Even our resourcing business, which, of course, is a completely different type of business where we're required to recognize the revenue of the payrolls and the likes that we run. So you'll see significant revenue growth in that area. It does a much lower-margin business. But we've even made quite significant strides in growing that margin. So really pleasing, and that's allowed us to deliver an operating profit at 23% net at 25%. So a very clean set of results in total. So again, we're very pleased. And I think particularly when one looks at the background, the environmental circumstances in which we are operating, it is well recorded. It is well understood. I'm sure in this audience that the South African economy continues to seriously underperform, consumers under massive pressure not only from a lack of economic growth, but also hard hit by inflation. I think if there is one element or perhaps slightly good news, it's that the inflation rate has started to come down, although I think given rand-dollar depreciation and fuel prices, the expectations, we'll see that move up a little bit again. But hopefully, we're starting to get into a cycle where inflation will come down. So that's about the only good news in what is some really depressing figures in the South African environment. Of course, supplemented a bit by a significantly better picture in Africa. These are economies that are in fact, predicted to grow ahead of global growth rates. I mean I was reading in The Economist just the other day that the expectation of China is that it's growing at 3.2. So if, in fact, the Africa figures come through at the sort of 4, 4.5 level compared to China, which everybody expects to be significantly higher. It does kind of position Africa as an opportunity. We do understand that's of very low basis and the GDP per capita is low, but growth is still nevertheless a really important factor for us. Not to mention the population size, urbanization and the useful profile of that population. So South Africa disappointing. We expect that to be the case for the foreseeable future. There's nothing that we're actually anticipating is going to shift or change that. We do see more opportunity in Africa. There are other challenges of operating in Africa, but if you are in the education business, then I think Africa represents a fabulous place to be. So we're quite excited about that. Our financial performance, I think 16% revenue growth when compared to the compounded growth rate of 12% over the last year. I think you must remember that we took no price increase in the year following COVID, understanding and recognizing the pressure that consumers wonder. Again, our relentless focus to try and ensure we deliver real value. We didn't take a price increase there. So revenue growth of 16% compared to our compounded growth rate of 12%, really encouraging, particularly as we tend to take moderate price increases. So volume growth, the student base, the student enrollment numbers really underpinning and somewhere we'd be focused on. Okay. So pleasing to see that translating into operating profit of 23%. Again, emphasizing the fact that our focus is on operational efficiencies, effectiveness, making sure that we eliminate any kind of waste and duplication, and we can pass that on to the consumers and deliver real value in quality education. So I think a pleasing result for us there in line with the strategy that we've been following. And then the enhancement of our operating margin, now it's necessary, and I will unpack that a little because, of course, at 19.2%, the impact that our resourcing business with its significant growth in the revenue line and its lower margin business is impacting that to some extent. So if we look at it, our educational business margin consistently growing, whereas our resourcing business, obviously, in a totally different sector, totally different business unit operates at a different margin level, and that skews it. If we look at the educational business themselves, our schools division, moving up into those 20s, the early 20s is the indication that we've got, and we've made good progress towards that. Our tertiary division continue to perform, I think, an excellent business and consistently delivering great results for us. If we look at the schools between South Africa and the rest of Africa, again, you can see the progress we're making in South Africa, portfolio of brands functioning well, performing across the board. And the opportunity that exists in the rest of Africa, we've always indicated that we do anticipate that there will be more margin for us in the Africa businesses than there would be locally. And I think we've been able to see that coming through in a very strong manner in a relatively short space of time. So this is very important for us, progress all in the right direction, and we're delighted to be able to report this result. So that means that our normalized earnings per share, up 25%, a compounded growth rate of 26%, so consistent performance over a number of years now. And even more pleasing, I think, is the fact that in U.S. dollar terms, we're generating really good returns, okay? So 8.5% growth in U.S. dollar, given the fact that the rand has depreciated the way that it does and the volatility of the currency, we think this is an important measure to look at. I understand inflation last year in the States was at around that 8% level, it has dropped down to sort of 3.2% now. So [indiscernible] return at 8.5% in this current environment, we think, is a really good performance in a hard currency appreciation -- hard currency term. So pleasing for us, too. Schools division. As I've said to you, we are delighted in the sense is that the schools business is now on a really solid trajectory moving in the right direction. Overall, 15% revenue growth, 25% operating profit up to ZAR 1.6 billion. It's really solid. Our portfolio of brands, well established, well resourced, well structured with those management teams who are responsible for each of those brands clearly focused on the value proposition and their operational efficiencies is really what's driving our success. I mentioned that the enrollment is the key indicator for the success of this business, and I'm pleased to report that every single one of our brands has shown positive enrollment growth. So the premium sector brands, the mid fee, as one might anticipate and our specialist brands, all delivering really good growth performance. So that, I think, bodes well. And there's a clear indication that the structure and the resources that we have in place are well focused and delivering an excellent result. Overall, again, a performance, you can see the sort of the acceleration, 15% growth in our revenue or compounded growth rate over the last few years of 11%, profit up 25% against a compounded growth rate of 20%, it is the importance of these improvements we've been looking from our schools division is accelerating and the operating margin moving in the right direction. Again, the same applies for both South Africa. And rest of Africa again, I think emphasizing the potential that we see in this market to have good growth and profitable businesses. Now of course, there are a lot of complexities in operating in different environments. And we will be very cautious, and we will conduct thorough due diligence before committing any investments. But we do believe that the continent of Africa represents great opportunities, particularly in the area of education. A point I make often, I know that the question is about some of the South African businesses experience on the continent has not been good. I do think there are some fundamental differences between the education sector and other endeavors. I would suggest that we have no dependency on supply chains. A lot of the operations that have been into Africa and have struggled is because either equipment or raw material invariably both are dependent on U.S. dollar rates. Educational institutions are autonomous, independent operating units that are usually seen as very good citizens, and they are independent of supply chains or in fact, dollar-based costing. And I think that makes us fundamentally different. And the inherent demand that we are seeing for education, I think South Africa proves the point, despite really tough economic circumstances, demand for quality education remains. That's the same across the continent. It's just that some of the economic indicators are even more bullish and positive than we experienced in our home base. So we are encouraged by the rest of Africa and what it could mean by way of both growth and profitability for ADvTECH in the future. With careful consideration on investments. I know a question will be asked. And often, the comment has made is that we may be very susceptible to immigration, and that's, of course, of great concern in the sense of our volumes, our enrollment numbers. But I'm pleased to point out that if we look at this period under review, we had less than 1,000 students leave the system from an immigration or relocation perspective. That is, by the way, if they weren't actually going into another ADvTECH system in another location. And that had dropped down by 37% over the prior. I don't think we should read too much into that. And I think the issue of immigration is very real. I think it remains a factor. It could well be that the period we're looking at is that there was pent-up demand after the COVID lockdowns and a lot of people left that period and the period we're looking at less impact. But I think nevertheless, the absolute number is not that significant in the overall scheme of things. So it is an issue. We are mindful, we do measure -- but just to let you know, in fact, what we do is of all of our teams is that we divide levers into what we call controllable and uncontrollable. An uncontrollable area -- or issues such as immigration relocation, our teams can do nothing about that if individuals have decided that, that's their future. And likewise, if they are under financial constraints and unfortunately, have to leave our system because they can't afford the fees. That's not our team's responsibility either. But everything else is carefully examined measured, questioned and understood and our teams are expected to respond if there are any other reasons for leavers and departures from our system that's the way that we treat that in our business, okay. Moving on to perhaps more positive areas, some new initiatives for us. We're opening a new Bridge Assisted Learning in Morningside. This is something that we have been working on for a while with our initial offering. It is a difficult model, and that's why we have not opened more of these sooner is that we wanted to perfect and understand it is a much lower student numbers business. As you can probably understand, there is a need for a much more -- a much closer level of intervention and supervision and instruction. So it runs with smaller numbers. As a result, then the commercial model is more difficult. But nevertheless, it's an extremely important area with a high level of demand in our society. And if we're able to meet and fulfill that demand with a commercial model that we believe is sustainable and meets our returns criteria, which we've now perfected with our pilot model. We're now in a position to roll out, and we're quite excited about the new one that we'll be opening in Morningside. That's opening next year. Chris, correct. Okay. So that will be one. And we will look to try and roll out into other centers and other areas where we perceive there to be viable demand for full learning-assisted model. So that's quite exciting. And I think it overall adds to ADvTECH as the leader in educational solution provision. That's, I think, very good for us on that school. Very exciting. Raslouw, which we opened this year, I think we were all very proud of Trinityhouse Glenvista, which beat all of our other previous opening records, I think, and in fact, never even had a J curve, while the Pinnacle brand team certainly met the challenge in opening Raslouw. We had a business model that anticipated we'd start with some 240 enrollments. We actually did start with 385 so 60% in excess of what our model called for. So a fabulous opening. And we've even grown those numbers by another 5% into term 2. So a huge success for us. And what we've had to do, of course, is bring forward the future CapEx in order to meet the level of demand. So that's a nice problem to have, and we're delighted with that opening. Gaborone, a great success for us and a really important school in so many respects. You will understand on -- we've spoken previously about the demand that we've experienced in Gaborone. Well, this school is now up to 3,000 students, okay, with significant demand and growing. It delivers outstanding academic results, and the correlation between academic results and demand is incredibly strong in Africa. There is a clear understanding and focus from parents, the importance of quality academics and good academic results. And if you're able to deliver on that score, the finest and most powerful marketing message we have is word of mouth. If we deliver on the quality academic promise, the demand is there. And that's really shown fantastic -- what we've delighted with is that we can then actually return that by investing into the site, and we have significantly enhanced the offering here. I can see Frank in the room and Frank probably remembers Gaborone and probably paid a visit to that site. I'm not sure if you recognize the picture, Frank. It really is fabulous. A new science and technology block that is state-of-the-art, and I think will be really well received by that -- by the students and parents in that instance, upgrading of the sports facilities as well. But I mentioned the importance of the school to us because not only do we have 3,000 students in that school, would we deliver fantastic academics, and it is the benchmark model that we're looking as we use into Africa. So we've been able to take a lot of the lessons that we've learned at Gaborone for example, and applied to Makini in terms of how to run a school of 3,000 individuals deliver the quality academics, improve the facilities -- and it's a wonderful model for us to use as a benchmark. Crawford and Nairobi, again, another success story for us. We've been delighted with the demand, again, delivering fantastic academic results, which are pretty good. But again, the demand is forcing us to bring forward the phases of investment even earlier in order to be able to accommodate that. So we're -- again, a nice problem to have, and Crawford is certainly establishing its reputation in the Nairobi market and a very sweet spot, which is working well for us. Okay. We talk about the operating leverage effect that we've had here is a clear demonstration of it. If you look at the investments that we've been making over time in terms of growing the capacity, the number of students that we had enrolled, the existing building capacity, you can see the utilization of existing building going up. Ultimate capacity. We've been investing all of the time and realizing we still have additional capacity, but the utilization moving from 56 to 66 of ultimate capacity gives a clear indication of the operating leverage effect and 81 to 84 on assets in the ground capacity utilization. So -- and we continue to look at that and measure it. So after a period of significant investment those utilization rates coming up and obviously translating into really good results for us. This is something that I wanted to talk about. I'm not sure I'm going to be able to do justice. But what we are so excited about and in previous presentations, I've mentioned how we've now believe we've earned the right to start putting a real competitive advantage between the competitor and ourselves in the sense and the areas that we want to focus on, are in being the experts in teaching and learning. And that's at the heart of what we do, quality academics. If we do that well, as I've mentioned, the most powerful marketing tool we have is word of mouth on the reputation that our institutions have. And therefore, if we focus on teaching and learning and deliver on that promise, that believe we'll seriously -- we think that we are in a wonderful position, probably unique in a sense is that if we look at our tertiary and our schools business combined through the central academic team, we not only offer education as one of the most important faculties in our tertiary but we can take the very best of the students that are coming through that system. We can secure them into the ADvTECH business. We can use the central academic team and our quite extensive range across 109 schools, different brands, different geographies and provide real teacher development learning and ensure that we have the best of talent. And then, of course, the second area is we can support that with technology. We are firm believers that technology rather than perhaps being disruptive as it's often spoken about, but we believe that technology is a fabulous enabler. And if we embrace that and embed it into the way that we do work, we can extract real value, one of the most exciting areas that we're dealing with is the developments of use of technology and embedding that technology into our system. We've developed a product called ADvLEARN with a [indiscernible] software house. And this, I must say, as I said to you, I hope I'm going to be able to do justice, but I think our academic teams are hugely excited that this really has the potential to kind of transform teaching and learning in the way that we've actually operate in our schools. We're using artificial intelligence in this tool. And what we do is our vision is that we will have a personalized development plan for every single student in the ADvTECH system. So what happens is that we started off with Maths and Science, we intend to extend this across all subjects and ranges. And what happens is that we use this in terms of setting homework, the child do their homework using the tool. Because of the AI and the algorithms, it assesses the concept that the child has mastered and then moves on to a different level or repeats the work in audits until that foundation is properly built. That's the one aspect of it. You can understand that when a teacher is standing in front of a class of 25, it's very difficult to understand exactly where every child is and every child learns at a different pace. But with this tool, each child can have a personalized development plan that is based on the mastery of particular concepts and building solid foundations. But that's not all. The power is in the data that comes out of it. Because then the teachers, not only are the teachers able to see where they need to focus attention, but we can start benchmarking right across by grade, by school, by our divisions. And we link that into the international benchmarks that we are using and the assessments as to where children should be at particular points in time, and then we can really direct the emphasis and the focus. So it's so much more efficient and effective. And I'm pretty sure if I've done a half decent job in conveying this to you, our academic team do it significantly better than I, you can understand the power that this has to transform the way that people teach and learn in our system. And we, I think, again, are uniquely positioned to take advantage of that because of our scale, okay? So we're very excited. The idea being that the students have set homework, personalized learning paths are developed. It adjusts assessments. So it actually produces assessments for the child to do based on what they're demonstrating their capacity is and where we should be testing. And the most important thing perhaps is the information, the data that we get out of that, we put that into dashboards that allow us to quickly identify where there are problems is, for example, is in an area of electronics and sound. These are the problems. The others are okay, the concept or alternatively to look across grades, across subjects, and we can then actually direct our central academic team to where we have teaching weaknesses or deficiencies we need to supplement. So the power of this tool is incredible and unique to us. And as I said, I think other organizations would find incredibly hard to follow. So another exciting development for us. Moving on to our tertiary division. I have to say I often feel I'm sorry for our tertiary division now. It is a fabulous business and continues to deliver terrific results for us. We had some exciting and some change and venture into Africa with our schools business. But if you look at the performance of our tertiary business, 13% revenue, 19% operating profit growth. Again, the fundamental of the success of this business is that we have clearly established brands well positioned and with management teams that understand their value proposition, their role and what their purpose and delivery is. So these brands have been working exceptionally well for us for a number of years now. You can see the consistent and continued performance and look at the operating margin that we deliver. Okay. Our gain and growth is essential for us. Growth for us is a critical measure. It is the key driver of our business. But more than that, it's really the asset test as to whether our value proposition has traction in the market. That's the way we know that we are successful and that we can continue to have success or if we've got to make adjustments. -- we're getting volume growth, that means the consumers are voting to support our proposition. And so consistent growth in this area. And I know this is a question that's often asked the idea about online education and the opportunity that exists. Well, I want to remind that we have all modes of delivery, face-to-face, online, distance and blended learning. We cover -- our goal is that anytime, anywhere and any place that the student is choosing, we will be able to provide a certification, a credited qualification that is meaningful to that student. So we cover all modes of delivery, and we take them all equally seriously. I must say that our learning is that the online space is becoming particularly relevant to post-graduate qualification. I think that's very understandable. Undergrad your degree and a campus experience is a wonderful thing, and I'm sure all of you probably look back on your student days with a great deal of fondness. I battle to remember some of mine, but -- for lot of reasons. But the online offering is certainly helps when you become a working adult and you're looking to extend that lifelong learning. So that's where we're seeing the difference. And our growth in our online is exciting, and we certainly have a good strong presence. Every single qualification that we register or credit is done for both distance or contact, okay? So we provide the full range of products. Speaking of which, we've extended our faculty base quite significantly [indiscernible] engineering, health sciences. I can't let the presentation go by without saying that we have the largest law faculty in the country, okay. Again, seeing Frank here and Frank will remember when we first ventured into law was in a partnership with the University of Free State, Frank, we grew their faculty. They had 100 law graduates or undergraduates in their faculty. In the first year that we did a qualification with them and made it available, we grew that faculty to 700. Okay. We've continued to grow now with our own qualification. That was the one that we shared and our law faculty is now the largest law faculty in the country. Okay. It kind of shows the premise and the promise that we have, okay? So -- in addition to that, we have a range of qualifications that starts at skills development and goes all the way through to doctoral programs, and I emphasize in each and every mode of delivery. So we cover the full prospect. We're also adding to it. We have 233 registered and credit qualifications, which I think is probably nearly 3x as many as some of our competitors, and we have some 51 in the pipeline for development. So we have a really good pipeline following through. We are extensive in this area. New site, Rosebank College, we'll be opening in Mbombela with one of our digitally enabled campuses, okay, something which we think is very exciting. It's really worked well for us. This can be either a tuition center or blended learning more specifically, which I happen to feel is probably one of the best ways of learning. The combination of technology together with some face-to-face and also the collaboration with other students and our campuses have proved to be very successful and not only in volume growth but in terms of the quality of the academic. So a new campus. We're hoping to get the accreditation and the registration sorted out for opening even if we don't, as a full signed campus, we'll use it as a tuition center. But that project is underway, and we anticipate opening in 2024. I'm also hopeful that at the next presentation, you might hear about the first digitally enabled campus in the rest of Africa, but I'll keep that a little bit of a dark secret, but that would be a really exciting development for us. Okay. Our resourcing division remains a tale of 2 cities. We have our local South African operation, which, of course, is so closely linked to the economy, the performance of the economy. And I have to -- again I've done that in the last couple of presentations, I think, but take my hat off to the management team who do an outstanding job in some of the most difficult circumstances. We talk about how we in education are quite fortunate because there is a degree of annuity returning students in our business. So once we've secured and if we do our jobs properly, those people will be back for other 12 or 3 or 4 years depending on whether it's schools or tertiary, but our resourcing business get up every day, and it's round number 2. So they do a really tough job. And of course, South Africa has already helped. But again, their foray into Africa to look at alternative geographies and alternative industries has really paid handsome dividends for us. And is the driver of the resourcing business' performance. We did, during this period, sell a small organization contract accountants to some former owners. So there isn't a slight adjustment in the sense of the sale of that business. But our revenue continues to grow on the back of the Africa expansions, operating profit up, and you can see even the movement in our operating margin. If we look at South Africa, revenue would have gone back -- has on a like-on-like comparison but because of the sale of contract accountants. If you looked at the like-on-like we still would have grown by about 6%, I think it is, okay. And the profit impact was insignificant in the sense. But -- so South Africa, the story here is holding our position, doing the best we can and what are some very, very tough economic circumstances. But Africa, has been a fantastic initiative and opportunity on the part of the resourcing leadership. [ Glen ] and his team are to be congratulated because this business continues to grow. And to the point, as I mentioned, we -- even the improvement in operating margin, the revenue growth and stuff is starting to have an impact on the total group position, which is why it's necessary to unpack margin by education. And resourcing now, but this is a phenomenal success for us and continues to be a source of great news, okay? So our balance sheet remains incredibly sound. I think the big issue is that as we reported in the financials at the end of last year, was we did have a bit of a hiccup in terms of our information system that we will put into place that we weren't able to build timeously, which meant that the debtors book and the tertiary did shift out a bit. I'm going to cover all of that in some detail. However, if we look at this period, so what is important to remember is that 30th of June, which is the comparative period prior year did not include that movement in the debtors book, which we experienced towards the end of the year. So the base kind of exaggerates the impact. But what I want to point out is that even if you look at the total that's moved by some 20% and revenue growth at 16%. So the difference is not even that great. It's very much in the area of tertiaries, where you see even if the schools have moved up, the absolute number is not significant. And when one looks at the credit losses, that's only moved by 6%, whereas revenue, in fact, is moved by 16%. So -- and in fact, losses as a percentage of revenue hasn't changed much. It's just been a shift really in terms of between the schools, which has gone down and the tertiary, which has gone up. And to give you some information and some feedback in terms of what happened with regards to those tertiary debtors. This is what we reported at the end of December was ZAR 669 million. The loss allowance of ZAR 380 million meant that we had to collect some ZAR 289 million. And as at the 30th of June, we've collected ZAR 281 million of that ZAR 289 million. So we've made really good progress in rectifying that problem. We still have a little bit of a way to go. But overall, the debtors remains incredibly well managed. These are difficult times. We do understand that consumers are under significant pressure. But I think overall, we're very satisfied that -- we got to grips with the problem we experienced at the end of last year. We've made good progress on that. And overall, the debtors remains very well managed and well in line with our expectations. Of course, continuing this real key feature of our business, which is our cash generation, very strong cash generation again in the period, so a solid performance and continuing the trend. And of course, that's enabled us to continue to pay down the levels of debt. And if you have a look at our covenants, the banks would give us 3.25 EBITDA cover. Our own internal covenants are at 2.75, even more conservative than that. And we're currently actually at 1. So the level of borrowing is coming down quite significantly and a sound balance sheet. And that's all been achieved. There's still quite a significant investment over the period. We have made investments in both our schools and our tertiary business to accommodate the growth that we've experienced to reposition brands, put in the necessary assets to deliver on our promise. So a significant investment program over the years. But the strong cash generation has enabled us to not only achieve that but pay down debt. We only calculate ROFE at the at the end of the year, okay? So we can't put in a figure for that, but I'm hopeful that you would see the trajectory, and we do expect that, that would continue. And that at the end of the year, we'll have some good news to report on where the ROFE is in a sense, which I think is really encouraging. CapEx spent some about some ZAR 270 million so far on new -- 1 new school site, still investing in systems and technology to support our business and our delivery of our initiatives. But the majority of the CapEx going into adding to existing sites and facilities and IT in particular, to support the sites. So well under control. We do expect to spend somewhere between ZAR 650 million and ZAR 700 million at the end of the year. So that's CapEx to date. So all in all, I think the remarkable thing about education is despite the poor economy here in South Africa, but because of the features across the continent, there is an inherent underlying of demand, okay, for quality education. So we really are fortunate compared to a number of other sectors. That underlying level of demand remains even if it is driven by negative factors in South Africa, I say they are all positive contributing factors elsewhere. We've got a really good quality asset base, a well-established brand portfolio with clarity in terms of what their value proposition is, management that are clearly focused and understand and live, breathe, sleep, eat, the success of their particular brands. We've got strong cash generation, a very sound balance sheet, good financial controls and systems into place as we've been working on those over the years. And I think we've developed a really robust and flexible business model. I think that's been demonstrated in the results that we put to date, some of the issues that we've been able to deal with and some of the initiatives that we put into place. And that's because of an investment in people, primarily I think a terrific organization in that sense with people who are so committed, dedicated not only to the delivery of quality academics but to the success of our organization. Systems and technology and intellectual property that we're developing all the time to build real competitive advantage. And of course, we're a good ESG story, too, that goes without saying we operate in a terrific sector. So sound base, agile business. We remain excited by the growth opportunities that we are hugely excited by what we still believe we can see as opportunities for us in the education sector. So I think that's something which is exciting. And I think that ADvTECH is probably uniquely positioned to take advantage of those opportunities given our position in both schools and tertiary and our central academic team that we're seeing real benefit from leveraging across both of those sectors, okay? And that's not all. I think that's -- that kind of led the Board to have the confidence to increase the dividend payment by some 30% over the period prior to $0.30 a share with that robust healthy balance sheet. Good cash generation. And I do say that we still see good growth opportunities. But nevertheless, it's encouraged the Board to increase the dividend to $0.30, which is a healthy increase over the prior Okay. I hope that's useful. We'll now take any questions. Didier, I see there are some there. Didier will read them out. And between he and I will do our best to answer those. By the way, before you do, are there any questions? Frank, yes.

Congratulations [indiscernible] to you and the team [indiscernible].

Sorry, Frank, I think we might need a microphone. So someone's coming across in order for those who are online to hear. Sorry. Thank you.

Roy, I was very interested to see your focus briefly on the U.S. dollar returns and the compound annual growth rate. I think that's very encouraging and reflects a more international focus by the Board and the management team. What I wanted to ask was if you looked at the return on funds implied in dollars on dollar assets, you might get a very interesting story. Because, of course, the weakness of the rand means that your installed asset base is continually declining in dollars, whereas your returns are growing in dollars. And that perhaps paints a very good story of ADvTECH's performance. And I think it's important to raise this because at $11 million market -- ZAR 11 million market cap. You probably know more than $500,000 or $600,000 in a highly competitive global economy in a sector which is becoming more and more international. And the other side of that coin is that with 80,000 or 90,000 students, you're barely scratching the surface of ZAR 16 million or so in South Africa and maybe 10x that or more in Africa, which means the potential market is enormous. But of course, the problems of getting paid by all of those people are equally enormous. So I think the question that I would like to ask is what is the international focus? Because it's quite clear to me that the local competition is not really competition for the exposition you've given today, the outstanding performance of ADvTECH. But the reality is that there are some very real and meaningful international competitors that we have to consider ADvTECH to be up against now. And perhaps that's something you'd like to comment on a little bit.

[Indiscernible]. I was hoping it was just going to be the commentary because I was quite enjoying that, but -- but you are right. I mean we do believe that it really is important to try and broaden the appeal of ADvTECH to international investors. I can tell you it is work that Didier and I look at. In fact, I'm going to quote some Didier, please correct me if I'm wrong. I think at one point in time, our international shareholding was probably up at around about 25%. It's down to 13%. We believe a lot of that is actually due to the South Africa risk environment more than it is our own performance in a sense. So it is something that we're mindful of. And we do believe that we could bring in a significant pool of international investor would help us in terms of ADvTECH and ADvTECH profile. So we are trying, in fact, I'm not sure if it's within the rules, but I will tell you is that Didier and I are actually going to the U.K. next week to meet with some investors and try and assess what the appetite, what the sense might be towards ADvTECH and investment in ADvTECH in South Africa and education more broadly. So hopefully, that might have some benefit we'll see. But again, I think [indiscernible] really -- the other issue is just about our international standing competitiveness education. I think, again, and we really do believe this, we've been saying it quite often, is that I think we are uniquely positioned to be the PanAfrican education asset of choice. I think we understand, we acknowledge and we know that there are many different countries with many different nuances, cultures, environments that we need to understand, but I think we're better positioned than most to take advantage of that. And we certainly have our eyes lifted at the horizon, and we're working on opportunities in that area. Again, those things, whether we'll be able to bring them to fruition or whatever there's a myriad effects to take into account but it's something that the Board and the management are acutely aware of where the opportunity is, and we certainly are exploring and I would like to believe that given the right set of circumstances, we will be able to do that in the future. Okay. Right. Dale, right? So you've got some questions here, first of all, we'll come to the ones online.

Yes, it will be a short one. Just in terms of the rest of Africa operating margin that you're able to achieve -- over the medium term, what do you think the target is for that margin? It's already substantially ahead of the [ ESA ] schools business, but where do you think you can take that to?

Well, I think we just -- I really don't want to put a specific figure there, but we have always maintained that we believe that our Africa assets will be more profitable than the South African. Because, again, we think the risk factor, we will be looking for high levels of return of moving off into other geographies. We're comfortable that, that's going to be the case because we look at the cost structures involved, and they are different to that in South Africa. So we are quite comfortable that we would be able to extend that margin and it would be better than that, which we deliver in South Africa, okay? I'm not sure if it's -- if we really want to put a figure on that in a sense at this point in time. Didier, do you want to?

We do believe it will be at a significantly higher margin than South Africa. And I think that's already demonstrated in our Botswana schools, so which we are using as a benchmark. So yes, we it will pay out over the next few years.

Good. Online?

The first question actually came in before the presentation started. So I think we have answered it, but it was really about details of the new school and the tertiary site, where they located and the capacity -- and then if it's included in the CapEx. So I think the 2 sites we've dealt with, the Morningside Bridge and the Rosebank College just enabled site. The capacity at Morningside, I think, ultimately, it's somewhere close to about 414. The one in [indiscernible] Mbombela, I'm not quite sure of...

860.

About 900. So that's it. Both are included in the CapEx for this year, but both are leased buildings. So they really just refurbed and fit out. So it's not a significant part of our CapEx for the balance of the year, but it is included in there. Second question is to do with the 2 pilot solutions for the solar. And what was the size of the plant and what percentage of electricity consumption that it replaced. I don't have that information at hand. The asker of the question is welcome to pop me a e-mail, and I'll respond to it by return of e-mail. Okay. The second question has got about 6 or 7 parts to it. So I'm going to break it down a bit. So first part is what were the average fee increases in each segment, excluding the mix effect. So again, I think as we flagged in the presentation, we do try and keep somewhere close to CPI. There's obviously -- we take market factors into account. And there might be some where we go a little higher and some where we go a bit lower, but we try not to deviate too far from there. Just later on in the questions, there was a bit about the rest of Africa and whether we apply that similar fee strategy in rest of Africa. Again, we -- as we enhance some of the offerings of our schools like Makini and that, we have been taking a little bit of additional price. But we believe that the value that we're adding more than compensate, so the value equation remains very compelling.

Maybe just to build on that. Actually, part of the acquisition is that we believe we evaluate an asset from the point of view we think we can add value and how we can enhance. And we do look also at where is that offering in the competitive space. So for example, in Makini, we did anticipate that competitive offerings that were on a like-for-like basis as we enhance the offering would give us some scope for price increase. So there, our strategy will always remain trying to deliver real value to parents. If we are going to take more price increase, that's because we believe we've added to the offering, and we've enhanced the operation and the competitive circumstance warranted as such. But otherwise, we would be looking to make sure that we have responsible pricing and not the idea in the concept that it's simply 2 percentage points above inflation because it could be. We think that, that's a road that you quickly run out of track on.

Okay. Next question is, could you please provide more color and examples of the investment made in the additional global benchmarking artificial intelligence tools to support personalized learning and the student information system. I think we did deal in the presentation with the artificial intelligence. There are also benchmarking exams, assessments that we carried -- we carry out across many grades of the school to assess where the kids are relative to global averages. And again, it provides useful information to assist with a personalized learning journey sort of together with the ADvLEARN. And then additionally, we continue to enhance our student information system. And another area that we've invested in this period is some training initiatives, particularly for our teaching staff. So I think that those cover the main initiatives. We have budgeted in the region of about ZAR 30 million for the full year for these initiatives. In the operating space is some that's CapEx, but the ZAR 30 million we've budgeted for as operating expenditure. So again, if you look at our margins, not only have we been able to absorb this cost and we've also increased the margins. So the efficiencies that we are bringing through are really meaningful and allows us to invest in areas that adds value to our product and our offering and we believe gives us competitive advantage and makes our business sustainable. Okay. The next one is, could you provide us with a status update in finding regards the substitute teacher incident at Crawford College Victoria? And how will this be managed in the fall out to the brand?

Okay. Look, it was an unfortunate incident. I think it was dealt with really well by the teams. Moved quickly. We do not tolerate that kind of a behavior. It was dealt with immediately. I think it was unfortunate that we had literally fallen back on an individual who did work in the business as a quick solution. And I think the learning from that has been well made to the management teams. I don't believe that there will be any long-term fallout from the business in quite the contra, I think often, as is the case in these things, it's how the organization handles the problem in which it's judged more than the incident itself, and I really do believe that it was very efficiently, effectively and swiftly dealt with in the right manner. And as far as we're concerned, we will learn the lessons of how that appointment was made. And hopefully, we will not repeat that mistake.

Okay. Next question. Why does the Gaborone International School preprimary need to be rebuilt? And what is the cost of just the rebuild of the preprimary. I think that the school was never focused on preprimary. It was always a primary and high school, and it had a little preprimary element to it. But it was really to deal with siblings of kids that wanted to come to the main grades of the school. So there was never much focus and investment in there pre -- us acquiring it. I think it is not the standard of facilities that we would like to be associated with. We've really improved the balance of the site. And we think that we need to now bring this up to the required standard and also make it a more compelling proposition for parents as opposed to just a place to house a sibling if your kid is in the main school. It is a relatively small part of the CapEx. I can't tell you the exact number off hand, the total CapEx of both phases were in the region of ZAR 100 million, of which ZAR 50-odd million was built last year we spent last year and the remaining ZAR 50 million on Phase 2 now. I would imagine that it's probably not more than 20% or 25% of that amount. It's a relatively small portion. But we do believe that it will enhance the proposition and make it a viable preprimary going forward. In terms of the draft regulations published by the Minister of Higher education in [indiscernible] in September 2022. Does ADvTECH currently meet all the criteria to qualify as a university? If not, which specific criteria does ADvTECH not meet?

Okay. The criteria that were published to really quite broad, wide-ranging and not specific, and I think certainly inadequate in determining what is a university versus what is not. There has been comprehensive and detailed feedback not only by ourselves, but by others in a sense of those criteria. We know the Department of Higher Education is working on that. And we are in close collaboration in a sense of that process. Equally, on our side, we are well aware of what we believe would be the requirements for us to conform to a university status, and we have quite significant and very aggressive plans to put those into place together with time lines for which the management teams are fully committed. And our determination is to try and make sure that we believe we are fully compliant with what we think would be reasonable university status criteria in the shortest possible time. So it's difficult to assess exactly what will happen in this process. But we are actively and positively engaged in it, and I think we'll manage that successfully, okay.

Okay. Please share your views regarding the pricing power across your operational divisions. And then the second part, the Trinity school brand is growing and gaining popularity? Are there more plans of opening up more schools? And if yes, what is the strategy?

Okay. I think pricing power, because we've shifted our approach in terms of saying we want to take increases that are in line with or even slightly behind inflation, if we possibly can, due to the efficiency and effectiveness of our processes, systems and structures. We do believe and we are very strong in that perception that we will be able to recover whatever cost increases we are required. The most important of that, of course, is actually to ensure that we have the right caliber and quality of staff. Our business depends upon our teachers, our educators. And obviously, we want to make sure that we are able to attract and retain the very best. So that's the primary driver of growth. And we are very comfortable that we would be able to recover the costs necessary to do that. What we want to try and do there, on the other side of the equation is to use all of our resources to ensure that we're delivering very effectively and in the most efficient way we can so that we can contain those cost increases. So you talk about pricing power. Very comfortable we can recover cost increases. That's not the issue for us. It's about being responsible in terms of pricing and making sure that we have no duplication and wastage. I said I'd repeat that, and I've repeated it again. Okay. In terms of Trinity, yes, we do believe it's a really well-established brand with good brand recognition and a strong presence. And we are looking -- and we have plans in a sense of how we'll evaluate, but I wouldn't want to disclose any further details at this stage.

I think the next question was regarding the African pricing, which I think we've dealt with. So move on. In 2022, the annual CapEx investment required purely to maintain current operations with around ZAR 200 million. What would your expectations be for this maintenance figure over the next 3 to 5 years? Again, I would think in the region of about ZAR 200 million to ZAR 250-odd million. Obviously, we -- as we get bigger and inflation, it will move up a bit. Again, relatively little maintenance as a percentage of capital is required for the buildings. The -- often that goes through your operating expenses as repairs and maintenance. A large chunk of that is in the IT equipment, which obviously needs to be replaced on a fairly regular basis. Particularly as you introduce more of these tools and assessments in that. So still, I think ZAR 200 million to ZAR 250 million will cover it. Then the next question is in the presentation slide, it showed that 999 students were lost to immigration from February 2022 to February 2023. Do you have an estimate of the first half of 2023 for those numbers?

I don't have that figure with me at the moment. What I would say is that we are not seeing any dramatic shift in it. But again, it could be towards the end of the year, we have a change in that pattern, but I don't have an absolute updated figure here now.

I mean, we will update it as part of the year-end presentation when we do that chart for the following year's enrollments. The next one has to do with resourcing, what employment sectors are buoyant in the rest of Africa resourcing division?

Well, I think really the success of the resourcing -- rest of Africa resourcing is that, in fact, we operate in a number of different geographies with a range of industries. And they can be NGOs, it can be educational institutions. It can be resource businesses. There isn't one that actually tends to dominate. I'm looking at [indiscernible] as I speak, he's nodding, so I must be saying things that are reasonably accurate. I think, quite honestly, it really is the fact that right across the continent, there are opportunities for us to provide these services to organizations where it doesn't warrant them putting in their own investment behind the structural service. And we've become if you like, the point of call for those organizations. We built a reputation and in-country partners that assist in the delivery of that service. And the opportunities have grown very successfully. And the business -- the management team have also worked quite extensively at their operations and improve their margin in servicing those clients. So there isn't one that's dominant. I am aware that, in fact, in some of the press reports, there was a reference to oil industry. And I just want to say that it's not specific to one or any other. These tend to be a multiple of clients in a variety of different industries. And that's accurate. Okay.

Okay. The next set of questions. The first one has been answered around the fee increases. Second part of the question, some color on staff count addition and wage inflation.

Okay. I think obviously, we are -- we do look at where we are expanding, where our educational institutions are expanding. We have obviously needed to take on staff to accommodate that. However, on the other side, what we've done is looking at our administration processes and streamlining systems, we've been quite effective at actually consolidating, rationalizing and keeping head count growth well within -- significantly less than as we expand our student base. So that's the operating leverage that's coming in. Again, we look at inflation -- in [indiscernible], but maybe more important than that is actually we really do pay a lot of attention to performance and performance delivery, and we try to reward -- we've introduced new remuneration schemes in our schools business, in particular, where we have a much closer assessment of performance. And by the way, we also reward against achievement of other objectives such as enrollment growth and also productivity and efficiency ratios within the schools. People ratios, salaries and wages to revenue and the likes. And so they're actually almost building on flexible versus fixed cost as a way of rewarding as well, which we believe is also quite innovative and allows us to reward great performance and the success of the brand. So we think that's quite critical in terms of some of the performance elements we show. Does that answer that question? Do you think Didier?

Yes. And I mean I think that also, for us, the ultimate measure is what is the total cost of salaries and wages go up relative to revenue. And that percentage is favorable. So we are continuing to get the efficiencies and the operating leverage. And again, as Roy says, our focus on the efficiencies and teaching. So hopefully, not only do we get the efficiencies, but we also spend the money where we enhance the value to the students. Next question is what is the long-term vision for the Africa schools business in terms of size?

Wow, okay, 2.5 billion people on the continent, the majority of which will be under the age of 14. You can do the numbers. Yes. I think it's very hard to say. But our investment will be based on where we think the best returns are to be made where the opportunities are most real for us. And I just think that for the foreseeable future, I think that there is good growth potential. It's almost unlimited in a sense if that is such a thing, if you look at the Africa and the size of it, yes.

Okay. Then next part, how many leavers in tertiary due to nonpayment, then in addition, what is the process around learner contract termination across both divisions. We don't -- I don't have off hand the tertiary leavers. But it's -- the pattern is no different to prior years. Every year, we will always have some drop out -- not only for financial reasons, but for other reasons as well. Again, we always try and work with the students, particularly where they are performing well in the classroom. To see how we can assist them so that they don't forfeit the potential of getting an education because of fees. But obviously, we also can't carry all students. So -- but we do try as far as possible. I think the process across both schools and tertiary is -- we would always first give a level of warning that the account is in arrears and that it needs to be brought up to date. We would typically give a second warning that if it's still not addressed, it's going to lead to a suspension. And then ultimately, if it's still not addressed, we will then have to suspend the student. Again, we always take compassionate reasons into account where necessary. So it's not a one size fit all. And we -- so overlaying that, we will try and take personal circumstances into account. But at the end of the day, we need to get paid where we are delivering the service. Okay. And then what types of qualifications line engineering and health science faculty?

Well, in engineering, we've actually -- Luis is here, and she can help in terms of it, electrical engineering, we're looking at civil engineering. We'll look to extend into all ranges of engineering we can and health faculty. We're looking to extend. We have programs in for accreditation that would help us in those areas. So -- yes, we -- I think what we're trying to do is to build qualifications in areas where we haven't previously been that are well known in terms of which would lead to meaningful career opportunities. Obviously, we need to do that on a phased basis due to the investment required and the need to skills and also the ability to get programs accredited. Luis, have I left anything obvious out? Okay. Okay.

Question around, had we learned, how long was a product in development for and who are the partners? And has it been rolled across -- out across all of our schools. And lastly, do you have any doubt yet pointing to learning improvements?

I'm going to say -- answer that in this way. Firstly, we've been working on this for probably about a year, okay? Secondly, I'm not going to tell you who we're working with because that's a competitive advantage. And I'm certainly not going to discuss it. Suffice to say that we've tied it up with a lot of contracts. Thirdly, do we have any data to suggest that it's working. Yes, we do. In fact, hugely encouraging. I think, in fact, that's probably been one of the things that's enabled us to really get the rollout across our schools as successfully and as rapidly as we have because we're able to prove and demonstrate to the teaching community, the real benefits and enhancements that this delivers. So yes.

I mean just to that. It has been rolled out across all of our South African schools, and we're now going to start with a rollout to the rest of Africa schools as well. And then we also have the next subject that we're hopefully going to get across the line is English. So very exciting. Okay. Are the Tertiary margin sustainable at the current levels. We believe they are so. We have lots of efficiencies in the business and potentially could drive them higher if we chose to, but we also invest a lot back into the business. One, in order to get to the university status and two, to the continuous enhancement and sustainability of our business. So we're very comfortable with the margins of that kind of level. Okay. Next question. Traditionally, second half is much less cash generative with most of the cash flow in the first half. How will you finance the ZAR 750 million CapEx for 2023? Do you have existing facilities to finance the CapEx? I think our banking facilities are just over ZAR 2 billion at the moment. At half year, we were a little over ZAR 400 million, drawn down against those facilities. And yes, it is true. We get the bulk of our cash in the first half but we still do get significant cash coming into the business in the second half. And we will manage that well within our existing facilities, and in all likelihood, at reduced borrowings compared to year-end 2022. So we got more than enough headroom to handle that. Okay. In the Kenyan schools, how do you think about fee increases? Is it linked to domestic inflation? And does it factor into account the currency weakness?

It certainly is linked to domestic inflation in a sense of -- because, again, there is a strong link in terms of salaries and wages as well. And we want to be able to make sure that we can recover as sufficient to reward staff accordingly, and we need to take inflation into account. So it is, in fact, taking [indiscernible] those domestic circumstances, yes.

Yes. I mean the currency weakness -- our costs are by and large in the same currencies. So we have that natural hedge between our fees and our costs. So that [indiscernible]. Okay. Kindly elaborate further on the university status with your views on when this legislation will be promulgated and how ready you are. I think we've answered part of the question, but when it will -- when we expected.

If you want a view, I suppose, what we could say is that we are working towards a 2-year timetable where we would be ready within 2 years, okay. And I'm looking at the academic and tertiary team. They're smiling and nodding so make that 18 months. Sorry, Linda, I didn't look at you.

Okay. The next question, why exactly was a contract [ accountant ] business sold off? I think this was 1 of the partner business. We acquired about 6 or 7 years ago. It was 3 businesses, the bulk of which is the rest of Africa resourcing business that you see in the numbers. And this was a little business that came along with it. And our sense was that this part of the business was never really going to scale up into anything meaningful. And we felt that it -- while it was a nice little business, we don't -- at that kind of size, we don't believe it belongs in a listed company like ADvTECH. So -- we've sold it back to the -- our partners in the business. And yes, it has a very small impact on the group. The return on capital invested for your schools is significantly higher than the other listed schools group. Is this a function of historic cost of the investment in land and building and higher-priced models? Or are there other factors to explain the higher level of return?

I can't comment on other businesses. I think we're just -- we're happy with where we are and the progress that we're making. I think would be the right answer on that one.

Yes. I mean I think that our utilization rates are high. Our efficiencies are good. We evaluate our businesses both on historic cost as per the balance sheet, but we also have a revaluation done every 3 years, of our properties and even stacked up against the 3 -- the valuation that we did about a year ago, our returns are still very acceptable. So yes, I mean as Roy says, we can manage our assets, and we're comfortable with where we are. Tertiary volumes have held up strongly -- the understanding has been -- is that there is a strong link between tertiary volumes and ability to improve income post studying. Is this perception correct? If so, it's surprising that tertiary volumes have held up as economy means our ability to improve earnings capability must have deteriorated.

I think the answer is that it's probably even more direct than that. It's not so much about earnings, but it's about the prospects of a job are substantially enhanced if you have a tertiary qualification. Linda, I think you are familiar with the figure, if you -- okay.

[indiscernible]

Okay. So yes -- just -- so let's put that in the [indiscernible]. If you only have a trick, your chances of getting a job of 60 less -- less than 60%. If you have a tertiary qualification, your chance of getting a job are reduced to 12 -- less not getting a job, if you have a degree to -- okay. So it's clearly understood that getting a tertiary qualification is your best chance of securing employment. Never mind about the return on that investment in the sense that simply and you can imagine in a sense. So I'm not sure that second part, but it is very well and very clearly understood that the way to getting a career or an opportunity to support yourself and your family is to get a tertiary qualification. And I think that's why we believe it's going to continue to the inherent underlying demand.

[indiscernible]

The unemployment rate is around 63%, right? The highest is unemployment in the world. If you have a degree, the unemployment rate, according to [indiscernible] is 12.5% for people with a degree. For the trick. I mean I'm speaking under correction, but I think it's about 57%. And so it scales down. So if it goes to diploma it's in the 30s and -- sorry, and so as [indiscernible].

Sorry, yes, I beg your pardon. I hope -- yes. Okay.

Okay. Will ADvTECH start currency hedging to protect revenues from other African currencies and are management thinking about this risk? I think we're always thinking about it. I mean it's not always as easy as you may think. But I mean the costs are, by and large, in the same currency as our revenue. So from a income statement point of view, it's really the translation into the reporting currency. Obviously, the assets if those devalue that also impacts on the balance sheet. But -- so we always are looking at strategies. And obviously, one way would be to have liabilities in matching your assets currency, and we look at that. And additionally, we are also trying to make our African operations fully self-sustainable and able to fund themselves. And I think we -- nearly 3 years now, we have not had to support them in any way. And in fact, they hold significant cash reserves and mainly in U.S. dollars at the moment. So I think we -- it is something we are mindful of. I think also that while at the moment, the Kenyan shilling is devaluing, it is still at a better rate to the rand than when we acquired the assets and the [indiscernible] and the dollar or other 2 trading currencies have all appreciated relative to the rand up to now. So it's worked largely in our favor up to now, but obviously, we do try and manage the risk.

I think the answer is we are acutely aware of that as an issue, okay? We can't always offer a mitigating circumstance, but it is fundamental in terms of any of our decisions to invest. And we will be mindful, as I say, I think the structure of our business is somewhat different to others. But it is something that we are acutely aware of and will manage as best we can. Yes.

Okay. Could you please unpack the tertiary revenue growth of 13% where fees ADvLEARN numbers went up [ 4 ]. So it looks like it's ahead of the average fee increase. Rosebank growing faster would imply sort of the mix being negative. So yes [indiscernible]

So there is obviously also a mix element in that. You can see the range of qualifications that we have from skills programs, vocational higher certificates through degree programs, post-graduates, et cetera. So it's always -- there is a mix element in a sense. And I would suggest that there's probably a deemphasis on higher certificates per se and more into full undergraduate programs linked directly to what Linda has said, or chance of employment are substantially higher if you have a degree versus simply a higher certificate. So we probably -- there has been an element of shifting affordability, it's difficult and those people still pursuing degree programs or even post graduate programs versus those at some of those lower points of higher certificates, et cetera. Okay.

Okay. In the schools, it looks like gross receivables are growing faster than top line. Could you please unpack that? Yes, it has grown at a marginally higher rate I mean it is a relatively small number. So the rand value is quite small. Total gross debt, I think it was ZAR 166 million. So it's about ZAR 10-odd million higher on a like-for-like basis if you adjust for revenue compared to the prior year. It is a tough economic environment. So it has been challenging sometimes to collect, as you would expect, but we still believe we're on top of it. I think to some extent, the timing of the June school holiday also has an impact if the June holiday starts a little bit earlier, we tend to have slightly lower collections in June. And obviously, if it's later and the holiday runs more into July, we get a bit more collections. We're -- we've had good collections in July and August. So we're comfortable that it's there or thereabouts. I think also, even though the book is at slightly higher relative to the growth in revenue, the aging of the debt is also more favorable than in the prior year. which has allowed us to have a lower loss allowance against it. Further information on teacher churn and teacher salary inflation. I think we've spoken about the salaries and how much space to enhance student teacher ratios but then I think the next part, we've actually dealt with that largely really the teacher ratios on the churn.

Yes. Teacher churn, we monitor our turnover levels by brand as a key indicator in a sense of the operations and the stuff. And I think we've got -- and certainly, in some cases, we've had quite a lot of probably amongst young teachers in their first appointments, and we tend to see that they actually changed quite a lot and more specifically. There certainly is -- we're aware, I think, of some recruitment and immigration amongst teachers. We've actually had -- we have knowledge of specific recruitment companies coming to South Africa to recruit teachers specifically. For the U.K., I think, in fact, is one that we're aware of most recently. So there is that element in a sense. On the other hand, I think it's important, I think we're well positioned, as I've mentioned to you, we're probably unique is that we have educational faculties we're able to identify very early on, and we have specific programs between the schools and the tertiary business to actually identify teachers of high potential and high talent, which we can secure through bursaries and scholarships and bring them into our own situation. So I think we're better positioned than most. The fact that our geographic reach is now quite broadened, we're finding a pool of really good talents in other geographies that we're able to pull into the system as well, and that's quite exciting. So yes, we do see levels of turnover for a variety of reasons. Again, we've covered off increases. We're looking at creative and innovative ways of remunerating. We want to get away from just straight benchmark, if I'm a teacher with 5 years of service, I get this. If I'm a 10 years of that. We're not really interested. We're interested in performance and academic delivery. And as I say, the involvement and commitment and we are trying to reward through other mechanisms and look at that flexible component of pay as a first to fixed cost. So all in all, we're comfortable with the levels of turnover. It doesn't -- I'm not saying that it isn't no concern whatsoever. Getting the right staff, the right caliber into the right positions is foremost to the brand management teams. But I think, overall, we're very comfortable with our ability to manage and some of the mechanisms that we're bringing to try and ensure we've got the best caliber of teaching stuff.

Just quickly on the immigration. Sort of how is the 999 of this year changed over the last few years. I think, obviously, it was lower during the COVID period, 2020, 2021. We then did see a bit of a spike and now it's reduced again. So I would say this is probably our first sort of normalized year-end.

If I could actually say, but I think it's important to remember that when you look at our numbers, our enrollment growth numbers that have been consistent over the years, those are net of immigration figures. Yes, it is an issue. We're acutely aware of that's a discussion and a hot topic. But the reality is there's still a vast majority of South Africans that are searching for quality education. And at the end of the day, our enrollment numbers are net of those departures. So I think it's in hand. We reported it's not like it is really substantive and meaningful that is going to run the risk of seriously damaging the business. But it's a factor that we measure and monitor and we'll report on it when we have the latest stats.

Okay. How do learner numbers compare at June versus February? I think in our schools business, they are marginally up compared to February, which is a similar pattern that we've had over the last 3 years. So it's a very similar pattern. And on the tertiary, we do have a midyear enrollment, but it's a relatively small part of our business. The mid-year enrollment has gone well. But as I say, it's not going to be -- make a meaningful difference to the overall performance of the tertiary in the current year. Okay. Then what are the disappointments to date in your view was ADvTECH achieving a sustainable competitive advantage of a PanAfrican education business?

Well, the fact that I'm coming to the end of my tenure and there's so much more opportunity. No, I think we're making good progress on a variety of fronts. I really do. I think it is a very exciting place to be. So I don't know, I'm looking around the room, and there are a lot of ADvTECH people here. Is there anything that particularly disappoints you not that they tell me with. I think I did put up the sort of phases in a sense of where we've been, where we restructured, reorganized, put into place systems, in a sense, -- we then optimized and we've seen enhancements in performance. And I think we're now moving into this area of serious competitive advantage. There's 3 areas that I think are hugely exciting for us and I think provide enormous opportunity. Not so much a disappointment, but I suppose there's a warning flag that I always say comes with that, is that -- we have to make sure that those areas of competitive advantage in which we're investing truly deliver results for us because they can become areas where you constantly are now where we're going to get this benefit, and we're going to have this investment and we keep pouring money into them without getting the corresponding return. So I think measuring the return that we get is critical. So I'm trying to think of a disappointment -- sorry, it's hard to think of disappointments when we got these results. Frank wants to say something, sorry. We got a microphone. Thanks.

Roy, I'm very interested in this point. And I would like to suggest a couple of things that you could comment on in a very positive way. The first is that -- there is huge demand for education we know in Africa as a developing continent. But perhaps the real disappointment is the ability of families to be able to afford the kind of fees that make us sustainable. But I think that is both a problem and an opportunity. And you may perhaps have some interesting comments you'd like to make. Some of them, I'm sure, are under wraps and not for discussion. The other observation would be that the regulatory and accreditation process, just the approval of ministries of education who tend to be ultra-conservative and perhaps not very friendly or well disposed towards an innovative groundbreaking educational institution like ADvTECH must be a disappointment for you in terms of the speed of rollout of institutions into the rest of Africa. And again, I think that represents an opportunity and an area to work on. But perhaps you'd like to comment on those 2.

You should never get me -- a lot of people in ADvTECH know that if you stop me talking, I won't stop, so I've got to try and be concise. But the issue is that, firstly, I think, yes, there is a huge opportunity. And we're -- quite honestly, we probably won't even be able to make a scratch into some of that, if you look at where it is. So we've got to be quite specific about where we go and what but it's [indiscernible]. We always say demand is not the problem, affordability is the issue. Having said that, a lot of the initiatives, we're putting around trying to make it is more efficient. I don't think we have a silver bullet that will actually solve the sort of scale of a large-scale quality employment, education, I think that's going to be a battle. But I do want to say is that, yes, certainly, in the South African context, it has been frustrating on occasions the ability to register on a credit programs as fast as we would want. We balance that by understanding that there is an element of quality control. And so there does have to be that check and balance, if you like, but we would like it to be more efficient than it currently is, and we think there's an opportunity there. I think it's always frustrating in terms of public private partnerships. We do believe that South Africa has an education crisis and that we are well positioned to try and assist in resolving that crisis. And we think we could certainly make some serious contribution in that area if there was a more constructive environment. But by the way, it's not necessarily the same across the continent. I can tell you that we have some really firsthand examples of where we have been welcomed in other geographies and recognized and acknowledged in terms of the programs that we offer and the status that we have. And furthermore, we've also witnessed and seen some of the most amazing private education initiatives in areas where we're not allowed to at this point in time. I would tell you that we have seen some of the most phenomenal medical, dentistry, health care areas, specifically to name a couple, that are actually -- would open the eyes of South Africans in terms of our other countries in the continent or handling these issues, and that's exciting. So if we could take those lessons and bring them home, that would be fabulous as well as being able to extend our own reach to the continent. So yes, I hope I've addressed some of it. I think the problem is so big and the opportunity is so large that it's unlikely we're going to really scratch it. But my good lord, there's still huge opportunities and quite exciting things for us to look at. Okay.

Down to 2 questions. Since you appear to be de-gearing, should you not raise the dividend payout ratio?

Okay. It's something that -- I think the answer to this is that the Board is debating and considering this all of the time, and they're acutely mindful of the position and how the business has performed. And I think there is a prudent balance between acknowledging, recognizing in a sense that opportunity, but also the opportunities that exist for us still as a business. And I think the Board will apply their minds properly, and address that issue. But to date, I think this is a clear indication of how the business has performed.

And then on the final question, as soon as I've asked it, we're going to have to hand our microphones to somebody else because it's is a bench as strong as 2 of us.

Yes, I think that's actually one of the successes of ADvTECH, to be quite honest, is that if you look at our brand portfolio, our management structures in every area of the business, we have really high [ caliber ] we put it up there as one of our strengths is the resources and the investment that we have in people. So I'm actually more than convinced that the performance of ADvTECH is actually as a result of the people in the organization. That's really what has delivered a phenomenal performance, and we'll continue to do so. So yes, the answer is the bench is really good.

That's all the questions that we have. Just refresh one more time.

No, don't refresh.

There is one last question.

One last question. [indiscernible]

Does the IFC stake in board position, add value for the South African -- for the Africa plans?

I can say unequivocally and without a [indiscernible] of a doubt, yes. I think the IFC have been in so many respects, a really good partner for us. And I think the contribution of the Board has been welcomed and much appreciated. I think it's -- yes, it certainly does add value to ADvTECH .Yes. Okay. I really didn't expect that many questions. Thank you for your patience. I hope it's been useful. And -- thank you for joining us. Okay.