IDP Education Limited (IEL) Earnings Call Transcript & Summary

Thanks, operator. Good morning. For those of you who I haven't met, my name is Tennealle O’Shannessy. I started at IDP's Chief Executive Officer last week. I'd like to thank all of those shareholders that have reached out to me. And importantly, I'd like to express my thanks to the Board for giving me this opportunity. I'm very pleased to be returning to this growing, exciting industry and to an Australian success story, like IDP. I believe my experience in the global education industry and in strategy, M&A and technology gives me the platform I need to be able to build on the success of IDP's strategy over the coming years. It's an honor to be with you today to present the results the team has delivered for the first half of the financial year 2023. Joining me today are Murray Walton, our Chief Financial Officer; and Craig Mackey, our Director of Corporate Development. I'm especially pleased today as we present such strong results for the first half. During this period, IDP once again demonstrated its unwavering commitment to its ambitious long-term strategy, its [indiscernible] leadership and the depths of its experienced and talented global teams. The business has delivered record results this half, with strong growth reflecting IDP's industry leadership and commitment to a strategy that builds on our competitive advantages and leadership position. We continue to see a positive global landscape and strong macro conditions with resurgent demand for international study and migration and a highly supportive policy environment. Along with our financial statements for the first half, this morning, we lodged with the ASX, our investor presentation, which we would like to take you through now. In doing so, we will review our financial performance for the 6 months ended 31st of December 2022, we will provide an update on the state of the industry and the positive macro settings that are underpinning through-the-cycle growth for IDP, we will summarize our strategic areas of focus and the key developments on those during the period and at the end of the call, we will be very happy to take questions. So moving to the presentation. I'll start off on Slide 4 for those following along with a summary of the key operational and financial statistics for the half. The business delivered a record half year performance that reflects IDP's leadership position and innovation in a rebounding industry. We delivered revenue at $502 million, up 26% on the prior period, driven by double-digit revenue growth across all product lines and a 63% increase in student placement revenue to highlight. Adjusted EBIT of $123 million, up 53% versus the prior period. Margin expansion, which has been a theme of recent results, was obviously a key driver of this great outcome. Adjusted NPAT at $84.4 million was up a very strong 59%. And we have also announced a 56% increase in dividends for the period with the $0.21 per share payment a reflection of the unique characteristics of IDP, a growth company with a strong balance sheet that generates free cash flow. Looking now at some of the highlights from an operational perspective. Student placement volumes came in at 43,000, up a very strong 53% versus the prior period. All destination markets performed strongly with Australian placements up 128% to 15,200, which is above the levels recorded in the first half of FY '20 before the pandemic commenced. Our Northern Hemisphere destinations also continued to post impressive results, with volumes to the U.K. up 31%; Canada, up 22%; and the USA, up 32%. IELTS volumes were up 5% with growth consolidating on a very strong FY '22. And finally, enrollment volumes in our English language courses were up 40%, with our Cambodian operations able to return to a normal cadence following the removal of COVID control measures. If I move now to Slide 5. From a macro perspective, IDP is operating in an industry that has strong structural tailwinds. Demand for international education and migration has rebounded very strongly with our customers' aspirations aligning with the desire of governments to attract young talent and skilled workers to support longer-term economic growth. Across all of our key destination markets, Australia, Canada and the U.K., we are seeing very supportive industry conditions in terms of policy settings relating to post study work right. We can clearly observe the strong through-the-cycle industry structural growth that IDP is aligned to with our global network. Importantly here, growth is from all markets with IDP's diversified exposure to a large number of both source and destination markets a key feature of our business model. During the period, we also looked to further strengthen our diversification and our longer-term growth profile by acquiring Intake Education, which has a very strong operation in Africa, a market which has attractive demographics and is expected to see strong long-term growth. Moving now to Slide 6. Slide 6 demonstrates the broad-based rebound occurring across the global system as international mobility returns. This chart shows the aggregate student visa data for each of our major destination markets. Due to the strong demand growth and the positive structural tailwinds we've called out, all of our major destination markets are now back above pre-COVID levels in terms of total student visa issuance from our source countries. The reopening of Australia's borders in mid-December '21 has triggered a strong recovery with the underlying attractiveness of Australia as a study destination overcoming the negative sentiment during the pandemic. A key constraint on growth at the moment relates to the supply chain with ongoing visa processing delays and higher rejection rates impacting sentiment and demand for Canada. Shifting gears now on Slide 8. I'd like to spend some time outlining our strategic areas of focus and the key developments during the period. We're continuing to execute a well-established strategy that is delivering results. To put simply, our strategy is focused on delivering a compelling proposition to our customers that's best described as intimacy at scale. After several years of investment to build our digital capabilities, alongside our world-leading physical network, we now offer an unmatched combination of global scale and trusted expertise. The seamless omnichannel service we now offer brings a very tailored, personalized digital experience to our customers. This is made possible by the world's most comprehensive international student dataset and is incredibly difficult for our fragmented competitors to replicate. In a traditionally analog industry, technology very much acts as an enabler that enhances our customers' experience, an experience that is centered on human connection and trust. Our highly trusted brand, which has been built over decades through local human connection, is now powered by our global digital capabilities to deliver an experience that is quite simply life changing for our customers. So just to go a little bit deeper on this slide, what do we mean when we say trusted experts? To bring some color here, we have trusted brands such as IELTS that are relied upon by universities and governments to provide reliable and consistent assessment of language ability. We have over 1,800 counselors that provide independent and personalized advice, offering both in-person and virtual support. And we have deep client relationships with over 800 universities who rely on IDP to provide insights, advice and quality well-matched students. When it comes to human connections, we continue to innovate and invest to enhance our global scale and footprint. I'd like to share some examples of this from the first half. We built out our physical network through the period, adding 34 new student placement offices across the network, bringing the total to more than 190 with an additional 24 offices planned for the second half. We're also very proud of our IELTS network that spans over 50 countries with more than 230 computer-delivered centers. We're also growing our digital scale with more than 600 employees at our digital campus and with an extensive portfolio of local language websites that generate over 100 million visits annually. And a call out here, these are some of the most popular and heavily trafficked websites in the industry globally. This half, we've accelerated the uptake of our recently launched IDP Live student placement app and the IELTS app. And I'll talk a little bit more on both of these a little later on in the presentation. Moving now to Slide 9, going a little deeper on each of our major business lines, starting with our student placement business. Now just as a reminder, our aim with the student placement business is to reimagine the student placement model through enhancing our human expertise with global technology and data. Earlier, I spoke to student placement volumes being up 53% versus the prior period. I'd now like to talk through how we're continuing to drive this growth. We're combining our trusted and personalized advice with data and insights and systems to deliver what is a highly innovative model for the industry. As part of this, we've begun to deliver what are transformative services for our students and clients. An example of this innovation is the digital functionality we've incorporated within our student placement app, IDP Live. So with IDP Live, we've built out the core functionality and some of the aspects that are already available are things like a comprehensive course database and search functionality, a highly sophisticated recommendation engine that helps students shortlist the courses that are right for them and the ability to apply directly to unis and to manage the documentation process all through their phones. In addition, the IDP Live app provides access to FastLane, another key strategic initiatives we're focused on. Just as a reminder, FastLane is a new service that harnesses IDP's unrivaled global dataset and client relationships to enable students to receive real-time in-principle offers from leading institutions. We've been very pleased with the progress and the adoption by our customers with 1.4 million app downloads. We've also had 75 clients onboarded or signed up to FastLane and over 7,000 formal offers completed. And we're well on track to deliver our stated target of 9,000 this financial year. And we're just getting started here with a future pipeline of functionality planned as we build out the student placement marketplace experience. Moving to Slide 10 with a focus on IELTS. As a reminder, IELTS is the world's leading language -- English language test for study and migration. The IELTS' value proposition is compelling, offering both choice and flexibility in the way candidates can take a test, and a dramatically enhanced customer experience through product innovation and improved support. Our aim with IELTS is to be at the forefront of innovation in English language testing, and we've got a strong track record of delivering this, introducing computer-based testing and more recently, online testing. This year, IELTS has continued to strengthen its position as the world's most trusted high-stakes English language test, enhancing our trusted human expertise through global technology. Together with our partners, British Counsel and Cambridge, we have undertaken a complete modernization, the underlying technology infrastructure that supports test creation and delivery. The new platform, amongst other things, will enable us to drive product innovation and to deliver significant enhancements to our customer experience, and it's already allowed us to launch multiple new products, the first of which was IELTS Online. During the first half, we accelerated the rollout of IELTS Online to more than 40 countries, and we're well on target for 50-plus countries by FY '24. And a big call out here. One of the advantages with IELTS Online is it gives us the opportunity to offer the IELTS test in countries where we do not currently have a presence to really aid in the geographical expansion piece. Another proof point on this product innovation road map is the IELTS One Skill Retake or OSR. As a reminder, OSR is a new product that allows a candidate to retake just 1 of the 4 skills where improvement is needed in just one area. This is based on student feedback that we've had that this is something that is, I guess, a key piece of functionality students are looking for. And this changes the test taker experience dramatically. It represents a strong value proposition for candidates as they're able to retake just a component of the test without jeopardizing their scores in the other three skills. We have very high ambitions for this product as we believe it will be a unique and highly differentiating feature of IELTS. First tests were completed successfully in December, and it is now being rolled out across Australian cities. We're also very focused on improving the test taker experience, and we launched our IELTS by IDP app in May 2022. Just want to talk you through our vision for the IELTS app. Our view is that it will be a game changer. Not only will it improve the test taker experience, the success here is a candidate is able to be successful, not just enabled to take a test. Now we are early days here, but we've already been very pleased with the strong take-up in the last 6 months. I'm really happy to share we've reached more than 500,000 downloads since launch. So I'm going to pause there, and I'd now like to hand over to Murray to take you through the financial results.

Thanks, Tennealle. So turning to the financial results for the period. We have delivered a record half year performance. Revenue was $502 million, up 26% versus the pcp with growth across all divisions. Student placement revenue was up 63%, underpinned by the strong rebound in Australian revenue. Multi-destination revenue was up 36%, with volumes to the U.K., Canada and the USA all growing strongly to record levels for the half, whilst revenue was up 11% versus the pcp with volume and price contributing equally to the growth. Digital marketing and Events revenue grew by 11% as we returned to physical events and clients invested in meeting potential students and partners in their home countries but reduced their spend in digital marketing for international students. English language teaching revenue rebounded strongly, up 80% versus the pcp, as classes were back on campus in Cambodia with a higher average price. Adjusted EBIT is at $123 million and 53% higher versus the pcp. And adjusted net profit after tax is at $84 million, which is 59% higher than the pcp. Moving on to Slide 13. The key operating metrics highlight the strong growth and rebound we've seen in student placement, underpinned by the 128% volume growth in Australia. IELTS volumes were 1,019,000 with growth of 5% versus the pcp, a consolidation after the strong growth in FY '22. Student placement volumes were 43,000, 53% above the pcp with Australia rebounding to 15,200, in line with the first half FY '20 volumes. For Australia, we saw strong growth from Southeast Asia, particularly Thailand, Vietnam and Cambodia, with India, Sri Lanka and Nepal, the strongest contributors to growth in South Asia. North Asia, particularly China and Hong Kong, lagged the market, while we saw doubling of volumes from Taiwan versus the pcp. U.K. volumes were up 31% with strong growth from India and Pakistan while Canada was up 22% despite delays in visa processing and capacity constraints in some popular colleges. I'll move on to the average fee performance. The average test fee for IELTS was $280, a 5% increase with price increases taken across a majority of our countries. The average student placement application processing fee has increased to $4,018, a 7% increase versus the pcp, with the majority of the increase coming from higher commission rates and higher tuition fees. I'll move on to Slide 14. The student placement pipeline highlights the rebound of the Australian business with qualified leads for the half up 67% versus the pcp and applicants up 71%, close to the record levels recorded in the first half of FY '20. The pipeline for our Northern Hemisphere destination continues to show good growth with each of the U.K., Canada and the U.S. expanding at similar rates. It's important to note that we see a significant opportunity for efficiencies and improved conversion rates in our student placement funnel. Over the last 12 months, we have deployed a sophisticated lead scoring and prioritization model that is helping us deliver the likely applicants to counselors in a more timely fashion. This is starting to deliver outcomes, which will help us drive efficiencies and scalability. Moving on to Slide 15, margins. Our operating leverage in the student placement business is driving the margin expansion, even with the continued investments we're making for future growth. [indiscernible] with strong gross profit growth across the key business lines with IELTS gross profit up 26%, student placement up 69% and teaching up 99%. Group gross profit margin increased to 62%, primarily due to the high contribution from student placement. IELTS gross profit margins increased to 48%, with the expansion largely due to price increases taken and cost synergies relative to the pcp from the acquisition of the India testing business. The EBIT margin expansion to 24.6% was driven by the gross profit improvement. While overhead costs for the half of $167 million included $2.7 million of M&A costs and $5.4 million of unrealized FX losses related to the restatement of foreign currency receivables, contract assets and intercompany balances. The overheads per month run rate, excluding those items on a pre-AASB 16 basis, were $28.6 million. Move on to the Slide 16, the balance sheet. Our balance sheet remains strong with cash of $135 million at the 31st of December. The acquisition of Intake was completed in November with the major movements, an increase in debt of $52 million, an increase in intangible assets and an increase in contract assets from Intake student placements yet to be invoiced. Contract assets overall has increased by $93 million, reflecting the strong growth in student placement revenue during the period. A later billing cycle agreed with Canadian and U.K. clients, and the addition of Intake Education contract assets were included. Contract assets, as they have in the past, are expected to be invoiced and the majority of the cash collected in the second half. I'm going to hand back to Tennealle now.

Thanks, Murray. I'll now move on to the summary slide, Slide 18. The business has delivered record results this half with revenue up 26% and adjusted EBIT up 53%. Strong volume growth clearly reinforces the strong through-the-cycle structural demand for global education and migration. And these record results demonstrate IDP's industry leadership and its commitment to a strategy that continues to build on our competitive advantages. We continue to see a positive global landscape and strong macro conditions with resurgent demand for international study and migration and a highly supportive policy environment. IDP is executing on a compelling strategy that is creating a unique combination of both digital and physical services for our customers through ongoing innovation and disciplined investment. With an unwavering focus on our customers and a clear strategy of combining our trusted brand and human expertise with unrivaled technology systems, I believe IDP is very well positioned to strengthen its industry leadership throughout 2023 and beyond. Finally, I would like to acknowledge our Chief Financial Officer, Murray Walton, on the call, who acted as interim CEO for the period, IDP's global leadership team and its broader global staff. IDP is an exceptional business driven by extraordinary people. It's a privilege to be joining an organization that fundamentally changes the life of its customers through access to global education and careers. I'm excited to be returning to this growing exciting industry, and I believe my experience in the global education industry will enable me to accelerate and build upon the success of IDP's strategy over the coming years. Thank you all for your time today. Murray, Craig and I will now take questions. I'll hand you back to the operator to put them in the queue. Thanks, operator.

[Operator Instructions] And your first question comes from the line of Michael Peet from Goldman Sachs.

Just the first one on IELTS, the sort of 5% growth there versus pcp, obviously off a high base. Is that sort of the go-forward growth we should expect from IELTS now?

Thanks, Michael. I'll hand over to Murray to provide a little bit of color there. But I guess lifting up a little bit, as you saw today, we saw global growth in the IELTS volumes at 5%. What we would say is looking forward, the long-term drivers of growth haven't changed, and we remain excited by the size of the opportunity and the demand drivers, albeit we're seeing some short-term supply chain constraints in some of the markets. I think it's important, too, to call out that, yes, excluding India, volume growth in IELTS was sitting at 15%. In terms of what we see moving forward, I'll ask Murray to cover off that part of the question.

So over the long term, Michael, we still believe that the IELTS business should continue at a growth trend of the 10% that we've seen over the last 10 years. The short-term challenges around Canada in terms of student placement -- sorry, in terms of visa processing and some of the challenges with the Canadian government migration settings, but we certainly believe that the long-term growth over the next 3 to 5 years is certainly at 10%.

So I guess India went backwards a bit, but is that sort of -- as you sort of start to cycle that acquisition? Or is competition -- I imagine there's been a response there. Could you just sort of walk us through what's happened in India a bit more?

Yes. Michael, it's Craig here. So we posted obviously 72% growth in Indian volumes last year, which was a rebound of the COVID or Delta wave. We went into '23 with relatively modest expectations for India, knowing that we would be consolidating off that period, which had pretty much strong pent-up demand. There were a few points below where our expectations were for the period. And the main issue there relates to a softening of sentiment towards Canada, particularly for the immigration component. And we've seen that evident through our general test, which is the one predominantly used for migration. The large backlog of Canadian visas is sitting at about 2 million tests, in fact, 1 million outside the normal service levels, and wait times are in the dozens of months for a migration visa in an economic class. What we've seen as a result of the sort of a pullback of sentiment towards Canada, people not willing to take the long journey, prepare for IELTS, take the test and then sit in the queue without any uncertainty on that. So we expect that to ease up. The macro and thematic is strong. We've got the Canadian government still leaning into migration, but they're undoubtedly seeing challenges in their visa processing system at the moment, which is pretty well documented. So look, we view it as a temporary sort of supply chain bottleneck. Unclear when it will clear. But the macro is pretty strong and the Indian market is attractive.

And just finally, just on that point you raised there about the general test, the approval of a competing test. What sort of impact do you think that will have in Canada on your IELTS volumes?

Look, Michael, as we've discussed, and it's been well documented, the competing test is only for the economic class category. It comes into play later this year. Impact, yet to be known. The equivalences haven't been set. The test is new and is not well understood or marketed in the market. So we have a glide path of impact which, again, is yet to be determined. We're hopeful. We're indeed confident that the rising market environment, the demand for Canada provides ample room for the two players.

Yes. And just to add a little bit more color there, too, Michael. As Craig mentioned, it's new, so watching brief quite closely. However, what we understand is, at this time, the test will only be available on computer, which may impact popularity in markets like India where paper-based remains very popular. And what we look to as guiding is the most recent precedent for the style of events actually occurred back in 2020 where we saw the U.K. government accept three additional tests, Pearson being one of them for migration visa purposes. Prior to this, IELTS was the only test that was accepted. So if we take a look at recent data which is instructive, we can see that IELTS continues to hold a 90% market share for the U.K. visa purposes for candidates located outside the U.K. So that's the current thinking. All of that aside, we will, of course, be responding competitively to ensure we maintain IELTS leadership position. And this is where our innovation agenda becomes really important and is key. So as we roll that unique functionality like One Skill Retake, we believe that will be an important element of our competitive response. And due to that, we're prioritizing India as a rollout market there.

Your next question comes from the line of Piers Flanagan of Barrenjoey.

Just a couple from me. Just -- on the working capital and the late billing cycle sort of in the Northern Hemisphere, is that a new norm going forward? Or is that more specific to the first half?

The arrangements we've got with the U.K. and Canadian clients, this will be ongoing. We'll expect to see invoicing trigger normally in the January, February time frame instead of what we have been used to in the November, December time frame. So contract there will be high. But we've always had a bias for the second half where our collections ramp up in the second half. So that is as we would have expected.

Sure. And then just thinking about the Canada issues over the first half, I mean has there been any change sort of in the second half to date? I mean you made the comment about sort of an IELTS build or backlog, but anything around sort of the visa backlog unwinding?

Yes, I can talk a little to that one. Whilst we are seeing that reported processing times are coming down for student visas, I think the last data point was 10 weeks versus a 12-week average. I think it's fair to say that the sentiment towards Canadian visa processing times is still quite negative and impacting customer purchase decisions. So I think a key issue that still remains is less around the processing times, but more the elevated rejection rates. And so, our current visa acceptance rate for Canada sits at 84% for IDP versus 94% pre-COVID, and the market average is currently sitting at around 50% acceptance versus 70% pre-COVID. What we suspect is we suspect this step-up in rejection rates is a side effect of the government's attempt to clear the backlog, which, as Craig touched on, remains at almost 1 million applications. But having said that, I think the thematic and the long-term structural settings for this market remains very strong. The Canadian government is leaning into migration and looking to, I guess, aggressively resolve this. It's just unclear how long this issue will remain.

Just a last one just on the IELTS gross profit margin, so supported by pricing synergies there in the first half. Looks like it's holding sort of a higher level, looking at the 2 half '22 as well. Can we expect sort of that 48% margin as sort of the go-forward June norm?

I'll let Murray take that one, I think.

So the first half, we had some benefits from some price. We've got some additional synergies in the first half, which, from our perspective, we've got a couple of issues in the cost base, perhaps going forward with inflation in the test day activity and with the manufacture and distribution of the test. And so, I don't expect to see the margin expand. I think the second half will be slightly lower than the first half. But overall for the year, it will still be higher than the previous full year.

Your next question comes from the line of Darren Leung of Macquarie.

I might ask mine sequentially, please. So on the chart on Slide 14, obviously, all the indicators look like they go in the right direction. But I want first to make sure it went happening correctly that the leading indicator to student placement in ANZ nicely back at 2019 levels and that we haven't seen any level of pent-up demand.

Yes, Darren, it's Craig here. We are certainly confident it's back of prepandemic levels. One thing to note in this and -- in the detail is that we're really yet to see the reemergence back to prepandemic levels of India and China. So within that, the composition is weighted to Southeast Asia and particularly other parts of South Asia. But if you look at the underlying volumes, our volumes for China and India are below the levels of FY '19 in a placement and lead percentage. What that's telling us is there's some good momentum to come. Clearly, China is a little unknown. We're early days there, but we're getting some strong momentum coming from India for Australia, and we'll see that in coming periods. So the two big engines, I suppose, if you like, for Australia are really yet to kick into gear. These are indicative forward-looking indicators. But as Murray said, you'll find that the work we're doing in lead prioritization and scoring really will improve conversion through the funnel over time. So these perhaps become somewhat less indicative as we improve that funnel conversion going forward.

And maybe just the second question was really around the multi-destination placement volumes. I suppose that the growth rate just look a little bit slower than what I think we had originally anticipated. I guess the question is, is there still enough confidence in the network or the other big brands in terms of [indiscernible] placements?

Yes, absolutely. If there's a delta to your expectations, it would probably be a couple of thousand in Canada. And we'd point squarely to higher rejection rates, which if you move your 94% acceptance write-down and 84%, as Tennealle indicated during the period, that drops away a few students that we would have, otherwise, had at normal acceptance rates. So yes, the Canadian market is probably the slight difference, a couple of thousand students versus where we were expecting.

Got it. And just a third one, and apologies, I may have missed this earlier, is there an overhead cost guidance for second half '23 or for the full year on an excluding M&A costs and the FX loss basis?

Sorry, is there -- there's certainly a waiting for the second half in terms of expenses. So yes, we did have the M&A costs and the FX loss in the first half. But we've got the Intake acquisition that we took over in November. That's going to add -- we've got the overhead costs from that business in the second half of $4 million to $5 million. And we will also invest in head count and frontline people to make sure that for FY '24, we're ready to take advantage of the increase in demand and student placement. So it will be slightly weighted to the second half in terms of overheads.

Your next question comes from the line of Tim Plumbe of UBS.

Just two questions from me, if possible, please. The first one, Craig, around FastLane. Maybe can you talk about the marketing and getting the word out? What has to happen to kind of get that network effect kicking in, students talking about it online? And then just the second part of the FastLane question, how are you guys tracking in terms of getting to 40% to 50% of those courses for the 61 clients online, please?

Yes. Thanks, Tim. I can have -- I can talk through that one. So in terms of how we're thinking about FastLane, we're really pleased with how the rollout of the product is going. I think as I shared as part of the presentation, we've had more than 7,000 students who have received formal course offers. This is up from 3,000 in the full year for FY '22, and we're well on track to exceed the target of 9,000 for the year that we communicated. In terms of supply, we've had over 75 unis and colleges on FastLane, including 34 in Australia, 35 in the U.K. and 6 in Canada. To your specific question in terms of client adoption, our focus for now is on building inventory and increasing the volume, of course, that are activated for FastLane. I think getting that critical scale, of course, is really what unlocks the customer virility piece that you were referring to. We've had over 1,700 courses activated in those high-volume markets like India. If we look back, I think the targets that we communicated and set for ourselves where we started the year with a target of having what we said was 50% of the courses for which students have applied from Tier 1 countries in FY '22 on FastLane. So if we have a look at where we are currently, we're a little behind that target at the moment. It's currently tracking to about 33% in Australia and high 20s in the U.K. And I think that we've got a couple of initiatives in place to increase that speed of adoption. And where we're really focused is two things. Firstly, it's simplification of the legal contracts to really aid the speed of review and onboarding with universities. And then also adding more resources to client onboarding from our side. But I think it's also important to call out that what we're working with is a, I guess, a university client base that is experiencing very strong demand themselves and have constraints around their employee resources to work through this. So I think overall, really pleased strategically. It remains a key differentiator. The rollout is progressing really strongly. And we continue to be focused on the scale-up of university partners and courses.

Great. Just the other question for me. Maybe a follow-on from the GP margins. Just thinking about IELTS in the second half, as China opens up, is it fair to assume that you guys will get a higher contribution from that historical base China royalty, which should be coming through at 100% margin? And then how do we think about that impacting that second half IELTS GP margin, please?

So the China volume is still not back to prepandemic levels by quite a way. We expect it to ramp up heading towards the last couple of months of the year. It will have a small impact, I don't know, $1 million or $2 million in the second half, but I don't think it's going to change the GP margin significantly.

So more of a GP margin improvement for the following year?

Yes. If we get back to the prepandemic levels, absolutely. This year, we're certainly maybe at 60% of what it had been prepandemic for the full year.

Your next question comes from the line of Matt Johnston from Jarden.

Maybe just first one for me, and apologies if you've answered this already. Could you give a sense or a gauge around what U.K. growth in multi-destination placements look like relative to Canada in the period?

Sure. I'll turn it over to Murray for that one.

So I think U.K. volumes, we had 31% growth in the first half versus the pcp. And Canada we had 23% volume growth versus the pcp.

Okay. Great. That's helpful. And then maybe thinking about the seasonality in the second half skew of volumes, given the delays, how should we think about the second half volumes? Are we back to a pre-COVID SKU of multi-destination business?

So we're certainly heading back to a pre-COVID SKU. But remember that our student placement business for multi-destination is also much larger now. So the U.K. expectation is it will be 70% in the first half, 30% in the second half. For Canada, which is now quite a sizable volume, will be 40% in the first half and 60% in the second half because we have two intakes for Canada in the second half. The U.S., although smaller, is again, very similar to the U.K. at 70-30. So it's probably -- for multi-destination, it's probably a SKU in favor of the first half, just a little.