ADvTECH Limited (ADH) Earnings Call Transcript

Good afternoon, and welcome to our 2023 results presentation. Just a few pointers before we start. Because it is a live webcast, what we'll do is take questions at the end. The line is open for anybody who's watching online to submit any questions. We will try and answer all of the questions. But if we could ask those in the audience, perhaps to hold over questions until the end as well, then we'll take them all and deal with them then. But thanks very much. This is indeed an auspicious occasion -- this is my final presentation -- and the reason is because if the new CEO was going to get his picture up, I had to have a picture up as well. It gives me great pleasure to introduce Geoff who, as you will all know, has joined us with effect and taken over as CEO from the 1st of March. We have been having a handover period. But obviously, it makes good sense for me to do these results. I think we are really indeed very fortunate to have Geoff join us. I know the Board is delighted. He has a fantastic background and experience, track record with blue chip multinational organizations. His expertise in the area that is really going to make a significant contribution to ADvTECH. He has international business experience, strong marketing background and an impressive track record of a number of organizations. So we're indeed very lucky to have Geoff and Geoff welcome. Obviously, he would be available to answer any questions that anybody might have for him at the end as well, okay? So, right. Without further ado, let's move on. And of course, it is with great pleasure actually that I can announce our results for 2023. The top line, of which I'm sure you're probably all familiar with, but a really nice performance for us right across the board. As emphasized, if you look at the divisional performance, where revenue and operating profits up in all categories. We will dive into the detail on each of these divisional results in a little more detail later on. But it really is encouraging that now I think for at least the second or maybe even the third year in a row, all of our divisions have performed strongly and in line with our expectations, so leading to a really good result. Of course, the fundamental driver of performance in our business is enrollment growth. That is probably the most critical factor that we have. And as you can see, we have continued the trend. This is the results -- the enrollment growth that we experienced for the 2023 year that underpins the results that we're seeing now today. So in schools in South Africa, we had a really good 6% enrollment growth, 10% in the rest of Africa, giving us 7% overall in the schools division, tertiary at 4% and overall total group enrollment at 5% for 2023. What I am pleased that's in the record book, that's done. 2024, of course, is extremely important for us, and I'm really delighted to report to you that we've had another strong enrollment season, okay? Schools, again, another good performance at 5%. Schools in the rest of Africa are at 4%, probably a surprise in a sense because we do anticipate that's going to be the engine room of growth in the future. But there are some very good reasons for that, that I will explain a little later on, and we do anticipate that that's a short-term aberration overall. And as I say, there are good reasons for it. I'll explain those a little later. So schools division overall at 4%, tertiary up with a really good enrollment period at 7%. And again, you can see the wonderful balance that we get in our business, overall enrollment growth up at 6% versus last year's 5%. So all in all, ADvTECH in good shape and that enrollment growth for 2024 is extremely encouraging here. I think another key feature of the results for us is the fact that we've had good margin improvement in the critical areas, something that we set out to achieve and has certainly been delivered over a number of years. Again, we'll look at the margin by division in a little more detail later on and show the progress that we've made. I think all of this is particularly pleasing, given the operating environment that we are in. We all know that the South African economy has underperformed by any measure you choose to use. And the tragedy, I suppose, is that as we look forward, we don't see much changing in that area. All of the forecast predictions for the economy to grow are at and around the 1% level depending on where you read. Unemployment remains unacceptably high, something that I want to touch on in this presentation as well. And inflation, not sure that we've beaten back the monster yet. But perhaps after some relatively good news there, the most recent readings was slightly up. We do expect that perhaps to plateau, and we do hope it will decline. But of course, one can never be certain, but still running at relatively high levels. On the other hand, we see Africa, not without its problems, but what we do see is significantly higher levels of economic growth. The GDP is somewhere between this 4%, 4.3%. In fact, Didier and I were looking this week, I think, at Kenya's revised forecast from 6.1% up to 6.3% GDP growth. With that South Africa could have achieved such levels, that would be wonderful for us. So we are confident that all of the key drivers of our kind of performance in our sector and our business are really positive in the rest of Africa. You look at population growth, you look at urbanization, you look at the fact that there are governments that battle to provide quality education. And on top of that, you overlay good economic growth. We are quite confident that if we're careful and selective, that there are enormous opportunities for us in Africa. So we are and remain quite bullish about how we can actually realize those opportunities and continue the good trend that ADvTECH has established. What are the drivers of private education? Well, I think it's well recorded. And I'm pretty sure that everybody is well aware of the fact that the public sector really is battling severe headwinds. For some time now, there has been significant concern expressed about public schools and the quality and the standard and the stat there refers to the fact that we ranked third-last out of 64 countries in math and science. These sort of statistics are well represented, and I think are understood. And the tragedy is we don't really seem to be making any progress. We celebrated the fact that the matric pass rate was higher this year. But actually, when you start to take into account how many children have dropped out of the system before they even got to matric, it's really not something that we should necessarily be celebrating as a country yet. On the other hand, our higher education system is also starting to show signs of great stress. And we often say within the business that they are sailing into the headwinds and the tailwinds are behind us. I think if you look at these degree completion rates in the public sector, that's actually -- for those who complete qualifications in the requisite time. So in other words, if you were on a 3-year undergraduate degree, you complete it in 3 years, you can actually see that those percentages are really low. For us, the [ IRE ] substantially higher. We are in order of magnitude, better in terms of people who qualify within the defined time period. Still not, I think where we would want to be. And if one compared globally, that's probably on the lower side, and we've got work to do. On the other hand, if you think a great number of those students of ours actually come out of a public system that's truly battling, then I think it's understandable. But what this represents, of course, is the fact that the quality of the education, the student-centric approach that we take is substantially better, I think, than students could normally expect, generally speaking, in the public system. And I understand there are exceptions by location, by faculty. But overall, as a system, we can see the problems that the public sector faces, okay? So not surprising then that we've seen over, quite a significant period of time now, a rapid growth in the private education both in schools and in higher education as parents seek out better opportunities for quality education for their children. So, we are lucky. We're very fortunate in a sense is that what is essentially a negative for the nation ends up being a positive driver of our business. And despite a very tough economy, it just goes to show how much people are prepared to sacrifice to ensure that their children do get the right quality of education. Another feature that we've been operating in, and I'm sure is kind of topical and people would want to understand is the impact that load shedding has on our business. Again, we're quite fortunate. We are not significant users of power. On the other hand, we do depend on reliable electricity and more and more so with our information systems. On the other hand, we've done and put into place, are some, I think, really quite exciting and innovative initiatives that reflect our obsession with trying to control every single element of cost and ensure that there is no wastage or duplication within our system, and we use that to try and drive the value equation for our parents, particularly in taking responsible pricing level. So one of the most exciting initiatives, I think, is through our Properties division and using technology, we've centralized the ability to monitor and control electricity and water usage through the Internet of Things. And you can see, in doing so, we can monitor every single one of our quite considerable numbers of sites across a multiple of geographies, and we can understand -- we can turn off lights, we can turn off geysers and we can monitor usage in terms of water and identify where there potentially are leaks. And you'll see some of the stats there as to kind of the productivity gains that we've had. We've reduced our electricity usage by 7%. Our water consumption by a similar level on a per capita basis, that actually represents quite significant productivity gains. So it's an example of how we're managing within these kinds of scenarios, not least to say is that actually, each of our sites has a generating capacity for load shedding, so we can continue operations even despite the outages. And we are now -- we finished piloting in the first 5 sites, micro [ Stoffel ] solar. And now that some of those regulations have changed, we can take advantage of being able to put power back into the grid. So having done those 5 pilot sites, we now are in a much better kind of position to understand what the implications. I must admit, I think the latest news was that we were hoping we might be able to sort of classify into 3 categories and roll out rapidly. It looks like every single implementation is going to have to be done on an individualized basis because there are some unique elements to them. However, the plans are well advanced, and I anticipate that we'll be making some very good progress in having solar power available to most of our sites within a reasonable time period. Okay. So our financial performance then, and it does give me a pleasure to show our revenue continuing the trend that we've had for the last few years, 13% up, driven primarily, as I say, by volume and responsible pricing. Of course, our drive for efficiency, elimination of wastage, leveraging the scale of our operations and the operating leverage that we do get with good volume growth, we've been able to show, I think, really good operating profit growth and continuing the trend that we've had over the last 4, 5 years, okay. Pleasing, as I said already, is the operating margin, group margin, up another 1%. But I think what's important is just to try and understand how the various divisions contribute to that because, of course, the resourcing revenue, particularly in Africa has grown so much, and it is a unique type of business that tends to have an impact on skewing our group margin. You can see that the educational businesses, the margin is up at 23.8% versus our resourcing business at 6.3%. And again, just to remind, that margin is low. We are required through IFRS accounting regulations to recognize the revenue of the payrolls that we run on behalf of the companies that we represent through the geographies of Africa, which means that the margin on that business is lower. So that's the difference. But if we split it out, so we can understand the components of our business and how they perform. If we look at the educational businesses overall at 23.8%, you can see the schools division at 21.4% and tertiary at 26.3%. If you look at that performance in tertiary, it's really positive. Maybe a little bit too much in the margin there as we've recovered from the debtors problem that we had last year, but then had conversely the 2022 is probably a little bit lower than it was because of that same problem. So actually, it's still the guidance we give is around that 25% to 26% level. Every time we talk about that margin, the tertiary margin creeps up a bit, but it really is very comfortable. We're particularly proud, and it may be a little bit overrepresented because of the debtors recovery. If we look at the schools and split it out now into South Africa and Africa, again, South Africa making good progress, another 1%. If I had to express some concern, I would actually say, I'd like to see that moving even more rapidly up, Mike, Maurice Christa, we want to get to that mid-20s. On the other hand, it is a really solid and a terrific performance. But I think the remarkable figure in there is, of course, the schools in Africa. If you look at where that margin is at now 30%. We've always said that we believe that the Africa business ought to be more profitable in reflecting the risk that we have in some of those geographies in those markets. But this business division of ours is truly starting to deliver. So well done to Jako and his team, it's impressive, and we do believe that, that positive trend will continue. If we look at the contribution of revenue and profit by segment, again, the sort of skewed revenue contribution by the resourcing division is the reflection of that payroll that we recognize. But nevertheless, it shows the growing business in Africa. And again, a nice healthy balance between our tertiary and our schools business, both in terms of revenue and profit contribution. So we're very comfortable in the sense of that. All of this means that our earnings per share is up 20%, continuing the trend of the past years, the compounded growth rate and earnings of 25%. And perhaps it's almost sad that we feel the need to show this slide, but what we are very pleased about is that even in U.S. dollars, given the volatility of our currency and the volatility and experiences that we've made really positive and I think good progress even measured in U.S. dollar terms. So up 11%, compounded growth rate, 16% over the time period. So I think giving a measure of the value and the worth of the business. The divisional performance, starting off with tertiary, as I say, another great performance from a really solid set of well-positioned brands, all of which are performing well and all of whom I think have some wonderful opportunities as we look forward. It's a comprehensive portfolio of not only qualifications, but modes of delivery. You'll remember that we say anytime, anywhere and any place of the students choosing, we would desire to deliver quality education and our portfolio of brands allows us to do that right across the spectrum of qualifications. So revenue up 10%, operating profit up 16% and the margin at 26.4%, a really good performance from a division that has performed consistently well now for a number of years. Okay. Enrollment growth, we're up 7%. I'd say a really good enrollment period for us in 2024. So we can look forward to a solid performance this year as well. I know this is of keen interest to people. Our online enrollments are showing growth, 17%, and you can see the compounded growth rate in online. It is -- one of the key features that we're finding in online is that there is a preference perhaps undergraduate degree for campus life and certainly a lot of demand for post-graduate qualifications in the online space. And I think that makes great sense. -- holistic education experience is often one which is campus-driven. If you have to do it online, that's fine. But in many respects, the learning environment is enhanced by a campus type environment. I'm sure all of you who experienced similar perhaps would understand. On the other hand, once you're into the work environment and you want to enhance your qualifications and improve, then online is a perfect way for you to follow post-graduate qualifications. And we're seeing that sort of shift in trend in terms of our online versus campus environment. So healthy growth. And to remind you that every single one of the new qualifications that we accredit, we do so for both contact and distance. Okay. I think to remind again, as I look back, we've had quite a significant amount of faculty expansion. The law faculty was introduced, education was introduced. And more recently, engineering and health sciences, we've expanded into. So we've seen faculty growth, which provides opportunity for more organic growth within our existing businesses as well. As I said, we have a comprehensive suite of programs from skills developments right the way through to PhDs, and we provide those in every single mode of distribution. So it really is a comprehensive offering in our tertiary business. And what's more is we're constantly building on that offering all of the time. You'll see here we have some 71 programs in the pipeline to add to an impressive 229 full-time qualifications that we already offer. So as we expand, as we grow, we offer further qualifications right across the range. And there is a fair amount of baked in growth for our tertiary division with this kind of a program alone, okay. I wanted to touch on how we're starting to really utilize the technology in our business to a much greater extent. It has been interesting for me to observe – so the development of the organization over time, getting structures, processes, systems right, capability, resources have grown in terms of the capabilities and competence. And it really is quite pleasing for us to see how we're starting to embrace new technologies and actually utilizing that in the delivery of education. More recently, Rosebank College has started to use AI to help in terms of the development of its online or video-supported programs for blended learning operations. And I just wanted to give you an indication as to how this works. At the forefront of this cutting-edge approach to education, Rosebank College is the first institution in South Africa to utilize generative AI to create video tutorials for students. While other colleges and universities are still grappling with the conceptual ideas of AI, Rosebank is actively implementing them and in the process, gaining a considerable first-mover advantage. So how do we get 800 modules to market? Traditionally, creating video tutorials was a labor-intensive process; hours of setup, recording editing and post-production. But now enter Synthesia AI. Comparing the traditional recording studio to Synthesia AI, the difference is clear. The future is faster, more efficient and tailor-made for the digital age. See, that was produced using the AI tool with an avatar. Gosh, I'm really up to speed with all the terminologies, okay. And I think it's really quite exciting. Look, we are trialing and we're learning all of the time, but this is really -- you can see, it would take us up to 3 weeks to produce a module using a studio environment. With the AI, we can do it in 4 days. We have, as you've seen, a significant portfolio of products. We have some 800 modules that we're looking. Imagine if each one of those took 3 to 4 weeks to develop and the cost you can understand versus using the AI tool and with pretty -- I think we are using a lot of student feedback. It's quite interesting, and I'm looking at Linda here because I think I'm going to quote correctly. Interesting to know, [indiscernible] was a white woman with an American accent. Now we actually surveyed and this was the feedback from students that, that was deemed to be the most appropriate character that they thought was most convincing. Am I right in that? Okay. So we're working with students, we're launching modules, getting feedback, but I think it's really quite exciting how the teams are embracing the new technology and utilizing it for productivity gain, and I think enhancing the quality and the experience for the students. So it's an exciting development. Okay. In addition to that -- gosh, this certainly is part reminiscing. I can remember, I think it was back in 2013 when we actually produce the CapEx to -- which was approved for our learning management system. And we went with Blackboard, which was state-of-the-art propriety software and the most appropriate at that point in time. And ever since then, we've been working on Blackboard. I must say, we were early in our journey. And whilst it certainly was innovative -- and by the way, if we look back at COVID, one of the reasons that we enjoyed so much success, and we're able to switch 70,000 students online in a matter of 3 weeks was because of our investment in LMS, in the tertiary and the Blackwood tool, and we were able to utilize that to support in the schools division. But actually, as life goes on and things progress -- gosh, that's poignant, isn't it? -- certain assets become less relevant. And the team have found a more sophisticated, more flexible and altogether, I think, more engaging tool in terms of Bright Space. And so the decision has been taken to migrate from Blackboard into Bright Space. And it's a project that they've really embraced with a lot of enthusiasm. I think there's been phenomenal progress made. That tool, much more flexible, adaptive and will allow us to do so much more, which is in line with our strategy of developing personalized learning plans and utilizing AI and tools to enhance that learning experience. So altogether, the students' experience interaction with Bright Space is far more compelling, more enjoyable and more informative than at the end of the day, I'm sure the learning experience will be significantly better. We've got a comprehensive plan for rolling that out. And as I say, it's directly linked to our vision of having a personalized learning plan for every single student in the ADvTECH system. Okay. So I think that's another exciting development for us. Again, just touching on the opportunities that exist for tertiary, I've already spoken about how we've done the faculty expansion and these sort of professional qualifications. And just to give you some idea of a relative short space of time, what kind of growth we're experiencing. And we've seen a distinct shift perhaps from what would I call it, the more general type of qualification to more specifics that are likely to lead to good employment opportunities. I think that's quite obvious, quite what you would expect. Education is expensive, and people are making the best bet on that education that they think will earn them a good career and job prospects in the future. So it is pleasing to see this. And of course, we've matched it in terms of our investments into these categories. And we do believe, as you've seen from that program extension that we'll be able to continue to develop in those faculties and maybe even other faculties. I want to talk today about a couple of areas that -- and those in the business will know I'm quite excited about and quite passionate, but I do think it represents great opportunity for ADvTECH as we look forward. And that's quite a side perhaps from this geographic expansion, which, of course, remains a key objective for us is to take our brands into Africa. We do have, I think, one of the most exciting developments. We're looking at opening Rosebank College in Ghana. We had hoped to do it early next year, but I think we're going to push that project out to ensure that we do it correctly. But that will be quite exciting as we take the blended learning Rosebank college experience into Ghana into ACRA. We've already identified a location. Stoffel, we actually concluded the lease agreements or not yet -- not quite yet. Okay. We're very close, good, okay. But it's an ideal location. So we are quite far down that route. And I'm pretty sure that, that will be brought to fruition and will be an exciting development for ADvTECH. But if we look at this trend to employ -- I want to share a slide with you. The unemployment stats in South Africa are nothing short of horrendous. And I think you all appreciate and understand that, okay. It's my understanding and my information, maybe out of date, I can only imagine that it's probably gone up. But my understanding is that we need GDP growth of at least 8% to achieve the labor absorption rate. In other words, that would just take care of those new workers coming into the market. And as I said, my information might be slightly out of date, but I doubt it's anything less than that at this point in time. And as we've seen, when was the last time we experienced 8% GDP growth? And I don't think that many people would be prepared to make a bet that we might in the near future. So we're actually staring down almost an insolvable problem. However, if we look at what's happening in terms of around the globe, there are amazing examples. In Egypt, for example, it is the second largest contributor to the Egyptian GDP is the repatriation earned by the diaspora who are working on expected conditions and that amounts to something like USD 24 billion. So Egyptians who have moved out of their own home, moved to other countries and repatriate earnings on that basis. The Philippines is another very good example of a massive diaspora that are returning something like $40 billion to the Philippines as they found gainful employment outside their own country. So it does beg the question is, well, if we have an insurmountable problem in the sense of GDP growth in this country that's never going to help us to solve the unemployment crisis, why don't we start looking at this as perhaps an area of opportunity? And why don't we actually start trying to train to employee and skilling people, that they may well be able to take those skills and seek employment elsewhere. The benefit to the country will be enormous in terms of the repatriation of funds. And I would bet my bottom dollar that 98% of those people would want to return to South Africa at some point in time, and they will come back to this country with a better level of experience and skills in any event. So I can't understand why as nation, we don't try to follow such a strategy. If we look at what that might mean to us -- and by the way, nursing is a classic example. I'm sure you've probably heard that there's already a raging debate about the shortage of nurses in this country. On the other hand, most countries from the United States, Europe and Australia experienced shortage of nurses. Already, you can see the statistics; 16% of the nurses in the United States are actually migrant labor, who have actually moved there to fulfill these positions. And they see the demand actually continue to increase. If you look at the national health in the U.K., we know, okay, there was an article in the paper not so recently that they've actually virtually taken up the majority of nursing resources in Ghana. They certainly travel here to South Africa to recruit experienced nurses to take back to the national health system as well. Likewise, in[ EMEA ]. So there is demand. And if we skill people, there is an opportunity for them to get gainful employment. 1 in 8 nurses are working in a different country to where they were trained, okay? So this is a practice already. And if we could actually just start to open up the opportunity to train nurses, I think it represents a huge opportunity for ADvTECH. And by the way, I'm very pleased to report that brokered by one of our shareholders, the IFC, we are having discussions with large multinationals as well as local corporations, okay, in terms of setting up a health care faculty or facility where we could look at training, not only nurses, but health care workers in general. Okay. We have a long way to go. As I said, this is some of the blue sky, but I think there is an enormous opportunity that if we could get behind, I think it might actually will help society in South Africa to start resolving this problem of unemployment. So there's one area. The other area is this whole cruise liner. And I know Rene is sitting here today. She's just frightened me with a number of jobs that she says she now has in the book. We started to explore and investigate through the cruise liner industry, which is amazing if you look at these stats, okay? A 155 billion sector of the economy, 1.2 million jobs and recovering after the COVID pandemic, continues to grow. Passenger volumes from 2023 are expected to be 35.7 million in 2024. So this is growing. 14 new ships were brought into service in 2023, okay. The stat is that for every 24 people who were on a cruise liner, that creates one full-time job. So if you say that's going to go from 31.5% to 30.7%, -- by the way, that's 175,000 new jobs created as a result of a growth in that industry. And these are not particularly high skill jobs. They do require a level of skill, but they're in this area, chef, cook, waiter, bar service, guest service officer of food and beverage, which is ideally Capsicum and our hotel school are ideally placed to train, and we have started this initiative to work with the cruise liners and the placement agencies to start to uncover some of this opportunity. As again, I was checking with Rene, the status is that there is one cruise liner that has indicated to us that they are looking for 600 people a month. I think you mentioned to me that they have 13,500 jobs that we're looking to source, okay? So again, this to me is one of the ways which we can actually look to try and solve some of the unemployment problems in South Africa because our own economy certainly isn't going to do this. And again, I think ADvTECH is perfectly positioned to take advantage of this kind of a development. If you look at the salaries that can be earned on the cruise liner versus what those equivalent jobs we did in South Africa, and take into account that as long as you're outside of the country, that becomes tax-free and also take into account that you have no living expenses while you're on board the ship and factor in meals and accommodation are provided, you can start to see that financially for individuals, this makes great sense. Okay. One of the problems, how do the students who would be interested in these kind of opportunities get funded? That remains, as we said, demand is not the problem in South Africa, affordability is the issue. But it's a wonderful opportunity for our tertiary division. We are really just making the first baby steps, but I think it's very exciting when one looks at our division as to what opportunities there may be and what we could realize. Okay? And that goes without saying -- without telling you how busy we've been just in our own home market; we acquired a new building in Pretoria. Just to give you an idea, I'm sorry, my point isn't very strong. And in fact, it looks like it's -- maybe if I took my finger off it -- that was our building in Pretoria and we bought this building, which we are now busy refurbing and getting out of what -- we've in fact completed it. Apparently -- I'm sorry, this isn't the best we've really battled to try and give you a picture that kind of really does justice to the development. But we have created a hugely exciting student environment. Linda tells me that our new registrations in 2024, were standing there, taking pictures of themselves, posting on social media, immensely proud of the facility that they go to. And that is our desire is to try and create institutions, learning environments where the students cannot believe what fantastic value they're getting and the kind of environment that they're actually in. And I think we have done quite well in differentiating ourselves in that area. This is the development of varsity college in Pretoria -- very exciting, and I'm pleased to report that both Rosebank College in Pretoria, varsity college in Pretoria have done exceptionally well in their enrollment cycle, and we attribute some of that success to the new exciting environment that we've been able to create and provide. So that this justification for the CapEx [indiscernible]. Varsity college waterfall, similarly, and thanks to the property division, they really are able to execute a significant number of projects and develop these, I think, very exciting student environments. We've opened a new Rosebank college in Mbombela. And I think we've had a good enrollment cycle, Linda? Yes. So ahead of our expectations there. So another growth opportunity. There's the inside of that. And as I say, our desire is to try and create these exciting student environments where they can't believe what they're getting for the kind of price that they're paying. Our Rosebank College, Braamfontein, I think I have shared this issue before, but we did have some questions more recently. This is the campus that we bought, and we've now bought that building, okay? There it is. Our vision is that we will own this entire block, and we will turn it into a student precinct over time. That building there belongs to VITS, it's a VITS residents. We have had some discussions with them about the possibility or opportunity to do a property swap because it's a little out of the way. And as I said, sitting on our site. There's no progress on that yet. But as I say, the vision is for us to have this entire block in Braamfontein, and then develop it as a student precinct. One of the first phases of that is to reskin this building. That's the existing building, and this is the architects rendition and we'll be starting that project mid this year, okay? The CapEx still has to be signed but the costings and the groundwork has been done. And just to give you an idea, this is the sort of environment that we want to try and create. So, I think any student of Rosebank college would really enjoy and revel in that kind of environment and how proud you might be of your institution if that's what we are able to deliver, which is our goal. So very exciting developments from the tertiary division. And all of that and increased margin, fantastic business and well done to the tertiary teams. If we move on to our schools business now, and across the board, a really good performance. Our portfolio of brands is really delivering. And I can't speak highly enough of how the structure, the management teams are focused, understand what the key drivers of their business are. The metrics I was reflecting with Didi, the management meetings that we attend now, the presentations are exceptional, where each of the operating functional heads of the brand management team truly understand what drives their business and are on top of the information. And all of that gives me great confidence that we're going to continue to enjoy success in the schools division. It's a comprehensive portfolio. I think it's very well positioned. We are really able to optimize the markets by having these kind of brands, key focused at specific segments. Again, underpinning our growth by the schools division, operating profit up 21%, the margin moving in the right direction. -- in South Africa, continuing the trend. And as I say, I'd love to see that margin a bit higher Mike, Maurice, Christa, -- but it's getting there. It's the right direction. Schools rest of Africa, yes, I think what we need to do is to set up a little bit of internal competition between South Africa and the Rest of Africa on that margin. And then again, just to share with you the slide, I know there is always a question around what about financial hardship, what about immigration and how is that affecting your business? So yes, this shows the impact, both immigrations and financial levers are up versus the prior period, and yet we have still reported positive growth, okay. And again, another key feature or another way to look at this is that I think this started in the COVID year where the tradition in our business was that we would start the year with a certain number, we would see some degree of erosion, we would end the year with a low number. In COVID year, that turned around. And in fact, we had more students in our system at the end of the year than we did at the start of the year. We attributed that to the quality of our online offering and the fact that the organization was able to respond with speed in terms of putting online education and the kind of past support and program quality that we put behind it. But what we've been delighted with is that the trend of ending the year at around or even sometimes slightly above what we start the year has continued. So if you look at our numbers, in 2022, we started in February [ 36802 ], and in fact, we ended the year with some 370 more students than we had at the beginning of the year. In 2023, our numbers from the start to the end have only declined by 50. So yes, we are seeing levers through financial. We are seeing levers and immigration. -- but the brands and their value proposition and the team's effort at providing quality education in a value equation that's meaningful, I think, is really holding up in the market extremely well. This is very positive. And so when we start the new year on 41,000 2024 figures, our overall volume growth is at 4.4%, okay? So I think it's a really good indication of the health of the brands and their focus in terms of delivering in the market proposition. I said I would spend some time on Rest of Africa because if there is a question around our volume growth, then it must be while we talk in growing terms about the growth opportunities in Africa. And certainly in the past, we've had double digit. We'd like to see that continuing, okay. But this year, at 4%, but there are some very good reasons for that, okay? Firstly, we'll explain -- we closed 1 school in the west of Kenya in Kisumu. Secondly, we've made a strategic switch into the Cambridge curricula at – in [ robin ] McKinney. And then finally, the Gabarone International school, that has been a phenomenal success and is now pretty much at capacity. In fact, it is at capacity, I guess. And therefore, the impact that, that's had in our numbers growth over the past few years is now negated to some extent. Just explaining a bit more. As I said, to your Kisumu in the west of the country, there's Nairobi, it's on the shores of Lake Victoria. And what we actually had was 3 or 4 sites within Kisumu itself, one of which was in Kibos, which was a boarding school. Now the roads to Kibos were notorious, something like those in Sandton. I couldn't resist, sorry. And so it's difficult to get to. The boarding facilities to tell you the truth, were probably not what we would want and the investment required for us to put it up to the standard that would be acceptable from an ADvTECH perspective wasn't warranted in terms of the size of the site. And so we've made a decision to close that boarding school down and consolidate into Kisumu itself onto the sites we've got and we'll increase at those sites. However, we have lost those students that wanted and it is a preferred option amongst some of the population, in Kenya. They want a boarding school environment. It's very important for them to send their children to a boarding school. So obviously, those people have looked for alternatives, and that had a negative impact on our numbers in Kenya. In terms of the success of the Cambridge curricular, I think we described to you that during the COVID-pandemic, -- we were not able to provide the local Kenya qualification online. So what we did as a substitute and to try and ensure that the children weren't kind of lost in their academic career, we supplemented with Cambridge, which we could support and we could provide online. Well, what's happened in Kenya is that there's been quite a shift where the Cambridge option is now the preferred option as opposed to the local curricular, which has now moved towards an outcomes-based kind of criteria and some of the parents are a little suspicious about what that might mean, whereas the Cambridge system, of course, is internationally recognized and guarantees you access into an international university and certainly into a local university, so why not do the Cambridge system. So we've seen that shift in terms of what the market is looking for. And in order to be able to accommodate the growth in the Cambridge, we've had to close the old high school that was the Kenya curricular, and that has had a negative effect on some of the numbers in this year, okay? But what it does mean is that the Cambridge curricular is an opportunity for even enhanced revenue per student and an improvement on that margin. Okay. That was easy. However, just to give assurance, we do still see significant opportunity for growth, and we say this is an aberration, and we all back on that kind of, I would hope, if not double digit, then very close to double-digit growth in our Africa business. We have approved already CapExes to increase expansion at McKinney, which is, as I said, that will amount another 8% and 4%. We are currently investigating other opportunities, which I cannot share any more detail at this stage, but that would represent quite a significant jump in our Africa business, too, and nothing is finalized or approved, but the team are busy working on those. So again, we have confidence in terms of our Africa business looking forward and with an additional 7%. So we're actually saying that just increasing the capacity, there's 11% additional capacity at the moment, which is guaranteed, if you like. And there are some exciting plans that we hope the management team will deliver, okay? Here you are [indiscernible] I'm creating a road for you back. I just wanted to talk now about academic excellence and our commitment within the business to academic excellence. And we've been on this journey for a while now, but we are now really starting to be able to show the clear empirical evidence of our focus on academic excellence and what it's doing in terms of our competitive advantage of our numbers . Starting with our junior colleges, which is one of our unsung brands, it does a phenomenal job. I've never seen such a dedicated management team. They are amazingly enthusiastic and deliver so much with so little, but it's wonderful. And what we started to do was to work on the importance of early childhood development in the academic career of a child is absolutely critical and starting to be understood more and more. Well, with the junior colleges initiatives, what we've been able to do now with their kind of programs and the academic support that they put into place, now we can use the MAP system, okay, which is the academic performance assessments as an international benchmark. I'm going to show you some stats a little bit further on of what we're using and how it's driving decision making in our business. But we're now able to obsess the performance of these students when they now move into the ADvTECH system. And we have empirical evidence that says the students that come through junior colleges, when they actually move into our ADvTECH schools, are at a 15% advantage in terms of their performance in math, 13% in terms of English, and 88% of them have a higher reading capacity than the average that move in. So here is empirical evidence for parents as to why they should be sending their children to a junior college. And I think it's a powerful argument and something that we now need to build into the communication. And I know that's something that Geoff will certainly be paying specific attention to and assisting the businesses and how we actually communicate this message more powerfully going forward. So it's a wonderful example of the real value that we add. Likewise, in Evolve, I think when we launched Evolve, we explained that this is a different school, okay? And the whole concept of Evolve is based around the mastery of skills, not on chronological knowledge age. So what happens is that it's an MIT developed system. What happens is that the child in order to progress has to demonstrate that they've mastered that concept and they move on to another. If they don't, they reinforce okay? And therefore, the limit and the potential of the child is not intended by the chronological sort of Grade 1 and Grade 2, Grade 3 performance, but how well they're doing academically in the sense. So this is our first IEB exams in the online space. And you can see how well we have performed. So this is our pass rate at 93% and our bachelor pass rate for an online school at 77%. The IEB average for online school is 89%, we're at 93%. Bachelor pass rate, 65%, our pass rate 77%. On the national curricular [indiscernible] ones, those averages are lower, and so we obviously exceed it. If you look at some of the other competitors in the online space, if you look at the UCT offering, 70% pass rate versus 93% and only 29% bachelor degree pass rate versus our 77. Brain line, we could not get information on their bachelor degree pass rate, but we beat them on overall pass rate and even an impact. Again, we couldn't get their overall pass rate, but we beat them on their bachelor pass rate. So I think here again, strong empirical evidence that the Evolve offering is significantly different and does offer an advantage to those who enrolled. And I'm pleased to see not only that, but the retention rate for an online school is around 83%. Am I right, Chris yes? Which we believe it's hard for us to get an industry standard, but we believe that's exceptional. You can imagine, to leave a school, the decision to leave a school, a normal brick-and-mortar school is quite difficult. You have friends. It's probably your chosen option, or on your route, it's convenient. So if you decide to leave in a brick-and-mortar school, it's quite a tough decision, not so much with an online. You can move in and out of online quite easily. So to have an 83% retention rate, we think, is an exceptional performance. So Evolve is starting to deliver in the areas where we would expect it to. So another example of the commitment to academic excellence. I've spoken in the past about our ADvLEARN, our investment in AI and the software, and we're working specifically with the development team to make a unique tool for the ADvTECH system and how we're embedding that into our -- I probably won't be able to do justice to what this has the potential, what it's doing currently to our business and what the potential is. And I have spoken to Geoff about the possibility of setting up a specific Investors Day to actually do a deep analysis of what we're doing in this area of AI and the personalized development plan for people to better understand it because this is probably isn't the forum to try and cover it. But suffice to say that this is where homework is set on this tool, the children do the homework. It uses the AI technology to then again, if they show mastery, move them to a higher concept and if they don't, to repeat that kind of learning information, where we're seeing great value out of this tool is that the information is available to the teacher on a dashboard immediately as to which children progressed where, what and which concepts we found difficult. So the teacher can now redirect their learning and be much more efficient in helping the children to progress. but that's not all. We get a dashboard, okay, of which are the teachers right across the ADvTECH system are the most successful at delivering those concepts and getting the best results, which teachers may well be struggling. And we're then able to direct the attention of the central academic team to correct that problem. So the power is in the data and in the information that we are actually gathering and assembling as a business. And of course, that is a cumulative effect. I mentioned the MAP, measuring academic progress. This is an international benchmarking system. [ Ders ] remind me how many globally, is it 14 million, did you say? 11 million I added a few. 11 million is the database across 150 countries. So we're able to measure international norms. And what we've been doing now for 3 years, okay, is testing in these various subjects, and we're now building up, as you can imagine, the information base that allows us. So the first observation that we have is the progress. So we started this process when this cohort were in grade [ naught ], we measured them, okay? We then measured again in grade 1, and we measured in grade 2. And we're now able to demonstrate the kind of progress that we make, of course, and we benchmark this against in. Likewise, why this starts at 3 is because we measure this cohort at grade 3. And now we've got the grade 4 and grade 5 results and likewise. So this is powerful information. Firstly, we're able to assess are we making progress in terms of the potential and the learning of the set. We can benchmark it against the international standards. And again, as I said, we're building up this database of information that will help us enormously. And I don't think there's any other schools group or basically any other educational business that has the power to utilize the technology in this manner, and I do think it's going to bring a clear competitive advantage to ADvTECH in the future. And here, some of the results, again, if you look at our matric pass rate at 99.7% versus 98.5%. I must say this excludes, by the way, the Abbotts College. This was Abbott's colleges first year, the degree pass rate at 93% versus the IEB average at 88.6%, Okay. Now correct me, I'm going to just put you on the spot again, [ Des ]. We try to compute what percentage of the total IEB or ADvTECH students. I think it was 20, it was above 20%. So obviously, as we get bigger, we're going to tend to the average, it's going to be harder to be. But the issue is this is that although we're quite a significant component, and I think it's somewhere in the order of 25%, I was going to say 50%, but anyway, it is quite significant. And as we grow in scale, will be harder and harder for us to beat the average, but the truth is we're delivering really good performances. Our Cambridge International also results are phenomenal, okay? All of the students at Crawford International wrote the A level Cambridge exam were accepted into international universities, okay? And again, hot off the press, this arrived just yesterday from Crawford, it was voted the best academic school in Kenya. So you can see how this focus on academic excellence is central to the thrust and I believe, contributing significantly your reputation and as a result, enrollment growth. Okay. And I think we're only starting to scratch the surface in terms of how we're building significant advantage in our focus on academics. Okay. So just back to some of these capacity stats. And you can see at 83% operating leverage, we've come from 79, 82. Obviously, a new school in Resla was on board, but we're only at 68% of ultimate capacity. So plenty of headroom opportunity to still enjoy that operating leverage as numbers full and not least of all, we have more opportunities. New schools, Morningside, a new bridge. We have piloted the bridge in Beverly. This is an opened very successfully exceeded our numbers and expectations already a really exciting environment. It's a lovely looking school, looking forward to the success that Resla has been phenomenal. We were very proud of the investor but I think you've outstripped the investor, have you not Mike, Christa? -- okay? We developed Phase 1, and I think Stoffel just had to leave the construction crew on to do Phase II immediately thereafter that's how successful the enrollment has been. So a phenomenal success and the school has, again, I think, now established a new record. Pinnacle Ridgeview exciting new development to happen. We have Charter House, which is only a preprimary and a prep school and therefore, quite limited in a sense of what it could offer. We've managed to acquire a sizable piece of land next door, and we will be building a high school and repositioning this as Pinnacle College Ridgeview -- and I said to Stoffel. -- if the building ends up anything like the architecture additions, I'm quite sure that that's going to be Resla isn't it crystal... There you get... Lovely another new project, okay? Moving on to resourcing. And as we say and somebody quoted back to me yesterday, it's a tale of 2 cities, okay? Our South Africa business has an ending admiration. You can imagine what it's like trying to run a resourcing business in South African economy, which is performing the way it is and where the employment crosses where it is as well. And they have an incredibly tough time. And I think we have done an outstanding job despite the fact that perhaps the financial results don't do them justice at this point in time. We are very appreciative of what a tough environment they're actually operating in. On the other hand, the senior team at resourcing not to be congratulated on brilliant execution of the strategy to go and look for other geographies and other markets because that has certainly paid handsome dividends for. Okay. So overall, the resourcing division, a really respectable set of results. Of course, in terms of South Africa, the picture is somewhat different. But we do have to point out that we did sell contract accounting. And you can see the contribution that contract accounting had in the past. So what they've managed to do is kind of hold their own in terms of revenue. The loss of the operating profit from the sale of that business also impacted them. So to still nevertheless produce that result in this environment. We are appreciative of the effort that you and your team make, okay. The rest of Africa, a fabulous story, 26% revenue growth, 28% operating growth. It's been a wonderful journey, and we expect that, that will continue in the future. So overall, resourcing, delivering a good result. So -- really strong balance sheet. I think probably the most important factor is that we did acknowledge and admit that we scored somewhat of an own goal last year with the new information system in our tertiary business and the billing cycle at the beginning of the year was immensely difficult for us. That meant that we were on the back foot when it came to the collecting of the debtors, and that was the one fly and the ointment of last year's results, but I'm pleased to report to you that we have significantly corrected and fetched back that position during the course of this year as we undertook to do. So if you look at the total receivables, they hardly changed so despite the fact that we've had that revenue and student growth, okay? And the picture is altogether significantly better. Just to give you an idea, the receivables, the collections and the loss allowance. So we probably have around about 3.5 million left to collect, which is really quite insignificant. So I think we can say that we've retrieved that position quite effectively. In terms of our cash flow, a strong feature of the business, something which we flag all of the time, another great performance in this area. And of course, what that's allowed us to do is to continue to reduce borrowings. To the extent now, okay, we -- obviously, we're looking at our balance sheet structure in terms of trying to ensure that we have the right returns. And that, of course, has led to the fact that we can increase the dividend, which is one of the key features. ROFE, a significant turn trending in the right direction now up to 20.7%, despite and a significant investment plan. We're not at that stage where the business is generating more than enough cash to cover its investment plans and still enhance the returns. So that's our CapEx expenditure of 669 odd million, adding mostly to existing sites, which is, of course, the most efficient CapEx that we have. There were a couple of new schools in terms of Morningside in particular and Ras okay, so not new but a new site in terms of Rasa, the morning side one and then, of course, furniture, fixtures and fittings and the student management. We continue to invest in systems as well. So that's the breakdown of CapEx expenditure. Okay. Our strategy, our one-page strategy document. I'm quite certain that Geoff will want to look at this in terms of his view and his perspective to see what he believes is relevant and whether that's still the appropriate way for us to do it. But it has served a good purpose for us, I think, in terms of keeping focus on things. Something else that a lot of work has gone into. We are obviously, I think, a really good ESG investment, okay? And particularly, the social impact. Our footprint is relatively light. I'm very comfortable the governance structures of ADvTECH sound, but it's the area of social impact where we can probably contribute the most as an organized as an educational organization. And we really are putting a lot of effort into this in terms of our own business goals, vision and objectives that we're setting ourselves and also in terms of improving our reporting requirements in this area. So I think good developments there, too. So I think ADvTECH represents an outstanding investment opportunity. We have underlying demand driven perhaps by somewhat negative factors here in South Africa, but certainly driven by positive factors on the rest of the continent. We have a real quality asset base. I think we've demonstrated that well positioned brands well structured. We generate significant levels of cash, which we're now at the point where we're more than able to meet our investment plans going forward. We've demonstrated our business. It's robust. It's agile. It's flexible. We've made challenges on this journey and responded incredibly well. And as I said, we're emphasizing and highlighting the fact that from an ESG perspective, we're an outstanding quality asset as well. So a good argument as to why ADvTECH is a fabulous place to invest. The dividend, as I've mentioned, I think and I hope, has surprised all in a sense that the Board and I have evaluated the position. And as I say, our strong cash earnings, the fact that we've reduced our borrowing substantially, and we've been looking at the structure of our balance sheet and how we can optimize those returns. So it seems appropriate that we should be able to return back more cash to the investors at this point in time. So that's up 57% for the final dividend, 0.87, which is a 45% increase. And that continues the trend that we've experienced of increasing dividends over the last few years, okay? I think a positive note on which to finish Okay. And now we'll take any questions that people might have.

Just before we have questions, we actually have another slide. Okay. As you all know, this is grows final presentation and his final set of results. So we decided we'd do a public performance appraisal. -- seen that do like benchmarking, we said, well, we've got a benchmark in. So I had to think who could we benchmark them again. So why not the highest position in the land, seral -- so I think let's start with a commonality. They both like rattling on. I mean to raise about 20 minutes over time. But then that's where it ends. I mean, Soral can't make a decision, need to consult. When he sets targets, nobody can understand them. When you measure against them, you understand them even less. Roy, on the other hand, sort of very focused. I think his particular strength is identifying the problems, simplifying them and then determining what success is and then measuring against that success. So I think that sort of sets them apart. So if we just click on and sort of talked about how Roy simplifies things. If you listen to today's presentation, pretty much, that's all he spoke about, he needed 90 slides to do it. I can't be college -- but I think -- yes, I think if you -- in all of these presentations, I think 90% of what you said would hit one of those topics. I mean, quality education, it's a core of our business, and it's what that's what our customers expect of us and to leverage technology, and I think you as always talks about having a competitive advantage in this area. And I think he spoke a lot about that today. the value propositions. I mean, in the business, so sick of the -- if you're not growing, people are not buying your value proposition. If you're not growing faster than your competitor, well, they might like yours, but they like your competitors even more. You've spoken about the effectiveness and the efficiencies. I think you've seen some of that coming through and has spoken previously about turning the structure inside out. What was centralized, it has now been decentralized and vice versa and the shared services and some of the things we're doing in the properties and that and it's as we access more information, we can make more changes. And then the drive into Africa under his leadership as well. So that's pretty much how I say that laser focus that he has. This is pretty much what he's done with a few little nuances here and there besides this. So we then said, well, how does that translate? And we've sort of put up some graphs to sort of measure the success. So we first did Cyril, but they were all flat. So I didn't want to show them to you. So as Roy. So under his leadership, Advantech has increased student numbers by 73%, revenue by 2.92%. And then jobs created. Soral promised about 1 million more than Roy has delivered, but is actually delivered 3,000 less than Roy has. So -- and I think today, you can see the efficiency, 73% on the student enrollment, 55% on the job. So 3,000 more people employed, but we are doing it effectively. Had we left at Tesoro that all being government positions and not adding any value. Net more than trebled in that 8-year period. Share price, it's moved up nicely, but I think the shareholders are still being a bit tough on Ray, not quite as much as a net. But if you add the dividends on, it's a little bit better at 241% and with today's share price, probably closer to 250%. So Roy, I think you can be very proud of what you've achieved with this group. I'm sure all the shareholders and stakeholders are very appreciative of what you've done. -- and we wish you well in your retirement. Although we do think that it's a bit a bit young to return. And we are expecting to see your name on the ballot paper because I think 2 terms of being the President, if you could do this with ADvTECH, imagine what you could do as a country. And at the end of your 2 terms, you'd still be younger than those plants in America. So Ray, we wish you all the best. Thanks very much. We better get to those questions. It looks like you gave all the answers today.

There's only 2 questions at this stage. So the first one is, what are the key drivers of the high operating margins in schools, Rest of Africa business? And can this be replicated in schools SA?

I think, firstly, we do -- there are different cost bases in the rest of Africa. I mean, we have found that we can find some wonderful teaching staff. We're really excited about access to the talent that we have in those markets. And again, I think it adds strength to Advantech because, of course, we've now tapped into yet another sort of resource of really high-caliber teachers. But quite honestly, the cost structures of those organizations are substantially different to that which we expect in South Africa. I don't believe we will be able to -- we've always said actually investing in Africa, there are risks for us. There are specific market risks that we need to be cautious and careful of, and it's one of the reasons why we try to be very considered before we make an investment. But we do expect those returns to be higher as a result of those risks. So I don't think it would be fair to compare the 2 businesses. We think that, as we said, the guidance we've given is 25% for the South African schools businesses. So you need to get there -- but we're very pleased with the progress that we've made towards in the Africa business, and I think that's in line with our expectation in terms of when we made the investment decision. So primarily the cost base, how we've been able to accelerate there, I think, is all the work that the management teams have done some really good work at looking at the efficiencies, the structure of those businesses, changing kind of the traditional thought of what a school had to have versus what we believe is necessary. So again, I think just good evidence of what the ADvTECH system can deliver when it focuses on bringing improvement into the operating model.

Next question. What impact do these property acquisitions and developments have on the margins and free cash flows and what's the management thinking?

I mean -- I think the issue is that they're already in the numbers. The majority of those CapExes that you saw were developments that happened last year and the balance are developments that are going to happen in the current year. So it's actually part of our ongoing CapEx program that we've been doing year after year. We've been adding sites, adding capacity, refurbishing buildings and this is no different. So it's already absorbed in our cash flow. It's already in our margins, and we do not anticipate that you will see any material movement in either of those 2 metrics going forward. I think that is it. I think we've answered all the questions. Any questions in the room?.