Curro Holdings Limited (COH) Earnings Call Transcript
August 21, 2024
Earnings Call Speaker Segments
Good morning, ladies and gentlemen and welcome to Curro's presentation on our interim results, and that would be for the 6 months ended on 30 June 2024. Just this morning's agenda, I'm going to provide a brief overview of Curro's highlights for the period. I'll then summarize 3 key features of our investment case and then explain our strategic focus for the future before handing over to my colleague and our CFO, Burtie September, who will scrutinize financial information with you. And as usual, we'll take questions at the end of the presentation. Curro's mission is to create many more opportunities for many more learners across Southern Africa. Every child matters. And so our Curro's schools are ambitiously expanding extramural offerings, academically, sports and culture. And we are already preparing confident versatile learners for the future. Our learners inspire us. They guide our efforts, and they certainly motivate us to offer exceptional education to so many communities. I'm going to share a short video with you about one such learner. A learner that grabbed his opportunities with both hands, perhaps with both feets as well. And a learner who has really showcased his amazing potential. Let's meet a remarkable young man with a very bright future and a true inspiration to all of us at Curro employees, learners and communities. [Presentation]
So I've watched this a few times and sort of lump in the throat is a little bit easier. But these are learners. These are our parents, these are our coaches, and this is our Curro. I'm going to move into -- I'm going to move into the financial highlights, which is a lot less exciting. And -- but nonetheless, I think, pretty good in a tough environment. So revenue increased by 8% to nearly ZAR 2.6 billion. EBITDA increased by 10% and recurring headline earnings increased by 16%. And I think a standout feature of this set of results is the increase in the operating margin certainly by that 1% from 17% to 18%. And I think our results show a degree of fortitude in what remains a very, very challenging consumer environment. Our weighted average number of learners increased by about 1% to 72,758 learners. And then I think the extent to which our learner number is sustained in this environment and increased slightly underpins the extent to which customers trust Curro for quality education. Cash generated from operations increased by 3% to ZAR 624 million which funded ZAR 306 million of CapEx during this period and some share buybacks. The next 3 slides, I've shown this to you before, I think, many times, but I'm going to reiterate them because I think, they really talk to 3 of the key features of Curro's investment case. The first one is what I call growth momentum, and that is the extent to which Curro has strong expansion potential based on the rollover from 1 grade to the next. And as an example, in 2024, we had over 7,000 learners in grade 8 with just under 5,000 learners in grade 12. The rollover of learners across grades, builds Curro's momentum and not just academically, but particularly in our high schools with keen enrollment interest in that space. The second issue, which I think should be recognized by investors is the extent to which Curro has invested nearly ZAR 14 billion over the last 25 years to establish its portfolio and its national footprint. We created different school models. They cater for different markets, different communities and different price points. And this exhibit shows the headroom capacity that is still available in some of these models to accommodate thousands more learners within Curro. Overall, Curro has available capacity for as much as another 30,000 learners. But I would submit that this would be a very attractive business with another 10,000 learners. CapEx is orientated to enhance and to optimize the utilization of our existing space. The third element perhaps of the investment thesis is the issue of cash generation. So in 2023, for the first time, we generated more cash from operations and what we invested in CapEx and that trend will continue. And you can see the gradual reduction, if you look at the graph and orange of CapEx over time compared to the gradual increase in cash generated in blue. We've reached a definitive stage of our business model which is to consistently generate more cash. And we're confident that this trend will continue. From a strategic perspective, I'm just briefly going to recap on our strategies again. These are things which we've shared with you before, and our focus there is unwavering. So in driving shareholder returns higher, the opportunity of operating leverage is apparent and is clear and it's something which I think everybody understands, but we work very hard to also work on the existing business. So we can't become a good business 1 day. We should be a good business every day. So this means driving up operating profit and cash flows by growing revenue, improving our operating margin and containing CapEx. In other words, the use of the cash that we generate. Revenue growth is a function of the numbers of learners that we enrolled and, of course, the fees charged to those learners. Based on the strong enrollments we see in high school, there is a sustained flight to the quality on offer in Curro's corridors. Generally, our tuition fees for 2024, in other words, for this year increased by about 6% per learner. School started to circulate their fee letters for 2025 this week. And they're kind of circulating that, of course, to current and prospective learners and I'm pleased to announce that the school fees in Curro in 2025 will increase by really an inflationary 5.5% on average. We then consider operating margin, I truly believe it's a measure of business excellence. And accordingly, we are very pleased with the improvement of our profit margins despite what remains prevailing in stubborn economic environment. CapEx, I've explained the extent to which we've reached a really important phase of our business cycle and we're confident that, that will continue that we will generate more cash than what is required for CapEx and that excess cash should be going to shareholders. Just briefly also, we are in a healthy position and our business operations are resilient, and so we've continued to buy back shares. We are confident that buying back shares is a small capital allocation decision and that it will enhance shareholder value permanently. We acquired and canceled over 20 million shares since we commenced our buyback program for ZAR 211 million to date. And then maybe in closing from me before Burtie takes over, Curro has built significant momentum in -- certainly over the last decade in particular, to establish a brand of quality education across different platforms. Our models are efficient, they are scalable, and we can optimize service and profitability. Curro is resilient, and I believe we are well on track to increase our shareholder returns. So I'm going to hand over now to Burtie to address the financial details of our results. Thank you.
Thank you, Jacobus, and good morning, ladies and gentlemen. I will provide commentary on the financial results and key drivers of growth of earnings for this period. In particular, I will provide detail on revenue and operating expenses, discuss the status of our [ trade ] receivables and to summarize our CapEx plans. We continue to provide a quarterly perspective of our financial results to support your analysis of Curro's performance. Curro's average weighted number of learners increased by 1% in the first half of 2024. The average weighted learners increased to 72,758 in 2024 from 72,385 in 2023. Total revenue increased by 8%, driven by the increase in learner numbers coupled with the annual school fee increase at the beginning of the year and then also by higher ancillary income. Fee revenue is the main component of Curro's revenue and increased by 7% in the first half of 2024. Average fees per learner increased by about 6% at the beginning of the year. This slide demonstrates the growth and resilience of fee revenue over the last 2 years on a quarterly basis. The process of granting discounts is discerning and disciplined. Discounts reduced further in the first half of 2024 to 6% as a percentage of total gross school fees from 9% of gross fees 3 years ago in the first half of 2021. Over the same 3-year period, gross fees increased by 38%. Ancillary revenue consists of non-division revenue lines, being rentals, boarding school fees, off-tick income, bus services and other income. Ancillary revenue increased by 17% in the first half of this year. As you know, Curro's ancillary revenue was disrupted severely in 2020 and 2021. We are pleased that it has more than recovered over the last 2 years. Ancillary revenue in the first half of 2024 was 75% higher than the first half of [ 2019 ] compared to the increase in total school fee income of 73% in the first half of 2019. Learner growth and activity at schools are the major drivers of our operating expenses. This slide provides operating expenses per quarter. Total operating costs increased by 8.1% from the first half of 2023, still below the 8.3% in the revenue increase. Total staff cost constitute about 2/3 of operating costs, and this increased by 7.4% in the first half of 2024. The new schools opened at the beginning of 2024 added costs in this period. On a like-for-like basis, the total staff cost increased by 6.7% due to the increase in learners which required additional teachers and an average salary increase of about 6% for this year. We do not expect a meaningful improvement in the learner to teacher ratio over the next 2 years. Due to the growth in our house schools, which offer more subjects and accordingly have smaller class sizes. On a like-for-like basis, so excluding the 3 new school campuses, total cost increased by 7.4%. Importantly, the 17% increase in ancillary revenue required additional costs to execute the associated income-generating activities. If these costs of executing ancillary services are excluded from other expenses, operating costs increased by 6.8% on a like-for-like basis. Curro's mission is to create as much opportunity as possible for our learners, and we continue to expand school activities. Learner engagement in sports tournaments, leagues and a comprehensive range of cultural [ extreme ] activities across our schools are rising impressively. We are very pleased with enthusiastic levels of participation and proud of the education enrichment for our learners. Facility costs increased by 9% to ZAR 213 million in the first half of 2024. Curro's operating margin increased by 1% from 17% in the first half of last year, to 18% in the first half of this year. The group's costs are well managed, and our operating leverage will be a powerful driver of future profitability. Gross receivables increased by 17% to ZAR 522 million at the end of this period from ZAR 445 million on 30 June 2023 and a similar number in December 2023. Total gross fees, total gross outstanding balances did increase by about double the comparable 8% increase in the revenue. We are not overly concerned about this. Since the aging of accounts continue to improve from the previous period and on 30 June 2024, it fell on a Sunday, which resulted in some [ mounting ] collections being received in July after the interim month end. The expected credit loss provision is now at 31% of gross receivables, slightly lower than the 32% on 31 December 2023, despite the increase in the outstanding balance. We used the same provisioning policy and calculation methodology as in the last 3 years. Expected credit loss rate has steadily reduced from 40% in June 2022 to 36% in June 2023 and is now at 31% of outstanding debtor balances. The reduced ratio of provision to debtors demonstrate mathematically how the aging of accounts has improved in addition to the provision for expected credit losses, Curro also incurs other bad debt related costs like collection fees. The total bad debt related costs expressed as a ratio to turnover improved to 3.4% in this period from 3.8% in the first half of 2023. We continue to work hard to improve in this area. However, investors must know that Curro will always adopt a level of bad debt risk in the context of expanding quality education opportunities to more learners. This graph tracks the change in trade receivables and provisions in the first half and second half from 2021 to 2024. Curro recognized expected credit losses of ZAR 77 million in this period, similar to the expected credit losses of ZAR 78 million in 2023. Curro wrote off and sold long outstanding debtors of ZAR 54 million during this period. This relates to learners, who have left Curro and constitute a nonperforming portion of the debtors book. The ZAR 54 million full write-off of underperforming debtor balances in this period was about 1/3 of the ZAR 169 million written off in the first half of 2023. The expected credit loss provision of ZAR 161 million is the same as the provision balance in June 2023, after writing off the oldest account balances against the debtor and the provision balances. Trade receivables are split between active accounts for the learners that are still enrolled in our schools and then inactive accounts for learners who have left Curro. The remaining debt is booked net of the expected credit loss provision consists of ZAR 240 million of actively enrolled accounts and ZAR 121 million of inactive accounts. The slow paying portion of the debtors book mainly relates to the inactive book. Inactive debt, net of the provision there on increased from ZAR 90 million at the end of the first half of 2023 to ZAR 121 million on 30 June 2024. This slide confirms the earnings per share numbers. Earnings per share on 30 June 2023 included a loss on sale of assets of ZAR 7 million net of tax, which explains the difference between the recurring and normal earnings per share. Recurring headline earnings increased by 12% to ZAR 228 million in the first half of 2024, from ZAR 203 million in the first half of 2023. Our share buyback program has benefited shareholders as can be seen in the enhancement from total earnings to earnings per share. The group's balance sheet is well structured to support our growth ambitions. Total net debt decreased by ZAR 37 million from December 2023. The global credit rating company reaffirmed both the long and short-term national scale issuer ratings assigned to Curro. Net finance costs increased to ZAR 157 million in the first half of 2024 from ZAR 131 million in the first half of 2023. The increase in finance costs is due to the higher interest rates and due to the higher average net debt in the first half of 2024 compared to the same period last year. Cash generated from operating activities in the first half of this year increased by 3% to ZAR 624 million, net of higher interest and tax payments of ZAR 37 million, more than the same period last year. Curro repurchased and cancels 10.4 million of its shares for ZAR 116 million in 2024. The group also purchased an additional 2.4 million Curro shares for ZAR 24 million to settle future vesting obligations in terms of its long-term incentive scheme. The group paid a dividend of ZAR 83 million in 2024. Curro invested ZAR 306 million in its business in the first half of 2024, which included the following: ZAR 28 million on new business and development of schools; ZAR 34 million was received from disposals; ZAR 108 million on expansion of capacity in classrooms and existing school facilities; and ZAR 18 million on backup power solutions; ZAR 186 million of CapEx for refurbishments, maintenance and replacement of assets. We will invest in total ZAR 700 million in capital projects during 2024. We are firmly focused on increasing the capacity utilization at our existing facilities. Thank you, ladies and gentlemen. We will now take questions.
Jacobus and Burtie, good morning.
Chris just gave me a moment. I apologize. There's -- there was a problem on the line, the webinar line. It appears to be not from here, but somewhere in the [ ethos ]. So just for all investors, this session has been recorded and will be available on our website. And so you can watch it at your leisure in the future. So you haven't really missed anything, but apologies then just for the technical errors, it's kind of out of our control. And then it's kind of at that Chris has the mic because I forgot to welcome him and Stephanie, Dr. Chris van der Merwe, of course, the man who has started it all with Stephanie. And so thanks for joining us also today, Dr. Chris. So you get to ask the first question.
Jacobus, I actually grabbed the microphone just because of the excitement. But is it possible, Burtie, to put that slide on again where you indicate the number of learners in Grade 8 versus the number of learners in Grade 12 currently. I think there's such a slide.
We have this one.
So am I -- and let me just confirm, I'm asking the question as a shareholder, not as a founder and an ex-CEO, just to keep myself in safe surroundings. Am I making the correct conclusion about this model. Do we currently have 7,050 learners in Grade 8.
That's right.
We currently have 4951 in Grade 12. That means if our learning and teaching and ethos on the campuses and the way we treat children is good, we should be keeping the 7,000-odd children in each grade moving towards Grade 12.
No, that's the idea, Chris, and I think one must be sensitive to issues like relocations, immigration, economic circumstance and otherwise. But by and large, we would hope that grades roll forward. So that 7,000 in due course move from Grade 8 to grade 12. And of course, that the Grade 8 group in itself grows as well. And that then kind of perpetuate. So in our view on our organization, we think there's probably 7,000 or 8,000 learner growth over the next 5 years that's kind of baked into to what we already have, if rollover is successful and of course, relative to the service and the quality on offer.
Because if we can succeed with that, then it's almost a 70% to 80% growth towards Grade 12 in our high schools.
Yes. I think -- I mean, there is a degree of falloff. And I want to caution investors, I mean things are beautiful in Excel, but in the real world, life happens. And people do exit schools, they move, families go through various things. So -- so -- but by and large, that is effectively should get us from 73,000 up to or about 80,000 learners. So in other words, get us to about 80% of capacity over the next 4 to 5 years. All right. Let's see if there's another question. [indiscernible].
While we're on this slide, is the -- are the numbers we see for the primary schools and a sort of fairly muted growth from 2023 to 2024. Is that a function of the primary schools being add capacity to some extent, whereas high schools obviously aren't? Or is there something different behind, let's say, relatively muted learner growth in the primary school years?
I think there is capacity at the primary schools. And if anything, I would submit that our economic circumstances showed up in that element of our organization. I don't think you can really see it in bad debt. So I don't think you can really see it in operating margin you can't really see it in the growth in real growth in consumers. But where you can see it is the pressure on young families to get through the month on the back of already sort of absolutely high interest environment over the last, say, 2 years. And so our task has been to make sure that we offer an exceptional service at that age that we can truly convince parents that it makes sense to invest in your child's education as early as possible because it does make a difference. That does matter. But inevitably, young families at some point have had to make decisions. And so we have seen higher terminations, not necessarily low enrollment, but higher terminations in the youngest grades, which is said but we hope to see those families back in our schools as soon as possible.
And then just a follow-on to that, I guess. Are you seeing lower levels of applications? Or are you having to turn more people away? Or how does this pressure sort of filter through into the learner numbers? What's the process that drives or that results in this picture in the primary schools.
Look, I think Burtie explained it well when you said we will always adopt some bad debt risk because our mission is to expand opportunity. And credit vetting and all these good things are helpful, but they don't always recognize how a family or a family group or an uncle or aunt or a grandparent puts child preschool. There's a whole world out there, which is not so easily discernible in credit -- sort of basic credit kind of mechanism. So ostensibly, we would prefer to welcome people in, work with them. But if they can't pay and it becomes a challenge, then unfortunately, the services must be terminated because we also can't deliver a service for free. Another way in which we extend opportunity as we work very closely with the foundation called Ruta Sechaba. Ruta Sechaba at this stage has nearly 600 learners on scholarships within Curro. And they, in turn, work with corporates, people like Capitec KFC, Exxaro, and many others who are making contributions to the foundation, the foundation in turn works with us to make sure that learners succeed because it's one thing to put a child in a school, it's something else to care for them and make sure that they succeed. Now those bursary programs are more powerful in the high school end because you've got a better read on the child's sort of attitude and potential. So in the preprimary and primary side, we've sharpened our effort, the quality and the understanding really of what we bring, but parents do have options. And some of those options are convenient, cheaper and they do take those. And so that is also a very competitive space in the market.
So I guess -- are you seeing lower applications to schools? Or just -- I mean have people reached a point where they feel that, look, I won't be able to afford it in any case, I might as well not apply? Or is that not something you see?
So our application levels are similar. The pain really, and it's painful for us as, I guess, educators to have to terminate the accounts when people can't afford the fees.
Jacobus, how much land do you have banked. And how frequent do you review that locations as to whether they are still appropriate and will be used in the future. And also, is that purely just the debt cost that you're paying rates, et cetera and getting nothing back.
You've been listening in on our [ Exo ] meetings. Look, we you got to understand an organization and chapters. And I think we went through a chapter of rapid expansion where -- and certainly, in the [ early-'20 teens ], late '20s, there was plenty of opportunity and excitement and we did take up position all over the country. And we've executed on many of those sites. We have reviewed our portfolio of [ ISIN ]. We have sold off and/or on the process of selling off maybe about half of them where we think the site will not meet its purpose. And some of them is a function of a new settlement that's opened up adjacent and some of them are because of lack of services. And some of them are because we just simply don't think that the site is going to come on stream as much as we'd expected. So by and large, I think from a cost perspective, the sites we do have are ones we think where there's ongoing merit, the ones where we have taken a critical perspective, we view the sold or in the process of selling. So it's not a drag per se in our income statement, and there still are opportunities out there. But I do think we must appreciate that we have established a large national network of schools. And we don't have to chase. We must execute with what we have also, where we're just over 70% of capacity. And our emphasis is certainly to try and fill a little bit of that before building to many more schools. See what's coming from the web. There's a few we cannot hear anything. I'm sorry about that. There's a question here about how many schools are still earning below desired returns? So it's a hard question. Because our return on equity as an organization is only about 7%, which is below desired returns. So I think one was link time scale to that question. And on a timescale basis, instances where we have schools where we felt or could predict that they were slower, and we're not getting to the returns as anticipated and as required, we've impaired over the last 3 or 4 years. And that's well, I think, explained and has been sort of published and so on. So from that perspective, there's not so much a question of whether a school is earning below return. It's whether it's on track to achieve its eventual return. And from that perspective, we're satisfied with where we are. Then there's a question here about how much CapEx do you need to spend to facilitate the 45,000 student growth as those Grade 8 in vintages mature? So we communicated in 2023 -- '22 really, that we expected to spend about ZAR 2.8 billion being roughly ZAR 700 million per year in the years '23, '24, '25 and '26. And that within that ZAR 2.8 billion sits about ZAR 1 billion that we think we need to add classrooms and laboratories and bathrooms and facilities to accommodate that extra group of learners. So broadly speaking, that's exactly where we're at is that we've invested ZAR 700 million last year, we're going to be investing ZAR 700 million this year. It looks like we're on track to invest similar numbers over the next 2 years and that will accommodate and facilitate that learner growth. The next question is, what is the strategy to grow Grade R and Grade 1 enrollment? This is quite a few strategies because it matters to us. I think to name a few, I think we've really evaluated our service offering there, and we've really worked hard with parents. So I think as we speak, we've completed a national roadshow across South Africa in all of our schools to advise parents on school readiness on preparation, I guess, for learning. And I think that's been very, very helpful. I think it's been very powerful. So service offering matters, the quality of the facilities matter and then fees matter. And I think parents should they'll recognize when they see the fee letters that they're getting that we've really tried to sharpen our pencils there as well and to make sure that young families have a reasonable chance to get going within our portfolio. The next question then is, is it fair to assume that extra students come at a 70% incremental margin. No. But yes, so it's a very difficult thing in our operations. So in simple terms, a full class has a teaching cost of basically half the fee. So depending on where you are within the class, you benefit from all more learners, no extra teacher until you do so well that you've got to open another class and appoint another teacher, at which point the thing tumbles the other way. So I don't really want to be drawn on a 70% so that it's way more complex than that. If we then look at -- so I'm just reading here, because there's anecdotal evidence of [ emigration ] to the Western Cape. So I think it's more than anecdotal. And that the Western Cape schools are full, can you comment on this and how Curro intends to respond? So we have many schools in the Western Cape and many campuses, and we're always evaluating opportunities. I know from engagement with the Western Cape government, that's a burning issue for them that they're working really hard to add schools in this province, and I think they're doing a great job in doing that. But of course, there's opportunities, and we'll take those as they present themselves. Then how pervasive has the drop in Grade 1 learner has been, is it broad-based financial pressures, is it a handful of schools? It's pretty much across the board. Even in more affluent schools, we've seen similar trends. So it's not so much particular markets as it's across the board. Families have been under pressure, particularly when you're young and you've started out in life and you started with debt on your car, debt on your house, debt on your furniture and a heavy credit card. And there's a question here. Could you please unpack for us flat D&A [indiscernible] depreciation and amortization growth this year. Ostensibly, our CapEx program has, if you will, stabilized, we are into a portion of that CapEx is replacement and refurbishment, maybe ZAR 300 million, ZAR 400 million of it. And the rest of it is new. And so you reach a stage where the depreciation and amortization charge starts to plateau a little bit, and I think that's where we are. So we would expect -- we would expect earnings before depreciation to grow at a stronger clip than the depreciation charge. Next question is, can you quantify the extent to which you plan to expand into Southern Africa planned finances and territories. So it's very sexy, okay, to announce grand plans to go and do exotic things in exotic places, okay? We have a lot to do in South Africa with our existing operations. We happen to have opened 2 campuses in Namibia. Like in South Africa is also in Africa because so we are here. And we've been busy here. And we've opened extra facilities in Namibia, and that's great. And both in Walvis Bay and Oshana. And we continue to evaluate opportunities, but I'm very cautious for us to venture too far from our current core expertise and our current requirements, which is to drive up the returns of this operation in its current form. Will we do more in the future? Sure, but not soon. There's a question on buyback of shares. I think that's disclosed in detail. There's a question about this immigration angle. What would be your capacity utilization, specifically in the Western Cape. I'm not going to comment on that here, but we always have space for more. And I have some enrollment forms at the door. And then I think it's important to also appreciate that in how we apply CapEx, we really try and do these things on a modular basis. So we have space on campuses, and we can in many of them, you can open additional blocks of classes and so on. So we can follow opportunity as it presents itself within our existing operations. And the good thing about that is from a risk perspective, you're investing in a site and in the community and a catchment area that you understand really well. And so you can do really responsible and smart things. There's a question here has the lower load shedding in 2024 impacted your profitability positively. If so, how material is it? So Burtie, I'm going to kind of look at you and -- can you tell me how many liters diesel we haven't burned?
So it was [indiscernible] of saving of the diesel was account of the delinquency cost. So the net impact was about 0.
Okay. So we've seen increases in electricity and of course, because we get to use [ Eskom ] electricity again, we do have to pay for that. We have invested heavily in battery and solar solutions already. Some of my colleagues are over there, they've done remarkable work in that space. And so I guess what we've achieved over the last kind of 2.5 years is to I guess, energy prove the business. So it's not so much about saving costs or things. It's about being able to execute quality education consistently without disruption all the time. It's about a metric group being able to sit in a hall and write their [ metric ] exams with lights, not candles. And I think from that perspective, I think we've done like an incredible job and look I'm glad something, yes, they deserve a lot of price for that. There's a question as to what percentage of your schools are full? Are you prepared to play with the teacher learner ratio to create capacity in these schools. So the challenge of the class that's full is that it's full, okay? So it's quite hard if a class was designed for 25 learners and there is 25 learners, you can't squeeze another one in, okay? I think so the issue of capacity in a sense then drives a decision about you had another block of classes, and you open another stream, you appoint another group of teachers. So if you have a 4-stream school, do you go to 5-stream? Or do you contain the school at 4-stream and work with what you've got and rather have a slightly more profitable affair with less the bad debt and collection risk perhaps. So those are the kind of things we ponder a lot. And yes, we do have schools that are full. So the -- it is a real challenge. But I think the learner-teacher ratio, while we talk about that it's quite a dangerous thing. And I've encountered it many times with analysts and investors that a small tweak on the learner-teacher ratio and your Excel models generates, this is like exotic profits, okay? Okay. Makes the -- what's the kind of -- okay, any of these kind of bubbles again, makes it look kind of small, okay? So be very careful. I think I prefer to guide that rather kind of hold your learner-teacher ratio is reasonably flat because over the next kind of few years, we have to -- we're going to be growing in to high schools. The high schools fundamentally have a low learner-teacher ratio because of subject choices. And I think it's safer in terms of your modeling. You may be less disappointed. There's another way to put it. So I think learner-teacher ratios will improve gradually. But don't -- I don't think model for extravagant jumps. I think it's also probably sensible to say, if you consider our overall capacity, which at this stage, both is just over 100,000 learners. I think you'll do well to model to 85% or at max 90%, but 85% of capacity is a very, very high level of achievement in a school. You convert that into numbers. You have a class of 25 learners. If 2 or 3 of them at any moment are sick, the parents have moved, something has happened, they've immigrated et cetera, et cetera. You can't replace that learner in [ C2 ] the next day with somebody else. Life doesn't work like it. So I think be cautious to overmodel I think, those aspects, I think you'll find at the numbers I've guided it would be good. Okay. All right. Let's just see, retention rate from Grade 8 to 12, it varies. It varies. I would suggest you could probably look at -- there could be as much as a 10% fall off between Grade 8 and 12, could be as high as that. Some schools, it's lower, some it could be slightly more, but that's probably a safe kind of assumption in models because, of course, it's very difficult for us to introduce a learner in Grade 11 or 12 at the most significant moment of the schooling. So that's 1 of the challenges is that it's difficult to replace. Right. I guess -- you've been a beautiful audience. You've listened to all these [indiscernible] on questions and answers. I don't know if there's any other questions within -- from the floor? And then I'm going to close it out. I think that's it. Thanks very much, and thanks for all your support and for your interest and all the best. Thank you.
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