Earnings Call: H2 2020

Aug 20, 2020

Yes. Thanks, operator, and good morning, and welcome, everyone, to IDP's FY 'twenty Financial Results. Today, I'm joined by Murray Walton, our CFO and Craig Mackey, our Head of Investor Relations and Corporate Development. I'm going to be walking through with Murray the pack that was published this morning, and we'll begin with the business update. IDP's results for the year reflect strong momentum of the business, in particular through the first eight months of the year. This was followed by a decisive pivot to disciplined capital management, expense control and digital product innovation through the remainder of the year. If we move to Page four and review the performance highlights, I mean, certainly a solid performance, I believe, despite the COVID-nineteen headwinds in Q4. If we look at revenue, revenue was $587,000,000 down 2%. Some highlights in that number were our multi destination revenue up 52% for the full year. And at the end of Q3, across all lines of the business, we were up 19.2%. The impacts of COVID-nineteen lockdown, social distancing and travel restrictions meant that Q4 was a challenge with revenue down in that quarter, down 64. EBIT at $107,800,000 was up 11%, again, really a combination of the momentum we had through the first eight months, and then disciplined and prudent cost control through the following four months. In fact, when we look at the average operational overhead run rate for the first half, we're running at around $21,000,000 per month. And through the second half, that average is out at $15,000,000 So you can see the actions taken delivered significant cost savings through the last four months of the year. NPATA at $70,500,000 up 3%. Strong cash balance at $3.00 $7,000,000 as of 06/30/2020. So since the equity raise towards that February or that February period, we've only seen a reduction of $27,000,000 in cash in that time. Our working capital facility at $175,000,000 remains undrawn. If I touch on a couple of the highlights as they relate to volume metrics, student placement at 51,000 students placed or APFs was up 3%. The UK up 22% in that number. Canada up 29%. Australia down 15%, and this primarily reflects some of those restrictions, which impacted intakes through the second half of the year. IELTS testing at 1,095,000 is down 15%. The first half, as some of you may recall, was up 11%. And through the second half, basically across the globe through April with almost a full shutdown impacting second half volumes being down 41%. English Language Teaching at 94,400 courses reflects a 0.2 growth on the year, even though we had lockdowns of schools in both Vietnam and Cambodia for extended periods in the second half. Digital marketing at 27,300,000.0 revenue up 11%. And pleasingly inside that number, our international digital marketing orders, which are supporting our clients in engaging with international students using our digital technology were up 25% in the year. If I move to Slide five, just to really summarize to everyone how we responded as we entered into this challenging period. I mean the first thing we did was not take our foot off the Transformation Accelerator. We made a commitment and have continued to double down on those transformational initiatives, which we believe position IDP for the long term and equally position us to effectively engage with our customers and our markets through this difficult time. Rapid very rapid innovation enabled us to stand up new capabilities literally within weeks. And we had 60,000 students attend more than six sixty virtual events through the four month period from March. We introduced IELTS Indicator, an online English proficiency test in 70 countries across and during the peak of restrictions. And we quickly moved to virtual counseling with over 35,000 virtual counseling sessions delivered. So the business really did pivot quickly And thankfully, to the investments that we've made over the last few years, we were able to stand up strong engagement channels with our customers. We took prudent and decisive capital management actions, The $254,000,000 equity raise and the $175,000,000 working capital facility has really enhanced our balance sheet strength. And clearly, you look at our current cash balance and cash burn, we're very, very well positioned to ride out the challenges that we see ahead of us. Disciplined cost control measures delivered over $35,000,000 of overhead savings in H2 versus H1. And we also quickly reprioritized our capital expenditure profile to ensure that those strategic programs, in particular, aligned to student placement and IELTS transformation continued to be resourced through the period. We've been able to develop and continue to grow a strong pipeline and with our technology continue to nurture our customers. We've really established ourselves as the authoritative content in the industry and SEO is driving a strong organic web inquiries. In fact, web inquiries are up 25% over the same period last year. Our IDP Connect business, which is serving our clients directly with data and digital marketing services, continues to perform strongly and remained completely operational through the period. Our data insights orders for our information or insight data products was actually up 89% over the previous year, reflecting our clients' desire to get greater insights into how student perceptions are shifting. If I move on to the next page, Page six, just covering off really a current operational status for everybody on the call. We're seeing a progressive reopening of offices and IELTS test centers after a near global shutdown in April. As of the August 18, at a student placement level, 109 of our 127 student placement offices are open. And we've established virtual offices, in fact, across a number of countries, but in India to specifically supplement in some of the other states where we've been unable to open our physical offices. But 31 of our 40 offices have now opened in that market. In English language testing, IELTS has now resumed testing in 53 of the 55 countries in the IDP network. There's still some restrictions in a number of markets due to social distancing and the amount of people who can come together as a group that is impacting the capacity. But nevertheless, as of the August 18, 55 of IDP's network capacity has been reinstated. From an English language teaching perspective, schools reopen quickly in Vietnam as they really overcome some of the challenges of COVID-nineteen quickly, But our schools in Cambodia remain closed for the moment, and we expect those hopefully to be opening or reopening in the October time frame. From an IDP Connect perspective, really little impact on our teams and our ability to continue to sell our digital marketing and data products to clients. In fact, again, as I've noted earlier, a greater demand for those services through this period. Moving to page seven, again, just reinforcing how we were able to leverage the investment, not just in technology, but really capability that we've built in the business through the last couple of years. We launched very quickly a number of new products and services to ensure that we remain connected and really became the authoritative voice and platform for the industry through this difficult time. I touched on virtual events. We established a bespoke virtual events platform literally within three or four weeks of countries going into lockdown. And this really enabled us to stay connected with students and the continued opportunity there and desire for international students to connect and travel ultimately for an international education. We have 60,000 students, I think most pleasingly as well over 7,000 clients attended six sixty virtual events by the end of the financial year. IARDS Indicator, which we stood up in particular for those markets where we were unable to provide a physical test, whether that be paper or computer delivered, was stood up in a very short period of time, and we managed to get it accepted literally in weeks by more than 900 institutions around the world, and it was delivered in 70 countries at the peak of the shutdown. Virtual counseling, again, the technology that we had put in place pre COVID-nineteen enabled virtual counseling, so we were very quickly able to ensure our counselors were productive regardless of the fact that they were working from home. And around the world, at one point in time, all of our counselors were working from an at home environment. And they've continued to be productive, and we've continued to hold on to that resource because we see that critical to position ourselves for the rebound as it occurs. If I move to page eight, just touching on the pipeline. Clearly, the virtual events and lead nurturing programs has enabled us to continue to build a strong pipeline of customers. And as you can see by that pie chart on the right hand side, our applied volumes through the full year have grown by 31%, and there you can see a breakdown by market. If we look at the chart on the left, you can see that our physical events engagement in terms of attendance grew by 10%. But overall, having implemented our virtual events platform, we were able to grow attendance by 58% through the full year. And in the lighter blue chart, you can see really the pure growth in attendance on that virtual platform. We significantly reduced our cost per lead as we pulled back on paid marketing spend and put our efforts into SEO and content development. And really, I think we also benefited in that context from the aura around our digital events, which led to continued growth in pipeline. In fact, if we look within our pipeline in that period from September coming up, just ahead of us to March, we have over 82,000 unique applicants in our pipeline that we are engaged with who are preparing to study overseas in the coming period. We were equally able to continue to engage and ensure our customers were serviced well, with nine out of 10 students saying that they would recommend IDP. If I move to Page nine now, through the year, we built out and executed what I think is the definitive insight into student intentions through our Crossroads surveys, and we've run a number of those through this period. They've been provided to and have provided policymakers and governments in our destinations, as well as our university's unique insights into the changing intentions of international students through this disruptive period. Our research shows that students are still holding on to their study intentions with seventy four percent of students with current offers holding on their plans to take up courses, whether that be a combination of online or should they be able to travel into the destination market. I think interestingly, since we did the first study in April, the second study has shown a transition of preference from face to face to online. And maybe it's not so much preference, it's probably more acceptance that students are realizing that they may need to, should they want to begin their courses online and then transition to face to face as face to face delivery becomes available. If I move to Page 10, this provides a really, I think, a very strong and clear insight into the challenges that we had in April as the world went into a lockdown almost in unison. But clearly, we're seeing the recovery begin. In particular, this is reflecting the IELTS numbers, and you can see the recovery through the May, June and right up to the July period. Computer delivered testing has really assisted us in taking advantage of that recovery opportunity as it enables us to stand up and configure environments that can fulfill social distancing and group size restrictions in a very agile way. In fact, we currently have available IELTS in 196 computer delivered centers, with 29 new centers added since January 1, and we're planning on adding another 52 to be scheduled and opened before the end of the financial year. If I move to Page 11 again, I wanted to just represent and reinforce the fact that we continue to pursue our objective as being the industry transformer through bringing our platform, technology, capability and data insights to market. And those investments continue. Our digital campus in Chennai has grown in number through this difficult period as we've continued to prioritize and in some cases expand on the work we're doing, in particular in areas like propensity modeling and matching for students and for institutions. We've completed building our data science team, and they are engaged in driving data science initiatives, which we believe will unlock operational product and new insight opportunities. So let me pause there, and we'll move into the financial results update. And I'll hand over to Murray Walton to take us through the next few slides. Murray? Thanks, Andrew. I'm going to start on Page 13, covering the FY 'twenty overview. So revenue was 587000005% below last year on a constant currency basis. We were showing a strong growth through the, end of the third quarter with growth of 19% versus the same period last year. COVID nineteen had a significant impact on the fourth quarter with a reduction in revenue, as Andrew mentioned, of 64% compared to the same period in FY 'nineteen. A couple of highlights for the year, however, were the strong growth in multi destination student placement, which was up 48% on a constant currency basis. And our digital marketing business, excluding discontinued revenue lines, was up 11%. EBIT is, was a 107,800,000.0, up 7% on last year on a constant currency basis. The EBIT margin increase, from 16% to 18% was a result of improved, gross profit margin and the effective control of costs as we delivered savings of 35,000,000 from the run rate, when we started taking action to reduce overheads in March. Overheads on a pre double a s b 16 basis at a constant currency was 6% lower than last year. Depreciation and amortization of 38,000,000 includes 21,000,000 of depreciation of leases capitalized under double a s b 16 with normal depreciation of 17,000,000, which increased by 11%. And net profit after tax is $667,800,000.0, and it's 2% below last year on a constant currency basis. So I'm gonna move to page, 14, on, disciplined cost reduction. So in March, as we started to see the impact of COVID nineteen on our revenues, Andrew set up a team to develop the plans and report on the execution of cost reduction initiatives across the business. In the first half and through to the February, our monthly run rate of overheads pre AASP 16, so including the rental of our offices, was $21,000,000 per month. In the last four months, we reduced our month our monthly run rate to 12,500,000.0 and delivered overall savings of $35,000,000. The actions we took included all staff agreeing to a 20% salary reduction to the September, a hiring freeze on both replacements and new positions, reduction in bonuses, negotiated reductions in rent, and reducing marketing and travel and travel speeds. We also participated in government wage subsidies in a number of countries where that was available, and this totaled 3,700,000.0 of the savings and overhead of $35,000,000. I'm now gonna move to page 15, our key operating metrics. The key operating metrics highlights the importance of our multi destination strategy. Student placement volumes increased to 51,000, up 3% on last year, with multi destination volumes up 28% to 26,800 and making up 53% of our total volume. Strong growth to Canada, UK, and The USA to the March ensured strong full year growth despite the second half declining 7%. The Australian student placement volume of 24,200 was a decline of 15% with a small number of Chinese students unable to commence in semester one, but semester two for all of our source markets was effectively canceled. IELTS volumes were a 95,000, a decline of 15% on last year, as a large proportion of our test centers were unable to operate in the last quarter. We did see, however, Nigeria, Japan, and Uzbekistan had some solid growth year on year, but the majority of our markets declined versus the PCP. Moving on to average price performance. The average test fee for IELTS increased by 6%, and on a constant currency basis, the increase was 1%. Price increases were applied in many markets, including India and Australia, adding 1.5% on a constant currency basis. But the loss of the BC, British Council China license fee for five months was a negative impact of 2% on an average price for the year. The average student placement application process fee has increased to $3,740, an 8% increase on the same period last year on a constant currency basis. The Australian average fee increased 2% on a constant currency basis with favorable study mix, increase in commission from clients, and a small amount of client incentives offset by a 4.6% increase in our credit provisions. The multi destination average fee increased 16% on a constant currency basis with a favorable study sector mix, an increase in client commissions negotiated by client teams, off offset a little by a decline in student pays revenue from China, which was down. So I'm gonna move to page 16, looking at our strong margin performance. So we've continued to expand our gross profit margin, increasing our f y 20 g GP margin by 2.9 percentage points to 58.8%. IELTS margin increased by 1.8 percentage points to 44.8% coming from a combination of lower cost for test day activity in India and price increases in key markets, more than offsetting the reduction of the British Council China license fee in the second half. Student placement gross profit margin held steady at 81.4% as increases in both volume and average price of multi destination student placement covered the increase in investments and the support of our student placement platform in Chennai. Lower sub agent commissions from China also supported the holding of the student placement gross profit margin. While student pay placement margin holding steady what with with the student placement margin holding steady, it contributed 2.9% sorry, contributed to the 2.9% GP margin improvement due to a higher mix of student placement revenue. The move to virtual events in the second half also made a positive contribution to margin improvement as the cost of running virtual events was significantly lower than physical events. Gonna move to page 16, the balance sheet. The balance sheet remains strong with a cash balance at the close of $307,000,000. Our cash burn for the last four months was limited to 27,000,000 relative to the pro form a balance sheet we presented for the equity raise in March. Given our current cash burn rate and our current cash balance, we're in a strong position to get to the other side of the of the pandemic. I'm gonna hand back to Andrew now. Thanks, Murray. I'll move on to the summary, which is on Page 19. I think, again, I'd probably just reinforce a couple of things that I've already said. For us through this period, we saw an opportunity to accelerate our digital transformation. And we saw, of course, a need given the physical lockdowns that were impacting the business. But that investment and our ability to pivot using the technologies available to us and the capabilities has enabled us to rapidly change and address opportunity, again, to reposition ourselves as the leader in the international education marketplace. Virtual events and virtual counseling enabled us to remain in a position where we could nurture not just new prospects, but those prospects sitting in our pipeline for future intakes. The investment in our data science capabilities now complete is putting us in a good position to continue with new transformational services into the coming period. I think just as Murray quickly noted, another highlight is our disciplined capital management and cost control. Clearly, that contributed significantly to our EBIT performance without requiring us to cut muscle out of the environment. And we remain strongly focused on ensuring that we take our strong global talent to the other side and actually position them to take advantage of the opportunities we see as we do that. I think finally and most importantly, the structural demand drivers of our industry remain unchanged. And I think that's clearly reflected in the feedback and the intentions of students through our surveys. Firstly, clients are relying more and more on us and our IDP Connect business for trusted insights on those student behaviors and student intentions. Again, you can see the industry coming back to life in its preparations to travel abroad through the reopening of the IELTS test centers and the increasing curve of volume as test takers come back into market to take tests. And we believe students are holding on to their global study aspirations. And as I said, 74% of those surveyed with applications intend to continue with their objective to travel and study overseas. So I believe the company is poised and well positioned to take advantage of these opportunities as restrictions slowly ease into the forward period. So let me stop there. And what I'd like to do, operator, is open up the call to questions at this point. Thank you. Thank Our first question comes from Tim Plum from UBS. Please go ahead. Hi, guys. How are you doing? Good, Tim. Good. Just, sorry, just two questions from me, if that's alright. This is Andrew. Just if I'm looking at that slide that shows the IELTS recovery test, it looks like you guys are kind of back to a monthly run rate of about 62,000 odd, which if I apply the price to just around $18,000,000 of revenue and kind of $14,000,000 of GP, am I thinking about that the right way in terms of July? I think certainly from a, you know, from a volume perspective, you're thinking, you know, you're thinking about it in the right way. So, yeah, volumes are are are continuing to increase. I think, Murray, did you wanna make a comment on the the the margin component of that question? Well, what was your revenue number, Tim? So obviously About $18.18 mil of of revenue, about 14 mil of GP. So our our GP for IELTS is around 40, 43, 44%. So if you're 18, it's, 44. So so about eight, yeah, about 8,000,000 of of GP. Sorry. Eight. Sorry. Yes. Eight. And are you able to make any comments in terms of overall exit or beginning run rate revenues for for July for the group? Oh, no. We we we're not in a position to to do that, Tim. Right. Just last question around the semester one for for the Australian university. Just wondering how the discussions are going with the university. How are they thinking about this semester? What's the appetite in terms of providing online? And is there any appetite to provide a discount or to to contribute towards the quarantine costs required? Yeah. Because I think mean, I would say semester one seems a long way away at this juncture being in, you know, February primarily February of of next year. And there's a lot of movement in the industry. You would have seen Charles Darwin, so the NT industry looking to stand up their first pilot of bringing students back in, providing quarantine for them. And equally, in the South Australian pilot, which is aimed for September, to do a similar thing. I think that's those pilots will be used to inform the government and, I think, equally, balance out the local citizens' concerns around public health. But it's very difficult to predict what will happen in the s one intake in Australia at this point in time. And I think probably I would just expand on that and note that from IDP's perspective, I mean, clearly, we're continuing to develop a large pipeline should should that that intake be something that students want to pursue. But at the moment, we're very much focused really on the fall intakes into Canada and to The UK. I think it's a bit difficult to predict exactly what will happen with the S1 intake and where universities will be. A number of them are looking clearly at being prepared to bring students back onto campus through, you know, through quarantine measures, but equally have, have online learning available should that not be that not be the case. Right. Thanks, guys. Thanks, Tim. Our next question comes from Philip Pepe from Blue Ocean Equities. Look, well done on a good result in very tough conditions. Just on, you know, when things can potentially kick back to, quote, unquote, the normal. I guess we can only talk at moment, but do do you think as you look around the ground in terms of where you operate that governments are gonna we're gonna require a full reopening of the borders before students are allowed in, or do you think in some regions, they'll be considered temporary residents and, as mentioned earlier, subject to lockdown, you know, quarantine for a couple of weeks, you know, come before the tourists come for the sake of various economies. So where where are we around the world in terms of willingness to allow students in to help some of these economies recover? Yeah. No. I think it's a good question, and it's probably a question that I you know, we ask ourselves every day at the moment. We have a situation call with each of our destinations and and source countries around the world, and things are changing very dramatically, and and I'll I'll give you an, you know, just an an example if you like, and then maybe just we can do a quick trip around the world. But, you know, in the course of the last last week, you know, British Airways started flying into India and out of India in back into The UK. And The UK is working very hard to be, you know, to be open for their September, you know, September intakes. And in that context, changes are happening very rapidly. If someone had said three weeks ago, is there an opportunity for students really to take up the opportunity in The UK? I would have been a little bit more conservative. But in the last week, flights have appeared. So now the logistics challenges of students getting there are no longer an issue. Now for The UK, of course, they don't have restrictions in in being able to travel into The UK and they have a quarantine period required. But it's different in different markets. Of course, at the moment, international students can't get into the country. Canada, they can get into the country, but they have to have a clear reason for why they need to be there on campus to study in the fall. In the case of Canada, many institutions are providing letters to the students that they can provide to immigration upon their arrival. So I think just to point out, there's a lot of complexity given the amount of destination markets and the source markets we're talking about, and it's changing on a weekly basis at the moment. You know, my view is is from a a near term period, The UK is the most open, and and we can see in terms of student interest a real pull towards The UK because of that opportunity to travel. I think it's all also worth noting that in many markets, and let's take The UK for example, they're also now looking at having some universities having a November and a January intake. For Canada, of course, we have free intakes through the year. So if people can't get into study online sorry, study on campus in September, you'll see a lot of that pipeline probably defer to intakes in the second half. And for Australia, it's still a little bit unknown, right? Australia, I think, is still working through those challenges with what's been proposed by South Australia and Northern Territory and would seem in South Australia's case to be supported by the federal government. Clearly, in that case, you know, Scott Morrison has stepped away from his demands that all states state borders be open and is enabling, you know, in that case, one of the states to begin their pilots without as a that as a prerequisite. Excellent. And if I can just sneak in one question about the operating cash flow. Obviously, creditors need to be paid, and, you know, debtors or revenue down because of COVID. Do we just take the current balance sheet ratios as an abnormal and we get back to normal operating cash flow levels, you know, let's call it calendar twenty twenty one? Yeah. I'll just pass that question to Murray. Yeah. Look. I think that's reasonable. An example, for the of the abnormal levity is that activity is the fee we pay Cambridge for the IELTS test. At year end, we this this was 16,000,000 or 75% lower than the last year. But for the year, the fee we paid Cambridge was actually only 20% below. So right at the end of the year, quite a significant movement in a number of those, working capital items. Our next question comes from Matt Johnston from Macquarie. Please go ahead. Good morning, Andrew Murray. Can you hear me? Yes. I can, Matt. How are you? Good. How are you? Good, mate. I might just pick up where we left off just around the student placements for multi destination. Is there any sense you can give us or make any comments around, the size of the intakes for UK Canada? Oh, not really. I can give you a little bit of, you know, a little bit of commentary, but I'm not sure I can really give you any, you know, firm view on on what the volumes will look like because we just, you know, we just don't know at the moment. I would say that the, you know, the full intakes for both Canada and The UK will certainly be more subdued than they were last year in the first half. And I think we'll see certainly how we're predicting it, stronger second half with many of The UK universities for the first time standing up a January intake. And of course with the two Canadian intakes in the second half, those will prove to be more attractive for the students. And the reason I say that is you have to recognize that for the past couple of months in markets like China and India, it's been very difficult to do your IELTS testing. And in many cases, the visa offices have been closed. So a large proportion and as I pointed out, we have a very large pipeline of students ready to go. But because through this last period, both IELTS and Visa processing has been disrupted, there's a view that we have is that a number of students are deferring into those new intakes in terms of The UK and those available intakes in terms of Canada, just to provide them with the time to do their full preparation, have their visas ready to go and a much higher chance of being able to go directly into an in classroom environment. We do certainly have demand for both Canada and The UK in autumn, and we're seeing some interesting shifts, as I said, on a weekly basis. Literally in the last week, if you look into some of our data, now students in India, 80% of the volume of students we have in India plan to travel. That was not the case three or four weeks ago into The UK in the coming fall intake. But it's very difficult to predict how many may, when they get down to the wire, may choose to defer because of current requirements for quarantine, and equally, the ability potentially to, you know, to defer to a January intake in some cases. Okay. That's helpful. And maybe just a quick one on the overhead cost per month. Is it fair to assume that going into first half twenty one that the 12,500,000.0 to 15,000,000 is a fair assumption? Maybe I'll pass that one to Murray. So as the sell the staff salary reductions roll off because they will roll off at some point in the in the first half. So for the first quarter, you know, the the the the run rate that we've had in the in the last quarter of last year, it'll tick up a little. But once those salary reductions come off, the expectation is that it will tick up again, you know, closer to the 18,000,000 to $19,000,000, over the over the longer period. Okay. That's helpful. And then I might squeeze one quick one more in just around, I guess, the the digital strategy and the platform. When you talk about, shifts, from students, Andrew, have you seen many, changes, I from people indicating they want to go to Australia, but given the border closures, they then shift to UK, Canada through the platform? Yeah. I think that's a great question. And and and, you know, we had a similar question the other day at us from a geopolitical perspective. But, you know, most people most people from a behavior and an intentions perspective based on the survey data still intend to go to their destination of choice. And and, you know, for for for us, I mean, out of China, for example, our major, you know, placement locations are Australia and The UK. You know, that they they remain strong in terms of intentions. I mean, interestingly, what we have seen though, because of some of this geopolitical rhetoric, is those students who many of the students out of China who had intended to go to The US are now shifting their intentions to Australia or The UK, which was an interesting insight from the data. I think clearly if if students intending to come to Australia start to get nervous about their ability to come in in that s one intake, I believe we will see a number of those shift to The UK, with The UK being a net beneficiary of that as they go into what looks like many of the universities having for the first time an intake that'll be competitive with Australia's s one in that January, February period. Okay. Great. That's really helpful. Thanks, guys. Our next question comes from James Bales from Morgan Stanley. Please go ahead. Firstly, I appreciate the color that you've given on the IELTS forward bookings trajectory. Can you talk maybe to how or the current test taking, can you maybe talk to the forward bookings visibility that you've got and how that compares to the 55% capacity that you've outlined? Yes. I think good question, James. Thank you. I mean, at the moment, what we're seeing from a capacity and a volume perspective, they're pretty much in sync. As the capacity is increasing, the test volume is increasing. And that probably reflects that the demand for testing is robust. And as we open up more centers, we we are fulfilling the the capacity of those centers with test takers. It's it's it's almost linear at the moment, to be quite frank. So, you know, whether that continues or not is another question, but right now, it's running pretty much in sync. So that begs the question, what does that ramp up profile look like? And roughly, where do you expect to be by December or June? Yeah. Well, I wish I had the crystal ball for that one. But clearly, we're, you know, we're impacted by the, you know, by the continued social distancing and and and restrictions on venue, you know, venue numbers. And the team I mean, as I would say, the team globally has done an awesome job of of daily restructuring of venues based on shifting chief medical officer requirements on on how many people you can have per session. Probably, you know, one of the bigger the bigger things to watch, and it's not it's not a prediction because I don't think I'm in a position to do that with so many unknowns, is is is India and and the and the continued ability for us to start standing up paper testing because that enables us to do larger volumes quickly. It's again step by step. India itself is opening up. But I think people need to understand that occasionally for one step, two steps forward, take a little step back. For example, The Philippines took a step back when it closed down a few weeks ago. But yes, overall, I think it has a lot more right now to do with us being able to stand up the capacity, but that where that dependency is on the restrictions in place country by country. As restrictions ease, we will push forward with more and more capacity. But I can't predict when those restrictions will ease with any accuracy. Great. So you've given a run rate for IELTS up until, like, last week or something in that deck. There's nothing similar for student placement. You've talked about how things might unfold, but could you maybe give us a sense of how applications are coming in as a percentage of last year? And how do you sort of think about the willingness of the student to actually go ahead and study remotely if if that's forced upon them versus deferrals? Yeah. No. Good question. And, again, you know, it's very difficult to do a, you know, to do a run rate on on on student placement in in this environment given the structure of when intakes happen and the disruption that we're currently facing. But clearly, in the pack, I showed that applications are up 31% year on year. And, you know, over the last couple of months, they've, you know, they've probably, you know, they've probably stepped down a little bit, you know, into that low teen teen numbers. But nevertheless, you know, the the number of applicants we're holding in inventory is still growing. As I mentioned, we have 82,000 students, unique students with with with counselors, with applications in to go study between September and March, and that application number is continuing to grow, in that probably low teens number. And the challenge now is just helping them navigate the restrictions and the opportunity to move ahead. We have seen in the last month, in particular as it relates to the fall intakes, an an increasing number of those students willing to start online. Now, again, is that a clear predictor as to what will happen? We're not sure because we don't have historic data that gives us any confidence. And what we can see is, compared to where we were last year as to where we are today, students are taking longer to really finalize and commit to their study. They're still watching. And as I used that example before, literally in the last week, British Airways started flying in and out of India to The UK again. On my situation call last night, the Chinese airlines and VA now look like they're going to go in China. And that's that's that's shifting people's views. So people are watching, and and at the last minute, I think we'll see, you know, which path they choose to go. But it's not clear to us at at the moment. There are students who will go online. What proportion would only be a guesstimate at the moment. And then finally, you flagged a step up in commission. Can you talk to the quantum of commission step ups in SP and the permanence that you expect there? Sure. I might get Murray to take that one. Thanks, James. So James, the negotiated increase in commission rate across all destinations is 6.4%. So that's there's no FX, and that that's that's purely increase in negotiated commissions. And then, of course, there's a study sector mix. So we've had a a big step up in postgrad volume. It's now 50% of our, 50% of our of our total volume. So that was also added 3% to the, average price. Our next question comes from Will McDermott from Ord Minnett. The growth in applicants that you're currently getting is obviously very impressive in the environment. To what extent do you think you're sort of winning market share in that space? And I guess, what are you seeing in the market with respect to other agents? Presumably, there's a lot of pain, but are you seeing a lot of smaller agents or even larger agents leave the market? Yeah. I think so I kind of missed a little bit of the first part of that question, but I thought it related to market share. Was that correct? That that's right. Sorry. Yeah. Yeah. I mean, from a market share perspective, we we continue to do, you know, very well. You know, if we look at Australia through the full year, you know, Australian Australian numbers overall were probably down minus 24%. And as I mentioned, we were down 15%. Obviously, you're seeing the impact of a reduced S1 and sorry, S2 and S1 in that second half in those numbers. From a UK perspective, we know they're probably growing as a market sub-ten percent and IDP was 22% up. And then Canada's growth was about 4.3%, and we were up 29%. So I think where we sit right now with inventory of international students and our ability to continue to engage in a full complement of counselors in place, as as restrictions do ease and and students do start to travel, one of our aims was to ensure that we would take, again, a a step up in market share from our competitors. I think we're well poised to do that given our close connection to the clients and the inventory of international students we're engaged with, who are, you know, who are, as I said, ready to go and may choose online or or may defer until they can do face to face, but they will, you know, they will be from our inventory. And and then I think, you know, to the second part of your question, clearly, you know, many of the smaller agents are under duress and and having a a more difficult time through this period. So the clients, I believe, will be more reliant on us to fulfill their seats and their demand as the market does come back. Okay. Great. And then if students do, elect to study online or required to study online, what impact might that have on your fee and, I suppose, the fees that they pay as well? Are they just gonna be doing one or two modules, which means their first year is less? What are sort of dynamics around how that might play out? No. We've been quite we've been quite clear with our our clients and and our agreements. And we've had, by the way, extremely good support from our clients in in in reconfirming how we propose to move forward in our position is that we will continue to receive full commission regardless of whether it's online or or they begin online or if it's in classroom. And and and and regardless, you know, generally, if it's for a a smaller number of modules. In fact, we're being offered, in some cases, larger commissions to help them bring students into an online environment so that they can, you know, that that that they can rely on us to increase conversion in the period where they may not be able to get students into market. I mean, interestingly, some of The UK universities are all also paying at an earlier point in, you know, in in in the the student onboarding process to try and keep their agents afloat through, through this difficult period. So there are institutions who are, you know, very aware that they need to keep the muscle in their agent networks to enable them to actually benefit from the from the rebound when it comes. Okay. That's, yeah, really interesting. And then just finally, in terms of the recovery of IELTS volumes, has there been some markets in particular where that have supported that? I guess what I'm getting to is India's had a tough time with COVID. Are you seeing a recovery there as well? Yeah. Interesting. And, you know, in in these numbers, India is probably muted a little bit relative to, you know, the the, upticks we're seeing across the rest of the world. I think we'll start to see India come into these numbers in the coming months, but these numbers and this uptick is more reflective of the other markets opening up around the world. I mean, just I'll give you, you know, one really positive data point in Canada, which is one of our top three markets. You know, we're seeing demand for IELTS 25% up on what it was in the same period last year. So again, those are markets that aren't even completely open. We don't have all of our test centers open in Canada yet, but we've been able to again leverage the network of CD centers where we can operate three times a day, seven days a week, should we choose to, to start to service that demand. But India will start to come more online and impact this upswing through the coming months. Terrific. Thanks very much. Our final question will come from Arun Gyo from Goldman Sachs. Congrats on a great result in tough times. Just the first one, just thinking about your comments about growing inventory and the pipeline building, can you just give us an idea about what you think you know, a potential sort of super semester intake could look like relative to normal levels? Like, do you think you could be, you know, 50% higher than normal, you know, twice as large? Any sort of sense around there? And just with regards to the operational capacity of your business, do you think you'd be able to handle these volumes? And also any color around discussions with universities about larger intakes as well would be helpful. Yeah. No. Thanks, Aaron. Yeah. I certainly thought you know, we we we thought earlier in the piece, you know, going, you know, really all the way back to, you know, probably the other half year result. Uni some universities could see the challenges were speaking to the potential for super intakes. I don't believe, you know, that's really the case now. I think, you know, the universities themselves are are looking to have having, you know, multiple intakes as opposed to super intakes. And I think multiple intakes are are more closely aligned to getting them back to on trend with where they where they were COVID nineteen through the course of, you know, 2021 and into 2022. It's very difficult for the universities really to have a super intake of any one particular cohort for any particular course. My view is, you know, what we're seeing is the universities respond by ensuring that they're they're much more flexible now with multiple intakes as they move towards bringing back international students to a similar degree as what they had them before. I think IDP's position in that is that what we are seeking and are well positioned to do is to take again a larger share of those intakes as they come back as opposed to be reliant on on what was referred to by the universities as potential superintakes. Great. That's that's very helpful. And I was just really interested in that slide you had just on on the pickup in IELTS volumes and how it's much more computer based testing. Just wondering if you think this is a bit of a, you know, catalyst to actually transition your networks to computer based testing faster than what you would have originally expected and maybe perhaps more of an opportunity over the longer term? Yeah. No. I think, Aaron, you I mean, it's a good, great question. You probably heard from some other companies along this regard. I mean, the new normal is accelerated. Right? I mean, our our ability to do virtual counseling, virtual events, which Murray told me today are actually less expensive than physical events, which sounds interesting. And then, yeah, the shift to CD is is is is accelerating. And partly, it becomes a self fulfilling prophecy because more people do it, and then they themselves communicate to more test takers about the convenience, the ease, and the experience. So, yes, I think coming, you know, coming out through this forward period, and you can see how many CD centers we've got scheduled to open up between now and the end of the year, we see it as a as a bigger proportion of of the the overall testing volume relative to paper. Great. No. That's good color. Thanks very much, Andrew and Murray, and, you know, congrats again, all the best for the year ahead. Yeah. Thanks, everyone. Thanks for joining us on the call today, and I look forward to speaking with many of you through the the next couple of days. Cheers.