Earnings Call: H1 2021

Feb 24, 2021

Yes. Thank you, and good morning, everybody. I'm pleased to be presenting our H1 financial results and update, joined this morning by Murray Walton, our Chief Financial Officer and Craig Mackey, Head of Corporate Development investor relationships. Well, certainly, I believe we've delivered a solid result given the environment that we're operating in. IDP's recovery is clearly underway, and we are regaining momentum and very well positioned to support the sector's recovery. I'm going to begin by starting on Slide 4. I think all of you are aware we took decisive actions to ensure that we could steer the company through the crisis and the pandemic. You'll see as we go through the presentation, our diverse business model across geographies and markets as well as product lines and services has put us in really good stead to take advantage of the opportunity as it's been with restrictions easing in many parts of the world. But most importantly, still aligned to the through the cycle thematic of global citizens wishing to ultimately reconnect with work, migration and study around the world. We held our global teams in place, so we remain at full capacity and capability. And that's clearly got us set well as those opportunities present, and you'll see how we've been able to respond extremely well as markets have opened up. We're in a very strong financial position with a strong cash balance and the disciplined cost management through the prior period has again put us in a good position. One thing that's most important is As we move through this pandemic, our business model has remained really critical to the industry and the industry rebuild. You'll see very pleasingly that IELTS volumes have rebounded to pre pandemic levels, again reflecting how important that service is to ultimately connect customers to that global ambition that they are retaining. We've been able to support our customers through what's been a difficult and uncertain time by holding our counseling organization together. And we know from the studies and surveys that we've done that our students still paying their study ambition and we'll move in particular to study in complete numbers as Universities and colleges are open for them to join again on campus. Our Client services in particular as it relates to data insights have become increasingly valuable to our university and college clients as they too try to understand the circumstances they're operating in and look to take advantage of restrictions easing and the rebound that they are planning for themselves. The company is strongly positioned for the opportunity ahead. Clearly, the investment we made in digital capability through the last number of years enabled us to be agile and adapt to the market and to continue to support our customers through this difficult time. But certainly, our balance sheet, our cash position and having a full complement of people in the organization is really poised IDP to take advantage of the opportunity as it presents itself. If I move to Slide 5 and we have a look at some of the financial highlights. Revenue at $269,000,000 was down 29% on PCP. But I think as you'll hear in Murray's presentation quite pleasingly, our revenue is 29% higher in half one FY twenty twenty one as compared to half two FY twenty twenty. So clearly that top line recovery is well underway. EBIT for the period was $47,300,000 down 43%. NPAD A at $30,400,000 was down 49%. And we've retained a very strong cash balance at $293,000,000 and now that's only down 14,000,000 since the 30th June. And in that timeframe, we paid a significant dividend of just on or over 40,000,000 If we move to some of the kind of operational metric highlights underneath those financial numbers, Our student placements at 21,200 are down 37% compared to the previous comparable period, which is reflecting really the restrictions and disruptions that we have for international students and their ability to begin on campus. If we dig into those numbers a little bit, you'll see that the UK is only down 12%, which reflects Again, that market remaining open in the most part for international students through the period. Canada was down minus 39% and Australia down minus 47%. Moving to IELTS, volumes at 540,000 tests were down 36%. But clearly, here you'll see that IOPS volumes have very strongly rebound and as I said are now back at pre COVID levels. In fact, if we look at half 1, FY twenty twenty one versus half 2 FY twenty twenty, IELTS volumes are up 49%. English Language Teaching at 37,300 courses is down 29%, again reflective some of the disruption and social distancing that have been in place, but that now is beginning to clear for the schools in Cambodia and Vietnam. Digital marketing was up 9% to $17,500,000 a reflection of how our clients are reliant on our digital data and insight services, as I said before, to prepare them for the rebound. Moving to Page 6. At a high level, our global platform and our investment in people have really driven a significant amount of innovation through this period. And I mean most pleasingly that has enabled us to stay very close to our customers whether they be universities and colleges, students or test takers through the new technology and fundamentally leveraging the investments in both people and technology that we put into the business for the last 3 years. Our study abroad app had 87,000 downloads to December 30. And that's really enabling students to stay connected with us in a virtual way and track their progress in real time. Our IQ services from our IDP Connect teams are using our deep insights and data sets to provision up competitive tracking information, analytics and dashboards to the clients, so that they can best prepare their competitive positioning as they seek to again compete against other universities and colleges. And we've had 70 higher ed institutions sign up for those services in the first half. The uptake of computer delivered Ios has been extremely strong at 38% of total test volumes now in half 1, and that's up from 22% in half 1 FY 2020. We spoke, I guess, quite a bit about virtual counseling being stood up and our ability to stay connected to our students. Well, we're now with many of our office network open, we have students coming back in through the doors. But nevertheless, I mean, virtual counseling will now be simply a part of our omni channel servicing strategy. And as of today, we have about 20% of our counseling interactions taking place now online. We haven't lost sight of customer satisfaction through this period. It's being a key metric we've been holding our teams and ourselves accountable to and we've seen a very strong improvement in our net promoter score from 55 in Q1 FY 2020 to 59 in Q2 FY 2021, even though we've been operating in more disrupted environment with more challenges to stay connected to our customers. Moving to Slide 7, Our IELTS digital transformation remains a key priority for us. And yes, we're very pleased with the rebound in IELTS volumes. But equally, as I've said before, we're moving ahead to ensure that we're making the investments in that product and service, so that IELTS remains the leading high stakes English language test. We've rolled out a number of new web sites to support our customers and we have 34 more country websites to roll out before the end of this financial year. And we have a major piece of IELTS modernization work going along going on along with our partners Cambridge and BC, and that's to ensure that we've got the flexibility to rapidly innovate IELTS and bring new IELTS products and services to market. We've delivered an IELTS app, enabling us to better connect with test takers and their preparation on their IELTS journey. We ran a major campaign through the half reaching over 36,000,000 impressions in H1. And of course, as I touched on before, we rolled out IELTS indicator, which was an online IELTS test to support the accepting organizations and test takers whilst we had disruption within our physical test network. Moving to Slide 8, And here you can clearly see, for many of you, you would have seen this slide previously at the end of the full year and probably during our AGM meeting, we've continued to see a very strong rebound in IELTS. And in aggregate, we're at levels higher than we were pre COVID with most countries operating at near or full capacity. I mean, probably with the only exception that comes to mind of being Canada, where there still are some restrictions in our test network, but clearly a great rebound with IELTS. Pleasingly and as part of our strategy to take advantage of every unity that was to be presented in this challenging environment. We rolled out 58 new computer delivered centers in half 1 And we have another 44 scheduled to open before the 30th June 2021. Moving on to Slide 9, And this really reflects a couple of things. 1, it reflects the improving demand within the pipeline And the students themselves again looking to seek to reconnect with their global study ambition. That's reflected in our organic web traffic to the IDP sites and you can see that is up 35% and web traffic organic website traffic now above pre pandemic levels. This is our highest quality traffic and highest converting traffic. And I wanted to pull this one out in particular because as we looked at Other channels for traffic, of course, we've really pulled back on paid marketing through the last 6 months. However, we now have plans to layer in aggressively marketing spend in the coming half to prepare ourselves for the 4 intakes and of course the Australian intakes we would be expecting in February FY 2022. I mean interestingly, you can see some data on the right hand side reflecting somewhat The preferences of international students through this period with Canada, the U. S. And generally the UK really standing out as markets of preference and a little bit of a challenge in Australia. And that's primarily on the fact that there's still uncertainty about when international borders will open up and when students will be able to recommence their study here. I mean, on that note, moving to the next slide, I'll give a little bit of a summary on each one of the destination markets. The United Kingdom has Continue to probably take a bit of a leading position in terms of preferences. That's reflected in a couple of things. 1, obviously, the quality of their institutions, but 2, they've remained open to international June through the pandemic period. So borders are open. They've got very attractive post study work right settings. And we do believe that with their coordinated and new international strategy announced, there'll be a strong market for IDP as we move into the latter part of this calendar year. Canada borders are open for international students and they've again been very proactive in getting their regulatory settings in particular around post study work right visas and the ability ultimately to connect to employment. They've recognized the importance of international students and clearly communicated that as being potential immigration and permanent residents in that country as They seek to achieve what are even increased immigration targets for Canada. Australia, as I noted, I mean borders remain closed. Still having good post study work right opportunities. And throughout the network, we're still seeing Australia as being perceived as a strong destination indeed. The response to The pandemic here in the student community is perceived very well across our source markets. But clearly, there's some frustration in getting an indication as to when Australia will open up for international student arrivals. I won't really spend too much time on the other slide, U. S, New Zealand and Ireland, but there's some commentary there for you to look at. If I move to the following slide, just really in summary, I think IDP is uniquely positioned in the industry extremely well. We've remained deeply connected to our students in our 30 plus source countries with 1200 counselors. Our counseling teams have had to work extra hard just to help the students really navigate some of the complexities through COVID. So I think that strengthened the relationships We have with a very large student cohort. We've, of course, stepped into really an omnichannel delivery model enabling Students to connect with us in the way they want, at the time they want, so that we can provide a service to them. Our in country client management has become more important than ever. And that's really unique for IDP in the student placement industry. In each one of the destination markets, we have a strong client team on the ground who can this with data, data insights, international student recruitment strategy and really ensure that IDP is front and center as each one of those clients seeks to again get back to full capability with their international student cohort. Our global digital capability has served us well through this period. And we continue to have a number of strategic programs that remain fully funded and fully supported by our large Digital development team, 400 people in Chennai and our digital campus and our more than 100 marketing specialists working on concepts like marketplace and IELTS modernization. As I've mentioned, we've rapidly expanded our IELTS test center network and we now have over 500 test locations providing test support and preparation support to test takers around the world. And through COVID, we've expanded our data science and artificial intelligence capability, Really that came into the business in March and is very much focused on ensuring that we can drive higher conversions and higher quality students through the pipeline much more quickly through sophisticated matching capabilities. So let me pause here and then hand over to Murray to take us through a more detailed review of the financial results. Thanks, Andrew. I'm on Slide 14, the first half overview. So revenue was $269,000,000 down 26 on a constant currency basis, but was up 29% compared to the second half of FY twenty twenty. All our product categories declined versus the PCP, although digital marketing revenue grew 9% within the 7% decline of events and digital marketing. English Language Testing revenue of $158,000,000 was 22% lower than the PCP on a constant currency basis, But a strong rebound had revenue up 63% compared to the second half of FY twenty twenty. The November December volumes were above 90 Student placement revenue was $78,000,000 a decline of 35% on a constant currency basis with declines in all of our key destinations. The U. K. Destination performed relatively better than the other destinations as the borders remained open. English Language Teaching and Digital Marketing and Events revenue declined versus the PCP as our schools moved on to online classes And our student placement events went digital. Digital marketing, however, continued to grow during the period with revenue up 9% versus the PCP. Gross profit was $157,000,000 with a decline in line with revenue at 26% and GP margin steady at 58.4 With IELTS margins improving to 45.5 percent offsetting the decline in student placement margins to 78%. Overhead costs declined 21% on a constant currency basis as significant reductions in employee cost, Marketing and travel were made to manage our cost base during the half. EBITDA at 68,000,000 33% lower versus the PCP. EBITDA is $47,000,000 43% lower versus the PCP and net profit after tax is 30,000,000 And 45% lower versus the PCP on a constant currency basis. I'm going to move to the key operating metrics on Slide 15. The key operating metrics show the impact of the pandemic across IELTS, student placement and English language teaching, But we have seen improvements in our volumes in Q2. Files volumes were 540,000, a decline of 26% on last here. Capacity has now returned to pre COVID levels. Student placement volumes were 21,200 And 37% below last year with the Australian destination declining 47% and multi destination down 29%. Australian volume was 8,000 while multi destination volume was 13,200 with the UK decline only 12%, making the UK our largest destination in the first half. Moving on to the average fee performance, the average test fee for IELTS was 2.90 $3 a 5% increase on a constant currency basis with price increases taken in India, Australia and Pakistan adding 2.6 percent to the average price and a change in country mix as lower volumes in India at a lower price And proportionately larger volumes from higher priced countries added 2.1%. This was however offset by a 5.3% and unfavorable FX movement, which was a result of the stronger Australian dollar. The average student placement application processing fee has increased to $3,693 a 4% increase on the same period last year on a constant currency basis. The Australian average fee increased 14% with major movements being 7.5% from increases in commission rates, 3.1% from favorable study sector mix with a lower proportion of alley costs and pathway courses and higher post grad and undergrad programs And a 1.4% from bonuses and incentives from our client partners. The multi destination Average fee declined 1% on a constant currency basis with a favorable study sector mix of 6.8% and a favorable destination mix of 1%, offset by a higher credit note provision that reduced average price by 7% to ensure that we provide for UK and Canadian students that have commenced online, but may not join the course on campus. I'm going to move to Slide 16. Our overheads have been well managed with proactive and disciplined cost reduction initiatives across the business in the first half. The monthly run rate pre AAASB 16, so including office rent, averaged $16,400,000 in the first half as reductions in employee costs, marketing and travel costs contributed to the 21% reduction versus the PCP. Employee costs were down 22% with salaries returning to pre COVID levels for all staff except the Board and senior executives in October, With the Board and senior executives returning to pre COVID levels in January 2021. The monthly run rate the second half will increase to around $20,000,000 per month as salaries return to pre COVID level, wage subsidies cease, The recruitment of replacement staff commences for vacancies caused by natural attrition in the first half and marketing spend returns to pre COVID levels. This does not include any investment that may be made to prepare the business to take advantage of opportunities for FY 'twenty two. The operating cash flow of the business has remained strong during the half with CapEx reduced versus the PCP as we focused only on strategic projects. The FY 2020 first half dividend of $42,000,000 was paid in September with the cash balance closing at $293,000,000 Only $14,000,000 lower than the opening cash balance for the year. We're going to move on to Slide 17, the balance sheet. The balance sheet remains strong with $293,000,000 of cash with undrawn working capital facility of 175,000,000 Receivables is down by 12% to $61,000,000 but as a result of the billing for the UK student Placement business been delayed until January. Contract assets increased to $53,000,000 as the increase in students for the UK that were due for invoicing in November December with the later January as clients needed more time to confirm online and on campus since before invoices could be triggered. Our current borrowings drawn of $59,000,000 move to current liabilities as the 3 year facility is repayable at the end of December and refinancing negotiations have commenced with our banking panel. Our net our current net cash position is $233,000,000 Thanks. That's it. Back to you, Andrew. Yes. Thank you, Murray. And I'll just summarize on Slide 19. I think Clearly, the results highlight the strength of the IDP business model and the strategy. And in fact, we really haven't diverted from our strategy through COVID. Our multi destination model in providing choice to students has put us in a very resilient position as we're able to flex relative to student study destinations. We've seen a very strong rebound in IELTS test volumes, and we continue to expand our computer delivered network to take advantage of the opportunity and the demand for IELTS testing out there. The digital transformation and the investment that we've made there, again, competitively, I think really has IDP standing out relative to others in the industry in both the way we can service our clients with data and insights. But most importantly, service our students in better matching them to the right courses and ensuring the counselors in the network are getting the highest quality leads to serve us as a priority. That data science capability whilst in really early stages shows great promise given the breadth of our network and the depth of the technology we've invested in our platform. Clearly, we're regaining momentum and position to capture the opportunity. The rebound in IELTS reflects that. And I think it's worth just recognizing that IELTS is a great leading indicator for the industry as it relates to the customers' demand to reconnect with their global citizen ambitions, whether that be migration or International Education. We've held our teams at full strength and they're energized And we're taking advantage of every opportunity that presents itself. And clearly, when we look at the half One, revenue versus half to FY twenty twenty two, we can see that recovery is well underway now. So let me pause there. And operator, I'd like to open up the call to questions now, please. Thank Your first question comes from Michael Peek From Goldman Sachs. Please go ahead. Hi, Andrew, Murray and Craig. Just on Slide 8, just the IHOP testing volume chart there that you've This is Sean. I'm just wondering, do you think there'll be a bit of a catch up in terms of volume as students have missed out during that sort of downturn So I need to catch up to their ambitions. And just wondering whether that in the last 6 weeks, you've seen that line continue to trend upwards? Yes, I think there's a combination of 2 things in there. Clearly, there's a catch up of demand as it relates to those markets where centers have been closed and it's been difficult for people to get their tests done. I mean markets like Canada reflect that quite strongly. The lockdowns on onshore and the beginnings of opening reflect quite a backlog of demand for us to get through. But I think more importantly, at the same time, people have kind of sat back and waited to really see what's going to happen as restrictions ease, etcetera, and are now coming back in and booking their tests as they see that future opportunity for study and travel again come to the mix. So I think as in answering your question in the recent couple of months, we've continued to see it trend up. And so that's a good indicator. There's a little bit of backlog that we're working through, but the trend through the last couple of months have also shown us that there's more demand there to be had. And I think you've indicated pretty clearly that the UK has been the leader in this period, Australia the laggard for obvious reasons, but Do you see what are the strategies for the universities here or government do you think from here in Australia? Do we have some intakes, Yes, unusual intakes through the year to get some students back? Or is it just too early to call at the moment? Yes, I think it's too early to call at the moment. Clearly, Australia has stepped into an eradication strategy and prioritize the return of Australian citizens. As we all know, vaccinations are underway. I mean, in my conversations with various government departments. I do get a view and I've put it to them in particular that Canada and the UK are presenting as extremely attractive alternatives to Australia, both from an international student and the migration perspective at the moment, both the UK and Canada have flagged migration will be a key strategy for the rebound economically from COVID. I get the view that at the right time, Thorelli will step forward and move quickly to, I guess, retake their position. The perceptions of students interestingly, the Students out of Southeast Asia really aren't changing their preferences, whether that be for the U. K. Or Australia, very little switching going on. We've seen actually through the most recent period, strong demand from China still remains to Australia, and there is a high regard for how Australia has protected the safety of people here. The challenge there again is just getting the borders open. The Indian students themselves are a little bit more pragmatic. They want to get on with their career aspirations international studies. So they're more likely to switch out of markets like Australia into the UK and Canada if they don't get certainty on border openings. But coming back to your initial observation, probably a little bit early to give any clarity or get any clarity. I mean, we're prepared to take advantage of the opportunities that comes. I mean, as you can see in aggregate, through this period, we've ended up placing quite a number of students still into Australia, albeit in an online study environment with the expectations that they'll travel when the market opens up. Great. Thanks, Andrew. That's what I have for now. Thank you. Your next question comes from James Barker from Morgan. Please go ahead. Good morning, Andrew, Murray and Craig. Just wanted to touch maybe on the IELTS capacity. You mentioned backlogs before. Can you just If we do see a period of significant pent up demand, I guess what's the limitations on your ability to service that? Yes, I think you can see there, James, I mean, we've been rapidly rolling capacity out with those 58 new computer delivered centers in the first half. And again, a significant number to be delivered in the second half. I don't think we'll have capacity issues because we've got computer delivered being rolled out rapidly. And now in a number of markets, and in particular, our largest market, India, We're now able to test using paper as well. So a lot of those social distancing restrictions and restrictions on venues have now been removed. And that actually enables us to very quickly stand up larger venues with more desks and papers. So I think whilst we can see some backlog, in particular, in some markets, We'll continue to push as hard as we can to drive the capacity to take that demand as it's presented. Okay, that's great. Thank you. I think you mentioned at the full year result, there was 82,000 sort of unique applicants in the Obviously, some of those would have been placed over the first half, but are you able to provide an update on that metric, please? Yes, I think, I mean, I've got probably just to give you a little bit of insight. I mean, one of The leading indicators that we keep an eye on is applications, right? So the application number that we've got in the system. Now That doesn't itself directly in an environment like this lead to an APF because you'll go into a phase where you'll put applications in and ultimately then they may defer. I think At the AGM level, we had about a minus 22% of that application pipeline year to date. And as we've come into the end of the year, we're still down, but it's minus 14% and so on a year to date level. So the application decline in aggregate is lower. But I think it's very important to note that there's a couple of different dynamics going on. We are seeing quite a few students, in particular post grad students defer. So they will they'll look at their ability to get on campus in market. And if they believe they can't do it. They will defer their application to the next intake. So again, there's probably quite a bit of movement into in and out of the pipeline at the moment. We've decided and we made a conscious decision to pull back on paid marketing through the last 6 months, just again to be prudent on our expenditures. But we'll now move and have moved to release marketing dollars and we believe we can fill the pipeline given we can see the intakes very quickly, given our marketing and our digital capabilities. Okay. That's great. Thank you. Maybe just in terms of touching on Canada from the visa processing side, obviously, there's been a few bottlenecks and delays From a student perspective there, are these expected to impact the second half intakes and are they resolved now? There's still I mean from a I mean, I guess Canada for us is it's a big market in particular from India. Canada is very attractive to the Indian students and only becoming more so based on their settings. There remains some challenges in that supply chain in getting Visa processes and that just reflects in some respects, the safety precautions as we can see it of the Canadian government in opening up visa centers on mass in India, in particular for biometric acquisition, which is required for Canadian visas. So we have a good number of students in the pipeline for the second half intakes for India. It is constrained still, albeit we're expecting that to alleviate alleviate through the next couple of months. Of course, where that may be problematic, we do have a Very proactive strategy of convincing those students to begin online whilst there may be some These are impediments in the short term. They will flush through the system. So begin online and then study as soon as you move to FLY and study as soon as you get around to getting your visa approved. So I can't Say, I'm 100% sure of how many will move in that direction. But again, the Indian students are very pragmatic. If they think it's just a short term delay, they're probably likely to study online and then move to country once their visa is processed. Okay. Thank you. And just one last one for me. Could you just talk about, I guess, your market share in the IELTS distribution over the half? Yes, well, we've taken a few points of share through the half. And I mean, as you can imagine, We commercially respond very quickly, very aggressive with the opening up of CD capacity, which has been helpful given social distancing and restrictions and keeping customers feeling safe in that test taking experience. So yes, we've taken share through the half. Thank you. Your next question comes from Tim Plumb from UBS. Please go ahead. Hi, guys. Congratulations on an impressive result there. Just Two questions from me, if that's all right. Andrew, the first one around the IELTS recovery and a bit of continuation of the other questions. But back to pre COVID levels now, I suspect that demand for works, economists or immigration is still quite depressed. Do you have any insights in terms of what Portion of customers are taking what sort of portion of customers taking the test potential students? And how we should think about that as a lead indicator the potential recovery within the student placement volumes? Yes. So I think when you look into the data, it's probably around fifty-fifty migration and students. So I think in that context, certainly, we believe we've got all the demand we need to get back to strong levels on student placement. I don't think When we look at IELTS and the other data we have out there relative to student intentions, that there's any question about demand. It really is a supply I guess, a supply side issue as it relates to restrictions easing. As restrictions ease, the students will be there. That's very clear from the engagement that we're having and attendance at events, etcetera. But it's about fifty-fifty, Tim. Got it. Thank you. And the second one just about digital strategy, continuing to show good momentum with the online inquiries up 35%. I mean, I think you touched on it a little bit earlier, And it's probably difficult given that it's not a business as usual environment. But do you have a sense in terms of where we are In that journey of closing the gap between inquiries and conversions? I think it's a difficult question. I think I know where we are in the journey. We've got a lot of Unity sitting in between inquiries and APS. The data science team that we've put in place. And again, we only hired in the CDO in March. We've got very good data. We've been building that for a number of years and that team's priority is to look at a couple of things. 1, a transformative shift in business model from platform to marketplace, which primarily is about leveraging data in a sophisticated way to now enable clients to target the right students for them and students to be matched to the right clients, leveraging data, which takes a lot of ultimate the overhead of our counseling base. Our counseling base still being really important as an expert by their side. But yes, as I think, we're driving for a couple of percent improvement in conversion at the moment through better lead scoring, leveraging the data set. But I think we're very early days in that journey. But that is the priority of the data science team is the lift conversion up dramatically by scoring the very large lead pipeline we getting it to the right counselor, the best counselor for conversion in real time. That's kind of what the ask is of that team at the moment. We've rolled out that technology. It's integrated now into most of our contact center and marketing automation systems, but we're probably only given we started it in March, a month or so into that. So that will play a role, but it will play a role as we move into more likely the first half of next year. Got it. Thanks guys. Thank you. Your next question comes from Matt Johnston from Jarden. Please go ahead. Good morning, Andrew. Can you hear me? How are you doing? Yes, not too bad. Maybe just first question for me, obviously online penetration is high with student placements. Could you maybe talk to expectations around leakage that could happen in the second half? Sorry, you mean students I'm just trying to understand the question, just students studying online? Correct, yes. Yes, I think I'm not sure I understand the question exactly, Matt. So when you say leakage, you mean leakage out of our revenue because they're studying online? Yes. So what's the actual the rate at which you can actually convert into the consensus shut off with the universities? Sorry, I lost you there. Can you hear me now? Yes, I got you now. Yes. So just because you brought forward and people Online, is there a risk that leakage on holding on to that revenue could increase in the second half if they will sort of change their preferences because they're not happy with the online study? Okay. All right. No, got you. So you mean switching from an online study engagement with 1 fusion and then dropping out and moving to another institution. Is that the question? Correct. Yes, I certainly don't think we're seeing really any of that at the moment. So for those students who have started online, there may be some who drop out. And we obviously take that into account and build a position relative to credit notes, which is probably more conservative in our numbers right now than would normally be based on just the uncertainty about how many students may continue past census date. But no, in general, we're not seeing students drop out of an online study engagement and Twitch. I think there's probably some frustration with some of them in terms of the quality of the engagement. But this is a big decision in the first place for the student and the family. They're unlikely to switch unless they're unable to gain confidence that they can get into the market in the longer term. So there's probably very little risk for Canada and Australia in sorry, Canada and the UK in that regard, possibly a little bit more risk for Australia for the longer period of time there. They're not clear as to when international borders will open, but No real data points to point to there as it is. I think one other thing just worth noting, We do remain very closely connected to our students, in particular, as they begin their study journey. And we're often in a position where we're providing direct feedback to the institutions relative to the students experience, in particular, whether that's an online experience. So the counselor is still with them at that point. And if they were to choose to switch, then we would be in a position to be the adviser that would actually help with that switch. So I don't believe we would lose the revenue opportunity in that instance, but we may be the instrument that helps them get a place in another institution. Okay. That helps. And then maybe just from the institution perspective, could you maybe comment on any sort of data or anecdotes you have Certainly around engagement with them and if possible some sort of like for like that. On a look through basis, you should be saying that You're engaged more with the institutions and likely to take share? I think, Yes, certainly, I mean, IDP, as you all know, is very unique, right? There isn't a clear comparative competitor to IDP. So the client relationships that we have strengthened significantly through the last 6 to 9 months. I mean, firstly, because they themselves are unable to travel. So they're disconnected to their source marks from a marketing engagement and events perspective. They don't have a data set that enables them to get clear insights into changing student preferences within market relative to their in market competitors or to other markets. And then from a digital marketing campaign point of view, we're able to work with them on bespoke campaigns based on the data sets that we can provide for them to best prepare for the uptick and be much more nuanced about how they spend their marketing dollars. You can imagine some of them are constrained from a marketing spend and therefore will spend more with fewer. And I think we're in a very good position for that. We are seeing some as I guess Murray said on the strain increase on average fee. We are seeing the universities coming to us willingly to improve the financial terms of trade, so that we can assist them with that rebound. Okay, great. And so as you increase marketing spend getting ready for the fall intake in Australia in 2022, do you expect to take Marketing dollars from those institutions at the same time? Yes, absolutely. We expect to take a greater share of wallet. I mean, through the provision of relevant services and in particular, the data capability and insights and our marketing skills and the leverage of that technology. And I mean equally, we haven't held our teams together as we have, not to have a very clear expectation about driving market share gains across all of our destination and source markets. Okay, great. That's helpful. Thank you. Thank you. Your next question comes from Philip Pepe from Blue Ocean Equities. Please go ahead. Hi, guys. Thanks for taking the question and well done on the good result. Look, most of my questions have been answered, so I might ask a couple on the cash flow, if I can. Great result on the expense management, particularly employee costs and marketing. Do I interpret from your earlier comments that both of those will rebound whether marketing and employee expense will revamp. Yes. So in the second half, The marketing spend will go back to similar levels to pre COVID and FY 2019. So we'll get back to normal spend levels in terms of Staff, was that the other one, staff costs? Yes. So the salary sacrifice that the employees have given in the first half Winds off, we put the staff, the staff vacancies back in that we've And through natural attrition in the first half and the wage subsidy that we have had in the first half ends. So you would be back. About second half? Yes. Well, in terms of expenditure, first half was $16,500,000 per month. Second half will be at $20,000,000 per month. So up about $3,500,000 per month Excellent. And just one more just on the tax. Tax expenses, dollars 15,000,000 tax paid was $8,000,000 Is that a timing difference? Was there a benefit utilized then? We've got some challenges in our techs We've not been able to take up the food or take advantage of tax deferred tax assets in Countries we were making losses. The pandemic has really challenged the the transfer pricing model. So we have to have another look at that. But as the business comes back, I expect that tax rate will drop back to more normal levels. How about the discrepancy between cash tax paid versus tax accrued? Is that a time difference or a timing difference? Thank you. Your next question comes from William McDiarmid from Ord Minett. Please go ahead. Hi, guys. Well done on the net earnings results. Just looking forward, I guess, FY 'twenty two, playing off some of the market share comments you've been making. To what extent has the lack of investment in digital really damaged your competitors' ability to service some of these institutions? And I guess, the opportunity to get to FY 'twenty two in the places like the UK and Canada in particular? And I guess an extension from that, what kind of competitive response have you seen for English testing competitors given how much you benefited from computer based testing? Yes, I think, I mean, as we look to FY 2022 and we look at it from a competitive perspective, I think, Again, we hold a very unique position. I mean, as you would know, in student placement, most of our competitors are small, highly fragmented businesses. And many of them are single destination focused and certainly don't have a strategy or the wherewithal to make the investments that we've made. So I think we're very well placed in that regard. And you've got to remember, most of our competitors were small and fragmented, do not have strategic relationships with the client side of the equation. So IDP is very unique in that industry and that we have highly professional teams in each one of those destination markets working day in and day out, sitting across the table on helping those universities and college craft their international recruitment strategies. So we really do take up the space as it relates to to data, data insights, digital marketing, digital marketing campaigns. We run the most engaged and the busiest search international student search platforms in the world that's connected to sophisticated marketing automation some lead scoring systems and integrated into our experts or our counselor network. So I think our clients and I know through some other events that maybe you've been some of you've been involved in, they've been very clear as to the important role IDP will play, not just in their rebound, but in their ongoing international education strategy. I mean, equally, we work quite closely in the UK with the and Australia with the industry groups and organizations. I mean, in Australia, we run The Australian International Education Conference, it's the largest conference for clients on international education in this part of the world. So we're just very well connected on both ends of the equation there. And that puts us in very good stead to help them with not just intakes in FY 2022, but clearly ongoing. And then in English language testing. IELTS remains clearly the world's leading test. We've just had an Dension in Canada for IELTS for 5 more years from the Canadian government has come through. So in that marketplace, there are maybe a few smaller challenges. But our position is just so strong and our distribution network in terms of test centers and supporting Reporting preparation organizations in the ecosystem really holds a large mode around IELTS. Now As I said before, we're not sitting on our hands. We're innovating IELTS substantially along with a partner. So yes, I'm very confident we'll hold that position going forward. Okay. Thanks very much. Thank you. Your next question comes from Calum Sinclair From Macquarie. Please go ahead. Hi, guys. Appreciate the call is running pretty long. So I'm just sticking to if that's okay. Just an extension to the And at our market share comments you've made, just any signs you're seeing around the fragmented base around reducing footprint or staff numbers And what that could mean as things recover? Yes. I certainly think again, It's more anecdotal, right? It's very difficult to get a very clear view of the landscape. So The data in this area, I rely on my region directors and my country heads to give me a view of how things are unfolding on the ground. I mean, a couple of things I would note. Clearly, those student placement organizations that were solely focused on Australia have really been hammered through this period. And we've seen many of them under significant financial duress and reducing their teams. Where they had the wherewithal, they've tried to shift their resource to focus on the UK, but you cannot do that very quickly. Counselors require multiple years of knowledge and experience in the market to be effective and successful. I mean, again, that's where we're very well positioned with a counselor base and destination leaders that are aligned to the specific markets they report. But my expectation is we'll see a reaction within the competitor network to focus more on the UK for the upcoming intake. We're expecting that. We're well prepared for it because of our position. But for many of them, that will be at the cost of probably focusing on their traditional markets, which may have been Australia, Whereas we will hold our position for Australia and our strength for Australia because we do believe as restrictions ease Australia again will be an extremely popular destination for international students. So we hold on to that pipeline. We're helping them move to online learning with the expectations that border restrictions will ease, in particular, as we move into FY 2022. Great. And I'll just finish up on the gross margin outcome. Flat overall is pretty good given the headwinds from COVID. I guess, would we expect the gains here from IELTS and Shift to Digital to be permanent, while obviously the student placement side of things is cyclical? So Should we think that you've gained a lot of those structure side of things and the cyclical side goes back to where it was pre COVID? For IELTS margin, I expect the margins won't drop back. I'm expecting them to I mean, they're sitting at 45.5% at the moment. I expect that to continue to creep up a little because of the higher mix of computer delivered. For student placement, it's the lower volume over some fixed costs that means the margins just dropped a little. As volumes come back, we'll see that gross profit margin get back up to pre COVID levels. Right. That's it for me. Thanks guys. Okay. Well, I think we've probably run through Tom. I'd like to thank everybody for joining the call this morning, and thank you for your questions. And Murray and Craig and I look forward to speaking to many of you over the coming days weeks. Thank you very much.