Okay. Good morning, everyone, and welcome to our results presentation. We left this on the screen, but just a couple of bits of housekeeping. All of the collateral from today will be posted on our website. The slides I'll take you through will upload immediately after the presentation, and the webcast and the transcript will follow. We'll take questions at the end. If you're online, you can submit using the button on the left of your screen, and then the audience, if you just raise your hand, we'll get a microphone to you. Please also join us for a finger lunch and drinks after the presentation. We have some small but special gift bags for everyone to take away, hand prepared by our chefs from the Capsicum Culinary Studio. Ronnie, thank you for doing that.
I had a little look at what's in. We've got chocolate chip cookies, shortbread, chocolate macaroons, and assorted chocolate truffles. Please grab one on your way out. Getting into the results presentation. First up, a welcome to our new CFO, Hannes Boonzaaier. Hannes joins us from AfroCentric Group, where he's been CFO for the last 10 years. He has some excellent listed company and M&A experience. I think he's known to a lot of the analysts already, and winner of multiple financial industry awards. We were gonna list them, but we didn't have room on the slides, so take my word for it. Just getting into the performance at very high level. We'll get into the detail as we go through the slides. Revenue up 8%, operating profit up 14.
Our operating margin improved by nearly a point to 21%. We had a 16% increase in HEPS, NEPS, and the full year dividend. I think it's also worth noting that our earnings per share number has moved through 2 ZAR for the first time, whilst our dividend has moved through the 1 ZAR mark. Some big milestones. High level, but divisional performance. Schools South Africa, revenue up 11%, operating profit up 12%. Schools in the rest of Africa, revenue up 18%, operating profit up 28%. In tertiary, 14% growth in revenue, 15% up on operating profit. At resourcing, down a little bit on revenue and operating profit.
As covered at our strategy last year, and looking at the relative size of the divisions, it's just worth noting that our education businesses account for 90%, sorry, 94% of our operating profit. The resourcing numbers have a limited impact overall. Just a reminder of our brand portfolios across schools, tertiary, and resourcing. Under schools, you'll note the addition of the Flipper International School group in Ethiopia, and a first outing for our new branding for Abbotts and The Bridge, which are here and here. Under tertiary at the bottom in the middle, I'm also pleased to be able to share the new logo for Rosebank University in Ghana, which I'll talk more about later. The headlines on enrollments. These are up-to-date numbers measured against the same dates last year.
Looking at the total group number, we're up 13% year on year. Then if we split that, the schools division up 11% and the tertiary division up 14%. If we looked at the CAGRs, you can see that we are accelerating ahead of the five-year compound annual growth, both at a total and divisional split level. We're also delighted to have crossed a couple of major milestones this year with tertiary enrollments breaking through 60,000 for the first time and total enrollments going through 100,000. Then breaking down schools for you. I showed you the 11% total. School South Africa grew a very solid 4%. Schools rest of Africa grew by 40%.
If we look at the underlying number, excluding the Flipper acquisition, the rest of Africa schools also grew by a solid 4%. Then tertiary, just breaking that 14% growth down. The contact numbers were up 11% and distance up 40%. We've accelerated nicely across all our brands, but Rosebank College has performed particularly well. Although we are delighted to have made such strong progress, the outperformance of Rosebank and distance, which you can see on the bottom there, will have a mixed impact on revenue in the current year of about 4%. They're at lower price points. Then just a split to show you the impact of Flipper on total group enrollments. If you exclude it, we had organic growth of 10%, which is clearly very strong.
Flipper gave us an additional 3, but we thought that break might be useful. Moving on to the financial performance at a more detailed level. Group operating profits we grew by 8%. Sorry, group revenue by 8%, group operating profit up 14%. Some very healthy numbers and some nice operating leverage coming through. The CAGRs at 12% and 19%. On margin, we had the margin expansion I mentioned from 20.1% to 21%. That's driven by, on the positive side, operating leverage from enrollment growth, a continued focus on efficiencies, a favorable mix shift between high margin education and lower margin resourcing, partially offset by further investment into systems and preparation for university status.
Looking at the divisional operating margins, education in total up 24.2%, and the resourcing division up from 6.3% to 6.6%. Splitting the education margins, a bit more detail there. Breaking down that 24.2%. Schools division went from 21.4% to 22%, and tertiary climbed from 26.3% to 26.6%. Further breaking down schools, South Africa, we moved from 20.3% to 20.5%, and schools rest of Africa went from 30% to 32.4%. If we look at our NEPS in South African cents, we had a growth of 16 to north of ZAR 2, so to a ZAR 2.5. A nice compounding number coming through over 5 years.
If we look at that in U.S. dollars, the growth was 13%, and over five years compounding at 15%. Moving on to the detail of the schools division. We now operate in four countries with 119 schools and heading towards 46,000 students. Those are the major brands listed. If we look at revenue was up 4% for schools in total, operating profit up 15%. Again, some healthy CAGRs. Schools South Africa, revenue up 11%, operating profit up 12%. Rest of Africa, revenue up 18%, and operating profits up 28%. Again, I just mentioned that we only benefited from the Flipper acquisition for the last two months of 2024. Not a major effect on the numbers.
We look at the academic results, a very strong pass rate at 99.4%. Our bachelor pass rate increased from 93.1% to 94.5%. Quite a big move there. Our distinctions moved from a total of 2,669 to 3,317. This is a big shift for us. The average distinctions per student moved from 1.9 to 2.1. We also were recognized with our top students as covered on the right-hand side of the slide. I think it's also worth noting that our bachelor pass rate is 5% better than for the IEB as a whole at 89%. Just running through the real estate and acquisition side of things. We opened Pinnacle College, Ridgeview in January of this year.
The total capacity there is 980, which is short 400 in the first phase. It's early days, but the school has opened well. An update on our Gaborone International School expansion, where the building work to take us to capacity for 3,300 students has now been completed. Flipper International School, which I said I'd come back to. This adds Ethiopia to our international operation alongside Kenya, Botswana, and Ghana. It's got a very good fit with our existing mid-fee African model. We internally funded the acquisition price. What we bought is five well-established schools in Addis Ababa. 3,000 students and 450 staff, with a strong academic performance and reputation, and in a market where there is surging demand for quality education.
Just a little bit more background on Addis, it is the 12th largest city in Africa, with a population approaching 6 million. It's also the 5th fastest growing city on the continent. On building capacity and utilization. Our utilization of both built and ultimate capacity is pretty stable year-on-year at 83% and 71% respectively. These numbers do dart around a little bit, but as I said, fairly stable year-on-year. Moving on to the tertiary division. Just a reminder of our brands. Now with 34 campuses and north of 60,000 students. We offer a comprehensive range of qualifications from skills development to PhD in a flexible range of delivery modes, as covered on the slide here.
Looking at some of the numbers, revenue up 14% to ZAR 3.4 billion, and operating profit up 15% to ZAR 903 million, with some healthy compound growth coming through. Academics are also critically important in our tertiary division, and I'm pleased to report that our module success rate, which is a key metric, improved to an excellent 80% in 2024. As you can see on the slide, on a solid upwards trajectory. A lot of detail on this slide, so I'm not gonna cover it all, but we continue to invest aggressively in securing university status, and we will apply as soon as we can once the final criteria are published. I would just draw your attention to the top right point.
Our minimum time degree completion rates are more than twice as good as the public universities, and our graduate employment rates are also better. If you wanna complete your degree quickly and find a job at the end of it, you need to be studying with us. A final but important point, I think recognition as a university will finally put our students on an equal footing with their peers who obtain identically accredited qualifications at public institutions. A quick summary of the real estate position in tertiary. The campus upgrade has been completed at Varsity College, Pretoria. Vega in Pretoria has been relocated to the same campus in new premises and looking great. I think most people will have heard about our plans for the new campus in Grayston Drive.
Just as a reminder, Varsity College Sandton and Vega Bordeaux will relocate in 2026. Stoffel, who's here in the audience, is very busy knocking down buildings and getting the new design on the ground. It's a big investment for us, very big area, but it will double our current capacity in phase one to 9,000 students and will give us an ultimate capacity north of 11,000. Rosebank College, Braamfontein, where we've purchased the adjacent building and are working on increasing the amenities for students as well as student capacity. The upgrade commenced in the last quarter of last year and will deliver a nice big increase in overall student numbers. A little bit of how that's going to look when completed. It really is a beautiful project.
Rosebank College Polokwane also doing very well. We've acquired two new buildings, one in 2022 and one in 2024, and they increased capacity from 2,100 to 3,300. They are almost full already after the enrollment season just finished. Polokwane doing extremely well. A new Capsicum opening in Rustenburg at the MSA campus. Obviously, it's just started, but enrollments are progressing well. I said I'd come back to this, but Rosebank International University College, Ghana. It adds Ghana to our rest of Africa operation and takes the Rosebank brand outside of South Africa for the first time. We are very excited about the potential here. The international universities in Ghana are priced at around $8,000-$10,000. We're gonna come in at $3,000, so a very advantaged position.
We've established that there is strong local demand for tertiary education, and there is a significant shortfall in public places. We've also had great support from the Ghanaian government. Ironically, we'll open in Ghana from scratch with university status. We will be Rosebank International University College. Capacity in phase one here will be 1,500 students. Moving on to resourcing. Revenue here down slightly, down 8%, and operating profit at a total level down 4%, though the underlying compound growth, as you can see, have been strong. If we look at rest of Africa, which is the bulk of our resourcing division, we've seen constrained top-line growth, but an improvement in both operating profit and margin.
We've grown nicely in this business over the years, but we're now in a consolidation phase with profit growth being driven by rotation into higher margin contracts. An overall improvement in margin and operating profit in the bulk of this business. If we then look at South Africa, we are impacted by a constrained market locally. Clearly, the SA resourcing business is under pressure. Market activity was constrained in the first half of last year in advance of the national elections, and the second half was a little more staccato but also quite muted. I think it's important to remember that this business is very small. It represents only 13% of resourcing revenue and 2% of group revenue. Its performance has a negligible impact on our overall numbers.
I think it's also fair to say that management are doing all they can to make the most of a difficult environment, both on revenue and cost management. What we really need for this business to take off is an improved South African economy. Then I'll hand over to Didier to run through some group numbers.
Okay. Good morning. I'm just gonna deal with the debtors, cash flow, some return on funds employed, CapEx, and the dividend. Let's start with debtors. I think we all understand the tough economic environment we dealing with at the moment. But notwithstanding that, I think we're very pleased that our debtors actually declined year-on-year. The gross debt is down 1%. If you take the revenue increased 8%, that's a real decline of 9%. If we look at it by division, schools actually did increase by a little bit faster than their revenue growth. I think the majority of this debt is in South Africa, about ZAR 120-odd million of the ZAR 131 million. So Africa really very strong collections.
In South Africa also at 120, it's a bit worse than last year, but still not a bad result. I think within the underlying numbers, a really good positive for us is in the prior year, of the ZAR 106 million, 35% was active debtors. Where the kids are still in our schools, and the balance inactive, which is a more difficult collection. In the current year, 41% of the debtors book is active students. Certainly had a better mix. With the active students, we've pretty much collected all of that money, subsequent to year-end. With the level of provisioning that we have, there's only a very small amount to still collect on the inactive debtors, in order to get ourselves up to these provisioning levels.
That more favorable mix has allowed us to have a slightly lower coverage ratio, dropping from 60 to 58. I think the standout performance is tertiary. We're 5% lower in terms of the gross debtors number, notwithstanding a 14% revenue increase. Again, in real terms, that's a 20-odd% improvement. A really great performance, and I think it's really our systems are now sort of like we've enhanced them over the last few years. We've added debt collection tools on top, and you know, the teams are really driving this aspect very hard. Also, the decline in the absolute numbers, but also more favorable aging, that's more in our favor, more recent debt.
That's also allowed us to reduce the coverage ratio marginally from 50% down to 49%. Resourcing, relatively small number, but an increase year-on-year. Again, if we look at the ZAR 41 million, about ZAR 10 million is in South Africa, so that's a really small part of it. The balance is rest of Africa. In rest of Africa, we actually changed the way we do business with our clients, which has driven this debtors number up. We run payrolls for major companies, and we are reliant on them paying us ahead of us paying the employees on their behalf.
If they default on that, it puts us in a very difficult position because for a lot of these, we are the employer of record, so have the legal obligation to pay these employees. What the management team have been doing is that they've been insisting on getting deposits from their clients for one month's payroll so that we're not in a position where if they default, we're in this difficult position. But I mean, the opposite of that is they've then extended the payment terms slightly, which has driven the debtors number. However, we've got the money sitting in the deposit account, which shows under creditors. Overall, we're actually in a better cash position, although from an accounting point of view, it shows a slightly more negative.
Credit losses have moved roughly in line with the education growth in revenue, where and that's where the bulk of our debtors is in any event. I think overall it remains in a steady state. Okay, moving on to the cash generation. I think a feature of this business has always been our strong inherent cash generating ability, and that continues. I mean, as we grow our scale, it just gives us more money to invest in more opportunity to give funds back to the shareholders, and keeping ourselves in a healthy position and providing us with opportunity and firepower to take advantage of any opportunities that may come our way. Again, you can see that consistent, you know, double digits mirroring the earnings.
The benefit of that strong cash flow over the five-year period that we're looking at, you can see that borrowings did reduce. In the current year, that trend turned a little bit where borrowings increased marginally. I think there were three main factors that drove that. The one is the opportunity to acquire the FNB training center, which was obviously ZAR 180 million. That was not in our initial plans, but you know, again, we have the firepower to take advantage at short notice of opportunities that come our way. The other was the acquisition of Flipper. The net impact was ZAR 76 million because although the purchase price was ZAR 136 million, the business had ZAR 60 million cash in it as well.
Then the last aspect that drove that up was the more generous dividend policy that the board approved a year ago. If you look at it as a ratio to cash generation, it hasn't moved. We're well within our covenants. We still believe that we're on the low side of our optimal capital structure and you know could invest in good investments and drive up the borrowings comfortably, provided obviously they are investments that are gonna enhance the group overall. Looking at the ROFE, you know, we've shown sort of approximately 2% growth per annum over the last few years. That has moderated a bit in the last year, but you can see it's on the back of a significant CapEx and acquisition program.
I mean, I've always guided sort of CapEx at somewhere around ZAR 700 million-ZAR 750 million, which you can see 2022 and 2023 were roughly in that range. Maybe a little bit lower in 2023, but now it accelerated quite a bit. It's really again the Flipper and the FNB that drove that up. Now, the issue is that it's in our asset base for the second half of the year, so you know, using the opening and the closing balance. Your asset base goes up, but we haven't benefited from the income from those investments to any material extent at this stage. I mean, FNB not at all. And for Flipper only for 2 months.
In fact, just excluding the Flipper asset and taking out the profits that they did make in the last two months would've pushed the ROFE up by another 0.1%. It will, you know, it's slightly muted growth, but still moving in the right direction. As those investments come on stream, we think that'll drive that, the return on funds employed up again. Again, you can see for 2025, not necessarily our biggest CapExes, but some openings, Pinnacle Ridgeview. That's more capacity coming on stream. Obviously, the CapEx is spent largely in 2024 for the opening. Then, again, the Capsicum, the West Rand site, and Rosebank International.
We started investing already in the last quarter of last year towards getting it open for its September opening. I think a slide we've never shown before, the return on invested capital or ROIC as the investor community knows it. We have decided to introduce this as our sort of headline measure going forward. I think that, you know, having assessed the various return measures, we find that invested capital sort of takes into account all forms of capital no matter where you get them from, whether it's equity, borrowing short-term or long-term, and it's an after-tax measure. It'll. You know, it's relative to WACC. It gives you a more accurate measure than probably the return on funds employed.
Executive remuneration will be based on this measure going forward, as opposed to ROFE as it has been in the past. You know, you'll see this presented in the future on a more regular basis. I think again, saying that it's a good comparator to WACC. We have determined our WACC to be at 12.3%. I'm sure all investors run their own models, but I'm sure that we're not far out either way. On that basis, we're 3.4% ahead of our cost of capital. Again, also steadily improving. Moving on to the CapEx. The new school, that's Ridgeview, the high school that you saw the pictures of. I don't know. Schools don't look the same as when I was at school.
you know that at our more mid-fee level, never mind the premium level. Yeah. We move on to the three new sites. I think the first one is a FNB site that we acquired. We spent another ZAR 6 million on, you know, starting to prepare it. ZAR 186 million was spent on the FNB site last year. You've got the Vega Pretoria, where that got built out. The last one was the Polokwane, where we acquired the one building and then the other building and have kitted them out. That's the three new sites.
In terms of the business and teaching and learning systems, again, there's quite a few things in there, but three standout projects. The rollout of Microsoft D365 to schools, support office and shared services. It went live in May 2024. Now, this system has significant functionality that our old system didn't have. So we can now start harnessing some benefits that we were not able to get from the old system. Like for instance, we now have workflow built into the systems. We have the ability to consolidate creditors' ledgers, which will enhance our procurement going forward. You know, if you've got your consolidated creditors list, you know how much you're spending with each creditor as opposed to each school having their own creditors list.
You can, you know, start grouping and negotiating discounts or rebates, going forward. The second system was the HR system. We're rolling out HR systems SuccessFactors in a phased approach, and the first few modules went live in the last financial year, and more modules will be coming live going forward. That also included sort of changing the payroll system and outsourcing our payroll, which we believe in time, while there might be initial inefficiencies, in time will again enhance our operating efficiencies. Then the last one is we've swapped out our LMS systems, where we're now using Brightspace, which has got a lot more functionality. It's much more modern. We can do much more adaptive learning, personalized learning journeys and that.
We believe that is gonna significantly enhance our academic offering going forward. The additions to existing sites. I went through the CapEx list yesterday, and I counted 17 sites that we made some form of additions or improvements to. The bulk or the bigger of those projects would be Gaborone International, where you saw the pictures. That's now complete. Crawford, Pretoria, we've done a significant renovation in that area. Then three Pinnacle schools being Waterfall, Kyalami, and Raslouw. Now, at Raslouw, we were supposed to pause now and in a year or two continue with the fourth and final stage of the development, but their enrollments have again been so strong that we've just told contractors to stay on site and finish the school. That'll be.
Raslouw will be fully built out in its, I think it's their full third year of operation. It'll be fully built out in its third year and probably full within 4-5 years of opening. Furniture, fittings, and IT. We had quite a lot of swap out of IT equipment in the year. Replacing aging equipment, and then also obviously having to add equipment to accommodate our growth as well as to make more equipment available as we're using more IT-related tools in the teaching environment. The acquisition is Flipper net of the cash in the business, on acquisition date. Right. Moving on to the dividend. Firstly, the, you know, we've spoken about our cash generation, being very strong and, you know, our investment program.
You know, we've been able to fund it in the current year, marginally, not completely, but I think over a sustained period of time, we funded it quite comfortably. A year ago, the board decided to change the dividend cover from 2.4 times to 2 times. If we look at the final dividend, it's up 11% on last year. The prior year included a bit of a catch-up of moving from the 2.4 to the 2 times cover. The full year. Sorry, there's a typo on the slide. The prior year number of 57 should be ZAR 0.87. But it's 16% up at ZAR 1.01, which is exactly in line with the earnings.
We've maintained that cover and, you know, I think the board will probably maintain that cover for a while longer and then assess, you know, what investment opportunities are in front of us and then make a decision to whether to continue with that or maybe be more generous. It'll really depend on what opportunities come our way. I think if we look at it over a period of time, you know, you can see consistently moving up. I think, as Jeff said in, you know, the strong growth, we've hit ZAR 1 with the dividend. I mean, in 2021, we hit ZAR 1 in earnings per share for the first time. Three years later, the dividend has surpassed that.
We're very pleased with the performance and the cash that we can give back to the shareholders. You can see how it's played out between interim and final. I know that we've used the COVID year as the base. The 50% compound is maybe not the most accurate reflection, but I think any business that can double its dividend payout in a three-year period, I think hopefully shareholders would be happy with that. Okay. I'm gonna hand back to Geoff.
Thanks, Didier. Just a couple of slides to wrap up. A reminder of our forward vision. We've set out to lead in every market segment in which we choose to operate and to become the employer of choice in the education and resourcing sectors. That second point, particularly acknowledging the centrality of people to our overall business. Then an update on the strategic imperatives covered at our 2024 investor strategy day. If I just run through these in order. Looking at the addition of tertiary qualifications, we're making good progress here, adding high-demand degrees at both Varsity College and Rosebank. VC is focused on adding law, IT, health sciences, and higher degrees, including work on 9 new masters and 3 PhDs. Rosebank is also adding law degrees alongside commerce, education, social science, ICT, and security studies.
Rosebank will add their first master's in 2026 and their first PhD in 2028. The simplification of brand structures point. This is an ongoing process, but we recently brought Oxbridge under the management of Rosebank College. On the school side, we've moved Charterhouse to the Pinnacle brand, but that process of simplification will continue. The optimization of brand propositions and marketing. Again, as covered at the strategy day, we've developed detailed propositions for all our brands, and we're now working on both delivering and communicating these effectively. I think it's fair to say that there's been a step change in the level of our marketing over the last year, which is benefiting enrollment growth. On investment to secure university status.
I covered a bit of this earlier, but it is a significant area of focus, and we will be ready to apply as soon as the final criteria are published. Expansion of African operations. This initiative is progressing well, as you've seen in the numbers. The 40% growth in African schools that I mentioned earlier, on the enrollment side and the imminent opening of Rosebank University in Ghana underscore the point. Aggressively growing distance tertiary. As explained again at the strategy day, we believe that distance tertiary is a significant area of opportunity, and driven by an expansion in our qualifications basket and better marketing and operations, we grew distance enrollments by 40% this year. That very much on track. Further extending our academic advantage, across all our brands.
We continue to invest in people and systems to improve academic outcomes in both our schools and tertiary divisions, leveraging our 160-strong central academic team. I mentioned our academic results earlier, but we believe that excellence in this area is central to attracting students in a competitive market going forward. Solid progress there. Just a quick run through on prospects. We think that the tailwinds in South African demographics on the supply and demand balance continue. A strong demand for quality education definitely persists in the markets that we operate in. We believe we lead by a margin in teaching and learning. We have a sound balance sheet, strong cash generation that Didier just mentioned, and a growing scale and expertise in Africa.
We're working very hard on extending our competitive advantage across the business, and because of that strong cash generation and sound balance sheet, we're able to invest with confidence when areas of opportunity come up. We are in a good position to maintain our growth trajectory. If I could pause for a moment and have a little bit of an aside and beg your indulgence. I just want to close by taking a minute to talk about our retiring commercial director and CFO. Although Didier has kindly agreed to stay on to support Hannes in a consultancy role for the next year, he officially leaves us at the end of April. He departs with an impressive track record over two decades. As you can see on the slide, he joined us as a group financial manager in 2005.
I don't know if someone died, Didier, but you were promoted almost immediately to group financial director. Then with a big expansion of responsibility in 2019 when Didier took on the commercial director responsibilities alongside CFO. If I could just cover some of these shifts. Student enrollments going back to when Didier started, 10,000, now 105,000 as we've covered. Group revenue has gone from ZAR 661 million to ZAR 8.5 billion. Our employees have quadrupled. NEPS has gone from 15.7 cents to 202.5. The share price when incidentally Didier acquired most of his shares was ZAR 2.1 and jumped to ZAR 33.84 at the end of last year.
If you look at the share price, including cumulative dividends, it's gone from ZAR 2.1 to ZAR 39.78. I just pause a second. You might be wondering, the sharp-eyed amongst you, why we have a 2023 employee number. We wanted to surprise Didier with these slides, and no one was willing to commit to a 2024 number unless he'd seen it. We went with 2023. Anyway, Didier, this is a record to be very proud of, and I think from everyone at ADvTECH, warm thanks for all you've done, and we wish you a long and happy retirement. Well done. Now we can move to the Q&A. Didier, if you want to join me quickly. I think Hannes is gonna be quiz master.
Let's start with.
Thanks. I think we'll move to Q&A. It's fine. Maybe we wanna start with a question in the room.
Right at the back there.
First guys, well done. Fantastic results. I think it was slide 7 or 8 on the school enrollments. I just wanna zoom into that and zoom into the South African segment of it. You obviously have high LSM schools and some mid to lower. What do their enrollment differences look like across the LSMs and across the market positions then?
We've seen strong growth across all our brands, so it's been relatively even. I mean, clearly, when you add a very strongly performing new school in Raslouw, it helps Pinnacle, but we've seen strong growth across the brands.
Okay. In terms of the bad debt profile, or at least the provisioning on that, likewise, similar comparisons?
Slightly higher on the lower fee schools, but I mean, it's not material. I mean, we're talking about, you know. I mean, our overall bad debt is 1% across the schools. So I mean, it's sort of maybe the premium schools are 0.9%, 0.8%, and the lower fee schools maybe just over 1%. So it's not a material difference. There is a slight difference. Noticeable, but not material.
Thanks very much, guys. I can just echo what Geoff said. Didier, it's been wonderful interacting with you across the years, and I'd like to welcome Hannes.
Sure. Thanks. Please.
While we're just getting ready for another question in the room, just a question online. Maybe some background just on the Ghana operation. Which town did we acquire it, and how was the acquisition funded?
Well, we're in Accra. I don't know if you wanna cover the detail, Didier.
Yeah. I mean, it's not an acquisition. I'm not sure if the question's maybe mixing a little. Let me deal with Accra, and then we can come back to Flipper. I mean, Accra is where we're renting a building that we're obviously kitting out. Again, you know, we wanna test the market. We're very confident that it's gonna be successful. But again, we wanna test the market before we put, you know, meaningful CapEx down. It's a relatively limited amount of money that we have to spend up front. I think it's about ZAR 20 million-ZAR 25 million, if I remember correctly, up front. As we prove the success, we will obviously, you know, release more CapEx to make this a meaningful size business.
I mean, the initial phase is 1,500 students. That's not our ambition. Our ambition is to have, you know, meaningful businesses of scale. We'll continue driving that as we've, you know, tested the model and prove it. Just in terms of Flipper, if the question is more related to that. We did fund it out of funds from South Africa. We believe that will be the only requirement of their funds. They've got significant funds in country. They are very strong, strongly cash generative, and we believe from here, we will be able to use their cash flows to fund the build-out of the school.
I think you're all aware that it is quite challenging to take funds out of Ethiopia at the moment. The lack of foreign currency. I mean, there's lots of progress in the country that we think is moving in the right direction, granting banking licenses, opening a stock market, really softening the regulation. When we make an acquisition like this, it's not just about the initial investment. We want a runway of at least 10 years worth of, you know, cash that we generate, that we can reinvest, so that we're not stuck in a position where we might have been trapped cash, which is potentially devaluing.
The team is working on the further expansions, looking at various sites, and we're pretty confident we will be able to roll out a meaningful business with the cash that they have already on hand, together with the cash that they are gonna generate over the years.
Sorry, Didier. Just to link onto that and another question coming up a bit later on the Flipper acquisition. Just confirmation whether it was done in U.S. dollar or Ethiopian birr and the confirmation of the ZAR 76 million net cash.
The 76 is the purchase price. The cash was $60 million. The bulk of that cash is sitting in birr within the country. The acquisition was actually done via Mauritius because their holding company is in Mauritius. We acquired the holding company, and it was paid in US dollars. I mean, the rand equivalent is ZAR 136. There's no further exposure. That is the number.
Didier, it's James here. I just also want to thank you for all the years that we've worked with you. It's been incredible. Thank you.
Yeah. Thank you.
I have a few questions. The first one is, when you move Varsity College in Vega into Grayston, what is happening with Benmore, that campus? What is the carrying value in the books? Then, when you get university status, do you think there's a step-up opportunity in fees? And lastly, do you think that the Cambridge curriculum has a place in the South African schools?
Wanna cover the first one or
We own both the buildings in Benmore and the Vega building in Craighall Park. Obviously, the site that Varsity College is on has a Crawford as well. Actually, Crawford takes a bulk of it. Our properties team have been doing an exercise to convert the Varsity College into the group head office. Well, I mean, I think we're quite far in the process, and I think it's gonna give us a very good return. It will enhance our profits, and it's a good investment. If we take the rental that we're currently paying in our office park. The other thing is that we can fit in our whole head office, get a return, and we've still got approximately 800 square meters spare.
That's also after putting a teacher training center in place. We, the academic team want to enhance the training of our lecturers and teachers. We'll move the whole head office, have a you know really great space to do training of our own staff and have 800 square meters spare for future expansion, you know of our shared services and other departments as required. We believe that one's a great opportunity. In terms of Vega, we are considering some options at the moment in terms of housing one of our brands. We're still busy working on that, but you know. Hopefully we can put one of our other brands into that site. If not, we'll dispose of the building.
Yeah. Sorry, you asked a second question about possibly stepping up the fees and university pricing. What was the other question?
Is there a place for the Cambridge?
Cambridge and SA, yeah. Okay, well, let me talk about the step up in fees. We are actually a major pricing project to try and optimize profitability and enrollments. I don't think we would plan to step away from that project when we get university status. We see the big upside in enrollments. We're not looking to charge higher fees, but we do think there is potential when we have equivalent status to really drive enrollment numbers. On the Cambridge curriculum, it works very well for us in Africa. We do have a little bit of it in South Africa, but I think overall we think IEB is the stronger option. Okay.
Well, thank you. Excuse me. Morning, and once again, congratulations on the good set of results. Just a few questions from my side. On average, how much were the fee increases year-on-year? Across-
Talking 2024 or going into 2025?
I guess you can give me both figures.
Okay. I think in 2024, it was roughly about 6% at the schools, probably a half a percent or so lower in tertiary. Rest of Africa, marginally higher because they do also have higher inflation rates. I mean, the demand with their economies performing better than ours also gives us a little bit of opportunity. Going into the current year, it's again fairly similar, maybe just slightly lower than last year as inflation has mitigated a bit. You know, probably no more than half a percent lower than what we did in 2024.
Just the second question, is there a possibility of the Makini Cambridge brand increasing its footprint in Africa?
Well, there is a very close fit in the brand proposition of Makini with both Flipper and the Gaborone International School. We think there's potential to harmonize those. Certainly we plan to scale those brands in the countries we're in. If we enter a new country, then certainly that would be an attractive option for us as well. The answer is yes.
Okay. On the university status, I think the last time we spoke at the strategy day last year, you guys mentioned that you're pretty confident that the minister will publish, like, what you guys need in order to achieve that status by last year, December. Is there an update on that?
Yeah. I think I was a bit optimistic. We are hopeful that the final criteria will be issued soon, but we have been serially disappointed. I think the original court order compelled the regulations to be issued in August of 2022, so they're already quite overdue.
Okay. The last one from my side. I know Resourcing South Africa is quite tiny, in the grand scheme of things, but with business confidence increasing in South Africa, what's the outlook for that business?
Well, I think I covered it on the slide. I think the shift that is required to reignite that South African resourcing business, which as you mentioned, is extremely small in the group context, is an improvement in the economy. I think at the moment, there is an improvement in sentiment with the GNU. I'm not sure if we've seen the economic benefits of that yet. I think if the economy improves, then we'll benefit in our SA resourcing business.
Thank you.
Just a normal question we usually get. What are the plans for the resourcing division?
I mean, as I've covered, 94% of our operating profit comes from education, and strategically, that's where we're focused. We make a significant amount of operating profit from resourcing, and any decisions we take there will need to take into account value for shareholders.
Just, circling back to the Ghana business. Is the ZAR 25 million upfront number for all of phase one?
Yes. That, including operating costs. That's a fit out as well as the costs ahead of starting operations. You know, we obviously have to employ some staff in advance on that. Yes, that should cover it.
It's a bit of a skeptical question in saying that our enrollment growth is quite high compared to last year's, you know, say, overall 7% growth. What is driving the 2025 volume growth?
I think we've got the tailwinds economically. We've got the tailwinds of supply and demand imbalances, particularly in tertiary. I also think we're doing a great job of delivering great options for students and their parents at the most attractive price points we can provide. I think we are clearly winning significant market share on the back of that. I think it's a strong performance, but in the context of some tailwinds.
Just another question on the more capital employed. What is your target ROIC on the investments and over what time frame do you expect to see the returns coming through?
Okay. Our sort of primary measure is actually the internal rate of return. We do look at various measures, but internal rate of return would be our primary measure that we assess projects against. Clearly, we look at breakevens and, you know, sensitivities and all of that as well. I think again, the way that we build up our returns is we start with WACC. We take a group WACC, we take single project risk, which is obviously a premium compared to if you consolidate, and then we look at the specific project as well and what the risk is associated with that project. For instance, an investment in resourcing would generally be a lot more risky than an investment in a school. That would play out.
Also depending on what CapEx is and what business it's in, the time period that we allow it to get to the hurdle rate may change. For a full K-12 school, we typically allow about 15-25 years to get there. A tertiary institution closer, usually closer to 15 years, and obviously if it was in resourcing, it would be a lot shorter than that. Again, we take country risk as well into the project. You know, when we put the risk premium, we'll take country risk into it. Generally we would be aiming for about 25% return in terms of IRR.
I mean, if the project is not very risky, we would go a bit lower than that. Clearly if it is more risky, we may require more than that. Then also the period that they have to obtain that income can also change according to the investment that we are making.
I don't see any more questions in the room. Maybe a last question online.
Morning, Geoff and Didier.
Hi there.
Great to be here.
Sure.
Congrats on a solid performance. My question is, in thinking about ADvTECH as a fundamental growth stock, one of, I think, the important factors is what is a sustainable growth rate and the balance between mature and maturing parts of the business and the growth and investment parts of the business? How do you think about the sustainable growth rate versus perhaps a really eye-catching step change that will give you massive growth and therefore massive capital requirements in any of the spaces that you've spoken about or perhaps some that you just dream about? Thanks.
One of us start with that one?
Okay.
Look, I mean, we're always looking at opportunities to accelerate our growth as fast as possible, but balancing it as well with the risk. I mean, I think we have had a step change in our growth in the current year. It's hard to say whether that's gonna sustain, but I think, sustainably we have been growing at sort of 7%-8% in the businesses. We've started our investment into Africa, the rest of Africa, which we can see is accelerating and, you know, improving margins and growing at a much faster rate.
I accept it's still relatively small in the scheme of things, but I mean, we must remember that other than Botswana, we only started in 2019 with the balance. I think we're adding two extra countries. We're always looking at the possibility of a needle-moving acquisition opportunity. Of course you know, it's not in our hands. It's a willing seller, willing buyer situation, and often the price could be, you know, beyond what we're prepared to pay. I mean, yeah, I think the first thing to us is to obtain sustainable growth. You know, we're not a one-year business. It's sustainable. We wanna be printing, you know, whether we get 13%, 14% next year or not. We certainly want 5% plus year after year after year.
I think that's our target, and obviously if we can get something on top of that, great. That's the core of what we do. Then we look for opportunities that may accelerate that. I mean, you never know. It's very hard to predict when they're gonna come to fruition. We're always working on them. In the background, there's lots of things we're working on. Again, a lot of them don't necessarily ever come off. It doesn't stop us from looking.
Okay, maybe just for all the questions that was asked online, we did cover a few of them with the questions asked in the room. Our last question from the online group is: Given the significant learner growth in tertiary, do you expect margins to still increase?
I think more students gives us more opportunity for operational leverage. Yes, I think there's every chance that we can continue pushing our tertiary margins.
Sorry, I think the online grouping is definitely asking more questions. Something coming up. Yeah. He's just referring to the Moneyweb story yesterday about the 100,000 matriculants with bachelor passes, and how can ADvTECH absorb this into their tertiary system? Are these the tailwinds that you spoke about?
Well, that imbalance of supply and demand. I mean, it's always difficult to quantify exactly what that is because of multiple applications to the same institution. I think there is an imbalance of supply and demand, and we will capitalize on that by offering the right qualifications at prices that people can afford. That's our strategy across our portfolio of tertiary brands.
I think that concludes our questions online as well.
Great. Thank you.
Okay. Thank you, everyone. Don't forget to pick up your gift pack. Put on a kilogram. Help yourself to some lunch. Great to see you all. Thanks for coming through. Once again, thanks to Didier.
Thanks, Geoff.