Transcript ADvTECH Strategy Day Presentation 26 November 2024

- 1 -

GEOFF WHYTE

Good morning. We're waiting for a couple of people from Cape Town, but I think we're on quite a tight timeline, so let's maybe get going. So first of all, welcome and thanks very much for making the time to join us in the wind down to the end of the year, and we're looking forward to a trip to some of our locations, and also giving you a flavour of our forward strategy.

So let me get straight into the slides. This is the latest snapshot of our brand portfolio. As you can see, it's a wide set of brands across Schools, Tertiary, and Resourcing, and those sharp eyed amongst you will have spotted that we've added the Flipper logo on the school side, our new acquisition in Ethiopia, of which I will talk more later. And this is the latest picture of the revenue and profit breakdown of the company, just to give you a sense of the shape. So Tertiary, 40% of revenue, 50% of operating profit.

The Schools business split between South Africa and International, 36% in South Africa, 37% of profit.

International, contributing 5% of revenue, and 7% of operating profit. So the education total 81% of revenue, and 94% of profit, and then Resourcing 19% of revenue and 6% of operating profit. So we will focus today on our education strategy, in the interest of time, and because it represents the bulk of the business. And I wanted to share our forward vision, and this is something we've been talking about throughout the company for the last 10 months or so, and we've set ourselves the task of leading in every market segment in which we choose to operate, and that's a little bit of a shift from a focus on incremental year on year revenue into a leading share position, and we also want to become the employer of choice in both the Education and Resourcing sector.

So moving on from there, and just a little bit of background on the process that we've been through to create the work that we're going to share today. And first of all, we took every one of our brands and defined it on this model, and we found that very useful in terms of extracting the essence of our difference in advantage versus the competition in the marketplace.

So just to run you through how that model works. At the bottom there, you've got the brand icons, so any phrases that we own, any iconography that we own, payoff lines, that kind of thing, and then attributes, and we've identified the key differentiating features of our brands. And the filter there is they must be relevant, differentiating and true, and then we'll add that into the functional benefit. So the benefit of that attribute, what does it mean practically, and then also into the emotional space.

And I think particularly when you're dealing with parents and children, that emotional space is also extremely important. And then the essence, the defining promise of the brand. So that's the model we work to, and we have done this work across every single one of our brands. And then to give you an

- 2 - example of how that works, this is a live example of Junior Colleges, and you can see there we've added ambition at the top there. So to be Africa's leading preschool group, and I think leading in preschool is one part of that, the other is the Africa piece, because we think we can scale junior

Colleges into the continent. And then starting at the bottom, and you can see the color coding. The attributes are color coded to the functional benefits above, and the defining attributes for Junior

Colleges start with purpose built environments, with on-site security, and CCTV monitoring, and the fact that junior Colleges is part of ADvTECH, that ladders into the functional benefit above, which is children are safe and secure in the care of the school, which is clearly very important to parents. And then going up detailed real time feedback is given to parents via specialised app, and that means that parents are connected to the child throughout the day, another major consideration, if you've got young children out of your control.

And then parent support networks, which means the parents are informed and connected, both to the school and to each other. And then we have qualified and registered early learning teachers, and play based learning, and that's very different from just play, and that leads to superior grade one Maths, and language scores when we benchmark in grade one.

Then we have fees, including after care, holiday periods and meals, which means known costs, and no surprises for parents, and we are open early to late throughout the year, and that leads to year-round flexibility and convenience for parents. So we think that's a very potent mix that really plays to the core of what parents are looking for with children of this age.

And then emotionally, parents feel confident their child is safe and, in a nurturing, and stimulating environment, and the students themselves feel loved and engaged, and the essence of the brand building your child's foundation for life. So we think this is very powerful. As I say, we've done this for all of our brands. It's been very useful, and then this becomes a basis for investment, for focus and communication. So that is central to the strategy process. Around that, and you can see the brand positioning piece with the arrows there. It's a pivot, but we've also defined our segment leadership ambition.

We've spent a lot of time thinking about target markets, growth trends, where the opportunities are looking like there. Then the broader demographic and market trends, including the supply demand balances. A SWOT analysis, a full review of our competitors, and then we've taken that into strategy, which in essence, is how we will leverage our strengths against the competition to achieve our ambition. And then we've built 5- and 10-year commercial plans behind that, looking at real estate expansion, enrolments, revenue, margin and EBIT. So it's been a very thorough and comprehensive process.

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And then, just before we get into the actual results of that, just a quick word about capital allocation, I think one of the strengths of ADvTECH has been we have been very disciplined in this area, and we are absolutely committed to that continuing. We asked quite a lot what our ideal capital structure is, we've laid that out there, so 15% negative working capital from fees paid up front, and equity at 40%, debt at

45%, just a comparison of where we sat at the end of 2023, on the right there. So there or thereabouts, on the negative working capital, but a bit higher on equity and a bit lower on debt, than we'd like ideally. But when you buy an Ethiopian Schools group and a major campus in Sandton, that's probably going to help. The business is strongly cash generative, I think everyone in the room will be aware of that, and we continue to look for attractive investment opportunities, but only where they meet our rigorous criteria.

You will also be aware that we've reduced our dividend cover and increased our dividend payments.

And looking ahead, if we do have future excess cash, we'll look at all options to distribute that, between increased dividends, special dividends, and potentially share buybacks.

And then moving into the education strategy. This is our footprint in South Africa. So you can see massive strength in Gauteng, pretty strong in KZN, reasonably strong in the Western Cape, bit light on the school side, but I will come back to that. But that's the shape of the business in SA.

And then we've done a lot of what distilling, at an aggregate level, what our competitive advantage is.

And we believe that there are significant synergies through our Schools and Tertiary Divisions. If we had the choice of splitting them or keeping them together, we would definitely keep them together.

And through that combination, we're getting a lot of value from our Shared Services division, and that's centralising procurement, the processing of transactions, and account management, and that is delivering really quite large cost savings, some of which is going to margin, and some of which is being reinvested back into the brands.

And in terms of where we are on that process, we think we're about halfway through the journey, so still lots of upside potential through the Shared Services Group. And then on marketing, we're working on creating winning brand propositions and communication, and leveraging our scale when it comes to purchasing media, for example, and also optimising our pricing strategies. To assist us with that, we hired an industry heavyweight in Steve Miller in June of this year, Steve has been group marketing head for both AVI and Tiger brands, and ran Global Innovation for SAB-Miller, so he knows what he's doing, and is already having a big impact. And then, from people point of view, we are leveraging our scale and investment in training, and career development to attract and retain the best people, as you can imagine, in a business like ours, people are absolutely essential, it's the biggest part of our cost

- 4 - base, so getting that right is a huge priority. And as I said in the vision statement, we are absolutely committed to being the employer of choice in both education and resourcing. And then a huge point of difference and advantage for us, that has built over the years, is our Central Academic Team, and they are focused on delivering superior academic outcomes across both Schools and Tertiary. And that's a team of 160, and they are working on the design and review of qualifications, technological systems to support teaching and learning. I'll talk a bit more about that later, teacher and leadership development programs, a lot of best practice sharing across the business, and also publishing an accredited academic research journal. And just to stop on the Central Academic Team for a second, this is the ambition that we've laid out for that team, and that is to maximize our academic advantage in both the

Schools, and Tertiary Divisions, and also to be internationally recognised as leaders in academic thought and practice. And that's something that we have already started putting a lot of effort behind.

And then the areas of focus for that Central Academic Team, so accreditation, academic governance, also quality insurance, making sure the standards are kept very high. There's a compliance piece to that around schools, elevating teaching practices I just touched on, but also creating and integrating systems to improve learning outcomes, and again, I'll come back to those. And then institutional research, elevating the standing of our tertiary Divisions with Research and Quality Enhancement, and also creating, and optimising academic support systems. So, and again, this is a huge benefit to both the Schools Division and the Tertiary Division.

And then moving on to the South African Schools strategy. We have some very helpful tailwinds up at the top left of the slide there, and the first of those is the long-term growth of our middle- and high- income target markets. And despite the best efforts of the ANC, that continues to head very much in the right direction, and shorter term, everyone's aware, consumer and business sentiment is improving and interest rates are coming down, and that can only be positive for us. In terms of the headwinds, the long term under performance of the SA economy, leading to immigration, amongst other things, and in the Schools Division, it is a highly competitive market.

And in terms of our focus, we, and I've touched on this already, but we're creating winning propositions for all our brands, and then communicating them really effectively. And I think any school delivers three things, superior academic outcomes is the core, life skills in different flavours supports that, and then excellent student experiences, and that's about culture and the facilities. And delivering consistent high quality in every brand for us is very important. We operate at a number of different price points, but the quality standard remains the same, and we flex the number of subject choices and extra-curricular choices in line with price points, but that quality standard, as I said, remains. And we also will continue to drive affordability through price increases in line with, or even slightly below inflation, and our view there is that drives full schools, and there's tremendous leverage in that for us.

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And then our well-established portfolio, and I'll give you a flavour of that a bit more in a second, covers all the most valuable areas of demand. I've talked about the focused expansive subject and extracurricular choices. So the stripped down version would be Pinnacle, and the most expansive would be Crawford. We also range from traditional to liberal, you know, Trinity is quite traditional,

Crawford is quite liberal. Early learning, I touched on Junior Colleges in the opening, specialised academic support, and Assisted Learning, and also online through the Evolve School. And then, just coming back to that tailwind, this is some interesting research looking at the actuals for 2020, and 24, and a prediction for 2029, which is the last bar, and that shows a decline in the low income segments, a pretty steady growth in middle income, and we target the middle income with Rosebank, and then

LSM 8 to 10, also showing good growth. So as I said earlier, despite the economic challenges, our target market continues to grow very positively.

And this is how the Schools Division looks, hurriedly updated to include Flipper. So we're up to 118 schools, about 44,000 students and 4,500 staff, and you can see the breakdown there. I won't go through that in detail, but it will be in the packs that we publish. And then to give you an idea of the portfolio and the price segmentation that were operating, these are the matric price points for the major brands. So Crawford at just north of 162,000 Rand in Matric, at The Bridge just below that Trinity

House at 127 000, 128.000, Pinnacle College at 90 000, Abbotts at 86 000, and Evolve the online school at 42 000.

And then just a quick word about a couple of the systems that we use across the School's division to support academic excellence. And the first of those is AdvLEARN, which is powered by some very clever Tech and AI. So it currently covers Maths, Maths Literacy, and Science. We're looking to expand the range of subjects that are included. It tracks student homework and use, but at the same time it generates personalised learning pathways for the kids, coaches them through problem solving, and then this is incredibly valuable, it provides immediate teacher feedback at both individual level, and at class level to the teacher, so they can act on it the following day. It also uses AI to build individually focused assessments, and it gives the schools real time dashboards, giving insights into teaching and learning effectiveness, and that has been incredibly powerful for us in terms of driving teaching and learning outcomes.

And then the MAP program, of international benchmarking, this is looking at adaptive assessments in

Maths and English currently, again, we're looking to expand that, and it gives really powerful insights into student ability and level, and sets growth goals for them, what's possible, and then creates personalised learning plans to close those gaps. And then we assess at year end how each student has done against those goals, and it also allows us to track performance across all our schools and also against international benchmarks. So again, hugely useful, and a very powerful tool. And then if you

- 6 - look at what that's translating into, these are our 2023, schools academic results. So on the IEB side,

100% matric pass rates, and the bachelor pass rate at 93%, that is 4% better than for the IEB segment as a whole. That's a result we're proud of. On the SA curriculum, we had 2,669 distinctions at an average of two per student. I think that's a great outcome, though we do have plans to push that higher, and on the Cambridge curriculum, 327 distinctions and 100% of the Crawford international A level students got into international universities.

So I think our academic results are very strong. And then in terms of enrolments, this is looking back a few years, but we are compounding enrolments, growth at 5% in South Africa, and the most latest shift there, 23 to 24 was also 5%, so in line with the CAGR. And how that's translating into the commercial side of things, revenue is compounding at 13%, operating profit at 16%, and you can see that we are continuing to nudge up our operating margins, and that's despite significant ongoing investment into our school system.

And this is a slide showing our enrolments build from 23 to 24, and the first point I'd make there is, joiners is a huge number, 8,500, new joiners, so strong demand definitely exists for our schools, brands. And then looking at other bars, matric levers, kids leaving at the end of school, is not a lot you can do about them. But if you then focus on the other two bars, immigration, relocation, and financial, and other leavers, that stands at just short of 5,000, largely driven by economic effects. And if we were in a more positive operating environment, the economy improves, and that reduced non-leavers, sorry, non-matric leavers, by 25%, we'd have grown net SA enrolments this year by 9% instead of 5%.

So a small positive shift in the economy will have a significant positive shift on our enrolments. And what does the economic outlook look like at the moment. Well, I think we are all cautiously optimistic about the GNU, and the Western Cape is storming ahead, I think, and showing what is possible. And that's generating lots of positive headlines. And we found an Investec projection, which may be optimistic, but looking at 23 to 24, we've gone from tepid growth to slightly less tepid growth. Their forward view for next year and further on is that we will see growth heading back up to around 3%, which is still not where it needs to be, but it's clearly a positive trend.

So things looking quite positive on the macro front. And then in terms of what we will focus on strategically, so we're going to leverage the CAT, the Central Academic Team, and our AI systems to further push academic advantage, that is the core of what students and parents are looking for. We think there's room to go in shared services. We are upping our game on marketing, both in delivery and communication of compelling brand propositions linked to the ladders that I shared with you.

We're also going to use scale average to grow margins and operating profit but avoiding aggressive price increases. As I said, our priority is full schools. We also are very focused on becoming the

- 7 - education sector employer of choice, and that's about attracting, retaining the best teachers, and academic leaders. Touched on the marketing piece, and should the SA economy improve, we're probably building one school a year at the moment, if that shifts in the right direction, we'll definitely up our plans there, maybe moving up to building three schools per year. And we're also addressing slight under representation in schools in the Western Cape, as I showed you on one of the earlier slides, we definitely have some room to grow, and we are attacking that with lots of energy.

And then moving on to the Tertiary strategy. This is the shape of the business at the moment. So,

Varsity College, Rosebank College, the two behemoths supported by Vega, and then Capsicum on the culinary side, and the School of Hospitality and Service Management, and then vocationally Oxbridge

Academy. And here the tailwinds picture, slightly different from schools. We still have that demographic growth, which is very helpful, but the other big driver is the significant and growing shortfall of the supply of state university places. And I'll share some more information on that in a second. Then the short term, we're seeing that economic improvement, the headwinds again, the

South African economy has been tough for the last few years. So in Tertiary, we are focused on creating and delivering winning propositions for all our brands. I think we've made some really good progress there, and focused on superior academic and employment outcomes, again, slightly different from the schools. And there, we're looking at work readiness and career support leading the way on that, and also excellent student experiences. And we think that we've covered all critical areas of demand, so we've got mainstream to niche qualifications and vocation, as you just saw. We've got a broad range of price points, and we're also quite focused on the distance opportunity.

So coming back to that supply and demand imbalance, looking at this as the private higher education sector, 2010, to 2021, we'd love to share more recent numbers, but they haven't been published yet, so this is the latest we can give you, but I think it demonstrates the trend quite nicely. So private student numbers continue to grow strongly. They've nearly tripled over this 11-year time period to

235,000, we've obviously been a huge beneficiary of that growth. They seem to be leveling off at around a 6, 7% annual growth rate, off a higher base. And the sector is being driven, as I just touched on, by demographic growth on one hand, and a constrained public system on the other. And then maybe the more interesting chart is the public chart, again over the same time period, and we've run some numbers here. So public university student numbers declined by 2%, 2018 to 2021, growth has been negative in 2 of the last 4, 5 years, and it looks like public places are fairly static at around 1.1 million. And then we've been extrapolating what we think the market opportunity looks like, and to meet the NDP 2030, targets, if we assume no increase in public sector capacity, which looks likely, private sector places will have to increase by 300,000 by 2030, this is only five years away, so that looks like a huge shift. If the public sector matched the last 10 years growth rate, which, as I said before,

- 8 - looks a bit unlikely, that would still mean a shortfall of nearly 170,000 places. So that supply demand imbalance is powerful and continuing.

And then an idea of our brand portfolio and price points. So Rosebank College covering from R16, 000 to R50,000 Rand a year. Varsity College, R28,000 to R110, 000, Vega, R86,000 to R138,000 Oxbridge, on the vocational side, and distance from R4,000 to R37,000, the hospitality school, R45,000 to around

R70,000 and Capsicum around R24,000 to R90,000. But again, a good range of prices covering our bases in the market. And just a high-level positioning for Varsity College, our target market here is definitely the upper end, so LSM, 8 to 10. And our ambition is to cement Varsity College's position as the leading private university in the country, and also producing the country's most employable graduates. And that second part doesn't relate to just the private sector. We would like to have the most employable graduates across the entire sector, including public. And headline positioning, we want to maximise student academic potential through superior teaching and support systems, in safe, optimally equipped campuses in prime locations. And that's really the core of the offer. And then

Rosebank, a lower target market with LSM 4 to 7, and our ambition is to be the largest and most respected university in Africa. We have international ambitions that I'll come back to for Rosebank, and positioning here is fast tracking students’ careers through affordable employment, focused qualifications, delivered by excellent lecturers in easily accessible campus locations. We often talk about one taxi, but that easy access is very important for Rosebank.

And then just that reminder of the chart that I showed you earlier. So that LSM 5 to 7 group, very powerful for Rosebank, and 8 to 10 very powerful for Varsity College. So that demographic shift, and the supply demand imbalance, are two powerful forces running in our favor. And then, just to give you an idea of the faculty breakdowns, this is Varsity College and Vega, and you can see a good spread of strong numbers there, I would also point out that we are already the biggest Law Faculty in South

Africa at Varsity College with 4,500 students. And then the similar picture for Rosebank, Law is in its early stages, but we have big plans on the legal side, and again, strong numbers across the board, but you can see that we are heavily focused on commerce currently.

And then the shape of the business. Everything currently forms part of the IIE, the Independent

Institute of Education, which is our registered holding company for all of these brands, and all of our higher education students are currently assessed and certified by the IIE, regardless of which brand they're actually attending. So looking forward, and with University status in mind, I just wanted to share our forward plan there. So from the IIE, if you look towards Rosebank, we're looking at adding a second entity there under Rosebank College. And then the evolution would be to a University College initially, and then to full University status. And then, from a Varsity College point of view, we'd like to

- 9 - bring Vega, MSA, and the hospitality school formally under Varsity College. And we think, based on the latest regulations, or latest draft regulations, we should be able to go straight to University, but with a new name, so that's the plan there. And just in terms of timing, I've laid it out on the right, that we think it's going to take us 18 months, to 24, so a couple of years to get to university status. We're hoping that we'll have final criteria by the end of this year, that has been promised by governments, but they've broken a few promises before, but let's hope it's coming soon. We will apply as quickly as we can, certainly within 6 months of having the criteria, and we hope to have Varsity College University under new name, and Rosebank International University College by 2026.

And then just some price comparisons, historically, Varsity College has been tracking at a big premium to the public universities. What we've seen is a gradual closing of that gap, and that's despite the

30,000 Rand per student subsidy that the government gives public university students. So the price disadvantage that we've historically had is becoming less over time, and again that clearly works in our favor.

And then looking at Varsity College against private tertiary, so against Stadio and Eduvos, on this chart, you can see that we operate at a premium price, and we back that up with a premium offer. So we're definitely commanding a healthy premium against those two biggest competitors. And then in terms of our competitive position for Varsity College in Vega, against the public universities on the left of the slide, so we believe we're tracking ahead in terms of the quality of teaching and learning, definitely ahead on campus security, student support and development, also an advantage, and Career Services definitely in our favour, if we were losing, currently, and we're working on it, and I'll come back to this, our range of qualifications isn't quite where we'd like it to be, and the level of academic staff, in terms of their level of qualification has room for improvement, and also upping our research output.

University status I've touched on, we'd love to nail that one, and extracurricular facilities and price. We are actively addressing all of those areas of shortfall, however.

And then against private tertiary, we're winning on student experience, range of qualifications is an upside for us there. Quality of teaching and learning, reputation, and career services, we are losing on price, we're undercut on price by some lower quality competition, so we're not too concerned about that, and then access as some of the competitors will allow people in to study with lower schools qualifications. And again, we're not going to move our position there. So summarising that, we are highly advantaged against the private competition, and we have some significant advantages already over the public universities, and we're working on any areas of weakness.

And then Rosebank College in terms of the price analysis. So on the left bars, you've got the distance sector, and then on the right you've got contact. And again, here we have some significant price

- 10 - advantage in the market. So we are currently, on distance, charging 10,000 Rand a year, less than

Varsity College Vega, we are in line on distance with key private competition, but also lower than the public universities, by around 8,000 Rand. And then moving across to contact, we are 58,000 Rand less than Varsity College Vega at Rosebank, 20,000 Rand less than the Key private competitors, and 26,000

Rand less than the public universities. So we have a significant price advantage brand in Rosebank

College.

And then just summarising their competitive position. So we are winning on minimum completion time, so people that actually finish the degree in the time that they're supposed to, affordability, student support and development, smaller class sizes and campus safety. Those are very important things to our students. We lose some offset to Varsity College, University status, campus facilities, the range of academic offerings, particularly in post grad, which we're addressing, and also research output and the level of our lecturer qualifications. And then against the private higher education institutions, we also win on minimum completion times, affordability and contact, academic reputation, campus facilities, and Career Services. The one area we've identified where we have a shortfall, that we want to address, is support centers for distance learning, so places where IT and the

Internet can be accessed with computers and connections to the world.

And then summarising, we have a big price advantage over our public and private competitors at

Rosebank, and we think distance is a huge opportunity. And then looking at our enrolments the CAGR there is 6% in the most recent year, 23, 24 that was 7%, so we're actually tracking against a very positive, ahead of a very positive, long term trend. And from a commercial performance point of view, revenue is compounding at 12%, operating profit at 16%, and again, we are increasing our operating margins despite investment in the brands.

And then just a quick word on distance, I've said on the slide here, strong growth off a relatively low base. We have, as you'll see, been growing very aggressively, but our market share of tertiary distance, we think it's around 4%, and that's a long way behind Stadio, for example, and we definitely feel there's an opportunity to go after there. And these are the enrolment growth numbers for Varsity

College in Vega. So compounding going back to 2020 at 22%, so in isolation, that's a great number, until you look at the market share side, and that growth has been driven by, I think, strong brand proposition, and the addition of some carefully chosen new qualifications. And then, just for background, you know, we are 88% contact in Varsity College at Vega, and only 12 in distance, And again, that suggests a big opportunity to grow. And then off a smaller base, this is looking at the

Rosebank College distance enrolment growths, and 24 against 2020 we're up 475%, so this one is really taking off. We have strong distance growth that's driven by market demand, attractive pricing, and the addition of new qualifications. And interestingly, the split between contact and distance is exactly the

- 11 - same as Varsity College Vega, and again, we think there's big upside there. And then addressing some of those challenges, the product strategy, so the qualifications we offer for Varsity College in Vega, we are going to add high demand distance qualifications to drive growth. So in Law, IT application development, and an MBA, which we don't currently have. The accelerated introduction of higher degrees, support university status. So Masters and PhDs, quite an aggressive program there. And also leveraging synergies between Vega and Varsity College, in terms of teaching and interpolation of students from one to the other to teach various courses, and co-locating the campuses, and you'll see that later on our tour. And we're also getting into health with a Bachelor of Physiotherapy Degree.

And then, from a Rosebank point of view, the high demand fields at that 4 to 7 LSM, are in cybersecurity, supply chain, law enforcement, and security management, so slightly different focus.

But we're also going to increase our distance learning programs, education, law and commerce, and we think there's a particularly large opportunity in Law, and we've got a big program of qualifications launching between 2025, and 2028 in Commerce, Finance, Law, Security Studies, ICT, Education and

Social Science. This is a big program, and we're also aggressively expanding our post grad portfolio with

Masters and our first PhD. And then to summarise, our Rosebank College strategy. So we want to aggressively grow market share in LSM, 4 to 7, both in contact and distance, whilst further increasing our margins through operational leverage and realising cost efficiencies, that will be achieved through the expansion of the qualifications I just covered, the introduction of student contact centers to support distance, and improved marketing, and all of those initiatives are currently underway. Our communication will focus on the key points of difference against both public and private, so safety, on time degree completion, and graduate employment rates. And we also will expand the brand into

Africa, starting with Ghana in 2025, so very soon, opening as Rosebank International University

College. Interesting that we can open with no presence in Ghana as a University, but we can't do that in South Africa, yet.

We also will invest to improve the qualification level of our lecturers. We're doing a lot of work on data driven pricing, and we will add International to the brand name in South Africa post the Ghana opening with a new logo, and this is the new logo that no one else has seen, so you guys are the first. And then the Varsity College Vega strategy, we want to grow market share in LSM 8 to 10. We plan to maintain our current premium prices and margins, and we're going to deliver that by investing to build competitive advantage against the private sector, and by narrowing the gap against the public universities. So we've got a twin, twin parts to that strategy. Again, we'll focus on our growing points of advantage against both public and private, but in that, we want to position ourselves as a first-choice option. I think historically, we've been a second-choice option to the public universities, we want to change that. We also build our clear Vega sub brand for Varsity College, with a niche leadership position there, and that will focus back on brand strategy and design, that's been diluted a little over

- 12 - the last few years, and in that process, we're going to migrate the more generic Vega degrees to

Varsity College, whilst expanding the specialist side in Vega, especially in the post graduate space. We'll also build a clear School of Hospitality and Service Management brand under Varsity College, and our license to use the MSA brand name is expiring, and when that happens, we will discontinue it.

And then the focus areas for Varsity College. So we are going to leverage a number of quite attractive areas. So best in country, minimum time, degree completion, and graduate employment, we think those are huge strengths. Our superior private university experience, so safe class, leading facilities and prime locations, and enhanced reputation when we nail the University status and a name change.

We're going to leverage our academic staff to improve our research output, and also our teaching and learning outcomes, which we already believe are very strong. I've spoken about the addition of new qualifications that can scale. Big focus on online market share, particularly in the post grad side of things, where the biggest growth is happening, better communication to well defined target markets, there’s a lot of work being done to improve the quality of our lead generation, and also our conversion ratio of leads to enrolments, and the development of pricing, again, I've touched on that, but that's a big area of focus, and then realizing further synergies with ADvTECH brands and divisions, and again, that is a big project. And another final area is to increase our effective catchment areas by supporting third party owned and run student residences. We don't want to run them ourselves, but we'll definitely facilitate that, and that effectively increases our catchment area for students.

And then at our interim results, we weren't able to share exactly the details of our new University campus in Grayston Drive, though that is now public domain, these are a couple of pictures of how it will look, and it's a very significant campus development. So, and the plan, just to remind you, is to move our existing Varsity College, Sandton and Vega Bordeaux campuses to the new site in 2026, we'll invest just short of 420 million Rand over two years. It's a vast land area of 47,000 square meters. It really is a magnificent location and site, and it will double our current capacity to 9,000 students, and ultimate built capacity will be at least 11,000 and, on our tour, later, we're not going to go in in the interest of time, but we will drive past and give you a look at the actual location.

And then moving on to our international division. We used to refer to this as other Africa, or rest of

Africa. So this is now ADvTECH International, very proud of the new logo. And the ambition here is to be the leading private education group on the African continent with the most students, best academic results, and best student experience. And we are very focused on delivering all three and believe that it is very possible. And then just anticipating a few questions on why we have expanded into selected

African countries. So this is really a summary of why we believe Africa is attractive. So demand for high quality private education is both strong, and growing quickly. We've got very strong demographic

- 13 - growth in our favor, urbanisation is happening quickly, and relative to South Africa, you have fast expanding GDP. And then we also think that our business model mitigates many of the risks of African expansion. So our Mega School structure of 3,000 plus students allows us to deliver strong returns and margins at affordable fee points. We also find that the cost of teachers is around 20% lower in Africa than it is in South Africa. The vast, vast majority of what we need to own and operate schools is local, so local supply chains. We operate relative to many businesses on high margins, knocking on 30%, and we have negligible hard currency Capex costs, so you can never remove the risk of Africa, but we think our business model suits it quite well.

There is also generally limited private sector competition, and the opportunity for us to differentiate in terms of superior academic results and facilities is huge. And we're also able to leverage our Central

Academic Team, putting those AI systems in place, for example, and also optimising developing curriculums and qualifications. And we're also able to leverage our support teams in South Africa. It's a huge benefit to us, and leveraging property expertise with Stoffel, who's in the room, but also on the people side, and also on finance, and we are also able to self-fund expansion in local currency from existing operations, and again, that's a significant de-risk. And this is how the international Schools enrolments are looking. So we're compounding at 9% going back to 2019, and another milestone, I think, with the addition of Flipper, we now have over 11,000 students in our international division, which is slightly more than a third of our student numbers in SA. So the international side of things is becoming very significant for the company.

And then the financial performance, again going back to the half year results, but revenue compounding at 21%, operating profit of 56%, and operating margin from 21 to 24 has gone from

13.5% to just short of 29%. And then country selection for the existing operations, just to give you an idea of why we've chosen the countries that we have. So Kenya, big economy, strong GDP, strong GDP per capita, sizable and growing population, and it's a young population. Official language is English, that's important for us, and the GDP forecast remains strong. Ethiopia, it's close to Kenya, which is clearly helpful they’re neighbouring countries. It's the fifth largest economy in Africa, strong GDP, and

GDP per capita, massive population at 107 million, also young. English is the language of instruction in many schools, and again, that's helpful, and we have first mover advantage in the country, as the economy liberalises, and there is, relative to the whole country, a high degree of security and political stability in Addis Ababa, and that's reinforced by being the home of the African Union. And again, GDP forecasts there north of 6,500. Ghana, decent sized economy, reasonable GDP per capita, good base of population, also young, English is the official language, and it's relatively stable, GDP north of 5%, and

Botswana, smaller, but close to home, very high GDP for Africa per capita, and youngish population, and obviously operating in English. So those are the core reasons why we've chosen those 4 countries.

And then in terms of our growth strategy in any new expansion, your initial focus will obviously be on

- 14 - country entry. But going forward, what we want to do is scale 3 brands in those existing countries of operation.

So Rosebank International University, starting with Ghana, the mid-fee Mega Schools, which are all operating very much the same model, probably under a single new brand name, and then Crawford.

And we think we can fund these developments largely from cash generated by the in-country operations and local borrowing. Obviously, if there is a very large acquisition, we might need to look beyond that, but not for the organic expansion. And we will consider further country entries only if they meet strict criteria, and I'll share those with you in a second. And then, just to give you an idea of the management structure, historically, we have been managing all of the African brands through an

African team. We're going to change that going forward. So Rosebank, at a price point of 2,500 to

4,000 Dollars, will be managed by the Rosebank team based in South Africa under Linda Meyer, who's with us, also the mid-fee Mega Schools, ranging from 1,500 to 4,000 Dollars in annual fees will be managed by the existing ADvTECH International Management team who are based in Nairobi, so there's actually no change there. And then Crawford will move under the management of the Crawford team based in South Africa. And then the key criteria for new country entry, we want to be able to build scale across those three brands. We'd like a large, stable economy, preferably one that isn't too cyclical. We're targeting higher GDP growth than South Africa, large populations with high rates of urbanisation, high young population. English as the predominant language of instruction, and comparatively safe structured countries with good transport links to major cities.

And just a little bit of background on our latest acquisition, Flipper. So it adds Ethiopia to our international operations, alongside Kenya, Botswana and Ghana. It's a very good fit with our existing mid-fee Mega School model. The acquisition price, which was internally funded of 135 million, and it consists of 5 well established and respected schools in Addis Ababa. So it was founded 1998, so there's some history there, 3,000 students, 450 staff, strong academic reputation, and surging market demand for quality education. So we are excited about the opportunity here. Addis Ababa is the 12th largest city in Africa with a population approaching 6 million, and it's the fifth fastest growing city on the continent, so exciting opportunity there. And then a little bit about Ghana, with Rosebank International

University. So it adds Ghana to our international operation, extends Rosebank for the first time outside of SA, the fee price point we're pitching at around 3,000 Dollars, the existing international universities are between 8 and 10. So we're going to enter with a great proposition, with a significant price advantage. There is strong demand for tertiary education. We have the support of the Ghanaian government. Capacity in phase one will be 1,500 students, and we will open in September of 2025, so very excited about that opportunity. And then looking ahead, our 10-year ambition in terms of enrolments, and if we build in Ghana, 1 Crawford, and 2 Rosebank, we think we can go from zero students to 10,500. Botswana, if we build one more Gaborone International School, and one Rosebank,

- 15 - that'll take us from 3,000 to 10,500 students. Ethiopia, if we build five more Flippers, one Crawford, and one Rosebank, that will take us from 3,000 to 24,000 students. And in Kenya, if we build two more

Makinis, one Crawford, and one Rosebank, that will take us from 5,300 students to 70,300. So in aggregate, that will take us from today at 11,300 including Flipper, north of 62,000, so we think this is a huge opportunity, and that these numbers over 10 years are very achievable, and that is my story. So if

I could maybe ask Didier to join me, we'll be happy to take any questions. Ja.

QUESTION 1

Thanks very much. Just a question on the SA schools. So obviously, you quite mature in SA in terms of the schools, and a lot of them have sort of gone through a life cycle. If you look at your SA student base, is there still a big tilt towards primary school students. So is that kind of organic growth from students moving across the different grades, still in your belly, you know, obviously things ratchet up as kids.

GEOFF WHYTE

We're seeing a pretty even pattern. So there's no segment that's going faster or slower. It's relatively steady across the different phases.

QUESTION 2

But if you look at the current pace, are you kind of, is the organic growth like in the sense that you have more primary school students than you do high school students, and they need to progress through the grades.

DIDIER OESCH

I mean, I think our portfolio is quite balanced. I think, we've obviously got more primary school kids because it's 7 years versus 5, but the balance, you know, we actually not, you know, some school groups have indicated that there's more high school demand. We actually getting good demand across the whole chain, so the balance remains, at all of our entry points we're getting good, good enrolment uptake.

QUESTION 3

Okay, and then the chart you showed with the bridge of leavers and joiners, about 15%, you know, regretted leavers, if you will, immigration, and financial reasons. Where was that number, you know, where has it been, historically.

DIDIER OESCH

I mean, we've had about 15 years of tough economy, probably the last 7 or 8, worse than the early

- 16 - part. So it's not actually very different to what it's been in the last few years. It's a fairly consistent pattern over the last few years. I mean, if we go back to, sort of like, when I started, I mean, the net growth was closer to 10% per year, because we had a lot less leavers and that. So, you know, we still got a strong demand coming through, but the leaver pattern has changed. So hopefully we're seeing improved economy, improved sentiment, you know, I think a half a percent improvement in the interest rate, and people feeling a little bit better, economy going up 1% or so. I don't think it's going to be game changing, but every little bit helps. I mean, if we just reduce it by 3, 400 students, it's, you know, I mean, the operating leverage of our business is quite significant.

QUESTION 3

Okay, great. Thank you. Thanks.

QUESTION 4

I have 2 questions, just on your joiners, are they mostly great 0 or grade 1. So are you getting joiners in from the bottom, or are they coming in from the sides, first question. Second question, because it's not a hard one. Do you also intend to be a market leader in distance learning, given your competition in that segment.

DIDIER OESCH

Okay, I'll deal with the first one. You can take the second.

GEOFF WHYTE

The second one is, yes, we would like to be leading. That is our intent. Didier answer the hard one.

DIDIER OESCH

Look, I mean, the natural entry points are in the pre-primary, and not necessarily only at the bottom, because, you know, it's not compulsory. So a parent can choose whether to send their kid to school when they're three years, four years, five years old, so we will get across those. Then grade one, we sort of, grade R, or what grade nought or grade R, you would get a lot of students coming in there, and like our Pinnacle brand, for instance, that is a natural entry point, they don't have pre-primaries. And then grade one, you know, you can get a little bit around sort of grade four when you go, you know, it's a fairly natural point, but it's not a, you know, so you might get a little bit of movement there, because that's when you're going away from class based teaching to, sort of, specialist teachers, and then again at your entry into high school. So grade eight, you will get a little bit in grade 10 in that, but, I mean, grade, the bottom of your pre-primary, grade R, grade one, and grade eight is where the majority of our students are. Then you’re always going to get some movement both ways in the grades in between, you know, families moving, you know, changing home and moving area and that, or, you

- 17 - know, maybe their financial circumstances have improved, so now that they can afford to send their kid to a private school, where, maybe previously they had to send them to a government school, and you know, we will lose some as well, where they move away to a different area and that. But a, definitely the natural entry points are at the beginning of the school cycle.

QUESTION 5

I just wanted to know if you could talk about how, you see the J curve evolving, particularly for

Ethiopia, and for Ghana.

DIDIER OESCH

Okay, for Ethiopia, there will not be a J curve. It will be,

QUESTION 5

So you will never make a profit.

DIDIER OESCH

We will make a profit from day one, from day one, five existing schools, that make money.

QUESTION 5

How is that possible.

DIDIER OESCH

Well, I mean, the acquisition is at somewhere close to three times EBITDA multiple. So, I mean, you know, you can work out the EBITDA from there, take off, the interest on 135 million Rand, minus some tax, and you can see that it'll be earnings enhancing from day one. For Ghana, it'll take us about three years to get into profit. So there will be a J curve for the first, sort of, three years. So I mean, including, you know, next year we only operate for a very, we only start in September, but we're already starting to incur costs now, because you have to, you know, you have to have the site in order to get the accreditation, and obviously you've got to have the staff, some staff in place, one for marketing, but two to get all the products accredited, and, you know, get the operations up and running. So we will incur a reasonable amount of cost during the course of next year, and then only have three months of revenue. So it will be a reasonable J curve next year, but we'll absorb it in our margins.

QUESTION 6

Okay, and so what was the, if you can disclose the multiple you paid for Ghana.

- 18 -

DIDIER OESCH

No, no, Ghana is a greenfield, it's a new country. So we, you know, no, no acquisition there. We renting a building, so there's obviously a rental cost. When does the rental kick in, Stoffel, March the rental kicks in, but we get occupation a little bit earlier, and then there's quite a bit of fit out, and, you know, obviously we've got to put IT equipment, and, you know, desk and chairs and that. So there will be, again, I can't remember the exact number, but about 20 to 30 million Capex in year one, and then obviously quite a bit of operating cost with very little revenue in 2025, and then obviously that would start ratcheting up as enrolments grow into the following year.

QUESTION 7

And then, so would this be margin accretive, both expansions into Africa.

DIDIER OESCH

Well, I mean, in the long term, yes, but, I mean in the short term Ghana will, as I say, be negative. So they will make losses for, you know, the first three years or so. So they will be taking away from the margins, but, you know, with a bit of luck, the rest of the tertiary business, will have another great enrolment season and cover it.

QUESTION 7

And you're speaking about, sorry, I've probably been asking a lot of questions. You’ve got this fancy new marketer, would he also be marketing into Africa as well, or just South Africa.

GEOFF WHYTE

The fancy new marketer, I'm going to tell him, he’ll be thrilled. Yes, yes. Steve Miller is involved across the business.

QUESTION 7

Okay.

QUESTION 8

Just on Ethiopia. I'm still kind of scratching my head, trying to understand the rationale there, I get it ticks all the high level boxes. But just, look, I guess, as far as getting current capital out of there, like I understand this, capital controls, can you actually get those, the money out, and currency devaluations, you know how much of a risk is that.

- 19 -

GEOFF WHYTE

I'm sure you'll have a view. But I mean, we're taking a 10-year view, and there is a very dramatic and fairly quick liberalisation happening of the Ethiopian economy. And over 10 years, we're confident that we'll resolve those problems, we'll generate cash and market to expand, and we believe that we'll be able to repatriate funds at the time that we'd like to, given that liberalisation. I don't know if you want to add to that, Didier.

DIDIER OESCH

Ja, look, I mean, I think, firstly, the acquisition was done after the major devaluation, now, now, I mean, again, don't, you can never say it's not going to happen again. But I think that they've moved the currency to what was a black-market rate in any event, so they've just normalised that. So usually when a country does that, there is a little bit more stability, not necessarily 100% stability, but better stability. So hopefully the worst of the currency movement is now behind us, but, you know, we'll watch it. But I think, as Geoff says, when we enter a new country, the part of what the team that is motivating, that acquisition or greenfield opportunity is, we've got to say, they've got to justify, and motivate, and convince us that any excess cash that they will have over the next 10 years, they have an investment plan for it. Because, I mean, the worst thing you can have is sit with, you know, sort of long in cash, that you can't get out in a devaluing currency. I mean, that can hurt you. But if you are reinvesting it back into assets, you know, then obviously that currently, the risk of a devaluation of a currency is avoided. And in Ethiopia, the pricing is dollar based. So not necessarily that they pay in dollar, but they pay the equivalent of dollars. So if it's 1,000 Dollar fee, the parent can either pay a

1,000 Dollars, or they can pay the Birr equivalent of 1,000 Dollars, but it's dollar based, so you also de- risk the currency to some extent through that.

QUESTION 8

Hi, sorry, over here. Sorry, just a question around your cost saving initiatives, and sorry if I'm a bit ignorant here, but you mentioned that 50% of your, of the cost several cost savings have been realised.

Could you just maybe give a sense of the absolute numbers that have been saved, and, you know, the remaining 50%, how long will it take to realise that.

DIDIER OESCH

Ja, the exact number, I must admit, I don't have it, but it must be at least 50 million that we have saved up to now, probably even starting to get ahead of that, and we believe there's still that opportunity, I mean, a major milestone that we've hit during the course of this financial year, it was in the months of

May, is we changed accounting systems in our Shared Services and Schools Division, so now Tertiary

- 20 - and Schools are on the same system. Tertiary is still not in Shared Services, so we still have that opportunity, but we were running our Shared Services on a system that was not conducive to a Shared

Service. So for instance, we couldn't have any workflows. All the workflows were manually outside of the system, our new system now the workflows go through, and the other things that we've done, that the new system has allowed us to do is collapse our creditors ledger, or our supply list from each brand having their own creditors, you know, book to one creditor, book for the whole group. So now we've got about 4,500 suppliers across the group. The intention is to get that down to less than 600, so you'll get the synergy, well, firstly, the admin that comes with that out. But then when you, as you consolidate it, you can get, you know, you can start negotiating pricing, volume rebates, all of that. And we're getting some. But, I mean, when you've got, you know, when your information is housed and you've got separate accounts for Crawford, and every, you know, and Trinity and Abbotts and that, it's very difficult to negotiate with suppliers. When you pull it all together it's a lot easier to do things like automated billing, you know, in our, on the old system, we had to generate an invoice for every student, every month. Where on the new system, you do annuity billing, so you generate the student a bill once, at the beginning of the year, and then only changes. So, you know, so the amount of admin that goes out over there is quite significant.

Early next year, we'll be taking Botswana across the line in terms of the new system, which will then also facilitate them coming into the Shared Services. We're already doing some work for them, but minimal, and then after Botswana, we think that there's quite a, sort of, low hanging fruit to take

Kenya over the line as well. So I mean in terms of automating a process that we couldn't do before, that the new system allows simplifying and, and, you know, standardising, and taking in more of the businesses. And then the procurement advantage, I think, would be our big-ticket items that we can still leverage quite significantly.

QUESTION 9

I think there's been some comments around your capital structure being sub optimum, at some point, but it seemed like you trying to move to the ideal capital structure - is going to address some of those comments. Do you perhaps want to comment in terms of, how fast do you plan to get to that level.

GEOFF WHYTE

Ja, it depends a little bit on the acquisition opportunities, we will aggressively pursue attractive acquisitions, but we're not going to drop our rigorous standards. If we are successful, then the capital structure will move closer to our ideal. But, you know, there are no guarantees of that, it's a long, complex process, as you'll understand.

DIDIER OESCH

- 21 -

Maybe if I can just add, I mean, you know, as Geoff indicated, we've been building one school per year, and, you know, if the economy improves, maybe we can do three. So to some extent, the better the operating environment, the more likely we are to get to our capital structure within a reasonable period of time, because we would then invest more aggressively. And, you know, I think in the environment that we've been in over the last sort of six, seven years, it was probably, I believe it was a right strategy not to be investing aggressively, and, I mean, that's pulled our, that's changed our capital structure from where we were quite highly geared, to now a lot lower. But I mean, if the environment changes, that will certainly help us to find more attractive projects.

QUESTION 10

And then just one more, sorry, you did indicate that you're going to transfer some of your students from Vega Bordeaux to the new University campus here in Sandton do you mind explaining a little bit in terms of what's going to happen to the campus in Bordeaux, the Vega Bordeaux campus, please.

GEOFF WHYTE

We are looking at various options. We haven't made a definitive call yet, but it's an attractive location, and we've got a number of ideas that we can apply there.

QUESTION 11

Good morning. So just to go back on Ethiopia, as you scale in that country, can you scale at the returns implied by your first acquisition over there, because at high level, it looks like the implied returns will be good.

GEOFF WHYTE

Talking about Africa.

QUESTION 11

Ja, Ethiopia specifically.

GEOFF WHYTE

Ethiopia specifically, okay.

QUESTION 11

Ja, Ethiopia specifically. And then number two, fees over there, are dollars, so do the parents over there earn in dollars, or dollar equivalent earnings, and then, is staff also paid in dollars, or dollar equivalent.

- 22 -

DIDIER OESCH

So, I mean, in the, again, Jaco is not here, and he's done a lot of the work, but my understanding is that the people that can afford private school fees, generally have access to dollars, or their income is earned, you know, aligned to dollar equivalent. So, I mean, when, in Ethiopia, or the issue as I understand it, is that the better of people are actually not impacted by currency devaluations and that, it's sort of the, you know, the lower affordability levels where, you know, where people actually feel the pain, quite aggressively, you know, quite badly when you get a devaluation that, ja.

So, the part of the market that we're playing in, we think we reasonably us, you know, insulated from currency issues, and, ja, the teachers, you would also be scaling up their salaries, you know, in line with, you know, your fee increases and that, so, you know, there are, I think the idea is, you collect your fees at the beginning of the term, and you dollarise them as quickly as possible, and then obviously, you match your, you know, you try and match your costs, so that you don't have an open issue where you have, you know, your income stuck in, say, Birr, and your costs devaluing. So you're trying to match them the whole time through dollarising as quickly as possible where you can, and ja, you're adjusting teacher salaries accordingly.

QUESTION 12

Two questions for me, just net working capital in Africa, you've got 15% of your operations funded through negative working capital, is Africa the same at also 15%. And follow up question, just also on the balance sheet. I know that there's been complaints about a lazy balance sheet, but going forward, it does seem that more of your operations will be in Africa, which is a slightly riskier jurisdiction, is now the time to be less conservative on the balance sheet, just a question.

DIDIER OESCH

So firstly, the way fees are paid outside of South Africa, and it's every country outside of South Africa that we've ever looked at, is actually quite different. In rest of Africa, typically, fees are paid at the beginning of every term. So as a term starts, the parents will pay their fees. Now again, you know, you always get some that don't quite make it, so generally, our debtors book is a lot smaller in rest of Africa than it is in South Africa. And, you know, because, ja, because you're getting your money up front all the time, if anything, your negative working capital on average is slightly bigger than, you know, it's a slightly higher percentage than in South Africa. And, sorry, I forgot the second question.

QUESTION 13

Balance sheet optimisation.

DIDIER OESCH

- 23 -

Ja, okay, balance sheet optimisation. So I think our aim is to make every country that we enter self- sufficient as quickly as possible, so that, you know, we don't need to use our South African balance sheet to fund them. I mean, Botswana is more than self-sufficient, they funded their whole Capex, 100 million Capex program out of their own cash flows, and they supported Kenya with about 40 million

Rand towards their requirements. I mean, Kenya has now got a material EBITDA themselves, and so they can fund all of their own capital requirements now, it's only if we did a reasonably material acquisition. So, I mean, Crawford is about to go through its next expansion in Kenya, they will fund that themselves, and Makini is funding their, you know, sort of organic growth themselves. But if we do make an acquisition, we may still have to support them. I mean, they do have the ability to leverage their balance sheets quite significantly as well. The only issue that we have is, if you take Kenya and that interest rates, currently, if you go to a bank, you're going to pay somewhere around 20, 21% interest. And then in South Africa, I mean, we're getting our money at JIBAR, plus not very much. And, you know, when you start taking that interest differential, you're saying, well, is it better to rather pay out of South Africa, and as long as a currency doesn't devalue by more than 10 to 12%, you actually better off. So we’ve still, you know, so on a case by case, we look at that, but, ja, I think, I don't see our

South African balance sheet being put at risk by our investments into rest of Africa, because of our drive to get them self-sufficient as quickly as possible. The only business that will not be self-sufficient for the next three years is our Ghana business. They will need us to support them as they go through the J curve.

QUESTION 14

Hi guys. Just three questions from me. I think you said in the presentation, you're looking at 62,000 students in 10 years’ time, from the international side of the business. If you compare that with the growth in South Africa, what shape of the business would that be geographically, both in students, and in terms of earnings in 10 years’ time. And then a follow up there, what's the target, very long term, of the International to local split for ADvTECHs’ Tertiary business. And that's the first question, if you'd like to answer that, then I'll go on from there.

GEOFF WHYTE

Ja. I mean, I think we've given you a 10-year ambition, and there's lots of variables, and a long time period. So, you know, there's the growth rate in South Africa relative to that aspiration over a long timeline, so it's hard to give you a definitive answer. I don't know if you've got any kind of view that would be.

DIDIER OESCH

- 24 -

I mean, look, it would be a material part of our business, but, I mean, we South Africa, we also anticipate that growing. So I would still see South African students being, hopefully bigger than that in

10 years’ time. I mean, long, long term, obviously, the continent is a lot bigger than just South Africa.

So, I mean, you at some point, you would expect that to turn, and I think, you know, the tertiary business also is growing. So I think we will still be, I mean, we will still be generating at least two thirds of our profits from South Africa with that ambition, if the rest of our business grows in line with expectations.

QUESTION 15

Ja, thank you. And then there's lots of talk about South Africa, and the LSM growth, and potential GDP growth post the GNU, regardless, it seems that there's a motivation to expand outside of South Africa.

So, are you, sort of behind the sort of closed doors, concerned about growth in South Africa, and is that part of the motivation for the expansion into the broader Africa. If not, can you explain how you think expanding inside South Africa versus outside, and what motivates the international expansion, rather than sort of sticking to an economy that's served ADvTECH very well over the last sort of 5 to 10 years.

GEOFF WHYTE

I think we're optimistic about the GNU, our Schools business would definitely benefit significantly from an improved economy, as hopefully we demonstrated. The demographic shift, and the imbalance of supply and demand in tertiary means that we have a huge opportunity, almost regardless of the economic position. So I think we are optimistic because of the broader tailwinds, but if the economy improves, there was definite upside. We're very well positioned to benefit from any improvement.

QUESTION 16

So to return to international business, do they look better than South Africa, or, why aren't we just looking to take full advantage of the South African potential and expand sort of into Africa.

GEOFF WHYTE

We think the opportunity for faster growth on higher margins makes Africa attractive, but we also think we have a very attractive business in South Africa.

DIDIER OESCH

We're not constrained, we can do both. So by going, you know, we think we can invest at all opportunities in front of us, that makes sense in South Africa, as well as the rest of Africa, you know,

- 25 - and we're not in a position where we're having to choose. We have more than sufficient cash generation to look at all opportunities. So we don't see it as, you know, choosing between the two, we see it as, you know, there's opportunity in both.

QUESTION 17

Okay, thank you, and then just my last question. The Ethiopian acquisition, seems at a very good multiple, are you counting for that as a bargain purchase. Are you sort of seeing the assets as more than you paid for them, or is it just a very healthy multiple, and then why do you think they were prepared to sell the asset at such a low multiple to you guys.

DIDIER OESCH

Ja, okay, I mean, in terms of, you know, we've only just taken on the business at the moment, so what we have to do is get a proper property valuation, and, you know, value all the assets, and then, depending where that comes out, we will determine whether it's a bargain purchase or not, because it'll either be negative goodwill or there'll still be some goodwill left. So, too early to say that yet, but you know, that's just accounting, it really makes no difference in the long, you know, the long run in that.

Sorry, what was her second part. Oh, sell so cheap. Look, I mean, you know, Ethiopia is a more risky country in terms of the capital, you know, not being able to get the capital out, and, you know, I think that it was, you know, other than ourselves there were maybe a few European investors that were interested in the business. I mean, this was part of the Tana business, where they had Moroccan assets, and Ethiopian assets. I mean, the Moroccan assets had huge interest from European investors, and, I mean, it sold at double the price that we were prepared to pay for it. I mean, I think some of this is family money, and that if they get 6 to 8%, you know, return on investment, they're happy with that.

I don't think our shareholders in this room would be happy with that. So, you know, at least you know that we won't just spend for the, you know, we won't chase an acquisition for the sake of it. It's got to hit our criteria. But I think it was less attractive to African invest, sort of European investors, so I think we had quite a lot of bargaining power there, and, you know, drove a hard deal. And from a Tana point of view this, you know, having tidied up the rest of the education portfolio, this was, you know, all that was left, and, you know, they made their money on Morocco, and you know, if they could get something out of this. So I think we had quite a lot of leverage.

QUESTION 19

Firstly, thank you for the site visit today. It's always gratifying to come along and see what you do.

You've answered some of my questions, specifically one on Tana. I know when I met Geoff in Cape

Town, probably a good year ago, Vineyard, we had a long discussion, (not quite) seems like a long time.

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We had a long discussion regarding your ambition and service company, and here we are discussing quite a lot regarding Africa and the 10-year expansion. I was with your Tertiary competitors a couple of weeks ago, at their launch in Cape Town, and I was intrigued by your comment regarding University status, which seems to be far more bullish on its timeline than the competitors. Perhaps you can give us a bit of colour as to why you think it's going to be coming faster than your competitors. Secondly, my question on Africa, good growth, it's what you articulated to me in Cape Town regarding your ambitions. Where next, I know you were fairly keen on Morocco, the price, as we all know, was outrageous. You did mention some other countries you were looking at. So aside from before, what else can we look at going forward. Thank you.

GEOFF WHYTE

Our view on University status. So the clear indications from government are that they will issue the final regulations by the end of this year, so we can choose to trust them on that, or not trust them, but that's what they're saying. The revised set of criteria that they issued last, we believe we can comply with relatively quickly. So if they deliver to their own timing, and there isn't a radical change, we believe we can comply quickly. So that's the reason for our view on the timing. I don't know if you want to have a crack at the second one.

DIDIER OESCH

Just sorry, just remind me, ja, where else the other countries. The other countries, ja, the other countries. I mean,

GEOFF WHYTE

I mean, I think, you know, we've laid out what our criteria are. So countries that meet those criteria would be of interest. So ability to scale, predominantly English, relatively stable, non-cyclical, all of those criteria, and we continue to look, so I think you can probably chalk off a few African countries from that filter, and work out what's left. But…

DIDIER OESCH

Ja, I mean, I think obviously there's, I think there are some attractive countries, but the macros maybe are not the right time. I mean, Egypt would be a very attractive, but I mean Egypt we need to, I mean, my view is Egypt is probably the best education market in Africa, but, you know, the macros are a little scary at the moment, so we'll continue to, you know, pay attention and, you know, see in the future, if things stabilise and look more, you know, investor friendly, ja. And I think we got quite a lot to build out in the countries we've already entered, while looking at others. And I think there's, you know, quite

- 27 - a few countries, as Geoff says, would be ticked off the list that we wouldn't enter. But ja, I think we've got quite a lot on our plates, while still looking at one or two other attractive countries and waiting for maybe the timing to be better.

QUESTION 20

Sorry, maybe if I can just take it back to your rest of Africa operations. I mean, obviously the margins there look pretty good, but ultimately, when I look at it for your cost of capital, versus your excess returns that you can expect, I'm just trying to figure out how you can make excess returns over there. I mean, you touched on how teaching staff is 20% cheaper in the rest of Africa versus South Africa. But how can you make sure that you're actually getting the right returns in need for risk you're taking on.

Is/ was the cost of land cheaper there, or, ja, just how do you square that circle

DIDIER OESCH

Look, I mean, obviously we, you know, when we do the Capex motivation, or the investment motivation up front, we put in a risk premium in excess of what we do for South Africa. Interesting that the IFC often puts in a higher risk premium for Africa, for South Africa, than a lot of the countries we’re invested in. But that's a different story. But, so, you know, we would, I mean, if you take Kenya, Kenya for instance, I mean, their WACC. If you do a international, you know, based WACC calculation, is only marginally higher than South Africa, but yet we put a fairly significant premium on top of that, and then, you know, obviously Ethiopia and Ghana are higher. But when we do our motivation, we do it in three ways. We do local currency, South African Rands and US Dollars, and then we benchmark the returns against all three of those currencies. So we obviously take, you know, we assume what, taking inflation rates into account, and that, what do we think the devaluation is going to be, and then, you know, we put a risk premium, obviously, in local currency, it would be a very risk, high risk premium, and by time you turn it to Dollars, maybe a slightly smaller one, because obviously you're factoring in the devaluation. But ja, we're, so with the risk premium, we're quite comfortable. And I mean, if you take a return on funds employed, our rest of Africa operations are already ahead of our schools in

South Africa. So I mean, at the moment, we only have schools in rest of Africa, so, I mean, compare that. So you know, in that short time that we've had them, we've already been able to get a higher return on our assets. So we're quite confident that our model, you know, stacks up, and we've put in a sufficient risk premium to make sure that we, you know, can accommodate, you know, some of these fluctuations and currency devaluations.

QUESTION 21

Great. Thank you. Just a question on the SA tertiary opportunity, I mean, you outlined that in your presentation. Are you currently at like, max capacity, so are you turning down a lot of applications

- 28 - every year, I just want to get a sense of what your current demand, supply, and balance is right now, I mean, if you build a new campus, is there kind of really demand there to fill that.

GEOFF WHYTE

We are very able to scale in line with demand. So we will expand an existing building till we run out of capacity, opening it in stages, then we'll look to relocate to a bigger location, which is the pattern that we followed. Didier likes to talk about the rubber walls of tertiary investment, and, you know, that's very much how we view it. So we are not constrained in any way in terms of tertiary places growth.

QUESTION 21

Because obviously the I mean, the macro picture is, is very attractive, there’s a huge amount of students coming through, you know, from Matric every year. There just isn't places at public universities, but the price point is really, I suppose, what capture market size, it's affordability. So, you get a sense that Rosebank is at the right point where, you know, you could see that student growth continue. You happy with that being at the right level, that a large amount of students can actually afford.

GEOFF WHYTE

Ja, I mean, I think the growth numbers that we've seen, and the acceleration that you saw, there's no reason to believe that that won't continue, given the imbalance of supply and demand in places, and demographic growth. So those are the two factors driving demand. I think we are well positioned in terms of pricing, and we're making good returns at those prices, thanks to the great work of Linda, who's right here.

QUESTION 21

Thank you.

QUESTION 22

Morning guys, thanks very much. Maybe you can just talk to us about Unisa and what's going on there.

If you do a Google search, it looks like they've got 400,000 students in their system, but I don't know, I haven't met anybody going there. So you gave 1.1 million people in government tertiary education systems, I assume that excludes Unisa, and maybe just talk about that landscape, whether that's an opportunity or a threat.

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GEOFF WHYTE

You have a go at that one.

DIDIER OESCH

Well, I mean, Unisa’s still growing. So everybody is talking about them falling over, but actually they still growing. So, you know, I think, yes, they've had, I think they've had some administrative issues…

GEOFF WHYTE

and challenges to the quality of their qualifications also,

DIDIER OESCH

But, you know, in terms of attracting students, it's still, they still don't have a problem with that. I mean, obviously their fees are at a relatively low price point, being, you know, distance and state subsidised, you know, so, again, a fairly significant proportion of their students are NSFAS funding, so, I mean, you know, we believe there's opportunity, but we believe it's actually a very small part of that

400,000, I mean, I think the exact numbers, I think I saw was about 360, 365,000 students, I think they at, at the moment, but, I mean,

GEOFF WHYTE

It’s kind of low-quality demand driven by low price, not really the part of the market that we want to play in. That's what limits

DIDIER OESCH

I mean, I if I were, my estimate would be that there's at best 10% of Unisa students that could afford our fees.

QUESTION 23

You guys no longer do any, or rely on UNISA for any of your courses or anything like that, that’s all over.

DIDIER OESCH

That’s a long, long time ago, ja.

QUESTION 24

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So, in online distance learning tertiary, I mean, a lot of the rationale for Varsity College, Rosebank

College was a place for kids to go and have a tutor, or get Wi Fi, or communicate with other people.

How does that play into pure online aspirations for tertiary, I mean, ja, do both still exists, or is it hybrid of the two, or where do you go from there.

GEOFF WHYTE

They at very different target market, so your face-to-face student is 19, wants the face to face experience, your distance student is in their 30s, often working, and studying smaller numbers of units part-time, so, and studying for different reasons, more interested in post graduate qualifications. So we think they’re two very distinct markets.

QUESTION 25

Ja, last question. Just Ethiopia, you own the land and buildings and I assume any expansion going forward in Africa would be, you want to own land and buildings.

DIDIER OESCH

Stoffel, it’s a mix, we own the major site and the balance is leased. So I mean it often is a challenge in rest of Africa, because they put huge amount of value on the land, you know, unreasonable amounts of value to the land. So, you know, to buy is often, you know, you just can’t make the numbers work, but, you know, they say their land is worth, I don’t know, 40 million Dollars, but they prepared to accept a

1% yield in terms of a rental, so how does that tie up, but I think there’s a very emotional attachment to the value of the land. So, ja, I mean, quite a lot of our operations, I mean, Makini is largely on leased sites, Crawford is, it’s our own site, by, it’s actually a 99 year lease, so effectively it’s owned. Botswana, you can’t own land in Botswana, but your lease it from the Government at, I think we leasing our site at about 4 Pula per annum or something, so that also helps make Botswana such an attractive investment, because you get the land for free effectively. So, ja, very difficult to own land often in rest of Africa.

Our issue is we’re not that concerned whether we own or not, as long as we have long term tenure, and a legal system that we trust. So that’s a big part of our due diligence when we go into these countries, is to check the legal system, and again, sort of IFC, or 4% shareholder of us are very good at assisting us with that, you know, they put us in touch with the right people, both in government and in the legal circles and that, so that we can really, you know, do a detailed due dill, and, ja, you know, touch wood we haven’t had any land problems to date and that is, I think our contracts are water tight, and we trusting the legal system in those countries to perform.

QUESTION 26

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Just to talk about your investment in technology, you mentioned, machine learning and AI, it’s kind of platform to help student and I suppose helps teachers with the students. For a call it’s an external partner developing that technology that kind of the key AI technology, maybe just talk to kind of ownership of the data, the platform, the tooling, would the external party be allowed to let other schools use it, would you want to let other schools use it, or do you want to really just take advantage, obviously we understand well enough to know you got a data advantage which means, you know, small private school, you know, like a, I don’t know, like a Michael House that does not have enough data , where as you guys would have a huge data set, so it gives you an advantage in these tools, you know, where does this progress to, you spoke about tenure ambition for Africa, where does this progress to over 10 years, does it become quite a comparable, kind of, competitive advantage for you, to have this tooling available to kind of, because it also lines up with obviously teachers wanting to teach there because, you’ll probably know enough teachers in this room to know they’re vocational , they love teaching but they often moan about their job, how can you make their life a little bit easier, just unpack that a little bit for me, but also the legal ownership and where it all sits in the data, please.

GEOFF WHYTE

Listen, I mean I think it does improve the teaching experience for our staff, and it definitely drives academic outcomes, so it’s a powerful tool. In terms of the data, we own our data, there is a third- party supplier however, so I don’t know if you want to enlarge on that.

DIDIER OESCH

Ja, I mean we’re paying a license fee. If we developed something, we’ve got first mover advantage that it’s locked, that they can’t sell it to anybody else for a period of time, but in terms of them making the tool, you know, we can’t restrict them from selling it to other people, but we’re actually not that concerned, because actually you can go and find hundreds of Apps’ that do fairly similar things. The difference is integrating it into your operations and your other systems. You know most of these Apps’ that a teacher will tell your kid, oh, download this App, or whatever, and you might even get it for free, or for a very low subscription, but you can’t get the back end data, and actually that’s where the value is, is the back end data, because, you know, it might be useful for the student to go through, and, you know, have a, you know, do some sums and maybe the App helps them, but, you know, unless you integrating the data and making it accessible to the teacher, and the principle, and the school, and our academic staff, the value is minimal. So, you know, for a standalone school or somebody to, it’s a significant investment, and, so for us it’s, the value is in integrating it into our systems and our operations, and the tool is interesting, but actually if we had a fall out with our existing supplier, we would just go and find another supplier , and just reintegrate it. So, I think it’s our scale and the way that we use it, which is actually where the advantage is, and not so much the software itself.

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GEOFF WHYTE

I think we are almost running out of time, so let’s maybe take 2 more questions, and then maybe have to wrap up and get on the road, sorry.

QUESTION 27

I have 2 more questions; I don’t know if you want to ask 2 more people.

GEOFF WHYTE

Okay, you can have 2, then 1 more person can ask.

QUESTION 27

So a quick question on your Western Cape opportunity that you identify, that you don’t have a huge exposure there, is that greenfield acquisitive, is it an area of focus or just something you aware of.

Second question, just can you compare the economics of your university with the Research Masters and PhD offering, with what you currently offer, is it a higher margin, etc.

GEOFF WHYTE

We are strong in Tertiary in the Western Cape, we believe we light on schools. So, we are very focused on looking for, you know, could be a greenfield, could be an acquisition, I think it’s more likely to be greenfield, and we actually engaging with the Western Cape Government to identify land. The second question, you know, in pursuit of University Status, and adding qualifications that are margin accretive, we believe that Masters qualification is where we can drive scale, are profitable, PhDs’ are valuable to the institution, but they’re going to be small, and they probably won’t make money. So we can make money out of Masters, less likely to make money out of PhDs, and the bulk of that income comes from scale and adding highly demanded undergraduate qualifications.

DIDIER OESCH

Ja, I mean, I think by having the Masters and the Doctorate and that, even if they not making you money, and I think Masters we think we can, we think it adds gravitas to the institution, and you are likely to get a higher enrolment at the low levels that will more than offset that.

GEOFF OESCH

Ja, and it obviously reinforces University Status against the existing public institutions. Okay, last one.

QUESTION 28

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Good morning, I’m just going to ask 2 questions in relation to your Tertiary Division. So, to make it easier for students to come to your private higher institutions, are you guys structuring maybe financing deals with the parents, and the secondly, are you able to attract or pursue partnerships with other funders like SETAs and if not, why not.

GEOFF WHYTE

Ja, listen from our corporate point of view we definitely engaging with the SETAs’, quite successfully.

The challenges of funding in terms of bad debts and the costs to students relative to paying in installments make it unattractive. So, I don’t think that’s a big focus for us.

DIDIER OESCH

Ja, I mean we’ve tried, especially in my early years with ADvTECH, I spoke to every bank and, loan provider and that, to see if we could structure some kind of deal, and we’ve just never got any meaningful traction.

I mean to me there’s a few things, a criteria that the banks and the other providers put in place, are often so onerous that the only people that give the loans to are the people that could afford our fees on our terms in any event. I think secondly the interest rate are very, very high, because worldwide, student loans is the worst performing book, that the banks have, so the interest rates are typically 20% plus, and, you know, you’ve got to be, you, sometimes you read their pamphlets and they say, oh, funding at 10%, to whatever, but it’s actually not that honest, because what they is they take it as a straight line, so they say if it’s a 20,000 Rand loan, the interest will be 2,000 Rand, but I mean obviously you’ve got a diminishing balance, and then what they also do is it’s like a 250 Rand fee on months 1 to get it up, and then 75 Rand monthly admin fee, and by the time you put all of that in it’s well over 20%.

So, I mean, we offer terms to our students, and we embed an interest rate in the proper way of calculating it, on the diminishing balance, you know, relative to the cash fee of about 10 to 12 odd percent. And, you know, when you take the monthly repayment it’s actually quite attractive, because relative to what the banks are giving, you would pay maybe a few 100 Rand more on our fee, but over a 10 month period, versus a 2-to-3-year period. So students have quickly seen that and, ja, some students are getting funding on their own, but we don’t see it as a meaningful way of really opening up our offering to a lot of students. The better way is to keep our product as affordable as possible, and, you know, drive efficiency, keep the price down, and that will open the market to a greater number of students.

QUESTION 29

Ja, and then just in relation to that, if you guys do achieve your University Status, will your students be eligible for NSFAS.

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DIDIER OESCH

Not at the moment, so, that would have to be a law change, and I think that one, you know, we obviously would have a crack at it, but I think that one is going to be quite difficult to get. I mean we’ve also got to be just a little bit careful for what we wish for, because, you know, often the students under the NSFAS funding are the ones that are more disruptive to the universities, because they see it as a social grant, and, you know, if they’re about to lose it because they failing or something, you know, it’s in their interest to cause some disruption, and say well on that basis, you know, I couldn’t study properly and that’s why I failed, so give it to me next year again. So, something we looking at, but we also cautious about it, because it could change the make-up of our student body, you know, touch wood we don’t have student issues on our campuses, you know, look you have the isolated incident, but not en masse, we don’t have protests and that, our students come there, and they motivated to learn, and not to disrupt the campus, so we’ve got to make sure that we maintain that balance.

Sorry I think we need to go, we’re going to be together all day so feel free catch us at any moment and ask your questions.

-ENDS-