Stadio Holdings Limited (SDO) Earnings Call Transcript & Summary

It's 10:00. Good morning, ladies and gentlemen, and welcome to STADIO Holdings 2023 Interim Results Presentation. My name is Chris Vorster. I'm the CEO of STADIO Holdings and with me this morning to do the presentation is our Chief Financial Officer, Samara Totaram. The presentation, just in a nutshell, I will start off with a brief setting the scene. Thereafter, I will hand over to Samara, who will unpack the interim results for us. After Samara's presentation, I'll get back to our investment case. And then at the end, we will open for questions. Ladies and gentlemen, STADIO Holdings, our purpose is to empower the notion by widening access to quality higher education. We do this through our 3 distinct private higher education institutions being Milpark, STADIO Higher Education and AFDA. Milpark, our business that focus on the financial industry, banking and accounting, focusing on online offerings. AFDA, our well-known film school focusing on the film industry as well as the creative economies. And then lastly, STADIO Higher Education, our third brand, which is the comprehensive institution with multi schools, multi faculties as well as multi modes of delivery. We've come a long way, ladies and gentlemen, in becoming a first choice institution. I must be honest to say that we're not there yet. We're not where we want to be, but we have made great progress over the last few years. Our student numbers are growing, and it looks very good for the second half of this year as well, but I'll come back to our second semester numbers at the end of the presentation. Looking at our 3 brands, we see STADIO Higher Education. The brand is really gaining momentum. What we must remember is that the brand is less than 3 years old. It came about with the merging of 4 institutions into STADIO Higher Education. And I'm very happy to say that this brand is really showing nice traction, especially during 2023. For all 3 years thus far, the brand also shown double-digit growth, which is very exciting. The Milpark brand, I must say, is also performing very well. I think one of the main contributors to the strengthening of the Milpark brand is the performance in the SAICA in ITC Board exams. AFDA remains a very strong brand and is a well-established and leading film school in Africa. So overall, 3 well-established brands well set to take on the future. From an economic perspective, the economic situation in our country is real, and it remains a challenge. And it has an impact on our students' ability to pay. We see that more students come under pressure and a lot of our students also take longer to pay. A lot of work is going into addressing our bad debt in collections going forward. Over the last few weeks, our finance team in particular has put a lot of processes and new structures in place to deal with this issue. I believe going forward, this will really show a nice upside. Our strategy, ladies and gentlemen, is working, and I am very excited about the commercial prospects of the group. But even more exciting for us is the group's contribution to the success of our country. If we want to change things in South Africa, there's no other way than to give more people access to quality higher education. But let's move on to the interim results for the period January to the end of June. In this period, the first semester, we see student numbers up by 9% to 41,865. Our revenue is up for the period 16%. Profit after tax up 21%. Earnings per share up 21% to ZAR 0.136 per share. The headline earnings per share up 22% to ZAR 0.135 per share. Our core headline earnings up 20% and our core headline earnings per share also up 20% to 13.6% -- ZAR 0.136 per share. Exciting for us, return on equity now in the double digits to 10.8%. And we're now on our way in reaching our target of 20%. So in a nutshell, that is the results. I'm going to hand over now to Samara, who will unpack these results for us in more detail. Thank you, Samara.

Great. And thank you, Chris, and good morning to -- and welcome to everybody. I'm going to start, as always, by just giving a summary of the key items that would have impacted the results to June of this year. So one of the strategic drivers is positioning the business to become or the businesses within the group to become first choice institutions. And this does necessitate a focus on operations, processes and student experience and has had an impact on some of the costs we've experienced during the year. Consumer pressures and affordability is a reality, and it is impacting the business. Students are definitely taking longer to pay and overarchingly it is impacting our overall loss allowance for the period. For the year, the key capital projects include the development of the Durbanville campus: planning is underway. It is expected that the bulk of the construction will happen during the 2024 year to complete the project by 2025 and then opening for new students in 2026. Through the second half of the year, we will also take transfer of the Krugersdorp property. And to date, we've invested about ZAR 3 million in solar projects, and we expect a total cost of about ZAR 12 million for the rest of the year. We've also focused specifically on the development of core qualifications and we earmarking effectively ZAR 19 million on program development for the year. And looking at share issues and repurchases, we issued 3.1 million STADIO shares in April. And this was effectively to settle obligations of the long-term incentive scheme. We, however, have repurchased 3.3 million shares by this share incentive trust, and this effectively is to settle future obligations of the long-term incentive scheme. And furthermore, post June, we've repurchased further 3.1 million shares for a sum of ZAR 14 million and subsequently canceled those shares. There's no interim dividend declared for the period. Our policy is to pay annual dividends based on excess cash flow that we actually have. So student numbers are actually the driver of this business. Looking at our student numbers, they are represented here on a head count basis at 30th of June, is what we refer to as our semester 1 students. And we've seen an excellent growth in first semester student numbers, increasing by 9% to 41,865. I think really encouraging for this first semester is our growth in new students for the period, which is sitting at about 13%. And then this really does create a pipeline for growth into future years. We note that our student numbers are still hampered by what we refer to as the B2B business, and this is effectively the training needs of corporate customers that sit within the Milpark business. It still continues to be a bit of a drag on our overall student numbers and if we had to take out the B2B business, the remainder of the student numbers in the group would have actually grown by 14%. Looking at our contact learning student numbers. Contact learning student numbers currently account for 14% of our total student numbers for the year. We've seen growth of 3% in our student numbers for the year, which is very good given the fact that in the prior period, we saw a 4% decline in student numbers. The 3% growth, however, is still muted, and it's impacted by what we refer to as a COVID-19 overhang, where we've had poor enrollments in prior years that have actually impacted our rollover students. And generally, those would be your third year and fourth year students, which are almost off the system. Also, we've seen Milpark Education transition away from contact learning. We still do have some students in teach-out and those students kind of drop off as the years continue. But very encouraging in the contact learning space is that 15% growth in new contact learning student numbers, and it really does create a nice trajectory for growth on the contact learning base. And what we've seen is our strategy of optimizing campuses and effectively putting existing qualifications on our existing campuses or qualifications that we have and moving them nationally to ask our campuses as well as accrediting new qualifications are really putting us in a good position to see future growth in our contact learning student numbers. From a distance learning student number perspective, majority of our student numbers are distance learning, currently sitting at 86%. And outside of UNISA, we're the biggest distance learning provider in the country. We've seen excellent growth in distance learning student numbers for the period, so a 10% overall growth to 36,058 students, very much driven by the good growth in professional programs. And as I've mentioned, the B2B business still impacting overall distance learning growth. And if we have to actually remove the distance or the B2B business, we see a 16% growth in student numbers. We also note that the Milpark business is successfully focusing on transitioning the Milpark business to actually have less reliance on the B2B business in future years. So we see good top line growth in revenue, 16% growth in revenue to ZAR 714 million, largely driven by growth in student numbers as well as tuition fee increases. Our average tuition fee increase for the year is sitting at about 6% for the period. To the end of June, we grew tuition fee income by 15%. We've seen a 22% growth in registration fees, which only accounts for about 5% of revenue, and that's as a result of our growth in new students which is actually at a higher registration fee than our returning students. And then we also note that those students who have elected to do year modules have paid their registration fees upfront this year versus prior years. We've seen a 76% increase in the sale of our learning materials for the period. This is purely a timing issue where students have elected to purchase materials earlier in the year than the prior year. Our bursaries and discounts have increased by 31% for the period, mainly because of 2 reasons. So it's the increase in discounts provided to some certain students who are repeating qualifications. And we note that 2024 -- I mean 2022 was actually a lower base for discounts and bursaries. Our discounts and bursaries currently account for about 2.7% of revenue. Last year accounted for 2.4%. And if you look at the period prior to COVID, our bursaries and discounts were sitting at the 2.7% level. So effectively, what we're getting back to is our pre-COVID levels when we look at bursaries and discounts. So our EBITDA for the period has grown by 10% from ZAR 192 million to ZAR 210 million. Over the last 5 years, our compounded growth in EBITDA has grown by 28%. We do, however, see a decline in EBITDA margin for the period from 31% reported last year to 29%. And the 29% is still in line with our full year EBITDA at the end of last year. And there are additional costs that have come into the business that have impacted the EBITDA margin in the current year. But the major impact or the major item that's impacting the reduction in our EBITDA margin is the increased loss allowance as a result of the increased risks in our debtors' book for the period. So just dissecting the EBITDA movement in a little bit more detail. So we note that additional costs have come into the business specifically diesel costs during load shedding. So for the first 6 months of the year, we've spent about ZAR 1.3 million on diesel costs across the group. With our investment into solar alternatives, we will see this cost decline over the periods to come. But to date, it has actually had a negative 1% impact on our movement in our EBITDA for the period. We also note that in terms of our loss allowance raised in the prior year, we had a lower loss allowance expense in the prior year, and that was primarily due to provisions that were raised in the 2020 and 2021 year that were unutilized in June of 2022. And that's accounted for effectively a negative 2% movement in our margin. If we look at the underlying growth in our EBITDA, it is very positive. And that follows our growth in revenue as well as maintaining our cost margins. That's been our employee cost margins as well as our operating expense margins also in the context of actually investing in new systems and processes. However, the increase in loss allowance for the period has negatively impacted our EBITDA movement by negative 5%. And overall, we look at our normalized EBITDA movement for the period been around 13%. From a margin analysis perspective, so quite positive impact from a margin analysis. We see our employee costs are improving to 41% of revenue. Ultimately, we would like to target margins 40% and below. So that is definitely moving in the correct direction. Our operating expense margin is consistent at 23% and this is influenced by the additional costs of doing business in South Africa. So I've mentioned that load shedding and the cost of diesel is a real cost that we experience, but over and above that, we note that municipal costs and security costs, as an example, have also increased our cost base for the period or in general. And furthermore, our investment into systems and processes to really move towards operational excellence is actually impacting our operating expenses for the period. However, 23% is still maintained at a good level. And ultimately, over time, we would like to reduce that to 20%. From a loss allowance expense perspective, we see a material increase in our loss allowance expense margin. So in June last year , it was 6%. As I mentioned, our loss allowance expense was lower in the prior year, moving up to 8% in the current year and ultimately to account for the increased risk in the debtors' book. So focusing specifically on the debtors' book and trade receivables. Just as a point of reference, we note that our debtors' book generally peaks in June of every year and it reduces post June throughout the rest of the year as students pay to access results and as they pay to access semester two registrations. Consumer pressures are definitely impacting collections for the period. What we've also noted that our trade receivables balance has increased by 24% for the period. About 75% of that trade receivables balance relates to distance learning students. And we've seen a massive growth in distance learning students and particularly distance learning revenue for the period. Over the period, our distance learning revenue has grown by 19%. The remaining 25% of the book being our contact learning book is actually performing really well. We've actually seen a decline in our gross trade receivables on our contact learning book for the period. The major contributions to the change or the increase in our debtors' book is definitely consumer pressures, but it's also the change in approach in terms of what we've adopted as part of our policy in collecting debtors. So currently, we allow more students to re-register with arrear balances. Historically, this was never allowed. Students have to actually pay in full to be able to access future registration periods. This has the effect that it allows students to pay over a longer period of time. Furthermore, we've actually seen a reduction in upfront deposits charged, and this actually makes studying more accessible to students and it's very much in line with our objectives of widening access. We still do see that students pay when they want to receive academic results and academic transcripts. It's a tool that's actually being used successfully in the past, and it continues to deliver on getting students to pay in time. And we've also seen with the increase in distance learning students, we've noted over the years and through experience that distance learning students do generally take longer periods of time over which to pay. Now given the increase in our trade receivables balance, the raw increase of 24%, we've increased our loss allowance for the period. As a percentage of revenue, it is increased to about 8%, and we've maintained our coverage at 43% of our gross debtors, which is very in line with what we had in June last year. Also to note that our bad debt recovered has actually increased by 28% for the period. So it moved up from ZAR 1.8 million to ZAR 2.3 million, which is also quite encouraging. Looking a little bit deeper into our gross debtors balance. We note that the risk is actually concentrated in terms of our prior academic year. So that would be debtors related to the 2022 academic year and earlier -- academic years and earlier. And that accounts for about 32% of the book. In terms of our provisioning, we have provided for 90% of the prior year book. The remaining 10% relates to a combination of corporate customers, where the credit risk is actually quite low, as well as performing term debtors, where we've allowed more extended periods of time, sits in that remaining 10%. And then the balance relates to distance learning customers, we've noted that they take longer to pay. Looking at the current year debtors, we've actually provided 21% of the current year book. And effectively, it amounts to 8% of our current year revenue, and as a relative measure, our historic bad debt write-off ratio has actually been at 7% of average prior year revenue, and that is before taking into account any bad debt recovered. We've also seen very positive collections post June 2023 as we close out S2 registrations. But I think more specifically, we've actually revised our processes to have more specific and focused attention, specifically on our distance learning debtors' collection and actually managing the overarching credit risk in that book. And hopefully, we will start to see positive results over the next few weeks. Notwithstanding the 10% increase in EBITDA, we see a 21% increase in profit after tax to the period to ZAR 127 million largely attributable to the increase in interest income for the period. Last year, we had an interest expense for the period. And we've also seen positive changes in our tax rate. Similarly, we see a 21% growth in our earnings per share from ZAR 0.112 per share to ZAR 0.136 per share. And on our headline earnings per share, we see a 22% increase from ZAR 0.111 per share to ZAR 0.135 per share. We also note that our weighted average number of shares have been impacted by new shares issued in April of this year as well as 3.1 million shares that we repurchased in May of the year. So core headline earnings represents headline earnings adjusted for nonrecurring items that have an impact on the results from year-to-year. And it's been a consistent measure that we've actually used since this day and actually a true measure that we use to track our underlying performance as a business. So we've seen good growth in core headline earnings for the period, so increasing by 20% from ZAR 96 million to ZAR 116 million, and that equates to a 29% compounded growth over the last 5 years. On a core headline earnings per share basis, we've seen -- also seen an increase of 20% from ZAR 0.113 per share to ZAR 0.136 per share, which equates to a 28% compounded annual growth rate over the 5-year period. If we dissect the movement in our core headline earnings, we note that 10% of the contribution to core headline earnings is coming from our growth in EBITDA with the balance coming from the tax rate change or the positive impact on the tax rate change. So in the current year, we've seen that the current change in tax rate from 28% to 27% has had an impact on our current year earnings. However, we note that in the prior year, we actually took a once-off ZAR 3.4 million tax rate adjustment on our deferred tax rate change, and it was a negative adjustment as a result of being in a deferred tax asset position. And that actually hasn't continued into the current year. So our change in taxes has actually contributed 7% to our growth in core headline earnings. And the balance of the growth is actually coming from being in an interest income position and that follows positive cash balances that we had at the year end and also increase in interest rates for the period. We continue to maintain a very healthy and clean balance sheet. We've invested ZAR 31 million of capital expenditure to date, ZAR 3 million was spent on solar projects, ZAR 5 million on software development for the period, ZAR 4 million on curriculum or program development. We spent ZAR 4 million on building projects. So that's a little bit of an overhang on the previous work development as well as the planning process as part of the Durbanville construction. And from a recurring CapEx perspective or business as usual CapEx like -- as I like to refer to, we've spent ZAR 15 million for the period. We currently sit with ZAR 175 million of cash on hand, and we've got 0 gearing in the business and still have access to debt facility of ZAR 100 million, which we actually haven't utilized during the year. Looking at our cash flow from operations, we've presented what we refer to as adjusted cash flow from operations and that's largely to remove the impact of the settlement in the prior year related to the CA Connect acquisition to make the results a little bit more comparable. Our net cash generated from operations has actually grown by 2% from the year. Definitely impacted as a result of working capital changes from slower debt collection, but still reflecting a very, very positive and healthy cash generated or cash conversion ratio. So currently, we have cash generated from operations as 121% of EBITDA and still reflecting a very healthy free cash flow less recurring CapEx of ZAR 166 million. From a capital investment perspective, we've noted to shareholders over the last 1.5 years that we're definitely moving into the capital-light phase of the business with the material development still remaining the Durbanville development and consistent investment into systems and processes. As I've mentioned, we've invested ZAR 31 million for the period to June, which takes our cumulative investment to about ZAR 2.2 billion since putting together as 5-year at the end of 2016, and we're starting to see a movement into double digits on our return on invested capital. From a cash utilization perspective, we started the year with a healthy cash balance of ZAR 148 million. We've generated ZAR 181 million of cash for the period, spent ZAR 31 million on capital expenditure, ZAR 15 million spent on net repurchases of shares. We've repaid our lease liabilities of ZAR 18 million for the period. And for the first 6 months of the year, we've actually paid ZAR 93 million in dividends leaving us with a very healthy ZAR 175 million of cash. And looking forward for the remainder of the year in terms of material capital projects, we will take transfer of the Krugersdorp property in the second half of the year. That amounts to about ZAR 37 million. Curriculum development and intangibles development for the remainder of the year will be about ZAR 23 million. From a building projects perspective, a change here where we note that majority of the construction of the Durbanville campus will now take place in 2024, will complete into 2025. We have some expected smaller costs coming through to the remainder of this year as part of the planning and the remaining part of our solar expansion or solar investment will also take place to the latter part of this year. And that brings our capital projects to about ZAR 76 million for the remaining 6 months of the year. So that concludes my part of the presentation. I will hand back to Chris to continue with the investment case. Thank you very much.

Thank you, Samara. If we look at strategy, sorry, I just want to get my slide show going this side. Thank you. When we look at strategy, we see that -- strongly believe that we have the right strategy for where the business are currently and that we're gaining very nice momentum. Our strategy and all decisions that we take at STADIO is underpinned by what we call our WWS. The WWS stands for widening access, giving more students the opportunity to access quality higher education. Then secondly, alignment with the world of work, ensuring that our qualifications are relevant and that our students are short after in the world of work. And then lastly, our student support, ensuring that our students are supported to be successful with their studies. Our focus for the last few years has been to build infrastructure and to improve our systems and processes so that we can accommodate big student growth. A lot of the cost for this infrastructure that we've put down has already been occurred. And therefore, we're very confident that our EBITDA margins for the next few years will really be possible to get to that 30% to 35% range that we've set ourselves. We see good return on our contact learning business. We've got new contact learning growth of 15%. This is very exciting, taking into account the 2 bad intakes during the COVID years. Those 2 bad intakes will phase out of the system going forward, and we should see some nice uptake and nice growth in contact learning also for the next few years. We will continue, as Samara already indicated with our optimization of our existing campuses and processes. We're really looking at rationalizing our smaller campuses and focus more on comprehensive campuses. Obviously, on the comprehensive campuses, we see bigger student numbers and therefore, also bigger margins. Our Durbanville campus is to open to new students in 2026. So the plan here is to start with construction in 2024 to move our current students at the Bellville campus over onto that new Durbanville campus in 2025 in the second semester and then to be ready for a big intake of new students in 2026. STADIO is a highly cash generative business with minimal debt requirements needed to do all our expansion plans. The market remains large, and we see that the market is growing every year. Currently, we see that only 39% of matriculants qualify for first year intake at public universities. So the market is definitely big and it continues to grow. Looking at our programs and our program mix, our PQM, we have a clear program development strategy. We have a very good pipeline of in-demand qualifications comparing with last year. We now have 91 qualifications in the group with 47 pipeline programs. The idea here is to create a comprehensive institution. And when legislation allow us to do so, we will definitely apply them to be a comprehensive university. On this slide, ladies and gentlemen, for illustration of how our strategy is working in practice. There is an example of our school of commerce, just to show over the last 3 years, what happened. If we look at the school of commerce, we would see when we started in 2020, we only offered the school of commerce qualifications with 1 Mode of delivery, and that was contact learning. Now we offer the school of commerce qualifications in both contact and distance learning. When we started in 2020, we offered the school of commerce only at 2 sites. We now offer it at 4 sites. And in 2020, we only had 7 qualifications in the school of commerce. We now have 19 qualifications in the school. So well on our way in creating comprehensiveness and the product development have mainly been paid full year. So as the students enroll, we should see growth in student numbers and that will also then improve the profitability of our offerings. From our learning management system, I've spoke to this previously that we have now implemented our new learning management system at all our campuses, which is called Canvas. It's a world-class system, and it is now rolled out to both our contact and distance learning students. Our campuses are conducive to offer quality learning and then exciting also to announce that STADIO introduced sport this year for the first time with our lady netball team starting this new trend, participating at the USSA tournament July here in Stellenbosch. And then later this year, we would then also see our sevens rugby team for the first time taking the field in the USSA's tournament. The strategy or the thinking on sport is mainly to focus only on 3 competitive sports for this year and next year. That would include then the netball and rugby sevens, as I already mentioned, and then also e-sports. As the institution grow, we will expand the sport offering. Definitely, we've soccer for both men and women being the next competitive sport on the agenda. Participating in sports, this is for mass participation of both staff and students will continue. We have our running club. We have a cycling club also planned for next year. So that is more on a casual basis. A few highlights for the 2023 year thus far for the first 6 months. STADIO was involved in the sponsorship of the very successful under 18 and under 13 Craven weeks, which gave us very nice exposure to a lot -- to many schools. We've also seen STADIO Higher Education conferring its first 2 doctorate degrees, which is very exciting. And then very nice also to mention that the Milpark Education, the PGDA program had an 82% pass rate for first time writers of the SAICA ITC Board exam, and then it's official now that STADIO is the biggest contributor to the CA industry in South Africa with 428 successful candidates in 2023. That is 23% of all candidates. The AFDA Film School, as I said, the brand is very strong. The AFDA graduation films continue to win awards, winning the Simon Sabela Best Student Film Award now for the eighth year running. And then also exciting for us, our school of fashion produced 3 of the 11 young fashion designers for the competition finalists. So 3 of the 11 come from the school of fashion. And then also a highlight for us, I'm sure there are a lot of them joining us this morning. We continue to roll out our Khulisa student share scheme with 441 new shareholders joining this year. So the question, why STADIO? Why the STADIO Group? I think STADIO is a new vision in higher education. We don't just want to be another university. We want to do things different. We want to do things better, and we want to do it the STADIO way. So looking at the market, the market is definitely big enough to grow our business and to meet our very aggressive growth strategy. We have 3 well-positioned distinct institutions to get these grow for us with 3 different strategies. We have the breadth of quality programs that will give us our comprehensiveness that we seek. We have minimum debt requirements for this growth. I think we're then also very well positioned with the infrastructure that we've put down our processes and systems. It's all ready to accommodate nice and big student growth. And lastly, our second last there, students become shareholders. This is very exciting for us as a new vision in higher education. We believe by having the Khulisa student share scheme, we're creating an active alumni, alumni that gives back to the institution. And we're also creating a lifelong learning partnership with our students. And then ultimately, the goal for our 3 institutions is to become first choice institutions, which I've already indicated, I think we're well on our way in reaching that. Then if we look at the remainder of the year or the full year picture and we include the second semester, it makes for a very exciting reading. Our distance learning currently, at the end of August, in comparison with December last year, the full year last year, we see a 14% growth in our distance learning students up to 40,411. The contact learning students remain the same as we don't have a second semester intake in our contact learning offerings. Total student growth then expected for the year of 12%. That can still change as registrations are still in the final stages. So very exciting for us as a young institution to show 12% growth predicted for the end of the year. In our pre-listing statement, we set the target of 56,000 students by 2026. To get there, we need to grow at about 8% per annum. And taking into an account that we're already at 46,000 now in August, I would be very disappointed if we don't reach that 56,000 students before the end of 2026. So overall, very well positioned to get to that number by 2026. In conclusion, as I said, we're excited with our current numbers, the interim results, and we can build on this going forward. We have a clear strategy and really see very nice momentum at all 3 of the brands. And we believe that we're well on our way to become a first choice institution at our 3 brands for students in the market. So thank you, ladies and gentlemen. We will now gladly take any questions.

The first question comes from Charlton. It says congratulations on the results. Two questions from me. Could you break out the employee costs between staff counts increase and wage inflation? Secondly, can you add some color on average fee increases between the brands, barely comment on capacity utilization percentage at the current campuses?

Let's take those 3 first. Samara, perhaps you can look at the staff question first.

Yes. So just on employee costs, I don't actually have the staff count increase, and that's because we use quite a large number of contractors, and that varies from period to period. But on a wage inflation basis, our average wage increases generally are between 6% to 6.5% for the 2023 year. I can actually comment also on the average fee increases between the brands, if you would like. So on the average fee increases between the brands are generally our high-cost products. So for example, our AFDA brand, the general fee increases there range between 5%. And then for both the Milpark and STADIO Higher Education brands, they've actually ranged between 6% and 6.5%. In terms of capacity utilization across the various campuses. So currently from a group perspective, we're just shy of 50% capacity across the group and they vary per campus across the 14 campuses. So we've created new capacity, as an example, Centurion is a new campus. But at Musgrave, we still actually have capacity to take new programs, the same at Waterfall. And at our Bellville campus, we don't have significant amount of capacity, and that's why the development of Durbanville is a priority for us going forward. I think that was it.

Yes. Just to carry on a few more questions from Charlton. Can you give an update on Centurion student numbers and profitability in terms of breakeven? When do you estimate you'll reach your target of 20% return on equity? And finally, what's the maximum outstanding balance that students can carry over into the new academic year?

I think, Samara, if I could just start off with the Centurion campus and just give some background to it. So I think what we need to remember, when we opened that campus there, we experienced quite a lot of delays coming from the authorities in accrediting the programs. So we started that campus with low student numbers due to the fact that the site extensions that we applied to -- applied for was delayed. Those are now sorted out. We see accreditation of quite a number of programs for this Centurion campus. And we're very excited for the next year intake, 2024 intake as we have more products to offer on that campus. I will hand back to Samara if you can just unpack those breakeven points for us, Samara.

Yes. So we currently -- from a breakeven perspective, we're still making a small loss on the campus, and we will definitely break even in the campus into 2024.

Then question from Samantha. Can you -- please can you give some color on how you think about the rate involvement going forward to meet the 2026 targets, given the increased affordability pressure in the consumer students? Which faculties or qualifications continue to grow the most and appear to slow down, given the higher unemployment or limited opportunities? And are you able to give a sense or size of students that are already working with those [indiscernible]?

So if we look at the target of 56,000 students that we said in the pre-listing statement for us to get there, we need to grow at an 8% growth per annum. This year, last year, and it looks like the remainder of this year, our growth would be double digits. So we're well on track in achieving that. From an affordability point of view, I think we've positioned the institutions very well to cater with that. Especially the STADIO Higher Education brand with the number of distance learning offerings, we have the luxury of really offering those programs at very competitive prices. If we look at a typical fabric university, the STADIO prices are very, very competitive.

Next question from [ Merwe ] saying, do you have any information on leavers, for example, due to immigration, financial and other reasons?

So currently, our brands are not highly affected. I think the brand that would be the most affected by leavers for -- due to migration would be AFDA, where we don't really see that affecting the other brands. So yes, not a big factor for us at this stage.

The next question is from [ Dave van Eeden ] saying, what do you think the impact of UNISA's administration challenges will be for STADIO? Secondly, you've talked about an ambition of 20% growth, and we're running at 12%. Given the operating leverage that we're seeing flows through, does it not make sense to start sharing your skilled benefits with students, drop your pricing and grow the size of your market?

Yes. I think on pricing, we're very well positioned. We believe that we have the right pricing for the variety of students that we attract through the different brands. So we're happy with that. We think we're very competitive. Sorry, can I have just the first part of that question again?

What do you think the impact of UNISA's administration challenges will be with STADIO?

All right. Yes. So yes, I would not like to talk a lot about UNISA. I think UNISA is a very important institution for our country. What we though see is a lot of students from the UNISA brands in certain of the schools moving over to STADIO, but that is not our focus. Our focus is to be a first choice institution to make sure that we position ourselves well to attract students as a first choice and not to be a default institution per se.

Next question from Simon Fillmore saying, what is the cost of students studying online degree with STADIO or do you have a range of the cost of degrees per annum?

Yes. I think Samara can give us more detail in this regard, but a typical online degree program will cost in the range of ZAR 30,000 to ZAR 35,000 and our contact learning then between ZAR 55,000 to ZAR 60,000. That's the average prices. Yes, we have some of the programs that are cheaper than that and others that are more expensive, depending on the type of qualification.

Nest question from [indiscernible] saying, is the institution continuing to own 100% of the property instead of renting?

Yes. Currently, our strategy is to rather own than rent. Thus far, I think if I'm not mistaken, Samara the only properties that we're still renting is that of the Bellville campus in the Western Cape and then the Krugersdorp campus in Krugersdorp.

And then a question saying how -- please outline how you expect to double the return on equity to 20%? And what student numbers and margins are required to get there? Also, when do you expect to get there?

Samara, so I think it would be a combination of efficiencies coming through. As I said, a lot of the infrastructure has already been put in place. The cost occurred to do so. And so now as we grow and we see more students coming on to the campus, those efficiencies should come through and we should see our margins improve over time. Where do we see the student numbers? The first target is that of the 56,000 students. But I think from day 1, we always said that there is basically no limit to where this institution can go as we have a very good infrastructure in the distance learning space, especially. So we can accommodate big numbers going forward in the institution. And it is not reliant on more infrastructure, meaning campuses, funds and seats.

If I may add to that comment just in terms of the return on equity, so we paid our maiden dividend about 1.5 years ago. And the expectation is to continue to become a regular dividend payer going forward. And that will have a significant impact in terms of improving our return on equity over the medium to short or the medium to long term as well.

I don't see any further questions coming through. And if anyone does have questions, they are welcome to e-mail Investor Relations at stadio.co.za. Back to you, Chris.

Thank you. If there are no further questions, then thank you for the opportunity. And that is the end of our presentation. Thank you, everybody.