Stadio Holdings Limited (SDO) Earnings Call Transcript & Summary

There you go. Good morning, ladies and gentlemen, and welcome to STADIO Holdings Interim Results Presentation for the period ended 30 June 2026. Today, we're going to do things a bit different than usual. We are coming live to you from our Durbanville campus here in the Western Cape, and we are broadcasting from our architecture room at the campus. So to all those who are joining us in person, special l of welcome to all of you, and welcome back to university. Ladies and gentlemen, our presentation today, I will start us off with a brief introduction and setting the scene. Thereafter, I will hand over to our Group CFO, who is joining me with this presentation this morning, Ishak Kula. He will unpack the numbers for us in detail. And thereafter, I'll give everybody a blink into the future of STADIO and some of our plans for going forward. After that, there would be a question-and-answer session. And then for the people joining us live here at the venue, some drinks and refreshments as well as a campus tour of the new facilities for those of you who would be interested. Again, welcome. [Presentation]

The first 6 months, we've seen a very good first 6 months for the STADIO Holdings Group. Just to get started here again, the Holdings Group has 3 distinct brands. The first one being STADIO Higher Education. During the presentation, we'll talk about the different brands. The first one being STADIO Higher Education, our comprehensive brand offering both distance and contact learning. Our second brand in the group is Milpark Education, Milpark being an immersive online institution and still the biggest providers of CAs in the country. And then thirdly, our multi-award-winning film school AFDA and AFDA is a contact learning institution. Just for clarity, when we talk about the 3 brands, these are independent brands with their own strategy and a specific market segment that they target. We started the year off with the opening of the Durbanville campus, which has been a strategic milestone for us in the group. It's been a long journey to get where we are today. And I'm also very happy to see that we are joined by Dr. Chris van der Merwe, our previous CEO for STADIO. And it was Chris' vision to obtain this land many years ago. So Chris, I'm sure it must be very special for you also to step on to this premises and to see what we have actually put down at this stage. Again, thank you so much for your vision in identifying this land when you did. This Durbanville campus, ladies and gentlemen, we set ourselves a target to open the campus with 1,000 students. We thought that would be very ambitious. At the close of registration, we registered 1,250 students on our first go on this campus. That obviously led us or got us to the point to pull the trigger on the second phase. And when you do the campus tour today, you would see there's still a lot of development taking place on the campus. That is Phase 2, and that phase should be completed by November this year. That includes additional engineering labs, a mood court, sport facilities as well as cafeteria and our new hall, which is actually completed already. Talking about the 3 brands, STADIO Higher Education, the comprehensive brand has seen a stellar year thus far. We've really seen fantastic growth in that institution. 18% growth in total student numbers. If we unpack it, 33% of that growth comes from contact learning and then 16% coming from our very big distance learning. Looking forward, maybe just a quick appetizer. We're very excited about applications already for next year, but I'll talk more to that later in the presentation. STADIO Higher Education obtained BAC, that's British Accreditation Council accreditation this year as well as becoming a full member of the International Council for Distance Education. But we didn't just open this campus in 2026, we also opened a new campus for AFDA in Hatfield, Pretoria. Very excited about that. We've also exceeded our targeted numbers at that campus. And we believe that's a good market for our AFDA brand, especially the Pretoria area. But it hasn't been all plain sailing, ladies and gentlemen. We had some headwinds in our AFDA and Milpark brand, AFDA being affected by the crisis in the film industry, especially what is happening in Canal+, the close down of Showmax. [indiscernible] is here. I think she can tell you more about everything that happened to the industry. But we see it as a temporary and short-term glitch. We already see nice green shoots coming from AFDA for the future. At Milpark as well, a lot of new initiatives in our Milpark business, new programs coming in for next year, and we're super excited about the growth prospects also in our Milpark business. 2026 is a deliberate year of investment. I'll talk more to it after Ishak's unpacking of the results, showing our focus in this investment year. But even with the investment year, we are very excited about our EBITDA margins that we are still producing. So all in all, a good start to the year. We have a solid foundation, a very strong balance sheet, and we are ready for growth opportunities. Promise is made promise is keep. What did we promise? We promised in our pre-listing statement that we will get to 56,000 students by 2026. We've done that with 56,171 registered students by the end of June. So we can pick that box. I can then also say, as we stand here today, we're busy with our second semester intake, and we have already surpassed the 59,000 student mark. STADIO has delivered consistent growth over the years, not just in student numbers, but also in revenue and core headline earnings. But let's look at the group's interim results in the summary. I'll just touch on it high level, and then Ishak will unpack the results for us in detail. Firstly, student numbers for the group, up 10% to 56,171 students. This is at the end of June. Revenue, up 13%; normalized EBITDA, up 31%; profit after tax, up 14%; earnings per share, up 15%; core headline earnings per share, up 18%. And then cash generated from operations, up 13%. And then our return on equity, up from last year's 15.4%, up to 17.2%. So we are well on our way to reach our long-term goal of 20% return on equity. I will now hand over, ladies and gentlemen, to our Group CFO, Ishak Kula, who will unpack these numbers for us in more detail.

Thank you Chris. Good morning, ladies and gentlemen. It's good to see you all here this morning. And I could see the Chris van der Merwe's smile when he saw the 56,000 student number that Chris just put up on the screen. But again, a big milestone for us as a group. And I know a promise that was made at the back end of 2017, 2018 of the Chris van der Merwe. So well done. It's a big milestone for us. Allow me the opportunity to take you through the results for the half year. I'd like to go through it systematically and perhaps highlight some of the key changes and some of the highlights that you can see. I think as Chris alluded to, I think it's a year dubbed as a year of deliberate investment, but with sustained growth. And I think that's important. Although we embarked on this year, we always promised our shareholders that we'll continue to generate good results. And I think the numbers will speak for themselves as we go through the slides. I think first and foremost, STADIO achieved its pre-listing statement and highlight of 56,000 students for the half year. That's underpinned by a 13% revenue growth, I think, for the half year, really driven by the 10% overall student number growth that we've seen. As Chris alluded to, we've opened 2 new campuses, STADIO Durbanville campus, which we're all on today for those that are here in person, where we exceeded our target with 1,250 students in total, and we also opened our AFDA Hatfield campus. Our loss allowance margin is consistent and flat with the prior period at 8.7% of revenue. Then going to our normalized margins for the period, 31.3% for the half year, up from the 30.6% we saw in the comparative period. And importantly, to the earlier point, which I'll unpack a bit later, in a year of investment, we believe that's a very good and healthy margin and can be sustained in the long term. I think financial performance, it's good to have good financial performance, but it's also really backed up by good cash generation with our cash generated from operations also up by 13%. Then on the theme of deliberate investment for the year, some capital expense highlights, and I'll unpack that a bit more. Our big CapEx for the year in total accumulated to ZAR 147 million. That was invested ZAR 79 million into the Durbanville facility with a bit more to come in the remainder of the year. We've also expanded in our STADIO Higher Education brand. We acquired the Curro Waterfall building for ZAR 18 million earlier in the year as part of our expansion journey in the Waterfall region. We've also invested ZAR 38 million on other campus enhancements across the STADIO Holdings Group. And again, to support our IT strategy and the curriculum enhancements, we invested another ZAR 12 million in that sphere. Then moving on to shareholders' returns. I think for the period, we returned ZAR 217 million to our shareholders, comprised of ZAR 156 million of dividends to our ordinary shareholders as well as ZAR 11.3 million to our minority shareholders. In the period, as a stated strategy, we've embarked on a journey to acquire all of the long-term incentive share -- long-term incentive scheme as those shares vest under the scheme, our strategy was to ensure that our shareholders aren't diluted. And in the period, we purchased and canceled 3 million shares up to 30 June, which costed us ZAR 36.3 million. And subsequent to 30 June, we bought another 1.87 million shares for ZAR 24.6 million. Further, we also issued 2.4 million shares under our long-term incentive scheme to those individuals that are entitled to the long-term incentive, and we'll continue to do this in our strategy going forward. As Chris alluded to, I think importantly, although we've got a good -- massive year of investment and more to come, we've managed to maintain our debt levels at fairly low levels with half year debt amounting to ZAR 120 million, but that substantially paid off post the half year. Then what does it mean in student numbers? I'll take you through the total student numbers and break it down into contact learning and distance learning. I think some of the highlights there, as we've alluded to earlier, we've grown our student numbers by 10% in total with student numbers going from 51,197 to 56,171 at the half year mark, exceeding our pre-listing statement of 56,000 students. I think important to note there, our student numbers continue to be impacted by the B2B component of our Milpark education business. If we exclude the cyclical nature of that, our student number growth would have been 14%. Then looking at our contact learning student numbers, breaking that down. I think for the period, growing by 15% year-on-year. We see -- continues to see incredibly good momentum. Student numbers up from 7,018 to 8,082 students. I think probably 3 key components to highlight from that story is in STADIO Higher Education, we've achieved 43% new student growth in the first semester. We've opened 2 new campuses, STADIO Durbanville and AFDA Hatfield. And to Chris' earlier point, we've also taken some strain and a higher price point qualifications, particularly in AFDA. Then moving on to our distance learning student numbers and how that performed. Distance learning student numbers overall up 9% for the period from 44,179 to 48,089 students. Again, 3 highlights here. We remain the leaders in the private higher education distance learning space. This is the core component of our group. And whilst we see good contact learning momentum, continue to see accelerated and good growth in distance learning and remain the leaders in that space. I think what is exciting and encouraging for us, although we've got a tremendously big base already in distance learning, we still saw 14% growth in new students in the distance learning space and starting higher education. And overall, our distance learning numbers would have also grown by 14% if it wasn't impacted by the B2B component in our Milpark business. On the revenue side, we've crossed the ZAR 1 billion mark for the half year. Our revenue increased from ZAR 957 million to just over ZAR 1 billion, ZAR 1,080 billion. That 13% growth is made up of 2 components. Our contact learning revenue growth grew by 10% to ZAR 333 million, while our Distance Learning revenue grew by 14% with to ZAR 743 million. Important to note, given the fact that we have taken some strain in our high price point qualifications that has played an impact on our student mix and our average revenue per student. And you can see that in the contact learning growth with student numbers are up 15%, but revenue up in the contact learning space only by 10%. And if you look at our EBITDA and adjusted EBITDA, I think importantly, I want to highlight the fact that we -- in a year of investment, we've continued to achieve over the 30% mark, which was our stated objective with our normalized EBITDA margins at 31.3%. The key difference I want to highlight there between normalized EBITDA, normal EBITDA and adjusted EBITDA in the period when we acquired the Curro building in Waterfall, we had historically had a sublease with Curro there. And because we had acquired the building, we had to derecognize a component of our sublease receivable, which led to a once-off adjustment in our income statement, a loss of ZAR 6 million, which we've added back for EBITDA purposes because it's not normal trading results. And that's the differential between adjusted EBITDA and normal EBITDA. I think on the back of that, despite all of the 2 investments or the number of investments, we still managed to achieve a very strong EBITDA margin. Just breaking the margins down a little bit more into our employee cost base, operating cost base and loss allowance margins. I think for the period, our employee cost base margin with the growth that we've seen has actually improved. If you look at our employee cost base as a percentage of revenue, that's improved from 38.3% in June 2025 to now 37.3% at the half year mark with overall growth in employee cost of 10%. If we look at our operating expenses, that in total pre-normalization has grown by 17% off the back of the various investments, which I'll also highlight to you in the slides that come. If we add back the once-off partial derecognition of that sublease receivable, operating expense as a percent of revenue has slightly increased from 22.9% to 23.9% at the half year. And loss allowance, which I'll cover a bit more in detail, that is flat at the half year, year-on-year. If we look at trade receivables and loss allowance holistically, I think the picture is we've achieved 8.7% year-on-year. So it's flat year-on-year despite, I think, still challenging macroeconomic conditions. So we believe it's a good outcome. We continue to innovate in this space. And I think it's exciting to see that we are seeing our recovery rates of debt that we've written off in historic years. We've seen an acceleration of collections in that space. So it's showing us that our initiatives in terms of how we go about collecting is improving. But unfortunately, we've also seen some strain in high price point qualifications, and that all played out that the loss allowance at the half year is flat year-on-year. And again, just an operational matter. I think we've highlighted it previously, but importantly, particularly in our distance learning space, students moving from semester 1 to semester 2. If they carry a significant amount of debt, we will not allow them to reregister in the second semester. But of course, it's our intention, our stated objective because we want to widen access, which is one of our core pillars in our organization. We'll try and assist students as far as we practically can to help them guide them through the year where it's possible. Then just giving you a breakdown of how the debtors balance moved at the half year year-on-year. Overall book grew by 9%, whilst revenue grew by 13%. The current year book grew by 12% with revenue 13%. So you could see those collections in the current period was well managed. And I think also realistically, if you look at our prior year debt component, which we believe is the highest risk category in our organization, last year '24 to '25, our prior year debt book grew by 21% when the current period, it only grew by 5%. And to my earlier comment, we see good recoveries on our older book, which allowed us to keep our loss allowance coverage within an acceptable range, but to release some of those provisions. The profit or loss for the period. I think profit up 14% for the half year year-on-year with profit increasing from ZAR 183 million to ZAR 209 million, up 14%, really supported by good underlying organic growth in our organization despite all of the investments, which I'll unpack a little bit more. And I particularly want to highlight this point, our investment into people, processes, infrastructure and brand, you can see in our half year results. And despite those investments, we continue to deliver good results. And as Chris always said, our stated objective is we will become a household name over time. And looking at our earnings per share and headline earnings per share movements for the period. From left to right, earnings per share increasing by 15% from ZAR 0.208 to ZAR 0.24 with our headline earnings per share increasing by 16% from ZAR 0.207 per share to ZAR 0.24. Then looking at our core headline earnings, this is our stated metric that we use as a management team. This excludes that partial derecognition of that sub lease. So we normalize for that, which is a once-off adjustment. This is where we believe if you look at the growth of 18%, still incredibly healthy in a year of investment, that up 18% from June '25 of ZAR 176 million to ZAR 207 million and core headline earnings per share up from ZAR 0.207 to ZAR 0.245. And I'd like to take a moment and pause here. We talked a lot about our investment, our investment here. So what does it mean from an earnings perspective and what sits in our income statement. This is a slide that effectively rolls our June '25 core headline earnings to our June '26 core headline earnings. And you can see here the underlying organic growth in our institution net of our loss allowance, that moved and increased by 26%. And then that is set off by our strategic investments, which is inclusive of the incremental costs in opening all of our -- the 2 new campuses we cited earlier as well as our investment in brand, people infrastructure. That reduced our organic growth of 26% by 8%, and that's how we roll to 18% at the half year. Then on the statement of financial position, I think I highlighted the CapEx investments. I think the message here is we remain lowly geared. We've got an incredibly strong balance sheet, and we are ready to pounce on opportunities with lots of headroom in all of our facilities that we've got available. Then looking at our cash flow from operations, so our free cash flow and cash from operations. If you look at the middle section there, our cash generated from operations, we generated 123% cash when we compare that to our normalized EBITDA, in line with historic levels. So we still continue to generate a healthy amount of cash and with our free cash flow moving from ZAR 291 million to ZAR 332 million. Capital invested for the period, the ZAR 147 million can be broken up into 2 components, our infrastructure development and capital assets of ZAR 139 million and then ZAR 8 million into program development specifically at the half year, taking our total cumulative investment from 2021 or from inception to present to ZAR 2.9 billion. We look at how we spend our cash for the half year. We start with an opening cash balance of ZAR 156 million. Our operating activities generated ZAR 353 million for the period. We then spent ZAR 79 million on our Durbanville campus. We spent ZAR 18 million as part of our Waterfall expansion in contact learning as well. We spent another ZAR 16 million on various other enhancement and growth opportunities with ZAR 12 million in software and curriculum development. Our recurring CapEx number for the group is ZAR 22 million we spent at the half year, and we paid ZAR 12 million down for all of our lease liabilities across the group. Then we paid a dividend of ZAR 156 million in the period to ordinary shareholders and ZAR 11 million to our minority shareholders and our net repurchases of ZAR 33 million for the period. And that's how we rolled our cash balance from ZAR 156 million to ZAR 150 million at the half year. Then total CapEx projects for the year. This is -- gives you an indication of our -- what we've earmarked for the year, a total of ZAR 301 million, ZAR 42 million in curriculum and intangibles development. Our Durbanville property is circa ZAR 110 million for the full year. And then other campus expansions of ZAR 130 million we earmarked for the year with recurring CapEx for the full year at ZAR 36 million. That's how we roll to ZAR 301 million for the full year. Ladies and gentlemen, in a 6-year financial overview, I think the message is clear. We remain optimistic. We think the future is bright. We've got a solid track record with consistently good growth. Thank you very much.

Thank you very much, Ishak. I think, yes, those set of results deserve a hands. Ladies and gentlemen, just to expand on what Ishak has said and to give you a little bit of a blink into the future and what we are busy with at STADIO. We have, as I said, reached the 59,000 mark in student numbers in August. We are actually still in a registration period, so we can expect those numbers still to grow. The next target that we've set ourselves as a group is that of 80,000 students by 2030. To get there, we need to grow at a rate of about 7% per annum. We really believe that is achievable, and we actually believe we can do better, actually much better. Our growth strategy is effective. It's been serving us well over the last few years. The growth strategy focused on those 5 pillars. For the last few years, we've really spent the majority of our attention on the first 4. That includes accrediting new in-demand programs where we have more than 100 accredited programs in the group currently, taking programs to new sites of delivery and to new modes. I'll talk more to modes as we believe there is still a fantastic opportunity for us, opening new facilities and schools or faculties and schools, opening comprehensive campuses, optimizing current campuses. And then the last pillar has come into play since May this year after restructuring the STADIO Higher Education institution. The executive team now have space and capacity to actively explore new opportunities and new markets. Let me say this at this stage. There's a lot of work going on behind the scenes, and we are very excited about a lot of potential projects that we will launch soon. As Ishak said, we are investing for growth. And this year, especially, we have targeted this year to up our investment, the focus there on people, technology and systems, infrastructure, brand and university status. Just a few examples. If we look at people, we've launched a new academic model in the beginning of this year, a model that we are very excited about and believe we will see even better improvement in our academic quality with scale. And that has been the challenge. We think that we've cracked that nut. We're very excited about it, and it is now to capacitate our new academic model. Also a lot of capacity in our Chief Information Officer office with the appointment of software developers, engineers as well as IT specialists. Looking at technology and systems. This would be a continuous development for us, and it will require investment on a year-to-year basis as we see technology as an enabler for us to deal with the growing student numbers in our group. There's also currently a big focus on AI, not just for our staff and students, but also in our operations. It is a nonnegotiable for us at STADIO that all our STADIO graduates would be AI literate, but not just being AI literate, they will also get the necessary skills to make a difference in the specific industries that they will move in after they have graduated. Infrastructure, I will come back to that when we talk more about contact learning. Then brand building, as Ishak said, we identified our sponsorship with the Springbox as the vehicle for us to become a household name in South Africa. We believe there's a lot of synergy between the 2 brands. Both of these brands are very proudly South Africa. And as we said, I've mentioned it at all our previous meetings, for STADIO, it's all about becoming the first choice higher education institution in the country. And then a further investment priority for us is on university status, and that require investment in curriculum, expanding our offerings and our faculties, improving our teaching and learning at all our campuses, research outputs as well as community engagement. So yes, ladies and gentlemen, we will become a university as soon as the regulations will allow us to apply. We've visited the department in late July, myself and Dr. or Professor Divya Singh, to just go and clarify the time lines, to give proper feedback to our investors and all our stakeholders. And I can report back that there is still not a clear time line on when regulations will become available. The department is working on it. There's a lot of complexities in this regard, but we know it is coming, but we don't know when. So we keep on preparing as if we can become a university tomorrow. We believe that we are ready should the regulations become available, our plan is to apply for university status in STADIO Higher Education, university college status for our Milpark education. We believe that there is also potential to actually apply for university status in Milpark in the closer future. And then lastly, After, we will register as a university -- as a higher education college, not because that they are inferior in offering, it's just to the nature of their programs. It's a very practical program. And therefore, that category will suit them best. For those of you watching from -- online, there are just a few pictures of the facilities here at our Durbanville campus. As I've said, we're extremely excited, and there's a lot of interest in this campus. Very exciting news to share with you on the land, if you look outside the window on our right-hand side, it's earmarked for our indoor high-performance center that we will start construction with late next year. This would be an indoor center that will meet international standards. We are in discussions with SA Netball as well as other sports codes that it would host international events in this indoor arena. Looking at our sports strategy, a lot of inquiries about what is STADIO's vision for sport going forward. Our sports strategy focused on 3 levels. Firstly, our social level, that is on-campus sport. You will see on all our campuses, we have multipurpose sport courts for mass participation and intercampus events. Competitive sport for those students who want to take the sport at a competitive level. We have sports clubs. And we are also partnering with clubs in the area for those codes that we do not offer at our different campuses. And then the third level is at Barcity Sport level. We participate in the universities of South African sporting events in the codes of Rugby, Netball, Chess, eSports and soon, we will add soccer to it. This campus in Durbanville will have a focus on Netball, especially, as I've already indicated, the international facility that we will put down. We will focus our Rugby program in Pretoria and then our soccer program in our Musgrave campus in Durban. Nice to share this with our investors. We've participated this year in USA and both our Netball and Rugby won their respective divisions. But let's get back to the growth story. As Ishak already indicated, we have a stellar over year, especially our contact learning that is doing very well in the group and especially in STADIO Higher Education. 43% new student growth in STADIO Higher Education, 33% total student growth in contact learning and then very good demand already for next year. Obviously, with this growing demand, we have decided to look at our capacity and to expand our capacity in contact learning. We've done quite a lot in this regard at Durbanville, as I already indicated, we've pulled the trigger with Phase 2, which you can see is currently in development. The indoor arena that is coming next year. At Centurion, we've converted our big hall into lecturing facilities, and we are starting soon to develop our new 1,500-seater hall there at our Centurion campus. Waterfall, very exciting. We've acquired the Curro building that's on the same site. That will increase our capacity there. And there is still potential to acquire a second Curro building on that site. So there's a lot of prospect for growth at our Waterfall campus. At Musgrave, we also acquired or rented extra space in that area to also cover growth that we expect coming in the Musgrave area. Ladies and gentlemen, we said that we're not going to put down a campus in every town in the country when we started this contact learning project of ours in 2020. However, the demand is so big, and we see especially demand in cities outside of the metropolitan areas, and that is really something that we believe we want to test. And hopefully, soon, we will then also open a new campus in a province that we are not currently actually operating in. Moving on to our Distance Learning business. Without a doubt, STADIO is the leader in distance learning in the private higher education sector with more than 50,000 students currently studying by way of distance learning. Just to put it in perspective, during this first semester in STADIO Higher Education Institution on its own, we've registered 13,400 new distance learning students. We believe that we are very well positioned in that regard. We remain the leader in distance learning. We also see a lot of runway still there with a lot of new programs coming and a lot of new technology that we will phase in to make the offering even better going forward. So currently, in the group, we offer 2 modes of delivery. we have contact learning and we have distance learning. Each one of them coming at a specific price point. Obviously, your contact learning is at a higher price point and your distance learning at a lower price point due to the lack of infrastructure needed. We've done a lot of research, ladies and gentlemen, over the last few years, and we looked at the higher education market. And what we have seen is a definite need for something in between contact and distance learning, an offering that will come at a lower price point than what we are currently offering at contact learning level. And with that being said, we will soon launch our blended learning campaign. What will this mean? It could be an offering that will give more people access to classroom education, but at a lower price point, meaning it will still be the same curriculum, the same academic quality, but we will be able to offer it at a reduced price point and offer it to students at a reduced price point. If you look at the market, it is evident that the big demand for higher education or the growth in demand for higher education predominantly comes from quantile 3, 4 and 5 schools. These are lower fee paying schools. And we believe by bringing in this mode of delivery, we will then widen access to more South Africans to access quality higher education. We are very excited as a group on this, and we believe this is going to open a total new market for us. If you look at the group currently, we operate in the high premium price point. We offer in the middle. We offer programs in the middle price point level. And now with this new mode of delivery, we will also be able to offer a contact learning equivalent for a lower price point. In summary, we say that we are well positioned to accelerate growth, as we've said to our shareholders. Our distance learning is well established. We see a lot of runway still in distance learning. We are only playing in a few markets. There's a lot of market expansion potential for us by bringing in blended learning. We have no offerings in the FET and skills training market. And we haven't touched the rest of Africa yet, although we believe we have still a lot of runway in South Africa. We already start looking at potential outside of the boundaries of the country, but we also realize that we need more expertise and experience in doing business in Africa, and that's also something that we are focusing on in building that capacity. The wider range of price points. As I've just indicated, we are paying only in the 2 brackets. We've got nothing in the lower price point bracket for contact learning or equivalent contact learning. We see that as a very exciting new step for us at STADIO. Then the quality of our programs, we are very confident that STADIO is producing quality graduates. Our employment surveys prove that. Our graduates are highly in demand. We are well positioned as a business with a very strong balance sheet. We can act on all these opportunities. And I think one will see a lot of things happening over the next few months towards the end of the year. And then lastly, ladies and gentlemen, we're very excited, and I can say that we believe we're a university in waiting and that we will meet the criteria that would be set by the department when we can apply for university status. So yes, we've laid the foundation, as Ishak also alluded to. We're very excited about the second half of this year, and we believe that STADIO will really accelerate our growth over the next few months. Thank you very much.

We will now open for a question-and-answer session. Kate, you will read us the questions from the online people, and we will take -- we'll have a roaming mic for questions in the room. Any questions?

I'm just interested in the format of the blended offering. You mentioned it, but what will it look like?

Okay, I'm not going to unpack it in detail. What makes us very excited about the blended offering is, as I've indicated, there is a big demand for contact equivalent contact learning at a lower price point, and that blended model will focus on exactly that. Not having these big campuses with all the campus life on it, but to look at a premises that can offer a quality environment but without having to spend all the CapEx in offering that fast-paced education.

Well done. I am incredibly inquisitive in terms of how big this market is. You know those 3 questions, is there a market? And how big is the market? And will the product be a lasting product if we take a view for over 10 years. Now the growth has been sterling. So my question is if our parliament adopts sterling, considering the power of AI, how big do you think is our market considering that we can also expand to the SDIC countries?

Chris, let me start off by saying we really believe in the market, in the size of the market. I think over the last few years, especially, we've seen a shift in South Africa, where in the past, private or private school education was seen as a premium product. However, private higher education has been -- has the reputation of being inferior to our public universities. That has changed tremendously over the last few years. And I strongly believe that what is happening currently in this private higher education space is contributing to that. I think the quality of the offering of not just STADIO, but also a lot of our bigger competitors have really increased the quality of higher education in this space. So we believe that the market is very big. Also, if you look at the profile of South Africa and its schools, a lot of our lower fee schools in the past didn't get access into higher education programs. The main reason for that has been affordability. If you add up all the costs associated with enrolling at the university, it is actually astronomical. Your school or your tuition fees are normally not the biggest part of your cost. It's the accommodation, traveling and your life expenses moving into a town where your university campuses. So I think by taking education into those areas where there are not, university campuses even increase the size of the market.

Just a follow on from Dr. Chris' question regarding blended. As I was driving in this morning from town in this foggy day, I was listening to SAFM and the crisis going on in the NISPAS funding scheme. And the gentleman on the call said 97%, if I'm right, of NISPAS funding goes to accommodation, which means you can -- you can do away with that and actually provide that funding from government into educational purposes. There will be a huge market for this company going forward once you get university status. Any comment on that, please?

Yes. No, 100%. It is, as I've said, we have identified exactly that. Just in our research the last few months, people responsible in sponsoring and assisting students to go to university have said exactly that. With this blended mode of delivery that we are planning to roll out. We have worked out that you can accommodate 5 students for the same price as 1 student going to university and having to pay for accommodation and traveling costs. So yes, definitely, that's all part of our ethos and our DNA is to make higher education accessible to more South Africans.

Chris, just a question on affordability. So it seems like the thing that's coming through a lot here is around just consumer pressure. That's kind of the biggest learning for me of the morning. So if I look at that data book, it looks like the longer duration piece of it has grown disproportionately with the total debtor book, which is interesting. So that talks to affordability, I guess. The high-price qualifications taking strain. Just is it pockets of issues? So is it like the AA issue potentially? Is it a broader story? And then I guess the university status, does that give you more pricing power long term? So you've got blended learning coming in, which is a great volumes play and ROE, but is there some pricing power that comes with that as well maybe for in person?

Look, I'll hand over to you to talk about the debtors. Let's say it's a tough environment for a lot of our students. Even if you look at our debtors book, I think there's generally, we see it takes longer for students to settle their tuition fees, especially if we look at our distance learning behavior, these are typical adult learners. So they have other life priorities as well and sometimes education gets paid last than the priority list. However, we do see these students come back even if it takes longer, they do come back, pay their school fees and then continue. We do see pressure on the premium price point offerings that we have currently, but there is also a strong and definite market that want to operate in those specific qualifications that we offer at that high price point. Ishak, do you want to talk about the debt?

Yes. Thank you, Chris. Thank you, Rob, for the question. I mean exactly right to your earlier point. I think we are -- to answer your first component, we are definitely seeing it isolated to higher price point qualifications, where I think the payment behavior does take longer. So there is certainly a bit more pressure in that system. But I think likewise, we've responded commensurately as a business by introducing various initiatives to try and curb that. I think quite interestingly to articulate and to substantiate the point in the start education example in contact, we've actually seen improvement in collections year-on-year. So I think that's also remarkable. So I think the initiatives and the drive there has shown that although the consumer remains under pressure. We're still seeing good collections and particularly in that space, but high price point one is definitely taking some strain. And then I think the point I would just want to raise that growth on the prior year book is still less if you look at the gross book than the prior year. It's grown by 5% only comparatively to 20%, I think, o in the prior year. But because we're seeing enhanced recoveries of things we've written off, we've -- we've been able to reduce the coverage a little bit there to compensate for that enhanced recoveries.

Just a question from my side. Just given some of the growth initiatives currently underway, is there any thought given to increasing leverage in the business? Or would you still look to keep leverage at the same level -- the same targeted level?

Yes. I think there is a lot of projects that we are currently considering. It's at a very sensitive point. I don't know really how to say more in that regard, but definitely, we look at a lot of new potential projects coming in very soon. And that will really address the leveraging of the total business going forward.

If I may add to that, I think just to maybe give us some color in terms of numbers. At the half year, I mean, our debt levels was ZAR 120 million. We repaid the majority of that post the half year. And I think our strategy pending sort of further acquisitions or other opportunities and expansion is, of course, to keep that as low as we practically can because the business is generating a significant amount of cash. If we look at our debt carrying capacity, I mean, I'm side any December '25 numbers, of course, before I give you forecast information. I think we generated EBITDA of just over ZAR 500 million at December '25. We've got debt carrying capacity of circa just over ZAR 1 billion. So I think there's headroom there. Of course, we'll look at the optimal debt levels when we will embark on the growth opportunity to make sure that the shareholders' returns are optimal. So you can definitely expect some increased gearing capacity, but it will always be within acceptable parameters.

At Milpark, can you maybe just speak a bit more about the headwinds that you're experiencing there? And then you also mentioned some green shoots and new initiatives. So just to touch a bit on those.

We have the CEO of Milpark here. I will also give him an opportunity. I think the big issue there is still the decline in the B2B business. I think we've been seeing that for the last 2 years. It's still the corporate business that is not showing any growth. Actually, we see more and more of the corporate entities cutting down on this type of formal education, maybe looking more at skill training. But I think for Milpark, especially, we haven't introduced a lot of new programs over the last few years, but we have a few very exciting programs in the pipeline for next year already, a minimum of 3 new programs that we will launch there, if I'm right, Andrew. And then a whole lot of exciting other programs that will come to offer around about the end of '27 and 2028.

Chris, if I may, I know there's been a question too on the B2B piece. I think just maybe if we look at total student numbers, it always -- it's sort of between the 4% and 8% of our total student numbers and it ranges between that level depending on the corporate and the number of students they enroll on the programs. And therefore, you can see the impact, I think, that we cited in our total students, the impact is about 4% at the half year mark. In saying that, I think we like to believe that it's hopefully reached its bottom, of course, but you can never say with a great degree of certainty. I think to Chris' point, therefore, we've seen in the banking and financial services space that many of the corporates opt for QCTO type qualifications. And as a consequence, I think Andrew -- led by Andrew and his team, there's a number of initiatives in that space to try and one, not only curb, I think, the B2B impact, but hopefully, over time, even grow it.

Thank you, Chris. Nick, I think I just spoken to your B2B question. [indiscernible] has asked 3 questions. First one, it's difficult to ascertain the effectiveness of marketing, but have you seen the Rugby campaign helping student growth?

Well, I've put my head on the block here in the sense of partnering with the Springrod brand. Definitely, I can say that the numbers are not yet in. It's our first year of doing it. But I think there is a general feedback that we get that the campaign is working very well for STADIO. We get a lot of exposure in this regard. Just for example, the past Saturday, we had 3 Springbox on the field studying with STADIO being Damian Willemse, Paul de Villers, who had a blinder of a match and then also Zachary Porter, the young [indiscernible]. If I can say our involvement with the Springbox at under 20 level. There, we had 30 boys that participated in the World Cup in Georgia and 16 of those 30 man quite are studying with STADIO. We see all of these boys being ambassadors for the brand. And we strongly believe that when the numbers are in at the end of the year, we will see or we will reap the benefits of the partnership with SA [indiscernible].