DUDU RAMELA: Stadio Holdings, which unbundled from Curro Holdings and listed on the main board of the JSE in October 2017, has released its [interim] results. The company focuses on investments in higher education institutions. It announced a sizeable increase in core headline earnings. Revenue increased from R297 million to R409 million.
I’m joined in the studio, to look at what all this means, by CEO Dr Chris van der Merwe. Thank you very much for joining us, Dr Van der Merwe.
CHRIS VAN DER MERWE: Yes, Dudu, thanks for the opportunity.
DUDU RAMELA: I guess congratulations are in order, despite tough economic conditions. You’d grade an A on your results. What do you put this down to in such a short space of time?
CHRIS VAN DER MERWE: Dudu, I think in terms of our vision we always said that as a group of educationists we were concerned that our 26 public universities can enrol only 190 000 first-year students per annum, while about 442 000 students qualify during their matric year to be allowed to universities. So, we asked the pinnacle question: what happens to those youngsters? We accept the fact that the future of South Africa will be developed by our youngsters, and the better they can be qualified and passionate about this country, the better for all of us. So, that is what drives the company. And I have reason to believe that this concept that I just put on the table played a role in terms of the growth that we saw, besides Milpark, because Milpark services the corporate clients predominantly.
So, if you strip out Milpark, the growth was actually 16 to 19% and we are extremely thankful and satisfied.
DUDU RAMELA: Sure. And you’ve noted a 10% increase in student numbers. Are you able to share with us the strategy to migrate your six private higher education brands to one Stadio multi-varsity?
CHRIS VAN DER MERWE: We work very closely with the Council on Higher Education, and also the Department of Higher Education and Training because, as you know, the tertiary environment is heavily regulated. And there are a lot of rules and regulations, processes and procedures that need to be followed. After many conversations with them, it was very, very clear that the regulator prefers a mono brand, because it’s just so much the easier to have a set of central policies, a kind of shared quality – and much easier to market the concept.
DUDU RAMELA: When we look at your qualifications – 82 accredited qualifications, 57 pipeline programmes – how do you ensure that you offer qualifications that talk to the needs of society, students and the world of work?
CHRIS VAN DER MERWE: It has to do with the science of curriculum development. So, in terms of curriculum design, one would liaise with companies and industries quite regularly, and ask what kind of skill sets they actually wish to see when a candidate sits in their boardroom during an interview. And, more importantly, we do our best to forecast what kind of job descriptions would be relevant for 2030. Now, that’s not so easy, but we are trying our level best.
DUDU RAMELA: I can imagine. When we go back to the numbers, though, you haven’t declared a dividend. Are you able to share with us why?
CHRIS VAN DER MERWE: Look, we see a lot of growth in the sector. Dudu, this a young company. Remember, we unbundled in 2017. We first want to build those three multi-faculty campuses, of which Centurion and the Western Cape are two examples, and obviously we’ll need all our resources to build them. We are sitting on R349 million in cash, and we also announced that we are almost in the conclusion phase of buying out our last 26% in SBS [Southern Business School]. Obviously, we’ve got to save our money for that.
So, we are consolidating our brands in terms of owning 100% of all our brands, and there is huge opportunity to scale this business. We are first going to use the cash resources to do that. Obviously, when we strike critical mass, we’ll look at dividends.
DUDU RAMELA: When we talk about some of the challenges that you have met along the way, are you able to share with us some of those and some of the lessons learned?
CHRIS VAN DER MERWE: Thankfully there is a big market. What challenges me, Dudu, is not actually the business environment. It sounds strange now, but when I speak to the youth and when they say, “You know, sir, just give me some hope,” the best I can do as an educationist is to say: “We’ll do our best to send you to the real world with a relevant qualification”. But, as a teacher, [it is depressing] to see youngsters losing hope. So, I guess there is a huge responsibility on the seniors of this country to believe in the country, to believe that the state sector and also the private sector will work closely with each other to unleash all the potential in this country. And I think that message needs to be conveyed to these students, just to make everybody positive again.
DUDU RAMELA: Absolutely. Hope – that’s what binds us. And you are exploring the “graphic expansion of programme offerings through greenfield developments” – what are we talking about here, essentially?
CHRIS VAN DER MERWE: Currently we have 14 buildings and it’s in those buildings that we accommodate our 30 000 students, of which there are 6 500 contact learners, or let’s call them on-campus learners, and about 22 000 off-campus students. These 14 buildings are predominantly what we call single faculties. So, you’ll see a building in Waterfall, but that’s only a standalone faculty of education.
Now, the two campuses that we announced today that we are going to develop are, as a matter of fact, what we call multi-faculty campuses. That’s more or less like a UJ or a Wits, or the University of Stellenbosch, but a bit smaller. These campuses will carry about five to six different faculties and they will accommodate 3 000 to 5 000 students. So we are extremely excited, Dudu, that finally we are ready to announce that we’ll go on site this year, towards the end of the year here in Centurion, and we’ll start building that first multi-faculty campus. And hopefully in January 2021 we can have a discussion again and discuss the opening of that campus.
DUDU RAMELA: Any plans to expand outside South Africa onto the rest of the continent?
CHRIS VAN DER MERWE: Yes. There is definitely the kind of student that still wants to go to a campus. So, we envisage that about 20 000 of our anticipated 100 000 students over time will be what you call on-campus students, and for those purposes they need a site.
But we want to keep the product affordable. So, with our software system that we are currently engineering, we believe that we will be able to cover a wider market than South Africa, and indeed have a chance to service the SADC countries in terms of training the youth. And of course we are going to keep that price point as low as possible. We are currently thinking about R20 000 per annum.
DUDU RAMELA: Is that, would you say, what sets you apart from the rest, especially in a country like South Africa, when we talk about #FeesMustFall, we talk about affordability of higher education? How big a concern was that for you, or how have you moved to deal with it?
CHRIS VAN DER MERWE: The #FeesMustFall [movement] was a concern for all academics, including myself. This was a situation where the South African youth cried out to the community to say, “We want to study but we need help”. We have to listen now. The good thing about the private sector is that in the tertiary space their price points are almost exactly like the state sector’s price points. So this is not a question of it not being affordable. However, one can say it’s affordable, but I guess we must all hold out our hands to fund these students. The part that we are playing is that we are allocating a part of our turnover to bursaries. When I was still the CEO in Curro, we utilised about 4% of our revenues for bursaries to open the access, and we are following suit in Stadio.
Then I’ve spoken to many, many JSE CEOs. We all want to make this country work, so we expect, over time, that the companies in terms of their social responsibilities will also reach out to us and see where we can offer which kind of bursaries.
DUDU RAMELA: Right, working together for the South Africa we want. Thank you very much. It’s been such a pleasure chatting to you.