Private school group Curro has reported an influx of new pupils despite Covid-19, though the pandemic has led to parents taking their children out of the group’s nursery schools. It is also struggling with the prospect of parents not being able to pay fees and has more than tripled its provision for bad debts, to R153m.
Curro said on Wednesday that from January, the group would be converting four nursery schools into primary schools or assisted learning facilities, to better use its space. Two are in Johannesburg, one in George and one in Cape Town.
CEO Andries Greyling said the group was seeing some stability after schools had reopened, but learner numbers were down since March.
“It feels like as we are opening we are seeing some sort of stability,” Greyling said. “[But] we aren’t entirely sure how this will play out.”
Learner numbers increased 5% to 59,967 during the group’s half year to end-June, though the numbers declined in nursery schools, which are not a compulsory stage of schooling. Year on year, nursery school numbers fell by a quarter, with those learners falling to 9.6% of its learner base at the end of June, from 13.5% previously.
The group has, however, lost 2,515 pupils since March 27 when SA entered lockdown, with 72.6% of this loss from preschool learners.
Curro has grown rapidly since listing on the JSE in 2011, from about 12 campuses then, to 76 currently. This has been funded through debt, which stood at a net R3.6bn at the end of December, but is expected to fall about R1bn after the group receives the proceeds of a R1.5bn rights offer, expected at the beginning of September.
Curro intends to use the rest for acquisitions.
The rights issue remained questionable, said Small Talk Daily's Anthony Clark, and Curro should instead be cutting back on expansion to stabilise its finances.
“Curro’s share price has been trading below that of the rights offer price (of R8.07) — that’s telling you that many in the market aren’t interested,” he said. As some shareholders would not take up their rights, this could allow PSG, which holds 55.4% of Curro, to increase its stake “by stealth”, Clark said.
The decline in nursery school numbers was also concerning, and could add pressure as those pupils often transitioned into other Curro schools, Clark said. “They may have to work a bit harder to get students into their feeder network,” he said.
Headline earnings per share (HEPS) for the six months to June fell 23% to 38.7c, or headline earnings of R160m. In the year-earlier period, the group had reversed a deferred tax liability of R53m. Headline earnings strips out certain one-off items to give a better indication of underlying performance.
Revenue increased 7% to R1.6bn.
Curro gained 1.74% to close at R8.19 on Wednesday.
Update: August 19 2020
This article has been updated with additional information
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