Cheered by the continued interest shown in it by parents who want to educate their children during the pandemic, SA’s biggest private education group, Curro, intends to expand its digital offering, largely in the form of better subject choices.
Curro, majority owned by SA investment heavyweight PSG Group, has been pursuing a capital-intensive expansion since listing in 2011, which has seen its school base grow from 24 to 178 at its half-year to end-June.
Even as Covid-19 pulled children out of classrooms and put them in front of computers, Curro’s fixed costs have come under pressure amid a municipal battle over water and electricity bills.
The group hopes some sense of normality will return for the education sector by end-2021 as vaccinations gain momentum, CEO Andries Greyling told Business Day on Wednesday, but Curro is encouraged by continued growth across its schools, and doubts if Covid-19 will result in a fundamental shift away from in-person education.
Curro’s model is to build schools starting with, for example, grade 8, and then adding new facilities every year as those pupils move through the grade levels. The group maintains it is still a “young” company, and just more than a third of schools are yet to add a grade 12 classroom.
The group said on Wednesday its average learner numbers for the first half increased 7.2% to 66,167, helping, with fee increases, to lift revenue 12% to R1.78bn.
Protect competitiveness
The group has earmarked R1.1bn in capital expenditure for its 2021 year, largely on adding new classrooms. The group had spent R374m in its first half.
With construction projects, and adding items such as swimming pools and hockey fields in certain facilities to protect competitiveness, Greyling said Curro also aims to expand what has been offered through its recently launched online school to its brick-and-mortar schools.
Curro Online, launched in June, has since grown to 750 pupils, mostly from those in areas without one of its schools. Greyling said the group will be looking to offer pupils in existing schools the ability to break away from normal schooling to attend online classes in subjects not offered there due to a lack of demand.
“We are in a face-to-face market and we need to deliver a face-to-face education,” said Greyling, adding that applies especially at the primary school level, as soon as conditions allow pupils to flood back to school.
Rising costs
Cash generated from operational activities rose 48% to R525m, with the group benefiting from paying off some higher-cost debt, though the cash bump was partly due to a dispute with the City of Johannesburg, which has seen it hold on to some of its bills.
The group is in a battle over rates after the city moved to change zoning from education to business. Municipal costs rose 18% to R162m in the first half. It follows a 37% rise in 2020. Curro is in a dispute with the city over rates, saying it was surprised by some of its schools being rezoned into business areas from education.
Greyling said a dispute has been declared and Curro is awaiting a response from the city, failing which the matter could be expected to go to court in the next week or two.
Curro, valued at R6.96bn on the JSE, has seen its shares fall by just more than a third since the beginning of 2020, but are up almost a quarter in 2021. The shares were down 2.06% to R11.40 on Wednesday.
The group tapped shareholders for R1.5bn in September 2020. This increased its shares in issue by 42%, but net finance costs fell about a third to R91m to end-June, while net debt fell R1.4bn to about R1.2bn.
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