SA’s largest private school operator, Curro, has restored its dividend payout after returning to profit in 2021, saying it is optimistic about a more normal school year as Covid-19 recedes.
About 40% of pupils who left in 2020 due to financial pressure on their parents have since returned, CEO Andries Greyling told Business Day, with Curro seeing signs that it is becoming a preferred brand in the market, having only started its serious expansion efforts about 10 years ago.
“As things start opening up, I think cash flow will get better and we will see more growth,” he said.
Curro, majority owned by SA investment heavyweight PSG Group, has grown rapidly since its launch in 1998, from 28 pupils then to more than 70,000 today.
The group generated R251m in profit for its year to end-December, from a loss of R43m previously. It had written down underperforming schools by R207m in the previous year, when the pandemic also put financial pressure on parents and pushed up bad debt.
Group revenue grew 14.5% to R3.54bn to end-December, with average pupil numbers up 9.3% to 66,447. Curro said it had also kept its costs under control and beefed up its debt collection processes.
Expected credit losses of R131m were provided for, from R146m in the previous year. The group said overdue accounts are managed more stringently and the quality and ageing of outstanding accounts for enrolled pupils improved significantly.
“We still see some pressure on parents and affordability, but hopefully we can keep learners, and as the economy recovers, our churn rate will be lower,” Greyling said.
As at February, Curro had 70,408 pupils enrolled for the 2022 year, which excludes a recent deal to acquire HeronBridge College, representing a 6% increase.
Curro declared an 8.2c final dividend, from none previously, representing about a R49m payout for the group, which is valued at R7.55bn on the JSE.
“The business showed resilience and recovered quite quickly out of Covid-19,” said Greyling. Demand for face-to-face education had clearly not been derailed by Covid-19, he said, adding he was surprised by the level of enthusiasm shown by parents for the return of extramural activities and sports matches.
Small Talk Daily’s Anthony Clark said he had been disappointed with the group’s earnings for the past two to three years, but the restoration of dividend was pleasing, given the company had pursued a highly dilutory R1.5bn rights issue in 2020.
The market was looking for greater utilisation of Curro’s existing asset base, and management seemed to only be pursuing expansion when needed, he said.
“It is not going to be easy, but I think Curro has learnt from the school of hard knocks and these numbers are hopefully the trough, and they will hopefully get a better report card in the next six to 12 months,” he said.
By the JSE’s close Curro’s share price was up 1.03%, giving it a market capitalisation of R7.624bn. The share is down about 6.5% over the past two years, roughly the length of time the pandemic has lasted.
Update: February 23 2022
This article has been updated with additional information throughout.
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