Private school group Curro is limiting its exposure to early education and holding off on acquisitions while investing in its online offering as a way of boosting high school enrolment.
More than 2,800 pupils have signed up on its online platform, which allows them to take extra subjects not offered by their schools. The extra courses, aimed mainly at grade 12 pupils, helps them to obtain better matric results.
Branded as Curro Choice, this programme complements Curro Online, which has more than 600 pupils enrolled and provides remote teaching for grades 4-11.
Andries Greyling, CEO of Curro Holdings, said online schooling trends have changed. Curro Online, mainly targeting primary schools pupils, was started in 2020 in the middle of the pandemic and grew rapidly but is now stagnating as pupils return to schools.
“The learners want social interaction, to be part of the community and need [physically present] teachers,” he said.
But in high school the model is completely changing. “Over the last two years we introduced a wider subject choice. Lessons are pre-recorded and once a week learners will have access to the teachers online,” he said.
Timetables at Curro's physical campuses will have slots to accommodate the subjects that are only available digitally, he said. “This is an enhanced offering from us which is making us unique. Also that's also why our high school learners are growing because this makes it easier for them to have wider subject choice.”
Curro Online will expand mainly to areas where the group does not have schools.
This year the company plans to spend R1.1bn on expanding its bricks-and-mortar school network and finalising the acquisition of HeronBridge College.
Greyling said the company is not planning any new greenfield projects but “maybe we can pick up another acquisition at some point” if an opportunity arises.
If that happens, the company is keen to expand in KwaZulu-Natal, Western Cape and Gauteng where there has been high demand. It will also close one underperforming school but Greyling did not specify which one.
Last year, Curro invested R929m, which included the construction of Curro Durbanville’s state-of-the-art high school campus in Cape Town, which opened on January 13. Greyling said enrolments exceeded expectations.
According to Greyling, as of February 18 Curro had 70,408 new pupils enrolled for the 2022 academic year, an increase of 6% on a like-for-like basis from 2021. This excludes the acquisition of HeronBridge College's 1,169 pupils.
Curro’s average number of pupils for the year to end-December increased 9.3% to 66,447 while revenue rose 14.5% to R3.5bn.
Curro generated R767m cash from its operating activities, 49.2% higher than the previous year. Operating costs were higher, because schools were open throughout 2021 without the same government relief in the form of the temporary employment relief scheme as in the previous year.
Facility costs (water, electricity and municipal rates) rose 7% to R308m, an increase of 46% on 2019.
Curro is no longer taking children younger than two at its nursery schools, where numbers dropped from 7,600 to 6,000 due to competition and the inability of some parents to pay.
“It's a price-sensitive segment. Parents go for price, not quality. Moreover, such service is not compulsory. We are happy with the numbers that we have,” he said.
Jihad Jhaveri, head of process at Camissa Asset Management, said pupil numbers have grown strongly and are 16% higher than in 2019. “While profitability has increased, it is yet to reflect the learner growth success of recent years.”
He said ancillary revenue, which includes nontuition revenue from extracurricular activities, aftercare services, transport services and boarding fees, had been hit by pandemic-related factors.
In addition, bad debt charges are also running at significantly higher levels than normal.
There has been strong growth at the high school intake level (grade 8) in recent years.
“The natural rollover from grade 8 to higher grades means that we are in a sustained period of strong learner growth,” Jhaveri said. As the pandemic effect eased, higher ancillary revenue and lower bad debt charges would add to the equation and “should result in significant profit growth”.
Curro recorded 6,802 grade 8 pupils for the 2022 academic year from 4,178 in grade 7 in 2021.
Madalet Sessions, portfolio manager at Denker Capital, said Curro management delivered on what it had promised the market — “the company matched our expectations on all fronts”.
She said “just delivering on what they have set out to do will be tough. We are confident though that the team is focused, taking the appropriate steps and prioritising the right things.”
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