Headline earnings per share in private education provider Curro Holdings increased by 19.2% to 73.2 cents for the full year to December, propelled by solid growth in the quality of middle and secondary school pupils on the company’s books and whose ability to pay tuition fees had solidified.
Full-year revenue for Curro Holdings soared by 14.6% to R4.7 billion, with earnings before interest, taxation, depreciation and amortisation (Ebitda) rising by 24.7% to R1.1bn.
“This is the fourth reporting period where we have seen improving underlying operating results not just regarding margin but regarding growth in HEPS. There remain challenges; the economy is very constrained and learner growth in private education has been quite slow,” Anthony Clark, independent analyst at Smalltalkdaily Research, said yesterday.
Earnings per share (EPS) for the period decreased by 82.5% to 7c after Curro recognised impairments of R378 million net of tax related to lower-yielding school assets.
Nonetheless, the “quality of the learner base they have in terms of ability to pay is significantly greater”, which explains why the company’s “doubtful debt provision year-on-year actually fell by 1 percentage point and is expected to improve”, said Clark.
“While the primary school side is not doing well as anticipated because young families are finding it difficult to send their children to pre and primary schools, there is solid growth in middle and high school where parents realise that getting their children a good chance by passing their matric is worth spending on,” he added.
Curro declared a final gross dividend of 14.64c per share from income reserves for the year ended December 31, 2023, compared to 11.08c in the year earlier period.
Shares in the company on the JSE trended down by 3.93% yesterday to close at R10.50.
Investments of about R715m were ploughed into Curro’s business in 2023, including the acquisition of Courtney House Learning Centre. This year, Curro plans to invest an additional R700m in capital projects to maintain, replace and expand facilities.
During the year under review, the company had average learner numbers of 72 031, a 2% increase on prior year learner numbers. By February 5 this year, Curro had grown its learner numbers by 1.6% from the 2023 year-end base to 73 159 registered learners.
Curro Holdings CEO Cobus Loubser said: “Curro's results show fortitude in a strained economic environment. The extent to which learner numbers sustained and increased shows how much our customers trust Curro in the quality education space.”
Tuition fees for the period increased by 12% due to the growth in learner numbers, coupled with price-mix across grades and annual fee increases, while discounts granted decreased to 7% of tuition fees from 8% in the previous year.
The group’s employee costs increased by 9% while other expenses were higher for the full year by 21%.
“On a like-for-like basis, if the acquisitions of HeronBridge College in 2022 and Courtney House International School in 2023 are excluded, employee costs increased by 7% and other costs by 19%.”
The ageing and quality of outstanding debtors accounts for the period continued to improve. Resultantly, Curro’s expected credit loss of R128m provided for during the year is lower than the R147m provided for last year.
The company’s remaining debtor’s book, net of the expected credit loss provision, consists of R175m in actively enrolled accounts and R124m in inactive accounts.
Curro closed the period under review with total debt, net of cash and investments in money market funds, of R3.2bn compared to the previous period’s R3.1bn.
Loubser said he was positive that Curro, which “generated more cash from its operations than what we invested in capital expenditure”, would continue on this trend this year as its customers are likely to benefit from a lower interest rate environment later this year.
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