The South African private school that’s cheaper than some government schools

Private schools have made financial headlines over the past months as South African investors continue to climb into an industry that is providing massive margins – all while promising to address the shortcomings facing public education.

Census data indicates that only an estimated 48% of students who begin Grade 1 actually complete Grade 12, with most learners dropping out of school in Grade 10 and 11, while teachers and university professors claim that pass rates of 30% to 40% are just too low to be of any value, globally.

It is no surprise then that a rising black middle-class combined with an increasingly lowered barrier of entry to private schools has seen the enrollments and financial returns in private education rocket over the past few years.

These are some of the biggest players on the market right now.

SPARK

Not all of the big players in South Africa’s private education arena are JSE-listed investor sweethearts.

Spark made the news in October 2016 when it closed a Series B round investment of US$9 million (R121 million) with a group of investors led by the Omidyar Network. At the time, group which currently operates eight primary schools across South Africa and aims to have 20 schools by 2019, with a capacity to serve 20,000 scholars.

What made headlines however, was Spark’s plan to disrupt the education arena by introducing a private school education for less than the cost of a government school.

According to BusinessTech’s most recent research, it costs approximately R19,500 – R21,500 a year to attend an average government fee-paying school. This excludes free government schools and former model-C schools and also doesn’t factor in extra stationery, sporting and curricular activities.

In contrast, a year of tuition at a Gauteng-based Spark school will cost R19,100 in 2017 and R21,800 a year in 2018 (excluding stationery, registration etc).

“Beyond monthly tuition, we aim to limit the amount of extra costs to Spark scholars and their families,” says Spark’s website.

“Monthly tuition is the total cost for your child to attend SPARK Schools, including daily sport, computer-based practise, and enrichment activities during the extended school day (08h00 to 16h00).  Aftercare is available for those families who require it and runs from dismissal to 17h30 daily.”

In addition the school will provide all necessary stationery for students upon receipt of an annual stationery fee and parents are not responsible for purchasing textbooks or replenishing school stationery.

Curro

JSE-listed private education group Curro boosted profits by a massive 83% in its past financial year, as it rapidly climbed to 50,000 registered students and announced plans to add 26 more schools to its roster.

The company which posted its 2016 financial year end results in March of this year, reported a 69% increase in headline earnings to R169 million – up from R100 million recorded in 2015. Revenue saw a 27% increase to R1.76 billion while annual profits increased by 83% to R162 million.

Notably, Curro also saw a significant leap in the number of learners attending its schools, adding over 7,200 learners during the course of 2016, and adding 4,400 more in the 2017 school year, taking it to a total of 47,589 learners by January 2017.

To date, the group has also added a further 26 schools and 5 more campuses, taking the totals to 127 schools and 4 campuses on the group’s portfolio.

Advtech

AdvTech, owner of the Crawford college and Trinity House schools in South Africa also posted significant growth over the past financial year. This included a 24% increase in revenue to R3.4 billion, with total enrolments increasing by 13%.

Operating profit rose to R608 million, with normalised earnings coming in at 66.7c per share, yielding 19c per share.

At the end of January 2017 ADvTECH bought a 51% stake in the University of Africa (UoA), representing the group’s first tertiary partnership outside of South Africa.

The University has more than 2,000 students and offers 22 Bachelors, eight Masters and a Doctoral degree. The staff complement of 145 academic and administrative support employees is expected to grow rapidly as operations expand.

Pembury (PLG)

PLG Schools, which forms part of the Pembury Lifestyle Group, listed in the Specialised Consumer Services sector on the JSE’s AltX board at the end of March.

PLG Schools is focused on building mid-sized campuses with 600 to 1,200 learners per school and no more than 25 learners per class.

The company has already secured its first two schools for 2018, namely PLG Greenhills Academy, based in Randfontein and a property in Carlswald, Midrand with the aim of increasing its current portfolio of 19 schools.

The PLG Carlswald Academy will be open in 2018 and will comprise three additional schools being a Pre-Primary School, a Primary School and a High School, Pembury said.

The property will be expanded over time to a capacity of 1,200 students from grade 000 to Grade 12.

With the addition of the PLG Carlswald Academy, and including PLG Randfontein, the PLG Schools division will grow in 2018 from seven to nine campuses and 19 to 25 schools, with a future potential capacity of 9,000 students.

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