Listed private education group Curro says its business model has proven resilient in the face of the challenges brought by the Covid-19 pandemic, underpinned by its strong financial position following a rights offer in 2020 that raised R1.5 billion.
It said in a trading statement on Tuesday (3 August), that “strong learner growth recorded this year endorses the credibility of our robust offering, including an increased focus on digital education solutions”.
Despite this, Curro said it expects headline earnings per share for the first half of the financial year ended June to be 40% to 50% lower than the corresponding period in 2020.
The main contributing factor to the lower HEPS is the rights offer in September 2020, resulting in there being 42% more shares in issue in the first half of 2021 compared to a year ago. This, it said, reduced the respective earnings per share figures meaningfully.
It also pointed out that the Covid-19 pandemic and various lockdowns over the past 16 months have skewed its reporting data.
Curro noted that its earnings for the previous financial year – ended December 2020 – were significantly weighted toward the first half of 2020. Schools were closed for three months due to the Covid-19 induced lockdown with concomitant cost savings in the first half of 2020.
However, schools were fully operational in the second half of 2020 and in 2021.
“The quantum and timing of impairment charges, fee discounts granted, provisions for excess credit losses and significant increases in municipal charges also impacted more on the second half of 2020,” it said.
“As a result, R167 million or 93.3% of the total recurring headline earnings for 2020 of R179 million, was recorded in the first half of the 2020-year. However, we expect a more balanced distribution of earnings across the 2021 financial year.”
Despite how the figures reflect in its books, Curro said that the business proved resilient to the challenges of the pandemic.
The group bolstered its balance sheet through its rights offer – R1.1 billion of which was used to reduce debt. This helped the group save in finance costs and enabled the company to pursue various acquisition opportunities.
Average learners at Curro schools increased by 7% and overall revenue also increased by 12% from the previous comparable period, it said, showing strong signs of recovery.
It said that the acquisition of Heronbridge College remains subject to approval by the Competition Commission, while the group is on track with an overall capital expenditure program to invest approximately R1.1 billion in the business in 2021.