Curro expects boost in profit as it adds 2,400 more learners

 ·13 Feb 2023

Private schooling group Curro has signalled a healthy increase in earnings when it releases its 2022 annual results next month. However, it also showed some signs that parents are struggling to afford private education.

In a trading statement published on Monday (13 February 2023), Curro forecasted an increase in recurring headline earnings per share (RHEPS) of between 25.9% and 45.5% for the year ended 21 December 2022.

This is partly thanks to a couple of special items, which included a R29 million subsidiary from the provincial government to Curro’s Meridian Schools and a change in the South African corporate tax rate from 28% to 27%.

Curro said that these considerations are of great benefit, as its Meridian Schools accommodate 14% of its learners, while the tax reduction has reduced its deferred tax expense by R23.6 million.

However, following an annual impairment assessment review of the business plans for each school as required by International Financial Reporting Standards (IFRS), the group recognised impairments of R127 million in 2022 due to lower-yielding school assets.

This impairment was calculated in the group’s EPS, which projected between a decrease of 17.3% to an increase of only 2.3% over the period.

The group is finalising its financial results for the year ended 31 December 2022, which will be published on Thursday, 2 March 2023.

Curro noted that it experienced strong enrolment interest in 2023 and had 72,835 registered learners on 10 February 2023, compared to 70,408 learners on 23 February 2022 (+2,427 learners or +3.4%).

While learner numbers were up, the group pointed to some problems, with management needing to implement “disciplined termination” of long overdue accounts.

This restrained the overall learner growth from the previous year, the group said, “but we are confident that this responsible approach will sustain and improve the group’s operating margin.”

According to TPN Credit Bureau, private schools are heavily dependent on school fees as their primary source of income – and the number of school fee accounts in good standing is steadily declining.

The group’s survey showed that at the end of 2022, only 62.57% of school fee accounts were in good standing compared to 63.75% at the end of 2021. 25% of parents did not make any payment towards school fees in 2022, TPN said.

While Curro managed to increase enrolments, more than 40% of private schools reported having fewer learners this year than last year.

TPN said that the higher fees being charged at private schools are proving unaffordable for many South African parents as households review priorities in 2023.

This statement echoed true as the Department of Basic Education’s Simone Geyer, who noted in a recent parliamentary portfolio committee briefing that the number of applications from parents who can no longer pay private school fees has increased in 2023 – placing strain on the government’s public school system.

Geyer said that parents in Gauteng and the Westen Cape have been particularly hard-hit by this trend and can no longer afford private school fees due to financial distress, forcing them to leave the private schooling sector and apply for placement in public schools.


Read: What it costs to send a child to private vs public school in South Africa

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