Private school parents are under pressure

 ·2 Mar 2023

Private schooling group Curro posted a healthy increase in earnings for 2022 but signalled inflationary pressures on parents which is restrained learner growth.

The group published its annual results for the full year ended 31 December 2022, which included an uptick in the number of registered learners at its schools.

Curro’s weighted average number of learners for the year under review increased by 6.4% to 70,724 from 66,447 in 2021.

Although the group noted an additional increase in learners in February 2023 – to 73,047 – is said that momentum slowed to 3.3% compared to enrollments in 2022.

“Higher interest rates and the impact of inflation on the cost of food, fuel and electricity have been suppressing consumers’ disposable income for some time, which will continue in 2023,” said Curro.

Over the period under review, the group showed that the number of outstanding accounts also increased, signifying added pressure on households.

The group said expected credit losses of R147 million were provided for during the year (2021: R131 million). However, Curro sold the non-performing portion of its debtors’ book, which relates to learners who have left Curro (inactive accounts).

“The remaining debtors’ book, net of the expected credit loss provision, consists of R137 million of actively enrolled accounts and R112 million of inactive accounts.

“The ageing of outstanding accounts for enrolled learners continued to improve due to more frequent terminations of non-paying accounts and improved collections,” said Curro.

“Terminating long overdue accounts restrained the overall learner growth from the previous year, but we are confident that this prudent approach will sustain and improve the group’s operating margin going forward,” it said.

In light of this, the group said it is focused on improving its operating margin and is managing costs stringently.

Discounts granted have decreased to 7.8% of tuition fees from 9.1% in the previous year. Tuition fee revenue also increased by 14.1% due to the growth in learners, coupled with the annual fee increase.

As a result, Curro delivered promising growth in revenue and profitability. Recurring headline earnings increased by 34.7% to R330 million, while revenue increased by 17.3% to R4 156 million (2021: R3 543 million).

Financial highlights

Despite the prevailing economic conditions, Curro generated R800 million in cash from its operating activities, 4% higher than the previous year.

  • Headline earnings per share were up 50% to 61.4 cps;
  • Revenue increased by 17% to R4.15 billion;
  • The dividend per share was up 35% to 11.08 cps (2021: 8.20 cps);
  • Schools’ EBITDA (earnings before interest, taxation, depreciation, amortisation and head office expenditure) increased by 18.0% to R1.195 billion for the year.

Impact of Load shedding 

Curro said the unprecedented load shedding and failure of state energy infrastructure in 2022 disrupted South Africa.

Curro said it is in a unique position – the business is not a high electricity consumer overall, but its electricity consumption is mainly concentrated during a portion of the day.

The group took the following additional actions in 2022 to mitigate power outages:

  • Installed electricity meters at all facilities to track consumption and manage behaviour;
  • Acquired several large diesel generators to provide backup power where most required; and
  • Evaluated battery and solar solutions which could enable our schools to generate and store enough electricity to be self-sufficient.

“We will continue to invest in backup power solutions in 2023 to mitigate our operational risk and to reduce energy dependency and cost over the long term,” added the group.

“Curro is in a healthy financial position and is on track to increase shareholder returns as the business matures. We plan to invest up to R800 million in capital projects to
maintain, replace and expand facilities in 2023.

“Our business remains resilient, and we are committed to continuing to provide an excellent education for all our learners,” it said.

Read: Load shedding hits Woolworths for R90 million

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