Two private schools in South Africa in big trouble

Curro expects a significant jump in earnings in its coming financial results but warned that two schools in its portfolio might have to be impaired due to the closures affecting steelmaker ArcelorMittal South Africa (AMSA).

In a trading statement for the financial year ended 2024, Curro said it expects earnings per share to jump between 117.1% and 217.1% in its coming results.

The group said it recorded a credible operating performance with strong cashflows during the 2024 financial year and is in a strong financial position.

However, following an annual impairment assessment review of the business plans for each Curro school, the company identified impairments of between R340 million and R380 million (net of tax).

Although these impairments are still subject to final audit review, it still includes eight campuses that had previously been impaired.

The value of these schools is being further reduced due to slower-than-anticipated learner growth. These eight impairments account for about two-thirds of the total expected impairment (net of tax).

Two campuses, in particular, are expected to be impacted by the closure of steel manufacturing operations in their respective catchment areas.

Curro did not go into any details in the trading statement but is likely referring to the expected closure of AMSA’s Long Steel Business in Newcastle and Vereeniging, where the private education group has campuses.

AMSA previously announced that it would wind down its Longs Business as international steel-to-raw material price spreads remain under pressure.

Although the businesses were initially supposed to be shut down at the end of January, funding support totalling R380 million from the IDC allowed it to continue operations until the end of February.

AMSA said the delayed closure will allow it to fulfil its higher-than-anticipated outstanding order book.

It will meet with the South African government to continue conversations about saving the Longs Business, which plays an important role in the South African economy.

No update on these talks has been given, and it is believed that the closure would result in roughly 3,500 direct and indirect jobs closures. Other estimates show 100,000 jobs being lost due to ripple effects.

What this means for Curro

Curro said that it expects that these steel-industry closures could restrict their value in use in the future, and the company is thus impairing the book value of these campuses.

These impairment charges are included in the calculation of earnings per share but are added back for purposes of headline earnings per share, hence the major differences in reported figures.

The impairment charge is a non-cash item, and the group expects to continue generating cash from operations ahead of its capital expenditure requirements.

Looking elsewhere, Curro also saw its total number of registered learners drop from 72,553 in November 2024 to 72,109 in 2025.

“Consumer spend remains constrained and the group’s enrolment has not benefited from moderating inflation and the gradual easing of interest rates over the last few months,” said Curro.

The group will publish its annual results for 2024 on Wednesday, 5 March 2025, and expects the following increases: