Four private schools in South Africa in trouble

Private education group Curro has seen solid growth in revenue and profitability for the year ending 31 December 2024.

However, the numbers belie trouble at some of its campuses, with R74 million impaired at four schools.

The group’s revenue was up 8% to R5.14 billion, and its profit for the year was R97 million, driven mainly by increases in school fees (up 7%) and ancillary revenue (up 12%).

Ancillary revenue reflects non-tuition fee revenue streams, such as hostel fees, aftercare fees, bus income, recovery income and other income.

Headline earnings for the year—accounting for various impairments and reversals—increased by 10% to R469 million.

The group declared a final dividend of 16.60 cents per share (13.280 cents after dividends tax).

Despite the growth, learner numbers were flat, with the average up only 1% from 72,031 in 2023 to 72,638 in 2024. Worryingly, these numbers are declining.

Curro noted that learner growth slumped in 2025, with only 72,109 registered on 10 February 2025. The group said a weak consumer environment stunted enrolments.

“Consumer spending 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,” it said.

Headline earnings per share (HEPS) increased by 13% from 73.2 cents to 83.0 cents, and earnings per share were up 166% from 7.0 cents to 18.6 cents.

The huge disparity between EPS and HEPS is explained through the group’s impairments.

Curro recognised net impairments of R365 million (2023: R378 million) relating to lower-yielding school assets. This includes impairments of R462 million and reversed impairments of R97 million.

These impairment charges are included in the calculation of EPS but are added back for the calculation of HEPS.

This points to the other troubles in the business, with the impairments reflecting the lower value of the schools in Curro’s portfolio.

School impairments

Curro said seventeen schools and a building in the Curro segment grew at weaker growth rates than expected and had muted prospects.

The group said its high schools continue to grow in line with expectations, but the challenging effects of elevated interest rates on constrained consumers negatively impacted young families.

This has resulted in a reduction in new enrolments of learners in the youngest grades of primary schools.

However, some previously impaired schools in the Curro segment have also been reversed during the year due to increased enrolments and effective cost management.

“These previously impaired schools are forecasted to generate higher cash flows,” it said.

The group also recorded a “goodwill” impairment of R74 million at four schools.

Goodwill is a value added to the books when an acquisition is bought for more than the fair market value of the target’s net assets.

In Curro’s case, these assets are the schools in its portfolio. The group does an annual impairment test to track the value of these schools.

These impairments are based on an assessment test that includes tangible (performance) and intangible (risk) factors. It indicates how the group expects this operations to perform.

In the latest financial year, four of its schools saw goodwill impairments – this includes two schools in the Curro stable, as well as Northriding College and Waterstone College.

The Curro schools saw a R23 million write-down, while Northriding and Waterstone were impaired by R27 million and R25 million, respectively.

These schools exhibited slower-than-expected growth, Curro said.

While the group did not mention which two schools in its Curro stable were written down, it previously warned shareholders that two schools in its portfolio might have to be impaired due to the closures affecting steelmaker ArcelorMittal South Africa (AMSA).

AMSA is in the process of winding down its Longs Business as international steel-to-raw material price spreads remain under pressure. This will have a knock-on effect on the communities in key areas it operates.

Curro noted that all current schools with goodwill are mature schools and have been operating for more than seven years.

It said it will continue to invest in its schools and assets to support and increase the capacity use of its existing facilities.

The group invested R669 million in its business during the year and opened three new campuses in Walvis Bay and Oshana in Namibia and at Barlow Park in Sandton, Johannesburg.

The two new campuses in Namibia are part of a joint venture through a R37 million equity-accounted investment in Namibia.

It said it will invest up to R660 million in capital projects in 2025, to maintain, replace and expand its facilities.

“The business is resilient, and the group is committed to providing high-quality learning and teaching for all its learners,” it said.