Curro reports 18% jump in revenue, plans to invest in growth projects

On 76 campuses learner numbers grew to 63 000, spiking in Grade 8, with growth the highest in three years – CEO Andries Greyling.

CHRIS GILMOUR: I’m talking now to Andries Greyling, the CEO of Curro, on the occasion of their audited results for the year ended December 31 2019. Andries, good evening.


CHRIS GILMOUR: Andries, if I look through these results, they’re very detailed. But, if I start off at the very top, pupil numbers – and excuse me for using the term “pupils”; I’ve never managed to get my mind around “learners”, I’m very old school at this regard – volumes up 12%. And revenue rose by 18%. That’s a good result. How was that achieved at that level?

ANDRIES GREYLING: Over the years we’ve built up a portfolio of schools, which we call the Curro traditional schools, which are priced at about R4 500/month, moving into more affordable models. And over the years the Curro Academy and Curro …… model.

So the learner number growth is obviously a bit of a strain at the higher end of the market, but we’ve seen rapid growth in volumes in the Curro Traditional Academies, in the …… schools. So that’s the learner growth.

But we also saw a huge intake in Grade 8. I’m going to use your word of “pupils” enrolled in Grade 8 – we saw a massive intake in Grade 8. And what we’ve been able to do is, obviously, by having a portfolio of schools, when we look at fee increases, we look at it per school, per grade, and then balance it out to make sure there are schools that have fee pressure and we make sure that we limit the increases. So on average our increases were between 6% and 8% last year, and that brought us to 18% in total.

CHRIS GILMOUR: I’m with you. Okay. That’s always been hallmark of Curro, the fact that you do have this very, very good balance out there, from the lower end – if I can use that expression – to the higher end and everything in between. And I think that’s probably held you in very, very good stead.

ANDRIES GREYLING: I think if we were only one segment that got that, but  we’ve got nine campuses where learner numbers could climb in the last two years, purely because of fees, emigration, and so forth, …… South Africa…… We’ve also seen that.

Then have …… investment in South Africa. So there are about nine campuses that over the last two years declined in numbers. But with us having a portfolio we’ve been able to stabilise fees, actually restructure in some cases. And we structured our costs in there as well, and we’ve been able to stabilise the ship at those schools, and …… those numbers …… So yes, I think if you are only focused in that segment, it’s going to be a tough ride in a year or so.

CHRIS GILMOUR: Absolutely. In there you made reference to emigration. Does that have a discernible impact, or has it had an impact on the new intake and existing numbers?

ANDRIES GREYLING: Only at those nine schools that I talked about. We’ve got 76 campuses. So, if you just take a year ahead, where we are now in 2020, our learner numbers grew to 63 000, and that’s another 9% increase. And the bulk of that …… growth and that is the highest it’s been in three years for Curro itself.

So if you dissect it, the Curro traditional schools are still doing well and it’s about 6% organic growth. But in Academies we actually grew 28%. And now, our Grade 8 has shown a massive increase and it’s starting to show us that the market in the pre-primary and the primary school may not be going to grow as quickly, and parents are still putting their children in the public sector. When coming to high school, it seems like they are now making the decision to put their children specifically in the …… to prepare them for university. …….

CHRIS GILMOUR: Okay, now going back to the income statement, expenses increased by19%. I’m assuming that’s really because you spent, what, R2 billion on capex last year. So your interest expense obviously is one aspect further down the income statement, but that’s obviously having an impact.

ANDRIES GREYLING: There are two things I just want to explain, or actually three things. The first one, obviously the R2 billion was spent on capital on new campuses. We added 22 campuses between 2017 and 2019. So the interest on that is about R200 million. If we look at those campuses at the end of 2019, they made ebitda of R99 million, and they had about 9 000 learners in the system. I’m glad to say that that number grew by 31% to about 12 500 in 2020. So, if we are a pure short-term player, we would never have invested in new campuses. But we saw the opportunity.  We still believe that there is a huge opportunity for growth in the correct areas, correct market. And that obviously …… short term, so that’s one.

And then the second thing is that last year we could review, as the board, to change our strategy of allowing the children that were …… back into the system. In the past if you were in arrears at the end of November we terminated service. We try to follow a rehabilitation process. That added another 1% to our bad debts. But it’s still really lower, and still 1.7%, which I think in these times is not that bad a percentage. And I’m glad to say that of those 1 700 learners or accounts we allowed back, only 500 didn’t adhere or get rehabilitated. So it seems that strategy also worked. In the short term costs were 1% higher.

CHRIS GILMOUR:  Well, I was going to say, you do mention in the narrative that there was a deliberate strategy to retain pupils. So that seems to have been successful. But, as you say. it has cost you a little bit. Is that a fair interpretation?

ANDRIES GREYLING: One hundred percent. …… we added 98% to our revenue. If you lose a learner, the parents go through difficult times, ….. grades for a month or two, and then you are back on track. So if you are back on your account …… ask a child to leave, obviously you’ve got the fees and rules and regulations that …… before they get the grades for an extended period, and it seems like after a month or two the parents are rehabilitated and they are back on track.

So yes, it’s also part of the ….. investment ….. we also need to keep it …… I’m glad to say we have also offered options to children as well.

CHRIS GILMOUR: Absolutely. And then finally, Andries, you’ve got another one R1 billion earmarked for capex this year, so you are still very much walking the talk. I mean, it’s not like you’re taking advantage of a really poor economy, and saying, well, we can’t do anything. You’re still going out there and putting your money where your mouth is.

ANDRIES GREYLING: Your bigger challenge currently is that we’ve got 76 campuses …… you’ll say the numbers. Our Grade 8 grew from 3 800 two years ago to 5 800 – just in that grade. So they need to roll over in Grade 9, 10, 11 and 12. So all things …… those numbers in the next four, five years will be in Grade 12. So I need to create capacity for them.

You know, we don’t construct a full campus at stage one, otherwise you are wasting capital. As you grow, you start doing phase two, three or four, so actually ……to the point where I spend the money to construct classes. The first phase will be your more expensive, when you pay for the erven, pay for your civil works, you do all the admin block, which you actually get no money for. You do a limited amount of classes, and then you wait for your next phases as your numbers are there you construct.

So yes, we are still spending, but that is I think the safer money to spend on current campuses. We are not going greenfields …… And then, if we pick up some acquisitions at fair prices, we still try to put them into our business.

But I’m also glad to show that over the last five years our cash flow compound growth was about 32%. So we generated cash of over R700 million in 2019, which is equal to our ebitda, which in tough times still shows us it’s quite a predictable model. If you enrol a child, you know how many you’re going to lose, and then you just forecast, etc. You can determine what you cash will be for the next two to three years.

CHRIS GILMOUR:  Fantastic. Andries Greyling, many, many thanks for that valuable insight into the workings of this outstanding operation.



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Good news feels so strange. Glad to see a loca business doing well and wish them continued success.

I always wonder if there are enough quality teachers coming through the system to support this growth.

Absolutely! Awesome stuff and thank you for investing in our future. I will continue to invest in Curro!

If all is going so well, why did the share price tank by about 50% the last year?

The share is down 80% from its stupid levels when PSG peddled the myth of private schools as the next big thing. I know school numbers very well and can guarantee you that unless a school receives immense donations or other forms of free money, it is NOT possible to generate anywhere near an attractive return on capital invested. No company that does nit earn a high return capital invested can thrive. This was just another acquisition -fuelled ego trip from Stellenbosch.

I bought Stadio shares at R6/share lol 🙁

Bwahaha! I bought Stadio at R3.89/share, so I feel your pain.

End of comments.



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