Curro needs the kids to come back to school

Pandemic has probably delayed the promised returns by a few years.
Curro Brackenfell in Cape Town. Costs are increasing faster than income for the group, but it looks like shareholders are still hoping for strong growth. Image: Supplied

The latest results from Curro Holdings show that the Covid-19 pandemic hit PSG Group’s attempts to bring better schooling to the average family – normal hard-working people who are disappointed with government schools – extremely hard.

The schools are growing and attracting more scholars, but costs are rising faster than income.

In addition, a lot of families just couldn’t afford to pay school fees when their employers cut their working hours, or they lost their jobs.

Curro had to write off large amounts, even after offering discounts on school fees.

Earnings before interest, tax, depreciation and amortisation (Ebitda) declined by 16.3% to R390 million in the six months to June 2021 compared to R466 million in the first half of the previous financial year.

Headline earnings and headline earnings per share (EPS) decreased nearly 28% from R160 million to R116 million and by 49% from 37.9 cents to 19.4 cents respectively.

Summary of interim results to June 30, 2021

(Rm) 2021 2020 % change 12m Dec 2020
Revenue 1 784 1 590 12.2% 3 094
Ebitda  390  466 -16.3%  686
Earnings  161  30 437% -108
Headline EPS 19.4c 39.7c -49% 36.4c
Dividend per share 0c 0c 10.04c
Share price R 11.75
12-month high R 12.61
12-month low R 7.69
Price-earnings ratio 65

Source: Curro Holdings interim results, JSE market data

While earnings increased by more than 400%, headline EPS declined due to the huge dilution when Curro had to force a rights issue on its shareholders towards the end of the 2020 financial year. The number of shares in issue increased from 412 million to 598 million.


Costs increase fast

It is immediately noticeable from the income statement that costs are increasing faster than income.

During the six months under review, revenue increased by just more than 12% from R1.59 billion to R1.78 billion. Average learner numbers increased by 7.2%, from 61 746 to 66 167 at the end of the first half of the financial year.

While management lauded the increase in revenue and student numbers, employee costs increased by 30% and other expenses by 23%. The other expenses include the write-off of unpaid fees.

Bad debt and discounts

Curro CEO Andries Greyling notes that the levels of bad debt and fee discounts were higher than those the company experienced in the previous year, which were also higher than before to the pandemic.

“Curro granted non-recurring discount relief of R60 million to its customers due to the Covid-19 pandemic,” says Greyling.

“If the Covid-19 discount granted in the previous year is excluded, discounts increased marginally to 9.1% of tuition fees from 8.8% in the comparable period.”

Greyling says the non-performing portion of the debtors book mainly relates to learners who have left Curro, adding that concerted efforts are being made to recover these and the situation has improved. “The quality and ageing of outstanding accounts for enrolled learners improved during the first half of this year.”

Curro’s own debt situation does not look good either.

The balance sheet discloses that debt is still high, despite the R1.5 billion rights issue less than a year ago. In fact, the cash flow statement shows that the full R1.5 billion went to repaying debt, and more. Curro settled more than R2 billion of its debt then.

Unfortunately, debt levels are increasing again – from R4.3 billion at the end of December 2020 to R4.4 billion at the end of June 2020. The level peaked at R5.7 billion a year ago, before the R1.5 billion capital injection.

Not good

“It is not a good result,” says Keith McLachlan, investment officer at Integral Asset Management.

He explains: “Curro is not achieving the returns it hoped for, even considering the long-term nature of building schools and filling them with learners.

“It takes time to build a new school and to reach capacity. They are basically expanding one grade at a time, adding a new class every year as learners move from one grade to the next.

“Newer schools needs several years to fill and reach break-even.

“But even considering this, the more mature schools full of learners are not achieving the returns investors hoped for,” says McLachlan.

He notes that Curro’s older schools are achieving returns of around 28%, while earlier estimates pointed to returns of as high as 40%.

“It is difficult considering the target market, and the devastating effect of Covid-19.”


Investors had high expectations, maybe too high. Curro received a warm welcome when it listed on the JSE in 2011.

The success of adding schools and children on school benches saw the share steadily rising to a high of more than R57. Investors were obviously thrilled that PSG has worked its magic and found another winner.

But the profits didn’t follow, and it has been downhill for shareholders since then.

The share hit a low of only R4.85 in March 2020 during the Covid-19 crash. It has since recovered to R11.75.

This presents an conundrum. Already some 80% lower than its record high, the latest figures put the share on a demanding price-earnings (PE) ratio of nearly 70 times based on the headline earnings for the latest 12 months.

While management points out that earnings will accrue more evenly in the current year, the latest results would indicate a forward PE of not much below 30 times. This indicates that shareholders continue to hope for strong growth from what still looks like a good business opportunity.

“The primary objective for Curro remains to increase capacity utilisation of its existing facilities,” says Greyling.

Unfortunately, it looks like the pandemic has slowed the growth and delayed break-even in the schools by a few years.

Listen to Fifi Peters’ interview with Curro’s CEO on the group’s latest results: 



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The financial success of Curro is a barometer for the financial health of the middle class. These hardworking people are over-indebted and cashflow-restricted due to the many government infringements on property rights.

The various individual taxes, plus municipal taxes, combined with the effects of lockdown measures and a shrinking economy flows through to the bottom line of Curro. Many are unemployed due to the shortsighted Covid measures enforced by the populist government.
These parents want what is best for their children. School fees should be tax-deductible because parents are doing the job of the state. Parents are paying taxes to finance the school fees at government schools, and then they have to bear the cost of tuition for their own children as well. No economy can afford a socialist government. Instead of lifting the working class out of poverty into the middle class, socialist ANC policies transform the middle class into the working class.

“The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.”. – Lenin

South Africa has become an Enclave Society, where the affordability of 1st worldness is so high that is constitutes extortion.

I use to travel back home every 3 to 6 months but the prices of even a 7 night stay at the same standard were I live now costs me R35,000 all inclusive. For the same Vacation i can go to Georgia R13,000 and even Dubai R22,000.

My son is given a first world education from a private tutor and it only costs R22,000 a year.

The Thousands abroad wish to come home and rebuild their lives and share their skill but they will not dues to the all the different types of extroration.

Covid needs the kids to stay at home.

Hardly. Kids are largely unaffected by covid – thankfully. Government and the media are just using kids as the biggest fear-inducing tool to keep us under this medical tyranny. Lockdowns have been the greatest crime on kids and will be felt for a generation. And for what.

Curro Brackenfell has strikingly colorful garden hedges, can’t help but think the red might have come from impaled children. Seems like a safety hazard practically unavoidable in the play area, but deaths probably attributed to the vid.

Unless a school benefits from substantial donations, no school (bring me harvard oxford Cambridge results, anybody you choose) is a viable business. The return on capital is less than the cost of capital.

Throw in a few endowments, that free hockey field and aquatic center, a donated library and technology center and suddenly the school looks like a more attractive investment.

Education should not be treated as a commodity; and takes revenge on those who try to treat it like that. However, a well-run school can balance it books and run self-funding (after lots of philantropic input), but then still subject to being specific to and loved by its community, as a local asset, not a country-wide listed shareholder driven machine.

Education was commoditized the moment it was standardized.

Education is always a very lonely and individualist process for the student, even with formal education. The value of the process is determined by the level of determination, focus, and accountability of the individual. No amount of money can turn a communalist into an individualist. No amount of money can buy accountability.

Disselboom : I think we sort of say the same thing – education as a money-making machine is not possible. The great schools all benefit from massive endorsements.

To be honest having had a child in a Curro school, their two focuses are 1) Money 2) Grades, in that order. No holistic view to the child’s development, or concern for much else.

Curro is a poor man’s private school.

Yeah, all those new money parents. The facebrick cheap buildings. Midrand. Lack of success at sports. The sad old PE teachers.

We sneer at you. You will NEVER have the same prestige.

Barry teaches PE at a sub-mediocre tier facebrick school that uses a shipping container for a gym. Sad.


I’m still waiting for you to call my so-called employers.

All bark and no bite.

Hehe. Midrand facebrick ‘prestige’ in a shipping container.

While the real schools offer all the sports and hire springbok coaches. They have you. A sad overweight balding old man. No wonder no one thinks about you lot.

Who said anything about ‘calling’? Old man on the phone. Do you also send faxes? Crass. Someone is nervous. You certainly cleaned up your act.

All because you suggested a little pnp bank account and you got mocked for being a little boy. I am sure your kiddies have bigger bank accounts than that! But no need to be so hurt about it. Move on. I am not thaaat good.

You threatened to call my so-called employer on numerous occasions and under more than one of your aliases.

My advice: make sure you have the right person before you pull that trigger. Once you do, there’s no turning back. Believe that.

This topic really enlightens the chasm between private and public interests. And yet at their core they are the same

On one side every parent wants to do everything within her power to avoid losing one generation after the next to ignorance and poverty.

On the other, a certain depth of know-how, technology, skills and training and governance, applied over a reasonable period of time, is required to achieve the desired affect.

Government schools, like all else associated with “public” are teetering between open and closed, working at perhaps less than 50% efficiency- smouldering in the doldrums really.

If we don’t sort this out properly, we are going to pay an even higher price than the unsavoury one we already have.

I know that so-called “model C” schools have a far stronger contingent of parent involvement in their process, bigger budgets from these efforts and contributions, and corresponding better results all round.

Is there not space in this model for cooperation between these type of schools and a group like Curro?

I could “C” a room where as an outside consultant, schools could outsource some of their funding and technology needs in return for a cut of their budget spend- some of these funds might even be “public” related?

Get as many of the kids online as possible, streamline the systems and integrate the syllabuses- as far as education goes more is always better than less, and I mean everybody ends up getting a little bit more for a little bit less, in some form of win-win?

Higher turnover volume for Curro, better volume economies for staff and training and infrastructure- perhaps slightly lower margins but better content, technology, teaching and access for the quintessential scholars.

Plus a major contribution to stabilising the very dank and dangerous looking environment that see’s our kids as anything less than the champions of the 4th Industrial revolution that they are.

Our education system needs a critical overhaul. And if it’s not fast and good then it actually hardly matters what the cost in ronds is- the resulting further deterioration of the situation will be untenable for the quantum that will follow.

My daughter spent a number of years at one the Curro Academies, which was about 5 years old when she started.
Sport never took off and never came near matching the government schools in town. It appeared that the teaching staff was inadequate or reluctant and the school would not pay for part time coaches.

Living in an exceptionally hot part of SA, year after year we were promised a pool but that never happened. Using normal accounting methods of overheads and averaging fees and salaries, it was not hard to see that there was easily sufficient funds surplus, but that the group was obsessed with its own growth, including a school purchase in Botswana, notwithstanding its investor annual payout, that that is where all excess funds were going.
The group importance as opposed to the individual school led to parents feeling there was no hope in our raising the level of the school. The school thus lacked a parent body and no school can establish an identity without sporting ties with other schools.

The group centralization of uniform purchases and intention to outwit the directives from the Consumer Commission further enhanced the viewpoint that the group emphasis was on profit and not on education

You don’t need to go to private school to realise that profit is the aim of business. But, apparently you did need to.

Curro Schools are only about profit. The teachers are not payed as one would expect from a private school. Little Peter must get good marks or else his dad threatens the teacher with taking him to another school. Little Peter does not have the brain power to get good marks. He does however get good marks or else….

*paid. You need to ask a refund from your teacher.

End of comments.



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