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Curro offers bigger discounts to hang on to students

It managed to grow student numbers by 5% over the first part of the year.
In the past decade, the number of Curro schools has grown from 24 to 177. Image: Supplied

Curro’s half-year results to June 2020 provide a window into the state of private schooling during lockdown, and it’s not as bad as many feared.

Student numbers rose 5% to 59 967, though new sign-ups were up 9% prior to the lockdown.

School fee increases of 15% were softened by discounts amounting to 12.6% of revenue, up from 7.5% for the same period in 2019. Releasing the results on Wednesday, CEO Andries Greyling said this helped reduce student attrition, while a hybrid of face-to-face tuition – for those classes permitted to operate – and technology has allowed the group to prepare students for their year-end exams.

Greyling threw out some impressive tech stats: 60 000 devices connect on Curro’s closed network, 22 terabytes of data is used daily, with 43 703 Microsoft Teams collaborations every day. It’s unclear what shape schooling will take over the next year or two, but Curro is preparing for all eventualities, increasing its investment in robotics, coding, performing arts and sport.

It seems almost certain that online tutoring, combined with face-to-face classes, is the way of the future.

Revenue for the period went up 7% to R1.59 billion (2019: R1.48 billion). Ebitda (earnings before interest, tax, depreciation and amortisation) increased 12% to R466 million (2019: R415 million).

The question on many people’s minds is the near-term outlook for private schools in a year massively disrupted by the lockdown.

The answer is by no means certain, but the longer-term trends aren’t in doubt: there is an inexorable migration from public to private schools, even among lower middle class and some working class South Africans.

Curro started entering the township market several years ago, offering monthly school fees as low as R1 600 and scaling up to R10 000-plus for the more elite academies.

The gap

Despite the R281 billion budgeted by government for public schools this year, equivalent to 6% of GDP, the academic results are pretty abysmal. This is the gap private schools are diving into. Just 4% of government’s education budget goes to infrastructure and about 80% to payroll, which makes it harder for the 23 000-odd public schools to catch up in terms of new curricula development and online delivery. Using international trends as a guide, Curro sees potential for private schools to grow from having about 5% to as much as 15% of total student numbers in the country.

Read: New evidence supports the belief that South Africa’s education is not all bad

The parent profile of Curro students gives an indication of lockdown-related risks: 21% of parents work for government, 33% for small, medium and micro-sized enterprises, 11% for multinationals, and 9% large corporations – much of which offers relatively secure employment. Therefore these parents are less likely to cut back on school fees. Some 11% are listed as working in entertainment, which is at the riskier end of the spectrum.

“Teaching and learning have not continued in the traditional sense. But by tapping into our digital strength, we innovated more,” said Greyling.

“We will complete the academic year and cover the curriculum in its entirety; all learners will be assessed by the end of the year. I am proud of the way Curro, its staff, parents and teachers were able to adapt and rise above the challenges of the pandemic. We are particularly proud of our learners who have shown resilience and persistence that will undoubtedly pay off as they progress on their education journeys.”

Results

Recurring headline earnings and recurring headline earnings per share increased by 9% from R153 million to R167 million and from 37.1 cents to 40.5 cents respectively.

Headline earnings decreased by 23% from R206 million to R160 million, while headline earnings per share decreased from 50 cents to 38.7 cents, which was predominantly due to a once-off deferred tax reversal recognised in the prior-year interim period.

No interim dividend was declared for the period under review.

A decade ago, Curro comprised 12 campuses, 24 schools and 4 200 students. At the end of June, the portfolio had grown to 76 campuses, 177 schools and 60 000 students.

The focus now is on boosting school occupancy levels. Greyling said that since schools were allowed to reopen in June, new enrolments have exceeded those of the previous comparable period.

A total of R278 million was spent on completing projects commenced in 2019 , with a further R600 million committed to creating additional capacity, mainly through the development of new schools already planned.

Listen to Nompu Siziba’s interview with Curro CEO Andries Greyling on its interim results

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It is quite interesting to see how the covid virus makes a distinction between a SADTU member and a teacher at a private school. The virus is able to identify those who don’t want to work, who do not care about the children, who act as parasites on the system and then target them. What else can explain the fact that SADTU teachers are scared of the virus while Curro teachers are not?

Frankly, SADTU should be banned. The only thing they have at heart is the bloated salaries of their own members? SA’s pupils? Pah! No need to worry about them.

Sort of. But, it also reflects the fact that unions are stronger than individuals. A lot of teachers at private schools are equally concerned but they have no bargaining power.

What kind of individual abuses his power in the form of “bargaining power” to inflict economic harm to society or psychological harm to children by refusing to do the job they are paid for? This is a form of negligence is extortion and borders on criminality. They have the right and the freedom to resign is they feel threatened or if they experience the working environment as unsafe. I support the right to resign, but nobody who respects law and order can support a teacher who refuses to work while demanding his salary. Although the refusal of SADTU to honour their obligation to teach is legalised plunder, it is an injustice nonetheless.

@sensei if you’ll ignore the fact its about the cretins at SADTU for a moment, many staff and individuals globally are protesting in response to not working in unsafe conditions. Some will be more protected than others in terms of bargaining rights. Strong unions help in a situation such as this. Firing people or resigning is not the answer to this situation as that exploits people. I empathise with people that are still afraid to work in an unproven environment, so perhaps that is the reason for my support for staying away this one time in recent history.

jblack, I respect your opinion and many people share your point of view. I am a farmer, so nature forces me to be more pragmatic. The movement of the seasons and the gestation period of sheep do not afford me the privilege to “be safe” and to “avoid the dangers of the workplace”.

People are incentivized to think in a particular way. When people can put food on the table, even if they do not have to work, it is only logical that they will find many reasons not to work. I would share that line of reasoning if I were in that position. Unfortunately, I am forced by circumstances to work for my food, so are my workers. Entrepreneurs pay taxes to support all those individuals who have many reasons why their job is simply too dangerous.

No work, no food. That is my mantra.

@sensei, the destruction of entrepreneurs businesses during this pandemic has put me off ever wanting to own a restaurant or tourism related entity. Perhaps there will be no competition and the reward will reflect that, but the emotional damage wrought by our government has been devastating.
As you say incentives determine our response to everything.
Thanks for being a farmer we’re very appreciative that some are still willing to do it!

School fee increases of 15‰ when last year inflation was about 5‰?

Heard more than one Curro teacher at numerous occassions remarking that Curro is first and foremost a business, and get there score for the fact that they pay your salary. Doubt if these Curro teachers had much choice. Notwithstanding, also know there are many very dedicated teachers who wants to be educating and look after their pupils’ interests as first priority and hats off to them!

Everybody needs assistance during this time and im glad they are giving discounts to parents. Everybody is feeling the pinch and we need to be here and support each other.

CURRO once again proves to be a bad investment. The constant rights issues over time dissipating the share value, and the excuse they give for not giving back to the shareholders even a minimal amount in dividends to show good faith for their future. We now have another rights issue in the very near future which if taken up will help the shareholders again loose money by loosing value in their investment. If they are honest, CURRO would cut the salaries of its CEO, its directors and executive management in the same spirit of the reasons they always give for not giving a little pittance to their shareholders. They say they are plowing the profits back into the system to grow the company. Bu11$h1t.

Curro was priced at 30—40x PE on listing… That isn’t a particularly attractive investment…

End of comments.

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