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.
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.
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.”
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