Curro half-year earnings jump, plans R800 million investment in 2023

Private schooling group Curro saw a significant increase in earnings for the first half of this year and plans to invest up to R800 million in capital projects to maintain, replace and expand facilities in 2023.

Curro released its interim results for the six months ended 30 June 2023 today, which revealed a strong half-year performance.

In the six-month period, the company’s weighted average number of learners increased by 3% to 72,385 (H1 2022: 70,519).

This growth in learner numbers saw Curro’s tuition fees increase by 14%, coupled with annual fee increases.

This saw the company’s revenue increase by 16% to R2.39 billion (2022 H1: R2.06 billion). 

Curro said this revenue growth was supported by an increase in ancillary revenue, which was R53 million and 31% higher than the previous period. 

In addition, discounts granted decreased to 7% of tuition fees from 8% in H1 2022. 

The company’s employee costs increased by 11% and other expenses by 24%. 

However, on a like-for-like basis, excluding the acquisitions of HeronBridge College during the prior period and Courtney House International School in the current period, employee costs increased by 8% and other costs by 21%. 

“Furthermore, other expenses increased in relation to the growth in the number of learners and the normalisation of campus activity to pre-pandemic levels,” Curro said.

“Accordingly, the ratio of other expenses to revenue in the current period was higher than the previous period, driven by additional extramural activity and increased costs associated with the growth in ancillary services.” 

The company said its expected credit losses of R78 million provided for during the first half of this year were similar to the R76 million provided in H1 2022. 

The remaining debtor’s book, net of the expected credit loss provision, consists of R194 million (H1 2022: R175 million) of actively enrolled accounts and R90 million (H1 2022: R74 million) of inactive accounts. 

“The ageing and quality of outstanding accounts improved during this period, and the group is benefiting from disciplined collection strategies,” the company said. 

The company’s EBITDA (earnings before interest, taxation, depreciation, amortisation and head office expenditure) increased by 20% to R716 million for the first half of 2023. 

Headline earnings and headline earnings per share (HEPS) also increased by 24% from R164 million to R203 million and by 26% from 27.5 cents to 34.6 cents, respectively. Recurring HEPS (RHEPS) grew by 36%.

Earnings per share (EPS) increased by 21% from 27.6 cents in the previous period to 33.4 cents. 

“In evaluating these results, shareholders should take into account that certain items are included in the calculation of EPS but are added back for purposes of the calculation of HEPS,” the company said. 

“Curro’s Meridian subsidiary received a non-recurring long-overdue education subsidy income of R25 million during the previous comparable period, which was treated as non-recurring.” 

“This subsidy income was included in the calculation of EPS and HEPS but was removed for purposes of the calculation of RHEPS in the prior period and thus represents the key difference between RHEPS, HEPS and EPS in that period.” 

The company generated 17% more cash from its operations than the comparable period. 

However, after higher tax and interest payments and lower inflows from changes in working capital, the company’s cash generation grew by only 2%. 

Curro also made a dent in its debt in H1 2023, as the company’s total debt, net of cash and investments in money market funds, reduced from R3.127 billion on 31 December 2022 to R2.991 billion on 30 June 2023. 

The company said its primary objective in the short to medium term is to support and increase the capacity utilisation of its existing facilities. 

Curro invested R312 million in its business during the period, which includes the acquisition of Courtney House International School. 

The company plans to invest up to R800 million in capital projects to maintain, replace and expand facilities in 2023.

Curro did not declare an interim dividend for the period.