South Africa - Johannesburg - Curro Holding - 14 August 2019 Andries Greyling (CEO) presenting the interim Curro result at Hyatt Regency Hotel Rosebank Picture: Bhekikhaya Mabaso African News Agency (ANA)
DURBAN –Listed independent education provider Curro Holdings is pushing ahead with its expansion plans, saying it planned to invest R223 million in the establishment of four new campuses in the year ahead.

The group said yesterday that the investment would push its expansion and replacement programmes this year to R1 billion.

Chief executive Andries Greyling said it was necessary to invest in the business as student numbers continue to increase every year.

“Our learner numbers have increased by 13percent to 57173 students in the six months to end June,” Greyling said. “There is still a huge demand for private education in the country despite the financial pressure felt by most parents.”

Curro reported a 44 percent increase in headline earnings to R206m for the six months to end June from R143m recorded during the corresponding period last year.

Revenue increased 19 percent to R1.48bn from R1.24bn, boosted by an increase of 13percent in learner numbers. Recurring headline earnings, which excludes once-off charges, increased by 7 percent to R153m.

The group said a once-off permanent reversal of a deferred tax liability of R53m decreased the effective tax rate to 2percent.

Headline earnings per share increased 44percent to 50cents a share, while recurring headline earnings per share rose 7percent to 37.1c.

Earnings before interest, tax, depreciation and amortisation increased by 21percent to R415m.

The group did not pay an interim dividend.

Greyling said Curro was positioned for growth and would focus on increasing utilisation of the existing school infrastructure capacity in the short to medium term.

He said major projects were currently under way at Curro Vanderbijlpark, Building Blocks in Midrand, Curro Hillcrest and Curro Academy Pretoria.

“The estimated investment for expansion and replacement of assets in 2019 is R1bn, but it is a necessary undertaking for us as a business and for our learners who will be the beneficiaries of our enhanced facilities,” Greyling added.

Nolwandle Mthombeni, an equity analyst at Mergence Investment Managers, said the figures inflated by some restatements that have to do with deferred tax.

Mthombeni said share price reactions in the last 18 months reflected poor sentiment as management failed to meet market expectations.

“Curro is currently in a high capex cycle and is very leveraged, so the ability to generate sufficient cash to pay off debt is key,” Mthombeni said. “The net cash generated from operations was up only 1percent despite the reported 44percent. So the underlying operational performance was disappointing, given that it is meant to be in a growth phase.”

Curro shares rose 6.84 percent on the JSE yesterday to close at R17.80.

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