Curro Holdings said a creditable operating performance and strong cash flows saw headline earnings per share (Heps) increase between 14.1% and 23.1% for the year to December 31.
“The group's high schools continue to grow in line with expectations but the challenging effects of higher interest rates on constrained consumers impacted young families particularly negatively and resulted in a reduction in enrolments of learners in the youngest grades of primary schools,” the group said in a trading statement yesterday.
Curro had 73 159 learners on February 5, 1.9% more from the 71 809 learners on November 30, 2023. The group had 73 047 learners on February 20, 2023.
Earnings per share figure for the year was expected to fall due in the main to the need to make impairments on schools. The charge was a non-cash item, which does not impact the prospects to generate free cash flows ahead of its capital expenditure requirements.
Heps was expected to be between 70 cents and 76 cents, compared with 61.4 cents a year before.
Recurring headline earnings per share (Reps), upon which the decision to declare dividends is made, would likely increase between 26.3% and 37.2% to between 70 cents and 76 cents from 55.4 cents, the group said.
Earnings per share was expected to decline between 83.6% and 66.4% to between 6.6 cents and 13.5 cents from 40.1 cents previously.
Impairments of between R340 million and R380m would be recognised following the impairment assessment review of its schools.
About a third of the charge was due to a 1.1% increase in the cost of capital in the impairment calculations, which in turn arose from the increase in interest rates.
Curro had 182 schools of which 28 had lower than anticipated growth over the last two years, and the company was reducing the book value of these schools relative to muted medium-term prospects.
In the previous financial year, non-recurring subsidy income of R25m and a reduction in deferred tax by R23m were included in the calculation of eps and Heps, but were removed for purposes of Rheps.
The company repurchased and cancelled 11.5 million Curro shares for R100.9m during the year. The annual results are expected to be published on March 5, 2024.