The decay of public schooling has opened a window of opportunity for Curro Holdings.
Curro is expecting demand to grow and it plans to invest up to R1.1 billion in further expansion opportunities during 2022 to meet this expected growth.
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Curro is expecting demand to grow and it plans to invest up to R1.1 billion in further expansion opportunities during 2022 to meet this expected growth.
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In 2021, Curro acquired HeronBridge College. The acquisition is aligned with Curro’s intention to expand the group’s geographical footprint. Curro also bought St George Preparatory School.
Curro invested R549 million in the business during the first half of 2022.
This includes the acquisitions of HeronBridge College which was effective from 1 April 2022 and a building in Cape Town for DigiEd Foreshore school.
This includes the acquisitions of HeronBridge College which was effective from 1 April 2022 and a building in Cape Town for DigiEd Foreshore school.
Running a private school is a very capital intensive task with limited operating leverage. It is similar to telecommunications.
In 2021, Curro invested R929m in the business mainly for the construction of schools.
In 2021, Curro invested R929m in the business mainly for the construction of schools.
Setting up a school requires significant up-front capital to buy land etc.
Then building starts which requires more cash.
Once that is done, you are faced with a relatively high fixed cost base with teachers’ salaries taking the lion's share of the open.
Then building starts which requires more cash.
Once that is done, you are faced with a relatively high fixed cost base with teachers’ salaries taking the lion's share of the open.
In 2019/2020, Curro's R1.3bn capex was spent on;
R185m: Curro New Road, Delft, Academies at the Blyde and Mbombela,
R949m: expanding Curro Vanderbijlpark, Building Blocks, Curro Hillcrest and Curro Academy Pretoria,
R24m invested in land banking and
R127m on acquisitions.
R185m: Curro New Road, Delft, Academies at the Blyde and Mbombela,
R949m: expanding Curro Vanderbijlpark, Building Blocks, Curro Hillcrest and Curro Academy Pretoria,
R24m invested in land banking and
R127m on acquisitions.
Northstar Asset Management once stated that, a new school will take at least 7 years to reach a capacity utilisation of more than 80% (where it reaches full potential operating margins and creates large shareholder returns).
For example, Curro once made R388m in operating cash but shelled out R739m to buy more land, built more schools and added to old ones. It also helps to have a big backer.
Curro has PSG that increased its stake from 55% to 60%.
Curro has PSG that increased its stake from 55% to 60%.
Curro did a rights offer of R1.5bn last year to be used for future acquisitions, expansions, strengthen the balance sheet and reduce debt. PSG committed R1.15bn of the R1.5bn rights offer Curro.
Due to the high operating cost, Curro's balance sheet was highly geared.
Curro used R1.1bn of the R1.5bn raised from the rights offer to pay down its debt pile.
The rights offer proceeds "helped" strengthen the balance sheet, achieve savings in finance costs.
Curro used R1.1bn of the R1.5bn raised from the rights offer to pay down its debt pile.
The rights offer proceeds "helped" strengthen the balance sheet, achieve savings in finance costs.
Net finance cost in FY21 fell by R53m to R170m as a result of the reduction in debt following the rights issue.
However, net finance cost for H1 2022 increased to R77m from R68m for H1 2021.
However, net finance cost for H1 2022 increased to R77m from R68m for H1 2021.
Curro listed on the JSE in June 2011 and had;
12 Campuses,
24 Schools and
Average learners of 4 200.
1 Aug 2022, Curro had;
77 campuses
181 schools and
71 011 learners enrolled.
This growth is crazy.
Curro has acquired 61 schools and developed 120 schools.
12 Campuses,
24 Schools and
Average learners of 4 200.
1 Aug 2022, Curro had;
77 campuses
181 schools and
71 011 learners enrolled.
This growth is crazy.
Curro has acquired 61 schools and developed 120 schools.
Bad debts
Curro's bad debt are above pre-Covid-19 levels with bad debts standing at 4% of turnover vs 4.2% in 2021.
Curro is owed R74 million in school fees from parents of kids who are no longer enrolled at its schools.
Curro's bad debt are above pre-Covid-19 levels with bad debts standing at 4% of turnover vs 4.2% in 2021.
Curro is owed R74 million in school fees from parents of kids who are no longer enrolled at its schools.
Curro splits its receivables between Active (learners still in schools) and Inactive (learners who left Curro).
Curro sold the nonperforming portion of its debtors’ book, which relates to learners who have left Curro (inactive accounts).
Curro sold the nonperforming portion of its debtors’ book, which relates to learners who have left Curro (inactive accounts).
Curro’s gross receivables stand at R418m while Curro’s loss provision is at 40% of gross receivable. The effects of Covid-19 are clear for all to see.
Curro terminated 312 learner contracts at 30 June 2022 which will have a negative effect on revenue for the remainder of FY22.
Curro terminated 312 learner contracts at 30 June 2022 which will have a negative effect on revenue for the remainder of FY22.
Curro has a prudent credit loss provision methodology, where full balance of each account is allocated under its oldest aging category.
Revenue ⬆️ by 15.5% to R2.060bn during H1 of 2022. Tuition fees ⬆️ by 13.3% from H1 2021, due to the ⬆️ in learners, coupled with fee increases
Revenue ⬆️ by 15.5% to R2.060bn during H1 of 2022. Tuition fees ⬆️ by 13.3% from H1 2021, due to the ⬆️ in learners, coupled with fee increases
Curro is also on a stringent cost management path and has reduced school fees discounts reduced to 7.8% of fees from 9.1%.
Curro had cost savings of R114m in Q2 of 2020 in due to the extended national lockdown.
Curro had cost savings of R114m in Q2 of 2020 in due to the extended national lockdown.
Extra-murals were restricted since Q2 of 2020 due to Covid-19, but this has resumed in full in 2022. As a result, facility costs (water, electricity and municipal rates) ⬆️ by 5% in H1 2022.
Good news is that Curro generated R598m of cash from its operating activities, a 14% ⬆️
Good news is that Curro generated R598m of cash from its operating activities, a 14% ⬆️
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