Private school group Curro warns 2021 profits may fall sharply after Covid-19 storm

JSE-listed firm Curro said in a trading statement that headline earnings per share — the main profit measure in the country that strips out once-off costs — would likely fall by between 44% and 52% compared with the same period a year ago. 

“The R1.5-billion rights offer in September 2020 resulted in there being 42% more shares in issue in the first half of 2021 compared to the first half of last year, which reduced the respective earnings per share figures meaningfully,” said the group. 

In its 2020 results, Curro estimated that revenue could have been about R300-million higher had it not been for Covid-19.

The company, backed by investment giant PSG which holds 60% of the firm, said the average number of learners at its more than 175 schools nationwide had increased by 7%, while revenue was up by 12%. 

The comparable period, the first six months of 2020, were marked by a three-month schools closure due to the pandemic, making the 2021 figures a touch rosier than they might have been, considering the tough economic environment that has stretched into 2021. 

Curro admitted as much in the profit warning. 

“Schools were closed for three months pursuant to the Covid-19-induced lockdown, with concomitant cost savings in the first half of 2020, but were fully operational in the second half of 2020 and in 2021,” Curro said. 

The private schooling group also warned that “the levels of bad debts and fee discounts remain higher than what the company experienced historically before Covid-19”.

In 2020, the group estimated credit losses would nearly double to 48%, forcing it to increase its provision for bad debt to R148-million from just R67-million the year before.

Job losses have burnt a hole in parents’ pockets, with some opting for cheaper alternatives such as home schooling or online learning. Fellow private school group Advtech this year ruled out increases in school fees as it looked to move thousands of learners to online platforms.   

Curro launched two off-site platforms during Covid-19 — Curro Online and Curro Choice — to tap demand for digital learning.

Dropout rates will also remain a problem for Curro’s expansion plans. As many as 750,000 learners may have quit school during the pandemic, according to a NIDS-CRAM survey published in July — about three times the pre-pandemic level. BM/DM