Curro results reflect lucrative opportunities in private education

Cape Town - Curro Holdings' [JSE:COH] 24% revenue rise from R872m in 2016 to R1.085bn for the half year ending June 30 2017 provides yet more proof of how lucrative South Africa's private education sector is.

The listed independent education provider announced its interim results on Tuesday. Curro Holdings provides education to more than 47 000 learners across 127 schools on 54 campuses throughout southern Africa.

Headline earnings rose by 46% from R81m in 2016 to R110m in June 2017. Headline earnings per share (Heps) increased by 22% from 22 cents to 26.9c. The group’s earnings before interest, tax, depreciation and amortisation (Ebitda) increased by 24% from R259m to R322m.

The group results were, however, negatively affected by the seven Meridian campuses operating in the rural lower-fee market. These experienced pressure as a result of fewer than expected learner numbers compared to the previous year. Additional expenses also resulted from the expanded vision for the tertiary business, Stadio Holdings.

Heps for Curro schools - excluding Meridian and Stadio - rose by 47% to 31.4c.

The results have been presented with the school and the tertiary businesses reflected separately. For the year ending June 30 2017, Stadio Holdings’ revenue lifted by 26% from R27m to R34m.

According to CEO Andries Greyling, who was appointed on July 1 2017, the group’s vision is to make education accessible to more learners throughout southern Africa.

“With education being one of the cornerstones of society, it’s one of the best investments we can make in our children’s future,” said Greyling.

Unbundling

He announced that Curro Holdings intends to unbundle its subsidiary Stadio Holdings before the end of 2017. Expansion costs were substantial and Stadio Holdings’ Ebitda was affected by corporate costs, incurred in establishing and operating the new head office component required for its pending separation.

Stadio Holdings also made two further acquisition investments and progress will be made towards its unbundling and separate listing on the JSE before the last quarter of the year, according to Greyling.

“We are optimistic about the SA education market which has undergone a lot of changes in recent years. Curro is contributing positively to the education sector. We remain on track on achieving our vision set of being 80 campuses by the end of 2020," said Greyling.

"We are committed to SA and its continued social and economic growth and believe there are adequate opportunities to continue expanding Curro beyond 2020."

By mid-morning Curro's share price on the JSE was down 0.27% to R43.50.

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