Hard les­son

Finweek English Edition - - SPOTLIGHT -

Curro is not ac­cus­tomed to bad news. In fact, one of its chal­lenges since list­ing in 2011 has been to man­age very high ex­pec­ta­tions. So when a race is­sue at one of its schools es­ca­lated, Curro was thrown into the spot­light – some­thing it did not ex­pect or, as be­came clear in the af­ter­math, know how to han­dle.

Curro was a c c us e d of r a c i a l seg­re­ga­tion at its Rood­e­plaat school in Pre­to­ria, which has three grade R classes. Two classes had only black pupils. The six white pupils in the grade were all placed to­gether in the third class with other black pupils. CEO Chris van der Merwe has ex­plained that this was an iso­lated in­ci­dent.

He has ex­plained that two-thirds of Curro’s learn­ers are black, and that the whole pur­pose of Curro’s ex­is­tence is to broaden ac­cess to in­de­pen­dent schools for all chil­dren. He has ex­plained that Curro does not prac­tise seg­re­ga­tion.

But what is dif­fi­cult to ex­plain, hence the out­cry, is the old mind­set ex­pressed by re­gional manager An­dré Pol­lard, who was quoted say­ing: “It is not be­cause we would like to seg­re­gate the whites. It is just be­cause of friends. Chil­dren are able to make friends with chil­dren of their cul­ture.”

Van der Merwe says that Curro has l e a r nt a l e s s on a bout good com­mu­ni­ca­tion. He says t hat an in­cor­rect mes­sage had been sent out that this was a sep­a­rate white class. “This was a few white chil­dren among black chil­dren in one grade R class, but they were not dis­trib­uted evenly to the other classes.

“This was an in­te­gra­tion mis­take, and we apol­o­gise. If you look at broader Curro, we don’t stand for a pol­icy of seg­re­ga­tion − we wouldn’t have en­rolled 36 000 chil­dren, of which 24 000 are black. We learnt a cru­cial les­son about com­mu­ni­ca­tion,” he ex­plains.

There has been some progress in the af­ter­math. Curro has adopted a pol­icy in that school where the par­ents will help the teach­ers to de­clare that all the classes are rep­re­sen­ta­tive. All the chil­dren in the grade R classes were re­al­lo­cated and are to­day in­te­grated.

Van der Merwe adds that as Curro grows and there are more learn­ers, in­ci­dents are prone to hap­pen. “We have learnt t hat t here is a way to han­dle them, it is def­i­nitely about good com­mu­ni­ca­tion.

“This in­ci­dent will make Curro stronger, and if the process and pro­ce­dure that we im­me­di­ately put into that school to re­as­sure par­ents works, we can adopt it as a pol­icy in the group.”

In­vestors have gen­er­ally shrugged off the in­ci­dent and pos­si­ble rep­u­ta­tional reper­cus­sions, although they were a bit ner­vous about Curro’s re­cent trad­ing up­date ahead of its re­sults on 17 Fe­bru­ary. Earn­ings for the year to De­cem­ber will be 33% to 43% higher than the pre­vi­ous year. This is strong growth, but not as high as what has be­come ex­pected of Curro, which trades at a price-toearn­ings (P/E) mul­ti­ple of al­most 200. Its growth has been ex­cep­tion­ally fast.

In Au­gust last year, it had close on 30 000 learn­ers at 32 cam­puses. Less than six months later, it had just over 36 000 across 42.

Van der Merwe says that two years ago the P/E was 1 600, “so we have made some progress”.

“The P/ E con­cept isn’t nec­es­sar­ily ap­pro­pri­ate on a com­pany like ours. You have to un­der­stand the model. By 2020 we will be 80 schools, and we will not sit with a whole bunch of empty schools − most will be full ca­pac­ity or close to Cents 3 500

3 000

2 500

2 000

Mar ’ 14

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