Curro scores with some strong gains

• Private-school group CEO says acquisitions and cost cutting led to gains in interim margins

Fast-growing privateschool business Curro Holdings is confident of replicating, and possibly improving on, a resurgent interim profit performance during the second half of the financial year. On Tuesday Curro, which operates 139 schools on 50 campuses, reported strong gains in margins in the six months to end-June as efforts to cut costs by centralising various functions kicked in.

Fast-growing private-school business Curro Holdings is confident of replicating, and possibly improving on, a resurgent interim profit performance during the second half of the financial year.

On Tuesday Curro, which operates 139 schools on 57 campuses, reported strong gains in margins in the six months to end-June as efforts to cut costs by centralising various functions kicked in.

Curro CEO Andries Greyling said efforts to centralise administrative functions including information technology, had paid off handsomely with head office costs increasing by only 10% in the interim period.

The margin improvement meant Curro could turn a 18% gain in revenue to R1.24bn into a sprightly 26% increase in pretax profits to R184m.

Greyling stressed that costcutting initiatives would extend into the second half with the centralisation of Curro’s debt collection functions. “Cost cutting will help margins and we are confident the profit growth performance will extend into the second half.”

He hinted that the secondhalf performance could be buoyed by recent acquisitions — including Cooper College, which was acquired in April.

A strong second-half performance, coupled with a 31% surge in operational cash flow to R342m, will heighten shareholder expectations that Curro might also evaluate a small maiden dividend for the full financial year to end-December.

The ebitda (earnings before interest, tax, depreciation and amortisation) margin fattened markedly from 23% to 27%.

Greyling reiterated remarks made earlier in 2018 around spending R1bn on acquisitions that could add between R80m to R100m to group profits.

He said it was likely Curro, which is rolling out greenfield developments, would snag acquisition opportunities outside the consolidated SA private schools market. The company already has a presence in Namibia and Botswana.

Greyling said that Curro was not targeting the “super-rich” private-school market in Africa, but was offering low-fee models with a mass market appeal.

Asked if Curro had set a medium-term target for revenues from African operations, Greyling indicated that the SA operations would still be the main focus for the foreseeable future. “We have not set a specific goal for our African operations … at the moment it is really about seeing which opportunities land on our table.”

Curro intends investing R400m in six new campuses at Curro Vanderbijlpark, Curro Edenvale, Curro Academy at Parkdene (near Boksburg), Protea Glen (near Soweto), Savanna City (in Johannesburg) and Curro Castle at Burgundy Estate (Cape Town).

Greyling said expansion projects were also under way at Curro Brackenfell, Building Blocks, Curro Heritage House and Windhoek Gymnasium.