Curro shares tank on ‘disappointing’ results

CURRO Holdings’ share price tanked nearly 15 percent yesterday after “disappointing” results for the year to December 31 and despite the independent schools company planning to invest about R1 billion in further growth and development projects in 2020.

Chief executive Andries Greyling said yesterday at the release of the results: “Although Curro has just undergone a process of consolidation we’re ready to expand our offering in a strategic manner. We will selectively take advantage of acquisitions and high potential greenfield opportunities, especially in the Curro Academy and DigiEd segments.”

The share price slid 14.6 percent to a low of R11.53 in midday trade, before closing at R12.45 – down 7.78 percent.

Recurring headline earnings and recurring headline earnings a share decreased by 15 percent to R212 million, paying 51 cents.

This was due to a strategy to retain learners in a weak economy, which hurt revenue per learner, an increase in interest paid from R2bn invested in acquisitions and new campuses since R2016, a changing the composition of learner numbers that adversely impacted teacher numbers as well as economic pressure on some schools at the upper end of the market and in selected rural areas.

Learner numbers rose by 12 percent to 57 597 and “continue to grow this year”, he said. From the start of the 2020 period, learner numbers grew 9 percent to 62 689. Strong growth was achieved in high school grades, with a significant rise in Grade 8 learner numbers, especially in Curro Academy schools.

Dividend per share fell 15 percent to 10.2c a share.

During the past year revenue rose 18 percent to R2.94bn. Earnings before interest, taxation, depreciation and amortisation increased 11 percent to R693m.

Greyling said future growth prospects were underpinned by good cash flow, which with the growth in learner numbers was achieved in “arguably the most challenging times”.

Market commentator Wayne McCurrie of First National Bank Wealth and Investments said on Twitter the results were “very disappointing”.