Release Date: August 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 8% to nearly ZAR2.6 billion, demonstrating growth in a challenging environment.
- EBITDA increased by 10% and recurring headline earnings rose by 16%, indicating strong financial performance.
- Operating margin improved by 1% from 17% to 18%, showcasing enhanced operational efficiency.
- Cash generated from operations increased by 3% to ZAR624 million, supporting capital expenditures and share buybacks.
- Curro Holdings Ltd has available capacity for an additional 30,000 learners, indicating potential for future growth.
Negative Points
- Weighted average number of learners increased by only 1%, reflecting limited growth in student enrollment.
- Gross receivables increased by 17% to ZAR522 million, indicating potential challenges in collecting outstanding fees.
- Expected credit loss provision remains high at 31% of gross receivables, highlighting ongoing credit risk.
- Net finance costs increased due to higher interest rates and average net debt, impacting profitability.
- Lower growth in primary school enrollments due to economic pressures on young families, affecting overall learner numbers.
Q & A Highlights
Q: Can you confirm the number of learners in Grade 8 versus Grade 12, and what does this imply for future growth?
A: We currently have 7,050 learners in Grade 8 and 4,951 in Grade 12. Ideally, we aim to retain these learners through to Grade 12, accounting for factors like relocations and economic circumstances. We anticipate growth of 7,000 to 8,000 learners over the next five years if rollovers are successful, potentially increasing our capacity utilization to about 80%.
Q: Why is there muted growth in primary school enrollments compared to high schools?
A: The primary schools are nearing capacity, and economic pressures on young families have led to higher terminations rather than low enrollments. We are focusing on offering exceptional service to convince parents of the value of early education investment.
Q: Are you seeing lower application levels due to economic pressures?
A: Application levels remain similar, but the challenge arises when families cannot afford fees, leading to account terminations. We work with foundations like Ruta Sechaba to provide scholarships and support learners.
Q: How much land does Curro have banked, and how often is it reviewed for future use?
A: We have reviewed our land portfolio and are in the process of selling about half of the sites that no longer meet our strategic needs. We focus on sites with ongoing merit and have established a large national network of schools.
Q: What is the strategy to grow Grade R and Grade 1 enrollments?
A: We focus on enhancing our service offering, advising parents on school readiness, and ensuring competitive fees. We aim to provide young families with a reasonable chance to start within our portfolio.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
