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Steep (l)earning curve

Steep (l)earning curve

DURBANVILLE headquartered private school venture Curro Holdings – which is controlled by PSG Group – is giving new meaning to the phrases “earning by learning.”Curro pushed revenue up 24% to R82m in the half-year to end June, while profits rose 27% to R259m.

Curro’s total number of learners grew 15% from 35,970 to 41,393. To date, Curro has built 110 schools on 47 campuses countrywide – with plenty space for growth with CEO Chris van der Merwe reporting that campuses were operating at 78% of existing building capacity and only 51% of eventual capacity. This means Curro has already surpassed its 2020 target of operating 100 schools almost four years earlier than scheduled. At this point is seems a realistic goal for Curro to reassess its expansion targets to providing the country with 80 campuses (200 schools) by 2020.

Van der Merwe said that while it was originally assumed that the private schools market would be saturated with 200 independent schools by 2020, it was now clear that the demand was far greater than the supply.

“We are therefore preparing to carry on with our vision and business concept beyond 2020.”

He stressed Curro’s focus would remain on developing new campuses – but said it would also consider suitable value-enhancing acquisitions “where and when” an opportunity arose. Van der Merwe said Curro already had a total of 170 schools in the offing for 2020 against the current 110 schools.

“We are nevertheless mindful of sustainable portability and we have over the years developed an optimal rate for constructing new schools and campuses. This entails six campuses or between 15 to 18 schools per year.” 

Van der Merwe added that the expansion of existing campuses – including a high school at Century City in Cape Town - would cost R500m with actual land banking of about R60m already undertaken in the interim period and another R300m lined up for the next six to 12 months.

Arguably the most interesting aspect of Curro’s interim financials is the performance of its more established schools – which include a number of Western Cape-based properties like Durbanville, Langebaan, Hermanus, Century City and Sitari (Somerset West.)

The company’s eight schools developed before 2009 – representing 3,422 learners – operated on a margin of around to 30% and grew earnings to R23m in the interim period compared with R17m in the corresponding six months in 2014. This illustrates the so-called ‘hockey-stick’ effect (or J-curve) on profitability as schools start running at optimum capacity.

Curro has developed 50 of its own schools since 2012, which could have a dramatic effect on profits in the next three years.


By Jenni McCann 

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