Curro Holdings yesterday issued an upbeat trading update as the independent school provider eyes buoyant interim earnings ahead after it grew its average learner numbers by almost 4% as enrolment rose in the year ended December 31, 2022.
In its trading statement for the year ended December 31, 2022, the group said it expects an increase in profits when it releases its 2022 annual results next month, as enrolment grew by 3.5% year on year to 72 835 learners in the reported period, as it experienced strong enrolments interests.
It had 70 408 learners on February 23, 2022.
Recurring headline earnings per share (Rheps) are likely to increase to between 51.5 cents to 59.5c or 25.9% to 45.5% higher.
Headline earnings per share (Heps) were expected to rise to between 57.4c to 65.5c per share – up between 40.4% and 60.1% – with eps likely at between 35.8c to 44.3c or between 17.3% and 2.3%.
“Management’s disciplined termination of long overdue accounts restrained the overall learner growth from the previous year, but we are confident that this responsible approach will sustain and improve the group’s operating margin,” the group said.
The group said its Meridian subsidiary received long-overdue education subsidy income from the provincial government of R29 million this year, which was treated as non-recurring.
According to Curro, the South African corporate tax rate for years of assessment ending on or after March 31, 2023, will change to 27% from the current 28%.
“Curro had a deferred tax liability balance of R664m at the end of the previous financial year. The impact of the rate change on deferred tax is a reduction of the deferred tax expense for the year of R23.6m, which is included in Eps and Heps but is non-recurring and removed for purposes of the calculation of Rheps,” it said.
The company recognised impairments of R127m net of tax in the 2022 financial year, relating to lower-yielding school assets.
“These impairment charges are included in the calculation of Eps, but are added back for purposes of the calculation of Heps and Rheps,” it said.
Curro expects to release its annual results on March 2.
Anthony Clark, an independent analyst at Smalltalkdaily Research, said in a note yesterday that “Curro Holdings, long seen as the academically challenged player in the private education sector and a counter I’ve had at the back of the class for near three years, suddenly rehabilitated itself in my eyes post an October 1 site visit with management.
“I had Curro in the third spot in my education ranking for some years. That changed in September, 2022. I issued a note on October 5 detailing my scenario that after the “three lost years” Curro had picked itself up, got a financial tutor and decided to buckle down and try to get its poor grades back up. That started with the first-half of the calendar year results, and I was confident it would continue with the financial year results for 2022,” he said.
“Today’s sparkling trading update confirms my views and I hope the March 2 results presentation will continue to enlighten the market to the prospects for a stock that has disappointed for many years, and now needs to rebuild trust,” Clark said.
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