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Curro saw a solid profit increase in the year to end-December, but primary school enrolments are under pressure, and it will have to impair the value of some of its underperforming schools.
On Thursday, the group said it would recognise impairments of between R340 million and R380 million (net of tax) relating to these "lower-yielding" schools.
Curro said 28 out of its 182 schools had seen lower-than-anticipated growth over the last two years. "(The) company is prudently reducing the book value of these schools relative to muted medium-term prospects."
The higher cost of capital following aggressive rate hikes over the past year also contributed to the impairments. The company's weighted average cost of capital rate used in the impairment calculations has increased from 14.5% in 2022 to 15.6% in 2023.
While high school learner numbers are growing in line with expectations, there has been a drop in enrolments of the youngest grades at its primary schools. Curro blames this on "the challenging effects of higher interest rates on constrained consumers (which) impacted young families particularly negatively".
Curro currently has 73 159 registered learners, from 73 047 in February last year - an increase of only 0.2%. Still, its headline earnings for the year is expected to increase by between 14.1% and 23.8%, the group said on Thursday.
Its share price lost almost 2% to R11.72 by late morning on Thursday.
"I've been waiting for impairments here for about a decade. This feels too low. (This) may not be the last one," said Keith McLachlan, chief investment officer at Integral Asset Management, in a social media post.
The group's results will be published on 5 March. Its shares gained 27% over the past year.
