SIMON BROWN: I’m chatting with Curro CEO Cobus Loubser. We had results for the year-end December. Revenue up 15%, HEPS up 19%, dividend up 32%, learners up 2%. Cobus, let’s start with expenses ex acquisitions, other expenses up 19%. Is this just inflation that we are seeing coming through into the business, or is there more to it? Some of it I imagine was probably interest rates.
But I think all in all it’s really important to note that we’ve actively reinvested in our experience on our campuses. So more sports programmes, more tours and tournaments, more culture, more everything to create a really holistic and special experience in our corridors and on our fields. That includes much innovation around issues like artificial intelligence, coding, robotics and the like.
COBUS LOUBSER: I think there’s still upside. And I think the operating margin of a business really is a measure of the quality of the management team and the quality of that business’s strategy to succeed. So I think from that perspective we expect that to increase. But of course there is operating leverage available within our facilities.
SIMON BROWN: Yes. That bad debt from 4.1% of revenue is down to 3.3% in the current year, 2023. What would be a normal level for that? I don’t know where normal is. I suppose it’s pre-pandemic, because we’ve had all the high interest rates, and before that we had the pandemic. We’ve almost got to go back to 2019 to get some sort of normal sense.
SIMON BROWN: I take your point on that. A question around capex. Obviously Curro has had a lot of capex – you’ve done acquisitions, but you’ve done a lot of building as well. You made the point that you are hitting your peak in the next 12 to 18 months, and from there on it comes down to just maintenance capex – normalising it at R300 million to R400 million a year.
SIMON BROWN: A last question. You mentioned diesel costs. Schools obviously predominantly run in daytime. Solar is an option. Is that something which you’ve been rolling out? I mean the challenge is you’ve got so many sites.