Curro’s results presentation includes a quote from Richard Branson: "If your dreams don’t scare you, they are too small." Perhaps the company should get its soothsayers to analyse the dreams of shareholders who bought in at Curro’s peak back in 2017, a cohort that has every right to wake up in a cold sweat even though the share price has bounced back nicely from its lows of March 2020.
It’s not Curro’s fault that the market gets overexcited on the up as well as the down, but a bit of calm would be welcome.
The good news for the company is that learner numbers are still going up, but the bad news is that the increase in revenue at 12% is not coming close to keeping up with the increase in costs, with employee costs up 30% and other expenses up 23%. Curro has done what it could to help customers reeling from the economic impact of the pandemic, granting discounts to the tune of R164m, but it is clear that in some cases continuing to pay school fees was impossible.
Important for the long term, however, is the international experience that the pandemic has widened the gap between private and state education. Private schools generally have the funds, the hardware and the skill-set to pivot seamlessly to distance learning, while in many government systems the experience has been patchy to nonexistent.
Curro remains a well-run operation providing a decent product at a number of different price points, so the hope is that the past couple of years will prove a mere blip on a generally positive trajectory.
BHP: No cigar yet for King Henry
When things are running smoothly and cash is gushing into the corporate piggy bank, it can be easy for management to rest the size 12s on the boardroom table, fire up a large Cohiba and go with the decidedly lucrative flow. Change is more likely to come as a result of a mighty cock-up or the arrival of some pesky activist investor.
But this does not appear to be the approach of Mike Henry, who became CEO of BHP in January 2020, and is proposing radical changes to the world’s biggest mining company.
BHP announced a cracking set of operational and financial results for the year, returning more than $15bn to shareholders on the back of record volumes and higher iron ore and copper prices. It delivered its four major development projects on or ahead of schedule and on budget, yet the focus appears to be on positioning the group for the future rather than patting itself on the back. BHP chair Ken MacKenzie expressed a desire to "create value and returns over generations".
Thus BHP is planning to offload its oil and gas business, simplify its corporate structure by moving to a primary stock market listing in Sydney, and gear its portfolio to respond to the global mega-trends of decarbonisation, electrification and population growth.
It is putting $5.7bn into its Jansen stage 1 potash project, in line with its strategy of investing in world class assets in future-facing commodities. It expects a payback period of seven years from first production and an earnings before interest, taxes, depreciation and amortisation margin of a cheeky 70%.
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