Wrap Text
COH - Curro Holdings Limited - Reviewed group results for the financial year
ended 31 December 2011
Curro Holdings Limited
Incorporated in the Republic of South Africa
Registration Number: 1998/025801/06
Share code: COH
ISIN: ZAE000156253
("Curro" or "the Company")
Reviewed group results for the financial year ended 31 December 2011
Highlights
- 100% Matric pass rate
- Revenue increased by 125%
- Learners increased by 80%
Condensed statement of comprehensive income
% Reviewed Audited
change 31 December 31 December
2011 2010
R`000 R`000
Revenue 125% 166 298 74 028
Earnings before interest, tax, (18%) 10 481 12 800
depreciation and amortisation (EBITDA)
Depreciation and amortisation (6 704) (3 014)
Earnings before interest and tax (61%) 3 777 9 786
Net interest expense (12 948) (5 106)
(Loss)/profit before tax (9 171) 4 680
Taxation 1 767 552
Total comprehensive(loss)/profit (7 404) 5 233
(Loss)/earnings per share (cents)
Basic (6,2) 6,5
Diluted (6,2) 6,5
Reconciliation between (loss)/earnings
and headline (loss)/earnings
Basic (loss)/earnings (7 404) 5 233
Adjusted for:
Profit on disposal of property, plant (105) (42)
and equipment
Tax effect thereon 29 12
Headline (loss)/earnings (7 480) 5 203
Headline(loss)/earnings per share
(cents)
Basic (6,3) 6,5
Diluted (6,2) 6,5
Number of shares in issue (million)
Basic 161,2 80,4
Diluted 165,5 80,4
Weighted average number of shares in
issue (million)
Basic 118,9 80,2
Diluted 120,0 80,2
Capitalisation dividend per share - 1,3
(cents)
EBITDA margin 6,3% 17,4%
Condensed statement of financial position
Reviewed Audited
31 December 31 December
2011 2010
R`000 R`000
ASSETS
Non-current assets 574 651 236 889
Property, plant and equipment 529 928 225 321
Goodwill 39 283 8 207
Intangible assets 5 440 1 783
Deferred tax assets - 1 578
Current assets 22 751 6 422
Trade and other receivables 12 836 2 285
Current tax asset 78 -
Cash and cash equivalents 9 837 4 137
Total assets 597 402 243 311
EQUITY AND LIABILITIES
Equity 369 775 57 686
Non-current liabilities 132 609 99 787
Other financial liabilities 122 416 99 787
Deferred tax liability 10 193 -
Current liabilities 95 018 85 838
Related-party loan 38 686 54 440
Loans and other financial liabilities - short term 12 298 10 861
Current tax liabilities 881 63
Trade and other payables 6 847 7 833
Construction and acquisition payables 14 792 1 500
Prepaid school fees and deposits 21 514 7 914
Bank overdrafts - 3 223
Total equity and liabilities 597 402 243 311
Net asset value per share (cents) 229,4 71,7
Condensed statement of cash flows
Reviewed Audited
31 December 31 December
2011 2010
R`000 R`000
Cash generated from operations before working 11 067 12 768
capital changes
Changes in working capital 10 006 2 999
- Trade and other receivables (5 156) (360)
- Trade and other payables 15 162 3 359
Interest income 1 437 137
Finance costs (14 385) (5 243)
Taxation paid (670) (594)
Net cash from operating activities 7 455 10 067
Net cash from investing activities (314 502) (121 203)
Net cash from financing activities 315 971 101 547
Total cash movement for the year 8 924 (9 589)
Cash at the beginning of the year 913 10 502
Total cash at the end of the year 9 837 913
Condensed statement of changes in equity
Reviewed Audited
31 December 31 December
2011 2010
R`000 R`000
Balance at the beginning of the year 57 686 52 453
Total comprehensive (loss)/profit for the year (7 404) 5 233
Dividends paid to shareholders - (1 017)
Shares issued 323 227 1 017
Share issue costs (4 454) -
Share-based payment 720 -
Balance at the end of the year 369 775 57 686
Notes to the financial statements
1. Statement of compliance
The condensed financial information has been prepared in accordance with the
framework concepts and the measurement and recognition criteria of International
Financial Reporting Standards (IFRS) of the International Accounting Standards
Board, AC 500 standards as issued by the Accounting Practices Board and the
Companies Act of South Africa. This independently reviewed report has been
prepared using accounting policies that comply with IFRS which are consistent
with those applied in the financial statements for the year ended 31 December
2010. The preparation of the group`s consolidated financial results for the year
ended 31 December 2011 was supervised by Bernardt van der Linde, the group`s
Chief Financial Officer.
2. Reviewed opinion
The condensed provisional financial information for the year ended 31 December
2011 has been reviewed by the group`s auditors, Deloitte & Touche. The review
was conducted in accordance with ISRE 2410 `Review of Interim Financial
Information performed by the Independent Auditor of the Entity`. A copy of their
unmodified review report is available for inspection at the company`s registered
office. Any reference to future financial performance included in this
announcement, has not been reviewed or reported on by the Company`s auditors.
3. Dividends
No dividend was paid during the year. For the comparative year a capitalisation
dividend of 1,3 cents per share was paid.
4. Issued capital
During the year the company:
- Issued 200 000 shares at R4 per share in terms of a specific issue to obtain
the requisite minimum public spread for listing on the JSE.
- Raised R322,4 million in a 1 for 1 rights issue where 80,6 million shares were
issued at R4 per share.
- Share issue costs were recognised against equity.
5. Borrowings
During the year, the group obtained additional short-term funding from its
parent company. This loan was capitalised as part of the rights issue process
that was completed on 11 July 2011.
6. Operating segments
Due to all of the services being educational related and within South Africa the
group has only one reportable segment. All historical information presented
represents the financial information of this single segment.
7. Note to the statement of cash flows
Reviewed Audited
31 December 31 December
2011 2010
R`000 R`000
Cash generated from operations before working 11 067 12 768
capital changes
(Loss)/profit before taxation (9 171) 4 680
Adjusting for:
- Depreciation and amortisation 6 704 3 014
- Interest received (1 437) (137)
- Finance cost paid 14 385 5 243
Profit on sale of asset (105) (42)
Movement in operating lease accruals (29) 10
Share-based payment 720 -
8. Business combinations
Effective 1 January 2011, Curro Holdings ("Curro") acquired the following
business operations:
- Aurora College for a cash consideration of R43 million
- Overstrand Learning Academy and Berghof Pre-primary in Hermanus for R785 000
- Heuwelkruin Kollege in Polokwane for R14,9 million
- Cape St Blaize in Mossel Bay for R2,7 million
- Siloam Academy for R4 million
Effective 1 July 2011, Curro acquired the following business operations:
- Mandorren Academy and Sport for R5,9 million
Effective 1 October 2011, Curro acquired the following business operations:
- Optimum Kids Playschool and Pre-primary for R1,8 million
- Laerskool Koraalsig for R1,3 million
Fair value of assets acquired
R`000
Purchase price 69 827
Property, plant and equipment 59 763
Intangible assets 4 400
Other assets 10 968
Liabilities (36 379)
Goodwill 31 075
9. Commitments and contingencies
Guarantee in favour of RMB
Curro has provided a guarantee of R10 million plus costs and interest for the
completion of the entrance road of the Serengeti Campus that is being
constructed by a contractor. The estate`s owners are responsible for this cost,
but Curro had to provide a guarantee for the interim financing thereof.
Reviewed Audited
31 December 31 December
2011 2010
R`000 R`000
Capital expenditure
Contracted 269 500 76 819
Authorised but not contracted 271 000 114 902
540 500 191 721
10. Events after the reporting period
The group has acquired or is in the process of acquiring:
- The business and properties of Embury College and Wonderland College, a
combined school based in Morningside, Durban
- The business and properties of Hillcrest Christian Academy, a Pre-primary and
primary school based in Hillcrest, Durban
- Land in Century City, Cape Town for the construction of a campus
- Land in Bloemfontein for the construction of a campus
- Acquired Woodhill College (Pty) Ltd and Woodhill College Property Holdings
(Pty) Ltd for an amount of R175 million (subject to Competition Commission
approval)
Learner numbers
2009 % 2010 % 2011 % 2012 (1)
Schools operating 2 059 15 2 371 9 2 581 8 2 793
in 2009
Schools operating - 681 42 969 31 1 274
in 2010
Schools operating - 31 2 007 65 3 316
in 2011
Schools operating - - - 1 925
in 2012
Total number of 2 059 50 3 083 80 5 557 68 9 308 (5)
learners
Other key ratios
2009 2010 2011 2012 (1)
Number of 3 5 12 15
campuses
Learners per 686 513 460 621
campus (2)
Staff 251 343 654 926
Educators 201 247 446 669
Learner/teacher 10,2 12,5 12,4 13,9
ratio (3)
Building size 33 000 44 500 75 000 84 000
(m2) (4)
Land size (ha) 27 55 107 111 (4)
Capital 35 128 315 -
investment (Rm)
- Current 13 13 80 -
campuses
- New campuses 21 114 175 -
- Acquisitions 1 1 60 -
(1) As at 27 February 2012
(2) Average full capacity of 1 400 per school
(3) Maximum of 25 learners per class
(4) Excludes planned capital expansion for 2012. Estimated to be about an
additional 40 000 m2 of buildings and 20 ha of land.
(5) Excludes Woodhill College acquisition. Subject to Competition Commission
approval.
Commentary
Overview
Curro`s business model revolves around the development, acquisition and
of private schools in South Africa. The model makes provision for
pre-school learners from the age of six months to Grade 12 in high school.
It has become apparent that the private school market offers other segments that
look promising from a business prospective. Although Curro will remain a focused
player in school education it will now expand from the original, affordable
Curro schools to three additional market segments being:
- The high-end/elite private school market
- A private community school initiative known as Meridian Private Schools
focusing on the lower end of the market
- The baby care/creche market that will be known as Curro Junior Academy
Since 2009 Curro has expanded its country-wide network of private schools from 5
to 15. The number of learners have increased threefold from 3 000 in 2010 to
more than 9 300 currently enrolled at Curro schools. In this period 2 700
learners accounted for organic growth.
A total of 220 Curro matrics undertook and passed the 2011 IEB examination at
the end of last year, with 80% receiving matric exemption. An average mark of
64% was achieved, while 92% of the learners obtained an average of more than
50%.
Investments
During the year under review, Curro invested R142 million in the establishment
of four new main campuses at Serengeti Estate in Kempton Park (Johannesburg),
Nelspruit, Hermanus and Mossel Bay. Curro also invested R80 million in expanding
capacity and upgrading of facilities at the existing campuses.
Two schools with established campuses, namely Aurora based in Randburg and
Heuwelkruin College in Polokwane, were also acquired. These campuses were
expanded during 2011 to the value of R33 million. Other schools acquired in 2011
were Mandorren Academic and Sport School that was incorporated into the Curro
Serengeti campus, as well as Optimum Kids and Laerskool Koraalsig that were
incorporated into the Curro Nelspruit campus.
On 22 November 2011 Curro announced the acquisition of Woodhill College. The
acquisition is still subject to Competition Commission approval. This
acquisition will add another 1 200 learners.
Results
On a comparative basis, Curro`s turnover has increased by 125% to R166,3 million
in the financial year ended 31 December 2011. Organic growth accounted for 33%
of this increase in turnover.
Earnings before interest, tax, depreciation and amortisation (EBITDA) has
decreased by 18% to R10,5 million. This can be attributed to:
- The addition of seven new schools with its concomitant fixed operational
expenses.
- Expansion of the head office in terms of information systems and human
resources capabilities to accommodate planned future growth and expansion.
- Additional transaction costs incurred for the securing of new school sites and
acquisitions.
In so doing, the foundation and infrastructure has been laid for the envisaged
growth going forward.
It is pleasing to note that the five main campuses that were operational at or
before 2010 saw an increase of 41% in EBITDA over the past year.
Curro made a headline loss of R7,5 million for the year ended 31 December 2011,
compared to a R5,2 million profit in the previous year. In addition to the
abovementioned reasons this was mainly as a result of the interest brought about
by the debt incurred through the aggressive capital expansion over the past two
years as well as an increase in depreciation.
Dividends
No dividend was declared for the period under review. For the comparative period
a capitalisation dividend of 1.3 cents per share was paid.
Established schools provide for sound cash generation. Curro will for the
foreseeable future use all cash generated to expand existing and establish new
campuses. In time a point will be reached where the operational cash generated
will exceed capital requirements. Curro will then commence with dividend
payments.
Prospects
The potential of the private schools market and the rapidly increasing demand
for private education bode well for Curro`s growth strategy. The Curro brand
continues to entrench itself by offering a value for money private education.
Curro will therefore, in addition to adding capacity to existing schools,
continue to aggressively expand its network of schools across South Africa. This
will be capital intensive and costly over the short to medium term, but the
board and management are confident about the long term return that this strategy
will bring about.
Any reference to future financial performance included in this announcement has
not been reviewed or reported on by the company`s auditors.
On behalf of the Board
JA le Roux CR van der Merwe B van der Linde
Chairman Chief Executive Officer Chief Financial Officer
27 February 2012
Directors
JA le Roux SC (Chairman)* CR van der Merwe (CEO) AJF Greyling (COO)
HG Louw B van der Linde (CFO) MC Mehl ** PJ Mouton * B Petersen **
M Vilakazi **
(* Non-executive; ** Independent non-executive)
Registered office
Suite 8, Monaco Square
14 Church Street
Durbanville
7550
Transfer secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street
Johannesburg
2001
PO Box 61051
Marshalltown
2107
Corporate advisor
PSG Capital
Designated advisor
Sasfin Capital
(a division of Sasfin Bank Limited)
These results are available at www.curro.co.za
Date: 28/02/2012 14:04:02 Supplied by www.sharenet.co.za
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