Wrap Text
Reviewed results for the year ended 31 December 2012
Curro Holdings Limited
Incorporated in the Republic of South Africa
Registration Number 1998/025801/06
JSE Share Code: COH
ISIN: ZAE000156253
("Curro" or "the Company" or "the Group")
Reviewed results for the year ended 31 December 2012
Revenue increased by 114%
EBITDA increased by 410%
Learners increased by 124%
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
31-Dec-12 31-Dec-11
R'000 R'000
Revenue 355 886 166 298
Other income 9 863 4 036
Operating expenses (312 269) (159 853)
Earnings before interest, taxation,
depreciation and amortisation (EBITDA) 53 480 10 481
- Schools 78 870 26 558
- Head office (25 390) (16 077)
Depreciation and amortisation (18 113) (6 704)
Earnings before interest and taxation (EBIT) 35 367 3 777
Investment revenue 1 501 1 437
Finance costs (16 618) (14 385)
Profit/(loss) before taxation 20 250 (9 171)
Taxation (5 573) 1 767
Profit/(loss) for the year 14 677 (7 404)
Other comprehensive income - -
Total comprehensive income/(loss) 14 677 (7 404)
Profit/(loss) attributable to:
Owners of the parent 15 104 (7 404)
Non-controlling interest (427) -
14 677 (7 404)
EBITDA Margin 15% 6%
Earnings/(loss) per share (cents)
Basic 7.1 (5.4)
Diluted 7.0 (5.5)
Reconciliation of headline earnings/(loss)
Earnings/(loss) attributable to owners of parent 15 104 (7 404)
Adjusted for:
Profit on disposal of property, plant and equipment (125) (105)
Tax effect thereon 35 29
Headline earnings/(loss) 15 014 (7 480)
Headline earnings/(loss) per share (cents)
Basic 7.0 (5.4)
Diluted 7.0 (5.4)
Number of shares (millions)
Basic number of shares in issue 240.4 161.2
Diluted number of shares in issue 245.7 165.5
Weighted average number of shares (millions)
Basic weighted average number of shares in issue 213.0 137.0
Diluted weighted average number of shares in issue 215.5 138.0
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
31-Dec-12 31-Dec-11
R'000 R'000
ASSETS
Non-current assets 1 426 177 574 661
Property, plant and equipment 1 209 758 529 938
Goodwill 148 861 39 283
Intangible assets 67 558 5 440
Current assets 57 519 22 751
Current tax receivable 1 288 78
Trade and other receivables 26 727 12 836
Cash and cash equivalents 29 504 9 837
Total assets 1 483 696 597 412
EQUITY AND LIABILITIES
EQUITY
Equity attributable to equity holders of parent 861 211 369 774
Share capital 843 710 369 788
Share based payment reserve 4 065 720
Retained income/(accumulated loss) 13 436 (734)
Non-controlling interest 507 -
Total equity 861 718 369 774
LIABILITIES
Non-current liabilities 323 861 132 609
Loans and other financial liabilities 239 228 122 416
Deferred tax 84 633 10 193
Current liabilities 298 117 95 029
Loans from related parties 5 033 38 686
Loans and other financial liabilities 122 290 12 298
Current tax payable 1 912 882
Trade and other payables 21 282 21 649
Prepaid school fees and deposits 36 400 21 514
Acquisition payables 36 660 -
Bank overdraft 74 540 -
Total liabilities 621 978 227 638
Total equity and liabilities 1 483 696 597 412
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reviewed Audited
31-Dec-12 31-Dec-11
R'000 R'000
Balance at the beginning of the year 369 774 57 689
Total comprehensive income/(loss) for the year 14 677 (7 404)
Issue of shares 475 632 322 543
Share issue costs (1 710) (3 774)
Recognition of share-based payment reserve 3 345 720
Balance at the end of the year 861 718 369 774
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Audited
31-Dec-12 31-Dec-11
R '000 R '000
Net cash generated from operating activities 57 240 11 494
Net cash utilised in investing activities (726 981) (327 719)
Net cash from financing activities 614 868 325 146
Cash and cash equivalents movement for the year (54 873) 8 921
Cash and cash equivalents at the beginning of the year 9 837 916
Cash and cash equivalents at the end of the year* (45 036) 9 837
* Consists of:
- Cash and cash equivalents 29 504 9 837
- Bank overdraft (74 540) -
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF COMPLIANCE
The condensed consolidated financial information has been prepared in accordance with the framework concepts and
the measurement and recognition requirements of International Financial Reporting Standards (IFRS),
the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by the Financial Reporting Standards Council, the information as required by IAS 34:
Interim Financial Reporting and the requirements of the Companies Act of South Africa as amended. The 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 2011. The condensed consolidated financial information was prepared
under the supervision of the chief financial officer, B van der Linde, CA(SA).
These condensed consolidated annual financial statements were approved by the board of directors on 21 February 2013.
2. REVIEW CONCLUSION
The condensed consolidated financial information for the year ended 31 December 2012 has been independently reviewed
by the Groups 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 Companys registered office. Any
reference to future financial performance included in this announcement, has not been reviewed or
reported on by the Companys auditors.
The auditors report does not necessarily cover all of the information contained in this announcement/financial report.
Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditors work
they should obtain a copy of that report together with the accompanying financial information from the registered office
of the company.
3. BASIS OF PREPARATION
The condensed consolidated statements are prepared in thousands of South African rand (R'000).
4. ACCOUNTING POLICIES
The accounting policies adopted in the preparation of the condensed consolidated financial information are
consistent with those of the annual financial statements for the year ended 31 December 2011. For a full list of standards
and interpretations which have been adopted, we refer you to our 31 December 2011 annual financial statements.
5. ISSUED CAPITAL
Effective 2 July 2012 79.2 million shares were issued through a 0.36 to 1 rights issue and a specific
issue of 21.4 million shares at R6.00 per share.
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. BUSINESS COMBINATIONS
Reviewed Audited
31-Dec-12 31-Dec-11
Fair value of assets acquired R'000 R'000
Purchase price 321 959 73 321
Property, plant and equipment 242 651 59 782
Intangible assets 62 971 4 399
Trade and other receivables 2 615 5 849
Cash and cash equivalents 20 483 5 743
Loans and other financial liabilities (24 989) (11 360)
Deferred tax (74 383) (15 587)
Trade and other payables (16 957) (6 580)
Goodwill 109 568 31 075
8. EVENTS AFTER THE REPORTING PERIOD
Effective April 2013, Curro through its 65% subsidiary Campus and Property Management Company (Pty) Ltd
will acquire the business operations and properties of Northern Academy for a cash consideration of R150 million.
LEARNER NUMBERS
Schools operating 2011 % change 2012 % change 2013*
2009 2 581 7 2 773 7 2 955
2010 969 118 2 109 31 2 761
2011 2 007 28 2 578 26 3 240
2012 5 013 6 5 309
2013 6 575
5 557 124 12 473 67 20 840
OTHER KEY RATIO'S
2011 2012 2013*
Number of campuses 12 22 26
Learners per campus 463 567 802
Staff 654 1 630 2 257
Educators 446 1 151 1 522
Learner/teacher ratio 12 11 14
Building size (m2) 75 000 169 924 185 024
Land size (ha) 107 153 159
Capital investment (Rm) 328 782 -
- Current campuses 80 223 -
- New campuses 175 237 -
- Acquisitions 73 322 -
The table below illustrates the J-Curve effect from newly established schools to more mature schools.
Year ended 31 December 2011
Number of schools % of eventual Learner EBITDA** EBITDA
capacticty numbers margin
1 75%-100% 1 175 9 228 26%
3 50%-75% 2 461 17 871 23%
4 25%-50% 1 269 4 305 11%
4 0%-25% 652 (4 846) (29%)
12 5 557 26 558 16%
Year ended 31 December 2012
Number of schools % of eventual Learner EBITDA** EBITDA
capacity numbers margin
5 75% - 100% 4 160 41 630 36%
6 50% - 75% 3 890 33 964 27%
5 25% - 50% 2 728 9 999 15%
6 0% - 25% 1 695 (6 723) (18%)
22 12 473 78 870 23%
Notes:
* As at 12 February 2013
** EBITDA at school level (excluding head office costs and enrolment fees for new schools)
COMMENTARY
Overview
Curro listed on the Alt-X just more than 18 months ago. On listing, the Company had 5 557 learners
in 12 schools. In the pre-listing statement the Company envisaged that by the end of 2013 it would
have 17 schools with 9 594 learners. To date the Group has grown to 26 schools and 20 840 learners
across 7 provinces.
This growth can be attributed to:
- the significant demand for quality private schools at affordable school fees;
- the aggressive expansion of Curro schools across the various brands being Curro (traditional),
Meridian, Select and Curro Castles (nursery schools);
- the belief in the product and support of shareholders that have since listing contributed
almost R800 million in equity to pursue this accelerated vision;
- the partnership between Curro and OMIGSA whereby the Meridian model will be rapidly expanded
with R440 million in funding.
In the year under review the Group has:
- invested R223 million in the expansion of capacity at the existing campuses;
- developed 4 new Curro campuses at Bloemfontein, Century City (Cape Town), Krugerdorp and
Thatchfield (Centurion, Gauteng) as well as a new Meridian campus at Pinehurst (Kraaifontein,
Cape Town) for a total investment of R237 million;
- Acquired Woodhill College (Pretoria East), Embury College and Hillcrest Christian Academy
(both in Durban) as well as 2 nursery schools being Rosen Castle in Durbanville and BidiBidi in
Krugersdorp and three Meridian Colleges in Pretoria, Rustenburg and Polokwane for a total
consideration of R322 million.
Results
On a comparative basis, Curro's revenue increased by 114% to R356 million for the year ended
31 December 2012. This is mainly due to the significant increase in learner numbers.
EBITDA amounted to R53 million, an increase of 410%. This is mainly as a result of capacity being
filled at existing schools without a proportionate increase in costs, as well as the inclusion of
profit making schools from acquisitions for a portion of the year. A headline profit of R15 million
was recorded for the 12 month period compared to a headline loss of R7 million in the previous
year.
Headline earnings per share of 7.0 cents and basic earnings per share of 7.1 cents were realised
compared to a headline loss per share and basic loss per share of 5,4 cents in the previous
year.
Capital expansion, funding and rights issue
The expected growth in learner numbers at existing campuses alone justifies another R300m capital
investment in this year. In addition 3 new Curro campuses, 4 new Meridian campuses and 2 new Curro
Castles will be established. Curro has also identified 5 sites that will be purchased ("banked") for
construction in 2014.
The Development Bank of South Africa has approved R150m in funding. In addition, Curro has embarked
on the listing of a Domestic Medium Term Note Program that will provide the Company with capital
for expansion over the long term. However, over the short term, as a result of these opportunities in
the market, Curro will embark on a R606 million underwritten rights issue on a 21 rights for every 100
shares held at R12 per share. Shareholders are referred to the detailed rights offer declaration
released simultaneously with this results announcement.
Dividends
No dividend has been declared for the period under review. As soon as cash generated exceeds capital
requirements, dividends will be paid.
Prospects
Curro's management is committed to expanding the business by means of organic and acquisitive growth in
years to come, while driving efficiencies in all areas of operation.
Board of directors
As was announced in July 2012, Adv Fef le Roux SC will retire as chairman and board member at the end
of March 2013.The Company is grateful for the invaluable role that he has played in its history, from
2005 as a director and since 2009, when PSG acquired 50% of the shareholding, also as chairman. In his
capacity as chairman and with the benefit of his legal background Fef was instrumental in guiding the
company through the period leading up to and implementing the listing process in June 2011. The Company
is however privileged to be lead by incoming chairperson Santie Botha and is looking forward to her
guidance in future.
On behalf of the board
Fef le Roux Chris van der Merwe
Chairman CEO
21 February 2013
DIRECTORS: JA le Roux SC (Chairman)* CR van der Merwe (CEO) SL Botha** ZL Combi** AJF Greyling
(COO) HG Louw (CIO) PJ Mouton* B Petersen** B van der Linde (CFO)
(*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 AND SPONSOR: PSG Capital
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