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Unaudited interim results for the six months ended 30 June 2013
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")
UNAUDITED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2013
- Revenue increased by 91% to R309 million
- EBITDA increased by 178% to R51 million
- Learners increased by 76% to 21 908
Condensed consolidated statement of comprehensive income
Unaudited Unaudited Audited
30 Jun 13 30 Jun 12 31 Dec 12
6 months 6 months 12 months
R'000 R'000 R'000
Revenue 308 766 161 303 355 886
Other income 6 874 2 123 9 863
Operating expenses (264 357) (144 957) (312 535)
Earnings before interest, taxation, depreciation
and amortisation (EBITDA) 51 283 18 469 53 214
Schools 75 374 30 803 78 870
Head office (24 091) (12 334) (25 656)
Depreciation and amortisation (15 888) (6 053) (17 848)
Earnings before interest and taxation (EBIT) 35 395 12 416 35 366
Investment revenue 1 682 549 1 502
Finance costs (16 665) (17 107) (16 618)
Profit/(loss) before taxation 20 412 (4 142) 20 250
Taxation (5 692) 1 160 (5 573)
Profit/(loss) for the period 14 720 (2 982) 14 677
Other comprehensive income
Total comprehensive income/(loss) 14 720 (2 982) 14 677
Profit/(loss) attributable to:
Owners of the parent 14 135 (2 982) 15 104
Non-controlling interest 585 (427)
14 720 (2 982) 14 677
EBITDA margin 17% 11% 15%
Earnings/(loss) per share (cents)
Basic 5.3 (1.8) 7.1
Diluted 5.3 (1.8) 7.0
Reconciliation of headline earnings/(loss)
Earnings/(loss) attributable to owners of the parent 14 135 (2 982) 15 104
Adjusted for:
Profit on disposal of property, plant and equipment (181) (145) (125)
Taxation effect thereon 51 41 35
Headline earnings/(loss) 14 005 (3 086) 15 014
Headline earnings/(loss) per share (cents)
Basic 5.3 (1.9) 7.0
Diluted 5.2 (1.9) 7.0
Number of shares in issue (millions)
Basic number of shares in issue 293.7 161.2 240.4
Diluted number of shares in issue 298.9 165.5 245.7
Weighted average number of shares
in issue (millions)
Basic weighted average number of shares in issue 265.8 161.2 213.0
Diluted weighted average number of shares in issue 268.7 165.5 215.5
Condensed consolidated statement of cash flows
Unaudited Unaudited Audited
30 Jun 13 30 Jun 12 31 Dec 12
6 months 6 months 12 months
R'000 R'000 R'000
Net cash generated from operating activities 31 097 8 421 56 165
Net cash utilised in investing activities (495 746) (404 459) (726 907)
Net cash from financing activities 581 724 380 970 614 869
Cash and cash equivalents movement for the period 117 075 (15 068) (55 873)
Cash and cash equivalents at the beginning of
the period (46 036) 9 837 9 837
Cash and cash equivalents at the end of the period* 71 039 (5 231) (46 036)
* Consists of:
Cash and cash equivalents 71 039 34 819 28 504
Bank overdraft (40 050) (74 540)
71 039 (5 231) (46 036)
Condensed consolidated statement of financial position
Unaudited Unaudited Audited
30 Jun 13 30 Jun 12 31 Dec 12
6 months 6 months 12 months
R'000 R'000 R'000
Assets
Non-current assets 1 932 840 1 029 783 1 426 179
Property, plant and equipment 1 570 698 859 927 1 209 758
Goodwill 270 004 132 832 148 861
Intangible assets 92 138 37 024 67 560
Current assets 100 073 48 159 57 520
Inventories 2 929
Current tax receivable 2 009 305 1 288
Trade and other receivables 24 096 13 035 27 728
Cash and cash equivalents 71 039 34 819 28 504
Total assets 2 032 913 1 077 942 1 483 699
EQUITY AND LIABILITIES
Equity
Equity attributable to equity holders of parent 1 529 633 368 190 861 211
Share capital 1 495 645 369 787 843 710
Share-based payment reserve 6 416 2 119 4 065
Retained income/(accumulated loss) 27 572 (3 716) 13 436
Non-controlling interest 1 091 507
Total equity 1 530 724 368 190 861 718
Liabilities
Non-current liabilities 394 500 196 537 320 572
Loans and other financial liabilities 284 156 158 569 236 243
Deferred tax 110 344 37 968 84 329
Current liabilities 107 689 513 215 301 409
Loans from related parties 196 040 5 033
Loans and other financial liabilities 14 280 4 425 125 275
Current tax payable 1 280 994 2 216
Trade and other payables 28 979 16 504 21 285
Prepaid school fees and deposits 57 150 35 259 36 400
Acquisition payables 6 000 219 943 36 660
Bank overdraft 40 050 74 540
Total liabilities 502 189 709 752 621 981
Total equity and liabilities 2 032 913 1 077 942 1 483 699
Net asset value per share (cents) 520.5 228.4 358.2
Condensed consolidated statement of changes in equity
Unaudited Unaudited Audited
30 Jun 13 30 Jun 12 31 Dec 12
6 months 6 months 12 months
R'000 R'000 R'000
Balance at the beginning of the period 861 718 369 774 369 774
Total comprehensive income/(loss) 14 720 (2 982) 14 677
Issue of shares 661 198 475 632
Share issue costs (9 263) (1 710)
Recognition of share-based payments 2 351 1 398 3 345
Balance at the end of the period 1 530 724 368 190 861 718
Notes to the financial statements
1. Statement of compliance
The consolidated interim financial information for the six months ended 30 June 2013
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, the Listing
Requirements of the JSE 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 in all material aspects with those applied in the financial
statements for the year ended 31 December 2012. The unaudited interim results have
been prepared by DN Hartshorne, CA(SA) under the supervision of the Chief Financial
Officer, B van der Linde, CA(SA) CFA.
2. Basis of preparation
The condensed interim financial statements are prepared in thousands of South
African Rand (R'000).
3. Accounting policies
The accounting policies adopted in the preparation of the condensed interim
financial information are consistent with those of the annual financial statements
for the year ended 31 December 2012. For a full list of standards and interpretations
which have been adopted, we refer you to our 31 December 2012 annual
financial statements.
4. Issued capital
Effective 10 May 2013, 50.5 million shares were issued through a 21 for 100 rights
issue at R12.00 per share. On 29 May 2013, 2.8 million shares were issued through a
specific issue at R19.75 per share.
5. Operating Segments
Due to all of the services being education-related and within South Africa, the Group
has only one reportable segment. All historical information presented represents the
financial information of this single segment.
6. Events after the reporting period
There are no significant events after the reporting period.
Other key ratios
31 Dec 31 Dec 30 Jun
2011 2012 2013
Number of campuses 12 22 26
Learners per campus 463 567 843
Staff 654 1 630 2 414
Educators 446 1 151 1 283
Learner/educator ratios 12 11 17
Building size (m²) 75 000 169 024 221 346
Land size (ha) 107 153 188
Capital investment (Rm) 328 782 500
Current campuses 80 223 232
New campuses 175 237 65
Acquisitions 73 322 203
The table below illustrates the J-Curve effect from newly established schools to more
mature schools.
Interim period ended 30 June 2012
Number % of eventual Learner EBITDA EBITDA
of schools capacity numbers R'000* margin
5 025 1 313 (3 099) (23%)
8 2550 4 071 5 047 12%
8 5075 5 575 23 757 28%
1 75100 1 240 5 097 26%
22 12 199 30 803 19%
Interim period ended 30 June 2013
Number % of eventual Learner EBITDA EBITDA
of schools capacity numbers R'000* margin
3 025 750 (1 120) (9%)
11 2550 6 913 13 936 14%
6 5075 5 396 23 182 25%
6 75100 8 849 39 377 36%
26 21 908 75 374 24%
Note:
* EBITDA at school level (excluding head office costs).
Commentary
Overview
Curro celebrated its 15th birthday in July. The school opened with 28 learners on that winter's morning
in 1998 and today has 21 908 learners. The following components remain key focus areas to ensure
Curro's continued success in the future:
- Support from our clients
- Efficient and timeous development of our campuses
- Debt and equity funding
- Product and people development
Curro's vision of 80@20, meaning 80 schools by 2020, is achievable.
During the period under review, the Group:
- Acquired the Embury Institute for Teacher Education for R53 million. This Durban-based teachers
training college will be expanded to Gauteng and the Western Cape and will work with Curro schools
to educate and train educators for Curro, other private schools and the public sector at large.
- Took ownership of the 4 500-learner Northern Academy Campus with effect from 1 April 2013.
This school has provided intellectual capital that will form the basis for the development of the
Meridian schools.
- Raised R605 million through a rights issue.
Results
On a comparative basis, Curro's revenue increased by 91% to R309 million and EBITDA increased by 178%
to R51 million for the period ended 30 June 2013. This is mainly due to the significant increase in
learner numbers as a result of both organic and acquisitive growth.
A headline profit of R14 million was recorded for the six-month period compared to a headline
loss of R3 million in the previous period.
Headline earnings per share of 5.3 cents were achieved compared to a headline loss per
share of 1.9 cents in the previous period.
Balance sheet and funding
The rights issue has significantly strengthened the balance sheet of the Company. Over the short
term, all the legacy funding at different terms and covenants have been repaid save for R60 million in
moveable asset finance. This has now created a base to raise funding at more favourable terms. This
will be balanced between a Domestic Medium-Term Note (DMTN) programme and term and facility
funding from banks. In this regard Curro has obtained a BBBcredit rating. The only other outstanding
debt as at 30 June 2013 was in respect of the Meridian business.
Meridian
Meridian is a ring-fenced structure of which Curro owns 65% and The Schools and Education Investment
Impact Fund of South Africa owns 35%. The total initial extent of this partnership is R440 million. As at
30 June 2013, R263 million has been drawn down.
Developments
Curro will be investing more than R500 million in the expansion and development of new campuses
this financial year. New Curro campuses are being built in Ballito and Port Elizabeth. For the Meridian
business, a new campus is being built in Karino (Nelspruit), as well as an additional campus in
Polokwane. The first new Curro Castle is under development in George.
Dividends
No dividend has been declared for the period under review. As soon as cash generated exceeds
capital requirements, dividends will be paid.
Prospects
The 2014 enrolment numbers are looking promising. Management will ensure the delivery of quality
education in the classrooms, the timeous completion of expansion projects and the driving of
efficiencies in all areas of the business.
On behalf of the Board
SL Botha CR van der Merwe
Chairman CEO
Directors: SL Botha* (Chairman), CR van der Merwe (CEO), AJF Greyling (COO), B van der Linde (CFO), HG Louw (CIO), PJ Mouton*, B Petersen**, ZL Combi**, S Muthwa**,
(* Non-executive, ** Independent Non-executive)
Registered office: 38 Oxford Street, Durbanville, 7550
Transfer secretaries: Computershare Investor Services (Proprietary) Limited, 70 Marshall Street, Johannesburg, 2001| PO Box 61051, Marshalltown, 2107
Corporate advisor and sponsor: PSG Capital, 1st Floor, Ou Kollege, 35 Kerk Street, Stellenbosch, 7600
These results are available at www.curro.co.za
Date: 20/08/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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