Wrap Text
Reviewed Provisional Results For The Year Ended 31 December 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")
REVIEWED PROVISIONAL RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2013
Learners increased by 69%
Revenue increased by 80%
EBITDA increased by 114%
PAT increased by 145%
HEPS increased by 87%
Condensed consolidated statement of comprehensive income
Reviewed Audited
Percentage 31 Dec 2013 31 Dec 2012
increase R'000 R'000
Revenue* 80% 659 128 365 749
Operating expenses (545 460) (312 535)
Earnings before interest, taxation, depreciation and
amortisation (EBITDA) 114% 113 668 53 214
– Schools 154 988 78 870
– Head office (41 320) (25 656)
Depreciation and amortisation (36 966) (17 848)
Earnings before interest and taxation (EBIT) 117% 76 702 35 366
Investment income 3 802 1 502
Income from equity accounted investments 1 000 –
Finance costs (26 199) (16 618)
Profit before taxation 173% 55 305 20 250
Taxation (15 584) (5 573)
Profit for the year 171% 39 721 14 677
Other comprehensive income:
Net fair value loss on cash flow hedge (489) –
Total comprehensive income 167% 39 232 14 677
Profit attributable to:
Owners of the parent 145% 37 049 15 104
Non-controlling interest 2 672 (427)
39 721 14 677
Total comprehensive income attributable to:
Owners of the parent 36 560 15 104
Non-controlling interest 2 672 (427)
39 232 14 677
Reconciliation of headline earnings
Earnings attributable to owners of the parent 37 049 15 104
Adjusted for:
Profit on disposal of property, plant and equipment (360) (125)
Taxation effect thereon 101 35
Headline earnings 145% 36 790 15 014
EBITDA margin 17% 15%
EBITDA margin for schools 25% 23%
Earnings per share (cents)
– Basic 86% 13.2 7.1
– Diluted 87% 13.1 7.0
Headline earnings per share (cents)
– Basic 87% 13.1 7.0
– Diluted 85% 13.0 7.0
Number of shares in issue (millions)
– Basic 294.8 240.4
– Diluted 300.6 245.7
Weighted average number of shares in issue (millions)
– Basic 281.2 213.0
– Diluted 283.6 215.5
Note:
* A reallocation of R9.8 million was done between revenue and other income to align prior year disclosure with current year disclosure
Condensed consolidated statement of financial position
Reviewed Audited
31 Dec 2013 31 Dec 2012
R'000 R'000
ASSETS
Non-current assets 2 516 174 1 426 179
Property, plant and equipment 2 131 811 1 209 758
Goodwill 271 748 148 861
Intangible assets 97 607 67 560
Investment in and loans to associates 12 680 –
Other loans 2 328 –
Current assets 117 573 57 520
Inventories 6 817 –
Current tax receivable 1 592 1 288
Trade and other receivables 30 231 27 728
Cash and cash equivalents 78 933 28 504
Total assets 2 633 747 1 483 699
EQUITY AND LIABILITIES
EQUITY
Equity attributable to equity holders of parent 1 560 199 861 211
Share capital 1 500 671 843 710
Reserves 7 310 4 065
Retained income 52 218 13 436
Non-controlling interest 3 180 507
Total equity 1 563 379 861 718
LIABILITIES
Non-current liabilities 874 426 320 572
Loans and other financial liabilities 755 145 236 243
Deferred tax 119 281 84 329
Current liabilities 195 942 301 409
Loans from related parties – 5 033
Loans and other financial liabilities 69 885 125 275
Current tax payable 1 173 2 216
Trade and other payables 48 439 21 285
Prepaid school fees and deposits 61 131 36 400
Acquisition payables 15 314 36 660
Bank overdraft – 74 540
Total liabilities 1 070 368 621 981
Total equity and liabilities 2 633 747 1 483 699
Net asset value per share (cents) 529.2 358.2
Condensed consolidated statement of cash flows
Reviewed Audited
Percentage 31 Dec 2013 31 Dec 2012
increase R'000 R'000
Net cash generated from operating activities 88% 105 574 56 165
Net cash utilised in investing activities (1 086 976) (726 907)
Net cash from financing activities 1 106 371 614 869
Cash and cash equivalents movement for the year 124 969 (55 873)
Cash and cash equivalents at the beginning of the year (46 036) 9 837
Cash and cash equivalents at the end of the year* 78 933 (46 036)
* Consists of:
– Cash and cash equivalents 78 933 28 504
– Bank overdraft – (74 540)
78 933 (46 036)
Condensed consolidated statement of changes in equity
Reviewed Audited
31 Dec 2013 31 Dec 2012
R'000 R'000
Balance at the beginning of the year 861 718 369 774
Total comprehensive income for the year 39 232 14 677
Issue of shares 666 405 475 632
Share issue costs (9 443) (1 710)
Recognition of share-based payments 5 467 3 345
Balance at the end of the year 1 563 379 861 718
Notes to the financial statements
1. Statement of compliance
The condensed consolidated financial information for the year ended 31 December 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. The report has been
prepared using accounting policies that comply with IFRS which are consistent in all material
respects with those applied in the financial statements for the year ended 31 December
2012. The reviewed provisional results have been prepared by DN Hartshorne, CA (SA) and
supervised by the Chief Financial Officer, B van der Linde, CA (SA) CFA.
2. Review conclusion
The condensed consolidated financial information for the year ended 31 December 2013
has been independently reviewed by the Group's auditor, 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 conclusion 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
Group's auditors.
The auditor's 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 auditor's work they should obtain a copy of that
report together with the accompanying financial information from the registered office of
the Company.
3. 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 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 shares 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
Effective 1 January 2014, the Group acquired the business operations and properties of
Grantleigh, an independent school situated on the north coast of Kwazulu-Natal, for a
consideration of R30 million.
Other key ratios
2011 2012 2013 2014*
Number of schools 12 22 26 31
Number of learners 5 777 12 473 21 027 26 463
Learners per school 463 567 809 854
Staff 654 1 630 2 472 2 829
Teachers 446 1 151 1 283 1 304
Learner/teacher ratio 12 11 16 20
Building size (m2) 75 000 169 024 261 004 264 441
Land size (ha) 107 153 188 223
Capital investment (Rm) 328 782 1 076
– Current campuses 80 223 602
– New campuses 175 237 242
– Acquisitions 73 322 232
* As at 31 January 2014
The tables below illustrate the J-Curve effect from newly established schools to more mature
schools.
For the year ended 31 December 2012
% of eventual Number of Learner EBITDA* EBITDA
capacity schools numbers R'000 margin
0-25 5 1 316 (6 234) (20%)
25-50 6 3 107 9 510 12%
50-75 5 3 590 32 465 27%
75-100 6 4 460 43 129 35%
22 12 473 78 870 23%
For the year ended 31 December 2013
% of eventual Number of Learner EBITDA* EBITDA
capacity schools numbers R'000 margin
0-25 7 2 668 (2 653) (4%)
25-50 6 4 017 24 094 21%
50-75 8 6 119 43 553 21%
75-100 5 8 223 89 994 38%
26 21 027 154 988 25%
The tables below illustrate the J-Curve effect from newly established schools to more mature
schools per school brand.
For the year ended 31 December 2012
Number of Learner EBITDA* EBITDA
Brands schools numbers R'000 margin
Curro** 19 11 072 72 900 20%
Meridian 3 1 401 5 970 35%
22 12 473 78 870 23%
For the year ended 31 December 2013
Number of Learner EBITDA* EBITDA
Brands schools numbers R'000 margin
Curro** 22 14 638 120 733 22%
Meridian 4 6 389 34 255 32%
26 21 027 154 988 25%
The tables below illustrate the J-Curve effect from newly established schools to more mature
schools per school origin.
For the year ended 31 December 2012
Number of Learner EBITDA* EBITDA
Origin schools numbers R'000 margin
Acquired 10 5 125 54 744 35%
Developed 12 7 348 24 126 12%
22 12 473 78 870 23%
For the year ended 31 December 2013
Number of Learner EBITDA* EBITDA
Origin schools numbers R'000 margin
Acquired 10 10 300 103 044 35%
Developed 16 10 727 51 944 16%
26 21 027 154 988 25%
Note:
* EBITDA at school level (excluding net head office costs and teacher college results)
** Curro schools incorporating Select schools and Curro Castles
Commentary
Curro has become the largest for profit independent school group in South Africa.
It has 31 campuses accommodating 27 263 learners including the teachers college accommodating 800 students.
Curro has achieved this through:
- Good academic results combined with excellence in sport and cultural activities;
- Support from its clients for the value for money offering;
- Dedication from its teachers to provide a quality service; and
- Capital from its shareholders and funders to develop and acquire schools.
Curro serves clients in 3 segments
Model Average monthly
school fees
Curro schools incorporating Smaller class sizes (20-25 learners) with a variety of subject Primary school R2 600
Select schools choices and extra mural activities. High school R3 700
Meridian schools Larger class sizes (30-50 learners) with a selection of key subjects R1 400
and an academic focus. Boarding facilities at most of the campuses.
Curro Castles Full day care facilities incorporating a structured cognitive R2 550
development programme for children from 3 months to 4 years.
These schools are augmented by the Embury Institute for Teacher Education. The Institute also offers short course
training to teachers in the public and private sectors.
Academic results
IEB NSC
Number of learners 380 632
Pass rate 100% 92%
University exemption 79% 56%
Average number of A's per leaner 1.1 0.6
Average 65% 56%
Average > 60% 68% 49%
Maths (taken and average) 56%/62% 49%/48%
Through the Curro Centre for Educational Excellence, we support, train and develop our teachers to ensure that they stay
abreast of best practice regarding content and methodology. We also monitor learner performance at the level of grades 3,
6 and 9 to ensure that we can intervene where it may be needed. With the Embury Institute for Teacher Education, we also
drive a research agenda which guides our strategic approach to in-service as well as pre-service teacher education.
Develop and acquire
During 2013, in addition to expansion at existing campuses, Curro developed two new Curro schools in Ballito (KwaZulu-
Natal) and Port Elizabeth (Eastern Cape), one new Meridian school in Karino (Nelspruit), one additional Meridian campus
in Polokwane and a new Curro Castle in George (Western Cape).
Curro has also acquired the following schools and teacher training centre:
- Embury Institute for Teacher Education with effect from 1 January 2013;
- Northern Academy — a school with 4500 learners with effect from 1 April 2013; and
- Grantleigh — a school with approximately 700 learners with effect from January 2014.
For the 2014 year, Curro aims to develop 10 new Curro schools and there will
also be expansion projects at approximately 7 existing campuses across the group.
To ensure a constant supply of developable sites for schools after 2014, Curro is looking to land-bank approximately
15 sites during 2014.
Results
Revenue increased by 80% to R659 million and EBITDA 114% to R114 million for the year ended 31 December 2013. This
was due to organic growth in existing schools as well as the acquisition of profitable businesses.
The increasing occupation rates at our schools meant that the EBITDA margin has increased from 15% to 17% for this
financial year.
Balance sheet and funding
During 2013 Curro invested more than R1 billion for the development, expansion and acquisition of schools.
Apart from R106 million in cash generated from operating activities, additional funding was also obtained from the
following sources:
- A R606 million rights issue;
- R397 million of available funding of which R306 million has been drawn down, from the Schools and Education Impact Investment
Fund of South Africa, ring-fenced for the Meridian schools;
- R150 million in 15-year funding from the Development Bank of South Africa;
- R150 million in 5-year bonds through a Domestic Medium Term Note Programme. The offer was 8 times oversubscribed; and
- A R250 million 18-month revolving credit facility. At year end, R130 million was drawn on this facility.
For the 2014 year, Curro will
- Raise up to R1 billion in bond and/or long term bank funding; and
- Raise R589 million through a 1 for 10 shares rights issue at R20.00 per share, which will be underwritten and completed by
June 2014. Shareholders are referred to the detailed rights issue declaration announcement released simultaneously
with this results announcement.
Dividend
No dividend has been declared for the period under review.
Changes to the Board of Directors and Company Secretary
Dr SWF Muthwa was appointed as independent non-executive director effective 1 May 2013.
Mr AJF Greyling resigned as Company Secretary effective 1 October 2013.
Ms R van Rensburg was appointed Company Secretary effective 1 October 2013.
Prospects
Curro remains well on track to achieve its stated target of 80 schools by 2020.
On behalf of the Board
SL Botha CR van der Merwe
Chairman CEO
18 February 2014
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")
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**, SWF Muthwa**
* Non-executive, ** Independent non-executive
Registered office: 38 Oxford Street, Durbanville, 7550
Transfer secretaries: Computershare Investor Services (Pty) Ltd
70 Marshall Street, Johannesburg, 2001| PO Box 61051, Marshalltown, 2107
Corporate advisor and sponsor: PSG Capital
These results are available at www.curro.co.za
Date: 18/02/2014 08:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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