Wrap Text
Unaudited interim results for the 6 months ended 30 June 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")
UNAUDITED INTERIM RESULTS
For the 6 months ended 30 June 2014
Learners Revenue EBITDA PAT HEPS
up 32% up 54% up 89% up 87% up 76%
to 28 899 to R487m to R97m to R27m to 9.0 cents
Condensed consolidated statement of comprehensive income
Unaudited Unaudited Audited
30 Jun 2014 30 Jun 2013 31 Dec 2013
Percentage 6 months 6 months 12 months
change R million R million R million
Revenue 54% 487.2 315.6 659.1
Operating expenses 48% (390.5) (264.4) (545.5)
Earnings before interest, taxation,
depreciation and amortisation (EBITDA) 89% 96.7 51.3 113.7
– Schools 86% 140.2 75.4 155.0
– Head office 81% (43.5) (24.1) (41.3)
Depreciation and amortisation 75% (27.9) (15.9) (37.0)
Earnings before interest and taxation
(EBIT) 94% 68.8 35.4 76.7
Investment revenue 141% 4.1 1.7 3.8
Share of profits (loss) of associates (0.6) — 1.0
Finance costs 107% (34.5) (16.7) (26.2)
Profit before taxation 85% 37.8 20.4 55.3
Taxation 81% (10.3) (5.7) (15.6)
Profit for the period (PAT) 87% 27.5 14.7 39.7
Other comprehensive income:
Net fair value profit (loss) on cash flow hedge 0.2 — (0.5)
Total comprehensive income 88% 27.7 14.7 39.2
Profit attributable to:
Owners of the parent 93% 27.3 14.1 37.0
Non-controlling interest 0.2 0.6 2.7
87% 27.5 14.7 39.7
Total comprehensive income
attributable to:
Owners of the parent 95% 27.5 14.1 36.6
Non-controlling interest 0.2 0.6 2.7
88% 27.7 14.7 39.2
Reconciliation of headline earnings:
Earnings attributable to owners of the
parent 27.3 14.1 37.0
Adjusted for:
Profit on disposal of property, plant and
equipment — (0.2) (0.4)
Taxation effect thereon — 0.1 0.1
Headline earnings 95% 27.3 14.0 36.8
EBITDA margin 20% 17% 17%
EBITDA margin for schools 29% 24% 25%
Earnings per share (cents)
– Basic 73% 9.0 5.2 12.9
– Diluted 75% 8.9 5.1 12.8
Headline earnings per share (cents)
– Basic 76% 9.0 5.1 12.8
– Diluted 75% 8.9 5.1 12.7
Number of shares in issue (millions)
– Basic 324.3 293.7 294.8
– Diluted 327.4 298.9 300.6
Weighted average number of shares in
issue (millions)
– Basic 303.8 272.0 287.8
– Diluted 306.9 274.9 290.2
Condensed consolidated statement of cash flows
Unaudited Unaudited Audited
30 Jun 2014 30 Jun 2013 31 Dec 2013
Percentage 6 months 6 months 12 months
change R million R million R million
Net cash generated from operating
activities 179% 86.8 31.1 105.6
Net cash utilised in investing activities (34%) (327.3) (495.7) (1 087.0)
Net cash from financing activities 12% 650.8 581.7 1 106.4
Cash and cash equivalents movement
for the period 410.3 117.1 125.0
Cash and cash equivalents at the
beginning of the period 78.9 (46.0) (46.0)
Cash and cash equivalents at the end
of the period 489.2 71.0 78.9
Condensed consolidated statement of financial position
Unaudited Unaudited Audited
30 Jun 2014 30 Jun 2013 31 Dec 2013
6 months 6 months 12 months
R million R million R million
ASSETS
Non-current assets 2 916.6 1 932.8 2 516.2
Property, plant and equipment 2 454.1 1 570.7 2 131.8
Goodwill 330.6 270.0 271.7
Intangible assets 117.6 92.1 97.6
Investments in and loans to associates 12.3 – 12.7
Other loans 2.0 – 2.3
Current assets 523.0 100.1 117.6
Inventories 3.3 2.9 6.8
Current tax receivable 2.4 2.0 1.6
Trade and other receivables 28.1 24.1 30.2
Cash and cash equivalents 489.2 71.0 78.9
Total assets 3 439.6 2 032.9 2 633.7
EQUITY AND LIABILITIES
EQUITY
Equity attributable to equity holders
of parent 2 173.3 1 529.6 1 560.2
Share capital 2 083.7 1 495.6 1 500.7
Reserves 10.1 6.4 7.3
Retained income 79.5 27.6 52.2
Non-controlling interest 3.4 1.1 3.2
Total equity 2 176.7 1 530.7 1 563.4
LIABILITIES
Non-current liabilities 1 049.2 394.5 874.4
Loans and other financial liabilities 899.8 284.2 755.1
Deferred tax 149.4 110.3 119.3
Current liabilities 213.7 107.7 195.9
Loans and other financial liabilities 20.0 14.3 69.9
Current tax payable 2.7 1.3 1.2
Trade and other payables 67.8 29.0 48.4
Prepaid school fees and deposits 84.2 57.2 61.1
Acquisition payables 39.0 6.0 15.3
Total liabilities 1 262.9 502.2 1 070.4
Total equity and liabilities 3 439.6 2 032.9 2 633.7
Net asset value per share (cents) 670.1 520.5 529.2
Condensed consolidated statement of changes in equity
Unaudited Unaudited Audited
30 Jun 2014 30 Jun 2013 31 Dec 2013
6 months 6 months 12 months
R million R million R million
Balance at the beginning of the period 1 563.4 861.7 861.7
Total comprehensive income 27.7 14.7 39.2
Issue of shares 591.0 661.2 666.4
Share issue costs (8.0) (9.3) (9.4)
Recognition of share-based payments 2.6 2.4 5.5
Balance at the end of the period 2 176.7 1 530.7 1 563.4
Notes to the financial statements
1. Statement of compliance
The consolidated interim financial information for the six months ended 30 June 2014 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 Listings Requirements
of the JSE Ltd 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 respects with those applied in the financial statements for the year ended
31 December 2013. The unaudited interim results have been prepared by DN Hartshorne,
CA (SA) and supervised by the Chief Financial Officer, B van der Linde, CA (SA) CFA.
2. 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 2013. For a full list of standards and interpretations which have been adopted,
we refer you to our 31 December 2013 annual financial statements.
3. Issued capital
Effective 23 June 2014, 29.5 million shares were issued by way of an underwritten
renounceable rights offer at a subscription price of R20.00 per rights offer share, in the ratio
of 1 rights offer share for every 10 Curro ordinary shares.
4. 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.
5. Business combinations
Effective 1 January 2014, the group acquired the business operations and properties of
Grantleigh independent school for a consideration of R30 million.
Effective 2 June 2014, the group acquired 100% of the equity interest of Waterstone College
(Pty) Ltd for a consideration of R130 million.
6. Events after the reporting period
There are no significant events after the reporting period.
Other key ratios
31 Dec 2011 31 Dec 2012 31 Dec 2013 30 Jun 2014
Number of schools 12 22 26 32
Number of learners 5 777 12 473 21 908 28 899
Median number of learners
per school 481 567 759 834
Staff 654 1 630 2 387 2 932
Teachers 446 1 151 1 593 1 951
Learner/teacher ratio 13 11 14 15
Building size (m2) 75 000 169 024 261 004 277 593
Land size (ha) 107 153 188 255
Capital investment (Rm) 328 782 1 076 327
– Current campuses 80 223 602 160
– New campuses 175 237 242 37
– Acquisitions 73 322 232 130
The tables below illustrate the J-Curve effect from newly established schools to more mature schools.
For the 6 months ended 30 June 2013:
% of eventual Number Number EBITDA* EBITDA
capacity of schools of learners R million margin
0 – 25 3 750 (1.1) (9%)
25 – 50 11 6 913 13.9 14%
50 – 75 6 5 396 23.2 25%
75 – 100 6 8 849 39.4 36%
26 21 908 75.4 24%
For the 6 months ended 30 June 2014:
% of eventual Number Number EBITDA* EBITDA
capacity of schools of learners R million margin
0 – 25 7 1 748 (1.4) (5%)
25 – 50 7 5 888 23.0 28%
50 – 75 10 12 652 59.6 28%
75 – 100 8 8 611 59.0 36%
32 28 899 140.2 29%
The tables below illustrate the profitability of Curro and Meridian schools.
For the 6 months ended 30 June 2013:
Number Number EBITDA* EBITDA
Brand of schools of learners R million margin
Curro** 22 15 509 60.7 22%
Meridian 4 6 399 14.7 33%
26 21 908 75.4 24%
For the 6 months ended 30 June 2014:
Number Number EBITDA* EBITDA
Brand of schools of learners R million margin
Curro** 27 20 958 114.8 29%
Meridian 5 7 941 25.4 27%
32 28 899 140.2 29%
The tables below illustrate the profitability of acquired and developed schools.
For the 6 months ended 30 June 2013:
Number Number EBITDA* EBITDA
Origin of schools of learners R million margin
Acquired 10 11 443 52.5 33%
Developed 16 10 465 22.9 15%
26 21 908 75.4 24%
For the 6 months ended 30 June 2014:
Number Number EBITDA* EBITDA
Origin of schools of learners R million margin
Acquired 12 14 598 78.7 32%
Developed 20 14 301 61.5 26%
32 28 899 140.2 29%
Note:
* EBITDA at school level (excluding net head office costs and including teacher college results).
** Curro schools incorporating Select schools and Curro Castles.
Commentary
Education is one of the cornerstones of society, providing the primary strategic drive for the long-term socio-economic
development of South Africa. While government remains the predominant supplier, independent providers are playing an
increasingly important role in improving access to education in the country.
Curro develops, acquires, manages and supplies ancillary business services in the education sector.
Curro educates 28 899 learners. However, we still remain small in the wider education market in South Africa that has around
12.5 million learners. This serves as a source of inspiration to the group for growth in the years ahead.
Curro consists of 6 distinct lines of schools/businesses, each with its own characteristics:
School types Fees (Rand per month) Characteristics
Curro 2 000 – 4 200 Small class sizes: 20 – 25 learners; Academic and co-curricular
activities; single, dual and parallel medium schools; wide variety
of subject choices and co-curricular activities.
Select 3 400 – 6 200 Small class sizes: 20 – 25 learners; Acquired schools each with
own ethos; convenient location; superior facilities; broad subject
choices and co-curricular activities.
Curro Academy 1 500 – 2 000 Medium class sizes: 30 – 35 learners; Academic focus with
appropriate co-curricular activities.
Curro Castle 1 800 – 2 800 Ages 3 months to 5 years; Full day care; custom designed
cognitive development programme.
Meridian 1 000 – 1 500 Managed by Curro
Medium class sizes: 30 – 35 learners; Academic focus, with
relevant co-curricular activities.
Embury Institute for 2 500 – 3 000 (adjusted for Accredited Private Higher Education Institution;
Teacher Education comparative purposes) Short courses, diplomas and degrees.
Investment
In addition to its current 32 campuses in operation, Curro is in the process of developing the following campuses
during 2014:
- 4 Curro traditional campuses in Brackenfell (Western Cape), Kathu (Northern Cape), Lanseria (Gauteng) and
Secunda (Mpumalanga);
- 2 Meridian campuses through Campus and Property Management Company (Pty) Ltd, a subsidiary, in Cosmo
City (Gauteng) and Newcastle (KwaZulu-Natal);
- 2 Curro Academy campuses in Mahikeng (North-West) and Soshanguve (Gauteng);
3 Curro Castle campuses in Douglasdale, Waterfall (Gauteng) and Somerset West (Western Cape); and
- Land banking more than 20 sites for development beyond 2014.
Funding
For the year 2014, Curro will be investing approximately R1.5 billion in the expansion of existing facilities, land
banking, the development of new campuses and acquisitions.
Curro's balance sheet has been strengthened by the R589 million rights offer that was successfully concluded in
June 2014. In addition thereto, the following sources of funding were secured:
- R125 million in a 5-year bond issue; and
- R188 million in fixed term funding specific for the Meridian business.
Curro's corporate credit rating of BBB- has been confirmed. For the remainder of the year, Curro will be raising
further funding from either banks or the bond markets.
Curro is further exploring additional funding opportunities from development finance institutions for the furtherance
of the Curro Academy brand.
People
Curro has approximately 3 000 employees. People, and their development, are at the heart of our business. With
this in mind we:
- Deliver an enhanced curriculum to our learners. The national curriculum is supplemented with additional and
relevant material including a fully developed IT and Robotics curriculum, advanced mathematics, specially
developed literacy programmes and science and technology programmes relevant to the 21st century including
nano science, plastic materials, satellites (CANSat-project) and space weather;
- Provide extensive training to our employees, which, inter alia, include 3 conferences for executive heads every
year and an annual conference for teachers;
- Appoint leading educationalists at our schools;
- Enhance development through the extensive use of technology in the form of computers, data projectors,
interactive whiteboards, tablets and extensive access to the internet which enhances the sharing and delivering
of learning material, as well as general management.
Financial
For the period under review, revenue has increased by 54% from R315.6 million to R487.2 million. EBITDA has
increased by 89% from R51.3 million to R96.7 million. The EBITDA margin has increased from 17% to 20%.
Headline earnings have increased by 95% from R14.1 million to R27.3 million with earnings per share increasing by 73%
from 5.2 to 9.0 cents per share and headline earnings per share increasing by 76% from 5.1 to 9.0 cents per share.
Dividends
No dividends have been declared for the period under review.
Prospects
As a result of the proven demand for the variety of schools that is being offered by Curro, the Company should,
by year end, achieve its pre-listing statement target of 40 schools. This is 5 years ahead of the Company's initial
schedule. Curro also remains on track to achieve its revised target of 80 schools by 2020.
On behalf of the board
SL Botha CR van der Merwe
Chairperson Chief Executive Officer
5 August 2014
Directors: SL Botha** (Chairperson), 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: 05/08/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
