Wrap Text
Reviewed provisional results for the year ended 31 December 2014
Curro Holdings Ltd
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 2014
Learners
up 37%
to 28 737
Revenue
up 52%
to R1 bn
EBITDA
up 68%
to R192m
Cash generated
up 133%
to R247m
HEPS
up 38%
to 17.7cents
Condensed consolidated statement of comprehensive income
Reviewed Audited
Percentage 31 Dec 2014 31 Dec 2013
increase R million R million
Revenue 52% 1 001 659
Operating expenses 48% (809) (545)
Earnings before interest, taxation,
depreciation and amortisation (EBITDA) 68% 192 114
– Schools 69% 262 155
– Head office 71% (70) (41)
Depreciation and amortisation 57% (58) (37)
Earnings before interest and taxation (EBIT) 74% 134 77
Investment income 200% 12 4
Impairment (1) –
Share of profits of associates 1 1
Finance costs 158% (67) (26)
Profit before taxation 41% 79 56
Taxation 75% (28) (16)
Profit for the year (PAT) 28% 51 40
Other comprehensive income
Net fair value loss on cash flow hedge (3) (1)
Total comprehensive income 23% 48 39
Profit attributable to:
Owners of the parent 48% 55 37
Non-controlling interest (4) 3
27% 51 40
Total comprehensive income attributable to:
Owners of the parent 41% 52 37
Non-controlling interest (4) 3
20% 48 40
Reconciliation of headline earnings
Earnings attributable to owners of the parent 48% 55 37
Adjusted for:
Loss on impairment (after taxation) 1 –
Headline earnings 51% 56 37
EBITDA margin 19% 17%
EBITDA margin for schools 26% 25%
Earnings per share (cents)
– Basic 36% 17,5 12,9*
– Diluted 35% 17,2 12,8*
Headline earnings per share (cents) (HEPS)
– Basic 38% 17,7 12,8*
– Diluted 37% 17,4 12,7*
Number of shares in issue (millions)
– Basic 325,6 294,8*
– Diluted 330,1 300,6*
Weighted average number of shares in issue
(millions)
– Basic 314,4 287,8*
– Diluted 319,0 290,2*
Notes:
* Earnings per share and headline earnings per share for the comparative period have been adjusted
downwards by 0,3 cents compared to the audited annual financial statements for the year ended
31 December 2013. This is due to the retrospective adjustment of the 2014 rights offer undertaken.
The adjustment to basic and diluted weighted average number of shares in issue is an increase of
6,6 million shares due to the bonus element contained within the rights offer.
Condensed consolidated statement of cash flows
Reviewed Audited
Percentage 31 Dec 2014 31 Dec 2013
increase R million R million
Net cash generated from operating activities 133% 247 106
Net cash utilised in investing activities 16% (1 257) (1 087)
Net cash from financing activities 2% 1 126 1 106
Cash and cash equivalents movement
for the year 116 125
Cash and cash equivalents at the
beginning of the year 79 (46)
Cash and cash equivalents at the end of
the year 195 79
Condensed consolidated statement of financial position
Reviewed Audited
31 Dec 2014 31 Dec 2013
R million R million
ASSETS
Non-current assets 3 813 2 515
Property, plant and equipment 3 338 2 131
Goodwill 338 272
Intangible assets 121 97
Investment in associate 9 13
Other loans 7 2
Current assets 259 118
Inventories 17 7
Current tax receivable 3 2
Loans to associates 6 –
Trade and other receivables 38 30
Cash and cash equivalents 195 79
Total assets 4 072 2 633
EQUITY AND LIABILITIES
EQUITY
Equity attributable to equity holders of parent 2 212 1 560
Share capital 2 092 1 501
Reserves 9 7
Retained income 111 52
Non-controlling interest (1) 3
Total equity 2 211 1 563
LIABILITIES
Non-current liabilities 1 561 874
Loans and other financial liabilities 1 395 755
Deferred tax 166 119
Current liabilities 300 196
Loans and other financial liabilities 23 70
Current tax payable 2 1
Trade and other payables 122 49
Prepaid school fees and deposits 114 61
Acquisition payables 39 15
Total liabilities 1 861 1 070
Total equity and liabilities 4 072 2 633
Net asset value per share (cents) 679,1 530,2
Condensed consolidated statement of changes in equity
Reviewed Audited
31 Dec 2014 31 Dec 2013
R million R million
Balance at the beginning of the year 1 563 862
Total comprehensive income 48 39
Issue of shares 600 666
Share issue costs (8) (9)
Recognition of share-based payments 8 5
Balance at the end of the year 2 211 1 563
Condensed consolidated segmental report (Restated)
Reviewed Audited
Percentage 31 Dec 2014 31 Dec 2013
increase R million R million
Revenue 52% 1 001 659
– Curro 49% 817 550
– Meridian 68% 184 109
School EBITDA 69% 262 155
– Curro 82% 219 120
– Meridian 24% 43 35
Property, plant and equipment 57% 3 338 2 132
– Curro 59% 2 864 1 798
– Meridian 42% 474 334
Loans and other financial liabilities 72% 1 419 825
– Curro 80% 897 499
– Meridian 60% 522 326
Notes to the financial statements
1. Statement of compliance
The condensed consolidated financial information for the year ended 31 December 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, and to
also, as a minimum, contain the information required by IAS 34: Interim Financial Reporting, the Listings 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 respects with those applied in
the financial statements for the year ended 31 December 2013. The reviewed condensed consolidated 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 2014 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 Company'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. The directors take full responsibility for the preparation of the report and that the financial information
was accurately extracted from the underlying annual financial statements.
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 2013. For a full list of standards and
interpretations which have been adopted, we refer you to our 31 December 2013 annual financial statements.
4. Shared capital
Effective 23 June 2014, 29.5 million shares were issued by way of an underwritten renounceable rights offer at a
subscription of R20.00 per rights offer share, in the ratio of 1 rights offer share for every 10 Curro ordinary shares.
On 9 October 2014, 1.3 million shares were issued to employees through the Curro share incentive scheme.
5. Events after the reporting period
Effective 1 January 2015 the Company acquired the business operations and properties of St Dominics Academy
(Newcastle), for a consideration of R10 million. No other events have been identified.
Other key ratios
Unreviewed Unreviewed Unreviewed Unreviewed
31 Dec 31 Dec 31 Dec 31 Jan
2012 2013 2014 2015
Number of schools 22 26 32 42
Number of learners 12 473 21 027 28 737 36 021
Median number of learners per school 567 759 898 858
Staff 1 630 2 387 3 128 3 211
Teachers 1 151 1 593 1 905 1 949
Learner/Teacher ratio 11 14 15 18
Building size (m(2)) 169 024 261 004 392 314 392 314
Land size (ha) 153 188 298 298
Capital investment (Rm) 782 1 076 1 305
– Current campuses 223 602 651
– New campuses 237 242 482
– Acquisitions 322 232 172
The tables below illustrate the J-Curve effect from newly established schools to more mature schools:
For the year ended 31 December 2013 (Unreviewed)
% of eventual Number Number EBITDA
capacity of schools of learners EBITDA* margin
0 – 25 7 2 668 (3) (4%)
25 – 50 6 4 017 24 21%
50 – 75 8 6 119 43 21%
75 – 100 5 8 223 90 38%
26 21 027 155 25%
For the year ended 31 December 2014 (Unreviewed)
% of eventual Number Number EBITDA
capacity of schools of learners EBITDA* margin
0 – 25 7 1 780 (5) (9%)
25 – 50 6 4 444 20 18%
50 – 75 10 9 096 93 27%
75 – 100 9 13 417 154 32%
32 28 737 262 26%
The tables below illustrate the profitability of acquired and developed schools:
For the year ended 31 December 2013 (Unreviewed)
Number Number EBITDA
of schools of learners EBITDA* margin
Acquired 10 10 300 103 35%
Developed 16 10 727 52 16%
26 21 027 155 25%
For the year ended 31 December 2014 (Unreviewed)
Number Number EBITDA
of schools of learners EBITDA* margin
Acquired 12 14 422 152 30%
Developed 20 14 315 110 23%
32 28 737 262 26%
Notes:
* EBITDA at school level (excluding net head office costs).
Commentary
Curro Holdings Ltd ("Curro" or "the Company" or "the Group") opened in January 2015 with 42 campuses and the board is
pleased to announce that Curro has achieved its prelisting objective of at least 40 campuses, five years ahead of its original
target of 2020. Curro has grown by an additional 8 758 learners to 36 021 learners since January 2014.
The Group, through its business models (details found on our website: www.curro.co.za), caters for learners from
three months old to Grade 12. Curro also has a training institute focused on educator training at a tertiary level.
Academic results
IEB NSC
2014 2013 2014 2013
Number of learners 637 380 488 632
Pass rate 99% 100% 90% 92%
University exemption 82% 79% 43% 56%
Average number of A's per learner 1.12 1.1 0.7 0.6
Average 65% 65% 56% 56%
Average > 60% 66% 68% 29% 49%
Maths (learners taken and average achieved) 50%/65% 56%/62% 52%/45% 4 49%/48%
Financial results
Revenue increased by 52% from R659 million to R1 billion. As a result of operational gearing, EBITDA increased by
68% from R114 million to R192 million. The EBITDA margin increased from 17% to 19%. The cash generating ability of the
business was proven by the increase in net cash generated from operating activities which increased by 133% from
R106 million to R247 million.
Net interest expense has increased by 150% from R22 million to R55 million. The interest consolidated from Meridian
business represents R37 million (2013: R14 million) thereof.
Headline earnings increased by 51% from R37 million to R56 million. Headline earnings per share increased by 38% from
12.8 cents to 17.7 cents.
Investment and expansion
During the 2014 year, the group invested approximately R1.3 billion on the following projects:
- Four new Curro schools built at Brackenfell (Western Cape), Secunda (Gauteng), Monaghan Farm (Lanseria) and Kathu
(Northern Cape);
- Two new Meridian schools built at Cosmo City (Johannesburg) and Newcastle (KZN);
- Two new Curro Academy schools built at Mahikeng (North West) and Soshanguve (Pretoria North);
- Acquired Waterstone College (Johannesburg South), effective 1 June 2014, for a purchase consideration of
R130 million with R58 million goodwill recognised and acquired Grantleigh (Northern KZN), effective 1 January 2014, for a
purchase consideration of R30 million with no goodwill recognised. Acquisitions were done at fair value;
- Completed the land banking of seven sites to a value of approximately R100 million; and
- Invested approximately R650 million on improvement and expansion at existing campuses.
In 2015 Curro plans to
- Invest approximately R600 million on the expansion of existing campuses;
- Develop three new Curro schools at Waterfall estate (Johannesburg), Sitari (Somerset West) and Hillcrest (Durban)
- Develop a new site for the Meridian Pretoria school and expand the Cosmo City campus;
- Develop three new Curro Castles in the Johannesburg Area;
- Invest R250 million in land banking of various key sites; and
- Investigate potential acquisitions.
Balance sheet and funding
In 2014 Curro raised R500 million in long-term funding, drew down on R210 million on facilities at Meridian and raised equity
of R600 million through a rights offer.
As part of the Group funding and growth plan, Curro plans to raise R740 million through a fully underwritten rights offer. In terms of the rights
offer, shareholders will receive, for every 11 shares held, the right to acquire one additional share at R25 per share. This
represents a 23% discount to the 30day VWAP as at 16 February 2015. The rights offer will take place during April 2015 and information on the
rights offer will be communicated in due course. Curro also plans to raise up to R700 million in the debt markets.
Dividend
No dividends have been declared for the period under review.
Prospects
Curro remains on track to achieve its target of 80 schools by 2020.
On behalf of the board
SL Botha CR van der Merwe
Chairperson Chief Executive Officer
17 February 2015
Directors: SL Botha** (Chairperson), ZL Combi**, AJF Greyling (COO), HG Louw (CIO), PJ Mouton*, SWF Muthwa**,
B Petersen**, B van der Linde (CFO), CR van der Merwe (CEO),
* 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
Creating future leaders through world class education
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