Wrap Text
Reviewed Provisional Results For The Year Ended 31 December 2015
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 2015
Headline earnings increased by 79% from R56m to R100m
HEPS increased by 67% from 17.2 cents to 28.7 cents
Schools EBITDA increased by 46% from R262m to R382m
Revenue increased by 38% from R1bn to R1.38bn
Number of learners ('16) increased by 16% from 35 970 to 41 864
CONDENSED CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
Reviewed Audited
31 Dec 31 Dec
Percentage 2015 2014
change R million R million
Revenue 38% 1 384 1 001
Operating expenses 35% (1 092) (809)
Earnings before interest, taxation,
depreciation and amortisation (EBITDA) 52% 292 192
Schools EBITDA 46% 382 262
Head office EBITDA 29% (90) (70)
Depreciation and amortisation 47% (85) (58)
Earnings before interest and taxation
(EBIT) 54% 207 134
Investment revenue 125% 27 12
Gain from bargain purchase 4 –
Share of profits of associates 1 1
Impairment 500% (6) (1)
Finance costs 76% (118) (67)
Profit before taxation (PBT) 46% 115 79
Taxation (18%) (23) (28)
Profit for the year (PAT) 80% 92 51
Other comprehensive income:
Net fair value profit/(loss) on cash flow hedges*** 25 (3)
Total comprehensive income 144% 117 48
Profit attributable to:
Owners of the parent 78% 98 55
Non-controlling interest 50% (6) (4)
80% 92 51
Total comprehensive income
attributable to:
Owners of the parent 137% 123 52
Non-controlling interest 50% (6) (4)
144% 117 48
Reconciliation of headline earnings:
Earnings attributable to owners of the parent 98 55
Adjusted for:
Impairment 6 1
Gain from bargain purchase (4) -
Profit on disposal of property, plant
and equipment –* –*
Headline earnings 79% 100 56
EBITDA margin 21% 19%
EBITDA margin for schools 28% 26%
Earnings per share (cents) (EPS)
– Basic 66% 28.2 17.0**
– Diluted 65% 27.8 16.8**
Headline earnings per share (cents)
(HEPS)
– Basic 67% 28.7 17.2**
– Diluted 68% 28.3 17.0**
Number of shares in issue (millions)
– Basic 356.9 325.6**
– Diluted 362.4 330.1**
Weighted average number of shares
in issue (millions)
– Basic 348.3 322.5**
– Diluted 353.8 327.1**
Notes:
* Balances less than R500 000 are displayed as RNil in million rounding.
** Earnings per share and headline earnings per share for the year ended
31 December 2014 have been adjusted downwards by 0.5 cents. This is due
to the retrospective adjustment of the 2015 rights offer undertaken.
The adjustment to the basic and diluted weighted average number of shares
in issue for the year ended 31 December 2014 is an increase of 8.1 million
shares due to the bonus element contained within the rights offer.
*** This has been reclassified to equity.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Audited
31 Dec 31 Dec
Percentage 2015 2014
change R million R million
Cash generated from operations 54% 306 199
Taxation paid 13% (9) (8)
Net finance costs 65% (91) (55)
Working capital movements (140%) (44) 111
Net cash generated from
operating activities (34%) 162 247
Net cash utilised in investing activities (18%) (1 030) (1 257)
Net cash from financing activities (20%) 904 1 126
Cash and cash equivalents
movement for the year 36 116
Cash and cash equivalents
at the beginning of the year 195 79
Cash and cash equivalents
at the end of the year 231 195
CONDENSED CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
Reviewed Audited
31 Dec 31 Dec
2015 2014
R million R million
Balance at the beginning of the year 2 211 1 563
Total comprehensive income 117 48
Issue of shares 756 600
Share issue costs (14) (8)
Recognition of share-based payments 11 8
Balance at the end of the year 3 081 2 211
CONDENSED CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
Reviewed Audited
31 Dec 31 Dec
2015 2014
R million R million
ASSETS
Non-current assets 4 796 3 813
Property, plant and equipment 4 290 3 338
Goodwill 333 338
Intangible assets 134 121
Investment in associate 10 9
Other financial assets 29 7
Current assets 283 259
Inventories 8 17
Current tax receivable 6 3
Other financial assets 2 –
Loan to associate – 6
Trade and other receivables 36 38
Cash and cash equivalents 231 195
Total assets 5 079 4 072
EQUITY AND LIABILITIES
EQUITY
Equity attributable to equity holders
of parent 3 088 2 212
Share capital 2 834 2 092
Reserves 39 9
Retained income 215 111
Non-controlling interest (7) (1)
Total equity 3 081 2 211
LIABILITIES
Non-current liabilities 1 750 1 561
Loans and other financial liabilities 1 561 1 395
Deferred tax 189 166
Current liabilities 248 300
Loans and other financial liabilities 28 23
Current tax payable – 2
Trade and other payables 110 122
Prepaid school fees and deposits 104 114
Acquisition payables 6 39
Total liabilities 1 998 1 861
Total equity and liabilities 5 079 4 072
Net asset value per share (cents) 865.3 679.1
CONDENSED CONSOLIDATED SEGMENTAL REPORT
Reviewed Audited
31 Dec 31 Dec
Percentage 2015 2014
change R million R million
Revenue 38% 1 384 1 001
– Curro 41% 1 149 817
– Meridian 28% 235 184
Schools EBITDA 46% 382 262
– Curro 49% 326 219
– Meridian 30% 56 43
Net head office expenditure 29% (90) (70)
Headline earnings 79% 100 56
– Curro 79% 111 62
– Meridian 83% (11) (6)
Headline earnings per share (cents) 67% 28.7 17.2
– Curro 67% 31.8 19.0
– Meridian 72% (3.1) (1.8)
Earnings per share (cents) 66% 28.2 17.0
– Curro 66% 31.3 18.9
– Meridian 63% (3.1) (1.9)
Total assets 25% 5 079 4 072
– Curro 28% 4 398 3 437
– Meridian 7% 681 635
Total liabilities 7% 1 998 1 861
– Curro 5% 1 350 1 283
– Meridian 12% 648 578
KEY RATIOS
31 Dec 31 Dec 31 Dec 31 Dec 31 Jan
2012* 2013* 2014* 2015* 2016*
Number of campuses 22 26 32 42 47
Number of schools 61 72 80 101 110
Number of learners 12 473 21 027 28 737 35 970 41 864
Average number of
learners per campus 567 809 898 856 891
Number of employees 1 630 2 387 3 128 3 969 4 350
Number of teachers 1 151 1 593 1 905 2 339 2 637
Learner/teacher ratio 11 14 15 15 16
Building size (m(2)) 169 024 261 004 392 314 449 067 461 312
Land size (ha) 153 188 298 359 364
Capital investment (Rm) 782 1 076 1 305 1 030
– Current campuses 223 602 651 646
– New campuses 237 242 482 369
– Acquisitions 322 232 172 15
Note:
Unreviewed
J-Curve
The table below illustrates the J-Curve effect from newly established schools to more mature schools by age
Unreviewed Unreviewed Unreviewed Unreviewed Unreviewed Unreviewed
Number at 31 Dec 2015 Learner numbers (Dec) Growth% Schools EBITDA (R million) Growth% Schools EBITDA margin
Schools Campuses 2013 2014 2015 13/14 14/15 2013 2014 2015 13/14 14/15 2013 2014 2015
Developed schools 74 29 10 577 14 645 20 694 38% 41% 52 111 171 113% 54% 16% 23% 23%
2009 and before 8 3 2 961 3 100 3 332 5% 7% 24 31 35 29% 13% 26% 28% 27%
2010 6 2 1 636 1 994 2 120 22% 6% 8 17 24 113% 41% 17% 25% 29%
2011 16 6 2 962 3 721 4 337 26% 17% 7 25 40 257% 60% 8% 19% 23%
2012 6 2 1 002 1 362 1 618 36% 19% 2 8 15 300% 87% 7% 17% 23%
2013 11 4 2 016 3 645 4 922 81% 35% 11 37 66 236% 78% 19% 32% 37%
2014 8 4 823 1 271 54% (7) 1 (114%) (32%) 2%
2015 19 8 3 094 (10) (13%)
Acquired schools 27 13 10 450 14 092 15 276 35% 8% 103 151 211 47% 40% 35% 30% 33%
2012 and before 17 8 6 050 6 483 6 851 7% 6% 76 97 121 28% 25% 34% 36% 38%
2013 3 2 4 400 5 690 5 779 29% 2% 27 45 52 67% 16% 38% 29% 30%
2014 5 2 1 919 2 046 7% 9 34 278% 12% 28%
2015 2 1 600 4 17%
101 42 21 027 28 737 35 970 37% 25% 155 262 382 69% 46% 25% 26% 28%
Note:
Acquired schools included from the year the school was incorporated in Curro. All acquired schools have at least been established for more than seven years.
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF COMPLIANCE
The condensed consolidated financial information for the year ended 31 December 2015 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 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 2014. The reviewed
condensed consolidated results have been prepared internally under the supervision of 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 2015 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 2014. For a full list of standards and interpretations which have been adopted,
we refer you to our 31 December 2014 annual financial statements.
4. SHARE CAPITAL
Effective 8 May 2015, 29.6 million shares were issued by way of an underwritten renounceable
rights offer at a subscription of R25.00 per rights offer share, in the ratio of 1 rights offer share
for every 11 Curro ordinary shares. On 15 October 2015, 1.7 million shares were issued to
employees through the Curro share incentive scheme.
5. BUSINESS COMBINATIONS
Effective 1 January 2015, Curro acquired the business operations and properties of an
independent school for a purchase consideration equal to its business liabilitis as at 1 January 2015.
A bargain purchase gain of R4 million was recognised at acquisition due to the fair value of assets
acquired of R16 million exceeding the fair value of liabilities assumed of R12 million. No contingent
consideration has been recognised at acquisition.
6. EVENTS AFTER THE REPORTING PERIOD
Effective 1 February 2016, Curro acquired the business operations and properties of Windhoek
Gymnasium, for a consideration of R185 million. No other events have been identified. The
accounting for this transaction is still in progress.
RESULTS COMMENTARY
FINANCIAL RESULTS
Revenue increased by 38% from R1 billion in 2014 to R1.38 billion in 2015. Schools EBITDA
increased by 46% from R262 million to R382 million over the same period with EBITDA
increasing by 52% from R192 million to R292 million. The increase is attributable to the
increase in learner numbers offset by once-off head office expenses that occurred in the prior
year. Due to tougher economic circumstances, bad debts as a percentage of turnover has
increased from 0.6% in 2014 to 1% in 2015, which is in line with Curro's long-term average.
The EBITDA margin increased from 19% to 21%. Net interest expense has increased by 65%
from R55 million to R91 million as a result of a higher interest expense in the Meridian business.
Headline earnings increased by 79% from R56 million to R100 million. However, headline
earnings per share increased by 67% from 17.2 cents to 28.7 cents due to the increase in the
weighted average number of shares in issue following the rights offer in May 2015.
LEARNERS
Curro currently has 41 864 (2015: 35 970) learners in 110 (2015: 101) schools on 47
(2015: 42) campuses.
Approximately 50% of our learners attend our schools where the average school fees
range between R2 000 and R4 000 per month, with 30% in schools with average school
fees of less than R2 000 per month. The balance of learners attend schools where the average
school fee is in excess of R4000 per month.
ACADEMIC RESULTS
Curro's "Class of 2015" Matrics produced another year of pleasing results. Of particular
significance was the increase in the overall pass rate and bachelor degree pass rate for
learners who wrote the National Senior Certificate exams.
Unreviewed Unreviewed Unreviewed Unreviewed
IEB IEB NSC* NSC*
2014 2015 2014 2015
Number of learners 637 724 488 707
Pass rate 99% 99% 90% 98%
University exemption 82% 82% 43% 57%
Average number of A's per learner 1.1 1.1 0.7 0.6
Average > 60% 66% 69% 29% 43%
Note:*
Meridian and Curro Academy Schools
INSTITUTE FOR HIGHER EDUCATION
In 2016, our Embury Institute for Teacher Education ("Embury"), based in KwaZulu-
Natal, will educate more than 800 full-time and 100 distance learning students. It will
also provide continuous professional development education courses to approximately
4 000 teachers.
This year will also mark the expansion of Embury's geographic footprint and academic
offerings. Embury will commence with the conversion of a new larger site in Durban
to accommodate 2 600 students, construct a new campus at Waterfall Estate (Midrand) with
a capacity of 1 400 students, as well as acquire a 800-student capacity campus in
Montana (Pretoria).
We are in the process of developing and registering a number of new courses,
diplomas and degrees which will include BSc, BCom and BA degrees. We are also
converting and registering our campus-based courses into distance learning offerings.
INVESTMENT AND EXPANSION
In 2015 Curro invested R1 billion in growth and expansion projects. The most significant
investments included:
- R284 million in the construction of new Curro campuses at Sitari (Somerset West) and a
high school at Hillcrest (KwaZulu-Natal), as well as three new Curro Castles (pre-schools)
at Waterfall Estate, Bryanston and Douglasdale (all based in Gauteng).
- R646 million invested to expand existing campuses, which included significant
expansions at, inter alia, Waterstone College, Grantleigh, St Dominic's Academy, Curro
Hazeldean, Curro Serengeti and Curro Bankenveld.
- R85 million was invested as part of our land banking initiative to secure an office site
in Rivonia (Gauteng) which will be converted into a Curro Castle and a Curro primary
school in 2016.
Curro intends to invest up to R2 billion in 2016. R800 million is earmarked for the
construction of new campuses and R450 million for the expansion of existing campuses.
The remainder will be used for acquisitions and land banking opportunities.
ACQUISITIONS
Effective 1 February 2016, Curro acquired Windhoek Gymnasium (Namibia) with
1 700 learners.
RIGHTS OFFER
Curro plans to raise a further R1 billion in 2016 through an underwritten rights offer
to fund future growth. In terms of the rights offer, shareholders will receive the right to
acquire one additional share at R33 per share for every 11 shares held. This represents
a 26% discount to the 30-day VWAP of R44.45 at 19 February 2016. The rights offer will
take place during May 2016 and further details in respect thereof will be communicated
in due course.
DIVIDEND
No dividend has been declared for the year under review (2014: RNil).
PROSPECTS
Curro believes in the long-term potential of South Africa and remains on track to achieve its
target of 200 schools (80 campuses) by 2020.
On behalf of the board
SL Botha CR van der Merwe
Chairperson Chief Executive Officer
23 February 2016
STATUTORY AND ADMINISTRATION
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 (Pty) Ltd
World-class education for tomorrow's leaders
website: www.curro.co.za
Date: 23/02/2016 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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