Wrap Text
Interim results for the six months ended 30 June 2016
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 2016
Headline earnings up 59% from R51m to R81m
HEPS 51% up from 14.5 cents to 22.0 cents
Schools EBITDA up 27% from R204m to R259m
Revenue 24% up from R705m to R872m
Number of learners up 15% from 35 970 to 41 393
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
30 Jun 2016 30 Jun 2015 31 Dec 2015
% 6 months 6 months 12 months
change R million R million R million
Revenue 24% 872 705 1 384
Operating expenses 22% (661) (541) (1 092)
Earnings before interest, taxation, depreciation and 29%
amortisation (EBITDA) 211 164 292
- Schools EBITDA 27% 259 204 382
- Head office EBITDA 20% (48) (40) (90)
Depreciation and amortisation 24% (52) (42) (85)
Earnings before interest and taxation (EBIT) 30% 159 122 207
Investment revenue 64% 18 11 27
Gain from bargain purchase - - 4
Share of profits of associates* - - 1
Impairment - - (6)
Finance costs 18% (78) (66) (118)
Profit before taxation (PBT) 48% 99 67 115
Taxation (19) (19) (23)
Profit for the period (PAT) 67% 80 48 92
Other comprehensive income:
Net fair value (loss) / profit on cash flow hedges (18) 5 25
Total comprehensive income 17% 62 53 117
Profit attributable to:
Owners of the parent 59% 81 51 98
Non-controlling interest (1) (3) (6)
67% 80 48 92
Total comprehensive income attributable to:
Owners of the parent 13% 63 56 123
Non-controlling interest (1) (3) (6)
17% 62 53 117
Reconciliation of headline earnings:
Earnings attributable to owners of the parent 81 51 98
Adjusted for:
Impairment - - 6
Gain from bargain purchase - - (4)
Headline earnings 59% 81 51 100
EBITDA margin 24% 23% 21%
Schools EBITDA margin 30% 29% 28%
Earnings per share (cents)**
- Basic 51% 22.0 14.5 27.8
- Diluted 49% 21.6 14.5 27.8
Headline earnings per share (cents)**
- Basic 51% 22.0 14.5 28.3
- Diluted 49% 21.6 14.5 28.3
Number of shares in issue (millions)
- Basic 389.3 355.2 356.9
- Diluted 395.6 360.7 362.4
Weighted average number of shares in issue (millions)
- Basic 370.2 347.2 353.5
- Diluted 376.5 352.7 359.0
Notes:
* Amounts of less than R500 000 are displayed as R Nil in million rounding.
** Earnings per share (EPS) and headline earnings per share (HEPS) for the comparative periods have been adjusted
downwards by 0.3 cents for the six months ended 30 June 2015 and 0.4 cents for the year ended 31 December 2015
respectively. This is due to the retrospective adjustment of the 2016 rights offer undertaken. The adjustment to the
basic and diluted weighted average number of shares in issue is an increase of 5.1 million shares for the six months
ended 30 June 2015 and an increase of 5.2 million shares for the year ended 31 December 2015 respectively due to
the bonus element contained within the rights offer. EPS and HEPS are calculated on the actual rand value of amounts
disclosed in the condensed consolidated statement of comprehensive income and not on R million rounding.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
30 Jun 2016 30 Jun 2015 31 Dec 2015
% 6 months 6 months 12 months
change R million R million R million
Cash generated from operations 29% 218 169 306
Tax paid 33% (4) (3) (9)
Net finance costs 9% (60) (55) (91)
Working capital movements n/a 49 (32) (44)
Net cash generated from operating activities 157% 203 79 162
Net cash utilised in investing activities 102% (529) (262) (1 030)
Net cash from financing activities 44% 1 134 790 904
Cash and cash equivalents movement for the period 808 607 36
Cash and cash equivalents at the beginning of the period 231 195 195
Cash and cash equivalents at the end of the period 1 039 802 231
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 Jun 2016 30 Jun 2015 31 Dec 2015
R million R million R million
ASSETS
Non-current assets 5 291 4 052 4 756
Property, plant and equipmentˆ 4 725 3 568 4 250
Goodwill 397 338 333
Intangible assets 147 128 134
Investment in associate 9 9 10
Other financial assets 13 9 29
Current assets 1 154 868 323
Inventories 6 5 8
Current tax receivable 5 4 6
Other financial assetsˆ 53 - 42
Loan to group companies - 3 -
Trade and other receivables 51 54 36
Cash and cash equivalents 1 039 802 231
Total assets 6 445 4 920 5 079
EQUITY
Equity attributable to equity holders of parent 4 209 3 003 3 088
Share capital 3 885 2 819 2 834
Reserves 28 23 39
Retained income 296 161 215
Non-controlling interest (9) (4) (7)
Total equity 4 200 2 999 3 081
LIABILITIES
Non-current liabilities 1 895 1 670 1 750
Loans and other financial liabilities 1 640 1 492 1 561
Deferred tax 255 178 189
Current liabilities 350 251 248
Loans and other financial liabilities 36 30 28
Current tax payable - 5 -
Trade and other payables 127 91 99
Prepaid school fees and deposits 155 119 115
Acquisition payables 32 6 6
Total liabilities 2 245 1 921 1 998
Total equity and liabilities 6 445 4 920 5 079
Net asset value per share (cents) 1 078.9 845.4 865.3
Note:
ˆ R40 million of Property, plant and equipment has been reclassified to Other financial assets with respect to
the comparative year, 31 December 2015. The reclassification had no effect on the condensed consolidated
statement of financial position other than to more appropriately reflect the nature of the underlying transaction.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
30 Jun 2016 30 Jun 2015 31 Dec 2015
6 months 6 months 12 months
R million R million R million
Balance at the beginning of the period 3 081 2 211 2 211
Total comprehensive income 62 53 117
Issue of shares 1 070 740 756
Share issue costs (20) (14) (14)
Other 7 9 11
Balance at the end of the period 4 200 2 999 3 081
CONDENSED CONSOLIDATED SEGMENTAL REPORT
Unaudited Unaudited Audited
30 Jun 2016 30 Jun 2015 31 Dec 2015
% 6 months 6 months 12 months
change R million R million R million
Revenue 24% 872 705 1 384
- Curro 27% 741 584 1 149
- Meridian 8% 131 121 235
Schools EBITDA 27% 259 204 382
- Curro 28% 223 174 326
- Meridian 20% 36 30 56
Net head office expenditure 20% (48) (40) (90)
Headline earnings 59% 81 51 100
- Curro 44% 78 54 111
- Meridian n/a 3 (3) (11)
Headline earnings per share (cents) 51% 22.0 14.5 28.3
- Curro 35% 21.0 15.5 31.4
- Meridian n/a 1.0 (0.9) (3.1)
Earnings per share (cents) 51% 22.0 14.5 27.8
Total assets 31% 6 445 4 920 5 079
- Curro 37% 5 806 4 232 4 398
- Meridian (7%) 639 688 681
Total liabilities 17% 2 245 1 921 1 998
- Curro 29% 1 579 1 222 1 350
- Meridian (5%) 666 699 648
J-CURVE
The table below illustrates the J-curve effect from newly established schools to more mature schools by age. All amounts are as at 30 June.
Number Learner numbers Growth Schools EBITDA Growth Schools EBITDA Eventual capacity
of schools (R million) margin
2016 2014 2015 2016 13/14 14/15 15/16 2014 2015 2016 13/14 14/15 15/16 2014 2015 2016 2014 2015 2016
Developed schools 80 14 633 20 734 24 344 36% 42% 17% 62 88 132 175% 43% 49% 25% 23% 28% 40% 40% 42%
2009 and before 8 3 121 3 313 3 422 5% 6% 3% 17 19 23 45% 7% 23% 31% 29% 30% 79% 84% 86%
2010 6 1 999 2 131 2 216 22% 7% 4% 9 12 15 155% 34% 26% 26% 29% 32% 62% 66% 69%
2011 16 3 720 4 382 4 530 26% 18% 3% 14 20 28 419% 46% 37% 22% 23% 27% 39% 45% 47%
2012 6 1 351 1 599 1 764 34% 18% 10% 4 8 9 428% 68% 17% 19% 23% 23% 40% 48% 53%
2013 11 3 643 4 918 5 651 71% 35% 15% 20 34 48 467% 71% 41% 35% 37% 42% 37% 50% 58%
2014 8 799 1 267 1 506 59% 19% (3) 1 2 n/a 120% (27%) 5% 9% 12% 19% 22%
2015 19 3 124 4 730 51% (5) 9 n/a (14%) 14% 20% 30%
2016 6 525 (1) (14%) 9%
Acquired schools 30 14 266 15 351 17 049 28% 8% 11% 78 117 131 48% 49% 12% 32% 35% 34% 72% 75% 77%
2012 and before 17 6 511 6 890 6 847 11% 6% (1%) 49 64 69 28% 29% 7% 36% 39% 38% 68% 72% 71%
2013 3 5 728 5 795 5 541 8% 1% (4%) 26 31 33 77% 22% 5% 31% 33% 36% 74% 75% 71%
2014 5 2 027 2 066 2 425 2% 17% 4 19 23 435% 23% 14% 30% 31% 82% 84% 82%
2015 and 2016 5 600 2 236 273% 3 7 138% 23% 19% 81% 92%
Property rental (1) (4)
Total 110 28 899 36 085 41 393 32% 25% 15% 140 204 259 86% 45% 27% 29% 29% 30% 51% 50% 51%
Note:
Acquired schools indicates the year the school was incorporated in Curro. All acquired schools have been established for at least 7 years.
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF COMPLIANCE
The condensed consolidated interim financial information for
the six months ended 30 June 2016 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 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 audited annual financial statements for the year ended
31 December 2015. The unaudited condensed consolidated
interim results have been prepared internally 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 audited annual financial statements for the year
ended 31 December 2015. For a full list of standards and
interpretations which have been adopted, we refer you to the
31 December 2015 annual financial statements.
3. SHARE CAPITAL
Effective 16 May 2016, 32.4 million shares were issued
for a total cash consideration of R1.07 billion by way of an
underwritten renounceable rights offer at a subscription price
of R33.00 per rights offer share and a ratio of 1 rights offer
share for every 11 Curro ordinary shares held.
4. BUSINESS COMBINATIONS
Effective 1 March 2016, Curro acquired the business operations
and properties of Windhoek Gymnasium.
5. EVENTS AFTER THE REPORTING PERIOD
Effective 1 July 2016, Curro acquired Building Blocks pre and
primary school, situated in Midrand, and St Conrad's College,
situated in Klerksdorp.
On 12 August 2016, Curro raised R250 million through the
issue of 6 million ordinary shares, in terms of a general authority
to issue shares for cash, at R41.50 per share.
6. FINANCIAL ASSISTANCE
Curro has established a wholly owned subsidiary, Curro Funding
Company (Pty) Ltd ("Curro Funding"), to act as a funding and treasury
vehicle within the Group by obtaining funding from third-party
financiers and providing financial assistance to inter-related
entities within the Group. Curro will, directly or indirectly,
guarantee the obligations of Curro Funding in terms of such funding
and provide indemnities to any third-party financiers of Curro Funding.
In addition, Curro will provide a loan of up to R550 million to its
wholly owned subsidiary, Embury Institute for Teacher Education
(Pty) Ltd, for its planned expansions and acquisitions.
In this regard, Curro hereby gives notice in terms of section 45(5)
of the Companies Act, No. 71 of 2008, as amended that on 15 August 2016
Curro's board of directors ("Board") authorised
the Company to provide the above-mentioned loan, guarantees
and indemnities. The above-mentioned financial assistance is
granted in terms of the authority that was provided to the Board by
shareholders at Curro's annual general meeting on 24 June 2016.
31 Dec 31 Dec 31 Dec 31 Dec 30 Jun
KEY RATIOS 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 41 393
Average number of learners per campus 567 809 898 856 887
Number of employees 1 630 2 387 3 128 3 969 4 606
Number of teachers 1 151 1 593 1 905 2 339 2 752
Learner/teacher ratio 11 13 15 15 15
Building size (m2) 169 024 261 004 392 314 449 067 493 918
Land size (ha) 153 188 298 359 380
Capital investment (R million) 782 1 076 1 305 1 022 529
- Current campuses (R million) 223 602 651 638 193
- New campuses (R million) 237 242 482 369 181
- Acquisitions (R million) 322 232 172 15 155
COMMENTARY
Curro provides private education to 41 393 learners in 110
schools on 47 campuses. It operates at 78% of existing
building capacity and at 51% of eventual capacity.
FINANCIAL RESULTS
Revenue increased by 24% from R705 million to R872 million.
Schools EBITDA increased by 27% from R204 million
to R259 million. EBITDA increased by 29%
from R164 million to R211 million. The EBITDA margin
increased from 23% to 24%. The increases are attributable
to the increase in learner numbers. The filling of
classroom capacity has had a positive effect on the
Schools EBITDA margin, which increased from 29%
to 30% and which can be viewed in the J-curve table.
Net interest expense has increased by 9% from
R55 million to R60 million as a result of increased
borrowings used for expansion at existing schools
and development of new schools.
Headline earnings increased by 59% from R51 million to
R81 million, and headline earnings per share increased
by 51% from 14.5 cents to 22.0 cents as a result of the
aforementioned increased weighted number of shares
in issue following the rights offer.
DIVIDEND
No dividend has been declared for the period.
ACQUISITIONS
Effective 1 March 2016, Curro acquired Windhoek
Gymnasium (Namibia), with approximately 1 700 learners.
Effective 1 July 2016, Curro acquired:
- Building Blocks pre and primary school, situated in
Midrand, with 805 learners; and
- St Conrad's College, situated in Klerksdorp, with 600
learners.
Curro will continue to look for suitable value-enhancing
acquisition opportunities.
INVESTMENT AND EXPANSION
The 2016 investment programme includes:
- Construction of nine new campuses to the value of R950 million.
These campuses include Curro Waterfall Primary
(Gauteng), Curro Century City High School (Western Cape),
Curro Krugersdorp High School (Gauteng), Curro Rivonia
(Gauteng), Curro Academy Wilgeheuwel (Gauteng), Curro
Academy Clayville (Gauteng), Curro Academy Pretoria
(Gauteng), and a campus for Embury Institute for Teacher
Education in Waterfall Estate (Gauteng);
- Expansion of existing campuses to the value of R500 million;
and
- Actual land banking of R60 million for the period
under review, with another R300 million in the pipeline
during the next six to 12 months, depending on the
timing of conditions met.
PROSPECTS
Curro has an attractive pipeline of new opportunities
and remains on track to achieve its vision of "80@20",
being 80 campuses (200 schools) by 2020.
On behalf of the board
SL Botha CR van der Merwe
Chairperson Chief Executive Officer
16 August 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 adviser and sponsor: PSG Capital
Date: 16/08/2016 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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