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Unaudited Interim Results for the Six Months Ended 30 June 2018
PEMBURY LIFESTYLE GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2013/205899/06)
(“PL Group” or “the Company”)
ISIN Code: ZAE000222949 JSE Code: PEM
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2018
REVENUE UP 151%
SCHOOL CAMPUSES UP FROM 7 TO 11
PUPILS UP UP 48.9%
TOTAL ASSETS UP UP 49.9%
The board of directors are pleased to present the interim results for the six months ended
30 June 2018, which are starting to show positive developments in line with the long-term
strategy of the group, particularly evidenced in the Schools segment, which is now profitable.
Furthermore, the corrective action taken during the earlier part of the year has resulted in a
vast improvement in the accounting and control environment, which had previously hindered
the Company.
These results show the growth from both organic and acquisitive activities and shareholders
are also referred to the discussion and business overview below.
BUSINESS OVERVIEW
Business Focus
Management are concentrating on finalising the outstanding property deals to ensure the
continued asset growth of the group in the property division. Simultaneously, management is
focusing on the expansion of its campuses in the schools’ environment while driving
occupancy numbers in the retirement space
School environment
The major focus is on supporting the 4 new schools opened in January 2018 and ensuring that
critical mass is achieved by increasing pupil numbers for 2019. The pupil teacher ratio is
between 10 and 19 for the schools group, whilst 8 of the 11 campuses are reflecting a positive
EBITDA. Following IEB and Caps curriculums in the different schools, the focus on the
remaining part of 2018 is on ensuring the high education standards set by the group are
maintained, aiming for a high pass rate for our 2018 grade 12’s results.
Retirement Villages environment
In 2018 there has been a temporary decrease in occupants’ numbers due to mainly natural
causes and the focus is currently on increasing the occupancy numbers using a targeted
marketing campaign, of which positive results have been experienced in Q3 of 2018.
Furthermore, by focusing on acquiring the Retirement properties, it will allow PLG to invest
capital into upgrading the facilities and thus attract and increase the occupancy.
Prospects
The Company will consider acquiring smaller existing private schools which show positive
growth potential as well as opening new schools, although this will be done on a conservative
basis.
The retirement industry is expected to expand in South Africa and PLG will have various
opportunities to grow.
COMPANY AND FINANCIAL HIGHLIGHTS:
- Revenue has grown 151% for the 6 months ended 30 June 2018 compared to the six months
ended 30 June 2017
- Increase in number of pupils to 2 235 at 30 June 2018 up from 1 501 pupils at 30 June 2017
and 2 184 in January 2018 in the PLG Schools business
- Four new campuses opened in January 2018
- Eight of the eleven campuses are operating at a positive EBITDA and are thus through the
J-Curve.
- Results for the Pembury Retirement Villages included for the six months ended 30 June 2018
and the commencement of retirement village operations at Sanrock during the period
- Further increase in net asset value from 39.58 cents per share to 44.14 cents per share
compared to June 2017
- Strengthening of the total assets of the Company from R262 million at 31 December 2017 to
R264 million at the end of June 2018.
- Loss and headline loss per share increased by 86% to (1.51) cents from (0.81) cents, based
on higher weighted average shares in issue of 405 693 119 compared to 274 184 530 shares
at 30 June 2017.
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The accounting policies and method of measurement and recognition applied in the
preparation of these condensed unaudited consolidated interim results are in terms of
International Financial Reporting Standards (“IFRS”) and are consistent with those applied in
the audited annual financial statements for the previous year ended 31 December 2017.
The unaudited consolidated interim results are prepared in accordance with the requirements
of the JSE Limited Listings Requirements and the requirements of the Companies Act, 71 of
2008. The unaudited consolidated interim results are presented in terms of the disclosure
requirements set out in International Accounting Standards (“IAS”) 34 – Interim Financial
Reporting, as well 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 Financial Director, Riaan van Jaarsveld CA (SA), was responsible for the preparation of the
unaudited consolidated interim results. The directors of PL Group (“the Board”) take full
responsibility for the preparation of the interim results.
With effect from 1 July 2017, the Company acquired the business and assets known as the
Pembury Retirement Villages, and thus the interim results for the six months ended 30 June 2018
are not strictly comparable to the results for the six months ended 30 June 2017, which only
included the PLG Schools operations and associated property acquisitions.
STATEMENT OF FINANCIAL POSITION
Unaudited six Audited Unaudited six
months ended Year ended months ended
Figures in Rand 30 June 2018 31 December 2017 30 June 2017
ASSETS
Non-Current Assets 180 135 039 184 483 674 159 188 455
Property, plant and equipment 144 818 567 142 890 550 64 688 153
Goodwill 7 502 196 7 502 196 3 152 014
Intangible assets 25 714 276 27 399 038 -
Loans to related parties - 4 591 890 -
Deferred Tax - - 2 170 180
Prepayments 2 100 000 2 100 000 -
Property Deposits - - 89 178 108
Current Assets 83 581 215 77 969 518 16 705 280
Loans to related parties 296 835 - 7 774 999
Trade and other receivables 7 286 137 3 386 643 4 361 375
Other financial assets 1 300 - -
Prepayments 74 464 394 72 700 000 -
Cash and cash equivalents 1 532 549 1 882 875 4 568 906
Total Assets 263 716 254 262 453 192 175 893 735
EQUITY AND LIABILITIES
Equity
Equity Attributable to Equity Holders of Parent
Stated capital 184 661 769 180 609 409 138 042 800
Reserves 46 834 342 46 834 342 14 833 409
Accumulated loss (47 410 866) (41 292 595) (16 960 736)
184 085 245 186 151 156 135 915 473
Shareholders loans - -
184 085 245 186 151 156 135 915 473
Liabilities
Non-Current Liabilities 34 249 789 38 633 349 16 614 556
Financial liabilities 1 640 058 1 655 929 674 517
Finance lease liabilities 24 221 153 22 237 463 15 922 711
Deferred income - 509 308 -
Deferred tax 7 896 307 13 492 871 17 328
Life rights liability 492 271 737 778
Current Liabilities 45 381 220 37 668 689 23 363 706
Trade and other payables 32 380 851 22 048 302 19 384 849
Loans from group companies 4 651 783 6 651 795 -
Other financial liabilities 580 165 4 148 273 2 297 248
Finance lease liabilities 2 577 485 2 435 972 1 607 438
Operating lease liability 2 092 099 1 605 953 74 171
Deferred income 1 551 508 197 200 -
Current tax payable 525 242 525 242 -
Provisions 221 866 50 000 -
Bank overdraft 800 221 5 952 -
Total Liabilities 79 631 009 76 302 038 39 978 262
Total Equity and Liabilities 263 716 254 262 453 192 175 893 735
Number of shares in issue 406 284 805 404 817 430 343 400 000
Net asset value per share (cents) 44.14 45.98 39.58
Net tangible asset value per share (cents) 35.96 37.36 38.80
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited six Unaudited six
months ended months ended
Figures in Rand 30 June 2018 30 June 2017
Revenue 72 341 127 28 796 491
Other operating income 1 128 662 79 174
Operating expenses (77 679 418) (31 770 406)
EBITDA (4 209 629) (2 894 741)
Depreciation and amortisation (1 009 506) (308 594)
Operating Loss (5 219 135) (3 203 335)
Finance income 34 646 138 313
Finance costs (1 768 092) (9 831)
Loss before taxation (6 952 581) (3 074 853)
Taxation 834 310 860 959
Loss for the six months (6 118 271) (2 213 894)
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Gains on property revaluation - -
Related tax - -
Total items that will not be reclassified to profit or
loss - -
Other comprehensive income for the six months
net of taxation - -
Total comprehensive loss for the six months (6 118 271) (2 213 894)
Per share information:
Basic loss per share (cents) (1.51) (0.81)
Diluted loss per share (cents) (1.51) (0.81)
Weighted average shares in issue 405 693 119 274 184 530
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
based
Stated Revaluation payment Related party Accumulated
Figures in Rand capital reserve reserve loan loss Total
Balance at 1 January 2017 400 100 14 660 332 23 077 16 528 691 (14 746 843) (16 865 357)
Loss for the year - - - - (26 545 752) (26 545 752)
Other comprehensive income - 31 131 010 - - - 31 131 010
Total comprehensive income for the year - 31 131 010 - - (26 545 752) 4 585 258
Issue of shares 187 700 000 - - (16 528 691) - 162 171 309
Purchase of own shares (306 381) - - - - (306 381)
Shares to be issued 1 815 690 - - - - 1 815 690
Share based payment - - 1 019 923 - - 1 019 923
Balance at 1 January 2018 180 609 409 45 791 342 1 043 000 - (41 292 595) 186 151 156
Loss for the year - (6 118 271) (6 118 271)
Other comprehensive income - - - - - -
Total comprehensive income for the year - - - (6 118 271) (6 118 271)
Issue of shares 4 052 360 - - - - 4 052 360
Balance at 30 June 2018 184 661 769 45 791 342 1 043 000 - (47 410 868) 184 085 245
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited six Unaudited six
months ended months ended
Figures in Rand 30 June 2018 31 June 2017
Cash flows from operating activities
Cash receipts from customers 72 327 408 27 941 413
Cash paid to suppliers and employees (64 930 281) (7 068 812)
Cash generated by operations 7 397 127 20 872 601
Finance income 34 646 138 313
Finance costs (1 768 092) (9 831)
Net cash generated by operating activities 5 663 681 21 001 083
Cash flows from investing activities
Purchase of property, plant and equipment (9 234 903) (18 980 714)
Deposits for acquisition of property, plant and
equipment - (28 178 108)
Sale of financial assets (1 300) -
Net cash used in investing activities (9 236 203) (47 158 822)
Cash flows from financing activities
Proceeds on share issue 4 052 360 51 402 940
Proceeds of other financial liabilities - 1 604 941
Repayment of other financial liabilities (1 041 659) -
Proceeds from life right liability (245 507)
Finance lease payments 412 902 (3 349 858)
Repayment of loans from related parties (750 169) (2 083 116)
Related party loans capitalised - (9 080 480)
Loan to related parties - (7 774 999)
Net cash from financing activities 2 427 927 30 719 428
Total cash movement for the period (1 144 595) 4 561 689
Cash at the beginning of the period 1 876 923 7 217
Total cash at end of the period 732 328 4 568 906
SEGMENTAL ANALYSIS
For the year ended 31 December 2017 and pursuant to the acquisition of Pembury Retirement Villages, the Company reviews its business in three main
segments.
The reportable segments, which represent the structures used by the Chief Operating Decision Maker, to make key operating decisions and assess
performance are set out below:
Reportable segments
The Group's reportable segments are PLG Properties, PLG Retirement Villages and PLG Schools.
The revenue earned by the Schools segment is derived from educational services. The major sources of revenue are school fees, boarding fees, aftercare
fees, registration fees and sundry income. Taxation is assessed by the Chief Operating Decision Makers at a Group level and not considered separately at
a segmental level. The revenue earned by the Retirement segment is primarily monthly rental and frail care fees.
The revenue of PLG Properties comprises inter-segmental revenue, being rent charged on own properties.
The segment information is presented below:
Six-month period ended 30 June 2018
PLG Retirement Inter segment
PLG Properties PLG Schools Villages Other eliminations Total
Revenue 10 098 097 45 543 390 27 600 777 180 466 (11 081 603) 72 341 127
Other income - 1 427 835 628 440 - - 2 056 275
Operating expenses (12 473 781) (37 134 705) (31 595 032) (3 573 622) 6 170 109 (78 607 031)
EBITDA (2 375 684) 9 836 520 (3 365 815) (3 393 155) (4 911 494) (4 209 629)
Depreciation and amortisation (158 837) (258 204) (548 639) (43 826) - (1 009 506)
Finance cost (188 316) (1 454 641) (102 944) (22 191) - (1 768 092)
Finance income - 34 646 - - 34 646
Profit/(Loss) before tax (2 722 837) 8 158 321 (4 017 398) (3 459 172) (4 911 494) (6 952 581)
Total assets 190 511 094 54 562 413 56 442 861 200 268 669 (238 068 783) 263 716 254
Total liabilities (37 711 174) (67 544 216)* (47 993 339) (8 736 938) 77 602 401 (84 393 266)
* - The majority of these liabilities are inter-group
Six-month period ended 30 June 2017
Head PLG Willow PLG PLG Mellow PLG PLG Allens PLG PLG PLG
Total Office View Hartbeespoort Oaks Northriding View Raslouw PLG Springs Properties Holdings
Revenue 28 796 491 - 4 569 022 7 889 321 6 663 077 4 586 882 1 145 739 2 841 125 1 101 325 - -
Other income 79 174 5 910 420 61 114 5 495 1 800 2 785 530 1 120 - -
Operating
expenses (31 770 406) (4 705 846) (2 480 193) (6 592 525) (4 979 015) (2 122 607) (1 469 743) (2 606 283) (1 159 602) (1 094 202) (4 560 390)
EBITDA (2 894 741) (4 699 936) 2 089 249 1 357 910 1 689 557 2 466 075 (321 219) 235 372 (57 157) (1 094 202) (4 560 390)
Depreciation
and
amortisation (308 594) (100) (53 938) (126 894) (45 128) (34 151) (16 275) (14 562) (17 546) - -
Interest
received 138 313 - 10 652 525 346 58 169 152 - 136 401
Finance cost (9 831) - (6 310) (2495) - (97) (929) - - - -
Profit/(Loss)
before tax (3 074 853) (4 700 036) 2 029 011 1 229 173 1 644 954 2 432 173 (338 365) 220 979 (74 551) (1 094 202) (4 423 989)
Total assets 175 893 735 12 845 634 7 888 349 46 746 459 6 633 428 5 130 483 1 141 629 2 413 712 1 290 028 84 663 684 7 140 329
Total liabilities (39 978 262) (4 076 794) (2 023 783) (5 915 916) (711 025) (952 287) (463 151) (564 971) (371 863) (24 120 932) (777 540)
RESULTS COMMENTARY
PL Group originally focused on providing accessible, affordable, private education through its
schools. From 1 July 2017 it expanded into retirement accommodation and associated services.
Accordingly, the interim results presented below are the first for the combined education and
retirement business.
The Company is a holding company of three subsidiaries, namely:
- Pembury Schools Proprietary Limited, known as PLG Schools, the education business;
- PLG Properties Proprietary Limited, which owns the group properties; and
- PLG Retirement Villages Proprietary Limited, known as Pembury Retirement Villages, the
retirement segment.
Where possible, PL Group acquires the properties from which its schools or retirement villages
operate, with the initial property acquisitions being mostly PLG Schools properties. This was
facilitated by the listing on the JSE. The intention going forward is to acquire additional properties
associated with the PLG Schools and Retirement Villages operations.
Revenue has grown 151% for the six months ended 30 June 2018 to R72.3 million compared to
R28.8 million for the comparable period ended 30 June 2017, of which PLG Schools contributed
R45.5 million and Pembury Retirement Villages R27.6 million.
In 2018, PLG Schools revenue grew to R45.5m, being an increase of 58% compared to R28.8m in
the prior period, with growth in pupil numbers at the eleven campuses (2017: seven). Growth in
pupil numbers is being achieved in the existing schools and through the launch of four new
campuses in January 2018, with 2 235 pupils at 30 June 2018.
Other operating income comprised income from the sale of food, drinks, tuck shop sales and
sundry income. During the period under review, the company decided to outsource the tuck
shop operations.
Operating costs increased by 145% for the same period to R77.7 million, which increase is primarily
associated with the following:
- additional schools operating during the period;
- the acquisition of 6 Retirement Villages; and
- the acquisition of properties by PLG Properties.
The costs of the holding company, retirement villages and the new property operations amounted
to R47 642 435 for the six months under review compared to more than R10 million for the six months
ended 30 June 2017. These costs are not expected to grow in line with growth in revenue.
The operating loss for the period under review increased to a loss of R5.2 million compared to a
loss of R3.2 million in the prior comparable period.
Finance costs increased to R1.76 million, mostly due to the increase in interest-bearing obligations
associated with the bond on Carlswald as well as finance costs associated with the Hartbeespoort
property and other financed assets.
As a result of the above, the net loss for the period was higher at R6.1 million compared to a loss
of R2.2 million for the previous six-month period.
The loss and headline loss per share increased by 86% to (1.51) cents from (0.81) cents, based on
higher weighted average shares in issue of 405 693 119 shares in the period under review
compared to 274 184 530 for the period ended 30 June 2017.
Accounts receivable and accounts payable both increased by 115% and 47% from 31 December
2017 due to the increase in the number of campuses and expansion of operations. The approach
to accounts receivable and the provision for credit allowances remains conservative, with
additional provision for credit allowances of 3.6% during the period under review.
Prepayments, which represents amounts paid for properties which have not yet been transferred
to PLG Properties, increased due to payments during the period for Sanrock.
Details of the headline loss reconciliation and per share information are set out below:
Unaudited six Unaudited six
months ended months ended
Headline Earnings Reconciliation: 30 June 2018 30 June 2017
Net loss after taxation (6 118 271) (2 213 894)
Adjusted for: - -
Headline loss for the six months (6 118 271) (2 213 894)
Per share information:
Weighted average shares in issue 405 693 119 274 184 530
Loss per share (cents)
Basic loss per share (1.51) (0.81)
Diluted loss per share (1.51) (0.81)
Headline loss per share (cents)
Basic headline loss per share (1.51) (0.81)
Diluted headline loss per share (1.51) (0.81)
ACQUISITIONS AND DISPOSALS
During the period under review, the group acquired the Finch Haven property for a purchase
price of R16 000 000, financed through an interest-bearing loan that is payable within 7 years of
the transfer of the property. This remains a commitment as at 30 June 2018.
The Company entered into an agreement for the acquisition by PLG Properties of the property
known as Pembury Sandton, located on Katherine Street in Sandton, Johannesburg on the
remaining extent of Erf 22 Sandown and Erf 23 Sandown and the rental income stream received
from the Sandton Property from Zephan Properties Proprietary Limited for a total consideration of
R159 000 000, which agreement has lapsed during the period under review. The intention of the
parties is to revive the agreement on the same terms and conditions, which acquisition will be
subject to board and shareholder approval.
During the period under review, management made a decision to not continue with the
Plettenberg Bay Lodge as negotiations to acquire the underlying property were unsuccessful.
COMMITMENTS AND SUBSEQUENT EVENTS
As at 30 June 2018, the Company had commitments in relation to the following property
acquisition agreements as set out below:
- the acquisition of unregistered portions of remainder of Portion 163 of the Farm Elandsvlei
249 IQ Elandsvlei, being the current location of PLG Greenhills Academy, which opened in
2018, for R6 000 000 (including VAT and commission), of which R1.6m remains outstanding at
30 June 2018;
- the acquisition of ERF 1729, Strubenvale EXT. 2, Springs, being the current location of PLG
Springs Academy which opened in January 2017, for a purchase consideration of
R3 500 000, including VAT), of which R2.8m remains outstanding at 30 June 2018;
- the acquisition of ERF 640, Allensnek EXT. 35, Roodepoort being the current location of PLG
Allens View Academy which opened in January 2017, for a purchase consideration of
R7 500 000), of which R6.8m remains outstanding at 30 June 2018;
- the acquisition of Portion 57 of the Farm Knopieslaagte No 385, City of Tshwane Metropolitan
Municipality, Registration Division JR, Gauteng being the location of PLG Midview Academy,
which opened in January 2018, for a purchase consideration of R14 000 000, including VAT),
of which R12.6m remains outstanding at 30 June 2018; and
- Finch Haven, as detailed under Acquisitions and Disposals above.
SHARE ISSUES AND REPURCHASES
During the period under review, the Company issued 1 467 375 shares for cash under its general
authority. There have been no repurchases of shares by the Company or any of its subsidiaries
during the period under review.
RELATED PARTY DISCLOSURE
The following related party information, which is material to an understanding of these results, is
disclosed below:
30 June 2018 30 June 2017
Figures in Rands R R
Loans receivable/(payable)
Pembury Services Proprietary Limited 296 835 7 774 999
Pembury Lodges CC (arising from the Retirement
Villages acquisition (4 465 741) -
Kygoway Proprietary Limited (186 042) -
Amounts included in trade and other payables
Kygoway Proprietary Limited (3 456 835) -
Rent paid to (received from) related parties
Pembury Services Proprietary Limited
Joan McLachlan 259 200 240 000
Pembury Lodges (Pty) Ltd 240 000
The above related party loans did not bear interest during the period under review and there are
no fixed terms of repayment.
Pembury Services Proprietary Limited provided head office and administration services to the PL
Group and a management services contract for shared services was in place. This service
contract was terminated with the related party acquisition of Retirement Villages with effect from
1 July 2017.
Kygoway Proprietary Limited provides construction and maintenance services to the group.
Pembury Services, Pembury Lodges CC and Kygoway have common directors and shareholders
as the PL Group.
GOING CONCERN
The unaudited interim results have been prepared on the basis of accounting policies applicable
to a going concern. This basis presumes that funds will be available to finance future operations
and that the realisation of assets and settlement of liabilities, contingent obligations and
commitments will occur in the ordinary course of business. Shareholders are referred to the more
detailed statement on going concern in the recently published results for the year ended
31 December 2017.
CONTINGENT LIABILITY
The Group currently has an agreement with tenants where an amount is to be refunded to the
tenant at the end of their life expectancy period. Pembury Retirement Villages could be held
liable for the life rights sold by the previous owner when the life rights are sold in the future even
though the Group is not contractually obligated to. This is due to the fact that the Group is
currently paying this liability on behalf of the previous owner which could lead to a constructive
obligation. The Group has a warranty from the previous owner that it would be liable for this debt
and reimburse the group, if and when the liability crystallises.
A valuation was performed on all life rights within the Group as at 31 December 2017. The value
of the liability that could potentially be paid out to tenants amounted to R9 145 967.
CHANGES TO THE BOARD OF DIRECTORS
As at 30 June 2018, the Board was composed of two executive directors and four non-executive
directors, of which three are independent. Subsequent to 30 June 2018, Mr Sheldon Nielson has
been appointed to the Board as chief operating officer of PL Group.
DIVIDEND
No dividend has been declared for the period under review (2017: Nil).
ANNUAL GENERAL MEETING - UPDATED FORM OF PROXY
Shareholders are advised that an amended form of proxy as been uploaded on the Company’s
website: www.plgschools.co.za in relation to the Annual General Meeting to be held on Thursday,
1 November 2018.
For and on behalf of the Board
ANDREW MCLACHLAN RIAAN VAN JAARSVELD
Chief Executive Officer Group Financial Director
16 October 2018
Executive Directors Registered Office
Andrew McLachlan (Chief Executive Officer) 111 9th Avenue, Fairland, Gauteng, 2030
Riaan van Jaarsveld (Financial Director) (PO Box 73723, Fairlands, Gauteng, 2030)
Independent Non-executive directors Company Secretary
Lou Brits (Chairman) Arbor Capital Corporate Services Proprietary
Barry Moyo Limited
Grant Waters Designated Advisor
Non-executive directors Arbor Capital Sponsors Proprietary Limited
Christo Hechter Transfer Secretaries
Njabulo Mthembu Link Market Services South Africa Proprietary
WEBSITE Limited
http://www.plgschools.co.za
Date: 16/10/2018 02:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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