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Audited Summary Results For The Year Ended 31 December 2017
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")
AUDITED SUMMARY RESULTS FOR THE
YEAR ENDED 31 DECEMBER 2017
HIGHLIGHTS - SCHOOLS*
REVENUE
22%
from R1 715 m
to R2 099 m
SCHOOLS EBITDA
22%
from R487 m
to R594 m
HEADLINE EARNINGS
24%
from R162 m
to R201 m
HEPS
17%
from 41.8 cents
to 49.0 cents
* Represents the group's continuing operations comprising of Curro and Meridian schools.
SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited
Audited Restated
% 31 Dec 2017 31 Dec 2016
change R million R million
Revenue 22% 2 099 1 715
Operating expenses 22% (1 626) (1 338)
Earnings before interest, taxation,
depreciation and amortisation (EBITDA) 25% 473 377
- Schools EBITDA 22% 594 487
- Head office EBITDA 10% (121) (110)
Depreciation and amortisation 25% (131) (105)
Earnings before interest and taxation (EBIT) 26% 342 272
Investment revenue (28%) 41 57
Profit/(loss) on sale of PPE 12 (1)
Gain from bargain purchase - 15
Share of profits of associates 1 1
Impairment - (11)
Finance costs (6%) (119) (127)
Profit before taxation (PBT) 34% 277 206
Taxation 67% (75) (45)
Profit for the year from continuing operations 25% 202 161
Discontinued operations
(Loss)/profit for the year from
discontinued operations Na (4) 7
Profit for the period (PAT) 18% 198 168
Other comprehensive income:
Net fair value (loss)/profit on cash flow hedges (13) (21)
Total comprehensive income 26% 185 147
Profit attributable to:
Owners of the parent 22% 209 172
Non-controlling interest (11) (4)
18% 198 168
Total comprehensive income attributable to:
Owners of the parent 30% 196 151
Non-controlling interest (11) (4)
26% 185 147
Reconciliation of headline earnings:
Earnings attributable to owners of the parent 209 172
Adjusted for:
Impairment - 11
Gain from bargain purchase - (15)
(Profit)/loss on disposal of property, plant
and equipment (12) 1
Headline earnings 17% 197 169
EBITDA margin 23% 22%
Schools EBITDA margin 28% 28%
Earnings per share (cents)
- Basic 14% 51.0 44.7
- Diluted 14% 50.8 44.5
Headline earnings per share (cents)
- Basic 10% 48.1 43.9
- Diluted 10% 48.0 43.7
Number of shares in issue (million)
- Basic 412.0 407.2
- Diluted 413.5 408.8
Weighted average number of shares in
issue (million)
- Basic 408.9 384.7
- Diluted 410.4 386.3
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited
Audited Restated
31 Dec 2017 31 Dec 2016
R million R million
ASSETS
Non-current assets 7 276 6 509
Property, plant and equipment* 6 660 5 851
Goodwill 397 428
Intangible assets 169 191
Investment in associate 12 11
Other financial assets 38 28
Current assets 808 812
Inventories 3 10
Current tax receivable 2 7
Other financial assets* 125 4
Trade receivable 66 29
Other receivables 41 56
Cash and cash equivalents 571 706
Total assets 8 084 7 321
EQUITY AND LIABILITIES
EQUITY
Equity attributable to equity holders of parent 5 019 4 976
Share capital 4 733 4 556
Reserves 14 23
Retained income 272 397
Non-controlling interest (23) (12)
Total equity 4 996 4 964
LIABILITIES
Non-current liabilities 2 717 1 942
Loans and other financial liabilities 2 342 1 624
Deferred tax 375 318
Current liabilities 371 415
Loans and other financial liabilities 40 27
Trade and other payables 169 126
Prepaid school fees and deposits 135 171
Development and acquisition payables 27 91
Total liabilities 3 088 2 357
Total equity and liabilities 8 084 7 321
Net asset value per share (cents) 1 226 1 222
* In the current year, management reclassified R240 million of other financial assets to property, plant and
equipment with respect to the year ended 31 December 2016 in the summary consolidated statement
of financial position. The reclassification had no effect on the summary consolidated statement of
financial position in the previous year other than to appropriately reflect the nature of the underlying
transaction, which has changed since December 2016.
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Audited Audited
31 Dec 2017 31 Dec 2016
R million R million
Balance at the beginning of the period 4 964 3 081
Total comprehensive income 185 147
Issue of shares 177 1 749
Share issue costs (1) (27)
Stadio unbundling (345) –
Other 16 14
Balance at the end of the period 4 996 4 964
SUMMARY CONSOLIDATED SEGMENTAL REPORT
Audited Audited
% 31 Dec 2017 31 Dec 2016
change R million R million
Learner numbers (unaudited) 8% 45 870 42 343
- Curro 11% 36 205 32 545
- Meridian (1%) 9 665 9 798
Revenue 22% 2 099 1 715
- Curro 27% 1 828 1 440
- Meridian (1%) 271 275
Schools EBITDA 22% 594 487
- Curro 27% 540 425
- Meridian (13%) 54 62
Net head office expenditure 10% (121) (110)
- Curro 11% (110) (99)
- Meridian - (11) (11)
EBITDA margin 23% 22%
- Curro 24% 22%
- Meridian 16% 20%
Headline earnings 17% 197 169
Schools 24% 201 162
- Curro 33% 232 174
- Meridian 158% (31) (12)
Stadio Na (4) 7
Headline earnings per share (cents) 10% 48.1 43.9
Schools 17% 49.0 41.8
- Curro 26% 56.6 45.0
- Meridian 137% (7.6) (3.2)
Stadio Na (0.9) 2.1
Earnings per share (cents) 14% 51.0 44.7
Schools 22% 51.9 42.6
- Curro 30% 59.5 45.8
- Meridian 137% (7.6) (3.2)
Stadio Na (0.9) 2.1
Total assets 10% 8 084 7 321
Schools 14% 8 084 7 069
- Curro 16% 7 381 6 390
- Meridian 4% 703 679
Stadio - - 252
Total liabilities 31% 3 088 2 357
Schools 45% 3 088 2 132
- Curro 64% 2 315 1 414
- Meridian 8% 773 718
Stadio - - 225
Net asset value per share (cents) 1 226 1 222
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
% 31 Dec 2017 31 Dec 2016
change R million R million
Cash generated from operations 23% 489 399
Taxation paid - (8) (8)
Net finance costs 13% (77) (68)
Working capital movements - operations (27) (4)
Working capital movements - investments (64) 85
Net cash generated from
operating activities (23%) 313 404
Net cash utilised in investing activities (30%) (1 192) (1 700)
Net cash from financing activities (50%) 891 1 771
Net cash from Stadio unbundling (147) -
Cash and cash equivalents movement
for the period (135) 475
Cash and cash equivalents at the
beginning of the period 706 231
Cash and cash equivalents at the end of
the period 571 706
KEY RATIOS (UNAUDITED)
31 Dec 31 Dec 31 Dec 31 Jan
2015 2016 2017 2018
Number of campuses 41 48 51 59
Number of schools 100 114 124 138
Number of learners 35 130 42 343 45 870 52 233
Average number of learners per campus 857 882 899 885
Number of employees 3 886 4 723 5 369
Number of educators 2 290 2 546 2 778
Learner/educator ratio 15 17 17
Building size (m2) 447 221 540 799 598 194
Land size (ha) 359 423 444
Capital investment (R million) 1 022 1 700 1 192
- Current campuses (R million) 638 571 652
- New campuses (R million) 369 649 472
- Acquisitions (R million) 15 266 12
- Stadio (R million) - 214 56
J-CURVE (UNAUDITED)
The table below illustrates the J-curve effect from the newly established schools to more mature schools by age. All amounts are as at 31 December and exclude profit on sale of assets.
Number at Schools EBITDA
31 Dec 2017 Learner numbers (Dec) Growth (R million) Growth EBITDA margin Eventual capacity
Campuses Schools 2015 2016 2017 15/16 16/17 2015 2016 2017 15/16 16/17 2015 2016 2017 2015 2016 2017
Developed schools 36 89 20 694 24 699 28 315 19% 15% 174 258 342 48% 33% 23% 27% 27% 40% 42% 45%
2009 and before* 3 8 3 332 3 470 3 443 4% (1%) 37 44 55 19% 25% 28% 29% 26% 84% 88% 87%
2010 2 6 2 120 2 232 2 254 5% 1% 24 31 37 29% 19% 29% 33% 35% 66% 69% 70%
2011 6 16 4 337 4 567 4 552 5% 0% 40 52 53 30% 2% 23% 26% 28% 45% 47% 47%
2012 2 6 1 618 1 788 1 904 11% 6% 15 19 25 27% 32% 23% 25% 28% 48% 53% 57%
2013 4 12 4 922 5 757 6 149 17% 7% 67 93 104 39% 12% 38% 41% 39% 50% 59% 63%
2014 4 8 1 271 1 531 1 833 20% 20% 1 3 6 200% 100% 2% 2% 9% 19% 22% 27%
2015 8 19 3 094 4 767 5 748 54% 21% (10) 17 38 Na 124% (13%) 13% 21% 20% 31% 37%
2016 4 7 - 587 1 179 0% 101% - (1) 15 - Na - (2%) 22% - 10% 20%
2017 3 7 - - 1 253 0% 0% - - 9 - - - - 18% - - 23%
Acquired schools 15 35 14 436 17 644 17 555 22% (1%) 203 233 268 15% 15% 33% 30% 30% 75% 73% 73%
2012 and before 8 17 6 851 6 884 6 919 - 1% 121 130 142 7% 9% 38% 36% 37% 72% 72% 72%
2013 1 2 4 939 4 701 4 233 (5%) (10%) 44 42 35 (5%) (17%) 30% 26% 25% 82% 78% 70%
2014 2 5 2 046 2 441 2 618 19% 7% 34 43 56 26% 30% 28% 29% 33% 84% 85% 92%
2015 and 2016 4 11 600 3 618 3 785 503% 5% 4 18 35 350% 94% 17% 19% 20% 81% 69% 72%
Property rental
and royalties (3) (4) (16)
Total 51 124 35 130 42 343 45 870 21% 8% 374 487 594 30% 22% 28% 28% 28% 50% 52% 53%
Note
Acquired schools indicates the year the school was incorporated into Curro. All acquired schools have been established for at least seven years.
*2009 and before schools have a maximum of 20 learners per class, which has a direct impact on the EBITDA. Other schools have a maximum of 25 learners for Curro and Select,
or 35 for Meridian or Academy schools.
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF COMPLIANCE
The summary consolidated financial statements are prepared in accordance with the
requirements of the JSE Limited Listings Requirements for provisional reports, and
the requirements of the Companies Act applicable to summary financial statements.
The Listings Requirements require provisional reports to be prepared in accordance
with the framework concepts and the measurement and recognition requirements
of International Financial Reporting Standards (IFRS) and the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and Financial
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 accounting policies applied in the preparation of the consolidated
financial statements from which the summary consolidated financial statements
were derived are in terms of International Financial Reporting Standards and are
consistent with those accounting policies applied in the preparation of the previous
consolidated annual financial statements. The summary consolidated results have
been prepared internally under the supervision of the Chief Financial Officer,
B van der Linde, CA(SA) CFA. The directors take full responsibility for the preparation
of the summary consolidated financial statements and that the financial information
has been correctly extracted from the underlying annual financial statements.
2. AUDIT OPINION
These summary consolidated financial statements for the year ended 31 December 2017
have been audited by PricewaterhouseCoopers Inc., who expressed an unmodified
opinion thereon. The auditor also expressed an unmodified opinion on the annual
financial statements from which these summary consolidated financial statements
were derived.
A copy of the auditor's report on the summary consolidated financial statements
and a copy of the auditor's report on the annual consolidated financial statements
are available for inspection at the company's registered office, together with the
financial statements identified in the respective auditor's reports.
The auditor's report does not necessarily report on all the information contained
in this announcement/financial results. Shareholders are therefore advised that, in
order to obtain a full understanding of the nature of the auditor's engagement,
they should obtain a copy of the auditor's report, together with the accompanying
financial information from the issuer's registered office.
3. ACCOUNTING POLICIES
The accounting policies adopted in the preparation of the summary consolidated
interim financial information are consistent with those of the annual financial
statements for the year ended 31 December 2016. For a full list of standards and
interpretations that have been adopted, we refer you to our 31 December 2017
annual financial statements.
4. BUSINESS COMBINATIONS
Effective 1 January 2017, Curro acquired the business operations and property of
Eco Kidz.
Group
Business combinations
Property, plant and equipment 5 147
Intangible assets 4
Trade and other receivables 46
Cash and cash equivalents 83
Deferred tax liability (1 276)
Trade and other payables (20)
Total identifiable net assets 3 984
Goodwill 8 316
12 300
Consideration paid
Cash (12 300)
(12 300)
Net cash outflow on acquisition
Cash consideration paid (12 300)
Cash acquired 83
(12 217)
5. IFRS 13 SWAP DISCLOSURE
2017 2016
SWAP liability 17 297 597
The interest rate swap agreements are measured using market-to-market rates by
the issuer of the instruments and represents a Level 2 fair value measurement for
financial reporting purposes.
6. EVENTS AFTER THE REPORTING PERIOD
In February 2018 Curro conditionally acquired Baobab School, a leading primary
school that is situated in Gaborone, Botswana. They also acquired another
independent school group in South Africa.
7. FINANCIAL ASSISTANCE
Further to the announcement of 16 August 2016 where Curro announced that it 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. Notice is hereby given, in terms of section 45(5)(a) of
the Companies Act, No. 71 of 2008, as amended ("the Companies Act"), that the
board of directors of Curro ("the Board"), at a meeting held on 16 February 2018,
authorised the Company to provide financial assistance, as may be required from
time to time, to its wholly-owned subsidiary Curro Funding Company (Pty) Ltd by way
of the granting of loans up to a maximum of R380 million, which loans bear interest
ranging from zero percent to prime interest rate. The primary source of the approved
financial assistance is Curro's current cash on hand. This authority was granted to
the Board by shareholders at Curro's annual general meeting held on 23 June 2017.
In accordance with section 45 of the Act, the Board is satisfied and acknowledges
that immediately after providing such financial assistance, Curro would satisfy the
solvency and liquidity test provided for in section 4 of the Act and that the terms of
the financial assistance are fair and reasonable to Curro.
Overview
Curro has delivered a satisfactory set of financial results for 2017 in a tough economic market.
The board believes that the group is strategically positioned and poised for both organic and
acquisitional future growth.
Curro was established in 1998, and is the leading for-profit independent school provider in
southern Africa. It develops, acquires and manages independent schools for learners from
the age of three months to Grade 12. The different school models are Curro Castles (nursery
schools), Curro, Curro Academy, Meridian and Select schools.
In its 20th year of existence, Curro has passed another milestone with more than
50 000 learners across 59 campuses (138 schools).
Learner numbers
Year 2016 2017 2018
All schools 42 343 8% 45 870 14% 52 233
We are satisfied with the 14% growth in learner numbers in 2018, considering that 5% of
2017 learners did not enrol in 2018, mainly due to affordability reasons.
Matric results
The 22 Curro schools that wrote the IEB exams achieved an overall pass rate of 99.74%, with
the 2017 Grade 12 group achieving an average of 65.4%. A total of 112 learners managed to
obtain an A aggregate, with 85.14% of all Grade 12 learners receiving a BD pass (qualifying to
study for a bachelor's degree) - one of the highest percentages in the country. The NSC exams
were written by nine schools (824 candidates), with 346 learners obtaining a BD pass rate and
ten an A aggregate. The first group of matriculants from Meridian Cosmo City, achieved a
100% NSC pass rate and a 72% BD pass rate.
Stadio Holdings
Given the potential identified in the tertiary-education market, Stadio listed separately on the
Main Board of the JSE and unbundled from Curro on 3 October 2017. The Stadio results have
therefore been accounted for as a discontinued operation, of which nine months' results are
included in the current year and a full 12 months' results in the prior year.
Stadio embarked on a growth plan that included significant acquisitions in order to increase its
product offerings in the private higher-education space, as well as the geographic expansion
of its offerings (i.e. the two new Embury Institute of Higher Education (EIHE) campuses in
Waterfall Estate and Montana). The once-off acquisition costs, new campus set-up costs,
costs of establishing a new head office management team, as well as the costs to list Stadio,
all impacted the results for the 2017 financial year. Stakeholders are referred to the trading
update released by Stadio on 16 February 2018. Stadio's full year results for the 2017 financial
year will be released on or about 9 March 2018.
Financial results
Continuing operations
For the year ended 31 December 2017, learner numbers increased by 8% from 42 343 to
45 870, increasing revenue by 22% from R1 715 million in 2016 to R2 099 million. Schools'
EBITDA (earnings before interest, taxation, depreciation, amortisation and head office
expenditure) increased by 22% from R487 million to R594 million over the same period, with
EBITDA increasing by 25% from R377 million to R473 million.
The EBITDA margin increased to 23% despite the negative growth from Meridian. Satisfactory
EBITDA margin growth is evident in schools where capacity utilisation increases.
Headline earnings increased by 24% from R162 million to R201 million during the reporting
period. However, headline earnings per share increased by 17% from 41.8 cents to 49.0 cents
due to the increase in the weighted average number of shares in issue following private
placements undertaken and shares issued in terms of the Share Incentive Trust during the year.
The effective tax rate has increased from 21.8% to 27.1% due to the reduced permanent tax
difference arising from the capital contribution made to the Share Incentive Trust.
Group (including discontinued operations)
Headline earnings increased by 17% from R169 million to R197 million during the reporting
period. However, headline earnings per share increased by 10% from 43.9 cents to
48.1 cents due to the increase in the weighted average number of shares in issue following
private placements undertaken and shares issued in terms of the Share Incentive Trust during
the year.
Investment and expansion
During 2017, R1.136 billion was invested in the schools business. The capital was deployed
in the following projects:
- Construction of five new campuses to the value of R324 million. These campuses
include Curro Castle Oakdene (Gauteng), Curro Castle Uitzicht (Western Cape),
Curro Academy Mamelodi (Gauteng), Curro Academy Riverside (Gauteng) and Curro
Academy Sandown (Western Cape).
- R652 million was invested in the expansion of existing campuses, which included
significant expansions at Curro Roodeplaat (high school), Curro Academy Wilgeheuwel
(high school), Windhoek Gymnasium (Namibia), Curro Hillcrest Academy and
Curro Hermanus.
- R148 million was invested in land banking.
During the year Curro refunded R850 million of debt at lower rates and raised additional
five-year bullet funds of R650 million. Curro (excluding Meridian) has unutilised facilities
of R550 million.
The group plans to invest up to R2.3 billion in 2018.
Acquisitions
Curro conditionally acquired Baobab School, a leading primary school with a 27-year
history and 750 learners that is situated in Gaborone, Botswana, and another independent
school group with more than 2 000 learners in South Africa.
Strategic acquisitions at competitive prices are continuously considered in addition to the
greenfield expansion programme.
Directorate
Effective 26 January 2018, Douglas Ramaphosa was appointed to the Curro board as an
independent non-executive director.
Dividends
Stadio was listed on the JSE and unbundled from Curro on 3 October 2017.
The unbundling was accounted for as a dividend in specie in terms of section 46(1)(a)(ii) of
the Companies Act, No. 71 of 2008, as amended, and section 46 of the Income Tax Act,
No. 58 of 1962, as amended, and amounted to R345 million. The debit was accounted
for as a decrease in retained earnings. Refer to the SENS of 9 October 2017 to understand
the apportionment of tax cost with respect to the unbundling. Shareholders are advised to
consult their own tax advisors in this regard.
No other dividends have been declared for the year under review.
Prospects
Curro will continue to take advantage of the significant growth opportunities in the
education market both in SA and across our borders.
On behalf of the board
SL Botha AJF Greyling
Chairperson Chief Executive Officer
19 February 2018
STATUTORY AND ADMINISTRATION
Directors: SL Botha** (Chairperson), AJF Greyling (CEO), B van der Linde (CFO), HG Louw (CIO),
PJ Mouton*, CR van der Merwe*, ZL Combi**, SWF Muthwa**, B Petersen**, DM Ramaphosa**
* Non-executive
** Independent non-executive
Registered office: 38 Oxford Street, Durbanville 7550
Transfer secretaries: Computershare Investor Services (Pty) Ltd Rosebank Towers, 15 Biermann Avenue,
Rosebank, Johannesburg 2196. PO Box 61051, Marshalltown 2107
Corporate adviser and sponsor: PSG Capital
Date: 19/02/2018 08:50:00 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.
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