Wrap Text
Results For The Six Months Ended 30 June 2018
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")
RESULTS FOR THE SIX MONTHS
ENDED 30 JUNE 2018
HEADLINE EARNINGS* Up 22% from R113m to R138m
HEPS* Up 22% from 27.6 cents to 33.6 cents
EBITDA* Up 31% from R255m to R335m
REVENUE* Up 18% from R1 051m to R1 242m
*From continuing operations
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited
Unaudited Restated* Audited
30 Jun 2018 30 Jun 2017 31 Dec 2017
6 months 6 months 12 months
change R million R million R million
Continuing operations
Revenue 18% 1 242 1 051 2 099
Operating expenses 14% (907) (796) (1 626)
Earnings before interest, taxation,
depreciation and amortisation (EBITDA) 31% 335 255 473
– Schools' EBITDA 27% 402 316 594
– Head office EBITDA 10% (67) (61) (121)
Depreciation and amortisation 18% (79) (67) (131)
Earnings before interest and taxation (EBIT) 36% 256 188 342
Interest income 19% 31 26 41
Profit on sale of property, plant and
equipment – 1 12
Share of profits of associate 1 – 1
Finance costs 51% (104) (69) (119)
Profit before taxation (PBT) 26% 184 146 277
Taxation 32% (50) (38) (75)
Profit for the period (PAT) 24% 134 108 202
Discontinued operations
Loss from discontinued operations – (3) (4)
Profit for the period (PAT) 28% 134 105 198
Other comprehensive income:
Net fair value profit/(loss) on
cash-flow hedges 5 (3) (13)
Total comprehensive income 36% 139 102 185
Profit attributable to:
Owners of the parent 24% 138 111 209
Non-controlling interest (4) (6) (11)
28% 134 105 198
Total comprehensive income
attributable to:
Owners of the parent 32% 143 108 196
Non-controlling interest (4) (6) (11)
36% 139 102 185
Reconciliation of headline earnings:
Earnings attributable to owners of the parent 138 111 209
Adjusted for:
Profit on sale of property, plant and
equipment – (1) (12)
Headline earnings 25% 138 110 197
– From continuing operations 22% 138 113 201
– From discontinued operations – (3) (4)
EBITDA margin 27% 23% 23%
Schools' EBITDA margin 33% 31% 28%
Earnings per share (cents)
– Basic 24% 33.6 27.2 51.0
– Diluted 24% 33.5 27.1 50.8
Headline earnings per share (cents) 25% 33.6 26.9 48.1
– From continuing operations 22% 33.6 27.6 49.0
– From discontinued operations – (0.7) (0.9)
Diluted headline earnings per share
(cents) 25% 33.5 26.8 48.0
– From continuing operations 22% 33.5 27.5 48.9
– From discontinued operations – (0.7) (0.9)
Number of shares in issue (millions)
– Basic 412.1 407.2 412.1
– Diluted 412.9 408.9 413.5
Weighted average number of shares in
issue (millions)
– Basic 412.1 407.2 408.9
– Diluted 412.9 408.9 410.4
*Previous figures were restated to reflect discontinued operations.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 Jun 2018 30 Jun 2017 31 Dec 2017
R million R million R million
ASSETS
Non-current assets 7 936 6 928 7 276
Property, plant and equipment 7 219 6 241 6 660
Goodwill 481 437 397
Intangible assets 192 212 169
Investment in associate 13 11 12
Other financial assets 31 27 38
Current assets 407 502 808
Inventories 1 6 3
Current tax receivables 2 2 2
Other financial assets 6 3 125
Trade receivables 76 43 66
Other receivables 50 30 41
Cash and cash equivalents 272 418 571
Total assets 8 343 7 430 8 084
EQUITY AND LIABILITIES
Equity attributable to equity holders of parent 5 169 5 091 5 019
Share capital 4 733 4 556 4 733
Reserves 25 28 14
Retained income 411 507 272
Non-controlling interest (19) (17) (23)
Total equity 5 150 5 074 4 996
LIABILITIES
Non-current liabilities 2 774 2 009 2 717
Loans and other financial liabilities 2 310 1 658 2 342
Deferred tax 464 351 375
Current liabilities 419 347 371
Loans and other financial liabilities 34 27 40
Trade and other payables 146 126 169
Prepaid school fees and deposits 215 177 135
Development and acquisitions payables 24 17 27
Total liabilities 3 193 2 356 3 088
Total equity and liabilities 8 343 7 430 8 084
Net asset value per share (cents) 1 249 1 246 1 226
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
30 Jun 2018 30 Jun 2017 31 Dec 2017
6 months 6 months 12 months
R million R million R million
Balance at the beginning of the period 4 996 4 964 4 964
Total comprehensive income 139 102 185
Issue of shares – – 177
Share issue costs – – (1)
Stadio unbundling – – (345)
Other 15 8 16
Balance at the end of the period 5 150 5 074 4 996
CONDENSED CONSOLIDATED SEGMENTAL REPORT
Unaudited Unaudited Audited
30 Jun 2018 30 Jun 2017 31 Dec 2017
6 months 6 months 12 months
change R million R million R million
Learner numbers 10% 50 691 45 890 45 870
– Curro 14% 41 356 36 288 36 205
– Meridian (3%) 9 335 9 602 9 665
Revenue 18% 1 242 1 051 2 099
– Curro 20% 1 102 915 1 828
– Meridian 3% 140 136 271
Schools' EBITDA 27% 402 316 594
– Curro 30% 372 287 540
– Meridian 3% 30 29 54
Net head office expenditure 10% (67) (61) (121)
– Curro 11% (61) (55) (110)
– Meridian 0% (6) (6) (11)
EBITDA margin 27% 23% 23%
– Curro 28% 25% 24%
– Meridian 17% 17% 16%
Headline earnings 25% 138 110 197
Schools 22% 138 113 201
– Curro 17% 150 128 232
– Meridian N/a (12) (15) (31)
Stadio – (3) (4)
Headline earnings per share (cents) 25% 33.6 26.9 48.1
Schools 22% 33.6 27.6 49.0
– Curro 17% 36.6 31.4 56.6
– Meridian N/a (3.0) (3.8) (7.6)
Stadio – (0.7) (0.9)
Earnings per share (cents) 24% 33.6 27.2 51.0
Schools 20% 33.6 27.9 51.9
– Curro 15% 36.6 31.7 59.5
– Meridian N/a (3.0) (3.8) (7.6)
Stadio – (0.7) (0.9)
Total assets 12% 8 343 7 430 8 084
Schools 16% 8 343 7 181 8 084
– Curro 17% 7 632 6 525 7 381
– Meridian 8% 711 656 703
Stadio – 249 –
Total liabilities 36% 3 193 2 356 3 088
Schools 50% 3 193 2 131 3 088
– Curro 69% 2 400 1 421 2 315
– Meridian 12% 793 710 773
Stadio – 225 –
Net asset value per share (cents) 1 249 1 246 1 226
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
30 Jun 2018 30 Jun 2017 31 Dec 2017
6 months 6 months 12 months
change R million R million R million
Cash generated from operations 31% 342 262 489
Tax paid N/a (7) – (8)
Net finance cost 74% (73) (42) (77)
Working capital movements –
operations 76% 37 21 (27)
Working capital movements –
investments N/a (3) (74) (64)
Net cash generated from operating
activities 77% 296 167 313
Net cash utilised in investing
activities 40% (681) (487) (1 192)
Net cash from financing activities N/a 86 32 891
Net cash outflow from Stadio
unbundling N/a – – (147)
Cash and cash equivalents
movement for the period (299) (288) (135)
Cash and cash equivalents at the
beginning of the period 571 706 706
Cash and cash equivalents at the
end of the period 272 418 571
KEY RATIOS
31 Dec 31 Dec 31 Dec 30 Jun
2015 2016 2017 2018
Number of campuses 41 48 51 57
Number of schools 100 114 127 139
Number of learners 35 130 42 343 45 870 50 691
Average number of learners per
campus 857 882 899 889
Number of employees 3 886 4 723 5 369 5 710
Number of teachers 2 290 2 546 2 778 2 976
Learner/teacher ratio 15 17 17 17
Building size (m2) 447 221 540 799 598 194 631 287
Land size (ha) 359 423 444 465
Capital investment (R million) 1 022 1 700 1 192 681
– Current campuses (R million) 638 571 652 213
– New campuses (R million) 369 649 472 253
– Acquisitions (R million) 15 266 12 215
– Stadio (R million) – 214 56 –
J-CURVE
The table below illustrates the J-curve effect from the newly established schools to more mature schools by age. All figures and amounts are as at 30 June.
Number at 30 Jun 2018 Learner numbers Growth EBITDA** (R million) Growth EBITDA margin Eventual capacity
Campuses Schools 2016 2017 2018 16/17 17/18 2016 2017 2018 16/17 17/18 2016 2017 2018 2016 2017 2018
Developed schools 40 98 24 344 28 315 31 872 16% 13% 131 179 243 37% 36% 27% 29% 33% 42% 45% 45%
2009 and before* 4 9 3 818 3 897 3 872 2% (1%) 23 29 36 26% 24% 26% 30% 33% 81% 83% 82%
2010 2 6 2 216 2 254 2 205 2% (2%) 15 20 20 33% 0% 32% 37% 35% 69% 70% 68%
2011 5 15 4 134 4 098 4 177 (1%) 2% 27 29 33 7% 14% 30% 30% 31% 46% 46% 46%
2012 2 6 1 764 1 904 1 978 8% 4% 9 14 17 56% 21% 24% 30% 32% 53% 57% 59%
2013 4 12 5 651 6 149 6 445 9% 5% 47 55 69 17% 25% 41% 40% 44% 58% 63% 65%
2014 4 8 1 506 1 833 2 169 22% 18% 2 3 8 50% 167% 8% 9% 19% 22% 27% 32%
2015 8 19 4 730 5 748 6 216 22% 8% 9 19 25 111% 32% 14% 21% 23% 30% 37% 40%
2016 4 8 525 1 179 1 681 125% 43% (1) 7 19 N/a 171% (9%) 26% 38% 9% 20% 28%
2017 3 8 – 1 253 2 499 – 99% – 3 21 – 600% – 14% 41% – 23% 46%
2018 4 7 – – 630 – – – – (5) – – – – (42%) – – 9%
Acquired schools 17 41 16 209 17 575 18 819 8% 7% 123 144 165 17% 15% 33% 33% 33% 78% 75% 73%
2012 and before 7 17 6 847 6 919 7 007 1% 1% 68 76 78 12% 3% 36% 39% 38% 71% 72% 72%
2013*** 2 2 4 701 4 253 3 855 (10%) (10%) 25 19 17 (24%) (11%) 34% 28% 25% 78% 71% 64%
2014 2 6 2 425 2 618 2 742 8% 5% 23 30 40 30% 33% 31% 35% 40% 85% 92% 95%
2015 and 2016 4 13 2 236 3 785 4 147 69% 10% 7 19 25 171% 32% 19% 22% 24% 92% 72% 79%
2018 2 3 – – 1 068 – – – – 5 – – – – 25% – – 52%
Property rental and
royalties (5) (7) (6)
Total 57 139 40 553 45 890 50 691 13% 10% 249 316 402 27% 27% 30% 31% 33% 51% 53% 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 and Academy schools.
** Schools' EBITDA
*** Learner number losses at Northern Academy.
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF COMPLIANCE
The condensed consolidated interim financial statements for the six months ended
30 June 2018 have 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 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 results have
not been reviewed or audited by the Company's auditor. The condensed consolidated
interim financial statements have been prepared internally under the supervision of the
Chief Financial Officer, B van der Linde, CA(SA) CFA.
2. ACCOUNTING POLICIES
The accounting policies applied in the preparation of the condensed consolidated
interim financial statements are materially consistent with those of the annual financial
statements for the year ended 31 December 2017, except for the mandatory adoption
of IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers
which became effective 1 January 2018. The adoption of IFRS 9 and IFRS 15 did not
have a significant impact on the amounts recognised or disclosed in the condensed
consolidated interim financial statements.
3. BUSINESS COMBINATIONS
Effective 1 March 2018, Curro acquired Dot's Learning Centre and on the 1st April 2018,
Curro acquired Cooper College including Magic Beings.
R million
The following assets and liabilities were recognised:
Property, plant and equipment 176
Intangible assets 4
Trade and other receivables 10
Cash and cash equivalents 1
Deferred tax liabilities (47)
Trade and other payables (10)
Non-controlling interest (8)
Total identifiable net assets 126
Goodwill 94
220
Total purchase consideration
Cash consideration paid (216)
Deferred purchase consideration (4)
(220)
Net cash outflow on acquisition
Cash consideration paid (216)
Cash acquired 1
(215)
4. CASH-FLOW HEDGES
R million Jun 2018 Jun 2017 Dec 2017
Fixed-for-variable interest rate swap
liabilities 9 3 17
The interest rate swap agreements are measured using mark-to-market rates by the
issuer of the instruments, representing a Level 2 fair value measurement for financial
reporting purposes.
5. EVENTS AFTER THE REPORTING PERIOD
The previously announced acquisition of the operations and property of Baobab
Primary School (Gaborone, Botswana) became effective on 1 July 2018.
6. FINANCIAL ASSISTANCE
Notice is hereby given, in terms of section 45(5)(a) of the Companies Act, No. 71 of
2008, as amended ("the Act"), that the board of directors of Curro ("the Board"), at a
meeting of the Board held on 13 August 2018, resolved that the Company will provide
financial assistance to its subsidiary Campus and Property Management Company (Pty)
Ltd ("CAPMAC") to the value of R256 million, for purposes of repaying a portion of
the higher interest rate carrying debt in the Meridian venture. The R256 million will be
provided in the form of interest free subordinated junior debt between the Company
and CAPMAC. The primary source of the approved financial assistance is Curro's
current bank debt and facilities. The resolution by the Board was taken pursuant to the
authority granted to the Board by shareholders at Curro's annual general meeting held
on 4 June 2018. 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.
REVIEW OF RESULTS
The Board is pleased to present solid results for the six months ended 30 June 2018 in the year
that Curro celebrates its 20th birthday. With more than 50 000 learners in 57 campuses across
Southern Africa, Curro remains committed to providing quality independent school education
to an ever-increasing number of learners throughout Southern Africa.
Learner numbers
Dec 2017 Jun 2018 % increase
Organic growth 45 870 49 623 8%
Acquisitions 1 068
Total 45 870 50 691 10%
Financial results
For the comparative period to 30 June 2017, Stadio which was unbundled to shareholders on
3 October 2017, has been disclosed as a discontinued operation.
For the period ended 30 June 2018, learner numbers increased by 10% from 45 890 to 50 691,
increasing revenue by 18% from R1 051 million in 2017 to R1 242 million.
Schools' EBITDA (earnings before interest, taxation, depreciation, amortisation and head
office expenditure) increased by 27% from R316 million in 2017 to R402 million for the period
under review, with EBITDA increasing by 31% from R255 million to R335 million. The major
improvement in the EBITDA margin from 23% to 27% is due to increased efficiencies and
capacity utilisation.
Finance costs increased by 51% from R69 million to R104 million as a result of long-term interest
bearing debt increasing from R1 658 million to R2 310 million.
Headline earnings from continuing operations increased by 22% from R113 million to R138 million
during the reporting period. Headline earnings per share from continuing operations increased
by 22% from 27.6 cents to 33.6 cents.
Meridian
The shareholders have resolved to recapitalise the business to redeem expensive interest-bearing
debt. Curro is a 65% shareholder in Meridian and will invest R256 million. This will significantly
improve the profitability of this venture and will have a positive impact on Curro going forward.
New campuses and expansions
Curro will invest R400 million in six new campuses at Curro Vanderbijlpark and Edenvale, Curro
Academies at Parkdene (Boksburg), Protea Glen (Soweto) and Savanna City (Johannesburg),
as well as a Curro Castle at Burgundy Estate (Cape Town).
Major expansion projects are underway at Curro Brackenfell, Building Blocks, Curro Heritage
House (previously Curro Embury) and Windhoek Gymnasium. The estimated investment for
expansion and replacement of assets is R700 million.
Curro has acquired Baobab Primary School (Gaborone, Botswana), Cooper College (Douglasdale,
Gauteng) and Dot's Learning Centre. Further acquisitions are being explored.
Balance sheet and funding
Curro has a strong balance sheet. The increasing cash generation improves the Group's ability
to service debt, which will be the preferred method of funding going forward. Interest service
cover ratio for Curro (EBITDA/Net Finance costs (including capitalised interest)) was at 3.5 times
which is well ahead of internal targets. Gearing levels (debt/equity) increased from 33% to 45%
but will continue to be conservatively managed.
Directorate
Effective 10 August 2018, Zandile Nangamso (Nan) Mankai was appointed to the Curro Board as an
independent non-executive director. Nan has been appointed as a member of the audit and risk committee.
Dividends
No dividend was declared for the period under review.
Prospects
The Board believes Curro is well positioned for growth and remains optimistic about its
long-term prospects.
On behalf of the board
SL Botha AJF Greyling
Chairperson Chief Executive Officer
14 August 2018
STATUTORY AND ADMINISTRATION
Directors: SL Botha** (Chairperson), ZL Combi**, AJF Greyling (CEO), HG Louw (CIO),
ZN Mankai**, PJ Mouton*, SWF Muthwa**, B Petersen**, D Ramaphosa**,
B van der Linde (CFO), CR van der Merwe*
* Non-executive
** Independent non-executive
Registered office: 38 Oxford Street, Durbanville, Cape Town, 7550
Transfer secretaries: Computershare Investor Services (Pty) Ltd
Rosebank Towers, 15 Biermann Avenue, Rosebank, Johannesburg, 2196
Corporate adviser and sponsor: PSG Capital
Company Secretary: IWM Isdale
Celebrating 20 years of excellence in education
www.curro.co.za
Date: 14/08/2018 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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