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Results For The Year Ended 31 December 2018 And Dividend Declaration
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 2018
HEADLINE EARNINGS*
Increase 23% from R201m to R248m
REVENUE*
Increase 19% from R2 099m to R2 496m
HEPS*
Increase 23% from 49.0 cents to 60.1 cents
EBITDA*
Increase 33% from R473m to R627m
*From continuing operations
SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
31 Dec 2018 31 Dec 2017
change R million R million
Continuing operations
Revenue 19% 2 496 2 099
Operating expenses 15% (1 869) (1 626)
Earnings before interest, taxation, depreciation
and amortisation (EBITDA) 33% 627 473
- Schools EBITDA 30% 772 594
- Head office EBITDA 20% (145) (121)
Depreciation and amortisation 18% (154) (131)
Earnings before interest and taxation (EBIT) 38% 473 342
Interest income 34% 55 41
Profit on sale of property, plant and equipment - 12
Share of (loss)/profit of associate (1) 1
(Loss)/profit on disposal of investment in
associate (1) -
Finance costs 62% (193) (119)
Profit before taxation (PBT) 20% 333 277
Taxation 21% (91) (75)
Profit for the period (PAT) from continuing
operations 20% 242 202
Discontinued operations
Loss from discontinued operations - (4)
Profit for the period (PAT) 22% 242 198
Other comprehensive income:
Net fair value profit/(loss) on cash-flow hedges 6 (13)
Foreign currency translation (1) -
Total comprehensive income 34% 247 185
Profit attributable to:
Owners of the parent 19% 248 209
Non-controlling interest (6) (11)
22% 242 198
Total comprehensive income attributable to:
Owners of the parent 29% 253 196
Non-controlling interest (6) (11)
34% 247 185
Reconciliation of headline earnings:
Profit attributable to owners of the parent 248 209
Adjusted for:
Profit on sale of property, plant and equipment - (12)
Loss on disposal of investment in associate - -
Headline earnings 26% 248 197
- From continuing operations 23% 248 201
- From discontinued operations - (4)
EBITDA margin 25% 23%
Schools EBITDA margin 31% 28%
Earnings per share (cents)
- Basic 18% 60.0 51.0
- Diluted 18% 59.8 50.8
Headline earnings per share (cents) 25% 60.1 48.1
- From continuing operations 23% 60.1 49.0
- From discontinued operations - (0.9)
Diluted headline earnings per share (cents) 25% 60.0 48.0
- From continuing operations 23% 60.0 48.9
- From discontinued operations - (0.9)
Number of shares in issue (millions)
- Basic 412.1 412.1
- Diluted 413.0 413.5
Weighted average number of shares in issue
(millions)
- Basic 412.1 408.9
- Diluted 413.0 410.4
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
31 Dec 2018 31 Dec 2017
R million R million
ASSETS
Non-current assets 8 718 7 274
Property, plant and equipment 7 937 6 658
Goodwill 520 397
Intangible assets 239 169
Investment in associate - 12
Other financial assets 14 38
Deferred tax 8 -
Current assets 447 810
Inventories 5 3
Current tax receivable 1 3
Other financial assets 21 125
Trade receivables 89 66
Other receivables 146 42
Investment in money market 15 -
Cash and cash equivalents 170 571
Total assets 9 165 8 084
EQUITY AND LIABILITIES
Equity attributable to equity holders of parent 5 238 5 019
Share capital 4 733 4 733
Reserves 9 14
Retained income 496 272
Non-controlling interest 34 (23)
Total equity 5 272 4 996
LIABILITIES
Non-current liabilities 3 400 2 717
Loans and other financial liabilities 2 853 2 342
Deferred tax 533 375
Contract liability 14 -
Current liabilities 493 371
Loans and other financial liabilities 49 40
Trade and other payables 143 169
Contract liability 197 135
Development and acquisitions payables 26 27
Bank overdraft 78 -
Total liabilities 3 893 3 088
Total equity and liabilities 9 165 8 084
Net asset value per share (cents) 1 277 1 226
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Audited Audited
31 Dec 2018 31 Dec 2017
R million R million
Balance at the beginning of the period 4 996 4 964
Total comprehensive income 247 185
Issue of shares - 177
Share issue costs - (1)
Stadio unbundling - (345)
Other 29 16
Balance at the end of the period 5 272 4 996
SUMMARY CONSOLIDATED SEGMENTAL REPORT
Audited Audited
change 31 Dec 2018 31 Dec 2017
Learner numbers 12% 51 305 45 870
- Curro 16% 41 992 36 205
- Meridian (4%) 9 313 9 665
Revenue (R million) 19% 2 496 2 099
- Curro 22% 2 222 1 828
- Meridian 1% 274 271
Schools EBITDA (R million) 30% 772 594
- Curro 32% 714 540
- Meridian 7% 58 54
Net head office expenditure (R million) 20% (145) (121)
- Curro 21% (133) (110)
- Meridian 9% (12) (11)
EBITDA margin 25% 23%
- Curro 26% 24%
- Meridian 17% 16%
Headline earnings (R million) 26% 248 197
Schools 23% 248 201
- Curro 14% 265 232
- Meridian N/a (17) (31)
Stadio - (4)
Headline earnings per share (cents) 25% 60.1 48.1
Schools 23% 60.1 49.0
- Curro 14% 64.3 56.6
- Meridian N/a (4.2) (7.6)
Stadio - (0.9)
Earnings per share (cents) 18% 60.0 51.0
Schools 16% 60.0 51.9
- Curro 8% 64.2 59.5
- Meridian N/a (4.2) (7.6)
Stadio - (0.9)
Total assets (R million) 13% 9 165 8 084
Schools 13% 9 165 8 084
- Curro 15% 8 473 7 381
- Meridian (2%) 692 703
Total liabilities (R million) 26% 3 893 3 088
Schools 26% 3 893 3 088
- Curro 41% 3 267 2 315
- Meridian (19%) 626 773
Net asset value per share (cents) 1 277 1 226
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
31 Dec 2018 31 Dec 2017
change R million R million
Cash generated from operations 29% 632 489
Tax paid 125% (18) (8)
Net finance costs 79% (138) (77)
Working capital movements - operations N/a (10) (27)
Working capital movements - investments N/a (78) (64)
Net cash flow generated from operating activities 24% 388 313
Net cash flow utilised in investing activities 15% (1 373) (1 192)
Net cash flow from financing activities N/a 506 891
Net cash flow from Stadio unbundling N/a - (147)
Net decrease in cash and cash equivalents (479) (135)
Cash and cash equivalents at the beginning of the
period 571 706
Cash and cash equivalents at the end of the
period 92 571
KEY RATIOS
31 Dec 31 Dec 31 Dec 31 Jan
2016 2017 2018 2019
Number of campuses 48 51 58 68
Number of schools 114 127 138 164
Number of learners 42 343 45 870 51 305 57 276
Average number of learners per
campus 882 899 885 842
Number of employees 4 723 5 369 5 628 6 175
Number of teachers 2 546 2 778 2 945 3 301
Learner/teacher ratio 17 17 17 17
Building size (m2) 540 799 598 194 656 081
Land size (ha) 423 444 514
Capital investment (R million) 1 700 1 192 1 373
- Current campuses (R million) 571 652 590
- New campuses (R million) 649 472 534
- Acquisitions (R million) 266 12 369
- Stadio (R million) 214 56 (120)
J-CURVE (UNAUDITED)
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 31 December.
EBITDA**
Number at 31 Dec 2018 Learner numbers Growth (R million) Growth EBITDA margin Built capacity Eventual capacity
Campuses Schools 2017 2018 16/17 17/18 2017 2018 16/17 17/18 2017 2018 2016 2017 2018 2016 2017 2018
Developed schools 41 98 28 315 31 798 15% 12% 342 464 33% 36% 27% 32% 60% 64% 63% 42% 45% 47%
2009 and before* 4 9 3 443 3 874 (1%) 13% 55 64 25% 16% 26% 30% 82% 83% 82% 88% 87% 71%
2010 2 6 2 254 2 205 1% (2%) 37 39 19% 5% 35% 35% 79% 79% 75% 69% 70% 55%
2011 5 15 4 552 4 166 0% (8%) 53 65 2% 23% 28% 31% 63% 62% 59% 47% 47% 50%
2012 2 6 1 904 1 977 6% 4% 25 34 32% 36% 28% 33% 68% 72% 75% 53% 57% 59%
2013 4 12 6 149 6 427 7% 5% 104 127 12% 22% 39% 42% 66% 71% 74% 59% 63% 64%
2014 4 8 1 833 2 148 20% 17% 6 17 100% 183% 9% 20% 41% 47% 55% 22% 27% 44%
2015 8 19 5 748 6 193 21% 8% 38 52 124% 37% 21% 24% 55% 66% 63% 31% 37% 47%
2016 4 8 1 179 1 682 101% 43% 15 37 N/a 147% 22% 37% 17% 35% 45% 10% 20% 32%
2017 3 8 1 253 2 485 0% 98% 9 38 - 322% 18% 37% - 41% 72% - 23% 40%
2018 5 7 - 641 - 0% - (9) - 0% - (37%) - - 19% - - 10%
Acquired schools 17 40 17 555 19 507 (1%) 11% 268 324 15% 21% 30% 33% 86% 84% 76% 73% 73% 68%
2012 and before 7 17 6 919 6 985 1% 1% 142 153 9% 8% 37% 41% 77% 77% 73% 72% 72% 61%
2013*** 2 2 4 233 3 837 (10%) (9%) 35 30 (17%) (14%) 25% 23% 95% 85% 64% 78% 70% 78%
2014 2 6 2 618 2 744 7% 5% 56 70 30% 25% 33% 36% 99% 91% 96% 85% 92% 80%
2015 and 2016 4 11 3 785 4 142 5% 9% 35 47 94% 34% 20% 24% 88% 92% 100% 69% 72% 74%
2018 2 4 - 1 799 - 0% - 24 - 0% - 37% - - 79% - - 86%
Property rental and
royalties (16) (16)
Total 58 138 45 870 51 305 8% 12% 594 772 22% 30% 28% 31% 69% 70% 69% 52% 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 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 IFRS 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.
2. AUDIT OPINION
These summary consolidated financial statements for the year ended 31 December
2018 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.
Copies of the auditor's reports on the summary consolidated financial statements,
appears at the end of this report. 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 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 applied in the preparation of the consolidated financial
statements are 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. For a comprehensive list of standards and interpretations that
have been adopted, we refer you to our 31 December 2018 annual financial statements.
4. BUSINESS COMBINATIONS
Effective 1 March 2018, Curro acquired Dot's Learning Centre and on 1 April 2018,
Curro acquired Cooper College including Magic Beings. Effective 1 July 2018, Curro
acquired Baobab School (Gaborone, Botswana) and on 1 December 2018, Curro
acquired Northriding College.
R million
The following assets and liabilities were recognised:
Property, plant and equipment 313
Intangible assets 43
Trade and other receivables 6
Cash and cash equivalents 11
Deferred tax liabilities (90)
Trade and other payables (14)
Non-controlling interest (8)
Total identifiable net assets 261
Goodwill 123
384
Total purchase consideration
Cash consideration paid (380)
Deferred purchase consideration (4)
(384)
Net cash outflow on acquisition
Cash consideration paid (380)
Cash acquired 11
(369)
5. CASH-FLOW HEDGES
R million Dec 2018 Dec 2017
Fixed-for-variable interest rate swap
liabilities 9 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.
6. EVENTS AFTER THE REPORTING PERIOD
Effective 1 January 2019, Curro acquired Creston College in KwaZulu-Natal and
Sagewood School in Gauteng.
REVIEW OF RESULTS
The Board is pleased with the financial results as well as the progress made in widening access
to quality school education in South Africa and beyond.
Due to both organic and acquisitive growth, more than 57 000 learners across 68 campuses are
attending a Curro school in 2019, its 21st year of existence.
In addition, Curro extended its brand offering with the opening of Curro Foreshore (Cape Town),
with a new tech-focused schooling model. This provides a progressive curriculum focused on
Mathematics, Science, Robotics and Coding - essential subjects for learners to operate in the
Fourth Industrial Revolution era.
Curro also opened the doors to Curro Private College Rivonia (Gauteng). This educational
facility is the first in our stable to offer the National Certificate Vocational (NCV) as an alternative
to the National Senior Certificate. Its focus in 2019 is on a NCV programme for Information
Technology and Computer Sciences.
Learner numbers
Dec 2017 Dec 2018 % increase Jan 2019 % increase
Existing schools 45 870 51 305 54 291 6%
New schools 1 674
Organic growth 45 870 51 305 55 965 9%
Acquisitions 1 311
Total 45 870 51 305 12% 57 276 12%
Financial results
For the period ended 31 December 2018, learner numbers increased by 12% from 45 870 to
51 305, increasing revenue by 19% from R2 099 million in 2017 to R2 496 million.
Schools EBITDA increased by 30% from R594 million in 2017 to R772 million for the period
under review, with group EBITDA increasing by 33% from R473 million to R627 million.
The major improvement in the EBITDA margin from 23% to 25% is due to increased efficiencies,
capacity utilisation and a lower bad debt expense.
The net bad debt expense as a percentage of revenue decreased from 1.5% in 2017 to 0.8%
under the adoption of IFRS 9 as a result of the significant recoveries on outstanding debtors post
year-end. Had IFRS 9 been applied in 2017, the bad debt expense as a percentage of revenue
would have been 0.7%.
Finance costs increased by 62% from R119 million to R193 million as a result of long-term
interest-bearing debt increasing from R2 342 million to R2 853 million to fund expansion
and growth.
Headline earnings from continuing operations increased by 23% from R201 million to
R248 million during the reporting period. Headline earnings per share from continuing
operations increased by 23% from 49.0 cents to 60.1 cents.
Headline earnings increased by 26% from R197 million to R248 million and Headline earnings
per share increased by 25% from 48.1 to 60.1 cents, respectively.
Matric results
2018 marked an exceptional year for Curro Holdings' IEB schools, with an overall pass rate of
99.7% for its grade 12 learners. The results revealed an increase in the number of students with
university exemption, growing from 85% to 88%; the number of A candidates improving from
9.8% to 11.5%; and candidates with an average C or above rising from 70.3% to 73.2%.
The pass rate for all Curro Holdings' NSC schools in 2018 was 94.3%. Complimenting this was
an increase in the number of learners with university exemption, from 42% to 52.1%, while the
number of A candidates doubled from 1.1% to 2.2%.
Investments
During 2018, R1.7 billion was invested in the business. The capital was deployed as follows:
Construction of six new campuses to the value of R416 million. These campuses include Curro
Vanderbijlpark and Edenvale (both in Gauteng), Curro Academies at Parkdene (Boksburg),
Protea Glen (Soweto) and Savanna City (Johannesburg), as well as a Curro Castle at Burgundy
Estate (Cape Town). A further, R118 million was invested in land banking.
R590 million invested in the expansion of existing campuses, significantly so at Curro
Roodeplaat, Curro Academy Wilgeheuwel, Windhoek Gymnasium (Namibia), Curro Midrand
(previously Building Blocks) and Curro Heritage House (previously Curro Embury).
Meridian was capitalised with R390 million, Curro's portion as a 65% shareholder amounted to
R253 million. This investment was used to reduce senior and mezzanine debt.
Dividend
The board has agreed to pay a maiden dividend of 12c per share from income reserves for the
year ended 31 December 2018. This constitutes 20% of the 2018 Headline earnings per share.
The dividend amount, net of South African dividends tax of 20%, is 9.6 cents per share.
The number of ordinary shares in issue at the declaration date is 412 087 989, and the income
tax number of the Company is 915/907/00/29.
The salient dates for this dividend distribution are:
Last day to trade cum dividend Tuesday, 5 March 2019
Trading ex-dividend commences Wednesday, 6 March 2019
Record date Friday, 8 March 2019
Payment date Monday, 11 March 2019
Share certificates may not be dematerialised or rematerialised between Wednesday, 6 March
2019 and Friday, 8 March 2019, both days inclusive.
Prospects
The board remains optimistic about the future growth prospects of Curro.
On behalf of the board
SL Botha AJF Greyling
Chairperson Chief Executive Officer
13 February 2019
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 Proprietary Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank, Johannesburg, 2196
Corporate adviser and sponsor: PSG Capital
Company Secretary: IWM Isdale
INDEPENDENT AUDITOR'S REPORT ON THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTS
To the Shareholders of Curro Holdings Limited
Opinion
The summary consolidated financial statements of Curro Holdings Limited, contained in the
accompanying provisional report, which comprise the summary consolidated statement
of financial position as at 31 December 2018, the summary consolidated statements of
comprehensive income, changes in equity and cash flows for the year then ended, and related
notes, are derived from the audited consolidated financial statements of Curro Holdings Limited
for the year ended 31 December 2018.
In our opinion, the accompanying summary consolidated financial statements are consistent,
in all material respects, with the audited consolidated financial statements, in accordance
with the requirements of the JSE Limited Listings Requirements for provisional reports, as set
out in note 1 to the summary consolidated financial statements, and the requirements of the
Companies Act of South Africa as applicable to summary financial statements.
Summary Consolidated Financial Statements
The summary consolidated financial statements do not contain all the disclosures required by
International Financial Reporting Standards and the requirements of the Companies Act of
South Africa as applicable to annual financial statements. Reading the summary consolidated
financial statements and the auditor's report thereon, therefore, is not a substitute for reading
the audited consolidated financial statements and the auditor's report thereon.
The Audited Consolidated Financial Statements and Our Report Thereon
We expressed an unmodified audit opinion on the audited consolidated financial statements
in our report dated 13 February 2019. That report also includes communication of key audit
matters. Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the consolidated financial statements of the current period.
Director's Responsibility for the Summary Consolidated Financial Statements
The directors are responsible for the preparation of the summary consolidated financial
statements in accordance with the requirements of the JSE Limited Listings Requirements for
provisional reports, set out in note 1 to the summary consolidated financial statements, and
the requirements of the Companies Act of South Africa as applicable to summary financial
statements.
Auditor's Responsibility
Our responsibility is to express an opinion on whether the summary consolidated
financial statements are consistent, in all material respects, with the audited consolidated
financial statements based on our procedures, which were conducted in accordance with
International Standard on Auditing (ISA) 810 (Revised), Engagements to Report on Summary
Financial Statements.
PricewaterhouseCoopers Inc.
Director: D de Jager
Registered Auditor
Stellenbosch
13 February 2019
PricewaterhouseCoopers
Capital Place, 15-21 Neutron Avenue, Techno Park, Stellenbosch, 7600, P O Box 57, Stellenbosch, 7599
T: +27 (0) 21 815 3000, F: +27 (0) 21 815 3100, www.pwc.co.za
Chief Executive Officer: T D Shango
Management Committee: S N Madikane, J S Masondo, P J Mothibe, C Richardson, F Tonelli, C Volschenk
The Firm's principal place of business is at 4 Lisbon Lane, Waterfall City, Jukskei View, where a list of the partners'
names is available for inspection.
VAT reg.no. 4070182128
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