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Unaudited interim results for the six months ended 30 June 2015
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 2015
Headline Earnings
Up 82%
from R28 m
to R51 m
EBITDA
Up 69%
from R97 m
to R164 m
HEPS
Up 68%
from 8.8 cents
to 14.8 cents
Revenue
Up 45%
from R487 m
to R705 m
Learners
Up 26%
from 28 737
to 36 085
Condensed consolidated statement of comprehensive income
Unaudited Unaudited Audited
30 Jun 2015 30 Jun 2014 31 Dec 2014
Percentage 6 months 6 months 12 months
change R million R million R million
Revenue 45% 705 487 1 001
Operating expenses 39% (541) (390) (809)
Earnings before interest,
taxation, depreciation and
amortisation (EBITDA) 69% 164 97 192
Schools EBITDA 46% 204 140 262
Head office EBITDA (7%) (40) (43) (70)
Depreciation and amortisation 51% (42) (28) (58)
Earnings before interest and
taxation (EBIT) 77% 122 69 134
Investment revenue 175% 11 4 12
Impairment – – (1)
Share of profits (loss) of
associates –* (1) 1
Finance costs 94% (66) (34) (67)
Profit before taxation 76% 67 38 79
Taxation 90% (19) (10) (28)
Profit for the period (PAT) 71% 48 28 51
Other comprehensive
income:
Net fair value profit (loss) on
cash flow hedges 5 –* (3)
Total comprehensive income 89% 53 28 48
Profit attributable to:
Owners of the parent 82% 51 28 55
Non-controlling interest (3) –* (4)
71% 48 28 51
Total comprehensive income
attributable to:
Owners of the parent 100% 56 28 52
Non-controlling interest (3) –* (4)
89% 53 28 48
Reconciliation of headline
earnings:
Earnings attributable to owners
of the parent 82% 51 28 55
Adjusted for:
Profit (loss) on disposal of
property, plant and equipment –* – –*
Loss on impairment – – 1
Headline earnings 82% 51 28 56
EBITDA margin 23% 20% 19%
EBITDA margin for schools 29% 29% 26%
Earnings per share (EPS)
(cents)***
Basic 68% 14.8 8.8** 17.0**
Diluted 67% 14.5 8.7** 16.8**
Headline earnings per share
(HEPS) (cents)***
Basic 68% 14.8 8.8** 17.2**
Diluted 67% 14.5 8.7** 16.8**
Number of shares in issue
(millions)
Basic 355.2 324.3 325.6
Diluted 360.7 327.4 330.1
Weighted average number
of shares in issue (millions)
Basic 342.1 311.6** 322.5**
Diluted 347.6 314.7** 327.1**
Notes:
* Balances less than R500 000 are displayed as R Nil in million rounding.
** Earnings per share and headline earnings per share for the comparative
periods have been adjusted downwards by 0.2 cents for the six months ended
30 June 2014 and 0.5 cents for the year ended 31 December 2014 respectively.
This is due to the retrospective adjustment of the 2015 rights offer undertaken.
The adjustment to basic and diluted weighted average number of shares in
issue is an increase of 7.8 million shares for the six months ended 30 June 2014
and an increase of 8.1 million shares for the year ended 31 December 2014
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 the Rmillion rounding.
Condensed consolidated statement of financial position
Unaudited Unaudited Audited
30 Jun 2015 30 Jun 2014 31 Dec 2014
6 months 6 months 12 months
R million R million R million
ASSETS
Non-current assets 4 052 2 917 3 813
Property, plant and equipment 3 568 2 454 3 338
Goodwill 338 331 338
Intangible assets 128 118 121
Investment in associate 9 12 9
Other financial assets 9 2 7
Current assets 868 523 259
Inventories 5 3 17
Current tax receivable 4 3 3
Loan to associate 3 – 6
Trade and other receivables 54 28 38
Cash and cash equivalents 802 489 195
Total assets 4 920 3 440 4 072
EQUITY AND LIABILITIES
EQUITY
Equity attributable to equity holders
of parent 3 003 2 174 2 212
Share capital 2 819 2 084 2 092
Reserves 23 10 9
Retained income 161 80 111
Non-controlling interest (4) 3 (1)
Total equity 2 999 2 177 2 211
LIABILITIES
Non-current liabilities 1 670 1 049 1 561
Loans and other financial liabilities 1 492 900 1 395
Deferred tax 178 149 166
Current liabilities 251 214 300
Loans and other financial liabilities 30 20 23
Current tax payable 5 3 2
Trade and other payables 91 68 122
Prepaid school fees and deposits 119 84 114
Acquisition payables 6 39 39
Total liabilities 1 921 1 263 1 861
Total equity and liabilities 4 920 3 440 4 072
Net asset value per share (cents) 845.4 670.1 679.1
Condensed consolidated statement of cash flows
Unaudited Unaudited Audited
30 Jun 2015 30 Jun 2014 31 Dec 2014
Percentage 6 months 6 months 12 months
change R million R million R million
Net cash generated from
operating activities (44%) 79 87 247
Net cash utilised in investing
activities (20%) (262) (327) (1 257)
Net cash from financing
activities 26% 790 650 1 126
Cash and cash equivalents
movement for the period 48% 607 410 116
Cash and cash equivalents
at the beginning of the
period 147% 195 79 79
Cash and cash equivalents
at the end of the period 64% 802 489 195
Condensed consolidated statement of changes in equity
Unaudited Unaudited Audited
30 Jun 2015 30 Jun 2014 31 Dec 2014
6 months 6 months 12 months
R million R million R million
Balance at the beginning of the
period 2 211 1 563 1 563
Total comprehensive income 53 28 48
Issue of shares 740 591 600
Share issue costs (14) (8) (8)
Deferred tax asset recognised through
equity 4 – –
Recognition of share-based payments 5 3 8
Balance at the end of the period 2 999 2 177 2 211
Condensed consolidated segmental report (Restated)
Unaudited Unaudited Audited
30 Jun 2015 30 Jun 2014 31 Dec 2014
Percentage 6 months 6 months 12 months
change R million R million R million
Revenue 45% 705 487 1 001
Curro 49% 584 392 817
Meridian 27% 121 95 184
Schools EBITDA 46% 204 140 262
Curro 51% 174 115 219
Meridian 20% 30 25 43
Property, plant and equipment 45% 3 568 2 454 3 338
Curro 48% 3 083 2 084 2 864
Meridian 31% 485 370 474
Loans and other financial
liabilities 65% 1 522 920 1 418
Curro 88% 973 518 897
Meridian 37% 549 402 521
Notes to the financial statements
1. Statement of compliance
The condensed consolidated interim financial information for the six months ended
30 June 2015 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 annual financial
statements for the year ended 31 December 2014. The unaudited condensed
consolidated interim results have been prepared by DN Hartshorne, CA(SA) 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 annual financial statements for
the year ended 31 December 2014. For a full list of standards and interpretations
which have been adopted, we refer you to our 31 December 2014 annual financial
statements.
3. Issued capital
Effective 8 May 2015, 29.6 million shares were issued by way of an underwritten
renounceable rights offer at a subscription price of R25.00 per rights offer share
and a ratio of 1 rights offer share for every 11 Curro ordinary shares held.
4. Business combinations
Effective 1 January 2015, Curro acquired the business operations and properties
of St Dominic's Academy. The business liabilities as at 1 January 2015 were
taken over as purchase consideration.
5. Events after the reporting period
There were no significant events after the reporting period.
Other key information/ratios
31 Dec 2012 31 Dec 2013 31 Dec 2014 30 Jun 2015
Number of campuses 22 26 33* 42
Number of schools 61 72 80 101
Number of learners 12 473 21 908 28 737 36 085
Average number of learners
per campus 567 843 871 859
Number of staff 1 630 2 387 3 128 3 917
Number of educators 1 151 1 593 1 905 2 462
Learner/educator ratio 11 14 15 15
Building size (m2) 169 024 261 004 392 314 415 979
Land size (ha) 153 188 298 355
Capital investment (Rm) 782 1 076 1 305 262
– Current campuses 223 602 651 228
– New campuses 237 242 482 34
– Acquisitions 322 232 172 –
Note: *Restated from 32 as disclosed in 2014 results.
The table below illustrates the J-Curve effect from newly established schools to more
mature schools by age (first year of opening).
Schools Schools Schools Schools
EBITDA EBITDA EBITDA EBITDA
Learner numbers (R million) (R million) margin margin
Number of 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun
First year in operation campuses 2014 2015 Growth 2014 2015 Growth 2014 2015
2009 and before 15 17 387 18 064 4% 96 132 38% 32% 34%
2010 2 1 999 2 131 7% 9 12 34% 26% 29%
2011 6 3 720 4 382 18% 14 20 46% 22% 23%
2012 2 1 351 1 599 18% 4 8 68% 19% 23%
2013 4 3 643 4 918 35% 20 33 68% 35% 37%
2014 4 799 1 267 59% (3) 1 Na (27%) 5%
30 June 2014 33 28 899 32 361 12% 140 206 47% 29% 31%
Acquired 1 600 3 23%
2015 8 3 124 (5) (14)%
30 June 2015 42 28 899 36 085 25% 140 204 46% 29% 29%
Commentary
Introduction
As at 30 June 2015, Curro had 36 085 learners, up 26% from 28 737 learners a
year earlier.
There are now 42 (2014: 33) campuses or 101 (2014: 80) schools across the Group.
A school consist of either a pre-primary school, primary school or high school whilst a campus
consists of a teaching location regardless of the number of schools. The majority of
Curro's campuses comprise of three schools.
Developments
In 2015 Curro aims to:
- Develop eight new schools (six campuses) to the value of R400 million. The
campuses are Curro Schools at Sitari Fields (Somerset West – Western Cape),
Waterfall Estate (Midrand – Gauteng), Hillcrest High School (Durban – KwaZulu-
Natal). Curro Castles will be constructed at Douglasdale (Johannesburg) and
Bryanston (Johannesburg). The construction of a new campus for the Embury
Institute for Teacher Education will also commence in 2015;
- Improve existing campuses to the value of R600 million with additional classrooms,
sport and cultural facilities. 13 campuses will see substantial improvements of at
least R10 million per campus;
- Invest in land banking for future growth to the value of R300 million; and
- Invest R13 million in the further development of its curriculum.
Acquisitions
Since inception, Curro has acquired 13 schools with its own campuses and numerous
other smaller schools that were incorporated into existing Curro Group schools.
These acquired schools have contributed approximately 57% of the schools' EBITDA
for the six month period ended 30 June 2015.
Acquired schools boost growth as they have already been through the J-Curve effect
that newly developed schools still need to go through.
In January 2015, Curro concluded the acquisition of St Dominic's Academy, a 600
learner strong independent school based in Newcastle, KwaZulu-Natal for a purchase
consideration equal to business liabilities of R10 million.
Curro will continue to look for suitable value-enhancing acquisition opportunities.
Financial results
Revenue increased by 45% from R487 million to R705 million. Schools EBITDA
increased by 46% from R140 million to R204 million. EBITDA increased by 69% from
R97 million to R164 million. This was as a result of once-off head office expenses in the
prior comparative period and higher management fee income in the current period.
The EBITDA margin increased from 20% to 23%.
Net interest expense has increased by 83% from R30 million to R55 million as a result
of a higher interest expense at Meridian.
Headline earnings has increased by 82% from R28 million to R51 million. However,
headline earnings per share increased by 68% from 8.8 cents to 14.8 cents because
of the increased weighted number of shares in issue following the rights offer in May 2015.
Inter-company financial assistance to wholly-owned
subsidiaries that own properties
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 12 August 2015, authorised the Company to
provide financial assistance, as may be required from time to
time, to its wholly-owned subsidiaries that own properties, by
way of the granting of loans up to a maximum of R200 million,
which loans bear interest ranging from zero percent to prime
interest rate. This authority was granted to the Board by
shareholders at Curro's annual general meeting held on 19 June
2015.
The Board, prior to authorising the aforementioned financial
assistance, considered and satisfied itself, in terms of
section 45 of the Companies Act, that:
1. Immediately after providing the financial assistance, the
Company would satisfy the solvency and liquidity test as
contemplated in section 4 of the Companies Act;
2. There has been due compliance with the Company's
memorandum of incorporation; and
3. The terms of the financial assistance are fair and
reasonable in relation to the Company.
Prospects
Curro remains on track to achieve its vision of '80@20', being 80 campuses (200
schools) and accommodating 90 000 learners by 2020.
On behalf of the board
SL Botha CR van der Merwe
Chairperson Chief Executive Officer
13 August 2015
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")
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 Corporate advisor and sponsor: PSG Capital These results are available at: www.curro.co.za
Transfer secretaries: Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg, 2001 | PO Box 61051, Marshalltown, 2107
Develop future leaders through world class education
Date: 13/08/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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