AD­vTech chases Curro

Finweek English Edition - - INSIDE - Garth The­unis­sen

Frank Thompson won’t ad­mit that the in­vest­ment in Trin­ity House has any­thing to do with Curro Hold­ings’ spec­tac­u­lar growth but in­vestors see it as a di­rect re­sponse to the lat­ter group’s roll-out of an af­ford­able pri­vate school net­work.

“Curro, with the am­ple funds of PSG Group be­hind it, has in­deed stolen a march of AD­vTECH and shown that the pri­vate schools mar­ket is thriv­ing i n South Africa,” says An­thony Clark, an eq­uity an­a­lyst at Vunani Se­cu­ri­ties. “With 26 cur­rent schools and 10 planned for 2013, Curro is ag­gres­sively ex­pand­ing in the space and AD­vTECH, due to its con­ser­va­tive na­ture and man­age­ment, has had no choice but to learn es­tab­lish­ment of t he pri­mary school struc­ture at Trin­ity House Lit­tle Falls and Palm Lakes. Four ad­di­tional Trini t y House projects have a l s o been ap­proved by the AD­vTECH board.

Thompson was ea­ger to point out that AD­vTECH won’t need to con­duct a rights is­sue as Curro has had to do in or­der to f und the con­struc­tion of the new schools. While in­ter­nal cash gen­er­a­tion will suff ice i n t he short to medium term, Thompson did say that a t hree- y e a r un­se­cured r e volv i ng credit and over­draft f aci l it y worth R400m had been ar­ranged with Absa.

Though cash gen­er­ated from op­er­a­tions fell 8% dur­ing the pe­riod un­der re­view to R279.1m, the busi­ness is still fairly cash gen­er­a­tive, al­beit one that is some­what prone to the sea­son­al­ity of when school fees are paid.

The f ull-year div­i­dend of 24 cents a s ha r e a l s o ap­pea r s t o have kept share­hold­ers happy with t he share price fairly steady at R6.70 post t he re­sults.

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