ADvTech chases Curro
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.