Pembury targets 12 new schools as revenue rises

Recently listed private education company Pembury Lifestyle Group (PLG) plans to open 12 schools in January 2018.

In financial results released on Wednesday, the company said these schools would be housed on four campuses: PLG Greenhills Academy in Randfontein, PLG Carlswald Academy in Midrand, PLG Midview Academy and a campus on a recently acquired property in Modimolle, Limpopo.

While private education is one of the JSE’s hottest sectors — as seen in the strong market ratings for large players like Advtech and Curro — PLG’s share price has fallen more than 45% since listing in late March.

The half-year results to end-June showed revenue up almost 40%, to R28.8m.

But CEO Andrew McLachlan said the growth in pupil numbers had been hampered by a delay in capital expenditure caused by the company listing on the JSE later than expected. He said PLG had also tightened its credit policies during the first term, adding that a conservative approach to accounts receivable meant a doubtful debts provision of R3.3m.

McLachlan said management had implemented strict controls over the debtors and started a debtor recovery plan.

This included hiring debt recovery agents for older debt, while a stringent policy on short-term defaulters was

being enforced.

He said that although this had contributed to a reduction in student numbers from the beginning of the year, the effort had improved the debtor position at the end of the interim period. "New procedures have been implemented for new pupils, with debit orders being put in place."

Another hitch — mainly hitting student numbers and increasing bad debts — was the closing down of the PLG school in Ballito in 2016 after protracted negotiations with the local town council to grant a special consent to allow the school, which reportedly flouted building regulations, to operate.

Overall, PLG notched up a R2.2m bottomline loss, not entirely unexpected considering the early development phase of its private education business.

But the operational profile of PLG changed in July, when it acquired a property firm specialising in retirement villages for R39.5m.

McLachlan said the retirement business was profitable, with positive cash flows and posted profits of R5.5m in the year to the end of February.