Pembury considers new acquisitions as it battles for survival

Education-focused Pembury Lifestyle Group, whose share price has lost 94% of its value since it listed in early 2017, said on Friday that it may acquire new private schools even as it battles to pass going-concern tests.

The board, led by CEO Andrew McLachlan, said during the release of its interim results to end-June that it was satisfied it should be able to meet foreseeable cash requirements, but needed to secure new funding.

Negotiations with two funding institutions, one for bond finance and the other for structured finance, were “well advanced,” the group said. It was also engaging investors as it seeks a long-term equity partner.

At the end of June, the group’s liabilities exceeded assets by R55.8m, with the company incurring losses of R21.9m, the bulk of which came from discontinued operations. The group’s auditors, Nexia SAB&T, said in the results that “a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern”.

In June, the embattled company said it would offload its retirement villages business to focus on the lucrative private education sector. The disposal would be completed by year-end, but is now considered a discontinued operation.

The company’s basic loss per share was 2.14c for the period, a 46.7% improvement from the prior comparative period.

Tangible net asset value per share fell 16.63% to R29.98.

Pembury said on Friday it would now focus on growing class sizes, with its 11 schools having pupil-teacher ratios of between 10 and 19, below the company’s longer-term target of between 25 and 28. 

The group saw its pupil number grow to 2,458 from 2,185 previously, while revenue from continuing operations rose 23% to R55m during the period.

“The company will consider acquiring smaller existing private schools which show growth potential, although this will be done on a conservative basis,” Pembury said.

Pembury had closed at 6c on Friday, representing a 94% fall from its R1 listing price in March 2017.

gernetzkyk@businesslive.co.za