HAPPYLAND PREPARATORY MARKET

ANALYSIS

GROUP MEMBERS:

Karani Erastus Muchimuti

Kyalo Lisa Muoti

Muchiri Vivian Wangari

Mwangi Victor Njoroge

Njenga Nduta Mwaura

Omwenga Joseph Osoro

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Table of Contents
1. EXECUTIVE SUMMARY ...........................................................................................................3
1.1 Overview of the company and history of the company: ...........................................................3
1.2 History of the school ....................................................................................................................3
2. MARKET ...........................................................................................................................................4
2.1 Market Size...................................................................................................................................4
2.2 Historical Growth and Projected Trends ...................................................................................4
2.3 Barriers to Growth ......................................................................................................................4
2.4 Market Segmentation ..................................................................................................................5
2.5 Customer Needs and Preferences ...............................................................................................5
2.6 Market Trends, Risk Factors, and Dynamics ............................................................................5
3. SWOT ANALYSIS .............................................................................................................................6
3.1 Happyland School SWOT Analysis. ...........................................................................................6
3.2 Happyland’s Competitors SWOT Analysis ...............................................................................7
4. CUSTOMER BASE .......................................................................................................................8
4.1 Demographics: .............................................................................................................................8
4.2 Preferences: ..................................................................................................................................8
4.3 Behavior: ......................................................................................................................................9
5. MARKETING STRATEGY AND BRANDING .........................................................................9
6. SCALABILITY ............................................................................................................................10
7. PESTEL ANALYSIS ....................................................................................................................11
8. SUPPLY CHAIN ..........................................................................................................................14
9. RISK FACTORS ..........................................................................................................................15
10. EXIT................................................................................................................................................16
11. FINANCIAL VALUATION ....................................................................................................16
12. RECOMMENDATIONS .........................................................................................................25
13. HAPPYLAND SCHOOLS JOURNEY TO GLOBAL STANDARDS LIKE XCL WORLD
ACADEMY SINGAPORE. .................................................................................................................25
14. APPENDIX ...............................................................................................................................26

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 1. EXECUTIVE SUMMARY
1.1 Overview of the company and history of the company:
Happyland School is a private Christian day and boarding school. The school currently operates
six campuses: one for the Girls' Senior School in Kiserian, one for the Primary Section, Junior
Secondary, and Pre-School along Rabai Road in Buruburu, and one for the CBC Primary
School and Junior Secondary in Greenspan.

1.2 History of the school

The school formally opened its doors to its first students in 1993 as a pre-school in a rented
home. Following the success of the pre-school for five years, management decided to open a
Primary Section. This happened in 1999, and they received their first K.C.P.E. in 2006. In 2007,
they opened a boarding school, which can currently house 500 students. There is currently a
full-time day and boarding program. They opened a girls' secondary school in Kiserian in 2015,
and a new elementary school with a new curriculum system (CBC) opened in Greenspan in
2021. In 2023, the school expanded again and opened two junior secondary schools, one in
Greenspan and one in Buruburu.

The Vision for the school is to be a school that imparts knowledge and moral values according
to biblical principles. The Mission of the school is to be a school that aims to reach our child,
building up hope, self-esteem and a sense of responsibility.

The school’s Core Values include:

• Obedience
• Respect
• Honesty
• Responsibility
• Fear of the Lord

For the management structure, the school follows a general hierarchy that is used in Kenyan
schools. The directors of the school are the owners, the family, who are in charge of the school's
operations, policy, and financial management. The top manager of the school is the principal,
followed by a deputy principal. Under them is the senior teacher for each campus, a curricular
head to ensure smooth running of the remaining 844 students and incorporate the new CBC
system. The sub managers include the head of departments or subjects who guide other

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teachers. Lastly, are the head of streams who are in charge the respective grades. The extensive
leadership structure allows smooth running of the quickly growing school.

2. MARKET
2.1 Market Size
The KNBS Economic Survey (2023) says that there are 8,838 private primary schools and
1,255 private secondary schools in Kenya as of 2022. In addition, 10,364,200 students are
enrolled in primary school while 3,858,000 students are enrolled in secondary school.
According to KPSA, current statistics show that by 2019 there were over 10,400 registered
private primary schools with a population of over 2,100,000 children and about 1,600
registered private secondary schools with a population of over 277,416 students in Kenya
(ABOUT KPSA – KPSA, 2023). In addition, 33% of primary schools are private while 15% of
secondary schools are private (Dissatisfaction with “Free” Public Education | D+C -
Development + Cooperation, 2019). In Makadara and Embakasi Sub-Counties there are 36,040
and 201,262 students aged between 4 years and 14 years which is the standard age for students
in Pre-Primary and Primary. There are 1,964,600 female students in 8-4-4 secondary schools,
we assume that there is a 0.08% (=100%*1/1255 private secondary schools in Kenya) chance
that student will join Happyland Girls Senior School. Therefore, the Total Addressable Market
is given by:

𝑇𝐴𝑀 = (237,302 ∗ 33%) + (0.08% ∗ 1,964,600) = 79,881

2.2 Historical Growth and Projected Trends

Happyland has shown significant growth since its establishment in 1993, expanding from a
Pre-School in a rented house to a fully-fledged institution. Projected trends could be influenced
by factors such as population growth, educational preferences, and the school's reputation,
which have all contributed to its success in the past. As per the school website, 10,700 students
are currently enrolled among the three schools.

2.3 Barriers to Growth

It is important to note that the education sector in Kenya grew by 3.6 % in the first quarter of
2023(Cowling, 2023) but this could possibly be impacted negatively by the tough economic
conditions such as increased inflation and taxes that could impact parents’ ability to afford fees
as well as the school's ability to run profitably. Following the COVID-19 pandemic, there has
been a decrease in the enrollment of students in private schools. This decline can be attributed

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to the economic aftermath of the pandemic, where parents faced job insecurities. As a result,
the challenging economic conditions prompted some parents to transition their children from
private schools to public schools. Another barrier is the new CBC system, which has proven to
be more costly to parents encouraging the transfer to public schools. Other barriers might
include saturation concerns in specific segments and competition from other private schools.

2.4 Market Segmentation

The market is segmented based on educational levels (pre-primary, primary, junior secondary,
senior girls) and boarding or day options.

2.5 Customer Needs and Preferences

Families in the area seek a holistic education for their children. Recent trends indicate a
growing interest in STEM programs and extracurricular activities. This can be seen on their
website as they talk about the various sports they offer, their music program and other
extracurricular activities.

Families seek high performance for their children. Parents are looking for educational
institutions that can provide individualized attention to students and closely monitor their
performance. The teacher-to-student ratio has become a crucial factor for parents in selecting
a school.

2.6 Market Trends, Risk Factors, and Dynamics

Current trends include an increased emphasis on digital learning tools, experiential education,
and extracurricular activities. Risks include sensitivity to economic cycles and external factors
like public health crises. Other risks include safety of students, fire and food contamination.

Summary:

Happyland Girls Senior School, established in 1993, has grown from a Pre-School to a thriving
institution with 10,700 current students. The market landscape, as per the KNBS Economic
Survey, highlights a substantial presence of private primary and secondary schools in Kenya.
Happyland's Total Addressable Market is estimated at 79,881 students, considering local
demographics and educational levels. However, barriers to growth include potential economic
challenges, integration of the new CBC system and competition. The school aligns with market
trends by offering holistic education, STEM programs, and diverse extracurricular activities.
Moreover, the education sector's growth, despite economic challenges, indicates resilience. To
navigate risks such as economic sensitivity and external factors, the school must stay attuned
to market dynamics and maintain a focus on safety and educational excellence.

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3. SWOT ANALYSIS
3.1 Happyland School SWOT Analysis.
Strengths
Strong brand and reputation – Happyland is well known for upholding the academic excellence
of its students. It is widely recognized for encouraging each student to reach their maximum
academic potential. This reputation goes a long way in attracting new customers and retaining
existing ones.

Modern facilities- The school has state-of-the-art facilities, such as swimming pools, well
equipped laboratories, basketball courts and IT center, to enhance the learning experience of
their students.

Emphasis on well-being of students- Happyland places a strong emphasis on the mental and
behavioral well-being of its students. They have a pastoral program and school counselor to
enforce the same. All rounded students will therefore keep uplifting the school’s reputation.

Weaknesses

Cost of education- Offering modern facilities and hiring qualified teaching staff makes the
tuition fees relatively high, potentially limiting the number of students who can join the school.

Undiversifiable Risks- The education sector within which Happyland operates tends to possess
plenty of systematic risks that affect the entire sector or institutions of a similar caliber. This
therefore serves as a weakness because it is very difficult to differentiate the services offered
within reasonable means, to gain a larger market share.

Opportunity

Offer IGCSE system- There is a growing demand for international education in Kenya. With a
rising desire among parents to provide their children with a competitive global standard of
education, the IGCSE program presents a good opportunity.

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Integrating technology in the learning system- The school can leverage online learning to
provide opportunities for remote education for students located beyond the local area.

Diverse Extracurricular Activities and Facilities- Happyland offers a wide range of

extracurricular activities including art, sports, coding, and drama. This ensures that the
students’ broad range of interests are catered for. The facilities that enable these activities may
also serve as new business avenues in the form of leasing or renting the facilities.

Fees differential- With high inflation rates and implementation of various levies and increments
in other statutory deductions such as the housing levy and proposed social health insurance
fund, the Kenyan education sector, especially private schools, face challenges in maintaining a
favorable financial position. However, based on our research, as compared to their competitors,
Happyland’s much needed fees increase is relatively lower, which provides an opportunity to
use it as a selling point, while still managing to keep their finances afloat.

Threats

New Government regulations- The government plans to introduce VAT (Value Added Tax) on
educational services through extra-curricular activities. This move would mean that the
premium fees demanded by schools such as Happyland for these facilities will only get steeper.
This is a threat to their cashflows as it will force them to either adjust their fees upwards (with
a risk of losing customers) or operate with less after-tax profits.

Competition from public schools- A focus on improving the Education sector by the Kenyan
government has resulted in public schools becoming more competitive with private schools as
they improve their facilities. Now they offer more after-school activities that appeal to parents.
Also, many public schools now offer advanced placement courses that can be beneficial in
many aspects.

Competition from private schools- Numerous Private schools are being established in Nairobi
offering education services at a cheaper fee. Between 2014 – 2020 the number of private
schools has increased from 7742 to 16,594 (Clark, 2023) .This threatens the potential growth
of the school.

3.2 Happyland’s Competitors SWOT Analysis

Happyland School has two close competitors. These are Rockfield school and Thomas Burke
school. These schools are comparable to Happyland hence operate under similar conditions
and face systematic risks and similar opportunities. The education sector creates a somewhat

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even playing field for schools of the same caliber, making it difficult for a particular institution
to create a niche in the market. Opportunities can however be created through specialized
marketing strategies.

One notable weakness with Rockfield School is that it has a limited geographic reach. Despite
having various school campuses located in different areas they are all concentrated in Nairobi.
Its geographic reach is limited compared to other private schools that have campuses in
different counties.

4. CUSTOMER BASE

This analysis includes the demographics, preferences and behavior of the happyland’s customer
base. Happyland Preparatory's customer base consists primarily of students and their parents
or guardians.
4.1 Demographics:
• Age: Students' age ranges between 4years in pre-school to 18years in senior school
while parents and guardians are likely in the age range of 25 to 45 years.
• Gender: It is a mixed school, with an approximate boy to girl ratio of 1:2 as shown in
enrollment details.
• Location: The school is situated within Nairobi and the students primarily come from
the local community around the school’s location, but the senior school is ranked as
national and therefore enrolls students from all regions in the country.
• Income Level: Middle to upper-middle-income families with a stable financial status,
capable of affording private education.
• Occupation: Parents/guardians are likely to be professionals, entrepreneurs, and
business owners or individuals with occupations that demand a focus on their careers
and value quality education for their children.
• Socioeconomic background: Since it is a private institution, parents/guardians
educating their children here must be well – off or in a position to afford the tuition
fees. This is because there are free primary schools, but they have however opted for
private education for their children.

4.2 Preferences:

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 • Educational Preferences: The school follows the Kenyan curriculum and is therefore
currently implementing the CBC curriculum.
• Learning Environment: Adopts the traditional classroom setting with a student
classroom ratio of 25.3 and student teacher ratio of 5:1.
• Extracurricular Activities: Such include football, music and art, ballet, golf, coding,
chess and even Tae-Kwon-Do.

4.3 Behavior:

• Enrollment and Retention.

Enrollment happens at the beginning of each year in the preschool and senior school. The
primary sector accepts those who graduate from preschool. The school also accepts transfers
from other schools for those who pass the entrance interview if they happen to have vacancies.

• Parental Involvement:
Parental involvement has mainly been limited to financial contributions and teacher-parent
meetings. However, with the introduction of new curriculum, the role of parents is crucial for
the academic success of their children.

• Feedback and Communication:

Communication between parents and teachers or the school is mainly through newsletters, or
AGMs. However, institutions are now incorporating WhatsApp as a means of communication.

5. MARKETING STRATEGY AND BRANDING

Online Presence:
The school has developed a user-friendly and informative website,
https://www.happylandschools.com/ that provides detailed information about the school's
programs, faculty, facilities, and enrollment process. The website serves as the digital face of
Happyland, providing a comprehensive and easily accessible source of information for
prospective parents. On this website, there are also links to the schools' online platforms such
as Facebook, Instagram, YouTube and WhatsApp. There's also a 24hr contact us/ enroll now

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link that is meant for consultations. The school also uses Search Engine Optimization (SEO)
to optimize the website for search engines to ensure it appears prominently in relevant online
searches.

Social Media Engagement:

Happyland regularly posts engaging content on Facebook, Instagram, X, and YouTube, such as
student achievements, behind-the-scenes glimpses, and educational tips also helps build a
community to showcase the school's culture and keep parents informed and engaged.

Referrals and testimonials:

The school relies on positive reviews and testimonials from satisfied parents. These
testimonials can be featured on the website and in marketing materials.

Community Engagement:
Though not pronounced, Happyland Preparatory has in the past organized and participated in
either community events, school fairs, or educational workshops. Such events allow for
establishment of partnerships with local community and businesses thus enhancing visibility
through community involvement.

Traditional Marketing:
Traditional marketing methods such as flyers and brochures are also used to reach a broader
audience. These promotional materials may be distributed during school meetings or
community gatherings.

6. SCALABILITY
Staffing and Professional Development:
Happyland hires qualified teachers and administrative staff to implement the curriculum.
Happyland then enrolls them on important ongoing professional development programs and
training opportunities to upskill them and maintain high-quality education. This leads to
efficiency in operations and higher performance, which makes the school attractive to the target
market and thus contributes to growth and expansion.

Infrastructure Planning:

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The current facilities and infrastructure at Happyland can accommodate a growing number of
students up to a set maximum. The school has plans for expansions or additional campuses in
strategically chosen locations to reach a wider audience.

Technology Integration:
Technology has become vital in all sectors of the economy. Happyland therefore has invested
in technology to streamline administrative processes, communication, and learning
management. Implementing a robust school management system that can handle increased
enrollment and administrative tasks efficiently would be vital to accommodate for growth in
times of scaling.

Admission and Enrollment Processes:

Happyland should develop efficient admission and enrollment processes to handle an increased
number of applications. Providing clear communication to parents about admission criteria and
procedures also plays a part in efficiency and growth.
Curriculum Development:
Happyland preparatory contributes to curriculum development through its membership or
representation in the Kenya Private Schools Association (KPSA). Happyland preparatory has
integrated the CBC curriculum which is flexible and accommodates varying learning styles
and levels. This curriculum makes use of technology-enabled learning tools to support
scalability and enhance the learning experience. CBC emphasizes practical, hands-on learning
and allows students to progress at their own pace. Happyland would also be open to expanding
to IGSCE system in the future.

7. PESTEL ANALYSIS

It entails an examination of the external macro-environmental factors that can impact

Happyland Preparatory school as follows:

Political:
• Political decisions that impact education sector and its resources: The government
policies tailored for other sectors of management can have residual effects on education.
For example, recently the government of Kenya has decided to privatize Kenya
Literature Buruea which is a major provider of books used in the Kenyan education

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 system. Privatizing the company could mean that costs for books would be higher,
which the school would need to account for as they offer textbooks for their students.
• Change in education policies: The Ministry of Education is the government department
in charge of overseeing Kenya's education system. They enact policies that the school
must always follow. Technology of information and communication. The policy
encouraged ICT instruction and training in schools, even going so far as to inform
students that ICT would be included in national and county examinations. The
government intended to offer computers and internet access to various public schools
as part of a larger strategy to use previously unavailable technology in national tests.
The policy now applies to pre-primary and primary schools where computers were not
formally tested at a national level in all schools. The school that possesses the necessary
technology would need to develop a strategy for preparing pupils in their pre-primary
and primary school for such an evaluation.
• Government efficiency- Efficiency of the government in managing education and
policies that directly impact education will affect HappyLand. The national exam
results for Primary schools have been contended by students and schools. Poor results
due to such inefficiencies affect the school’s image and marketing to new parents.

Economic:
The state of the economy directly affects the financial stability of the school since it impacts
parents' ability to pay tuition fees.
• Taxes- With an increase in taxes and other expenses in the country the school has to
adjust for increased costs while also charging fees that are in align with the changing
market and policies. Additional taxes imposed on schools also affect their finances. For
example, the government recently introduced VAT on co-curricular activities not
directly related to education such as swimming which were not previously taxed. This
reduces additional income for the school and prices might need to be adjusted to cater
for that cost.
• Inflation: Private schools' overall operating costs can be raised by inflationary
pressures, which can have an impact on expenditures for facility upkeep, employee pay,
and utility bills. Financial fluctuations in the price of educational supplies, such
technology and textbooks, have an impact on the school’s budget. The school plans to
curb such pressures by raising the fees by 2000KES in the coming year.

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 • Economic seasons- during economic downturns, parents are inclined to make budget
cuts which might mean enrolling their children in public schools which are relatively
cheaper than private schools.

Social:
• Demographics: Changing demographics, such as shifts in the age or cultural
composition of the student population, can affect enrollment. With different age groups
and generations, values and preferences change. To keep up with the changing
demographics, the school would need to stay up with current trends.

• Cultural Values: Societal values and attitudes toward education may influence parental
preferences for teaching methods and extracurricular activities. For example, parents
can easily influence what students should be offered as co-curricular activities. They
should therefore assess their customer base’s culture as the demographic change.

Technological:
• Technological Advancements: The integration of technology in education is becoming
increasingly important. The school must invest in technology to keep up with modern
teaching methods and e-learning. Due to such they have several projectors in the
classrooms that make learning more efficient as teachers can prepare for lessons earlier
and display information without needing to write it down again for students. They also
have a system that informs parents when their children have reached school.
• Online Learning: The school may need to adapt to the increasing demand for online and
remote learning solutions, especially during unforeseen circumstances like a pandemic.
The teachers in Happyland post their notes on google classroom for ease in retrieval for
students
• digitalization: New policies by the government show that there is focus on technology
in education. It becomes important for the school to teach and train the staff and students
in technology to compete with other schools.

Environmental:
• Climate and Weather: Factors like weather and climate can impact the school's daily
operations and, in some cases, may affect attendance and safety. For example, during

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 the heavy rain seasons the school must ensure they take precautionary measures such
as a good drainage system and taking note of flood warnings given by the government.
• Global warming: there is more emphasis by countries and companies to focus in
sustainable energy and engage in environmentally sustainable projects. The school
could engage in such projects through having information sessions for the students
regarding measures for environmental sustainability. Also, through community projects
such as trash collection and school trips to sites that use sustainable energy. Such
inclusion could attract environmentally conscious sponsors and parents.

Legal:
• Educational Regulations: The school must comply with Kenyan laws and regulations
governing education, including curriculum standards and health and safety
requirements. Kenya's principal educational legislation is the Education Act. This
statute requires private schools to follow its provisions, which encompass topics such
as curriculum standards, teacher qualifications, student welfare, and school governance.
The school is not allowed to offer extra lessons on Saturdays as tuition for students.
• Employment Laws: Compliance with labor laws, employment contracts, and teacher
certifications is crucial to avoid legal issues.
• Licensing: The school has to be registered with the ministry of education and offered a
license after approval. The registration process entails meeting infrastructural,
curriculum, and instructor qualification standards.
• Curriculum and Assessment: Private schools are obliged to adhere to the Kenya
Institute of Curriculum Development's (KICD) approved national curriculum and
assessment criteria. Currently the school should now follow the competence-based
curriculum which the school has now adopted.
• Financial restrictions: Financial restrictions apply to Happyland Preparatory, including
obligations for financial transparency, accounting processes, and fee collecting. These
rules are intended to protect the financial stability and integrity of private schools.
• Student rights and responsibilities: The school should follow laws regarding how they
should treat students. E.g. anti-discriminatory laws that prevent discrimination of
students against gender, class, tribe and other factors. Physical punishment and mental
harassment of students is banned.

8. SUPPLY CHAIN

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The main resources that the school needs include stationery, books and food for the pupils and
teachers. The school has made agreements with some suppliers to provide the necessary
resources that they need. These suppliers include Textbook Centre and M&G office supplier
for exercise books, textbooks and stationery items such as pens. Recently with the adaptation
of the new CBC system of learning, the students are now required to buy their own books,
which helps reduce costs for the school. On average the school's budget is about 81 million per
year thus they need the help of a bank to safeguard their revenue.

Therefore, in terms of financial supply through loans the team has teamed up with Cooperative
Bank and Equity. The banks handle their accounts and also provide loans which are usually
payable in 5 years. Their partnership with these four companies helps ensure there is
availability of capital and funds necessary to meet operating expenses as well as resources
needed in the classroom by the students and staff.

9. RISK FACTORS

Political factors

Changes in government policies- Shifts in education policies affect curriculum requirements,

accreditation, or funding, requiring the school to adapt quickly. For example, the government
recently introduced VAT on co-curricular activities not directly related to education such as
swimming which were not previously taxed. This reduces additional income for the school and
prices might need to be adjusted to cater for that cost.

Government inefficiency- inefficiency of the government in managing education and policies

that directly impact education will affect HappyLand. For example, the national exam results
for Primary schools have been contended by students and schools. Poor results due to such
inefficiencies affect the school’s image and marketing to new parents.

Economic factors

Enrollment and Affordability: Economic downturns may impact parents' ability to afford
private education, leading to a decline in enrollment. After the Covid pandemic, there was a
significant decline in students enrolling in private schools.

Operational Costs: Inflation or economic instability can increase operating costs, affecting the
school's budget and financial sustainability.

Social factors

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Child safety in school- The schools have to take necessary precautions ensure that students
avoid any accidents or injury. It is the school’s responsibility to ensure that the students return
home safe and sound.

Food contamination – The school runs the risk of causing health problems to students if the
utmost sanitary conditions are not upheld. The school schedules frequent visits by the public
health officers to assess the hygiene standards of the meal preparation area to mitigate this
issue.

10. EXIT
Happyland is a family-owned business with no intention of selling its shares to the public. The
ownership envisions a long-term commitment to maintaining control within the family. As part
of the strategic vision, the primary exit strategy for existing shareholders is through a seamless
transition of ownership via family succession.

11. FINANCIAL VALUATION

THE COMPANY IS VALUED AT KES 428,917,677.51

Assumptions:

1. Economic Growth:

- Assuming a moderate and stable economic growth rate of 4% per year.

(4.8% growth in 2022, World Bank)

2. Enrolment:

- Assuming a steady increase in enrolment at a rate of 3% per year.

3. CBC Integration:

- Assuming additional costs related to CBC integration.

Income Statement:

Direct Expenses: Expected to increase slightly due to additional costs related to the CBC.

Administrative Expenses: May increase moderately due to the need for teacher training and
curriculum adaptation.

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Other Operating Expenses: Could see an uptick due to the integration of the new curriculum.

Finance Costs: Assuming a stable financial environment, finance costs might remain relatively
constant.

Assumptions for Balance sheet:

2023-2025

- Capital Employed: May see gradual increases due to potential investments in infrastructure
and educational resources.

- Non-Current Liabilities: Borrowings might remain stable since the school does not plan on
taking up more projects.

- Non-Current Assets: Property, plant, and equipment may see gradual increases.

- Current Assets: Could increase in line with the growing turnover and enrolment.

- Current Liabilities: May increase moderately due to ongoing operational expenses.

- Net Current (Liabilities): May gradually improve as the school adapts to the CBC and
optimizes its operations.

Year 2022 2023 2024 2025 2026

Income
Statement

294,397,4 306,173,30 318,420,238. 331,157,04 344,403,330

Revenue 10.00 6.40 66 8.20 .13

47,280,22 49,171,433 51,138,290.3 53,183,821. 55,311,174.

Cost of sales 4.05 .01 3 94 82

257,001,87 267,281,948. 277,973,22 289,092,155

Gross Profit 3.39 33 6.26 .31

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 42,639,17 44,344,740 46,118,530.6 47,963,271. 49,881,802.
Operating expenses 4.00 .96 0 82 70

212,657,13 221,163,417. 230,009,95 239,210,352

EBITDA 2.43 73 4.44 .62
- - - -
33,935,366 33,935,366.0 33,935,366. 33,935,366.
Depr & Amort. .05 5 05 05

178,721,76 187,228,051. 196,074,58 205,274,986

EBIT 6.38 68 8.39 .56

Interest - - - -

178,721,76 187,228,051. 196,074,58 205,274,986

EBT 6.38 68 8.39 .56

53,616,529 56,168,415.5 58,822,376. 61,582,495.

Tax .91 0 52 97

125,105,23 131,059,636. 137,252,21 143,692,490

EAT 6.47 17 1.87 .60

Statement of
Financial
Position
ASSETS

421,643, 387,742,8 353,841,74 319,940,6 286,039,5

PPE-Net Book Value 986.00 64.54 3.09 21.63 00.18

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 2,208,52 2,174,278 2,140,033.9 2,105,789 2,071,544.
Intangible-Net Book Value 3.09 .49 0 .30 71

2,332,66 2,425,967 2,523,006.1 2,623,926 2,728,883.

Account receivables 1.00 .44 4 .38 44

25,956.9
Inventory 1 26,995.18 28,074.99 29,197.99 30,365.91

91,304,13 188,566,26 292,026,4 401,932,7

Cash 8.15 7.78 88.10 22.73

426,211, 483,674,2 547,099,12 616,726,0 692,803,0

TOTAL ASSETS 127.00 43.81 5.90 23.41 16.96

CAPITAL +
LIABILITIES

5,621,00 5,845,840 6,079,673.6 6,322,860 6,575,774.

Account payable 0.00 .00 0 .54 97

308,355, 308,355,6 308,355,68 308,355,6 308,355,6

Borrowings 682.00 82.00 2.00 82.00 82.00

5,626,45 5,626,458 5,626,458.0 5,626,458 5,626,458.

Current Liabilities 8.00 .00 0 .00 00

106,607, 163,846,2 227,037,31 296,421,0 372,245,1

Proprietor's Capital 987.00 63.81 2.30 22.87 02.00

TOTAL CAPITAL & 426,211, 483,674,2 547,099,12 616,726,0 692,803,0

LIABILITIES 127.00 43.81 5.90 23.41 16.96

19
Statement of
Cash Flows **
OPERATING
ACTIVITIES

178,721,7 187,228,051 196,074,58 205,274,98

EBT 66.38 .68 8.39 6.56
- - - -
33,935,36 33,935,366. 33,935,366 33,935,366
Depreciation 6.05 05 .05 .05
Amortization
Changes in WC
- - - -
Inc/Dec in Receivables 93,306.44 97,038.70 100,920.25 104,957.06

Inc/Dec in Inventories 1,038.28 1,079.81 1,123.00 1,167.92

224,840.0
Inc/Dec in Payables 0 233,833.60 243,186.94 252,914.42
- - - -
53,616,52 56,168,415. 58,822,376 61,582,495
Tax paid 9.91 50 .52 .97

Cash from Operating 91,302,44 97,262,144. 103,460,23 109,906,24

Activities 2.25 83 5.52 9.83

INVESTING
ACTIVITIES

92,506,50
Purchase of PPE 7.00

Cash used in Investing 92,506,50

Activities 7.00 - - - -

20
 - -
91,302,44 401,931,07
2.25 1,680.70 1,665.50 2.43
FINANCING
ACTIVITIES 2,605.24 2,140.15 1,644.60 1,114.99
New share capital

Cash used in
Financing Activities - - - - -

91,302,44 97,262,144. 103,460,23 109,906,24

Change in cash 2.25 83 5.52 9.83

91,302,442. 188,564,58 292,024,82

Cash at start of year 25 7.08 2.60

91,302,44 188,564,587 292,024,82 401,931,07

Cash at end of year 2.25 .08 2.60 2.43

VALUATION CALCULATION;

The comparable companies used were Curro and Advtech.

Brief History on the Comparable Companies and how they got listed:

a) Curro Holdings

Curro Holdings started in 1998 with 28 students in a church vestry. Today, it operates 115
schools across South Africa and Namibia and boasts a total enrollment of more than 66,000
learners. It is engaged in the provision of independent schools and education services. The
Company develops, acquires and manages independent schools for learners from the age of
three months to Grade 12. The different school models are Curro & Curro Select, Curro
Academy, Meridian, and Curro Castles (nursery schools). It has been one of the Johannesburg
Stock Exchange’s best-performing stocks since its 2011 IPO. Its share price has soared 491%
21
over the past five years, and, with an aggressive school rollout plan and new investments in
tertiary institutions, the company’s future remains bright.

In addition, Curro was listed on the JSE (AltX) on 2 June 2011 and moved to the JSE main
board in July 2012. Its business model revolves around the development, acquisition and
management of private schools in South Africa.

b) ADvTECH

ADvTECH is Africa's largest private education provider. The company operates in both the
schools and tertiary education segments. The schools segment offers pre-primary, primary, and
secondary education services. It consists of 109 schools across South Africa and parts of Africa.
The school division includes brands such as Crawford International, Trinity house Schools,
Abbotts Colleges, Maragon Schools, Centurus Colleges and Junior Colleges. The Tertiary
segment provides diploma, degree, and post-graduate services. It consists of 9 brands and 33
campuses. Brands include Varsity College, Rosebank College, Vega, MSA, Capsicum, School
of hospitality and service management, Oxbridge Academy and Mind sharp. It has previously
had a school-leaving exam pass rate of 99%. Advtech currently has 36 802 learners and 47 539
students across all its institutions, bringing its total client base to 84 341. Advtech stock has
tripled in value since the start of 2013. In addition, ADvTECH acquired Makini Schools, a
prestigious private school in Kenya. This was after they formed a partnership with Scholes
Limited, which is a London based company that manages schools in Kenya and Uganda.
ADvTECH continued with their expansion into East Africa by signing agreement with Schole
Limited that would let them manage Kisubi High School in Uganda.

It is also important that ADvTECH was founded in 1909 and listed on the JSE in 1987 regarding
electronics. Since its inception it has focused heavily on Academies Management by acquiring
and developing schools. They also tend to acquire other business units such as Communicate
Personnel and Network Recruitment which kicked off their resourcing department.

i) Comparables calculation

Curro Advtech

22
Mkt Cap
54,418,100,000.00 109,322,800,000.00
Cash
713,680,000.00 2,862,830,000.00
Debt
24,978,800,000.00 6,286,872,000.00
EV
78,683,220,000.00 112,746,842,000.00
EBITDA
7,509,860,000.00 13,610,202,000.00
Revenue
36,413,900,000.00 60,906,100,000.00
EV/EBITDA
10.48 8.28
EV/Revenue
2.16 1.85

Av.(EV/EBITDA)
9.38
Av.(EV/Revenue)
2.01

Apply illiquidity discount of 30%

Av.(EV/EBITDA)
6.57
Av.(EV/Revenue)
1.40

EBITDA*6.57
EV
Revenue*1.4
6,438,979.53
EV
413,388,745.99

Apply Survival Probability of 70%

23
 EV (EBITDA)
4,507,285.67
EV (Revenue)
289,372,122.19

The average EV is KES 146,939,703.93.

ii) DCF

FCF
2023 2024 2025

EBIT(1-T)
125,105,236.47 131,059,636.17 137,252,211.87
Depreciation
33,935,366.05 33,935,366.05 33,935,366.05
Capital - - -
Expenditures 3,000,000.00 1,000,000.00 500,000.00
Change in NWC
131,533.56 136,794.90 142,266.70

Totals
156,172,136.08 164,131,797.13 170,829,844.62

WACC 14.01%
Growth Rate 5.00%

Terminal Value
1,990,802,850.74

2 3 4
1

156,172,136.08 164,131,797.13 170,829,844.62 1,990,802,850.74

136,981,085.94 126,271,934.34 115,274,941.06 1,178,301,610.49

24
 Total
1,556,829,571.83

The final valuation of KES 428,917,677.51 is derived from an 80/20 split between the
comparables approach and DCF approach estimations.

12. RECOMMENDATIONS

Happyland Schools should carefully consider transitioning to a board of directors to govern

the company instead of solely relying on family succession. Introducing a professional
board can bring a diverse range of skills, expertise, and perspectives that may contribute to
more effective decision-making and strategic planning. While family succession has its
merits, a well-structured board can blend familial values with professional acumen,
fostering long-term sustainability and growth for the business.

Improve its marketing strategies to showcase the school’s readiness to accommodate the
new curriculum. Also, the marketing should showcase the success stories of current
students and alumni. This will illustrate the positive impact of the school on the student’s
academic and personal growth.

The school consider other ways to generate income:

-Opening a bookshop for students in CBC curriculum to purchase books and stationery.

-Leasing their swimming pool facility to external institutions that do not have the facility.

-Leasing their buses to external parties when not in use.

13. HAPPYLAND SCHOOLS JOURNEY TO GLOBAL STANDARDS LIKE XCL

WORLD ACADEMY SINGAPORE.

International Accreditation: XCL World Academy also has various accreditations that are
globally recognized such as International Baccalaureate World school, Council of International
Schools accreditation, hence they attract both local and international students. Happyland
schools should aim to obtain such accreditations to enable them to gain global recognition.

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Global Curriculum Integration: Happyland school should integrate global perspectives into the
curriculum to foster a diverse and inclusive learning environment. Offer internationally
recognized programs such as the International Baccalaureate (IB) to attract a broader audience.

Global Partnerships: Form partnerships with international educational institutions, fostering

collaborations on academic initiatives. Companies like Microsoft have programs to help
introduce young students to technology early on.

Alumni Engagement: Strengthen connections with alumni by creating an international alumni

network. Happyland should leverage successful alumni stories to enhance the school's global
reputation.

Participation in Global Competitions: Happyland should encourage and prepare students to

participate in international academic competitions, i.e. science fairs. This will help to display
their excellence on a global scale.

14. APPENDIX

INTERVIEW QUESTIONS FROM VISIT TO HAPPYLAND

BUSINESS MODEL

1. How does the school generate revenue apart from school fees?

School fee

After school activities

School trips

Transport

2. What is the target market?

Middle upper class from Buruburu, Edenville, kiserian

3. Is it a competitive industry?

Yes, the largest competitors are, Rockfields, Mary Immaculate, Thomas Bark, Kathsome

26
4. What sets the school apart?

Their dedication to students’ academic excellence. Performance is closely monitored and

poorly performing students are given extra attention through tuition sessions.

Cleanliness of school

English speaking of students in the school significantly improved.

Christianity

Have a counsellor, keen on mental health of students.

Good facilities for the new CBC curriculum

FINANCIAL PERFORMANCE

5. Key costs and expenses?

Salaries: Teaching staff are 189

Support staff are 56

Food

Learning materials(they supply exercise books and textbooks to 844 students but CBC students
are required to purchase their own books)

6. Key suppliers?

Text Book Centre

MNG

Cooperative Bank

Equity

RISK

7. Key Risk factors in school industry?

Government policies that keep changing, e.g. new CBC curriculum they have to quickly adapt.

Child safety in school.

Food, to ensure sanitary conditions are kept high to avoid food illnesses.

Insurance policies: Fire, burglary, learners’ accidental insurance

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TECHNOLOGY

8. Use of technology in the school?

Have projectors in every hall.

Posting notes for the students in google classroom.

Bus system to let parents know that student has reached school.

CUSTOMER BASE

9. How many students in the school?

Had 2140 students but has now dropped to 1641 students in Buruburu campus. Due to COVID
19 many parents could not afford fees hence they moved their children to public schools.

Have 5 streams per class.

School fees is about 68,000 on average.

10. Customer acquisition strategy

Word of mouth from existing customers to new customers.

Strong brand name: The school is known for academic excellence producing results.

Social media and website showcasing the school.

11. Customer retention?

The strategy is to ensure that the student attains good academic results.

Regularly engaging with parents through parent-teacher meetings to be made aware of any
arising issues.

12. Have you been involved in any social projects?

They were involved in a community project to paint a nearby school and cut the grass on a
frequent basis.

TEAM

13. Background of the founders?

School was founded by a couple, wife studied secretarial in Kianda college.

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They started a nursery in a house in Buruburu, the numbers continued to increase so they rented
a bigger space until they acquired the area on land where the school is bulit. From there they
have kept expanding to Primary, Secondary, Boarding school.

Have 3 branches, Buruburu, Edenville, Kiserian

14. How is the leadership structured?

School owners, family

School manager

Headteacher

Deputy Headteacher

Senior teacher

Curriculum head

Head of departments(subjects)

Head of streams (grades)

15. What criteria do you look for when hiring teachers?

Experience, Innovation oriented to cater to new system, Creativity.

EXIT

16. Would the company consider going public? No, they want to maintain it in the family

MARKET TRENDS

17. Has the new curriculum affected growth?

Yes, it has leveled the playing field for schools as they find ways to accommodate the new
system.

A number of parents have moved their children to public schools as this curriculum is not only
focused on academic performance that private schools had perfected.

Happyland has also had to input funds to build facilities such as labs, homescience rooms,
sports field, also to train teachers.

18. Plans to expand into new markets?

29
Happyland director is open to expanding into IG system in the future.

FINANCIALS

✓ Enrollment Trends:

What has been the historical trend in student enrollment over the past few years? Growing but
declining after COVID

Are there any significant changes expected in enrollment in the upcoming academic years?
Yes, interviews for CBC are increasing.

✓ Tuition and Fee Structure:

What is the current tuition and fee structure for different programs or grade levels?

Depends on grade -maximum 40,000 ;Salaries – maximum 81 million annually.

Are there any planned changes in tuition or fees?

-Fees increased by 2000

✓ Operating Budget:

Can you provide insights into the annual operating budget for the school? Financials

What are the major expense categories, and are there any cost-saving measures being
implemented? Salaries, food

✓ Fundraising and Grants:

Does the school rely on fundraising activities or grants? No

What has been the historical trend in funds raised, and are there any upcoming campaigns or
grants expected? Not really

✓ Capital Expenditures:

Are there any planned capital projects or significant investments in infrastructure? Happyland
Eden

How are capital expenditures typically funded? Profits reinvested and loans.

✓ Debt and Liabilities:

Does the school have any outstanding debts or significant liabilities? Yes

30
What is the repayment schedule for any existing loans? It’s paid per term so every 3 months.

✓ Government Funding or Subsidies:

Does the school receive any government funding or subsidies? None

Are there potential changes in government funding policies? None

✓ Reserves and Endowments:

Does the school maintain any reserves or endowment funds? No

How are these funds managed and utilized? No

✓ Insurance and Risk Management:

What types of insurance coverage does the school have? Fire, Burglary, Accidental, learners

How does the school manage risks and unforeseen events? Safety of students, fire, food,
government policy

✓ Community Engagement:

How engaged is the school with the local community? Not really, but they did something in
the past (Rabai Primary School-paint and cut grass)

Are there community partnerships or programs that may impact financials? None

Girl School (68,000)- 320 students

Students are from:

-Nairobi , Kiserian, Ngong

31