AFFINITY SQUEEZING MORE OUT OF CHILDCARE CENTRES

AFFINITY SQUEEZING MORE OUT OF CHILDCARE CENTRES

AFFINITY Education Group (ASX: AFJ) is squeezing more out of its childcare centres, reporting a 5 per cent lift in fees over the year and talking up expectations for earnings in 2015.

The listed Gold Coast-based childcare centre operator has also revealed it is buying another 16 centres for $45 million, lifting its stable of properties to 144 with a capacity for 10,800 childcare places.

The acquisitions will be funded from surplus cashflow and through an existing $100 million debt facility.

The latest contracts are due to settle in the March quarter, along with the remainder of 20 centres secured in September.

Affinity says it has already settled on 12 of those 20 centres. It also says the new acquisitions will be earnings accretive upon settlement.

"Occupancy across the group has continued to improve in the second half of 2014 and average fees have increased 5 per cent across the year," says Affinity in a statement to the ASX.

"A number of actions have been implemented in relation to 2015 enrolments, which is expected to result in improved results relative to the start of 2014," it says.

"Consistent with the group's performance to date, costs remain under control and acquisitions are integrating well, particularly in relation to operations, human resources and information systems."

Affinity chief executive Justin Laboo says the new centres have "strong occupancy, higher margins and earnings contributions, together with a reputation for delivering high quality services to children and families".

"These acquisitions top off a great year for the company, having achieved significant growth, operational improvement and successful integration of the centres in a relatively short period, whilst creating the platform for a strong start to 2015 and continued growth."

Affinity, which has just notched its first year as a listed company, has yet to report a profit. It posted an $8.8 million loss for calendar 2013, which was a truncated financial reporting period from May 21 to December 31.

The interim result for the six months to June 30 was a loss of $5 million, with revenue at $38.4 million up from the $37.7 million forecast in its prospectus.

However, the $5 million loss compares with a $2 million profit forecast by the company in the prospectus.

Affinity has not issued an updated profit forecast for calendar 2014, with the prospectus targeting an unlikely $7.78 million net profit.

However, should the forecast statutory profit of $5.7 million for the December half materialise, the company could still scrape through with a modest maiden profit for 2014.

Get our daily business news

Sign up to our free email news updates.

 
Whitefox Recruitment founder Luke Hemmings making strides as a careers leader
Partner Content
After relocating his Canberra-founded company Whitefox Recruitment to the Gold Coast la...
Whitefox Recruitment
Advertisement

Related Stories

ASIC secures its first court win for greenwashing against US giant Vanguard

ASIC secures its first court win for greenwashing against US giant Vanguard

The Australian corporate watchdog has caught out one of the world&r...

Medicinal cannabis group Althea shaves $1.5m from its cost base through staff cutbacks

Medicinal cannabis group Althea shaves $1.5m from its cost base through staff cutbacks

Australian-founded medicinal cannabis company Althea Group (ASX: AG...

Charter Hall snares 15pc stake in Hotel Property Investments for $97m from 360 Capital

Charter Hall snares 15pc stake in Hotel Property Investments for $97m from 360 Capital

Listed funds manager 360 Capital Group (ASX: TGP) has offloaded its...

The party’s over: Splendour in the Grass festival cancelled for 2024

The party’s over: Splendour in the Grass festival cancelled for 2024

Splendour in the Grass, Australia’s largest winter music fest...