Think Childcare released FY18 Annual Business Results

  • Feb 28, 2019 AEDT
  • Team Kalkine
Think Childcare released FY18 Annual Business Results

Think Childcare Limited (ASX: TNK) has released its annual report for the financial year ended 31 December 2018.

Financial performance:

  • Improved closing cash position at $3.6m (pcp $0.5m).
  • Disciplined acquisition strategy of 9 quality services at 4X EBITDA resulted in an increase in company’s goodwill.
  • Significant reduction in leverage ratio due to tighter controls around cash management.
  • Increase in PPE due to capital investment program to uplift the offering of its existing services to Nido quality along with greenfield development.
  • Additional long service leave provision of $0.9m as a result of a revision of the LSL calculation to reflect legislation and actual workforce behaviour.
  • Delivered a 3- year total shareholder return of 26.4% including franked dividends (ASX300 Accumulation index 11.9%).
  • Achieved top-end of ASX guidance of: Underlying EBITDA $10.7m (guidance $10m-$11m); NPAT of $5.0m (guidance $4.75m-$5.25m); and EPS 10.5 cents (guidance 10-11 cents)
  • Delivered on capital management initiatives which funded strategic acquisitions and the capital investment program: Secured a five-year syndicated debt facility of $58m plus $20m accordion (headroom $43m) and Raised $10.2m equity, net of costs.

Dividend:

On 27 February 2019, the Board determined a final fully franked dividend of $3.15 million or 6.5 cents per share (DPS). The ex-date is 18 March 2019 with the record date of 19 March 2019. The payment date is due on 28 March 2019.

Business performance:

  • Growth in the portfolio of child care services of 83% since IPO from 30 to 55 services.
  • Support future growth by enhancing capabilities in the people, education curriculum, service delivery and finance.
  • 86% improvement in overall rating on a like for like basis for 12 services.
  • Acquired 9 childcare services and opened 3 greenfield purpose built Nido services (including its first centre in the QLD market).
  • Greenfield days sold growth was slower in H1 than expected; however, in H2 growth is as anticipated (average 22% increase in days sold each month in H2).
  • 75% of rental increases are linked to CPI (44% are CPI only, and a further 35% have CPI plus market review at option).
  • Launched Project Elevate which would enhance its capabilities across various segments.
  • Completed over $3.1m capital investment program to elevate existing services to be best in the market.

Outlook:

There are positive lead indicators for FY 2019. The Supply, affordability and trading are in line with expectations.

  • The company will reduce the supply of new services in its markets which will assist the company in stabilising the performance.
  • Higher government contribution will help families which in turn should increase demand for quality child care services.
  • Revenue growth was driven by maintaining the volume of days sold and fee review.
  • The company is optimist about future prospects for the child care services sector and the benefits of the new Child Care Subsidy to the families and the communities it serves.
  • 2019 will see Think Childcare continue to focus on elevating the service model required to support the Educators in the delivery of learning outcomes.

January 2019 trading:

The Key performance metrics in January 2019 have shown improvement on a like for like basis compared to the prior year. The revenue for Jan CY19 stands at $6.1 m from $5.6m in Jan CY18.

The shares of the company closed at A$1.870 (as at 27 February 2019), up by 10% from its previous close. Today, 28 February, the shares are trading flat at A$1.870 (1:55 PM AEST).


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