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