My investment case for GEM, page-4

Refreshing to see such a quality post.

I'd like to add some information and my opinion to the discussion.

Updated Figures on Registered Early Learning Centres

The number of licensed long day care centres registered in Australia as of today is 7049. The number of licensed family day care schemes as of today is 853. In addition there are many preschools and community based around Australia to add to the list of options offered to families.
I am led to believe that there are currently 117 new centres or expansions to centres currently with various councils and regulatory bodies around Australia, this is unconfirmed.

Revenue

The revenue listed includes CCB (child care benefit), CCR (child care rebate), payments/bonds in advance from families, enrolment advance from DSS for every child enrolled paid on enrolment and repaid on exit from the centre, basically an interest free loan from the government, the LDCPDP (long day care professional development programme and LDCNPG (long day care national partnership grants). The LDCNPG has now ended and the LDCPDP ends in June this year.

Other Childcare Providers

The second largest provider trading on the ASX is Evolve Education, NZ based dual listing. Currently own 119 centres in NZ. In addition they have Porse and Au Pair Link that offer in home care and training. The reason Evolve is on my watchlist is because of the connections/shareholders, Kern Group, if you've gone back to the early days of G8, you'll be familiar with that name, also previously involved with Affinity, Wraith Capital owned by Chis Giufre husband of **rielle Giufre previous founder and director of Affinity Education and Stuart James previous chairman of Affinity, all Queensland based. Have been expecting their expansion into Australia for sometime now.

The other question is what are Anchorage going to do with Affinity? Will we see another IPO?

Occupancy

Many centres in not for profit, corporate, community based etc., currently trading with very low occupancy levels. Is oversupply one of the reasons - yes, but the main reason is not meeting the needs of the children and families within their communities.

Proposed Families Package - Activity Test

Removing the cap and increasing it to $10,000 in other cases is welcomed by all families, but will it do anything to increase occupancy?
The Activity Test, currently offering 8 hours of subsidised care per fortnight to non working or one parent working families who fail to meet the stipulated requirements of the test. Hopefully this will be increased, the hours mentioned are now 15 per fortnight. That equals one 7.5 hour day per week. If a centre is open for 12 hours the provider currently gets the subsidy for 12 hours regardless of how long the child is in attendance. With subsidies only available for 7.5 hours who is going to pay the difference or will the government introduce subsidising centres strictly on the hours attended?

Happy to hear informed and constructive comment on any of the above.

IMO & DYOR