Plenty of talk in the market about underlying health of ABC
Learning's (ABS.AU) business. In particular doubts have been raised over how its
intangible assets - the childcare licenses - are valued. "My understanding is that
this balance sheet item values approximately 2,323 childcare licences at A$1.5 million
per centre and yet the company sold 49 centres during the half year at an approximate
price of A$1.0 million per centre," says Craig Connelly, Managing Director, AR
Capital Management in Melbourne. "That's a chunky discrepancy. If the company
wrote their licence value down by just 10% (ie. down A$300 million), they'd breach
their shareholder funds covenant."
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