Taking into account the government subsidies for CCB and CCR, the minimum amount of funding towards childcare for any centre would be 50%, the highest for both combined would be around 85 - 90%. That amount of tax payer funding, should attract from the government consistent auditing on financial viability.
As I mentioned earlier, it has been suggested that the government may consider capping the number of centres that any one corporate can own. It would be hoped that this would be a lesson learnt from the ABC debacle.
With four corporates now listed on the ASX is there a rush to purchase centres? Is the focus on quantity not quality? Perhaps the recent Commission findings into childcare are sending a few tremors into the world of corporate childcare.
If the nanny subsidy is implemented (which it should be) and the ratio changes in 2016 are implemented it will have a considerable effect on the profitability of all centres. The ratio changes have already be legislated, the best case scenario for a room of 24 two year olds would be as follows:
That room would currently operate with 3 staff, from 2016 their options would be operate with 5 staff or 4 staff and drop four placements every day. These changes will have a massive effect on EBIT. There is only much of those increases that could be passed onto parents, and this would increase the popularity of the employment of subsidised nannies.
a good corporate organisation would be paving the way now to absorb those changes and maintaining high occupancy levels.
Interesting times ahead.
GEM Price at posting:
$4.41 Sentiment: None Disclosure: Not Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)