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24/02/16
18:39
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Originally posted by Islay
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Page 24 on Investor Presentation 2015 should read '44 new centres and 2439 licensed places'.
IMO it appears that they are finding it challenging to maintain and improve occupancy levels. The Investor Presentation for 2014 refers to LFL Occupancy Levels but the 2015 report refers to LFL Peak Occupancy Levels, where the figures are derived from "the highest monthly occupancy achieved throughout the year".
G8's problems with occupancy levels are at centre level. To confirm my thoughts about issues at centre level, last week I called seven G8 centres enquiring about enrolment. From the seven only one director was still available. Telephones were answered in rooms by staff whilst supervising children, one had no idea how much the fees were, another didn't know what primary school the children from the centre would most likely attend. Questions about fees in advance received several different answers of which only one relayed the information correctly from G8's releases. However, the one director I did speak to was outstanding, she answered all of my questions and her knowledge and passion for early childhood education was impressive. Out of the seven, that was the only centre I would even have considered visiting. I have mentioned previously, that the scale of their operation requires it to be broken down to groups within groups geographically. The fact that they have been offering $500 worth of toys for enrolments during November, a week free fees for introducing a friend in December and a free laptop if you enrol in February indicates that they too are concerned about occupancy levels.
Discussion here refers to the effect of regulatory changes on occupancy. The major change was introduced by the government in January this year. IMO the costs incurred by centres because of those ratio changes will be significant. The three states most affected are NSW, SA and VIC. For anyone interested those ratio changes can be viewed on the ACECQA website under Summary of Ratio Requirements Across all Age Ranges. I suggest that long term investors read the Investor Presentation released by Think (TNK) yesterday, where they detail how they have addressed the new ratio issues by reconfiguring rooms to maximise their licensed capacity. Reconfiguration is the only solution, without it centres will be reporting reduced income and increased wage costs. It is unacceptable to expect parents to cover all of those costs.
The proposed changes in July 2017 are concerning. I hope that the proposed 18 hrs care per fortnight is increased to 24 hours and that the government recognise the rights of every child to access early childhood education regardless of whether their parents are in full or part time employment. There will be more parents who won't qualify for the care they access now than parents who use the opportunity to either seek out employment or increase their working hours. IMO there will be further positive adjustments to the proposals.
Finally, let me drag out the old "interest by a non holder" chant before the choir break out the chorus. Just not enough transparency in their reporting for me at the moment, but as always watching with interest, G8 and other large child care providers.
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Non holders are often the best commentators, as they are the most disinterested. I got ripped off by a local posh centre here in the Melbourne wealth belt - NOT a g8 owned centre BTW. We went to the open day and there were lot of experienced women there who we were told were the ones to be looking after our child. We signed my daughter up. My wife went along with my daughter and there were two teenage carers with little experience at all. She went back five times and we realised it was a scam. We ended up getting a nanny - as there were little kids there getting no attention for over an hour at a time - they were standing around with a toy looking bored and understimulated, while all the squeaky wheels got the attention. They would not refund us even though there was obvious deliberate misrepresentation involved, and withheld another months costs as per the contract.
So I am a bit concerned that we will end up with a dumb-arse nation with the child care we are getting - kids need stimulation and attention for a start.