valuation!, page-2

The two most important factors that are going to affect the profitability of corporate childcare are:
The findings of the Commission, which should be known shortly after parliament resumes.
The changes to ratios for 2-3 yr old in 2016.

The key brief for the Commission was:
Workforce participation, need for childcare given changes in work patterns, affordability, alternative
models of care, allow parents to work flexible hours, more choice, and most importantly within existing
funding parameters.

In home subsidised nannies and payments to grandparents who look after their grandchildren to allow parental workforce participation, will no doubt be introduced and subsidised from the budget allocation of the governments parental leave scheme. If corporates want to keep their slice of the pie, they will need to consider trading for longer hours. The days of twelve hour opening will be a thing of the past. There are some centres at this time, who are trialling (and successfully) longer opening hours. Those who do not adapt to the needs of working families will be handing their business to the in home nanny scheme, on a plate.

The changes to staff to child ratios in 2016 will have a massive effect in the profitability of centres. I have supplied calculations in previous posts and it is a considerable sum per centre. Again, if centres pass this charge directly onto parents there is no doubt that it will make other options more attractive.

In my opinion, it is time for the corporates to minimise acquisitions, and to start looking outside the square to ensure they retain the enrolments they already have and offer flexibility to all families to increase their occupancy rates.

These are the two main factors I see as affecting the profitability of centres in the next two years. Happy to have everyone's opinion.

Islay.