All corporate childcare will be waiting for the release of the recommendations of the Inquiry Commission into the early childhood sector.
Part of the submission relates to the introduction of in home nannies. The nannies will attract the same government subsidies as formal childcare and there will be an option for families to share a nanny. This is referred to by the government as 'flexible childcare' and is long overdue and will be utilised by parents with two plus children in care and shift workers. It will be convenient and more economical for those families who will opt to share a nanny. This will have an impact on the occupancy/enrolment in centres.
There has also been a murmur that the government is considering capping the number of centres that any one corporate can own. The fallout of the ABC debacle is still echoing around the walls of Canberra.
The changes to educator ratios for 2 yr olds will change from January 2016 from 1:8 to 1:5, resulting in the employment of additional educators or reduced earnings, perhaps both, depending on the licence capacity of the centre.
All of the above are creating doubt regarding the forecast earnings of centres.
Affinity projected profit for the last 6 months of reporting was $2.6 m they delivered a $5 m loss. They have a lot to claw back to deliver the promised dividend.
The large share holdings of director/related parties companies with Evolve would also create uncertainty. There have been two articles published by Ethical Equities regarding Affinity worthy of reading.
If we have learnt anything from the ABC debacle it is that too much too quickly does not guarantee success. Lets hope for the sake of all our children we never see it in corporate childcare again.
AFJ Price at posting:
$1.12 Sentiment: None Disclosure: Not Held
