Think confirms jump in quality ratings and new strategic initiative in 2018 results
Following reassessment of 24 of its early childhood education and care (ECEC) services, Think Childcare Limited has confirmed in its 2018 full year results presentation a significant improvement in overall quality ratings, with the Group now having a total of 82 per cent of their services rated as meeting or exceeding the National Quality Standards.*
Of the 24 services that have undergone reassessment, 12 saw their rating improve from working towards to meeting bringing the total number of reassessed services with a quality rating of meeting or exceeding to 92 per cent of the total compared to only 42 per cent before hand.
Think highlighted in its 2018 full year results significant investments in support office capability and bandwidth as well as a further $3.1 million spent on upgrading its services over the year which have leant support to the quality push.
‘Project Elevate’ to drive further quality and service improvements going forward
The Group also provided details of a newly launched strategic and operational plan designed to enable the successful execution of it’s group strategy.
The plan, dubbed “Project Elevate”, focuses on achieving positive outcomes in four main pillars of the organisation, namely; people and performance, education and curriculum, service delivery, and business and finance.
The plan was formulated at the Group’s inaugural two-day strategy workshop held in October 2018.
The Group highlighted a multi-phase operational plan that illustrates specific initiatives to be actioned within each of the four pillars as well as detail on who the chosen external partner will be to support in the execution.
Phase 1 of the plan will include a focus on national curriculum; enhanced online training; a policy and procedures review in the education pillar; and, workers compensation and recruitment processes in the people pillar. Within the service delivery pillar emphasis will be placed on quality improvement process implementations and assessment and rating reviews.
Phases 2 and 3 of the plan will see additional targeted initiatives that build on the foundations created in Phase 1.
Commenting on the plan, Think Childcare Managing Director Mathew Edwards said “During the financial year we launched Project Elevate which, amongst other things, relaunched our capability across our core disciplines in people and performance, education and curriculum, service delivery and finance.”
Network expansion still a priority for the Group
Over the course of 2018 the company purchased nine ECEC services with a total value of $14.5 million, and developed three greenfield sites at a cost of $1.9 million.
The Group now owns and operates 55 centres of its own, of which 11 are currently trading under the Nido Early School brand, with plans to rebrand the balance already in place.
Think also manages services on behalf of its partners and currently has 19 services contracted for management services of which 10 are trading under the Nido brand.
Other key highlights from the report include:
- The Group generated $80.6 million in revenue, an increase of 28 per cent on last year
- Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 14 per cent to $10.7 million
- EBITDA margins fell from 14.9 per cent in 2017 to 13.3 per cent in 2018 as investment in the foundations of the business continued in the year
- Net profits were $5.0 million, a fall of $0.8 million due to higher one off financing costs
- Cash conversion was 135 per cent up from 79 per cent in 2017 and the closing cash balance improved to $3.6 million
- Earnings per share fell 25 per cent in the period despite profits rising due to the affect of an increase of shares in issue post a capital raise of $10.2 million in March 2018
- A successful refinancing of Group debt saw new facilities totalling $78 million secured of which $28 million has been drawn and $6.6 million allocated as bank guarantees
- A fully franked dividend of 6.5 cents was declared and will be paid in March 2019
- Fees increased by 6.5 per cent to $115 per day in 2018 and wages as a percentage of revenue was steady at 61 per cent
- As at 31 December 2018 the Group had 35 team members at their support office.
Looking forward the Group confirmed a positive start to 2019 with a 9.2 per cent increase in revenue growth compared to the same period last year and a constructive assessment with regards to future sector supply-demand dynamics and prospects.
Commenting on the outlook Mr Edwards said “We remain positive about the outlook for the childcare services sector and the benefits of the new Child Care Subsidy to our families and the communities we serve.”
*The ACECQA register as of today states that Think has had 52 centres rated of which 77 per cent have been rated meeting or better. Differences in total numbers will be a function of record dates and timing.