Mayfield provides solid Q1 trading update and acquisition confirmation
In an unscheduled Q1 trading update Mayfield Childcare has provided an update to their trading performance in the first quarter of 2018 and provided some detail on the acquisition of a single centre in Victoria.
Mayfield, which currently owns and operates 21 centres, including the new acquisition, in Victoria saw Q1 revenues increase 13.3 per cent to $7.62 million and Group EBIT increase 13.8 per cent to $0.66 million compared to the same period last year.
The revenue performance was driven by a better occupancy performance, 2018 acquisitions and fee increases. The company did not provide any indication as to how much fees were increased in the period.
The benefits of the revenue growth did not fully fall to the EBIT line due largely to ongoing investment in the organisation’s quality offer via curriculum and centre upgrades as well as further commitments to the marketing and community engagement capabilities of the business outweighing positive operational cost control.
Trading environment remains supportive as CCS benefits flow through
The company noted that the trading environment had continued to improve confirming a trend highlighted at their full year results in early February.
In particular, they noted a slow down in new supply as tighter lending standards diminish developer incentives to commence new projects alongside a pick up in affordability experienced by their families in the wake of the Child Care Subsidy (CCS) implementation last year.
Specifically, the company noted a 0.5 per cent improvement in occupancy and reiterated their full year 2019 occupancy guidance of 1.0 per cent growth.
Additionally, they highlighted that government contributions to the company’s revenue have increased from 49 per cent to 60 per cent signalling clearly the affordability benefits to parents that the CCS has brought.
Single Victorian centre purchase takes centre total to 21
A centre with annualised EBIT of $225,000 has had heads of agreement executed and is now subject to Department of Education licensing approvals and transfers.
The company will pay $900,000 for the 78 license place centre which will be funded by a mix of debt and cash and represents a multiple of 4.0x EBIT.
Notably, the company highlighted that the market was in their view returning to more traditional methods of securing growth with an increase in brownfield centres becoming available for sale.
For more information on the company update please click here.