Think Childcare releases 2021 interim results ahead of expected transition to Busy Bees

Think Childcare has released its last set of interim results ahead of the anticipated acquisition of the business by Busy Bees Early Learning Australia Pty Ltd (Busy Bees) which is expected to settle in October 2021. 

 

Think reported total revenues of $86.0 million in the six months to June 2021 and underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $9.2 million both of which were substantially higher than the results over the same period last year with both the child care business (TNK) and development business (TND) contributing to the performance. 

 

Revenues from the child care business were $77.7 million, of which 97 per cent were generated by the Group’s operating services, and the balance from management fees.

 

Underlying EBITDA margins, which include support office costs, were 15.1 per cent, an improvement on last year’s 13.6 per cent reflecting lower relative support office costs and slightly higher management fee income. 

 

Service EBITDA margins were the same in HY21 and HY20 at around 20 per cent. 

 

The Group’s performance was described in a release as “a testament to the character of all the people that work in the business. They have been asked time and time again to pivot and flex with the changing environment.”

 

“Every single time they have met the challenges with a fierce determination and a smile on their face. Without their can-do spirit, we would simply not be the company we are today,” a Think spokesperson said.

 

Think current occupancy at 79.4% ahead of both 2020 and 2019

 

Think’s current portfolio occupancy is currently 79.4 per cent, around 7.0 per cent higher than at the same point in 2020, and around 4 per cent higher than in 2019. 

 

The strong occupancy performance has occurred despite rolling lockdowns and notably now exceeds the highest occupancy levels recorded throughout both 2020 and 2019 with eleven weeks of the year to go, a signal that bodes well for full year occupancy performance. 

 

Additional perspective can be taken from fellow smaller listed child care operator Mayfield Childcare who reported occupancy of 71.2 per cent at the end of June 2021. 

 

Incubator executing on delivery of pipeline services 

 

Think Childcare Developments (TND), the incubator division of the business, contributed $10.6 million to Group revenues as it proceeded with ramping up services ahead of transition to the main operating entity, TNK. 

 

As at the half year, sixteen services were in trade up mode with overall occupancy for the cohort at around 60.0 per cent as at June 2021. As these services reach occupancy hurdles they will then be transitioned across to TNK as per the offtake agreement between the two entities. 

 

Elsewhere in the greenfield portfolio TND has 12 centres under construction and 8 services with development approvals. It is anticipated that over time these centres will also be completed, ramped up and transitioned to TNK. 

 

And finally, the Group confirmed in a separate announcement that the Federal Court of Australia has made orders to allow a General Meeting to be held on 29 September at which Think Group security holders will vote on the proposed acquisition by Busy Bees. 

To read the results presentation please click here.