Affinity reports strong business performance in 2022, spends $104m on acquisitions

Affinity Education Group reported solid business performance in 2022 with revenues of $411 million as it finished the year with 203 centres according to its annual financial statements lodged recently with ASIC. 

 

As a large private company Affinity has an obligation to submit financial statements to ASIC, which are available to the public, although this year organisations with in excess of 25 centres will also be required to disclose additional information to the Department of Education as part of the new transparency obligations included in the Cheaper Child Care Bill. 

 

Lodged under the name of its holding company, AEG Holdco Pty Ltd, Affinity reported revenue for 2022 of $411 million, profit before tax of $19.6 million and net profit of $13.7 million. 

 

Adjusted for the impact of IFRS 16 Leases (an accounting standard that requires long term leases to be treated as sources of finance and capitalised on the balance sheet with a corresponding implied finance cost passed through the income statement), the group generated underlying earnings (EBITDA) of $75.7 million representing a strong margin of 18.4 per cent. 

 

Total employee expenses were $226.4 million, around 55 per cent of revenue, with rental costs of $51.23 million representing 12.5 per cent of revenue. 

 

For context, Affinity’s larger peer G8 Education reported revenues of $903.5 million for 2022 with employee costs of $561.5 million, around 62 per cent of revenue and rental payments of $111.6 million, around 12.4 per cent of revenue. 

 

Thirty five centres acquired at a cost of $104 million across four states and territories

 

During the year, Affinity acquired thirty five childcare centres with twelve in New South Wales, eight in Queensland, fourteen in Victoria and one in the Australian Capital Territory taking the  total number of operating centres as at 31 December 2022 to 203. 

 

The total cash paid amounted to $99.4 million with $5.0 million of contingent consideration most likely for an earn out arrangement. 

 

Furthermore around $31.0 million was spent on payments towards property, plant and equipment which is largely accounted for by construction costs of Affinity’s nascent greenfield program and fixtures and fittings costs for it and its broader network. 

 

With 203 centres as at 31 December 2022, Affinity is now comfortably the third largest long day care provider in Australia, behind Goodstart at around 648 centres and G8 Education at around 442. 

 

Affinity financed the purchase of its new centres largely with debt with current long term liabilities reported to be $445.9 million, up from $340.0 million at the beginning of the year and a level substantially higher than G8’s $127.9 million reported at the end of 2022. 

 

To learn more about Affinity Education Group visit its website.