Mayfield confirms internal optimisation efforts continue in HY2023 results release

Early childhood education and care (ECEC) provider Mayfield Childcare continues to build on previous commitments to reset and re-organise the Group’s operations with a series of new initiatives confirmed in its HY2023 results. 

 

Specifically, the Group confirmed the planned sale of six underperforming centres, a new targeted centre remediation and reinvestment program and a broad based network wide compliance review. 

 

In addition, Mayfield has appointed a facilities manager, financial controller and new Chief Financial Officer as well as established a new in-house quality and compliance department. 

 

These moves were in response to a series of financial irregularities identified by the current management, and later confirmed by an external consultant, earlier this year. 

 

“The prior period issues and investigation announced earlier this year resulted in the Board and management having to take decisive action and remediation steps,” Chief Executive Officer, Ashok Naveinthiran said.

 

“We view this chapter as a critical turning point in our pursuit of a stronger, more resilient organisation. While one-time expenses are reflected in our financial performance for this period, they underscore our dedication to laying a solid and transparent foundation for sustainable growth.”

 

Operational performance impacted as remediation costs rise

 

Occupancy in the first half of the year across the Group’s forty centres was 63.9 per cent, 1.2 per cent higher than the same period in 2022, however when adjusting for the planned divestment centres occupancy was reported to be 70.6 per cent, 3.6 per cent higher than last year. 

 

Group revenue was up 14.8 per cent to $35.7 million in the period, with centre related costs up 5.0 per cent and total group costs, excluding one off items, up 6.7 per cent contributing to a fall in earnings before interest, tax, depreciation and amortisation (EBITDA) of 29 per cent. 

 

Head office costs increased by $0.4 million and $0.6 million and $0.3 million was spent on centre remediation work and educational resources respectively. 

 

Looking ahead the Group anticipates an improvement in performance as remediation and reorganisational initiatives yield results, alongside the disposal of underperforming centres and ongoing acquisitions of higher performing new centres. 

 

Cash levels drawn down as acquisition and dividends commitments paid

 

Mayfield’s balance sheet saw some notable changes in the period with cash and cash equivalents on hand as at 30 June 2023 falling to $347,000, from $2.7 million at the end of 2022, and long term borrowings increasing to $10.3 million, up from $6.3 million. 

 

The Group highlighted that the drawdown in debt was driven by acquisition and dividend funding and that additional headroom of around $4.6 million remains in the current agreed facility although $3.5 million of that capacity had been approved for drawdown in August 2023 to fund past acquisitions.

 

“Despite the significant challenges of the first half, our investment in our centres, people and brand equips us well for the road ahead,” Mr Naveinthiran said.

 

“As we move into the second half of the year and look ahead to 2024, our focus turns to growth, both organic and through new acquisitions,”  he added.

 

“We have proven this year the effectiveness of our acquisition approach and refined how we identify and integrate these opportunities, and while the Genius Incubator remains a source, we’re also looking at a range of other avenues for expansion. With a more strategic approach to acquisitions and a diversified pipeline, we’re optimistic about Mayfield’s trajectory.”

 

To review Mayfield’s results presentation please click here.