Affinity, OAC and Busy Bees CY23 results highlight divergent performance between large private operators

Large private early childhood education and care providers (ECEC) Affinity Education Group, Busy Bees Australia and Only About Children (OAC) have lodged, as part of their ASIC disclosure obligations, a copy of their CY2023 audited financial statements.

 

The results, extracts of which will be added to the StartingBlocks website as required by new financial reporting obligations for large providers, provide insights into the financial performance of private ECEC providers which, unlike their ASX listed peers, have different reporting requirements and post less regularly.

 

This set of reports highlights significant divergences in financial performance across the three businesses in 2023. Below is a high-level summary of each. 

 

Affinity Education Group

 

Affinity generated revenues of $552.8 million and profit before tax of $23.7 million in 2023, increases of 35 per cent and 20 per cent compared to the prior year respectively.  Net profit after tax was $13.7 million. 

 

The growth in revenues and profitability was driven in somepart by revenue generated from newly acquired centres across the year. Affinity acquired thirty three centers in 2023 taking the total number of centres across the network (as at December 2023) to 235. 

 

Employee expenses as a percentage of revenue were around 55 per cent in 2023, similar to that recorded in 2022, and the profit before tax margin was 4.36 per cent.

 

Affinity had $53.5 million of cash as at year ended December 2023 and borrowings outstanding of $563 million. The loans consist of a syndicated debt facility maturing in 2026 (around 85 per cent of debt) and unsecured loan notes maturing in 2027 (around 15 per cent of debt).

 

Only About Children

 

OAC generated $219 million of fee revenue and a loss before tax of $64 million in 2023. Comparisons against the prior year period are complicated by a change in ownership midway through 2022, meaning full year 2022 reporting is not available.

 

Over the course of the year six centres were acquired and disposed of with OAC closing out 2023 with 82 centres across Sydney, Melbourne and Brisbane with around $19.5 million spent on acquisitions. 

 

Employee expenses as a percentage of revenue were around 65.8 per cent in 2023. 

 

As part of the Group’s annual portfolio review it was concluded by management that an impairment charge of $36.5 million was required as occupancy levels, and workforce constraints, impacted expectations of future performance. 

 

OAC had $7.8 million of cash on its balance sheet at year end and a loan balance outstanding of $141.6 million in favour of the Group’s ultimate parent company, Bright Horizons Family Solutions. 

 

Busy Bees  

 

Busy Bees Australia Pty Ltd  reported revenues of $446 million, up 11.5 per cent on 2022, and a pre tax loss of $38.3 million in 2023 from its portfolio of 220 centres of which 142 are located in Australia and 78 in New Zealand. 

 

Activity in the network was focused on New Zealand throughout the year, with eight centres acquired and two divested. Australia saw two greenfields open and a further two centres divested. Overall payments for acquisitions amounted to $6.6 million, down from $30.9 million in 2022. 

 

Employee expenses as a percentage of revenue were around 65.3 per cent in 2023, higher than in 2022 (62.4 per cent). Busy Bees noted that tight labor markets in Australia partly explained additional costs in this area as well as the Group opting into Full Pay Parity in New Zealand. 

 

The Group finished the year with $26.4 million of cash on the balance sheet and borrowings of $372.6 million extended to Busy Bees Australia from the Group’s parent entity.