Mayfield HY2024 results highlight progress towards strategic goals being made

Mayfield Childcare has released its half year 2024 results in which as well as sharing financial performance the Group provided additional information on progress towards achieving it’s medium term strategic objectives.

 

The half year results showed headway across “growth and scale”, ”operational excellence” and “governance and risk management”, key strategic objectives initially outlined in a letter to shareholders published in April 2024 in the wake of a pivotal shareholders meeting. 

 

Mayfield posted underlying centre earnings before interest, tax, depreciation and amortisation (EBITDA) of $4.7 million for the six months ended June 2024 and underlying net profit after tax from continuing operations to $0.4 million. 

 

“We are pleased to report our Half Year 2024 results which clearly demonstrates Mayfield’s commitment to delivering financial and operational performance whilst also scaling the business,” Ashok Naveinthiran, Chief Executive Officer said. 

 

Precious Cargo integration takes network to 45 centres in total

 

The recently announced acquisition of Precious Cargo, seven early childhood education and care (ECEC) centres located in South Australia, has provided a boost to overall network size, with Mayfield now owning and operating 45 centres across three states. 

 

Precious Cargo was acquired for a total consideration of $4.8 million and is expected to deliver between $1.3 million to $1.5 million in earnings next year. 

 

Mayfield confirmed that it “continues to pursue strategic acquisitions to build the sufficient scale required to minimise volatility and to drive further operational efficiencies within existing sub-scale clusters.”

 

From a portfolio optimisation perspective Mayfield successfully closed one divestment centre in the period which coincided with an expiring lease and thus minimal additional costs to the Group on closure.

 

Improvements in key operational metrics evident but occupancy levels a lag

 

With “operational excellence” a strategic focus for Mayfield management will be encouraged by improved performances in key in-centre efficiency measures such as wages as a percentage of revenue, lower centre based costs and staff turnover levels in the first half of 2024. 

 

In particular, roster efficiency improved throughout the year, driven by management’s focus on effective workforce utilisation, the establishment of an internal casual pool and the overall reduction in agency usage with costs down 67 per cent reduction over the period. 

 

Notably however, Mayfield’s reported Group occupancy performance in HY2024 was hampered by 25 per cent of its portfolio being impacted by weather related closures in early January which interrupted business as usual enrolment processes and contributed to half year occupancy 3 per cent below 2023 levels.  

 

That being said, as at August 2024, as a cohort approximately 75 per cent of the Group’s centres had an occupancy of 75 per cent in the first half, with the top 20 centres averaging occupancy of 80 per cent.

 

Confidence in profit momentum triggers dividend reinstatement despite limited cash

 

Mayfield reported half year 2024 underlying centre EBITDA of $4.7 million, a 20 per cent increase on last year, which saw a strong Q2 performance EBITDA performance of $3.2 million mitigate the weak, storm affected Q1 performance of $1.5 million. 

 

Centre EBITDA margins were reported as 12.3 per cent, higher than last year’s 10.9 per cent but still some way off some of its listed peers like Embark Education Group which reported centre based margins of 23.5 per cent at its recent results. 

 

Operating cash generation for the period came in at $4.33 million, substantially higher than last year, with the majority of surplus cash being redirected towards debt and lease liability repayments. 

 

Cash on balance sheet as at the end of June was low at $161,000 however, confidence in the direction and momentum of group performance has led the Board to reinstate Mayfield’s  dividend program and to declare an initial fully franked dividend of half a cent for half year 2024. 

 

To review Mayfield’s HY2024 investor presentation and announcement click here and here.