Sunday, August 24, 2014

Boom for childcare operator

Vanguard September 2014 p. 6
Duncan B.

G8 Education is Australia’s largest for-profit childcare company.

In an industry where 84% of child care operators own only one centre, G8 currently owns 361 centres in Australia and 55 in Singapore. G8 has 78 more centres awaiting settlement in Australia, which will give it 439 Australian childcare centres.

G8 announced a purchase of 25 centres in early August, following on from the 115 it bought in the first half of 2014, and the 76 purchased in 2013. G8 is still on the look-out for more acquisitions.

Not surprisingly, G8 announced a 48% rise in interim net profit after tax to $16.3 million, with a 59% rise in revenue to $187.2 million.

It is obvious that the child care industry is a very profitable industry despite the collapse of ABC Learning in 2008. Many parents need to place their children in child care so that they can work.

Another factor underpinning the profitability of childcare centres is that the Federal Government subsidises some of the costs of childcare. Among the Government benefits is the Child Care Rebate which pays up to $7500 per child towards eligible child care. Parents still face high childcare costs, even after the Government subsidies.

Australian parents need access to low cost child care in not-for-profit centres, run to benefit the parents, not companies like G8.

No comments:

Post a Comment