Abc Learning Centres Limited

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1.Executive Summary
ABC Learning Centres Limited (ABC) has recently came into limelight in the childcare industry. It went into receivership on 6 Nov 2008 and Australian Government has announced to assist ABC to continue operation till end of 2008 by injecting $22 million.

An analysis has been done on ABC on why the company has landed itself into receivership by analysing its annual Income Statement, Balance Sheet and Cash Flow Statement. Reading and analysing of news and articles in relation to ABC has been done to support and supplement the analysis.

From the analysis, the underlying reasons for ABC to be in current state are the excessive borrowings to expand, high operating costs, poor credit control, constant issues on equity and their accounting method.

2.Industry Profile
Child-care centres provide supervision and educational programs for pre-school and school-age children. Most commercial companies operate child-care centres that are open to the public, but some operate corporate-sponsored centres for employees' children. Most commercial facilities concentrate on a small age range, since each age group requires a different program. (

In Australia, this market is moderately segmented due to a key player, ABC. It accounts for 30% of the market share, which makes it the largest privatized child care service provider in Australia. (

The Australian Child Care industry is supported and regulated by government. Child care providers are subsides via the Child Care Benefit, and this becomes an indirect subsidy of A$300 million every year to ABC to maintain a healthy staff-to-child ratio.

ABC has exclusive deal to provide childcare for Australian Defence Force staff. ABC competes with other listed operators including CDC and numerous independently operated centres. In US, it competes with market leader Knowledge Learning Corp and other small providers. (

3.Company Profile

Company Name
ABC Learning Centres Limited
43 Metroplex Ave, Murarrie, QLD?4172

Year of Establishment
Official Listing Date
Stock Code
Principal Activities
ABC Learning Centres Limited (ABS) is involved in private child care and education businesses in Australia, New Zealand, USA and the UK. The freehold property of many childcare centres is owned by private third party landlords and a variety of private trusts, and is leased by ABC. Geographical Presence

Direct operations in the following segments
Australia, New Zealand
United States of America
Europe - United Kingdom
Consumer services
Market Capital
Number of Centres
2238 Centres
As at 31 December 07 ABS operated over 1200 centres in Australia & New Zealand. As at 31 December 07 ABS operated 1,000 schools in the US.
ABS is the largest provider of child care in the UK, with over 100 owned and managed nurseries.

Number of Employees
16, 000 staffs (as at 31 Dec 2007)
Table 1 : Company Profile of ABC Learning Centres Limited

ABC Learning Centres Limited is involved in private childcare and education business. It opened its first childcare centre in Brisbane in 1988. It was incorporated in 1997 in order to acquire the freehold interest in Eddy and Le Neve Groves childcare centres and then acquired both of its current subsidiaries, ABC Early Childhood Training College Pty Ltd and ABC Development Learning Centres Pty Ltd. It was listed in the ASX in 2001 with a market capitalization of approximately $25 million. The Company has since grown through a combination of organic growth strategic acquisitions. It has also integrated several business models of acquired business into ABC systems as part of its growth. It currently has operations in Australia, New Zealand, the...
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