Abc Learning Centres Limited Essay

3943 Words Jun 12th, 2009 16 Pages
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
…show more content…
This is a signal that the company is not stable.

(http://business.theage.com.au/business/eight-banks-going-all-out-to-hold-abc-together-20081107-5k6t.html)
ABC Learning shares was suspended in August 2008 after the company failed to release its earnings for the 2007-08 financial year and was subsequently fell into receivership on 6 November 2008.

The federal government injected $22 million into the company to keep its childcare centres open until the end of 2008.
The company was subsequently delisted from the S&P/ASX 200. (http://en.wikipedia.org/wiki/ABC_Learning)

The following is an analysis on the financial data of ABC from 2005 - 2007 annual report.

30 June 05
30 June 06
Change
30 June 06
30 June 07
Change
31 Dec 06
31 Dec 07
Change
Financial Data
Revenue (A$ Million)
252.7
631.5*
149.9%
790.8*
1,696.496.4
115%
667.8
1,106.9
66%
Profit before Tax (A$ Million)
53.59
120.42
124.7%
120.42
197.80
64%
126.0
158.1
25%
Net Profit after Tax / NPAT (A$ Million)
43.35
81.1
86%
81.11
143
76%
63.9
37.1
(42%)
Earnings per share / EPS
(cents)
23
27.7
20.4%
27.8
36.05
29%
16.2
7.9
(51%)
Table 2 : FY06, FY07 and first half of FY08 Financial Year Results Overview
ABC recorded remarkable growth in the revenue since listing in 2001. The revenue was further expanded from just under A$800 million in FY06 to an impressive A$1,696.4 million in FY07 (115%

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