Mayfield Childcare Ltd. · ASX:MFD
Mayfield Childcare — FY2023 Earnings Presentation
41 slides from Mayfield Childcare's earnings presentation, Mar 5, 2024
Slide 1: Mayfield Childcare Limited 2023 Full Year Results
Mayfield Childcare Limited 2023 Full Year Results Investor Presentation 5 March 2024
Slide 2: Important notices and disclaimer
Mayfield Childcare Limited CY 2022 Full Year Results • Investor Presentation Important notices and disclaimer This Presentation contains summary information about the current activities of Mayfield Childcare Limited (Mayfield). It should be read in conjunction with Mayfield’s other periodic and cont
Slide 3: Contents
Contents 01 Foundations 02 Operational Review 03 Financial Performance 04 Revised Incubator 05 Key Focus Areas for 2024 06 Outlook & FY24 Guidance Appendix Fraud Review Governance Review
Slide 4: We nurture. It's our nature.
We nurture. It’s our nature. At Mayfield, our centres help every child reach their natural potential. A place to grow and discover. Grounded in each community. Where experienced educators, deliver quality education and care for every child. Where you are family, and each day is full of joyful possib
Slide 5: Foundations
01 Foundations Our Vision & Philosophy Our Strategy Our Values Our Team 5
Slide 6: Our Vision & Philosophy
01 Foundations Our Vision & Philosophy Where every child reaches their natural potential. Pillar 1 Pillar 2 Pillar 3 Pillar 4 Connected by In Safe Quality Education You Home Away Community Hands Can Count On from Home Every Mayfield centre is grounded in its The most important thing in any At Mayfie
Slide 7: Our Strategy
01 Foundations Our Strategy Our strategy is to expand our existing areas of operation, strengthen our brand presence without losing our community connections, invest in our people and culture, and to leverage innovation to drive operational efficiencies. We aim to achieve sustainable growth, while l
Slide 8: Our Values
01 Foundations Our Values 1 Lead with Heart Focus on the child at the heart of everything we do. 2 Achieve with Integrity Dream big, while staying true to our principles of honesty and respect in every interaction. 3 Be authentic, be respectful We are committed to open and honest communication that
Slide 9: Our Team – Experienced Leadership
01 Foundations Our Team– Experienced Leadership Experienced leader with a background in early Seasoned CFO, CCO, and Corporate Strategy education, corporate finance and private equity. professional. Served as CCO at Spirit Technology Served as CEO at Genius Childcare managing a Solutions and CFO & C
Slide 10: CY23 Snapshot
02 Operational Review CY23 Snapshot People & Culture Quality & Compliance Centre Review Support Infrastructure 10
Slide 11: Note from CEO
Note from CEO “Despite the challenging start to the year, I’m proud of the team for their resilience and diligence in laying the groundwork for what would become a notable turnaround in performance.” “As we look ahead to 2024, we shift our focus to performance and initiatives to unlock long-term val
Slide 12: CY23 Snapshot
02 Operational Review CY23 Snapshot • Core portfolio occupancy1 performed in-line with the prior year with occupancy of 75.2%. • Four acquisitions were completed, delivering occupancy of 78.4% and a 4 4.5x 53.1 Centre acquisitions Post acquisition Family NPS post-trading multiple of 4.5 times. compl
Slide 13: People & Culture: restructured operational framework
02 Operational Review People & Culture Centre Managers are the heart of our business, so we have restructured the operational framework around them. By providing Centre Managers with a strong support network, coupled with KPIs and incentives, they are empowered and motivated to run their centres wit
Slide 14: Quality & Compliance
02 Operational Review Quality & Compliance • Reinforced our commitment to child safety and quality standards by investing in Mayfield’s first dedicated Quality and Compliance role. • Fostered a culture that promotes proactive disclosure and cooperation with the Department of Education. • Achieved im
Slide 15: Centre Overview - Bookings
02 Operational Review Centre Overview - Bookings Family Utilisation Centre performance Days per week YTD Occupancy (%) 3.25 80% 3.20 75% 3.15 70% 65% 2023 core portfolio 3.10 2022 core portfolio 2023 family utilisation 60% 2023 approved divestments 2022 family utilisation 3.05 2022 approved divestme
Slide 16: Centre Overview - Income
02 Operational Review Centre Overview - Income Other Income Long Day Care Income Year to date ($M) Monthly 3.0 8 Millions Millions 7 2.5 2023 Other Income (YTD) 6 2022 Other Income (YTD) 2.0 5 1.5 4 3 1.0 2 0.5 1 0.0 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug S
Slide 17: Centre Overview - Workforce
02 Operational Review Centre Overview - Workforce Staff turnover Roster Efficiency Staff terminations as a pct by month Salaries as a pct of Long Day Care Income (ex agency) 8.0% 60% 7.0% 55% 6.0% 50% 5.0% 45% 4.0% 40% 3.0% 35% 2.0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-23 Feb-23 Mar-2
Slide 18: Centre Overview - Remediation & Investments
02 Operational Review Centre Overview – Remediation & Investments Centre Supply Expense Repairs & Maintenance ($) Centre supply expense as a pct of Long Day Care Income Repairs and maintenance expense by month 5.0% 120 Thousands 4.5% 100 4.0% 3.5% 80 3.0% 2.5% 60 Target 2.0% 40 1.5% 1.0% 20 0.5% 0.0
Slide 19: Support Infrastructure - Centre Support Team
02 Operational Review Support Infrastructure – Centre Support Team Mayfield has invested in its support office team commensurate to the number of centres under Appointment of a Recruitment management. Between Jan’22 – Sep’22 Mayfield outsourced the management of its 14 recently Manager acquired Geni
Slide 20: Financial Performance
03 Financial Performance Earnings Review EBITDA Drivers Balance Sheet 20
Slide 21: Earnings Review
03 Financial Performance Earnings Review • Long Day Care Revenue Growth: An $8.2M increase from $67.9M to A$000’s Underlying Underlying Underlying Underlying $76.1M, driven by increased family utilisation, daily fees and revenue 1H 2023 2H 2023 CY 2023 CY 2022 contribution from new acquisitions. (Re
Slide 22: EBITDA Drivers
03 Financial Performance EBITDA Drivers Adjusted Group EBITDA1 excluding the end of year CCS 1 provision, was primarily impacted by once off remediation 2 costs, catch-up investments required at a centre level, inflationary pressure in supplies and lease renewals and the reliance on agency costs to
Slide 23: Balance Sheet
03 Financial Performance Balance Sheet A$ 000's 31-Dec-23 31-Dec-22 Cash and cash equivalents 363 2,657 • Cash and cash equivalents: Refer to the Consolidated Statement of Cash Flows Trade and other receivables 2,993 3,981 in the 2023 Annual Financial Statements for detailed movements. Prepayments 5
Slide 24: Acquisitions & Incubator
04 Acquisitions & Incubator Acquisition Risks Enhanced Due Diligence Revised Incubator Terms 2024 Childcare Development Plan Divestments 24
Slide 25: Acquisition Risks - Historical Review
04 Acquisitions & Incubator Acquisition Risks – Historical Review Historical Acquisition Performance Year 1 EBITDA Trading Multiples The trading performance of acquisitions is highly volatile and subject to integration and performance risk. 50 Divested The 16 centres acquired in 2016 by former m
Slide 26: Enhanced Due Diligence
04 Acquisitions & Incubator Enhanced Due Diligence Demand Assessment Enhanced Due Diligence Acquisition Performance Key factors Occupancy (YTD) 2023 Acquisitions 2021 Genius Acquisitions 85% Group 2023 Acquisitions 2021 Acquisitions 2016-2020 Centres 80% Acquisition Price Per Rent Score Place 75% 70
Slide 27: Revised Incubator Terms - Controlled Growth through Incubation
04 Acquisitions & Incubator Revised Incubator Terms – Controlled Growth through Incubation A market-leading approach which uniquely provides Mayfield the ability to grow earnings and substantially mitigate acquisition risk, with deferred consideration - minimising the Company’s capital requirements
Slide 28: 2024 Childcare Development Plan
04 Acquisitions & Incubator 2024 Childcare Development Plan The Childcare Development Plan Centre Feb 241 April 241 July 241 submitted for CY20241 incorporates Centre 1 – VIC 74.2% 77.8% 83.3% a number of centres within regions Centre 2 – VIC 65.8% 69.5% 75.0% complementary to Mayfield’s Centre 3
Slide 29: Divestments - Portfolio Optimisation
04 Acquisitions & Incubator Divestments – Portfolio Optimisation 2022 Acquisition & Divestment History Divestment Selection Integration & catchment issues 18 80% 16 70% 2 14 60% 3 12 4 50% Centres Acquired 10 Occupancy 40% 8 30% 6 11 10 4 20% 1 2 4 10% 3 2 2 1 0 0% IPO 2017 2018 2019 2021 2021 (GL)
Slide 30: Focus Areas for FY24
05 Focus Areas for FY24 Operational Excellence Performance Management Organic Growth 30
Slide 31: Operational Excellence - Catalysing Success
05 Focus Areas Operational Excellence – Catalysing Success We have refined our operational framework to better support our Centre Managers, providing them with the technology and data they need for efficient management. This approach is about enabling our teams to deliver high-quality, high-performi
Slide 32: Performance Management - Aligning ambitions with outcomes
05 Focus Areas Performance Management – Aligning ambitions with outcomes We have implemented performance-based initiatives, which are directly aligned with our Group objectives. These have been designed to not only uplift our service quality and performance, but to also bolster team morale and commi
Slide 33: Organic Growth
05 Focus Areas Organic Growth Rebranding & Refresh Conversion Optimisation Organic Target Area 250 18 85% 19 avg. occupancy 200 70% occupancy Leads in Pipeline 11 150 13 100 6 50% - 70% occupancy Target Area 4 50 (1 centre at 46%) 6 0 divestments Q1 Q2 Completed No Change Jan Mar May Jul Sep Nov • 1
Slide 34: Outlook & CY24 Guidance
06 Outlook & CY24 Guidance Outlook CY24 Guidance Capital Management Plan 34
Slide 35: Outlook
06 Outlook & CY24 Guidance Outlook Regulatory Changes - The Productivity Commission review outcomes will likely be of benefit to the industry, with further support to families, staffing and/or operators being likely outcomes. Focus Areas - Having completed an extensive program of work in 2023 we
Slide 36: CY24 Guidance
06 Outlook & CY24 Guidance CY24 Guidance We are pleased to provide FY24 underlying Group EBITDA1 guidance of $9.0M - $9.5M. Centres approved for divestment will provide additional upside of $1.0M - $1.5M underlying Centre EBITDA2 on an annualised basis in FY24 once divested. The Key drivers for the
Slide 37: Capital Management Plan
06 Outlook & CY24 Guidance Capital Management Plan Operating Cashflow 1 2 3 Reinvestment Debt Reduction Acquisitions $1.5M budgeted for Target Net Debt $3.0M Opportunistic targets external to Incubator. centre works and projects by 31 Dec 2024 Revised Incubator requires no upfront capital. Excess Ca
Slide 38: Appendix
Appendix Fraud Investigation Governance Review 38
Slide 39: Fraud Investigation
Appendix Fraud Investigation As part of the Company The investigation uncovered that the former CEO had been misappropriating funds preparing its 2023 capital through three mechanisms: expenditure budget, a review 1. Doctored Invoices by changing the site address on the original invoices from a was
Slide 40: Governance Review
Appendix Governance Review • Conducted an independent search for new Independent Non-Executive Director: The Company continues to o Advertised through Australian Institute of Company Directors for qualified prioritise best practice applicants with the following Required and Highly Regarded attribute
Slide 41: Mayfield Childcare Limited
Mayfield Childcare Limited Suite 2, 207-213 Waverley Road Malvern East VIC 3145 www.mayfieldchildcare.com.au Ashok Naveinthiran Chief Executive Officer anavein@mayfield.com.au +61 3 9576 3156 Chris Hayes Chief Financial Officer chayes@mayfield.com.au +61 3 9576 3156 Andrew Angus Investor Relations a