Infobox_Company
company_name = ABC Developmental Learning Centres
company_
company_type = Public (asx|ABS)
foundation = 1988
industry = Child care
location = Brisbane, Australia
key_people = Edmund/Eddy Groves, CEO
homepage = [http://www.childcare.com.au http://www.childcare.com.au]
ABC Developmental Learning Centres (asx|ABS) is an Australian company that is the world's largest provider of childcare services. It is listed on the Australian Securities Exchange with its market capitalisation reaching AUD$2.5 billion in March 2006. The company is currently undergoing difficulties due to events surrounding an unexpected profit downgrade and concerns about the company's debt level. [cite web|url=http://www.abc.net.au/news/stories/2008/02/26/2173341.htm|title=Debt concerns slash ABC Learning's share price|accessdate=2008-03-08|date=2008-02-26|publisher=Australian Broadcasting Corporation]
History
ABC Developmental Learning Centres was founded in 1988 in Ashgrove, Brisbane, Queensland by Edmund/Eddy Groves, now the Global Chief Executive Officer of the company. Co-founder Le Neve Groves, is a senior executive and is also a major shareholder in ABC. The husband and wife jointly own 14.5% of the company. ABC rapidly expanded, reaching 43 childcare centres by June 30, 2001. By November 2005, it had 697 childcare centres throughout Australia and New Zealand. In March 2006, it forecast that would have 950 centres in Australia and New Zealand by June 30, 2006.
It has purchased the third largest childcare operator in the United States Learning Care Group Inc. which itself operates 467 centres in the US and other educational facilities in south-east Asia. The purchase provides the ABC Learning with 70,000 additional licensed childcare places in addition to the 50,000 it had previously. Other mergers with Pepercorn Management Group and the purchase of Child Care Centres Australia helped provide a considerable increase in the number of ABC's centres. The company plans to increases its number of centres by four a week. [ [http://www.smh.com.au/news/national/cradle-snatcher/2006/03/10/1141701698670.html Cradle snatcher - National - smh.com.au ] ] In March 2006, it announced a bid for Kids Campus, one of its few remaining large competitors in Australia [http://www.theaustralian.news.com.au/common/story_page/0,5744,18456794%255E2702,00.html] which would give it another 106 centres. [http://www2.shawstockbroking.com.au/egoli/egoliNewsViewsPage.asp?PageID={B490E9C4-2490-4B5A-965D-3263B359F3E7}]
On December 13, 2006 it was announced that ABC would acquire the second largest child care provider in the United States, Chicago based La Petite Academy for 330 million US Dollars as well as the 5th largest provider in the UK, Busy Bees Group, Ltd. With these acquisitions they are expanding into the UK market and increasing their market share in the US to 1%. [http://uk.biz.yahoo.com/13122006/240/abc-buys-la-petite-academy-and-busy-bees.html]
It has expanded aggressively into the outsourcing of child care services, negotiating deals with some of Australia's largest employers including the Australian Department of Defence which involved taking over the Department's nineteen childcare facilities. Aside from offshore expansion, the company is also expanding in training and education. It runs the ABC Early Childhood Training College, providing training for childcare workers, publishes a magazine "Small Wonders" aimed at parents with young children.
It is a highly profitable company, in the FY2004/5 recording net profit after tax of $52.3 million on total revenues of $292.7 million. The six months ending 31 December 2005 showed no slowing in the financial momentum for the company with profit after tax reaching $38 million and revenues of $219.8 million.
ABC Developmental Learning Centres is the major sponsor of the Adelaide 36ers in the NBL. [http://www.adelaide36ers.com/36ers/corporate/sponsors/]
In March 2008, ABC announced it would sell 60 percent of its American child care business to Morgan Stanley, using the proceeds to pay off accumulated debt.[cite news|title=ABC closes sale of 60pc in US arm|date=2008-03-05|url=http://www.theaustralian.news.com.au/story/0,25197,23324210-601,00.html] The sale, which fetched US$700 million, also involved a replacement of three board members. [cite web|url=http://www.theaustralian.news.com.au/story/0,25197,23583800-643,00.html|title=$742m US deal saves Groves' ABC|publisher=The Australian|accessdate=2008-04-23] ] Controversy and criticisms
Critics of ABC Developmental Learning Centres say it is making these considerable profits at the expense of Australian taxpayers whose money subsidises the use of childcare with means-tested tax rebates. ABC Developmental Learning Centres received $128 million of its revenue from government subsidies in the last financial year.
There is also controversy about the dramatic expansion of the company with claims that in some areas ABC - by acquisition - has achieved a monopoly in the provision of childcare services. The Australian Competition and Consumer Commission reviewed the company's acquisition of Peppercorn and permitted the deal to go ahead after imposing certain conditions including a requirement to close centres in some areas and agreeing not to purchase in other areas. [cite web|url=http://www.accc.gov.au/content/index.phtml/itemId/611198/fromItemId/621419|title=ACCC not to oppose ABC and Peppercorn Childcare merger|accessdate=2008-03-01]
ABC Developmental Learning Centres is also using its considerable financial resources to support challenges to regulations governing childcare and enforcing vicarious liability on the company. In one case, in 2006 it challenged a $200 fine imposed by a Victorian Magistrate for the actions of its staff who failed to adequately supervise a two-year old child who escaped from a centre in suburban Melbourne and was found by a neighbour and brought back to the centre. It argued that the company had done all it could reasonably be expected to do to provide facilities that made escape difficult and that any legal liability should rest with the staff involved. [cite web|url=http://www.smh.com.au/news/National/ABC-Learning-not-liable-if-kids-stray/2006/03/02/1141191782500.html|accessdate=2008-03-20|title=ABC Learning 'not liable' if kids stray|date=2006-03-02|publisher=Sydney Morning Herald]
In August 2006 ABC Developmental Learning Centres pleaded guilty to 'Failing to Enclose' in the Fremantle Magistrates Court and were fined $1300. A three-year old boy escaped from the centre in Lynwood, Western Australia, through a broken fence and was found by staff in a nearby car park. [cite web|url=http://www.abcsport.net.au/news/stories/2006/08/04/1706685.htm|title=Childcare centre fined for boy's escape|date=2006-08-04|accessdate=2008-02-29]
Forced share sales
An unexpected drop of 42 per cent in profit in the second half of 2007 to $37.1 million and adverse market rumors about its $1.8 billion debt triggered a decline in the company's share price. Several directors of the company were then forced to dump millions of shares after receiving margin calls. The combined effects caused the share price to plummet 43% to $2.15 after trading as low as $1.15. [cite web|url=http://business.smh.com.au/eddy-faces-annihilation-as-abc-board-caught-by-margin-calls/20080227-1v5b.html|title=Eddy faces annihilation as ABC board caught by margin calls|accessdate=2008-02-28|date=2008-02-27|publisher=Sydney Morning Herald] By the end of the selling, founder Edmund/Eddy Groves and his wife sold virtually all of their stakes of 20 million and 6 million shares respectively while director Martin Kemp unloaded 2.7 million shares. The combined Groves' stake represented 8 per cent of the company. [cite web|url=http://www.news.com.au/business/money/story/0,25479,23339977-14334,00.html|title=ABC Learning's Eddy stripped of stake|accessdate=2008-03-09|date=2008-03-08|author=Glenda Korporaal and Kevin Meade|publisher=The Australian]
The timing of the share dumps have raised questions about insider trading. [cite web|url=http://www.theaustralian.news.com.au/story/0,25197,23288367-2702,00.html|title=ABC crisis forces $50m stock dump|accessdate=2008-02-28|date=2008-02-28|publisher=The Australian]
References
External links
* [http://www.childcare.com.au ABC Developmental Learning Centres Website]
* [http://www.smh.com.au/news/national/cradle-snatcher/2006/03/10/1141701698670.html?page=fullpage#contentSwap2 "Sydney Morning Herald" Report on ABC Learning]
* [http://www.abc.net.au/7.30/content/2006/s1581704.htm Controversy over ABC Learning legal actions]
* [http://www.smh.com.au/news/national/behemoth-poised-to-tighten-nationwide-grip/2006/03/13/1142098404572.html "Sydney Morning Herald" Report on ABC Learning Takeover of Kids Campus]
* [http://news.smh.com.au/allco-responds-to-asxs-please-explain/20080227-1v9v.html Allco responds to ASX's 'please explain]
* [http://www.abc.net.au/insidebusiness/content/2007/s2228276.htm Eddy Groves] on "Inside Business"
