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…show more content…
( 4.Financial Position and State of Affairs In 2006, ABC acquired Learning Care Group, Busy Bees in UK and Forward Steps in New Zealand to become the world largest child care provider. All these major acquisitions took place during 2005-2007. In 2005, ABC bought over Funatastic Holding, the exclusive toys supplier for ABC. However, this doesn't mean ABC is getting the most competitive price. By making Funatastic Holding too dependent on ABC and may impede its growth. In last quarter of 2007, ABC further acquire Leapfrog Nurseries group of 88 childcare centres, increase its stakes to 80% in Mediasphere Pty Ltd in digital publishing and the completion of acquisition of New Zealand College of Early Childhood Education. They are involved in social activities like funding SIDS and Kids, Starlight Children's Foundation Australia and the Royal Children's Hospital-Brisbane, and many others. It also set up its own training college, NIECE-The National Institute of Early Childhood Education, which makes ABC one of Australia's most popular training and assessment providers in this specialized field. As a result of this rapid expansion, ABC financial woes start to unfold due to rumours about its $1.8 billion debt triggered a decline in the company's share price. The major shareholders were forced to sell their shares after receiving margin calls

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