Sydney - Tuesday - April 8: (RWE Australian Business News) -ABC...

Sydney - Tuesday - April 8: (RWE Australian Business News) -
ABC Learning Centres (ASX:ABS) reports timing issues associated with the
slowed pace of the childcare centre acquisition program and property
disposal program, coupled with other less material profit and loss
impacts, have resulted in ABC forming a view that EPS will likely be
34c-36c a share for FY08.
This guidance is prior to any transaction with Morgan Stanley in
relation to the United States business, the impact of which will be
announced if and when such transaction is consummated.
The Company had previously advised that it expected earnings in
excess of 41c for FY08, namely EPS growth of more than 15 per cent.
ABC recently stated its intention to reduce gearing having
regard to prevailing market conditions.
On 5 March, it announced that it had entered into a Memorandum
of Understanding with Morgan Stanley Private Equity for the sale of a
60% interest in its United States business. Discussions with Morgan
Stanley are ongoing. As previously stated, this transaction will enable
ABC to crystallise the value of its United States business and reduce
the Company’s gearing, while maintaining some exposure to the upside
potential of the fragmented United States childcare market.
The Company has also previously stated that it will sell its
United Kingdom vouchers business as part of a broader program to reduce
debt. That process is continuing. ABC still expects the transaction to
conclude during H2 FY08 and generate a capital profit in excess of $100
million.
Furthermore, ABC confirms that it has also slowed the pace of
acquisitions of new childcare centres in Australia, New Zealand and the
United States. In H2 FY08 ABC still expects to spend on non-material
childcare centre acquisitions an amount substantially in line with the
A$137 million stated in the H1 FY08 results presentation on 25th
February 2008.
However the delay in planned purchases means that most of the
earnings associated with these centres will be realised from FY09, and
not during H2 FY08 as originally anticipated.
ABC has also previously announced an ongoing program for the
sale of the freehold property associated with its childcare centres
which is expected to generate in excess of A$250 million.
Recent market conditions have seen a total A$150 million worth
of property sales which had been planned for H2 FY08 deferred to FY09.
The Company remains confident that the sales will still occur but at a
later date than had been expected.
ABC continues to be in compliance with all of the covenants
under its Syndicated Multi Option Facility Agreement as set out in the
announcement to ASX on the 26 February.