Eddie Groves reassures ABC Learning parents after loss ::

Date: February 27, 2008
Source: Source - The Adelaide Advertiser / Sunday mail

AUSTRALIA'S largest childcare centre operator has reassured parents that services are not in jeopardy despite the company's value plunging by $760 million.

A surprise fall in profit yesterday caused a 70 per cent dive in the share price of ABC Learning Centres, but Queensland identity and chief executive Eddie Groves said the company would continue to run as normal. ??ABC Learning has more than 200 centres scattered throughout Sydney as part of an international empire of more than 2000. ??In an effort to stem the mass sell-off of its shares and ease parental concerns, Mr Groves yesterday said the company was running fine.

He said parents had no reason to be worried about centres shutting down or receiving less funding.

"There's no effect on the business," Mr Groves said.

He "absolutely" ruled out any changes to childcare fees or sales of childcare centres.

But despite the reassurance from the ABC boss, there was growing concerns yesterday that the childcare centre operator was sailing in troubled waters.

One Sydney analyst, Roger Montgomery from Clime Asset Management, warned ABC Learning was "not an economically viable business in its current form".

Mr Groves and his wife Le Neve lost $60 million as a result of the falls, after steadily buying an 8 per cent stake in their company over many years.

Mr Groves, who also owns the Brisbane Bullets basketball team, suffered heavy losses as his 20.2 million shares in the company tumbled $32.3 million in value.

His wife, who along with Mr Groves co-founded ABC in 1988, with a centre in Brisbane's Ashgrove, took a $27.2 million hit to her share portfolio.

Since first spreading to the northern hemisphere in 2005, the company has spent $1.14 billion on buying new childcare centres, and has quadrupled in size.

In the past six months ABC has increased the number of centres it owns in the US from 357 to 1000. It also owns more than 100 centres in the UK and 1095 across Australia.

ABC had reported a 42 per cent fall in first half profit to $37.1 million, with the result sparking rumours Mr Groves is struggling with massive debt problems after the recent shopping spree.

ABC shares ended yesterday trading $1.60 lower, or 42.78 per cent, at $2.14 - meaning about $760 million was wiped off the value of the company.

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