1. A.B.C. Learning Centres Limited
Annual Report 2006
A.B.C. Learning Centres Limited ABN 93 079 736 664 Annual Report 2006

2. Contents
1 2006 Highlights
2 Chairman’s Report
4 CEO’s Report
6 ABC’s four Building Blocks
8 Review of Operations
– Australia, New Zealand
and United States
– Education
14 Board of Directors
17 Financial Report
Corporate Directory

3. Another record year has
seen ABC grow its business
exponentially and provide an
increased return to shareholders.
Revenue $631.5m
+149.9%
Operating profit after tax $81.1m
+86.4%
Earnings per share 27.7c
+20.4%
Business Highlights Growth in Childcare Places 112,179
2004–2006
January 2006
Acquisition of
Learning Care
Group, Inc. in
the United States 46,164
June 2006 22,969
Acquisition of Kids
Campus Limited
2004 2005 2006
Financial Highlights 2006 2005 % Change
(AIFRS) (AIFRS) 2005/2006
Revenue $631.5m $252.7m 149.9
Operating profit after tax $81.1m $43.5m 86.4
Earnings per share – basic 27.7 cents 23.0 cents 20.4
Final dividend – fully franked 8.0 cents 6.0 cents 33.3
Full year dividend – fully franked 15.0 cents 11.0 cents 36.4
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4. Chairman’s Report
The past 12 months have been a landmark year,
a transforming year for the Company.
With the acquisition of the US based Learning Care Group, Working closely with the existing Learning Care Group
ABC became the world’s largest listed childcare provider. As and Children’s Courtyard senior management, ABC
we stood on the threshold of this new stage of development can repeat its successful Australian and New Zealand
this year, we took time to do what we have always done – formula of achieving high occupancy by lifting the standard
pursue a program of well planned and well managed growth, of care and providing a world-class curriculum, quality staff
underpinned by the highest quality of early childhood and a comprehensive program of renewal and renovation.
education and care.
Within Australia, the acquisition of Kids Campus in
It was ABC’s foray into the US that gave us the most June 2006 further consolidated our position. ABC had
exciting business headlines of the year. In November 2005, demonstrated its ability to integrate new centres with
we announced our intention to acquire Learning Care, at a successful merger with the Peppercorn Management
that time the third largest for-profit childcare provider in Group in 2004, and this continued with Kids Campus.
North America. More recently, in August 2006, we agreed In July, we announced the acquisition of Hutchison’s
to purchase Dallas-based Children’s Courtyard, the ninth Child Care Services.
largest childcare provider in North America.
Another exciting development this year was our expansion
These acquisitions came out of our strong belief that the into corporate childcare, meaning parents have access to
US provides exceptional opportunities for ABC. The US has centres either actually in or near their workplaces. I have
a similar childcare market to Australia, with more mothers in visited two Westpac-ABC centres, a 75-place centre in
the workforce and a greater demand for the highest quality Brisbane and a 50-place centre in Westpac’s new building
education and care, but is served by a fragmented industry in Sydney, which have transformed those lucky families’
where no company holds more than three per cent of the lives. Arrangements with the Commonwealth Bank are also
market. This has meant that the US industry has not yet underway, as part of the bank’s new staff wellbeing program.
had the benefit of the capital injection we have achieved here.
Corporate childcare has emerged as an important service
We have always been aware that a move by an Australian that fits well into ABC’s strategy of managed growth.
company into the US can be viewed as risky. But the Board
and management have absolute confidence in our proven
track record of good management and sound planning
in a market that is similar to ours but 15 times larger.
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5. Right from the beginning, we
have understood the importance
not only of our families but also
of our communities.
An important aspect of this strategy is our continual review Revenue this year was $631 million, an increase of 150 per cent
and revision of our educational and developmental programs on last year, and our operating profit after tax was $81 million,
to ensure they capture the latest research and are in line with an increase of 86 per cent.
our approach to lifelong learning. You can read about these
The increase in revenue is being passed on to shareholders
important programs later in this report.
as a final dividend of 8 cents per share, fully franked, making
Right from the beginning, we have understood the importance a full year dividend of 15 cents per ordinary share fully franked
not only of our families but also of our communities. We have for the year.
always been involved with the communities, large and small,
In conclusion, it has been a year of progress on all fronts.
that have been home to our centres. And we have relished
It is the progress ABC has consistently shown since it
the opportunity to champion a number of causes, particularly
started its first centre less than 20 years ago and listed five
those with an emphasis on children, families and education.
years ago on the Australian Stock Exchange. There have
So this year ABC introduced SIDS and Kids Safe Sleeping
been many people on that journey and many people who
kits into our centres right across Australia and New Zealand
continue to make it successful. I would like to congratulate
and helped our children fundraise on Red Nose Day. Our
and thank them all.
support has been as varied as the Australian Children’s
Music Foundation and the establishment of a Chair in Your Directors feel enormous confidence in the road ahead,
Midwifery to be established by the Mater Mother’s Hospital and we thank you for joining us.
and the Australian Catholic University.
For you, our shareholders, the benefits of being part of a
dynamic, responsible company are equalled by our solid
financial results.
Sallyanne Atkinson AO
Chairman
3

6. CEO’s Report
ABC is now an international childcare provider with
an increasingly strong financial and shareholder focus.
During the year, we have repaid debt and funded
acquisitions and further growth opportunities.
Consolidation and International Expansion ABC has consolidated its position in the giant US market
In the last 12 months, ABC has evolved into a substantially with the recent acquisition of Children’s Courtyard in Texas,
different company. We are a significantly larger company giving us a total of 417 owned centres and 108 franchised
and now also an international organisation. centres in the US.
During the year, we commenced our expansion into the US, Our expansion into the US has been measured, with a
gaining a substantial part of the largest childcare market in deliberate focus on strategic integration into our existing
the world. business, enabling us to deliver shareholder value through
an immediate return on invested capital.
We cemented our position as the leading childcare provider
in the Australian market through our acquisitions of Kids We see greater potential in the US market for further
Campus and Hutchison’s Child Care Services and are acquisitions in addition to building new centres and
now Australia’s leading provider of childcare services. acquiring franchised businesses.
Our financial position has been strengthened with an Australian Acquisitions
additional capital raising underpinning our acquisitions We have continued to build our leadership position in the
and funding our future growth opportunities. Australian market through further acquisitions. Building
on our merger with the Peppercorn Group, we acquired
These initiatives have positioned ABC at the forefront of
Kids Campus Limited and announced the acquisition of
the childcare industry, enabling us to continue to provide
Hutchison’s Child Care Services Limited.
the highest quality of care for children and families in our
centres and strategically positioning us to capitalise on These acquisitions give us benefits of scale and importantly
these investments over the longer term. provide ABC with the opportunity to provide an enhanced
choice of centres for our corporate partners.
Expansion into the US
One of the major initiatives we have undertaken in the past With the Peppercorn merger, ABC has demonstrated its
year has been our expansion into the US. Our acquisition ability to manage and integrate acquisitions to enhance
of the Learning Care Group, Inc. in January, with 460 owned shareholder value without compromising quality of care
and franchised centres, gave ABC a significant position in or education.
the US market.
The successful integration of operational and administrative
The US expansion was a logical progression for the functions also enables centre staff to spend more time on
company. Our previous merger with Peppercorn Group what they do best – providing an exciting and challenging
meant we were of sufficient scale to warrant international early learning environment for the children in their care.
expansion and the Learning Care Group was a natural,
Realising the benefits of these acquisitions is not an easy
strategic fit for the Company.
undertaking and we are fortunate to have dedicated staff
We were able to bring the benefit of our management who are committed to ensuring the success of this program.
experience to an existing provider with two respected The amalgamation of the various offices into one corporate
operating subsidiaries, Tutor Time and Childtime, subsequently office has been a significant achievement and I would like to
expanding our operations further, with Tutor Time acquiring extend my appreciation to our staff for making this happen.
an additional 17 centres in southern California.
4

7. Our expansion into the US has been
measured, with a deliberate focus
on strategic integration into our
existing business, enabling us to
deliver shareholder value through an
immediate return on invested capital.
Following the acquisition of the Hutchison centres, This has been the hallmark of our business success
ABC will have over 1000 centres in Australia and and continues to be the primary focus of management.
New Zealand, or approximately 20 per cent of long day
In the next financial year, as part of our commitment to
care centres nationally.
raising standards across our industry, ABC will make
In addition to growth by acquisition, we will continue to significant investments in centre staff training programs.
selectively build new centres in the coming year. In addition, we will continue our corporate partnership
program to develop childcare centres for entities such
Capital Management
as the major banks.
During the year, ABC has raised sufficient capital to repay
debt and fund acquisitions and further growth opportunities. In the past year, ABC has been transformed as we have
Our net debt position at the end of June was $29.3 million. significantly expanded the scope and size of our business,
We can now feel comfortable in increasing the debt position while remaining true to our commitment to quality in all
of the Company as we continue to grow. our centres.
The breadth and scale of our operations now means that we The outlook for our business remains positive and we will
have also moved into the ASX Top 100 list of companies. The continue to selectively acquire and construct centres where
Company and its operations are now attracting the attention they meet a community need and add to our business.
of a new set of institutional shareholders and one of our
We thank our dedicated staff for their help in building ABC
priorities is to engage with this market to build understanding
into a prosperous international company.
of our development strategy.
Commitment to Training and Quality
In the past year the Company has experienced a significant
transformation in the size and composition of our business
while remaining firmly focused on the provision of quality
early childhood care and education.
Edmund S Groves
CEO Operations (Global)
5

8. ABC’s four Building Blocks
The best foundation for a child’s future
ABC Learning Centres is committed to ensuring each child
is loved, nurtured, educated and given the best possible
chance in life. That is why we have specifically created the
‘Four Building Blocks’. Each one of these building blocks is a
pathway to a child’s overall wellbeing and future development.
We recognise that in order for young children
to reach their full potential in a learning
environment, they must each be viewed
as an individual.
At ABC, we recognise that each child is uniquely
different. Our tailored learning curriculum
focuses on each child’s unique style of learning
that allows them to gain the most from these
experiences. Literacy, numeracy, and computer
skills are key elements of this building block.
We offer specialised and fun programs to nurture
a child’s nutritional and physical development.
Our aim is to ensure children begin and continue
to make healthy choices, as well as developing
and enhancing their gross and fine motor skills.
The programs and the activities offered in this
building block are based on the individual child.
Each child is able to develop skills according to
their own unique abilities and special interests.
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9. ABC prides itself on the special learning
environments it creates. Centre facilities are
constantly upgraded, ensuring a safe and secure
environment for all children.
That’s why we have re-invested close to
$100 million into our early learning centres
over the last four years. Our extensive play and
educational facilities are specifically designed
with child safety and child development as the
main priority. We are also the only company
continuing to build centres in all areas where
need exists across the country.
ABC centre staff are early childhood
professionals, dedicated to the development
of every individual child.
All our staff training and assessment services
are not only relevant to the real world but also
incorporate holistic practices in child development.
They undertake continuing levels of study to
achieve their qualifications developed specifically
for the care and education of children under six
years of age. In Australia, centre staff qualifications
range from Certificate level through to Diplomas,
Advanced Diplomas and Bachelor of Education
(Early Childhood). ABC centre staff are employed
according to the Child Care Regulations and
Acts specific to each State/Territory.
Real Mums. Real Stories.
“My son attends an ABC childcare how to use a cup and baby eating
centre one day a week, and has utensils and settling problems.
done since 12 weeks of age. ABC staff and directors assisted
It is on these days that we find me with post-natal depression, this
he is most settled, he is happy assistance is given freely and is not
when I arrive to pick him up. part of the school fees. This kind of
He spends his days finger painting, care and attention to a little person,
experiencing a myriad of toys that his growth and development
no parent would be able to provide and his family’s overall wellbeing
in such a variety or quantity. The is nothing short of a fantastic
staff there assist parents in learning community service to all.”
how best to cope with difficult
moments, how to introduce solids, Mrs K Barry, ABC Grays Point
7

10. Review of Operations
Australia, New Zealand and United States
It was a year of unprecedented expansion, with ABC
achieving a growth rate of 41 per cent in its number of
childcare centres, moving into the US and New Zealand
and significantly expanding the corporate care division.
Summary Another significant acquisition was the six childcare centres
Operations grew significantly through the year. The total managed by the Universal group in metropolitan Sydney.
number of centres increased from 660 to 933 (905 in This acquisition comprised 421 existing places with a further
Australia, 28 in New Zealand), a growth of 41 per cent. 960 places to be developed. More than half of the places are
to be for children under three years of age.
The Company continued to acquire high quality groups
and excellent sites and centres in outstanding locations. A further 192 centres were acquired through the year in small
A strengthening of our operational structure has enabled groups or individually.
us to focus on and measure our quantitative and qualitative
Delivery of Services
performance indicators more effectively. Systems have
The main focus of the delivery of services to our
continued to improve and have reduced the administrative
children and families continued to be on our high quality
burden for our centre staff, enabling them to spend
educational curriculum.
additional time with the children. Our Corporate Care
division has progressed markedly, securing further major Staff training continued as a key focal point with
organisations. Marketing has been enhanced this year, with curriculum training and our Rewards Success Program
a number of major campaigns boosting occupancies. featuring strongly.
Acquisitions
The acquisition of Kids Campus Limited (KDS) for
$127.9 million was the most significant new initiative during
the financial year. KDS has added 75 centres and an existing
pipeline of 21 centres to the group, with 8,000 places in
strategic locations. The transaction also included a further
4,000 places to be provided over three years.
Real Parents. Real Stories.
“Our daughter who is now or updated, and the systems and
26 months old has been going procedures have improved.
to a local (privately-run) day care Our daughter (who originally attended
centre for just on two years. In July one day and now attends three
last year it was turned into an ABC full days per week) has grown and
Centre, a move which my husband flourished and turned into a happy
and I, being small business owners, healthy toddler under their care.
were originally ambivalent about. ABC is the best thing that could
However, what we have noticed have happened to our centre.”
since the changeover is that,
parents are now better informed, Lana and Craig White,
every toy and piece of equipment ABC Jerraboombah
in the centre has been replaced
8

11. Northern Territory Queensland
15 335
Western Australia
78 Australian
Capital
Territory
New South Wales
210
South Australia
8 Victoria
56 281
Tasmania New Zealand
11 28
Our operational structure was strengthened by the addition Refurbishments were carried out at 212 centres through
of more than 40 area managers to the management team. the year and over 30,000 maintenance responses
These managers were mostly senior Centre Directors were undertaken.
promoted into the position but still retaining a strong
Staff computers were provided to over 200 centres
connection to the centres.
and there were over 6,000 IT&T responses in the year.
Operations Central, a centralised support service staffed
Systems
by senior early childhood personnel, was launched through
Improved access by Centre Directors to centre relief staff
the year. Operations Central has provided centre staff and
was achieved through our labour management system,
families with much improved support and the Company
Kronos. This system was also extended to our New Zealand
with essential feedback data on its operations.
centres. We also commenced automated child attendance
Performance times in our New Zealand centres, improving our security
Under the Commonwealth Quality Improvement and and management processes.
Accreditation System, 213 of our centres were accredited
A new rostering system was developed in our childcare
this year, 98 per cent achieving the highest level.
centre systems as well as automatic direct debiting of fees
And under our internal Quality Assurance Program, each and improved banking systems. These developments have
of our centres was visited once per quarter, resulting been instrumental in reducing office time for Centre Directors.
in 1,856 centre visits and the issuing of 4,937 quality
Substantial work was undertaken on our intranet
assurance certificates in the areas of Industry Compliance,
throughout the year. All centre policies and procedures and
Early Childhood Learning Environment, Centre Presentation
other essential centre information is now at the fingertips of
and Administration.
the Centre Director. Online ordering of toys and equipment
Centre staff turnover continued at the low rate of 8.3 per cent. as well as purchasing of supplies for the centres has been
Much of the turnover was for family or travel reasons. further developed.
9

12. Review of Operations
Australia, New Zealand and United States
Corporate Care Other campaigns through the year included the 2 Weeks
The Corporate Care division commenced the management Free and “Guess Who” campaigns. New signage
of the existing 19 Department of Defence childcare centres. turnaround times for acquired centres was also greatly
A number of existing ABC centres were converted to reduced, enabling the centres to be identified with the
Defence corporate care centres, increasing the total number ABC marketing campaigns.
to 35 centres.
Regional marketing information was amended to include the
Other corporate partners who joined through the year local centre telephone number as well as the toll-free number
included the Commonwealth Bank of Australia, Optus, (1800 222 543 in Australia, 0508 222 543 in New Zealand).
Chisholm TAFE, Chandler Macleod and the Queensland
Learning Care Group
Institute of Medical Research.
Joining the ABC Group has brought exciting opportunities
Marketing for growth and development of the Learning Care Group
It has always been ABC’s experience that word of mouth is in the US. Since the acquisition by ABC in January 2006,
our best form of marketing. This year has been no different the Learning Care Group has made a strategic shift in
in this regard and the constant stream of support letters its business strategy, which previously focused on growth
that we receive from our excited families suggests that through the franchise market.
the neighbourhood grapevine is hard at work. It is also
a constant reminder that the Company must continually
find improved ways to support and inspire those families.
We bolstered our marketing efforts this year with a major
re-enrolment campaign over the summer holiday period.
The campaign included an extensive flyer distribution
and TV advertisements which continued through the
Commonwealth Games and local radio advertisements.
Additional call centre staff were engaged and trained
to respond to the huge influx of enquiries.
Real Parents. Real Stories.
“When I was pregnant with Miranda, for Miranda and not to worry about
I struggled to find her an place in things, just enjoy the remainder
childcare as all the places were of the pregnancy and impending
full. My husband I and kept getting parenthood. This was very reassuring.
knocked back. Originally, we The staff are all thrilled when we
had avoided the larger corporate carry her in the door, and are
centres such as ABC for fear of our genuinely concerned for her welfare.
baby being treated as just another We are very thankful for the love
customer. But we then phoned and care that our daughter has
ABC and were surprised with the received, and would recommend
response we got. We were invited ABC centres to any other parents.”
to visit the centre and see how the
kids enjoy their time there. We were Brad and Janelle McKenzie,
told that a place would be found ABC Newtown
10

13. East
Midwest
91 128
West
125 South
138
Today, the company is driving growth by: As a result of these acquisitions, the Learning Care Group
(a) acquiring other regional early education providers operates in nearly 500 locations in the United States
who are known for their exceptional quality; of America.
(b) purchasing franchised Tutor Time centres; and We are currently undergoing an extensive remodelling program
(c) developing new centres to increase concentration and have budgeted approximately US$40 million to undertake
in select key markets. these refurbishments at more than 180 of the Childtime
centres across the country. These enhancements include an
In the eight months since the ABC acquisition, the Learning updated classroom environment that supports our new The
Care Group has been highly successful in executing Empowered Child™ curriculum. Early indications of recently
this shift in business strategy by acquiring 23 previously completed remodels show an improvement in enrolment,
franchised Tutor Time centres and contracting to purchase which is anticipated for all the centres involved throughout
Children’s Courtyard, which operates 46 schools (comprised this process.
of 74 centres) in Texas.
The Children’s Courtyard acquisition was an ideal fit under
Learning Care Group’s umbrella of brands, as they have
a strong commitment to high quality early education and
care. The synergies among both companies will allow
for continued growth in the marketplace and will position
Learning Care Group as a leading early education provider
in Texas.
11

14. Review of Operations
Education
Education is what we do. ABC’s National Institute of
Early Childhood Education had steady growth through
the year. Educational initiatives such as the ABC LifeSmart
Curriculum have enhanced our programs for older children
in our centres.
College – Australia The ABC LifeSmart Curriculum provides children with
The National Institute of Early Childhood Education (NIECE), the foundation learning skills they require to become
has experienced steady yet significant growth over the confident lifelong learners. The curriculum gives children
previous 12 months. the opportunities to explore and extend upon these skills
through their participation in a wide range of experiences
NIECE provides specialised training in Children’s Services
in their early learning environment.
qualifications to an average of 2,300 students at any
given time, on a national basis. Over 1,000 students The experiences offered by the early learning environment, the
have successfully graduated with Children’s Services daily routine and the interactions with educators all contribute
qualifications in the previous year. to create a supportive, stimulating and challenging program.
Trainers/assessors are based in nine locations around Within the environment a range of activities are offered
Australia, delivering courses to full-time and external that actively engage children to enhance all areas of their
students. NIECE’s unique delivery model allows external development, promote confidence and independence
students to access regular workshops in metropolitan and and assist them in transitioning to their first year of
regional locations as well as receive one-on-one mentoring. compulsory schooling.
NIECE has been awarded DET-funded User Choice contracts The ABC LifeSmart Curriculum has a significant focus
to deliver training services to trainees and apprentices in on literacy, numeracy and computer skills development.
Queensland, New South Wales, Victoria, Tasmania, South It also includes:
Australia, Western Australia and the Northern Territory.
– Letterland – a phonemic awareness program to
Trainees and apprentices equate to almost one-third of
promote early literacy skills;
enrolled students, the remainder being self-funded students
who select NIECE as their provider of choice. – Broadlearn – a specialised program for children to
develop computer skills using a digital library of over
NIECE is firmly established as a nationally Recognised
300 learning activities;
Training Organisation and is the largest private provider
delivering the Certificate lll, Diploma and Advanced Diploma – Behavioural Learning – a special program for children
in Children’s Services. to facilitate positive peer interactions and to assist
children with self-regulation and behaviour management;
ABC LifeSmart Curriculum – Australia/New Zealand
This year, while experiencing exceptional growth both in the – Read for 10 – a reading program for families which has
quantity and the types of early learning services we have been developed by the ABC Education Department in
acquired, we have focused specific attention on improving conjunction with the Dymocks Literacy Foundation and
our exciting and innovative programs and educational services. the National Institute of Early Childhood Education; and
The introduction of the ABC LifeSmart Curriculum has been – Hold on Tight, Stay in Sight – a program developed by
an educational initiative developed to further enhance the the ABC Education Department to encourage all children
educational programs currently offered in the oldest age group and families to be conscious of car safety in driveways.
classrooms at ABC Learning Centres. The curriculum meets
and extends on the varying legislative requirements of each
state and territory of Australia and the Te Whariki guidelines
established by the New Zealand Ministry of Education.
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15. To help support each of these exciting new initiatives, the – Biometric access systems – fingerprint identity
ABC Education Department has launched its own site verification to provide our families with an added sense
on the ABC Learning Centre’s intranet. This site provides of security;
additional support for centre personnel with each of these
– Next Generation Application data solution – which
new programs and offers additional advice for program
gives both parents and centre staff the ability to
planning and implementation.
seamlessly interact over the internet;
Each and every one of these projects is very special.
– PeopleSoft – designed to improve internal support
Each project has been specifically developed to extend
systems and provide up-to-date human resources
the educational opportunities for children and to increase
functions, as well as serving as a portal for company-
their learning outcomes.
wide information; and
ABC has been developing and providing early childhood
– Galileo educational software – helping teaching staff
programs for the past 18 years. The launch of our new ABC
tailor their educational program to the unique needs of
LifeSmart Curriculum is a further example of our dedication
the classroom and individual students.
to the ongoing development of educational programs for the
children in our care. The proprietary curriculum at Learning Care Group is
one of our key differentiators and strengths. The Tutor
Education and Curriculum – United States
Time LifeSmart™ and Childtime The Empowered Child™
Learning Care Group is committed to providing our families
educational offerings help inspire a lifelong love of learning.
with the best care, staff and centres. To ensure we have
We are currently in the process of providing all our teaching
achieved all of these goals, we are taking steps that will
staff with additional training on this curriculum, making
help our schools through the accreditation process, either
this the first time that Learning Care Group has made the
on a national or local level. These certifications may come
financial commitment to bring teachers together from an
from the National Association for the Education of Young
entire area and train them using a professional resource.
Children (NAEYC), the National Early Childhood Program
Accreditation (NECPA) or other state governing agencies. Recently, we completed a pilot of the online lesson planning
portion of our new Curriculum Embedded Assessment
The government relations department at Learning Care
System. The teachers were very receptive, reporting that
Group has been very involved with the Early Care and
lesson planning was more enjoyable and saved them time.
Education Consortium, with one of our staff members
Teachers will begin using this system company-wide in
serving as the committee’s president. Our team continues
December.
to strengthen its legislative relationships and raise awareness
on the issues affecting early education providers, ensuring Through extensive market research, Learning Care Group
Learning Care Group has a strong voice in the field. has seen more and more parents turn to online/web-based
resources when considering an early education provider
To be a leader in the early education field, it is imperative
for their child. We will continue to explore e-marketing
to utilise state-of-the-art technology and to streamline
opportunities to ensure that Learning Care Group and its
processes. We are currently in the process of testing and
brands are providing our target web-based audience with
installing a variety of technology enhancements, including:
the information they need in a user-friendly format.
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16. Board of Directors
Mrs Sallyanne Atkinson AO Mr Edmund Groves Dr Le Neve Groves Mr Martin Kemp
Chairman CEO Operations (Global) CEO Education Executive Director
CEO Operations
Sallyanne Atkinson is a Eddy Groves is co-founder Le Neve Groves is co-
(Australia and
former Lord Mayor of of ABC and was the founder of ABC, CEO of
New Zealand)
Brisbane, Australian Senior architect behind ABC’s Education and Principal
Trade Commissioner to listing on the ASX in 2001. of the National Institute of Martin Kemp has 16 years’
Paris and Chairman of He is renowned as one Early Childhood Education experience in childcare and
Queensland Tourism. of Australia’s business (formerly ABC Early has, in that time, co-founded
She is a director of several leaders and brings over Childhood Training College). a number of childcare groups
public companies and 18 years’ experience in the Le Neve holds several early including Premier Early
associations, including childcare industry. Eddy childhood qualifications, Learning Centres. He has
APN News & Media has primary responsibility including a Diploma of owned, managed, operated,
Limited and The Australian for financial and operational Teaching Primary/Preschool, acquired or developed
Ballet. She is chairman matters. He also provides Bachelor of Education, over 300 childcare centres
of the Federal Ministerial industry acknowledged Master of Education and throughout Australia and
Taskforce on Dementia skills in acquisition strategy, a PhD in Education. New Zealand.
and of the Crawford Fund centre location and design,
Le Neve assists in the Martin holds a Bachelor of
(Qld). Sallyanne is also a business development and
development of and Engineering (Hons) degree
Special Representative for corporate strategic planning.
oversees all early childhood and a Masters of Engineering
Queensland, South East He is among Australia’s
philosophies, policies and Science degree and is a
Asia in the Queensland leading public speakers and
practices in the ABC Group. member of the Institution
State Government. regularly addresses a range
Since the inception of ABC of Engineers Australia.
of business and childcare
Among Sallyanne’s many Developmental Learning He has extensive project
industry forums and events.
achievements, she has Centres, Le Neve has management experience in
received several awards supported the design and multi-million dollar projects
including Officer of the implementation of ABC’s around Australia.
Order of Australia and high quality programs for
Martin has been a member
recently was awarded which we have received 17
of the Commonwealth Child
an Honorary Doctorate industry awards. Le Neve
Care Advisory Council,
by the Australian Catholic is also the Chairman of
President of the Queensland
University. She is a Fellow ABC’s risk management
Professional Child Care
of the Australian Institute committee.
Centres Association,
of Management, Australian
Le Neve, a member of President of the Australian
Institute of Company
the Stronger Families and Confederation of Child Care,
Directors and Australian
Communities Partnership President of the Queensland
Institute of Planning.
established in 2004 by Private Child Care Centres
Sallyanne holds a Bachelor the Commonwealth Employers Organisation and
of Arts degree from the Government, is also a Foundation Board Member
University of Queensland. Queensland State Director of the Australian Childcare
for Young Media Australia. Centres Association (federal
employer organisation).
14

17. Mr William Bessemer Mr David Ryan AO The Hon. Lawrence Anthony
Non-Executive Director Non-Executive Director Non-Executive Director
Bill Bessemer is currently David Ryan is the Chairman Larry Anthony is currently a
Chairman of Austock Group of Tooth & Co and other board member of Learning
Limited and Australia Pacific Residual Assco Group Care Group, Inc, Macquarie
Exchange Limited and is a Limited group companies. Media Group, Indue Ltd
director of public company He is also a non-executive and the National Chairman
Timbercorp Limited. director of Transurban for the Duke of Edinburgh’s
Group and Lend Lease Awards Australia.
He has extensive experience
Corporation Limited, as
and practical corporate Larry has vast experience
well as a member of the
skills covering debt and in government sectors
Advisory Board of Virgin
equity raisings, financial and finance including roles
Management Asia-Pacific
structuring, mergers, with Merrill Lynch and
Pty Ltd and a member
acquisitions and business Potter Warburg. He is a
of the Advisory Board of
recoveries. former Federal Minister for
Caliburn Partnership.
Children and Youth Affairs,
Bill holds a Bachelor of
David has extensive Community Services and
Economics degree from the
business experience the Parliamentary Secretary
University of Queensland,
through his current and for Trade. He is also involved
a Master of Business
former roles which include with various charities
Administration degree from
holding senior executive across Australia.
the University of Melbourne
management positions in
and is a Certified Practising Larry holds a Bachelor
public companies and being
Accountant. of Commerce degree from
a member of a number of
the University of New South
public company boards.
Wales, a diploma from
David is well credentialed the Australian Institute
to provide support to of Company Directors, a
the ABC board as a diploma of Applied Finance
Non-Executive Director. and Investment and is a
Member of the Banking
and Securities Institute
of Australia and Australian
Institute of Company
Directors.
15

18. 16

19. A.B.C. Learning Centres Limited
Annual Financial Report for the year ended 30 June 2006
18 Corporate Governance Statement
23 Directors’ Report
36 Auditors’ Independence Declaration
37 Independent Audit Report
39 Directors’ Declaration
40 Income Statements
41 Balance Sheets
42 Statement of Changes in Equity
44 Cash Flow Statements
45 Notes to the Financial Statements
98 Additional Stock Exchange Information
17

20. Corporate Governance Statement
Corporate Governance 3. within the last three years has not been employed in an
The Company is committed to implementing the highest executive capacity by the Company or another group
standards of corporate governance. In determining what those member, or been a Director after ceasing to hold any such
high standards should involve the Company has turned to the employment;
ASX Corporate Governance Council’s Principles of Good
4. within the last three years has not been a principal of a
Corporate Governance and Best Practice Recommendations.
material professional adviser or a material consultant to the
The Company is pleased to advise that the Company’s policies
Company or another group member, or an employee
are consistent with those ASX guidelines.
materially associated with the service provided;
Where the Company’s corporate governance practices do not
5. is not a material supplier or customer of the Company
correlate with the practices recommended by the Council, the
or another group member, or an officer of or otherwise
Company is working towards compliance.
associated directly or indirectly with a material supplier
1. Board of Directors or customer;
1.1 Role of the Board
6. has no material contractual relationship with the Company
The Board’s role is to govern the Company rather than to
or other group member other than as a Director of the
manage it. In governing the Company, the Directors must act in
Company;
the best interests of the Company as a whole. It is the role of
senior management to manage the Company in accordance 7. has not served on the Board for a period which could, or
with the direction and delegations of the Board and the could reasonably be perceived to, materially interfere with
responsibility of the Board to oversee the activities of the Director’s ability to act in the best interests of the
management in carrying out these delegated duties. Company; and
In carrying out its governance role, the main task of the Board is 8. is free from any interest and any business or other
to drive the performance of the Company. The Board must also relationship which could, or could reasonably be perceived
ensure that the Company complies with all of its contractual, to, materially interfere with the Director’s ability to act in the
statutory and any other legal obligations, including the best interests of the Company.
requirements of any regulatory body. The Board has the final A majority of the Board is not made up of independent
responsibility for the successful operations of the Company. Directors. The Board currently has three independent Directors
To assist the Board carry out its functions, it has a Code of and four non-independent Directors.
Conduct to guide the Directors, the Chief Executive Officers, Mr William Bessemer is a Non-Executive Director of the
the Chief Financial Officer and other key executives in the Company and is also the Chairman and shareholder of the
performance of their roles. Austock Group Limited which owns the Company’s corporate
1.2 Composition of the Board advisors and as such does not meet the Company’s criteria for
To add value to the Company the Board has been formed so independence. However, as one of the founding Directors of the
that it has effective composition, size and commitment to Company, his experience and knowledge of the Company
adequately discharge its responsibilities and duties. The names makes his contribution to the Board such that it is appropriate
of the Directors and their qualifications and experience are for him to remain on the Board.
stated on pages 25 to 27 along with the term of office held by As the Company is now a global operation, the Board needs to
each of the Directors. Directors are appointed based on the carefully consider an appropriate and relevant Board structure
specific governance skills required by the Company and on the for the future before it appoints further Directors.
independence of their decision-making and judgement.
1.3 Responsibilities of the Board
The Company recognises the importance of Non-Executive In general, the Board is responsible for, and has the authority
Directors and the external perspective and advice that to determine, all matters relating to the policies, practices,
Non-Executive Directors can offer. Mrs Sallyanne Atkinson management and operations of the Company. It is required to
(Chairman), Mr William Bessemer, Mr David Ryan and the do all things that may be necessary to be done in order to carry
Hon. Larry Anthony are all Non-Executive Directors. In addition out the objectives of the Company.
to being Non-Executive Directors, Mrs Sallyanne Atkinson,
Mr David Ryan and the Hon. Larry Anthony also meet the Without intending to limit this general role of the Board, the
following criteria for independence adopted by the Company. principal functions and responsibilities of the Board include the
following.
An Independent Director:
1. Leadership of the Organisation: overseeing the Company
1. is a Non-Executive Director; and establishing codes that reflect the values of the
2. is not a substantial shareholder of the Company or an Company and guide the conduct of the Board,
officer of, or otherwise associated directly with, a substantial management and employees.
shareholder of the Company;
18

21. 2. Strategy Formulation: working with senior management to 1.4.2 Commitments
set and review the overall strategy and goals for the Each member of the Board is committed to spending sufficient
Company and ensuring that there are policies in place to time to enable them to carry out their duties as a Director of
govern the operation of the Company. the Company.
3. Overseeing Planning Activities: overseeing the development 1.4.3 Confidentiality
of the Company’s strategic plan and approving that plan as In accordance with legal requirements and agreed ethical
well as the annual and long-term budgets. standards, Directors and key executives of the Company
have agreed to keep confidential, information received in the
4. Shareholder Liaison: promoting effective communications
course of the exercise of their duties and will not disclose
with shareholders through an appropriate communications
non-public information except where disclosure is authorised
policy and promoting participation at general meetings of
or legally mandated.
the Company.
1.4.4 Continuous Disclosure
5. Monitoring, Compliance and Risk Management: overseeing
The Board has designated the Company Secretary as the
the Company’s risk management, compliance, control and
person responsible for overseeing and coordinating disclosure
accountability systems and monitoring and directing the
of information to the ASX as well as communicating with the
financial and operational performance of the Company.
ASX. In accordance with the ASX Listing Rules the Company
6. Company Finances: approving expenses in excess of those immediately notifies the ASX of information:
approved in the annual budget and approving and monitoring
1. concerning the Company that a reasonable person would
acquisitions, divestitures and financial and other reporting.
expect to have a material effect on the price or value of the
7. Human Resources: appointing, and, where appropriate, Company’s securities; and
removing the Chief Executive Officers (CEOs) and
2. that would, or would be likely to, influence persons who
Chief Financial Officer (CFO) as well as reviewing the
commonly invest in securities in deciding whether to acquire
performance of the CEOs and monitoring the performance
or dispose of the Company’s securities.
of senior management in their implementation of the
Company’s strategy. 1.4.5 Education and Induction
New Directors undergo an induction process in which they are
8. Ensuring the Health, Safety and Well-Being of Employees:
given a full briefing on the Company. This includes meetings
in conjunction with the senior management team,
with key executives, tours of the premises, an induction
developing, overseeing and reviewing the effectiveness of
package and presentations. Information conveyed to new
the Company’s occupational health and safety systems to
Directors include:
promote the well-being of all employees.
– details of the roles and responsibilities of a Director with an
9. Delegation of Authority: delegating appropriate powers to
outline of the qualities required to be a successful Director;
the CEOs to ensure the effective day-to-day management
of the Company and establishing and determining the – formal policies on Director appointment as well as conduct
powers and functions of the Committees of the Board. and contribution expectations;
Full details of the Board’s role and responsibilities are contained – details of all relevant legal requirements;
in the Board Charter, a copy of which is available upon request. – a copy of the Board Charter;
1.4 Board Policies – guidelines on how the Board processes function;
1.4.1 Conflicts of Interest
Directors must: – details of past, recent and likely future developments relating
to the Board including anticipated regulatory changes;
– disclose to the Board actual or potential conflicts of interest
that may or might reasonably be thought to exist between – background information on and contact information for key
the interests of the Director and the interests of any other people in the organisation including an outline of their roles
parties in carrying out the activities of the Company; and and capabilities;
– if requested by the Board, within seven days or such further – an analysis of the Company;
period as may be permitted, take such necessary and – a synopsis of the current strategic direction of the Company
reasonable steps to remove any conflict of interest. including a copy of the current strategic plan and annual
If a Director cannot or is unwilling to remove a conflict of budget; and
interest then the Director must, in accordance with the – a copy of the Constitution of the Company.
Corporations Act, absent himself or herself from the room when
discussion and/or voting occurs on matters about which the
conflict relates.
19

22. Corporate Governance Statement
In order to achieve continuing improvement in Board In addition, consistent with the law, designated officers are
performance, all Directors are encouraged to undergo continual prohibited from trading in the Company’s securities while in the
professional development. Specifically, Directors are provided possession of unpublished price sensitive information concerning
with the resources and training to address skills gaps where the Company. Unpublished price sensitive information is
they are identified. information regarding the Company, of which the market is not
1.4.6 Independent Professional Advice aware, that a reasonable person would expect to have a material
The Board collectively and each Director has the right to seek effect on the price or value of the Company’s securities.
independent professional advice at the Company’s expense, up Notice of an intention to trade must be given prior to trading in
to specified limits, to assist them to carry out their the Company’s securities as well as a confirmation that the
responsibilities. person is not in possession of any unpublished price sensitive
1.4.7 Related Party Transactions information. The completion of any such trade by a Director
Related party transactions include any financial transaction must also be notified to the Company Secretary who in turn
between a Director and the Company and will be reported in advises the ASX.
writing to each Board meeting. Unless there is an exemption 1.4.10 Performance Review/Evaluation
under the Corporations Act from the requirement to obtain Generally, it is the policy of the Board to conduct an evaluation
shareholder approval for the related party transaction, the Board of its performance annually. The Board’s performance will be
cannot approve the transaction. measured against both qualitative and quantitative indicators.
1.4.8 Shareholder Communication The objective of this evaluation is to provide best practice
The Company respects the rights of its shareholders and to corporate governance to the Company.
facilitate the effective exercise of those rights the Company is The Board is currently undergoing an independent review of its
committed to: performance by external management consultants.
1. communicating effectively with shareholders through 1.4.11 Attestations by CEO and CFO
releases to the market via ASX, the Company’s website, In accordance with the Board’s policy, the CEO and the CFO
information mailed to shareholders and the general made the attestations recommended by the ASX Corporate
meetings of the Company; Governance Council as to the Company’s financial condition
2. giving shareholders ready access to balanced and prior to the Board signing this Annual Report.
understandable information about the Company and 2. Board Committees
corporate proposals; 2.1 Audit Committee
3. making it easy for shareholders to participate in general Below is a summary of the role, composition and responsibilities
meetings of the Company; and of the Audit Committee. Further details are contained in the
Audit Committee’s Charter.
4. requesting the external auditor to attend the annual general
meeting and be available to answer shareholder questions 2.1.1 Role
about the conduct of the audit and the preparation and The Audit Committee is responsible for reviewing the integrity of
content of the auditor’s report. the Company’s financial reporting and overseeing the
independence of the external auditors.
The Company also makes available a telephone number and
email address for shareholders to make enquiries of the 2.1.2 Composition
Company. During the 2006 financial year, the Audit Committee consisted
of three members. The Hon. Larry Anthony was appointed to the
1.4.9 Trading in Company Shares Audit Committee in August 2006. Members are appointed by
The Company has a Share Trading Policy under which the Board from amongst the Non-Executive Directors, a majority
Directors, members of senior management and other of whom are also independent. The current members of the
employees likely to be in possession of unpublished price Audit Committee are Mr David Ryan (Chairman), Mrs Sallyanne
sensitive information and their associates may not trade in the Atkinson, Mr William Bessemer and the Hon. Larry Anthony. All
Company’s securities during the following “blackout periods” members can read and understand financial statements and are
commencing: otherwise financially literate and Mr David Ryan, the Chairman,
– 30 days prior to the release by the Company of its is a qualified accountant with experience in financial and
half-yearly results to the ASX and concluding two days accounting matters. The details of the member’s qualifications
after such release; and may be found in their Director Profiles on pages 25 to 27.
– 30 days prior to the release by the Company of its The Audit Committee held two meetings throughout the year
annual results to the ASX and concluding two days after and details of attendance of the members of the Audit
such release. Committee are contained in the following table.
20

23. August 2005 February 2006 2.2.4 Criteria for selection of Directors
Mr David Ryan ✓ ✓ Directors are appointed based on the specific governance skills
Mrs Sallyanne Atkinson ✓ ✓ required by the Company. Given the size of the Company and
Mr William Bessemer ✓ ✓ the business it operates, the Company aims at all times to have
at least one Director with experience in the childcare industry.
2.1.3 Responsibilities In addition, Directors should have the relevant blend of personal
The Audit Committee reviews the audited annual and half-yearly experience in:
financial statements and any reports which accompany
– accounting and financial management;
published financial statements before submission to the Board
and recommends their approval. – legal skills; and
The Audit Committee also recommends to the Board the – CEO-level business experience.
appointment of the external auditor and each year, reviews the 2.2.5 Responsibilities in respect of Remuneration
appointment of the external auditor, their independence, the The responsibilities of the Committee include setting policies for
audit fee, and any questions of resignation or dismissal. senior officers’ remuneration, setting the terms and conditions
2.2 Nomination and Remuneration Committee of employment for the Chief Executive Officers, reviewing and
Below is a summary of the role, composition and responsibilities making recommendations to the Board on the Company’s
of the Nomination and Remuneration Committee. Further details incentive schemes and superannuation arrangements, reviewing
are contained in the Nomination and Remuneration Committee’s the remuneration of both Executive and Non-Executive
Charter. Directors and making recommendations to the Board on any
proposed changes and undertaking an annual review of the
2.2.1 Role
Chief Executive Officers’ performance, including, setting with
The role of the Nomination and Remuneration Committee is to
the Chief Executive Officers goals for the coming year and
help achieve a structured Board that adds value to the
reviewing progress in achieving these goals.
Company by ensuring an appropriate mix of skills are present in
Directors on the Board at all time and to assist the Board in 2.2.6 Remuneration Policy
fulfilling its responsibilities in respect of establishing appropriate Details of the Board’s policy on remuneration are set out on
remuneration levels and incentive policies for employees. pages 27 to 34 of the Directors’ Report which incorporates the
Company’s remuneration report.
2.2.2 Composition
Mrs Sallyanne Atkinson (Chairman), Mr Edmund Groves and 2.3 Risk Management Committee
Mr David Ryan are the current members of the Nomination and Below is a summary of the role, composition and responsibilities
Remuneration Committee the majority of whom are of the Risk Committee. Further details are contained in the Risk
independent Directors. Committee’s Charter.
The Nomination and Remuneration Committee held two 2.3.1 Role
meetings throughout the year and details of attendance of the The role of the Risk Management Committee is to ensure that
members of the Committee are contained in the following table. the Company is able to manage a diverse and complex range
of significant risks. The committee is also responsible for
September 2005 June 2006
establishing policies on risk oversight and management.
Mrs Sallyanne Atkinson ✓ ✓
Mr Edmund Groves ✓ ✓ 2.3.2 Composition
The members of the Risk Management Committee are:
Mr David Ryan ✓ ✓
– Dr Le Neve Groves (Chairman);
2.2.3 Responsibilities in respect of Nominations
The responsibilities for nominations include devising criteria for – Mr William Bessemer; and
Board membership, reviewing the need for various skills and – Mr Martin Kemp.
experience on the Board and where appropriate identifying
specific individuals for nomination as Directors for review by the The Risk Management Committee held five meeting during the
Board. The Committee also oversees management succession year and details of attendance of the members of the
plans, including the CEO’s and evaluates the Board’s Committee are contained in the following table.
performance and makes recommendations for the appointment
and removal of Directors.
21

24. Corporate Governance Statement
September 2005 November 2005 February 2006 April 2006 June 2006
Dr Le Neve Groves ✓ ✓ ✓ ✓ ✓
Mr William Bessemer ✓ ✓ ✓ ✓ ✓
Mr Martin Kemp ✓ ✓ ✓ ✓ ✓
2.3.3 Responsibilities for its part is committed to providing clients, customers and
The duties and responsibilities of the Risk Management consumers with fair value.
Committee include:
Employment Practices
(a) Assessing the internal processes for determining and The Company endeavours to provide a safe workplace in which
managing key risk areas, particularly: there is equal opportunity for all employees at all levels of the
(i) non-compliance with laws, regulations, standards and Company. The Company does not tolerate the offering or
best practice guidelines, including environmental and acceptance of bribes or the misuse of Company assets or
industrial relation laws; resources.
(ii) litigation and claims; and Obligations Relative to Fair Trading and Dealing
The Company aims to conduct its business fairly and to
(iii) relevant business risks other than those that are dealt compete ethically and in accordance with relevant competition
with by other specific Board committees. laws. The Company strives to deal fairly with the Company’s
(b) Ensuring that the ABC Group has an effective risk customers, suppliers, competitors and other employees and
management system and that major risks to the ABC Group encourages its employees to strive to do the same.
are reported at least annually to the Board. Responsibilities to the Community
(c) Receiving from management reports on all suspected and As part of the community the Company:
actual frauds, thefts and breaches of laws. – is committed to conducting its business in accordance
(d) Evaluating the process the ABC Group has in place for with applicable environmental laws and regulations and
assessing and continuously improving internal controls, encourages all employees to have regard for the
particularly those related to areas of significant risk. environment when carrying out their jobs;
(e) Assessing whether management has controls in place for – encourages all employees to engage in activities beneficial
unusual types of transactions and/or any potential to their local community; and
transactions that may carry more than an acceptable – supports community charities.
degree of risk.
Responsibility to the Individual
(f) Meeting periodically with key management, internal and The Company is committed to keeping private information from
external auditors and compliance staff to understand and employees, clients, customers, consumers and investors
discuss the ABC Group’s control environment. confidential and protected from uses other than those for which
3. Company Code of Conduct it was provided.
As part of its commitment to recognising the legitimate interests Conflicts of Interest
of stakeholders, the Company has a Code of Conduct to guide Employees and Directors must avoid conflicts as well as the
compliance with legal and other obligations to legitimate appearance of conflicts between personal interests and the
stakeholders. These stakeholders include shareholders, interests of the Company.
employees, clients, customers, government authorities, creditors
and the community as whole. The Code includes the following: How the Company Complies with Legislation Affecting
its Operations
Responsibilities to Shareholders and the Financial Within Australia, the Company strives to comply with the spirit
Community Generally and the letter of all legislation affecting its operations. Outside
The Company complies with the spirit as well as the letter of all Australia, the Company will abide by local laws in all countries in
laws and regulations that govern shareholders’ rights. The which it operates. Where those laws are not as stringent as the
Company has processes in place designed to ensure the Company’s operating policies, particularly in relation to the
truthful and factual presentation of the Company’s financial environment, workplace practices, intellectual property and the
position and prepares and maintains its accounts fairly and giving of “gifts”, Company policy will prevail.
accurately in accordance with the generally accepted
accounting and financial reporting standards. How the Company Monitors and Ensures Compliance with
its Code
Responsibilities to Clients, Customers and Consumers The Board, management and all employees of the Company
Each employee has an obligation to use their best efforts to are committed to implementing this Code of Conduct and each
deal in a fair and responsible manner with each of the individual is accountable for such compliance. Disciplinary
Company’s clients, customers and consumers. The Company measures may be imposed for violating the Code.
22

25. Directors’ Report
Your Directors present their Annual Report on the Company and its controlled entities (referred to hereafter as the Group) for the
financial year ended 30 June 2006.
Directors
The names of the Directors in office at any time during the year and to the date of this report are:
Mrs Sallyanne Atkinson AO
Mr Edmund S Groves
Dr Le Neve A Groves
Mr William E Bessemer
Mr Martin Vincent Kemp
Mr David John Ryan AO
Hon. Lawrence James Anthony
Directors have been in office since the start of the financial year until the date of this report unless otherwise stated.
Principal Activities
The principal activities of the Group during the financial year were the provision of childcare services and education.
Operating Results
The consolidated profit of the Group for the financial year after providing for income tax amounted to $81,110,000
(2005: $43,534,000 AIFRS).
Dividends Paid or Recommended
The Directors have declared a fully franked final dividend of 8 cents per share ($31,451,724). The dividends will be franked at a rate
of 30%. The final dividend will be paid on 29 September 2006.
Dividend Date paid Dividend per share Total dividend
Ordinary Shares – 29 September 2005 6 cents $15,036,962
Final dividend for the year ended 30 June 2005 franked to 100%
Preference Shares – 30 November 2005 16.9212 cents $2,030,543
Final dividend for the year ended 30 June 2005 franked to 100%
Ordinary Shares – 31 March 2006 7 cents $18,417,078
Interim dividend for the year ended 30 June 2006 franked to 100%
Preference Shares – 31 May 2006 16.8288 cents $2,019,457
Interim dividend for the year ended 30 June 2006 franked to 100%
Review of Operations
A Review of the Operations of the Group during the year ended 30 June 2006 and up to the date of this report appears in the
separate section “Review of Operations” on pages 8 –13.
Significant Changes in State of Affairs
The following significant changes in the state of affairs of the Group occurred during the year:
(i) On 13 September 2005, the Company issued 10,000,000 ordinary shares at $6.00 per share to raise capital to reduce debt and
to fund the Company’s ongoing acquisition program;
(ii) On 15 December 2005, the Company issued 37,200,000 ordinary shares at $7.00 to raise funds for the acquisition of the
Learning Care Group, Inc. and to fund the Company’s ongoing acquisition program;
(iii) On 11 January 2006, the Company acquired the Learning Care Group, Inc. for US$159,100,000;
(iv) On 9 May 2006, the Company issued 44,104,239 ordinary shares at an issue price of $7.30 each to a range of institutional and
professional investors to refinance the Company’s balance sheet to place the Company in a strong position to take advantage of
global acquisition opportunities;
(v) In May 2006, the Company acquired Kids Campus Limited for $127,897,000; and
(vi) On 14 June 2006, the Company issued 38,087,542 ordinary shares at an issue price of $7.30 each to a range of institutional
and professional investors to refinance ABC’s balance sheet to place the Company in a strong position to take advantage of
global acquisition opportunities.
23

26. Directors’ Report
Significant Events After Balance Date
On 7 July 2006 the Company announced an off-market takeover bid of Hutchison’s Child Care Services Ltd for $1.50 per ordinary
share. On 25 September 2006 the Company declared the takeover bid unconditional and commenced compulsory acquisition of
the remaining shares.
On 6 September 2006 the Company acquired 100% of The Children’s Courtyard LLP, the ninth largest childcare provider in the US for
US$66 million.
No other matter or circumstance has arisen since 30 June 2006 that has significantly affected, or may significantly affect:
(a) the Group’s operations in future financial years; or
(b) the results of those operations in future financial years; or
(c) the Group’s state of affairs in future financial years.
Future Developments
The likely developments in the operations of the Group and the expected results of those operations in future financial year is
the proposed acquisition of a number of childcare centres in locations throughout Australia, New Zealand and the United States
of America.
The Board expects that the above developments will provide a wider market penetration and enable the Group’s activities to
be expanded.
Environmental Issues
The Group’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a State
or Territory.
Options
Sign-on options were granted over ordinary shares during the financial year by the Company to the Learning Care Group, Inc.
executives in accordance with their employment agreements.
The options granted under the employment agreements were:
1. 1,083,000 sign-on options granted to William Davis at an option premium of $0.00 per option and an exercise price of
$7.35 per option;
2. 375,145 sign-on options granted to Frank Jerneycic at an option premium of $0.00 per option and an exercise price of
$7.35 per option;
3. 334,807 sign-on options granted to Kathy Myers at an option premium of $0.00 per option and an exercise price of
$7.35 per option; and
4. 119,239 sign-on options granted to Scott Smith at an option premium of $0.00 per option and an exercise price of
$7.35 per option.
The options granted will vest at a rate of 20% per annum on each anniversary or at the end of the executives’ compensation period
(if the employment agreement is not renewed through to 2011).
Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any related body
corporate or in the interest of any other registered scheme.
During and since the end of the financial year no options have been exercised.
24