Highlights

  • Embark Early Education completed its off-market bid for Mayfield Childcare with a 49.80% ownership interest.
  • The company reported FY25 revenue growth of 29% to A$104.9 million and net profit after tax of A$10.7 million.
  • Mayfield Childcare withdrew FY26 guidance after reporting operational challenges and financial pressure.
  • Embark operated 39 early learning centres across Australia with approximately 2,700 children attending daily.
  • Child Care Subsidy funding accounted for A$74.6 million of Embark’s FY25 revenue.

Embark Early Education Limited (ASX: EVO) has increased its presence in the Australian early childhood education sector through its investment in Mayfield Childcare Limited (ASX: MFD).

The company completed its off-market takeover bid for Mayfield Childcare on 5 March 2026, resulting in Embark holding a 49.80% interest. The investment provides Embark with a significant position in another childcare operator, although the holding does not provide full ownership or control.

The transaction comes at a time when the childcare sector is experiencing changes in supply levels, regulatory requirements and operating conditions. Embark continues to focus on managing its existing centre network while assessing the strategic implications of its Mayfield investment.

Mayfield Childcare Stake and Transaction Details

Embark initially became a substantial shareholder in Mayfield Childcare on 29 October 2025 after acquiring a 19.9% stake for A$7.5 million.

The company later launched an off-market takeover offer for the remaining shares. The offer provided Mayfield shareholders with either A$0.50 cash per share or an alternative share-based consideration.

Following the close of the offer, Embark received acceptances representing 49.80% ownership of Mayfield. The company did not reach the level required for compulsory acquisition, meaning Mayfield remains a separate listed entity.

Embark has since nominated a representative to the Mayfield board as it continues to monitor the investment.

Operating Performance of Embark Early Education

Embark operates early learning centres across Australia under brands including Roseberry House, Cubby Care and Haven Early Learning.

The company reported 39 centres with 3,562 licensed places and around 1,100 employees. Its network is concentrated in Queensland, where it operates 24 centres, followed by Victoria with 11 centres.

For FY25, Embark reported revenue of A$104.9 million, representing growth of 29%. Centre EBITDA increased 16% to A$25.1 million, while net profit after tax increased 18% to A$10.7 million.

The company reported that Child Care Subsidy funding contributed A$74.6 million of revenue, while parent fees contributed A$29.9 million.

During the year, Embark also received A$3.1 million from the Commonwealth’s ECEC Worker Retention Payment program, which reduced employee benefit expenses.

Financial Position and Funding Capacity

Embark reported cash of A$20.7 million at the end of FY25. The company had A$6.4 million drawn from its A$25 million National Australia Bank facility, which was extended to March 2028.

The company reported debt of approximately A$124 million; however, most of this relates to lease liabilities under accounting standards for childcare centre properties.

During 2025, Embark paid four fully franked dividends totalling 6.0 cents per share. A further 1.5 cents per share dividend went ex on 25 May 2026.

The company’s financial position provides flexibility while it evaluates its Mayfield investment and continues operating its childcare network.

Mayfield Childcare Performance and Sector Conditions

Following Embark’s investment, Mayfield Childcare experienced operational challenges. The company withdrew FY26 guidance on 9 July 2026.

Mayfield reported a loss of A$21.4 million for calendar 2025 on revenue of A$91.6 million. Its June 2026 quarter update showed revenue of A$21.4 million and underlying centre EBITDA of A$1.8 million.

The company also reported cash of A$195,000 and drawn facilities of A$5.36 million. Its banking arrangements remain an important consideration, with its Westpac facility scheduled to expire on 31 August 2026.

Embark’s investment in Mayfield therefore remains linked to the future operational performance of the childcare operator.

Regulatory and Industry Developments

The childcare sector continues to experience regulatory changes, including updated workforce requirements and child safety obligations.

Embark operates a large Queensland-based network, with 24 centres located in the state. New requirements relating to reportable conduct schemes and workforce compliance have increased operational responsibilities for childcare providers.

The company has identified changes in government funding arrangements, including Child Care Subsidy settings, as factors that may influence future business performance.

Key Factors to Monitor

Future updates from Embark will provide further information on how the company manages its Mayfield investment and existing operations.

Important areas include the valuation of the Mayfield stake, occupancy trends across Embark’s centres, cash generation and any further strategic actions relating to the investment.

The company’s half-year results for the six months ended 30 June 2026 are expected to provide additional detail on financial performance and the accounting treatment of the Mayfield holding.

Conclusion

Embark Early Education has expanded its position in the childcare sector through its 49.80% investment in Mayfield Childcare while continuing to operate a growing network of early learning centres.

The company reported revenue growth and profitability in FY25, supported by its existing centre portfolio and government childcare funding arrangements. However, the Mayfield investment remains an important development as the acquired stake is held in a business facing operational and financial challenges.

Future results will provide further clarity on the value of the investment, sector conditions and Embark’s approach to long-term growth.