annual general meeting - g8 education · in march 2012 damien peters joined g8 education. damien is...
TRANSCRIPT
Annual General Meeting
G8 Education Limited (ASX:GEM) 26 April 2012
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Overview Following the acquisition of five separate child care groups over the past 22 months G8 Education’s child care portfolio now comprises:
Australia
135 owned child care centres
Eight brands: Early Learning Services
World of Learning
Bourne Learning
Community Kids
Holiday Club
Kindy Patch
Headstart
Ed-U-Care
Singapore
20 owned/operated* child care centres
51 franchised child care centres
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Significant events
Reported a profit after tax of $17,250,351 in 2011 compared to $3,480,324 in 2010.
Acquired an additional 53 child care centres and sold 7 underperforming child care centres in Australia.
Acquired 6 child care centres in Singapore (outside of the Cherie Hearts Group International acquisition).
In March 2012 Damien Peters joined G8 Education. Damien is an experienced Chief Financial Officer with more than 15 years’ experience in senior accounting and finance roles, most recently, as CFO of Retail Food Group, an ASX listed company with a market capitalisation in excess of $290 million.
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G8’s Vision & Mission
Quality Education & Care
• To nurture and develop children’s minds, social skills and confidence in a safe and stimulating environment.
Employees
• To commit to employee development and a rewarding culture which will ensure an engaged and driven workforce.
Community
• To be responsive to local families and deliver upon community expectations.
Profitability
• To grow and derive value for shareholders through innovative services, systems and management.
A portfolio of outstanding early childhood education brands
Focus on the importance of early childhood education
Make good centres great through focusing on outstanding early childhood education management
Our mission is to be Australasia’s leading provider of high quality, developmental and educational child care services, and to achieve this through growth and sustainability:
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Close Volume
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G8 2011 Audited Results Financial year ended 31 December 2011
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2011 Audited Results
Source: Annual Report Lodged 27 February 2012
• Operating cash flow for 2011 was lower than NPAT. This was due to a full week of revenue being received in January 2012 because 31 December 2011 was a Saturday. The cashflow shortfall was a timing issue which corrected itself in January 2012.
Consolidated
Year end 31 December ($’000) 2010 2011 Variance
Revenue 66,549 142,899 115%
Expenses (59,682) (118,017) 98%
Earnings Before Interest and Tax 6,867 24,882 262%
Interest (1,318) (2,188) 66%
Net Profit Before Tax 5,549 22,694 309%
Net Profit After Tax 3,480 17,250 396%
Less non-recurring abnormal transactions:
Write back of Headstart deferred consideration to revenue - (4,299)
Legal Expenses in respect of the Singapore court case (post tax effect) - 956
Share based payment expense 1,040 -
Underlying Net Profit After Tax 4,520 13,907 208%
Underlying EPS (cents per share) 4.15 7.48 80%
Gearing ratio 20% 32%
Adjusted Gearing ratio (refer Note 22(f)) 20% 25% For
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2011 Audited Results v Guidance
Source: Annual Report Lodged 27 February 2012
• Underlying Return on Equity has increased from 5% in 2010 to 12% in 2011.
• The Net Profit After Tax margin increased from 7% in 2010 to 10% in 2011.
Calendar Year 2011 Guidance
$AUD million
Audited Full Year 2011 Results
$AUD million
% Change
Revenue 132.35 142.89 8.0% Expenses (112.09) (118.01) 5.3% Earnings Before Interest and Tax 20.26 24.88 22.8% Interest (1.90) (2.19) 15.3% Net Profit Before Tax 18.36 22.69 23.6% Non-recurring abnormal transactions - (3.34) -
Net Profit After Tax 12.79 13.90 8.7%
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Australia
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Australian Centres
State Total centres
Queensland 60
New South Wales 47
Victoria 9
Australian Capital Territory 6
South Australia 13
Total centres 135
Total licence Capacity per day 9,868
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Australian operations
• The trading environment continues to be buoyant with average 2012 annual occupancy across centres expected to exceed 2011 occupancies.
• Long Day Care rate increased 2.66% in January 2012 against the budget of 1.50%
• Total centre payroll costs for CY11 was 59% against an industry average of 63.5%*. Further reduction expected in CY12
• Centre EBIT margin for CY11 was 18%
*Source: IBISWorld Industry Report O8710, Childcare Services in Australia, April 2011
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Singapore
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Singapore Centres
State Total centres
Owned centres 8
Operated centres* 12
Franchised centres 51
Franchisees seeking premises 10
Total centres 81
Total licence capacity per day for owned centres 618
* Refer 19 April 2011 announcement in relation to Cherie Hearts. G8 Education manages 12 of these centres while legal proceedings are resolved.
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Cherie Hearts Update • The legal proceedings between G8 Education Limited and the Cherie
Hearts Group, Sam Yap and Gurchran Singh in relation to various issues involving the contractual arrangements between the parties has been heard before Her Honour Justice Prakash in Singapore.
• Her Honour, Justice Prakash, has handed down judgement in the Singapore legal proceedings between G8 Education Limited and the Cherie Hearts Group, Sam Yap and Gurchran Singh in relation to various issues involving the contractual arrangement between the parties.
• Her Honour found in favour of G8 Education Limited. Her Honour dismissed the application brought by Cherie Hearts Group, Sam Yap and Gurchran Singh.
• In her judgement, Justice Prakash noted that, at the relevant time, Cherie Hearts Group was in breach of the conditions precedent in the Business Acquisition Contract with G8 Education in several respects, and that ‘Cherie Hearts Group acted wrongly in purporting to terminate the Business Acquisition Contract’ with G8 Education. Her Honour found that the Business Acquisition Contract is ‘still in effect and enforceable between the parties...’
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Cherie Hearts Update
• Accordingly, Justice Prakash has ordered specific performance of the contract, pursuant to which G8 Education acquires the Cherie Hearts child care businesses in Singapore under the Business Acquisition Contract.
• As advised to the market on 4 March 2011, G8 Education finalised the assignment and novation of the Cherie Hearts franchisee businesses in December 2010.
• The plaintiff, Cherie Hearts Group, Sam Yap and Gurchran Singh have now lodged a Notice of Appeal in the Court of Appeal in Singapore.
• Judgement was handed down on 12 April 2012.
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Looking forward
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Looking forward
G8 Education continues to perform strongly and is well positioned for further growth and additional acquisitions.
• An increase in the proposed annual dividend of 50% to 6 cents per share (fully franked), payable quarterly, has been announced.
• Strong acquisition pipeline of over 70 centres with over 5,400 licenced places are being considered.
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Australian Group Structure
Brian Bailison Non-Executive
Director
Andrew Kemp Non-Executive
Director
Chris Scott Managing Director
Jenny Hutson Chairperson
Susan Forrester Non-Executive
Director
Matthew Reynolds
Non-Executive Director
Chris Sacre Chief Operating Officer/
Company Secretary
Chris Scott Managing Director
Damien Peters Chief Financial Officer
Jae Fraser General Manager, Operations
12 operations managers
135 centre directors
More than 2,870 centre staff
Over 9,800 Licenced places
Board of Directors
Senior Management
Operational
Operations Managers
Centre Directors
Childcare Personnel For
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Singapore Operations BOARD OF DIRECTORS
Managing Director
Chief Operating Officer
Deputy Chief Operating Officer
General Manager, Operations
Senior Manager, Operations (2)
Operations Managers (Centre
based) (5)
General Manager, Curriculum &
Services
Head, Curriculum and Training
Senior Manager, Curriculum (3)
Senior Executive, Curriculum
Senior Manager, HR (2)
Head, Finance & Acquisitions
Senior Manager, Procurement &
Accounts
Senior Accounts Executive
Accounts Executive
General Manager, Franchise & Marketing
Senior Manager, Franchise & Marketing
Senior Manager, Franchise
General Manager, IT
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Capital structure
Shares on issue 200,209,010
Cash on hand
Debt
Current Debt – National Australia Bank
Replacement debt facility with BankWest
$14.2 million
$36.4 million
$50 million
Dividend Policy
Quarterly dividends to 65% cash payout ratio Dividend to be 1.5 cents per share from March 2012 quarter
Dividends are fully franked.
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Questions?
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Formal Resolutions
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Disclaimer
• This presentation has been prepared by G8 Education Limited based on the information available to them. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, neither G8 Education Limited ors its directors, employees or agents, nor any other person accepts any liability for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it, including, without limitation, any liability arising from fault or negligence on the part of G8 Education Limited or its directors, employees or agents.
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