G8 Education Overview

Transcription

1 For personal use only G8 Education Overview G8 Education Limited (ASX:GEM) February 2012

2 Overview Following the acquisition of five separate child care groups over the past 20 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 * Refer 19 April 2011 announcement in relation to Cherie Hearts. G8 Education manages 12 of these centres while legal proceedings are resolved. Page 2

3 The vision of G8 Education 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 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. Page 3

4 G Audited Results Financial year ended 31 December 2011 Page 4

5 2011 Audited Results Consolidated Year end 31 December ($ 000) Variance Revenue 66, , % Expenses (59,682) (118,017) 98% Earnings Before Interest and Tax 6,867 24, % Interest (1,318) (2,188) 66% Net Profit Before Tax 5,549 22, % Net Profit After Tax 3,480 17, % 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, % Underlying EPS (cents per share) % Gearing ratio 20% 32% Adjusted Gearing ratio (refer Note 22(f)) 20% 25% 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 Source: Annual Report Lodged 27 February 2012 Page 5

6 2011 Audited Results v Guidance Calendar Year 2011 Guidance $AUD million Audited Full Year 2011 Results $AUD million % Change Revenue % Expenses (112.09) (118.01) 5.3% Earnings Before Interest and Tax % Interest (1.90) (2.19) 15.3% Net Profit Before Tax % Non recurring abnormal transactions (3.34) Net Profit After Tax % Underlying Return on Equity has increased from 5% in 2010 to 12% in The Net Profit After Tax margin increased from 7% in 2010 to 10% in Source: Annual Report Lodged 27 February 2012 Page 6

7 Australia Page 7

8 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 Page 8

9 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 Page 9

10 Acquisition Improvements 1HY Revenue EBIT EBIT margin ($ 000) ($ 000) (%) ELS (settled Dec 2007) Payce (settled 25 March 2010) Kindy Patch (settled 14 March 2011) Local Kids (settled 28 June and 10 September 2010) 1H10 16,013 2, % 1H11 16,545 2, % Variance (%) 3.3% 13.3% 10.0% 1H10 11,752 1, % 1H11 12,941 2, % Variance (%) 10.1% 77.2% 60.0% 1H10 11,356 1, % 1H11 12,996 1, % Variance (%) 14.4% 39.5% 21.5% 1H10 Not Available Private Companies 1H11 10,150 1, % Variance (%) N/A N/A N/A Note: Due to the seasonality of the Australian child care industry the EBIT margin is stronger in the second half of the calendar year as centre occupancy grows. Page 10

11 Acquisition Improvements 2HY Revenue EBIT EBIT margin ($ 000) ($ 000) (%) ELS (settled Dec 2007) Payce (settled 25 March 2010) Kindy Patch (settled 14 March 2011) Local Kids (settled 28 June and 10 September 2010) 2H10 18,160 3, % 2H11 19,029 4, % Variance (%) 4.8% 19.7% 14.2% 2H10 11,497 2, % 2H11 12,421 2, % Variance (%) 8.0% 22.6% 13.5% 2H10 13,496 2, % 2H11 15,715 3, % Variance (%) 16.4% 44.8% 24.4% 2H10 10,233 1, % 2H11 11,662 2, % Variance (%) 14.0% 34.6% 18.1% Note: Due to the seasonality of the Australian child care industry the EBIT margin is stronger in the second half of the calendar year as centre occupancy grows. Page 11

12 Singapore Page 12

13 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. Page 13

14 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. The hearing commenced in Singapore in September 2011 and is now complete. Final submissions in the case were lodged on 16 December It is anticipated a decision will be made in early The original vendors, namely the Cherie Hearts group is not directly involved in operating the Cherie Hearts childcare centres. 12 of the 13 Cherie Hearts corporate centres continue to be operated by G8 Education pending judgment. Eight corporate centres in Singapore have been acquired directly and are operating strongly, as are the 51 Cherie Hearts franchised centres which have been operated by G8 Education Limited since 1 December Page 14

15 Looking forward Page 15

16 Looking forward G8 Education continues to perform strongly and is well positioned for further growth and additional acquisitions. In March 2012 Damien Peters joins 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. 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. Page 16

17 Australian Group Structure Board of Directors 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 Senior Management Chris Sacre Chief Operating Officer/ Company Secretary Chris Scott Managing Director Damien Peters Chief Financial Officer Operational Jae Fraser General Manager, Operations Operations Managers 12 operations managers Centre Directors 135 centre directors Childcare Personnel More than 2,870 centre staff Over 9,800 Licenced places Page 17

18 Capital structure Shares on issue 200,209,010 Cash on hand $14.2 million Debt Current Debt National Australia Bank Replacement debt facility with BankWest $36.4 million $56.5 million Dividend Policy Quarterly dividends to 65% payout ratio Dividend to be 1.5 cents per share from March 2012 quarter Dividends are fully franked. Page 18

19 Substantial shareholders Shareholder Number of Shares Percentage holding Perpetual Nominees Limited and subsidiaries 28.2 million 14.1% Wallace Infrastructure Pty Ltd 24.0 million 12.0% Paradice Investment Management Pty Ltd 14.8 million 7.4% Northcape Capital Pty Ltd 17.5 million 8.7% Greencape Capital Pty Ltd 10.4 million 5.2% Source: Substantial shareholder notices lodged with ASX Page 19

20 Board of Directors Jenny Hutson, B.Com, LLB, FAIM, Chairperson Merchant banker and fund manager Experienced corporate adviser and company director Over 20 years experience in capital markets involving listed companies Member of the G8 Education Audit Committee. Chris Scott, B.Econ(Hons), Managing Director Over 25 years experience in senior management positions including as founder and managing director of ASX listed S8 Limited which was an integrated travel company that made 36 acquisitions over 5 years and was capitalised at $700 million. More than 20 years business in Singapore where he was involved in a number of successful businesses Exceptional operational, analytical and strategic skills critical in selection of potential acquisition. Susan Forrester BA(Hons), LLB(Hons), EMBA, FAICD, FAIM, Non Executive Director Experienced company director with diverse portfolio career Keen focus on strategic development, corporate governance, brand and reputation management and strategic human resources Currently a director of Ergon Energy and a senior consultant to Board Matters Pty Ltd which provides expert advice to listed and unlisted boards on governance. Page 20

21 Board of Directors Brian Bailison B.Com, B.Acc (Cum Laude), ACA, Non Executive Director Over 15 years experience in finance, corporate finance and operations from senior roles in South Africa and Australia including senior positions at Rand Merchant Bank Limited and the Ivany Investment Group. Former director of Payce Child Care Pty Ltd which operated 59 child care centres prior to them becoming part of the G8 Education Group. Member of the G8 Education Audit Committee Andrew Kemp, B.Com, CA, Non Executive Director Managing director of Huntington Group, a Queensland based advisory firm that has operated for over 25 years Has structured and implemented the ASX listing of over 10 companies in addition to other corporate advisory and investment activities. Mr Kemp joined AIFC, the merchant banking affiliate of the ANZ Banking Group in Sydney prior to establishing Huntington Group Member of the G8 Education Audit Committee Matthew Reynolds, BSc(Hons), LLB(Hons), MQLS, Non Executive Director Extensive experience in ASX Listings, management buy outs and mergers and acquisitions. Expert in providing high level advice in a stringently regulated and highly technical market Mr Reynolds is a director of the Thailand based conglomerate Minor International and its subsidiary Delicious Food Holdings. The group recently acquired the Oaks Hotel group in Australia. He has held a number of board positions on emerging companies in the energy and resources and technology sectors. Page 21

22 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. Page 22