For personal use only Institutional Investors Presentation G8 Education Limited (ASX:GEM) November 2011
Overview For personal use only G8 Education’s child care portfolio comprises: Australia 132 owned child care centres 6 centre acquisition in South East Queensland Singapore 56 franchised child care centres 16 franchisees seeking premises 7 owned child care centres 13 operated child care centres * The 13 operated child care centres in Singapore are the subject of litigation. The case has been heard and a decision is anticipated in early 2012. Page 2
A portfolio of outstanding child For personal use only care brands: • Early Learning Services • World of Learning • Bourne Learning • Community Kids • Holiday Club • Kindy Patch • Headstart • Kids Corner • Cherie Hearts • Focus on the importance of education in child care • Make good centres great through focusing on outstanding child care management Page 3
For personal use only Guidance for 2011 Financial year ending 31 December 2011 Page 4
2011 Guidance - reaffirmed For personal use only G8 Education Limited has a calendar financial year. The group’s previous guidance for the 2011 financial year is reaffirmed. 2011 Guidance for 2011 Guidance for 2011 Guidance for the Australia Singapore Group AUD $ million AUD $ million** AUD $ million Revenue 125.50 6.85 132.35 Expenses 106.74 5.35 112.09 Earnings Before Interest and Tax 18.76 1.50 20.26 Interest 1.90 ‐ 1.90 Net Profit Before Tax 16.86 1.50 18.36 Net Profit After Tax# 11.55 1.24 12.79 # Excludes legal fees in relation to the litigation between the Cherie Hearts group of companies, Sam Yap and Gurchran Singh and G8 Education Limited as these are considered non recurring expenses **Assumes an exchange rate of 1.28 times as used in the group’s previous guidance announcements for Singapore. Page 5
Acquisition Update For personal use only • Acquisition of 6 centres in South East Queensland is unconditional with respect to due diligence but remains subject to conditions precedent of an administrative nature (such as licensing) • Financial close: December 2011 • Purchase price: $8.2 million • Centre EBIT for current year: $2.05 million • Historical EBIT multiple: 4 times Key Performance Indicators Occupancy: 95% Licensed places: 437 Average rate per day: $72.66 Page 6
Acquisition Improvements For personal use only Revenue EBIT EBIT margin ($’000) ($’000) (%) 1H10 16,013 2,261 14.1% ELS 1H11 16,545 2,561 15.5% (settled December 2007) Variance (%) 3.3% 13.3% 10.0% 1H10 11,752 1,230 10.5% Payce 1H11 12,941 2,180 16.8% (settled March 2010) Variance (%) 10.1% 77.2% 60.0% 1H10 11,356 1,056 9.3% Kindy Patch 1H11 12,996 1,473 11.3% (settled March 2011) Variance (%) 14.4% 39.5% 21.5% 1H10 Not Available – Private Companies Local Kids (settled June/September 1H11 10,150 1,477 14.5% 2010) 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 7
Financial Improvements For personal use only Since 30 June 2011 the following key drivers of the business have changed: Increase in Long Day Care fees effective from July 2011 of 4.3% against a • forecast of 3.5% Increase in Award wages effective from July 2011 of 3.5% against a • forecast of 4.0% Reduction in Lending Margin from 2.25% to 1.85% as a result of all • covenants met for the half year ended 30 June 2011. Contracts for sale secured for 5 underperforming centres. • Page 8
Page 9 Organisation Chart For personal use only
Group S tructure For personal use only Matthew Brian Bailison Andrew Kemp Chris Scott Susan Forrester Jenny Hutson Reynolds Board of Directors Non ‐ Executive Non ‐ Executive Managing Non ‐ Executive Chairperson Non ‐ Executive Director Director Director Director Director Chris Sacre Chris Scott Currently Recruiting Senior Management Chief Operating Officer/ Managing Director Chief Financial Officer Company Secretary Jae Fraser Operational General Manager, Operations Operations Managers 12 operations managers Centre Directors 132 centre directors More than 2,600 centre staff Childcare Personnel +8,000 children in care Page 10
Australian Operations For personal use only BOARD OF DIRECTORS Managing Director Chief Financial Chief Operating Officer Officer IT & Marketing Business Support Group Accountant General Manager HR Manager Payroll Manager Communications Manager Manager Manager HR Assistants Marketing Admin & Payroll Assistant (2) Assistant Reception (2) Accountant Operations Senior Operations Maintenance Managers (7) Manager (SE Qld) (2) Accounts Payable Operations (4) Managers (5) Centre Directors (76) Accounts Assistants (2) Centre Directors (56) Page 11
S ingapore Operations For personal use only BOARD OF DIRECTORS Managing Director Chief Operating Officer Deputy Chief Operating Officer General Manager, General Manager, General Manager, Head, Finance & General Manager, Curriculum & Franchise & Operations Acquisitions IT Services Marketing Senior Manager, Senior Manager, Senior Manager, Head, Curriculum Senior Accounts Procurement & Franchise & Operations (2) and Training Executive Accounts Marketing Operations Senior Manager, Senior Manager, Accounts Senior Manager, Managers (Centre Curriculum (3) HR (2) Executive Franchise based) (5) Senior Executive, Curriculum Page 12
Page 13 Directors profiles For personal use only
Board of Directors For personal use only 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 14
Board of Directors For personal use only 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 15
Page 16 ingapore Update S For personal use only
Cherie Hearts For personal use only • 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 are due in mid December 2011. It is anticipated a decision will be made in early 2012. • The original vendors, namely the Cherie Hearts group is not directly involved in operating the Cherie Hearts childcare centres. • The original 13 corporate centres acquired from Cherie Hearts continue to be operated by G8 Education pending judgment. • Seven corporate centres in Singapore have been acquired from third parties directly and are operating strongly, as are the 56 Cherie Hearts franchised centres which have been operated by G8 Education Limited since 1 December 2010. Page 17
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