For personal use only G8 Education Limited (ASX:GEM) RBS Morgans 2010 Annual Queensland Conference Craig Chapman, Chief Executive Officer and Chris Sacre, Chief Financial Officer 17 September 2010
Overview | G8 Education For personal use only Considered early childhood education Creation of G8 Education • • Early Learning Services Limited (ASX:ELY) listed in G8 Education has a board and management 2007 with 38 owned centres team with exceptional credentials • • Payce Child Care – an unlisted subsidiary of Payce Chris Scott, Managing Director and Craig Industries Limited – 31 owned and 20 managed Chapman, Chief Executive Officer are both centres outstanding businessmen who successfully operated child care operator SunKids for 2 years • ELY and Payce merged in March 2010 to form G8 during 2008 and 2009 and then Payce child Education (ASX:GEM): care’s business during 2009 before leading G8 ▫ This provided economies of scale and Education’s successful expansion program efficiencies throughout the child care centre • Chris Sacre is Chief Financial Officer and has operations been involved in G8 Education’s establishment ▫ Share price (10 September 2010) $0.63 and expansion phases ▫ Market capitalisation circa $80 million • Extensive experience in consolidation of • Acquisition of 51 additional early childhood businesses & integration of acquisitions across education centres on foot taking G8 Education’s various industries portfolio to 140 centres Modest debt gearing • The merged team is now profitably producing for all stakeholders across the centres operated by G8 • Current debt is $15.5 million Education • Debt to be assumed on finalisation of current • The bringing together of the S8 Limited (ASX: SEL) acquisitions is $14.2 million team that created in excess of 50% per annum • compound growth over 6 years Forecast Debt/EBITDA is 1.49 x for 2011 year
For personal use only Industry Overview
Industry Overview For personal use only • Key reason identified for child care is ‘work related’ – increasingly, child care is incorporated with education and vacation care. • Over 800,000 children benefit from government subsidised child care. • The industry produces nearly $7 billion in revenue each year. • The industry is low risk with medium barriers to entry, low volatility and a high level of government assistance. Child care remains an essential part of family life. • Growth in the population of children aged between 0 and 14 years is expected to continue.
Industry Overview For personal use only • Growth in the number of women in the labour force is also expected to increase. • Larger operators and larger centres are in a stronger position to attract qualified staff, to adjust the staff mix and to defray the costs of specialist staff and facilities over a larger fee base. Larger players will benefit from stricter regulation and an evolution in the concept of child care from child minding to child development, which is a concept recommended by the Commonwealth under the Early Learning Framework. • IBISWorld estimates that the industry will grow at an average annualised rate of 5% in the five year period from now to 2015. • The industry is quite fragmented, providing G8 Education with many positive opportunities in this changing landscape.
For personal use only G8’s vision
G8’s mission For personal use only Our mission is to be a leading provider of high quality, developmental and educational services, and to achieve this through growth and sustainability: Quality Education & Care Employees • To nurture and develop • To commit to employee children’s minds, social skills development and a rewarding and confidence in a safe and culture which will ensure an stimulating environment. engaged and driven workforce. Community Profitability • To be responsive to local • To grow and derive value for families and deliver upon shareholders through community expectations. innovative services, systems and management.
The vision of G8 Education For personal use only • A portfolio of outstanding early childhood education brands: • Early Learning Services • World of Learning • Bourne Learning • Community Kids • Holiday Club • Kindy Patch • Focus on the importance of early childhood education • Make good centres great through focusing on outstanding early childhood education management
For personal use only Centre Overview
Centres For personal use only Total centres State (assuming completion of all announced acquisitions as at 10 September 2010) Queensland 70 New South Wales 38 Victoria 9 Australian Capital Territory 5 South Australia 15 Western Australia 2 Tasmania 1 Total centres 140 Total licence capacity 9,854
For personal use only
Geographic Diversity For personal use only WA Qld 2 70 SA 15 ACT NSW 5 38 Vic 9 Tas 1
2010 Acquisitions Update For personal use only 1 April 2010 28 June 2010 acquisitions acquisitions 10 child care 9 child care centres centres 847 licensed places 655 licensed places 27 July 2010 2 August 2010 acquisitions acquisitions 30 child care 2 child care centres centres 2,078 180 licensed places licensed places
For personal use only Key Statistics
Key Statistics For personal use only Current share price $0.63 30 day VWAP $0.612996 (at close of trade on 10 September 2010) Shares on issue (as at 10 September 2010) 126,368,723 60 day VWAP $0.613312 Market capitalisation $79,612,295 90 day VWAP $0.611361 (at close of trade on 10 September 2010) Shares on issue during 2011 (following announced acquisitions and pre capital raising) 139,924,148 Market capitalisation at finalisation of all announced acquisitions, $90,950,695 and assuming share price of $0.65 at close on 15 September 2010) $0.80 7,000,000 10 June 2010 to 10 September 2010 $0.70 6,000,000 $0.60 5,000,000 $0.50 4,000,000 90 day price history: $0.40 3,000,000 $0.30 2,000,000 $0.20 1,000,000 $0.10 $0.00 0 Volume Close
Key financial results 1H2010 For personal use only Forecast 6 months to Actual 6 months to 30 June 2010* 30 June 2010 Revenue 23,585,383 23,282,014 EBIT increase 42.8% on forecast. NPAT increase 108.7% on forecast Expenses (excluding interest) 22,476,352 21,697,921 EBIT 1,109,031 1,584,094 Interest 641,289 608,083 Net Profit Before Tax 467,742 976,010 Source: GEM ASX Announcement: 16 August 2010
For personal use only 2011 Guidance
2011 Guidance For personal use only Calendar Year 2011 Guidance Revenue 115,474,615 Expenses 98,191,814 Earnings Before Interest and Tax 17,282,801 Interest 2,110,562 Net Profit Before Tax 15,172,239 Net Profit After Tax 10,620,567 Basic Earning per share (cents per share) 7.6 cents Average Interest coverage for 2011 9 times Debt/EBITDA 1.49 *Based on 139,924,148 shares being 126,368,723 shares currently on issue plus 13,555,425 to be issued shortly as part consideration for centre acquisitions that have been previously announced. *Assumes 140 centres owned/managed for the 2011 year. Source: GEM ASX Announcement: 18 August 2010
For personal use only Directors & Senior Management Team
Directors and Senior Management For personal use only Jenny Hutson, Chairperson Chris Scott, Managing Director B.Com, LLB, FAIMM, MAICD B.Econ (Hons) Jenny is an investment banker and Chris graduated with first class honours in fund manager. She is an experienced Economics from Latrobe University in corporate adviser and company director. Melbourne. He was awarded the DM Myers University Medal in 1977. Jenny has a keen interest in the welfare and education of children. In addition to Chris has over 23 years experience in senior chairing G8 Education, Jenny is a director management positions. He has spent over 20 years in business in of the Royal Childrens Hospital Foundation in Brisbane. Singapore where he was involved in a number of successful businesses. Jenny was previously a partner of a major law firm. She has over 20 years experience in board issues involving listed companies Chris Scott was also the founder of the S8 Group (now part of CVC’s including as chair of S8 Limited. Jenny was previously named Mantra Group). Chris is a ‘hands on’ manager. His operational, Queensland Businesswoman of the Year and Australian Institute of analytical and strategic skills were critical in the selection of Management Owner/Manager of the Year. potential acquisitions which met the criteria to ensure the profitable expansion of the S8 Group and now G8 Education.
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