G8 Education Limited · ASX:GEM
G8 Education — Investor Presentation (August 2023)
28 slides from G8 Education's investor presentation, Aug 22, 2023
Slide 1: ASX Announcement
ASX Announcement G8 Education Limited (ASX:GEM) 22 August 2023 The Manager Market Announcements Office ASX Limited 20 Bridge Street Sydney NSW 2000 Dear Sir / Madam I enclose the Investor Presentation for the half year ended 30 June 2023 for G8 Education Limited, which includes a trading update and
Slide 2: 2023 Half Year Results Investor Presentation
2023 HALF YEAR RESULTS Investor Presentation 22 August 2023 ASX:GEM UPDATE IMAGE 2023 Half Year results 1
Slide 3: Disclaimer & Non-IFRS Information
DISCLAIMER & NON-IFRS INFORMATION The material in this presentation has been prepared by G8 Education Limited (G8) and is general background information about G8’s activities current as at the date of this presentation. The presentation does not purport to be complete and should be read in conjuncti
Slide 4: Acknowledgement of Traditional Owners
G8 Education acknowledges the Traditional Owners of the lands on which we operate and pays our respects to Elders past, present and emerging. We recognise that Aboriginal and Torres Strait Islander peoples have been nurturing and teaching children on these lands for thousands of years. We are gratef
Slide 5: Agenda
AGENDA H1 SUMMARY & PROGRESS Pejman Okhovat UPDATE IMAGE OPERATING & FINANCIAL PERFORMANCE Sharyn Williams CURRENT TRADING & MEDIUM-TERM OUTLOOK Pejman Okhovat Q&A Pejman Okhovat & Sharyn Williams APPENDIX 2023 Half Year results | 4
Slide 6: H1 Summary & Progress
H1 SUMMARY & PROGRESS UPDATE IMAGE 2023 Half Year results | 5
Slide 7: Key Messages
KEY MESSAGES Balanced H1 with improved performance from focused operational execution SOLID EARNINGS RECOVERY UNDERPINNED PRIORITISING “HIGH IMPACT” AREAS TO STRONG CASH GENERATION AND BALANCE BY STRONG COST MANAGEMENT DRIVE OPERATIONAL EXECUTION SHEET POSITION • Revenue and earnings growth reflect
Slide 8: Financial Overview
FINANCIAL OVERVIEW Stronger performance underpinned by solid cost management GROUP OCCUPANCY OPERATING REPORTED Includes Greenfield centres Excludes non-trading3 items and Kiddo and includes lease interest expense In accordance with IFRS Revenue Revenue $456.1m 9.5% $455.3 9.3% Average – H1 0.6%pts
Slide 9: Drivers of Group Momentum
DRIVERS OF GROUP MOMENTUM Focused activities delivering improved results in a challenging environment TEAM QUALITY FAMILY • Team retention and vacancies improved, • G8 ‘meeting/exceeding’ centres are in line • Deliberate focus on higher quality enquiries resulting in lower agency usage and reduced w
Slide 10: H1 Environmental, Social & Governance Highlights
H1 ENVIRONMENTAL, SOCIAL & GOVERNANCE HIGHLIGHTS Continued progress against our Sustainability Pillars • Voluntarily joined Multi-Employer • Extensive training on Child • Maintained strong leadership • Progressed the first phase of Bargaining in Early Childhood Protection and Mandatory diversity of
Slide 11: Occupancy
OCCUPANCY Steady progress toward CY19 despite sector challenges • Occupancy1 for the half was 67.4%, 0.6%pts above the pcp and 2.1%pts below Group average occupancy1 CY19 H1 80% • Occupancy performance remains variable across the network predominantly due 78% Vacation Care impacts to three factors –
Slide 12: Occupancy
OCCUPANCY Capped centres have been impacted during crucial enrolment and transition (E&T) period Significant reduction in ‘capped’ centres ahead of crucial CY23/24 E&T period Centres that experienced ‘caps’ during CY22/23 E&T have underperformed Number of centres with caps during the period Average
Slide 13: Child Care Subsidy (CCS)
CHILD CARE SUBSIDY (CCS) Families benefitting from CCS changes slowly building momentum • G8’s CCS support team was established to help families through the transition CCS rates from 10 July 2023 to the new CCS: Family income Subsidy rate – Developed family friendly calculator – Held family informat
Slide 14: Team Retention & Attraction
TEAM RETENTION & ATTRACTION Strong tactical response has reduced impact of sector-wide shortages RETAINING QUALITY TEAM GROWING OUR OWN TALENT ATTRACTING QUALITY TEAM To build family experiences and child outcomes Addressing sector shortages and supporting early To support quality outcomes and becom
Slide 15: Regulatory Update
REGULATORY UPDATE Significant activity requires higher levels of involvement, advocacy and resourcing ACCC Productivity Commission Multi-Employer NSW IPART South Australian Child Care Inquiry ECEC Inquiry Bargaining ECEC Review Royal Commission into ECEC • Interim Report Released in July • Inquiry c
Slide 16: Network Update
NETWORK UPDATE More focused approach to network optimisation as an ongoing enterprise activity Current network Divestments Greenfields (GF) 434 36,982 • 5 centres exited in H1 • Total 10 centres in cohort • 8 centres exited YTD representing c$2m CY22 • 1 greenfield centre opened in H1 centres licens
Slide 17: Operating & Financial Performance
OPERATING & FINANCIAL PERFORMANCE 2023 Half Year results | 16
Slide 18: Group Performance
GROUP PERFORMANCE Solid group performance driven by disciplined cost management and operational execution $M CY23 H1 CY22 H1 Change • Improved Operating and Statutory NPAT and margins driven by improved centre performance, reduced Support Office costs and lower net finance Group revenue1 456.1 416.7
Slide 19: Centre Performance
CENTRE PERFORMANCE1 Solid performance through focus on operational execution and cost management vs impacted pcp • Improved centre performance reflected in both revenue and margin growth Centre performance1 $M CY23 H1 CY22 H1 Change • Centre revenue growth of 9.3% reflects: – Higher average occupanc
Slide 20: Capital | Cashflow
CAPITAL | CASHFLOW Capital allocation to sustain and strengthen the business and support shareholder returns • Capex focused on sustaining and enhancing the quality of the network: Cash flow – CY23 H1 capex materially lower than pcp, particularly relating to centre $M CY23 H1 CY22 H1 equipment and r
Slide 21: Funding and Capital Management
FUNDING AND CAPITAL MANAGEMENT Strong balance sheet with conservative leverage Dividend Balance sheet ratios • Interim fully franked dividend of 1.5 cents, up 50% reflecting strong NPAT $M 30 June 2023 31 December 2022 Non-current borrowings 145.2 127.9 growth Cash and cash equivalents 41.8 37.8 • P
Slide 22: Current Trading & Medium Term Outlook
CURRENT TRADING & MEDIUM TERM OUTLOOK UPDATE IMAGE 2023 Half Year results | 21
Slide 23: Fundamentals Supporting Demand Growth
FUNDAMENTALS SUPPORTING DEMAND GROWTH ECEC sector is viewed as critical to the Australian economy and has strong bi-partisan support Female participation continues to increase Net migration continues to recover Net supply growth1 trending higher % 63 500,000 62 400,000 4.1% 3.9% 3.7% 3.8% 61 3.5% 3.
Slide 24: Current Trading & Outlook
CURRENT TRADING & OUTLOOK Cautiously optimistic with the backdrop of increased demand in a challenging environment Trading update Outlook • Group ‘spot’ occupancy1 is 73.0%, 0.3%pts lower than CY22 and 1.6%pts lower than • Demand outlook for the ECEC sector is improving, with momentum slowly buildin
Slide 25: Q&A
Q&A UPDATE IMAGE 2023 Half Year results | 24
Slide 26: Appendix
APPENDIX UPDATE IMAGE 2023 Half Year results | 25
Slide 27: Financial Statements
FINANCIAL STATEMENTS Financial Overview Balance Sheet $M CY23 H1 CY22 H1 Change $M 30 June 2023 31 December 2022 ASSETS Current assets Total Operating Revenue2 456.1 416.7 9.5% Cash and cash equivalents 41.8 37.8 Employment costs (288.4) (265.8) 8.5% Trade and other receivables 24.4 22.5 Other curre
Slide 28: Cash Flow
CASH FLOW Cash flow Cash conversion calculation $M HY23 HY22 Change $M CY23 H1 CY22 H1 EBITDA 96.4 83.8 Cash flows from operating activities Receipts from customers (inclusive of GST) 456.8 414.6 10.2% Net non-trading items1 6.6 1.2 Payments to suppliers and employees (inclusive of GST) (358.1) (342