G8 Education Limited · ASX:GEM
G8 Education — Debt Investor Presentation (April 2016)
45 slides from G8 Education's debt investor presentation, Apr 26, 2016
Slide 1: G8 Education – Investor Presentation
G8 Education – Investor Presentation G8 Education Limited (ASX:GEM) 26 April 2016
Slide 2: Transaction Summary: New Issue Overview
Transaction Summary New Issue Overview Issuer G8 Education Limited In accordance with the Programme, the Issuer will ensure that, at all times, the consolidated total assets of the Issuer and the Guarantors subsidiary guarantors (taken as a whole) shall be at least 90 per cent. of the consolidated t
Slide 3: Transaction Summary: Tender Offer and Consent Solicitation Overview
Transaction Summary Tender Offer and Consent Solicitation Overview Issuer G8 Education Limited Offer to Purchase for Cash of the 2017 Notes, at Issuer’s sole discretion (the “Tender Offer”) and request to consent to certain Structure modifications of the relevant Terms and Conditions of the 2017 Not
Slide 4: Transaction Timetable
Transaction Timetable Indicative Timetable of the Tender Offer and Consent Solicitation Exercise (All dates and times are subject to change at the Company’s discretion) 26 April 2016 Tender Offer and Consent Solicitation Exercise commences 26 April 2016 Singapore Roadshow 9 May 2016, 10:00am (Singap
Slide 5: Table of Contents
Table of Contents 1 Business Overview 2 Competitive Strengths 3 Business Strategies 4 Financial Overview 5 Key Performance Metrics 6 Organic Growth Case Studies 7 Appendix 1: Government Regulation, Funding & Policy 8 Appendix 2: FY 15 Financial Statements 5
Slide 6: Business Overview
Business Overview
Slide 7: Corporate Snapshot
Corporate Snapshot Key Financial Highlights FY15 Capital Structure Underlying EBIT $145.4m Fully Paid Ordinary Shares (current) 374.7m Share Price (as at 19 Apr 2016) $3.95 Like For Like Centre Organic EBIT Growth $8.3m Market Capitalisation (as at 19 Apr 2016) $1.4bn Underlying EBITDA / Net Interes
Slide 8: Mission Statement
Mission Statement G8’s key strategic objective is to be the leading provider of high quality, developmental and education childcare services in both Australia and Singapore. By building and operating a portfolio of outstanding early childhood education brands, focusing on the importance of early chi
Slide 9: Overview
Overview G8 Education Limited (‘G8 Education’) is an Australasian childcare services provider that is listed on the Australian Stock Exchange (‘ASX’) under the ticker code ‘GEM’, with a market capitalisation of approximately $1.4 billion as at 19th April 2016. Figure 1: Child care services in We hav
Slide 10: Group Centre Portfolio
Group Centre Portfolio G8 Education Childcare and Education Centre Portfolio • The Group added 44 new centres and 13,697 licensed places in 2015 526 37 18 Singapore • Disciplined consolidation in high demand areas continues to be our focus franchises 353 292 37 Singapore • As at 31 Dec 2015 the Grou
Slide 11: Brands - Singapore
Brands - Singapore Owned G8 Education acquired 7 centres in 2011, with a further centre being acquired in 2012. G8 Education took ownership of a further 10 centres in 2013. Currently 18 centres are owned by G8 Education across Singapore. Franchised Centres The model under which the Singapore ‘franch
Slide 12: Brands - Australia
Brands - Australia Brand Total Casa Bambini 3 Community Kids 84 Early Learning Services 48 First Grammar 29 Great Beginnings 35 Headstart 20 Kinder Haven 17 Kool Kids 10 Kindy Patch 37 NurtureOne 22 Pelican 9 Penguin 7 World of Learning 68 Creative Garden 17 Bambinos 12 Jellybeans 21 Sandcastles 7 T
Slide 13: Business Organisation Flow Chart
Business Organisation Flow Chart Non executive director Non executive director Chairman Non executive director Non executive director Revenue Generation Revenue Accounting Managing Director Big Four Auditors & Misc Lawyers Chief Executive Officer Advice for Chief Financial Officer Tax/Modelling Exec
Slide 14: Acquisitions Responsibility Flow Chart
Acquisitions Responsibility Flow Chart Direct approaches, repeat Source vendors, broker introductions G8 CFO Financial Modelling 5% Acquisitions Minter Ellison Various Legal due diligence 15% G8 Operational due diligence Modelling GMO 55% Operations Due Diligence Review Settlement G8 Facilities SFM
Slide 15: Board of Directors
Board of Directors Mark Johnson Chris Scott Brian Bailison Matthew Reynolds Susan Forrester David Foster B.Com, FCA, FAICD B.Econ. (Hons) B.Com., B.Acc (Cum Laude), B. Sc. (Hons), LLB (Hons), B.App.Sci, MBA, GAICD, BA, LLB(Hons) EMBA, FAICD ACA MQLS SFFin Chairman Managing Director Non Executive Dir
Slide 16: Competitive Strengths
Competitive Strengths
Slide 17: Competitive Strengths
Competitive Strengths Multi-brand portfolio strategy G8 Education adopts a multi-brand approach, operating over 19 brands in Australia and 3 brands in Singapore to cater to the needs of the local community Revenue underpinned by supportive government policies Supportive government policies in the fo
Slide 18: Business Strategies
Business Strategies
Slide 19: Business Strategies
Business Strategies Quality Care and Acquisition Strategy Employees Community Education G8 Education focuses G8 Education believes G8 Education is G8 Education provided on identifying childcare that continually committed to care and education to centre brands within investing in its facilities maint
Slide 20: Financial Overview
Financial Overview
Slide 21: Financial Strategy
Financial Strategy The Group’s primary financial objective is to maintain year on year double digit earnings per share growth through: 1. Occupancy Growth Driven by sustaining the execution of the G8 corporate model with an emphasis on first class care provision through on going investment in our st
Slide 22: Track Record of Financial Performance
Track Record of Financial Performance Total Revenue (A$m) EBITDA (A$m) and EBITDA Margin (A$m) 200 21.4% 21.9% 25.0% 18.9% 19.6% 706 17.8% 155 20.0% 150 491 11.9% 105 15.0% 100 275 54 10.0% 143 180 50 27 32 67 5.0% 8 0 0.0% FY10 FY11 FY12 FY13 FY14 FY15 FY10 FY11 FY12 FY13 FY14 FY15 EBITDA EBITDA Ma
Slide 23: Key Balance Sheet Statistics
Key Balance Sheet Statistics Total Assets (A$m) (A$m) (Net Borrowings)/Net Cash Position (A$m) 400 1,234 194 200 114 121 1,003 8 14 22 0 -114 -16 -36 -49 -353 -200 (8) (0) (22) (27) -515 482 -400 269 (232) 115 188 -600 (321) -800 FY10 FY11 FY12 FY13 FY14 FY15 FY10 FY11 FY12 FY13 FY14 FY15 Cash and C
Slide 24: Prudent Capital Management
Prudent Capital Management Gearing Ratio (x) Total Secured Debt / Total Assets (%) 0.85 0.65 19.3% 18.3% 0.53 0.43 13.5% 0.37 0.32 0.27 9.5% 0.19 0.19 0.15 0.09 0.00 0.0% 0.0% FY10 FY11 FY12 FY13 FY14 FY15 FY10 FY11 FY12 FY13 FY14 FY15 Total Borrowings / Total Equity (x) Net Borrowings / Total Equit
Slide 25: Debt Structure
Debt Structure G8’s debt structure as at 31 December 2015 consists of the following debt instruments: Principle Currency Cost Maturity A$70,000,000 AUD 7.65% 7 August 2019 A$50,000,000 AUD BBSW + 3.90% 17 February 2018 S$175,000,000 SGD 4.75% 19 May 2017 S$85,000,000 SGD 4.75% 19 May 2017 S$155,000,
Slide 26: Key performance metrics
Key performance metrics
Slide 27: Full year like for like EBIT performance
Full year like for like EBIT performance Full Year Like for Like EBIT $000 Vintage Number 2011 2012 2013 2014 2015 Growth of FY15 on centres FY14 Acquired pre 2011 74 15,682 17,298 21,021 21,579 24,019 2,440 • Like for like EBIT margin % increase 10% 22% 3% 11% increased to 23.8% in 2015 from Acquir
Slide 28: Like for Like - Occupancy
Like for Like - Occupancy LFL Peak Occupancy Vintage Number of centres 2011 2012 2013 2014 2015 Acquired pre 2011 74 86% 86% 87% 87% 85% Acquired in 2011 43 - 93% 95% 94% 93% Acquired in 2012 33 - 95% 94% 93% Acquired in 2013 74 87% 85% Like for likes calculated based on ownership for a full calenda
Slide 29: Support Office Cost per Licensed Place
Support Office Cost per Licensed Place 2010 2011 2012 2013 2014 2015 Number of Places 6,304 9,868 12,661 17,597 32,782 35,221 Support Office Cost per Licensed Place $710 $523 $520 $485 $455 $439 • Support office cost per licensed place fell in 2015 to $439. • Efficiency and productivity gains Suppor
Slide 30: Organic Growth Case Studies
Organic Growth Case Studies
Slide 31: Operational case studies
Operational case studies A selection of group acquisitions demonstrates the Group’s ability to drive organic EBIT growth via the execution of the G8 corporate model: Purchase Price $'000 97,480 $'000 CY15 • Ramsay Bourne – 25 Centres acquired in March 2010 Revenue 155,239 • Local Kids – 19 Centres a
Slide 32: Operational Excellence – Case Studies
Operational Excellence – Case Studies Name of Acquisition Ramsay Bourne Name of Acquisition Local Kids Number of Centres 25 Number of Centres 19 Date Acquired Mar-10 Date Acquired Sep-10 Purchase Price 16,000,000 Purchase Price 14,300,000 $'000 FY11 FY12 FY13 FY14 FY15 $'000 FY11 FY12 FY13 FY14 FY15
Slide 33: Operational Excellence – Case Studies
Operational Excellence – Case Studies Name of Acquisition Kindy Patch Name of Acquisition Kids Korner Number of Centres 24 Number of Centres 6 Date Acquired Jan-11 Date Acquired Apr-11 Purchase Price 22,300,000 Purchase Price 7,080,000 $'000 FY12 FY13 FY14 FY15 $'000 FY12 FY13 FY14 FY15 Revenue 29,8
Slide 34: Operational Excellence – Case Studies
Operational Excellence – Case Studies Name of Acquisition Roly Poly Name of Acquisition Pacific Group Number of Centres 8 Number of Centres 16 Date Acquired Sep-13 Date Acquired Sep-12 Purchase Price 28,000,000 Purchase Price 9,800,000 $'000 FY13 FY14 FY15 $'000 FY14 FY15 Revenue 28,563 30,840 33,00
Slide 35: Appendix 1: Government Regulation, Funding & Policy
APPENDIX 1: GOVERNMENT REGULATION, FUNDING & POLICY 35
Slide 36: Overview - Singapore
Overview - Singapore Early Childhood and Development Agency The Early Childhood and Development Agency serves as the regulatory and developmental authority for the early childhood sector in Singapore, overseeing all aspects of children's development below the age of 6, across both kindergartens and
Slide 37: Government Funding - Singapore
Government Funding - Singapore Childcare subsidies To enhance the affordability of childcare services in Singapore, the Singaporean Government provides child care subsidies to working and non-working mothers whose children are enrolled in a licensed centre. From 1 April 2013, the ComCare Child Care
Slide 38: Government Regulation - Australia
Government Regulation - Australia National Quality Framework The recent introduction of the National Quality Framework has resulted in a large change to the regulatory environment of the childcare industry in Australia. Introduced in January 2012, the framework replaces existing state-based standard
Slide 39: National Quality Standard
National Quality Standard 39
Slide 40: Government Funding - Australia
Government Funding - Australia The Commonwealth Government provides fee assistance to families to increase the accessibility of childcare. Government investment in childcare has increased significantly over the last decade (Figure 2) and is expected to continue (Figure 3). The Commonwealth Governmen
Slide 41: Government Funding - Australia
Government Funding - Australia Figure 2: Total Government Expenditure ($’M) Figure 3: Growth in Commonwealth Government Funding expected through to FY17 9000 Government funding 8000 FY15 FY16 FY17 $bn $bn $bn 7000 Child Care Benefit 3.36 3.62 3.84 Child Care Rebate 3.07 3.53 3.99 6000 Total Funding
Slide 42: Appendix 2: FY15 Financial Statements
APPENDIX 2: FY 15 FINANCIAL STATEMENTS
Slide 43: FY15 Income Statement
FY 15 Income Statement 2015 2014 Consolidated Year end 31 December $'000 $'000 • Revenue increased by 44% year on year rising Revenue* 703,547 488,402 from $488m in 2014 to $703m in 2015. Expenses (543,124) (382,437) • Wages as a percentage of revenue from Earnings Before Interest and Tax 160,423 10
Slide 44: FY15 Balance Sheet
FY 15 Balance Sheet 2015 2014 $'000 $'000 Following the decision to appoint Ernst & Young as external ASSETS auditor for 2016, the Company has engaged Ernst & Young to Current assets perform specific procedures to compare G8’s current accounting Cash and cash equivalents 193,840 120,804 policies, as
Slide 45: FY15 Cash Flow
FY 15 Cash Flow 2015 2014 $'000 $'000 Cash flows from Operating Activities Receipts from customers 676,870 494,744 • Operating cash flow in 2015 was strong at $95.1m compared Payments to suppliers and employees (516,762) (383,483) to $74.7m in 2014. Interest received 2,861 2,919 Interest paid (22,35
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