G8 Education Limited · ASX:GEM
G8 Education — Investor Presentation (April 2020)
37 slides from G8 Education's investor presentation, Apr 9, 2020
Slide 1: Investor presentation: Equity raising
Investor presentation Equity raising 9 April 2020
Slide 2: Important Notice and Disclaimer
IMPORTANT NOTICE AND DISCLAIMER (cont.) This document (the Presentation) is dated 9 April 2020 and has been prepared and authorised by G8 Education Limited (ABN 95 123 828 553) (the Company or G8) in connection with the proposed capital raising (the Equity Raising), comprising: • a fully-underwritte
Slide 3: Important Notice and Disclaimer (cont.)
IMPORTANT NOTICE AND DISCLAIMER (cont.) Not for release to US wire services or distribution in the United States This Presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States or any other jurisdiction in which such an offer would
Slide 4: Important Notice and Disclaimer (cont.)
IMPORTANT NOTICE AND DISCLAIMER (cont.) Financial data All references to dollars, cents or $, AUD, or A$ in this document are to Australian dollars, unless otherwise stated. This Presentation includes certain financial information as at 31 December 2019, being: • the historical consolidated balance
Slide 5: Important Notice and Disclaimer (cont.)
IMPORTANT NOTICE AND DISCLAIMER (cont.) Going concern basis of preparation The Financial Information has been prepared on a going concern basis, which contemplates continuity of the Group's normal business activities and the realisation of assets and the settlement of liabilities in the ordinary cou
Slide 6: Important Notice and Disclaimer (cont.)
IMPORTANT NOTICE AND DISCLAIMER (cont.) There can be no assurance that actual outcomes will not differ materially from these forward-looking statements. Several important factors could cause actual results or performance to differ materially from the forward- looking statements, including (without l
Slide 7: Important Notice and Disclaimer (cont.)
IMPORTANT NOTICE AND DISCLAIMER (cont.) Disclaimer Neither UBS AG, Australia Branch (UBS) or Royal Bank of Canada (trading as RBC Capital Markets) (RBC) (the Underwriters), nor any of their or the Company's respective advisers nor any of their respective affiliates or related bodies corporate, nor a
Slide 8: Introduction
Introduction G8 provides an essential service to the Australian community with the recent Australian Government initiatives helping to support the industry • The COVID-19 outbreak has had a significant adverse impact on occupancy levels across the sector, including G8 Education, as parents withhold
Slide 9: Government announced support measures
Government announced support measures Recently announced Government support measures will help keep G8 centres open and team members employed Early Childhood Education and Care Relief Package JobKeeper package • On 2 April 2020, the Australian Federal Government announced the • On 30 March 2020, the
Slide 10: Operational initiatives
Operational initiatives G8 is enacting a number of initiatives designed to mitigate the reduction in revenues through the COVID-19 impacted period – all whilst continuing to prioritise the safety and health of our children and team • The safety and wellbeing of our children and team is paramount • T
Slide 11: Capital structure initiatives
Capital structure initiatives The Equity Raising, along with a number of other capital structure initiatives, will provide G8 with a strengthened balance sheet and increased flexibility through the COVID-19 impacted period, while also positioning the Company strongly to pursue potential growth oppor
Slide 12: G8 is a leading childcare operator in Australia
G8 is a leading childcare operator in Australia Leading national footprint with solid operating metrics prior to COVID-19 impact Centre locations Steady occupancy rates prior to COVID-19 Half-Yearly Like-for-Like Occupancy (%) 90% 78.3%1 78.9% Australia 71.3%1 72.9%1 475 QLD 60% 73 30% 0% CY18 H1 CY
Slide 13: Solid operational progress in 2019 - prior to COVID-19 impacts
Solid operational progress in 2019 - prior to COVID-19 impacts • Investments in quality and capability resulted in solid LFL occupancy and EBIT growth Operating • Group EBIT result impacted by investment and Greenfield ramp up performance • Consistent Greenfield occupancy growth trends providing con
Slide 14: Detailed financial impact and initiatives
Detailed financial impact and initiatives
Slide 15: Financial impact of COVID-19
Financial impact of COVID-19 G8 is implementing a number of initiatives to preserve cash during the COVID-19 impacted period Temporary COVID-19 measures to be implemented and assumptions • Under the ECECRP, fee revenue will be funded by the Government, paid weekly, at a fixed rate of 50% of fee leve
Slide 16: Illustrative financial impact of COVID-19
Illustrative financial impact of COVID-19 G8 is adopting prudent operating measures to minimise its cost base during the COVID-19 period Summary of pro-forma monthly revenue and key cash costs ($m) Commentary and assumptions • Wage costs Average monthly revenue1 Average monthly key cash costs (excl.
Slide 17: Equity Raising details
Equity Raising details
Slide 18: Equity Raising details
Equity Raising details • A fully underwritten Equity Raising of c.$301 million ("Equity Raising" or "Offer") via: − an Institutional Placement of $134 million; Offer size and − a 1 for 2.2 pro-rata accelerated non-renounceable entitlement offer of c.$167 million, comprising an Institutional Entitlem
Slide 19: Adjusted capital structure
Adjusted capital structure Leverage ratio reduces to 0.4x EBITDA on a CY19 adjusted basis • Proceeds raised from the fully underwritten Equity Raising will be used Impact of the to strengthen the balance sheet and provide flexibility, positioning G8 fully underwritten Adjusted capital strongly for a
Slide 20: Pro-forma balance sheet
Pro-forma balance sheet 31-Dec-19 Impact of the fully underwritten 31-Dec-19 $m (Audited) Equity Raising1 (Unaudited Pro-forma) Assets Cash 41 289 330 Other current & non-current assets 2,006 3 2,009 Total assets 2,047 292 2,339 Total liabilities 1,207 - 1,207 Net assets 840 292 1,132 Equity Share c
Slide 21: Offer timetable
Offer timetable Event Date Equity Raising announcement and Placement and Institutional Entitlement Offer opens Thursday, 9 April 2020 Placement and Institutional Entitlement Offer closes Thursday, 9 April 2020 Trading in G8 shares resumes on an ex-entitlement basis Tuesday, 14 April 2020 Record date
Slide 22: Conclusion
G8 Education Conclusion
Slide 23: Conclusion
Conclusion Early childhood G8 is taking action to Equity Raising Banking syndicates and 1 education is an 2 preserve cash and 3 4 positions G8 to lead landlord support essential service improve efficiency recovery • Government actions have • Optimising workforce • Banking syndicates are • Significan
Slide 24: Key Risks
5) G8 Education’ Key Risks
Slide 25: Key risks – introduction
Key risks – introduction This section describes the key business risks of investing in G8 together with the risks relating to participation in the Offer which may affect the value of G8 shares. It does not describe all the risks of an investment. Before investing in the Company, you should be aware
Slide 26: Key risks – business
Key risks – business • The ongoing COVID-19 pandemic has had a significant impact on the global and Australian economy and the ability of businesses, individuals, and governments to operate. Emergency powers and restrictions have been enacted at a State and Federal level in Australia which, amongst
Slide 27: Key risks – business (cont.)
Key risks – business (cont.) • The performance of the Group will continue to be influenced by the overall condition of the economy in Australia and any deterioration in employment or economic growth could adversely affect G8's business. It is currently expected that the COVID-19 pandemic will have a
Slide 28: Key risks – business (cont.)
Key risks – business (cont.) • The early learning sector remains competitive with new supply consistently entering the market. This environment creates both opportunities and Competition risks that may impact business performance within the local markets in which G8 operates. G8 may be adversely aff
Slide 29: Key risks – business (cont.)
Key risks – business (cont.) • G8's team members are key to the success of G8's business and it is critical that we can attract, retain and motivate appropriately skilled and trained team members that meet existing and future education and care needs. The operating and financial performance of the G
Slide 30: Key risks – other key risks
Key risks – other key risks • Investors should be aware that there are risks associated with any investments in equity capital. The value of the New Shares may rise above or fall below the Offer Price, depending on the financial position and operating performance of G8. Further, the price at which t
Slide 31: Key risks – other key risks (cont.)
Key risks – other key risks (cont.) • The Entitlement Offer and Placement are subject to a range of conditions and termination events set out in the underwriting agreement entered into by G8 and the Underwriters on 9 April 2020 (Underwriting Agreement). If certain conditions are not satisfied or cer
Slide 32: Key risks – other key risks (cont.)
Key risks – other key risks (cont.) − any of the offer documents include content that is misleading or deceptive or is an untrue statement of a material fact or omit a material fact necessary to make the statement not misleading; − G8 or a subsidiary representing 5% or more of the assets or earnings
Slide 33: Key risks – other key risks (cont.)
Key risks – other key risks (cont.) − trading in all securities quoted or listed on ASX, the London Stock Exchange or the New York Stock Exchange ("NYSE") is suspended or limited in a material respect for at least 1 day on which that exchange is open for trading, or a Level 3 “market-wide circuit br
Slide 34: Key risks – other key risks (cont.)
Key risks – other key risks (cont.) Shortfall • Although an Underwriter may procure other subscribers for any New Shares which it is required to subscribe for under the Underwriting Agreement (Shortfall Shares), the Underwriting Agreement provides that an Underwriter is not itself (or through its af
Slide 35: Selling Restrictions
5) G8 Education Selling Restrictions
Slide 36: Selling restrictions
Selling restrictions This document does not constitute an offer of New Shares of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or sold, in any country outside Australia except to
Slide 37: Selling restrictions (cont.)
Selling restrictions (cont.) Singapore This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other document or materials in connec