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G8 Education Posts 16 Per Cent Revenue Growth; NPAT Impacted by Amortisation

G8 Education Posts 16 Per Cent Revenue Growth; NPAT Impacted by Amortisation
Revenue for the half year was $361.2 million compared to $310.9 million last year and Underlying EBITDA rose 11.4 per cent or $6.5 million to $63.5 million.
Aug 16, 2016 By Simon Herrmann Tags: GEM, Earnings

Childcare centre operator G8 Education (ASX:GEM) released financial results for the first half of 2016 today, showing a 16 per cent increase in revenue and underlying EBIT growth of 8.5 per cent.

Growth in Underlying Result, NPAT Impacted by Amortisation Charges

Revenue for the half year was $361.2 million compared to $310.9 million last year and Underlying EBITDA rose 11.4 per cent or $6.5 million to $63.5 million. Underlying NPAT increased 1.6 per cent $32 million.

The company stated that during the half year investments in staff training and centre refurbishment was substantially offset by savings in other areas. Office costs have increased due to additional board and senior executive appointments. Acquisitions are performing “in line with expectations” having contributed $8.4 million in EBIT.

The statutory result was impacted by $10million of borrowing costs being amortised due to refinancing of S$260 million corporate notes. G8 Education raised S$270 million of Senior Unsecured Notes as part of the company’s S$600 million Multicurrency Issuance Program which provides the company with liquidity over the upcoming three years.

23 childcare centres that were acquired in second half of 2015 contributed to the result as well as 9 acquisitions during the first half of 2016. As at 30 June 2016 G8 Education operated 478 centres in Australia and 20 centres in Singapore. The total capacity of all licenced centres was over 37,000 places.

G8 Education aims to grow via acquisitions as well as organically with a main focus being the acquisition of high quality child care centres in attractive locations to enhance the group’s portfolio. The company pays a quarterly dividend yielding over 7 per cent.

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Simon Herrmann Author: Simon Herrmann Aug 16, 2016

Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.

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