G8 HALT SEEN AS PRELUDE TO INVESTOR WINDFALL

Written on the 2 December 2014 by Nick Nichols

G8 HALT SEEN AS PRELUDE TO INVESTOR WINDFALL

SHARES in burgeoning childcare centre operator G8 Education (ASX: GEM) ended their month-long slide today ahead of an update to the company’s profit forecast and its dividend payment expected later this week.

G8 shares have been placed in a trading halt, but more than 1.3 million changed hands this morning in the lead-up to the halt.

The shares jumped 3.1 per cent, or 13c, to $4.26 by the early afternoon as the ASX 200 edged 1.3 per cent higher.

G8 shares have fallen from above $5 at the end of October, and a record high of $5.63 in September.

G8 says the trading halt was called after a board meeting this morning at the company’s Varsity Lakes headquarters.

It comes ahead of an update to G8’s full-year profit result to the end of December, and after a highly acquisitive year.

The company, headed by Chris Scott (pictured left with Jae Fraser and Chris Sacre), settled the purchase of 19 childcare centres in October, adding 1301 childcare places to its portfolio.

G8 now has 435 childcare centres following those acquisitions, and more than 30,100 childcare places in Australia. It is still to settle on another 24, due in January
This time last year G8 had just 233 childcare centres and 17,538 childcare places.

G8 posted a record $31.1 million profit in the 12 months to the end of December 2013, up 62 per cent from a year earlier.

The near doubling of the company’s childcare portfolio over the past year is expected to lead to a near doubling of its net profit, as occupancies at the centres continue to hold firm around 84 per cent.

The quarterly dividend at the end of last year was 3.5c a share, rising to 5c in September. Market analysts are expecting an updated quarterly dividend to reflect the forecast profit surge, with some tipping a 6c quarterly dividend.

G8 Education traditionally does not issue a profit guidance, but has consistently landed profit above consensus forecasts by analysts.

The company’s acquisition program this year has been aided by $340 million in funds raised from bond issues.

G8 Education’s shares are expected to resume trading on Thursday morning with the release of its profit guidance.


Author: Nick Nichols

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