G8 EDUCATION SHARES SLIP DESPITE RECORD YEAR
22 February 2016, Written by Jenna Rathbone
SHARES in G8 Education (ASX:GEM) fell as much as 8.8 per cent this morning, despite the Gold Coast-based company releasing a record full-year profit result for calendar 2015.
G8 closed the year with a net profit of $88.6 million, up 68 per cent on C14, aided by a 44 per cent boost in revenue to $706.2 million.
This result comes on the back of an eventful year for the childcare operator, which included the failed takeover bid of Affinity Education Group, which would have added 161 childcare centres to G8's portfolio.
Instead, the company acquired 44 centres in 2015, which brings its total portfolio to 489 company owned centres in Australia and Singapore, representing more than 35,000 childcare spaces.
The results follow a period of significant growth in 2014, when the company added 203 childcare centres and boosted underlying profit by 88 per cent to $60.6 million.
G8 managing director Chris Scott (pictured left) says 2015 has been a year where priorities have been more evenly spread between growth, integration and service provision.
"The integration of these significant childcare acquisitions combined with strong operational organic growth has delivered underlying earnings before interest and tax of $145.4 million, which is up 45 per cent on the prior year," says Scott.
"Our ability to integrate acquired centres in a seamless, efficient manner has long been one of our core competencies and I am pleased to report that 2015 was a year of real achievement in this area.
"Our acquisition strategy continues to focus on consolidation opportunities in and around metropolitan areas where supply and demand dynamics combined with attractive pricing create opportunities for earnings accretive acquisitions."
During 2016, the company aims to generate double-digit earnings per share growth and acquire between $50 million and $150 million in centre acquisitions.
"The sector continues to exhibit high degrees of fragmentation coupled with favourable underlying fundamentals," says Scott.
"This combined with our extensive investment in the foundation of our business will ensure that the group is positioned to deliver on its commitment to its children, families and communities as well as its shareholders in the year ahead."
G8 declared a quarterly dividend of 6c per share fully franked, which was paid on 11 January.
Shares are currently sitting around $3.22, but fell as low as $3.11 during early trading, after finishing last week at $3.41. More than 5.4 million shares changed hands.
Author: Jenna Rathbone
About: Jenna Rathbone is a Queensland-based journalist who writes on a range of issues including business and property affairs and social issues.Connect via: Twitter