G8 Education Overview 2 FY12 Results Presentation Corporate Snapshot Capital Structure 1 Year Share Price Chart Directors & Senior Management Substantial shareholders 0 20 40 60 80

G8 Education ‐ Overview

G8 Education Limited (ASX:GEM)25 February 2013

For

per

sona

l use

onl

y

Page 2 FY12 Results Presentation

Corporate Snapshot

Capital Structure

1 Year Share Price Chart

Directors & Senior Management

Substantial shareholders

0

20

40

60

80

100

120

140

160

180

Jan‐12 Mar‐12 May‐12 Jul‐12 Aug‐12 Oct‐12 Dec‐12

Jenny Hutson Chairperson

Chris Scott Managing Director

Andrew Kemp Non‐Executive Director

Brian Bailison Non‐Executive Director

Matthew Reynolds Non‐Executive Director

Susan Forrester Non‐Executive Director

Chris Sacre Chief Financial Officer

Jae Fraser General Manager Operations

Substantial Shareholder Shares % Holding

Perpetual Limited 29,889,139 11.03%

Wallace Infrastructure 24,000,000 8.88%

Northcape Capital 17,149,433 6.33%

Ordinary Shares 270.9 million

Options exercisable at $1.27 0.2 million

Shares price 22 February 2013 $1. 785

Market capitalisation 484 million

Cash (as at 31/12/12) $21.8 million

Drawn debt (as at 31/12/12) $50 million

Senior debt facility $50 million

For

per

sona

l use

onl

y


G8’s Vision & Mission

Quality Education & Care

To nurture and develop children’s minds, social skills and confidence in a safe and stimulating

environment

EmployeesTo commit to

employee development and a rewarding culture

which will ensure an engaged and driven

workforce

CommunityTo be responsive to local families and

deliver upon community

expectations

ProfitabilityTo grow and derive

value for shareholders through innovative services,

systems and management

Our mission is to be Australasia’s leading provider of high quality, developmental and educational child care services. We aim to achieve this through:• A portfolio of outstanding early childhood education brands

• A focus on the importance of early childhood education

• By making good centres great through focusing on outstanding early childhood education management

For

per

sona

l use

onl

y


FY12 Audited ResultsConsolidated

Year end 31 December2012

($’000)

2011

($’000) Variance (%)Revenue 179,991 142,899 26%Expenses (150,584) (118,017) 28%Earnings Before Interest and Tax 29,407 24,882 18%Interest (2,539) (2,188) 16%Net Profit Before Tax 26,868 22,694 18%Net Profit After Tax 19,209 17,250 11%Less non‐recurring abnormal transactions:

Deferred consideration not paid (954) (4,299)Legal expenses in relation to the Singapore court case 535 956Share based payment expense 250 ‐Stamp duty 494 ‐Write off of borrowing costs on refinance 196 ‐

Underlying Net Profit After Tax 19,730 13,907 42%Underlying EPS (cents per share) 9.20 7.48 23%Underlying Earnings Before Interest and Tax 30,012 21,539 39%Gearing ratio 24% 32%

Source: Annual Report lodged 25 February 2013

Operating cashflow remains strong at $20.0m for CY12 which represents 101% of underlying NPAT at $19.7m.

For

per

sona

l use

onl

y


Financial performance

• From 2010 to 2012 G8 Education Limited achieved an underlying CAGR for EBIT and Revenue of 54% and 39% respectively.

• Underlying revenue increased by 29% from $138m in FY11 to $179m in FY12.

• Underlying EBIT increased 39% from $21.9m in FY11 to $30.0m FY12.

• Like for like revenue and EBIT increased 10% and 11 % respectively from FY11 to FY12 across 118 centres.

$23.3

$60.7

$78.0

$1.6

$7.3

$10.1

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$0.0$10.0$20.0$30.0$40.0$50.0$60.0$70.0$80.0$90.0

1H10 1H11 1H12

Group Financial Performance ‐ First Half Year Analysis

Underlying Revenue ($m) Underlying EBIT ($m)

$43.1

$77.3

$101.0

$6.6

$14.2

$19.9

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

2H10 2H11 2H12

Group Financial Performance ‐ Second Half Year Analysis

Underlying Revenue ($m) Underlying EBIT ($m)

For

per

sona

l use

onl

y


Financial performance

• Return on Invested Capital continues to increase. It is currently 24.8% based on the adjusted equity value as at 31 December 2012.

• The fair value adjustments shown opposite represent accounting adjustments to equity based on the difference in the value of the shares taken by vendors at settlement as payment of the purchase price compared to the original share value agreed at the time of contract. This is a result of the share price change between contract date and the settlement date.

FY12 FY11Equity as at 31 December 2012 182,307,582 115,164,091

Fair value adjustments to equity due to AASB 3:Business Combinations 24,026,790 23,835,853 Adjust equity for fair value 158,280,792 91,328,238 Add Net Debt 27,462,272 22,232,372

185,743,064 113,560,610

Average forecast EBIT for FY13 as published by five broking houses 46,000,000 27,000,000

Return on Invested Capital 24.8% 23.8%

For

per

sona

l use

onl

y


Financial Margin analysis

• Group EBIT margin is affected by seasonal fluctuations in occupancy from January to June compared with July to December due to the transition of children from Kindergarten to primary school in January each year.

• Underlying EBIT margins have improved through a combination of organic improvements and high quality acquisitions.

• Underlying EBIT and NPAT margin have increased by 8% and 10% respectively in FY12 compared to FY11

3%

7%8%

7%

12%13%

0%

2%

4%

6%

8%

10%

12%

14%

1H10 1H11 1H12

Group Margin Analysis ‐ First Half

Underlying NPAT margin Underlying EBIT margin

9%12% 13%

15%

18% 20%

0%

5%

10%

15%

20%

25%

2H10A 2H11A 2H12A

Group Margin Analysis ‐ Second Half

Underlying NPAT margin Underlying EBIT margin

For

per

sona

l use

onl

y


Centre Portfolio

• G8 Education has continued to make earnings per share accretive acquisitions throughout 2012.

• The group acquired 33 childcare centres during 2012 and sold one centre.

• There are 7 other centres that the group will consider divesting in 2013.

• G8 Education Limited represents approximately 3% of the long day care childcare sector in Australia . The acquisition opportunities remain strong.

77 88 132 135 136

167

18 18 18

18

1H10A 2H10A 1H11A 2H11A 1H12A 2H12A

Centre Portfolio

Australian centres Singpore centres

39

12

63

9 2

31

‐

‐1 ‐1

‐6 ‐1

‐

1H10A 2H10A 1H11A 2H11A 1H12A 2H12A

Change In Portfolio

Additions Disposals

For

per

sona

l use

onl

y


Occupancy

• Average portfolio occupancy increased year on year by 2 full percentage points in FY11 (for example: 78% to 80%) and a further 3% year on year in FY12.

• The portfolio peak occupancy is in November each year. It increased year on year by 4% in FY11 and a further 2% year on year in FY12.

• Like for like occupancy across 118 child care centres has increased by 2.2% in 1H11 v 1H12 and 0.5% in 2H11 v 2H12

FY12

FY11

FY10

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Occupancy

Percen

tage

For

per

sona

l use

onl

y


Significant Events post 31 December 12

• G8 Education Limited raised $35m through a placement to institutional and sophisticated investors resulting in the issue of 24,137,931 shares. The placement was completed on 13 February 2013 at $1.45 per share.

• Contracted to acquire 12 childcare centres for $18.7m which represents 4 times anticipated EBIT for the 12 months post completion. The purchase price is structured with $16.6m paid at settlement and a further payment of $2.1m conditional upon centre based EBIT targets being achieved in the 12 months post settlement. The centres are located in New South Wales and Victoria.

• A 25% increase in the dividend from 8 cents per annum fully franked to 10 cents per annum fully franked was announced effective from the March 2013 quarterly dividend.

For

per

sona

l use

onl

y


Operational Updates

• At 31 December 2012 the group had 13,421 licenced places per day and employed 4,204 employees.

• The Australian centres are currently in the process of being assessed and rated under the new National Quality Standards. 24 Centres have currently been assessed across 169 Quality Areas.

• The group employee retention rate for permanent staff improved 5% when compared to 2011. Retention rates are well above the industry average.

• Under the National Quality Standards each childcare centre must have a bachelor qualified teacher by 2014. G8 Education currently has 157 teachers across 99 centres and continues to recruit bachelor qualified teachers.

• The continued focus on providing a quality kindergarten curriculum has resulted in 43 centres being approved by the relevant state authority to receive kindergarten funding with a further 31 centres pre approved. Funding for the preapproved sites will commence upon recruitment of a bachelor qualified teacher. This funding is available in QLD, VIC and SA. The funding received has been applied to employ quality teachers, improve existing facilities and development of existing curriculum framework.

For

per

sona

l use

onl

y


Group Structure ‐ Australia

Chris SacreChief Operating & Financial Officer/Company Secretary

15 operations managers

167 centre directors

More than 4,000 centre staff

Over 13,400 Licenced places

Jae FraserGM Operations

Melanie ExcellSenior Operations Manager

Angela KarzonMarketing Manager

Emily MacDonaldFinancial Controller

Jessica BattersbyHR Manager

Matthew Reynolds

Non‐Executive Director

Brian BailisonNon‐Executive

Director

Andrew KempNon‐Executive

Director

Chris ScottManaging Director

Jenny HutsonChairperson

Susan ForresterNon‐Executive

Director

Kirsten BerrySenior Operations Manager

Glenn DaviesIT Manager

For

per

sona

l use

onl

y


THANK YOU

Questions?

For

per

sona

l use

onl

y

Documents

G8 Education Overview 2 FY12 Results Presentation Corporate Snapshot Capital Structure 1 Year Share Price Chart Directors & Senior Management Substantial shareholders 0 20 40 60 80