G8 Education (GEM) H1 2025 earnings summary

Executive summary

• Statutory NPAT rose 12.4% to $22.5 million for H1 2025, despite a 3.7% revenue decline driven by lower occupancy and divestments.

• Strong cost management, procurement initiatives, and margin expansion offset revenue pressures.

• Maintained a conservative balance sheet with strong liquidity and low leverage, supporting ongoing dividends and share buybacks.

• 93.7%–94% of centres rated as 'Exceeding' or 'Meeting' NQS, above sector average; employee engagement and retention improved.

• Operated 399 centres serving 36,000 children weekly, with a focus on safety, quality, and operational excellence.

Financial highlights

• Group revenue was $464.7 million, down 3.5%–3.7% year-over-year due to lower occupancy and divestments.

• Operating EBIT increased 2.8% to $40.5 million; statutory NPAT up 12.4% to $22.5 million; EPS up 16.2% to 2.9 cents.

• Operating cash flow was $85.4 million, up 27.5% year-over-year; cash conversion at 139%.

• Fully franked interim dividend of 2 cents per share (69% of NPAT) declared; on-market share buyback of up to 5% of issued capital announced.

• Net debt at $102.2 million, leverage 0.7x–0.9x, gearing ratio 10%–13%.

Outlook and guidance

• Full-year earnings expected to be similar to CY24, with continued focus on cost control, occupancy growth, and network optimisation.

• Capex guidance for CY25 is $40–45 million; further on-market buyback of up to 5% of issued capital from mid-September 2025.

• Macro environment remains challenging, but medium-term indicators such as interest rates, CPI, and birth rates are expected to improve demand.

• Strategic initiatives underway to improve occupancy and service quality, with tailored support for underperforming centres.

• Government reforms and policy changes, including the abolition of the activity test in CY26, are expected to support future occupancy.