G8 Education (GEM) H2 2025 earnings summary

Executive summary

• Provided early childhood education to 36,000 children across 395 centers, maintaining a strong focus on quality, safety, and team capability, with improved team retention and network quality despite challenging market conditions.

• 2025 was challenging due to affordability pressures, lower demand from declining birth rates, increased sector supply, and sector confidence issues, but operational execution and safety focus supported resilience.

• 95% of centers met or exceeded National Quality Standard; family Net Promoter Score reached its highest since 2023.

• Team retention improved to 79.5%, up 2.5 percentage points year-over-year.

• Disciplined cost management and prudent capital allocation helped maintain EBIT margin stability, with a conservative balance sheet and ongoing network optimisation.

Financial highlights

• Group operating revenue was AUD 946.9 million, down 7% year-over-year due to lower occupancy and fewer operating centers; operating EBIT was AUD 93.3 million, down 18.9% year-over-year.

• Operating NPAT was AUD 59.0 million, down 18.4% year-over-year; reported NPAT was a loss of AUD 303.3 million due to a non-cash goodwill impairment of ~AUD 350 million.

• Group occupancy for 2025 was 65.8%, down 4.9 percentage points from 2024.

• Fully franked total dividend of AUD 0.02 per share paid (34% of NPAT, excluding impairment); no final dividend declared.

• Share buyback of 38.4 million shares (AUD 42.6 million) completed during the year.

Outlook and guidance

• Near-term conditions remain challenging with continued cost of living pressures, low birth rates, inflation, and regulatory changes impacting occupancy and costs; no material relief expected soon.

• No final dividend for FY25; share buyback paused.

• CapEx for CY 2026 expected to be around AUD 50 million.

• Medium to long-term sector outlook remains positive, with government policy support, initiatives like the three-day guarantee, and expected fertility rate recovery.