G8 takes $118m hit
ALMOST $118 million was wiped from the value of Gold Coast’s largest-listed company yesterday as shareholders dumped their stakes in the early education juggernaut which continues to struggle with an oversupply of childcare places.
Shares in G8 Education were down 7.2 per cent on closing, reaching a 52-week low of $2.23 after opening at $2.49.
Shareholders punished the Varsity Lakes-based company on the day of its annual general meeting, where chairman Mark Johnson and managing director Gary Carroll blamed industry conditions for poor occupancy, revenue and profits.
The plunge follows another in December, when $458 million was sliced from G8’s market capitalisation after it cut its earnings forecast.
Since October, when shares were trading at $4.71, G8’s value has been slashed by $1.1 billion.
Mr Carroll said the company’s previous earnings-pershare target of 40 cents per share by December 31, 2019 was “no longer achievable”.
The company will provide a more specific three-year EPS target when it releases its half-year results in August.
Mr Johnson told shareholders that record high supply had impacted occupancy, but changes in Federal rebates to families provided hope of improvement.
Despite the challenges, the group reported in February CY17 pre-tax earnings of $156 million and net profit of $81 million, delivering franked dividends of $77 million.
“The new Government funding package is also expected to drive demand in the sector from July 2018, with the demand/supply environment to be much more in balance in 2019,” Mr Johnson said. “With the investments that have been made over the past two years, we feel strongly that we are positioned well to take advantage of any opportunities that may arise while maintaining our high levels of service provision to Australia’s communities.
“Recent share price performance has been disappointing. While not something the board and management team can control, the attitude to the sector underplays, in our view, the positive medium and longterm industry fundamentals and the investments we have made to capitalise on better times.”