G8 Education daily fees to remain at $126 a day, as it announces $45.7m net profit

The child care provider’s better-than-expected result, combined with an on-market share buyback worth about $100m, sent the stock to its highest point in more than two years.

G8 Education chief executive Gary Carroll said he was “pleased with the result’’ despite the challenges.

One of Australia’s biggest childcare and early education providers has returned to profitability but warned that near-term Covid headwinds remain a threat.

G8 Education announced on Tuesday that it had generated a net profit of $45.7m in the last calendar year, a significant turnaround from the $189m loss it suffered in 2020.

The better-than-expected result, combined with an on-market share buyback worth about $100m, sent the stock 5 per cent higher to close at $1.275, its highest point in more than two years.

It also noted that nearly $38m had been directed to 18,677 current or former staff who had been underpaid. Settlement remains outstanding for another 7400 workers.

Average daily fees of $126 per day per child will remain unchanged for 2022, a spokeswoman said.

The Gold Coast-based company revealed that operating revenue of $866m and an occupancy rate of 71 per cent were both improvements over the previous year but down from 2019.

Pandemic movement restrictions heavily impacted occupancy in the second half of the year for the group’s 448 centres nationwide, which provide services for more than 50,000 children.

Chief executive Gary Carroll said he was “pleased with the result’’ despite the challenges created by Covid.

“Occupancy has been impacted right across the sector and this was particularly felt in the second half as a result of an escalating Covid-19 environment,’’ Mr Carroll said.

“It has been encouraging to see our enquiry pipeline is strong and great momentum in the lead indicators for occupancy…positioning G8 well in the Covid-19 recovery period. The strength of our balance sheet provided us with resilience during the period.’’

Investors will received a fully-franked 3 cents per share dividend in April.

The company provided no profit guidance for the year ahead as it flagged a number of hurdles that have already flared up in the new year.

It cited an “unprecedented’ increase in closures during January without corresponding business continuity payment support, as well as isolation requirements triggering lower attendances and centre closures.

G8 also flagged delayed enrolments for softer occupancy levels and a shortage of staff, resulting in attraction and retention challenges.

But Mr Carroll said several “strategic initiatives’’ are at aimed at blunting the impact of these problems.

“Our improvement program has continued to deliver strong financial and quality performance results, reinforcing our investment in the program,’’ he said.

“Our network optimisation program is progressing and we have put in place a comprehensive program to attract, retain and develop our people in what has been a difficult people market across the sector.’’

G8 said it would commit $65m for capital expenditures this year, up from $55m. That will include $10m in property works carried over from 2021 which had to be postponed as a result of lockdowns.