Gold Coast childcare giant G8 Education flags intention to remain dividend-paying company as it grapples with COVID challenge

Industry consolidation isn’t on G8 Education boss Gary Carroll’s mind as he steers the child care giant through the COVID-19 crisis.

INDUSTRY consolidation isn’t on G8 Education boss Gary Carroll’s mind as he steers the child care giant through the COVID-19 crisis.

Instead Mr Carroll, who presented his address by video link to investors with chairman Mark Johnson at today’s ‘virtual AGM’, is taking the short-term view.

G8 Education is the largest-listed childcare company in Australia with 475 centres operating under brands including Jellybeans and Pelicans. It frequently talks about leveraging its scale to attain a competitive advantage over other operators.

“I’m not sure at the moment (what will happen with consolidation) because there are so many unknowns,” he said.

G8 Education managing director Gary Carroll.

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“I think we are focused on the short term at this point in time.”

Mr Carroll said those ‘unknowns’ include what will happen to occupancy after the Federal Government’s transitional support package comes to an end on September 27.

The new package, which will see G8 centres receive a “transition payment” equal to 25 per cent of each centre’s fee levels prior to the coronavirus pandemic, replaces an earlier more generous package and comes as the end of free childcare approaches on July 12.

The government support was announced as occupancy levels plummeted at child care centres at the height of the COVID-19 pandemic when many parents decided to stop sending their children.

G8 occupancy hit a low of 30 per cent across its centres in Australia in April before recovering to 50 per cent following government support.

The company reacted through a $301 million capital raising to shore up liquidity and help support the operation of its centres.

Average attendance at G8 centres is just 53 per cent. Photo: iStock

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Occupancy now sits at 65 per cent although attendance is lower at 53 per cent.

“No one knows what is going to happen post-September in terms of occupancy,” he said.

“There are lot of things that could impact that. Parents paying again, unemployment rate etc, so we will be … tracking closely what happens between now and September and working in consultation with the government.”

However, Mr Carroll said he was confident government support would continue.

During today’s meeting, where all resolutions were passed, chairman Mark Johnson reiterated the company’s intention to resume paying dividends after earlier freezing payments.

“There is no plan to pay another dividend before June 2021,” he said.

“I don’t what to prejudge how things will be at that point in time but certainly the broad intention is that we will still be a dividend paying company. It is just a question of what we can afford and what is right for the circumstances at that point in time.”

Shares closed today down 2 per cent at 93c.