Gold Coast childcare giant G8 Education looks to cut down on its 23 brands to deliver clear message to parents

Childcare giant G8 Education is set to make dramatic changes to its vast number of brands. The Coast company made the announcement after its annual meeting.

CHILDCARE giant G8 Education will look to slash the vast number of brands it uses in an effort to deliver a clear message to families about what it stands for in the highly-competitive industry.

Yesterday shareholders at the annual meeting at Mantra on View in Surfers Paradise heard about the company’s plans to drive an offer differentiated from competitors in the crowded field.

The Gary Carroll-led G8 has struggled recently with falling occupancy at its 502 centres in Australia amid an industry-wide oversupply of childcare outlets.

Its share price crashed 23 per cent in one day last year after the company warned it was not expecting market conditions to improve until mid-to-late this year.

G8 Education managing director Gary Carroll pictured at the Mantra on View hotel in Surfers Paradise for the AGM on April 17, 2019. Photo: Scott Powick

Pretax earnings for last calendar year fell by 12.7 per cent to $136.3 million.

Mr Carroll told shareholders the company will look to finalise the “optimal” number of brands it will use by the middle of this year.

G8 has 23 brands, including Sandcastles, Great Beginnings, Penguin Childcare, Headstart Early Learning Centres, Pelican Childcare, Kindy Patch Kids, Kinder Haven and others.

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“We do not know the exact number (we will end up with) but it will be a number a lot less than 24,” Mr Carroll said after the meeting.

“The intention behind the brand strategy is to be really clear about what our brands stand for,” he said.

“So what they are delivering for families and children in terms of a physical environment, curriculum and other value-added services.”

G8 Education is hoping to differentiate its offering more from competitors. Photo: iStock

He said if it can provide a consistent experience across its centres then it can market those more clearly.

Mr Carroll sounded an upbeat note on the childcare sector during the meeting.

He said that growth in occupancy this year is at the higher end of the forecast of between 1 and 2 per cent.

Mr Carroll said the major part of profit growth will come in the second half based on strategic initiatives, $3 million in investment in new centres and a ramp up in “greenfield” or newly-built childcare centres.

Gold Coast resident Ernest Astbrink, who has held stock in G8 since it was listed in 2007, said he was disappointed with the performance of the stock, which dropped below $2 last year.

However, Mr Astbrink said it appeared the company is now on the right trajectory.

“The stock price is a little bit better now,” he said. “It appears to have stabilised a bit.”

Another shareholder, who did not want to be named, said she is concerned that the company is paying dividends that are too high.

“Are they paying out more than they are bringing in?” she asked. “We need to know the collateral for the loans is not being used to pay out the debt.”

G8 paid out $48.1 million in dividends to shareholders last year.

She said the situation has improved from two years ago when there were problems with the board.

Greg Thompson, an executive with Singapore-based United Overseas Bank, which participated in the $500 million syndicated bank debt financing last year, said the bank had previously opted not to commit any financing to the company.

“We looked at it twice and knocked it back because of the previous management,” he said. “With the current management structure we are a lot more comfortable.”

He said the childcare sector remains in a strong position because of bipartisan political support and new policies that could lower the eligible age for children to receive subsidies.

Shares closed down 5.5 per cent, or 18c, at $3.06.