G8 Education’s first-half profit has fallen by 20 per cent as a result of higher costs but the childcare centre operator says occupancy rates are climbing.
The company says profit for the six months to June 30 fell by $4.8 million to $19 million following the adoption of a new leases accounting standard in January, which its says contributed to an 11.2 per cent increase in total costs to $403 million.
Total revenue for the period grew 8.6 per cent to $430.8 million as average like-for-like occupancy rates increased by 1.5 per cent.
G8 said this was driven by its new customer engagement centre, group‐specific initiatives and improved affordability for parents via the federal government’s Child Care Subsidy.
Underlying earnings of $51.6 million for the half was in line with consensus forecasts and 7.0 per cent above the prior corresponding period.
The company has lifted its interim dividend by 0.25 cents to a fully franked 4.75 cents per share.
The group said it was on track to complete the refurbishment of 80 centres in 2019 and would continue to evaluate opportunities to rationalise underperforming centres, with eight centres closed during the period and a further five identified for closure at lease expiry in the second half of the 2019 year.
“As previously outlined, G8’s network modelling suggests there is capacity to continue to grow the centre network without cannibalisation,” G8 said in its release to the ASX.
“We maintain a rigorous approach to portfolio analysis as part of our commitment to providing the best quality experience for our families.”
Shares in the company were worth $2.74 before the open of markets on Monday, down 3.18 per cent so far in 2019, but up 26 per cent from $2.02 a year ago.