Ann: Half Yearly Report and Accounts-GEM.AX, page-20

From Marcus Today just now....he's praying like the rest of us....somewhat re-assuring....

G8 Education (GEM) -19% disappointing results this morning in some respects. At least the market has taken it badly with an extreme knee jerk reaction to 264c down 27% early.
We hold the stock in our MT Growth portfolio and are a little disappointed in the reaction to the results, with shares down as much as 29% presumably on the 1H 10% rise in wage costs. Some of this rise is due to the increased ratio of staff to children. The yield is at now around 9.5% which is very attractive. Unfortunately, there was no mention of acquisitions - much of the source of growth - in the presentation. No guidance given either except on the wage increase being significantly reduced in the second quarter. The second half is a seasonally strong one and the company is positive on the outlook.
Our View -We will await to see how the analyst briefing goes. It is hard to see growth without acquisition although existing centres are being refreshed and the standards in the recently acquired centres are being improved too. Hopefully the wage pressures from increased ratios will abate. We will continue to hold for a second half improvement, reduced staffing costs and the yield. We would expect the stock price to rally as the results are digested.