Very 1-sided the writer's agenda is pretty obvious. Concerning margins it might interest you to know that gross margins are actually improving: 16.3% in CY12 compared to 17.9% in CY13. G8's organic growth strategy is based on increasing the number of places in each centre and maximising occupancy rates, which have gone from the low 70's to 84% in recent figures. Granted this strategy will slow down in the mid 90s% or so but it will take the business 3-5+ years to reach that level. The main differences between G8 and ABC Learning are that G8 funds its acquisitions with debt and equity and ensures the strength of its balance sheet, something that the author fails to understand. Interest payments are also very benign at current levels with acquisitions delivering more than enough free cash flow to easily accommodate for this.
GEM Price at posting:
$4.41 Sentiment: LT Buy Disclosure: Held
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