We should see acquisition settlements this week and hopefully the aggressive accumulation of acquisitions becomes a thing of the past.
There are many avenues that G8 could explore to improve it's growth. IMO, one area that needs to be addressed, is for management to reevaluate the profitability of some centres. I mentioned in a previous post the key licensed places you should look for when purchasing centres. Thirty nine, fifty nine, seventy nine, eighty plus are crucial to maximising the benefit of employing early childhood bachelor qualified educators.
Bachelor qualified educators are the highest paid staff members in any centre. Between 30-39 places you require one, between 40-59 you require 2, between 60-79 you require 3 and 80+ you require 4 to be included in your staff to child ratios. You must, therefore ensure that your licensed capacity is as close as possible to the maximum number of licensed places required for university trained staff as possible.
Prior to the introduction of the The National Quality Framework centres operating with under 29 placements did not require a university trained educator, now a centre with fewer than 25 licensed places must have a university trained educator 20% of the time and centres between 25-29 placements must have one 60% of the time. A large expense for smaller centres to carry. For example a 49 place centre means that you are carrying the cost of two early childhood university trained educators with a shortfall in placement of ten licensed places.
G8 would have acquired some centres similar to those mentioned above, they may have been purchased as part of a group. IMO if G8 cannot reconfigure floor space within a centre to maximise ratios with outgoing employee costs then serious consideration must be given to selling these centres. I also suspect that the low occupancy levels of some of those smaller centres is significantly affecting the occupancy level reporting.
Hopefully the new chairman will not be as dismissive with shareholders as his predecessor. Shareholders need to hear of plans to pay down debt, maximise profits, increase occupancy and solutions to regulatory changes.
Nice to see a change of notice for directors holdings last week. Think that may be a message of renewed confidence with the recent board changes.
GEM Price at posting:
$3.61 Sentiment: None Disclosure: Held
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