I think the question should be whether G8 will maintain its rate of acquisitions, not could maintain its rate of acquisitions.
Years ago there were many centres running year long waiting lists. Today, because of the oversupply of centres very few are lucky enough to run a waiting list.
Under utilised centres, would normally be those with poor reputations, great potential for growth, if the location was good.
Strategy 101, (3) acquisitions, yes, they buy centres, but are they utilising every opportunity to improve that business (1), utilisation, doesn't necessarily require adjustments to regulations for that centre. There are many ways to improve delivery of service.
Case study : G8 operate the B.K. group, ten centres, operational hours vary between 10.5 hours per day to 12 hours per day. None of those centres are full. The two that caught my eye were a thirty six place and a thirty place one. Both of them, despite low licensed numbers have vacancies every day, they also operate shorter hours than the rest of the group and their fees are higher than the other centres in their area. When the new regulations regarding the hiring of degree qualified teachers for smaller centres was introduced, small centres, like the two mentioned, would have seen a large increase in staffing costs. They would have come as part of the group, but why keep them? Sell them to an owner operator and concentrate on high occupancy, high returning centres. I have said before, the G8 operation is now so large, it needs to operate as groups within groups.
If the departing CFO/G8 are looking at the development of premium new centres I see that as a positive.
They really do need to focus on improving occupancy levels, without gimmicks. Many options and opportunities within their centres for increasing occupancy levels.
For those committed investors in G8, you can view all of their centres by visiting www.acecqa.gov.au. Click on National Registers, type in G8 or approval number PR-00000898. All of this information is publicly available.
IMO & DYOR
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