when is too low is too low?, page-56

For those who are fairly new to G8, the business is largely different from other education providers and current environment provides positive and negative aspects to the stock.

- The business largely leases the properties it operates, meaning the value of the business is in the services offered, not ground capital.

- The business has been downscaling, which appears to have been perceived as a negative by ASX buyers and sellers. This has been through a combination of center sales and closures.

- Dividend payments are among the best in the market and well covered by earnings, simply because ground capital costs are not funded by the business.

- Increasing soft cost related to increased salaries have affected profit margins.

My personal opinion:

- Ground rents/lease costs are offset against tax, increasing profit margins.
It also gives the business an ability to scale up or down much faster than its' competitors, allowing it to respond to population, economic and government policy movements much faster than other childcare providers.

- The downscaling of centers has provided one-off benefits to the bottom line of the business.

- There is no indication and no guidance for substantial change in dividend payout reduction.

- My personal firm belief is that by investing in better quality and well trained staff is a positive. To be able to tell parents that internal and ongoing training of staff is ongoing, it is telling parents the business cares and is not simply a factory line environment. We need to treasure our staff, retaining the good and moving any underperformed out to our competitors.

I stand to be corrected of any of the above is incorrect, but agree the company is a great long term investment in myself and in Australia.