1. Many thanks to the board for agreeing to the request to disclose the proxy position to the ASX along with the formal addresses ahead of the AGM. As a bonus, you've also voluntarily thrown in the shareholder voting numbers. Well down for the strong support for all resolutions and are you prepared to also publish a full transcript of today's AGM debate, like you did last year?
Answer: Chair David Foster: Yes, it will be published as per last year.
2. What is the G8 Education policy position on making political donations and will we be making any related to the current Federal election? Given that we do build child care centres, are we classified as a property developer and therefore banned from making political donations in some states.
Answer: Chair David Foster: We don't make political donations and haven't historically. We, as Gary alluded to, have a good relationship with both sides of government and we're collaboratively working on policy. The second topic, we aren't a property developer. We obviously engage with people who do develop properties, potentially on our behalf for greenfield expansion. But we ourselves are not property developers.
3. I'm a City of Manningham councillor in Melbourne's eastern suburbs and we own 25 kindergartens, all of which are by run by independent not for profit community committees. Are we competitors to G8 Education and how prominent are councils across Australia in the childcare sector? Do you have any views on how competent the local government sector are when it comes building, maintaining and running kindergartens and child care centres?
Answer: David Foster: Well, I think by the nature the structure of the industry is quite a fragmented one. There are a lot of participants, whether they be public, private or government related entities. Certainly it is a community-based business that we're in and we do compete on a local basis. So in that context, yes, they certainly are a relevant participant in the sector. I probably couldn't provide a specific view on the quality of the ones called out. But again, because of that fragmentation, as we do with our own portfolio, have a range of performance right across the sector.
4. Camp Australia is the largest external provider of after-school care programs and is owned by private equity firm Bain. It has recently gone broke, defaulting on its debt which is for sale at less than 50c in the dollar. Is this a business that we have looked at buying or that competes with us? Are there any implications for our sector from the Camp Australia collapse?
Answer: David Foster: Obviously that's a very targeted business focused on after school and holiday care. We have a very small number of centres that do provide that as a small part of the services. But at our heart we're a long day care business. So not a big component of our particular business. Probably the second part of the question. Do we look at those type of assets? Well I think we've got a reasonable example that from a strategic point of view we do look at a number of opportunities on an ongoing basis in adjacent areas relevant to our core business. A good example of that is the investment that we've made in Leor and Kiddo's which are both related to childcare. Leor specifically being focused on home care. So we do look broadly across the market but not specifically at Camp. It doesn't have any real relevance and a bearing on our industry.
5. We received $103.2 million in JobKeeper, which put us in the top 10 for listed companies. Could David and the other candidates for election today comment on whether the board had any discussions about repaying any of this figure given that the scheme is now regarded as having been widely rorted, with $38 billion of the $89 billion going to applicants which didn't qualify under the rules of the scheme.
Answer: David Foster: Thank you. Thanks again for the question, Stephen. That question relates to the FY20 financial year and I guess signifies the importance around - and speed at which the government introduced measures albeit for a relatively short period of time to sustain the viability of the industry. Ours, as a sort of an essential industry, is very much impacted, whether it be through families, our staff and this ability to keep the doors open, keep staff employed was absolutely critical. JobKeeper itself was only a very short term and interim measure before recognising that importance of the sector - sector-wide measures were introduced and support that was specific and tailored to the industry itself which carried on. As we then tipped into financial year '21, again I think I mentioned this a little bit earlier, we received about $20 million in support measures, again to support families and staff and keep services open and functioning through an ongoing, challenging period. But we, on balance, reinvested about $28 million in various activities to support staff and our families in the provision of those services in a subsidised way. That was the right thing to do during that period. If I look back to FY20, it was a year that shareholders certainly didn't enjoy benefit. There was no dividend paid. There was no LTI paid out, there was no STI paid out. Therefore there wasn't any consideration necessary, specifically on those particular items. But we're very cognisant of the broader community implications. A number of organisations who enjoyed super normal profits during that period and that should well and truly be considered. 11 But on balance, given where the money went and what it was used for around supporting families and our staff, we didn't think it was necessary or appropriate to repay it. But as indicated, when we had some further levers available in FY21 we did overinvest in our stakeholders to retain services and quality. Do you want to add anything, Gary?
CEO Gary Carroll: I'm conscious that there was a reference around rorting. Given that sector occupancy reduced from around 60% to 30% in a one-week period in March 2020, we're very comfortable that all sector participants, including G8 easily qualified for whatever the JobKeeper criteria was at the time. So we felt we appropriately applied the rules of that scheme. To David's point, I think we got the balance right because it was a real flowthrough to maintain employment levels and to ensure that families were not paying in a situation where they were unable to attend. So we actually think we got the balance pretty right.
6. Whose idea was it to limit retail shareholders to additional shares equivalent to only 25% of their entitlement in last year's $301m capital raising. Retail owned about 45% of G8 before this raising & were diluted down to closer to 30%, partly because the retail offer finished $50m short, which was partly because of the 25% limit on "overs'. You owe retail shareholders a make good capital raising to offset for the dilution caused by the $134m placement at 80c last year. Will you consider launching a retail only $30,000 SPP?
Answer: David Foster: Thanks for that question. Obviously balancing the need for both our institutional and shareholders, together with the specific needs of the business at the time absolutely paramount and certainly part of our considerations. We did deliberately provide an opportunity, notwithstanding significant institutional support, to provide some opportunity, albeit not as requested, for our retail shareholders. They certainly are front of line, as evidenced by reintroducing the dividend most recently. We obviously, having recently announced a share buyback, which hopefully will drive shareholder value over time. We don't have a need for capital raising at this moment in time but will certainly keep that suggestion in mind if that eventuated in the future.
7. RBC and UBS made million of dollars under-writing last year's $301 million capital raising. Have either of these firms offered any entertainment or corporate hospitality to any of the directors or senior executives since that capital raising was launched. Could Debra also comment on how involved the non-executive directors were in the allocation decisions with the raising.
Answer: David Foster: Well, I'll let - well, Debra wasn't part of the Group at that particular time. I can say that the other Directors haven't participated in any activities as questions. As I think a little bit earlier - we certainly, as part of the strategy for the capital raising explicitly discussed participants and the profile of that capital raising based on the circumstances and appetite at the particular time.
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