G8 Education, Australia’s largest listed childcare operator, has significantly reduced its goodwill by $350 million, citing poor occupancy rates and fee pressures. This decision follows a challenging year marked by allegations of child abuse at one of its centres. G8 Education is a provider of early childhood education and care services, operating numerous centres across Australia. The company aims to provide quality education and care for young children.
The write-down reflects a reassessment of “projected future occupancy based on current occupancy levels”, “future fee increases and the impact of cost of living pressures”, and “anticipated additional regulatory and compliance costs”. Increased regulatory scrutiny from both federal and state governments, prompted by the alleged offences, has led to stricter compliance measures. These include more frequent compliance checks and revised thresholds for revoking working with children checks.
In response to the crisis, G8 Education has been implementing CCTV across its centres and enhancing staff checks. Despite these efforts, the company has suspended its share buyback program and has warned shareholders not to expect a final dividend for the year. RBC Capital Markets analyst Wei-Weng Chen noted that the goodwill write-down indicates significant challenges for G8 Education.
G8 Education shares plummeted more than 20 per cent on Tuesday, closing at 50¢. The company is scheduled to release its full-year results and annual report on February 23.
