Evolve Education provides guidance update, recommences acquisition strategy
Evolve Education Group has released a shareholder update in which it advises on current profit guidance and outlines a resumption of its acquisition strategy which was temporarily put on hold due to the onset of the COVID-19 pandemic.
The Group is expecting earnings before interest, tax, depreciation and amortisation (EBITDA) to be in the range of NZ$14.4 million to NZ$14.8 million, equivalent to around $13.6 million to $13.8 million Australian dollars, in the nine month period to September 2020.
This compares to full year results of NZ$8.2 million in the 12 months to March 2020, and NZ13.3 million in the 12 months to March 2019.
The company cites the key drivers behind the 2020 performance as being a combination of operational and support based factors including:
- Positive trading across the Group’s ten Australian centres
- Higher than expected occupancy performances across its New Zealand portfolio as well as more focused usage of labour in centres combined with a streamlined support office structure post a reorganisation last year
- COVID-19 relief related and payments from both New Zealand and Australian Governments which saw NZ$11.8 million in wage subsidies received. The Group paid out a total of $16.8 million of wages in the period.
The company confirmed that it now believes “green shoots” can clearly be seen in the New Zealand operations signalling that the turnaround phase, which commenced with the new management team taking operational control of the business in September 2019, is well advanced.
Australian acquisitions back on the agenda as COVID uncertainty diminishes
Evolve also provided an outline for the resumption of its Australian acquisition strategy which was temporarily placed on hold due to the onset of the COVID-19 pandemic.
Having raised $83 million of new equity in CY2019, the Group had paid down $38 million of debt leaving the balance available to fund its initial acquisition strategy. To that end the Group acquired ten centres in Australia in CY2019 before ceasing further activity as the COVID-19 outbreak escalated in seriousness.
Evolve has now signalled that it is recommencing acquisition activities and is currently considering potential acquisitions with a value of approximately $20 million. These new acquisitions will be funded using existing cash reserves on the balance sheet.
Looking ahead the company noted that further information about centre acquisitions will be provided in the near future.
To read the shareholder update please click here.