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G8 Education posts lower H1 net profit on higher costs

G8 Education on Tuesday said it posted a net profit of S$24.9 million in the first six months of the year, down 11.9 per cent year on year, due to higher costs.

For the first half, total revenue was up 16.2 per cent year on year to S$361.2 million, driven by contributions from existing centres and the integration of centres acquired during the period.

But the growth in revenue was partly offset by the rise in wages which rose 19.3 per cent to S$209.8 million, due to a combination of regulated staff to children ratio changes as well as legislative related costs.

"Second-quarter wage performance improved significantly, reducing the cost impact from 1.7 percentage points to 0.4 percentage points with further improvement expected in the second half," the group said.

It added that its profit margins were also impacted by investment in staff training and centre refurbishments, which are expected to yield both top line and cost line benefits in the future, and have been substantially offset by savings in other areas.

Earnings per share for the first half was 6.62 Singapore cents, down from 7.84 cents in the year-ago period.

Chris Scott, G8 Education's managing director, pointed out: "The momentum established across the group in Q2 is encouraging to note and lays a solid foundation as we enter the seasonally stronger second-half period. It is also pleasing to have completed the refinancing of our Sing dollar bonds that were maturing in May 2017, extending the term to May 2019 and fully hedging the foreign-exchange exposure."