G8 Education Limited (GEM) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. My name is Mark Johnson, and I am the Chairman of G8 Education Limited. It is my pleasure to welcome you to G8 Education Limited's Annual General Meeting. A quorum is present, and I declare the meeting open. On behalf of the Board, I would like to acknowledge the traditional owners of the land upon which we meet today and pay my respects to their elders, past, present and emerging. As you know, the meeting today is being run as a fully virtual meeting. We hope that holding a virtual meeting will assist in further curbing the spread of the COVID-19 virus and encourage greater participation and engagement amongst our shareholders going forward. Gary Carroll, our Managing Director and Chief Executive Officer and I, are together here in Sydney. Due to social distancing and travel restrictions, all other G8 directors being Julie Cogin, Susan Forrester, David Foster, Peter Trimble and Margaret Zabel, are joining us today via teleconference. Today, I will be giving a Chairman's address followed by a presentation from our Managing Director and Chief Executive Officer, Gary Carroll. I will then move on to the procedural matters of the meeting. Right now I'm pleased to present my Chairman's address. So fellow shareholders, I would like to formally welcome you to the 2020 Annual General Meeting for G8 Education Limited. Let me start by thanking you for your understanding regarding the changes we have had to make to today's meeting format in response to COVID-19 conditions. I will take this opportunity to talk about 3 things. First, the current environment, including an overview of the impact of COVID-19 on our business. Secondly, our 2019 financial performance. And finally, an update on the Board. Gary Carroll will then provide more detail on our 2019 performance and the impact of and our response to COVID-19, including an update on trading performance. Following Gary's presentation, we will then move back to the formal items of business of this annual general meeting. So firstly to the COVID-19 pandemic, an unprecedented period for the communities in which we operate, our people and, of course, the economy. At G8 Education, our focus during these extraordinary times has been in 2 primary areas: our top priority being the safety and well-being of our team and the children and families that attend our centers, and business continuity, specifically our cash flow, liquidity and balance sheet. In our 2019 full year results presentation in February, we flagged the early impact of COVID-19 on attendance levels at our centers. This impact accelerated rapidly over the succeeding weeks as the government escalated measures to slow the rate of virus infection. By late March, attendances across the sector were approximately half the level of those experienced in prior years, placing the viability of the sector at risk. Recognizing this risk, the federal government announced an initial sector-specific relief package on the 2nd of April, providing all sector participants with certainty of revenue to enable centers to remain open during the peak of the pandemic. That initial relief package was reviewed and updated with the transition phase package of support announced by the government on the 8th of June, and which will come into play from the 13th of July. These relief packages reinforce the essential role our sector plays in the economy. In addition to the important role we play in the cognitive, social and emotional development of Australian children. Following the announcement of the government's initial sector relief package, we raised $301 million by an underwritten institutional and retail entitlement offer. This capital raising provides the group with the liquidity and financial flexibility to withstand a prolonged period of economic downturn as well as allowing G8 to pursue any sensible opportunities that may emerge from this challenging period. The Board also made the difficult but prudent decision to delay the payment of the group's 2019 financial year dividend to October of this year to provide more flexibility to deal with the unfolding of pandemic, along with reducing directors' fees and the salary of the executive leadership team by 20% for a 6-month period. Gary will provide more detail on the impacts of COVID-19 and our response. But I would like to note that during this period, Gary and the management team have worked closely with the Board to devise up and update and implement comprehensive plans that have enabled us to carefully manage the impacts of the pandemic. This has involved significant time and effort with weekly Board meetings and continuing close Board oversight during this period. I would like to take this opportunity to acknowledge Gary and the management team for their commitment and skill through this period. Also, on behalf of the Board, I would sincerely like to thank every member of the G8 Education team, their tireless efforts in supporting our children, families and communities through this period. Turning to a review of the 2019 year, the last 12 months represented a key step along the strategic pathway for G8 Education, with the strategy being focused on continuing to harvest the benefits of the scaled advantage that had been built in the period from 2010 to 2016. In broad terms, we believe that the group is well positioned to continue to use its scale to provide a differentiated experience, both for its families and its team. In 2019, we've made good progress towards achieving our goal of being the center of choice in the markets in which we operate. A central component of being considered the center of choice is the quality of the center. As well as ensuring the highest standards of safety are maintained, quality in this sense covers the physical environment, the learning environments and programs, team capability and the experiences and interactions with the children and their families. I will outline the 2019 achievements in terms of safety and physical environment, while Gary will outline our achievements in the remaining quality areas in his report. From a physical environment perspective, 70 major refurbishments were undertaken in 2019 at a total cost of some $21 million. From a safety perspective, the group made excellent progress both in terms of team member and child safety. As a result of a number of initiatives such as a national injury hotline, enhanced training and communications frameworks, the group reduced its lost time injury frequency rate for team members by more than 50%. From a child's safety viewpoint, we leveraged our industry-leading partnership with Bravehearts to jointly develop an enhanced training package, which has been rolled out to a number of pilot centers prior to full rollout in the second half of 2020. The financial performance of the group in 2019 reflects that the components of the group's financial performance were aligned to delivery of the group's strategy. Positive occupancy growth, the first in 4 years, resulted in good growth in our organic earnings. This organic growth was offset by the investment in both greenfield centers that have been opened in the last 2 years as well as investment in driving center quality. Our statutory earnings were impacted by the introduction of the new accounting standard for leases also. On an underlying basis, net profit after tax was $76.4 million, down some 4% on 2018. Cash flow generation continued to be strong with $90.2 million in operating cash flows being generated. Dividends for the year equated to $0.1075 per share, bringing the full year dividend payout ratio to 70%. Further improvements to the group's capital base were made in 2019 with higher cost Singapore bond facilities being repaid and all debt facilities being consolidated into a single syndicated bank debt facility. This provides increased capital, improved tenor and pricing, and coupled with the proceeds of the recent capital raising, ensures the group has all the capital that is required to deliver its current strategy. Finally, ladies and gentlemen, I wanted to provide an update on G8's Board. As announced recently, Brian Bailison retired from his position as Non-Executive Director of G8 on the 20th of May. Brian was a Director of G8 for 10 years and retired in accordance with G8's normal Board succession plans. On behalf of the Board, I wanted to thank Brian for his long-term contributions during a period of significant transformation and wish him the greatest success for the future. The Board appointed Peter Trimble as Non-Executive Director on 13 May 2020, following an extensive nonexecutive director search and recruitment process. Peter's significant financial risk and management and strategic expertise across several industries, coupled with his extensive corporate experience, will be extremely valuable to the Board. The Notice of Meeting provides you with further background on Peter, and we look forward to providing shareholders with the opportunity to vote on Peter's election to the Board later in the meeting. In closing, ladies and gentlemen, I would like to thank all G8 team members for their fantastic contributions throughout 2019 as well as during the extremely challenging start to 2020. Their passion, dedication and skill make us all very proud. I would also like to thank you, our shareholders, for your continued commitment and support. I'll now hand over to our Managing Director and Chief Executive Officer, Gary Carroll, who will provide an update on our COVID-19 response, our trading performance for the 2019 year as well as an update on the progress of our group strategy so far in 2020. Thank you very much.

Thanks, Mark. And I would also like to extend my welcome to fellow shareholders to the 2020 Annual General Meeting for G8 Education Limited. And once again, thank shareholders for their flexibility as we conduct this virtual meeting. As Mark outlined, I'll spend the next few minutes providing you with an update in 3 key areas: firstly, an overview of the 2019 year; secondly, our response to the COVID-19 environment; and thirdly, our current trading performance. During 2019, the group showed strong progress in demonstrating how scale can be deployed to drive quality in our centers as well as an enhanced experience for our families. Starting with family experience, I'm pleased to say that our centralized engagement center delivered in line with our targets during 2019, increasing our conversion of inquiries to tours and maintaining excellent levels of customer service. Following the rollout of our core child care management system platform in 2018, we rolled out the parent and educator apps in 2019. As well as providing a more seamless communications experience for families, for the first time, this system gives our central, early education and learning support team, real-time visibility of the learning programs being developed by our centers. And this insight is invaluable in allowing our early education and learning team, which was established at the beginning of 2019, to provide the optimal support to our center. And when combined with our social networking platform Workplace that was rolled out in August 2019, our centers now have ready access to a dedicated team of experienced early learning professionals and are able to leverage best practice from a 470-plus strong center network when developing learning programs for their center. Our strategic focus from a team member perspective is to provide a compelling employment offer, covering career pathways and training as well as market-leading benefits, reward and recognition programs. And as part of a values-based, purpose-driven culture, these programs will enable us to recruit and retain highly capable and engaged team members. During 2019, the group made very good progress on a number of fronts. From a training and career perspective, we've rolled out a market-leading bachelor scholarship program to support our deployment qualified educators to study towards the bachelor's degree. Initial responses have been strong, with our first cohort in this program consisting of over 120 educators. We also piloted an innovative center manager induction program with promising results. And a full rollout is planned for this program in the second half of 2020. Such initiatives, together with our Workplace connection platform as mentioned above, and adjustments to Early Childhood Teacher or ECT, wages in late 2018 have enabled the group to improve its turnover of both Centre Manager and ECT roles to record levels that are also on track with our medium-term goals. Finally, the group made good progress in developing its new people management platform, covering all aspects of people management, such as recruitment, onboarding, rostering, performance management, et cetera. We've been utilizing this platform to assist in rostering during the volatile COVID period with very promising results. We've continued to progress this essential platform during the current period with the remainder of the platform being on track to be rolled out in the third quarter of 2020. From a network optimization perspective, in 2019, we acquired a total of 15 early education centers. We divested 25 centers, and we closed a further 16 centers in Australia. This brought our total number of centers as at December 31, 2019 to 475 in Australia and 17 in Singapore. And these centers provide a total combined license capacity of more than 40,000 places. And our activities in this network optimization area have improved network quality as well as providing a source of material earnings growth in future years as the greenfield portfolio matures. After a number of years of declining occupancy, it was very pleasing to see like-for-like occupancy grow by around 1 percentage point in 2019. And this occupancy growth translated to a 3% increase in organic earnings before interest and tax or EBIT to $165.7 million. The investment made in greenfield centers and driving quality offset this organic growth with underlying group EBIT of $132.5 million, being in line with last year after accounting for license fees in 2018. The group's ability to convert earnings before interest, tax, depreciation and amortization, or EBITDA, to cash remains strong, with 107% cash conversion in 2019, generating operating cash flows of $90.2 million pre-AASB 16. I'd now like to run through the group's key activities in response to COVID-19. Once we became aware of the initial COVID impact, we implemented a cross-functional COVID response team and plans to ensure the health and safety of our team, children and families as well as the continuity of operations. People-focused initiatives have included expanding hygiene and safety measures across all of our centers and support offices as well as implementing work-from-home arrangements where possible. Regular communication with our team and families has been a core element of our response program, including information in relation to hygiene, social distancing awareness as well as well-being initiatives. For our families, we have provided access to online learning and information platforms to assist parents who are caring for children at home, and to keep them engaged with our center community. Turning now to the measures we've implemented to ensure business continuity. We've adopted a 3-pronged approach. Firstly, we established an appropriate governance structure to steer us through the pandemic, featuring daily COVID team meetings that allow us to monitor the ever-changing landscape and adapt our near-term COVID-19 response plan. Secondly, we had to ensure we had the liquidity and financial flexibility to survive a prolonged downturn. Our recent capital raising, which was completed with the support of our lenders, was at the center of this area as well as continued stress testing of our balance sheet, P&L and liquidity position across a range of scenarios. Lastly, we had to implement measures to bring our capital and operating expenditures in line with the COVID-19 trading environment. Given the heightened uncertainty as to the duration of the lockdowns and the ultimate impact on the broader economy, we decided to be prudent to defer noncritical projects, thereby reducing our capital expenditure for the 2020 financial year from $40 million to $25 million. We also identified cost savings that we can deliver in the 2020 year through the optimization of wages, removal of nonessential spend and by engaging with our landlords to reduce rental costs during the peak of the pandemic. I'm pleased to say that our total cost savings are in line with the targets outlined in our investor presentation that was released on the 9th of April. I often say you learn a lot about people during a crisis. In this sense, I'm immensely proud of the entire G8 team and how they have collectively responded to the COVID challenge. Our center-based teams have been in the front line of our COVID response, providing continuous care to children and families throughout the COVID period, displaying courage and service in a time of great uncertainty. In addition to the online learning platforms that were developed by our education and marketing teams, our center teams have also provided personalized support to our family communities, such as cooked meals for families, take-home packs for children and aged care pen pal activities. On behalf of the G8 management team, I'd also like to acknowledge the support and guidance we've received from the Board during this challenging time. Their wise counsel and commitment have been fantastic and assisted us in making the right decisions to navigate these turbulent times. I'd also like to acknowledge the work during this time of government and health authorities across the regions in which we operate. The government's swift response to support the sector was tremendous and succeeded in ensuring the viability of the sector during the peak of the health crisis. The working relationships with governments at all levels has also been excellent, with the level of openness and collaboration that has greatly assisted us in navigating this unprecedented period. And for me, the government's support and the relief packages reinforce the essential role our sector plays in the economy both in terms of supporting working parents as well as the cognitive social and emotional development of children in Australia. I'd now like to provide an update on our recent trading experience, including the impact of the recent changes to the government's relief package for the sector. As announced on the 8th of June, the government's transitional relief package for the sector means that for the duration of that relief package, G8 expects to be in no worser position than we would have been in under the initial support measures, even at more subdued occupancy levels. The group's booked occupancy is currently circa 65%, with physical attendance of circa 53% as some parents continue to choose to keep their children at home despite having a booking at our center. Booked occupancy is expected to be impacted by various factors, including the reintroduction of parent copayments under the CCS arrangements, which recommenced from 13 July, parents returning to work, including in-office locations and unemployment rates. The group is not in a position at this stage to comment on the net effect of these factors on booked occupancy. However, the gap between booked occupancy and attendance levels is expected to continue to narrow. We're also continuing to engage with our families regarding their plans and how the economic changes may impact their booking patterns. Finally, as announced on the 11th of June, the group expects to recognize a noncash impairment charge in its calendar year '20 half year results of between $230 million and $250 million. This follows a review of the impacts of the COVID-19 operating environment, which has exacerbated the challenging industry supply environment that has been in place for the past 12 to 24 months. Any impairment will be noncash in nature and will have no impact on the company's debt facilities or compliance with its banking covenants. It also provides the group with more flexibility with respect to how it manages those underperforming assets. The final outcome of the impairment review is subject to audit and approval of the CY '20 half year financial statements. We look forward to providing a further update -- trading update in the group's half year results announcement on the 24th of August 2020. In closing, I'd like to reiterate that we have the people, the financial flexibility and the processes in place to ensure that we emerge from the COVID environment as a stronger, better business. And I look forward to giving you updates on our progress throughout the year. Thank you.

Thank you, Gary. Before moving to the specific business of the meeting, I will now summarize the shareholder question and voting procedures, which will apply to this meeting. As set out in the Notice of Meeting, there are 6 resolutions to be considered today. The resolutions have been outlined and explained in the explanatory statement that accompany the Notice of Meeting. I will put each resolution to the meeting. Shareholder questions submitted online, which are relevant to the resolution will be read out by Tracey Wood, our company Secretary, and addressed by me and Gary. I will then advise the number of proxy votes received on each resolution before moving to the next item of business. Ladies and gentlemen, might I remind you that only shareholders or corporate representatives of shareholders, or those holding a valid proxy from a shareholder are entitled to submit questions. Instructions for how to lodge a question online are set out in the presentation today. There is also an online guide available via a link at the bottom of your screen. That guide is also available on our corporate website under the 2020 AGM tab. I encourage shareholders who have questions to submit your questions as soon as possible. As I said earlier, our company Secretary, Tracey Wood will read out questions submitted online at the appropriate time. The proxy votes are contained in our presentation today, which will be displayed on the screen at the appropriate time. All resolutions being put to the meeting today will be determined via a poll. All undirected proxies will be voted by myself in favor of the resolution to the extent I am permitted to do so. You may place your votes at any time using the voting card on your screen. For assistance with voting, there are instructions in our presentation today. There is also an online guide available via link at the bottom of your screen. And again, that guide is also available on our corporate website under the 2020 AGM tab. Each resolution set out in the Notice of Meeting is to be considered as an ordinary resolution, and as such, must be approved by a simple majority of the votes cast by shareholders and entitled to vote and voting on the resolution. Shareholders can submit their votes online until 5 minutes after the meeting closes. Once the voting is closed, our share registry provider, Link Market Services, will tabulate the results, which will be released as soon as possible today on the Australian Securities Exchange. Those results will also be displayed on our corporate website once available. Before proceeding to the first item of business, let me introduce our auditor, Mr. Ric Roach from Ernst & Young, who has joined us via teleconference today and is available to take questions on the conduct of the audit and the preparation and content of the independent external auditors report. All questions should be directed to myself as Chair of the meeting, and I will then invite any other direct or relevant person to respond as appropriate. So ladies and gentlemen, I now turn to the financial statements for G8 Education Limited. You have received the annual financial report, the director's report and auditor's report for the year ended December 31, 2019. I now invite discussion on the financial statements and annual report, including questions on the business or operations of G8 Education Limited or on the management of the company generally. Questions that have been submitted regarding other items of business will be held over until we come to those respective items. Tracey, are there any questions?

Yes, Mr. Chairman, the first question is from ACCR. The question is the April 2020 investor presentation that accompanied the equity raising stated that the company had an expectation the government would extend the ECEC subsidy package beyond the June 28 expiry to September in line with JobKeeper payments. With parent fees slated to return in July, and the drastic impact this could have on occupancy and attendance during a recession, what is the Board's plan for managing this potential drop in revenue?

Well, thank you for your question. Let me firstly say that, as you know, the existing arrangements in a week or 2 and the new arrangements the government had put in place from the 13th of July will extend for the period to 30 September. And we feel well placed and no worse off over the next few weeks in terms of the ability for us to provide the services to our parents and for them to participate. I think the question beyond the end of September is really going to be one-off circumstances that exist at that point in time. We haven't got a crystal ball, and we've seen so many forecasts and estimates recently for short or wide or be lower than the mark that we really need to wait and see what happens. Let me say though that, obviously, one of the things we've done to put us in a position where we will survive and deliver great services to our families is the strengthening of our capital base. Other actions we take will need to be assessed at the time. As always, we balance the needs of the families and children that we serve. Our employees and the investors in the organization, and we'll obviously look to do that then. Thanks, Tracey.

Mr. Chairman, the ACCR have submitted a further question. The question is, given that ongoing, stimulating and emotionally supportive relationships between educators and children are key to quality early learning, what reassurances can you give shareholders that you are committed to decreasing casualization and turnover, considering the impact it has on delivering quality early learning? Using WGEA, it was 36% for '18 to '19. But Gary Carroll has given much lower figures in investor calls. He said in 2018, it was around 23% in total, 17% for Centre Managers.

Well, look, thanks for that question. And let me say turnover is a very important factor in the success of our business. We're very focused on it. We have lowered staff turnover over the last few years and continue to intend to do so. Our turnover numbers are lower than the sector, let me say that. When you're looking at turnover, you need to look at the various constituent parts of our turnover. So our ECT turnover has historically been high as it has been in the industry. That said, ours has reduced substantially, particularly after we took steps to lift ECT terms about 18 months ago. Our general turnover is in the low 20s and Centre Manager turnover is around 16%. So they are pretty close to industry-leading statistics. That said, we acknowledge that we need to do more, and we're very committed to doing so. Thank you, Tracey.

Mr. Chairman, we have a question from Patrick. The question is, are there any plans to review the dividend payout rate?

Yes. As we said, there's no plans for us to pay another dividend before June 2021. Immediately before June 2021, the Board will obviously be discussing the environment and circumstances then and looking at what we can do in that environment. So I don't want to prejudge how things may be at that point in time. But certainly, the broad intention is that we will still be a dividend-paying company. It's just a question of what we can afford and what's right for the circumstances that exist at that point in time.

Mr. Chairman, there are no further questions on this item of business.

So I'll pull from -- pause just for a moment or 2 to see if any final questions come in.

Okay. So as there are no further questions, we'll now move on to the formal resolutions. As a reminder, you can place your vote with respect to the resolutions before the meeting at any time using the virtual voting card. The first resolution on the Notice of Meeting is a nonbinding resolution to adopt the remuneration report. Please note that the vote on this resolution is advisory only and does not bind the directors or the company. Voting exclusions apply to this resolution as set out in the Notice of Meeting. The resolution is that the remuneration report for the year ended December 31, 2019, be adopted. I now welcome questions with respect to the remuneration report.

There have been no questions submitted regarding this item of business, Mr. Chairman.

Okay. I'll just pause for a second. Not expecting any questions to come through at the last minute, but... Okay. Proxy votes have been received in respect of this resolution. The results of the proxy votes do appear on the screen. So we'll now move to resolution 2, the reelection of Professor Julie Cogin. The company seeks members' consideration, and if thought fit, to pass the following resolution as an ordinary resolution that Professor Julie Cogin, who having been reelected on 20 April, 2018, as a Director in accordance with the company's constitution, retires as a Director of the company and being eligible officer so for reelection as a Director of the company, be elected as a Director of the company. As stated in the Notice of Meeting, Professor Cogin is seeking reelection as a Director of the company, and she has the full support of the Board for her reelection. I confirm that the Board considers her to be an Independent Non-Executive Director. Professor Cogin's background, qualifications and experience appear on the explanatory note to the notice of annual general meeting. And I now invite Julie to give comment in relation to her reelection. Julie, over to you.

Thank you, Mark. Good morning, shareholders and guests. It is my privilege to nominate for election as an Independent Non-Executive Director for another term. The last 2.5 years as a Director and member of the people and culture committee have been highly rewarding. I've worked in the education sector for more than 25 years because I passionately believe it is education that combats hate, ignorance and solves big global challenges. Education of young children is especially important because a high-quality learning environment promotes optimal development. And there's so much more to this than watching, feeding and keeping children safe. Progressive education programs require caring, and nurturing, understanding child development and psychology, what children are learning and how they are learning it. It's not just planning activities to keep children busy all day. I believe that early learning education is one of the most important investments we can make in the future. Research consistently shows that children who attend early education are better prepared for school, more likely to succeed in the workplace as an adult and have healthier lives. And in 2019, 55,000 children attended our G8 center every week. 55,000. So the impact we have on the lives of these children is significant, and we must get it right. I've been highly engaged with other members of the Board to provide input into G8's corporate strategy and education strategy, which we believe is right for today's market and will position us well in the future. My experience and knowledge gained through my current position as Deputy Vice Chancellor and Vice President of RMIT University, which is Australia's largest multi-sector university, requires me to stay abreast of education trends, influence education policy and shape curriculum. I have degrees in business, education, psychology and law, and believe my skills and knowledge are well aligned to G8's current and future needs. It is with this background and my commitment to supporting G8's future success that I am nominated for reelection.

Thank you, Julie. Are there any comments or questions regarding Professor Cogin's reelection?

Mr. Chairman, there's been no questions submitted regarding this item of business.

Okay. Proxy votes have been received in respect of this resolution. The results of the proxy votes appear on the presentation, Professor Cogin will not vote on this item. We now move to resolution 3, the election of Mr. Peter Trimble. The company seeks members' consideration, and if thought fit, to pass the following resolution as an ordinary resolution. That Mr. Peter Trimble, who having been appointed by the Board as a Director on 13 May, 2020, retires in accordance with the company's constitution and ASX listing rules, and being eligible, offers himself for reelection as a Director of the company -- be elected as a Director of the company. As stated in the Notice of Meeting, Mr. Trimble is seeking election as a Director of the company. And he has the full support of the Board for his election. I do confirm that the Board considers Mr. Trimble to be an Independent Non-Executive Director. His background, qualifications and experience appear in the explanatory note to the notice of Annual General Meeting. I now invite Mr. Trimble to give comment on his election. Peter, over to you.

Thank you, Chairman, and thank you, shareholders of G8 your attendance here today online. My name is Peter Trimble, and I joined the Board on the 13th of May and was appointed Chair of the Audit and Risk Management Committee on the 20th of May. My background is... [Technical Difficulty]

This is the operator. Peter's line has just disconnected.

Okay. Ladies and gentlemen, we might pause while we just try and reconnect, Peter. So bear with us while we try and sort this little glitch out. Thank you. Can I suggest in the interest of time, what we might do is roll forward to a couple of the other resolutions and come back to this one while we reconnect Peter. So let's move forward. And we'll go to the next resolution, which is resolution 4. So we moved to resolution 4 regarding the approval of G8 Education's executive incentive plan. The G8 Education executive incentive plan was previously approved at the 2017 Annual General Meeting and has applied for the last 3 years. The Board of Directors reviewed the plan and seek shareholder approval for all purposes under the Corporations Act and the listing rules. The company seeks members' consideration, and if thought fit, to pass the following resolution as an ordinary resolution. That for the purposes of listing rule 7.1, and in accordance with listing rule 7.2, exception 13, and for all other purposes, the G8 Education executive incentive plan as described in section 2.3 of the explanatory statement be approved for the issue of securities under the G8 Education executive incentive plan. Are there any comments or questions regarding the revised executive incentive plan?

Mr. Chairman, there have been no questions submitted regarding this item of business.

Thank you, Tracey. Pause again for a minute to see if there's any late-breaking questions. It seems not. So we note that proxy votes have been received in respect of this resolution and are shown on the screen in front of you. Voting exclusions apply to this resolution as set out in the Notice of Meeting. We'll now move to resolution 5 regarding the issue of performance rights to the Managing Director and Chief Executive Officer, Gary Carroll. This resolution relates to the granting of performance rights pursuant to the G8 Education executive incentive plan, that was considered under resolution 4 today. G8 Education Limited seeks members' consideration, and if thought fit, to pass the following resolution as an ordinary resolution, that approval be given, a, for the purposes of listing rule 10.14 and for all other purposes, to the grants of 520,000 performance rights to the company's Chief Executive Officer and Managing Director, Gary Carroll; and b, for the purposes of section 200E of the Corporations Act to the giving of a benefit to the company's Chief Executive Officer and Managing Director, Mr. Gary Carroll, in connection with any vesting of those performance rights on the cessation of Mr. Carroll's employment with the company or a related body corporate of the company, in each case, under the G8 executive incentive plan and on the basis described in section 2.5 of the explanatory statement. Are there any comments or questions regarding this resolution, Tracey?

Mr. Chairman, there have been no questions submitted regarding this item of business.

Okay. Again, I'll like just wait for a second or 2 to see if there's any late-breaking questions. Okay. Proxy votes have been received in respect of this resolution. The results of those votes are shown on your screen. Voting inclusions do apply as set out in the Notice of Meeting. Ladies and gentlemen, resolution 6 relates to the ratification of shares issued. By way of background on 22 April, the company announced that it had issued new shares by way of placement. The placement represented approximately 25% of the company's share capital. The company is looking to reinstate its ability to issue up to 15% of its share capital, that is the first 15%, included in the 25% placement. As set out in the explanatory memorandum, while there is no current intention to raise additional capital, the directors considered sound practice to maximize the company's fundraising flexibility and to create opportunities for increasing shareholder value. To do so, the ratification of the issue of the first 15% placement shares is sort under listing rule 7.4. So that the placement is not counted towards the company's 15% limit under listing rule 7.1. Therefore, G8 Education Limited seeks members' consideration, and if thought fit, to pass the following resolution, as an ordinary resolution. That for the purposes of listing rule 7.4 and for all other purposes, shareholders ratify the prior issue of 100,402,240 shares, which were issued by a way of an institutional placement as described in the explanatory statement. Ladies and gentlemen, are there any questions or comments regarding this resolution?

Mr. Chairman, there are no questions submitted regarding this item of business.

The proxy votes have been received in respect of this resolution, the results of the proxy votes appear now on your screen. Voting exclusions do apply as set out in the Notice of Meeting. Ladies and gentlemen, I'll now return to the earlier resolution for the election of Peter Trimble, who I now understand is on the line. And Peter, let's do take 2, if we could. So over to you.

Okay. Thank you again, Mark. Chairman, I'll restart from the start. I'm not sure when I lost you all. But in any event, thank you also to shareholders for attendance here today online. My name is Peter Trimble. I joined the Board on the 13th of May and was appointed Chair of the Audit and Risk Management Committee on the 20th of May. My background is first and foremost in finance. However, I have held a number of senior management and executive positions, including as CEO, CFO, VP of Strategy and Development and Company Secretary. Therefore, I have experience handling responsibilities across governance, risk management, strategy and planning, merger and acquisitions, along with business restructuring and improvement. These skills have been incredibly valuable in my various nonexecutive director positions with a number of private companies, including the Mulgowie Farming Company where I hold the position of Chairman. Additionally, the roles I have held have crossed a diverse range of industries, including construction materials, manufacturing, infrastructure and agriculture and include 12 years of experience in the USA. One of my passions, though, is education, as demonstrated by the role I played as CFO of ABC Learning, along with my Non-Executive Director and Deputy Chair positions of Somerset College. As CFO of ABC Learning, I was part of the small team that significantly restructured and improved the performance of the childcare operations and business in Australia prior to its sale. Given my experience, if elected, I look forward to the contribution that I can make on the Board of G8 Education, and I thank the Board and the shareholders for the opportunity. Thank you, Chairman.

Thank you, Peter. Are there any comments or questions regarding Peter's election?

Mr. Chairman, there's 1 question, which has been submitted by the ACCR. The question is, and it is directed to Peter Trimble, what similarities and differences does Peter Trimble see between the situation that G8 faces today and ABC when he started? And how do you think your experience at ABC Learning will help you assist the company in navigating the COVID crisis?

Well, thank you very much for that question. I might start off by making it clear to all shareholders that Peter joined very shortly before the troubles at ABC Learning emerged, and he was part of the solution, not the problem. So let me emphasize that point as I hand over to Peter to specifically answer the question raised by ACCR. Peter, over to you.

Thank you, Chairman, and thank you for reinforcing that. I joined ABC Learning when it was suspended from trading amid serious clouds over the reported earnings of the previous few years. I was involved in the team that put it into administration and receiverships 6 weeks later and was then involved for a further 18 months helping to -- working with receivers to turn the business around. At the time, ABC had severe cash problems and a real cloud over what its earnings really were, which is a very different situation to where G8 is. So that would be, I guess, the first difference. The second difference I would consider that even though it's early days for me, G8 has a stable and an experienced management team and Board, who are absolutely committed to the business. And that would have been a bit mixed, I would say, to be polite at ABC Learning when I joined. And finally, as far as the difference that, I guess, at short notice I'd identify is that G8 is consistently and passionately focused on children's education, on its families, on our team, our shareholders and other stakeholders. And I would consider at ABC Learning when I joined that, that was quite mixed. Some components of the organization were and some were not. As far as similarities, I mean, I think it is absolutely true within both organizations, that team members within the organization are absolutely committed to the children and the families and the business itself. The second component of the question as to how I might be able to help or how I see that I can help. Look, again, it's early days. When I joined, ABC Learning had significant wins and risks to its earnings and operation in a very different climate and a very different context. There are certainly challenges for G8 as we move out of the current situation and the COVID-19 impact that we are going to face going forward. But I would certainly like to think that with the heavy involvement that I had in the successful restructure and improvement of the performance of the -- of ABC's childcare operations that, to the extent it's those -- the experience from that is applicable that I can apply that in my role as a Director of G8. Therefore, if I had to...

Thank you, Peter. I think that's a pretty thorough answer. Just to say the Board obviously did extensive due diligence around this role, we were obviously very attracted to Peter's broad experience generally. But I think as COVID-19 was well underway as we were finalizing the decision for this new director, we were very focused on somebody who was very focused on operational excellence because one thing we have to be very, very good at is the basics in this environment. And one of the things that Peter showed real skill at ABC Learning was making sure they drove operational excellence in everything they did in that business as they approach the disposal of that business. So thank you for your answer, Peter, and thank you also for the question. I understand it. And it was a good question. So thank you.

So ladies and gentlemen, proxy votes have been received in respect of this resolution. The results of the proxy votes appear on the presentation in front of you. And Peter Trimble will not be voting on this item. So ladies and gentlemen, this is the end of the business being put to the meeting today. I understand we may have one general business question, Tracey, which frankly should have been raised a little earlier. But in the interest of transparency, I'm happy to take this one further question.

The question has been submitted by [K. Cogin]. Occupancy at 100% would substantially increase revenues. Is the current occupancy levels considered good performance?

Well, let me start off by saying, no. I don't think current occupancy levels would be considered good performance. As you know, the industry has been substantially affected by COVID-19. Our occupancy is running at about 65-odd-percent in terms of bookings, some 10% to 12% lower than that in terms of physical attendance. That is much lower than we would normally expect at this time of year. It's pretty consistent with industry performance. We obviously want to see occupancy go much higher. And I suppose, as noted earlier, the next few months in terms of the government subsidy and support, what happens once government funding ends, how deep any recession is, how long unemployment lasts, how much investment the government and others put into the economy, how individual businesses around Australia respond in terms of their own approaches to coping with their costs and et cetera, stuff. All these sorts of things will have an impact on how many families choose to take the advantage of providing a terrific education for their children and take advantage of the opportunity to get back to work as soon as they can. So we feel confident that over time, we're going to come back much more strongly. But certainly, the higher the occupancy and the more successful the business is. And we've certainly got plans to try and drive occupancy with our strategy as much as we can. Thank you. Thank you for that question. So I think we've now come to the end of the formal items of business. Please ensure that you have submitted your votes online using the online voting card, if you've not already done so. As mentioned earlier, shareholders can submit their votes online until 5 minutes after the meeting closes. So about 5 minutes from now. The results of the 6 polls taken today will be announced to the market as soon as practicable after the meeting. Thank you, ladies and gentlemen, for joining us online today. That does bring to an end the formalities of this meeting. On behalf of the Board, I do thank you for your attendance at the meeting and your interest in the company, and we look forward to your ongoing support in the coming year. Perhaps next year, we can have this meeting face-to-face once again. I'm certainly hopeful of that. Thank you for your indulgence today. I now declare the meeting closed.