Evolve Education Group Ltd failed to complete its acquisition of 5 childcare centres in the Australian Capital Territory by the sunset date, last Wednesday, but said yesterday it would continue to evaluate Australian acquisition opportunities.
Evolve announced its proposed acquisition of 5 childcare centres in the Australian Capital Territory on 9 December, conditional on satisfactory due diligence, and settlement was expected to occur about 31 March.
However, managing director Chris Scott, who took up the job last September, said: “Due to several factors, including the impact of Covid-19, none of these acquisitions were able to be completed by the sunset date of 8 April and will now not proceed.”
The acquisition price of $A12.03 million represented a 4.3 times multiple of centre-based ebitda.
Mr Scott said Evolve would continue to evaluate Australian childcare centre acquisition opportunities as they arise.
The company closed all its early learning centres on 25 March, in compliance with the Covid-19 shutdown.
Evolve expects to announce its financial results for the March year on 25 May. On 9 March, Mr Scott said there’d been no material impact from the pandemic – either operational or financial – on any Evolve centre in New Zealand or Australia, or in aggregate terms, so the company’s November guidance remained intact.
On 28 November, he said Evolve anticipated ebitda (earnings before interest, tax, depreciation & amortisation) of no less than $15 million for calendar 2020.
In December, Evolve raised $A18.9 million through an A13c/share institutional placement – at a 10.3% discount – to support the acquisitions, pay down bank debt and provide increased flexibility to implement the New Zealand turnaround & Australian expansion strategy.
Mr Scott, holding 19% of Evolve’s shares, had committed to subscribing for $A3.3 million of the placement and entities associated with chief executive Timothy Wong had committed to subscribe for $A4 million.
For the half-year to September 2019, Evolve made a net loss of $1.44 million on revenue of $69.2 million – a 95% improvement on 14% lower revenue.
The company had underlying ebitda of $13.3 million in the year to March 2019, net profit of $5.5 million after tax & before non-recurring items ($12 million in 2018), but sank to a net loss of $101.6 million after tax & non-recurring items, primarily goodwill impairment of $107.1 million.
Underlying ebitda fell from $21.6 million in 2018 to $13.3 million in the year to March 2019.
The 2019 operating result was impacted by a 2% lower average occupancy across all childcare centres on a comparable basis (same centre occupancy) and an increase in head office costs of $3 million for investment in infrastructure improvements to support the centre network.
Attribution: Company releases.