Kip McGrath FY25 Revenue Up 8.9%, EBITDA Rises 13.4%, NPAT Losses Persist

Strong Core Performance Amid Strategic Refocus

Kip McGrath Education Centres Limited has delivered a year of steady progress in FY25, with revenue from its continuing operations; primarily in the Asia-Pacific and UK markets; rising by 8.9% to $31.4 million. This growth was accompanied by a 13.4% increase in EBITDA to $7.8 million, reflecting the company’s renewed focus on its core franchise business after a decisive exit from its underperforming USA operations.

The company’s underlying EBITDA, which excludes one-off costs such as CEO transition expenses and onerous lease charges, rose an impressive 23% to $8.5 million. This improvement underscores the operational efficiencies and stronger franchise revenue streams that Kip McGrath has cultivated in its primary markets.

Navigating Challenges and Strategic Exits

Despite these gains, the company reported a statutory net loss after tax of $5.3 million, largely attributable to a $7.6 million loss and impairment from the discontinued USA operations. This exit, while costly in the short term, allows Kip McGrath to concentrate resources on its more profitable and stable franchise networks in APAC and the UK, where double-digit revenue growth was recorded.

Operational metrics reveal a stable lesson volume of 1.9 million student lessons, with a slight consolidation in centre numbers but an increase in average weekly lessons per centre. The company also benefited from a rising average lesson charge, supported by modest price increases and favorable currency movements, which helped offset the impact of smaller centres exiting the network.

Capital Management and Shareholder Returns

Kip McGrath’s balance sheet remains robust, with nil debt following the repayment of its corporate debt facility and a healthy cash balance of $4.9 million (net of franchisee cash). The board declared a final fully franked dividend of 0.5 cents per share, bringing the total dividend for the year to 1.0 cent per share, signaling confidence in the company’s cash flow and future prospects.

In a move to enhance shareholder value, the company announced an on-market buy-back program of up to 10% of its shares over the next 12 months. This initiative reflects management’s belief that the shares are undervalued and underscores a commitment to returning capital to investors.

Outlook, Cautious Optimism for FY26

Looking ahead, Kip McGrath expects lesson numbers to remain flat, with mid-single-digit revenue growth driven by price adjustments. Cost increases are anticipated to be lower than revenue growth, and a reduction in depreciation and amortisation expenses is forecast to support early double-digit NPAT growth in FY26.

Capital expenditure is planned at approximately $1.7 million, focusing primarily on technology enhancements and selective acquisitions, positioning the company to better serve its franchise network and adapt to evolving educational demands.

With a refreshed leadership team and a clear strategic focus, Kip McGrath aims to build on its core strengths and deliver stronger earnings and returns for shareholders in the coming year.