G8 Education Reports 65.8% Occupancy, $350m Goodwill Hit in 2025
G8 Education’s 2025 full year results reveal significant occupancy challenges amid affordability pressures and sector confidence issues, alongside a $350 million goodwill impairment. Despite these hurdles, the company maintains a strong focus on child safety, operational discipline, and cautious capital management.
- Occupancy declines driven by affordability, falling birth rates, and sector trust issues
- $350 million goodwill impairment weighs on statutory results
- Operating EBIT margin remains stable through disciplined cost control
- Enhanced child safety policies and regulatory compliance initiatives
- Network optimisation continues with centre divestments and lease surrenders
Challenging Market Conditions
G8 Education Limited (ASX: GEM) has reported its full year results for 2025, painting a picture of resilience amid a tough operating environment. The company faced a notable decline in occupancy rates, falling to 65.8% for the year, down nearly 5 percentage points from 2024. This drop reflects a confluence of factors including sustained affordability pressures on families, a continuing decline in birth rates, and shaken sector confidence exacerbated by recent media scrutiny.
These headwinds have tempered revenue growth and weighed heavily on earnings, with statutory net profit after tax showing a loss of $303.3 million. A significant contributor to this loss was a $350 million goodwill impairment, reflecting a prudent reassessment of the company’s underlying performance and future outlook.
Operational Discipline and Safety Commitment
Despite these challenges, G8 Education’s management emphasised strong operational execution and a steadfast commitment to child safety and regulatory compliance. The company reported stable operating EBIT margins, supported by disciplined cost management and ongoing efficiency initiatives. Wages and other operating costs were carefully controlled, even as the company invested in enhanced safety training and compliance systems.
Child safety remains a top strategic priority, with G8 Education implementing rigorous policies aligned with new national and state regulations. This includes mandatory safety training, a ban on personal devices in childcare rooms, and the rollout of CCTV across centres. The company also actively engages with government inquiries and regulatory bodies, signaling its intent to lead sector reform and rebuild trust.
Network Optimisation and Capital Management
G8 Education continued its network optimisation strategy by divesting five centres and surrendering or letting expire six leases during 2025. This portfolio refinement aims to strengthen the overall network footprint and improve earnings quality. Capital expenditure increased to $45.7 million, supporting centre improvements and technology upgrades, with a further $50 million planned for 2026.
On the capital management front, the company maintained a conservative approach, balancing operational needs with shareholder returns. The share buyback program is currently paused, and no final dividend will be paid for 2025, following a fully franked interim dividend of 2 cents per share.
Outlook Amid Ongoing Headwinds
Looking ahead, G8 Education acknowledges that near-term conditions remain challenging. Affordability pressures, regulatory complexity, and demographic trends continue to impact demand. However, the company is focused on improving controllable factors such as family engagement, team capability, and safety standards. Government reforms, including the new three-day subsidy guarantee and investments in early childhood education infrastructure, offer some medium-term optimism.
G8 Education’s ability to adapt to this evolving landscape while maintaining operational discipline and a strong safety culture will be critical to its performance in 2026 and beyond.
Bottom Line?
G8 Education’s 2025 results underscore the sector’s tough realities but also highlight a determined pivot towards safety, quality, and operational resilience.
Questions in the middle?
- How will ongoing regulatory reforms and inquiries impact G8 Education’s operational costs and compliance burden?
- Can occupancy rates recover amid persistent affordability pressures and declining birth rates?
- What is the timeline and expected impact of the CCTV rollout and other safety initiatives on family trust and enrolments?
