G8 Education Stock

Thank you for standing by, and welcome to the G8 Education 2026 Half Year Results Call. [Operator Instructions]

I would now like to hand the conference over to Mr. Pejman Okhovat, CEO. Please go ahead.

Good morning, and welcome to 2026 half year results call for G8 Education Limited. My name is Pejman Okhovat, and I'm the Managing Director and CEO of G8 Education. I'm joined today on the line by Group Chief Financial Officer, Steven Becker.

Good morning.

Steven and I will take you through the investor presentation that was released to the ASX earlier this morning. Following the presentation, we will open the line for Q&A.

I'd like to begin by acknowledging the Gadigal people of Eora Nation, who are the traditional custodians of the lands on which we are conducting this presentation today. We respect their spiritual leadership and relationship with the country, and we pay respects to their elders past and present. I extend that respect to any Aboriginal and Torres Strait Islander people peoples joining us today. I would also like to acknowledge the G8 Education team who consistently and tirelessly nurture outcomes for children and support our local communities with the important role they play.

This morning, we will cover a summary of the 6 months ended June 30, 2026, providing an update on our progress, outlining operating and financial performance for this period, and we will conclude with a brief current trading update and near-term outlook.

Beginning on Slide 6. Everything we do starts with children. Our purpose to nurture the greatness in every child to grow, thrive and learn remains the center of every decision we make. That purpose guides us on our focus on safety, quality, education and care and the important role we play in supporting children, families and communities across Australia. Despite the challenges facing our sector, we remain committed to investing in the areas that matter most, our people, our families, our quality outcomes and our children's safety practices, ensuring we continue to deliver positive outcomes for children every day.

Slide 7 now. The first half of 2026 continued to be impacted by challenging sector conditions with affordability pressures, lower birth rates, supply growth affecting demand across the sector. Group occupancy for the half was 57%, that is 7.5% lower than pcp. Spot occupancy of 61.9% as of week ending Friday, August 21, 2026, is 5.1% lower than pcp.

During this period, we have remained focused on improving the areas within our control. We have continued to improve performance across key operational measures, including team retention, family experience, quality outcomes and child safety initiatives. Team retention increases to 80%, the highest level it has been in 6 years. Family Net Promoter Score improved by 7 points to 58, and we've continued to invest in safety, quality and compliance of our network. Our efforts have ensured we remain high level of compliance whilst improving quality outcomes with more than 97% of our centers now meeting or exceeding the national standards.

At the same time, we took decisive actions to strengthen the business. This included the suspension of operations of around 40 centers, the restructure of our support office in June and ongoing procurement efficiencies and continued network optimization activities. These initiatives are expected to deliver at least $10 million in annual cost savings. Furthermore, we remain -- we maintained a conservative balance sheet, stable liquidity and compliance with all our financial covenants throughout the period.

Turning to Slide 8. The financial results reflected both the challenging operating environment and actions we have taken to strengthen the long-term sustainability of our business. Lower occupancy continued to impact earnings, resulting in operating revenue of $409.1 million, operating EBIT of $14.7 million and operating NPAT of $6.7 million for the half. Reported earnings were impacted by nontrading items, particularly impairment expenses associated with the suspension of operations at 40 centers and other portfolio optimization activities. This resulted in a reported net loss after tax of $38.8 million. We have maintained discipline in managing costs, preserving liquidity and moderate gearing.

Now turning to Slide 9. We continue to make meaningful progress across our environmental, social and governance priorities. We strengthened governance through the establishment of a dedicated Board Safety Committee, refreshed our enterprise risk framework and delivered on our inaugural climate disclosure. From a people perspective, 73% of our center managers appointed were filled through internal promotions, hiring efficiencies improved and average childhood vacancies reduced by 57%.

As mentioned before, family engagement continues to strengthen with our NPS reaching 58, while network quality improved, as mentioned previously. Progress was made in reduction of the Scope 1 and 2 emissions by 18% and waste reduction by 18%. We also continued our partnership with Act for Kids, progressing with our CCTV program trial, reduced emissions and improved waste reduction, as mentioned earlier.

Slide 10. Our balanced scorecard highlights the progress we continue to make in the areas that we are directly within our control. Compared with our prior corresponding period, team retention improved by 2 percentage points, family sentiment improved by 7 points and quality ratings improved across both key measures and operating disciplines remained strong. While occupancy and earnings continue to be impacted by the broader market dynamics, the continued improvement across our operational measures demonstrates the strength of our strategy and the quality of our underlying business.

Slide 11, our Team. Our people remain one of the greatest strength and are fundamental to delivering quality outcomes for children and families. During the half, we continued to strengthen workforce stability with retention improving to 80% and vacancy levels remaining low across the network. Permanent vacancies reduced by 57% and our hiring efficiencies improved, helping us build a more stable workforce. Leadership development continues to be a key focus with 73% of our managers appointed internally. And importantly, psychological safety improved by 75% and engagement around our Safety, First and Always value continued to strengthen, reflecting a resilient culture despite significant sector challenges that we are all facing.

Slide 12, family experience. We continue to see a strong momentum in family sentiment during the first half. As mentioned, our Net Promoter Score increasing to 58, that's 7 points above same time last year. The continued embedment of our family value proposition is a strengthening family engagement across all key measures, particularly in culture and safety, quality learning outcomes and center environment. While affordability remains a significant challenge for families, booking frequencies increased slightly, inquiries remain lower than last year across the sector, our marketing activities have ensured we compete well.

Slide 13. Quality remains one of G8's core strengths. Today, 97% of our centers are meeting or exceeding the National Quality Standards, which is 6 percentage points above broader sector. Quality Area 1 results are also continuing to improve, reflecting on our focus on educational outcomes and continuous improvement. Teacher retention continues to improve and support the delivery of funded preschool programs and a strong educational outcomes for children. Safeguarding remains a core priority. During the half, we continued to roll out of the Learn to Be Safe with Emmy and Friends program in partnership with Act for Kids, supporting our commitment to Child Safe Organization and Protective Behavior Education.

Slide 14. Demand continues to be impacted by affordability pressures, lower birth rates and ongoing supply growth and broader economic conditions. As a result, group occupancy for the half was 57%, 7.5% below the prior corresponding period. We are encouraged by the improvement of 2% in our conversion given the backdrop of lower demand. Net supply into the sector was increased by 2.5% in the latest quarter, quarter 2 of 2026, noting this was the lowest quarter over 10 reported quarters by the authorities. Portfolio optimization activities undertaken during the period have also improved overall occupancy trends since June.

Turning to Slide 15, improving our occupancy. Our approach is focused on 3 areas: driving demand, improving execution and competing effectively in local markets. We have refreshed our marketing approach, increased local marketing activities and community engagement, strengthened our educational proposition and enhance the family journey from inquiries through to enrollment. We have also invested in additional area manager support, center-specific growth plans, improved tour quality and digital booking capability to improve conversion and operational execution. We are constantly monitoring the sector and being diligent in our competitiveness through pricing and flexibility of days and hours, improving our local presence where families are. We are trialing local social media capability for our centers with rollout planned over the next 2 months across our network.

Turning to Slide 16. Over the first half, we continue to evolve our operating model to strengthen execution, improve efficiency and support center performance. We deliberately redirected resources closer to our centers through the redesign of our support office structure, reducing support office headcount by 21% while increasing area manager capacity to enhance center support, accountability and performance.

Alongside these changes, we've continued investing in the systems and processes that improve productivity and execution. This includes implementing new facilities and maintenance systems, introducing a more efficient payroll platform, simplifying end-to-end processes and leveraging AI across marketing, operational performance and administrative activities.

Safety and compliance remain our highest priorities. During the half, we delivered more than 118,000 hours of training, expanded our safety leader program, continued center management workshop and progressed with our CCTV initiative with a pilot commencing in this quarter. Importantly, these initiatives are delivering results. While sector statutory compliance actions doubled compared to the prior corresponding period, G8 reduced the statutory compliance action by 5%. Reportable compliance incidents reduced by approximately 25%, while high-risk compliance incidents reduced by 56%.

Slide 17. Maintaining financial resilience remains a key priority. Operating cash flow remained positive and supported continued investment in center improvements, equipment, technology and safety initiatives. Our cost base remained well controlled, supported by procurement initiatives and support office restructure completed in June. We also continue to optimize the network through divestments, lease exits and suspension of operation at 40 centers, ensuring capital is directed to the strongest long-term opportunities. Importantly, we maintain a conservative balance sheet, extended one of our debt facilities through to 2029.

I will now hand over to Steven to discuss the financial performance in more detail.

Good morning, and thanks, Pejman. On Slide 19, we discuss in more details our group financial performance. Group operating revenue was 12% lower than the first half last year, while operating NPAT was down 74% to $6.7 million, largely as a result of the occupancy shortfall to last year. Effective cost management, procurement savings helped to mitigate the shortfall in revenue. Underlying network support costs were effectively managed, resulting in decrease versus last year. Finance costs were slightly higher due to higher interest rates and slightly higher debt levels. In terms of our nonoperating items, these primarily relate to impairment expenses due to the suspension of operation of 40 centers and our SaaS expenses as a result of the implementation of new systems. Overall, the group reported net loss after tax was $38.8 million.

Turning to Slide 20 and our center performance. This was down on last year, again, largely as a result of lower bookings and occupancy. Center revenue was 11.5% lower than the first half last year. Employment costs were appropriately managed and have decreased versus H1 '25. This was driven by lower booking volumes. However, wage as a percent of revenue was slightly higher year-on-year. Other expenses were largely in line with lower occupancy levels.

Now turning to our balance sheet and capital allocation. The group continues to have moderate leverage and stable liquidity. Operating cash flow, as noted on Slide 21, continued to be positive despite difficult operating conditions. This was supported by prudent cost and capital management. During the half, we invested $24.4 million in CapEx and a share buyback of $600,000. Net debt for the group ended at $123.6 million, marginally higher than December '25. The group continues to maintain a conservative gearing ratio of circa 25% and has moderate leverage levels.

In addition, the group has access to a further $40 million of undrawn committed bank debt facilities as and when required. And during the half, the group also extended the maturity of 1 of its $100 million revolving debt facilities from December '27 to January '29. Prudent capital and cost management disciplines will continue to be a focus for the group going forward.

I'll now hand back to Pejman, who will talk through the rest of the presentation.

Thank you, Steven. Turning now to current trading on Slide 23. Trading conditions remain broadly consistent with those experienced during the first half. Group spot occupancy is currently 61.9%, which is 5.1% lower than pcp. Year-to-date occupancy as at end of July was 58%, 7% lower than pcp, showing a small trend improvement since June.

Seasonal patterns remain similar to previous years, albeit at the lower levels as experienced across the sector. While inquiries remain below the prior corresponding period, our marketing strategies are yielding better performance on main aggregator platforms compared to the sector average. As mentioned previously, we continue to improve our family engagement through our NPS and our conversion reaching 32%, which is 2% improvement on the prior corresponding period, frequency also increasing modestly.

Capital allocation remains disciplined. We expect full year capital expenditure of approximately $50 million as previously reported. No interim dividends will be paid and the share buyback program has now concluded.

And finally, turning to Slide 24, our near-term outlook. Sector dynamics to be -- continue to evolve. Government support for the sector continues with the extension of the Worker Retention Payment until 2028, increase in CCS and considerable collaboration to restore confidence in early childhood education and care. Anticipated improvements in birth rates over medium term will assist with demand. Supply is expected to moderate through lower net new and contraction within the sector as operators exit due to wide-ranging number of factors.

As an organization, we are focused on the areas we can control. We have decisively taken actions to adjust to current conditions through key initiatives to reduce non-center-based costs, improve efficiency, optimizing our network and extending our banking facilities.

Our near-term focus areas are very clear: continue to improve quality, safety and compliance, which includes focusing on driving Exceeding themes, driving positive engagement with our families, focusing on conversion and increasing satisfaction, maintaining above sector team engagement and retention, developing longer-term succession and capability growth for sustainability for future growth. Increased occupancy through improved enrollment and transition plans, optimizing our network, managing costs diligently, ensuring no compromise on safety and compliance and ensuring financial sustainability and performance resilience.

Importantly, the progress we have made across our core operations and controllable measures over the recent years has created a stronger and more resilient organization, putting G8 in a good position as sector continues to evolve and improve.

I'll now hand back to the moderator for Q&As. And following Q&As, I will close with some closing remarks.

[Operator Instructions] Your first question comes from Tom Tweedie from MA Moelis Australia.

I just had a question around the sort of suspension divestment strategy. If we have a scenario if this operating conditions and environment goes on for, say, another 12 months, what are your thoughts on potentially flagging or looking at further suspensions? And then within this, how difficult is it at the moment to sort of surrender a lease or actually divest the center itself just given the operating environment?

Thanks, Tom. Look, I think in terms of the future, I mean, obviously, we'll just have to assess that as we go. But potentially, we may do that in the future. We can never rule that out.

In terms of how we -- what we've done with the portfolio, we've obviously suspended them, and we're looking to -- obviously, we're trying to look to divest those or either surrender those back to the landlord.

In terms of buyers, we have had some success. I think we won't give an exact number before the end of the year, but we certainly are very confident that we will divest a number of those centers before December, certainly not all of them. And certainly, also in that package of things that we'll do, we will have some lease surrenders as well where we give those back either the lease ends or we come to some arrangement with the landlord on those. But obviously, each of those is a case-by-case proposition depending where the property is and depending on the lease and those sorts of things.

And then, sorry, can I just also clarify, you mentioned that on the inquiry levels remain below pcp. Just want to suggest, is that on a like-for-like basis as in excluding the 40 suspended centers or not?

The inquiry levels, Tom, that's been reported, that's for the like-for-like, yes.

Great.

[Operator Instructions] Your next question comes from Cameron Bell from Canaccord Genuity.

I may well ask 2 questions. I know you said 1, but given the [indiscernible]. So firstly, could you talk to that occupancy move in July is pretty material and kind of amplified its importance for you and the industry. Can you maybe talk to us why you think there's been this jump in like-for-like occupancy in the last, say, 6 to 8 weeks?

Well, I think it's -- well, it's kind of -- as we said in the presentation, the -- if you look at the occupancy curve that we've shown on the slide -- on Slide 14, the impact of suspending the operation of those 40 centers in June kind of improved the June period. But since then, we've experienced kind of very similar seasonal pattern from that kind of end of June to last week. And that pattern, as you've seen at the end of June, we were minus 7.5%. End of July, we are minus 7%, which kind of indicates a trend pattern improvement of 0.5%. That's a combination of those center closures and some of our centers and some weeks actually our pattern has been slightly better than the previous years.

Okay. Do you know how much of the contribution in occupancy narrowing is due to the closing of centers?

We've kind of -- we're estimating at this point is somewhere between that 2% to 3% is the impact of those centers.

Yes. Okay. And...

[indiscernible]

Yes, yes, yes, that's roughly it. Yes. Like it's something that I've been kind of hoping to see across the industry, but it's -- which is organic from...

Well -- yes, but just -- overall industry -- as you know, Cam, there isn't a lot of industry-wide available information on occupancy. The data points that probably you've come across and we've come across there are wide-ranging impact across the sector. We're hearing anything from kind of minus 5%, minus 6% to about minus 15% on previous years. And unfortunately, as you've noticed, there are -- we've seen an increasing number of operators that are actually just closing down as well. So it's wide ranging.

Yes, that makes sense. And maybe just on your balance sheet. You mentioned your covenants there. Could you maybe just talk to -- well, like any greater deal you can -- detail, sorry, you can provide us there, whether or not you're talking to banks about covenant holiday as you refinance these loans or how close you think you're going to go come February? Could you step us through that?

Look, what we said there, Cam, is obviously, we disclosed we've got 3 broad covenants, and we're compliant with those in June, and we expect to be compliant with those going forward. We obviously refinanced our debt with -- or sort of rolled the debt, I suppose, is a better way to say it with Westpac, and we sort of have their full support at the moment. So we don't give the actual number, but we're comfortable in terms of our headroom at this point.

Tom (sic) [ Cam ], kind of covenant holidays or -- there were no waivers or anything involved.

Yes, sure. And the other part of your debt, you're going to try and extend that in the next few months?

No, they both -- there were 2 tranches and they both expire at roughly the same time in '29.

But Cam [indiscernible] someone else.

Yes.

Your next question comes from Peter Drew from Carter Bar Securities.

A question on the 35 centers that are remaining that have been shuttered. Just wondering what's the sort of approximate WALE on that portfolio? And also, can you give us a guide on the sort of annualized cash costs of holding those centers?

Look, we haven't given a disclosure of that, Peter, I suppose. It's probably the WALE on those is probably consistent with most of our portfolio. It's -- some of them have shorter term, some of them are longer. They will vary. But -- and in terms of the cash cost, we haven't given a breakout of that.

Probably just to expand on that, as you'll see in our P&L, what we have done is for those remaining things, you'll still have the cash cost of those leases there. But in terms of the maintenance cost of those, we've taken an onerous lease contract, which basically will absorb any costs of those going forward, putting aside the lease interest, which will still be amortized, but that will go into nontrading going forward. But we will have the cash cost of those leases to the extent that we don't divest them or come to some other arrangement.

That's helpful. And then just in terms of the cost savings from restructuring, is it fair to assume that we'll start -- you're starting to see those benefits come through in the first half and you'll sort of see sort of maybe half of what you've called out in the first half.

You are correct in that assumption. So as we noted, those kind of 3 big activities that we highlighted, one being the suspension of operation of the 40 centers, the support office restructure and some of the targeted procurement initiatives that we run, we anticipate that combination of those initiatives will have at least a $10 million annualized impact. And we concluded those initiatives fundamentally towards end of June.

So therefore, you're right, if you wanted to kind of go, will I see the impact of those in half 1 of '27, you are correct. But you also got to kind of balance that a little bit of -- there's always cost increases that happening around us, particularly around the operating environment of comp price and those kind of things. But your assumption there will be -- it will roll into half 1.

There are no further questions at this time. I'll now hand back to Pejman Okhovat for any closing remarks.

Thank you. Thank you all for attending this result announcement call. I also want to thank all our shareholders and wider stakeholders within the sector. We appreciate your continued support.

I'd like to thank our team again across the country for their professionalism, commitment and dedication during what has been a period of significant change across the sector. The progress we continue to make in safety, quality, family experience and operational performance is only possible because of their passion and professionalism. Every day, they make a meaningful difference in the lives of children and families, and I thank them for the important role they play in delivering our purpose.

Thank you again for attending this call. So we appreciate your support. The meeting is now closed.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.

Good afternoon, everyone, and welcome to the 2026 Annual General Meeting of G8 Education Limited. My name is Debra Singh, and I'm the Chair of G8 Education. I note that a quorum is present, and I declare the meeting open.

I would like to begin with an acknowledgment of country. I begin by acknowledging the Jagera and Turrbal people as the traditional custodians of the land on which we are conducting our meeting today, and pay respect to elders, past and present. We recognize that Aboriginal and Torres Strait Islander peoples have been nurturing and teaching children on these lands for thousands of years.

We are grateful for the opportunity to work, learn and grow connections together as a united community. The company is delivering its 2026 Annual General Meeting as a hybrid meeting and is pleased to provide shareholders with the opportunity to attend and participate in the meeting either in person or online, where shareholders will be able to watch, listen, ask questions and vote online.

I thank you for those that are in attendance today. Please note that shareholders and proxy holders will each be limited to asking 2 questions on each item. While we welcome all visitors attending the meeting today, please note that visitors are not permitted to ask questions or otherwise be involved in the proceedings.

I would like now to introduce my fellow directors who are here with me today: Toni Thornton, Margaret Zabel, Professor Julie Cogin, Stephen Heath, and our Managing Director and CEO, Pejman Okhovat. Peter Trimble is unfortunately unable to attend today's meeting due to unforeseen circumstances. I also welcome Ms. Sally-Anne Jamieson, our auditor from Ernst & Young, who is available to take questions and Ms. Josie King, our Company Secretary.

Today, I will be giving a chair's address, and this will be followed by a presentation from our CEO and Managing Director, Pejman Okhovat.

Can I just ask, is peter Trimble available for questions bearing in mind is up for reelection. Is he on the phone?

He's very unwell today. He's unfortunately had an on-site accident and is not able to answer questions, but we can refer those questions to him. I'm sure he'll be happy to answer any questions you have.

I will then move into the procedural matters of the meeting. I am now pleased to present my Chair's address. As Chair, I can say that unequivocally, 2025 was one of the most challenging and defining years in G8 Education's history and indeed, across the entire early childhood education and care sector.

Events across the sector, including the horrific incidents in Victoria had profound impact on families, educators, regulators, shareholders and the broader community. They've tested confidence and trust in early childhood education and care providers nationally and require deep reflection across the center. For G8 Education, this period reinforced the privilege and responsibility in trusted in caring for children across Australia and to continuously improve safety, vigilance, transparency and accountability.

In the face of these challenges, the defining strength of our organization with our people. I want to acknowledge the professionalism, compassion and resilient shown by our team members who continue to support children, families and one another with care, integrity and purpose during an exceptionally difficult year.

Their actions reflected the very best of our values and our commitment to children and community. Safety first and always is one of our core values, and it guides every decision we make. We have zero tolerance for any behavior that compromises the well-being of a child. Throughout the year, we continued to strengthen our governance frameworks, systems, training and oversight to reinforce safety at every level of the organization.

Importantly, the Board established a dedicated safety committee separate from the Audit and Risk Management Committee to provide enhanced focus governance and accountability in this critical area. Despite the challenges of the year, our commitment to high-quality education and care did not waver. By the end of 2025, 95% of centers were meeting or exceeding the national quality standards, outperforming the sector average.

While this result is encouraging our internal aspiration remains clear: to achieve a future in which every one of our centers meets or exceeds the required standards with no service assessed as working towards. Supporting and retaining skilled capable educators and teachers remains fundamental to delivering safe and high-quality education and care.

By the end of 2025, we were proud to have around 36,000 children attending our services each week supported by more than 8,800 passionate team members all thriving together to build bright futures for the children in our care. I've already highlighted how challenging the operating environment was in 2025, increasing cost of living pressures influenced enrollment decisions, market demand softened and the sector experienced heightened regulatory scrutiny and reputational impacts.

During the year, our occupancy levels reflected broader sector conditions. And despite the maintenance of disciplined operations, this places pressure on the group's financial performance. In these circumstances and consistent with the Board's focus on accountability, and alignment with shareholders' outcomes, the Board has determined not to propose a resolution to grant performance rights at this year's AGM.

The Board does wish to acknowledge our CEO, Pejman, the leadership team and our broader team, who have worked tirelessly to steer G8 through a very difficult period. We are always grateful for their contribution and efforts and never more so than the last 12 months.

Notwithstanding these tough conditions, operating cash flow remain positive. The Board also continued to support targeted investment in safety, quality and center environments, while strengthening portfolio alignment through carefully considered divestment activity. Throughout this period, the Board remained focused on balance sheet resilience, long-term sustainability and disciplined decision-making, acknowledging that shareholder returns were constrained during the year.

During 2025, working with management, the Board refreshed the organization's strategy to reflect emerging sector dynamics and regulatory changes. We introduced strategic Horizon 2.5, strengthening and enhancing a deliberate phase focused on consolidating capability, embedding initiatives launched earlier -- in earlier years and reinforcing our safety operational culture and service fundamentals.

While sector conditions remain challenging, the Board remains confident in the company's strategic direction, leadership and commitment to continuous improvement. We have confidence in our leadership team and in the strategy they are executing to take the organization forward. As we continue to strengthen our service offering, our focus is on building the confidence and trust already placed in us by more than 36,000 families who attend our centers every day.

While extending that same trust to more families across the communities we serve. While this will take time, the Board is optimistic about the opportunity ahead to strengthen that trust, build confidence and position G8 Education as a leader in the early childhood education and care sector. The fundamentals of the business remain strong and G8 Education is in good shape.

We do, however, acknowledge that broader sector and macroeconomic conditions have created headwinds and contributed to pressure on our share price with the market currently reflecting sentiment across the early learning sector as a whole. While these factors are outside our control, they do not diminish our confidence in the resilience of the sector or in G8 Education's long-term prospects. Our focus remains on disciplined execution, strengthening performance and delivering sustainable value for shareholders.

On behalf of the Board, I extend my sincere thanks to our team members across our network for their dedication, professionalism and care. I also thank families, communities, regulators, partners and shareholders for your ongoing trust, engagement and support. Together, we remain committed to creating safe nurturing environments where every child can learn, grow and thrive. Thank you for attending today. I will now hand over to our CEO and Managing Director, Pejman Okhovat to deliver his address.

Thank you, Debra, and good morning, everyone. As the Chair has outlined, 2025 was a defining and challenging year, not just for G8 Education but for the entire ECEC sector. Today, I'll provide an overview of the operating environment, our strategic focus and the progress throughout the year and how we are strengthening G8 Education's foundation for the future.

The operating context through 2025 was complex and demanding. Cost of living pressures continue to influence family decision-making, impacting enrollment patterns and demand stability across all jurisdictions. At the same time, serious incidents reported nationally rightfully led to heightened regulatory scrutiny and an enhanced focus on safety across the sector.

These incidents impacted family confidence and trust right away across Australia. I want to acknowledge the criminal hearings that further -- was further adjourned last week involving a former employee who worked across a large number of Victorian early childhood services, including G8 Education. While our focus remains on supporting families and team members during the incredibly difficult time, we continue to do everything we can to give the authorities the best chance of achieving justice for the families involved.

Because this matter is currently before the court, it is not appropriate for me or the Board to comment further on this matter. Safety first and always is one of G8 Education's core values, and it shapes every decision that we make. There's no higher priority than safety and well-being of children in our care and we have zero tolerance for any behavior that compromises that safety.

In response to sector conditions and changes to regulations, we continue to update and further enhance our governance, systems and practices across our organization. Child safety standards continue to be strengthened within our governance framework and operational culture, reinforcing consistent expectations and behaviors at all levels.

Key initiatives included enhanced recruitment, vetting and mandatory reporting processes, centralized working with Children Checks and teacher registrations, ongoing mandatory safety and safeguard training, prohibiting personal advices in center rooms, a strengthened whistleblower protection and confidential reporting channels and continued investment in cybersecurity and safe digital environments.

We also invested in safety leader capability within center leadership teams and reinforce the importance of children having a voice in their own safety. Body safety education programs were incorporated into curriculum frameworks, with further expansions planned for 2026. Following our announcement in July 2025 to roll out CCTV across the network, the project has progressed carefully, and we are working closely with the federal government and other experts using pilots and phased implementations to ensure strong safeguards are in place relating to child safety, dignity, privacy and data protection.

Despite a challenging environment, our commitment to high-quality education and care remained unwavering. This was reflected in a strong assessment on rating outcomes, by the end of 2025, 95% of our centers were meeting or exceeding their national quality standards overall. That put us 4% above the sector average and 2% above the prior year.

Our focus on family experience continue to strengthen through enhancement to our family value proposition with clear communication, greater visibility of learning, increased flexibility and improved access to support services. It was reflected in the increase in our Net Promoter Score, demonstrating growth and confidence and trust from our families.

At the same time, individual learning plans were embedded across our network supporting more personalized learning, development and well-being outcomes for every child in partnership with their families. Our educators and teachers are foundation of everything we do. Throughout 2025, we focused on strengthening capability, leadership and support across the organization. The second tranche of federally funded ECEC Worker Retention Payment was implemented in December '25, recognizing the critical contribution of our center-based teams.

Engagement remained strong and above center benchmark throughout the year, Importantly, we saw retention improve, reflecting a positive impact of our continued investment in culture, career pathways and capability building and leadership development, talent mapping, succession planning programs were expanded across the organization.

In inclusion and reconciliation, 98% of our centers were operating their own reconciliation action plan by end of the year, reflecting meaningful progress in culturally responsive practices. Financial outcomes of 2025 as outlined in our annual report. Operating conditions, as I said, remained difficult, reflecting ongoing cost of living pressures and a softer inquiry and conversion activity from our families. Our financial performance reflected these headwinds with a statutory EBIT loss of $234.7 million and a statutory net loss after tax of $303.3 million.

The underlying EBIT, which is lease adjusted, excluding impairment recognized at 31st December 2025 was $93.3 million. Despite these conditions, operating cash flow remained positive at $103.8 million, underpinned by decent operational and cost management.

We recognize and are acutely aware of the evolving family expectations, change in government policy and broader sector dynamics that requires G8 Education to continually evolve and adapt. We're committed to strengthening child safeguarding, embedding safety leader capability, continuing to invest in CCTV deployment, enhancing quality and education outcomes, improving family experience and supporting our team and our people and maintaining financial disciplines. Central to our strategy is the delivery of high-quality education and care across Australia.

Our continued investment in child safeguarding quality standards and operational integrity position G8 well to rebuild trust, support sustainable occupancy outcomes and deliver long-term value. Quality is not only fundamental to purpose. It is a critical driver of resilience and performance in current operating landscape. As we outlined in February, the near-term operating environment continues to be challenging with global inflation, declining birth rates, rising interest rates and cost of living pressures for families influencing occupancy and operating conditions across the sector.

While new supply continues to enter the sector, the pace of growth has slowed. We continue to respond to rapidly regulatory changes, which differ from time to time and state by state and territory, which adds complexity and cost of compliance and staffing and daily operations. As reported earlier today, our current occupancy as of week ending 25th of April 2026 is a spot occupancy of 56.4%, which is 4% (sic) [ 7% ] below same time in the same prior comparable period. Year-to-date occupancy is 56.1%, which is 7.9% lower than PCP.

We have proactively assessed our network to ensure we remain sustainable, resilient and well positioned to continue delivering safe, high-quality early education and care for Australian children. We have carefully assessed where our resources can be best effectively allocated in the current conditions to support high-quality early education and care outcomes. As a result of G8 Education's assessment, the following 3 key initiatives are planned to be delivered during FY '26. Suspension of operations of approximately 40 centers. Our network optimization framework identifies challenged and underperforming centers, and these have been exacerbated by the current macro conditions.

G8 Education's immediate focus remains supporting families that are impacted and transitioning them to one of our nearby centers and redeployment of our team members where possible. G8 Education will then consider long-term options for those centers including surrendering of the leases, divestments or other alternatives.

Secondly, procurement and cost saving initiatives, which do not impact safety, compliance or capacity of our center-based team to deliver high-quality education and care. And thirdly, implementation of a reorganization of G8 Education support office structure and reducing its cost base. While decisions like this that are never easy, is absolutely the right thing to do to achieve the outcomes I've just outlined to you. Our priorities are clear. Child safety and paramountcy sits at the core of our culture and governance underpinned by every decision we make. Alongside this, we are focusing on delivering consistently high-quality education and care, strengthen our family trust and engagement and operating within the financial discipline and operational accountability.

Together, the priorities guide our operating decisions and long-term strategy, positioning our business to navigate the current conditions while delivering resilient outcomes and a stronger and more sustainable business for future. In conclusion, I want to express my sincere appreciation to our team members across the country for their professionalism, resilience and care, particularly during such demanding year.

Their dedication builds bright future for the children and families in our services every day. I would also like to acknowledge the support of our supplier partners, key government and regulatory stakeholders and wider sector colleagues. Lastly, I would like to extend my thanks to you, our shareholders, for your continued support and for being here with us today. It remains a privilege to help lay the foundations for long-life learning for children in Australia.

Thank you, and I'll now hand back to the Chair.

Thank you, Pejman. Before we move to the formal business of the meeting, I will summarize the shareholder question and voting procedures, which apply to this meeting. As set out in the notice of meeting, there are 4 resolutions to be considered today. The resolutions are outlined in the explanatory statement that accompanied the notice of meeting.

If there is no objection, I propose that the notice of meeting be taken as read. Thank you. For each of the 4 resolutions, I will put each resolution to the meeting and ask for questions. Only shareholders, proxy holders or corporate representatives of shareholders, those holding yellow or blue cards are entitled to submit questions.

As a reminder, visitors, those holding red cards are not permitted to ask questions. I will ask for questions in the following order. Firstly, if you are in the room, you can ask questions by raising your yellow or blue attendance card and a microphone will be brought over to you. Secondly, if you have joined us online, you can submit questions at any time. Your questions will be read out by our company Secretary and addressed at the relevant resolution.

Questions that are similar in nature or of a common theme, may be summarized and aggregated together. For those of you who have joined us online, instructions for how to lodge the 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. If you have joined us online, I encourage you to submit your questions as soon as possible.

I note that we have not received any shareholder registrations to ask questions via telephone. The voting procedure for voting will be as follows. The proxy votes are contained in our presentation today and will be displayed on the screens 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 as follows in favor of resolutions 1 to 4 to the event extent, I am permitted to do so. If you are attending in person and holding a yellow card, please complete the voting form and place the voting cards in the boxes carried by MUFG Corporate Market share registry staff at the conclusion of the meeting.

For those of you who have joined us online, you may place your votes at any time using the voting card on your screen. For assistance with voting, please see the instructions in our presentation today or the online guide available via the link at the bottom of your screen or on our website at www.g8education.edu.au/AGM2026. 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 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 will tabulate the results, which will be released shortly after today's meeting on the Australian Securities Exchange. The results will also be made available on our corporate website.

Before proceeding to the first item of business, let me introduce our auditor for the 2025 financial statements. Ms. Sally-Anne Jamieson; and Ms. Kelly McKenzie. Thank you, Kelly, for joining us today and for the last 9 years of your audit services, who's joined us in person and is available to take questions on the conduct of the audit and the preparation and content of the independent external auditor's report.

All questions should be directed to myself as Chair of the meeting, and I will then invite any other director or relevant person to respond as appropriate. Item 1. I'll now turn to the first item of business, the financial statements and reports for G8 Education Limited. You have received the FY '25 annual report, including the financial statements for the year ended 31 December 2025. I now invite discussion on the financial statements and reports, 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 until we come to that item.

I would like to remind you that only shareholders, proxy holders or corporate representatives of shareholders holding a yellow or blue attendance card are entitled to speak. Please address all your questions through to me as Chair. If you believe you do not have the correct attendance card, please see a member of MUFG Corporate Markets at the registration desk, and they will be able to assist you. Are there any comments or questions from those in the room on this item of business?

Chair, David Kingston from K Capital. Look, obviously, from a shareholder's point of view, another extremely disappointing announcement this morning. Three key things: occupancy hasn't improved much from its unacceptably low level; secondly, you have closed or suspended another 40 centers; and thirdly, the market is voting very negatively. It's down 1/3 today.

I'd also say, Chair, as per the Corporations Act, I do have a number of comments to make, which are important for my 2 questions at the end of my comments. To put it in context. Let's look at the facts, Chair. G8 was Australia's largest ASX-listed child care company, still is, had 400 centers. It's now got 360, which are operating. Child care, yes, I accept it has challenges, Chair. But disturbingly in the past year, G8 has been far and away the worst performing ASX-listed child care stock. It's fallen by 80% to 85% share from $1.20 to $0.24 yesterday, a calamitous of $0.16 today. Your 3 listed competitors, Chair Embark has fallen only 35% from 70% to 45%, Mayfield has fallen from just 10% from 40% to 36% and Nido has fallen from 80% to 38%.

So unambiguously, I don't like to say this chair, but I'm going to be frank, G8 is the dunce of the class. The fall in the last 3 months has been spectacular from the high 60s. On the 10th of February, there was a disturbing market update with $350 million of goodwill written off along with the cancellation of the dividend. And CEO's investor call, I listened to that. It was very, very underwhelming and the stock got smashed after that. Stock continues to be smacked $0.24 yesterday, $0.16 today. But let's look over a 10-year period because you can have a bad year. But that's equally as woeful. G8 was $4 a share 10 years ago. Anyone unfortunate enough to have bought then has a capital loss of 94%. That's massive value destruction.

Let's also look at what's happened with this company. You keep on going to the market to raise equity. You've raised a lot of money and shareholders have been hurt big time. There was a $100 million placement before your time Chair, but on October 2014 at $4.91 a share to purchase 20 new child care centers. No one on the board was on the board then, so that's not your fault. But there are a number of directors who are on the Board when you raised $300 million at $0.80 a share in April 2020, those people who back to you have lost a lot of money.

More shares were issued under the DRP , but then the really bad capital management continued. In 2024-'25, G8 undertook a $50 million on-market buyback to improve EPS. The shares were purchased at miles above today's price. So G8 has overpaid, lost share -- more shareholding. The buyback was paused in February '26. At the current share price of $0.24 yesterday, $0.16 today, G8 yesterday had a market cap of $185 million. Today, it's $125 million. You've actually raised $300 million in April 2020. That's the extent of the shareholder value destruction.

The share fall from around $1.20 a year -- I mean, a year ago, 1 year ago, none of your competitors or peers have fallen as calamitously. You had a market cap of $1 billion. Yesterday, your cap was $185 million. Today, it's $125 million, $130 million. Clearly, as I said before, different directors have been on the Board for different periods. Margaret Zabel, Julie Cogin, September 2017, Peter Trimble, May 2020. Yourself Chair, Toni Thornton, November '21, CEO January 2023, so he's been on the Board for 3 and a bit years. Stephen Heath, you got a [indiscernible], you've only been on the board for -- since June '24. Let's look at what's gone so badly wrong. And to be frank, I thought the Chair's address and the CEO's address were full of euphemisms.

In my opinion, this is a crisis. This company is bordering on bankrupt the way it's going. Your market cap is below your debt, and I'll come to that in a minute. But what's gone so badly wrong. Yes, I accept child care is tough. I'm not going to blame you for a couple of bad employees. That's fine. That's endemic. That's got nothing to do with you. So that's not my issue. My issue is you are the dunce of the class, far and away the worst performing listed child care company.

And the malaise goes back for 10 years, which is a mile before the improper behavior of few bad people. In addition, as Toni Thornton will know, there's a lot of people that have made good money out of child care. Capable people make money in child care. It's subsidized by the government to a large degree. So it's not a case that everyone is losing money. There's been a lot of people who have made good money.

In my opinion, factors contributing to the disastrous performance. Look, clearly, before your time Chair, previous management have probably committed to excessive rents on a number of properties. Part of the reason why today you're closing another 40 properties. You used to have 500 centers. Yesterday, you're at 400, now you're at 360. Let's look at a couple of shocking deals. In November 2019, G8 sold 25 Western Australian centers for a paltry $6 million. Even worse on October '23, you announced the transfer of 31 underperforming centers and agreed to pay the new operator $26 million to take those centers, a liability. As it turned out, some of the landlords refused to transfer them and I believe only 18 were transferred.

In my opinion, the second key factor is that you're too centralized, you're too bureaucratic. A lot of the smaller groups are making good money. You're so centralized, in my view, that's inappropriate. It tends to lead the highest head office expenses and arguably less effectiveness at central level.

There's no real synergies because your biggest cost, Chair, is labor. And whether you've got 400 centers or 1, you're paying the same labor rates. But I believe the central management structure is one of the problems. Third factor clearly is really bad capital management. You bought back shares at over $1. You bought them on market at over $1. You could buy them today share at $0.16. That's contributed to your gross debt being $155 million, which is above your market capitalization. It's contributed to canceling the dividend because you've got no money left to pay the dividend.

And obviously, you have to cancel the buyback. In my view, the financials are terrible, 25 accounts, revenue down 7%. EBIT down 19%. NPAT before the abnormal down heavily. But sadly, it's going to get worse. The results this year are going to be unambiguously worse. What's the key problem that the Board has to fix? Occupancy, '25 it was 65.8%, down from 70.7% in '24. Spot occupancy in the trading update, 15th February, 54.4%, it's seasonal, you announced today, it's 56.4%, which is very disappointing. Market expected you to jump more because it's seasonal.

The profit outlook is horrendous with the ongoing poor occupancy, rents and labor rates go up. Yes, you've made a little bit of head office cost reduction, but the '26 earnings outlook clearly is going to be way below '25 earnings. The balance sheet really worries me Chair. I'll get to my questions in a second. But the balance sheet is a real concern. Gross debt is $155 million. Sure, you can deduct the $38 million cash and net debt arguably is $117 million, but you need that cash for working capital. So the balance sheet worries me.

I think the intangible assets, even though you've dropped them by $350 million, in my view, that's delusional. I don't know how the auditor signs off on that. You're valuing the intangible assets at $699 million, which is a write-down from the previous year at $916 million. It's just too high and the market is saying it doesn't believe it. You retained losses of $427 million. Your NTA is negative. Lease liabilities $664 million.

David, I don't want to be rude. I would happily spend some time after the meeting with you. If you would like to have a discussion because I think there are many more than 1 or 2 questions there. I think we've -- we -- not for one moment, do we think our performance is acceptable. One of the reasons we're doing and taking the initiatives we're taking that we announced today is to ensure that we actually can retain a sustainable business. And I'm happy to talk about that with you in more detail, but I don't really want to take up any more time today to do that. Pej and I both volunteer time to spend with you.

Look, thanks for that, Chair. I'm getting to my questions, but I don't think you're going to have a whole list of people asking questions. And I make no apologies.

We do have questions.

I'm sure you'll have questions, but I don't think you can have a whole list of people. But I will get to my 2 questions on this first item, Chair. Clearly, for the reasons I've mentioned, I tried to explain why I think the performance is unacceptably poor by, in reality, the Board of Directors. My first question, though, chair, will G8 breach its debt covenants? And where you need to consider yet another emergency equity raising? Question one.

First answer to your question. If we were anywhere near breaching debt covenants that would be disclosable. And as you know, we're very good at disclosing any challenges we've had as a business. And at this point and second part of your question, not at this point.

Okay. Well, that's at this point. It could potentially be different in a month's time. Do you want to help the shareholders understand the risk that they're facing by clarifying what the debt covenants are because you owe $155 million, which is higher than the value of the whole company?

That's right. Pej, would you like to -- because I've been talking a lot.

Yes. No, thank you. We have -- we don't publicly disclose our debt covenant agreements with our bank. But as Chair said, and I'll echo Chairs response that the Board and the management take their obligation incredibly seriously. We are reviewing our financial situation on incredibly regular timely frames and we're updating the Board accordingly. If at any time the Board assesses that there's a disclosure required, the Board will do so as they have demonstrated that throughout the last few years. And if there were any specific issues or challenges, the Board will have considered that. So I think the Board and I have answered that question.

Well, I don't think you have, with respect, Pej. You're hurting a lot of shareholders. Shareholders are being eviscerated by the woeful performance. The market is saying the value of the company is below your gross debt. I think you do owe it to the shareholders to let them know whether this company is at risk in breaching its debt covenants and whether there is a potential equity issue in the not-to-distant future.

Is there a second question? I leave it to Chair to...

No, I think -- and we do an update at the half. And I think we will leave it there. Any other questions, Josie?

Sorry, Chair. My second question, that was the first question about the debt covenants.

David, I thought you had -- that was 2 questions.

No, no. That was a follow-up Chair. My second question Chair either for you or from Pej or from the auditor. On what basis in the accounts we're discussing today, can you possibly support a goodwill amount of $697 million that gives shareholders' funds of $525 million. If you take out that goodwill, you've got no shareholders' funds left. But on what basis can you possibly do that? Like the goodwill clearly on 40 centers is 0. You've closed them or suspended them. But if either you Chair or Chief Executive or the auditor could clarify on what basis you can come up with that figure, as the market disagrees vehemently.

Sally, would you -- or Steve, maybe. Thank you.

Obviously, our goodwill calculations are done at a full year, and we'll do our next calculations at the next half. But obviously, the calculations done at the full year were based on the assumptions and the numbers at that point.

I'd also refer you to our audit report, which outlines the accounting guidance and the procedures that we performed at that time. And I think it is important to note that, that testing is performed at 31 December last year without the use of any hindsight. So to Steve's point, it will be done again at 30 June.

So as a follow-up. So in other words, the true goodwill figure today may be dramatically lower. Clearly, you've got no goodwill on 40, you've closed. You've lost 10% of your facilities as per this morning's announcement. So it sounds like that goodwill figure will come down again dramatically at the next half year. Is that fair?

Potentially, we'll do that assessment. The other point I'd make is some of those centers have been impaired already. So they've already built into those numbers.

But clearly, some of those 40 centers had some goodwill. So clearly, that has to come off. But it sounds like in 2 months' time, there's likely to be another drop. Anyway, thank you.

I can answer that if you want. You do at test goodwill at each center level. So that's outlined in both -- it's outlined in the financial report and in the audit report. So the requirements aren't to test it at a center-by-center basis.

I know that. But clearly, the goodwill associated with 400 centers is highly likely to be higher than the goodwill associated with 360 centers. Thank you.

All right. Let's move along. Josie, any questions in the room? No.

Chair, we've received a number of questions in relation to the general performance of the business. The first question relates to the employee -- it comes from John Logan. It relates to employee payment and remediation. What is the total cost of the scheme to date? Has $42.2 million has been paid out? Also of the $1.5 million remaining, how many employees are affected?

Don't you want me to?

Pej, why don't you -- yes, we've talked to this before, but...

Thank you. To date, as you outlined, the payment has been made to 96% of the employees affected. We continue to work with Fair Work Ombudsman in a sustained effort to finalize the remaining employee payment remediation. The remaining employers, we've tried a number of different avenues to reach them and we haven't been able to locate those individuals. The funds that are relating to those employees are absolutely sitting there. We're working with the Fair Work to find the best way to get it to them. And we've also informed the Fair Work that we're very happy to put it in a trust under their guidance for future to be able to assess that.

Thanks. Josie?

Okay. The next question relates to -- is another question from John Logan. A second question. From the report, it appears that most revenue is derived from government public sources, what percentage of revenue is generated from what you could call private sources?

Pej, I hate to do this to you. But it's the detail that you know very deeply.

Yes. Look, if you just kind of probably just step back, I think Mr. Logan's commentary is absolutely right. Government provides families with the child care subsidy, which has got different elements of assessing each to access that through there's means testing and there's activity test that's changed around that. What we do is, on behalf of the family, we actually access that once they've applied for it and then pay. You're absolutely right, the center-by-center, the level of child care subsidy goes towards the fees that are charged by providers and at times, there are -- those fees that are paid through the child care subsidy may not meet the level by which the actual fee of the operator is like G8 Education.

And therefore, family have to top that CCS at that level, which if I'm correct in understanding Mr. Logan's assessment is that's the part that he's talking about on average basis, look, again, it's not a metric that we calculate and we share very publicly. I can give you an approximation of that. Approximately around 60% of the revenue does come from CCS, and that's very similar across the sector.

Thank you. Josie?

The next question comes from Mr. Brett Westbury. To have earmarked the 40 centers for suspension what has the Board assessed as the financial impact?

Well, I think it's fair to say we have literally just finalize that decision. We aren't prepared to talk about what the actual dollar impact is at this point in time. We've suspended those centers and we'll continue to assess as we go through this process. Essentially, we have said that we'll be able to probably update at the half pitch as we continue through the program, and we will know more.

Yes. No, I think just in terms of -- you're absolutely right, Chair. And just to put a slightly -- a little bit of color on that point, if I may. That look, in this really tough conditions, those centers, actually closing those centers to find an alternative. We do assess that it'll have a positive EBIT impact. But to Chair's point, there's still a lot of things that we need to do over the coming weeks and months. And of course, when you have third parties like landlord involved, it can take a bit of time. But assessment has been that they would have a positive impact, but the exact amount of it will work through in due course. And whatever we have concluded by half we will report on.

Another question. This one comes from Mr. Daly. And his question is, do you have a strategy for growing the business?

We absolutely do. And I'll throw it to you in a minute Pej, but essentially, it sort of feels a bit counterintuitive, but actually what we're -- these initiatives that we're going through right now that we have announced today is actually going to help grow the business. And we have a number of initiatives underway. I talked about that in my Chair's address in relation to our strategy and phase 2 of our strategy around enhancing growth. It's a very difficult time in the sector, but we feel very confident about the future. We have 36,000 children in our care every day.

It's about retaining those families and actually being able to attract more families. And we believe with our safeguarding and our focus on safety, we will actually be able to lead in that area. So we see the future as being quite positive in relation to how we will sustainably grow the business. Pej, anything you'd add?

No, I think you've highlighted all the key points, Chair. Our assessment and many others who we work closely with and many others who are closely involved in the sector. We're going through an incredibly unprecedented tough time, probably not too dissimilar to what aged care went through probably a few years ago. What we are doing, as Chair outlined, we're ensuring that we course adjust the business. We are ensuring that we proactively deal with the things that are in our control, making sure we rightsize our support functions, rightsizing our cost, paying attention to the areas that need to be addressed.

So ensuring to your point, we remain sustainable and fit to navigate through this challenging time. These challenging times are not here for the next month or so. We're anticipating they'll be here for a few months, but we want to ensure that we are fit and sustainable and to be able to grow when the market condition changes.

Chair, that is 2 questions from each shareholder online. However, there are some additional questions from those shareholders. Would you be willing to entertain additional questions?

I'm just very cognizant of time. We're already at 5 to 1. So I'm very happy to -- Pej and I are very happy to answer those questions post AGM.

There are a number of questions relating to -- there's 1, perhaps 1 question that I will present to you now. It is a query around the Board. And why has the Board considered resigning after an abysmal performance, e.g. 80% of shareholder value destroyed in the last 12 months and 90% gone in the last 8 years.

I don't want to be flippant. But managing through the crisis that the Board has managed through over the last 12 months, it would have -- an easy option would have been to resign. But this Board definitely didn't ever go to that. We went to how do we lean in, how do we continue to support the leadership team, how do we manage through this crisis and how do we come out of it and how do we protect the 36,000 families and children that are in our care and in our centers every day, how do we retain our entire team of 9,000 people.

We, as a Board, I would say, leaned in, as I said, an easy option would be to resign in my view. The tougher option is to actually manage through the crisis. And obviously work towards a positive outcome. And we're still working through that, but I can tell you it's been an extremely tough period, but I would not want to be surrounded by any other Board members and I have got around the table among other Boards and the support has been fantastic.

Thank you, Chair. There is one question from Stephen Mayne. Stephen Mayne asks, David Kingston is the best thing to happen to an Australian AGM debate in 25 years. I was going to ask 4 questions today. Will you let David have more full time and ask my 4 questions for me?

No. I think we are going to run out of time today. I'm happy to spend time with Stephen or with David.

Thank you, Chair. There's no more questions online in relation to this item of business.

Up the back. We have a yellow card.

Charlie Kingson. Just a quick follow-up on that comment that closing the 40 centers should be EBIT positive. My understanding is you're still going to be paying the rent and a bunch of other fixed costs, but is what you're saying that those centers are losing more than the fixed cost that you're still going to have to be paying? And then the second part, it sounds like it's -- you haven't done the work yet, but as was mentioned before, there's been a few years ago, yes, you had to pay a lot of money to exit some of your loss-making centers. But clearly, the market down 30-odd percent is appearing a pretty bad outcome to exit some of these centers.

Could you just give some more clarity? Do you think it's going to cost further money, put more strain on the balance sheet to exit? I presume if you could have sold them, you would have. But I mean just any reassurance or detail that you could provide would be helpful. And can you talk on the rent as well, please, because I don't know what the rents are costing, but how long are the leases, like any other detail you could provide because I think you pay about $120 million in rent, so 10%, $12 million, like are those -- I know that there's a big spread there, but they must be losing a lot of money. So just if you could clarify that, please.

Thank you. Look, as I said earlier on, I'm not able to disclose a lot of the specific information that you asked or what I can say in an overall shape of those 40, your logic of, is the losses of it more than then the rent we pay, you are correct in your assumption. So therefore, my earlier comment that it will have a positive impact from an EBIT point of view, that's where it's coming from.

Have we kind of run to the ground on every one of those circa 40 centers, what the outcome will be, what will it take either to divest them or to hand them back to the landlords, we will find out in time and we'll provide the appropriate update on that at -- as I said, half year if we've managed to do that, and anything post that.

Just a quick follow-up. How did they get to that state, like what's the occupancy? Presumably very bad. Is there any geographic area or was it related to some of the incidents in the past, but how did they get to such a bad state and what are the learnings like?

No, it's a good question again. For those who kind of certainly kept close with G8 over the last 3, 3.5 years. What I have implemented rather than having projects is portfolio optimization framework. We assess our portfolio every year. Now the one one-off issue that it was 3 days ago when we went to the market, that was a catch-up because we haven't done -- looked at our portfolio optimization for many years.

So we did that once. Since then, we have continued to optimize our portfolio. And I think, look, it would be very open and honest to say, certainly over the last 12 to 18 months as the market conditions have got tougher and tougher, it exasperates the performing, of the average performance. Some of average performance are becoming lower performance due to the fact that the sector is significantly has been impacted.

So this isn't just -- we made this decision last couple of months. We assess our centers all the time. And at some point, we make a decision to optimize. We have predominantly been optimizing in -- over the last 2 years, as I said, probably from the bottom end. We haven't added many from the top. The commissions haven't been right. But for example, last year, overall. I think it was at 11 or 12 centers that we optimize out of the centers. But this year, that number would have been relatively similar numbers if the condition had to significantly change.

It is the exacerbation of the situation that's made the number higher this year.

Thank you, Josie. Can we move forward? No more questions? Thank you. As there are no further questions, I will move to the formal resolutions. As a reminder, if you are joining online, you can place your vote at any time using the virtual voting card. The first resolution in 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 to consider and if thought fit pass following the solution as a nonbinding ordinary resolution in accordance with Section 250R (2) of the Corporations Act that the remuneration report for the year ended 31 December 2025 be adopted. I now welcome questions with respect to the remuneration report from those in the room. Are there any questions? David?

Thank you, David Kingston. Look, good move to not put forward equity incentives that would upset quite a few shareholders. Look, CEO's base is $1 million. Base Director's fees is $140,000 plus committee fees. That's fine, when the company was $1 billion, it's getting fairly toppy, now the company is $130 million. But look, a question to Toni Thornton. Toni, I've had the pleasure of meeting you before. Look, you're a very capable person, a member of the team. We actually met with your role at Star Entertainment, which I said to Toni before the meeting, Chair, that she tends to take tough jobs. That was a very tough job. I think you had so many Board meetings there. But I respect what you do, Toni, you worked in corporate finance for 15 years. You’re also a founding director of Habitat Childcare Enterprise.

Two questions, Toni. I'm sure that the financial performance and the capital value of Habitat Childcare Enterprise has dramatically outperformed the woeful performance of G8 both in terms of capital value over the past 10 years. So that's -- I'd be interested in your comments. I made a comment before that I think a lot of the small centers actually do pretty well, because the hands-on management, they're very focused. And in my opinion, arguably, these monolithic centers -- companies with 400 facilities, there's diseconomies of scale. But I'd be interested, I think all shareholders would be interested in your views on that, Toni because you wear 2 hats, an owner of a smaller one and a director of a horribly performing big one.

But the follow-up to that is part of the same issue is, the shareholder value destruction has been so horrendous, $4 peak down to $0.16 per today, 96%, 97% down over short-term and long-term periods. Has G8 lost the license to run this facility? How the shareholder value destruction been so great that it should be put up for sale? Should it be broken up? I think you've got over 20 brands, Toni. Should it be broken up? Is the value of this company greater. if either the entire company is sold or it's broken up into smaller parts. Thanks, Toni.

Thank you, David. We've actually met before Star, but originally in a previous corporate finance background, but thank you for your attendance today. And look, thank you for your feedback and your questions. Shareholder feedback is very important to us. Look, I think comparisons can be really difficult. I don't think there is a ECEC operator in the current environment who has seen anything like what we are going through today, whether it be small operators, medium operators, operators of not-for-profits equally. Everyone is looking at a scenario where there has been a significant shift in the supply-demand mechanics.

There has been a significant erosion of trust through various and numerous events. I think Pej had alluded to it that aged care has gone through what you would say is a similar situation. So look, I'm not convinced it's great to look at the comparisons between the operators. Smaller operators tend to have different structures, different cost structures, different lease obligations, some of them own buildings, some of them don't.

And this industry is very much about -- the main drivers of occupancy are really around that network quality. So when I look at G8, our network quality is on the improve, which is one of the key drivers of leading occupancy. And that's a really important metric. This is an industry that has a profit-for-purpose environment. This is not a -- this is an investment banking. It is where we really need to invest in the long-term sustainability of the business. And as a Board, that is a very important ticket to play as such, the words that you used.

And for us, working through this volatile period and staying very focused on that to lead us through what has been a really challenging time is the most sensible strategy for shareholder value for the amazing team that we have that turn up each day. So from my perspective, that's probably the most useful comments I can make in that -- in your questions. And I'm very happy to chat to you afterwards as I spoke to you before.

Thank you, Toni, and I respect those comments. I'm sure that you won't be closing any of your own centers, whereas G8's announced today, it's closing 10% of its own centers. Having closed in the last few years, dropped from 500 to 400. We're now down at 360. I don't think that fate is awaiting your private business. But one thing I do take a little bit of umbrage at, I just don't -- I do try to be balanced and fair, believe me. I don't just look at the 1-year period. I've gone back 10 years because I think 10 years takes out the blips and I honestly do try to be fair and balanced. And to be honest, I'd be much preferred to come along here today and congratulate everyone, but I'm not going to do that.

But I do think there's been a lot of euphemisms today. I think the Chair said before, we are in good shape. You and I, Chair have a different definition of good. The CEO said we're looking to sustainably grow this company. Chair -- CEO, I think the big issue is whether you can survive with the debt you've got. But Toni, you're a mature person. You've been around for a long time. Thank you for reminding me. We met before Star. But the excuses keep coming, Toni. And this is a long-term massive erosion of shareholder value. And I accept that the challenges have come out more acutely in the last 6, 12 months.

I actually now Adele Ferguson personally, I know her well. I think she was a bit too tough on the sector, but that's Adele. I accept that. That's tough. It's tough for everyone. But my point today, Toni, yes, it's a tough sector. but G8 by a million miles is far and away the worst performing of the listed child care companies. That's the issue. If you're on the same page as the others, I would have no comments, because I accept it's a tough game. But you're the worst of the breed, and I appreciate your thoughts on that, Toni.

David, I'm not sure I can add anything to my previous comments in terms of where we sit and the difficulties with comparisons. I fully accept that the performance to date has and is not something that, as a Board, we're comfortable with. We are very wholly and solely focused on navigating this business through an incredibly tough time. I'm not sure what else I can say about that. I'm very happy to chat to you afterwards about sector dynamics and various elements of what can and drives growth in occupancy in this sector.

But at the moment, even our most significant competitors are having a very, very depressed experience with occupancy. And until we navigate through that, and we are very focused on navigating through that. This is the period that we need to stay firm on a very clear goal and clear direction to help drive the business into a good shape.

Thank you, Toni. We'll move forward. Josie, no other questions?

Apologies, Chair. There is one more question from Stephen Mayne. His question is, he's amazed, there are no protest votes on any item today, including the remuneration report, which proxy advisers issued reports and did they oppose any items, including this remuneration report?

We had 2 proxy advisers report, Ownership Matters and Glass Lewis, and there was no opposing votes as I understand it, Josie, that's correct?

Yes.

Thank you. Okay. Now can we move forward? Okay. Proxy votes have been received in respect of this resolution and up here on screen now. This resolution will be determined by a poll. Can I ask all in attendance that have been issued with a yellow shareholder or proxy holder card to complete the voting from on the reverse of the card.

Resolution 2. We will now move to Resolution 2, the reelection of Professor Julie Cogin. The resolution is to consider and if thought fit to pass the following resolution as an ordinary resolution that Professor Julie Cogin, who having been elected 20th of April 2023 as a Director in accordance with the company's constitution, retires as a Director of the company and being eligible offers herself for reelection as a Director of the company to be elected as a Director of the company.

As stated in the Notice of Meeting, Professor Julie Cogin is seeking reelection as a Director of the company. I can confirm that Julie has the full support of the Board for her reelection, and the Board considers her to be an independent Non-Executive Director. More information about Julie's background, qualification and experience appear in the explanatory note to the notice of Annual General Meeting.

Before we move to the resolution, Julie will say a few words.

Chair, fellow directors and shareholders, thank you for the opportunity to speak today as I stand for reelection as a Non-Executive Director of G8 Education. I have served on the Board for 9 years and have spent over 35 years working in the education sector. My commitment to G8 and the families we serve is grounded in a long-standing belief of the power of education to change lives. I believe that has sustained my motivation as a leader through periods of significant challenge for the education sector.

I have seen firsthand how high-quality learning delivers lasting benefits for children. It also provides significant value to families and communities by enabling workforce participation and contributing to long-term social and economic outcomes. These experiences continue to shape how I approach my role on this Board.

At G8, our responsibility begins with the safety and well-being of children in our care. Child safety is not simply a compliance obligation. It is our most fundamental duty and the foundation of trust families place in us each day. As a Board member, I am strongly committed to ensuring that child safety is embedded in our governance, systems, culture and leadership expectations and that it remains subject to rigorous oversight and continuous improvement. I have degrees in organizational psychology, law, education, HRM, cybersecurity and business. And I bring experience across various areas with deep expertise in strategy, law, education and HR.

And this contributes to our ongoing efforts to elevate educational quality, workforce stability, disciplined financial management and effective execution of strategy. My experience has consistently reinforced that high-quality education outcomes depend on the experience of our people, educators who are supported well-led and engaged, create safer, more stable and higher-quality learning environments. And from a governance perspective, this requires a strong focus on culture, workforce capability, leadership development and accountability, not as soft considerations, but as essential drivers of performance and risk management. Quality is not only fundamental to our purpose. It is a critical driver of performance in the current operating landscape and will ensure our long-term growth.

If reelected, I am committed to championing the safety and well-being of children as our foremost responsibility bringing an education informed and people-centered perspective to board discussions, supporting a culture of accountability, professionalism a continuous improvement and working with the Board and management to drive improved performance and increased returns for shareholders. delivering safe, high-quality education and achieving strong financial performance are mutually reinforcing. And I'm committed to supporting G8 to be an organization that families continue to trust. Educators are proud to work for and shareholders can have confidence in over the long term. Thank you for your continued support and for considering my reelection.

Thank you, Julie. Are there any comments or questions from the room? David?

Thank you, Chair. David Kingston. You spoke beautifully Professor, I'll call you Professor, very eloquent, obviously, a very intelligent woman, far more degrees than I've got, and I'm purely law and commerce. Professor, you're law and numerous things. So obviously, a highly talented women. You ignored one thing, though, professor, the elephant in the room. In your 9 years, Professor, under your tenure, and you are the longest-serving director on the Board, along with Margaret, the company has destroyed 95% of shareholder value, mid- to high 3s down to $0.16 today.

And again, I'm happy to ignore short-term issues. I think clearly, there's challenges at the moment. But this is a 9-year issue, Professor. Under your -- you're one of the Board, destroyed 95% of shareholder value. Board seats are not a sinecure. You're being voted on every day, as is every director by the share market.

And at the moment, even though you're an incredibly intelligent women with great credentials. The share price, Professor, you hand out marks to your students. Share price is giving you an F. F for fail because you've destroyed a lot of shareholder value in your role as a director. I have 2 questions for the professor.

You ignore the issue of shareholder value destruction. So what personal accountability do you personally take for the major share price destruction, which hurts people. Shareholders are hurt, they're injured over your duration. That's question number one. Question number two is, I've got enormous respect for you for the reasons I've said. But I'm surprised you are standing for reelection today. You've been on the Board for 9 years. I'm surprised you're not resigning.

And also, would you care -- you're obviously a very kind, decent, great person, but would you personally take the opportunity today, Professor, to apologize to the many shareholders who have been hurt over your duration as director because they've lost a lot of money, not me, I'm a recent shareholder. So I'm not injured, but a lot of other people are, Professor. They are my 2 questions. Thank you.

So I certainly, as a director for nearly 9 years, take responsibility for the performance of this business. It's not where we would hope it would be, and I believe that it is undervalued. So definitely take responsibility we've worked very hard as every event has unfolded to the best of our ability. I am going up for reelection because the sector is facing a lot of pressure, uncertainty, regulatory change and continuity in the Board and corporate knowledge is important to us. And as a Board, we have ongoing evaluation of our performance, and this has helped with external people.

We have a skills matrix and that has guided our decision. We do have active activities in place for Board renewal at the moment. And we encourage people -- the new people to come on board and new directors. That said, there are a number of initiatives that Pej and Debra have outlined for the future. And I believe that I'm able to contribute to those and that my experience places me in good stead to contribute to those. Ultimately, it's up to shareholders just to make a call about if I'm making a contribution. So I'll leave it up to them.

Thank you, Julie. And I think we'll move on.

I have a follow-up question.

You asked 2 questions, David. We need to keep moving forward. I'm sorry.

With due respect, I've attended a lot of AGMs. Number one, the professor did not answered one of my questions. But I have never known a Chair who refuses to allow a follow-up question. Particularly as this is the right of shareholders in the Corporations Act.

Okay, David. We are running out of time.

Chair, this is a crisis meeting. Shareholders are being slaughtered. I think you should give shareholders the right to ask the questions, make the comments that under the Corporations Act they are allowed to ask, with respect -- the meeting has been going an hour and 20 minutes. This is a crisis meeting from a shareholders' perspective. I do think they should have the right to ask questions.

Professor, you didn't answer my specific question. I'm the professor now, you're the student. That's a joke. You didn't answer my specific question. Do you take this opportunity today to apologize for your contribution to the massive value destruction that has incurred over your 9 years?

And I do disagree with you, Professor. There's 2 parties in this equation. There's you, highly talented woman, notwithstanding the failure, the F for fail over your 9 years, you have decided to put your name forward for reelection. There's 2 parties. There's, do you feel embarrassed to say you should step down, but secondly, you are right, the shareholders do have the right to disagree with you, but I'm intrigued as to why an honest, highly talented woman of your caliber is actually fronting up today given the value destruction for shareholders and putting your name forward. So 2 follow-ups, but particularly, do you want to apologize for the painful value loss that you have partly contributed over your 9-year period?

So Mr. Kingston I have said that I regret the performance of this business over the term of my tenure as a director. I believe from the election results so far that I haven't been given an F as a fail. I believe that they're supportive of my reelection because of the value that I am still making and contributing to the Board. So I'll leave it at that.

Thank you, Julie. Are there any questions online?

Yes, Chair, there is one question -- 2 questions from Mr. Brett Westbury. The first is, notwithstanding your contributions to the Board, did you actively question the capital allocation policies at meetings, including the buyback?

Yes, and very much a fulsome way, not only the capital allocation, but all financial matters and all business performance of G8.

And there's a second question. Have Professor Cogin's theories of early childhood education played any role in the poor financial performance of the company?

I'm not sure exactly what that question is getting at, but theories of education are discussed at the education advisory board, which we have, which I Chair, and those theories do convert into G8's education strategy, which we're very proud of and is obviously delivering in terms of quality outcomes for our children. The education strategy, like our IT strategy, like our marketing strategy, our family strategy always has to be considered in a balanced way. What we can afford to do, how do we prioritize. And it's exactly the same happens with education.

And one final question, Chair. This is from Mr. Stephen Mayne. Is this your last term?

I believe so. We have a guidance of 10 years. So at this stage, to the best of my knowledge that I have, this would be my last term.

Thank you, Julie. And we're very supportive of your reelection, I think, as our major shareholders. I'd also just like to add that we are undergoing right now, and we do this periodically a Board renewal process. And I won't ask you to talk to that, Margaret, as the nomination Chair, but just to say that we are actively -- have board renewal process underway. Is that all, Josie?

Thank you. Proxy votes have been received in respect of this resolution and appear on screen now. Professor Cogin will not vote on this item, and the resolution will be determined by a poll. Please mark your voting card accordingly. We will now move to Resolution 3, the reelection of Peter Trimble. The resolution is to consider and if thought fit, to pass the following resolution as an ordinary resolution that Mr. Peter Trimble, who having been reelected on 20 April 2023 as a director in accordance with the company's constitution, retires as a Director of the company and being eligible offer 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. Peter Trimble is seeking reelection as the Director of the company.

I can confirm that Peter has the full support of the Board for his reelection, and the Board considers him to be an independent Non-Executive Director. More information about Peter's background and qualifications, experience, et cetera appear in the explanatory note to the notice of Annual General Meeting.

Before we move to the resolution, I would like to read Peter's prepared remarks in support of his reelection. Dear shareholders, it is my privilege to nominate for reelection as an independent nonexecutive director. The last 3 years as a Director and Chair of the Audit and Risk Committee have been challenging for our company and the industry, but still highly rewarding, and I continue to be inspired by the passion and dedication of the entire G8 team, including my fellow directors. My background is first and foremost in finance, but also extends across governance, risk management, strategy and planning, M&A and business restructuring and improvement, including in the early learning sector.

It has enabled me to contribute to the strategic thinking and good governance of this company. I believe focus must always be on delivering great outcomes for our children and families. And if we do this well, by carefully managing the associated risks, we can, in parallel, be a great employer, deliver shareholder value, long-term sustainability and be a good corporate citizen. Like Julie, I also believe that early learning education is one of the most important investments we can make in the future and is at the core and reason why I am committed to this company and focused on its future success.

Ladies and gentlemen, thank you for the opportunity to address you today. It would be an honor to have your support for another term. That concludes Peter's prepared remarks.

Any questions for the room?

Thank you. Look, Chair, I appreciate Peter's unwell, so he was unable to participate. So maybe if I can address my questions to Peter, to you? Look, Peter's experience is obviously highly relevant. He joined ABC Learning in 2008 as CFO, immediately prior to it going into administration. He played a major role in the restructure and the sail to good start. In Peter's words before, he mentioned that he is strong at business restructures, which I would accept. He is strong at strategic thinking, that I'm not sure that I would agree with that because the company is not in a good place.

And he's strong, he says at managing risk. Again, I'm not sure that I agree with that because the risks are currently hurting this company big time. But in Peter's absence Chair, I would appreciate maybe if you could comment on 2 things. I was surprised to hear you say before the company is in good shape.

And secondly, I was very surprised to hear the CEO say before that the company will sustainably grow the business. In my view, priority number one is to rescue the company, restructure the company, to recover some shareholder value, to grow the business to me is fanciful at the moment. But I'd just appreciate the comments on those 2 comments, Chair, in Peter's absence. Thank you.

What I'm going to say to that, David, is what we're doing, and I said it earlier, the initiatives we're taking is actually about how we continue to keep this business as a sustainable business. we believe everything we're doing across the business is actually building for the future. And I can tell you, Peter is an integral part of the Board. And I think I'll leave it there. He has the full board support. And I think I'll leave it there.

Sure. Just a brief follow here. At what point do you say we've had enough time. We've had a crack. We have destroyed a lot of shareholder value. We are going to pass the baton to a better operator or break the company up into components. To keep on hearing, as the share value goes down to horrible levels to keep on hearing about growth, sustainable future, there may be no sustainable future, Chair. I am concerned about the debt covenants and the answer to that was at the moment, there's no concern. Maybe there is in a months' time. But at what point does the professor and yourself, say, we've had enough, we've had a decent crack. It didn't work, let's pass the baton? Thank you.

I appreciate your thoughts, and I'll take that under consideration. Thank you. No more questions, Josie?

Chair, there are 2 questions. The first question relates in respect to this business. It's a question for Mr. Trimble, similar in nature to the question asked of Julie Cogin in relation to her contribution to the Board and actively questioning the capital allocation policies at meetings, including the buyback. I think I would just take this opportunity to say, as noted, Mr. Trimble is unable to be here. So he will be unable to answer that question.

The next question is did either of the candidates up for election today meet with any shareholders or proxy advisers before winning these thumping 95% endorsements despite shareholders losing 95% of their money? And that's a question from Stephen Mayne.

I'll answer that. Peter didn't meet with any of the proxy advisers with me, but Julie has every year that we -- just prior to AGM, we spent time with our proxy advisers and Julie, we had some very good conversations with them over the last few weeks.

Thank you. No further questions, Chair.

Proxy votes have been received in respect of this resolution and appear on screen now. Mr. Trimble will not vote on this item, and the resolution will be determined by a poll. Please mark your voting card accordingly. We will now move to Resolution 4 regarding the approval of the G8 Education Executive Incentive plan. The resolution is to consider and if thought fit to pass the following resolution as an ordinary resolution that for the purpose of Listing Rule 7.1 and in accordance with Listing Rule 7.2, exception 13, and if all other purposes, the G8 Education executive incentive plan as described in Section 2.5 of the explanatory statement be approved for the issue of securities under the GEIP. Are there any comments or questions from the room?

So Chair, does that mean that shares might be issued at the current calamitous level of $0.16. Could you just clarify for the benefit of shareholders, what price the shares will be issued at or the performance rights, whatever they are?

there's no performance rights going up, Julie, do you just want to add?

Yes. No, we're not recommending any performance rights. This is in terms of our remuneration framework. If we are going to offer them to the CEO and the executive team, we've got to come back to shareholders and get their support to do that. This is for our incentive plan.

But Professor, you wouldn't contemplate issuing shares to any executive at the current appalling level of $0.16, would you?

Well, I think we've made that clear because there's nothing being offered at the moment. And shareholders are not voting on that. What you're doing is voting on our framework and our plan.

There are no questions online, Chair.

Proxy votes have been received in respect of this resolution and appear on screen now. Voting exclusions apply as set out in the notice of meeting. The resolution will be determined by a poll. Please mark your card accordingly. That is the end of the business being put to the meeting today. I will now ask that all shareholders in attendance that have been issued with a yellow shareholder or proxy holder card to complete and finalize the voting form, place it in the boxes carried by the registry staff. Please ensure that you submit your votes online using the online voting card if you have not done so already. As mentioned earlier, shareholders can submit their votes online until 5 minutes after the meeting closes. The results of the polls taken today will be announced to the market as soon as practical after the meeting. That brings us to the end of the meeting today. Thank you for your attendance and for your continued interest in G8 Education. We look forward to your ongoing support in the coming year. I now declare the meeting closed. Thank you.

Good morning, and welcome to the 2025 Full Year Results Call for G8 Education Limited. My name is Pejman Okhovat, and I'm the Managing Director and CEO of G8 Education. I'm joined today online by Group's Chief Financial Officer, Steven Becker.

Good morning.

Steven and I will take you through the investor presentation that was released to the ASX earlier this morning. Following the presentation, we'll open the line for Q&A.

I would like to begin by acknowledging the Gadigal people of Eora Nation, who are the traditional custodians of the land on which we are conducting this presentation today. We respect their spiritual relationship with the country, and we pay respects to their Elders, past and present. I extend that respect to any Aboriginal and Torres Strait Islander people joining us today.

I also want to recognize our G8 Education team whose resilience, dedication and care underpin everything we deliver and continue to demonstrate the profound impact early childhood education has on children, families and communities.

This morning, we will cover a summary of the 12 months ended 31st of December 2025, provide an update on our progress, outlining operating and financial performance for this period, and we will conclude with a brief current trading update and outlook.

Slide 6. Beginning on Slide 6, as always, everything we do starts with children. We are proud to provide quality early childhood education and care to around 36,000 children across our network of 395 centers. Our purpose remains at the core of everything we do, to nurture the greatness in every child to grow, thrive and learn. This purpose continues to guide our operational decisions, our investment in our people, and our commitment to quality and safety across every G8 center.

Turning to Slide 7. 2025 was a challenging year for the sector, particularly with the persistent affordability pressure on families, softer demand being impacted by falling birth rates and increased supply over the past 3 years. Despite these headwinds, operationally, our team have executed strongly in areas within our control.

Performance across our controllable balance scorecard metrics continues to improve in quality, team retention and family engagement. 95% of our centers are now rated meeting or exceeding the overall national quality standards and Family Net Promoter Score improved to the highest level since launch of our Voice of Customers program in 2023.

These outcomes reflect sustained investment in quality and team capability. Team retention improved again this year, supported by positive engagement initiatives and wage uplift delivered through the fully funded ECEC Worker Retention Grant.

Our unwavering commitment to safety has been demonstrated through continuously strengthening child safety policies and procedures through dedicated safety leader, strong compliance oversight and active management with governance and regulators.

While the occupancy environment has been challenging, disciplined cost management has ensured margin and stability, demonstrating resilience of our core operating model.

Our balance sheet remains conservative with a stable liquidity and low leverage, reflecting a cautious capital management approach and considered balance between operational needs and shareholder returns.

Now turning to Slide 8. We have delivered a solid result in a challenging operating environment. Lower occupancy and a reduced number of operating centers resulted in revenue decline by 7% compared to pcp.

Operating EBIT and NPAT were also lower year-on-year. However, margins remained relatively stable. Operating costs were lower than pcp, reflecting continued cost disciplines and a well-controlled cost base, consistent with our focus on operational efficiencies.

From a statutory perspective, the reported net loss after tax included the recognition of an impairment expense of circa $350 million, as a result of disciplined reassessment of underlying performance. A dividend was paid in October 2025, representing 34% of the reported NPAT, excluding goodwill impairment expense. No final dividend will be paid.

Group occupancy for the year was 65.8%, with softer conditions particularly evident in the second half and continuing into early '26. Occupancy in half 2 continued to be constrained by affordability pressure on our families and confidence in the sector contributed to reduced inquiry levels across the sector.

Our spot occupancy as of 15th of February of 54.2% is 7.6% behind pcp and year-to-date spot occupancy of 57.1% is 7.9% lower than pcp.

Turning to Slide 9. Our commitment to shaping a resilient, inclusive and sustainable future for all stakeholders across the 4 pillars of our governance, service, quality, people and environment. We will cover the first 3 pillars on the next slide as part of our balanced scorecard result. In our environment pillar, from an emission perspective, we achieved a 9.4% reduction in Scope 1 and 2 emissions, deliver solar generation equivalent to 262 homes of usage.

Moving to Slide 10. The balanced scorecard has continued to deliver improvement across our controllable areas. Our strategy enabled a strong focus on further strengthening our core operations, with clear results from our targeted initiatives. We are proud to have further strengthened team retention, continue to improve family sentiment as reflected in a strong NPS result and increased the number of our centers now meeting or exceeding the overall national quality standards.

Occupancy was lower than the prior comparative period with key reasons outlined earlier continue to impact demand. Team retention outcomes saw a positive result, up 2.5 percentage points on prior comparative period to 79.5%.

Quality assessment ratings of meeting or exceeding have increased to 95%, 4% ahead of the long-dated sector average. Our targeted focus on family journey is resulting in improved NPS result being 3 points ahead of prior comparative period.

Turning to Slide 11. Our employer brand continues to strengthen, supporting attraction, retention and robust internal talent pipeline in a competitive market. Our recruitment process continues to deliver strong result, with permanent vacancies down 33% year-on-year and average time to hire improved by 14%, all while maintaining enhanced screening and governance.

Retention is improving, particularly in critical roles. Center manager retention increased slightly and early childhood teacher retention improved materially, reflecting the impact of targeted engagement programs and training.

We were pleased to deliver a second wage increase to our award-based team members in December, meaning they have now received a cumulative 15% increase through the fully government-funded ECEC Worker Retention Grant.

We continue to grow our talent supported by redesigned leadership and development pathway, resulting in more than half of our center managers appointments being filled through internal promotions, reinforcing the depth of our talent pipeline and the strength of our employer brand.

While engagement-based engagement eased marginally year-on-year, it remains well above Australia and sector benchmark. Overall vacancies continue to decline, workforce stability is strengthening and our people investment are supporting quality, safety and long-term performance.

Turning now to Slide 12, our family experience. We have continued to see family sentiment strengthen across the year with Net Promoter Score reaching its highest level since the Voice of Customer program commenced in 2023. We successfully launched and began embedding our family value proposition, targeting the key drivers of family experience. This supported continued improvement across family experience metrics, including knowing children's individual needs, safety and stronger outcomes for families and children aged 3 to 5, particularly in school readiness and educational quality.

While engagement remained strong, affordability pressures continued to influence behavior. Higher out-of-pocket costs constrained families' ability to commit to additional permanent days, resulting in broadly flattening frequency year-on-year.

Inquiry levels softened in the second half, consistent with broader market conditions. However, conversions remained stable, demonstrating resilience in a tough market.

Tactical initiatives included a second continued casual day offer supported occupancy in quarter 4. Overall, family sentiment remained a strength of our business. The progress across controllable experience drivers provide a solid foundation as we navigate ongoing affordability and macro headwinds.

Turning to Slide 13, quality, education and care. Across our network, 95% of our meeting or exceeding the overall national quality standards, placing us ahead of the sector average and demonstrating consistency of our operating model and commitment to delivering high-quality centers for our families.

We have made further progress in Quality Area 1, educational program and practices with 96% of our centers meeting or exceeding the standards. This improvement has been underpinned by strong educational leadership, monthly learning communities and focused capability uplift across our teaching teams.

Inclusion is another area where we have continued to make headwinds. 98% of our centers have commenced or published a reconciliation action plan. We have also strengthened support for children with additional needs through a new inclusion support plan template, enhanced behavioral guidance resources and expanded professional development for educators.

Turning to Slide 14. For full year, group occupancy was 65.8%, which is 4.9 percentage points lower than CY '24. This reflects a market environment that remained challenging throughout the year, with softer inquiries levels across their sector.

Performance was mixed by region. Victoria, Western Australia experienced the most significant occupancy pressure, driven by tougher supply-demand dynamics in those markets with New South Wales and Queensland being less affected.

At macro level, several factors continue to weigh on occupancy outcomes. Affordability pressures remain front of mind for families, particularly as broader cost of living pressures persisted.

In addition, participation in long day care has softened, reflecting both economic conditions and demographic trends. While market conditions remain challenging, we are focused on controllables within our operating model, supporting conversion, retention and center level execution.

Over to Slide 15. Our operating model remains a key strength as we navigate a challenging environment. Safety continues to be our highest priority. During the year, we embedded our safety leader program across the network, strengthening leadership capability, accountability and connection to support the structures. We also completed a rigorous procurement process for CCTV with rollout to commence in '26.

We have sharpened execution through simpler meeting structures and center leadership forum, improving alignment and speed of delivery across our network. Ongoing investment in systems is giving us better visibility at center level, enabling earlier intervention and more targeted support. We also made progress across enrollment and growth initiatives with a stronger cross-functional execution supporting key occupancy drivers despite softer conditions.

Finally, we extended our turnaround program with additional wave focused on team capability, family experience and facilities. These initiatives are designed to lift center performance and support the sustainable occupancy recovery over time.

Overall, we remain focused on disciplined execution, strengthening our foundations and positioning the business for sustainable improvement without compromising on safety, compliance or quality.

Now moving to Slide 16. Operating cash flow remains robust, supported by strong cash conversion and conservative leverage. We maintained a prudent approach to capital management. A fully franked dividend of $0.02 per share was paid during the year, representing 34% of the reported NPAT, excluding the goodwill impairment. We also completed a $42.6 million share buyback, returning excess capital to shareholders while preserving balance sheet strength.

Net debt increased, reflecting higher investment in CapEx and the share buyback during CY '25. Liquidity remains strong, providing flexibility as we navigate near-term market conditions. Our cost base remained well controlled. Wages as a percentage of revenue increases slightly, with ongoing wage optimization supporting additional safety training.

Portfolio optimization continued to be an important lever. During CY '25, we divested 5 centers and surrendered or exited 6 leases, continuing to refine the network footprint and improving overall returns.

I will now hand over to Steven Becker to take us through the financial performance.

Good morning, and thanks, Pej. On Slide 18, we discuss in more detail our group financial performance. Group operating revenue was $946.9 million, down 7% on last year, reflecting lower occupancy levels across the network as previously discussed by Pejman.

Our group operating EBIT was impacted by the lower revenue, but came in within our previously guided range. Against the backdrop of challenging occupancy levels, our focus has been on disciplined cost management and preserving balance sheet strength without compromising safety, quality or compliance.

Operating EBIT adjusted for leases was $93.3 million, with an EBIT margin of 9.9%. While margins were lower year-on-year, they remained resilient given the operating environment, supported by disciplined procurement, ongoing cost management and reduction in underlying support office costs of 3.6%.

Finance costs decreased as a result of improved borrowing rates from a debt financed last year. Reported statutory results were materially impacted by a non-cash goodwill impairment of approximately $350 million, reflecting conservative reassessment of long-term assumptions in light of current trading conditions. This does not affect cash flow, liquidity or covenant strength.

From a center performance perspective, center revenue was 6.7% lower than last year, mainly due to lower occupancy. Employment costs were appropriately managed and have decreased year-on-year, which were driven by the lower booking volumes. Wages as a percentage of revenue were slightly higher year-on-year.

Rent as a percentage of revenue has increased as a result of normal CPI and market reviews. Depreciation increased slightly due to the increased investment in capital works completed on center upgrades and center-based resources.

Other expenses are largely in line with lower occupancy levels and continuing benefits from our strategic procurement activities. This resulted in center margin decreasing year-on-year by 1.3% to 16.4%.

In terms of our balance sheet and capital allocation, the group maintains a strong balance sheet with low leverage and good liquidity. Cash flow generation was strong with cash conversion above 100% and operating cash flow after interest and tax of $168 million.

During the year, we invested approximately $52 million in CapEx, paid out dividends of $43 million and bought back shares to the value of $42.6 million, resulting in free cash flow for the year of $12.3 million.

Net debt for the group ended at $117 million, representing a conservative gearing ratio of circa 23% and leverage of 1.18x. In addition, the group also has access to another further $45 million of committed bank debt facilities and as if required.

Prudent capital and cost management disciplines will continue to be a focus for the group going forward. And in this regard, taking into account the current challenging operating environment, the Board has resolved not to pay a final dividend for FY '25 and to pause the on-market share buyback.

I'll now hand back to Pejman, who will talk through the rest of the presentation.

Thanks, Steven. Before I turn my attention to trading update and the outlook, I'd like to focus momentarily on child safety. At G8 Education, child safety is fundamental to everything we do. It is central to our values, our governance and our social license to operate.

Over the past year, the sector has experienced significant reform with heightened expectations around compliance, transparency and safeguarding. We welcome these changes and continue to work constructively with federal and state governments and regulators to strengthen protection for children and support meaningful reforms across early childhood education.

Our approach to child safety is an always-on commitment. We continuously review and strengthen our policies, procedures and operational practices to ensure accountability, trust and the highest standards of care.

All our policies are aligned with the national and state legislation, including recent changes such as restrictions on personal devices incentives, enhanced mandatory reporting requirements and upcoming national training and registration reforms.

Importantly, we have invested in particular, on-the-ground safeguards. This includes dedicated safety leaders in every center with protected time, expanded mandatory training from pre-day 1 onwards, strengthened recruitment and background checking processes and ongoing quality and compliance reviews across the network.

We have also continued to invest in systems and infrastructure that improves oversight and visibility, including our compliance platform, enhanced reporting and investment in physical and digital environments that promote child safety and well-being.

Above all, in the best interest of children guide decision-making at every level of our organization. We encourage transparent, confidential reporting of concerns, and maintain a zero tolerance approach to behaviors that compromise child safety.

I will now speak to current trading. Group spot occupancy is 54.4%, 7.5% lower than the prior corresponding period and 57.2% year-to-date, representing 7.8 percentage points lower than the prior corresponding period.

A challenging operating environment has impacted occupancy in 2026, driven by ongoing affordability challenges for our families, a continued trend of declining birth rates over the past 5 years, confidence and trust in the sector being somewhat impacted by recent events and media coverage, supply increasing and female workforce participation slightly decreasing, impacting demand and significant change to the national law and regulatory operating environment requires additional focus and resources.

Changes to the Child Care Subsidy activity test are showing early signs of an increase in frequency, particularly in new families, with low uptake likely due to lack of awareness across the country. A cautious approach to capital allocation was taken in response to softer sector conditions, balancing operational priorities and shareholder return.

We anticipate CY '26 CapEx to be circa $50 million. No final dividend is to be paid in respect of the year ended 31st December 2025, and the market buyback is currently paused.

Turning to outlook. Near-term operating conditions remain challenging, with cost of living pressure continuing to weigh on families' affordability. And at this point, we are not seeing material relief from inflation or interest rate increases. There are several factors that continue to impact occupancy and operating environment in the near term.

Female work participation is starting to flatten. Demand has softened as the total fertility rate has declined to historic low over the past 2 years. Ongoing significant changes to regulation and compliance impacting operating environment and creating complexity. While supply to the sector continues, it is now starting to slow.

Cost of living issues with increased inflation and interest rate impacting parents affordability and our cost base is increasing as we invest in attracting talent, meeting heightened regulatory expectations and managing broader operating cost pressures. That said, when we look beyond the near term, the medium- to long-term dynamics for the sector remain encouraging.

Government policy continues to support workforce participation through initiatives such as a 3-day guarantee and further investment in kindy programs across states. Both the state and federal governments have clearly articulated an intention to create a more equitable and affordable early childhood education and care system. Current projections indicate that Total Fertility Rate is expected to increase over medium term.

We are seeing continued investment across the sector to uplift quality and rebuild trust and supplies are starting to decline with some operators choosing to exit the sector. Against this macro backdrop, we are actively adjusting how we operate to be effective in what is the new normal.

Our focus remains firmly on a strong execution and on improving the areas we can control with initiatives centered on our key safety and occupancy drivers. Safety remains our top priority, supported by continuous improvement and a strong regulatory alignment.

We are focused on delivering the key drivers of family attraction and retention. We will continue to promote and embed the 3-day guarantee activity test changes. We are investing in strengthening team capability and attracting top talent. We remain positioned for performance resilience with a proven ability to adjust our cost base and remain disciplined in managing costs relatively to occupancy levels.

Portfolio optimization will continue with rigor, and we remain committed to improving network efficiency as we navigate this new operating environment.

I will now hand back to the moderator for Q&A.

[Operator Instructions] Your first question comes from Tim Plumbe from UBS.

Pejman, just wondering if we can talk about the cost base into FY '27. And I appreciate it's probably a bit of a difficult question given that there's still some moving parts with the inquiries that are ongoing. But do you guys have any sense for like incremental training costs that you're expected to incur in FY '27?

And then you were mentioning headcount changes potentially. Can you talk a little bit about how we should think about the increased cost base under the new environment? And then, sorry, if there are any further offsets that you can do in terms of cost management initiatives, please?

Tim, thanks for your question. I'll try to answer your question fundamentally kind of if I heard it correctly, it was in 3 parts.

Look, you are right. We don't have a very clear visibility into costs for '27. But you are absolutely right. The significant regulatory changes that we saw in late '25 and also in early '26, and there are a number of reforms that actually come into effect from 27th of February, they are adding operating costs fundamentally through new changes in regulation, stronger compliance activities, significant increase in compliance visitations, and also the training, which are -- some of them are mandatory trainings around safety that has been established across all the states and territories with the federal government. Those trainings will have additional costs.

One thing we do know from that specific training cost, Tim, there is 2 phases for that training. First phase will go live at the end of February, and all providers have got the obligation to complete that first phase of training within the first 6 months. So it takes us to about October.

When the second phase of mandatory training will be released, which again, the providers will have ability for another 6 months, which will take us in '27.

We don't know exactly the cost that's implicated by these trainings, but let's take the assumption that when you have 8,000 to 9,000 employees and every one of our team has got to go through majority of these training, it will be quite a bit of extra cost.

For '26, we believe somewhere between -- again, we haven't run all of this to grant. As you said, there's more regulations that are coming into effect, and there may well be more in '26 or '27. So these numbers that I'm quoting they're just draft estimates in our mind at the moment. There'll be probably about $5 million, maybe to $10 million of extra costs that we can currently see coming towards us.

I didn't mention anything about specific headcount. What I did mention is that over the last 3 years, we have demonstrated our ability to manage costs really well with market conditions changing. What does that mean? We -- where there's variability in costs based on trading conditions, we have again demonstrated that and we'll continue to exercise that lever really well. Beyond that, there's a certain level of fixed costs.

And as you would know, in our centers, we've done a really great job over the last 3 years in operating the core of the business efficiently. So there isn't a significant amount of cost savings or improvement in efficiency that can come from our centers. The next layer of work for us over the next few months will be looking at our -- how do we kind of leverage our support costs a bit better. But as this impact on occupancy, we've really been facing into it only in the last 5 weeks, that work is still to be -- to come ahead of us and to be determined what that really means. I hope Tim I've answered all your part of your questions.

Your next question comes from Wei-Weng Chen from RBC Capital Markets.

Apologies, I joined just in time for the Q&A. So I heard that last question and kind of that's it. So hopefully, I haven't addressed it in the press. Just in terms of the ordering of your macro concerns on your slide, do you see the cost of living as the fundamental issue facing the sector? Or is there a broader sort of issue around that loss of trust in the entire sector? And if so, like what is -- what's going to be the circuit breaker for this industry?

Yes, we did kind of go through it, but I'm more than happy just to go. I think you are right. We're not saying there's one factor at the moment that overplays another one. But in our sector, like whatever we do is all joint. But for our families, all of these factors are also in some way, interconnected. So if we start by the macroeconomic factors that are definitely continuing to play a role in families affordability, no doubt.

Everyone was hoping for improved inflation rate. And with 2 rate reduction last year, I think families were getting a little bit more optimistic coming in '26. But unfortunately, coming after Christmas, which is usually a very expensive part of the year for our families coming into January and being kind of promote -- seen in the public that there was going to be a rate hike and the rates did increase and inflation, unfortunately, is not coming down, definitely has an impact on families' ability to have that discretionary spend.

The other couple of components which impacts partly the demand is, again, there's been a number of reports that have come out. The birth rate over the last few years and certainly, when you look at the fertility rate over the last 2 years, it's been the lowest consecutively in the last 5 years. So that birth rate is definitely impacting some age groups within the sector, particularly that sort of 1- to 3-year olds in this -- in where we are.

But saying that, again, last year, there were reports showing that pregnancy testing and ultrasound have been slightly increasing in '25, which hopefully means somewhere mid- to end of '26, we might start to see some of that birth rate improving. We don't have exact numbers, but those are some of the indicators that we can only use.

The other part, which I think what we said when we want to be very open and genuine as always, is in the last 6 to 8 months, the media focus and attention on some horrific issues across the sector has been pretty unrelenting too. Again, us, including everyone in G8, and I do know that, the whole of the sector condemns any of those activities, and we're all appalled by any of those horrific issues that have been surfaced across the country and in every state that people intentionally are causing harm to children.

With that public attention and rightly so and the media attention to bringing those to fruition, a number of public inquiries, whether they're federal or a state-based has definitely increased some family concerns around safety and perhaps impacting their trust in the system. And again, federal government and the state governments are all very aware of this issue and everyone is trying to work really hard with the providers to build that trust back.

I think for us, it's probably a little bit like, if you go back a few years ago, like aged care, there is everyone that's part of the sector has a responsibility, including ourselves, to continue to work collaboratively to build that trust back to where it has been historically.

The other couple of components, which again goes hand-in-hand with everything else, is the supply into the sector, there still continues to be a net supply. The one positive that we've seen in the last quarter, and again, if you remember through all our reporting periods, net supply over the last 7 or 8 quarters was somewhere in 3.4%, 3.5% but the last quarter dropped to 2.4%.

We did highlight in the second half of last year that with cost of construction, we were anticipating not just us, but the sector was anticipating that supply would slow down somewhat. So we are seeing that. But having said right here right now, there's still 2.4 percentage of net supply into the sector. So we are seeing those kind of impacting some of that demand overall.

[Operator Instructions] Your next question comes from Peter Drew from Carter Bar Securities.

Just a question on, I guess, the portfolio. Are there any more sort of planned changes for the portfolio? And given the sort of the tough environment, is there any scope to approach your landlords for some sort of relief?

Thank you for your question. Look, as we mentioned in the last 2 years, and you've seen evidence of how we've been approaching this, portfolio optimization has been an always on for us in the last 2 years. And in both previous years, we have divested or exited or surrendered a number of centers. So last year, as noted in 2025, we divested 5 centers, and we surrendered or exited 6, a total of 11.

We will continue to have a diligent eye on dynamics of every one of our centers across the states that we operate, and we will take appropriate action in where we see appropriate.

The second part of your question, approaching landlords, yes, of course, that is very much what we do. But to be very open and frank, at the moment, no landlord is prepared to do anything to help and support the providers, not us. And I can tell you none of my other counterparts are also facing the same thing. Unfortunately, landlords at the moment are unrelenting.

sYour next question comes from Tim Plumbe from UBS.

So just one for me on occupancy and thinking about flowing that through into calendar year '26. Quick back of the envelope suggests you guys -- I guess, the comps get easier as we progress throughout the year, like that minus 7.5% spot, if I flow it through and assume that it's kind of maintained at that level, but the comps get a little bit easier. I kind of get occupancy down in the high 2s, like 2.7-ish. Is that the right way to think about the potential headwinds into FY '26? Or should we be factoring in potentially interest rate increases, making it a little bit harder again? How are you guys thinking about the rest of the remainder of the year relative to where we stand now?

Thanks, Tim. Great question, but a very difficult one to be honest, to be very, very accurate about that. As you know, historically, the occupancy curve is at its lowest at that first or second week of February. From there onwards, the occupancy curve builds towards November, be it there are some kind of minor ups and downs due to Easter holidays and school holidays throughout the year, but it gradually improves towards November. And then from mid-November to December, it kind of comes back down as families take your children out and take them on holidays.

We anticipate the curve -- the shape of the curve to be pretty similar to every other year. What I can't tell you right here right now is how steep will that curve be compared to last year? And will we see an improving. The points that you made are valid. Last year was a challenging year. So you are correct in terms of will we be comping some, let's say, softer numbers as we go through Q1, Q2, Q3, Q4? Perhaps, but it just depends how the market conditions are this year. And I think it would be -- it would not be wise of me to start giving any forecast. But as you know, we will provide the market with a market update at our AGM in April, and we'll provide a market update again when we do our half year results in August.

But just -- but Tim, I did want to say, hopefully, as I said in my presentation, that we are generally not leaving any stones unturned. At the moment, we're pulling all the levers, including further investment in marketing activities to kind of capture more inquiries that's available in a very tough market. Our teams on the ground daily conversations with families, every inquiry, we're doing our best to turn them into a tour, and we're following every tour up within 24 hours to see whether we can convert the families into an enrollment.

Your next question comes from Peter Drew from Carter Bar Securities.

Just a question on sort of EBIT sensitivity. I mean, putting aside the additional regulatory costs that you flagged, that $5 million or $10 million estimate that you understand that that's just an estimate at this stage. But if we put that to one side, how should we think about the EBIT sensitivity to a percentage point decline in occupancy based on where you've got the cost base today?

Yes, look, I think it's probably changed. It probably hasn't changed somewhat from where we've normally pitched it. I mean, we've always said that every percentage was worth a few million dollars or so. So yes, probably goes up to that $4 million to $5 million. So we don't think that's changed materially. Obviously, we've got some extra costs, but obviously, we're taking some other costs out as well. So we don't see that materially changing.

And that kind of number that Steven just talked to, Peter, is across a full 12-month impact.

Annualized, yes.

Annualized, yes.

Yes. And what about support costs for sort of '26? Should we a?ssume that they can stay relatively flat year-on-year?

Yes. I think we managed to pull them down. Obviously, this year, saw we pull them down by 3.6%. I think we would be disappointed if we -- I think at least flat, and we hope to maybe take some -- maybe some out of those as well.

So is a reasonable way to look at, I guess, the numbers for calendar '26, taking into consideration an assumption around occupancy at that $4 million to $5 million EBIT impact and then layering over the top that $5 million to $10 million impact from these regulatory changes?

Yes. And then obviously take some savings into account as well that we will obviously -- we'll adjust our cost base as well. And there's a limit, as Pej said, because we've got to be careful that we -- when we optimize our cost base, we don't sort of cut off our nose to spite our face a little bit because we really -- so we will manage that sort of prudently.

There are no further questions at this time. I'll now hand back to Mr. Okhovat for closing remarks.

Thanks, everyone, for attending the call and really appreciate your engagement with G8 Education, and appreciate for those who have questions.

In closing, I would like to once again thank the G8 Education team for their outstanding work that has delivered these results and outcomes. Our team's passionate and dedicated work result in supporting thousands of families and their children with high-quality education and care. Their hard work allows us to live our purpose to nurture the greatness in every child to grow, thrive and learn.

And we thank all our stakeholders from our shareholders, to our families, to our communities, and of course, everyone is within the sector that we work collaborative with. Appreciate it. This now ends the presentation.