- Evolve Education (EVO) has signed deals to buy 10 childcare centres around Australia for an upfront fee of $27.13 million
- The new centres have a licensed capacity of 816 children per day with expected earnings before interest, tax, appreciation, and amortisation (EBITDA) of $6.93 million per year
- If the total EBITDA from the new centres hits at least $8.2 million over the first 12 months from Evolve's purchase, the company will pay an extra $5 million
- This would take the total price of the buy to $32.13 million
- On top of the news of the purchases, Evolve has also announced new dividend payments for the last quarter of 2021
- The company has not paid a dividend since 2019 but said details for the renewed payments will be revealed later in the year
- Shares in Evolve are up over 6 per cent this afternoon to trade at $1.26 per share
Evolve Education (EVO) has signed deals to buy 10 childcare centres around Australia for an upfront fee of $27.13 million.
The new childcare centres will have licensed capacity of 816 children per day. This is expected to translate to earnings before interest, tax, appreciation and amortisation (EBITDA) for Evolve of $6.93 million per year.
The child centre specialist will also make a deferred payment of $5 million if the centres bring in an additional $1.27 million worth of EBITDA within the first year of the transaction.
Essentially, this means if the total EBITDA for the new centres for the first 12 months after the transaction has settled is at least $8.2 million, Evolve will pay $32.13 million for the purchase.
"This latest acquisition takes the total number of centres operated by EVO to 116 in New Zealand and 20 in Australia," Evolve Managing Director Chris Scott said.
He added that the company will only have to front minimal addition support office costs to manage the extra to childcare centres.
Dividends back on the table
Along with the announcement of the extra childcare centre purchases, Evolve said it plans to begin paying dividends once more from the final quarter of 2021.
While the company did not give any details about the dividend or exactly when shareholders can expect the payout, it's likely welcome news for investors given the halting of dividend payments over the 2020 financial year.
Evolve paid a two-cent-per-share dividend in the 2019 financial year, but made the call to pay no dividend in 2020 as the COVID-19 pandemic continued to bring major uncertainty to the company and global economy.
Evolve said further details about dividend payments will be announced later in 2021.
Shareholders responded well to today's news, with Evolve shares up 6.36 per cent at 3:05 pm AEDT to $1.26 per share. The company has a $164.9 million market cap.