Kip McGrath Education Centres (ASX:KME) Provides FY25 Trading Update and Announces Exit from USA Business
Financial Performance
Kip McGrath Education Centres Limited forecasts FY25 total revenue between $31.0m and $31.3m, a decrease of 2.8-3.7% compared to FY24. Underlying revenue, excluding US operations, is projected to grow by 6.3-7.3% to between $30.6m and $30.9m. Underlying EBITDA is expected to reach between $8.1m and $8.5m, an increase of 15.7-21.4% from FY24’s $7.0m.
Exit from USA Business
The company will cease funding and exit its USA businesses, Tutorfly and the Frisco tutoring centre, effective 27 June 2025. Operating losses in the USA, approximately A$1.4m for FY25, led the Board to discontinue these operations. The USA business will be reported as discontinued, with investment and deferred tax assets fully impaired or written off. Exit costs will also be recognized as part of the discontinued business.
Executive Changes
Kip McGrath has announced that Melinda Smith will commence as the new CEO in the second half of 2025. The company will recognise the contractual entitlements, as well as legal and recruitment costs associated with the CEO transition, outside of the underlying results.
Capital Management
As of 31 May 2025, the company’s unreserved cash balance was $4.7m, up from $3.2m on 30 June 2024, with no bank term debt. The Board is reviewing the company’s capital management strategy, including potential dividends and/or share buybacks, with decisions expected at the full year’s results announcement in August 2025.
Company Relocation
Kip McGrath has transferred its registered office from Newcastle to Sydney, recognising the vacated Newcastle premises as an onerous lease, outside of the underlying results presented.
Executive Comments
Executive Chair Mr Damian Banks stated, “Today we are announcing an underlying FY25 trading update as well as a number of non-recurring charges to be taken during the half. We are also announcing that we will cease funding and will therefore exit from the USA operations of Tutorfly and closure of our Frisco tutoring centre effective 27 June 2025. The expansion of the Kip McGrath business into the USA has proved to be uneconomic and likely to remain so even if persevered with by the Company.”
Motley Fool contributor Lianne Eastty has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Kip McGrath Education Centres. The Motley Fool Australia has recommended Kip McGrath Education Centres. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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