G8 Education to close 40 childcare centres after Victoria staffer’s alleged sex crimes spark client exodus

Shares in G8 Education plunged to a near 17 year low over the closure of about 40 childcare centres around Australia, with “horrific” child sex abuse allegations against a former staffer partly blamed for a client exodus.

After Joshua Dale Brown was charged over alleged offences at 23 childcare centres across Melbourne last year, G8 Education confirmed he had worked for some of their businesses, sending the share price below $1.

The West does not suggest that the allegations against Mr Brown are true or that he is guilty, only that he has been charged.

On Wednesday, when the company reported occupancy had sunk to just 56 per cent and announced the closures, investors piled out of the stock.

It plunged more than 30 per cent to 16.5¢ in intraday trade, levels not seen since 2009. That compares to more than $5 in 2014.

“Events across the sector, including the horrific incidents in Victoria, had profound impacts on families, educators, regulators, shareholders and the broader community,” chair Debra Singh told G8’s tense annual general meeting on Wednesday.

“They tested confidence and trust in early childhood education and care providers nationally and required deep reflection across the sector.

“For G8 Education, this period reinforced the privilege and responsibility entrusted to us in caring for children across Australia and to continuously improve safety, vigilance, transparency and accountability.”

Chief executive Pejman Okhovat noted Mr Brown’s criminal case was further adjourned last week.

“While our focus remains on supporting families and team members during this incredibly difficult time, we continue to do everything we can to give authorities the best chance of achieving justice for the families involved,” he said.

“Because this matter is currently before the courts, it is not appropriate for me to comment further on this matter.”

The company also blamed factors including lower birth rates and socio and macro-economic headwinds for its dire trading update.

But prominent activist investor David Kingston, who jumped to his feet with the first question, said those were euphemisms and G8 was “the dunce of its class”, with its malaise going back a decade.

“The profit outlook is horrendous . . . the balance sheet really worries me, chair,” he said.

“This is a crisis. This company is bordering on bankrupt.

“Capable people make money in childcare. It’s subsidised by the Government to a large degree.

“Shareholders are being eviscerated . . . slaughtered.”

G8 had gross debt of $155 million, he noted, compared to a market capitalisation of just $185m.

And faced with rising rents and labour costs, it could soon be in breach of debt covenants, Mr Kingston suggested.

Appearing somewhat rattled, Ms Singh replied that if G8 was “anywhere near” that point, it would be disclosable to the market.

“We will do an update at the half (yearly results) and we’ll leave it there,” she said.

The company didn’t believe “for one moment” that its performance was acceptable, the chair concurred.

Mr Kingston went as far as suggesting the company could potentially achieve greater value by being sold entirely “or broken up into smaller parts”.

“This is a long-term massive erosion of shareholder value,” he said.

Another investor asked if the board had considered stepping down.

Ms Singh agreed it was a crisis — faced by a workforce of about 9000 — and the key to sustainability was retaining the 36,000 children under the company’s care and attracting more.

“The easy option would have been to resign but the board didn’t ever go to that . . . it’s been an extremely tough period but I wouldn’t want to be surrounded by any other board members,” she said.

Asked for specific details on the closures, a spokeswoman said the company was “communicating with impacted families and team members. We want them to hear from us first”.

“G8 Education’s immediate focus remains on supporting families to transition to one of its nearby centres and redeploying team members, where possible,” she said.

The calamity didn’t end there, with the chair revealing director Peter Trimble had not attended because he was “very unwell” after an on-site accident.

Allegations against Mr Brown are so horrific that Victoria Police recommended children who attended the centres he worked at on the relevant dates undergo precautionary testing for infectious diseases.

They say he worked at 23 childcare centres around the State between January 2017 and May 2025.