Education services provider Navitas (NVT) remains confident of its outlook, despite suffering a sharp fall in profit for the year to June 30 from the loss of a contract with Macquarie University in Sydney from 2016.
That contract loss and possible impact was revealed in early July.
Yesterday the company reported its 2013-14 results and directors see no reason to change course.
Full year dividend is steady at 19.5c a share after the final was trimmed to 10.1c from 10.2c a year ago.
And the company’s underlying earnings before interest, tax, depreciation and amortisation are forecast to rise between $162 million and $172 million in the current financial year from $145 million in the year to June 30.
NVT YTD – Navitas upbeat despite Macquarie loss
Navitas yesterday reported a net profit of $51.58 million for the 2013-14, down from $74.6 million a year ago.
The fall followed $30.5 million in goodwill write-downs, mostly to its university programs division.
Navitas said its university programs division incurred a $23.3 million goodwill impairment in relation to SIBT, a college that provides courses aimed at transitioning students from high school to Macquarie University. Macquarie has renewed the contract for a year after which it intends to establish its own on-campus pathway programs.
The division also incurred a $7.2 million goodwill impairment for its EduGlobal and AUSI businesses following declines in performance over the last few years. The carrying value of EduGlobal and AUSI has been reduced to nil.
But despite this, the company said yesterday its universities division had continued to grow, helping to lift they company’s full year revenue 20% to $878 million.
And Navitas English programs division and its creative media education business SAE also recorded strong revenue growth during the year.
Chief executive Rod Jones said in a statement the company expected further growth across all three divisions this year.
"Navitas broader growth strategies across University Programs, SAE and Professional and English Programs are progressing as planned and will continue to deliver value for students, partners and shareholders well into the future," he said.
Navitas said it opened two new colleges, one in the UK and one in New Zealand, added new systems and management capability in its SAE division and ramped up business development opportunities for new colleges in the US.
Mr Jones said the loss of SIBT’s capacity to deliver programs on Macquarie University’s North Ryde (Sydney) campus from February 2016 will likely result in a one-off decline in growth in the division’s earnings which will impact the second half of the 2016 fiscal year and the first half of 2017.
He said that this impact will be mitigated by other growth initiatives.
Navitas lost ground in the afternoon and the shares fell more than 3.5% to close at $4.98.
That’s well below the year high of $7.88 hit in June. The low of $4.43 was hit earlier this month in the sell-off after the shares plunged in the wake of the Macquarie University news.
