Education services provider Navitas (NVT) disappointed investors yesterday with a weak 2015-16 financial year outlook, despite reporting a 40% plus jump in earnings for the year to June 30.
The company told the ASX yesterday in its 2014-15 profit statement that it had earned net profit of $72.1 million for the June 30 year, up from $51.6 million the previous year.
Underlying earnings before interest, tax, depreciation and amortisation were up 13% at $163.1 million.
Directors said they expect its 2015-16 earnings result to be broadly in line with that figure – so no improvement is foreseen at the moment.
The company will pay an unchanged final dividend of 10.1 cents a share, taking the total for the year to a steady 19.5 cents, which is a hint the board is a bit uncertain about the way the company will perform in 2015-16. Hence the conservative earnings forecast.
As a result the shares fell more than 6% to $4.27.
NVT 1Y – Navitas lower on soft outlook
In yesterday’s announcement Navitas Group Chief Executive Officer Rod Jones, said:
“In FY15 Navitas celebrated 20 years of delivering high quality educational outcomes to students and partners.
“A number of key achievements were; continued high progression rates in the University Programs Division, improved Net Promoter Scores in the Professional and English Programs and SAE Divisions, an expansion of our global agent network and an increase of 15% in the royalties paid to our university partners.
“Financially we delivered 12% growth in revenues and met earnings guidance with 13% underlying EBITDA growth.
“As the global education sector undergoes significant change driven by regulatory, technological and competitive forces, we are also evolving our strategy by building on our leadership position, our diversified portfolio and our global capacity to achieve growth for the longer term."
Revenue rose 11.6% to $980.3 million for the year (and should crack the $1 billion level this year) from $878.2 million in 2013-14.
The result includes an additional $10.5 million goodwill impairment charge in the second half (comprised of $7.4 million for Study Overseas Limited and $3.1 million for Navitas Resources Institute). Including the $9 million impairment for Sydney Institute of Business and Technology announced in the first half, total goodwill impairments for the financial year were $19.5 million.
Navitas warned that the material earnings impact from the loss of the University Programs MQC and SIBT on campus contracts will take effect from February, but that this is expected to be mitigated by earnings growth from other university programs contracts and the other Divisions within the group. Hence the circumspect outlook for the new financial year.
