On line jobs and education group, SEEK (SEK) has reaffirmed its full-year profit guidance, but says it expects its struggling education arm will damage those results to the tune of a $24 million blob of red ink.
In fact that loss (around $16 million after tax) will make a dent in earnings, no matter how the company tried to spin it yesterday.
Chief executive Andrew Brassat told the AGM yesterday that the company still expects a net profit of between $215 million and $220 million before one-off items.
But he said that excludes the costs of cleaning up, SEEK Learning, which had a poor result in June 30 financial year. Its losses and costs are expected wipe $16 million from profit this financial year.
He said the guidance was ex that figure.
SEEK says closing and replacing its education division will result in job losses and cut $24 million from net profit this year.
Chief executive Andrew Bassat expects impending Federal Government regulatory changes for vocational education will prohibit SEEK Learning, as it will be classified as an education broker.
He said the unit will therefore be closed, and the cost of redundancies and goodwill charges are expected to reduce its annual net profit by $16 million.
There will be a "significant impact" on Seek Learning employees, and the company is adopting a "people first approach" to looking after its staff, Mr Bassat told SEEK’s annual general meeting.
SEEK will launch a new education business in 2017 that provides "independent education and career insights", he said.
The new business will have an online service similar to popular travel review website TripAdvisor, and providing free advice on career discovery, course options and job seeking.
SEEK said the new business is expected to make losses of about $6 million in the year to June 30, 2017.
Excluding these losses, SEEK still expects to post an annual net profit of between $215 million and $220 million before the one-off items, up from $179 million in 2015-16.
Mr Bassat also said SEEK was in discussions with potential partners for its Chinese jobs business Zhaopin, which is the subject of takeover interest.
"SEEK is continuing to take its time to be thoughtful in assessing the right path and partners who will best support Zhaopin," he said in a presentation to the meeting.
The company’s shares rose 0.4% to $14.90. The mooted losses from the restructure of the vocational learning business didn’t worry investors.
