Shares in private education provider Navitas were sold off yesterday after it revealed an 8% drop in half-year revenue and earnings due to campus closures and changes to government regulations around sector funding.
Navitas lifted net profit by 18.3% to $53.3 million for the six months to December 31, 2016, while revenue was down 7.7% to $479 million and earnings before interest, tax, depreciation and amortisation were 8% lower at $76.6 million.
Navitas shares were down 6.1% to $4.43.The shares fell across the session yesterday. The company said the closure of two Australian colleges had established a “reset platform” and it affirmed guidance, expecting full-year earnings broadly in line with 2015-16’s 164.6 million.
I other words, no real gain in profit for the current year which was the real bottom line for worried investors.
The majority of the company’s revenue and earnings is derived from its partnerships with universities to provide student support and pathway programs.
It also operates the SAE creative media institute and professional and English language programs.
The 18% rise in net profit to $53.3 million was mainly due because of a $14 million gain on its disposal of the Perth Institute of Business and Technology into a joint-venture with Edith Cowan University (ECU).
“With the closure of the two Australian colleges now complete Navitas has a reset platform for future growth with expectations of solid underlying organic growth going forward,” the company said in a statement.
Navitas re-affirmed its guidance of earnings before interest, tax, depreciation and amortisation (EBITDA) broadly in line with the $164.6 million made in 2015-16 financial year, on a constant currency basis.
"This guidance takes into account changes to regulatory environments globally but ongoing uncertainty exists in some markets,” it said.
