Shares in education group, Navitas (NVT) fell more than 15% yesterday after it issued a profit warning for the 2018 year!
The shares ended the day off 15% at $4.22 after telling the market it expects its earnings to fall by at least $12 million next financial year if the federal government reduces the number of regions the company is contracted to teach English to migrants.
CEO Rod Jones says earnings are likely to fall between $12 million and $14 million, but the company will understand the full impact of proposed changes to its tender to deliver the Commonwealth’s Adult Migrant English Program by April 4 when the company has its investor day.
The company said it had “been informed by the Commonwealth Department of Education and Training that it has been recommended as a preferred tenderer for a reduced number of contract regions to deliver the Adult Migrant English Program (AMEP) from 1 July 2017 under the recent tender process. Existing AMEP and SEE contracts will continue to be delivered until 30 June 2017.”
"It should be noted that a tender is not taken to have been accepted until a formal contract has been executed between the tenderer and the Australian Government. Notice by the Department to any tenderer that it is, or is not, a preferred or successful tenderer does not constitute an acceptance or rejection of any tender.
"Assuming the Department successfully concludes formal contracts with all of its preferred tenderers, including Navitas, it has been estimated that this reduction in AMEP delivery centres will decrease the Professional and English Programs Division’s EBITDA by between $12m to $14m in FY18 and beyond.
“The proposed reduction in contract regions is disappointing news as Navitas has been delivering this important program to a high standard since 1998,” said CEO Rod Jones.
“However we will continue to focus on providing high quality outcomes to our clients in our remaining and new contract regions; and ensure any transition for clients is as smooth as possible.” Mr Jones added
Navitas said in January that it expected 2017 earnings to be line” with FY16’s $164.6 million on a constant currency basis.
