Shares in college and training group Navitas were bounced yesterday by nervy investors despite clear signs the company had survived the closure of two of its Sydney colleges and reported an 10.8% drop in 2016-17 profit.
The shares fell 10% to $4.44.
Perhaps it was the warning in the outlook that it will be hit in the near term by the wind-down in the government-funded Adult Migration Education Program and lack of contributions from the closed colleges.
Navitas said its 2017-18 outlook will be affected by the loss of Adult Migrant English Program contracts in NSW worth $14 million over the 12 months, as well as by the closed colleges in Sydney which would contribute no income in FY18.
That’s despite a boost to the number of students attending its other colleges in Australia and New Zealand helped offset the costs associated with the closure.
Navitas said its net profit fell to $80.3 million in the 12 months to June from $90.1 million in 2015-16
The impact of the closures of the Macquarie City Campus in central Sydney, which was managed on behalf of Macquarie University, and the nearby Curtin University Sydney during 2016 was seen in a 5% fall in group revenue to $955.2 million.
Annual earnings before interest, tax, depreciation and amortisation rose to $155.0 million to meet guidance provided to the market earlier in the fiscal year.
“Our underlying student enrolments have grown by 5 per cent across the year despite tighter market conditions in the US and UK,” chief executive Rod Jones said in yesterday’s statement.
Falls in student enrolments in the UK and the US were offset by strong growth in Navitas colleges in Australia, New Zealand and Canada and enrolments in Australia and New Zealand grew 16% in the year, the company said.
Navitas’ other division, careers and industry which includes vocational education courses as well as professional and English programs, saw earnings grow with earnings before interest, tax, depreciation and amortisation up 13% to $61 million in FY17.
There was a $3 million hit profit from the company’s continuing value added tax dispute in the UK where Navitas lost a court case over disputed payments going back to 2011. The company is appealing the decision.
Directors declared a final dividend of 10.1 cents a share, bringing the annual payout to 19.5 cents a share unchanged from 2015-16, a sign the board is trying to keep shareholders on side because of the uncertain outlook.
