Navitas grows profit, outlook steady

Navitas chief executive Rod Jones says he has been impressed by the company’s ability to retain earnings despite the closure of two university joint ventures in Australia, with the education provider growing net profit and maintaining guidance for the 2017 financial year.

Perth-based Navitas posted a net profit of $53.3 million for the six months to December, up 18 per cent on the previous corresponding period, with underlying earnings growth up 8 per cent.

The increase in profit was helped by a $14 million gain on the company’s  recent disposal of the Perth Institute of Business and Technology into a joint venture with Edith Cowan University.

However, revenue was down 7.7 per cent to $479 million and earnings before interest, tax, depreciation and amortisation was down 8 per cent to $76.6 million, on the back of the closure of two Australian colleges in which Navitas had partnerships with Macquarie and Curtin respectively.

But Mr Jones told Business News it was an impressive result nonetheless, given the circumstances, and there would be a very insignificant financial impact on the closure of the universities in the coming six months.

“A lot of people have failed to understand the impact on the business of the closure of those colleges over the last couple of years, it was very significant,” Mr Jones said.

“We’re talking about $30-odd million in Ebitda.

“But the fact that we’ve been able to hold our results steady for two years while the underlying Ebitda has been dropping away has been pretty impressive.”

Mr Jones said the company was continuing to evolve its strategy and work to restructure Navitas to leverage its strengths as well as developing future growth options and adapting to advancements in technology to maintain its leadership position in a changing global education market.

Navitas said federal government changes to funding for vocational education and training (VET) were smashing the VET sector, but its exposure to the VET sector was very small.

The government was forced to overhaul the VET sector in 2016 following revelations of widespread rorting of student loans by unscrupulous education providers who signed up students to courses that would never be completed.

Most of Navitas's revenue and earnings is derived from its partnerships with universities to provide student support and pathway programs.

Navitas declared an interim dividend of 9.4 cents per share, fully franked.

It also reaffirmed its guidance for FY17, with Ebitda to remain “broadly” in line with its FY16 result on a constant currency basis.

Navitas shares were 6.1 per cent lower to $4.43 each at 12:45pm.