THE state’s mining industry, which dominates the TSR performance charts, might complain about recent tax issues distorting the market, but there is one non-resources Western Australian company that has weathered sovereign risk problems for even longer.
Listed education services group Navitas took a blow from the federal government when Canberra acted to tighten certain visas in 2010, hitting the foreign student market savagely.
The federal government was acting to stop visa rorts but its broad-brush approach hit all providers, including Navitas, which operates at the higher end of the market.
But Navitas hasn’t just got the Australian government to blame for its difficult past 12 months, during which its TSR slumped to negative 10 per cent, despite a strong long-term track record equating to 21 per cent per annum over five years and 30 per cent per annum over three years.
The flow-on effect from the actions of the Australian authorities caused a flood of students to the UK market, where Navitas also has big operations, prompting a similar reaction from the British as they sought to belatedly shut the gates.
Explaining the tough year during a conference call this week, Navitas founder and CEO Rod Jones said he believed efforts by the UK government to provide certainty would help stabilise that market, and hoped a parliamentary inquiry taking place in Australia would have a similar impact when it made its recommendations in September.
Mr Jones played down the impact of the strong Australian dollar, noting that the UK international student market was suffering despite a historically low pound and Canada’s sector was thriving despite a high currency.
Applecross-based Navitas is a global operator in education. It started out offering bridging courses to students wanting to qualify for university but has since broadened its services offering to provide English-language courses, vocational studies and recruitment services.
During the past 12 months it bought another player in its global education space, purchasing media technology training institute SAE for $289 million in an acquisition funded by a debt facility and a fully underwritten $100 million institutional equity placement.
Oxford-based SAE was founded in 1976 and has expanded to become one of the world’s largest media technology training institutes, with 47 campuses in 19 countries.
This week, Navitas reported 20 per cent profit growth to $77.4 million for the year ended 30 June 2011, compared to $64.3 million in the previous 12 months.
Revenue increased 16 per cent to $643.8 million, from $556.7 million.
Excluding SAE’s contribution, net profit after tax was $66.7 million and revenue $576.8 million.