18/07/2018 - 15:37

Navitas to close colleges in $130m restructure

18/07/2018 - 15:37

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Global education services provider Navitas has announced it will close colleges in the United States and the United Kingdom, as well as exiting its Australian health care training business, in a restructure of its careers and industry division.

Global education services provider Navitas has announced it will close colleges in the US and UK, as well as exiting its Australian healthcare training business, in a restructure of its careers and industry division.

The majority the cutbacks will be related to its US operations, which account for around 17 per cent of its careers and industry division revenue.

The changes will trigger $130 million of post-tax expenses in its 2017-18 financial results, including provisions for onerous leases, property write-downs and goodwill impairments.

The company said it would close three SAE colleges and was assessing whether it would sell all of its remaining SAE creative media colleges in the US.

Navitas bought the SAE Group for $289 million in 2010, and this financial year the SAE’s US businesses are expected to turn over $60 million at a loss of $3million.

In a statement, the company said challenging operating conditions in the US were the primary reason behind the changes.

“Accreditation needs to be awarded at a state level as well as with national accreditation agencies, leading to long lead times and high compliance costs,” it said.

“Coupled with added administrative costs for student financial aid and graduate employment programs, the SAE US business has incurred significantly higher costs relative to the remainder of the careers and industry portfolio.”

SAE’s operations in Canada will be unaffected by the US restructure. Navitas said Canada remained an attractive market opportunity with fewer restrictions and faster accreditation for new course products.

Perth-based Navitas said vocational education funding rules in Australia have impacted the long-term viability of its Health Skills Australia business and its plans to divest or close those operations will cost around $4 million.

Navitas assured students at affected colleges and campuses they would be able to complete their programs before closure, or would be supported to transfer to a similar provider to complete their program.

Navitas shares were down 3.3 per cent at the close of trade, trading at $4.09, its lowest point since August 2017.

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