Navitas reports losses amid restructuring
Published 14/08/2018
Navitas Limited shared a “disappointing” report for the fiscal year 2018, with $55.8m in losses resulting from a 2.5% drop in overall revenues. But the senior management aimed to reassure shareholders as failing parts of the company have been identified, while others continue to flourish.
The bulk of this loss was blamed on the “major rationalisation of our Careers and Industry Division [including SAE],” according to CEO David Buckingham and chairman Tracey Horton in their joint address to shareholders.
“Navitas has taken difficult but necessary measures in FY18”
But it was far from a litany of bad news for the Australian student recruitment giant. Figures from the University Partnerships side of the business were promising, with retention at 90% and progression even higher at 94%.
The past 12 months have also brought renewed university deals, concentrated in the UK, along with new deals around the world. Signing with Virginia Commonwealth University and Murdoch University in Dubai are cited as highlights by Navitas itself.
However, the headline for Navitas shareholders in 2018 will be the firm’s failure in the US, with SAE colleges in Los Angeles and San Jose (both California) closed down due to lack of “satisfactory return on capital in an acceptable timeframe”. The future of the other six colleges in the US arm of SAE are yet to be decided, as the company promised to “explore the divestment of the remaining colleges”.
“Navitas has taken some difficult but necessary measures in FY18 to strengthen its platform for long term growth,” the chair and CEO added.
Globally, Navitas remains strongest in Australia, with 63% of all revenue earned in the firm’s native country. Canada is second most valuable, but the gap is still large, with only 12% of revenues coming from operations there. The US and UK are steady on 9%, with the European Union bloc close behind on 7%.
However it would be unfair to describe even the Australian side of Navitas’ business as plain sailing over the past year.
In July it announced it would divest from Health Skills Australia, its nursing colleges in Brisbane and Melbourne. Both national and local political decisions were blamed for the move.
Changes to the VET rules by the Canberra government led to “a significant decline in enrolments at both college locations”, due to “a $15,000 cap imposed on loans accessed by eligible nursing students,” according to a Navitas statement. It also noted that local government grants were not guaranteed for future students.
Despite a somewhat turbulent year, Navitas made a AUS$931m in revenue over 12 months, and are expected to fulfil dividend payments of eight cents per share in September. It is traded on the Australian Stock Exchange.
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