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Govt contract losses, closures hit Navitas

Christian Edwards  |  01 Aug 2017Text size  Decrease  Increase  |  

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SYDNEY - [AAP] Shares in education giant Navitas (ASX: NVT) have fallen after the company announced a 10.8 per cent full-year profit fall and said a decline in government-backed language training contracts had hurt the outlook for its English language training division.

Profit fell to $80.3 million in the year to June 30, while revenue dropped 5 per cent to $955.2 million, largely on the back of the closure of two colleges in Sydney, the company said in a statement on Tuesday.

Underlying earnings before interest, tax, depreciation, and amortisation were down 5.8 per cent at $155 million, in line with the company's guidance.

Chief executive officer Rod Jones said Navitas had achieved guidance despite tighter market conditions in the US and the UK, and was streamlining the business' operating structure to deliver future growth.

"Despite delivering a result in line with our guidance, group revenue declined due to a number of factors including the final closures of two University Partnerships colleges," Mr Jones said.

The two Sydney colleges were ventures with Macquarie University and Curtin University.

Within Australia, Navitas has delivered government-contracted settlement services in English, education, and employment pathways, focusing on migrants and refugees.

Navitas said its near-term earnings would be hit by a reduction in the size of contracts under the federal government-backed Adult Migrant Education Program (AMEP) contracts, announced in April, and the shutdown of its two university partnership colleges.

"However, global demand for high quality education remains strong and is forecast to continue to grow in Navitas' key markets," the company said.

In April Navitas said the latest round of AMEP contracts would result in a two-thirds reduction in contracted areas from the beginning of July.

Navitas will offer a full year dividend of 19.5 cents per share, on par with 2016.

At 1250 AEST Navitas was down 53 cents, or 10.7 per cent at $4.44.

NAVITAS 2016/17 RESULTS:

* Net profit down 10.8pct to $80.3m

* Revenue down 5pct to $955.2m

* Final dividend flat, at 19.5cps, fully franked

 

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