SUCCESS THROUGH DIVERSITYFY13 HALF YEAR RESULTSFor the period ended 31 December 2012   ASX: NVT
Disclaimer      Important Notice and Disclaimer      This document has been prepared by Navitas Limited ABN 69 109 613 309...
Company profile      Navitas (ASX: NVT) is a leading global education provider that offers      an extensive range of educ...
H1 FY13 Group highlights               Revenue                         EPS                          Total Group revenue u...
Strategic and structural review outcomes    •      The Parthenon Group engaged to facilitate Navitas strategic and        ...
FINANCIALPERFORMANCE
Group performance summary    ($m)                                                                           H1 FY13       ...
Core Divisions perform well                 EBITDA ($m)                                             H1 FY13    H1 FY12    ...
Long term growth                              REVENUE ($m)                                                     PERIOD MOVE...
Consistent shareholder returns                                EARNINGS (cps)                                              ...
Balance sheet remains conservatively geared                                        Net debt $m                            ...
University Programs     Financial Performance                                                 Highlights      Revenue*    ...
SAE     Financial Performance                                               Highlights      Revenue      $55.6m           ...
English     Financial Performance                                               Highlights      Revenue      $64.1m       ...
Professional (formerly Workforce)     Financial Performance                                               Highlights      ...
Student Recruitment     Financial Performance                                               Highlights      Revenue      $...
Corporate costs      Corporate Costs                                                    Highlights                        ...
OUTLOOK
Sem 1203 sees UP enrolments return to growth                                              Equivalent Full Time Students (E...
Global market conditions positive                                   World population by gender      90+               2010...
Outlook    University Programs    •       Growth against pcp expected in H2 FY13                New student recruitment i...
Outlook      Professional and English Programs      •      Second half earnings projected to be greater than H1 FY13      ...
APPENDIX
Corporate snapshot          375.4m                                                                            ASX200      ...
Detailed H1 P&L – 5 years                                                                                                 ...
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Navitas FY13 Interim results presentation

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Navitas FY13 Interim results presentation

  1. 1. SUCCESS THROUGH DIVERSITYFY13 HALF YEAR RESULTSFor the period ended 31 December 2012 ASX: NVT
  2. 2. Disclaimer Important Notice and Disclaimer This document has been prepared by Navitas Limited ABN 69 109 613 309 ("Navitas" or the "Company"). Information in this document should be read in conjunction with other Navitas announcements made to ASX. This document has been prepared for information purposes only and does not take into account your individual investment objectives, including the merits and risks involved in an investment in Navitas shares, or your financial situation or particular needs, and is not investment, financial product, legal, tax or accounting advice or opinion. You must not act on the basis of any matter contained in this document, but must make your own independent investigation and assessment of Navitas and its shares and obtain any professional advice you require before making any investment decision based on your investment objectives and financial circumstances. An investment in Navitas shares is subject to investment and other known and unknown risks, some of which are beyond the control of Navitas, including possible delays in repayment and loss of income and principal invested. Navitas does not guarantee any particular rate of return or the performance of Navitas, nor does it guarantee the repayment of capital from Navitas or any particular tax treatment. All information in this document is believed to be reliable, but no representation, warranty or guarantee, express or implied, is made by Navitas, its subsidiaries or their respective directors, officers, employees or agents, nor any other person (the “Beneficiaries”) as to the fairness, accuracy, completeness, reliability or correctness of the information, opinions and conclusions contained in this document (including, without limitation, any estimates, calculations, projections or forward looking statements). No action should be taken on the basis of the information, and no reliance may be placed for any purpose on the accuracy or completeness of the information or opinions contained in this document. To the maximum extent permitted by law, the Beneficiaries shall have no liability, including, without limitation, any liability arising from fault or negligence, for any direct or indirect loss or damage which may be suffered by any recipient through relying on anything contained in or omitted from this document. The distribution of this document in other jurisdictions outside Australia may also be restricted by law and any such restrictions should be observed. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. This document does not constitute an offer, invitation, solicitation, advice or recommendation with respect to the issue, purchase or sale of any security in any jurisdiction. In particular, this document does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or to any "U.S. person" (as defined in the U.S. Securities Act of 1933 ("U.S. Securities Act")). Shares in Navitas have not been and will not be registered under the U.S. Securities Act, or under the securities laws of any state or other jurisdiction of the United States. Accordingly, shares in Navitas may not be offered or sold, directly or indirectly, in the United States or to, or for the account or benefit of, U.S. Persons, except in a transaction exempt from, or not subject to, the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. This document may not be distributed or released in the United States or to, or for the account or benefit of, any U.S. person. All references to dollars, cents or $ in this document are to Australian currency, unless otherwise stated.NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT 2
  3. 3. Company profile Navitas (ASX: NVT) is a leading global education provider that offers an extensive range of educational and training services for students and professionals across Australia and around the world Market cap Annual Staff Students Colleges/ revenue headcount schools ~$1.8b $702.1m ~5,000 > 80,000 111 University Programs - leading provider of pathway colleges and managed campuses SAE Group - creative media education delivering qualifications in audio, film and multimedia English - leading provider of migrant settlement services and English language programs Professional (formerly Workforce) – providing quality vocational, higher education, employment and placement services. Active in health, psychology, security, recruitment and workforce. Student Recruitment – recruiting students to universities in Australia, UK, USA, CanadaNAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT 3
  4. 4. H1 FY13 Group highlights Revenue EPS  Total Group revenue up 4% to $355.4m $355.4m 9.3¢  EBITDA up 5% to $59.9m  Net profit after tax $35.1m NPAT DPS  Earnings per share 9.3¢ 35.1m 9.3¢  Fully franked interim dividend of 9.3¢ Operational  Return to growth in University Programs enrolments  SAE earnings growth below expectations  English earnings bounce back strongly  Professional and Student Recruitment record earnings losses  Strategic and structural review of Navitas completed and implementation underwayNAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT 4
  5. 5. Strategic and structural review outcomes • The Parthenon Group engaged to facilitate Navitas strategic and structural review • Findings affirm value of Navitas’ core business and identify growth opportunities • Key structural outcomes:  Merging of Navitas Professional and Navitas English to leverage strong similarities and create efficiencies. Merged Division to be known as Professional and English Programs (PEP)  Student Recruitment Division to be incorporated into University Programs Division  Appointment of Chief Strategy Officer and redefinition of other senior roles • Changes create three significant operating Divisions  All future external reporting to reflect new structure (UPD, SAE and PEP) – commencing from FY13 Full Year ResultsNAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT 5
  6. 6. FINANCIALPERFORMANCE
  7. 7. Group performance summary ($m) H1 FY13 H1 FY12 Δ% Revenue Continuing business 347.9 339.3 3 New campuses* 7.5 2.5 200 Total 355.4 341.8 4 EBITDA Continuing business 62.6 60.8 3 New campuses* (2.7) (3.7) (27) Total 59.9 57.1 5 EBITDA Margin 16.9% 16.7% NPAT ($m) 35.1 35.4 (1) EPS (cents) 9.3 9.4 (1) Full Year Dividend (cents) 9.3 9.4 (1) *FY13: USA UP market expansion, ICRGU, EIC, NIC and SAE Chicago and Jakarta (FY12: USA UP market expansion, ICRGU, EIC, NIC and SAE Bochum, Chicago and Jakarta)NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT 7
  8. 8. Core Divisions perform well EBITDA ($m) H1 FY13 H1 FY12 Δ% University Programs 53.1 49.2 8 SAE Group 12.6 11.8 7 English 7.1 0.8 788 Professional (2.5) 2.9 n/a Student Recruitment (0.8) 0.7 n/a Divisional EBITDA 69.5 65.4 6 Corporate costs (9.6) (8.3) 16 Group EBITDA 59.9 57.1 5NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT 8
  9. 9. Long term growth REVENUE ($m) PERIOD MOVEMENT 341.8 355.4 50.4 13.6 270.2 291.4 21.2 217.4 52.8 55.2 13% CAGR H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13 H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13 EBITDA ($m) 8.7 2.8 57.1 59.9 5.0 13.0 48.4 18% 43.4 1.9 30.4 CAGR H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13 H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13 NPAT ($m) 35.4 35.1 2.8 (0.3) 32.6 5.1 19.0 27.5 17% 2.5 8.5 CAGR H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13 H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT 9
  10. 10. Consistent shareholder returns EARNINGS (cps) PERIOD MOVEMENT 9.5 9.4 9.3 8.0 1.5 (0.1) (0.1) 2.5 5.5 14% 0.8 CAGR H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13 H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13 OPERATING CASH FLOW (cps) 4% 4.9 2.5 (2.5 ) 10.1 (1.2 ) 8.6 6.1 5.2 CAGR 0.3 4.9 H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13 H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13 DIVIDENDS (cps) 0.7 (0.1) 9.4 9.3 0.6 14% 8.7 2.6 8.1 5.5 0.5 CAGR H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13 H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT 10
  11. 11. Balance sheet remains conservatively geared Net debt $m 1-Jul-12 117.0 Cash realisation ratio1 of 0.88x Dividends 37.9 (H1 FY12: 0.46x) Deferred revenue up 5% to Capex 7.9 $165.0m Other 1.6 Net debt represents only 0.98x of rolling 12 months EBITDA Operational cash flows (37.7) ($129.6m) 31-Dec-12 126.7 Debt constituents ($m) Debt 178.8 Cash related to the (39.5) Tuition Protection Service 1Cash realisation ratio = Net Operating Cashflow Other Cash (12.7) NPAT plus amtsn and depcn 31-Dec-12 126.7NAVITAS – – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT NAVITAS HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2011 – ASX: NVT 11
  12. 12. University Programs Financial Performance Highlights Revenue* $196.0m 8% • Results still affected by policy changes in Australia EBITDA * $53.1m 8% • Australian enrolments declined against pcp in 201203 but new enrolments grew by 7% • UK performance improvement • Continued strong performance in Canada and Singapore • Start up losses substantially reduced in US • Main US intake (Sept 2012) reported 103% increase in new enrolments • Agreement for University of Canterbury, NZ college announcedNAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT * Several adjunct English businesses reclassified from English to UP for reporting 12
  13. 13. SAE Financial Performance Highlights Revenue $55.6m 3% • Australian earnings grew by 15% EBITDA $12.6m 7% • Impacted by sluggish results from some European schools • No one-off profits from Licensing (H1 FY12: $0.5m) • Title IV access in the US improves new student recruitment and halts decline in enrolments • Includes start up losses of $0.9m Pre-Acquisition periodNAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT 13
  14. 14. English Financial Performance Highlights Revenue $64.1m 10% • Significant improvement in Government EBITDA Programs $7.1m 788% • pcp impacted by transition to new contracts in July 2011 caused significant disruption EBITDA $m • H1 FY13 returns to normal pattern • ELICOS business now making small gains off a low baseNAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT 14
  15. 15. Professional (formerly Workforce) Financial Performance Highlights Revenue $30.2m 10% • Strong performance in most education programs (ACAP, HSA, NCPS) EBITDA ($2.5m) 186% • Corporate training and Professional Year main source of decline • Training services significantly restructured  Over exposed to Government funding and b2c market  Issue with student progression  New focus on mining/resources and b2b • Professional Year remains profitable  pcp experienced one-off spike due to Government migration program changesNAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT 15
  16. 16. Student Recruitment Financial Performance Highlights Revenue $7.5m 10% • SOL remains severely impacted by cessation of the UK Post Study Work Visa EBITDA ($0.8m) 214% • EduGlobal impacted by foreign exchangeNAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT 16
  17. 17. Corporate costs Corporate Costs Highlights Corporate costs $1.3m higher than pcp (H1 FY12: $8.6m) • Provision for anticipated increases in FY13 EVA staff incentive payments • Less favourable foreign currency translation outcomes • Less than 3% of Group revenuesNAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT 17
  18. 18. OUTLOOK
  19. 19. Sem 1203 sees UP enrolments return to growth Equivalent Full Time Students (EFTSU): Semester enrolments 20,000 40.00% 18,000 35.00% Equivalent Full Time Students 30.00% 17,811 16,000 17,149 16,422 25.00% % Enrolment growth 15,724 15,419 14,000 14,675 20.00% 14,601 14,529 14,306 14,097 13,602 13,320 12,000 15.00% (EFTSU) 12,268 12,025 11,573 10,000 10.00% 5.00% 9,210 8,000 9,020 0.00% 6,000 -5.00% 4,000 -10.00% 2,000 -15.00% 0702 0703 0801 0802 0803 0901 0902 0903 1001 1002 1003 1101 1102 1103 1201 1202 1203 Semester • 201203 EFTSU up 2% on pcp with trend set to continue:  Largely due to returning stability in Australia and UK following regulatory changes • 201203 Australian new student recruitment up 7%  Growth in new student recruitment anticipated to continueNAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT 19
  20. 20. Global market conditions positive World population by gender 90+ 2010:3.45bn 2010: 3.40bn 80-89 2025: 3.99bn 2025:3.95bn Male Female 70-79 60-69 50-59 263 40-49 million by 2025 30-39 20-29 10-19 0-9 -1,000 -500 0 500 1,000 International student Millions International education market share (%) enrolments (m) 8.2 4.1 3.7 3.5 2.8 3.0 3.1 2.1 2.4 2.6 3.2 2.1 2012 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2025 2011 to 2024 Source: , UNESCO Institute of Statistics, OECD Education at a Glance 2012NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT 20
  21. 21. Outlook University Programs • Growth against pcp expected in H2 FY13  New student recruitment in 201203 and 201301 expected to arrest earnings decline in Australia relative to pcp  UK and US results will continue to be strong compared to pcp  Growth in both Canada and Singapore moderating  Student Recruitment losses expected to continue in H2 FY13 SAE • SAE’s modest earnings growth in H1 FY13 is expected to be repeated in H2 FY13  Australia and US to provide earnings momentum  Weakness in parts of Europe anticipated to continue in H2 FY13NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT 21
  22. 22. Outlook Professional and English Programs • Second half earnings projected to be greater than H1 FY13  Losses stemmed in Professional  English performance is not expected to be as strong as first half Corporate costs • Expected to rise in H2 FY13 and beyond partly due to restructure • Efficiencies sought at divisional level • Anticipated to remain steady at less than 3% of revenue H2 FY13 tax and depreciation expense to be lower than H1 FY13 All factors should support some improvement in FY13 with more significant growth from FY14NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT 22
  23. 23. APPENDIX
  24. 24. Corporate snapshot 375.4m ASX200 NVT Shares on issue $4.70 $1.8b Share Price 31 December 2012 52 wk range $2.83 - $4.70 Market Capitalisation Annualised dividend 19.5cpsNAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT 24
  25. 25. Detailed H1 P&L – 5 years PCP Change NAVITAS LTD H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13 $000s Index CAGR Operating Revenue University Programs 129,660 162,763 182,713 182,021 196,040 14,019 108% 11% SAE Group - - - 57,063 55,594 (1,469) 97% n/a English Language 59,956 71,227 68,633 58,371 64,144 5,773 110% 2% Workforce & Training 14,969 22,584 26,582 33,713 30,245 (3,468) 90% 19% Student Recruitment 11,061 11,918 10,675 8,636 7,466 (1,170) 86% -9% Corporate & consolidation items 793 1,126 2,095 1,863 1,350 (513) 72% 14% Total operating revenue 216,439 269,618 290,698 341,667 354,839 13,172 104% 13% Expenses (186,038) (226,220) (242,321) (284,530) (294,965) (10,435) 104% 12% EBITDA 30,401 43,398 48,377 57,137 59,874 2,737 105% 18% Depreciation   (2,415) (3,302) (3,825) (6,233) (7,039) (806) 113% 31% EBITA 27,986 40,096 44,552 50,904 52,835 1,931 104% 17% Amortisation    (502) (488) (2,603) (488) (488) - 100% -1% EBIT 27,484 39,608 41,949 50,416 52,347 1,931 104% 17% Net Interest (paid)/received    246 441 390 (4,085) (3,802) 283 93% n/a Net profit before tax 27,730 40,049 42,339 46,331 48,545 2,214 105% 15%  Income tax  (8,955) (12,807) (10,122) (10,938) (13,242) (2,304) 121% 10% NPAT 18,775 27,242 32,217 35,393 35,303 (90) 100% 17% Outside equity interest 228 272 355 (33) (233) (200) 706% n/a NPAT attributable to Navitas 19,003 27,514 32,572 35,360 35,070 (290) 99% 17%NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT 25

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