Navitas FY14 Interim Results presentation

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Navitas FY14 Interim Results presentation

  1. 1. Shaping Shaping the the Future Future FY14 INTERIM RESULTS For the half year ended 31 December 2013 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 FY14 Interim Results Presentation – 31 December 2013 - ASX:NVT 2
  3. 3. Company Profile Navitas (ASX: NVT) is a leading global education provider offering an extensive range of educational and training services for students and professionals across Australia and around the world Market cap  Annualised  revenue Staff headcount Students Colleges/ schools $2.41b $795.3m ~5,500 > 80,000 115 University Programs - leading provider of 32 pathway colleges and managed campuses across Australia and in the UK, US, Canada, Singapore, Kenya, New Zealand and Sri Lanka SAE - creative media education provider delivering vocational and higher education qualifications in audio, film and multimedia via 58 colleges in Australasia, US, Europe and the Middle East Professional and English Programs – provides vocational training, higher education and placement services in areas of key demand across Australia as well as providing English as a second language courses for international students and English language, settlement and work preparation programs for migrants and refugees Navitas FY14 Interim Results Presentation – 31 December 2013 - ASX:NVT 3
  4. 4. FY14 Interim Result Highlights Group • • • • Revenue up 19% to $421.9m 6% increase in EBITDA to $63.2m Net profit after tax up 3% to $36.1m Interim dividend of 9.4 cents per share University Programs • Revenue up 20% to $243.2m following enrolment  growth in all key regions and significant fee growth • 12% increase in EBITDA to $58.4m with margins  impacted by sales and marketing enhancements • Two new colleges opened SAE • 22% increase in revenue following improvement in US  and Germany – 11% post favourable FX impact • EBITDA down to $9.0m due to investment in US  operations, staff capacity, systems and processes Professional and  English Programs • Continued growth provides 15% revenue increase to  $108.1m and 134% EBITDA growth to $11.0m • ACAP increases EBITDA by more than 50% Navitas FY14 Interim Results Presentation – 31 December 2013 - ASX:NVT 4
  5. 5. Financial Performance Navitas FY14 Interim Results Presentation – 31 December 2013 - ASX:NVT
  6. 6. Investment in new businesses continues Group performance summary H1 FY14 H1 FY13 ∆% 419.7 347.9 21 2.2 7.5 (70) 421.9 355.4 19 Continuing business 65.5 62.6 5 New campuses* (2.3) (2.7) (15) Total 63.2 59.9 6 EBITDA Margin 15.0% 16.9% NPAT ($m) 36.1 35.1 3 EPS (cents) 9.6 9.3 3 Interim Dividend (cents) 9.4 9.3 1 ($m) Revenue Continuing business New campuses* Total EBITDA *H1 FY14: EIC, NIC, UCIC, BCUIC and SAE Chicago and Jakarta (H1 FY13: USA UP market expansion, ICRGU, EIC, NIC and SAE Chicago and Jakarta) Navitas FY14 Interim Results Presentation – 31 December 2013 - ASX:NVT 6
  7. 7. Strong revenue growth across all segments Core Divisions perform well in 1st half Revenue($m) H1 FY14 H1 FY13 ∆% 243.2 203.5 20 68.1 55.6 22 UP Professional and English Programs 108.1 94.4 15 SAE Divisional revenue 419.4 353.5 19 PEP 2.5 1.9 32 421.9 355.4 19 University Programs SAE Group Other Group revenue Divisional revenue by region 5% 6% 7% 8% 26% $419.4m 58% 16% Australia 7% UK Europe $419.4m Canada 67% USA ROW Navitas FY14 Interim Results Presentation – 31 December 2013 - ASX:NVT 7
  8. 8. EBITDA impacted by investment for the future Core Divisions perform well in 1st half EBITDA ($m) H1 FY14 H1 FY13 ∆% 58.4 52.2 12 9.0 12.6 (29) Professional and English Programs 11.0 4.7 134 Divisional EBITDA 78.4 69.5 13 Corporate costs (15.2) (9.6) 58 Group EBITDA 63.2 59.9 6 University Programs SAE Group H1 FY14 Divisional EBITDA H1 FY13 Divisional EBITDA 7% 14% UP 11% $78.4m SAE 18% $69.5m PEP 75% 75% Navitas FY14 Interim Results Presentation – 31 December 2013 - ASX:NVT 8
  9. 9. Strong record of consistent growth… Track record of compound annual growth (CAGR) EBITDA ($m) Revenue ($m) NPAT ($m) 421.9 35.4 63.2 341.8 36.1 32.6 59.9 355.4 35.1 57.1 27.5 291.4 48.4 270.2 43.4 217.4 19.0 28.5 162.2 30.4 14.1 24.9 137.2 15.1 16.5 22.0 108.0 21.5% 16.3% 14.4% CAGR CAGR CAGR Navitas FY14 Interim Results Presentation – 31 December 2013 - ASX:NVT 9
  10. 10. …translating into solid returns for shareholders Earnings (cps) Operating cashflow (cps) Dividends (cps) 11.4 9.4 10.1 9.5 9.4 9.3 9.3 9.4 8.7 8.1 9.6 8.6 8.0 6.1 5.5 6.1 5.5 4.9 4.8 4.1 5.2 4.7 4.7 4.3 4.3 1.5 1.6 13.1% 33.7% 10.4% CAGR CAGR CAGR Navitas FY14 Interim Results Presentation – 31 December 2013 - ASX:NVT 10
  11. 11. Strong cash generation continues to reduce debt Net debt $m 1-Jul-13  Cash realisation ratio1 of 0.93x (H1 FY13: 0.88x) 94.9  Deferred revenue up 30% to $214.1m 38.3 Dividends Paid Capex  Net debt represents only 0.82x of rolling 12 months EBITDA ($133.3m) 9.9 FX Translation charge 9.2 Operational Cashflows (42.7) Other (0.8) 31-Dec-13 108.8 Debt composition ($m) 1Cash realisation ratio= Net Operating Cashflow NPAT plus amtsn and depcn 31Dec-13 31Dec-12 Debt 185.5 178.8 Cash related to the Tuition Protection Service (64.6) (39.5) Other Cash (12.1) (12.7) 31–Dec 108.8 126.7 Navitas FY14 Interim Results Presentation – 31 December 2013 - ASX:NVT 11
  12. 12. University Programs University Programs Highlights Financial Performance Revenue EBITDA * $243.2m 20% EBITDA * $58.4m 12% • Underlying revenue up 16% (10% volume  and 6% avg price) after adjusting for FX  movements • Enrolment growth in all key regions; US  (45%), UK (23%), Canada (21%), Aus (13%) • US colleges reach operational breakeven EBITDA $m 53.6 43.5 49.9 52.2 58.4 • UC International College (New Zealand) and  Birmingham City University International  College (UK) opened • La Trobe University Sydney Campus contract  extended for 10 years • Outstanding academic outcomes with 95%  progression rates H1 FY10 H1 FY11 H1 FY12 H1 FY13 H1 FY14 • Discussions with new potential partners  ongoing Navitas FY14 Interim Results Presentation – 31 December 2013 - ASX:NVT 12
  13. 13. SAE SAE Highlights Financial performance) Revenue $68.1m 23% • EBITDA $9.0m Underlying revenue up 11% after adjusting  for FX movements 29% • Strong A$ revenue growth led by US (69%)  and German (35%) operations • Earnings impacted by investments in US  operations, staff capacity, systems and  processes • Australian operations moderate following  period of solid growth • New York college relocated  • New Chicago college opened; recently  granted Title IV funding • Strong underlying growth demonstrated by  revenue improvement  EBITDA $m 11.8 12.6 9.0 Pre-Acquisition period H1 FY10 H1 FY11 H1 FY12 H1 FY13 H1 FY14 Navitas FY14 Interim Results Presentation – 31 December 2013 - ASX:NVT 13
  14. 14. Professional and English Programs Professional (formerly Workforce) Highlights Financial performance Revenue $108.1m 15%  Record performance with increases in  revenues and earnings boosted by weak  pcp • Return to normalised earnings levels • EBITDA $11.0m • Improvement largely from ACAP and  English and Foundation Skills (formerly  Government Programs) 134% EBITDA $m o ACAP increases earnings by more than 50%  following significant student growth o 11.0 English and Foundation Skills increases client  numbers and hours against pcp 9.5 5.0 3.7 H1 FY10 H1 FY11 H1 FY12 4.6 H1 FY13 • Key government contracts due for renewal  on 1 July 2014, government holds 3 year  extension option H1 FY14 Navitas FY14 Interim Results Presentation – 31 December 2013 - ASX:NVT 14
  15. 15. Corporate costs Corporate costs Highlights EBITDA ($m) H1 FY10 H1 FY11 H1 FY12 H1 FY13 H1 FY14 • Corporate costs rise due to investment in  business for future growth • Increases in EVA incentive payments as  Group performance improves • Increase in lease costs associated with  surplus space at Wynyard Green -8.3 -9.7 -10.2 -9.6 o • Wynyard Green vacancies being  rationalised with Navitas businesses  o -15.2 Higher capex to be offset by lower lease  costs and operational efficiencies Charges from the marking to market of  FX hedging book Navitas FY14 Interim Results Presentation – 31 December 2013 - ASX:NVT 15
  16. 16. Outlook Navitas FY14 Interim Results Presentation – 31 December 2013 - ASX:NVT
  17. 17. Recovery continues to strengthen… UP enrolment trend continues to improve University Programs Equivalent Full Time Students Units (EFTSU): Semester enrolments • • • 13% semester 3 2013 EFTSU growth against pcp All key regions showing good growth Australian new student enrolments up more than 30% in semester 3 2013 Navitas FY14 Interim Results Presentation – 31 December 2013 - ASX:NVT 17
  18. 18. ..supporting solid growth momentum in FY14… Professional and English Programs University Programs • Recent student enrolment increases to benefit in H2 FY14 and beyond • H2 FY14 growth vs pcp to exceed H1 FY14 • Impact from investments to continue throughout FY14 SAE • Strong revenue growth indicating improvement trend • Expecting stronger H2 though FY14 result will be flat, or lower, than pcp • US operations expected to record small profit following H1 EBITDA loss of $2m Navitas FY14 Interim Results Presentation – 31 December 2013 - ASX:NVT 18
  19. 19. …and reaffirming guidance Professional and English Programs Professional and English Programs • Full year growth anticipated but lower H2 than pcp • ACAP and English and Foundation Skills to moderate off higher comparatives • Key government contracts due for renewal, government holds 3 year extension options Navitas • Corporate costs to rise but remain at ~3% of revenues • FY14 EBITDA guidance reaffirmed at $138m to $148m • Dividend Reinvestment Plan commencing for FY14 interim dividend Navitas FY14 Interim Results Presentation – 31 December 2013 - ASX:NVT 19
  20. 20. Appendix Navitas FY14 Interim Results Presentation – 31 December 2013 - ASX:NVT
  21. 21. Profitable and highly capital efficient model Financial metrics vs Campus size • % of revenue 40% Established Campus Strong operating leverage as  student numbers increase • 50% Low capital requirements o leverage partner universities  infrastructure and spare  teaching capacity o fees received in advance  drives negative working  capital 30% Royalty payments (Variable) 20% Teaching costs  (Semi‐variable) 10% Agent commissions (Variable) Marketing & Admin costs (Semi‐fixed) New Campus 1,000 2,000 3,000 Campus size (# of students) Indicative EBITDA Margin Navitas FY14 Interim Results Presentation – 31 December 2013 - ASX:NVT 21
  22. 22. Global market conditions remain positive Supply imbalance in key source markets (m) China Global tertiary enrolment (m) 9.57 9.33 6.57 98 263 million by 2025 9.15 6.85 6.75 China domestic university places Current enrolments 165 * Gaokao students Enrolment growth • 2010 2011 2012 Chinese  university  entrance exam International education market share (%) 8.2 International student  enrolments (m) 16.5 USA UK 2.1 2.4 2.6 2.8 3.0 3.1 3.2 3.5 3.7 4.1 4.3 47.2 GER 2011 13.0 France Australia 6.3 6.2 Canada ROW 4.7 6.1 Navitas Limited Citi Results Presentation – 31 December 2013 - ASK:NVT Navitas FY14 Interim Australian Growth Conference 21 May 2013 ASX:NVT Source: UNESCO Institute of Statistics, OECD Education at a Glance 2013, ICEF 22
  23. 23. Section title to go here Navitas Limited Citi Results Presentation – 31 December 2013 - ASK:NVT Navitas FY14 Interim Australian Growth Conference 21 May 2013 ASX:NVT 23
  24. 24. Corporate snapshot Corporate snapshot 375.4m Shares on issue $2.41b Market Capitalisation ASX100 $6.43 Share Price 52 wk range NVT $4.60 - $6.47 31 December 2013 Annualised dividend 19.5cps Navitas Limited Citi Results Presentation – 31 December 2013 - ASK:NVT Navitas FY14 Interim Australian Growth Conference 21 May 2013 ASX:NVT 24
  25. 25. Detailed P&L – 5 years Detailed H1 P&L – 5 years Navitas Ltd $000s PCP Change H1 FY10 H1 FY11 H1 FY12 H1 FY13 H1 FY14 $000s Index CAGR* Operating Revenue University Programs 174,681 193,388 190,657 203,506 243,208 39,702 120% 9% - - 57,063 55,594 68,130 12,536 123% n/a 93,811 1,126 95,215 2,095 92,084 1,863 94,389 1,350 108,070 1,149 13,681 (201) 114% 85% 4% 1% 269,618 (226,220) 290,698 (242,321) 341,667 (284,530) 354,839 (294,965) 420,557 (357,346) 65,718 (62,381) 119% 121% 12% 12% EBITDA Depreciation 43,398 (3,302) 48,377 (3,825) 57,137 (6,233) 59,874 (7,039) 63,211 (9,634) 3,337 (2,595) 106% 137% 10% 31% EBITA Amortisation 40,096 (488) 44,552 (2,603) 50,904 (488) 52,835 (488) 53,577 (375) 742 113 101% 77% 8% -6% EBIT Net Interest (paid)/received 39,608 441 41,949 390 50,416 (4,085) 52,347 (3,802) 53,202 (3,509) 855 293 102% 92% 8% n/a 40,049 (12,807) 42,339 (10,122) 46,331 (10,938) 48,545 (13,242) 49,693 (13,602) 1,148 (360) 102% 103% 6% 2% NPAT Outside equity interest 27,242 272 32,217 355 35,393 (33) 35,303 (233) 36,091 (11) 788 222 102% 5% 7% n/a NPAT attributable to members 27,514 32,572 35,360 35,070 36,080 1,010 103% 7% SAE PEP C orporate & consolidation items Total operating revenue Expenses Net profit before tax Income tax * Cumulative Annual Growth Rate from H1 FY10 to H1 FY14 Navitas Limited Citi Results Presentation – 31 December 2013 - ASK:NVT Navitas FY14 Interim Australian Growth Conference 21 May 2013 ASX:NVT 25

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