For the period ended 31 December 2012 ASX: NVT
SUCCESS THROUGH DIVERSITY FY13 HALF YEAR RESULTS
2 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
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.
3 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
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
~$1.8b
Annual revenue
$702.1m
Colleges/ schools
111
Staff headcount
~5,000
Students
> 80,000
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, Canada
4 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
Total Group revenue up 4% to $355.4m
EBITDA up 5% to $59.9m
Net profit after tax $35.1m
Earnings per share 9.3¢
Fully franked interim dividend of 9.3¢
H1 FY13 Group highlights
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 underway
Operational
Revenue $355.4m
NPAT 35.1m
EPS 9.3¢
DPS 9.3¢
5 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
• The Parthenon Group engaged to facilitate Navitas strategic and structural review
• Findings affirm value of Navitas’ core business and identify growth opportunities
• Key structural outcomes:
Merging of Navitas Professional and Navitas English to leverage strong similarities
and create efficiencies. Merged Division to be known as Professional and English
Programs (PEP)
Student Recruitment Division to be incorporated into University Programs Division
Appointment of Chief Strategy Officer and redefinition of other senior roles
• Changes create three significant operating Divisions
All future external reporting to reflect new structure (UPD, SAE and PEP) –
commencing from FY13 Full Year Results
Strategic and structural review outcomes
FINANCIAL PERFORMANCE
7 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
Group performance summary
($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 ($m) 35.1 35.4 (1)
EPS (cents) 9.3 9.4 (1)
Full Year Dividend (cents) 9.3 9.4 (1)
*FY13: USA UP market expansion, ICRGU, EIC, NIC and SAE Chicago and Jakarta (FY12: USA UP market expansion, ICRGU, EIC, NIC and SAE Bochum, Chicago and Jakarta)
8 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
Core Divisions perform well
EBITDA ($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 5
9 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
Long term growth
13% CAGR
18% CAGR
17% CAGR
217.4 270.2 291.4
341.8 355.4
H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13
REVENUE ($m)
30.4
43.4 48.4
57.1 59.9
H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13
EBITDA ($m)
19.0
27.5 32.6 35.4 35.1
H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13
NPAT ($m)
55.2 52.8 21.2
50.4 13.6
H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13
1.9
13.0 5.0
8.7 2.8
H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13
2.5
8.5 5.1
2.8 (0.3)
H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13
PERIOD MOVEMENT
10 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
Consistent shareholder returns
14% CAGR
4% CAGR
14% CAGR
5.5
8.0 9.5 9.4 9.3
H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13
EARNINGS (cps)
8.6 6.1 4.9 5.2
10.1
H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13
OPERATING CASH FLOW (cps)
5.5
8.1 8.7 9.4 9.3
H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13
DIVIDENDS (cps)
0.5
2.6 0.6
0.7 (0.1)
H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13
0.8
2.5
1.5 (0.1) (0.1)
H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13
PERIOD MOVEMENT
2.5 (2.5 ) (1.2 ) 0.3
4.9
H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13
11 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
Balance sheet remains conservatively geared
1Cash realisation ratio = Net Operating Cashflow NPAT plus amtsn and depcn
Net debt $m
Net debt represents only 0.98x of rolling 12 months EBITDA ($129.6m)
Cash realisation ratio1 of 0.88x (H1 FY12: 0.46x)
Deferred revenue up 5% to $165.0m
NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2011 – ASX: NVT
126.7
(37.7)
1.6
7.9
37.9
117.0
31-Dec-12
Operational cash flows
Other
Capex
Dividends
1-Jul-12
Debt constituents ($m)
Debt 178.8
Cash related to the Tuition Protection Service
(39.5)
Other Cash (12.7)
31-Dec-12 126.7
12 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
University Programs
Financial Performance Highlights
8%
8%
Revenue* $196.0m
EBITDA *
$53.1m
• Results still affected by policy changes in Australia
• 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 announced
* Several adjunct English businesses reclassified from English to UP for reporting
13 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
SAE
Financial Performance Highlights
3%
7%
Revenue $55.6m
EBITDA $12.6m
• Australian earnings grew by 15%
• 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 period
14 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
English
Financial Performance Highlights
788%
10% Revenue $64.1m
EBITDA $7.1m
• Significant improvement in Government
Programs
• pcp impacted by transition to new
contracts in July 2011 caused significant
disruption
• H1 FY13 returns to normal pattern
• ELICOS business now making small gains
off a low base
EBITDA $m
15 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
Professional (formerly Workforce)
Financial Performance Highlights
186%
10% Revenue $30.2m
EBITDA ($2.5m)
• Strong performance in most education programs (ACAP, HSA, NCPS)
• 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 changes
16 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
Student Recruitment
Financial Performance Highlights
214%
10% Revenue $7.5m
EBITDA ($0.8m)
• SOL remains severely impacted by
cessation of the UK Post Study Work Visa
• EduGlobal impacted by foreign exchange
17 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
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 revenues
OUTLOOK
19 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
Sem 1203 sees UP enrolments return to growth
Equivalent Full Time Students (EFTSU): Semester enrolments
• 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 continue
9,21
0
9,02
0
12,2
68
11,5
73
12,0
25
15,4
19
14,3
06
14,5
29
17,8
11
15,7
24
14,6
75 17
,149
14,6
01
13,3
20
16,4
22
14,0
97
13,6
02
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
0702
0703
0801
0802
0803
0901
0902
0903
1001
1002
1003
1101
1102
1103
1201
1202
1203
% E
nro
lmen
t g
row
th
Equ
ival
ent
Full
Tim
e S
tud
ents
(E
FTS
U)
Semester
20 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
-1,000 -500 0 500 1,000
0-9
10-19
20-29
30-39
40-49
50-59
60-69
70-79
80-89
90+
Millions
263 million by
2025
Global market conditions positive
2.1 2.1 2.4 2.6 2.8 3.0 3.1 3.2 3.5
3.7 4.1
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
to
2024
2025
International student enrolments (m) 8.2
International education market share (%)
Source: , UNESCO Institute of Statistics, OECD Education at a Glance 2012
World population by gender
2010:3.45bn 2025: 3.99bn
Male Female
2010: 3.40bn 2025:3.95bn
2012
21 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
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 FY13
22 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
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 FY14
APPENDIX
24 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
Corporate snapshot
375.4m Shares on issue
$1.8b Market Capitalisation
ASX200
52 wk range
Annualised dividend
$4.70 Share Price 31 December 2012
NVT
$2.83 - $4.70
19.5cps
25 NAVITAS – HALF YEAR RESULTS PRESENTATION – 31 DECEMBER 2012 – ASX: NVT
Detailed H1 P&L – 5 years
H1 FY09 H1 FY10 H1 FY11 H1 FY12 H1 FY13 $000s Index CAGR
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/aEnglish 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%
216,439 269,618 290,698 341,667 354,839 13,172 104% 13%
(186,038) (226,220) (242,321) (284,530) (294,965) (10,435) 104% 12%
30,401 43,398 48,377 57,137 59,874 2,737 105% 18%
(2,415) (3,302) (3,825) (6,233) (7,039) (806) 113% 31%
27,986 40,096 44,552 50,904 52,835 1,931 104% 17%
(502) (488) (2,603) (488) (488) - 100% -1%
27,484 39,608 41,949 50,416 52,347 1,931 104% 17%
246 441 390 (4,085) (3,802) 283 93% n/a
27,730 40,049 42,339 46,331 48,545 2,214 105% 15%
(8,955) (12,807) (10,122) (10,938) (13,242) (2,304) 121% 10%
18,775 27,242 32,217 35,393 35,303 (90) 100% 17%
228 272 355 (33) (233) (200) 706% n/a
19,003 27,514 32,572 35,360 35,070 (290) 99% 17%
NAVITAS LTDPCP Change
Operating Revenue
Total operating revenueExpenses
EBITDA
Income tax
NPATOutside equity interestNPAT attributable to Navitas
Depreciation
EBITAAmortisation
EBITNet Interest (paid)/received
Net profit before tax