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IDP reports “solid” year in 2021 despite 10% drop in growth

The financial performance of global agency and data insights company IDP Education has declined by 9.9%, posting total revenue for 2021 of AUD$528.7 million, according to the organisation’s annual financial report.

The report tells a tale of two halves, with the first half of the financial year reporting a revenue decline of 29% compared to the first half of 2020. Photo: IDP

IDP announced in July it would acquire IELTS in India for £130m

The report, detailing the financial performance period up to 30 June 2021, tells a tale of two halves, with the first half of the financial year reporting a revenue decline of 29% compared to the previous financial year. However, the figure transformed in the second half of the year with Covid impacts being less severe – revenue grew 24.8%.

Compared to 2020’s financial year, earnings before interest and taxes had a heavy decline of 40.7% from $111.3m to $71.8m, while net profit after tax also declined 42.7% from $70.6m to $45m.

The report put the rocky performance to travel bans, border closures and lockdowns in both “source and destination countries” brought on by Covid-19.

However, it also reported that despite the total group revenue being down, IDP finished the year with a strong cash balance of $307m.

Australia, IDP’s largest student placement destination by volume, contributed to the impact on revenue as it “significantly reduced the volume of students” over both halves of the financial year, with total revenue dropping by 20%.

Asia’s financial growth for the company declined 18.7% compared to 2020, but continued to be a “key driver” of IDP’s profitability with the region producing 61% of group earnings before interest and taxes.

“Northern Hemisphere study destinations fared better, with the United Kingdom reporting a 4% increase in volumes”

However, the rest of the world ended the year on a good note, with a total growth of 18.6%, which included countries like Brazil, Canada, Kenya, the US and the UK among others.

“Given continued restrictions, our student placement business was heavily impacted with volumes down 25% on the prior year,” said chairman Peter Polson and CEO Andrew Barkla in the report.

“Northern Hemisphere study destinations fared better, with the United Kingdom reporting a 4% increase in volumes.”

However, both remarked on the contribution of IELTS over the year.

“These headwinds were partially offset by a solid year for IELTS, with overall volumes up 5% versus FY20,” they added.

The organisation’s IELTS volumes increased 4.9% in the financial year, with 1.15 million tests, despite Covid-19 impacting the volume in South Asia and South East Asia.

Despite that growth, gross profit declined by 1.7% to $143.2m and gross profit margin declined narrowly to 44% from 45% due to the annual payment-per-test increase to Cambridge Assessment.

India’s revenue was impacted for the most part by capacity constraints for IELTS testing, but IDP also “explored opportunities to gain greater exposure” in the market and acquired the British Council’s IELTS operations in India, which was completed for £130m in July.

Leaders at IDP were confident with the expansion of IELTS .

“We rapidly grew our IELTS footprint by the addition of 100 computer-delivered IELTS test centres, and via our strategic acquisition in India,” Polson and Barkla explained.

English language teaching, however, was significantly impacted by “government mandated closures during Covid-19 lockdowns”, so online courses were provided.

This resulted in volumes being down 21.7% for the year to 73,900 courses.

The report also expanded on IDP Live, its new one-stop-shop app.

“IDP Live empowers our counsellors with real-time connection to students’ preferences… this allows for more informed conversations and higher-quality course recommendations,” the report said.

Polson and Barkla also remarked in the report that research also revealed some promising opinions from students.

“Our IDP Connect Crossroads research revealed that despite the many obstacles, students were holding onto their global study goals, with 79% surveyed in July 2021 intending to commence study as planned.”

“IDP heads into the next financial year well-positioned to lead the sector’s recovery”

Despite the issues with growth in some areas, IDP remained optimistic.

“IDP heads into the next financial year well-positioned to lead the sector’s recovery,” said Polson and Barkla.

“With an expanded IELTS footprint, new application tools and smarter ways to connect with our customers, we are equipped to support globally ambitious people achieve their study and career plans.”

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