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Navitas reports earnings up, North America growth ambitions

Navitas has announced “solid growth” in revenue, earnings and margins so far in FY2016, though contract closures will keep earnings in line with 2015’s, the company has predicted. It has also reiterated its commitment to continue its aggressive growth strategy in North America in the coming year, after seeing 18% year-on-year growth in student numbers across its US and Canadian partnerships to spring 2015.

Navitas's pathway at Florida Atlantic University, its newest North American partner, saw 27% student growth in the last semester. Photo: Wikicommons/Kmgcoolguy4.

Revenue for the first half of FY2016 came in at A$517.5m, up 8% year-on-year, while EBITDA rose 16% to to A$82.8m

Financial results for the first half of FY2016 showed an 8% increase in group revenue year-on-year and a 16% surge in EBITDA, fuelled by growth across all divisions and rising progression rates in university pathways.

“Key achievements included increased progression-to-university and pass rates for university programmes, supporting 16% underlying EBITDA growth”

Revenue across all divisions came in at A$517.5m, up from A$479.4m for the same period in 2015, while EBITDA rose to A$82.8m.

Net profit after tax also grew, up 12% to A$45.1m year-on-year.

However, the closure of the Macquerie University City Campus and relocation of the Sydney Institute of Business and Technology off the university campus this month are likely to have an impact on earnings for the remaining half of the year, leading the company to predict that EBITDA for FY2016 will remain broadly in line with last year’s results.

These contract changes are likely to dent revenue for the higher eduction division, which climbed 6% to A$295.5m in the first half of the year, and earnings, which grew by 1% to A$69.2m, in the coming six months.

The group’s CEO, Rod Jones, said the figure represents a “solid first half result”, and attributed the growth to a “continued focus on academic excellence and enhancing greater return on investment”.

Navitas’s media education arm, SAE, saw the strongest growth, with earnings nearly doubling to A$14.5m, while professional and English programmes saw earnings increase 29% to A$16.8m.

“Our goal is to ensure not only that our university partners become leading study destination for those students, but that they are also able to retain and sustain those enrolments over time”

“Key achievements included: increased progression-to-university and pass rates for university programmes, continued high student satisfaction rates across professional and English programmes and an ongoing focus on cost controls, resulting in margin improvement and supporting 16% underlying EBITDA growth,” Jones commented.

The company’s growth strategy looks set to continue, with the appointment of Darcy Rollins, former director of international education and executive director of corporate services for the Department of Advanced Education for the Government of Manitoba, as college director and principal at the International College of Manitoba, one of Navitas’s two Canadian partnerships.

The growth in student numbers at the company’s North American partnerships, which exceeded targets for the spring intake, included 27% growth in student numbers at its newest US partnership, Florida Atlantic University, compared to last semester.

“Our goal is to ensure not only that our university partners become leading study destination for those students, but that they are also able to retain and sustain those enrolments over time,” commented David Stremba, executive vice president, global business development.

“We offer universities true partnerships that delivers the support and strategic guidance to ensure they are able to enhance their global profile and achieve long-term sustainable growth.”

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