navitas fy13 full year results presentation

Shaping the

FutureShaping

the Future

FULL YEAR RESULTS

For the year ended 30 June 2013

ASX:NVT

Navitas FY13 Full Year Results Presentation - 30 July 2013 - 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 documentshould 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.

2


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

$2.2b

Market cap

$2.2b

Annual revenue

$731.7m

Annual revenue

$731.7m

Colleges/schools

111

Colleges/schools

111

Staffheadcount

~5,500

Staffheadcount

~5,500

Students

> 80,000

Students

> 80,000

University Programs - leading provider of 30 pathway colleges and managed campuses across Australia and in the UK, US, Canada, Singapore, Kenya and Sri Lanka

SAE - creative media education provider delivering vocational and higher education qualifications in audio, film and multimedia via 57 colleges in Australasia, US, Europe and the Middle East

Professional and English Programs – provides quality 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

Company Profile

3


Total Group revenue up 6% to $731.7m

EBITDA up 3% to $130.0m

Net profit after tax up 2% to $74.6m

Earnings per share up 2% to 19.9¢

Fully franked full year dividend of 19.5¢

H1 FY13 Group highlights

Return to student enrolment growth in UPD during FY13

Enhanced SAE leadership team and course offering

Merger of Professional and English Divisions to create Professional and English Programs (PEP) Division

Continued growth in government contracts and education businesses contracts drives strong PEP growth

Key strategic and structural actions implemented

Operational

Revenue $731.7mRevenue $731.7m

NPAT $74.6mNPAT

$74.6m

EPS 19.9¢EPS 19.9¢

DPS 19.5¢DPS 19.5¢

FY13 Group Highlights

4


Financial Performance


Group performance summary

($m) FY13 FY12 ∆%

Revenue

Continuing business 715.3 682.0 5

New campuses* 16.4 6.5 152

Total 731.7 688.5 6

EBITDA

Continuing business 136.9 135.4 1

New campuses* (6.9) (8.6) (20)

Total 130.0 126.8 3

EBITDA Margin 17.8% 18.4%

NPAT ($m) 74.6 73.1 2

EPS (cents) 19.9 19.5 2

Full Year Dividend (cents) 19.5 19.5 0

*FY13: UP USA, ICRGU, EIC, BCUIC, NIC and SAE Chicago and Jakarta (FY12: UP USA, ICRGU, EIC, NIC and SAE Bochum, Chicago and Jakarta )

Investment in new opportunities continues…

6


Core Divisions perform well in 1st half

Revenue($m) FY13 FY12 ∆%

University Programs 415.7 382.5 9

SAE Group 114.9 113.9 1

Professional and English Programs 196.4 188.3 4

Divisional revenue 727.0 684.6 6

Other 4.7 3.9 21

Group revenue 731.7 688.5 6

FY13 (%) FY12 (%)

… with solid growth across divisions and regions…

$684.6m$727.0m

7


Core Divisions perform well in 1st half

EBITDA by Division

70%

17%

13%

$150.5m

72%

18%

10%

$143.2mFY13 FY12

… and EBITDA reflecting further diversification

EBITDA ($m) FY13 FY12 ∆%

University Programs 106.1 102.9 3

SAE Group 25.1 26.4 (5)

Professional and English Programs 19.3 13.9 39

Divisional EBITDA 150.5 143.2 5

Corporate costs (20.5) (16.4) 25

Group EBITDA 130.0 126.8 3

8


Track record of compound annual growth (CAGR)

27.3%CAGR27.3%CAGR

14.1%CAGR14.1%CAGR

12.5%CAGR12.5%CAGR

Key metrics demonstrate solid cumulative growth

9

106.1

226282.7

345.4

470.7

556.7

641.8688.5

731.7

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

Revenue ($m)

45.3 47.954.0

63.4

77.1

96.7

121.1126.8130.0


EBITDA ($m)

29.1 31.5 32.237.4

49.2

64.3

77.473.1 74.6


NPAT($m)


Strong shareholder returns

11.4%CAGR11.4%CAGR

20.1%CAGR20.1%CAGR

11.1%CAGR11.1%CAGR

* Simplified for full year calculation

Recovery evident in shareholder returns

10

8.4* 9.1 9.310.8

14.3

18.8

21.7

19.5 19.9


Earnings (cps)

7.8

11.914.1

22.7

30.5

25.3

18.519.7

33.8


Operating cashflow (cps)

8.49.5 9.3

10.9

14.3

18.8

20.719.5 19.5


Dividends (cps)


Moderate gain in wealth created

$m FY13 FY12 %

Operating revenue 731.7 688.5 6

Cost of services and other external costs (202.2) (190.4) 6

Total wealth created 529.5 498.1 6

Payments to university and consortium partners 135.2 128.5 5

Payments to teaching and academic employees 156.8 147.9 6

Payments to other employees 115.6 102.8 12

Payments to shareholders – dividends 73.2 73.3 ‐

Payments to governments – income taxes 31.0 30.5 2

Reinvested as depreciation, amtsn and retained earnings 17.7 15.1 17

Total wealth distributed 529.5 498.1 6

University & consortium partners

Teaching & academic employees

Other employees

Shareholders ‐ dividends

Governments – income taxes

Reinvested as depreciation, amortisation & retained earnings

Wealth distribution benefits all stakeholders

11

∆


EVA steady

EVA®

EVA steadied after a poor FY12

FY13 result well below EVA growth target

TPS introduction in Australia from 1 July 2012 reduced EVA by $3.1m in FY13

40.6

54.6 57.9

38.446.6

0

10

20

30

40

50

60

70

FY09 FY10 FY11 FY12 FY13

$m

46.7*

EVA® is a registered trademark of Stern Stewart & Co.

* Adjusted for an 8% WACC as applied in FY13


Strong liquidity and cash flow

1Cash realisation ratio= Net Operating CashflowNPAT plus amtsn and depcn

Net debt $m Solid cash realisation ratio1 of 1.39x (FY11: 0.84x)

Cashflow from operations up by 72% reflecting favourable negative working capital model

24% deferred revenue growth reflects strong cash generation and foreshadows FY14 revenue recognition

Net debt represents only 0.73x FY13 EBITDA

Interest cover of 17.1x

Debt facilities refinanced over 5 years with club of four banks

Debt constituents $m

Gross Debt 151.2

Cash related to the Tuition Protection Service (38.5)

Other Cash (17.8)

Net Debt at 30 June 2013 94.9

Substantial reduction in net debt

13

94.9

(126.8)

(1.6)

13.5

20.0

72.8

117.0

30 June 13 net debt

Cashflow from Ops

Other

FX Translation charge

Plant & Equipment

Dividends Paid

1 July 12 net debt


University ProgramsEarnings ($m) Highlights

EBITDA *

• Return to student enrolment growth

• Agreement signed with University of Canterbury for college in New Zealand

• Contract renewal with Brunel and Curtin University

• Strong performance by UK and Canadian colleges

• US colleges move closer to breakeven

• SVP and Post Study Work Rights support Australian recovery

• Investment costs reduced to $5.5m

• Student Recruitment incorporated into the Division

University Programs

76.5

100.3111.9

102.9 106.1


102.9

6.8

2.8

2.5

1.7

(6.6)

(2.5)

(1.5)

106.1

FY12

Canada

UK

USA

ROW

Australia

Student Recruitment

Divisional/marketing

FY13

EBITDA ($m)

14


SAEEarnings ($m) Highlights

• Enhanced leadership team

• Improved reporting and benchmarking systems

• New courses and qualifications for US campuses with enrolments trending positively

• New campuses in Chicago and Jakarta

• Price increases and cost reduction support Southern region growth

• No significant one‐off Licencing sales

• Divisional costs up due to investment in staff and processes

• SAE well positioned for FY14 growth

Pre-Acquisition period

26.4 25.1

FY12 FY13

SAE

26.4

1.0

2.2

(0.1)

(1.0)

(1.0)

(1.3)

(1.1)

25.1

FY12

FY12 one‐off Items

Southern

USA

Europe

Licencing

Start Up and Relocation

Divisional costs

FY13

*

* Chicago & New York

15


Professional (formerly Workforce)Earnings ($m) Highlights

• Record year

• Merger of Professional and English Divisions to create the Professional and English Programs Division (from 1 July 2013)

• Significant performance from government contracts

• Solid performance from Professional Institute businesses (ACAP, HSA, NCPS)

• ELICOS returns to growth

• Restructure of corporate training activities to focus on resources and allied sectors

• Return to normal patterns for Careers and Learning Skills (Professional Year)

16.3 15.9

11.7

13.9

19.3


Professional and English Programs

13.9

9.4

3.0

0.3

(6.1)

(1.2)

19.3

FY12

English and Foundation Skills

Navitas Professional Institute

Careers and Learning Skills

Training and Development

Divisional Costs

FY13

16


Corporate costs

Earnings ($m) Highlights

• Increases in EVA incentive payments as Group performance steadies

• Unfavorable FX movements from revaluation of year end FX book

• Reduction in Wynyard Green sub tenant rental income

• 2.8% of Group revenue

(15.9)

(19.5) (19.7)

(16.4)

(20.5)


Corporate costs

17

(16.4)

(2.5)

(2.1)

(0.7)

1.3

(0.1)

(20.5)

FY12

EVA Changes

FX movements

WG sub tenant income

FY12 strategic review costs

Other

FY13

($m)


University Programs Enrolments


UP enrolment trend continues to improveEquivalent Full Time Students Units (EFTSU): Semester enrolments

Semester 2 2013 EFTSU5% growth against pcp

Recovery trend continues

19

6,77

0

6,82

6 8,13

4

6,89

9

6,78

1 8,01

2

7,19

4

7,08

7 8,16

7

7,62

9

7,64

2

9,76

9

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

17,1

49

14,6

01

13,3

20

16,4

22

14,0

97

13,6

02

17,0

67

14,7

44

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,00003

02

0303

0401

0402

0403

0501

0502

0503

0601

0602

0603

0701

0702

0703

0801

0802

0803

0901

0902

0903

1001

1002

1003

1101

1102

1103

1201

1202

1203

1301

1302

-% E

nrol

men

t gr

owth

on

pcp

(RH

S)

-EFS

TU (

LHS

)

Semester


Africa and Asia

• 19% decline in combined ACBT (Sri Lanka) and AUSI (Kenya) enrolments –financially less material due to significantly lower fee levels (i.e. <$5k for a full year of study)

• Following years of significant growth Curtin Singapore declines by 4%

+15%

+15%

201302

+12%

+12%

201301

Australian new student enrolments

12021201

Australian recruitment

• International students from source countries up 33%

• Australian domestic students up 20% (relatively small base)

• International students already in Australia down 14%

• Results impacted by processing bottlenecks in high growth markets due to SVP

• ~200 students deferred to 201303 who paid but were unable to secure visas

Total Australian enrolment returns to growth

20

After three years of decline Australia records 5% total enrolment growth


Outlook


• Overall student growth combined with recent price increases to boost earnings

• New colleges in UK and New Zealand to open

• Australian new student growth on track to continue

• Return expected from recent new colleges in Australia and UK

• US network expected to reach breakeven (excluding impact from any expansion activity)

Professional and English ProgramsExciting UP medium term outlook…

22


SAE

• Recent investment in people and process to support growth

• US operations to provide solid contribution following expansion in course offerings

Professional and English Programs

• FY14 growth expected

o Merger efficiencies gained

o FY13 Corporate training issues addressed

o Government contracts expected to slow due to

federal election impact on migration

Professional and English Programs…supported by SAE and PEP growth

23


Appendix

Navitas Limited Citi Australian Growth Conference 21 May 2013 ASK:NVTNavitas FY13 Full Year Results Presentation - 30 July 2013 - ASX:NVT

16.5

13.0

6.3

6.26.14.7

47.2

USA

UK

GER

France

Australia

Canada

ROW

263million by2025

263million by2025 165

98Current enrolments

Enrolment growth

International student enrolments (m)

International education market share (%)

Source: UNESCO Institute of Statistics, OECD Education at a Glance 2013, ICEF

2011

Global tertiary enrolment (m)

Global market conditions remain positive

Supply imbalance in key source markets (m)China

9.57 9.33 9.15

6.57 6.75 6.85

2010 2011 2012

Gaokao students

China domesticuniversity places

2.1 2.4 2.6 2.8 3.0 3.1 3.2 3.5 3.7 4.1 4.3

8.2

25

*

• Chinese university entrance exam


The Navitas global network

• Glasgow• Liverpool• Oxford• Birmingham

• Berlin• Cologne• Frankfurt• Bochum

• Munich• Hamburg• Leipzig• Stuttgart

• Geneva• Zurich• Ljubljana• Stockholm

• Singapore• Jakarta

South East Asia

• Nairobi• Cape Town

• Perth• Adelaide• Brisbane• Melbourne• Sydney• Newcastle• Darwin• Cairns• Auckland

Australia/NZ

• Atlanta• Los Angeles• Miami• Nashville• New York• San Francisco• Chicago• Boston• Dartmouth• Lowell• Bowling Green• Durham• Vancouver• Winnipeg

North America

• Cambridge• Hertfordshire• London• Plymouth

• Portsmouth• Swansea• Aberdeen• Edinburgh

United Kingdom

Africa

• Colombo

Sri Lanka

Europe

• Athens• Milan

• Madrid• Vienna• Brussels• Paris

• Istanbul• Amsterdam• Rotterdam• Barcelona

Navitas’ global footprint

26


Corporate snapshot

375.4mShares on issue

$2.2bMarket Capitalisation

ASX200

52 wk range

Annualised dividend

$5.77Share Price

30 June 2013

NVT

$3.60 - $6.32

19.5cps

27

Corporate snapshot


Detailed H1 P&L – 5 years

28

Navitas Ltd GrowthFY09 FY10 FY11 FY12 FY13 $ Index CAGR*

Operating RevenueUP 304,938 365,842 390,607 382,479 415,713 33,234 109% 8%SAE - - 57,947 113,864 114,934 1,070 101% n/aPEP 162,254 185,983 182,472 188,306 196,377 8,071 104% 5%Corporate & consolidation items 2,644 3,569 3,727 3,497 2,537 (960) 73% -1%

Total operating revenue 469,836 555,394 634,753 688,146 729,561 41,415 106% 12%

Expenses (392,777) (458,694) (513,609) (561,329) (599,559) (38,230) 107% 11%

EBITDA 77,059 96,700 121,144 126,817 130,002 3,185 103% 14%

Depreciation (5,668) (6,637) (9,981) (14,120) (15,492) (1,372) 110% 29%

EBITA 71,391 90,063 111,163 112,697 114,510 1,813 102% 13%

Amortisation (1,003) (976) (4,322) (977) (863) 114 88% -4%

EBIT 70,388 89,087 106,841 111,720 113,647 1,927 102% 13%

Net Interest (paid)/received 216 1,235 (1,624) (7,603) (7,590) 13 100% n/a

Net profit before tax 70,604 90,322 105,217 104,117 106,057 1,940 102% 11%

Income tax (22,407) (27,509) (27,983) (30,497) (31,006) (509) 102% 8%

NPAT 48,197 62,813 77,234 73,620 75,051 1,431 102% 12%

Outside equity interest 994 1,438 158 (471) (476) (5) 101% n/a

NPAT attributable to Navitas 49,191 64,251 77,392 73,149 74,575 1,426 102% 11%

* Cumulative Annual Growth Rate from FY09 to FY13

PCP Change

Detailed P&L – 5 years