

Navitas (ASX:NVT)
1. About
Navitas is a leading global education provider that delivers an extensive range of educational services to over 80,000 students annually through more than 120 institutions in 31 countries. Navitas locations throughout Australia, North America, Europe, Africa, and Asia, and over 80,000 current students, the Company understand the world’s learning needs. For more than two decades, Navitas has helped its partner institutions across the globe to achieve sustainable growth by cultivating a more diverse and internationalised campus. Its partnerships with industry and professional bodies deliver work integrated learning programs, with benefits for students, employers, universities and the economy.
2. Business model
The Company operates the following divisions:[1]
Division |
Revenue ($’000) |
% of Revenue |
% of Profit (bef Int, Tax, Depn & Amort) |
Profit drivers[2] |
University Partnerships |
$598,887 |
64.4% |
161.2% |
|
Careers and Industry - SAE |
$203,417 |
21.9% |
(36.5%) |
|
Careers and Industry - PEP |
$114,146 |
12.3% |
18.8% |
|
Corporate |
$13,243 |
1.4% |
(43.6%) |
N/A |
3. Strategy
Key strategies include:[3]
Navitas continued to pursue its strategic plan in FY18, incorporating the following vision and goals:
Division
University Partnerships
Vision
- To be the preferred transformation partner to universities around the world
Goals
- Extend and enhance University Partnerships contracts, services, and student outcomes
- Develop new products
- Develop new partners
- Transform to broader partner activities
Careers and Industry
Vision
- Provide students with a quality, valued education in segments with strong employment prospects
Goals
- Refocus the Division into industry aligned sectors
- Increase performance of the core including academic outcomes
- Build or acquire new industry niches
- Develop online and EdTech opportunities
Navitas Ventures
Vision
- Support the ideas, people and companies that will shape the future of Higher Education
Goals
- Appoint key resources and establish deal pipeline
- Make investments that provide a 15% minimum IRR to Navitas Gain access to new capabilities that enable, extend and hedge Navitas’ core business
4. Markets
The Company operates in markets including:[4]
Industry (Australia) |
Industry Revenue (2018) |
Growth Rate |
University And Other higher Education |
$33 billion |
2.9% (annual 14-19) |
Technical And Vocational Education And training |
$12 billion |
2.3% (annual 14-19) |
Art And Non Vocational Education |
$6 billion |
5.5% (annual 13- 18) |
5. Competition
Major competitors include[5]
- Far Eastern University Inc.
- RedHill Education Ltd (ASX: RDH)
- Academies Australasia Group Ltd (ASX: AKG)
- Site Group International Ltd.
6. History
1994[6]
Founded in Australia
2004
Listed on Australian Stock Exchange
2009
Selected to run La Trobe University International College
2011
Navitas partnering with Birmingham City University
Sells SAE Dubai and Collaborates with Abu Dhabi Government
Navitas completes acquisition of SAE
Successful Completion of Share Purchase Plan
2014
Expanding creative media footprint- agreeing to acquired California College
2015
Opening sixth US college in partnership with Florida Atlantic University
2016
Navitas and ECU completing restructuring of PIBT
2017
Navitas finalises Adult Migrant English Program contracts
Navitas completes acquisition of Christchurch College of English Limited
Navitas renews partnerships with Curtin University for Curtin College and Curtin Singapore
Navitas renews agreement with the University of Manitoba
2018
Navitas continues Netherlands expansion with new Pathway College Agreement with The Hague University of Applied Sciences
Navitas expands into the Netherlands via partnership with the University of Twente
Navitas to partner with Murdoch University to support Dubai campus
7. Team
Board of Directors[7]
Tracey Horton – Non-Executive Chairman
David Buckingham – Group CEO and Managing Director
Tony Cipa – Non-Executive Director
Diana Eilert – Non-Executive Director
Lisa Paul – Non-Executive Director
David Robb – Non-Executive Director
Management Team
David Buckingham – Group CEO and Managing Director
Philip Mirams – Chief Financial Officer
Bev Hudson – Acting CEO of University Partnerships, Australasia
Scott Jones – CEO of Navitas Careers and Industry
Rob Lourey – Head of Human Resources
Paul Lovegrove – CEO of University Partnerships, Europe
Mick Campbell – Chief Information Officer
Iain Rothwell – Chief Commercial Officer
8. Financials
2018 Full Year Results Presentation
Financial Year 2017/18 (ended 30 June):[8]
Division |
Revenue ($’000s) |
% Change |
Profit (before Int, Tax, Depn & Amort) ($’000) |
% Change |
University Partnerships |
$598,887 |
204.3% |
$132,142 |
0.7% |
Careers and Industry - SAE |
$203,417 |
201.4% |
($29,913) |
(199.9%) |
Careers and Industry - PEP |
$114,146 |
165.5% |
$15,438 |
(50.3%) |
Corporate |
$13,243 |
406.5% |
($35,708) |
4.1% |
Total |
$929,693 |
197.5%) |
$81,959 |
(47.1%) |
9. Risk
Major risks include:[9]
Capital risk
When managing capital it is the Company’s objective to maximise the returns to shareholders as measured by Economic Value Added (EVA®), whilst also ensuring that the entity maintains a balanced capital structure that provides flexibility for the Company to invest in its business to achieve its strategic goals. The Company regularly reviews its capital structure to ensure that the Group takes advantage of favourable costs of capital. As the market is constantly changing, the Company will: actively review the amount of dividends to be paid to shareholders, return capital to shareholders, issue new shares, and initiate on market share buy backs, and drawdown on/repay bank borrowings to ensure that capital is managed appropriately.
Financial risk
Interest rate risk
The Group’s exposure to market interest rates relates primarily to the Group’s long-term borrowing obligations with a floating interest rate. The Group’s debt facilities allow borrowings in multiple foreign currencies, accordingly, interest rates on interest-bearing loans of the Group currently range from 1.0% to 3.6% (2017: 0.6% to 3.0%). The Group’s policy is to manage its interest cost using a mix of fixed and variable rate debt, and that between 50% and 75% of core borrowings must be at fixed rates of interest. Core borrowings is defined as the lowest level of borrowings forecast in the Group’s forward projections.
In the absence of fixed rate debt the Group’s policy allows for the use of interest rate swaps, collars, and caps. Where the Group enters into fixed rate debt it is understood that this creates a fair value exposure as a by-product of the Group’s attempt to manage its cash flow volatility arising from interest rate changes. The Group has entered into interest rate swap contracts, in order to protect against rising interest rates, under which it has a right to receive interest at variable rates and to pay interest at fixed rates. At 30 June 2018, the value of interest rate swap contracts held was $143.580m (2017: $131.506m).
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or expense is denominated in different currency from the Group’s presentation currency) “Transactional risk”, and the Group’s net investments in foreign subsidiaries “Translational ris
Transactional risk
The Group’s foreign currency risk policy is to only hedge known and committed exposures
Translational risk
The Group’s policy is to hedge its exposure to fluctuations on the translation of its foreign operations by holding net borrowings in foreign currencies, where the unhedged exposure exceeds $10.0m. This is currently limited to the Group’s Euro, US Dollar, Canadian Dollar and Singapore Dollar exposures.
Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade and other receivables, other financial assets and derivative instruments. The Group’s exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments.
Liquidity risk
The Group’s objective is to maintain a balance between the continuity of funding and flexibility through the use of operating cash flows and committed available credit facilities. The Group has a series of five year multi-currency bilateral revolving credit facilities for $400m. Of this facility $100m expires in December 2020 and $300m expires in December 2022. These facilities are split into two tranches. Tranche A is $320m and wholly consists of credit facilities, whereas Tranche B is $80m and is primarily for contingent instrument requirements. A total of $325.277m (2017: $308.164m) had been utilised of the total facility, split between lease rental and performance guarantees of $63.138m (2017: $60.131m) and borrowings of $262.139m (2017: $248.033m). Cash flows from operations for 2018 were $92.301m (2017: $101.534m).
References
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Annual Report 2018, P. 64
https://www.listcorp.com/asx/nvt/navitas/news/annual-report-to-shareholders-1983641.html -
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Annual Report 2017, P. 18-22
https://www.listcorp.com/asx/nvt/navitas/news/annual-report-to-shareholders-1983641.html -
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Annual Report 2018, P. 08
https://www.listcorp.com/asx/nvt/navitas/news/annual-report-to-shareholders-1983641.html -
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http://www.ibisworld.com.au/industry/default.aspx?indid=600
http://www.ibisworld.com.au/industry/default.aspx?indid=601
http://www.ibisworld.com.au/industry/default.aspx?indid=603 - ^ https://quotes.wsj.com/AU/XASX/NVT
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https://www.linkedin.com/company/navitas_2 https://e6c67dfea7107c66cf4b-5fe525cefecba56744297355853ea71e.ssl.cf6.rackcdn.com/Navitas_Investor_Day_Presentations.pdf
https://e6c67dfea7107c66cf4b-5fe525cefecba56744297355853ea71e.ssl.cf6.rackcdn.com/Navitas_expands_creative_media_footprint__agrees_to_acquire_California_college.pdf
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https://www.listcorp.com/asx/nvt/navitas/news/amep-contracts-signed-1576015.html
https://www.listcorp.com/asx/nvt/navitas/news/navitas-completes-acquisition-of-ccel-1761232.html
https://www.listcorp.com/asx/nvt/navitas/news/navitas-renews-agreements-with-curtin-university-1760961.html
https://www.listcorp.com/asx/nvt/navitas/news/navitas-renews-agreement-with-the-university-of-manitoba-1579318.html
https://www.listcorp.com/asx/nvt/navitas/news/navitas-signs-pathway-college-agreement-with-thuas-1983074.html
https://www.listcorp.com/asx/nvt/navitas/news/navitas-expands-into-netherlands-with-university-of-twente-1932831.html
https://www.listcorp.com/asx/nvt/navitas/news/navitas-to-partner-with-murdoch-university-in-dubai-1827107.html -
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https://www.navitas.com/organisation/directors
https://www.navitas.com/organisation/leadership_team -
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Annual Report 2018, P. 64
https://www.listcorp.com/asx/nvt/navitas/news/annual-report-to-shareholders-1983641.html -
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Annual Report 2018, P. 13, 82-85
https://www.listcorp.com/asx/nvt/navitas/news/annual-report-to-shareholders-1983641.html