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Navitas' Rod Jones says US travel ban on Muslims is good for Australian international education

Tim Dodd
Tim DoddEducation Editor
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Navitas CEO Rod Jones believes there is a "strong possibility" that US President Donald Trump's travel ban on passport holders from seven Muslim countries will boost Australia's international education industry.

Speaking after the release of Navitas' half-year results on Tuesday, Mr Jones said there was now a perception that the US did not welcome international students and that the UK, after Brexit, was a tough market for them.

The three other main English-speaking education destinations – Australia, Canada and New Zealand – were "well-respected", he said. Navitas, a listed Australian-based education provider, operates in all five countries.

Navitas CEO Rob Jones said that after completing college closures, the company was in "clear air".  Josh Robenstone

The Navitas share price fell more than 6 per cent on Tuesday after the company announced an 8 per cent fall in half-year earnings, mainly due to the continuing impact of the closure of two of its university partner colleges linked to Macquarie University and Curtin University.

It said the closures were now complete and the company had "a reset platform for future growth".

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"That's over, we're now out the other end, we're in clear air," Mr Jones said.

Navitas reaffirmed its guidance that FY17 EBITDA would "remain broadly in line with the FY16 result on a constant currency basis".

EBITDA for the half-year ended December 31 2016 was $76.6 million, down from $82.8 million in the previous corresponding period.

Most of the earnings fall was attributed to the company's university partnerships division – affected by the college closures – for which EBITDA was $70.3 million in the 2016 December half compared to $74.2 million a year earlier.

Navitas said that without the closures the university partnerships division would have recorded 8 per cent growth in underlying EBITDA.

Net profit after tax was up 18 per cent, which the company said was helped by a "non-recurring, non-cash gain" from the sale of one of Navitas' colleges, Perth Institute of Business and Technology, to a joint venture between Navitas and Edith Cowan University.

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The company's statement said its balance sheet remained strong, allowing for the continuation of the share buy-back scheme.

Earnings per share were up by 21 per cent and a fully franked interim dividend of 9.4¢ per share will be paid on March 15, with a record date of March 1.

Mr Jones said the results were "in line with our expectations and our full-year guidance".

Navitas shares closed at $4.43 on Tuesday, down 6.4 per cent from Monday's close.

The company also blamed unfavourable foreign exchange movements and the federal government's reforms to the failed VET FEE-HELP student loan scheme for the reduced group earnings.

The new Vocational Student Loans scheme, which replaces VET FEE-HELP, has put ceilings on the amount students can borrow to fund a course. In some cases the loan amount is less than the course cost, unlike VET FEE-HELP in which the loan to students covered the full cost of a course.

Navitas said this had little impact on the first-half results but was likely to limit future growth in the company's professional and English programs division.

However Mr Jones said that because the company's business was mainly in the higher education space, this had an impact on only a small proportion of company activities and was already taken account of in its profit guidance.

Tim Dodd writes on education specialising in business education, apps and opinion. Based in our Sydney newsroom, Tim covers higher education, schools, vocational education, online education and MOOCs. Connect with Tim on Twitter.

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