Navitas FY13 full year results presentation

Shaping
the
Future
Shaping
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 document
should 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
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All information in this document is believed to be reliable, but no representation, warranty or guarantee, express or implied, is made by
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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
Staff
headcount
~5,500
Staff
headcount
~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
$731.7m
Revenue
$731.7m
NPAT
$74.6m
NPAT
$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%
$143.2m
FY13 FY12
… and EBITDA reflecting further diversification
EBITDA ($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%
CAGR
27.3%
CAGR
14.1%
CAGR
14.1%
CAGR
12.5%
CAGR
12.5%
CAGR
Key metrics demonstrate solid cumulative growth
9
106.1
226
282.7
345.4
470.7
556.7
641.8
688.5
731.7
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13
Revenue ($m)
45.3 47.9
54.0
63.4
77.1
96.7
121.1
126.8130.0
EBITDA ($m)
29.1
31.5 32.2
37.4
49.2
64.3
77.4
73.1 74.6
NPAT($m)

Strong shareholder returns
11.4%
CAGR
11.4%
CAGR
20.1%
CAGR
20.1%
CAGR
11.1%
CAGR
11.1%
CAGR
* Simplified for full year calculation
Recovery evident in shareholder returns
10
8.4*
9.1 9.3
10.8
14.3
18.8
21.7
19.5 19.9
Earnings (cps)
7.8
11.9
14.1
22.7
30.5
25.3
18.5
19.7
33.8
Operating cashflow
(cps)
8.4
9.5 9.3
10.9
14.3
18.8
20.7
19.5 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
38.4
46.6
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 Cashflow
NPAT 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 Programs
Earnings ($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 $5.5m
• Student Recruitment incorporated into the
Division
University Programs
76.5
100.3
111.9
102.9
106.1
102.9
6.8
2.8
2.5
1.7
(6.6)
(2.5)
(1.5)
106.1
FY12
Canada
UK
USA
ROW
Australia
Student Recruitment
Divisional/marketing
FY13
EBITDA ($m)
14

SAE
• 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)
• 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
• 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 improve
Equivalent Full Time Students Units (EFTSU): Semester enrolments
Semester 2 2013 EFTSU
5% growth against pcp
Recovery trend continues
19
6,770
6,826
8,134
6,899
6,781
8,012
7,194
7,087
8,167
7,629
7,642
9,769
9,210
9,020
12,268
11,573
12,025
15,419
14,306
14,529
17,811
15,724
14,675
17,149
14,601
13,320
16,422
14,097
13,602
17,067
14,744
-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
20,000
0302
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
-%Enrolmentgrowthonpcp(RHS)
-EFSTU(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)
Exciting 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
• 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
…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
6.2
6.14.7
47.2
USA
UK
GER
France
Australia
Canada
ROW
263
million by
2025
263
million by
2025
165
98
Current 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 domestic
university 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
375.4m
Shares on issue
$2.2b
Market Capitalisation
ASX200
52 wk range
Annualised dividend
$5.77
Share Price
30 June 2013
NVT
$3.60 - $6.32
19.5cps
27
Corporate snapshot

Detailed H1 P&L – 5 years
28
Navitas Ltd Growth
FY09 FY10 FY11 FY12 FY13 $ Index CAGR*
Operating Revenue
UP 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/a
PEP 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

Navitas FY13 full year results presentation

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