28 September 2018 2018 Annual Report the 2018 Annual Report of Navitas Limited
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28 September 2018 2018 Annual Report The 2018 Annual Report of Navitas Limited (ASX: NVT) is attached. A copy of the report will be sent by mid-October 2018 to those shareholders who have elected to receive a copy. Navitas’ 2018 Corporate Governance Statement and Appendix 4G have been separately lodged with ASX today in accordance with ASX Listing Rule 4.10. These documents and the 2018 Annual Report are also available at www.navitas.com/organisation/investors. ------ENDS------ For further information contact: Hugh Hangchi, Company Secretary & Group General Counsel Navitas Limited Phone: +61 8 9314 9618 About Navitas Navitas is a leading global education provider that offers an extensive range of educational services through two major Divisions to students and professionals including university programs, creative media education, professional education, English language training and settlement services. Navitas is a S&P/ASX200 company. Further details about Navitas are available at www.navitas.com Navitas Ltd Head Office Main Details Level 8, Brookfield Place T +61 8 9314 9600 125 St Georges Terrace F +61 8 9314 9699 Perth WA 6000 Australia E [email protected] W navitas.com ABN 69 109 613 309 NAVITAS LIMITED ANNUAL REPORT 2018 OUR VISION To be one of the most trusted learning organisations in the world. OUR MISSION Navitas is passionate about creating opportunities through lifelong learning, and being a global leader in delivering better learning solutions. Navitas has helped generations of learners transform their lives through education. For over 40 years, hundreds of thousands of OUR VALUES learners from around the world have graduated from Navitas colleges DRIVE to achieve and having experienced a teaching and learning environment that supports advance together. them to harness their talents and achieve their dreams. ADVENTUROUS in mind and spirit. Navitas’ success is underpinned by its unparalleled international network, a peerless commitment to student experiences and outcomes, a track record of working in partnership CONVICTION in our purpose and potential. with universities and industry and a passion for discovering new technologies and models of teaching and learning that will improve education now and into the future. GENUINE in the way we behave and deliver. From pre-university and pathway programs to university, to English language and vocational training and undergraduate and postgraduate degrees, Navitas reaches aspirational learners RIGOUR to enhance our professional reputation at more than 120 colleges and campuses across its global network each year, powered by and credibility. a diverse group of talented employees. RESPECT by celebrating, Navitas is a proud Australian company that pioneered an innovative university valuing and caring for people partnership model of education in Perth in 1994. Its entities have and the environment. delivered education programs across the country since 1976. Navitas is listed on the Australian Securities Exchange (ASX:NVT) and is part of the S&P/ASX 200 Index. Contents 1 OPERATING AND FINANCIAL REVIEW 2 FY18 Highlights and Achievements 3 Chairman and Group CEO Report 5 About Navitas 7 Review of Operations 9 About our Businesses 13 Corporate Responsibility 21 Corporate Governance 25 2 DIRECTORS’ REPORT 31 Remuneration Report 37 3 FINANCIAL STATEMENTS AND NOTES 56 Consolidated Statement of Profit or Loss 57 and Other Comprehensive Income Consolidated Statement of Financial Position 58 Consolidated Statement of Cash Flows 59 Consolidated Statement of Changes in Equity 60 Notes to the Financial Statements 61 4 DIRECTORS’ DECLARATION 94 5 INDEPENDENT AUDITOR’S REPORT 95 6 ADDITIONAL INFORMATION 99 7 INVESTOR INFORMATION 100 8 GLOSSARY 101 9 CORPORATE INFORMATION 103 Section 1 Navitas Limited Annual Report 2018 Navitas Limited Annual Report 2018 navitas.com 1 Life-changing opportunities to learn Life-changing opportunities to learn 2 FY18 Highlights and Achievements QUALITY EFFICIENCY GROWTH CORPORATE RESPONSIBILITY Non-Executive Director Management Staff Gender Diversity Gender Diversity Gender Diversity 50% 40% 60% Global University Rationalisation of Careers 6% growth in average Pass rates 84%, and Industry Division (C&I) FY18 enrolments for Retention rates 90%, announced - stabilising University Partnerships FEMALE FEMALE FEMALE Progression rates 94% foundation for growth 50% 60% 40% MALE MALE MALE Above sector average Quality 40 bps margin improvement New agreements with Virginia 5,00 Indicators for Learning and in continuing University Commonwealth, Murdoch 49 0 Teaching (QILT) survey results Partnerships operations University and conversion $ Scholarships of Swansea College to JV awarded worth Navitas Education 1,450 Trust Donations Hours Volunteered 5 YEAR FINANCIAL SUMMARY 6 University Partnership Operations streamlined C&I opportunities with contracts renewed and shared service growing demand for tertiary 2018 2017 2016 2015 2014 % Change implementation progressed skills education, short courses, micro credentialing $000s $000s $000s $000s $000s 18/17 Revenue 930,980 955,195 1,010,651 980,341 878,219 -2.5% EBITDA 81,959 155,048 164,581 163,107 144,929 -47.1% Navitas Group Revenue ($m) Navitas Group EBITDA ($m) Navitas Group NPAT ($m) Profit/(loss) attributable to members of Navitas (55,847) 80,337 90,078 71,810 51,584 n/a Basic earnings per Share (cents) (15.6) 22.1 24 19.1 13.7 n/a 1200 180 100 160 80 1000 Interim dividend per Share (cents) 9.4 9.4 9.6 9.4 9.4 140 60 800 120 40 Final dividend per Share (cents) 8.0 10.1 9.9 10.1 10.1 100 20 600 ® 80 0 EVA created 38,642 49,545 60,286 62,861 51,779 400 60 -20 Operating cash flows 92,301 101,534 125,810 141,834 140,939 40 -40 200 20 -60 Total equity 28,807 155,738 209,799 206,667 211,709 0 0 -80 FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18 Return on capital employed 15.3% 18.2% 21.6% 22.8% 19.9% Navitas Limited Annual Report 2018 Navitas Limited Annual Report 2018 navitas.comnavitas.com 3 Life-changing opportunities to learn Life-changing opportunities to learn 4 At the end of FY18, Rod Joness,, coo-founder and inaugural CEO and Managing Director of NNaviitas retiired ffrom hiis executtiive rolless. We pay ttributte tto hiis tremendous vision and leadershipp in buiilding Naviitas to the Chairman and Group CEO Report company it is todayy. Dear Shareholder, At the end of FY18, Rod Jones, co-founder RATIONALISATION OF CAREERS and inaugural CEO and Managing Director The overall financial outcomes for the 2018 AND INDUSTRY DIVISION TO of Navitas retired from his executive roles. financial year (FY18) were disappointing, UNDERPIN IMPROVED RETURNS We pay tribute to his tremendous vision with the financial statements showing and leadership in building Navitas to the The portfolio review of the Careers an after-tax loss of $55.8m after taking company it is today, and to his enormous and Industry Division highlighted the account of a range of one-off charges positive impact on the education sector variability of financial returns across CONTINUED GROWTH CORPORATE GOVERNANCE quality student outcomes, a reputation associated with a major rationalisation in Australia and on the lives of many different regions. In high-demand sectors IN ENROLMENTS for innovation and with access to capital, of our Careers and Industry Division. An overview of our governance and risk hundreds of thousands of students who and regions with stable regulatory Navitas is well positioned to excel in an Despite the disappointing result for FY18, The University Partnerships Division management processes is available on have benefited from expanded and environments, the Division is well placed evolving education sector. the University Partnerships and the grew enrolments by 6% across FY18 page 25 and the full version online. We improved global education opportunities. to offer high quality student programs remaining Careers and Industry businesses ahead of Navitas’ 2020 target of 5%. encourage shareholders to read it in full. We would like to thank the Board The Navitas Board appointed Rod as a profitably. However, SAE’s US operations remain strong and are positioned well New partnership contracts were signed and the entire Navitas team for their Non-Executive Director, effective 1 July have experienced challenging operating David Buckingham was announced as for the future. The rationalisation of with Virginia Commonwealth University contribution to the outcomes achieved 2018. He will be taking a well-deserved conditions, a situation that is not expected the successor for Rod Jones as CEO the Careers and Industry Division was and Murdoch University and five existing in FY18. We would also like to thank all leave of absence until the December to improve in the foreseeable future. For and Managing Director in October 2017. implemented following a detailed portfolio partner contracts were successfully our shareholders for their ongoing support board meeting. We look forward to his example, accreditation is required at both Following a handover period, David review undertaken to address the renewed with no change in key commercial and look forward to delivering on our plans continued contribution to Navitas and state and national levels, leading to long assumed CEO responsibilities in March lower-than-expected return on capital terms. In addition, the college operated for growth in shareholder returns. to the education sector more broadly. lead times, high compliance costs, and 2018 and Managing Director responsibilities of the Division in the face of challenging with Swansea University was converted relatively small student cohorts. in July 2018. As previously mentioned, regulatory conditions. QUALITY OUTCOMES CONTINUE to a joint venture on 1 March 2018 to Rod was appointed as a Non-Executive The rationalisation program will include the implement a broader strategic The majority of this restructure will be in TO BE THE CORE FOCUS Director upon his retirement from closure and relocation of some colleges opportunity for growth.