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Listed education provider Navitas (ASX: NVT) has reported its profits have dropped by 53 per cent down to $24.7 million for the first half because of changes from government funding and US corporate tax rates.
Earnings and revenue are also down, by 4.6 per cent and 12.9 per cent respectively. Revenue for the half fell to $456.7 million.
Despite these disappointing figures, group CEO Rod Jones (pictured) remains optimistic about the future of the sector and of the company itself.
"Navitas has continued to deliver on strong academic and experience outcomes to students and partners while delivering growth and improved cash flows from our continuing operations," says Jones.
"Global demand for education and training continues to increase steadily providing Navitas with growth opportunities in traditional and emerging fields."
Key highlights for the group include retaining a 100 per cent renewal rate in the group's University Partnerships contracts, and the securing of a new agreement with Virginia Commonwealth University.
A one-off tax charge of $7.5 million was a not-insignificant dent in the company's results for the half-year. The charge was the result of the company being forced to write down the value of US tax losses thanks to a dramatic cut in the US corporate tax rate.
Investors have demonstrated their concern with these results on Tuesday and Wednesday. Shares closed at $4.75 on Tuesday, a 9.4 per drop. On Wednesday, shares opened at $4.63, and continue to remain down by 1.16 per cent to $4.70 per share at around 11.30am AEDT.
Its Australian operations were also hit, with the group's business division recording a drop in enrolments as the government axed a loan scheme for vocational program and replaced it with a new, more tightly regulated program.
Navitas' careers and industry division was also hit by a reduced contribution to adult migrant English programs by the government, following the loss of several contracts in a re-tender process.
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Business News Australia
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