TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH NAVITAS (ASX: NVT) MANAGING DIRECTOR, ROD JONES
Clive Tompkins: Hello Clive Tompkins reporting for the Finance News Network. Joining me for the first time from education provider Navitas, is Managing Director Rod Jones - Rod welcome to FNN. Can you start by introducing Navitas, how long it’s been going, what do you do and when did you list?
Rod Jones: Thanks Clive. Well we actually commenced back in 1995 and the whole concept grew out of a recognition that international students were actually failing when they were going to university. And it had nothing to do with academic ability, it was all to do with the fact that the transitional issues they faced in moving from their own country to Australia – in a different country, culture, language etc. So we put together a model with Edith Cowan University in 1995 geared around looking to get these students through the first year of their degree and successfully into second year.
End of 2004 we listed and really from listing, we then actually expanded the company into another three areas which are English Language Training, Workforce and Student Recruitment. But since listing we’ve basically doubled the size of the company.
Clive Tompkins: Okay Rod, so where do you operate geographically and how many students are enrolled?
Rod Jones: Currently we’re across most states of Australia. We’ve also got six colleges in the UK. We’re into Canada with two colleges. We’re in Singapore, Sri Lanka, Kenya and Zambia. So we’re across the world virtually these days.
Numbers of students - we’ve got in our University Programs Division about 20,000 students. In our English Division we’ve got about 15,000 students doing English Language Training and another 15,000 in the Adult Migrant Education Program, which is a Government funded program geared around assisting new migrants when they arrive in Australia. And in the Workforce Division, there’re probably about 4 to 5 thousand students.
Clive Tompkins: Rod, private higher education providers this year have been in the media for the wrong reasons, has this had a negative impact on your business?
Rod Jones: Actually it’s not really the private higher education providers; it’s more within the vocational area that the problems have occurred - and generally at the bottom end. And that’s generally around colleges that have been set up to cater for students who are seeking a quick way of migrating to Australia, based upon what is called Migration on Demand Courses like catering, like hairdressing and the like.
The particular area or space that we play in is very much at the university level high end and we’ve seen no impact whatsoever.
Clive Tompkins: Rod looking at your key markets now, starting with the pre-university programs, where’s the demand coming from and what’s the growth?
Rod Jones: The demand is really coming from a number of areas but particularly out of China, particularly out of Vietnam. They’re the new growth markets really, but really right through the whole Asian region. Africa – we get large numbers of students out of Africa and through South Asia.
Clive Tompkins: And before providers like Navitas, where did mature age students study for university admission?
Rod Jones: Mature age students are still going to universities as the way they did before. I guess we just happen to provide another alternative for them. Many of the students we’re getting from overseas are not mature age students, they’re actually students who are completing their secondary studies and then coming down for higher education studies within Australia or UK or wherever. And the main reason for that is that within their home countries, the numbers of places available for them are really limited.
Clive Tompkins: Onto English language training, who are your customers and where’s the growth?
Rod Jones: In the English language, again it’s from all over the world. Students come to actually learn English and where they’re looking to study generally, is in a western country. So that generally means they’ll go to countries like Canada, Australia, UK, US for English studies.
Clive Tompkins: You’re also involved in workforce training, who are your customers again and what’s the growth?
Rod Jones: The major areas we’re involved in are applied psychology, also security, security training and criminal justice. And we offer courses within those Programs from certificate level right through to post-graduate studies - masters degrees. It’s principally focused on vocational studies for people who wanted to move into those particular areas of the workforce.
The other part of what we do is also what is called The Professional Year and this is an Australian Government Initiative geared around trying to transition international students from completion of degree into the workforce.
Clive Tompkins: And finally student recruitment, is this a new business for Navitas?
Rod Jones: Yeah, look it is a relatively new business for us and I think part of it was around, in one sense, trying to shore up our supply chain of students from two of the major markets, particularly which are China and India. But in saying that also it’s an area where we don’t just focus on recruitment of students for Navitas Colleges alone, we recruit widely for universities and colleges not just in Australia but in the UK, Canada and the US.
Clive Tompkins: Turning to your financials now. Earnings before interest and tax were 77.1 million for the year to June 30, up 16 percent - what were the drivers?
Rod Jones: I think the key driver was the performance of our University Program Division that was up 33 percent for the year and that’s really been the continuous growth of new students flowing into the system. Alongside that however, we’ve also - we saw a 33 percent increase in English Language and we also had a 21 percent increase in Workforce. So across most of our Divisions, we really had some significant growth for the full year.
Clive Tompkins: And onto acquisitions, were there any this year?
Rod Jones: No, no acquisitions this year. Acquisitions are not something that are high on our radar. Certainly if we see good quality ones coming over our desk and to be honest we are seeing a lot - have seen a lot over the last twelve months – then we’ll look at them.
Particularly, if we are going to do things in the acquisition area, it’s more likely to be in the workforce area where we look to find high quality niche providers who we believe we can roll out in a way that’s going to maximise the opportunity. But, you know, acquisitions are not something that we’re actively seeking to do. Most of our growth is through organic growth in the different areas that we work in.
Clive Tompkins: Rod last question. Where do you see Navitas twelve months from now?
Rod Jones: I think we are going to be in a pretty good space. The first five months of this financial year have been, you know, really good and we see that the next – we’ve got pretty good visibility through most of the financial year because of the way our student enrolments happen. So we can see another good year coming up this year, at least equal to what we had last year.
Clive Tompkins: Rod Jones, thanks for introducing Navitas.
Rod Jones: Thank you.