N A V I T A S L I M I T E D
A N N U A L R E P O R T
2 0 1 5
II
Navitas Limited Annual Report 2015
CONTENTS
Operating and Financial Report 002
Navitas’ Global Footprint –
Colleges, Campuses and Offices 004
Highlights and Achievements 006
Board of Directors 008
Navitas Leadership Team 010
Chairman's and Group Chief
Executive Officer's Report 014
Financial Report 018
Divisional Review of Operations 022
Strategy and Corporate Responsibility 028
ValueShare Incentive Scheme 032
Corporate Governance Statement 033
Financial Statements 034
Consolidated Statement of Profit or Loss
and Other Comprehensive Income 034
Consolidated Statement of
Financial Position 035
Consolidated Statement of
Cash Flows 036
Consolidated Statement of
Changes in Equity 037
Notes to the Financial Statements 038
Directors’ Report 072
Directors’ Declaration 085
Additional Information 088
Investor Information 089
Glossary 090
Corporate Information 094
Navitas Limited Annual Report 2015 001
002 Navitas Limited Annual Report 2015
Navitas exists to provide people around the world with
the opportunity to realise their ambitions through
lifelong education and training.
We do this by anticipating the world’s learning needs, creating
and delivering a comprehensive range of quality education options
and equipping people with essential skills and experiences.
VISION
To be one of the most trusted
learning organisations in the world.
Navitas is passionate about creating opportunities through lifelong
learning, and being a global leader in delivering better learning solutions.
MISSION
VALUES
We have conviction to our purpose and potential.
We demonstrate drive by
achieving and advancing together.
We are adventurous in mind and spirit.
We demonstrate rigour in enhancing
our professional reputation and credibility.
We are genuine in the way we behave and deliver.
We show respect by celebrating, valuing
and caring for people and the environment.
Navitas Limited Annual Report 2015 003
004 Navitas Limited Annual Report 2015
NAVITAS’ GLOBAL FOOTPRINT
– COLLEGES, CAMPUSES AND OFFICES
Navitas offers an extensive range of educational services via
more than 120 colleges and campuses across its global network.
More information about education opportunities at these
locations is available at navitas.com.
North America
Atlanta, Boca Raton, Boston, Bowling
Green, Chicago, Dartmouth, Durham,
Los Angeles, Lowell, Miami, Nashville,
New York, San Francisco, San Jose,
Vancouver, Winnipeg
Mexico
Inicio
Colleges and Campuses (Region)
Colleges and Campuses (City)
Offshore Marketing Offices (Region)
China, India, Japan, Kenya, Middle East, Nigeria, Pakistan, Russia,
South Korea, Turkey, UK, Vietnam
Offshore Marketing Offices (City)
Beijing, Beyoglu, Dubai, Guangzhou, Hanoi, Ho Chi Minh City, Hong
Kong, Jakarta, Lagos, Lahore, London, Moscow, Nairobi, New Delhi,
Seoul, Shanghai, Taipei, Tokyo
Navitas Limited Annual Report 2015 005
Europe
Amsterdam, Athens, Belgrade, Barcelona, Berlin, Bochum, Brussels,
Bucharest, Cologne, Frankfurt, Geneva, Hamburg, Istanbul, Leipzig,
Ljubljana, Madrid, Milan, Munich, Paris, Rotterdam, Stockholm,
Stuttgart, Vienna, Zurich
United Kingdom
Aberdeen, Birmingham, Cambridge,
Edinburgh, Glasgow, Hertfordshire, Liverpool,
London, Northampton, Oxford, Plymouth,
Portsmouth, Swansea
India
Chennai,
Bangalore,
Mumbai
Bangladesh
Dhaka
Middle East
Amman, Dubai,
Jeddah, Qatar
Sri Lanka
Colombo
Africa
Cape Town
South East Asia
Bangkok, Jakarta,
Kuala Lumpur,
Singapore
Australia/New Zealand
Adelaide, Auckland, Brisbane, Byron Bay,
Canberra, Christchurch, Geelong,
Gold Coast, Darwin, Melbourne,
Newcastle, Perth, Sydney,
006 Navitas Limited Annual Report 2015
HIGHLIGHTS AND ACHIEVEMENTS
KEY HIGHLIGHTS
Continued delivery of strong student experience
and academic outcomes including higher than 90%
progression rates to university for University Programs
and continued improvement of Net Promoter Scores
for Professional and English Programs and SAE.
Two new university partnerships announced under
the existing royalty model – partnering with Florida
Atlantic University and University of Northampton.
Two new university partnerships announced
under the new joint venture model –
partnering with Western Sydney University
and the University of Canberra.
Three university partner contracts renewed
with similar terms and conditions.
Promising discussions with potential new
university partners, particularly in the US.
Professional and English Programs continued
its growth trajectory and leveraged scale
benefits and operational efficiency.
SAE delivered a strong second half result.
12%
Group Revenue
$980.3 million
13%*
EBITDA
$163.1 million
11%*
Net profit after tax
$91.4 million
11%*
Earnings per Share
24.3 cents
21%
Economic
Value Added®
14%
Wealth distributed
$717.6 million
Group capability and capacity further developed.
21% growth in Economic Value Added.®
*excluding goodwill impairment
® Registered trademark of Stern Stewart
Corporate Responsibility
Diversity – Management
Diversity – Board
Volunteer hours
Donations ($000)
44.3
63.2
63.6
41.5
58.5
36.4
36.8
55.7
Management
Staff
Male
Female
Male
Female
Male
Female
33.3
890
774
66.7
Hrs
1,150
ABCN
Management
Other
191.0
1,083.0
Scholarships
Fundraising
Wealth Distributed ($m)
Wealth Distributed (%)
Health and Safety*
FY11
FY12
FY13
FY14
FY15
6
6
24
$717.6m
10
21
33
474.2
498.1
529.5
664.0
717.6
University and
consortium partners
Teaching and
academic employees
Other employees
Shareholders — dividends
Governments — income taxes
Reinvested as depreciation,
amortisation and
retained earnings
Metric
Fatalities
Lost Time Injury
Frequency Rate
(LTIFR)
Prosecutions
or Regulatory/
Improvement
notices
*Australia only
Performance
0
2.3
0
Navitas Limited Annual Report 2015 007
Financial Summary
Revenues
EBITDA*
Profit attributable to
members of Navitas*
2015
$000s
2014
$000s
2013
$000s
2012
$000s
2011
$000s
2010
$000s
2009
$000s
2008
$000s
% Change
15/14
980,341
878,219
731,734
688,530
643,812
556,743
470,696
345,438
12%
163,107 144,929
130,002
126,817
121,144
96,700
77,059
63,443
13%
91,352
82,032
74,575
73,149
80,736
64,251
49,191
37,430
11%
Basic earnings per Share (cents)*
24.3
21.8
19.9
19.5
22.7
18.8
14.3
10.8
11%
Interim dividend per Share (cents)
(fully franked)
9.4
9.4
9.3
9.4
8.7
8.1
5.5
4.7
Final dividend per Share (cents)
10.1
10.1
10.2
10.1
12.0
10.7
8.8
6.2
0%
0%
EVA created
62,861
51,779
46,602
38,524
58,630
54,573
40,551
27,288
21%
Operating cashflows
141,834 140,939
126,819
73,859
69,458
86,504 104,344
78,609
1%
Total equity
206,667 211,709
235,747 233,560
239,213 103,446
98,576
93,980
-2%
Return on capital employed
22.8%
19.9%
19.0%
19.4%
50.0%
60.0%
47.3%
33.6%
15%
Revenue ($m)
EBITDA ($m)
NPAT ($m)
FY11
FY12
FY13
FY14
FY15
643.8
688.5
731.7
878.2
FY11
FY12
FY13
FY14
121.1
126.8
130.0
144.9*
FY11
FY12
FY13
FY14
980.3
FY15
163.1*
FY15
80.7
73.1
74.6
82.0*
91.4*
Revenue Distribution
5
9
7
6
9
64
Australia
UK
Europe
Canada
USA
ROW
5 6
6
7
9
67
FY15 – $980.3m
FY14 – $878.2m
*excluding goodwill impairment
008 Navitas Limited Annual Report 2015
BOARD OF DIRECTORS
Pictured left to right: James King, Diana Eilert, Harvey Collins, Tracey Horton, Rod Jones, Tony Cipa.
HARVEY COLLINS
BBus, FCPA, SFFin, FAICD
Non-Executive Chairman
Appointed 9 November 2004
Mr Collins has extensive executive and board
experience in a range of industries. From 1986
to 1996 he held senior management roles in
Western Australian regional bank, Challenge
Bank Limited, including five years as Chief
Financial Officer. From 1997 to 2002, he was
an executive director of listed investment
company, Chieftain Securities Limited. From
May 2009 to September 2012, he was the
non-executive Chairman of Bank of Western
Australia Limited (Bankwest). From February
2004 to 30 June 2013, he was a non-executive
director (Deputy Chairman) of Verve Energy
(Electricity Generation Corporation). Mr Collins
has held board appointments in industries as
diverse as financial services, health insurance,
telecommunications, equipment hire, mining
services, franchising and electricity. He is a
past member of the WA State Council of the
Australian Institute of Company Directors.
During the past three years, Mr Collins
has not served as a director of any other
listed companies.
*Denotes current directorship
TONY CIPA
BBus, Grad Dip Accounting
Non-Executive Director
Appointed 1 May 2014
Mr Cipa has extensive international business
and finance experience including his roles as
Chief Financial Officer and Executive Finance
Director for CSL Limited, the ASX listed
international biopharmaceutical company.
During his time leading the finance function
of CSL the company grew from a previously
government-owned business to a global market
leader with over 20 international locations
including the USA, UK, Canada and Germany.
Mr Cipa was CFO from 1994 to 2000 then
served as Executive Finance Director on CSL's
Board of Directors from 2000 to 2010.
Mr Cipa is currently the Chairman of the Audit
and Risk Committee and a Non-Executive
Director of ASX listed Skilled Group. He is also
the Chairman of the Audit and Risk Committee
and a Non-Executive Director of Healthscope
Limited. Mr Cipa is also a Non-Executive
Director at Mansfield District Hospital.
During the past three years Mr Cipa has
served as a director of the following other
listed companies:
• Skilled Group* (from 4 April 2011)
• Healthscope Limited* (from 28 June 2014)
ROD JONES
BComm, DEd (Hon) ECowan, MAICD
Group Chief Executive Officer and
Managing Director
Appointed 18 June 2004
Mr Jones has 35 years’ experience in
educational administration and has held a
number of senior administrative positions within
the Government and the private education
sectors. His background covers both secondary
and higher education in Australia.
Mr Jones has been involved in international
education since 1987 and is recognised as one
of the leaders in the successful establishment
of the sector in Australia. He is one of the co-
founders of Navitas and has been instrumental
in the expansion and development of the
Navitas model into the various markets in which
it now operates.
In April 2007, Mr Jones received an honorary
Doctor of Education from Edith Cowan
University in recognition of his outstanding
contribution to the development of the
international education sector both in Australia
and overseas, and in 2008 was named the
Australian Ernst and Young Entrepreneur of
the Year. In 2010, Mr Jones was recognised by
his colleagues with an International Education
Excellence Award from the International
Education Association of Australia for his
leadership in the field of international education.
Mr Jones is a member of the Business Council of
Australia and the Australian Institute of Company
Directors. He is also a significant supporter of a
number of charitable causes in Australia.
During the past three years, Mr Jones
has not served as a director of any other
listed companies.
Navitas Limited Annual Report 2015 009
DIANA EILERT
BSc Maths & Chemistry,
MComm Finance & Marketing
Non-Executive Director
TRACEY HORTON
BEcon (Hons) UWA, MBA Stan,
Prof Emer, FAICD, FGIA
Non-Executive Director
Appointed 28 July 2014
Appointed 13 June 2012
Ms Eilert is a professional non-executive director
with extensive board and executive experience
gained in a 25 year career across a variety
of sectors.
Ms Eilert is currently a non-executive director of
Veda (ASX: VED), AMP Life, Network NSW and
Queensland Urban Utilities, and was previously
a non-executive director of digital business
realestate.com.au (ASX:REA) and digital start-
ups such as “onthehouse” and OurDeal.
Ms Eilert has held operational roles as Group
Executive in Suncorp’s entire insurance business
and later, Group Executive People, Technology,
Marketing and Joint Ventures for Suncorp.
She had 10 years’ experience with Citibank
running retail bank credit and risk, the mortgage
business, the retail funds management
business, and the Direct Bank, reporting to the
Country Head.
Most recently Ms Eilert was Head of Strategy
and Corporate Development for News Ltd,
where her focus was on digital transformation
and emerging business models.
During the past three years Ms Eilert has
served as a director of the following other
listed companies:
• Veda Group Limited*
(from 18 October 2013 to present)
• Onthehouse Holdings Limited
(from 1 July 2012 to 26 November 2013)
Ms Horton has extensive international business
and education experience most recently as
Winthrop Professor and Dean of the University
of Western Australia’s Business School where
she was responsible for leading more than 200
faculty and staff and around 5,000 students.
Prior to this role she completed executive or
senior management roles in North America
with Bain & Company and across Australia with
Poynton and Partners and the Reserve Bank
of Australia.
Ms Horton has significant governance
experience currently serving on a number of
Boards including ASX listed Skilled Group and
Automotive Holdings Group. Ms Horton is the
Chairman of Presbyterian Ladies College and
Fashion Council - WA and President of the
Chamber of Commerce and Industry (WA).
Ms Horton is also a member of the Australian
Takeovers Panel and the Bain & Company
Advisory Board. She was previously Chairman
of D’Orsogna Ltd and Deputy Chair of the Water
Corporation in WA.
During the past three years Ms Horton has
served as a director of the following other listed
companies:
• Skilled Group* (from 10 February 2011)
• Automotive Holdings Group Limited*
(from 3 May 2012)
JAMES KING
BComm, FAICD
Non-Executive Director
Appointed 9 November 2004
Mr King brings to the Board of Navitas over 30
years of management and board experience with
major multinational corporations in Australia
and internationally.
Mr King was with Foster's Group Limited and
was Managing Director Carlton & United
Breweries and Managing Director Foster's
Asia. Prior to joining Foster's in 1997, Mr King
was President of Kraft Foods (Asia Pacific) and
resided in Hong Kong for six years from 1991.
Mr King is currently a non-executive director
of JB Hi-Fi Limited and Pacific Brands Limited.
He was previously on the board of The Trust
Company Limited, the Council of Xavier College
Melbourne and was also Chairman of the
Juvenile Diabetes Research Foundation (Vic).
Mr King is a Fellow of the Australian Institute of
Company Directors, and is the current Captain
of Royal Melbourne Golf Club.
During the past three years, Mr King has
served as a director of the following other
listed companies:
•
JB Hi-Fi Limited* (from 10 May 2004)
• Pacific Brands Limited*
(from 4 September 2009)
• The Trust Company Limited (from 1 February
2007 to 18 December 2013)
010 Navitas Limited Annual Report 2015
NAVITAS LEADERSHIP TEAM
ROD JONES
BComm, DEd (Hon) ECowan, MAICD
Group Chief Executive Officer
and Managing Director
20 years at Navitas
Rod has over 35 years' experience in
educational administration and has held a
number of senior administrative positions
within the Government and the private
education sectors. His background covers
both secondary and university education
in Australia.
Rod has been involved in international
education since 1987 and is recognised
as one of the leaders in the successful
establishment of the sector in Australia. He
is one of the co-founders of Navitas and
has been instrumental in the expansion and
development of the Navitas model into the
various markets in which it now operates. In
April 2007, he received an honorary Doctor
of Education from Edith Cowan University in
recognition of his outstanding contribution
to the development of the international
education sector both in Australia and
overseas, and was the 2008 Australian Ernst
and Young Entrepreneur of the Year.
In 2010 Rod was recognised by his
colleagues with an International
Education Excellence Award from the
International Education Association of
Australia for his leadership in the field of
international education.
BRYCE HOUGHTON*
BCA, ICANZ, INFINZ, MAICD
Chief Financial Officer
10 years at Navitas
Bryce joined Navitas in January 2005 as CFO
and is responsible for board and external
financial reporting, capital management, tax
planning, investor relations, performance
measurement, property and advising on
mergers and acquisitions.
He has previously held positions at Price
Waterhouse, National Bank of New Zealand
Ltd and Fonterra Cooperative Group Ltd.
Bryce holds a Bachelor of Business of
Commerce and Administration from Victoria
University of Wellington and has also
completed Columbia University’s Senior
Executive Program. He is a member of the
Australian Institute of Company Directors,
the Institute of Chartered Accountants of
New Zealand and the Institute of Finance
Professionals New Zealand Inc.
Bryce is Director of Hagar Australia, a
not-for-profit organisation dedicated to
restoring the lives of exploited and abused
women and children in Cambodia, Vietnam
and Afghanistan.
*While CFO for the full reporting period, as advised
to ASX on 20 August 2015, Bryce Houghton resigned
from Navitas effective 30 September 2015.
JOHN WOOD
BEcon (Hons), DPhil
Chief Executive Officer,
University Programs
8.5 years at Navitas
John has overall responsibility to lead
and grow the operations of Navitas’
University Programs division and also
oversees the relationships with Navitas’
partner universities.
He was the Deputy Vice-Chancellor at
Edith Cowan University and previously the
Foundation Dean of the College of Business
at the University of Notre Dame, Perth,
Western Australia, where he was also the
Deputy Vice-Chancellor (Academic).
John graduated with first class honours in
Economics from the University of Western
Australia and from Oxford with a Doctorate in
Economics and he has undertaken Harvard’s
strategic management programme. He
has taught at universities throughout the
world, including at Oxford, the American
International University of Europe and
Stanford. He has edited and co-edited 153
volumes on the world’s great economists and
leading management thinkers.
John has held executive leadership positions
including in the Office of the Prime Minister
and in State Government in the Departments
of Premier and Cabinet; Transport,
Employment and Training; State Development
and Commerce and Trade. He has served
Ministers from all major political parties. He
also held senior private sector positions,
including a period as Chief Economist and
Strategist with Ernst & Young.
John also served on a range of boards,
including Perth Education City, the WA Chair
of the Committee of Economic Development
of Australia and was on the Board of HBF for
11 years. John was appointed by the State
and Federal Ministers to the Australian
Qualifications Framework Council during
2011 to 2014.
Navitas Limited Annual Report 2015 011
LYNDELL FRASER
BEcon (Hons), MEcon (Hons), MBA
Chief Executive Officer,
Professional and English Programs
ROB LOUREY
BBus (HR), ADip PM, MAICD
Group General Manager,
Human Resources
6 years at Navitas
2 years at Navitas
Lyndell joined the Navitas Group in 2009 and
has overall responsibility to lead and grow
the operations of Navitas’ Professional and
English Programs Division.
Lyndell has held senior appointments
in the financial services industry with
key line and portfolio responsibilities in
banking and general insurance with major
Australian institutions as well as in areas
of strategy, distribution and corporate and
government relations.
She has served on the board of the
Insurance Council of Australia and on
various taskforces of the Australian Bankers’
Association, and currently is a board member
of the environmental organisation, Planet Ark
and on the Sydney Business Chamber and
Sydney First Regional Advisory Council.
Rob has many years’ experience in the
human resources function across a number
of industries including media, property,
construction, manufacturing and financial
services. Rob has been the principal human
resources executive in publicly listed
companies in each of these sectors and
has had responsibility for operations in
Australia, Asia, UK/Europe, Africa, US and
New Zealand.
Rob has been a non-executive director
with Afrox and Afrox Healthcare, South
African listed companies and Michael Page
International, a FTSE plc; and KU Children’s
Services, an Australian early childhood
education organisation.
Rob holds a Bachelor of Business in
Human Resources and an Associate
Diploma in Personnel Management and
is a member of the Australian Institute of
Company Directors.
NAVITAS IS AN ESTABLISHED, GLOBALLY
DIVERSIFIED ORGANISATION THAT HAS
DELIVERED SIGNIFICANT OUTCOMES
FOR STUDENTS, PARTNERS, EMPLOYEES AND
SHAREHOLDERS OVER ITS 20 YEAR HISTORY.
012 Navitas Limited Annual Report 2015
NAVITAS LEADERSHIP TEAM (CONTINUED)
NEIL HITCHCOCK
Chief Information Officer
18 years at Navitas
Neil has been involved with the Navitas
Group since 1996. With a background
in Finance and Administration, Neil
was involved in the set-up team which
oversaw the establishment of operational
structure, systems and processes in many
Navitas businesses.
When the Navitas Group consolidated in
November 2004, Neil took on responsibility
for all IT matters. This includes the setting of
Group policies and guiding the management,
dissemination, structure and use of
information by all stakeholders to enhance
decision making processes. He is also
responsible for the strategic development
and management of the information and
knowledge systems that are used by the
Navitas Group.
SCOTT JONES
BComm, GAICD
Chief Executive Officer, SAE
14 years at Navitas
Scott was appointed to the role of Chief
Executive Officer of SAE in July 2014, having
been Chief Operating Officer at SAE since
January 2013.
Prior to his role at SAE, Scott was Executive
General Manager responsible for Navitas’
Student Recruitment Division (from 2007 to
2013), Director of Marketing and Admissions
at Curtin University, Sydney (2005 to 2007),
and Marketing Manager (from 2001).
Scott has a strong track record of growth,
organisational performance and leadership,
both within Navitas and SAE, and before that
within the FMCG sector.
Scott started his career with Coca Cola
Amatil and the Mars Corporation in sales and
marketing roles.
PATRICK BROTHERS
BSc, MBA
Group General Manager Strategy and
Business Development
1 year at Navitas
Patrick joined Navitas in 2014 and is
responsible for Corporate Strategy, Program
Management and Business Development.
Patrick’s primary focus is the transformation
and growth of Navitas to ensure the company
achieves its full potential as a leading global
provider of educational services.
Prior to joining Navitas, Patrick held a number
of senior appointments working across Asia,
Europe and the Middle East, most recently as
Chief Development Officer with the Leighton
Group, also with Deloitte and the Australian
Defence Force.
Patrick holds a Masters of Business
Administration from the Australian Graduate
School of Management, a Bachelor’s Degree
in Mathematics and Computer Science
from the University of New South Wales
and is a graduate of the Royal Military
College Duntroon.
Navitas Limited Annual Report 2015 013
014 Navitas Limited Annual Report 2015
CHAIRMAN'S AND GROUP CHIEF
EXECUTIVE OFFICER'S REPORT
In its 20th year of operation Navitas has again
delivered high quality academic outcomes
to our students and partners in a global
education sector that is rapidly evolving.
The Group continued to achieve high
progression rates in the University Programs
Division. Net Promoter Scores improved in
the Professional and English Programs and
SAE Divisions. We also expanded our global
agent network and the number of courses and
programs available to students. Royalties paid
to our university partners increased by 15%.
Financially, we delivered 12% revenue growth
to $980.3m (FY14: $878.2m) and, in line with
market guidance, underlying EBITDA growth
of 13% to $163.1m (FY14: $144.9m). The
Group incurred a $19.5m goodwill impairment
in FY15 for a number of businesses including
SIBT, Study Overseas Limited and Navitas
Resources Institute. These businesses had
their carrying value reduced to nil.
Underlying NPAT, excluding goodwill
impairment, was up 11% to $91.4m
(FY14:$82.0m). Underlying earnings per
Share, excluding goodwill impairment, also
increased 11% to 24.3 cents per Share
(FY14: 21.8 cents per Share). Reported
NPAT was up 39% to $71.8m and reported
earnings per Share increased by 39% to 19.1
cents per Share.
The full year dividend remains at 19.5 cents
per Share fully franked.
Business operations
University Programs
The Division remained focused on academic
quality and student outcomes, partnering
with universities to enhance academic
and support services to students. Recent
outcomes highlighted pleasing results
including retention rates of over 85% and
progression to partner university rates of over
90%. The Division also engaged with partner
universities in the development of new
programs and to support the achievement
of their strategic goals. Royalties paid to
university partners increased by 15%.
In early FY15 Navitas announced that
its agreement for SIBT with Macquarie
University would not be renewed by the
university from February 2016, with the
full earnings impact not being felt until the
second half of FY16 and the first half of FY17.
The contract for Macquarie City Campus, the
Sydney CBD managed campus of Macquarie
University was not renewed and will close in
January 2016.
In addition, Australian and UK colleges face
a number of challenges which are impacting
enrolment growth in the short term. In the UK
HARVEY COLLINS
Non-Executive Chairman
ROD JONES
Group Chief Executive Officer
and Managing Director
Navitas Limited Annual Report 2015 015
GROUP REVENUE
EBITDA*
NET PROFIT AFTER TAX*
12%
13%
11%
this is due to recent changes to student visa
policy settings which mean that providers
risk losing Highly Trusted Sponsor status
if more than 10% of their visa applications
are rejected.
Softness in Australian enrolments is due to
a number of factors including the need for
stricter assessment of students from Nepal
and India, as well as the beginning of the
impact of the non-renewal of the Macquarie
University contract. These, and other
factors, resulted in the most recent semester
enrolments for the Division being in line with
the prior corresponding period. Excluding
Macquarie University operations, total
Divisional enrolments grew by 2%.
Navitas is working with university partners,
the agent network and governments to
mitigate these issues.
In terms of financial performance the
University Programs division recorded
underlying EBITDA growth (excluding
goodwill impairment) of 15% to $140.4m
(FY14: $121.8m).
The Division signed two university
agreements under the existing royalty model
– one with Florida Atlantic University for
Navitas’ sixth US college and one with the
University of Northampton, for Navitas’ 10th
UK college.
To create additional options for partners the
Division also developed the new joint venture
model. Two new university agreements were
signed under the joint venture model – one
with the Western Sydney University and
one with the University of Canberra, where
Navitas acquired 51% of an existing college.
Finally, all three University of Massachusetts
college agreements were renewed under
similar terms and conditions, with one being
extended for 10 years.
Professional and English Programs (PEP)
The Professional and English Programs
Division achieved a further improvement
on student survey results during the year
with Net Promoter Scores increasing in
FY15 surveys.
*excluding goodwill impairment
In another record year, the Division
delivered underlying EBITDA growth of 17%
to $29.5m (FY14: $25.2m) with ACAP, HSA,
NCPS, ELICOS and Careers & Internships
generating strong returns. Scale benefits and
operational efficiency also delivered earnings
and margin improvement. As anticipated
AMEP volumes declined following changes to
Australia’s humanitarian and refugee intake.
More recently Australian enrolments were
impacted by the longer term effects of
Streamlined Visa Processing including
an ongoing drop in international students
recruited onshore. Increased Department
of Immigration and Border Protection
involvement in visa assessment in higher risk
markets such as Nepal, India and Vietnam
also affected growth.
Towards the end of FY15 the Australian
government issued guidelines on how it plans
to further expand streamlined visa processing
via a new system called the Simplified
Student Visa Framework (SSVF). Under the
SSVF all education providers registered to
teach international students will be rated on
their past students’ immigration risk which
will then determine what evidence will be
required from students to secure a visa.
Regardless of the minimum requirements
Navitas will continue to complete robust
student assessments to ensure that all
students are genuine. The SSVF system will
be implemented in FY17 and should help to
ensure Australia retains its reputation as a
welcoming education destination.
Other higher education reforms which could
improve access and choice for Australian
domestic students remain unlegislated
though this may change in FY16. Regulatory
and policy settings for international students
in both Canada and the US remained stable
throughout the year.
As it has for several years Navitas continues
to engage and work with governments
globally to seek appropriate regulatory
and policy settings for genuine students
pursuing high quality education outcomes.
Sustainability and quality is critical for
Navitas and the Company seeks to influence
education policy where it can.
SAE
SAE recorded 7% growth in EBITDA in FY15 to
$26.1m (FY14: $24.5m), representing a 21%
increase in the second half compared to prior
corresponding period.
This result followed solid enrolment growth,
particularly in Australia. Ex’pression College
generated $0.5m EBITDA in its first full year
of Navitas ownership ($2.5m before $2.0m of
transaction and integration costs).
Operating environment
Regulatory change continued to occur in key
markets, most notably in the UK following
the reduction in the visa refusal rate in
November 2014.
As a result Navitas implemented risk
management strategies to ensure Navitas’
UK colleges remain well below the threshold,
but inevitably these measures reduced
University Programs UK enrolment growth
rates. UK government commentary since
winning re-election in May does not indicate
any immediate positive change to education
policy though the well-known economic and
global connectivity benefits of international
education to destination countries may
influence policy settings over time.
In Australia Navitas’ enrolments from Nepal
and India moderated following the application
of stricter assessment criteria on student
applications. These measures were instigated
by Navitas following higher than acceptable
levels of non-genuine student applications
from those countries in 2013 and early
2014 as students tested the relatively new
Streamlined Visa Processing rules.
016 Navitas Limited Annual Report 2015
CHAIRMAN'S AND GROUP CHIEF EXECUTIVE OFFICER'S REPORT (CONTINUED)
Globally, demand for international education
continues to grow, with the number of
students enrolled outside their country of
citizenship rising, from 2.1m worldwide in
2000 to 4.5m in 2012. This is largely due to
the growing wealth of the middle class in
developing countries and capacity shortfalls
in these regions. Demand is projected to keep
growing to over 8.0m by 2025. In terms of
international student market share, the US
and UK continue to dominate the rankings
while Australia, Germany, France and Canada
all hold approximately 6% market share each.*
Strategic developments
The significant changes currently being
experienced by the education sector globally
including the effect of regulation, technology
and competition is unprecedented in Navitas’
20 year history.
However as a leading global education
provider with a diversified portfolio and
strong heritage of delivering high quality
educational outcomes to students and
partners, Navitas is well positioned to adapt
to, and manage, such change.
In FY15 we demonstrated this by maintaining
record retention and progression rates,
working with partners to develop and deliver
new programs, expanding our global agent
network and engaging with governments to
influence and manage regulatory change.
Under the key pillars of quality, efficiency
and growth Navitas continued to progress
its existing strategy in FY15 centered on the
three key metrics of:
1. End-to-end student and
client experiences;
2. Student and client outcomes; and
3. Strategic relationships.
Specific growth opportunities which were
progressed in the year included:
•
University Programs expansion in the US
market with continued enrolment growth
and the opening of a sixth US college.
Business development capability also
increased with a number of new resources
including the appointment of an Executive
General Manager University Programs
Business Development for Europe and
North America;
•
Improvement in SAE internal capability
and product expansion – SAE’s refreshed
leadership team drove SAE growth of 7%
with the Australia region growing 28%;
* Project Atlas, US Department of State, 2014
•
Implementing Navitas’ new Sales and
Marketing structure – now functional
in China;
• Strengthening senior management
capability with a number of senior
appointments including the new role of
General Manager Strategy and Business
Development, the abovementioned
Executive General Manager University
Programs Business Development for
Europe and North America and a new
CFO for SAE US; and
• The development of new business
models to provide partners with more
options with the launch of the University
Programs joint venture model
Navitas and its communities
Navitas continued to progress its corporate
responsibility strategy in FY15, supporting
a number of education-based projects via
the Navitas Education Trust (NET), as well as
matching donations raised by students and
staff to support the victims of the earthquake
in Nepal with a total of $107,400 donated.
We are also proud to report that Navitas
distributed more than 130 scholarships in
FY15 worth more than $0.9m and over 1,600
hours of employee and student time was
dedicated to volunteering programs around
the world.
The Navitas Education Trust, funded by an
annual $0.5m contribution from Navitas,
awarded four grants in FY15. The first
supported Room to Read to establish 12
libraries in existing schools in Sri Lanka
and Nepal as well as funding the creation,
production and distribution of new local
language books in both countries. The
second funded ABCN to deliver six three-
year scholarships to students across
Australia from high needs schools to help
them complete high school and enter
tertiary education.
The third involves working with Hagar to
help educate abused and trafficked women
and children in Afghanistan. This three-year
project aims to help around 300 women
and children re-integrate into society
through education. The final project, also
for three years, funds Classroom of Hope
to improve the skills and resources of
teachers, school leaders and the community
based around seven schools in Battambang
province, Cambodia.
Navitas also supported Western Australian-
based sporting teams in FY15, maintaining
jersey sponsorship of the Western Force
and also becoming joint naming rights
sponsors of the Navitas Satalyst Racing
team, the WA based cycling team with a UCI
Continental licence.
More information about these projects and
Navitas’ broader corporate responsibility
strategy can be found on page 28 of
this report.
The Board
FY15 saw significant refreshing of Navitas’
board in line with its succession and
renewal policy.
This included the appointment of Diana Eilert
to the Board as non-executive director in July
and the retirement of Peter Larsen and Ted
Evans at the Annual General Meeting. Both
Peter and Ted contributed significantly to
Navitas; Peter was a co-founder of Navitas
and Ted was a director of Navitas for more
than 10 years.
Outlook
In accordance with previous announcements,
the Group anticipates FY16 EBITDA will
remain broadly in line with FY15.
The material earnings impact from the
loss of the University Programs’ MQC and
SIBT on-campus contracts will take effect
from February 2016. This is expected to be
mitigated by earnings growth from other
University Programs contracts and the other
Divisions within the Group.
Navitas is an established, globally diversified
organisation that has delivered significant
outcomes for students, partners, employees
and shareholders over its 20 year history.
We recognise the challenges ahead and are
well positioned to adapt to, and manage,
such change.
HARVEY COLLINS
Chairman
ROD JONES
Group Chief Executive Officer
Navitas Limited Annual Report 2015 017
018 Navitas Limited Annual Report 2015
FINANCIAL REPORT
We are pleased to provide the following report detailing the 2015 financial year.
Navitas Financial Performance
Navitas’ (the “Group” or “NVT”) results for the year ended 30 June 2015 and the prior corresponding period (pcp) are shown below.
Year ended
30 June 2015
Year ended
30 June 2014
Change
%
980.3
163.1
91.4
71.8
24.3
19.1
19.5
878.2
144.9
82.0
51.6
21.8
13.7
19.5
12
13
11
39
11
39
-
and a 0.4% increase in the University
Programs Division. This was offset by a
margin decline in SAE, largely as a result of
non-recurring expenses brought to account
in the first half of FY15.
Total revenue ($m)
Underlying EBITDA ($m)*
NPAT ($m)*
Reported NPAT ($m)
EPS (cents)*
Reported EPS (cents)
Full year dividend (cents)
*excluding goodwill impairment
The full year fully franked dividend of 19.5
cents per Share is unchanged and reflects
strong fundamentals such as low debt, strong
cash flow and long term facilities. The final
dividend for the year is 10.1 cents per Share
(FY14: 10.1 cents per Share).
Total revenue increased by 12% to $980.3m
(FY14: $878.2m) with growth recorded
following student and client enrolment
increases. Excluding currency exchange
movements this was 10% underlying growth.
In line with guidance provided to the market,
Group underlying EBITDA rose 13% to
$163.1m (FY14: $144.9m) with earnings
growth achieved in all three Divisions.
The Group underlying EBITDA margin
stabilised at 16.6% (FY14: 16.5%) due to
a significant 1.9% improvement in the
Professional and English Programs Division
Revenue Distribution
FY15 – $980.3m
FY14 – $878.2m
5
9
7
6
9
64
Australia
UK
Europe
Canada
USA
ROW
5 6
6
7
9
67
Financial Highlights
Revenue ($m)
EBITDA ($m)*
NPAT ($m)*
FY11
FY12
FY13
FY14
FY15
641.8
688.5
731.7
878.2
FY11
FY12
FY13
FY14
980.3
FY15
121.1
126.8
130.0
144.9
163.1
FY11
FY12
FY13
FY14
FY15
80.7
73.1
74.6
82.0
91.4
Navitas Limited Annual Report 2015 019
Divisional underlying EBITDA results are as follows:
Year ended
30 June 2015
$m
Year ended
30 June 2014
$m
Change
$m
Change
%
University Programs*
Professional and English Programs*
SAE
Divisional underlying EBITDA
Corporate costs and consolidation items
Group underlying EBITDA
Navitas’ Business Model
Navitas operates three Divisions which are
primarily involved in the provision of high
quality education services. While each
Division is unique, the following items are
evident in each:
• Students are recruited appropriately to
a wide range of courses and programs
around the world;
*excluding goodwill impairment
140.4
29.5
26.1
121.8
25.3
24.5
196.0
171.5
(32.9)
(26.6)
163.1
144.9
18.6
4.3
1.6
24.5
(6.3)
18.2
15
17
7
14
23
13
• Commissions are often paid to
independent student recruitment agents
who provide counselling to students
and progress them through the student
visa process;
•
In the majority of cases tuition fees are
received in advance which drives Navitas’
negative working capital model;
• Students requiring face-to-face
teaching are accommodated in facilities
which, in the majority of cases, are
either leased from third parties or
provided by institutions under various
partnership agreements;
• Curricula are either developed
and submitted for accreditation by
Navitas or secured under partnership
agreements; and
• Fixed costs include salaries and travel,
marketing and administration costs.
Many costs, including teaching costs,
can be variable.
020 Navitas Limited Annual Report 2015
FINANCIAL REPORT (CONTINUED)
Professional and English
Programs Division
The Professional and English Programs
Division delivered strong underlying
EBITDA growth of 17% against pcp largely
from sustained high performance from
ACAP, HSA, NCPS, ELICOS and Careers
& Internships businesses. Scale benefits
and operational efficiency across the
Division also contributed to EBITDA and
margin improvement.
FY15 EBITDA* movement ($m)
SAE Division
SAE increased EBITDA by 7% to $26.1m
(FY14: $24.5m) compared to pcp, with the
H2 FY15 EBITDA result increasing by 21%
compared to H2 FY14. Australia was the
highlight in FY15 growing earnings by 28%
following enrolment and fee improvement.
As noted in the interim results the US region
incurred management restructure costs as
well integration and transaction costs for
Ex’pression College. Ex’pression College
generated $0.5m in earnings ($2.5m before
$2.0m integration and transaction costs) in
its first full year of Navitas ownership.
Navitas Professional
Institute
Training and
Development
Careers and
Learning Skills
English &
Foundation Skills
Divisional total
Divisional costs
FY15
5.9
3.2
FY15 EBITDA movement ($m)
6.7
(2.5)
4.2
1.9
(4.3)
Southern
Divisional costs
Licensing
USA
Europe
FY15
2.1
(0.1)
(2.4)
2.7
(0.7)
1.8
University Programs Division
The University Programs Division achieved
a record result growing underlying EBITDA
by 15% despite a slowing student enrolment
growth trend over FY15.
Key highlights included:
• A maiden profit result for the US region
with EBITDA of $1.6m;
• Strong earnings growth from the UK
region following price growth and despite
slowing enrolment numbers; and
• Average fee growth of 4% across
the Division.
Navitas has entered into a binding MOU to
dispose of its 55% interest in EduGlobal for
nil consideration.
FY15 EBITDA* movement ($m)
Australia
Canada
UK
USA
ROW
Regional total
Student recruitment
Divisional/marketing
FY15
11.6
6.7
3.7
1.6
0.3
23.9
(0.4)
(5.3)
18.2
*excluding goodwill impairment
Navitas Limited Annual Report 2015 021
Corporate Costs
Depreciation
Cash Flows
Corporate costs were 23% higher than pcp
at $32.9m (FY14: $26.6m) primarily due to
EVA® incentive payments and unfavourable
FX impacts. Corporate costs remain at ~3%
of Group revenue.
FY15 movement ($m)
Salaries and wages
(2.9)
FX movements
EVA changes
Other
FY15
(2.1)
(1.9)
0.6
(6.3)
Depreciation for the year was $27.3m, an 11%
increase on FY14. This reflected increased
capital expenditure on projects such as the
Los Angeles, Melbourne and Sydney SAE
campus fit outs, the continued roll out of the
Navigate Student Management System and
the SAE Barcelona building purchase.
Interest
Net interest expense of $3.8m was 39% lower
than the FY14 charge of $6.2m. This was as
a result of lower average debt volumes and
pricing reductions achieved in December
2014 from restructuring of the Group’s
debt facilities.
Reported NPAT
At a Group level Navitas incurred a $19.5m
goodwill impairment in FY15 in relation to:
• a $9.0m impairment in relation to SIBT -
recognised in the first half;
• a $7.4m impairment for Study Overseas
Limited (SOL), following sustained
declines in performance closely linked to
the restrictive UK market; and
• a $3.1m impairment charge for Navitas
Resources Institute, related to the
acquisition of corporate training entities
dating back to 2005.
All entities reduced their carrying value
to zero.
Balance Sheet
Although at a seasonal low, net debt at 30
June 2015 is $36.0m (30 June 2014: $51.6m).
The $15.6m decrease continues the trend of
cash flows from operations being in excess
of capital expenditure, investments and
dividend payments. Net debt is now 0.22x
underlying EBITDA.
Shareholders’ funds at 30 June 2015 were
$206.7m (30 June 2014: $211.7m). Deferred
revenue at 30 June 2015 was $280.6m (30
June 2014: $258.4m) an increase of 9% over
the year – 5% on a currency adjusted basis.
Operating cash flows of $141.8m for the year
ended 30 June 2015 were effectively in line
with the prior year (FY14: $140.9m).
Capex for the year was $38.1m
(FY14: $25.3m) included SAE’s relocated LA
campus, the refurbishment of the Barcelona,
Sydney and Melbourne campuses, the
relocation of the Perth corporate office and
Navigate costs. Capex in FY16 is anticipated
to be ~$30m excluding the new Sydney CBD
fit-out which is targeted to be covered by
lease incentive.
Shareholder Value and EVA®
Navitas utilises the economic value added
(EVA®) framework to assess shareholder
value with EVA® being a measure of returns
relative to the Group’s weighted average
cost of capital for funds employed by the
business. EVA® for FY15 was $62.9m which
represents $11.1m growth in EVA®. Further
details about the calculation of EVA® can be
found on page 32 of this report.
Rewards declared under Navitas’ staff
incentive scheme are based on the actual
financial performance of Navitas in any
one year. As changes to the Group’s
contract with Macquarie University had
little impact on financial performance in
2015, rewards declared in 2015 were not
materially impacted.
However, to the extent that the changes
to the Macquarie contracts reduce EVA®
growth in coming years, rewards declared
will be lower in those years. This is consistent
with the objective of the scheme, which is
to base rewards on the sustained growth
in EVA® actually achieved, rather than on
estimates of future performance. Targets for
EVA® growth are set every three years and
were most recently set in April 2014.
Dividend
The Directors have declared a fully franked
final dividend of 10.1 cents per Share
(FY14: 10.1 cents). This takes the full year
dividend to 19.5 cents (FY14: 19.5 cents).
022 Navitas Limited Annual Report 2015
DIVISIONAL REVIEW OF OPERATIONS
Key Highlights
Financial Highlights
Colleges
Pleasing academic outcomes with
more than 90% progression rates.
Two new university agreements
announced under the new joint
venture model – partnering with
Western Sydney University and
the University of Canberra.
Two new university agreements
announced under the existing
royalty model – partnering with
Florida Atlantic University and
University of Northampton.
106.1
121.8
140.4
FY13
FY14
FY15
EBITDA ($m)*
Revenue ($m)
*excluding goodwill impairment
All three University of
Massachusetts agreements renewed
with similar terms and conditions.
Group Revenue
$980.3m
415.7
499.2
11
1
2
6
35
14
566.3
10
Australia
UK
US
Canada
New Zealand
Sri Lanka
Singapore
Divisional EBITDA
$196.0m
Promising discussions with
potential new University partners,
particularly in the US.
US network of colleges
achieve maiden profit.
UP
58%
UP
72%
THE UNIVERSITY PROGRAMS DIVISION
IS A GLOBAL LEADER IN PRE-UNIVERSITY,
MANAGED CAMPUS AND UNIVERSITY
PATHWAY PROGRAMS ENHANCING
STUDENTS’ PROBABILITY OF SUCCESS
IN HIGHER EDUCATION VIA SPECIALISED
AND SUPPORTIVE PROGRAMS.
Navitas Limited Annual Report 2015 023
UNIVERSITY PROGRAMS DIVISION
Overview of operations
The University Programs Division is a
global leader in pre-university, managed
campus and university pathway programs
enhancing students’ probability of success
in higher education via specialised and
supportive programs.
The pathway program model focuses on
providing pre and first-year university
courses to international students from more
than 140 countries who do not qualify for
direct entry to partner universities due to
either language or academic record. The
Australian colleges also admit domestic
students who do not gain direct entry to our
partner universities.
University Programs courses are delivered via
on-campus colleges, through an agreement
with a partner university, in a structured
environment aimed at maximising student
success. This includes additional teaching
hours, smaller class sizes and increased
levels of learning support and pastoral care.
Upon completion students then qualify to
enter the second year program at the partner
university, with the final objective to receive a
qualification from the university.
In FY15 the Division offered Certificate,
Diploma, Associate Degree, Bachelor and
Masters programs to more than 22,000
students in 35 colleges and managed
campuses across Australia, New Zealand,
Singapore, the UK, USA, Canada and
Sri Lanka.
Progress against strategy
Students
The Division remains focused on academic
quality and student outcomes working with
partner universities to enhance academic and
support services to students. The Division’s
2014 annual review of academic quality and
outcomes has continued to highlight pleasing
results with:
• Pre university and pathway program pass
rates of over 80%;
• Retention rates of over 85%; and
• A progression to partner university rate of
over 90%.
More than 4,300 students and recent
graduates participated in student satisfaction
surveys in 2014. The results demonstrate a
very high level of satisfaction with Navitas
programs. Beyond the survey results,
the success of these programs is further
evidenced by the academic outcomes
achieved, with Navitas students performing
as well as international students who had
gained direct entry to university.
Highlights include:
• Over 97% of surveyed students
were satisfied with their teaching
experience; and
• 97% of surveyed students (graduates)
were satisfied with the overall quality
of their program of study at a Navitas
University Programs College.
The Division recorded enrolment growth
throughout FY15 with equivalent full time
student units (EFTSU) growing 11%, 7% and
3% globally for each semester respectively in
the year compared to pcp.
The new market of the US continued to
grow strongly as did enrolments in Canadian
colleges. Overall growth was however
affected by the need to tighten student
assessment criteria in the UK and Australia
following recent regulatory change.
Financial
The Division achieved record results for
university partners increasing royalty
payments by 15%. The Division also recorded
a 13% increase in revenue to $566.3m
(FY14: $499.2m) following student growth
across all key regions and underlying EBITDA
growth of 15% to $140.4m (FY14: $121.8m).
The US college network achieved its first
year of profitability, including investments in
new colleges.
In early FY15 Navitas announced that
its agreement for SIBT with Macquarie
University would not be renewed by the
university from February 2016. In addition
the contract for Macquarie City Campus, the
Sydney CBD managed campus of Macquarie
University was not renewed and will close at
the same time. These changes will impact
enrolment growth and financial performance
for the Division in FY16 and FY17.
Internal processes
Four new agreements were signed in FY15
with two of those colleges now operational.
Navitas at Florida Atlantic University, the 6th
US college, opened in January 2015 and the
Division’s 14th Australian college, University
of Canberra College, was already operational
when Navitas acquired a 51% share in the
college in May 2015.
The other agreements were with the
University of Northampton, the 10th college
in the UK, and for Western Sydney University
International College.
Both Western Sydney University and the
University of Canberra agreements were
signed under the new joint venture model
which was developed to provide more options
to university partners.
All three University of Massachusetts college
agreements were renewed in the year under
similar conditions. The UMass Boston
agreement was extended for a 10-year period.
In addition, the Division worked with
university partners to develop a range of new
courses and programs across all regions.
People and culture
Extensive succession planning and personal
development plans were completed
across key management positions in FY15.
Senior capability and capacity was also
strengthened with the creation of the new
role of Executive General Manager University
Programs Business Development for Europe
and North America.
Outlook
Navitas will continue to progress positive
discussions with potential new university
partners in the year including a range
of possible new partnerships in the US,
Australia and the UK.
The University Programs Division will be
affected by the loss of SIBT’s on-campus
earnings with the material impact felt from
February 2016.
024 Navitas Limited Annual Report 2015
DIVISIONAL REVIEW OF OPERATIONS (CONTINUED)
Key Highlights
Financial Highlights
Continued high student satisfaction
and academic outcomes.
Fifth consecutive year
of record earnings.
Leveraged scale benefits and
improved operational efficiency
across the Division.
Solid growth from ACAP, HSA,
NCPS, ELICOS and Careers &
Internships businesses.
Several new contracts won
including the ACT AMEP.
19.3
25.3
29.5
FY13
FY14
FY15
EBITDA ($m)*
Revenue ($m)
*excluding goodwill impairment
196.4
224.2
224.0
Group Revenue
$980.3m
PEP
23%
Divisional EBITDA
$196.0m
PEP
15%
PROFESSIONAL AND ENGLISH PROGRAMS
PROVIDES QUALITY VOCATIONAL TRAINING
AND HIGHER EDUCATION, COUPLED WITH
PLACEMENT SERVICES IN AREAS OF KEY
DEMAND, AS WELL AS ENGLISH AS A SECOND
LANGUAGE COURSES FOR INTERNATIONAL
STUDENTS AND ENGLISH LANGUAGE,
SETTLEMENT AND WORK PREPARATION
PROGRAMS FOR MIGRANTS AND REFUGEES.
Navitas Limited Annual Report 2015 025
PROFESSIONAL AND ENGLISH PROGRAMS
• Winning a new three-year contract from
the Commonwealth Department of
Education and Training to deliver advisory
services to business as part of the
Industry Skills Fund. The Division earned
26 positions out of a total of 83 funded
positions in year one across Australia.
Financial
Achieving 17% underlying EBITDA growth, the
Professional and English Programs Division
had another record year, with $29.5m EBITDA
(FY14: $25.2m) off flat revenue of $224.0m
(FY14: $224.2m).
Education businesses ACAP, HSA, NCPS,
ELICOS and Careers & Internships delivered
much of this growth following continued
strong interest in their programs. Scale
benefits and operational efficiency across
the Division also delivered earnings and
margin growth. As anticipated AMEP volumes
declined following changes to Australia’s
humanitarian and refugee intake.
Internal processes
In December 2014 the Division won the
AMEP contract for the ACT and commenced
delivery in February 2015. This contract
will expire in June 2017 in line with all AMEP
contracts across Australia.
A number of Professional and English
Programs businesses, including ELICOS
businesses and HSA, achieved seven year
ASQA reaccreditation in the year without
audit - an indication of the confidence that
ASQA has in the quality of these businesses
following their rigorous risk evaluation prior to
re-registration. ACAP was also reaccredited
by TEQSA for seven years.
People and culture
The Division continues to develop its human
capital for the future and during the year
enhanced its executive capacity through
development programs and senior hires
in areas such as learning, teaching and
technology. This included significant work in
succession planning.
Investment continues in organisational
culture and structures to support greater
collaboration and cooperation across the
Division and lay the groundwork to open up
career pathway opportunities for staff. This
was reflected by 80% of appointments in
FY15 being filled by internal candidates.
Outlook
The Professional and English Programs
Division expects earnings growth in FY16
albeit with some moderation in AMEP
client numbers.
Overview of Operations
The Professional and English Programs
Division (PEP) comprises four business units:
• English and Foundation Skills: provides
settlement services and English language
and literacy programs to mainly migrants
and refugees settling in Australia as
permanent residents. The programs,
including AMEP, SEE and HSS are funded
by the Commonwealth government.
• Careers and Learning Skills: prepares
students for further learning and enables
students and clients to gain work
experience, and ultimately employment,
through English language courses, work
skills and career services. Careers and
Learning Skills includes ELICOS, Careers
and Internships and the Navitas English
Test Centre.
•
Navitas Professional Institute: delivers
programs to build and enhance careers
in the Social, Community, Health and
Education sectors. The unit includes
ACAP, NCPS, HSA and ATTC.
• Training and Development: is directed
at building capacity, core skills and
employee effectiveness in the resources
sector and related industries. This
includes the Navitas Resources Institute.
The Division is supported by specialist
marketing and sales, finance and risk
personnel, and a Learning, Teaching and
Technology unit. The latter includes Cadre
which provides bespoke online learning to
internal and external clients.
Progress against strategy
Students and partners
The Division made good progress against its
student and partner objectives in the year
with key highlights and achievements being:
•
Improved on already high student survey
results during the year with Net Promoter
Scores growing in FY15 surveys;
• Launched new higher education courses
in Social Work and Counselling and
Psychotherapy and online in Criminal
Justice; and
026 Navitas Limited Annual Report 2015
DIVISIONAL REVIEW OF OPERATIONS (CONTINUED)
Key Highlights
Financial Highlights
Colleges
21% second half earnings
growth compared to pcp.
Consistent enrolment growth
across key regions.
SAE Australia records 28%
earnings growth following
volume and fee increases.
Relocated or refurbished the
Barcelona, LA, Sydney and
Melbourne campuses.
Ex’pression College delivers
maiden earnings growth to SAE.
25.1
FY13
24.5
FY14
26.1
FY15
EBITDA ($m)*
Revenue ($m)
*excluding goodwill impairment
Group Revenue
$980.3m
114.9
150.3
185.5
9
10
4
7
54
8
7
9
Southern
Germany
US
Europe North
Europe South
UK
Licensed
Divisional EBITDA
$196.0m
SAE
19%
SAE
13%
SAE IS ONE OF THE WORLD’S
LARGEST CREATIVE MEDIA EDUCATION
COMPANIES, WITH 54 CAMPUSES
ACROSS 28 COUNTRIES.
Navitas Limited Annual Report 2015 027
SAE DIVISION
Overview of Operations
Financial
SAE is one of the world’s largest creative
media education companies, with 54
campuses across 28 countries. The Division
offers a range of predominantly Higher
Education opportunities including Certificate,
Diploma, Degree and Masters programs
across several major fields of study: audio,
film, animation, gaming, design, and web.
SAE also licenses its programs to third
party providers.
Progress against strategy
Students
SAE recorded a 23% increase in revenue to
$185.5m (FY14: $150.3m), approximately half
of this increase related to the acquisition of
Ex’pression College.
EBITDA by 7% to $26.1m (FY14: $24.5m) in
the year. The second half was particularly
pleasing for the Division, which recorded
a 21% increase in EBITDA from H2 FY14 to
H2 FY15, following solid enrolment growth,
particularly in Australia. Ex’pression College
generated $0.5m EBITDA in its first full year
of Navitas ownership ($2.5m before $2.0m of
transaction and integration costs).
Following ongoing investment in marketing
and lead generation throughout the year SAE
recorded solid growth in student numbers
in FY15.
Internal processes
A number of campuses were refurbished or
relocated in the year including Melbourne,
Sydney, Los Angeles and Barcelona in order
to improve facilities and enable growth
opportunities. The Barcelona property was
purchased to allow for campus expansion and
to deliver better financial returns.
Investment continued into both central and
regional management teams, improving the
knowledge and skill sets of key employees.
People and culture
Extensive succession planning and personal
development plans were completed across
key management positions in FY15.
Outlook
The Division anticipates that enrolment and
fee growth, and momentum from the strong
FY15 second half, will support earnings
improvement in FY16.
028 Navitas Limited Annual Report 2015
STRATEGY AND CORPORATE RESPONSIBILITY
Strategy
Students and Partners
Internal Processes
In order to achieve our vision we will
deliver superior:
The ‘Students and Partners’ and ‘Financial’
outcomes will be underpinned by:
• End-to-end student/client experience -
we will provide a consistent and quality
experience to our students, partners and
clients at every touch point.
• Student and client outcomes – we will
understand and deliver desired outcomes
for our students and clients.
• Strategic relationships - we will add value
to key strategic partners by assisting
them achieving their desired outcomes.
Financial
By achieving the outcomes under Students
and Partners above and rigorously evaluating
and prioritising growth opportunities:
• Navitas will deliver sustainable long term
EVA® growth for our Shareholders and
staff. Our Shareholders have entrusted
their money with Navitas. Therefore we
have a responsibility to repay this trust in
delivering appropriate returns to them.
This includes staff who benefit from the
EVA® incentive scheme.
• Sector leading learning and training - as
a learning and teaching organisation,
it is critical that we excel at this as this
is a key ingredient to providing our
students the best learning outcomes and
learning experiences.
• Strategic growth initiatives - we will
optimise strategic growth opportunities,
and continue to grow existing businesses
via new product lines and markets.
• Operational excellence – delivering on
our promises - we will continue to build
on our culture where we deliver on our
operational promises.
• Optimal systems, processes and
procedures that are consistently
applied and well understood - our
systems, processes and procedures will
consistently support the business units
in enhancing the student experience
and outcomes.
Navitas is a leading global education provider
with a 20 year record of providing high quality
educational outcomes to students and
partners. It is Navitas’ vision to be recognised
universally as one of the most trusted
learning organisations in the world.
However the global education sector is
undergoing significant change driven by
regulatory, technology and competitive
forces. Navitas is very conscious of these
global shifts and the Company will continue
to evolve its strategy to build on its diversified
portfolio and global capability to achieve
growth for the longer term.
Under the key pillars of quality, efficiency
and growth Navitas continued to progress its
existing strategy in FY15 centred on the three
key metrics of:
1. End-to-end student and
client experiences;
2. Student and client outcomes; and
3. Strategic relationships.
Our strategic objectives are communicated
and monitored using a Balanced Scorecard
model which is depicted in the Navitas
Strategy Map below:
Navitas Strategy Map
Navitas Limited Annual Report 2015 029
People and Culture
Our people and culture are critical to our
success, therefore we will invest in:
• Attracting and retaining talent - as we
continue to grow and become more
diverse, our continuing success will
rely on attracting and retaining the
best people.
• Appropriately developing and rewarding
our staff - developing our staff will assist
them, and therefore the company, to
become more productive.
• Continuing to foster a performance
culture - Navitas has had a history of
delivering outstanding performance. We
will ensure that this culture is maintained
and nurtured.
Risks
Strategic Highlights
Navitas continued to implement strategic growth opportunities in FY15 including*:
Initiative
Strategic focus
Continuation of University Programs expansion in the US market
Internal Processes
Improvement in SAE internal capability and product expansion
Implementing Navitas’ new Sales and Marketing structure
Strengthening senior management capability across Divisions
and Corporate
Developing new business models such as the joint venture model
Internal Processes,
People and Culture
Internal Processes,
Students and Partners
People and Culture
Students and Partners,
Internal Processes
* In reliance on section 299A(3) of the Corporations Act, more specific growth opportunities including, but not limited to,
specific potential partner universities in the US market and specific new products to be added to the product range such as
new diplomas and associate degrees in both UPD and SAE, have not been disclosed as their disclosure would likely result in
unreasonable prejudice against Navitas because disclosure of these would give Navitas’ competitors a commercial advantage
which would jeopardise Navitas’ growth plans and prospects.
Material business risks categorised under environmental, economic and social sustainability, and Navitas’ management of each risk, can be
summarised as:
Risk
Action
ECONOMIC SUSTAINABILITY
Competitor actions and
innovation adversely
affecting profitability
Navitas conducts internal reviews of existing service offerings and potential growth markets to maintain competitive
advantage and has a dedicated business intelligence function which provides:
• global insights into higher education trends;
Government actions lead
to a decline in revenue
Recruitment agents
do not comply with
regulatory requirements
SOCIAL SUSTAINABILITY
Damage to the Navitas
brand or reputation
Break down of
relationships with
universities and
key partners
• monitoring service of mergers and acquisition activity in the higher education space;
• competitor analysis across Divisions; and
• use of data analytics to enhance service offerings.
Navitas has a dedicated function to liaise with government and industry. Navitas has also developed a government
relations strategy and regularly engages with governments and bureaucrats to manage any changes to policy.
Navitas has established policies and procedures in place based on the relevant legislation to manage the regulatory
requirements of the recruitment agents. In addition Navitas has a risk management system and internal audit
program which provides further oversight of compliance with regulatory requirements.
Various policies regarding media and social media as well as multiple systems and processes to manage reputational
issues have been embedded into the Navitas business in addition to a robust risk management system.
Systems and processes to manage reputational issues are being embedded into the Navitas business. Balanced
scorecard metrics to measure relationships with key stakeholders such as students, recruitment agents and
university partners are being developed to enable management to monitor the ongoing health of such relationships.
In addition Navitas has a risk management system and internal audit program which provides further oversight
of relationship management risk. In terms of social sustainability Navitas is positioned as a “trusted provider of
education” with the strategic objective of creating a long term enduring relationship with students and therefore a
socially sustainable business.
ENVIRONMENTAL SUSTAINABILITY
Navitas does not consider that the Company has material environmental sustainability risks.
030 Navitas Limited Annual Report 2015
STRATEGY AND CORPORATE RESPONSIBILITY (CONTINUED)
Corporate Responsibility
Navitas has continued to progress its
corporate responsibility strategy and has
strengthened its reputation as a socially
responsible organisation alongside its
commitment to, and record of, high quality
academic outcomes.
Navitas’ corporate responsibility strategy
covers the wider categories of communities,
employees, the environment and our
customers. The strategy aligns with current
business objectives and is also reflective of
the significant interaction and involvement
that Navitas and individual business units have
had within their communities for many years.
The strategy is mutually beneficial, delivering
benefits to global stakeholders and
participants while bringing long term benefits
to Navitas and Shareholders.
Navitas continued to progress its corporate
responsibility objectives across all four
spheres of our people, our customers, our
community and our environment.
Contributing positively to
our community
The Navitas Education Trust (NET) was
established in 2013 as a vehicle for Navitas
to support charitable organisations and
activities. Navitas has committed to provide
annual funds to the NET, some of which will be
used to support education based programs in
partnership with charitable organisations and
some of which will be invested to generate
funds for future programs.
infrastructure redevelopment following the
deadly earthquakes in Nepal.
The NET management committee, comprised
of three Board members and chaired by the
Group CEO, funded four initiatives in the
2015 financial year:
1. Supporting Room to Read to establish
12 libraries in existing schools and
funding the creation, production and
distribution of new local language books
in both countries;
2. For the 2nd year in a row supporting
ABCN to offer six more three-year
scholarships to Australian, high need,
low SES, high school students to support
them to enter higher education;
3. Working with Hagar to help educate
and re-integrate abused and trafficked
women and children in Afghanistan via the
Empower through Education Program; and
4. Funding Classroom of Hope to improve
the skills and resources of teachers,
school leaders and the community based
around seven schools in Battambang
province, Cambodia.
As well as entering the second year funding
of the projects with Hagar and Classroom of
Hope in FY16 the NET has also announced
additional funding for Room to Read and
ABCN. Via ABCN Navitas will continue to fund
scholarships for disadvantaged Australian
domestic students while the Room to Read
project aims to support teacher training and
Navitas also supported a number of other
activities in the year including:
• Across more than 120 colleges and
campuses Navitas supported more than
160 academic scholarships worth over
$1.0m. In addition Navitas students and
staff raised $53,700 to support the victims
of the Nepal earthquake which occurred in
April. Navitas then matched the donation
resulting in a donated total of more than
$107,400. A further $83,000 of donations
and goods was raised in the year;
• 73 employees volunteered 774 hours
across Australia participating in primary
and high school mentor programs in
partnership with ABCN. An additional 890
staff and student hours were volunteered
across a variety of other community
based projects in FY15;
• More than 1,150 management hours
were committed to support corporate
responsibility activity in FY15; and
• Navitas continued to sponsor Yearn
to Learn (Y2L), an established charity
in Beijing, China which develops fully
functional classrooms and therapeutic
facilities for children in orphanages
who do not have access to educational
programs due to their disability, age,
gender or circumstance. With Navitas’
support Y2L has established two
programs in orphanages in Beijing.
Navitas Corporate
Responsibility Strategy
Corporate Responsibility Goal
We show respect by celebrating, valuing
and caring for people, our communities
and the environment.
Corporate Responsibility Principles
• Aligned with Navitas strategy and
business objectives
• Aligned to Navitas values, vision
and mission
• Evidence based and regularly
measured and communicated
• Delivering benefits to our people,
customers, communities and
the environment
• Ethical and committed to quality
Our People
Supporting our people and
being a good employer
Our Customers
Ensuring positive outcomes for
students, clients and partners
Navitas cares
We show respect by
celebrating, valuing and
caring for people,
our communities and
the environment.
Our Environment
Ensuring environmental
awareness and sustainability
Our Community
Contributing positively
to our communities
Navitas Limited Annual Report 2015 031
Supporting our people and being a
good employer
Navitas is committed to providing a safe and
productive workplace for its more than 5,800
employees around the world and this year
has reported on gender representation via its
diversity section in the Corporate Governance
report (see the Company's website:
navitas.com/investor_centre.html).
Navitas has recently taken steps to enhance
its health and safety capabilities and is
developing a new management system
framework and policies to improve analysis
and performance. In FY15 Navitas’ Australian
operations reported:
Metric
Fatalities
Lost Time Injury Frequency
Rate (LTIFR) - number of
lost time injuries per million
hours worked
Prosecutions or Regulatory/
Improvement notices
Performance
0
2.3
0
In addition, for many years Navitas has
worked to provide a flexible and supportive
workplace, introducing a number of policies
such as flexible working arrangements,
flexible leave arrangements, study assistance
and a diversity policy.
Ensuring environmental awareness
and sustainability
Although Navitas has a network of more than
120 campuses and colleges around the world
the majority of these are leased or owned by
partners. Within this constraint Navitas aims to:
• Ensure sustainability is included in
design and construction guidelines,
and where possible, all design materials
will come from sustainable, low energy
use resources;
• has commenced monitoring the
generation of general waste at a college
level, with the view of finding ways to
improve waste management.
Ensuring positive outcomes for
students, clients and partners
Navitas utilises a range of annual surveys
and studies to monitor and ensure key
academic performance indicators are met.
External benchmarking involves comparing
key academic performance indicators across
Navitas colleges while internal benchmarking
takes place between the individual colleges
and their partner universities.
Within University Programs, pass rates and
retention target rates (the rate of students
moving from semester to semester) are set at
>75%. In the 2014 calendar year both of these
targets were exceeded.
Navitas routinely participates in global
student surveys as a way of benchmarking
our performance against the sector in all
key countries. In the most recent i-graduate
survey of more than 1.5 million students and
1,200 institutions globally Navitas scored
well above the sector average in many areas
including quality of teachers, course content,
learning support and work experience. Results
also indicate that student satisfaction with
academic outcomes and support services has
also been improving steadily for many years.
Since 1995 total royalties paid to university
partners have exceeded $1b. As a leading
global provider of education services
Navitas plays a vital economic role in its
communities. Annually wealth generated by
Navitas is distributed as follows:
Affirming Navitas’ commitment to its
partners, 24% of generated wealth is
channelled to university and consortia
partners under royalty and contract
agreements. Following these payments
university partners stand to generate
substantial further income as approximately
90% of students graduating from Navitas
colleges enter partner university programs.
Highlighting Navitas’ focus on academic
outcomes and commitment to quality, 33% of
wealth is paid to academic and teaching staff,
a further 21% of wealth created is paid to
other employees. Payments to Shareholders
via dividends relating to FY15 equates to 10%
of wealth distribution.
Payments to stakeholders (%)
6
6
24
$717.6m
10
21
33
University & consortium partners
Teaching & academic employees
Other employees
Shareholders — dividends
Governments — income taxes
Reinvested as depreciation,
amortisation and retained earnings
FY15
$m
FY14
$m
Change
%
• Ensure that contractors used in
Operating revenue
Cost of services and other external costs
980.3
(262.7)
878.2
(214.2)
construction and maintenance demonstrate
sustainability credentials as part of tender
or contract establishment; and
•
Introduce energy savings through the
introduction of energy efficient equipment
and education.
As a part of this sustainability
strategy Navitas:
• has commenced measurement of
key environmental outputs such as
energy usage;
•
is supporting its staff at a college level
by providing information about ways to
reduce energy consumption; and
Total wealth created
717.6
664.0
Payments to university and consortium partners
Payments to teaching and academic employees
Payments to other employees
Payments to shareholders – dividends
Payments to governments – income taxes
Reinvested as depreciation, amortisation and
retained earnings
174.7
236.6
147.0
73.4
39.6
46.3
159.0
201.0
133.5
73.2
32.1
65.2
Total wealth distributed
717.6
664.0
12
23
8
10
18
10
0
23
(39)
8
032 Navitas Limited Annual Report 2015
VALUESHARE INCENTIVE SCHEME
An important part of the spirit of Navitas has
always been sharing the success that the
business enjoys, with the staff that make
that success possible. Over the past nine
years, the primary way that we have shared
our success with staff is through the Navitas
ValueShare Incentive Scheme.
The ValueShare Incentive Scheme helps
drive the success of the Company at three
important levels. It:
• helps attract and retain high quality staff;
• supports a merit-based culture by fairly
sharing with staff the financial success
Navitas enjoys; and
•
rewards sustained gains and therefore
aligns the interests of staff with those of
shareholders.
Helps attract and retain high
quality staff
The success of our business ultimately rests
with the quality and the dedication of the
people who work at Navitas.
To attract the best people, we need to offer
an engaging and enjoyable workplace where
the best in the education industry can pursue
their careers. But we also need to offer a
competitive level of remuneration.
Many of the educational institutions that
we compete with for staff offer high levels
of fixed remuneration (eg salary plus
superannuation). We try to match that by
offering the opportunity to share in the
financial success of our business, via the
ValueShare Incentive Scheme.
For most participants in the Scheme, if
performance targets are met, an incentive
of 10% of their salary will be earned. But for
senior managers, the on-target reward can
be 20% or higher, reflecting their higher level
of responsibility within the Group.
As a result, in good years, our staff may earn
more than what is on offer elsewhere in the
sector. But in disappointing years, they may
earn less. This performance based approach
to remuneration helps us attract a more
entrepreneurial workforce which has been
one of the key drivers of our success.
It also means that one of our largest
expenses — employment costs — rises and
falls with the performance of each of our
business units. If performance is good, we
share with our staff that success, but if our
profitability falls, then our employment costs
fall with it. This variability in our cost base has
helped us successfully negotiate some of the
strong headwinds that the Group has faced in
recent years.
Fairly shares with staff the
financial success Navitas enjoys
We believe that high quality staff are
attracted to a transparent, objective process
for sharing the success that the business
enjoys, one that reflects the merit based
culture that Navitas has encouraged since
its inception.
To that end, rewards under the ValueShare
Scheme are determined by a formula set for
each business unit by the Board, once every
The ValueShare Scheme shares success with
staff which in turn further drives our success
Align the
interests of staff
with those of
shareholders
Help attract
and retain high
quality staff
Fairly share
with staff the
financial
success
we enjoy
three years. This incentive formula clearly
sets out the rewards that will be earned by
participants at each level of performance.
For most staff, rewards are limited at twice
the amount that they would receive for on-
target performance. But for a small group
of senior managers, rewards are uncapped
and any amount, positive or negative, may be
declared. For these staff, amounts between
$0 and the amount they would receive for on-
target performance are paid in the months
following year end.
Any amount outside this range is settled in
three equal parts, the first in the current
year and the remainder in the two years
that follow. Deferred amounts are added
to or offset against future declarations and
are forfeited if the staff member leaves
the Scheme.
The formulaic nature of the Scheme
helps support the merit based culture
that Navitas has encouraged and once
again, tends to attract and support a more
entrepreneurial workforce.
Aligns the interests of staff with
those of Shareholders
While it is important to offer competitive,
performance-based pay to attract and retain
the best quality staff, we also understand
that the ongoing success and sustainability of
the business is dependent on providing good
returns to our Shareholders.
If the business is unable to generate an
attractive return on the capital entrusted to
it, Shareholders will look to place their money
elsewhere, starving the business of the
capital it may need to grow.
As a result, when we measure our
performance for the purposes of the
ValueShare Scheme, we take into account
not just the profits of the business, but what
investors could expect to earn elsewhere on
the capital entrusted to us, at comparable
levels of risk.
We call the profit above and beyond what
investors could expect to earn elsewhere our
‘Economic Value Added’ or EVA® for short
and rewards under the ValueShare Scheme
are linked to year on year growth in EVA®.
Navitas’ Executive Key Management
Personnel are required to use 50% of any
rewards under the plan to purchase Shares
in Navitas until they hold a beneficial interest
equivalent to one year’s fixed remuneration
(eg salary plus superannuation).
Navitas Limited Annual Report 2015 033
Outcomes for the 2015
Financial year
Rewards declared under Navitas’ staff
incentive scheme are based on the actual
financial performance of Navitas in any
one year. As changes to the Group’s
contract with Macquarie University had
little impact on financial performance in
2015, rewards declared in 2015 were not
materially impacted.
However, to the extent that the changes
to the Macquarie contracts reduce EVA®
growth in coming years, rewards declared
will be lower in those years. This is consistent
with the objective of the scheme, which is
to base rewards on the sustained growth
in EVA® actually achieved, rather than on
estimates of future performance. Targets for
EVA® growth are set every three years and
were most recently set in April 2014.
Full details of the outcomes of the
ValueShare Scheme in 2015 are included
in the Remuneration Report, as part of the
Directors’ Report.
Rewards are unlimited for some staff,
but can be lost if performance falls significantly
Incentive declared
Two-thirds of above
target declarations
are deferred
and can be lost
if performance
falls significantly
Performance
Negative declarations reduce
future payments
Target
Economic Value Added measures the value we create for shareholders
Economic Value Added
(the profit above and beyond
what investors could expect
to return elsewhere)
Profit made by
the business
during the year
Profit investors
could expect to
earn elsewhere at
comparable risk
CORPORATE GOVERNANCE STATEMENT
THE CORPORATE GOVERNANCE STATEMENT WILL BE MADE
PUBLICLY AVAILABLE ON THE NAVITAS WEBSITE AT THE SAME TIME
AS THE ANNUAL REPORT: NAVITAS.COM/INVESTOR_CENTRE.HTML.
034 Navitas Limited Annual Report 2015
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2015
Revenue
Marketing expenses
Academic expenses
Administration expenses
Impairment of goodwill
Finance costs
Note
2015
$000s
2014
$000s
2
980,341
878,219
(143,912)
(236,586)
(462,603)
(19,542)
(6,023)
(130,970)
(201,020)
(424,396)
(30,448)
(8,484)
3.2
3.2
Profit before income tax expense
111,675
82,901
Income tax expense
Profit for the year
Other comprehensive income
Items that may be subsequently reclassified to profit or loss
Net currency translation differences
Fair value movement in hedge instruments
Income tax relating to other comprehensive income
Other comprehensive income for the year
Total comprehensive income for the year
Profit attributable to:
Owners of the parent
Non controlling interest
Total comprehensive income attributable to:
Owners of the parent
Non controlling interest
Earnings per share
Basic
Diluted
3.4
(39,564)
(32,099)
72,111
50,802
(3,662)
(436)
(2,127)
(1,185)
(2,307)
561
(6,225)
(2,931)
65,886
47,871
71,810
301
51,584
(782)
72,111
50,802
66,351
(465)
48,559
(688)
65,886
47,871
3.6
Cents
Cents
19.1
19.1
13.7
13.7
The consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
Navitas Limited Annual Report 2015 035
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2015
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Prepayments and other assets
Total Current Assets
Non Current Assets
Property, plant and equipment
Deferred tax assets
Investments accounted for using the equity method
Intangible assets
Total Non Current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Deferred revenue
Current tax payable
Provisions
Total Current Liabilities
Non Current Liabilities
Trade and other payables
Bank borrowings
Provisions
Total Non Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Foreign currency translation reserve
Cash flow hedge reserve
Retained earnings
Equity attributable to owners of the parent
Non controlling interests
TOTAL EQUITY
Note
2015
$000s
2014
$000s
4.2
4.3
3.4
4.1
4.4
3.4
4.5
4.4
5.2
4.5
5.5
87,188
107,927
23,880
71,886
111,836
18,516
218,995
202,238
99,194
46,325
4,865
408,326
74,368
34,556
-
420,169
558,710
529,093
777,705
731,331
125,057
280,584
13,077
5,844
105,474
258,401
12,648
5,635
424,562
382,158
10,793
123,139
12,544
4,693
123,530
9,241
146,476
137,464
571,038
519,622
206,667
211,709
200,974
(4,774)
(1,920)
16,489
197,868
380
(1,615)
17,973
210,769
214,606
(4,102)
(2,897)
206,667
211,709
The consolidated statement of financial position should be read in conjunction with the accompanying notes.
036 Navitas Limited Annual Report 2015
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2015
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income tax paid
Net cash flows from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Net cash paid for controlled entities
Purchase of other investments
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Payments to non controlling interests
Payment of dividends
Payment of dividends to non controlling interests
Note
2015
$000s
2014
$000s
987,987
(795,005)
2,157
(6,208)
(47,097)
898,562
(712,154)
2,241
(8,259)
(39,451)
141,834
140,939
(38,133)
(6,796)
(4,865)
(25,348)
-
(240)
(49,794)
(25,588)
337,014
(344,645)
(541)
(70,653)
(740)
591,066
(618,664)
(37)
(71,382)
(825)
3.3
4.3
3.5
Net cash flows used in financing activities
(79,565)
(99,842)
Net increase in cash and cash equivalents
Net foreign exchange differences
Cash and cash equivalents at beginning of the financial year
12,475
2,827
71,886
15,509
45
56,332
Cash and cash equivalents at the end of the financial year
87,188
71,886
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Navitas Limited Annual Report 2015 037
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2015
Foreign
Currency
Translation
Reserve
$000s
Issued
Capital
$000s
Cash Flow
Hedge
Reserve
$000s
Retained
earnings
$000s
Non-
controlling
interests
$000s
Total
equity
$000s
Balance at 1 July 2013
195,375
1,790
-
39,966
(1,384)
235,747
Profit for the year
Fair value movement in hedge instruments (after tax)
Net currency translation differences (after tax)
Total comprehensive income for the year
Dividend reinvestment plan
Employee share plan purchase
Dividends paid
-
-
-
-
2,195
298
-
-
-
(1,410)
-
(1,615)
-
51,584
-
-
(782)
-
94
50,802
(1,615)
(1,316)
(1,410)
(1,615)
51,584
(688)
47,871
-
-
-
-
-
-
-
-
(73,577)
-
-
(825)
2,195
298
(74,402)
Balance at 30 June 2014
197,868
380
(1,615)
17,973
(2,897)
211,709
Profit for the year
Fair value movement in hedge instruments (after tax)
Net currency translation differences (after tax)
Total comprehensive income for the year
Dividend reinvestment plan
Employee share plan purchase
Dividends paid
-
-
-
-
2,641
465
-
-
-
(5,154)
-
(305)
-
71,810
-
-
301
-
(766)
72,111
(305)
(5,920)
(5,154)
(305)
71,810
(465)
65,886
-
-
-
-
-
-
-
-
(73,294)
-
-
(740)
2,641
465
(74,034)
Balance at 30 June 2015
200,974
(4,774)
(1,920)
16,489
(4,102)
206,667
Total attributable to:
Non controlling interests – 30 June 2014
Non controlling interests – 30 June 2015
-
-
-
-
-
-
-
-
(2,897)
(4,102)
(2,897)
(4,102)
Owners of the parent entity– 30 June 2014
Owners of the parent entity– 30 June 2015
197,868
200,974
380
(4,774)
(1,615)
(1,920)
17,973
16,489
-
-
214,606
210,769
Nature and purpose of reserves:
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign
subsidiaries and record gains and losses on the hedges if the net investments of foreign operations.
Cash flow hedge reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an
effective hedge.
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
038 Navitas Limited Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2015
1
Basis of preparation
This section sets out the accounting policies that relate to the Financial Statements of Navitas Limited (the “Company”) and its
controlled entities. Where an accounting policy is specific to one note, the policy is described within the note to which it relates.
The financial report of the Company for the year ended 30 June 2015 was authorised for issue in accordance with a resolution of
directors dated 24 July 2015.
Navitas Limited, the ultimate parent, is a company limited by shares incorporated in Australia whose shares are publicly traded on the
Australian Securities Exchange.
1.1 Basis of accounting
Statement of compliance
The financial report complies with Australian Accounting Standards, and International Financial Reporting Standards ('IFRS') as
issued by the International Accounting Standards Board.
The financial report is a general-purpose financial report, for a ‘for-profit’ entity, which has been prepared in accordance with the
requirements of the Corporations Act 2001 and Australian Accounting Standards and other authoritative pronouncements of the
Australian Accounting Standards Board. The financial report has also been prepared on a historical cost basis, except where noted.
The financial statements comprise the consolidated financial statements of the Navitas Group of companies.
Certain comparative information within the statement of financial position has been reclassified to be comparable to current
year presentation.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($000’s) unless
otherwise stated.
Except as disclosed in notes 1.2 through to 1.5 the company’s accounting policies are set out within each note disclosure.
1.2 Changes to accounting policies
Adoption of new and revised Accounting Standards
The Group has adopted all of the new and revised Standards and Interpretations, including amendments to the existing standards
issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current
reporting period.
The adoption of these amendments has not resulted in any significant changes to the Group’s accounting policies nor any significant
effect on the measurement or disclosure of the amounts reported for the current or prior periods.
The Group has early adopted AASB 2015-2 ‘Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to
AASB 101’.
The early adoption of this amendment has not resulted in any significant changes to the Group’s accounting policies nor any
significant effect on the measurement or disclosure of the amounts reported for the current or prior periods.
Navitas Limited Annual Report 2015 039
1
Basis of preparation (continued)
1.2 Changes to accounting policies (continued)
Accounting Standards and Interpretations issued but not yet effective
A project team exists to assess the impact of new standards and interpretations. Assessment of the expected impacts of these standards
and interpretations is ongoing, however, it is expected that there will be no significant changes in the Group’s accounting policies.
At the date of authorization of the financial statements, the Standards and Interpretations that were issued but not yet effective, which
have not been early adopted are listed below:
Affected Standards and Interpretations
AASB 9 ‘Financial instruments’ and the relevant amending standards
AASB 15 ’Revenue from Contracts with Customers’ and AASB 2014-5
‘Amendments to Australian Accounting Standards, arising from AASB 15’
AASB 2014-3 ‘Amendments to Australian Accounting Standards –
Accounting for Acquisitions of Interests in Joint Operations’
AASB 2014-4 ‘Amendments to Australian Accounting Standards –
Clarification of Acceptable Methods of Depreciation and Amortisation’
AASB 2015-1 ‘Amendments to Australian Accounting Standards –
Annual Improvements to Australian Accounting Standards 2012-2014 Cycle’
AASB 2015-3 ‘Amendments to Australian Accounting Standards
arising from the Withdrawal of AASB 1031 Materiality’
Application date
(reporting period
commences on or after)
1 January 2018
Application date
for Group
30 June 2019
1 January 2017
30 June 2018
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 January 2016
30 June 2017
1 July 2015
30 June 2016
1.3 Significant accounting judgements, estimates and assumptions
In applying the Group's accounting policies management continually evaluates judgments, estimates and assumptions based on
experience and other factors, including expectations of future events that may have an impact on the Group. All judgments, estimates and
assumptions made are believed to be reasonable based on the most current set of circumstances available to management. Actual results
may differ from the judgments, estimates and assumptions. Significant judgments, estimates and assumptions made by management in
the preparation of these financial statements are outlined below:
Significant accounting judgements
In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those
involving estimations, which have the most significant effect on the amount recognised in the financial statements: Recoverability of
deferred tax assets (See note 3.4).
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and
liabilities within the next annual reporting period are: Impairment of goodwill and intangibles with indefinite useful lives (See note 4.1).
1.4 Basis of consolidation
The consolidated financial statements comprise the financial statements of Navitas Limited and its subsidiaries (as outlined in note 6.1) as
at and for the period ended 30 June each year (the Group).
Subsidiaries are all those entities over which the Group has control. Control is achieved when the Group has power over an entity and is
exposed to, or has rights over, the variable returns of the entity, as well as the ability to use this power to affect the variable returns of the entity.
The financial statements of the subsidiaries are prepared for the same reporting period as Navitas, using consistent accounting policies. In
preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses
resulting from intragroup transactions have been eliminated in full.
Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease to be consolidated from the date on
which control is transferred out of the Group.
A change in the ownership interest of a subsidiary that does not result in a loss of control, is accounted for as an equity transaction.
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 040 Navitas Limited Annual Report 2015
1
Basis of preparation (continued)
1.4 Basis of consolidation (continued)
Non-controlling interests are allocated their share of net profit after tax in the statement of comprehensive income and are presented
within equity in the consolidated statement of financial position, separately from the equity of the owners of the parent.
Losses are attributed to the non-controlling interest even if that results in a deficit balance.
Interests in associates are equity accounted and are not part of the consolidated Group.
Transactions and balances between the company and its associates were eliminated in the preparation of consolidated financial
statements of the Group to the extent of the Group’s share in profits and losses of the associate resulting from these transactions.
1.5
Foreign currencies
Functional and presentation currency
Both the functional and presentation currency of Navitas Limited and its Australian subsidiaries is Australian dollars ($).
The functional and presentation currency of the non Australian Group companies is the national currency of the country of operation.
Transactions & balances
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the
balance sheet date. Foreign currency differences arising on translation are recognised in the profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at
the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined.
Translation of Group companies’ functional currency to presentation currency
As at the reporting date the assets and liabilities of foreign subsidiaries are translated into the presentation currency of the Group at
the rate of exchange ruling at the reporting date and the statements of comprehensive income are translated at the weighted average
exchange rates for the year. The exchange differences arising on the translation are taken directly to a separate component of equity,
the foreign currency translation reserve.
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 Navitas Limited Annual Report 2015 041
2
Segment Information
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur
expenses (including revenues and expenses relating to transactions with other components of the Group), whose operating results are
regularly reviewed by the Group’s Chief Executive Officer to make decisions about resources to be allocated to the segment and assess its
performance and for which discrete financial information is available. Management will also consider other factors in determining operating
segments such as the existence of a line manager and the level of segment information presented to the Board of Directors.
Operating segments for Navitas are:
University Programs:
The University Programs division delivers education programs, via pathway colleges and managed campuses,
to students requiring an university education.
Professional and English
Programs (PEP):
The Division delivers English language tuition, jobs skills training and higher and vocational education in
health, security and psychology.
SAE:
The SAE division delivers education programs in the area of creative media including courses in audio, film
and multi media.
Corporate:
Corporate is the aggregation of the Group’s corporate functions.
The Group accounts for intersegment sales and transfers as if the sales or transfers were to third parties at current market prices.
Segment revenues are attributed to geographic areas based on the location of the customers providing the revenues.
Segment accounting policies are the same as the Group’s policies.
2.1 Geographical areas
The Group operates in the following Geographical areas.
External Operating Revenue
Non Current Assets
2015
$000s
2014
$000s
2015
$000s
2014
$000s
Australia
United Kingdom
Europe
Asia
Canada
United States
Rest of World
628,881
84,365
59,277
49,434
66,478
84,617
5,089
590,129
74,060
58,508
48,471
52,713
46,461
5,631
355,721
8,070
96,803
12,007
214
40,022
227
365,418
14,123
93,564
12,289
222
8,468
453
Total
978,141
875,973
513,064
494,537
Operating revenue of $978.141m has been favourably impacted by the depreciation of the Australian Dollar compared to the previous
financial year. Using foreign exchange rates that applied in the 2014 financial year the Group would have recorded $17.0m lower revenue,
principally from United Kingdom and United States based operations.
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 042 Navitas Limited Annual Report 2015
2
Segment Information (continued)
2.2 Reportable Segments
University
Programs
2015
$000s
2014
$000s
Professional and
English Programs
2014
$000s
2015
$000s
SAE
Corporate
Total
2015
$000s
2014
$000s
2015
$000s
2014
$000s
2015
$000s
2014
$000s
Revenue
Tuition services
Other services
510,183 444,072 216,806
213,966
173,321
139,519
-
-
900,310
797,557
56,157
55,114
7,203
10,247
12,129
10,800
2,342
2,255
77,831
78,416
Total segment revenue
566,340
499,186 224,009 224,213 185,450
150,319
2,342
2,255
978,141 875,973
2,200
2,246
980,341 878,219
140,375
121,807
29,463
25,263
26,144
24,500 (32,875)
(26,641)
163,107 144,929
(4,901)
(5,071)
(3,830)
(3,091)
(12,538)
(13,412)
(6,049)
(3,019)
(27,318)
(24,593)
Goodwill impairment
(16,438)
(30,448)
(3,104)
-
-
-
(749)
(749)
-
-
-
-
-
-
-
-
(749)
(749)
(19,542)
(30,448)
119,036
86,288
21,780
21,423
13,606
11,088 (38,924)
(29,660)
115,498
89,139
Interest (Other Corporations)
Total consolidated revenue
Result
EBITDA*
Depreciation
Amortisation
Profit before tax and
net finance expense
Net finance expense
Profit before income tax
Income tax expense
(3,823)
(6,238)
111,675
82,901
(39,564)
(32,099)
72,111
50,802
Profit for the year
*EBITDA = earnings before net interest, taxes, depreciation, amortisation and impairment.
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 Navitas Limited Annual Report 2015 043
3
Financial performance
This section focuses on the results and performance of the Group and includes disclosures explaining the Group’s results for the year,
significant items, taxation, earnings per Share and dividends.
3.1 Revenue
Accounting policies
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be
reliably measured at the fair value of the consideration received.
In relation to the provision of education services, which is the Group’s primary activity, revenue is recognised where the contract
outcome can be reliably measured, the Group has control of the right to be compensated for the education services, and the stage
of completion can be reliably measured. The stage of completion is measured by reference to the number of contact days held as a
percentage of the total number of contact days in the course.
Where income is recorded in advance of the provision of service the full amount is recognised as deferred revenue in the statement of
financial position. Revenue is then recognised as outlined above.
3.2 Expenses
Accounting policies
Interest
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective
interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.
Depreciation
Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:
• Plant and equipment – over 2 to 10 years
• Leasehold improvements – the shorter of the lease term or the estimated useful life
The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year end.
Leases
Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term.
Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The
aggregate benefits of incentives are recognised as a reduction of rental expense on a straight line basis, except where another
systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 044 Navitas Limited Annual Report 2015
3
Financial performance (continued)
3.2 Expenses (continued)
Expense analysis by nature
Finance costs
Bank loans and overdrafts
Depreciation and amortisation
Depreciation
Amortisation
Lease payments
Minimum lease payments – operating lease
Employee benefits expense
Employee benefits
Post Employment benefits
Note
2015
$000s
2014
$000s
6,023
8,484
4.3
27,318
749
24,593
749
28,067
25,342
51,778
43,912
348,786
22,479
303,455
19,230
371,265
322,685
Losses
Impairment of goodwill
4.1
19,542
30,448
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 Navitas Limited Annual Report 2015 045
2015
$000s
2014
$000s
72,111
50,802
27,318
749
19,542
2,246
302
(1,303)
(2,515)
11,874
(3,967)
(9,453)
11,803
7,553
1,647
3,927
24,593
749
30,448
133
(45)
208
3
(15,383)
(50)
(5,837)
18,594
35,475
(2,196)
3,445
3
Financial performance (continued)
3.3 Reconciliation of profit to the statement of cash flows
Reconciliation of profit for the period to net cash flows from operating activities
Net profit for the period
Non cash items
Depreciation
Amortisation
Impairment of goodwill
Lease incentives
Net (gain)/loss on disposal of property, plant and equipment
Net exchange loss/(gains)
Other non cash items
Decrease/(increase) in assets
Trade and other receivables
Prepayments and other assets
Deferred tax assets
Increase/(decrease) in liabilities
Trade and other payables
Deferred revenues
Current tax liabilities
Provisions
Net cash flows from operating activities
141,834
140,939
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 046 Navitas Limited Annual Report 2015
3
Financial performance (continued)
3.4 Taxation
This note sets out the tax accounting policies of the Group, the current and deferred tax charges or credits in the year (which together
make up the total tax charge or credit in the income statement), a reconciliation of profit before tax to the tax charge (or credit) and the
movements in the deferred tax assets and liabilities.
Accounting policies
Income tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or
paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively
enacted by the balance sheet date.
Deferred income tax is generally provided on all temporary differences at the balance sheet date between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes.
Deferred tax assets are recognised where management consider that it is probable that future taxable profits will be available to utilise
those temporary differences. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax
asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has
become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance
sheet date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the profit or loss.
3.4.1 Income tax expense
The major components of income tax expense are:
2015
$000s
2014
$000s
Income tax recognised in profit or loss
Current income Tax
Current income tax charge
Adjustments in respect of current income tax of previous years
(45,402)
(2,661)
(37,360)
(705)
Deferred income tax
Relating to the origination and reversal of temporary differences
8,499
5,966
Income Tax reported in the statement of comprehensive income
(39,564)
(32,099)
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 Navitas Limited Annual Report 2015 047
3
Financial performance (continued)
3.4 Taxation (continued)
3.4.1 Income tax expense (continued)
The following table provides numerical reconciliation between aggregate tax expenses recognised in the statement of comprehensive
income and tax expense calculated per the statutory income tax rate.
2015
$000s
2014
$000s
Accounting profit before tax
111,675
82,901
At the Group’s statutory income tax rate of 30%
(33,503)
(24,870)
Adjustments in respect of current income tax of previous years
Non tax deductible goodwill impairment
Effect of local tax rates not at 30%
(2,661)
(5,863)
2,463
(705)
(9,135)
2,611
Income Tax reported in the statement of comprehensive income
(39,564)
(32,099)
3.4.2 Recognised tax assets and liabilities
Note
2015
$000s
2014
$000s
Current income tax
Opening balance
Charged to income
Foreign exchange movements
Payments
Closing balance
Deferred Income Tax
Opening balance
Charged to income
Foreign exchange movements
Charged to equity
Closing balance
Deferred income tax relates to the following:
Deferred tax assets
Employee provisions
Other provisions
Lease incentives
Interest rate swaps
Unrealised FX losses
Carry forward tax losses
Other temporary differences
12,648
48,063
(537)
(47,097)
14,134
38,065
(100)
(39,451)
13,077
12,648
34,556
8,499
3,291
(21)
28,275
5,966
(254)
569
46,325
34,556
12,734
2,132
961
823
236
27,622
1,817
10,291
1,774
1,485
692
2,582
17,271
461
46,325
34,556
3.4.3
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 048 Navitas Limited Annual Report 2015
3
Financial performance (continued)
3.4 Taxation (continued)
3.4.3 Carry forward tax losses
Federal and State operating tax losses of $24.3m have been incurred by the Group’s US domiciled entities since inception. These
losses may be utilized in years through to 2033 for both US federal and US state purposes.
These losses are considered recoverable as the management has determined that it is more likely than not that the Group will utilize
these losses through future profitable operations.
3.5 Dividends
3.5.1 Recognised amounts
Declared and paid during the year
Dividends on ordinary shares:
Final franked dividends for 2014: 10.1 cents (2013: 10.2 cents)
Interim franked dividend for 2015: 9.4 cents (2014: 9.4 cents)
2015
$000s
2014
$000s
37,947
35,347
38,288
35,289
73,294
73,577
3.5.2 Unrecognised amounts
Dividends proposed and not recognised as a liability
Dividends on ordinary shares:
Final franked dividends for 2015: 10.1 cents (2014:10.1 cents)
38,009
37,947
3.5.3 Franking credits
At balance date the value of franking credits available (at 30%) was $12.5m (2014: $5.0m).
3.6 Earnings per share
Net profit attributable to equity holders of the parent ($000s)
71,810
51,584
Weighted average number of ordinary shares for earnings per share (Number of shares)
376,053,714
375,490,701
2015
2014
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015
Navitas Limited Annual Report 2015 049
4
Assets and Liabilities
This section shows the assets used to generate the Group’s revenue and the liabilities incurred as a result. Liabilities relating to the Group’s
financing activities are addressed in Section 5. Deferred tax assets and liabilities are shown in note 3.4.
On the following pages there are notes covering intangible assets, working capital, other non-current assets and provisions.
4.1
Intangible assets
Accounting policies
Goodwill
Goodwill acquired in a business combination is initially measured as the excess of the sum of the consideration transferred, the
amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the
acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
Goodwill is not amortised. Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances
indicate that the carrying value may be impaired.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each
of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the
combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units or groups of units.
Each unit or group of units to which the goodwill is so allocated:
1.
represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; and
2.
is not larger than an operating segment determined in accordance with AASB8 Operating Segments.
Other Identifiable Intangible Assets
Other identifiable intangible assets acquired separately or in a business combination are initially measured at cost. The cost of an
identifiable intangible asset acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition,
identifiable intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses.
The useful lives of these identifiable intangible assets are assessed to be either finite or indefinite. Identifiable intangible assets
with finite lives are amortised over the useful life and assessed for impairment whenever there is an indication that the identifiable
intangible asset may be impaired. The amortisation period and the amortisation method for an identifiable intangible asset with a finite
useful life is reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption
of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate,
which is a change in accounting estimate. The amortisation expense on identifiable intangible assets with finite lives is recognised in
profit or loss in the expense category consistent with the function of the intangible asset.
Identifiable intangible assets with indefinite useful lives are not amortised. The useful life of an intangible asset with an indefinite life is
reviewed each reporting period to determine whether indefinite life assessment continues to be supportable. If not, the change in the
useful life assessment from indefinite to finite is accounted for as a change in an accounting estimate and is thus accounted for on a
prospective basis.
A summary of the policies applied to the Group's identifiable intangible assets is as follows:
Brand Names (a)
Indefinite
Useful lives
Amortisation period and method used Not applicable
Internally generated/acquired
Recoverable amount testing
Acquired
Annually and where an indicator of
impairment exists.
Other (b)
Finite
Between 10 and 25 years – straight line
Acquired
Where an indicator of impairment exists.
Amortisation method reviewed at each
financial year end.
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 050 Navitas Limited Annual Report 2015
4
Assets and Liabilities (continued)
4.1
Intangible assets (continued)
Accounting policies (continued)
Other Identifiable Intangible Assets (continued)
(a)
Brand Names
Brand names include intangible assets acquired in the SAE business combination. This intangible asset has been assessed
as having an indefinite life on the basis of brand strength, ongoing expected profitability and the expectation of minimal
ongoing expenditure.
(b) Other
Other includes copyrights and licences acquired through business combinations, principally the acquisition of businesses within
the PEP division.
4.1.1 Carrying amount of intangible assets
$000s
Gross Carrying amount
Balance at 1 July 2013
Impact of foreign currency conversion
Balance at 30 June 2014
Acquisition of controlled entity
Impact of foreign currency conversion
Goodwill
Brand
Names
Other
Total
306,059
2,167
308,226
6,954
1,494
136,000
-
136,000
-
-
17,694
-
17,694
-
-
459,753
2,167
461,920
6,954
1,494
Balance at 30 June 2015
316,674
136,000
17,694
470,368
Accumulated amortisation and impairment losses
Balance at 1 July 2013
Amortisation expense
Impairment of goodwill
Balance at 30 June 2014
Amortisation expense
Impairment of goodwill
Balance at 30 June 2015
Net book value
At 1 July 2013
At 1 July 2014
At 30 June 2015
(3,733)
-
(30,448)
(34,181)
-
(19,542)
(53,723)
-
-
-
-
-
-
-
(6,821)
(749)
-
(7,570)
(749)
-
(10,554)
(749)
(30,448)
(41,751)
(749)
(19,542)
(8,319)
(62,042)
302,326
136,000
10,873
449,199
274,045
136,000
10,124
420,169
262,951
136,000
9,375
408,326
Foreign currency conversion of goodwill
Some goodwill balances are denominated in currencies other than Australian Dollars. In particular a substantial portion of goodwill
associated with the purchase of the SAE Group is denominated in Euro’s. These non-Australian Dollar balances are translated at the
rate applicable at the reporting date, into Australian Dollars and fluctuate in line with foreign exchange movements. The exchange
differences arising on the translation are taken directly to the foreign currency translation reserve.
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 Navitas Limited Annual Report 2015 051
4
Assets and Liabilities (continued)
4.1
Intangible assets (continued)
4.1.2 Impairment
Accounting policies
Impairment testing is completed at each reporting date for goodwill and intangible assets that have indefinite useful lives or assets
that are not ready for use, or more frequently if events or changes in circumstances indicate that the asset may be impaired.
For intangible assets that are subject to amortisation the asset is reviewed for impairment whenever events or changes in
circumstances indicate that the asset’s carrying amount is greater than its estimated recoverable amount. Indicators of impairment
may include changes in technology and business performance.
In testing for impairment, the recoverable amount is estimated for an individual asset or, if it is not possible to estimate the
recoverable amount for the individual asset, the recoverable amount of the cash generating unit (CGU) to which the asset belongs.
CGUs are the smallest identifiable group of assets that generate cash flows that are largely independent from the cash flows of other
assets or group of assets. Each CGU is no larger than an operating segment.
The recoverable amount of an asset or a CGU is the greater of fair value less cost of disposal and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the risks specific
to the asset or CGU and the market’s current assessment of the time value of money. An impairment loss is recognised in the income
statement if the carrying amount of an asset or a CGU exceeds its recoverable amount. Impairment losses recognised in respect of
CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs) and then, to reduce the
carrying amount of the other assets in the CGU (group of CGUs).
Impairment losses recognised in respect of goodwill are not reversed. Impairment losses recognised in prior periods in respect of
intangible assets are assessed at each reporting date for any indications that the impairment loss has decreased or may no longer
exist. The impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount of the
asset and is reversed only to the extent that the carrying amount of the asset does not exceed the carrying amount that would have
been determined, net of amortisation, had no impairment loss been recognised.
Impairment losses recognised
Year ended 30 June 2015
Impairment testing of indefinite useful life assets, using a value in use calculation, for the year ended 30 June 2015 identified
goodwill balances of $19.5m that were not considered recoverable. These balances related to the University Program’s SIBT
($9.0m) (see below) and Study Overseas (SOL) ($7.4m) businesses and the Navitas Resources Institute (NRI) ($3.1m) in PEP.
SOL, Navitas’ Indian based student recruitment arm, was fully impaired following sustained declines in performance over the last
few years and the recent announcement that the UK Home Office plans to bar non EU students from part time or post study work
rights. NRI goodwill, which primarily related to the acquisition of training entities in 2005 and which formed the NRI business unit,
was fully impaired due to sustained losses and the current difficult environment for the Mining and Resources sector. Therefore a
goodwill impairment charge of $19.5m was recognised as at 30 June 2015.
Year ended 30 June 2014
Subsequent to balance date Navitas announced that its wholly owned subsidiary, Sydney Institute of Business and Technology
(SIBT), had reached agreement with its partner, Macquarie University (Macquarie), that from February 2016 SIBT’s on campus
pathway programs to students would cease. From this point on Macquarie would offer its own pathway program to students.
Accordingly, Navitas performed a value in use calculation, using a pre tax discount rate of 11.4%, for the SIBT cash generating
unit and determined that the recoverable value was $9.0m (2013: $32.3m). Therefore, $23.3m of goodwill recognised on the
acquisition of SIBT was not recoverable, and a goodwill impairment charge of $23.3m was recognised as at 30 June 2014. The
remaining carrying value of $9.0m was to be impaired during the 2015 financial year.
Further impairment losses of $7.2m were recorded during the year in relation to EduGlobal China and Ausedken (AUSI) reducing
the intangible balances associated with these cash generating units to nil.
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 052 Navitas Limited Annual Report 2015
4
Assets and Liabilities (continued)
4.1
Intangible assets (continued)
4.1.2 Impairment (continued)
Impairment testing of goodwill and indefinite life identifiable intangible assets
Carrying amount of goodwill allocated to each of the cash generating units
The carrying amounts of acquired goodwill have been allocated to the following individual cash generating units that have
significant amounts of intangibles, for impairment testing, as follows:
Cash generating unit (or group of units)
Carrying amount of Goodwill ($000s)
2015
2014
SAE
PEP (English and Foundation Skills)
PEP (ELICOS)
Sydney Institute of Business & Technology
Deakin College
Curtin College
Australian College of Applied Psychology
Queensland Institute of Business & Technology
Multiple units without significant intangibles
149,296
31,944
13,689
-
11,738
13,089
10,804
9,980
22,411
262,951
141,598
31,944
13,689
9,047
11,738
13,089
10,804
9,980
32,156
274,045
Value in use calculations for SAE
The recoverable amount of SAE has been determined based on a value in use calculation using cash flow projections covering
a five year period, based on bottom up financial forecasts prepared by local management and approved by SAE and Navitas
Senior Executives.
The following describes each key assumption on which management has based its value in use calculation for SAE.
• The discount rate applied to pre tax cash flow projections is 12.3%.
• Cash flows beyond the five year period are estimated using a terminal value calculated under standard valuation principles
incorporating a long term growth rate of 2.5%.
• Revenue from operations is forecast to increase as a result of increased volumes of students. This has been estimated as
10% on average over the five year forecast period. Weighted average forecast course fees have not been assumed to increase
significantly due to conservative estimates and changed country mix. Wage inflation is assumed to be in line with the long
run historical average for Australia, and EBITDA margins are forecast to improve in line with the long run average achieved by
established SAE schools.
• The impact of working capital has been assumed to increase in line with revenue growth.
• Capital investment required to run the business has been assumed based on detailed estimates for three years then at 5.0% of
forecast revenues.
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 Navitas Limited Annual Report 2015 053
4
Assets and Liabilities (continued)
4.1
Intangible assets (continued)
4.1.2 Impairment (continued)
Impairment testing of goodwill and indefinite life identifiable intangible assets (continued)
Value in use calculations for SAE (continued)
In addition, the cash flow projections for SAE also assumes the continued ability of existing and future students to access
government funding (loans) for the purpose of obtaining a qualification from a SAE school. This includes access to Title IV funding
in the USA and Fee-Help in Australia.
The implications of the key assumptions for the recoverable amount are:
• Discount rate - Management has considered the possibility that the discount rate used could increase. The recoverable
amount of SAE intangible assets would only be impacted if the discount rate increased by 20% or more.
• Long term growth rate - the recoverable amount of SAE intangible assets would only be impacted if the growth rate used was
lower than 1.75%.
• Forecast EBITDA for SAE would need to be 15% lower than used in the value in use model, over the five year forecast period,
either due to slower than forecast revenue growth or lower EBITDA margin, to result in a recoverable amount lower than the
carrying amount of SAE intangible assets.
The recoverable value of the SAE Brand Name of $136m has been assessed using the same methods and assumptions as the
related goodwill.
Value in use calculations for other cash generating units
The recoverable amount of these cash-generating units has been determined based on a value in use calculation using cash flow
projections covering a five year period, based on financial forecasts approved by Navitas Senior Executives.
The following describes each key assumption on which management has based its value in use calculation for the remaining cash
generating units.
• The discount rate applied to pre tax cash flow projections is 11.4% and cash flows beyond the five year period are estimated
using a terminal value calculated under standard valuation principles incorporating growth rates ranging from 0% to 3.5%.
• Revenue from operations is forecast to increase due to increased volumes of students and fee growth in line with historical
performance. Wage inflation is assumed to be in line with the long run historical average, and forecast EBITDA margins are
assumed to be stable, and in line with the long run average achieved by the established cash generating units.
In addition, the cash flow projections for the following cash generating units, also assume that significant partnership or service
delivery contracts are renewed at the end of the current fixed contract period. If the contracts are not renewed on substantially
the same or similar terms and conditions then goodwill may be impaired.
Cash generating units subject to partnership or service
delivery contracts with fixed term, subject to renewal
Carrying amount of goodwill associated
with each cash generating unit ($000s)
PEP (English and Foundation Skills)
Curtin College
Deakin College
Queensland Institute of Business & Technology
Multiple units without significant intangibles
31,944
13,089
11,738
9,980
13,559
80,310
Except for loss of material contracts, there are no reasonably possible changes in key assumptions that would result in a material
impairment of intangible assets for these cash generating units.
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 054 Navitas Limited Annual Report 2015
4
Assets and Liabilities (continued)
4.2 Trade and other receivables
Accounting policies
Trade receivables, which generally have 30 to 60 day terms, are initially recognised at fair value and are subsequently measured at
amortised cost using the effective interest rate method less an allowance for any uncollectible amounts.
Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off when
identified.
An allowance for doubtful debts is made when there is objective evidence that a trade receivable is impaired. The amount of the
allowance is measured as the difference between the carrying amount of the trade receivables and the present value of the estimated
future cash flows expected to be recovered from the relevant debtors.
Trade receivables
Allowance for doubtful debts
Accrued Income
Other receivables
2015
$000s
2014
$000s
90,786
(5,121)
91,179
(4,571)
85,665
86,608
16,298
5,964
17,605
7,623
107,927
111,836
Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value.
The Group is not exposed to significant credit risk due to the nature of revenue which is generally received in advance of the service
being provided. The maximum exposure to credit risk is the net carrying amount of receivables.
A significant portion of receivables is for student debts that are funded by monthly installments from Governments under student loan
arrangements. Subject to certain criteria being achieved by the student, Government funding has low credit risk.
In situations where revenues are not provided in advance of service, the Group trades only with recognised, creditworthy third parties,
and as such collateral is not requested nor is it the Group's policy to securitise its trade and other receivables.
It is the Group's policy that all customers who wish to trade on credit terms are subject to credit verification procedures including an
assessment of their independent credit rating, financial position, past experience and industry reputation. Risk limits are set for each
individual customer in accordance with parameters set by the Board. These risk limits are regularly monitored.
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 Navitas Limited Annual Report 2015 055
4
Assets and Liabilities (continued)
4.3 Property, plant and equipment
Accounting policies
Plant and equipment is stated at historical cost less accumulated depreciation and any impairment in value.
Information in relation to depreciation of property, plant and equipment is included in section 3.2.
Gross carrying amount
Balance at 1 July 2013
Additions
Disposals
Transfers
Exchange differences
Balance at 1 July 2014
Additions
Acquisition of controlled entity
Disposals
Exchange differences
Closing balance at 30 June 2015
Accumulated depreciation
Balance at 1 July 2013
Depreciation expense
Disposals
Transfers
Exchange differences
Balance at 1 July 2014
Depreciation expense
Disposals
Exchange differences
Plant and
equipment
$000s
Leasehold
Improvements
$000s
Total
$000s
37,627
25,165
(7,617)
(9)
(405)
54,761
18,912
7,575
(4,294)
6,727
83,681
(7,661)
(23,186)
7,617
697
314
(22,219)
(13,561)
4,107
(1,162)
95,456
183
(634)
9
(173)
94,841
19,221
-
(1,757)
2,310
133,083
25,348
(8,251)
-
(578)
149,602
38,133
7,575
(6,051)
9,037
114,615
198,296
(51,698)
(1,407)
634
(697)
153
(53,015)
(13,757)
2,247
(1,742)
(59,359)
(24,593)
8,251
-
467
(75,234)
(27,318)
6,354
(2,904)
Closing balance at 30 June 2015
(32,835)
(66,267)
(99,102)
Net book value
At 1 July 2013
At 1 July 2014
At 30 June 2015
29,966
32,542
50,846
43,758
41,826
48,348
73,724
74,368
99,194
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 056 Navitas Limited Annual Report 2015
4
Assets and Liabilities (continued)
4.4 Trade and other payables
Accounting policies
Trade payables and other payables have 30-60 day terms and are carried at amortised cost and represent liabilities for goods and
services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to
make future payments in respect of the purchase of these goods and services.
Wages, salaries, annual leave
Liabilities for wages and salaries, including non monetary benefits, and annual leave expected to be settled within 12 months of the
reporting date are recognised in other payables in respect of employees’ services up to the reporting date. They are measured at the
amounts expected to be paid when the liabilities are settled.
Annual leave expected to be settled more than 12 months after the reporting date is measured as the present value of the expected
future payments, adjusted for future wage and salary levels, and are recognised in other payables.
Current
Trade payables
Other payables
Lease incentives
Non Current
Lease incentives
2015
$000s
2014
$000s
20,411
100,995
3,651
16,097
87,269
2,108
125,057
105,474
10,793
4,693
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 Navitas Limited Annual Report 2015 057
4
Assets and Liabilities (continued)
4.5 Provisions
Accounting policies
Provisions
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present
obligation at the balance sheet date. If the effect of the time value of money is material, provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where
appropriate, the risks specific to the liability. The increase in the provision due to the passage of time is recognised as a finance cost.
Make good
Under the terms of its lease agreements the Group must restore certain leased premises to their condition as at the commencement
of the lease.
Long service leave
The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected
future payments to be made in respect of services provided by the employees up to the reporting date. Consideration is given to
expected future wage and salary levels, experience of employee departures, and periods of service.
Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to
maturity and currencies that match, as closely as possible, the estimated future cash outflows.
Current
Make good
Employee benefits
Non Current
Make good
Employee benefits
2015
$000s
2014
$000s
348
5,496
5,844
6,046
6,498
12,544
660
4,975
5,635
3,398
5,843
9,241
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 058 Navitas Limited Annual Report 2015
5
Capital structure and financing
This section outlines how the Group manages its capital structure and related financing costs, including its balance sheet liquidity and
access to capital markets.
The Directors determine the appropriate capital structure, specifically, how much is raised from Shareholders (equity) and how much is
borrowed from financial institutions (debt) in order to finance the Group’s activities both now and in the future. The Directors consider
the Group’s capital structure and dividend policy ahead of announcing results and do so in the context of its ability to continue as a going
concern, to execute the strategy and to deliver its business plan.
5.1 Cash and cash equivalents
Accounting policies
Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-term deposits that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing
and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Tuition Fees held in Tuition Protection Service Account in Australia
The Consolidated Entity is required to maintain, in Australia, separate bank accounts for funds received from international students
prior to commencement of their course (prepaid fees). As at 30 June 2015, the Consolidated Entity’s Australian operations
held $46.4m (2014: $47.8m) in prepaid fees for students who had not commenced studies with the Consolidated Entity, with a
corresponding amount included in deferred revenue.
These funds are held in separate bank accounts until the student commences their course, at which point the funds may be used to
settle normal obligations of the Consolidated Entity. At all times, the Consolidated Entity must ensure that there are sufficient funds
in these separate bank accounts to repay prepaid tuition fees to all international students, in respect of whom tuition fees have been
paid and who have not yet commenced their course.
5.2 Bank Borrowings
Accounting policies
All loans and borrowings are initially recognised at the fair value of the consideration received. Due to the nature of these borrowings,
the carrying amount of the Group’s borrowings approximate their fair value.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective
interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least
12 months after the balance date.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015
Navitas Limited Annual Report 2015 059
5
Capital structure and financing (continued)
5.2 Bank Borrowings (continued)
5.2.1 Summary of borrowing arrangements
At reporting date, the following banking facilities had been executed and were available.
Total facilities
Credit facility
Facilities unutilised at balance date
Credit facility
2015
$000s
2014
$000s
400,000
275,000
227,598
151,470
A total of $172.402m had been utilised of the total facility, split between lease rental and performance guarantees of $49.263m and
borrowings of $123.139m drawn in Euro, US Dollars and Singapore Dollars. The total utilised at 30 June 2014 was $123.530m drawn in
Euros and Australian Dollars.
The borrowings of $123.139m (2014: $123.530) include $14.180m (2014: nil) at floating interest rates and $108.959m (2014:
$123.530m) at fixed interest rates (via interest rate swap, see note 5.4.1).
The facilities are unsecured. The weighted average effective interest rate on the facilities was 2.62% (2014: 4.15%). Further details are
provided in note 5.3.
5.2.2 Leasing
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement and requires an
assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement
conveys a right to use the asset.
Operating leases- Group as lessee
The Group has entered into commercial leases on certain premises. These leases have an average life of between 3 and 12 years with
options to renew in some cases. There are no restrictions placed upon the lessee by entering into these leases.
Future minimum rentals payable
Within one year
After one year but not more than five years
More than five years
2015
$000s
2014
$000s
58,225
230,590
251,116
48,396
113,556
36,606
539,931
198,558
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 060 Navitas Limited Annual Report 2015
5
Capital structure and financing (continued)
5.3 Capital risk management objectives and policies
When managing capital it is management’s objective to maximize the returns to Shareholders as measured by Economic Value Added
(EVA®), whilst also ensuring that the entity continues to operate as a going concern.
EVA® measures the profits earned by the business after charging for the funds invested by both lenders and Shareholders. Accordingly
management aims to maintain a capital structure that ensures the lowest cost of capital for the Group, and maximizes returns to
Shareholders from their capital investment.
Management regularly review capital structure to ensure that the Group takes advantage of favourable costs of capital. As the
market is constantly changing, management will: actively review the amount of dividends to be paid to Shareholders, return capital to
Shareholders, issue new Shares, and initiate on market Share buy backs, and drawdown on/repay bank borrowings to ensure that capital is
managed appropriately.
The Group operates globally, primarily through subsidiary companies established in the markets in which the Group trades. None of the
Group’s entities are subject to externally imposed capital requirements.
The Group’s policy is to borrow centrally, using a variety of currencies, to meet anticipated funding requirements.
Management monitors capital through the combination of leverage ratio (market value of net debt/total market value of capital) and return
on capital employed. The Group’s target leverage ratio is 10%. Under certain circumstances the actual ratio will be higher or lower than the
target, in which case, capital will be managed towards the target.
The Group’s leverage ratios at 30 June 2015 and 2014 were as follows:
Total borrowings
Less cash and cash equivalents
Net debt
Market Capitalisation
Market value of capital
Leverage ratio
EVA® Is a registered trademark of Stern Stewart & Co.
2015
$000s
2014
$000s
123,139
(87,188)
35,951
1,611,807
123,530
(71,886)
51,644
2,678,830
1,647,758
2,730,474
2.2%
1.9%
The leverage ratio at balance date is lower than the average over the financial year as this is the annual low point for net debt. Seasonality is
driven by the timing of key student enrolment periods.
Management’s target for return on capital employed is a minimum return in excess of the Group’s weighted average cost of capital (WACC).
For 2015, the Group’s WACC was approximately 8% (2014: 8%). Returns on capital employed were 22.8% (2014: 19.9%) from continuing
operations; well above the Group’s WACC.
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 Navitas Limited Annual Report 2015 061
5
Capital structure and financing (continued)
5.4 Financial risk management objectives and policies
The Group’s principal financial instruments comprise receivables, payables, bank loans, cash and cash equivalents and derivatives.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
Such assets are carried at amortised cost using the effective interest method less impairment. Gains and losses are recognised in profit or
loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process.
The Group manages its exposure to key financial risks, including interest rate and currency risk in accordance with the Group's Treasury
policy. The objective of the policy is to support the delivery of the Group's financial targets whilst protecting future financial security.
The Group may enter into derivative transactions, principally interest rate swaps and forward currency contracts. The purpose is to manage
the potential interest rate and currency risks arising from the Group's operations and its sources of finance. Derivatives, specifically in
forward currency contracts, may also be entered into. These derivatives provide economic hedges, but do not qualify for hedge accounting
and are based on limits approved by the Audit and Risk Committee.
The main risks that may arise from the Group's financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk.
The Group uses different methods to measure and manage different types of risks to which it is exposed. These include monitoring levels
of potential exposure to interest rate and foreign exchange risk and assessments of market forecasts for interest rate and foreign exchange
rates. Where material, ageing analyses and monitoring of specific credit allowances are undertaken to manage credit risk, liquidity risk is
monitored through the development of future rolling cash flow forecasts and maintenance of appropriate credit facilities.
The Audit and Risk Committee periodically reviews the policies for managing each of these risks as summarised below.
Risk exposures and responses
5.4.1 Interest rate risk
At reporting date the Group had the following mix of financial assets and liabilities exposed to interest rate risk:
Financial Assets
Cash and cash equivalents
Financial Liabilities
Bank borrowings
Net exposure
Variable interest rate risk
Fixed interest rate risk
(after interest rate swap)
2015
$000s
2014
$000s
2015
$000s
2014
$000s
87,188
71,886
-
-
14,180
-
108,959
123,530
73,008
71,886
108,959
123,530
The Group’s exposure to market interest rates relates primarily to the Group’s long term borrowing obligations with a floating interest
rate. The level of debt is disclosed in note 5.2. The Groups debt facilities allow borrowings in multiple foreign currencies, accordingly,
interest-bearing loans of the Group currently range from 1.3% to 3.4% (2014: 1.6% to 4.9%).
The Group’s policy is to manage its interest cost using a mix of fixed and variable rate debt, and that between 25% and 75% of core
borrowings must be at fixed rates of interest. Core borrowings is defined as the lowest level of borrowings forecast in the Group’s
forward projections.
In the absence of fixed rate debt the Group’s policy allows for the use of interest rate swaps, collars and caps. Where the Group enters
into fixed rate debt it is understood that this creates a fair value exposure as a by-product of the Group’s attempt to manage its cash
flow volatility arising from interest rate changes.
The Group has entered into interest rate swap contracts, in order to protect against rising interest rates, under which it has a right to
receive interest at variable rates and to pay interest at fixed rates. At 30 June 2015 the face value of interest rate swap contracts held
was $128.959m (2014: $129.030m).
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 062 Navitas Limited Annual Report 2015
5
Capital structure and financing (continued)
5.4 Financial risk management objectives and policies (continued)
Risk exposures and responses (continued)
5.4.1 Interest rate risk (continued)
The following swaps have been in place for the current financial year.
• Euro interest swaps at 0.71% maturing in February 2018.
• AUD interest swaps at 3.49% maturing in February 2018.
For the 2014 financial year the Group had Euro interest swaps at 2.08% that matured in February 2014. These swaps were replaced
with the Euro and AUD swaps listed above.
Swaps in place cover approximately 118% (2014: 104%) of the principal outstanding at reporting date and are timed to expire at the
renewal dates of each loan.
The interest rate swaps require settlement of net interest receivable or payable each month. The settlement dates coincide with the
dates on which interest is payable on the underlying debt. All swaps are matched directly against the appropriate loans and interest
expense and as such are considered highly effective. They are settled on a net basis. The swaps are measured at fair value and all
gains and losses attributable to the hedged risk are taken directly to equity and re-classified into profit or loss when the interest
expense is recognised.
The fair value of interest rate swap contracts – cash flow hedges, is as follows:
Current Liabilities – payables
Interest rate swap contracts - cash flow hedges
2015
$000s
2014
$000s
2,743
2,307
Interest rate swap contracts are exposed to fair value movements if interest rates change. Under these contracts the Group is
committed to $1.488m (2014: $1.467m) interest expense within 12 months, $1.488m (2014: $1.467m) interest expense between 1
year and 2 years, and $1.110m (2014: $2.335m) interest expense between 2 years and 5 years, on $128.959m (2014: $129.0m) of
notional debt (at rates as per above).
The Group constantly analyses its interest rate exposure. Within this analysis consideration is given to potential renewals of existing
positions, alternative financing, alternative hedging positions and the mix of fixed and variable interest rates.
Sensitivity analysis
The following sensitivity analysis is based on the interest rate risk exposures in existence at the balance sheet date.
At 30 June 2015, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post tax profit
and equity would have been affected as follows:
Judgments of reasonably possible movements
Post tax profit and equity higher/(lower) +1% (100 basis points)
2015
$000s
2014
$000s
504
503
The movements in profit and equity are due to higher interest revenues from variable rate cash balances, and higher interest
expenses on variable rate borrowings. The sensitivity is unchanged compared to 2014 because of an increase in variable rate debt.
Management believe the balance date risk exposures are representative of the risk exposure inherent in the financial instruments.
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 Navitas Limited Annual Report 2015 063
5
Capital structure and financing (continued)
5.4 Financial risk management objectives and policies (continued)
Risk exposures and responses (continued)
5.4.2 Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s
operating activities (when revenue or expense is denominated in different currency from the Group’s presentation currency)
“Transactional risk”, and the Group’s net investments in foreign subsidiaries “Translational risk”.
5.4.2.1 Transactional risk
During the 2015 financial year the company changed its foreign currency risk policy to only hedge known and committed
exposures rather than forecast cashflows over a two year horizon. The policy was changed to benefit the business by increasing
certainty and reducing complexity.
5.4.2.2 Translational risk
The Group’s policy is to hedge its exposure to fluctuations on the translation of its foreign operations by holding net borrowings
in foreign currencies, where the unhedged exposure exceeds $10.0m. This is currently limited to the Group’s Euro, US Dollar and
Singapore Dollar exposures.
5.4.3 Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade and other receivables, other
financial assets and derivative instruments. The Group's exposure to credit risk arises from potential default of the counter party, with
a maximum exposure equal to the carrying amount of these instruments.
The Group is not exposed to significant credit risk. See note 4.2.
5.4.4 Liquidity risk
The Group’s objective is to maintain a balance between the continuity of funding and flexibility through the use of operating cash flows
and committed available credit facilities.
During the 2015 financial year, the Group completed a refinancing of the Group’s existing debt facilities via a series of five year multi
currency bilateral revolving credit facilities. The new facilities increased the total facility limit to $400m (2014: $275m) and increased
the term to December 2019 (2014: June 2018). These facilities are split into two tranches. Tranche A is $340m and wholly consists of
credit facilities, whereas Tranche B is $60m and can either be used as credit facilities or for guarantee requirements.
A total of $172.402m had been utilized of the total facility, split between lease rental and performance guarantees of $49.263m and
borrowings of $123.139m. The total utilised at 30 June 2014 was $123.530m.
Cash flows from operations for 2015 were $141.801m (2014: $140.939m).
The Group’s policy is that no more than 50% of credit facilities should mature within the following 12 months. At 30 June 2015, none
(2014: 20%) of the Group’s credit facilities will mature within the following 12 months.
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 064 Navitas Limited Annual Report 2015
5
Capital structure and financing (continued)
5.4 Financial risk management objectives and policies (continued)
Risk exposures and responses (continued)
5.4.4 Liquidity risk (continued)
Contractual maturities
2015
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Borrowings
Interest rate derivatives
<3 months
$000s
3 months to a year
$000s
1 —5 years
$000s
Total
$000s
87,188
101,963
189,151
20,411
-
372
20,783
-
5,964
5,964
100,995
-
1,116
-
-
-
-
123,319
2,598
87,188
107,927
195,115
121,406
123,319
4,086
102,111
125,917
248,811
Net maturity
168,368
(96,147)
(125,917)
(53,696)
2014
Financial assets
Cash and cash equivalents
Trade and other receivables
Foreign exchange derivatives
Financial liabilities
Trade and other payables
Borrowings
Interest rate derivatives
Foreign exchange derivatives
<3 months
$000s
3 months to a year
$000s
1 —5 years
$000s
Total
$000s
71,886
104,213
63
176,162
16,097
-
368
132
16,597
-
7,623
243
7,866
87,269
-
1,104
69
-
-
441
441
-
123,530
4,222
-
71,886
111,836
747
184,469
103,366
123,530
5,694
201
88,442
127,752
232,791
Net maturity
159,565
(80,576)
(127,311)
(48,322)
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 Navitas Limited Annual Report 2015 065
5
Capital structure and financing (continued)
5.4 Financial risk management objectives and policies (continued)
Risk exposures and responses (continued)
5.4.4 Liquidity risk (continued)
The Group has entered into financial guarantee contracts as disclosed in note 7.1. In the event of default these are at call. Default is
considered remote and the Group expect that no payment will be required in the foreseeable future.
The tables above reflect all contractually fixed settlement, repayments, receivables and interest resulting from recognised financial
liabilities and assets, including derivative financial instruments, as of 30 June 2015. For derivative financial instruments the gross
cash settlement is presented where gross settlement occurs and the net cash settlement is presented where net settlement occurs.
For the other obligations the respective undiscounted cash flows for the respective upcoming fiscal years are presented. Cash flows
for financial liabilities are based on the earliest possible date for on which the Group can be required to pay. Cash flows for financial
assets are based on the terms and conditions existing at the balance sheet date.
Management manages this liquidity risk by the maintenance of appropriate unutilised credit facilities and continued operation of
the business as a going concern generating operating cash flows. Whilst operating as a going concern, the material business units
of the Group receive operating cash flows prior to the provision of the service. At 30 June 2015, the Group had recognised deferred
revenue of $280.584m (2014: $258.401m), representing cash receipted by the Group for which tuition services had yet to be provided.
Management have utilised these cash receipts to reduce debt, return capital to shareholders, and to purchase investments.
At 30 June 2015, the Group had $123.139m bank debt (2014: $123.530m) and had unutilised credit facilities of $227.598m available
(2014: $151.470m). Management is confident this is sufficient to cover any liquidity risk exposure at balance date.
5.5
Issued Capital
Movements in shares on issue
2015
2014
Shares
(Number)
$000s
Shares
(Number)
$000s
Movements in shares on issue
At 1 July
Dividend reinvestment plan (i)
Employee share schemes (ii)
375,712,581
527,926
90,461
197,868
2,641
465
375,367,918
295,671
48,992
195,375
2,195
298
At 30 June
376,330,968
200,974
375,712,581
197,868
i) Dividend reinvestment plan
During the year the Company issued 527,926 (2014: 295,671) Shares to a value of $2.641m (2014:$2.195m) in lieu of cash dividends.
ii) Employee share schemes
During the year the Company issued 44,419 (2014: 15,987) Shares to executive employees (under the terms of the executive share
plan) to a value of $0.228m (2014: $0.097m) in settlement of obligations arising from the Company’s ValueShare incentive scheme.
These obligations were previously recognised in the Company’s results for the 30 June 2014 financial year. In addition, the Company
issued 46,042 (2014: 33,005) shares valued at $0.237m (2014: $0.201m) to eligible employees in lieu of salaries and wages as part of
the Company’s Employee Share Ownership Plan.
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 066 Navitas Limited Annual Report 2015
6 Other notes
6.1 Related party disclosures
6.1.1 Equity interests in related parties
The consolidated financial statements include the financial statements of Navitas Limited its controlled entities. The table below lists
the primary operating controlled entities of the Group. Individual controlled entities that do not provide a significant contribution to
the Group’s revenue, profits or net assets have not been listed. All are owned 100% except as indicated.
Country of incorporation
Name
Australia
ACL Pty Ltd*
Australian Campus Network Pty Limited*
Australian College of English Pty Ltd*
Cadre Design Pty. Limited*
Colleges of Business & Technology (NSW) Pty Ltd*
Colleges of Business and Technology (WA) Pty Ltd*
Cytech Intersearch Pty Limited*
Educational Enterprises Australia Pty. Ltd.*
Educational Services Pty Ltd*
EduGlobal Pty Ltd*
Hawthorn Learning Pty Limited*
Health Skills Australia Pty Ltd*
IBT (Canada) Pty Limited*
IBT (Sydney) Pty Limited*
IBT Education Pty Ltd*
IBT Finance Pty Limited*
Institutes of Business and Technology (UK) Pty Ltd*
LM Training Specialists Pty. Ltd.*
Melbourne Institute of Business and Technology Pty Ltd*
* indicates member of the closed group
Rest of World
Fraser International College Limited
Curtin Education Centre Pte. Ltd. (90%)
Entities subject to class order relief
Navitas America Pty Ltd*
Navitas Bundoora Pty Ltd*
Navitas College of Health Pty Ltd*
Navitas College of Public Safety Pty Ltd
Navitas English Pty Limited*
Navitas English Services Pty Limited*
Navitas Professional Institute Pty Ltd*
Navitas Professional Pty Ltd*
Navitas Professional Training Pty Ltd*
Navitas SAE Holdings Pty Ltd*
Navitas USA Pty Ltd*
Newcastle International College Pty Ltd*
Perth Institute of Business and Technology Pty Ltd*
Queensland Institute of Business & Technology Pty Ltd*
SAE Institute Pty Limited*
South Australian Institute of Business and Technology Pty Ltd*
Sydney Institute of Business and Technology Pty Ltd*
The Australian Centre for Languages Pty Ltd*
The Learning Space Pty Ltd*
SAE-Institute GmbH
Pursuant to ASIC Class Order 98/1418, relief has been granted to certain of the entities which are indicated above as members of
the closed group (“closed group entities”) from the Corporations Act 2001 requirements for preparation, audit and lodgement of
their financial reports.
As a condition of the Class Order, Navitas Limited and the closed group entities entered into a Deed of Cross Guarantee on 15
June 2006, as varied from time to time. The effect of the deed is that Navitas Limited has guaranteed to pay any deficiency in
the event of winding up of any closed group entity. The closed group entities have also given a similar guarantee in the event that
Navitas Limited is wound up.
During the period, no entity has been:
•
•
removed by a revocation deed contemplated by the Deed of Cross Guarantee; or
the subject of a notice of disposal contemplated by the Deed of Cross Guarantee.
During the period, no entity obtained relief under the Class Order or a previous order at the end of the immediately preceding
financial year but which was ineligible for relief in respect of the relevant financial period.
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 Navitas Limited Annual Report 2015 067
6 Other notes (continued)
6.1 Related party disclosures (continued)
6.1.2 Closed Group Disclosures
The consolidated statement of financial position and consolidated statement of profit or loss and other comprehensive income of the
entities which are members of the “closed group” are as follows:
Consolidated statement of financial position
Current Assets
Cash
Trade and other receivables
Other
Total Current Assets
Non Current Assets
Plant & equipment
Deferred tax assets
Intangible assets
Other financial assets
Total Non Current Assets
Total Assets
Current Liabilities
Trade and other payables
Deferred revenue
Current tax payables
Borrowings
Provisions
Total Current Liabilities
Non Current Liabilities
Trade and other payables
Borrowings
Provisions
Total Non Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Retained earnings
Total Equity
Consolidated Retained Earnings
At 1 July
Profit attributable to members of the closed group
Dividends
At 30 June
Closed Group
2015
$000s
2014
$000s
56,084
66,003
14,760
45,345
70,590
11,412
136,847
127,347
41,541
18,821
328,116
313,064
701,542
838,389
79,490
175,161
9,301
114,466
5,705
384,123
1,257
123,139
11,796
136,192
520,315
318,074
200,974
(1,920)
119,020
318,074
114,808
77,506
(73,294)
119,020
43,110
16,678
340,206
299,576
699,570
826,917
57,816
167,221
9,263
140,601
4,672
379,573
3,232
123,529
9,521
136,282
515,855
311,062
197,868
(1,614)
114,808
311,062
124,170
64,215
(73,577)
114,808
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015
068 Navitas Limited Annual Report 2015
6 Other notes (continued)
6.1 Related party disclosures (continued)
6.1.2 Closed Group Disclosures (continued)
Consolidated statement of profit or loss and other comprehensive income
Revenue
Marketing expenses
Academic expenses
Administration expenses
Finance costs
Profit before income tax expense
Income tax expense
Profit for the year
Other comprehensive income
Items that may be subsequently classified to profit or loss
Fair value movements in hedge reserves
Income tax relating to currency translation difference
Other comprehensive income for the year
Closed Group
2015
$000s
2014
$000s
649,289
608,074
(88,155)
(168,479)
(270,116)
(6,937)
(83,310)
(154,450)
(270,186)
(9,319)
115,602
90,809
(38,096)
(26,594)
77,506
64,215
(437)
131
(306)
(2,307)
692
(1,615)
Total comprehensive income for the year
77,200
62,600
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 Navitas Limited Annual Report 2015 069
6 Other notes (continued)
6.1 Related party disclosures (continued)
6.1.3 Transactions with other related parties
Transactions between the Group and its related parties
During the financial year, the following transactions occurred between the Group and its other related parties:
• Minority Shareholders were repaid $540,677 (2014: $36,802).
•
Hoperidge Advisors Pty Ltd, an entity associated with Mr Rod Jones, is a sub tenant in one of the Group’s rented properties.
Navitas has recorded income of $67,347 (2014: $37,475) in relation to this contract. This contract is on normal terms and conditions.
The following balances arising from transactions between the Group and its other related parties are outstanding at reporting date:
•
Current liabilities totaling $2,881,329 (2014: $2,851,553) are repayable to Mr David Shi and his related entities. Mr Shi is the
Managing Director of EduGlobal China Ltd (EGC) and owns the minority shareholding of EGC not owned by Navitas Limited.
Repayments of $540,677 (2014: $36,802) were made during the period.
All amounts advanced to or repayable to related parties are unsecured and are subordinate to other liabilities. The amounts
outstanding will be settled in cash.
6.1.4 Transactions with Key Management Personnel
A list of key management personnel is provided in the remuneration report on page 74. Aggregate compensation and shareholdings
are provided on pages 81 to 83.
6.2 Parent Entity Disclosures
Financial Information
Current Assets
Total Assets
Current Liabilities
Total Liabilities
Shareholders Equity
Issued capital
Reserves
Retained earnings
Total Equity
Profit for the year
Total comprehensive income
Parent
2015
$000s
2014
$000s
45,808
66,001
609,166
641,630
207,978
238,152
331,066
362,268
200,974
(1,920)
79,046
197,868
(1,614)
83,108
278,100
279,362
69,233
152,531
68,927
150,916
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015
070 Navitas Limited Annual Report 2015
6 Other notes (continued)
6.3 Auditor’s remuneration
The auditor of Navitas Limited is Deloitte Touche Tohmatsu.
Audit services
Auditor of the Company
Deloitte Touche Tohmatsu (Australia)
Audit and review of financial reports
Other regulatory audit services
Overseas Deloitte Touche Tohmatsu firms
Audit and review of financial reports
Other regulatory audit services
Other Auditor
Audit and review of financial reports
Other services
Auditor of the Company
Deloitte Touche Tohmatsu (Australia)
Other – consulting services
Other – tax services
2015
$
2014
$
306,000
14,900
545,464
11,730
345,500
7,400
554,703
11,400
878,094
919,003
-
-
-
6,129
-
12,500
884,223
931,503
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015
Navitas Limited Annual Report 2015 071
7
Unrecognised Items
7.1 Guarantees
The Group has entered into lease rental guarantees with a face value of $25.554m (2014: $20.658m) and performance guarantees with a
face value of $80.880m (2014: $65.052m). The fair value of the guarantees has been assessed as nil based on underlying performance of
the entities subject to the guarantees.
Cross guarantees between entities in the closed group (see note 6.1.1) have been provided by Navitas Limited and its controlled entities.
The fair value of the cross guarantees has been assessed as nil based on the underlying performance of the entities in the closed group.
7.2 Contingent Liabilities
A UK subsidiary of Navitas is currently in dispute with HM Revenue & Customs in the UK as to whether the subsidiary provides exempt
education for the purposes of UK VAT. The matter has been heard by the First-Tier Tribunal (Tax and Chancery Chamber) and the Tribunal
ruled in Navitas’ favour.
HM Revenue & Customs subsequently sought leave from the First-Tier Tribunal to appeal this decision. This initial request to the First-Tier
Tribunal was rejected, although HM Revenue & Customs was granted specific leave to seek permission to appeal to the Upper Tribunal
(Tax and Chancery Chamber). HM Revenue & Customs applied for permission to appeal to the Upper Tribunal on 30 June 2014 and on 23
July 2014 this was refused. HM Revenue & Customs applied for this decision to be reconsidered at an oral hearing in 11 December 2014.
Permission to appeal to the Upper Tribunal (Tax and Chancery Chamber) was granted subsequent to this hearing. The appeal is set for
1 and 2 December 2015.
Based on external legal advice, the Directors believe that there are good prospects that the Upper Tribunal (Tax and Chancery Chamber)
will rule in our favour on appeal. Should the ruling be overturned in favour of HM Revenue & Customs the Group faces a potential VAT
liability. As at 30 June 2015 the best estimate of such a liability is $5.190m, with a total potential reduction in profits after tax of $4.100m.
8
Events after balance sheet date
Subsequent to balance sheet date, the Directors of the Company declared a final dividend on ordinary Shares in respect of the 2015
financial year. The total amount of dividend is $38.009m, which represents a fully franked dividend of 10.1 cents per Share. The dividend
has not been provided for in the 30 June 2015 financial statements.
9
Changes in the Group’s Structure
In July 2014 Navitas acquired Ex’Pression College, a California based creative media company, for $6.796m. Ex’Pression College
contributed $2.5m to the Group’s EBITDA, before transaction and integration costs.
In June 2015 Navitas acquired a 51% interest in the University of Canberra College for $4.865m. This investment was made under Navitas’
joint venture model and will be equity accounted.
NOTES TO THE FINANCIAL STATEMENTSFor the year ended 30 June 2015 072 Navitas Limited Annual Report 2015
DIRECTORS’ REPORT
Your Directors submit
their report for the year
ended 30 June 2015.
Directors
The names and details of the Company’s
Directors in office during the financial year
and until the date of this report are set out on
pages 8 to 11. Directors were in office for this
entire period unless otherwise stated.
Interests in the shares and
options of the company and
related bodies corporate
As at the date of this report, the interests of
the Directors in the shares and options of
Navitas Limited were:
Directors
Harvey Collins
Rod Jones
Tony Cipa
Diana Eilert*
Tracey Horton
James King
* Appointed 28 July 2014
Ordinary
shares held
43,948
45,017,995
10,000
-
2,000
50,000
Directors’ meetings
The number of meetings of Directors
(including meetings of committees of
Directors) held during the year, and the
number of meetings attended by each
Director, were as follows:
Directors’ meetings
Audit and Risk
People and Remuneration
Meetings of Committees
Number of
meetings held
while a director
8
8
8
7
3
8
8
3
Harvey Collins
Rod Jones
Tony Cipa (i)
Diana Eilert (ii)
Ted Evans (iii)
Tracey Horton (iv)
James King (v)
Peter Larsen (iii)
For references (i) to (v) see following page.
Number of
meetings
attended
Number of
meetings
held while a
committee
member
Number of
meetings
attended
Number of
meetings
held while a
committee
member
Number of
meetings
attended
8
8
8
7
3
8
8
3
5
-
5
-
1
-
5
-
5
-
5
-
1
-
5
-
1
-
-
3
1
4
3
-
1
-
-
3
1
4
3
-
All Directors were eligible to attend all meetings held, unless specified.
Navitas Limited Annual Report 2015 073
Committee membership
Company secretary
As at the date of this report, the Company
had an Audit and Risk Committee and a
People and Remuneration Committee.
Members acting on the committees of the
board during the year were:
People and
Remuneration
Tracey Horton (iv)
(Chairman)
James King (v)
Diana Eilert (ii)
Audit and Risk
Tony Cipa (i)
(Chairman)
Harvey Collins
James King
(i) Appointed as the Chairman of the Audit and Risk
Committee on 29 July 2014
(ii) Appointed to the Board on 28 July 2014 and to the People
and Remuneration Committee on 12 September 2014
(iii) Retired on 4 November 2014
Hugh Hangchi, LLB, BComm
Appointed 27 April 2005
Mr Hangchi is a practising lawyer and has
experience in providing advice to directors
of listed and unlisted public companies in
relation to directors’ duties, the Corporations
Act, the Listing Rules and corporate
governance. He has also completed the
Company Directors Course Diploma.
Prior to joining the company, Mr Hangchi
was a senior associate at a national law firm
where he specialised in capital raisings,
mergers and acquisitions and regulated
takeovers. He has also worked as a
solicitor with the Australian Securities and
Investments Commission.
(iv) Appointed as the Chairman of the People and
Remuneration Committee on 12 September 2014
Corporate information
(v) Appointed to the People and Remuneration Committee
on 12 September 2014
Corporate structure
Indemnification and insurance
of directors and officers
The Company has made an agreement to
indemnify all the Directors against any
liability incurred by that Director in their
capacity as a director of the Company or a
subsidiary of the Company. The agreement
provides for the Company to pay an amount
to indemnify directors only to the extent:
a)
b)
the Company is not precluded by law
from indemnifying the Directors; and
for the amount that the Director is not
otherwise entitled to be indemnified
and is not actually indemnified by
another person (including a related body
corporate or an insurer).
During or since the financial year, the
Company has paid premiums in respect of a
contract insuring all the directors of Navitas
Limited against any of the following liabilities
incurred by the Director as a director, namely:
Navitas Limited is a company limited by
shares that is registered and domiciled in
Australia. Navitas Limited has prepared a
consolidated financial report incorporating
the entities that it controlled during the
financial year as listed in note 6 of the
financial statements.
Nature of operations and
principal activities
The principal activities during the financial
year of the Group were of the provision
of educational services to domestic and
overseas students. There have been no
significant changes in the nature of those
activities during the year.
Operating and financial review
A review of the consolidated entities’
operations and financial performance has
been provided for on pages 14 to 27.
a) any liability which does not arise out of
Dividends on ordinary Shares
Significant changes in the state
of affairs
There has been no significant change in the
state of affairs of the Company.
Subsequent to balance sheet date, the
Directors of the Company declared a final
dividend on ordinary shares in respect of
the 2015 financial year. The total amount
of dividend is $38.009m, which represents
a fully franked dividend of 10.1 cents per
Share. The dividend has not been provided
for in the 30 June 2015 financial statements.
Future developments
Likely developments in, and expected results
of the operations of the Group in subsequent
years are referred to elsewhere in this report,
particularly on pages 14 to 27. In the opinion
of the directors, further information on those
matters could prejudice the interests of the
company and the Group and has therefore
not been included in this report.
Environmental regulation
and performance
The Group’s operations are not subject to
any significant environmental regulations
under the government legislation of the
countries it operates in. The Board believes
that the consolidated entity has adequate
systems in place for the monitoring of
environmental regulations and is not aware
of any such regulations that apply to the
consolidated entity.
Rounding
The amounts contained in this report and
in the financial report have been rounded
to the nearest $1,000 (where rounding is
applicable) under the option available to the
company under ASIC Class Order 98/0100.
The Company is an entity to which the Class
Order applies.
conduct involving:
(i) a wilful breach of duty in relation to
the Company; and
(ii) a contravention of section 182 or
section 183 of the Corporations Act
2001, as permitted by section 199B
of the Corporations Act 2001; and
b) any liability for costs and expenses
incurred by the Director in defending
proceedings, whether civil or criminal,
whatever their outcome, and without the
qualifications set out in clause (a) above.
The total amount of insurance contract
premiums paid is $168,411.
Final dividends
recommended
Interim dividends paid
during the year
Final for 2014 shown
as recommended in the
2014 report
Cents
10.1
$000s
38,009
9.4
35,348
10.1
37,947
Non audit services
Details of the amounts paid to the auditor of
the Company, Deloitte Touche Tohmatsu, and
its related practices for audit and non audit
services provided during the year are set out
in note 6.3.
Auditor’s independence
declaration
The auditor’s independence declaration
is set on page 84 and forms part of the
directors’ report for the financial year ended
30 June 2015.
074 Navitas Limited Annual Report 2015
DIRECTORS’ REPORT (CONTINUED)
Remuneration report
This report outlines the remuneration arrangements in place for the key management personnel
(KMP) (Directors and executives) of Navitas Limited (the Company).
The following were key management personnel at any time during the reporting period and
unless otherwise indicated were key management personnel for the entire period.
Harvey Collins
Non-Executive Chairman
Rod Jones
Tony Cipa
Diana Eilert
Ted Evans
Tracey Horton
James King
Peter Larsen
(ii) Executives
Group Chief Executive Officer and Managing Director
Non-Executive Director (appointed 1 May 2014)
Remuneration structure
Non-Executive Director (appointed 28 July 2014)
Non-Executive Director (retired 4 November 2014)
Non-Executive Director
Non-Executive Director
Non-Executive Director (retired 4 November 2014)
Members of the Navitas Leadership Team:
Patrick Brothers
Lyndell Fraser
Romy Hawatt
Neil Hitchcock
Bryce Houghton
Scott Jones
Rob Lourey
John Wood
Group General Manager – Strategy & Business Development
(appointed 10 November 2014)
Chief Executive Officer – Professional and English Programs
Chief Executive Officer – SAE (resigned 31 March 2014)
Group General Manager – IT (appointed 1 September 2013)
Chief Financial Officer
Chief Executive Officer – SAE (appointed 1 July 2014)
Group General Manager - Human Resources
(appointed 1 September 2013)
Chief Executive Officer – University Programs
Remuneration philosophy
• Mandatory requirement for senior
The performance of the Company depends
upon the quality of its directors and
executives. To prosper, the Company must
attract, motivate and retain highly skilled
Directors and executives.
To this end, the Company embodies
the following principles in its
remuneration framework:
• Provide competitive rewards to attract
high calibre executives;
• Link executive rewards to
Shareholder value;
• Have a significant portion of executive
remuneration ‘at risk’, dependent
upon meeting pre-determined
performance benchmarks;
executives of the Company (Navitas
Leadership Team) to take at least 50%
of all incentive payments in the form of
ordinary shares in the Company
(until such executives hold a beneficial
interest in Shares in the Company equal to
the value of their fixed remuneration); and
• Establish appropriate, demanding
performance hurdles in relation to
variable executive remuneration.
People and Remuneration Committee
The People and Remuneration Committee
of the Board of Directors is responsible for
determining and reviewing compensation
arrangements for the directors, the Group
Chief Executive Officer (Group CEO) and the
senior management team.
The People and Remuneration Committee
assesses the appropriateness of the nature
and amount of remuneration of directors
and senior managers on a periodic basis by
reference to relevant employment market
conditions with the overall objective of
ensuring maximum stakeholder benefit from
the retention of a high quality board and
executive team.
In accordance with best practice corporate
governance, the structure of non-executive
director and senior manager remuneration is
separate and distinct.
Use of remuneration consultants
During the year ended 30 June 2015, the
Board did not engage any remuneration
consultants to provide any recommendations
or advice in relation to remuneration matters.
If and when remuneration consultants
are engaged by the Board, it has put in
place procedures to ensure remuneration
recommendations made by remuneration
consultants are free from undue influence
by those KMP to whom the recommendation
relates. These procedures include:
•
•
•
instructions for preparing remuneration
recommendations are only issued
to remuneration consultants by
the Chairman of the People and
Remuneration Committee or another non-
executive director;
the role of employees in any
engagement regarding a remuneration
recommendation is limited to the
provision of information and opinions
on current and past practices and does
not include any participation in the
development of recommendations;
remuneration recommendations by
remuneration consultants are made
directly to the People and Remuneration
Committee; and
• all remuneration recommendations made
by remuneration consultants are required
to include a declaration about whether
the remuneration recommendation is free
from undue influence by the members of
the KMP to whom it relates.
Navitas Limited Annual Report 2015 075
Non-executive
Director remuneration
Objective
The Board seeks to set aggregate
remuneration at a level which provides
the company with the ability to attract
and retain Directors of the highest calibre,
whilst incurring a cost that is acceptable
to Shareholders.
Structure
The Constitution and the ASX Listing Rules
specify that the aggregate remuneration
of non-executive Directors should be
determined from time to time by a general
meeting. The latest determination was made
at the company’s annual general meeting
on 23 November 2013 where Shareholders
approved an aggregate remuneration of
$1,100,000. An amount not exceeding the
amount determined is then divided between
the Directors as agreed.
The Board considers advice from external
consultants as well as fees paid to non-
executive directors of comparable companies
when determining the remuneration. The
amount of aggregate remuneration and the
manner of apportionment will be reviewed
periodically, and the quantum will be subject
to approval by Shareholders.
on which a Director sits. The payment of
additional fees for serving on a committee
recognises the additional time commitment
required by Directors which serve on one or
more committees.
The remuneration of key management
personnel, including non-executive Directors,
for the year ending 30 June 2015 is detailed
on page 82.
Senior manager and executive
Director remuneration
Objective
The Company aims to reward executives with a
level and mix of remuneration commensurate
with their position and responsibilities within
the Company and so as to:
• Reward executives for Company,
business unit and individual performance
against targets set by reference to
appropriate benchmarks;
• Align the interests of executives with
those of Shareholders;
• Link reward with the strategic goals and
performance of the Company; and
• Ensure remuneration is competitive by
market standards.
Structure
Each Director receives a fee for being a
director of the Company. An additional
fee is also paid for each Board committee
In determining the level and make up of
executive remuneration, the People and
Remuneration Committee considers the
market levels of remuneration paid to
executives of comparable companies.
Remuneration consists of the following
key elements:
• Fixed Remuneration
• Variable Remuneration (ValueShare
Incentive Scheme)
The proportion of fixed remuneration and
variable remuneration is established for
each senior manager by the People and
Remuneration Committee or the Group
Chief Executive Officer (as the case may
be). The fixed and variable components of
the remuneration of the key management
personnel are detailed on page 82.
Fixed Remuneration
Objective
The level of fixed remuneration will be
reviewed annually accordingly to ensure it is
commensurate with Company and individual
performance, as well as consistent with
market rates for comparable executive roles.
Structure
Fixed remuneration can be received in a
variety of forms, including cash and fringe
benefits such as motor vehicles and expense
payment plans. It is intended that the manner
of payment chosen will be optimal for the
recipient without creating undue cost for
the Company.
076 Navitas Limited Annual Report 2015
DIRECTORS’ REPORT (CONTINUED)
EVA® is more demanding than other profit
measures such as EPS or EBITDA as it
requires a reasonable return on equity to
be achieved before it becomes positive.
Research by independent consultancy Juno
Partners shows that only about 50% of the
top 300 Australian listed businesses generate
positive EVA® in any one year.
The Board sets the required return for
investors used to calculate EVA® annually
and may, at its discretion, make amendments
to the statutory profit to calculate EVA®.
Varies with each business’
financial performance
Every three years, the Board sets growth
targets for the Group and each business
unit. For the 2015-2017 period, the Group’s
growth target, if achieved, would represent
top 30% performance compared to the actual
three year EVA® growth achieved by the top
300 Australian listed companies over 2009 –
2013(1). The three year target is then broken
down into annual growth targets.
At the end of each year, after consideration
of the EVA® growth achieved by an individual
business unit and the Group against their
targets, an incentive declaration for each
participant is determined.
Variable Remuneration
Summary of outcomes for 2015
While final incentive payments are subject to
Board determination in September each year,
at a Group level, the financial performance of
the Group during 2015 was above target. As
a consequence, above target incentives are
expected to be declared for corporate staff in
relation to the 2015 year.
Consistent with the rules of the plan, two thirds
of above target incentive amounts declared
will be deferred and subject to loss in the
event of a significant deterioration in financial
performance or termination of employment.
Some business units within the Group achieved
below target levels of performance and these
incentive plan participants will receive amounts
below their Target Variable Pay.
Objective
The ValueShare Incentive Scheme aims to
share with participants the financial success
enjoyed by the Group and in so doing, align
their interests with those of Shareholders.
It also allows one of the largest costs – staff
remuneration – to rise and fall with the
performance of the business.
An important part of the Company’s ongoing
success is its ability to attract and retain
the best talent in the education industry
and in the ten years since its inception, the
ValueShare Incentive Scheme has helped
Navitas achieve that goal. For many of our
staff, the opportunity to share in the financial
success enjoyed by the business makes
working at Navitas attractively different from
other positions in the education sector.
Structure
The diagram below illustrates the structure
of the ValueShare Incentive Scheme. Further
detail is provided in the text that follows.
Captures all at-risk pay
Each participant in the ValueShare Incentive
Scheme is assigned a level of Target Variable
Pay (TVP) which is based on a percentage of
their fixed remuneration. The Group’s TVP
percentages range from 5% to 75% of fixed
remuneration, depending on the level of
responsibility held by the participant.
It is important to note that the ValueShare
Incentive Scheme comprises the entire
at-risk opportunity offered to staff; Navitas
does not offer any form of equity based
remuneration in addition to the ValueShare
Scheme, for example.
Based on shareholder value
The ValueShare Incentive Scheme is based
on sustained improvements in the financial
performance of the Group and its Business
Units, as measured by Economic Value
Added (EVA®).
EVA® measures the profit the business
makes above and beyond what investors
could expect to earn, had their funds been
invested elsewhere at similar risk. As such,
it is the value created by the business
for Shareholders.
ValueShare Incentive Scheme
Target Variable
Pay (TVP)
x
EVA
performance
=
EVA incentive
declared
+/—
Individual
performance
=
Final
Payment
TVP ranges from
10%—75% of fixed
pay depending
on responsibility
Corporate staff are tied
to the Group EVA result,
business unit staff are
tied to the business unit
and Group EVA result.
For participants with
TVP of 20% or more,
declarations are
uncapped on the upside
and the downside. For
others declarations to
0%–200% of TVP.
Individual performance
is determined by the
business unit managing
director, Chief Executive
Officer or Board (as the
case may be).
For participants with TVP
of 20% or more, if the
payment is in excess of
their TVP, two thirds of
the amount above
their TVP is deferred
at risk for two years.
EVA® is a registered trademark of Stern Stewart & Co.
(1) excluding investment companies, as determined by Juno Partners, an independent consultancy appointed by the Board.
Navitas Limited Annual Report 2015 077
For senior staff, above TVP payments
are deferred and can be forfeited if
not sustained
For participants with a TVP of 20% or more,
rewards are uncapped and any amount,
positive or negative, may be declared. For
these staff, amounts between $0 and their
TVP are settled in the current year. Any
amount outside this range is settled in three
equal parts, the first in the current year and
the remainder in the two that follow.
Deferred amounts are added to or offset
against future declarations and can be lost if
the employee's participation in the scheme
ends for whatever reason, or if future EVA®
growth falls substantially below target.
Any deferred amounts do not vest in the
employee and are not paid on the termination
of their employment.
For senior staff, incentive declarations
can be negative
If EVA® growth falls substantially below
target, participants with a TVP of 20% or more
can suffer a negative incentive declaration.
In this instance, prior year deferred amounts
can be reduced or lost altogether.
Additional requirements for Executive
Key Management Personnel
The aggregate of annual ValueShare
Incentive Scheme payments to Executive
Key Management Personnel is subject to the
approval of the Board.
An additional step is taken with the aim
of further strengthening the alignment of
Executive Key Management Personnel and
shareholders in the medium to long term.
For those executives, at least 50% of
the incentive payment is used to pay for
ordinary Shares in the Company (at an
issue price calculated as a volume weighted
average market price for the 5 trading days
immediately before the date of issue) until
such executives hold a beneficial interest in
Shares in the Company equal to the value
of their fixed remuneration. This ensures all
Executive Key Management Personnel have
a meaningful exposure to the performance of
Navitas Shares, funded out of the proceeds
of their incentive payments.
Not a short-term incentive scheme
While payments under the ValueShare
Incentive Scheme are made in cash and
classified under the accounting standards as
'short-term benefits' (due to the fact that they
will be paid within 12 months of year end),
there are a number of elements in the Scheme
that ensure rewards reflect sustained,
multi-year performance. These include:
• Payments reflect performance against a
set of three year targets;
• Two thirds of payments for above target
performance are deferred;
• Deferred payments are subject to loss if
performance deteriorates significantly or
the employee ceases to be a participant
in the plan for whatever reason;
• For Executive Key Management
Personnel, at least 50% of any payment
must be used to purchase Shares until
the executive has established a holding
in Navitas equal to the value of their
fixed remuneration.
Incentive outcomes in 2015
The growth in EVA® enjoyed by the Group
during the year exceeded target for the
first time since 2010. While final incentive
outcomes are subject to review and
confirmation by the Board in September of
this year, for staff working in a Group position
this will likely mean above target incentive
amounts will be declared for the year ended
30 June 2015.
EBITDA
Interest
Depreciation
Net Operating Profit Before Tax
Taxes at 30%
Net Operating Profit After Tax (A)
Capital Employed*
Cost of Capital
Capital charge (B)
+
–
=
–
=
x
=
A–B Economic Value Added (EVA)
Opening EVA
EVA increase/decrease
As noted above, for staff on TVP of 20% or
above, two thirds of any amount above TVP
will be deferred and subject to loss in the
event of a substantial deterioration in EVA®
or where the participant's employment is
terminated for any reason.
Impact of the loss of the University
Programs MQC and SIBT
on-campus contracts
Rewards declared under the ValueShare
Incentive Scheme are based on the actual
financial performance of the business in
any one year. As changes to the MQC and
SIBT on-campus contracts with Macquarie
University had little impact on financial
performance in 2015, rewards declared in
2015 were not materially impacted.
However, to the extent that the changes to
the MQC and SIBT on-campus contracts
reduce EVA® growth in coming years,
rewards declared will be lower in those
years. This is consistent with the objective
of the scheme, which is to base rewards
on the sustained growth in EVA® actually
achieved, rather than on estimates of
future performance.
Cash bonuses for participants have been
provided for in the financial statements for
30 June 2015, but as noted above, are
subject to review and confirmation by the
Board in September.
2015
$000s
2014
$000s
163,107
2,200
(27,318)
137,989
(41,397)
96,592
421,642
8%
33,731
62,861
51,779
11,082
144,929
2,246
(24,593)
122,582
(36,775)
85,807
425,350
8%
34,028
51,779
46,602
5,177
* based on the average of month end net debt and equity balances throughout the year, after adjustments
078 Navitas Limited Annual Report 2015
DIRECTORS’ REPORT (CONTINUED)
Relationship of rewards to performance
In the opinion of the directors the Company’s remuneration policies have contributed to the Company’s success in creating Shareholder value, as
demonstrated by the following table which has key measures of the Group’s earnings and Shareholder returns over the last 10 years.
Economic Value Added (EVA) ($million)
$62.86
$51.78
$46.10
$38.12
$57.88
$54.53
$40.64
$27.29
$20.59
$18.34
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
Dividends per Share –
paid and proposed (cents)
Dividends paid ($million)
19.5
19.5
19.5
19.5
20.7
$73.3
$72.8
$72.8
$80.3
$68.7
18.8
$57.8
14.3
10.9
9.3
9.5
$40.1
$33.7
$31.5
$39.5
Closing Share price (at 30 June)
$4.29
$7.13
$5.77
$4.34
$4.03
$4.66
$2.73
$2.09
$1.89
$1.88
Earnings per Share (cents)
19.1
13.7
19.9
19.5
21.7
18.8
14.3
10.8
9.3
9.1
Earnings per Share before amortisation
and impairment (cents)
Net profit after tax attributable to
members of the Company ($million)
Return on capital employed
Employment contracts
24.5
22.1
20.0
19.8
22.9
19.4
14.6
12.2
10.6
10.2
$71.81
23%
$51.58
20%
$74.58
19%
$73.15
19%
$77.30
50%
$64.20
59%
$49.20
47%
$37.43
34%
$32.25
27%
$31.49
40%
A summary of the key employment contract terms for the executive key management personnel is provided below. None of the non-executive
Directors have an employment contract with the Company.
Key Management Personnel
Executive
Term
Notice Period
Lyndell Fraser, Neil Hitchcock, John Wood*
No term is specified.
Either party may terminate by providing 3 months’ written notice.
The employee may terminate by giving 2 months’ written notice if there is a material diminution in the employee’s
responsibilities, or the employee is required to relocate outside their home state (“Material Change”). The Company
may terminate within 6 months of a Material Change occurring.
The Company may terminate without notice if the employee is guilty of any criminal or indictable offence, breaches
any law in relation to the performance of the employee’s duties, commits any serious breach of faith, or act of
serious neglect or gross misconduct.
The Company may also terminate without notice if the employee is unable to perform duties due to illness, injury
or incapacity.
* For this executive, a Material Change also includes where a third party acquires a controlling interest in the Company.
Termination Provisions
If the employee or the Company terminates due to a Material Change, a final termination payment equivalent to
3 months’ remuneration is payable.
If the Company terminates for illness, injury or incapacity, the employee is entitled to any amounts owing
as compensation under the employment agreement to the extent earned on a pro-rata basis together with
compensation (without loading, bonuses or profit share) that would otherwise have been paid to the end of the
then current term of employment, plus reimbursement for any properly incurred (and fully documented) costs.
Navitas Limited Annual Report 2015 079
Executive
Term
Notice Period
Termination Provisions
Rob Lourey, Scott Jones (appointed 1 July 2014), Patrick Brothers (appointed 11 November 2014)
No term is specified.
Either party may terminate by providing 3 months’ written notice, or such shorter notice as agreed by the parties, or
such longer notice as required by law (“Termination with Notice”).
The Company may terminate without notice if the employee is guilty of any serious, willful or persistent misconduct,
including but not limited to: willful or gross neglect or gross negligence in the performance of the employee’s
responsibilities; serious incompetence or inefficiency in the performance of the employee’s duties; breach of any
law relating to the performance of the employee’s duties, including any law relating to discrimination, harassment
or equal opportunity in an employment context; serious or repeated breaches of the employee’s employment
agreement or any repudiation of a term in it; disobedience or neglect of any lawful order or direction given by or
on behalf of the Company, including any policy or procedure of the Company; habitual use of alcohol or narcotics
while engaged in the performance of duties; misappropriation of any property of the Company; engaging in physical
violence, abuse or bad language towards any other employee, customer, members of the public or other person
having business dealings with the Company; conviction of a criminal offence that, in the opinion of the Company,
may detrimentally affect the Company; conduct that, in the reasonable opinion of the Company, may detrimentally
affect the Company; or any act of dishonesty or fraud in the course of or in connection with the performance of the
employee’s duties.
If the employee or the Company terminates by giving Termination with Notice, the Company in its discretion may
pay the employee the equivalent amount of remuneration in lieu of notice of such termination. If the employee’s
employment is terminated, the employee has no other claim against the Company for compensation or damages in
respect of the termination other than the amounts prescribed by the Termination with Notice.
Executive
Term
Bryce Houghton
3 years, from 19 July 2013 (being the “Commencement Date”).
Notice Period and
Termination Provisions
A review will be held on or before 18 months after the Commencement Date of the employment where the parties
may extend the term for a further three year period.
Unless otherwise agreed by the Company and the employee, if the Company does not extend the employment for
a further term of three years on terms and conditions at least equivalent to those in place at the review date, or
the employee is not willing to accept an offer to extend the employment on revised terms and conditions, then the
Company not extending the employment on equivalent terms and conditions will be deemed to constitute giving
notice on the date 18 months after the Commencement Date to terminate the employment in accordance with the
Employer Termination outlined below.
The employee may terminate at any time by giving one month’s notice in writing, or such shorter notice as may be
agreed by the parties.
The Company may terminate the employee’s employment by giving one month’s notice in writing. In the event of
termination by the Company the employee will be entitled to a final termination payment equivalent to the fixed
remuneration of the employee for a maximum of 12 months or the balance of the employment agreement, whichever
is greater (“Employer Termination”).
Unless otherwise agreed by the parties, the employee may terminate this employment in the event of a Material
Change* by giving one month’s notice in writing or such shorter notice as may be agreed by the parties (“Employee
Notice Period”). Where the employee’s employment is terminated by the employee in the event of a Material
Change*, at the conclusion of the Employee Notice Period, the Company will pay the employee a final termination
payment equivalent to the fixed remuneration of the employee for the balance of the employment agreement.
The Company may terminate without notice and without payment in lieu of notice if the employee: is guilty of any
criminal or indictable offence or commits any act of dishonesty in relation to the affairs of the Company; is guilty
of an offence under the Corporations Act 2001 (Cth); breaches any law in relation to the performance of the
employee’s duties, including any law relating to discrimination, harassment or equal opportunity in an employment
context; commits any serious breach of faith, or act of serious neglect or default or willful disregard of directions or
serious professional misconduct or gross misconduct or willful disobedience; is in serious and fundamental breach
of the employment agreement and such breach cannot be remedied or it can be remedied but, after being directed
in writing by the Company to remedy the breach, the employee fails to do so within two days after the giving of the
direction; or performs any act or is guilty of any omission, whether or not in the course of performing the employee’s
duties, the likely result of which is that the Company, a related body corporate of the Company’s business or a
material part of the Company’s business will be brought into disrepute.
The Company may also terminate without notice if the employee is unable to perform the full range of his duties due
to illness, injury or incapacity: i) for a continuous period of three months; ii) for a 3 month period aggregated in any
12 month period; and iii) at least three months has elapsed since the employee first became unable to perform the
full range of those duties. If the employee’s employment is terminated in this manner, then the employee is entitled
to any amounts due and owing as compensation under the employment agreement, on a pro rata basis including
compensation (without loading, bonuses, or profit share) that would otherwise have been paid to the end of the then
current term of employment, plus reimbursement for any property incurred (and fully documented) costs.
* For this executive, a Material Change means where there is a material diminution in the remuneration of the employee, or the responsibilities and
powers assigned to the employee.
Annual Leave
The employee is entitled to five weeks’ paid annual leave per year accruing pro rata.
080 Navitas Limited Annual Report 2015
DIRECTORS’ REPORT (CONTINUED)
Executive
Term
Rod Jones
No term is specified.
Notice Period
The Company may terminate at any time by giving the employee 6 months written notice.
The employee may terminate his employment at any time by giving the company 6 months written notice.
The Company may terminate the employee’s employment immediately without notice, and without payment in lieu
of notice, if the employee is guilty of, charged with, or under investigation for, any criminal or indictable offence, is
disqualified from holding office under the Corporations Act, has breached any law in relation to the performance of
the employee’s duties, commits any serious breach of faith, or act of serious neglect or default, or performs any act,
or is guilty of any omission, the likely result of which is that the company or the business will be brought into disrepute.
The Company may also terminate immediately without notice and without payment in lieu of notice if the employee is
unable to perform duties due to illness, injury or incapacity.
If the Company terminates by giving 6 months written notice, the employee has no claim against the company for
compensation or damage in respect of the termination other than payment of 6 months of his remuneration.
Termination Provisions
Key Management Personnel (members of the Navitas Leadership Team) from 1 July 2013 to 30 June 2014
Executive
Term
Romy Hawatt (resigned 31 March 2014)
This executive was engaged by the Company pursuant to a consultancy agreement.
No term is specified.
Notice Period
Either party may terminate by providing 3 months’ written notice.
If the consultant materially breaches the consultancy agreement or breaches a material term of the consultancy
agreement, the Company may give a default notice to the consultant specifying the nature of the breach and
requiring the consultant to remedy the breach within 10 business days of receipt of the default notice. If the
consultant fails to rectify the breach within this time period, the Company may terminate the consultant’s
engagement by giving the consultant 10 business days written notice.
The Company may terminate without notice if the consultant engages in any fraud, material misconduct, willfully
fails to discharge his obligations under the consultancy agreement, engages in any other conduct which is likely,
in the reasonable opinion of the Company, to adversely affect the reputation of the Company or the Group, or the
consultant becomes bankrupt or makes an arrangement or composition with creditors.
Termination of the consultancy agreement does not entitle the consultant to any form of payment or compensation
by the Company, except for payment for services provided under the consultancy agreement up to the date of the
termination and subsequently invoiced.
Termination Provisions
Navitas Limited Annual Report 2015 081
Remuneration and shareholdings of directors and other key management personnel
The aggregate compensation made to key management personnel of the company and the Group is set out below:
Short term benefits
Post employment benefits
Other long term benefits
2015
$000s
2014
$000s
7,289
293
126
7,708
5,885
204
154
6,243
The detailed compensation of each member of key management personnel of the Group is set out on the following page.
Shareholdings of Key Management Personnel
The movement during the reporting period in the number of ordinary shares in Navitas Limited held, directly, indirectly or beneficially, by each key
management person, including their related parties, is as follows:
Balance at
1 July 2013
Additions
Disposals
Balance at
30 June 2014
Additions
Disposals
Balance at
30 June 2015
(i) Directors
Harvey Collins
Rod Jones
Tony Cipa (1)
Diana Eilert (2)
Ted Evans (3)
Tracey Horton
James King
Peter Larsen (3)
(1) Appointed 1 May 2014
(2) Appointed 28 July 2014
(3) Resigned 4 November 2014
(ii) Executives
43,948
45,017,995
-
-
60,000
-
50,000
28,727,357
73,899,300
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5,293,747)
43,948
45,017,995
-
-
60,000
-
50,000
23,433,610
-
-
10,000
-
-
2,000
-
-
(5,293,747)
68,605,553
12,000
Balance at
1 July 2013
Additions
Disposals
Balance at
30 June 2014
Additions
Disposals
Patrick Brothers (4)
Lyndell Fraser
Romy Hawatt (5)
Neil Hitchcock (6)
Bryce Houghton
Scott Jones (7)
Rob Lourey (6)
John Wood
-
52,476
-
-
97,009
-
-
122,160
-
161
-
161
-
-
1,334
161
-
-
-
-
(10,000)
-
-
-
-
52,637
-
103,161
87,009
-(7)
1,334
122,321
-
23,352
-
2,309
-
20,000
7,562
-
271,645
1,817
(10,000)
366,462
52,223
(25,500)
2,694,265
(4) Appointed 10 November 2014
(5) Resigned 31 March 2014
(6) Appointed to the Navitas Leadership Team effective 1 September 2013. Mr Hitchcock’s balance at appointment was 103,000
(7) Appointed to the Navitas Leadership Team effective 1 July 2014. Mr Jones’ balance at appointment was 2,274,580
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
43,948
45,017,995
10,000
-
-
2,000
50,000
-
45,123,943
Balance at
30 June 2015
-
75,989
-
105,470
87,009
2,294,580
8,896
122,321
082 Navitas Limited Annual Report 2015
DIRECTORS’ REPORT (CONTINUED)
Directors’ and Executives’ remuneration
Short term benefits
2015
$
Salary &
Fees
Cash
bonus (i)
Non
monetary
benefits
Post-
employment
Super-annuation
Other
long term
benefit (ii)
Total
Performance
related %
Non-executive Directors
Harvey Collins
Tony Cipa
Diana Eilert
Ted Evans (1)
Tracey Horton
James King
Peter Larsen (1)
Executive Director (iv)
234,191
126,927
107,147
47,833
125,287
127,014
39,241
807,640
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
35,809
12,058
10,179
-
11,902
-
12,625
82,573
-
-
-
-
-
-
-
-
270,000
138,985
117,326
47,833
137,189
127,014
51,866
890,213
-
-
-
-
-
-
-
-
Balance of
Deferred
Cash
Balances
(iii)
-
-
-
-
-
-
-
-
Rod Jones
987,069
977,050
6,398
36,533
10,004 2,017,054
48%
79,339
Other Key Management Personnel (iv)
Patrick Brothers (2)
239,220
107,367
19,899
Lyndell Fraser
Neil Hitchcock
Bryce Houghton
Scott Jones (3)
Rob Lourey
John Wood
For notes see page 83
372,520
210,074
361,634
198,419
-
588
435,100
345,710
54,147
508,261
215,560
397,897
207,145
479,234
357,596
-
-
588
12,209
18,783
18,783
35,958
18,783
34,608
35,084
-
378,695
42,347
643,724
13,949
593,373
34,820
905,735
-
742,604
10,546
650,196
13,959
886,461
28%
33%
33%
38%
29%
32%
40%
15,378
93,026
15,139
25,131
(6,557)
26,659
109,772
3,780,935
2,618,921
81,620
210,741
125,625 6,817,842
38%
357,887
4,588,575
2,618,921
81,620
293,314
125,625 7,708,055
34%
357,887
Navitas Limited Annual Report 2015 083
Short term benefits
2014
$
Salary &
Fees
Cash
bonus (i)
Non
monetary
benefits
Post-
employment
Super-annuation
Other
long term
benefit (ii)
Total
Performance
related %
Balance of
Deferred
Cash
Balances
(iii)
-
-
-
-
-
-
-
25,037
1,444
-
8,665
-
35,000
70,146
-
-
-
-
-
-
-
236,997
17,057
123,886
102,340
129,272
102,340
711,892
-
-
-
-
-
-
-
37,960
108,047 1,763,825
34%
153,478
Non-executive Directors
Harvey Collins
Tony Cipa (4)
Ted Evans
Tracey Horton
James King
Peter Larsen
211,960
15,613
123,886
93,675
129,272
67,340
641,746
-
-
-
-
-
-
-
Executive Director (iv)
Rod Jones
1,025,973
591,845
Other Key Management Personnel (iv)
-
-
-
-
-
-
-
-
Lyndell Fraser
Romy Hawatt (5)
Neil Hitchcock (6)
Bryce Houghton
Rob Lourey (6)
John Wood
388,730
217,709
295,660
-
385,100
147,551
476,764
259,075
397,037
130,738
524,973
347,857
995
-
3,768
46,243
-
2,975
19,256
2,781
629,471
-
14,812
23,900
20,000
17,775
-
295,660
3,760
554,991
21,245
827,227
8,553
9,849
556,328
903,429
35%
-
27%
31%
24%
39%
78,070
-
20,049
38,831
-
102,463
3,494,237 1,694,775
53,981
133,703
154,235 5,530,931
31%
392,891
4,135,983 1,694,775
53,981
203,849
154,235 6,242,823
27%
392,891
(1) Resigned 4 November 2014
(2) Appointed 10 November 2014
(3) Appointed 1 July 2014. Remuneration is settled in Great British Pounds.
(4) Appointed 1 May 2014
(5) Resigned 31 March 2014
(6) Appointed 1 September 2013
(i) Cash bonus comprises the annual incentive (ValueShare Incentive Plan) payments payable in September of each financial year after review and confirmation by the Board. Under the terms
of the plan payments will only be made if the participant is an employee at the date of payment. The cash bonus includes the amount provided as payable in relation to the 2015 financial year,
adjusted for the difference between the amount provided for the in the 2014 financial year and the actual amount paid in September 2014.
(ii) Other long term benefits include movements in Long Service Leave.
(iii) Deferred Cash balances are the balances for key management persons (KMP) who hold a position as KMP at 30 June, and who are participants in the incentive scheme. As noted on page
77 of the Directors’ Report, for some participants in the ValueShare Incentive Scheme, rewards outside of the range of $0 to the participant’s Target Variable Pay are settled in three equal
parts, the first in the current year and the remainder in the two that follow. The Balance of Deferred Cash Bonuses is the total of these deferred amounts. It does not vest with the executive.
The executive is not entitled to any portion of the Balance of Deferred Cash Bonuses upon termination. For the purposes of the remuneration report the Balance of Deferred Cash Bonuses
does not form part of compensation for the year.
(iv) For these executives, at least 50% of the incentive payment will be used to pay for ordinary shares in the Company (at an issue price calculated as a volume weighted average market
price for the 5 trading days immediately before the date of issue) until such executives hold a beneficial interest in shares in the Company equal to the value of their fixed remuneration. This
requirement will be determined based on shareholdings in the Company as disclosed by these executives in August of each financial year. It is therefore not currently possible to quantify the
component of the cash bonus that will be used to buy ordinary shares in the Company.
Independent Audit and Remuneration Report
The required disclosures as included on pages 74 to 83 of this remuneration report have been audited by Deloitte Touche Tohmatsu.
The directors’ report, including the remuneration report, is signed in accordance with a resolution of the Directors.
R JONES
Group Chief Executive Officer
and Managing Director
Perth, Western Australia, 24 July 2015
084 Navitas Limited Annual Report 2015
The Board of Directors
Navitas Limited
Level 8, Brookfield Place
125 St Georges Terrace
Perth WA 6000
24 July 2015
Dear Directors
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Woodside Plaza
Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 (0) 9365 7001
www.deloitte.com.au
Navitas Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Navitas Limited.
As lead audit partner for the audit of the financial statements of Navitas Limited for the financial year
ended 30 June 2015, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
(ii) any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
A T Richards
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited.
Navitas Limited Annual Report 2015 085
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of Navitas Limited, I state that:
1. In the opinion of the Directors:
(a) the financial statements and notes are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the financial position as at 30 June 2015 and the performance for the year ended on that date of the
consolidated entity; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;
(b) the attached financial statements are in compliance with International Financial Reporting Standards, as stated in note 1.1 to the financial
statements; and
(c) there are reasonable grounds to believe that the Company will be able to pays its debts as and when they become due and payable.
2. This declaration has been made after receiving the declarations required to be made to the Directors in accordance with sections 295A of the
Corporations Act 2001 for the financial year ended 30 June 2015.
3. In the opinion of the Directors, as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed
Group identified in note 6.1.1 will, as a group, be able to meet any obligations or liabilities to which they are or may become subject, by virtue
of the Deed of Cross Guarantee.
On behalf of the Board
R JONES
Group Chief Executive Officer
and Managing Director
Perth, Western Australia, 24 July 2015
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Woodside Plaza
Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 (0) 9365 7001
www.deloitte.com.au
Navitas Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Navitas Limited.
As lead audit partner for the audit of the financial statements of Navitas Limited for the financial year
ended 30 June 2015, I declare that to the best of my knowledge and belief, there have been no
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
(ii) any applicable code of professional conduct in relation to the audit.
The Board of Directors
Navitas Limited
Level 8, Brookfield Place
125 St Georges Terrace
Perth WA 6000
24 July 2015
Dear Directors
contraventions of:
and
Yours sincerely
DELOITTE TOUCHE TOHMATSU
A T Richards
Partner
Chartered Accountants
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited.
086 Navitas Limited Annual Report 2015
Independent Auditor’s Report
to the members of Navitas Limited
Deloitte Touche Tohmatsu
ABN 74 490 121 060
Woodside Plaza
Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 (0) 9365 7001
www.deloitte.com.au
Report on the Financial Report
We have audited the accompanying financial report of Navitas Limited, which comprises the
statement of financial position as at 30 June 2015, the statement of profit or loss and other
comprehensive income, the statement of cash flows and the statement of changes in equity for the year
ended on that date, notes comprising a summary of significant accounting policies and other
explanatory information, and the directors’ declaration of the consolidated entity, comprising the
company and the entities it controlled at the year’s end or from time to time during the financial year
as set out on pages 34 to 71 and 85.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the consolidated financial statements comply with
International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control, relevant to the company’s
preparation of the financial report that gives a true and fair view, in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
Navitas Limited Annual Report 2015 087
Auditor’s Independence Declaration
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001,
which has been given to the directors of Navitas Limited, would be in the same terms if given to the
directors as at the time of this auditor’s report.
Opinion
In our opinion:
(a) the financial report of Navitas Limited is in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015
and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the consolidated financial statements also comply with International Financial Reporting
Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included on pages 74 to 83 of the directors’ report for the
year ended 30 June 2015. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion the Remuneration Report of Navitas Limited for the year ended 30 June 2015, complies
with section 300A of the Corporations Act 2001.
DELOITTE TOUCHE TOHMATSU
A T Richards
Partner
Chartered Accountants
Perth, 24 July 2015
088 Navitas Limited Annual Report 2015
ADDITIONAL INFORMATION
Additional information required by ASX and
not shown elsewhere in this annual report is
as follows. The information is current as at
28 August 2015.
Substantial Shareholders
The number of Shares held by the substantial
Shareholders, as disclosed in substantial
holding notices given to the Company, were:
Shareholder
Mr Rodney M Jones
Hyperion Asset Mgt
Fully Paid
Ordinary Shares
45,117,995
40,899,552
Goldman Sachs Asset Mgt
26,366,948
Dr Peter D Larsen
23,433,610
Voting Rights
The voting rights attached to the class of
Navitas fully paid ordinary shares as set out in
rule 111 of Navitas’ constitution are the right
to attend and vote at meetings of Navitas and
on a show of hands to one vote and on a poll
to one vote for each Share held.
Distribution of Shareholders and
their holdings
Size of holding
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001–and over
Total
Number of
Shareholders
1,694
1,689
453
300
75
4211
Number of holders of the class of Navitas
fully paid ordinary shares was 4,211.
Number of Shareholders holding less than
a marketable parcel of fully paid ordinary
Shares and their total value of Shares,
based on the market price on 28 August
2015 was 301 Shareholders holding a total
of 9,698 Shares.
None of the ordinary shares are subject to
voluntary escrow and there are no restricted
securities on issue.
The Company does not have a current on-
market buy-back for its shares.
There are no issues of securities approved
for the purpose of item 7, Section 611 of
the Corporations Act which have not yet
been completed.
Twenty Largest Shareholders
The twenty largest holders of Navitas fully paid ordinary Shares on the Company’s register as at 28 August 2015 were:
Rank Name
1
J P Morgan Nominees Australia Limited
Number of Shares
67,040,939
HSBC Custody Nominees (Australia) Limited
Remjay Investments Pty Ltd
National Nominees Limited
Landmark Holdings (WA) Pty Ltd
Wonder Holdings Pty Ltd
Cambo Investments Pty Ltd
Coolah Holdings Pty Ltd
Citicorp Nominees Pty Limited
RBC Investor Services Australia Nominees Pty Limited
BNP Paribas Noms Pty Ltd
Hoperidge Enterprises Pty Ltd
Mr Maxwell Charles Schroder
Ms Julianne Hannaford
Lily Investments Pty Ltd
Mrs Luniarty Kartosudiro
Pictorial Holdings Pty Ltd
Argo Investments Limited
Dasam Nominees Pty Ltd
BNP Paribas Nominees Pty Ltd
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Total
% of Issued
Capital
17.81
10.40
9.22
8.28
6.23
4.98
4.69
3.95
3.40
2.68
2.56
2.52
2.29
2.16
1.47
1.17
0.99
0.96
0.77
0.76
39,141,034
34,711,843
31,174,800
23,433,610
18,751,890
17,637,078
14,851,191
12,781,505
10,070,483
9,648,379
9,486,690
8,633,391
8,130,000
5,527,968
4,384,312
3,720,638
3,623,160
2,910,904
2,846,227
328,506,042
87.29
Navitas Limited Annual Report 2015 089
INVESTOR INFORMATION
Annual General Meeting
Change of address
Navitas publications
The Company’s annual report is the
main source of information for investors.
Shareholders who do not wish to receive
the annual report should advise the Share
registry. Navitas’ financial reports are also
available on the Navitas website (see below).
Navitas website
Information about Navitas and the Group is
available on the internet at navitas.com.
The Annual General Meeting of Navitas will
be held at:
Perth Convention and Exhibition Centre
Amcom Suite
21 Mounts Bay Rd
Perth
Western Australia 6000
on Wednesday 11 November 2015
at 9.00am (AWST).
Full details of the meeting are contained
in the notice of annual general meeting
sent with this annual report for those
Shareholders who elected to receive a hard
copy annual report.
Shareholder enquiries
All enquiries should be directed to the
Company’s Share registry at:
Computershare Investor Services Pty Limited
Level 2, 45 St Georges Terrace
Perth WA 6000
T 1300 55 70 10
F +61 8 9323 2033
All written enquiries should include your
Holder Identification Number as it appears
in your holding statement along with your
current address.
It is important that you notify the Share
registry immediately in writing if there is any
change to your registered address.
Lost holding statements
Shareholders should notify the Share registry
immediately, in writing, so that a replacement
statement can be arranged.
Change of name
Shareholders who change their name should
notify the Share registry, in writing, and
attach a certified copy of a relevant marriage
certificate or deed poll.
Tax File Numbers (TFN)
Although it is not compulsory for each
Shareholder to provide a TFN or exemption
details, for those Shareholders who do not
provide the necessary details, the Company
will be obliged to deduct tax from any
unfranked portion of their dividends at the
top marginal rate. TFN application forms
can be obtained from the Share registry,
any Australia Post Office or the Australian
Taxation Office.
090 Navitas Limited Annual Report 2015
GLOSSARY
ACAP
ACBT
AMEP
AQTF
ASIC
ASQA
ASX
Australian College of Applied Psychology Pty Limited
Australian College of Business and Technology Pvt Ltd
Adult Migrant English Program
Australian Quality Training Framework
Australian Securities and Investments Commission
Australian Skills Quality Agency
ASX Limited
ASX Listing Rules
The official listing rules of the ASX
ATTC
BAC
BCUIC
Board
CELUSA
Constitution
Australian TESOL Training Centre
British Accreditation Council
Birmingham City University International College
The board of directors of Navitas
Centre for English Language at the University of South Australia
The constitution of the Company
Corporations Act
Corporations Act 2001 (Cth)
CRIC
CRICOS
Cambridge Ruskin International College Limited
Commonwealth Register of Institutions and Courses for Overseas Students
Curtin College
Colleges of Business and Technology Pty Ltd trading as Curtin College
Curtin Singapore or
Curtin Singapore Campus
Curtin University of Technology Singapore Campus
Curtin Sydney or CUS
Curtin University of Technology Sydney Campus
Deakin College
Melbourne Institute of Business and Technology Pty Ltd trading as Deakin College
DIBP
Directors
DoET
EBITDA
EduGlobal
ELICOS
EOL
EPS
ESOS Act
EVA®
Eynesbury
Department of Immigration and Border Protection
Directors of Navitas
Department of Education and Training
Earnings before interest, taxation, depreciation, amortisation and goodwill impairment
EduGlobal China Limited
English Language Intensive Courses for Overseas Students
Employment Overseas Limited
Earnings per share
Education Services for Overseas Students Act 2000 (Cth)
Economic Value Added®
Educational Enterprises Australia Pty Ltd trading as Eynesbury International
Navitas Limited Annual Report 2015 091
FAU
FEE-HELP
FIC
Navitas at Florida Atlantic University
A government loan scheme to help eligible non-Commonwealth supported (fee paying)
students pay their tuition fees
Fraser International College
Group or Navitas Group
Navitas and its subsidiary companies
GMAT
GRE
Graduate Management Admission Test
Graduate Record Examination
Hawthorn-Melbourne
Hawthorn Learning Pty Ltd trading as Hawthorn-Melbourne
HIC
HSA
HSS
HTS
ICM
ICP
ICRGU
ICWS
KPI
LIBT
LLNP
LTM
LTUSC
MOOC
MQC
HIBT Limited trading as Hertfordshire International College
Health Skills Australia Pty Ltd
Humanitarian Settlement Services
Highly Trusted Sponsor
International College of Manitoba
International College Portsmouth Limited
International College Robert Gordon University
International College Wales Limited
Key Performance Indicator
London IBT Limited
Language, Literacy and Numeracy Program
La Trobe Melbourne
La Trobe University Sydney Campus
Massive Open Online Courses
Macquarie City Campus
Navitas or Company
Navitas Limited ABN 69 109 613 309
Navitas at UNH
Navitas at the University of New Hampshire
NRI
NCPS
NPAT
NQF
pcp
PDIC
PEP
PIBT
Navitas Resources Institute
Navitas College of Public Safety Pty Ltd
Net profit after tax
National Qualifications Framework
prior comparative period
Plymouth Devon International College Limited
Professional and English Programs
Perth Institute of Business and Technology Pty Ltd
092 Navitas Limited Annual Report 2015
GLOSSARY (CONTINUED)
PIBT IEC
PIBT International English Centre
PY
QAA
QIBT
RTO
SAE
SEE
Shareholder
Shares
SIBT
SOL
SPP
Professional Year
Quality Assurance Agency for higher education
Queensland Institute of Business & Technology Pty Ltd
Registered training organisation
SAE Institute
Skills for Education and Employment
A holder of a Share
Fully paid ordinary shares in the capital of the Company
Sydney Institute of Business and Technology Pty Ltd
Study Overseas Limited
Special Preparatory Program
StudyLink
Learning Information Systems Pty Ltd trading as StudyLink
TEQSA
TESOL
TVP
UCC
UCIC
UMass Boston
UMass Dartmouth
UMass Lowell
UNIC
UKBA
UPD
VET
WACC
WKU
WSUIC
Tertiary Education Quality and Standards Agency
Teachers of English to Speakers of Other Languages
Target variable pay
University of Canberra College
UC International College
Navitas at University of Massachusetts Boston
Navitas at University of Massachusetts Dartmouth
Navitas at University of Massachusetts Lowell
University of Northampton International College
UK Border Agency
University Programs Division
Vocational education and training
Weighted average cost of capital
Navitas at Western Kentucky University
Western Sydney University International College
Navitas Limited Annual Report 2015 093
094 Navitas Limited Annual Report 2015
CORPORATE INFORMATION
Directors
Executive Director
Mr Rod Jones
Non-Executive Directors
Mr Harvey Collins
Mr Tony Cipa
Ms Diana Eilert
Ms Tracey Horton
Mr James King
Company Secretary
Mr Hugh Hangchi
Registered Office
Navitas Limited
Level 8, Brookfield Place
125 St Georges Terrace
Perth WA 6000
Share Registrar
Computershare Investor Services Pty Limited
Level 2, 45 St Georges Terrace
Perth WA 6000
Auditor
Deloitte Touche Tohmatsu
240 St Georges Terrace
Perth WA 6000
Internet address
navitas.com
Navitas Limited Annual Report 2015 095
NAVITAS LIMITED
Level 8, Brookfield Place
125 St Georges Terrace
Perth WA 6000
T +61 (8) 9314 9600
F +61 (8) 9314 9699
E info@navitas.com
navitas.com
ABN 69 109 613 309
NAVC150630-1340 0915_AW