Ferret's Stock to Watch: IBT EDUCATION LIMITED
09:24, Thursday, 9 November 2006
A COMPANY INVOLVED IN GLOBAL LEARNING EXPANSION
Sydney - Thursday - November 9: (RWE Aust Business News)
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OVERVIEW
********
The education business looks to be booming and IBT Education
(ASX:IBT) is on the bandwagon.
Chairman Harvey Collins told shareholders at the annual meeting
this week that the first full financial year since listing in late 2004
was another year of sound financial performance.
IBT reported net profit of $31.5 million.
In light of this performance the board declared a final dividend
of 4.8c per share which, together with the interim dividend of 4.7c per
share, delivered a total dividend for the year of 9.5c per share fully
franked.
This year the company has taken steps to strengthen further its
strategic competitive position.
Mr Collins said that IBT is a leading international education
services company with operations on five continents providing
education services to thousands of students world-wide.
As recently as two years ago, the IBT Group was a loose
federation of individual pathway colleges linked by a common business
model and group of common shareholders.
It is now an integrated group which offers pathway, degree,
English language, migrant training and vocational education programs.
During the last financial year, IBT added operations in Canada
and China as well as new businesses in Australia.
"Whilst IBT continues to be a leader in Degree and pathway
programs, we are also now a major provider of English as a second
language training, vocational and workforce training and student
recruitment," Mr Collins said.
"Acquisition has played a key role in IBT's corporate strategy
and we will continue to seek out acquisition opportunities to strengthen
and expand our business.
"Our success in identifying and capturing a number of business
opportunities in the last year has meant that the scale and scope of
IBT's operations has expanded significantly, he said.
Highlights of the 2006 year included:
* Underlying revenue climbed 64 per cent to $226 million
* The company began the Curtin Sydney operation while ACL and
CSMK were acquired.
* Recent fee increases have been more effective in the current
2007 year and further increases are planned.
Mr Collins told shareholders that this growth has presented new
challenges for the team led by managing director and CEO Rod Jones.
This was why the company engaged GEM Consulting to assist with a
review of IBT's organisation structure.
This review has now been completed and has outlined an optimal
new corporate structure for IBT that better equips the group for future
growth.
An important factor is that the three executive directors with
the company since listing - Mr Jones and directors Peter Campbell and
Peter La rsen - are all major shareholders in IBT Education.
Mr Jones has committed to stay with the company and they all have
a significant stake in the long-term performance of the company.
During the year, Professor Di Yerbury joined the board as a
non-executive director.
She was Australia's first woman Vice-Chancellor on joining
Macquarie University in 1987.
IBT has a strong balance sheet as a result of its ongoing cash
generation.
In addition, many of the new growth initiatives opening up for
IBT do not require significant capital investment.
Following the review of IBT's capital structure, the board
decided to recommend a return of 10c per share, or approximately $35
million, to shareholders.
The move was approved by shareholder at the annual meeting and
the return will improve company's balance sheet efficiency and increase
total shareholder returns.
IBT Education has put in place a new $100 million loan facility
with Westpac to provide the funding flexibility to pursue new
opportunities as they emerge.
SHARE PRICE MOVEMENTS
*********************
Shares of IBT Education yesterday gained 4c to $1.94. Rolling
high for the year is $2.36 and low $1.615. All-time high is $2.57.
Dividend is 9.5c to yield 4.9 per cent. Earnings per share is 9.1c
while price/earnings ratio is 21.32. The company has 906 million shares
on issue with a market cap of $672.9 million.
At the annual meeting, Mr Jones told shareholders that the
company recorded another solid set of results.
Consolidated revenue rose 64 per cent on a like-for-like basis
for the year to $226 million, primarily due to the revenue generated from
the new acquisitions ACL and CSMK (now renamed Pollin8).
Underlying EBITDA rose 18 per cent to $47.9 million, reflecting
the very strong contribution from both ACL and Pollin8, as well as
continued growth from existing colleges.
Net profit was $31.5 million, up 2 per cent on the previous year.
However, after removing the impact of amortisation and
impairment, adjusted net profit was $35.2 million, up 15 per cent on
the prior year comparative, and adjusted earnings per share was up 15 per
cent to 10.2c per share.
"I believe this was a commendable performance that again
demonstrates the resilience of the IBT Group's various businesses in a
competitive market environment," Mr Jones said.
"Our portfolio of businesses also continues to generate strong
cash flows, with net operating cash flow for the year up 24 per cent to
$41.4 million."
At year end, IBT had cash and cash equivalents totalling $60.3
million.
Operationally, the last financial year has been one of the
busiest in the history of IBT and has led to achieving significant
diversification in its portfolio of businesses.
During the year the company made four acquisitions:
* Pollin8 - a provider of professional development and
information technology training solutions to a range of corporate
clients. IBT says vocational education and training is a significant
growth area and believes Pollin8 provides it with an opportunity to
expand in this area of the market;
* Foundation courses to domestic and international students in
Sydney;
* Australian College of Applied Psychology - a provider of
vocational programs and higher education qualifications in psychology,
counselling and people management and leadership. Like Pollin8, ACAP
provides IBT with exposure to a different but growing area of vocational
training; and
* LM Training Specialists - a provider of services to migrants,
including English language classes. LM Training is another specialist
provider of English language training that the company says is an
outstanding fit alongside ACL.
Mr Jones continued, "As you will note, all these acquisitions
diversified or solidified our presence in a particular segment of the
education services market where we believe we can compete and grow our
business successfully in the years ahead, whilst creating value for
shareholders.
"In managing this diversification we have been careful not to
take our eye off our existing pre-university and pathway colleges.
"At the commencement of second semester 2006, IBT's Australian
college equivalent full-time student units stood at 6,476, up 2 per cent
on the same semester last year.
"This is a commendable performance given the increasingly
competitive international market for overseas students," Mr Jones added.
During the year, IBT Education continued the expansion of its
existing pathway college business.
Major new initiatives this year included:
* Curtin Sydney - a new Sydney city college established by IBT
in conjunction with Curtin University, which commenced operations in
July 2005. Curtin Sydney performed extremely well in its first year, and
whilst it reported a loss in the last financial year, it is well on
track to make a positive contribution this year;
* Macquarie City College - will commence operations in the first
semester of 2007. Whilst it is not expected to report a positive result
this financial year, IBT expects this college to become a substantial
contributor in the near-term; and
* Fraser International College - IBT took its first steps into
the lucrative North American education market this year with the
establishment of Fraser International College, a new college located on
the campus of Simon Fraser University in Vancouver.
Fraser International College accepted its first students in
September.
But an important beachhead for IBT is the launch of EduGlobal
into the Canadian and wider North American education market in years to
come.
EduGlobal will conduct its business through a network of offices
in China and the company is confident that it will make an immediate
contribution to IBT's bottom line this year.
BACKGROUND
**********
IBT Education was listed on the Australian Stock Exchange on
December 15, 2004.
The company believes it is an industry leader in providing
pre-university and university pathway programs for domestic and overseas
students, as well as Year 10-12, ELICOS and English preparatory courses,
Foundation, Degree, Pre-Masters and Masters programs in a wide range of
disciplines.
With a network of colleges situated around Australia, and
internationally in England, Africa and affiliates in Sri Lanka and
Indonesia, IBT provides a huge choice of locations at which to study as
well as a diverse choice of study programs that offer a fast, affordable
pathway into second-year university, in association with leading English
and Australian universities.
All IBT colleges provide modern, world-class facilities to
enhance learning, including computer laboratories, libraries and access
to its associated universities extensive resources.
Every year, IBT helps around 10,000 students achieve their dream
of furthering their university education.
It claims that wherever you are going, IBT has the education
solution to match your needs.
Any Australian IBT college now has access to the Australian
government FeeHelp system when students chose to study the company's
higher education courses.
ENDS
Copyright © 2006 RWE Australian Business News. All rights reserved.
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