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) ********************************************************
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.
