Intueri first-half profit drops 43% on year-earlier one-time gains; revenue climbs

 Intueri Education Group [NZX: IQE], whose chief executive Rob Facer left suddenly this month, posted a 43% decline in first-half profit, saying a gain in revenue wasn't enough to offset the benefit of finance and other income in 2015 that wasn't repeated in the latest year.

Net profit fell to $3.5 million in the six months ended June 30, from $6.1 million a year earlier, the Auckland-based company said in a statement. Sales rose 17% to $50.1 million.

Underlying earnings before interest, tax, depreciation and amortisation were $10 million in the first half, down from $10.5 million a year earlier, and the company said today that it expects a "softer second half-year anticipated due to lower expected enrolments across all sectors". Guidance for full-year ebitda of about $15 million was subject to confirmation of a $A6 million lift in its funding cap from Australia's Department of Education, down from $21.5 million last year, it said.

"Intueri continues to trade profitably and we are heading into the second half of the year with a clear strategy and plan in place," chairman Chris Kelly said. "Our focus is on right-sizing and restructuring our organisation to meet the changing regulatory and operating environment. A number of initiatives are in progress and we expect to see initial benefits in the second half with full benefits being realised from FY17 onwards."

The company named chief financial officer Rod Marvin as acting CEO when Mr Facer quit this month and today said it had embarked on a recruiting process for a permanent replacement.

Online revenue jumped 90% in the first half to $18 million, while domestic revenue slipped 10% to $19.7 million, which it said reflected a drop in net enrolments at colleges that are being restructured. International revenue rose 8% to $10.9 million.

Net debt rose to $72.6 million from $52.7 million at January 1, largely due to $19.2 million used for acquisitions. The current debt to ebitda ratio of 3.2 times is forecast to increase and the company has agreed on amendments to its lending covenants with its banks "to include sufficient headroom to allow up to 5.75 times debt/ebitda ratio for the next 12 months". Its fixed cover charge covenant has been set at 1.25 for next the 12 months, it said.

As a result of the banking covenant amendments, Intueri has suspended dividend payments to concentrate on reducing debt, it said today.

Intueri's shares last traded at 30c and have fallen 58% this year. They listed at $2.35 in May 2014 and peaked at $3.35 in September 2014. Since then the company has missed prospectus forecasts and has been investigated by the Serious Fraud Office and its Quantum Education Group and Dive School units have been reviewed by the Tertiary Education Commission. It suspended dividends in February pending the TEC review. It has shed 70 staff and in May directors agreed to cut their fees as the company sought to slash costs.

In March this year it was ordered to pay about $150,000 in reparations to the family of a foreign diving student who died during training after pleading guilty to one charge under the Health and Safety in Employment Act, in addition to a $54,000 fine. In June, TEC said Intueri must refund $1.47 million plus tax after an investigation into its dive school showed some student enrolments between 2009-2014 could not be validated and some courses under-delivered against their funding agreement.

(BusinessDesk)

Click the hamburger symbol top right of our homepage to access the Rich List 2016 and other