Shares in Navitas have taken a beating after the education provider's first-half profit was hit by the closure of some colleges and a decline in government-backed language training contracts.
Navitas made a net profit of $24.7 million in the six months to December 31, down 54 per cent from a year ago.
The company said its profit was impacted by the loss of earnings following the closure of the Macquarie and Curtin Sydney colleges, and a $7.5 million devaluation of tax loss assets in the US as a result of recently passed tax cuts.
Also, net profit in the first half of the 2016/17 year was boosted by a $17.3 million gain from the conversion of the Edith Cowan College into a joint venture.
Shares in Navitas dropped 49 cents, or 9.4 per cent, to a three month low of $4.75, as the company's result missed some analysts' expectations.
Navitas said revenue and earnings from its continuing operations rose in the six months to December, largely driven by an eight per cent rise in student enrolments in the group's university partnerships division.
That division delivers education programs via pathway colleges and managed campuses to students seeking to attend university.
It operates in Australasia, North American and Europe and generates 65 per cent of Navitas's revenue.
Chief executive Rod Jones said Navitas delivered strong academic outcomes for students in the first half of the financial year, and achieved growth and improved cash flows from continuing operations.
"Global demand for education and training continues to increase steadily, providing Navitas with growth opportunities in traditional and emerging fields," He said.
Strong cash flow enabled Navitas to maintain its fully franked interim dividend of 9.4 cents per share, but it anticipates a move to partially franked dividends in the near future because it has run out of franking credits.
NAVITAS PROFIT HIT BY CLOSURES AND TAX CHANGES
* Half-year profit down 53.6pct to $24.7m
* Revenue down 4.6 per cent to $456.7m
* Interim dividend unchanged at 9.4 cents
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