Tuesday 27th September 2016
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Intueri Education Group shares slumped 87 percent after the company said there was a risk that an Australian government audit of its subsidiaries across the Tasman could threaten the viability of the company.
Audits by the Australian Skills Quality Authority (ASQA) found that Online Courses Australia (OCA) and Conwal & Associates weren't compliant with its standards. Intueri has until Oct. 21 to respond before the ASQA makes a decision, with possible outcomes ranging from a directive to correct areas of non-compliance through to the full cancellation of OCA and Conwal's registrations as registered training organisations (RTOs).
Cancellation of the registration for Conwal, which generates some 95 percent of OCA's revenue, "would place serious doubt on OCA Group’s ability to continue to operate, and also significantly impact Intueri’s ability to remain a going concern as it would be unlikely to meet its future banking covenants," Intueri said today. OCA accounted for 35 percent of Intueri's $50.1 million of revenue in the six months ended June 30.
The company is seeking legal advice and reviewing the audit reports as it prepares to respond, it said. Intueri "strongly cautions any investor seeking to trade in Intueri shares, and especially any investor seeking to acquire Intueri shares, to take full account of the information provided in this update before trading and consider delaying any such trading until further information is available".
Intueri was unable to update its 2016 earnings guidance until the audit outcome, it said. The non-compliance relates mainly to admissions procedures, assessment practices and learner support resources.
The shares had been halted for the announcement at 30 cents, having fallen 58 percent this year, and tumbled to just 4 cents when they resumed trading today, valuing Intueri at $4 million.
While it was too soon to predict an outcome of the audits, Intueri "believes cancellation of registration would be unwarranted".
"A number of the findings are capable of being disputed or remedied" although some are likely to be accepted, it said.
"Intueri is maintaining its normal operations, with continued bank support and no changes to its current access to the VET Fee-Help (VFH) scheme in Australia," it said.
A large percentage of students in Intueri's Australian online courses are funded through VET Fee-Help. The Australian government has imposed a cap on the scheme this year, holding all providers to their 2015 revenue levels. The Australian Federal Department of Education and Training is conducting a review of the scheme after a Senate inquiry found rampant abuse of the system and soaring costs, and legislation is expected to be introduced early next year.
The audits covered the period between April 2015 and July 2016, and were an assessment of compliance with the Standards for Registered Training Organisations 2015 and, additionally for Conwal, compliance with the VFH scheme where those requirements overlap or are relevant to the VET Quality Framework, Intueri said.
ASQA is Australia's national regulator for that country's vocational education and training sector, and regulates courses and training providers to ensure nationally approved quality standards are met.
The possibility of an Australian sanction adds to the list of setbacks Intueri has faced since listing in 2014, including New Zealand probes into student enrolments, a student death at its dive school, the sudden exit of its chief executive, and more recently amending its lending covenants that were at risk of being breached.
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