Intueri suspends dividends pending TEC review; 2015 earnings meet reduced guidance

Thursday 11th February 2016

Intueri Education Group, the private training college under investigation by the Serious Fraud Office, has suspended dividends pending the review by the Tertiary Education Commission funding agency, and says 2015 earnings met its downgraded guidance.

The Auckland-based company won't pay any more dividends until the TEC completes its review of funding for Intueri's Quantum Education Group and Dive School units to meet the Crown entity's funding conditions, it said in a statement.

Underlying earnings before interest, tax, depreciation and amortisation was $21.5 million in calendar 2015, meeting guidance of between $20.5 million and $23.5 million which was cut three times last year. Intueri didn't provide an underlying ebitda figure for the prior year, which strips out acquisition costs, impairments and other one-off costs, instead reporting statutory ebitda of $17.9 million.

"There have been significant changes in the vocational education sector recently which are having a material impact on our operations," chief executive Rob Facer said. "Our priority is to evolve and adapt to meet these market conditions and identify opportunities for continued growth."

The Quantum school is also the subject of a SFO investigation, with the white-collar crime investigator seeking information dating back to 2012 from the college, while the TEC has restricted enrollments for unfunded students at Intueri's Quantum school. The company said the TEC restriction will reduce fee revenue by between $8 million and $9 million, and the training college has embarked on a strategic review to align capacity with the lower numbers.

Quantum generated 20 percent of Intueri's revenue in 2015 which will drop to less than 10 percent in 2016, and the company will write down the value of the college in its 2015 accounts.

"Intueri is awaiting the outcome of the TEC and SFO reviews, at which time it will consider legal remedies and recourse against the original vendors," it said.

The announcement of the SFO last month triggered a sharp selloff in Intueri's shares, which last traded at 28 cents, and have plunged 61 percent so far this year. That adds to their 72 percent slump through 2015.

The company bought the Quantum school in 2014 leading up to its listing, when Intueri raised $62 million at $2.35 a share to pay for a series of acquisitions. In December, the Financial Markets Authority said the offer document for that float could have been clearer, but wouldn't take any further action.

Intueri anticipates 2016 earnings will be "slightly lower" as a reduction in student numbers at Quantum, though it anticipates growth from its international business and flat earnings at its Australian online division.

The company still has the support of its banks, who have agreed indicative terms for an $80 million three-year refinancing of its debt facilities, which are likely to be in place by the end of the month.

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