Intueri Education Group lowered its 2016 earnings guidance, saying deeper cost cuts and the decision to sell its dive school aren't enough to offset weaker enrollments and one-time restructuring costs.
Underlying earnings before interest, tax, depreciation and amortisation are forecast to be $9.5 million in calendar 2016, down from the $15m ebitda it forecast with its first-half results in August, the Auckland-based education provider said in a statement. It earned $21.5m on that basis in 2015.
Intueri shares have shed 92 per cent of their value this year to last trade at 5.9 cents in the face of a raft of bad news in New Zealand and Australia. The amended full-year guidance assumes an A$6 million uplift in Australian government funding which is being restructured for 2017.
Audits by the Australian Skills Quality Authority (ASQA) found that Intueri's Online Courses Australia (OCA) and Conwal & Associates weren't compliant with its standards. Intueri has until November 6 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).
The company said current Australian funding to Conwal "is sufficient to maintain current activities", which won't be affected if the assumed uplift isn't granted. But it said the amount of bank debt to be repaid will be impacted.
"The current financial outlook will require Intueri's banking arrangements to be amended by the end of 2016 and Intueri is working closely with its bank to achieve this", it said. The company said its bank, ANZ Bank New Zealand, "remains supportive of Intueri's strategy of restructuring its New Zealand operations."
The company said it is too soon to give 2017 guidance, given outstanding issues with Australian education authorities, but it does expect a stronger year in New Zealand with "a $5 million to $6 million uplift in 2017 ebitda due to the dive school divestment, Quantum and D&A restructuring, the benefits of amalgamation and other cost initiatives".
Last month Intueri said it will merge six training schools in New Zealand into a single entity, an amalgamation that it says will simplify its relationship with the Tertiary Education Commission and the NZ Qualifications Authority and reduce administration while phasing out the name of the Quantum school being investigated by the Serious Fraud Office.