What do profits signal? Navitas earnings soar in slump by Sara Rich Education provider Navitas has achieved a 32 per cent rise in full-year protit and says the global financial crisis may be working in its favour, with another year of double-digit earnings growth expected. Net profit for the year ended June 30 climbed to $49.2 million compared with $37.4 m3 year ago, while revenue rose 36 per cent to $470.7 m. The Perth-based company provides university pathway programs for domestic and international students, as well as language training, work-force education and student recruitment services. Navitas chief executive Rod Jones said the company, which had low debt levels and good cashflow, had not been affected by the downturn and that student numbers were at record highs. Last financial year, the number of students in Navitas’s university programs surged 26 per cent to about 20000. In total, there are about 45.000 domestic and overseas studen’s using the education provider's services. “When employment opportunities reduce, many students turn back to education,” Me Fones said. He said this had helped drive a 22 per cent increase in earnings before interest, 8% depreciation and amortisation to $77.1 m for the company. Earnings per share climbed 32 per cent to 14.3c, while operating cashilow was up 33 Pet cent at $104.3 m. Navitas declared a final dividend of 8.8c, up from 6.2c last year, taking the full ye" payment to 14.3¢, compared with the previous year's 10.9 canned with CamScanne canned with Vamocanne! id research | elmer ne lil PART 3 Accounting,; i 10 per cent sas financial Year was the fifth year in a row that Navitas achieved more than 10 pe! Browth in earnings, revenue and ing cashflow. 7 operating cashflow. 60. © company’s share price climbed 5.45 pet cent, or 15c yesterday to $2.9 ralian.com.au, Source: Excerpts from The Australian, 5 August 2009, p. 24, www.theaustralian.com, Questions i \'s earnings prospects. 1. Navitas’s announcement of soaring profit is a strong signal of the firm’s earnings pr : itas do in relation to Other comments in the article reinforce that signal. What could Navitas lo its profits to strengthen the signal even further? Explain your ans rial piovided by Navitas’s 2. What factors might increase or decrease the credibility of the signal pr , announcement and press attention? . ‘compensation 3| Whatde vou ekpectwillibeahe inact br the Soaring’ profits on management compet contracts of Navitas? oo