Thank you for standing by, and welcome to the NextEd Group Limited FY25 results. I would now like to hand the conference over to Mr. Mark Kehoe, Chief Executive Officer.
Good morning, and thanks for joining us. My name's Mark Kehoe, CEO, and with me is Andrew Nye, CFO and COO. FY25 was a year of stabilization and early execution. When I stepped in last November, the business was confronting real challenges. It also had clear strengths in brands and the footprint, our people, and compliance, and those are the strengths that have underpinned the reset and the momentum we'll outline today.
We've moved quickly and decisively, but there's still much to do, and we remain focused and disciplined on that journey. We'll cover four areas today. The key highlights: I'm going to cover off the strategic review from reset to rebuild. I'll then hand across to Andrew to present the financial operating performance before I close, and we take questions. So looking at our key highlights and financial summary.
The financial strength, policy shift, and new leadership together show that we're a stronger simpler business with growing momentum. We finished FY25 with a materially improved cash position and no debt. We've reset the base. The cost structure is simplified. The margins are improving as those changes flow through. T here are early tailwinds. The national planning level has lifted, and there's positive bipartisan support for the international student sector.
We're positioning around AI and skills, and we're aligning our portfolio to the markets with strong demand. We've built a platform for leverage. Our more simplified operations mean incremental revenue now drops more effectively through to earnings. We've delivered a strategic focus. The business now has a clear discipline plan anchored to profitability and growth. F inally, the business has seen a leadership reset with a new CEO, a new CFO, a new refreshed board bringing fresh accountability and pace.
This is the foundation that we've built over the last nine months. Turning to our FY25 key highlights, the reset is in motion. Firstly, looking at our financial performance, cash improved to AUD 18.9 million, up from AUD 13.7 million as of December 2024. We carry no debt, and we're on much stronger footing. Our operating costs were reduced by AUD 5.6 million, or 13.2%, through permanent measures executed early. Revenue was AUD 95.9 million, down 13.9% in a challenging regulatory environment.
Underlying EBITDA remained resilient at AUD 14.3 million, demonstrating financial and management discipline. We've made operational progress. As I mentioned before, that leadership reset is complete with the new CEO, CFO, and a refreshed board. Market share gains are clear. Greenwich VET is up 84%, and English language, or ELICOS, is up 11% year on year.
As part of a broader industry consolidation, we integrated International House, bringing AUD 16 million in forward revenue, four million of which was recognized in FY25. W e've taken strategic actions. The restructures delivered a simplified, cost-effective shared services layout. We're expanding the portfolio with new VET courses and extending higher ed under Greenwich. I mportantly, we're now positioned for recovery with a strategy focused on profitability, portfolio, and growth.
Tailwinds are emerging, and NextEd's really positioned to benefit. There's a positive shift underway. On the 4th of August, just over three weeks ago, the government announced that the student National Planning Level will rise to 295,000 in 2026. That's 25,000 more places than in 2025. This commitment to manage sustainable growth provides greater certainty and stability for the international education sector.
The government has become more supportive, with international education again recognized as critical to both the economy and to skills. I think with bipartisan backing, we can be confident that these policy settings will be durable. A gainst that backdrop, Greenwich has a clear advantage. So our visa approval rates are averaging 32% above the industry average, highlighting our quality and compliance levels.
That International House integration showed the strength and flexibility in our systems and also reflected the stronger relationship we've built with regulators. T hose factors are driving market share gains and positioning us well for the next phase. T hen more broadly, NextEd has a structural advantage. We're positioned at the intersection of high-growth sectors such as healthcare, hospitality, IT, and higher education pathways. Our compliance reputation is an asset, particularly as low-profile providers exit.
So in summary, as the sector recovers, NextEd is set to benefit given our mix and our quality and our footprint. Looking now at our financial performance, so the significant cost actions and a change in revenue mix has enabled us to protect earnings and stabilize our cash flows and strengthen our position through the year. A t a glance for FY25, revenue was AUD 95.9 million, down on the prior year in a challenging environment.
Underlying EBITDA of AUD 14.3 million showing resilience despite the revenue decline. Statutory impact was a loss in the mid-teens driven by one-off non-cash impairments on surplus property requirements. Operating cash flows were AUD 11.3 million, up strongly year on year. W e closed the year with AUD 18.9 million in cash, up from December and with no debt.
The key takeaway is that despite the lower revenue, cost discipline and mix improvements have meant we delivered steady earnings and a stronger balance sheet. Andrew's going to go through this in more detail shortly. Turning now to the strategic review, one of my first priorities as CEO. Its purpose really was to simplify and focus the business and build a platform for profitable growth. What we're doing now is we're moving from reset to rebuild.
This is what we found in that review. We operate in a large fragmented AUD 20 billion relevant market with attractive growth outlook. There's a need to simplify our brands, our courses, and operations. We've got strong brand equity and compliance in the network, especially at Greenwich. We've got market leadership in ELICOS and room to grow in the other sectors: vet, higher ed, domestic, and other segments.
Then this is what we've done. We've restructured the organization. We've refreshed the leadership. We've anchored the strategy to three pillars: profitability, portfolio, and growth. I'm going to go through those in a little bit more detail shortly. We've put enablers in place, including culture and our people, our capability, partnerships, and technology. W e've defined a framework for discipline consolidation where it strengthens our long-term position.
A t the center of the reset is a clear framework for execution built around three pillars. The first one, improved profitability. What does that mean? Enhancing our margins, looking at pricing discipline, our utilization, system development, and improving the student experience. The second is enhancing the portfolio where we're looking to sharpen the course mix by subject or duration and outcomes and really to ensure that they're aligned to demand.
The third one is to grow new business areas, and we're exploring opportunities in B2B, branded programs, micro-credentials. We've also recognized the need to transform AIT. T hen these three pillars are supported by the enablers: resetting our purpose and values with our people, which are a critical asset for us, and upgrading our capabilities and structure. I'll now take you through each of those pillars, those three pillars, in a little bit more detail.
At the center of our reset is a focus on profitability. U nder pillar one, we're taking decisive actions to strengthen the economics of the business. We're rationalizing our campus footprint, reducing rent, and exploring subleasing opportunities. We're lifting efficiency through better utilization of classroom and resources, tighter pricing, and commission discipline. W e're embedding systems and automation while sharpening marketing and, really importantly, that student experience.
These actions are already delivering results. Gross margin has improved by almost two percentage points. Shared services are now in place and silos removed, and we're making tangible property savings through lease exits and sublets. These are permanent changes that will flow through into FY26. Now looking at pillar two, our focus is on enhancing the portfolio, and Greenwich is at the heart of that strategy. Greenwich really continues to be both a strength and a growth platform for the business.
In ELICOS, our market share is now close to 17% and still growing, up 11% year on year. In vocational or vet, the momentum has also been very strong. Revenue in healthcare, hospitality, and management grew by almost 80%. That growth has translated directly into market share gains, with our vocational share now at 2.4%, up more than 80% year on year.
Then looking on that current state and looking ahead, we're really building on that momentum. We're really excited to announce that we're extending the Greenwich brand into higher education, launching in September with the first intakes in February 2026. That creates a pathway model that extends student lifetime value. It strengthens our positioning and also opens up new markets. T his is part of the broader restructure of AIT that I'll cover shortly.
We're expanding our VET offering into early childhood with a Certificate III launching in January 2026 and a diploma in early 2027. The Greenwich is a really powerful brand that continues to evolve from its roots as a language market leader into a multi-sector education platform. Then still under pillar two, let me turn to the other parts of the portfolio briefly, starting with AIT.
We've completed a restructure, essentially eliminating AIT as a business unit and folding it under Greenwich and domestic. A more cost-effective shared services layout is now in place, and the course mix is being realigned to skills demand. Importantly, this is where Greenwich will now extend into higher education, creating longer student pathways and strengthening our position. Looking at domestic vocational, we've put new leadership in place with a new general manager appointed in July.
The focus here is on core skills such as aged care, hospitality, and social work, and we look to diversify funding sources and courses. Go Study Australia, our international student recruitment business, remains steady and agile, and we're expanding into new markets. Finally, under pillar three, we're focused on disciplined growth, leaning into future skills while being selective about where we expand.
We're going to be exploring new B2B and branded programs and testing short courses to capture demand in more flexible short-form learning. We're open to portfolio expansion, but only where it strengthens long-term resilience and fits with our strategy. I think the context here is really important. AI disruption will reshape many knowledge-based jobs.
The human-facing roles in the area like aged care, childcare, hospitality, and social and community services are much more resilient. Government projections point to a strong growth in these areas over the coming years, and NextEd's position to capture that demand. The key is that our growth agenda is disciplined, data-driven, and targeted to areas where we know demand is strong. W ith those strategic priorities in place, I'm going to hand across to Andrew now to take you through the financial and operating performance in more detail.
Thanks, Mark, and good morning, all. This is my first time presenting the results of NextEd Group as Chief Financial and Operating Officer. I joined the business four months ago, and since commencing, I've focused on understanding the financial foundations and the reset that has been put in place. In the next few slides, I'll step through our financial performance, cost management actions, cash flow, balance sheet, and segment results before finishing with a closer look at the performance of Greenwich, our flagship brand. For FY25, group revenue came in at AUD 95.9 million, a decline of 13.9% compared to FY24. This reflects lower international English language enrollments and softer demand for technology and design courses. Gross profit margin after academic salary and agent fees improved by 1.9 percentage points, with higher margin courses and efficiency measures both contributing.
Operating cost measures taken early in the year delivered permanent savings of close to AUD 6 million, and combined with gross profit margin improvements delivered underlying EBITDA of AUD 14.3 million and flat year-on-year underlying EBIT. The statutory net loss after tax of AUD 14.6 million was impacted by non-cash impairments on surplus property requirements and restructuring costs.
On this page, you can see the detail of our cost-out program. In total, we have reduced operating costs by AUD 5.6 million, or 13.2%. The largest savings came from non-academic salaries, down AUD 4.1 million, or 15%. We also delivered AUD 1.1 million of savings in property costs as we exited surplus sites and AUD 0.7 million in other operating expenses. These changes are not temporary cuts. They represent a structural simplification and create a permanently lower cost base.
We expect a further AUD two million of benefits before measured reinvestment to flow into FY26 as the full impact of restructuring annualizes. In addition, the work on campus consolidation is ongoing, particularly in Sydney and Melbourne, where space is actively being marketed for sublease to align with current utilization requirements. This program represents a reset of the organization's cost structure, providing operating leverage into the recovery.
Turning to cash flows, operating cash flows strengthened materially in FY25. This improvement reflects the combination of cost measures and changes in the mix of working capital, in particular a reduced reliance on short-cycle English revenues. Investing cash flows were modest at AUD 0.7 million, largely related to the International House student acquisition. This is in sharp contrast to the prior year where we were completing several campus builds. Financial outflows totaled AUD 10.7 million, mainly related to campus lease repayments.
These were lower than FY24 as we exited several properties and reduced the lease base. Overall, the profile here shows a business that has simplified its cash requirements, strengthened operating cash flows, and is no longer consuming cash for capital projects. This is a stronger and more sustainable cash flow position than the business has been in in recent years. On the balance sheet, we closed the year with AUD 18.9 million in cash, a stronger position than in December.
Right-of-use assets reduced, owing to AUD 8.4 million of non-cash impairments on surplus properties, which brings the asset base in line with current utilization requirements. Contract liabilities increased, reflecting the upfront payment cycles of our international vocational courses. Lease liabilities reduced due to time expiry and previously mentioned lease exits, with no major new leases executed in the period.
Importantly, working capital is now more balanced and less dependent on the volatility of international English tuition volumes than in the past two years. The result is a cleaner, more stable balance sheet with stronger liquidity. Looking at performance by segment, technology and design performance was challenged. Student enrollments were impacted by government policy settings and the pace of change in the technology landscape, leading to further cost actions being taken in June.
With the pace of change, particularly around future AI education needs, there is a growing market opportunity for higher ed providers, and we are currently reviewing course mix to align with future demands. In our domestic vocational business, steady growth in community services courses underpinned revenues during the year. This is an attractive market segment for us, with well-publicized skill shortages in key areas of aged care, childcare, and social work.
These shortages are structural and long-term, and the resulting commercial opportunities play directly to our strengths as a trusted, compliant provider. Now, with a refreshed leadership team in place, the division is well-positioned to expand and capture opportunities. Go Study performed well, increasing both revenues and EBITDA. The business continues to be an important part of the portfolio, and we are actively pursuing growth opportunities in new international markets.
Finally, the corporate segment now reflects only true group-level costs, primarily group salaries, board and listing costs, audit, and insurance. This allocation gives a clearer picture of true operating performance across each business unit, and the comparatives have also been restated with a bridge to the previous disclosure set out in the appendices. Greenwich, our flagship international brand, performed strongly in what was a challenging year.
The business has successfully diversified beyond English language courses, which now represent less than 40% of total enrollments. We are increasingly focused on high-margin vocational segments such as management, healthcare, and hospitality, which offer longer student tenure and higher lifetime value per student. The International House student acquisition added AUD 4.2 million in revenue in the year, with a further AUD 12 million to be recognized over the next 12 to 18 months.
Greenwich also continues to benefit from its strong compliance reputation. As Mark mentioned earlier, visa approval rates were around 32% above the industry average, a major competitive edge in the current regulatory environment. Overall, Greenwich remains a cornerstone of our international offering, and we are confident the business is well-positioned to take advantage as the international education sector recovers.
In summary, FY25 was marked by revenue pressure, but our decisive cost reset, stronger cash flows, and a cleaner balance sheet have stabilized the business. Our portfolio is now clearer and more disciplined with Greenwich anchoring our international platform, and whilst there is work to be done to improve our domestic vocational business, recognized long-term skill shortages are expected to create significant structural demand and opportunity for NextEd. Mark.
Thanks, Andrew. So as we close, let me bring the story together. We've stabilized the business and reset the base. We've got a clear strategy focused on profitability, portfolio, and disciplined growth. The execution is underway, as you've seen. Costs have reset, and the structure has streamlined. I mportantly, the environment is improving, with policy stabilizing, the outlook more positive, and we're positioned in areas where demand is expected to grow.
As you can see, we've moved quickly and decisively, but there's still more to do, and we remain focused and disciplined. N ine months in as CEO, I'm confident NextEd is stronger, more disciplined, and positioned to create value for students, partners, and shareholders as the environment improves. So thank you for your support. Andrew and I now look forward to your questions.
Thank you, Mark and Andrew. We'll now move on to Q&A. Please submit your questions, which I'll read out for Mark and Andrew to respond to. Our first question relates to cash flow. The question is, in terms of the operating cash flow result, how much cash came in from the International House deal? Were there any one-off type items within operating cash flow, particularly in working capital, that benefit the FY25 results that might not be repeatable in FY26?
Are you seeing any other M&A opportunities like International House, given the ongoing tough macro environment? In terms of leases, have you already been able to sublet any sites, or are they all still being marketed? I see on Slide 19 that the contracted lease profile does not really drop away significantly until FY25. Does this mean if subletting is not achieved, that lease costs are not really going to change over the next two to three years? Thank you, Peter, from Select Equities.
Thanks, Peter. That's quite a question. I'll handle a couple of the questions, and hand over to Mark for the others. So in terms of the operating cash flow result, the revenues from the International House deal were AUD 4 million for the year, and the cash into our business was about AUD 6 million. So a fairly standard working capital laid out under that deal. So were there any other types, one-off types of operating cash flow? No, there weren't any significant one-off operating cash flows in the year. Have we benefited? Has the result benefited that might not be repeatable in FY26? No. So the underlying cash flow is as is, and the working capital trajectory is as I'd expect to flow out into FY26. I might cover the other parts, and Mark, you can handle M&A at the end.
In terms of leases, we have been able to sublet a number of, sorry, not sublet. We have been able to exit a number of smaller leases as they finished their contractual term. We are marketing certain floors within our Sydney and Melbourne campuses. You do note the contracted lease profile actually stays fairly steady and slightly increases for the next couple of years. That is the result of CPI changes in our current leases. So yes, you're right. If we're not able to sublet those properties, that would be our current profile for the next period of time, and over to you, Mark, for M&A.
Yes, so the question was, are we seeing any other M&A opportunities like International House, given the ongoing tough macro environment? Yes, so definitely a number of smaller RTOs have ceased business over the last six months. None of them are of the scale of International House. In many cases, when that happens, given Greenwich's strong standing and market share you could see before, yeah, we pick up many of those students organically. In some instances, we have entered into arrangements with RTOs for students to be offered places at Greenwich. They are much, much more than International House. Y es, so the answer to that question, we haven't seen any of that scale before or since, rather, but we continue to see consolidation in this sector, and where that occurs, we'll look to do similar deals.
Next, we have a question from Alan from Canaccord, and it's on student intakes. The question is, could you talk to recent intakes for management, healthcare, and hospitality, and what does your visibility look like into upcoming intakes? Lease dynamics imply you are seeking to reduce your exposure here. Sublet likelihood and/or when do leases in Melbourne, Sydney roll off? IH looks to have gone well so far. Is this the case? What were the pain points, and would you do similar deals going forward?
Okay. I might answer a couple of these and hand it across to Andrew. So the intakes for management, healthcare, and hospitality remain steady, which is encouraging to see. In terms of IH, what were the pain points? What would you do similar deals going forward?
So there was, I guess, for the Greenwich team, that was a really complex and busy period over the Christmas period. W hat was encouraging was within two weeks of us signing that transaction, we had students enrolled to start at Greenwich. What was really pleasing for us in that deal was, obviously, there was some commercial benefit for us, but objectively, it was hard to argue that the outcome that we delivered for students was really terrific, and the feedback we've had from them has been great. Would you do similar deals going forward? Yes, we would. I think we've answered that question. I think I'll pass to Andrew on the lease dynamics.
Yes.
Has everybody answered that, maybe?
Fairly well answered. So on Slide 19 of the presentation, there is the contracted lease profile set out in a fair bit of detail by state. Y ou'll see that the majority of our larger leases roll off in FY29. In terms of our likelihood of subletting, it's not easy, as you know. We have external parties involved to help us with the process, and we'll continue as actively as we can.
There is a question on working capital and cash from Jack from Totus Capital. How has the working capital dynamics in the business changed over the last two years? Accounts receivables now are materially higher relative to the past. Is there any expected seasonality in cash generation first half versus second half?
I can take that question. So the dynamic, the working capital has changed, and it will continue to change as we shift from revenues majority English to revenues now getting closer to 50% English and the rest vocational. The difference in working capital is that we receive at the start of a term for vocational students the term fees in advance. So you will have seen in the 30 June balance sheet that the contract liabilities is higher, and that is a function of the term start in July.
So probably the other point to note is that you will have seen over time the contract liabilities, and I'll present it there in a fair bit of detail on Slide 21, just the shift in the composition of our working capital. So in June 2023, it was very much English-focused, so the net of receipts and tuition liabilities. Now it's really shifted to be more kind of evenly balanced across the various subjects that we teach within the Greenwich business.
Finally, a question on student caps. There's two parts to this question, and the question's from Matt from Macquarie Group . First part of the question: What impact do you think the recently listed student caps will have on volumes into FY26 and FY27? Is any recovery here factored into the growth outlook? Second part of the question: IDP Education today talked to student placement prices to grow high single-digit to low double-digit in FY26, which is ahead of market expectations of +5%. How are you thinking about pricing for International House going forward?
Okay. Thanks, Matt. I'll take this one. So first of all, just to explain, there are no caps anymore. The concept of caps, that term is no longer used. So what the government has done is they've developed what's called a national planning level, student planning level, which are the number of student places, if you like, available, new placements available in Australia. That's gone up 9% year on year. Importantly, there is no cap, and we found that this year as well.
So we exceeded our what's called a NOM, which was, if you like, a soft cap. Y ou can exceed that cap without the visa processing time might slow down a little bit, is what they're suggesting. We're still waiting for the details on that. So it's important that you understand that there are no caps anymore is the first thing. It's a bit early to say what impact we're going to see on that. As I said, we think that's part of the tailwinds.
Generally, what we're seeing internationally is student recruitment around the world is quite disruptive. Countries like Canada, the U.K., and the U.S. are going through similar issues. The comment, so the government's change in stance, generally has been received well by our agents. Anecdotally, they were surprised on the upside with that announcement, and I think it places brand Australia in a stronger position from that. In terms of our pricing for International House, in terms of improving profitability, we are looking at that on a regular basis, benchmarking ourselves against competition, and we'll raise prices as required.
That looks like the conclusion of all the question submissions. Thank you all for your time and interest today. We will now close the.