TAFE NSW IT upgrade issues to bring Seek results down
Seek expects that its financial results in the second-half of the 2015 financial year will be affected by results in Seek Learning.
The company has reported that it expects earnings before interest, tax, depreciation, and amortisation (EBITDA) in FY15 will be between AU$31 million and AU$33 million.
Seek CEO Andrew Bassat has blamed the lower than expected results on the one-off issues that has arisen from an IT systems upgrade undertaken by TAFE NSW.
"Seek Learning had fulfilled its sales obligations but TAFE NSW's IT issues resulted in errors and significant delays in the enrolment process, ultimately leading to incompetent enrolments and very high withdrawal rates," he said.
Latest Australian news
"This has been an ongoing issue. Until recently based on discussions with TAFE NSW, we believed the issues would be resolved and the financial impact mitigated. Unfortunately, this has not eventuated."
Bassat added that incoming education reforms are also expected to impact the Seek Learning business in the future.
"Seek is supportive of the overall VET fee-help reforms that protect the education sector. Reforms implemented to date have not impacted Seek Learning," he said.
"However, other announced reforms will have a negative financial impact on certain Seek Learning partners when they are finalised and implemented."
Despite this, Bassat reaffirmed that the company's aggressive investment in new initiatives will improve overall revenue in the future, noting a number of new products and services will be launched in FY16.
"We are confident that the re-investment in new initiatives combined with Seek's market leadership across its large and growing markets will generate a strong return on investment," he said.
In turn, Seek Group expects growth in revenue and EBITDA to be moderately lower than growth in H2 FY15, due to its re-investment focus. It added its underlying net profit after tax in H2 FY15 to be broadly in line with H1 FY15 of AU$94.1 million.
During the 1H FY15, Seek reported that it achieved AU$395.3 million in revenue and AU$168.5 million in EBITDA.