• Sporadic growth is unpredictable with IEL’s business model and unable to forecast periods of slower growth.
• Currency conversion risk.

Figure 1: Revenue by segment

Source: Company

• FY18 Results – key highlights. 1. Revenue of $487.2m was up +25% on a constant currency basis over pcp, with volume growth across all segments underpinning revenue growth. 2. EBITDA at $89m, up +28% on a constant currency basis. EBITDA margin was 18.3%, an increase from 17.4% in FY17, driven by IELTS margin expansion and inclusion of Hotcourses earnings which are at +90% margin. 3. NPATA up to $55.3m, which equates to +27% gain on a constant currency basis. 4. The board declared a final dividend of 6.5 cents per share (60% franked). 5. Strong cash generation with gross operating cash flow of $101m, up +31%, reflecting 113% conversion from reported EBITDA. 6. Capex of $28.5m, with major investments being SP digital platform and new SP offices.
• English Language Testing (IELTS) (~63% of revenue). Revenue of $306.8m was up +22.4% (+24% on a constant currency basis), driven by +25% increase in IELTS volume, with IEL expanding its IELTS services to Uzbekistan, Nigeria and Switzerland and IELTS India returning to strong growth following the impact of demonetization in FY17. The average test fee for IELTS declined -2.5% to A$269 (on a constant currency basis, the average test fee fell -1%), adversely impacted by currency and mix shift. IEL has begun its global rollout of computer delivered IELTS with the online test now being offered in 11 countries
• Student Placement (~25% of revenue). Total revenue increased +19% to $122.7m, on a constant currency basis, driven by strong growth of +45% in revenue of multi-destination student placements. IEL saw volume up +15.1% to 39,700 driven by multi-destination volume growth of +49.5% with a notable +126% growth in volumes in Canada and +60% growth in volumes in India. However multi-destination fee fell -3% on a constant currency basis. Australia posted moderate growth in volumes (up +3%) reflecting tighter new migration policies in the country, however the Average Application Processes Fee in Australia rose +5%, benefitting from contract changes.

• English Language Teaching (~5% of revenue). Revenue increased +4.7% (+8% on constant currency) to $22.2m with course numbers up +9% on pcp to 83,300. Average prices decreased -3.6% but were mostly flat (-1%) on a constant currency basis.
• Advertising and Events (~6% of revenue) – Strong growth. Revenue of $31.9m was up +108.5% driven by the newly acquired Hotcourses business, providing +26% increase in international web traffic. Hotcourses revenue was up +22% with margin of 90%.
• No guidance for FY19. No specific guidance was provided but the CEO noted, “Company’s priorities remain the roll-out of both computer-delivered IELTS and the global digital platform and we are excited to build on the positive momentum gathered this year as we progress these industry-transforming initiatives.”