REG - Malvern Inter. PLC - Half-year Report
15/09/2022 07:00
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RNS Number : 5117Z Malvern International PLC 15 September 2022
15 September 2022
Malvern International PLC
("Malvern" the "Company" or the "Group")
Interim results for the six months ended 30 June 2022
Malvern International plc (AIM: MLVN), the global learning and skills
development partner, announces its interim results for the six months ended 30
June 2022 ("H1 2022").
H1 2022 results
· Revenues from continuing operations increased 62% to £2.3m (H1 2021:
£1.4m)
· Operating loss (before depreciation, amortisation and finance
charges) of £0.34m (H1 2021: profit £9k)
· Loss before tax on continuing operations increased to £0.68m (H1
2021: loss £0.35m), largely due to an increase in strategic investment in the
Company's current, new and targeted revenue streams including new geographies
such as India and Nepal, China business development staff, key senior
management positions and a Chinese website.
· Loss per share on continuing activities of 0.03p (H1 2021: loss
0.02p).
· Cash as at 30 June 2022 was £0.88m (FY 2021: £0.40m and H1 2021:
£1.28m).
· Successfully restructured the Company's £2.6m debt facility with
BOOST&CO ("BOOST"), to free up working capital and support growth.
Operating highlights
· University Pathways applications increased significantly in H1 2022
for the 2022/23 academic year versus H1 2021.
· Entered a five-year collaborative partnership with UEL to be the
preferred supplier of student recruitment services in mainland China.
· English Language Training ("ELT") centre revenues were ahead of the
2019 pre-pandemic level during the peak summer period.
· Junior summer camps successfully returned at the end of H1 for the
first time since 2019. A total of 976 students signed up for our 2022 summer
camps, providing a very encouraging base for an expected increase in 2023.
Commenting on the results and prospects, Richard Mace, Chief Executive
Officer, said:
"The Company is seeing the benefits of its strategic investment over the last
two years in its brand, sales and marketing, management team, processes,
partnerships, products and student offering. The Board believes this
investment puts Malvern in a strong position to grow its market share for the
remainder of 2022 and beyond. Pre-booked and delivered revenues for H2 2022
are showing a three-fold increase on H2 2021 and are ahead of like-for-like
pre-pandemic levels of H2 2019. Pre-bookings indicate that the Group can
expect further growth in revenues in 2023."
This announcement contains inside information for the purposes of Article 7 of
the UK version of Regulation (EU) No 596/2014 which is part of UK law by
virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon
the publication of this announcement via a Regulatory Information Service,
this inside information is now considered to be in the public domain.
For further information please contact:
Malvern International Plc www.malverninternational.com (http://www.malverninternational.com/)
Richard Mace - Chief Executive Officer Via Communications Portfolio
NOMAD and Broker www.whirelandcb.com (http://www.whirelandcb.com/)
WH Ireland Limited
Mike Coe / Sarah Mather +44 117 945 3470
Notes to Editors:
Malvern International is a learning and language skills development partner,
offering international students essential academic and English language
skills, cultural experiences and the support they need to thrive in their
academic studies, daily life and career development.
University Pathways - on and off-campus university pathway programmes helping
students progress to a range of universities, as well as in-sessional and
pre-sessional courses.
Malvern House Schools - British Council accredited English Language Training
at English UK registered schools in London, Brighton and Manchester.
Malvern Online Academy - British Council accredited online school, offering
supported tuition to students from around the world in English language,
higher education, and professional education.
Juniors and summer camps - fully-immersive summer residential English language
camps and bespoke group programmes for 13 to 18 year old students.
For further investor information go to www.malverninternational.com
(http://www.malverninternational.com) .
Chief Executive's review
Malvern has seen a significant improvement in student numbers and business
pipeline in H1 2022 with revenues up 62% at £2.3m (H1 2021: £1.4m).
The ELT industry has returned after international borders reopened following
two years of travel restrictions. This is evidenced through revenues across
the Group's three ELT centres during the Company's busiest summer period,
coming in ahead of the pre-pandemic level in 2019.
University Pathways starters for the 2021/22 academic year were lower than
expectations due to the impact of global travel restrictions. As a result,
revenue recognition for our Pathways division was down in H1 2022. However,
momentum is building in the Pathways division and the South Asian market. This
is a key region for Malvern and our partners and is recovering strongly. The
bounce back, combined with strategic improvements and investment in the
operational structure that underpins the division, has significantly increased
the number of student applications passing through our sales and conversion
pipeline.
In addition, the successful return of our Junior summer camps at the end of H1
2022, has resulted in the full range of Malvern's revenue streams returning
operationally in a very positive way. Developing momentum across these
respective streams is encouraging. Under difficult circumstances, the
Juniors division was able to generate revenues of c.£1.35m, following two
years of no activity.
Financial performance
Revenues from continuing operations for H1 2022 were £2.3m (H1 2021: £1.4m).
The loss before tax was £0.68m (H1 2021: loss £0.35m). The loss per share on
continuing activities was 0.03p (H1 2021: loss 0.02p).
Overall revenue in H1 2022 was still suppressed by the impact of Covid.
Despite this, revenues in H1 2022 were up £0.88m on the comparison period.
This was largely driven by the encouraging return of ELT, and to a lesser
extent, our summer camps. Summer camp revenue is predominately recognised in
July and August 2022. The deferred income for summer camps in 2022 (£0.87m)
sits within contract liabilities on the balance sheet.
The increased operating loss in H1 2022 against the comparator period is
driven by a number of factors and is largely due to increased investment to
build our targeted revenue streams. This strategic expenditure included;
additional sales resource and a new website in China, the return of travel to
key markets around the world for sales activities and further investment in
our sales and management teams. The investment has already started to bear
fruit for the Company, most notably in UEL student numbers, and the
encouraging levels of students from MENA in our ELT centres during the summer
months. The launch of NCUK in H2 2021 during the height of Covid has also had
an impact on our cost of delivery in the Pathways division (the cost of
delivery is higher for smaller class sizes). NCUK student numbers and class
sizes are expected to be higher in the 2022/23 academic year. Finally, we
received less other income (£0.12m) in H1 2022 due to a drop in Covid
grants.
Cost control and cash flow management continues to be a focus for the Group.
In March 2022 the Company announced the successful negotiation to restructure
its £2.6m debt facility, following constructive discussions with BOOST the
fund manager acting on behalf of the Company's debtholder IL2 2018. Following
the debt restructure, the Board remains in regular contact with BOOST, the
fund manager acting on behalf of the Company's debtholder. BOOST has
reiterated its commitment to provide ongoing financial support to Malvern for
its short-term working capital requirements should it become necessary.
Cash balances as at 30 June 2022 were £0.88m (31 December 2021: £0.34m and
30 June 2021: £1.3m).
Current trading and outlook
The Board is confident in the outlook for ELT in 2023 and beyond. Malvern is
currently working with the biggest agencies in Brazil, Saudi Arabia, Kuwait
and Italy, and the pipeline of bookings is strong. The focus for the remainder
of 2022 is to capitalise on the Group's momentum, to continue to foster good
relations and build Malvern's agent network across other key regions
The MENA market was the first big market to return. This was helped by the
Government's announcement in early May 2022 that Saudi Arabia and Bahrain
nationals can apply to travel to the UK for tourism, business, study or
medical treatment for up to six months with an electronic visa waiver from 1
June 2022. The initiative has made it easier for visitors from the Gulf to
enter the UK and is intended to deepen the UK's partnership with these
countries, enhance diplomatic ties and economic prosperity.
Pleasingly, with travel restrictions removed in most key markets the 2022/23
Pathways academic year is shaping up to deliver a significant increase on
previous years, with 230 UEL students booked for September 2022 vs. 46 new
starters in the prior year). The increase is the result of the expansion of
the international sales team, improved processes to manage and convert the
student recruitment pipeline, and significant recruitment travel to key feeder
markets including joint marketing trips to India and Nepal with UEL.
Approximately one third of the income from the 2022/23 academic year will be
recognised in Q4 2022. The remaining two thirds will be recognised in H1
2023. The growth of the NCUK business is expected to move at a greater pace
when the Chinese market fully re-opens. It is expected that there will be
approximately 15 new starters in the September 2022 intake, with more expected
to join in January 2023.
Overall student numbers across our Pathways division in the academic year
2022/23 are currently projected to be more than double the previous academic
year.
In H1 2022 the Company announced the award of a five-year contract to be the
preferred supplier to recruit students from China for UEL. The primary aim of
the partnership is to rapidly increase the volume of Chinese students who will
enrol onto Pre-Sessional English, Pathways, Undergraduate and Postgraduate
degree programmes at UEL's three London campuses.
This is aligned with the Company's continued strategic, and considered,
investment in China and represents a growth of our University Partnerships
division. Some of this investment is being delayed due to operating
constraints caused by Covid lockdowns and travel restrictions in that region.
Malvern's first Chinese students are expected in January 2023 as part of the
2022/23 Pathways cohort, with growth projected for September 2023 after a full
student recruitment campaign.
The Board believes the continued investment in the business puts Malvern a
strong position to grow market share for the remainder of 2022 and beyond.
Pre-booked and delivered revenues for H2 2022 are showing a three-fold
increase on H2 2021 and are ahead of like-for-like pre-pandemic levels of H2
2019. Pre-bookings for 2023 are also healthy. This positive momentum and
strong indicators of a return to a pre-pandemic operating environment gives
the Board confidence in the Company's outlook.
Richard Mace
Chief Executive Officer
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2022
Six Six Year ended
months ended
months ended
31 December 2021
30 June 2022
30 June 2021
£'000 £'000 £'000
Note Unaudited Unaudited Audited
Revenue 2,308 1,424 2,418
Cost of services sold & operating expenses (2,687) (1,573) (3,557)
39 158 224
Other Income
Operating profit / (loss) (340) 9 (915)
Finance costs (148) (147) (270)
Depreciation & amortisation (188) (207) (409)
Loss before taxation (676) (345) (1,594)
Income tax charge - -
Loss for the period / year from continuing operations(1) (676) (345) (1,594)
Discontinued operations(1) - (21) 449
Loss for the period / year (676) (366) (1,145)
Loss attributable to equity holders (676) (366) (1,145)
Loss for the period / year (676) (366) (1,145)
Translation movement - (5) -
Total comprehensive loss for the period / year (676) (371) (1,145)
Continuing operations (676) (345) (1,594)
Discontinued operations - (26) 449
Total loss attributed to equity holders (676) (371) (1,145)
Loss per share on continuing activities Pence Pence Pence
Basic (2) 4 (0.03) (0.02) (0.08)
Diluted (2) 4 (0.03) (0.02) (0.08)
(1) The final two Singapore entities were put into liquidation in H1 2022.
(2)Calculated at the weighted average number of shares in issue during the
period at 2,138,199,951 (H1 2021: 1,648,655,085).
UNAUDITED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
As at As at As at
30 June 2022
30 June 2021
31 December 2021
£'000 £'000 £'000
Unaudited Unaudited Audited
Non-current assets
Property, plant & equipment 39 66 50
Goodwill 1,419 1,419 1,419
Right-of-use assets 2,384 2,426 2,554
3,842 3,911 4,023
Current assets
Debtors 945 542 782
Prepayments 224 133 213
Cash at bank and in hand 881 1,276 377
2,050 1,951 1,372
Assets classified for disposal 10 -
Total Assets 5,892 5,872 5,395
Non-current liabilities
Term loan 2,583 2,547 1,792
Warrants 225 64 73
Deferred tax liability 10 10 10
Convertible loan notes - 224 -
Lease liabilities 2,891 2,313 3,076
5,709 5,158 4,951
Current liabilities
Trade payables 346 408 413
Contract liabilities 1,812 221 899
Other payables and accruals 852 1,190 577
Convertible loan notes 227 100 276
Provision for income tax 5 31 21
Lease Liabilities 386 354 279
Term Loan 11 19 809
3,639 2,323 3,274
Liabilities directly associated with assets classified for disposal - 211 -
Total Liabilities 9,348 7,692 8,225
Equity
Share capital 11,252 11,193 11,217
Share premium 6,619 6,575 6,604
Reserves (21,327) (19,588) (20,651)
(3,456) (1,820) (2,830)
Total Equity and Liabilities 5,892 5,872 5,395
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2022
Share Capital Share Premium Retained Earnings Translation Reserve Capital Reserve Convertible Loan Reserve Total Reserves Attributable to Equity Holders of the Company
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2021 10,310 5,782 (19,704) 288 171 28 (19,217) (3,125)
Total comprehensive income for the period - - (366) (5) - - (371) (371)
Direct costs relating to issue of shares - (90) - - - - - (90)
New share issue 883 883 - - - - - 1,766
Balance at 30 June 2021 11,193 6,575 (20,070) 283 171 28 (19,588) (1,820)
Total comprehensive income for the period - - (780) (283) - - (1,063) (1,063)
Transfer of Capital reserve related to Singapore - - 171 - (171) - - -
New Shared from EMI Options 3 - - - - - - 3
New share issue 21 29 - - - - - 50
Balance at 31 December 2021 / 1 January 2022 11,217 6,604 (20,679) - - 28 (20,651) (2,830)
Total comprehensive income for the period - - (676) - - - (676) (676)
New share issue 35 15 - - - - - 50
Balance at 30 June 2022 11,252 6,619 (21,355) - - 28 (21,327) (3,456)
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
Six Six Year ended
months ended
months ended
31 December 2021
30 June 2022
30 June 2021
£'000 £'000 £'000
Unaudited Unaudited Audited
Cash flows from operating activities
(Loss) / profit after tax from
Continuing activities (676) (345) (1,594)
Discontinued activities - (21) 449
Adjustments for:
Depreciation & amortisation 188 207 409
Fair value movement on warrants - - 17
Fair value movement on convertible loan reserve - - -
Share based payments - - 3
Loss on disposal of discontinued operations - (20) (503)
Loss on disposal of tangible assets - - 2
Impairment of trade receivables - - 311
Finance cost 148 147 270
Interest paid (13) (54) (60)
Tax paid (16) - -
(369) (86) (696)
Changes in working capital
Decrease / (increase) in debtors & prepayments (175) 520 (111)
Increase / (decrease) in creditors 1,118 (848) (348)
Decrease in related parties - (40) (40)
Net cash used in operating activities 574 (454) (1,195)
Cash flows from investing activities
Purchase of property, plant and equipment (8) (5) (11)
Investment in Intangible Assets - - -
Net cash used in investing activities (8) (5) (11)
Cash flows from financing activities
Decrease in finance lease liabilities (176) (18) (162)
New share issue - 1,651 1,651
Term loan - Net 114 (2) (10)
Net cash used in financing activities (62) 1,631 1,479
Net increase in cash and cash equivalents 504 1,172 273
Effect of foreign exchange rate changes on consolidation - - -
Cash and cash equivalents at beginning of period / year 377 104 104
Cash and cash equivalents at end of period / year 881 1,276 377
NOTES TO THE UNAUDITED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED
30 JUNE 2022
1. General information
Malvern International plc (the "Company") is a public limited liability
company incorporated in England and Wales on 8 July 2004. The Company was
admitted to AIM on 10 December 2004. Its registered office is 3rd Floor, 1
Ashley Road, Altrincham, Cheshire WA14 2DT and its principal place of business
is in the UK. The registration number of the Company is 05174452.
The principal activities of the Company are that of investment holding and
provision of educational consultancy services. The principal activity of the
Group is to provide an educational offering that is broad and geared
principally towards preparing students to meet the demands of business and
management. There have been no significant changes in the nature of these
activities during the period
2. Significant accounting policies
Basis of preparation
The accounting policies adopted are consistent with those of the previous
financial year.
This interim consolidated financial information for the six months ended 30
June 2022 has been prepared in accordance with IAS 34, 'Interim financial
reporting'. This interim consolidated financial information is unaudited and
is not the Group's statutory financial statements and should be read in
conjunction with the annual financial statements for the year ended 31
December 2021, which have been prepared in accordance with International
Financial Reporting Standards (IFRS) and have been delivered to the Registrar
of Companies. The auditors have reported on those accounts; their report was
unqualified, but did include, without qualifying their report, references to
which the auditors drew attention by way of material uncertainty in respect of
the preparation of the financial statements on a going concern basis.
The interim consolidated financial information for the six months ended 30
June 2022 is unaudited. In the opinion of the Directors, the interim
consolidated financial information presents fairly the financial position, and
results from operations and cash flows for the period. Comparative numbers for
the six months ended 30 June 2021 are unaudited.
This interim consolidated financial information is presented in £ sterling,
rounded to the nearest thousand.
3. Dividend
No interim dividend for this financial year is proposed.
4. Loss per share
The basic loss per share is calculated by dividing the loss attributable to
ordinary shareholders by the weighted average number of ordinary shares in
issue during the relevant period. The weighted average number of shares in
issue during the period was 2,138,199,951 (H1 2021: 1,648,655,085).
The diluted loss per share is calculated by dividing the loss attributable to
ordinary shareholders by the weighted average number of ordinary shares in
issue during the relevant period diluted for the effect of share options and
warrants in existence at the relevant period. The weighted average number of
shares in issue diluted for the effect of share options and warrants in
existence during the period was 2,138,199,951 (H1 2021: 1,648,655,085).
5. Share capital
On 3 February 2022 the Company announced the conversion of £50,000
convertible loan notes to shares at 0.142 pence per share adding 35,211,724
new shares. As at 30 June 2022, the total number of Ordinary Shares held in
the Company was 2,144,230,688 (30 June 2020: 2,087,467,240).
6. Subsequent events
In August 2022, the Company announced that it has allotted 50,000,000 new
ordinary shares of 0.1p each pursuant to the conversion of £50,000 of the
loan notes at a conversion price of 0.1 pence per share (being the average
price of the five business days prior to the conversion date) that were
otherwise redeemable on 31 July 2022. Following the loan note conversion, a
further £178,102 Loan Notes remain outstanding which is the final balance
redeemable or convertible on 31 December 2022.
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