REG - Malvern Inter. PLC - Interim Results
26/09/2024 07:00
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RNS Number : 7050F Malvern International PLC 26 September 2024
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.
26 September 2024
Malvern International PLC
("Malvern" the "Company")
Interim results for the six months ended 30 June 2024
Malvern International plc (AIM: MLVN), the global learning and skills
development partner, announces its interim results for the six months ended 30
June 2024 ("H1 2024" or the "Period").
H1 2024 results
· Underlying revenues(1), excluding agent commission, increased 22% to
£5.10m (H1 2023: £4.18m).
· Underlying operating profit was £0.39m (H1 2023: underlying operating
profit £0.50m).
· Statutory profit after tax for H1 2024 was £0.14m (H1 2023: profit
£0.22m).
· Statutory earnings per share was 0.57p (H1 2023: statutory profit
0.91p).
· Cash at 30 June 2024 was £1.31m (FY 2023: £2.20 and H1 2023:
£2.12m).
· The Group continues to reduce its debt with BOOST&CO with £2.02m
remaining at the period end (FY 2023: £2.24m, H1 2023: £2.60m).
Operating highlights
· University Pathways student numbers increased by 59% in H1 2024 to 794
students (H1 2023: 500 students) studying in our centres, delivering revenue
and profit growth.
· Significant growth in Juniors ELT, with student numbers increasing by
37% in 2024 to 3,405 students (2023: 2,478 students) during the peak summer
season. Approximately 95% of revenues will be recognised in H2 2024.
· Compared to a 66% rebound in H1 2023, adult ELT centre revenue growth
for H1 2024 was flat, delivering a loss for the division due to the fixed cost
base of our year round centres.
· Appointed senior sales staff in H1 2024 to support Junior and adult
English Language Teaching (ELT) student numbers and revenue growth.
(1.) Total underlying revenues and operating profit are detailed in note 4.
Commenting on the results and prospects, Richard Mace, Chief Executive
Officer, said:
"Our performance in H1 2024 reflects the investment made across the business
over the past three years. This investment is ongoing, and we are currently in
a transition phase where top-line revenue growth is fueling further investment
in our sales and marketing, teaching, and back-office functions, setting the
stage for accelerated growth in 2025. Whilst Pathways and Juniors are thriving
due to strong demand, our adult ELT centres are not experiencing equal growth.
We are taking measures to address this, including launching low-season and
academic group programmes to improve staff and centre utilisation throughout
the year at our permanent schools.
Looking ahead, our forward bookings and revenue visibility for H2 2024 and
early 2025 provide confidence in Malvern's short- and long-term prospects,
with growth anticipated across all divisions in 2025."
For further information please contact:
Malvern International Plc www.malverninternational.com (http://www.malverninternational.com/)
Richard Mace - Chief Executive Officer Via Zeus
NOMAD and Broker https://zeuscapital.co.uk/
Zeus 0203 829 5000
Mike Coe / Sarah Mather
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.
Adult ELT at Malvern House Schools - British Council accredited English
Language Teaching at English permanent UK registered centres in London and
Manchester.
Junior ELT - fully-immersive residential English language centres and bespoke
language programmes for 13 to 18 year-old students with a choice of
high-quality locations.
For further investor information go to www.malverninternational.com
(http://www.malverninternational.com) .
Chief Executive's review
Malvern has seen a significant improvement in revenues, student numbers and
mix, and business pipeline in H1 2024, and we are pleased to have posted a
small profit for the Period.
Financial review
Underlying revenues, excluding agent commission, increased to £5.10m (H1
2023: £4.18m). Revenue growth was driven by higher student numbers in
University Pathways and, to a lesser extent, by Junior summer centres, where
revenue is predominately recognised in July and August (H2 2024).
Underlying operating profit was £0.39m (H1 2023: £0.50m) due to increased
strategic investment in people, travel and marketing activities.
Staff costs increased by £0.56m in H1 2024 compared to H1 2023. This rise
included £0.09m for additional summer centres staffing to accommodate the
higher numbers of Junior students, £0.14m for new sales staff, £0.07m in
additional bonus accruals, £0.03m in staff settlement costs, £0.07m in
additional recruitment costs and the remainder in salary increases and new
operational staff. Travel expenses also increased by £0.12m in H1 2024 as a
result of intensified business development and sales and marketing efforts to
accelerate revenue and profit growth across all divisions.
Statutory operating profit was £0.35m (H1 2023: £0.40m).
We remain profitable before tax, achieving an underlying profit of £0.18m (H1
2023: £0.34m). The statutory profit per share from operating activities was
0.57p (H1 2023: 0.91p).
We continue to maintain tight cost controls whilst making strategic
investments to increase the depth of our teams, systems and processes to
support our growth plans.
Cash balances at 30 June 2024 were £1.31m (31 December 2023: £2.20m and 30
June 2023: £2.12m). This reduction was due to the delay in Junior summer
centre receivables, which fell into H2 2024. As at the date of this interim
announcement, the majority of the Junior's receivables has now been collected.
We continue to pay down the BOOST&CO debt, which stood at £2.02m at the
period end, down from £2.24m as of 31 December 2023. No payments were made to
reduce the BOOST&CO debt in H1 2023.
Operating review
University Pathways
The number of students studying in our University Pathways programmes in H1
2024 (794 students) was significantly higher than H1 2023 (500 students). Of
these, 783 students were enrolled at the University of East London (UEL)
International Study Centre.
The performance in student recruitment is driven by our expanded international
sales team and our expertise in managing and converting the student pipeline
from across the world. We continue to invest in staffing and operational
arrangements, focusing on learning, teaching and pastoral excellence to
maximise student attainment and progression. This investment will increase
once we have successfully concluded negotiations with UEL for a contract
longer than the current one year.
Junior ELT
Junior Summer Centres continued to produce significant revenue growth combined
with high-quality delivery. Approximately 5% of revenues from our Junior ELT
centres is recognised in H1 2024, with the remainder falling in the six months
to 31 December 2024.
We successfully delivered eight centres (2023: five centres) over the summer
season to 3,405 students (2023: 2,478 students), with feedback noting the
high-quality delivery. This result produced significant revenue growth with a
more diversified nationality mix, with growth from China, Taiwan, and MENA.
Adult ELT
Revenues from ELT teaching delivered to adults at our year round centres in
Manchester and London King's Cross were flat compared to the same period in
2023. This is a mature market compared to Junior ELT with greater overseas
competition, and the sector has yet to recover fully to pre-pandemic levels
and is now at approximately 80% of the 2019 peak. Our school's fixed-cost base
means that the division is currently running at an operating loss . Without a
sudden and unexpected increase in adult student numbers short-term change is
unlikely.
The Group is taking measures to address this situation, and we hope to see
significant improvements in 2025. Following our investment in our ELT sales
and marketing team, we are improving the quality of our engagement with our
agent network. We are also focusing on increasing year-round staff and
premises utilisation with the development of low-season group programmes.
Investment in sales and marketing
During the Period, we were pleased to appoint Maya Frost as our new Marketing
Director and Matthew Hird as Global Sales Director for ELT programmes. Both
Maya and Matt have considerable experience in international student
recruitment. In addition, we have appointed several new senior sales staff in
key recruitment and under-represented markets.
These investments are crucial to growing the business and maintaining our
market position since both Pathways and the ELT market face increased
competition from UK and non-UK destinations. We welcome the Labour
Government's decision to maintain the Graduate Visa Route in its current form,
ensuring the UK continues to be an attractive destination for international
students. With universities increasingly reliant on international students to
cover their costs and enable them to sustain publicly funded teaching and
research activities, we are pleased that the uncertainty has been lifted.
Summary and outlook
We are pleased with our performance in H1 2024, having taken advantage of
improved market conditions following our investment in the business over the
last three years. Pathways and Junior ELT continue to be the strongest
performing divisions in terms of revenue and profit growth, and we are
addressing the issues we face in our adult ELT division.
Approximately 490 students will start courses in September 2024 at the Group's
University of East London ("UEL") International Student Centre, compared to
450 students in 2023. This solidifies the Group's partnership with UEL as one
of the UK's largest and most successful University Pathway centres.
The investment in business development has resulted in discussions with
several potential university partnerships in the UK and the US, some of which
are at an advanced stage. The opportunities offer different models, including
providing a comprehensive Pathway programme and exclusive direct recruitment
contracts. Additionally, discussions regarding a renewed contract remain
ongoing with UEL, and the Board anticipates an update on this before the end
of the year.
Junior revenues for the full year are expected to increase by 62% to £6.05m
(2023: £3.72m), with £5.73m to be recognised in H2 2024, underpinning the
Group's full-year revenues. The Junior ELT market is expected to grow, and our
investment in our ELT sales and marketing teams will enable us to harness the
available opportunities. For 2025 we are developing new academic and
low-season programmes to target a broad range of international markets and
their respective national holiday seasons to improve our income profile during
the year.
Whilst the adult ELT industry has yet to fully recover from the pandemic,
there is an opportunity for us to take a greater share of this market. We have
recruited new sales staff to cover Europe, Spanish Latin America, and the Far
East. Given the long ELT recruitment cycle, we don't expect to see a material
upturn until 2025.
Student numbers and revenues are growing steadily, and we have the skills in
house to drive our growth strategy and expand the business significantly. With
this solid foundation, we are increasingly confident in growing all areas of
the business.
Richard Mace
Chief Executive Officer
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2024
30-Jun-24 (£'000) 30-Jun-23 (£'000) 31-Dec-23 (£'000)
Underlying* Non-underlying Statutory Underlying Non-underlying Statutory Underlying Non-underlying Statutory
Revenue
Sale of services 5,098 ― 5,098 4,177 294 4,471 10,650 672 11,322
Agent commission income 1,038 ― 1,038 380 ― 380 936 ― 936
Total revenue 6,136 ― 6,136 4,557 294 4,851 11,586 672 12,258
Direct costs
Cost of goods sold (1,599) 3 (1,596) (1,504) (195) (1,699) (5,192) (430) (5,622)
Agent commission expenses (1,043) ― (1,043) (326) (13) (339) (894) (21) (915)
Total direct costs (2,642) 3 (2,639) (1,830) (208) (2,038) (6,086) (451) (6,537)
Gross profit 3,494 3 3,497 2,727 86 2,813 5,500 221 5,721
Other income 38 ― 38 35 ― 35 52 ― 52
Administrative expenses
Other operating expenses (1,201) (10) (1,211) (952) (65) (1,017) (2,041) (259) (2,300)
Depreciation & amortisation (158) 1 (157) (156) (23) (179) (311) (224) (535)
Salaries & employee benefits (1,780) (35) (1,815) (1,151) (102) (1,253) (2,695) (191) (2,886)
Share based payments ― ― ― ― ― ― ― (5) (5)
Operating profit/(loss) 393 (41) 352 503 (104) 399 505 (458) 47
Finance costs (210) (3) (213) (170) (7) (177) (360) 168 (192)
Profit/(Loss) before tax 183 (44) 139 333 (111) 222 145 (290) (145)
Income tax credit/(charge) ― ― ― 2 ― 2 ― (15) (15)
Profit/(loss) for the year being total comprehensive income attributable to 183 (44) 139 335 (111) 224 145 (305) (160)
owners of the parent
Profit/(Loss) per share (in pence)
30-Jun-24 (£'000) 30-Jun-23 (£'000) 31-Dec-23 (£'000)
Underlying Non-underlying Statutory Underlying Non-underlying Statutory Underlying Non-underlying Statutory
Total Comprehensive income/(expense) for the year after tax 183 (44) 139 335 (111) 224 145 (305) (160)
Earnings per share 0.75 (0.18) 0.57 1.37 (0.45) 0.92 0.59 (1.25) (0.66)
* See note 4 for a reconciliation of underlying.
UNAUDITED STATEMENT OF FINANCIAL POSITION
AS AT 30 June 2024
As at As at
30 June 2024 30 June 2023
As at
31 December 2023
£'000 £'000 £'000
Unaudited Unaudited Audited
Non-current assets
Property, plant and equipment 66 28 68
Goodwill 1,419 1,419 1,419
Right-of-use assets 1,554 2,046 1,711
3,039 3,493 3,198
Current assets
Inventory 16 ― 8
Trade receivables 1,874 706 441
Other receivables and prepayments 3,087 1,310 919
Cash and bank balances 1,311 2,119 2,196
6,288 4,135 3,564
Total Assets 9,327 7,628 6,762
Non-current liabilities
Term loan 1,299 1,623 1,812
Warrants 415 190 415
Lease liability 1,733 2,307 2,086
Deferred tax liabilities (6) 10 ―
3,441 4,130 4,313
Current liabilities
Trade payables 739 460 1,496
Contract liabilities 5,730 3,574 2,460
Other payables and accruals 1,820 1,400 1,523
Provision for income tax ― (2) ―
Term loan 651 888 313
Lease liabilities 563 588 419
9,503 6,908 6,211
Total Liabilities 12,944 11,038 10,524
Equity
Share capital 11,324 11,331 11,324
Share premium 6,798 6,798 6,798
Other reserve 12 - 12
Retained earnings (21,751) (21,539) (21,896)
Total Equity (3,617) (3,410) (3,762)
Total Equity and Liabilities 9,327 7,628 6,762
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 June 2024
Share Capital Share Premium Retained Earnings Other Reserve Attributable to Equity Holders of the Company
£'000 £'000 £'000 £'000 £'000
Balance at 1 January 2023 11,324 6,798 (21,763) 7 (3,634)
Total comprehensive income for the period ― ― 224 ― 224
Balance as at 30 June 2023 11,324 6,798 (21,539) 7 (3,410)
New shares from share-based payments including EMI Options ― ― ― 5 5
Add: Tax adjustments for prior years ― ― 27 ― 27
Total Comprehensive income for the period ― ― (384) ― (384)
Balance at 31 December 2023 11,324 6,798 (21,896) 12 (3,762)
Deferred tax adjustments 2023 ― ― 6 ― 6
Total comprehensive income for the period ― ― 139 ― 139
Balance at 30 June 2024 11,324 6,798 (21,751) 12 (3,617)
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 June 2024
Six Six
months ended months ended
30 June 2024 30 June 2023 Year ended
31 December 2023
£'000 £'000 £'000
Unaudited Unaudited Audited
Cash flows from operating activities
Profit/(loss) after tax 145 224 (160)
Deferred tax adjustment for 2023 (6) ― ―
Adjustments for:
Depreciation of tangible assets 157 179 536
Fair value movements ― ― 131
Share based payments ― ― 5
Loss on disposal of tangible assets ― ― 1
Impairment of trade receivables (90) 54 23
Release of accruals adjustment for depreciation charges related to early 12 ― (12)
termination
Finance cost 213 177 192
Increase in stocks (8) ― (8)
Taxation ― ― 17
Interest paid (80) ― (143)
343 634 582
Changes in working capital
Decrease/(increase) in debtors & prepayments (3,512) (529) 158
Increase in creditors 2,822 1,108 1,219
Net cash (used in)/ generated from operating activities (347) 1,213 1,959
Cash flows from investing activities
Purchase of property, plant and equipment (9) (7) (58)
Net cash used in investing activities (9) (7) (58)
Cash flows from financing activities
Decrease in finance lease liabilities (298) (269) (557)
Additional loan 22 ― 44
New share issue ― ― ―
Term loan - net (253) ― (374)
Net cash used in financing activities (529) (269) (887)
Net increase/(decrease) in cash and cash equivalents (885) 937 1,014
Cash and cash equivalents at beginning of period / year 2,196 1,182 1,182
Cash and cash equivalents at end of period / year 1,311 2,119 2,196
NOTES TO THE UNAUDITED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED
30 June 2024
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
Company 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 Group's unaudited interim results for the six months ended 30 June 2024
("Interim Results") are prepared in accordance with the Group's accounting
policies which are based on the recognition and measurement principles of the
UK-adopted International Accounting Standards in conformity with the
requirements of the Companies Act 2006. As permitted, the Interim Results have
been prepared in accordance with the AIM rules and not in accordance with IAS
34 "Interim financial reporting" and therefore the interim information is not
in full compliance with International Accounting Standards.
The interim condensed consolidated financial statements are prepared under the
historical cost convention as modified to include the revaluation of certain
financial instruments. The accounting policies adopted in the preparation of
the interim condensed consolidated financial statements are consistent with
those followed in the preparation of the Group's annual consolidated financial
statements for the year ended 31 December 2023
(https://www.malverninternational.com/annual-report-2023/). The principal
accounting policies of the Group have remained unchanged from those set out in
the Group's 2023 annual report and financial statements. The Principal Risks
and Uncertainties of the Group are also set out in the Group's 2023 annual
report and financial statements and are unchanged in the period.
The financial information for the six months ended 30 June 2024 and 30 June
2023 has not been audited and does not constitute full financial statements
within the meaning of Section 434 of the Companies Act 2006.
The Group's 2023 financial statements for the year ended 31 December 2023 were
prepared under UK-adopted International Accounting Standards. The auditor's
report on these financial statements was unqualified and did not contain
statements under Sections 498(2) or (3) of the Companies Act 2006 and they
have been filed with the Registrar of Companies. However, the auditor's report
did draw attention to a material uncertainty in relation to going concern.
3. Profit/(Loss) per share
The basic profit/(loss) per share is calculated by dividing the profit/(loss)
before tax 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 24,442,400 (H1 2023:
24,442,400).
4. Reconciliation of Statutory information to underlying information
Underlying information is provided because the Directors consider that it
provides assistance in understanding the Group's underlying performance.
The following table includes details of non-underlying items and reconciles
statutory information to underlying information:
Sale of services Agent commission income Total revenue Direct Gross Operating profit Finance costs Profit before tax
costs profit
June 2024 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000
Statutory Results 5,098 1,038 6,136 (2,639) 3,497 352 (213) 139
Malvern House Brighton ((a)) ― ― ― (3) (3) 9 3 12
Staff restructuring costs ((b)) ― ― ― ― ― 35 ― 35
Malaysia Liquidation ((c)) ― ― ― ― ― (3) ― (3)
Underlying Results 5,098 1,038 6,136 (2,642) 3,494 393 (210) 183
Sale of services Agent commission income Total revenue Direct Gross Operating profit Finance costs Profit before tax
costs profit
June 2023 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000
Statutory Results 4,471 380 4,851 (2,038) 2,813 399 (177) 222
Malvern House Brighton ((a)) (294) ― (294) 208 (86) 104 7 111
Underlying Results 4,177 380 4,557 (1,830) 2,727 503 (170) 333
Sale of services Agent commission income Total revenue Direct costs Gross profit Operating Profit Finance costs (Loss) / profit before tax
December 2023 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000
Statutory results 11,322 936 12,258 (6,537) 5,721 47 (192) (145)
Malvern House Brighton ((a)) (672) ― (672) 451 (220) 325 (168) 157
Share based payments ((d)) ― ― ― ― ― 5 ― 5
Warrants ((e)) ― ― ― ― ― 226 ― 226
Loan write-back ((c)) ― ― ― ― ― (97) ― (97)
Underlying results 10,650 936 11,586 (6,085) 5,501 506 (360) 146
a. Malvern House Brighton
During 2023 the Directors of the Company announced its decision to close
Malvern House Brighton. The decision was made following a review of the
viability of the school, informed by current operations, overhead costs,
projected student numbers, financial performance and the further investment
required for the school to achieve profitability which it had yet to do.
b. Staff restructuring costs
The management of the Group are completing a staff review to ensure that we
are using our resources as efficiently as possible.
c. Malaysia liquidation & loan write-back
Minor liquidator costs to close out the remaining issues from the Group's
former Malaysian entity.
d. Share-based payments
The Company has an Enterprise Management Incentive share option scheme for
certain directors and employees. Under the scheme, participants have been
awarded options to acquire up to a prescribed level of shares.
e. Warrants
As part of the term loan, BOOST & Co. was issued warrants over 1,725,113
shares. These warrants are exercisable at the Strike Price at any time over
the following 10 years since the inception of term loan in August 2019. The
warrants are revalued at fair value annually, any movement is expensed in the
Consolidated Statement of Comprehensive Income.
- ENDS -
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