TIDMMLVN
RNS Number : 1845K
Malvern International PLC
04 May 2022
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
04 May 2022
Malvern International plc
("Malvern", the "Company" or the "Group" )
Final results for the year ended 31 December 2021
Malvern International plc (AIM: MLVN), the global learning and
skills development partner, announces its preliminary results for
the year ended 31 December 2021.
Results
-- Revenues increased 27 per cent. to GBP2.42m (2020: GBP1.90m).
The operating loss for the year was GBP1.32m (2020: loss GBP1.33m)
reflecting strong cost control measures coupled with increased
investment in our sales and marketing team to ramp-up student
recruitment efforts in key territories.
-- The loss for the year from continuing operations was GBP1.59m
(2020 loss: GBP1.66m), resulting in a loss per share on continuing
operations of 0.08 pence (2020 loss: 0.23 pence).
-- The total loss including discontinued operations was GBP1.15m (2020 loss: GBP2.14m).
-- As at 31 December 2021, the cash position was GBP0.4m and net
debt was GBP5.85m. Net debt includes GBP3.35m of lease
liabilities.
Operational highlights
-- Executive management team appointments: CFO and Director of University Partnerships
-- Reached 80 per cent. of pre-pandemic levels of students in Q4 2021
-- All language schools now approved by the Kuwaiti Cultural Office
-- Expanded sales team expansion to target key student recruitment geographies
-- Pathway student numbers impacted by pandemic but positioned to grow significantly in 2022
-- GBP2.6m loan restructured over six years (post year end)
Commenting on the results and prospects, Richard Mace, Chief
Executive Officer, said:
"Student numbers were rebuilding throughout 2021 and by Q4 we
had reached 80 per cent. of pre-pandemic levels, although ongoing
international travel restrictions impacted higher education starts
for the 2021/22 academic year. We have made strong progress in
building our sales and marketing team to target key territories
such as China and Middle East and North Africa ("MENA"). All our
language schools are now approved by the Kuwaiti Cultural Office
which presents a significant opportunity to attract a consistent
number of students and recurring income streams.
Since the year end, we successfully renegotiated the Company's
GBP2.6m debt facility which is now payable over six years up to
2028.
We expect student numbers to reach pre-pandemic levels during
this year and, with fewer international student providers today
than two years ago due to M&A activity and closures, we believe
we are well placed to build the business in 2022 and beyond ."
For further information please
contact:
Malvern International Plc www.malverninternational.com
Mark Elliott - Chairman Via our website
Richard Mace - Chief Executive
Officer
WH Ireland (NOMAD & Broker) www.whirelandcb.com
Mike Coe / Sarah Mather 0207 220 1666
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 olds.
For further investor information go to
www.malverninternational.com .
CHAIRMAN'S STATEMENT
Introduction
Student numbers were rebuilding throughout 2021 as we were able
to reopen schools and offer in-class teaching. However the dynamic
situation around international travel affected student applications
and bookings during crucial windows, particularly for higher
education students for the start of the 2021/22 academic year.
English Language Training ("ELT") student numbers reached 80 per
cent. of pre-pandemic levels in Q4 2021.
Revenues increased 27 per cent. to GBP2.42m (2020: GBP1.90m).
The operating loss for the year was GBP1.32m (2020: loss GBP1.33m)
reflecting strong cost control measures coupled with increased
investment in our sales and marketing team to ramp-up student
recruitment efforts in key territories.
The loss for the year from continuing operations was GBP1.59m
(2020 loss: GBP1.66m), resulting in a loss per share on continuing
operations of 0.08 pence (2020 loss: 0.23 pence).
The total loss including discontinued operations was GBP1.15m
(2020 loss: GBP2.14m).
As at 31 December 2021, the cash position was GBP0.4m and net
debt was GBP5.85m. Net debt includes GBP3.35m of lease
liabilities.
Financing and debt restructure
To ensure we had the cash resources to trade through the
continued difficulties caused by Covid-19 and to build on the very
significant progress made, the Company raised GBP1.70 million in an
oversubscribed fundraising in April 2021.
Since the year end, the management successfully renegotiated its
GBP2.6m debt facility with BOOST&Co., providing for a 12-month
payment and interest holiday to March 2023, with revised interest
terms and no early repayment penalties. Full details of the new
debt structure can be found in the announcement of 4 March
2022.
Board appointment
We were delighted to appoint Daniel Fisher in 6 December 2021 to
the Board of the Company as an Executive Director and Chief
Financial Officer. Daniel joined the Board having acted as the
Company's head of finance since January 2021. Daniel has a wealth
of experience in financial leadership roles.
Share option scheme
The Company continued to offer an EMI share option scheme to
retain, incentivise and align the interests of employees with
certain performance targets and strategic goals. A total of
146,000,000 ordinary shares of 0.1 pence each were granted in 2020
and 2021 to Directors and staff in three tranches, representing 6.9
per cent of the existing issued share capital of the Company. The
EMI options will vest three years after the date they were granted,
once defined share price targets have been attained.
Staff and staff appointments
Malvern has made a few strategic appointments to the sales and
marketing team to support the growth in student numbers and target
key territories, including China, South East Asia and MENA. I would
like to take this opportunity to thank all our colleagues for their
continued dedication in delivering quality education to our
students.
Governance
We continue to make improvements to our corporate governance
systems. Following the appointment of a dedicated, group-wide HR
Manager we have reviewed and updated our internal policies, making
them available to staff and suppliers as appropriate.
The role of Company Secretary has been taken on by our Chief
Financial Officer, Daniel Fisher, with the support of external
advisors, Oakwood Corporate Services Limited.
During the year we also carried out an internal review and audit
to ensure that we continue to comply with the Quoted Companies
Alliance Corporate Governance Code 2018. We also updated our
website to ensure continued compliance with the AIM rules.
Outlook
The easing of travel restrictions is attracting international
students back into the UK.
We are making significant investment in expanding our global
sales operations and agency network, including China for the first
time, with the expectation that this investment will greatly
benefit our partnerships with University of East London, NCUK,
Wrexham Glyndwr University and other future university
partnerships.
The ELT market has continued to consolidate with fewer providers
today than two years ago due to M&A activity and closures. We
are growing relationships with existing customers such as the
Kuwaiti Cultural Office and investing in our lead-management system
to have industry leading capability to generate and respond to
enquiries efficiently. These factors are enabling us to build
student numbers at our Brighton centre in its first full year of
operations and are supporting our expectations to reach
pre-pandemic levels in London and Manchester during 2022, ahead of
overall sector expectations.
As a business, we are well positioned to take advantage of the
expected growth in overseas student numbers over the coming years.
We are confident that we are well placed to build the business in
2022 and beyond, whilst recognising that some uncertainty with
Covid-19 and the war in Ukraine remain.
Mark Elliott
Chairman
OPERATING REVIEW
English language training ("ELT")
The English language schools provided a mixture in-class, online
and blended learning throughout 2021, with Malvern Online Academy
("MOA") supporting students with supplementary and hybrid learning
where required.
In Q4 2021, all three schools had grown their student bodies
back to around 80 per cent. of pre-pandemic levels.
With fewer international students the proportion of UK-based
students increased as a result of a concerted sales and marketing
effort, including upgrading our website. This audience will remain
important to us going forward.
All our schools are now approved by the Kuwait Cultural Office
("KCO") which allow us to accept sponsored students into all our
schools as well as our NCUK programme. With an average of 8,000
sponsored students per year studying for an average of 36 weeks,
the KCO approval presents a significant opportunity for us to
attract a consistent number of students and recurring income
streams.
The focus to make profitable language schools is to have a
student acquisition model that balances agency and embassy students
combined with students recruited directly via digital methods. With
our investment in systems and people, we are well placed with this
model for 2022 and beyond.
University Pathways
A total of 144 students enrolled in University Pathways courses
for the 2021/22 academic year compared to 170 students in the
previous year. Of these, 16 students are part of our first ever
NCUK cohort based out of our London Kings Cross school, a number on
which we can build for the next academic year. NCUK, a consortium
of leading universities dedicated to giving international students
guaranteed access to universities worldwide
The lower overall figures are the result of the traffic light
system on international travel extending into the autumn of 2021
which coincided with application deadlines for key geographies.
However an increased intake in January 2022 of 80 students compared
to 45 students in January 2021 is indicative of gradual return of
international students to the UK.
University of East London ("UEL") Since the year end, the
governance of our partnership with UEL has been enhanced with the
formation of a joint Strategic Management Group, which met for the
first time in March 2022. Within the centre, an experienced
Academic Director has been appointed with primary responsibility
for the quality of all aspects of our learning and teaching,
building on structural and staffing changes made within the study
centre in 2021. Increased numbers of students were recruited for
the January cohort, and the centre is now well placed to support
the projected significant growth in student numbers for the 2022/23
academic year.
NCUK
2021 saw the launch of our NCUK International Foundation Year
programme, and we welcomed a cohort of 16 students. For 2022/23
academic year we are growing our NCUK portfolio by offering Science
and Engineering routes, in parallel with our Business oriented
programme, and look forward to welcoming students looking to
progress to high quality universities in our London centre.
Malvern Juniors
Due to Covid-19, all of our Junior language camps were postponed
into 2022. There remains strong demand from Italian students with
three camps running in the summer of 2022. Hungarian groups will
resume in 2023.
In parallel, we have been building our sales and marketing
teams, targeting Junior students from China and South East Asia in
particular. We expect this to reflect in significant growth in
student numbers for 2023.
Central services
The Group continued to make improvements to its central shared
services, which includes both back-office and sales and marketing.
More positions have been brought into the head office function in
Manchester to strengthen the executive management team and
supporting team including a CFO, Management Accountant, Deputy Head
of Sales, Marketing Manager, Group HR Manager. The transactional
support team in Nepal has expanded to support post-pandemic growth
in admissions. Our continued investment in the development of our
HubSpot CRM has seen a tighter control of all enquiries and
management of service level agreements. Further development,
process controls and automation is planned for 2022.
We have continued to build our sales and marketing capability.
In China - the biggest international student market to the UK for
Higher Education and Junior summer camps - we appointed two
Regional Sales Managers based in Chengdu and Beijing and launched a
Chinese website. In addition we appointed a Sales Manager based in
Indonesia and a Regional Director for MENA and Turkey. We are in
late stages of appointing an international recruitment advisor in
India and one in Nepal. Both are growth markets for Higher
Education student recruitment. We are expecting the new recruits to
drive the growth of a global partner network and in turn our
student numbers across University Pathways and ELT adult and junior
programmes.
Richard Mace
Chief Executive Officer
FINANCIAL REVIEW
The trading landscape presented many challenges for the Group in
2021 due to the impacts of the pandemic. Despite these challenges,
significant progress was made in 2021 to stabilise our balance
sheet. We continued to demonstrate effective cash management under
very challenging trading conditions.
In the past twelve months, we forged strong relationships with
key suppliers and customers. All historical debt was moved
successfully onto long term payment plans, and in some cases, large
arrears have been waived or discounted. Strategic and operational
meetings have been established with key customers. In addition to
drastically improving student recruitment and enrolment conditions,
these more frequent interactions have enabled us to increase the
efficiency of the collection of receivables.
Revenues during the year increased 27 per cent. to GBP2.42m
(2020: GBP1.90m). The operating loss for the year was GBP1.32m
(2020: loss GBP1.33m) reflecting strong cost control measures
coupled with increased investment in our sales and marketing team
to ramp up student recruitment efforts in key territories.
Cost control continues to be a focus across the Group. New
systems and policies befitting a PLC were implemented in 2021 to
aid the control and tracking of our spending. Our shared services
function based in Nepal has also been expanded, which benefits the
Group through lower staffing costs, and helps us to achieve
required synergies as the Group continues to scale up. Additional
smarter spending strategies include our more targeted digital
approach to marketing, which will continue to bring down customer
acquisition costs. This approach is accompanied by an increase in
travel costs as our sales staff return to key markets to build the
Group's brands, and to enhance our relationships with key
agents.
The disposal of the main operating entity in Singapore
significantly reduced the expenditure in that region and is another
step towards a much healthier balance sheet.
We continued to work closely with BOOST&Co., the Group's
largest debt provider, to ensure that the Group had sufficient
working capital to operate through periods of very difficult
trading in 2021. In March 2021, BOOST&Co. invested in the Group
as part of a wider GBP1.70m fundraise that we undertook. This
investment was an indicator of BOOST&Co.'s confidence in the
management and prospects for the business. As described in the
strategic report and the going concern statement, BOOST&Co. has
committed to supporting the Group in 2022 and beyond.
Looking forward, we will continue to invest strategically for
the future with the expectation of higher revenue growth
accompanied by increased costs from our growing sales and marketing
team, along with continued investment in our new Chinese student
recruitment function and a resumption in staff travel. This
critical investment accelerates the Group's drive towards
profitability.
Daniel Fisher
Chief Financial Officer
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2021
Note 2021 2020
GBP GBP
------ ------------- ------------
Revenue
------ ------------- ------------
Sale of services 5 2,417,524 1,901,307
------ ------------- ------------
Total revenue 2,417,524 1,901,307
------ ------------- ------------
Cost of services
sold (1,071,679) (1,016,393)
------ ------------- ------------
Gross profit 1,345,845 884,914
------ ------------- ------------
Other income 223,989 418,363
------ ------------- ------------
Salaries and employees'
benefits (1,346,486) (1,095,012)
------ ------------- ------------
Share based payments 12 (3,128) (169,278)
------ ------------- ------------
Depreciation of property,
plant and equipment (409,271) (414,349)
------ ------------- ------------
Other operating expenses 7] (1,135,149) (950,745)
------ ------------- ------------
Operating loss (1,324,200) (1,326,107)
------ ------------- ------------
Finance costs 6 (270,190) (302,066)
------ ------------- ------------
Loss before tax (1,594,390) (1,628,173)
------ ------------- ------------
Income tax charge - (31,300)
------ ------------- ------------
Loss for the year
from continuing operations (1,594,390) (1,659,473)
------ ------------- ------------
Profit / (loss)
from discontinued
operation 448,741 (480,092)
------ ------------- ------------
Loss for the year (1,145,649) (2,139,565)
------ ------------- ------------
Attributable to:
------ ------------- ------------
Equity holders of
the Company ( 1,145,649) (2,139,565)
------ ------------- ------------
2021 2020
GBP GBP
------------ -------------
( 1,145,649
Loss for the year ) (2,139,565)
------------ -------------
Items that may be reclassified
subsequently to profit or loss:
Foreign currency translation movements - 15,575
------------ -------------
Total comprehensive income/(expense)
for the year ( 1,145,649) (2,123,990)
------------ -------------
( 1,594,390
Continuing operations ) (1,659,473)
------------ -------------
Discontinued operations 448,741 (464,517)
------------ -------------
Attributable to:
------------ -------------
Equity holders of the parent ( 1,145,649) (2,123,990)
------------ -------------
2021 2020
Loss per share from continuing
operations attributed to equity
holders of the Company (in pence)
------ ------
Basic (0.08) (0.23)
------ ------
Diluted (0.08) (0.23)
------ ------
Profit/(loss) per share from discontinued
operations attributed to equity
holders (in pence)
------ ------
Basic and diluted 0.02 (0.06)
------ ------
Consolidated Statement of Financial Position
as at 31 December 2021
Note 2021 2020
GBP GBP
---- --------- --------------
TOTAL ASSETS
---- --------- --------------
Non-current assets
---- --------- --------------
Property, plant, and
equipment 50,427 80,781
---- --------- --------------
Goodwill 1,419,350 1,419,350
---- --------- --------------
Investment in subsidiaries - -
---- --------- --------------
Right-of-use assets 2,553,726 2,612,614
---- --------- --------------
Total non-current assets 4,023,503 4,112,745
---- --------- --------------
Current assets
---- --------- --------------
Trade receivables 705,271 1,033,105
---- --------- --------------
Other receivables and
prepayments 289,607 162,093
---- --------- --------------
Amounts due from subsidiaries - -
---- --------- --------------
Cash and cash equivalents 377,170 103,609
---- --------- --------------
Total current assets 1,372,048 1,298,807
---- --------- --------------
Assets classified for disposal - 1,846
---- --------- --------------
Total assets 5,395,551 5,413,398
---- --------- --------------
2021 2020
---- --------- --------------
GBP GBP
---- --------- --------------
EQUITY AND LIABILITIES
---- --------- --------------
Non-current liabilities
---- --------- --------------
Term loan 1,791,952 2,532,115
---- --------- --------------
Warrants 72,801 63,701
---- --------- --------------
Convertible loan notes 11 - 272,817
---- --------- --------------
Lease liabilities 3,075,517 2,491,486
---- --------- --------------
Deferred tax liabilities 10,279 10,279
---- --------- --------------
Total non-current liabilities 4,950,549 5,370,398
---- --------- --------------
Current liabilities
---- --------- --------------
Trade payables 413,297 603,631
---- --------- --------------
Contract liabilities 899,137 676,287
---- --------- --------------
Other payables and accruals 598,253 1,229,743
---- --------- --------------
Amounts due to subsidiary - -
---- --------- --------------
Amounts due to related parties - 40,000
---- --------- --------------
Convertible loan notes 11 275,885 50,000
---- --------- --------------
Lease liabilities 278,961 350,829
---- --------- --------------
Term loan 808,869 -
---- --------- --------------
Total current liabilities 3,274,402 2,950,490
---- --------- --------------
Liabilities directly associated
with assets classified for
disposal - 216,737
---- --------- --------------
Total liabilities 8,224,951 8,537,625
---- --------- --------------
Equity attributable to equity
holders of the Company
Share capital 11,216,991 10,309,811
------------ ------------
Share premium 6,603,839 5,782,394
------------ ------------
Retained earnings (20,679,052) (19,703,963)
------------ ------------
Translation reserve - 288,149
------------ ------------
Capital reserve - 170,560
------------ ------------
Convertible loan reserve 28,822 28,822
------------ ------------
Total equity (2,829,400) (3,124,227)
------------ ------------
Total equity and liabilities 5,395,551 5,413,398
------------ ------------
The loss for the year as per the financial statements of the
parent company at 31 December 2021 was GBP1,103,278 (2020: Loss
GBP896,815).
Consolidated Statement of Changes in Equity
for the year ended 31 December 2021
Share Share Retained Translation Capital Convertible Attributable
capital premium earnings reserve reserve loan reserve to equity Total
holders
of the Company
GBP GBP GBP GBP GBP GBP GBP GBP
---------- -------------------- --------------- ----------- ---------- ---------------- ------------------------- ------------------------
Balance at 1
January
2020 9,363,236 5,431,449 (17,564,398) 272,574 170,560 28,822 (2,297,757) (2,297,757)
---------- -------------------- --------------- ----------- ---------- ---------------- ------------------------- ------------------------
Direct costs
relating
to issue of
shares - (122,250) - - - - (122,250) (122,250)
---------- -------------------- --------------- ----------- ---------- ---------------- ------------------------- ------------------------
Total
comprehensive
income for the
year - - (2,139,565) 15,575 - - (2,123,990) (2,123,990)
---------- -------------------- --------------- ----------- ---------- ---------------- ------------------------- ------------------------
New share issue 833,333 416,667 - - - - 1,250,000 1,250,000
---------- -------------------- --------------- ----------- ---------- ---------------- ------------------------- ------------------------
Share based
payments
(inc EMI options) 113,242 56,528 - - - - 169,770 169,770
---------- -------------------- --------------- ----------- ---------- ---------------- ------------------------- ------------------------
Balance at 31
December
2020 10,309,811 5,782,394 (19,703,963) 288,149 170,560 28,822 (3,124,227) (3,124,227)
---------- -------------------- --------------- ----------- ---------- ---------------- ------------------------- ------------------------
Direct costs
relating
to issue of
shares - (89,503) - - - - (89,503) (89,503)
---------- -------------------- --------------- ----------- ---------- ---------------- ------------------------- ------------------------
Capital reserve
transferred
to retained
earnings
on disposal of
Singapore - - 170,560 - (170,560) - - -
---------- -------------------- --------------- ----------- ---------- ---------------- ------------------------- ------------------------
Translation
reserve
transferred to
retained
earnings on
disposal
of Singapore - - - (288,149) - - (288,149) (288,149)
---------- -------------------- --------------- ----------- ---------- ---------------- ------------------------- ------------------------
Total
comprehensive
income for the
year - - (1,145,649) - - - (1,145,649) (1,145,649)
---------- -------------------- --------------- ----------- ---------- ---------------- ------------------------- ------------------------
New share issue 891,702 898,598 - - - - 1,790,300 1,790,300
---------- -------------------- --------------- ----------- ---------- ---------------- ------------------------- ------------------------
Share based
payments
(EMI options) 15,478 12,350 - - - - 27,828 27,828
---------- -------------------- --------------- ----------- ---------- ---------------- ------------------------- ------------------------
Balance at 31
December
2021 11,216,991 6,603,839 (20,679,052) - - 28,822 (2,829,400) (2,829,400)
---------- -------------------- --------------- ----------- ---------- ---------------- ------------------------- ------------------------
Consolidated Statement of Cash Flows
for the year ended 31 December 2021
2021 2020
GBP GBP
----------- -----------
Cash flows from operating activities
----------- -----------
Loss after income tax from
----------- -----------
Continuing activities (1,594,390) (1,659,473)
----------- -----------
Discontinued activities 448,741 (480,092)
----------- -----------
Adjustments for:
----------- -----------
Depreciation of tangible assets 409,271 414,349
----------- -----------
Fair value movement on warrants 16,755 (61,939)
----------- -----------
Share based payments 3,128 175,278
----------- -----------
Disposal of tangible assets 2,400 (115,587)
----------- -----------
Loss on disposal of discontinued operations (503,040) -
----------- -----------
Impairment of trade receivables 311,102 123,690
----------- -----------
Finance cost 270,190 302,066
----------- -----------
Adjustments for deferred tax - -
----------- -----------
Interest paid (59,526) (51,583)
----------- -----------
Tax paid - -
----------- -----------
(695,369) (1,353,291)
----------- -----------
Changes in working capital:
----------- -----------
Decrease in stocks - 6,153
----------- -----------
(Increase)/decrease in receivables (110,781) 94,657
----------- -----------
Increase/(decrease) in payables (348,043) 218,561
----------- -----------
Decrease in amounts due to related
parties (40,000) (6,646)
----------- -----------
Net cash flows used in operating activities (1,194,193) (1,040,566)
----------- -----------
Cash flows from investing activities
----------- -----------
Purchases of property, plant, and
equipment (11,280) -
----------- -----------
Net cash used in investing activities (11,280) -
----------- -----------
Cash flows from financing activities
----------- -----------
Repayment of lease liabilities (161,475) (194,801)
----------- -----------
New equity issued 1,650,797 1,155,712
----------- -----------
Term loan (10,288) 100,000
----------- -----------
Net cash generated by financing activities 1,479,034 1,060,911
----------- -----------
Net change in cash and cash equivalents 273,561 20,345
----------- -----------
Cash and cash equivalents at the beginning
of the year 103,609 83,264
----------- -----------
Exchange losses on cash and cash equivalents - -
----------- -----------
Cash and cash equivalent at the end
of the year 377,170 103,609
----------- -----------
NOTES TO THE UNAUDITED INTERIM FINANCIAL INFORMATION FOR THE
YEARED 31 DECEMBER 2021
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, United
Kingdom, WA14 2DT and its principal place of business is in the UK.
The registration number of the Company is 05174452. The Company
head office is Murray House, 85 Piccadilly, Manchester, M1 2DA.
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 Financial Statements of the Group and Company are prepared
on a going concern basis, under the historical cost convention
(with the exception of goodwill) and in accordance with
International Financial Reporting Standards (IFRS) and IFRIC
interpretations issued by the International Accounting Standards
Board (IASB) and adopted by the United Kingdom, in accordance with
the Companies Act 2006.
The Parent Company's Financial Statements have also been
prepared in accordance with IFRS and the Companies Act 2006. The
preparation of Financial Statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of
assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical
experience and factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making
judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ
from these estimates.
Going concern
The financial statements have been prepared on a going concern
basis. The Directors consider the going concern basis to be
appropriate having paid due regard to the Group and Company's
projected results during the twelve months from the date the
financial statements are approved and the anticipated cash flows,
availability of loan facilities, and mitigating actions that can be
taken during that period.
In March 2022, successful negotiations were finalised with
BOOST&Co. (the Group's fund manager, acting on behalf of the
Company's debtholder IL2 (2018) Sarl) to restructure the Group's
GBP2.6m debt facility. Under the original agreement monthly
payments were due to commence in April 2022 over a 24-month period.
The new agreement provides for a twelve-month payment and interest
holiday with monthly payments commencing from March 2023, over a
five-year period.
BOOST&Co., acting on behalf of IL2 (2018) Sarl, have also
provided a letter of comfort to provide ongoing financial support
to the Group for any short-term working capital requirement should
that become necessary. It is the present policy of BOOST&Co. to
ensure that the Group has adequate financial resources to meet
their obligations and to enable it to continue as a going concern
for a period of at least twelve months from the date of the signing
of the financial statements.
In making their assessment of going concern the Group's
Directors have considered the impact on the business of the
Covid-19 pandemic. Whilst this has been very disruptive to the
Group's operations, the business was able to adapt its service
offering through online learning. The Government announcement to
remove testing for fully vaccinated arrivals into the UK, provides
the Directors with confidence that student numbers will return to
pre-pandemic levels in 2022.
In Q4 of 2021, the number of students across the Groups English
language schools grew back to approximately 80% of 2019 levels. In
Q1 2022, this figure increased, which supports the Directors' 2022
recovery assumptions.
Pathway numbers in January 2022 also indicate an encouraging
recovery from the impact of Covid-19, with a 55% increase in
students year on year for one of the Group's key partners. In
addition, Malvern Juniors will return in the summer of 2022.
Profit and cash flow projections for the Group assume profitable
growth in its key operating entities once operations return to
normal. A large part of this assumed growth is driven by the more
profitable pathways division of the Group.
The global pandemic continues to create uncertainty in the
profit and cash flow projections for the Group. The provision of
the letter of comfort from the Group's lenders referred to above
provides confidence to the Group with respect to future funding.
However, there still remains a material uncertainty with respect to
going concern of the Group.
The above factors provide the Directors with confidence that it
is appropriate to prepare the accounts on a going concern basis,
albeit there continues to be a material uncertainty as set out
above.
3. Lessee accounting
The Group's leases primarily relate to properties and office
equipment. Lease terms are negotiated on an individual basis and
contain a wide range of different terms and conditions. Property
leases will often include extension and termination options, open
market rent reviews, and uplifts.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the individual lessee company's incremental
borrowing rate considering the duration of the lease.
The lease liability is subsequently measured at amortised cost
using the effective interest method, with the finance cost charged
to profit or loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the
liability. It is remeasured when there is a change in future lease
payments arising from a change in index or rate, or if the Group
changes its assessment of whether it will exercise an extension or
termination option. The lease liability is recalculated using a
revised discount rate if the lease term changes as a result of a
modification or re-assessment of an extension or termination
option.
The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for
any lease payments made at or before the commencement date, plus
any initial direct costs incurred. The right-of-use asset is
typically depreciated on a straight line basis over the lease
terms.
Amounts recognised in the statement of comprehensive income:
2021 2020
GBP GBP
-------- --------
Interest expense and similar charges
-------- --------
Interest expense 162,935 184,897
-------- --------
Interest expense on disposed right-of-use
assets - 103,302
-------- --------
Operating and administrative expenses
-------- --------
Depreciation of right-of-use assets 370,036 374,149
-------- --------
Depreciation of disposed right-of-use
assets - 283,353
-------- --------
Total expensed to statement of comprehensive
income 532,971 945,701
-------- --------
Right-of-use assets
At 31 December At 31 December
2021 2020
GBP GBP
--------------- ---------------
Balance as at the beginning of the year 2,612,614 4,912,511
--------------- ---------------
Net disposals - (1,605,429)
--------------- ---------------
Adjustment to operating balance of depreciation 33,614 -
--------------- ---------------
Depreciation of right-of-use assets (370,036) (374,149)
--------------- ---------------
Depreciation of disposed right-of-use
assets - (283,353)
--------------- ---------------
Changes from lease revaluations 277,534 -
--------------- ---------------
FX movement - (36,966)
--------------- ---------------
Balance as at the end of the year 2,553,726 2,612,614
--------------- ---------------
Lease liabilities
At 31 December At 31 December
2021 2020
GBP GBP
--------------- ---------------
Current liability 278,961 350,829
--------------- ---------------
Non-current liability 3,075,517 2,491,486
--------------- ---------------
Total liability 3,354,478 2,842,315
--------------- ---------------
Lease payments
At 31 December At 31 December
2021 2020
GBP GBP
--------------- ---------------
Total lease rent amount (Excl. VAT) 536,365 519,501
--------------- ---------------
Amount paid during the year (Excl.
VAT) (161,475) (194,801)
--------------- ---------------
Rent free amount (Excl. VAT) (72,495) (84,598)
--------------- ---------------
Balance amount at end of the year 302,395 240,102
--------------- ---------------
In October 2020, the Group disposed of the lease relating to the
office of the Singapore operations.
4. (a) Segmental Information
The Group organises its operations based on geographical
locations, as the services provided are similar in each
jurisdiction with both educational and language courses
offered.
UK Discontinued Total
Operations*
2021 GBP GBP GBP
--------------- ------------ -----------
Revenue from external customers 2,417,524 - 2,417,524
--------------- ------------ -----------
Depreciation and amortization 409,271 - 409,271
--------------- ------------ -----------
Loss before taxation (1,594,390) (38,447) (1,632,837)
--------------- ------------ -----------
Profit on disposal - 487,188 487,188
--------------- ------------ -----------
Taxation charge - - -
--------------- ------------ -----------
Profit/(Loss) for the year (1,594,390) 448,741 (1,145,649)
--------------- ------------ -----------
Segmental assets 5,395,551 - 5,395,551
--------------- ------------ -----------
Segmental liabilities 8,224,951 - 8,224,951
--------------- ------------ -----------
2020 GBP GBP GBP
--------------- ------------ -----------
Revenue from external customers 1,901,307 648,167 2,549,474
--------------- ------------ -----------
Depreciation and amortisation (414,349) (349,164) (763,513)
--------------- ------------ -----------
Loss before taxation (1,659,473) (480,092) (2,139,565)
--------------- ------------ -----------
Taxation charge - - -
--------------- ------------ -----------
Loss for the year (1,659,473) (480,092) (2,139,565)
--------------- ------------ -----------
Segmental assets 5,411,552 1,846 5,413,398
--------------- ------------ -----------
Segmental liabilities 8,320,888 216,737 8,537,625
--------------- ------------ -----------
(*Following the closure of the Singapore operations, 2021
figures have been presented as discontinued operations. SAA Global
Education Center filed an application for an inability to continue
business operations on 09 April 2021, and liquidation commenced on
12 April 2021. Malvern International Academy's application for
liquidation is currently with the liquidators, all activities
ceased on 31 December 2021.)
(b) Discontinued Operations
On 4 August 2020, the group announced closure of Singapore
operations and is reported in the current period as a discontinued
operation. Financial information relating to the discontinued
operation for the period to the date of disposal is set out
below.
i) Financial performance of discontinued operations.
The financial performance and cash flow of the discontinued
operations are presented as the consolidated Singapore entities,
for the year ended 31 December 2021. The Singapore entities
presented include; Malvern International Academy (MIA), which
ceased operating on 31 December 2021, and SAA Global Education
Center (SAAGE), which ceased operating on 9 April 2021 (SAAGE
entered formal liquidation on 12 April).
2021 2020
GBP GBP
---------- ------------
Singapore Singapore
---------- ------------
Revenue - 648,167
---------- ------------
Other Income - 118,279
---------- ------------
Expenses (38,447) (1,246,538)
---------- ------------
Profit/(Loss) before tax (38,447) (480,092)
---------- ------------
Income tax expenses - -
---------- ------------
Profit/(Loss) after income tax
of discontinued operation (38,447) (480,092)
---------- ------------
Profit on disposal of subsidiary 487,188 -
---------- ------------
Profit/(Loss) from discontinued
operations 448,741 (480,092)
---------- ------------
Exchange differences on translation
of discontinued operations - 15,575
---------- ------------
Other comprehensive income from
discontinued operations - 15,575
---------- ------------
Net cash flow from operating
activities (54,299) (24,299)
---------- ------------
Net cash flow from investing
activities - -
---------- ------------
Net cash flow from financing
activities - -
---------- ------------
Net cash generated by subsidiary 16,994 (24,299)
---------- ------------
ii) Details of the consideration on disposal of the subsidiaries
2021 2020
GBP GBP
Consideration received or receivable:
Fair value of consideration -
Carrying amount of net liabilities disposed 196,678 -
of
-------- -----
Profit on sale of subsidiary before income 196,678 -
tax and reclassification of foreign currency
translation reserve
Reclassification of foreign currency translation 290,510 -
reserve
-------- -----
Profit on disposal of subsidiary 487,188 -
-------- -----
iii) The details of assets and liabilities of disposed subsidiary
The carrying amounts of assets and liabilities of Singapore
operations as of 09 April 2021 for SAAGE and 31 Dec 2021 for
MIA.
2021 2020
GBP GBP
Property, plant and equipment - 546
Cash & cash equivalents 18,049 1,300
---------- ----------
Total assets 18,049 1,846
Trade creditors (147,396) (161,254)
Other payables (67,331) (55,483)
---------- ----------
Total liabilities (214,727) (216,737)
Net liabilities (196,678) 214,891)
------------------------------- ---------- ----------
5. Sale of Services
2021 2020
GBP GBP
--------- ---------
Course fees 2,189,651 1,659,601
--------- ---------
Accommodation fees 162,106 192,643
--------- ---------
Application fees, registration and examination
fees 50,264 28,470
--------- ---------
Training fees, course materials and others 15,503 20,593
--------- ---------
2,417,524 1,901,307
--------- ---------
6. Finance Costs
2021 2020
GBP GBP
------- -------
Interest on leases (IFRS 16) 162,935 184,897
------- -------
Interest on term loan 80,845 90,125
------- -------
Interest on convertible loan notes 21,503 24,766
------- -------
Other finance costs 4,097 2,278
------- -------
270,190 302,066
------- -------
7. Operating Expenses
2021 2020
=========
GBP GBP
Auditors' remuneration:
=========
Fees payable to the Group's auditors for
statutory audit 30,500 27,500
========= ========
Fees payable to the Group's auditors and
associates for statutory audit of subsidiary
Companies 31,425 40,000
========= ========
Administrative and marketing expenses 745,367 821,494
========= ========
Expected credit losses - trade receivables 311,102 123,690
========= ========
Fair value movements 16,755 (61,939)
========= ========
1,135,149 950,745
========= ========
8. Earnings/(Loss) Per Share
The basic and diluted earnings/(loss) per share attributable to
equity holders of the Company was based on the loss attributable to
shareholders of GBP1,145,649 (2020: loss of GBP2,139,565) and the
weighted average number of ordinary shares in issue during the year
of 1,878,898,511 shares (2020: 735,661,044 shares). The loss per
share (in pence) attributed to shareholders is 0.06 (2020: loss per
share of 0.23).
Calculations for dilutive EPS have not been made in respect of
the convertible loan notes (note 11) on the basis the impact would
be anti-dilutive.
9. Financial Liabilities
Group Company
2021 2020 2021 2020
--------- --------- --------- ---------
GBP GBP GBP GBP
--------- --------- --------- ---------
Non-current liabilities
--------- --------- --------- ---------
Convertible Loan Notes - 272,817 - 272,817
--------- --------- --------- ---------
Term Loan 1,791,952 2,532,115 1,723,537 2,432,115
--------- --------- --------- ---------
Warrants 72,801 63,701 72,801 63,701
--------- --------- --------- ---------
Lease liabilities 3,075,517 2,491,486 - -
--------- --------- --------- ---------
4,940,270 5,360,119 1,796,338 2,768,633
--------- --------- --------- ---------
Current liabilities
--------- --------- --------- ---------
Convertible Loan Notes 275,885 50,000 275,885 50,000
--------- --------- --------- ---------
Term Loan 808,869 - 675,251 -
--------- --------- --------- ---------
Lease liabilities 278,961 350,829 - -
--------- --------- --------- ---------
Trade and other payables 1,011,550 1,833,374 140,191 322,493
--------- --------- --------- ---------
Related parties - 40,000 - 40,000
--------- --------- --------- ---------
2,375,265 2,274,203 1,091,327 412,493
--------- --------- --------- ---------
Total 7,315,535 7,634,322 2,887,665 3,181,126
--------- --------- --------- ---------
Convertible Loan Notes
At 31 December 2021, the Group has an obligation for GBP275,885
(See note 11).
Term Loan
In August 2019, Malvern received a Term Loan from BOOST&Co.
for GBP2,600,000. This loan originally carried an interest rate as
the higher of (a) 10% per annum, or (b) 8% per annum plus LIBOR.
The loan was restructured in April 2022, the new terms includes a
twelve-month payment and interest holiday with monthly payments
commencing from March 2023 over a five-year period, with the
interest being set at 7% for the first two years and 10% for the
subsequent three years. There are no early repayment penalties on
this facility.
During 2020, the Group took advantage of the Government-backed
Bounce Back Loan Scheme ("BBLS"), benefitting from a total of
GBP100,000 to be repaid over a six-year period with a 2.5% fixed
rate of interest. The first twelve months of this lending facility
are free of any obligation to pay capital or interest. The balance
outstanding at 31 December 2021 is GBP89,872 (2020:
GBP100,000).
Warrants
As part of the term loan, BOOST&Co. was issued warrants over
45,500,464 shares. These warrants are exercisable at the Strike
Price at any time over the following ten years since the inception
of term loan in August 2019.
As at the date of financial position, the Group has fair valued
these warrants at GBP72,801. The following estimates were used to
calculate this fair value:
-- Annualised volatility of 109% and 154% at the inception of
term loan and at the year end respectively, calculated using share
price volatility over a preceding three-year period
-- Maturity of ten years applied, reflecting the duration over
which BOOST&Co. could exercise these warrants
-- Risk free rate of 0.50%, being the Yield on UK ten-year Government bonds
-- Strike price of GBP0.0015, being the 28-day average share
price preceding the date (i.e. 27 Aug 2019) of drawdown
10. Subsequent events
The Directors are reporting the following subsequent events to
the Statement of Financial Position which are significant to these
financial statements.
In March 2022, successful negotiations were finalised with
BOOST&Co. (the Group's fund manager, acting on behalf of the
Company's debtholder IL2 2018) to restructure the Group's GBP2.6m
debt facility.
Under the original agreement monthly payments were due to
commence in April 2022 over a 24-month period at an interest rate
of 7 to 10%, dependent on quarterly revenues. The new agreement
provides for a twelve-month payment and interest holiday with
monthly payments commencing from March 2023 over a five-year
period, with the interest being set at 7% for the first two years
and 10% for the subsequent three years. There are no early
repayment penalties on this facility.
In return, BOOST&Co. will receive warrants over 127,010,834
ordinary shares at an exercise price of 0.106 pence per share,
being 20% below the average market price. In addition,
BOOST&Co. will receive additional warrants, fully diluted, with
the same exercise price, if the loan is not repaid by 1 March
2024.
Furthermore, it has been agreed that the exercise price of
BOOST&Co.'s existing warrants over an aggregate of
45,500,464shares be adjusted from 0.15 pence per share to 0.1
pence.
11. Convertible Loan Notes
The Company issued the following loan notes in 2017.
In November 2020, Convertible Loan Note holders agreed a
variation of the redemption date from 16 November 2020 to 31
December 2022.
Convertible Loan Notes
Issue Name Convertible Unsecured Loan Notes
2020
================================= =====
Date of Issue 17 November 2017
================================= =====
Date of Redemption 31 December 2022
================================= =====
Interest Payable 1 Jan 2018-31 Dec 2018 3%
================================= =====
1 Jan 2019-31 Dec 2019 4%
================================================================= =====
1 Jan 2020-31 Dec 2020 5%
================================================================= =====
1 Jan 2021-31 Dec 2022 6%
================================================================= =====
Total Issued GBP1,200,000
================================= =====
Amount converted in 2017 (GBP100,000)
================================= =====
Balance at 31/12/2017 GBP1,100,000
================================= =====
Amount converted in 2018 (GBP771,898)
================================= =====
Fair value adjustment (GBP28,822)
================================= =====
Balance at 31/12/2018 GBP299,280
================================= =====
Fair value adjustment GBP17,307
================================= =====
Balance at 31/12/2019 GBP316,587
================================= =====
Unwinding Interest GBP6,230
================================= =====
Balance at 31/12/2020 GBP322,817
================================= =====
Unwinding interest GBP3,068
================================= =====
Share Conversion at 31/07/2021 (GBP50,000)
================================= =====
Balance at 31/12/2021 GBP275,885
================================= =====
12. Share based payments and share options
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 following a three-year vesting period if
the Company's share price has met the pre-determined target
conditions. There are two market-based conditions, each accounting
for 50% of the share options awarded to the employee. In addition,
the mid-market share price of the Company on the AIM Market of the
London Stock Exchange, must stay at or above the exercise price,
for 40 consecutive business days.
The Group has chosen to use the Black Scholes valuation
framework. The options have also been valued using the Monte Carlo
valuation method. The results of which are not considered
materially different from the valuation methodology described in
this note.
The inputs into the Black Scholes model as at 31 December 2021
are as follows.
Deemed
Strike probability
Exercise price Vesting Risk of achieving
price on grant period Expected free Fair market
Grant date EMI options (pence) date (pence) (years) volatility rate value condition
02/12/2020 33,625,000 0.5 0.15 3 12.30% 0.35% 0.34 5.02%
02/12/2020 33,625,000 0.9 0.15 3 12.30% 0.35% 0.74 0.37%
------------ -------------------- --------- ------------- --------- ------------ ------ ------- --------------
07/01/2021 5,000,000 0.5 0.15 3 11.98% 0.35% 0.35 5.30%
07/01/2021 5,000,000 0.9 0.15 3 11.98% 0.35% 0.75 0.37%
------------ -------------------- --------- ------------- --------- ------------ ------ ------- --------------
18/01/2021 6,000,000 0.5 0.15 3 11.98% 0.35% 0.35 5.30%
18/01/2021 6,000,000 0.9 0.15 3 11.98% 0.35% 0.75 0.37%
------------ -------------------- --------- ------------- --------- ------------ ------ ------- --------------
01/09/2021 28,375,000 0.6 0.22 3 10.45% 0.26% 0.38 1.10%
01/09/2021 28,375,000 1.1 0.22 3 10.45% 0.26% 0.87 0.00%
------------ -------------------- --------- ------------- --------- ------------ ------ ------- --------------
As with options containing performance-based market targets, the
probability of achieving the set condition is factored into the
determination of the value. These will not be re-measured at
subsequent reporting dates. The vesting probabilities presented are
products of lognormal distribution modelling over a 3-year period
to determine the likelihood of the vesting condition being reached,
based off the scaled mean and standard deviation from a prior
365-day period.
Year ended 31 December 2021
Number of options Weighted average
s trike price
Outstanding at 1 January 2021 69,500,000* 0.15p
Granted during the year 90,000,000 0.19p
Exercised during the year - -
Forfeited during the year 13,500,000 -
Outstanding at 31 December 2021 146,000,000 0.17p
Exercisable - -
(*The number of options outstanding at 31 December 2020 was
incorrectly presented as 34,750,000 in the 2020 Group accounts.
This did not impact on the financial statements.)
Of the options outstanding at 31 December 2021, 89,250,000
(2020: 69,500,000) options have an exercise price of 0.15pence and
56,750,000 (2020: nil) options have an exercise price of 0.22
pence.
The aggregate charge for share options recognised in the Group
financial statements in the year was GBP3,128(2020:GBP184).
During 2020, the Company also made an equity settled share-based
payment in lieu of fees to certain employees, directors and a
creditor. A total of 100,262,947 ordinary shares were issued at
0.15p per share. No vesting conditions were attached to this share
issue. The fair value at the grant date has been calculated as the
total of the fees owing for services provided. The cost recognised
for 2020 in respect of these share-based payments is, GBP144,394
for continuing operations, and GBP6,000 for discontinued
operations.
In addition, a bonus was also awarded to certain directors as
compensation for an additional and significant time commitment
during a change in Chief Executive Officer during the year. The
bonus was not paid until 2021, therefore an accrual was recognised
through liabilities in 2020. The cost recognised for 2020 in
respect of these share-based payments was, GBP24,700 (restated
2019: GBP19,192). The bonus was paid in 2021 when a total of
12,350,000 ordinary shares were issued at 0.20p per share (2019:
12,794,667 ordinary shares at 0.15p per share). No vesting
conditions were attached to this share issue. The fair value at the
grant date has been calculated as the total cash value of the bonus
awarded.
The annual report and accounts together with the notice of AGM
to be held on 8 June 2022, are expected to be uploaded to the
Company's website later today and posted to shareholders
shortly.
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END
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