TIDMMLVN
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 20 22
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 GBP2.3m (H1 2021: GBP1.4m)
-- Operating loss (before depreciation, amortisation and finance
charges) of GBP0.34m (H1 2021: profit GBP9k)
-- Loss before tax on continuing operations increased to
GBP0.68m (H1 2021: loss GBP0.35m), 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 GBP0.88m (FY 2021: GBP0.40m and H1 2021: GBP1.28m).
-- Successfully restructured the Company's GBP2.6m 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
Richard Mace - Chief Executive Via Communications Portfolio
Officer
NOMAD and Broker 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 .
Chief Executive ' s review
Malvern has seen a significant improvement in student numbers
and business pipeline in H1 2022 with revenues up 62% at GBP2.3m
(H1 2021: GBP1.4m).
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 operation ally 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.GBP1.35m, following two years of no
activity.
Financial performance
Revenues from continuing operations for H1 2022 were GBP 2.3m
(H1 2021: GBP1.4m). The loss before tax was GBP0.68m (H1 2021: loss
GBP0.35m). 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 GBP0.88m 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 (GBP0.87m) 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 (GBP0.12m) 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 GBP2.6m 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 GBP 0.88m (31 December
2021: GBP0.34m and 30 June 2021: GBP 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 MONTHSED 30 JUNE 2022
Six Six
months ended months ended Year ended
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
Note Unaudited Unaudited Audited
Revenue 2,308 1,424 2,418
Cost of services sold & operating
expenses (2,687) (1,573) (3,557)
Other Income 39 158 224
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 31 December
30 June 2022 30 June 2021 2021
GBP'000 GBP'000 GBP'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 MONTHSED 30 JUNE 2022
Share Share Retained Translation Capital Convertible Total Attributable
Capital Premium Earnings Reserve Reserve Loan Reserves to Equity
Reserve Holders of
the Company
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 MONTHSED 30 JUNE 2022
Six Six
months ended months ended Year ended
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'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
MONTHSED 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
GBP 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
GBP50,000 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 GBP50,000 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
GBP178,102 Loan Notes remain outstanding which is the final balance
redeemable or convertible on 31 December 2022.
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END
IR FLFEDARISLIF
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