29 September 2023
Malvern International PLC
("Malvern" the "Company")
Interim results for the six months ended 30 June 2023
Malvern International plc (AIM: MLVN), the global learning and skills development partner, announces its interim results for the six months ended 30 June 2023 ("H1 2023").
H1 2023 results
· Revenues from operations increased 110% to £4.85m (H1 2022: £2.31m)
· Operating profit (before depreciation, amortisation and finance charges) of £0.58m (H1 2022: loss £0.34m).
· Profit before tax from operating activities increased to £0.22m (H1 2022: loss £0.68m), largely due to an increase in strategic investment in the Company's sales structure and significant recruitment travel to key feeder markets including India and Nepal.
· Profit per share from operating activities of 0.92p (H1 2022: loss 3.16p).
· Cash at 30 June 2023 was £2.12m (FY 2022: £1.18m and H1 2022: £0.88m) and the Company's debt facility with BOOST&CO remained at £2.6m.
Operating highlights
· University Pathways student numbers increased by 247% in H1 2023 to 500 students (H1 2022: 144 students) studying in our centres.
· English Language Training ("ELT") centre revenues were 66% ahead of H1 2022.
· Junior summer camps returned once again over the summer months with a record number of camps and students. Payments in advance for these camps account for the high level of cash held at 30 June 2023.
Commenting on the results and prospects, Richard Mace, Chief Executive Officer, said:
"We are extremely pleased with our performance in H1 2023 which has been driven by a combination of a strong return in the international study market and our strategy to invest in our sales and marketing function over the last three years. The momentum has continued in the second half as we welcomed the new cohort of 450 University Pathways Students in September, and we experienced record performances from our ELT and Junior Summer camps in July and August.
We are also investing in highly experienced people in the Pathways sector to continue to expand our reach, whilst improving our systems of control and reporting. As a result of this investment we are expecting break-even or a small loss for H2 2023.
Our forward bookings and revenue visibility in H2 2023 and for the start of 2024 gives us confidence in Malvern's near and longer-term prospects. We expect to see growth in all divisions in 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.
For further information please contact:
| Malvern International Plc Richard Mace - Chief Executive Officer | Via W H Ireland |
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| NOMAD and Broker WH Ireland Limited Mike Coe / Sarah Mather |
+44 117 945 3470 |
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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.
Juniors and summer camps - fully-immersive summer residential English language camps and bespoke Company 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 revenues, student numbers and business pipeline in H1 2023 and we are pleased to have posted a small profit for the period.
The number of students studying in our University Pathways programmes in H1 2023 (500) was significantly higher than H1 2022 (144), which included 461 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 with a focus on learning, teaching and pastoral excellence to maximise student attainment and progression. This investment will increase once we have successfully concluded negotiations for a contract longer than the one year that currently exists.
During the period we ran joint marketing and recruitment trips to India and Nepal with UEL. The response to these events was very positive as we were able to showcase the quality of our offering to this key audience.
English Language Training ("ELT") centre revenues were 66% ahead of H1 2022. The wider ELT market is still recovering from the Covid-19 pandemic and is currently operating below 2019 levels. Consequently, we are very pleased with our performance.
Junior Summer Camps returned this summer stronger than ever, with five camps running during the June to August 2023 peak season. Approximately 10% of revenues from our camps are recognised in H1 2023 period, with the remainder falling in the six months to 31 December 2023 (H2 2023).
We continued to strengthen our teams, with the addition of new Heads of Marketing and Juniors. Emiliano Sallustri, the former Head of Juniors was promoted to Commercial Director of ELT and Juniors in January 2023.
Financial performance
Revenues from operations for H1 2023 more than doubled to £4.85m (H1 2022: £2.31m). Revenue growth was driven by higher student numbers in ELT and University Pathways, and to a lesser extent Junior summer camps which are predominately recognised in July and August (H2 2023).
Operating profit (before depreciation, amortisation and finance charges) was £0.58m (H1 2022: loss £0.34m) with operating profit margin at 12%. As with previous years, the operating profit margin is typically higher in the first half of the year than in the second half of the year due to the mix of revenues in each respective period.
We are pleased to report a small profit before tax of £0.22m (H1 2022: loss £0.68m), reflecting the improved trading conditions. The profit per share from operating activities was 0.92 p (H1 2022: loss 3.16p).
We continue to maintain tight cost controls whilst making strategic investments in increasing the depth of our teams, systems and processes to support growth.
Cash balances at 30 June 2023 were £2.12m (31 December 2022: £1.18m and 30 June 2022: £0.88m). The growth of our Juniors division in 2023 has led to an improved cash position in Q2 2023 relative to the prior year. We are also receiving payment sooner from our Juniors agents and managing the outgoings around this. These improvements help to support the broader Group's working capital requirements.
The Company's debt facility with BOOST&CO remained at £2.6m at 30 June 2023.
Considering these factors, the Board believes the Company's working capital position is sufficient to fund the ongoing investments in the business.
Summary and outlook
We are pleased with our performance in H1 2023, as we have taken advantage of improved market conditions following our investment in the business over the last three years. UEL University Pathways enrolments for September 2023 increased by 96% to c. 450 students (September 2022: 230 students) around a third of this income will be recognised in H2 2023, and two thirds in H1 2024. We expect this momentum to continue and we are currently anticipating the number of starters in January 2024 to be ahead of the 230 students who started in January 2023.
The peak months of July and August for ELT were c. 20% higher than in the same months in 2022, reflecting a return in confidence in the market with more Middle East and North Africa ("MENA") students travelling, supported by relaxed visa conditions for Saudi Arabian students coming to the UK and large groups of Italian students in our London centre.
We delivered five Junior Summer camps to c. 2,500 students in July and August 2023 (2022: 976 students) - a record for the Company - and we are already taking bookings for 2024.
Our significantly improved results are allowing us to invest in experienced higher education personnel to drive future sales, to build expanded sales and marketing teams together with associated business development, develop our teaching staff and operational delivery, and grow our agent network. The Company views these investments as essential to maximise current opportunities and to build on the solid base we now have for 2024 and beyond. The scale of this key strategic programme means we are expecting break-even or a small loss for H2 2023.
Richard Mace
Chief Executive Officer
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2023
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| Six | Six |
Year ended |
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| £'000 | £'000 | £'000 |
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| Note | Unaudited | Unaudited | Audited |
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| Revenue |
| 4,851 | 2,308 | 6,512 |
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| Cost of services sold & operating expenses |
| (4,193) | (2,687) | (7,013) |
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| Cost of services sold & operating expenses - Exceptional Item |
4 | (115) | - | - |
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| Total cost of services sold and operating expenses |
| (4,308) | (2,687) | (7,013) |
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| Depreciation & amortisation |
| (179) | (188) | (372) |
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Other income |
| 35 | 39 | 84 |
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| Operating profit / (loss) before finance costs |
| 399 | (528) | (789) |
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| Finance costs |
| (177) | (148) | (295) |
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| Profit/(Loss) before taxation |
| 222 | (676) | (1,084) |
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| Income tax charge |
| 2 | - | - |
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| Profit/(Loss) after tax for the period / year |
| 224 | (676) | (1,084) |
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Profit/(Loss) attributable to equity holders |
| 224 | (676) | (1,084) |
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| Total comprehensive profit/(loss) for the period / year |
| 224 | (676) | (1,084) |
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| Profit/(Loss) per share |
| Pence | Pence | Pence |
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| Basic | 3 | 0.92 | (3.16) | (4.95) |
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| Diluted | 3 | 0.80 | (2.75) | (4.95) |
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UNAUDITED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
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| As at | As at |
As at |
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| £'000 | £'000 | £'000 |
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| Unaudited | Unaudited | Audited |
| Non-current assets |
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| Property, plant & equipment | 28 | 39 | 31 |
| Goodwill | 1,419 | 1,419 | 1,419 |
| Right-of-use assets | 2,046 | 2,384 | 2,215 |
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| 3,493 | 3,842 | 3,665 |
| Current assets |
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| Debtors | 706 | 945 | 406 |
| Prepayments | 1,310 | 224 | 1,136 |
| Cash at bank and in hand | 2,119 | 881 | 1,182 |
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| 4,135 | 2,050 | 2,724 |
| Total Assets | 7,628 | 5,892 | 6,389 |
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| Non-current liabilities |
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| Term loan | 1,623 | 2,583 | 2,053 |
| Warrants | 190 | 225 | 190 |
| Deferred tax liability | 10 | 10 | 10 |
| Lease liabilities | 2,307 | 2,891 | 2,625 |
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| 4,130 | 5,709 | 4,878 |
| Current liabilities |
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| Trade payables | 460 | 346 | 417 |
| Contract liabilities | 3,574 | 1,812 | 2,200 |
| Other payables and accruals | 1,400 | 852 | 1,641 |
| Convertible loan notes | - | 227 | - |
| Provision for income tax | (2) | 5 | - |
| Lease liabilities | 588 | 386 | 451 |
| Term loan | 888 | 11 | 436 |
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| 6,908 | 3,639 | 5,145 |
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| Total Liabilities | 11,038 | 9,348 | 10,023 |
| Equity | |||
| Share capital | 11,331 | 11,252 | 11,331 |
| Share premium | 6,798 | 6,619 | 6,798 |
| Reserves | (21,539) | (21,327) | (21,763) |
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| (3,410) | (3,456) | (3,634) |
| Total Equity and Liabilities | 7,628 | 5,892 | 6,389 |
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2023
| | Share Capital | Share Premium | Retained Earnings | Convertible Loan Reserve | Total Reserves | Attributable to Equity Holders of the Company |
| | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Balance at 1 January 2022 | 11,217 | 6,604 | (20,679) | 29 | (20,650) | (2,829) |
| Total comprehensive income for the period | - | - | (676) | - | (676) | (676) |
| Balance at 30 June 2022 | 11,217 | 6,604 | (21,355) | 29 | (21,326) | (3,505) |
| Direct costs relating to issue of shares | - | (25) | - | - | - | (25) |
| New shares issued | 25 | 175 | - | - | - | 200 |
| New shares from share based payments including EMI Options | 4 | - | - | - | - | 4 |
| CLN Reserve transferred to Share Premium Account | - | 29 | - | (29) | (29) | - |
| Convertible Loan Notes | 85 | 15 | - | - | - | 100 |
| Total Comprehensive income for the period | - | - | (408) | - | (408) | (408) |
| Balance at 31 December 2022 / 1 January 2023 | 11,331 | 6,798 | (21,763) | - | (21,763) | (3,634) |
| Total comprehensive income for the period | - | - | 224 | - | 224 | 224 |
| Balance at 30 June 2023 | 11,331 | 6,798 | (21,539) | - | (21,539) | (3,410) |
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
| | Six | Six |
Year ended |
| | £'000 | £'000 | £'000 |
| | Unaudited | Unaudited | Audited |
| Cash flows from operating activities | | | |
| Profit/(Loss) after tax | 224 | (676) | (1,084) |
| Adjustments for: | | | |
| Depreciation of tangible assets | 179 | 188 | 372 |
| Fair value movements | - | - | (40) |
| Share based payments | - | - | 4 |
| Loss on disposal of tangible assets | - | - | 1 |
| Impairment of trade receivables | 54 | 132 | 114 |
| Finance cost | 177 | 148 | 295 |
| Interest paid | - | (13) | (41) |
| Tax paid | - | (16) | - |
| | 634 | (237) | (379) |
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| Changes in working capital | | | |
| Decrease / (increase) in debtors & prepayments | (529) | (307) | (659) |
| Increase / (decrease) in creditors | 1,108 | 1,118 | 2,171 |
| Net cash generated from operating activities | 1,213 | 574 | 1,133 |
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| Cash flows from investing activities | | | |
| Purchase of property, plant and equipment | (7) | (8) | (15) |
| Net cash used in investing activities | (7) | (8) | (15) |
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| Cash flows from financing activities | | | |
| Decrease in finance lease liabilities | (269) | (176) | (473) |
| New share issue | - | - | 176 |
| Term loan - Net | - | 114 | (15) |
| Net cash used in financing activities | (269) | (62) | (312) |
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| Net increase in cash and cash equivalents | 937 | 504 | 805 |
| Cash and cash equivalents at beginning of period / year | 1,182 | 377 | 377 |
| Cash and cash equivalents at end of period / year | 2,119 | 881 | 1,182 |
NOTES TO THE UNAUDITED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 JUNE 2023
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 6 months ended 30 June 2023 ("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 2022. The principal accounting policies of the Group have remained unchanged from those set out in the Group's 2022 annual report and financial statements. The Principal Risks and Uncertainties of the Group are also set out in the Group's 2022 annual report and financial statements and are unchanged in the period.
The financial information for the 6 months ended 30 June 2023 and 30 June 2022 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 2022 financial statements for the year ended 31 December 2022 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) 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 2022: 21,382,000).
The diluted profit/(loss) per share is calculated by dividing the profit/(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 (24,442,400 units) as at 30 June 2023, diluted for the effect of share options (1,965,000 units) and warrants (1,725,113 units) in existence during the period was 28,132,513 (H1 2022: 24,567,112). The weighted average number of shares in issue for H1 2022 was restated from 2,138,199,951 to 21,382,000 for effect of the share combination that took place in November 2022.
4. Exceptional Item
The separate reporting of exceptional items helps to provide an indication of the Group's underlying business performance.
In H1 2023, the Group is reporting a charge (£0.11m) related to revenue from the prior year. This is due to the late reporting of actual course attendance by a major customer. We are currently engaging with them over establishing better reporting systems from them to enable more prompt accounting for sales credits when required.
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