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.

27 August 2024

MALVERN INTERNATIONAL PLC

("Malvern", or the "Company")

Trading update

Growth in student numbers and revenues supporting ongoing business transformation

Malvern International plc (AIM: MLVN), the global learning and skills development partner, is pleased to provide a trading update for the six months ended 30 June 2024 ("H1 2024") ahead of its interim results to be announced in September 2024.

Highlights

Subject to review, the Company currently expects to report performance in H1 2024 as follows:

·    c.22% increase in underlying revenues, excluding agent commission, to £5.10m (H1 2023: £4.18m);

·    underlying operating profit of £0.40m (H1 2023: underlying profit £0.50m);

·    encouraging profit and revenue growth in the University Pathways division, following strong student recruitment for the 2023/24 academic year;

·    significant growth in the Juniors division, the Group expects revenue of c.£6m, the bulk of which will be recognised in H2 2024; and

·    English language centres experienced modest growth in a challenging market.

Group profit in H1 2024 was flat versus the prior year. After successfully completing the leap from a loss-making operation to a profitable business in 2023, management has ramped up strategic investment in people, travel and marketing activities in 2024. This spend is targeted at accelerating revenue and profit growth and business development across all divisions.  Return on this investment will be seen from 2025 onwards. Further details will be outlined in the interim accounts in September 2024.

The Company paid down £0.22m of the BOOST&CO debt in H1 2024. This debt stood at £2.02m as at 30 June 2024 down from £2.24m as at 31 December 2023.

Forward bookings and outlook

University Pathways

Approximately 475 students will start courses in September 2024 at the Group's University of East London ("UEL") International Student Centre, compared to 450 students in 2023. This solidifies the Group's partnership with UEL as one of the UK's largest and most successful University Pathway centres.

In addition, a cohort of 10 to 15 NCUK students will start University Pathway courses in September 2024. This result follows investment in the sales team, which has been developing relationships with universities and building the Group's agent network.

The investment in business development has resulted in discussions with several potential new university partnerships. Some of these discussions are at an advanced stage. The opportunities offer different models, including providing a comprehensive Pathway programme and exclusive direct recruitment contracts. These initiatives are with universities in the UK and the US.  Additionally, discussions regarding a renewed contract remain ongoing with UEL, and the Board anticipates an update on this before the end of the year.

Juniors

The Company delivered programmes to c.3,300 students in July and August 2024 (2023: 2,478 students), generating revenues of c.£6.0m (2023: £3.7m), with 95% of the revenue to be recognised in H2 2024. Pleasingly, in addition to growing the student numbers in 2024, the Company is also making progress on its strategic aim of diversifying the student nationality mix. While the number of Italian students grew significantly in 2024, the proportion of Italian students has reduced to c.65%, down from 95% in 2023. Following the Company's investment in China / East Asia, it is pleasing that we experienced growth in student numbers from both China and Taiwan in 2024. MENA, a region of strength for the Company, also produced encouraging growth. The Group plans to launch Junior Easter programmes in 2025 which will support continued growth and provide the Group with a better income profile throughout the year.

English language teaching ("ELT")

Building on solid growth last year, student numbers saw a modest uplift in H1 2024. The Adult ELT industry is still recovering at around 80% of its 2019 student weeks. To increase the Company's market share, it has recruited new sales staff to cover Europe, Spanish LATAM, and the Far East. Given the long ELT recruitment cycle, this investment will not produce significant revenue until 2025. 

Richard Mace, Chief Executive Officer, said:

"Our performance in H1 2024 is the result of investment across all areas of the business over the last three years. This process is ongoing, and we are currently undergoing a transition period where top-line revenue growth is supporting investment in our sales and marketing, teaching, and back-office functions to accelerate growth in 2025.  In the meantime, we continue to pay down the Company's debt, which is expected to reduce to around £1.80m by year end."

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.

English Language Schools - British Council accredited English Language Training at English UK registered schools in London and Manchester.

Language in Action juniors and summer camps ("Juniors") - 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.