This announcement contains inside information for the purposes
of Article 7 of the UK version of Regulation (EU) No 596/2014 which
is part of UK law by virtue of the European Union (Withdrawal) Act
2018, as amended ("MAR"). Upon the publication of this announcement
via a Regulatory Information Service, this inside information is
now considered to be in the public domain.
26 September 2024
Malvern International
PLC
("Malvern" the
"Company")
Interim results for the six
months ended 30 June 2024
Malvern International plc (AIM:
MLVN), the global learning and skills development partner,
announces its interim results for the six months ended 30 June 2024
("H1 2024" or the "Period").
H1
2024 results
· Underlying revenues1, excluding agent commission,
increased 22% to £5.10m (H1 2023: £4.18m).
· Underlying operating profit was £0.39m (H1 2023: underlying
operating profit £0.50m).
· Statutory profit after tax for H1 2024 was £0.14m (H1 2023:
profit £0.22m).
· Statutory earnings per share was 0.57p (H1 2023: statutory
profit 0.91p).
· Cash at 30 June 2024 was £1.31m (FY 2023: £2.20 and H1 2023:
£2.12m).
· The Group continues to reduce its debt with BOOST&CO with
£2.02m remaining at the period end (FY 2023: £2.24m, H1
2023: £2.60m).
Operating highlights
· University Pathways student numbers increased by 59% in H1
2024 to 794 students (H1 2023: 500 students) studying in our
centres, delivering revenue and profit growth.
· Significant growth in Juniors ELT, with student numbers increasing
by 37% in 2024 to 3,405 students (2023: 2,478 students)
during the peak summer season. Approximately 95% of revenues will
be recognised in H2 2024.
· Compared to a 66% rebound in H1 2023, adult ELT centre revenue
growth for H1 2024 was flat, delivering a loss for the division due
to the fixed cost base of our year round centres.
· Appointed senior sales staff in H1
2024 to support Junior and adult English Language Teaching (ELT)
student numbers and revenue growth.
1. Total underlying revenues
and operating profit are detailed in note 4.
Commenting on the results and prospects, Richard Mace, Chief
Executive Officer, said:
"Our performance in H1 2024 reflects the investment made
across the business over the past three years. This investment is
ongoing, and we are currently in a transition phase where top-line
revenue growth is fueling further investment in our sales and
marketing, teaching, and back-office functions, setting the stage
for accelerated growth in 2025. Whilst Pathways and Juniors are
thriving due to strong demand, our adult ELT centres are not
experiencing equal growth. We are taking measures to address this,
including launching low-season and academic group programmes to
improve staff and centre utilisation throughout the year at our
permanent schools.
Looking ahead, our forward bookings and revenue visibility for
H2 2024 and early 2025 provide confidence in Malvern's short- and
long-term prospects, with growth anticipated across all divisions
in 2025."
For further information
please contact:
|
Malvern International Plc
Richard Mace - Chief Executive
Officer
|
www.malverninternational.com
Via
Zeus
|
|
|
|
|
NOMAD and Broker
Zeus
Mike Coe / Sarah Mather
|
https://zeuscapital.co.uk/
0203 829
5000
|
Notes to Editors:
Malvern International is a learning
and language skills development partner, offering international
students essential academic and English language skills, cultural
experiences and the support they need to thrive in their academic
studies, daily life and career development.
University Pathways
- on and off-campus university pathway programmes
helping students progress to a range of universities, as well as
in-sessional and pre-sessional courses.
Adult ELT at Malvern House
Schools - British Council accredited
English Language Teaching at English permanent UK registered
centres in London and Manchester.
Junior ELT -
fully-immersive residential English language centres and bespoke
language programmes for 13 to 18 year-old students with a choice of
high-quality locations.
For further investor information go
to www.malverninternational.com.
Chief Executive's review
Malvern has seen a significant
improvement in revenues, student numbers and mix, and business
pipeline in H1 2024, and we are pleased to have posted a small
profit for the Period.
Financial review
Underlying revenues, excluding agent
commission, increased to £5.10m (H1 2023: £4.18m). Revenue growth
was driven by higher student numbers in University Pathways and, to
a lesser extent, by Junior summer centres, where revenue is
predominately recognised in July and August (H2 2024).
Underlying operating profit was
£0.39m (H1 2023: £0.50m) due to increased strategic investment in
people, travel and marketing activities.
Staff costs increased by £0.56m in
H1 2024 compared to H1 2023. This rise included £0.09m for
additional summer centres staffing to accommodate the higher
numbers of Junior students, £0.14m for new sales staff, £0.07m in
additional bonus accruals, £0.03m in staff settlement costs,
£0.07m in additional recruitment costs and the remainder in
salary increases and new operational staff. Travel expenses also
increased by £0.12m in H1 2024 as a result of intensified business
development and sales and marketing efforts to accelerate revenue
and profit growth across all divisions.
Statutory operating profit was
£0.35m (H1 2023: £0.40m).
We remain profitable before tax,
achieving an underlying profit of £0.18m (H1 2023: £0.34m). The
statutory profit per share from operating activities was 0.57p (H1
2023: 0.91p).
We continue to maintain tight cost
controls whilst making strategic investments to increase the depth
of our teams, systems and processes to support our growth
plans.
Cash balances at 30 June 2024 were
£1.31m (31 December 2023: £2.20m and 30 June 2023: £2.12m). This
reduction was due to the delay in Junior summer centre receivables,
which fell into H2 2024. As at the date of this interim
announcement, the majority of the Junior's receivables has now been
collected.
We continue to pay down the
BOOST&CO debt, which stood at £2.02m at the period end, down
from £2.24m as of 31 December 2023. No payments were made to reduce
the BOOST&CO debt in H1 2023.
Operating review
University Pathways
The number of students studying in
our University Pathways programmes in H1 2024 (794 students) was
significantly higher than H1 2023 (500 students). Of these, 783
students were enrolled at the University of East London (UEL)
International Study Centre.
The performance in student
recruitment is driven by our expanded international sales team and
our expertise in managing and converting the student pipeline from
across the world. We continue to invest in staffing and operational
arrangements, focusing on learning, teaching and pastoral
excellence to maximise student attainment and progression. This
investment will increase once we have successfully concluded
negotiations with UEL for a contract longer than the current one
year.
Junior ELT
Junior Summer Centres continued to
produce significant revenue growth combined with high-quality
delivery. Approximately 5% of revenues from our Junior ELT centres
is recognised in H1 2024, with the remainder falling in the six
months to 31 December 2024.
We successfully delivered eight
centres (2023: five centres) over the summer season to 3,405
students (2023: 2,478 students), with feedback noting the
high-quality delivery. This result produced significant revenue
growth with a more diversified nationality mix, with growth from
China, Taiwan, and MENA.
Adult ELT
Revenues from ELT teaching delivered
to adults at our year round centres in Manchester and London King's
Cross were flat compared to the same period in 2023. This is a
mature market compared to Junior ELT with greater overseas
competition, and the sector has yet to recover fully to
pre-pandemic levels and is now at approximately 80% of the 2019
peak. Our school's fixed-cost base means that the division is
currently running at an operating loss . Without a sudden and
unexpected increase in adult student numbers short-term change is
unlikely.
The Group is taking measures to
address this situation, and we hope to see significant improvements
in 2025. Following our investment in our ELT sales and marketing
team, we are improving the quality of our engagement with our agent
network. We are also focusing on increasing year-round staff and
premises utilisation with the development of low-season group
programmes.
Investment in sales and
marketing
During the Period, we were pleased
to appoint Maya Frost as our new Marketing Director and Matthew
Hird as Global Sales Director for ELT programmes. Both Maya and
Matt have considerable experience in international student
recruitment. In addition, we have appointed several new senior
sales staff in key recruitment and under-represented
markets.
These investments are crucial to
growing the business and maintaining our market position since both
Pathways and the ELT market face increased competition from UK and
non-UK destinations. We welcome the Labour Government's decision to
maintain the Graduate Visa Route in its current form, ensuring the
UK continues to be an attractive destination for international
students. With universities increasingly reliant on international
students to cover their costs and enable them to sustain publicly
funded teaching and research activities, we are pleased that the
uncertainty has been lifted.
Summary and outlook
We are pleased with our performance
in H1 2024, having taken advantage of improved market conditions
following our investment in the business over the last three years.
Pathways and Junior ELT continue to be the strongest performing
divisions in terms of revenue and profit growth, and we are
addressing the issues we face in our adult ELT division.
Approximately 490 students will
start courses in September 2024 at the Group's University of East
London ("UEL")
International Student Centre, compared to 450 students in 2023.
This solidifies the Group's partnership with UEL as one of the
UK's largest and
most successful University Pathway centres.
The investment in business
development has resulted in discussions with several potential
university partnerships in the UK and the US, some of which are at
an advanced stage. The opportunities offer different models,
including providing a comprehensive Pathway programme and exclusive
direct recruitment contracts. Additionally, discussions regarding a
renewed contract remain ongoing with UEL, and the Board anticipates
an update on this before the end of the year.
Junior revenues for the full year
are expected to increase by 62% to £6.05m (2023: £3.72m), with
£5.73m to be recognised in H2 2024, underpinning the Group's
full-year revenues. The Junior ELT market is
expected to grow, and our investment in our ELT sales and marketing
teams will enable us to harness the available opportunities. For
2025 we are developing new academic and low-season programmes to
target a broad range of international markets and their respective
national holiday seasons to improve our income profile during the
year.
Whilst the adult ELT industry has
yet to fully recover from the pandemic, there is an opportunity for
us to take a greater share of this market. We have recruited new
sales staff to cover Europe, Spanish Latin America, and the Far
East. Given the long ELT recruitment cycle, we don't expect to see
a material upturn until 2025.
Student numbers and revenues are
growing steadily, and we have the skills in house to drive our
growth strategy and expand the business significantly. With this
solid foundation, we are increasingly confident in growing all
areas of the business.
Richard Mace
Chief Executive Officer
UNAUDITED CONSOLIDATED STATEMENT OF
CASH FLOWS
FOR
THE SIX MONTHS ENDED 30 June 2024
|
|
Six
months
ended
30 June
2024
|
Six
months
ended
30 June
2023
|
Year
ended
31
December 2023
|
|
|
£'000
|
£'000
|
£'000
|
|
|
Unaudited
|
Unaudited
|
Audited
|
|
Cash flows from operating
activities
|
|
|
|
|
Profit/(loss) after tax
|
145
|
224
|
(160)
|
|
Deferred tax adjustment for
2023
|
(6)
|
―
|
―
|
|
Adjustments for:
|
|
|
|
|
Depreciation of tangible
assets
|
157
|
179
|
536
|
|
Fair value movements
|
―
|
―
|
131
|
|
Share based payments
|
―
|
―
|
5
|
|
Loss on disposal of tangible
assets
|
―
|
―
|
1
|
|
Impairment of trade
receivables
|
(90)
|
54
|
23
|
|
Release of accruals adjustment for
depreciation charges related to early termination
|
12
|
―
|
(12)
|
|
Finance cost
|
213
|
177
|
192
|
|
Increase in stocks
|
(8)
|
―
|
(8)
|
|
Taxation
|
―
|
―
|
17
|
|
Interest paid
|
(80)
|
―
|
(143)
|
|
|
343
|
634
|
582
|
|
|
|
|
|
|
Changes in working capital
|
|
|
|
|
|
|
|
|
|
Decrease/(increase) in debtors &
prepayments
|
(3,512)
|
(529)
|
158
|
|
Increase in creditors
|
2,822
|
1,108
|
1,219
|
|
Net cash (used in)/ generated from
operating activities
|
(347)
|
1,213
|
1,959
|
|
|
|
|
|
|
Cash flows from investing
activities
|
|
|
|
|
Purchase of property, plant and
equipment
|
(9)
|
(7)
|
(58)
|
|
Net cash used in investing
activities
|
(9)
|
(7)
|
(58)
|
|
|
|
|
|
|
Cash flows from financing
activities
|
|
|
|
|
Decrease in finance lease
liabilities
|
(298)
|
(269)
|
(557)
|
|
Additional loan
|
22
|
―
|
44
|
|
New share issue
|
―
|
―
|
―
|
|
Term loan - net
|
(253)
|
―
|
(374)
|
|
Net cash used in financing
activities
|
(529)
|
(269)
|
(887)
|
|
|
|
|
|
|
Net increase/(decrease) in cash and
cash equivalents
|
(885)
|
937
|
1,014
|
|
Cash and cash equivalents at
beginning of period / year
|
2,196
|
1,182
|
1,182
|
|
Cash and cash equivalents at end of
period / year
|
1,311
|
2,119
|
2,196
|
NOTES TO THE UNAUDITED INTERIM
FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 June
2024
1. General
information
Malvern International plc (the
"Company") is a public limited liability company incorporated in
England and Wales on 8 July 2004. The Company was admitted to AIM
on 10 December 2004. Its registered office is 3rd Floor, 1 Ashley
Road, Altrincham, Cheshire WA14 2DT and its principal place of
business is in the UK. The registration number of the Company is
05174452.
The principal activities of the
Company are that of investment holding and provision of educational
consultancy services. The principal activity of the Company
is to provide an educational offering that is broad and geared
principally towards preparing students to meet the demands of
business and management. There have been no significant changes in
the nature of these activities during the period.
2. Significant accounting policies
Basis of
preparation
The Group's unaudited interim
results for the six months ended 30 June 2024 ("Interim Results")
are prepared in accordance with the Group's accounting policies
which are based on the recognition and measurement principles of
the UK-adopted International Accounting Standards in conformity
with the requirements of the Companies Act 2006. As permitted, the
Interim Results have been prepared in accordance with the AIM rules
and not in accordance with IAS 34 "Interim financial reporting" and
therefore the interim information is not in full compliance with
International Accounting Standards.
The interim condensed consolidated
financial statements are prepared under the historical cost
convention as modified to include the revaluation of certain
financial instruments. The accounting policies adopted in the
preparation of the interim condensed consolidated financial
statements are consistent with those followed in the preparation of
the Group's annual consolidated financial statements for the year
ended 31 December 2023
(https://www.malverninternational.com/annual-report-2023/). The
principal accounting policies of the Group have remained unchanged
from those set out in the Group's 2023 annual report and financial
statements. The Principal Risks and Uncertainties of the
Group are also set out in the Group's 2023 annual report and
financial statements and are unchanged in the period.
The financial information for the
six months ended 30 June 2024 and 30 June 2023 has not been audited
and does not constitute full financial statements within the
meaning of Section 434 of the Companies Act 2006.
The Group's 2023 financial
statements for the year ended 31 December 2023 were prepared under
UK-adopted International Accounting Standards. The auditor's report
on these financial statements was unqualified and did not contain
statements under Sections 498(2) or (3) of the Companies Act 2006
and they have been filed with the Registrar of Companies. However,
the auditor's report did draw attention to a material uncertainty
in relation to going concern.
3. Profit/(Loss) per share
The basic profit/(loss) per share is
calculated by dividing the profit/(loss) before tax attributable to
ordinary shareholders by the weighted average number of ordinary
shares in issue during the relevant period. The weighted average
number of shares in issue during the period was 24,442,400 (H1
2023: 24,442,400).
4. Reconciliation of
Statutory information to underlying information
Underlying
information is provided because the Directors consider that it
provides assistance in understanding the Group's underlying
performance.
The
following table includes details of non-underlying items and
reconciles statutory information to underlying
information:
|
|
Sale of
services
|
Agent
commission income
|
Total
revenue
|
Direct
costs
|
Gross
profit
|
Operating
profit
|
Finance
costs
|
Profit
before tax
|
|
June
2024
|
£
'000
|
£
'000
|
£
'000
|
£
'000
|
£
'000
|
£
'000
|
£
'000
|
£
'000
|
|
Statutory
Results
|
5,098
|
1,038
|
6,136
|
(2,639)
|
3,497
|
352
|
(213)
|
139
|
|
Malvern
House Brighton (a)
|
―
|
―
|
―
|
(3)
|
(3)
|
9
|
3
|
12
|
|
Staff
restructuring costs (b)
|
―
|
―
|
―
|
―
|
―
|
35
|
―
|
35
|
|
Malaysia
Liquidation (c)
|
―
|
―
|
―
|
―
|
―
|
(3)
|
―
|
(3)
|
|
Underlying
Results
|
5,098
|
1,038
|
6,136
|
(2,642)
|
3,494
|
393
|
(210)
|
183
|
|
|
Sale of
services
|
Agent
commission income
|
Total
revenue
|
Direct
costs
|
Gross
profit
|
Operating
profit
|
Finance
costs
|
Profit
before tax
|
|
June
2023
|
£
'000
|
£
'000
|
£
'000
|
£
'000
|
£
'000
|
£
'000
|
£
'000
|
£
'000
|
|
Statutory
Results
|
4,471
|
380
|
4,851
|
(2,038)
|
2,813
|
399
|
(177)
|
222
|
|
Malvern
House Brighton (a)
|
(294)
|
―
|
(294)
|
208
|
(86)
|
104
|
7
|
111
|
|
Underlying
Results
|
4,177
|
380
|
4,557
|
(1,830)
|
2,727
|
503
|
(170)
|
333
|
|
|
Sale of
services
|
Agent
commission income
|
Total
revenue
|
Direct
costs
|
Gross
profit
|
Operating
Profit
|
Finance
costs
|
(Loss) /
profit before tax
|
|
December
2023
|
£
'000
|
£
'000
|
£
'000
|
£
'000
|
£
'000
|
£
'000
|
£
'000
|
£
'000
|
|
Statutory
results
|
11,322
|
936
|
12,258
|
(6,537)
|
5,721
|
47
|
(192)
|
(145)
|
|
Malvern
House Brighton (a)
|
(672)
|
―
|
(672)
|
451
|
(220)
|
325
|
(168)
|
157
|
|
Share
based payments (d)
|
―
|
―
|
―
|
―
|
―
|
5
|
―
|
5
|
|
Warrants (e)
|
―
|
―
|
―
|
―
|
―
|
226
|
―
|
226
|
|
Loan
write-back (c)
|
―
|
―
|
―
|
―
|
―
|
(97)
|
―
|
(97)
|
|
Underlying
results
|
10,650
|
936
|
11,586
|
(6,085)
|
5,501
|
506
|
(360)
|
146
|
a.
Malvern House Brighton
During 2023 the Directors of the
Company announced its decision to close Malvern House Brighton. The
decision was made following a review of the viability of the
school, informed by current operations, overhead costs, projected
student numbers, financial performance and the further investment
required for the school to achieve profitability which it had yet
to do.
b. Staff
restructuring costs
The management of the Group are
completing a staff review to ensure that we are using our resources
as efficiently as possible.
c. Malaysia
liquidation & loan write-back
Minor liquidator costs to close out
the remaining issues from the Group's former Malaysian
entity.
d. Share-based
payments
The Company has an Enterprise
Management Incentive share option scheme for certain directors and
employees. Under the scheme, participants have been awarded options
to acquire up to a prescribed level of shares.
e.
Warrants
As part of the term loan, BOOST
& Co. was issued warrants over 1,725,113 shares. These
warrants are exercisable at the Strike Price at any time over the
following 10 years since the inception of term loan in August 2019.
The warrants are revalued at fair value annually, any movement is
expensed in the Consolidated Statement of Comprehensive
Income.
- ENDS
-