Half-year Report

RNS Number : 8024J
Malvern International PLC
26 August 2021
 

 

26 August 2021

 

Malvern International PLC

("Malvern", the "Group" or the "Company" )

 

Interim results for the six months ended 30 June 2021

 

Malvern International plc (AIM: MLVN), the global learning and skills development partner, announces its interim results for the six months ended 30 June 2021 ("H1").

Results

· H1 revenues from continuing operations of £1.42m (H1 2020: £1.37m).

· H1 operating profit (before depreciation, amortisation and finance charges) of £9k (H1 2020: loss £53k)

· H1 loss before tax on continuing operations was £0.35m (H1 2020: loss £0.44m).

· Loss per share on continuing activities of 0.02p (H1 2020: loss 0.16p).

· £1.70m gross raised (£1.60m net of expenses) by way of placing and subscription.

· Cash as at 30 June 2021 was £1.28m (31 December 2020: £0.10m and 30 June 2020: £0.06m).

 

*In August 2020, the Group announced the closure of Singapore operations. The Singapore company was formally placed in liquidation in April 2021, this is reported in the current and prior periods as a discontinued operation. Financial information relating to the discontinued operation for the period to the date of the closure is set out in note 7 of the interim statements.

 

Operating highlights and outlook

 

· English Language Training ("ELT") schools are currently operating at approximately 20% of pre-pandemic levels, in line with management expectations.

· Provisional bookings for ELT are encouraging, demonstrating the pent-up demand in this area, however many student start dates remain subject to easing of travel restrictions.

· University Pathways deposits for 2021/22 academic year are currently ahead of the previous year.   However, with the current restrictions in place for international travel, there has been a significant level of deferrals to a January 2022 start .

· The Group's NCUK offering was launched in H1 2021.  Student applications are currently being processed for September 2021 term start and we have received the first deposits. The sales and marketing teams are focused on building the brand and reputation of this area of the business.

· The Group received a significant number of bookings for the 2021 summer camps prior to being put on hold, which points to a strong demand for our product. Our expectation is that this demand will return for summer 2022 as the border restrictions are relaxed.

· It has been announced that the Hungarian Government's Language Learning Scholarship Programme for Hungarian Students, Tempus Public Foundation will open again for summer 2022.   We can expect to accept bookings for summer 2022 from December 2021.

 

Commenting on the results and prospects, Richard Mace, Chief Executive Officer, said:  

" We have continued to provide tuition to students throughout the period through face-to-face, online and blended learning. While the pandemic has continued to disrupt bookings and the timing of start dates, we are pleased that we have managed to keep our ELT schools open and that provisional bookings for both ELT and University Pathways are rebuilding. There is a clear back-log of demand for all our education services and we expect a robust return once restrictions are eased and in-class teaching can resume. In the meantime we continue to strengthen our sales and marketing teams and ensure the quality of our education services remains high."

This announcement contains information which, prior to its disclosure by this announcement, was inside information for the purposes of the Market Abuse Regulation

 

 


For further information please contact:

 

Malvern International Plc

Richard Mace - Chief Executive Officer

www.malverninternational.com

Via Communications Portfolio

 

 

NOMAD and Broker

WH Ireland Limited

Mike Coe / Sarah Mather

www.whirelandcb.com

 

+44 20 7220 1666

 

 

Media enquiries

Communications Portfolio

Ariane Comstive

 

ariane.comstive@communications-portfolio.co.uk

+44 7785 922 354

 

 

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

Trading in the six months ended 30 June 2021 ("H1") has been significantly impacted by the effects of the Covid pandemic. Nevertheless the Group has made good progress in the period. Trading during the period for English Language Training ("ELT") and University Pathways students was at its highest since the outbreak of the pandemic in the UK in March 2020. ELT schools are currently running at approximately 20% of pre-pandemic levels and student numbers are expected to continue to rise, while University Pathways delivered courses to 170 students during the 2021/22 academic year. 

During this time, Malvern Online Academy has provided tuition both to students signed up to in-class courses in the form of blended and remote learning, as well as providing full online education.

Revenues from continuing operations for H1 were £1.42m (H1 2020: £1.37m). The loss before tax was £0.35m (H1 2020: loss £0.44m). The loss per share on continuing activities was 0.02p (H1 2020: loss 0.16p).

The Group has continued to implement strong cost control measures throughout the period. In April, the Group raised £1.60m after expenses by way of placing and subscription to support the business through the prolonged period of difficult trading and to build on the significant progress that has been made in many areas of the businessCash balances as at 30 June 2021 were £ 1.28m (31 December 20 20 : £ 0.10 m and 30 June 2019: £0.43m).  

Current trading

Language schools

There continues to be a significant backlog of demand for our educational products. This is reflected in the growing number of provisional bookings, which are subject to travel restrictions being eased, for ELT in our London, Brighton and Manchester schools. In light of this, the timing of individual start dates remains dependent on each nation's approach to allowing international travel to resume. 

Malvern's schools continue to run at approximately 20% of pre-pandemic levels which is in line with management expectations. Forward bookings particularly from the Middle East are encouraging. Middle East embassy bookings for Q4 are looking promising and should continue to build as travel restrictions are eased. A number of students quarantining in the UK, or yet to arrive, have elected to commence their language course online. In light of Covid, the UK government has extended concessions around student visa rules until April 2022, which allow online studies to qualify for post-study work rights.

Pathways

The demand for University Pathways courses is ahead of the previous year, as reflected by the deposits taken by our university partners for the September intake of the 2021/22 academic year. However the delays in the easing of travel restrictions, highlighted in our AGM update, and adjustments to admission procedure timetables, have together resulted in a significant level of start date deferrals to January 2022. As a result, September 2021 student numbers will be below last year but the number of the students for the academic year as a whole is expected to be at a higher level than 2020/21. We are partnering with UEL to refine the admission process to assist in maximising acceptance numbers of qualifying students for future cohorts.

The Group's first cohort of NCUK students are due to start in the last week of September. Recruitment for this programme is on budget. Our intention is to build our brand and reputation to grow this area of the business. To support our NCUK offering we have recruited an academic manager to ensure the quality of delivery of courses. We are confident with the team we have in place for the NCUK foundation programme that we have the platform for growth in 2022 and beyond.

Juniors

Due to anticipated international border issues we did not budget for any summer camps in 2021.  Not unexpectedly these have not gone ahead. Pleasingly, before our plans for these camps were put on hold, we had received a significant number of bookings pointing to strong demand for our product. Our expectation is that this demand will return for summer 2022 as border restrictions are relaxed. It has been announced that the Hungarian Government's Language Learning Scholarship Programme for Hungarian Students, Tempus Public Foundation will open again for summer 2022. We can expect to accept bookings for summer 2022 from December 2021. In 2019 we received provisional bookings of approximately £1.5m for this programme.

China

As part of our recruitment strategy we have appointed our first sales manager in China, in Chengdu, with a second sales manager post to be in place in Q4 2021. Our Chinese website is being developed and will be ready for the next student recruitment campaign in late 2021 / early 2022. China is the biggest international student market to the UK for Higher Education provision and junior summer camps.

Outlook

There is a clear back-log of demand for all our education services and we expect a robust return once restrictions are eased and in-class teaching can resume. Clearly a degree of uncertainty over the gradual opening of international travel remains, but in the meantime we are providing online and blended tuition where it is required. Our high quality team continue to build relationships with universities, agents, embassies and within countries worldwide.

Our fundraising in April 2021, along with strong cost-control measures has allowed us to weather the disruption caused by Covid to date, to strengthen our sales and marketing teams and contribute to other planned growth initiatives such that as restrictions ease we expect the number of students across the Group to grow substantially.

Richard Mace

Chief Executive Officer

 

 

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2021

 


 

Six
months ended
30 June 2021

Six
months ended
30 June 2020

Year ended
31 December 2020

 

 

 

£'000

£'000

£'000

 

 

Note

Unaudited

Unaudited

Audited

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

1,424

1,366

1,901

 

 

 

 

 

 

 

Cost of services sold & operating expenses

 

(1,573)

(1,612)

(3,232)

 

 

Other Income

 

158

193

418

 

 

 

 

 

 

 

Operating profit / (loss)

 

9

(53)

(913)

 

 

 

 

 

 

 

Finance costs

 

(147)

(178)

(302)

 

 

 

 

 

 

 

Depreciation & amortisation

 

(207)

(204)

(414)

 

 

 

 

 

 

 

Loss before taxation

 

(345)

(435)

(1,629)

 

 

 

 

 

 

 

Income tax charge

 

-

-

(31)

 

Loss for the period / year from continuing operations1

 

(345)

(435)

(1,660)

 

 

 

 

 

 

 

Discontinued operations1

7

(21)

252

(480)

 

Loss for the period / year

 

(366)

(183)

(2,140)

 

Loss attributable to equity holders

 

(366)

(183)

(2,140)

 

 

 

 

 

 

 

Loss for the period / year

 

(366)

(183)

(2,140)

 

Translation movement

 

(5)

(272)

16

 

Total comprehensive loss for the period / year

 

(371)

(455)

(2,124)

 

  Continuing operations

 

(345)

(435)

(1,660)

 

  Discontinued operations

 

(26)

(20)

(464)

 

Total loss attributed to equity holders

 

(371)

(455)

(2,124)

 

Loss per share on continuing activities

 

Pence

Pence

Pence

 

Basic 2

4

(0.02)

(0.16)

(0.23)

 

Diluted 2

4

(0.02)

(0.16)

(0.23)

 

 

 

 

 

 

 

1The closure of the Singapore school was completed in August 2020 and all operations in the territory have now ceased (liquidation commenced in April 2021). In line with the 2020 annual financial accounts, the Group continues to present the Singapore operations as discontinued.

 

2Calculated at the weighted average number of shares in issue during the period at 1,648,655,085 (H1 2020: 263,776,243).

 

UNAUDITED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021

 

As at
30 June 2021

As at
30 June 2020

As at
31 December 2020

 

£'000

£'000

£'000

 

Unaudited

Unaudited

Audited

 

 

 

 

Non-current assets

 

 

 

Property, plant & equipment

66

104

81

Goodwill

1,419

1,419

1,419

Right-of-use assets

2,426

2,800

2,613

 

3,911

4,323

4,113

Current assets

 

 

 

Inventory

-

 -

-

Debtors

542

1,413

1,033

Prepayments

133

289

162

Cash at bank and in hand

1,276

63

104

 

1,951

1,765

1,299

Assets classified for disposal

10

-

2

Total Assets

5,872

6,088

5,414

 

 

 

 

Non-current liabilities

 

 

 

Term loan

2,547

2,515

2,532

Warrants

64

68

64

Convertible loan notes

224

-

273

Lease liabilities

2,313

2,668

2,491

 

5,148

5,251

5,360

Current liabilities

 

 

 

Trade payables

408

457

604

Contract liabilities

221

269

676

Other payables and accruals

1,221

891

1,230

Amount due to related parties

-

-

40

Convertible loan notes

100

322

50

Provision for income tax

10

10

10

Lease Liabilities

354

344

351

Term Loan

19

-

-

 

2,333

2,293

2,961

 

 

 

 

Liabilities directly associated with assets classified for disposal

211

-

218

Total Liabilities

7,692

7,544

8,537

 

 

 

 

Equity

Share capital

11,193

10,310

10,310

Share premium

6,575

5,782

5,782

Reserves

(19,588)

(17,548)

(19,217)

 

(1,820)

(1,456)

Total Equity and Liabilities

5,872

6,088

5,414

 

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2021

 

 

Share Capital

Share Premium

Retained Earnings

Translation Reserve

Capital Reserve

Convertible Loan Reserve

Total Reserves

Attributable to Equity Holders of the Company

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 January 2020

9,364

5,431

(17,564)

272

171

28

(17,093)

(2,298)

Total comprehensive income for the period

-

-

(183)

(272)

-

-

(455)

(455)

New share issue

946

351

-

-

-

-

-

1,297

Balance at 30 June 2020

10,310

5,782

(17,747)

-

171

28

(17,548)

(1,456)

Total comprehensive income for the period

-

-

(1,957)

288

-

-

(1,669)

(1,669)

Direct costs relating to issue of shares

-

-

-

-

-

-

-

-

Balance at 31 December 2020 / 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)

 

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2021

 

Six
months ended
30 June 2021

Six
months ended
30 June 2020

Year ended
31 December 2020

 

£'000

£'000

£'000

 

Unaudited

Unaudited

Audited

Cash flows from operating activities

 

 

 

(Loss) / profit after tax from

 

 

 

Continuing activities

(345)

(435)

(1,660)

Discontinued activities

(21)

252

(480)

Adjustments for:

 

 

 

Depreciation & amortisation

207

204

414

Fair value movement on warrants

-

(57)

(62)

Fair value movement on convertible loan reserve

-

6

-

Share based payments

-

-

175

Loss on disposal of discontinued operations

(20)

(398)

-

Loss on disposal of tangible assets

-

-

(115)

Impairment of trade receivables

-

-

124

Finance cost

147

178

302

Interest paid

(54)

(49)

(51)

Tax paid

-

-

-

 

(86)

(299)

(1,353)

 

 

 

 

Changes in working capital

 

 

 

Decrease in debtors & prepayments

520

278

95

Increase / (decrease) in creditors

(848)

101

219

Decrease in inventories

-

2

6

Decrease in related parties

(40)

(43)

(7)

Net cash used in operating activities

(454)

39

(1,040)

 

 

 

 

Cash flows from investing activities

 

 

 

Purchase of property, plant and equipment

(5)

-

-

Investment in Intangible Assets

-

-

-

Net cash used in investing activities

(5)

-

-

 

 

 

 

Cash flows from financing activities

 

 

 

Decrease in finance lease liabilities

(18)

(259)

(195)

New share issue

1,651

100

1,156

Term loan

(2)

100

100

Net cash used in financing activities

1,631

(59)

1,061

 

 

 

 

Net increase in cash and cash equivalents

1,172

(20)

21

Effect of foreign exchange rate changes on consolidation

-

-

-

Cash and cash equivalents at beginning of period / year

104

83

83

Cash and cash equivalents at end of period / year

1,276

63

104

 


 

NOTES TO THE UNAUDITED INTERIM FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 30 JUNE 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 100 Avebury Boulevard, Milton Keynes, MK9 1FH 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 2021 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 2020, 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 emphasis of matter 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 2021 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 2020 are unaudited.

This interim consolidated financial information is presented in £ 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 1,648,655,085 (H1 2020: 263,776,243).

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 1,648,655,085 (H1 2020: 263,776,243).

5.  Share capital

On 1 April 2021 the Group announced the issue of 620,150,000 new ordinary shares through placing and a subscription to the Company of 230,000,000 new ordinary shares at a price of 0.20 pence per share to raise net proceeds of £1.60m. As at 30 June 2021, the total number of Ordinary Shares held in the Company was 2,087,467,240 (30 June 2020: 1,204,967,240).

6.  Subsequent events

In August 2021, the Company announced that it had allotted 21,551,724 new ordinary shares of 0.1p each pursuant to the conversion of £50,000 of the loan notes at a conversion price of 0.232 pence per share (being the average price of the five business days prior to the conversion date) that were otherwise redeemable on 31 July 2021. Following the loan note conversion, a further £272,817 Loan Notes remain outstanding of which a further £50,000 is redeemable or convertible on each of 31 January 2022 and 31 July 2022 with the final balance redeemable or convertible on 31 December 2022.

7.  Discontinued operations

The financial details related to Singapore operations are for the half year ended 30 June 2021. Following the decision to close the Singapore operations in August 2020, the company was formally placed in liquidation in April 2021.

i)  Financial performance of discontinued operations

 

Six months ended 30 June 2021
 '000

Six months ended 30 June 2020
£'000

Revenue

-

629

Other income

5

104

Expenses

(26)

(1,051)

Loss for the period

(21)

(318)

Other comprehensive income

-

570

Total Comprehensive income

(21)

252

 

 

ii) Assets and liabilities of entities classified for disposal

 

Six months ended 30 June 2021
 '000

Six months ended 30 June 2020
 '000

Asset classified for disposal

-

-

Property plant and Equipment

-

2,027

Other receivables

-

312

Cash & cash equivalent

10

6

Total assets classified for disposal

10

2,345

 

 

 

Liabilities directly associated with assets classified for disposal

-

-

Trade creditors

(145)

(699)

Other payables

(66)

-

Lease liability

-

(1,929)

Total liabilities

(211)

(2,628)

 

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