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MLVN.GB Malvern International Plc

24.50
0.00 (0.00%)
06:57:51 - Realtime Data
Share Name Share Symbol Market Type Share ISIN Share Description
Malvern International Plc AQSE:MLVN.GB Aquis Stock Exchange Ordinary Share GB00BNBVJZ07
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 24.50 22.00 27.00 24.50 24.50 24.50 0.00 06:57:51
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Malvern International PLC Final Results (5603V)

06/04/2023 7:00am

UK Regulatory


Malvern (AQSE:MLVN.GB)
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From Mar 2023 to Mar 2024

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TIDMMLVN

RNS Number : 5603V

Malvern International PLC

06 April 2023

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

06 April 2023

Malvern International plc

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

Final results for the year ended 31 December 2022

Malvern International plc (AIM: MLVN), the global learning and skills development partner, announces its final results for the year ended 31 December 2022.

Results

   --    Revenues increased 169% to GBP6.51m (2021: GBP2.42m) 

-- The operating loss for the year reduced to GBP0.78m (2021: loss GBP1.32m) reflecting continued strong cost control measures together with ongoing investment in our sales and marketing and central operations

   --    The loss for the year was GBP1.08m (2021 loss: GBP1.59m) 
   --    Loss per share of 4.95 pence (2021 loss: 8.49 pence) 

-- Cash balances increased by GBP0.81m during the year to GBP1.18m (2021: GBP0.37m) reflecting cash inflow of GBP1.32m (2021: cash outflow of GBP1.19m). This increase was due to the late invoicing to us of accommodation costs

-- Net debt was GBP4.38m (2021: GBP5.85m) including GBP3.08m (2021: GBP3.35m) of lease liabilities

Operational highlights

-- Over three-fold an increase in University Pathways students for 2022/23 academic year with 500 University Pathway students now enrolled

-- Revenues in English Language Training ("ELT") centres bounced back during summer months ahead of pre-pandemic levels

-- Continued to strengthen and deepen relationship with the University of East London ("UEL") with five-year partnership aiming to increase rapidly the volume of Chinese student enrolments

-- Strengthened senior management team with promotions and appointments of a Director of University Partnerships, Director of Student Recruitment, Commercial Director of ELT, Head of Operations and a Group HR Manager

   --    Appointed an experienced East Asia Director to manage and grow our agent network across China 

-- Junior programmes relaunched in summer of 2022 with 976 students enrolled after two years of no activity

Richard Mace, Chief Executive Officer, said: "Student numbers continued to rebuild throughout 2022 as limitations on international travel eased. English Language Training bounced back in 2022 with three centres posting revenues ahead of the pre-pandemic period during the busy summer months. Our University Pathways saw a three-fold increase in student numbers for the 2022/23 academic year start, contributing significantly to our overall University Pathways population of 500 students and giving a strong indication of the potential of this division. Juniors delivered programmes to 976 students, generating revenues of c.GBP1.35m after two years of no activity.

Our forward bookings and revenue visibility for the start of 2023, combine with the removal of all COVID-19 restrictions, gives us confidence in Malvern's near and longer term prospects. We expect to move towards profitable growth in all divisions in 2023."

 
 
   For further information please 
   contact: 
 Malvern International Plc           www.malverninternational.com 
 Mark Elliott - Chairman                          Via our website 
 Richard Mace - Chief Executive 
  Officer 
 WH Ireland (NOMAD & Broker)                  www.whirelandcm.com 
 Mike Coe / Sarah Mather                            0207 220 1666 
 

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 olds.

For further investor information go to www.malverninternational.com .

CHAIRMAN'S STATEMENT

Introduction

Student numbers continued to rebuild throughout 2022 as the limitations on international travel eased. The second half of the year saw more significant growth and a return to pre-pandemic levels of student numbers in our adult ELT schools. The Juniors division which runs two-week courses mostly over the summer holidays saw a c.50% return of student numbers compared to 2019, which was in line with the wider market performance since the majority of these courses are booked many months in advance and at a time where uncertainty around travel remained. We welcomed our largest cohort of 500 students for University Pathways in the 2022/23 academic year.

Financial performance

Revenues increased 169% to GBP6.51m (2021: GBP2.42m). The operating loss for the year reduced to GBP0.78m (2021: loss GBP1.32m) reflecting continued strong cost control measures together with ongoing investment in our sales and marketing and central operations.

The loss for the year was GBP1.08m (2021 loss: GBP1.59m), resulting in a loss per share of 4.95 pence (2021 loss: 8.49 pence).

Cash balances increased by GBP0.81m during the year to GBP1.18m (2021: GBP0.37m) reflecting cash inflow of GBP1.32m (2021: cash outflow of GBP1.19m). This increase was due to the late invoicing to us of accommodation costs. Net debt was GBP4.38m (2021: GBP5.85m) including GBP3.08m (2021: GBP3.35m) of lease liabilities (see note 24 of the financial statements).

Financing and debt restructure

In March 2022, successful negotiations were finalised with BOOST&Co., (the Group's fund manager, acting on behalf of the Company's debtholder IL2 (2018) Sarl) to restructure the Group's GBP2.6m debt facility. Under the original agreement monthly payments were due to commence in April 2022 over a 24-month period. The new agreement provides for a 12-month payment and interest holiday with monthly payments commencing from March 2023, over a five-year period. To assist with the lumpy nature of our cash flow we have also agreed with them to vary the timing of these payments during 2023. At the same time BOOST&Co., provided a letter of comfort to provide ongoing financial support to the Group for any short-term working capital requirement should that become necessary.

Share option scheme

The Company continued to offer an EMI share option scheme to retain, incentivise and align the interests of employees with certain performance targets and strategic goals. The Company awarded 575,000 ordinary shares of 1 pence each in the capital of the Company, pursuant to the Company's EMI share option scheme (the "EMI Options") to Richard Mace, Daniel Fisher and certain employees of the Company in December 2022. The EMI Options granted, when added to the previously granted EMI Options of 2,002,500 represent 8.2% of the existing issued share capital of the Company.

Staff and staff appointments

Malvern continued to build and strengthen its sales and marketing team, appointing an experienced East Asia Director to manage the region's agent network primarily across China following our February 2023 expansion of operations there. As the business grows so does the need to continue to build our excellent senior management team and this we will continue to do to drive the business in 2023.

I would like to take this opportunity to thank all our colleagues for their continued dedication in delivering quality education to our students and in the significant contribution they have made in the post COVID-19 recovery of our business.

Outlook

The significant revenue growth seen in H2 2022, in combination with the visibility of University Pathways revenue in H1 2023, and no COVID-19 restrictions affecting students' ability to travel, gives us confidence in Malvern's near and longer term prospects. We expect to achieve growth in all divisions in 2023.

Student numbers in our language schools have returned to pre-pandemic levels and the pipeline for 2023 is encouraging. In our University Pathways division, student numbers are up 247% on the prior academic year (21/22 v 22/23), which reflects the significant investment in this division. Finally, pre-bookings for 2023 summer camps are very encouraging and revenue growth is expected as an outcome.

We have a great management team and the services we offer are in demand. We expect to grow and diversify our revenue by bringing on board new educational establishments and attracting students from more countries than ever before.

COVID-19 was a very difficult time for our industry but with the support of all our stakeholders we survived. We now see great opportunities for us to prosper in 2023 and beyond.

Mark Elliott

Chairman

OPERATING REVIEW

English Language Training ("ELT")

The ELT industry has bounced back after international borders reopened following two years of travel restrictions. This is evidenced through revenues across the Group's three ELT centres during the Group's busiest summer period, coming in slightly ahead of the pre-pandemic level in 2019.

Adult ELT revenue increased in 2022, mainly coming from the MENA and Latin America markets. This was helped by the Government's announcement in early May 2022 that Saudi Arabia 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 English language schools provided a mixture of in-class, online, and blended learning in 2022, although there is now a clear return to predominately in-class learning.

The focus for the Group continues to be increasing the volume of accommodation options for students, which is a challenge across the industry, and continuing to develop our student acquisition model. Recruiting students via our growing agency network and directly via our digital presence and processes is a key strategy for this division. With our investment in systems and appointment of a Commercial Director we are well placed to grow in 2023 and beyond.

University Partnerships

Underpinned by strong partnership structures with UEL, including regular joint senior management group meetings and excellent relationships with colleagues from across UEL, our International Study Centre welcomed a three-fold increase of students for the 2022/23 academic year, contributing significantly to our overall University Pathways population of 500 students. An increase of over 240% on the 2021-22 academic year compared which had 144 students across our International Study Centres.

This increase in student numbers is being driven by our expanded sales team and improved processes to manage and convert potential students from across the world. In parallel, staffing and operational arrangements have developed rapidly in our centre, driving our focus on learning and teaching excellence and maximising student attainment and progression to the University. These are built on a continued focus on optimising quality assurance within the centre, which has been recognised by our University partners during a range of formal and informal quality assurance processes.

We have formally launched a five-year strategic collaborative partnership with UEL, significantly extending our partnership with the University and aiming to increase rapidly the volume of Chinese students enrolled at UEL's three London campuses. Our centre is expected to expand further over the next five years.

Following the appointment of an experienced East Asia Director, we will manage an extensive education agent network across China via our in-country team and undertake extensive marketing, student recruitment and conversion activities on behalf of UEL in mainland China. Together with UEL colleagues, we will support partnership development with academic institutions in China. These partnerships will support the identification and development of articulation agreements (an articulation agreement is a formal partnership with another institution, which guarantees a UEL place on a particular programme, or programmes, on successful completion at another institution) and transnational education opportunities.

NCUK

Our NCUK centre at Malvern House London continues to grow, playing its part within our University Pathways division. We have attracted an increased number of students to both the September 2022 and January 2023 cohorts, aiming to progress to high quality universities via their International Foundation Year programme.

The building of our brand presence in key recruitment regions such as China, Nigeria and Sub-Saharan Africa, is expected to greatly increase the numbers of students on the NCUK programme during 2023/24. Delivery of further NCUK programmes, such as Science and Engineering routes, is currently being explored with our partners at NCUK, with both organisations looking to our NCUK centre to support their strong growth trajectories.

Malvern Juniors

As expected, the Italian funded INPS programmes went ahead in July and August 2022. The Company delivered programmes to 976 students, generating revenues of c.GBP1.35m after two years of no activity. The bulk of the students originate from Italy.

This performance was in line with the wider Junior market with 2022 programmes running at around 50% to 60% of pre-pandemic levels.

The team had a very successful British Council inspection in July 2022. The final result is excellent and puts Malvern in the top quartile of inspections in the industry. Our next full inspection of Junior programmes is due in 2026.

In China, the biggest international student market to the UK for Junior summer camps, we are expecting students to begin travelling again in 2023. The Group's strategic investment in this market is expected to contribute significant growth from 2024.

The Group is well placed for growth in this division. There remains a clear backlog of demand for 2023 based on pre-bookings, consequently we expect significant growth in student numbers and revenues in 2023.

Central services

We continue to make improvements to our shared central services which includes both back-office and sales and marketing. Our priority is to place quality at the heart of our business, standardising and optimising our education provision. This is backed by a decision to centralise quality assurance in order to support each division in managing student feedback processes, accreditations, reviews and compliance.

The creation of our China recruitment function and appointment of an experienced East Asia Director to manage the agent network across China continues to build on our sales and marketing capabilities. We continue to work with our agent network as well as supporting our direct student recruitment channels. For the latter, we are improving lead generation and conversion processes as well as expanding our marketing collateral.

With the international student market re-stabilising we are aware of the need to develop and engage our staff to promote a positive and high-performance team. Our HR team has been working to improve remuneration packages to attract the best talent, enhance training and CPD opportunities as well as identifying future leaders within the business.

We are looking at ways to extend our current social responsibility activities beyond offering scholarship places, establishing charity days at each of our centres and developing a company-wide giving back culture.

Richard Mace

Chief Executive Officer

FINANCIAL REVIEW

Revenue

Revenues increased 169% to GBP6.51m (2021: GBP2.42m). Revenues have increased across all areas of the business. Student numbers recovered following a long period of travel restrictions. Juniors ran for the first time in 2019, generating cGBP1.35m in revenue, the bulk of students coming from Italy. Freedom of travel and continued investment in our pathway partnerships, resulted in a 247% increase in student numbers from the prior academic year (21/22 vs. 22/23).

Operating costs

The reopening of international borders aside, continued investment in the Group's sales and marketing functions has also been critical to the growth of revenue in 2022. Spending on these functions totalled cGBP0.24m (excluding salaries) in 2022 (2021: cGBP0.08m). Much of this increased spend is the result of increased travel. Across all divisions, student number growth is built on relationships with the Group's agent network. The relaxation of travel restrictions allowed our people to travel to key recruitment markets for the first time in two years.

Group salaries and benefits also increased in 2022, GBP2.06m v GBP1.34m in 2021. This increase can be attributed to an increased number of student facing staff to deal with the large increase in student numbers during the year. As previously stated, the Group continues to invest in the sales function, including additional headcount, and as an extension of the sales function, the Group has also invested in the UEL admissions pipeline and student support structure. These UEL functions have been key to delivering growth in student numbers in this division. As the staffing structure continues to take shape, the Group is well positioned to scale effectively in 2023.

The loss for the year was GBP1.08m (2021 loss: GBP1.59m), resulting in a loss per share of 4.95 pence (2021 loss: 8.49 pence). The reduced loss position is the result of a strong H2 revenue performance. The total loss in 2022 was significantly impacted by supressed revenue in H1 2022, caused by the impact of COVID-19. An anticipated full year of normal operating conditions in 2023, in combination with the visibility of University Pathway revenue in H1 2023, gives the board confidence about Malvern's near and longer term prospects.

Consolidated Statement of Financial Position

The Group continues to make incremental improvements on the Consolidated Statement of Financial Position. The convertible loan note, first issued in 2017, was fully redeemed during the year following a placing (2021: GBP0.27m). The levels of historical creditor balances were also reduced in 2022. This included making the final payment of a long payment plan to clear a cGBP200k Junior's accommodation invoice from 2019.

The cash balance at the end of the financial year was GBP1.18m (2021: GBP0.37m). This increase was due to the late invoicing (cGBP0.75m) to us of accommodation costs. The Group has managed expenditure tightly. In addition, debtor days have reduced which is important for our working capital and growth requirements. The Group's GBP2.6m debt was restructured in 2022, providing a 12-month payment and interest holiday with monthly payments commencing from March 2023, over a five-year period. To assist with the uneven nature of our cashflow we have also agreed with BOOST&Co Limited to vary the timing of these payments during 2023.

Daniel Fisher

Chief Financial Officer

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 
 
                                         Note          2022          2021 
                                                        GBP           GBP 
 Revenue 
 Sale of services                         3       6,511,602     2,417,524 
-------------------------------------  ------  ------------  ------------ 
 Total revenue                                    6,511,602     2,417,524 
-------------------------------------  ------  ------------  ------------ 
 
 Cost of services sold                          (3,558,448)   (1,071,679) 
-------------------------------------  ------  ------------  ------------ 
 Gross profit                                     2,953,154     1,345,845 
 
   Other income                                      84,744       223,989 
 
 Salaries and employees' benefits               (2,063,363)   (1,346,486) 
 Share based payments                               (3,745)       (3,128) 
 Depreciation of property, 
  plant and equipment                             (372,457)     (409,271) 
 Other operating expenses                       (1,387,080)   (1,135,149) 
-------------------------------------  ------  ------------  ------------ 
 Operating loss                                   (788,747)   (1,324,200) 
 Finance costs                            4       (295,086)     (270,190) 
-------------------------------------  ------  ------------  ------------ 
 Loss before tax                                (1,083,833)   (1,594,390) 
 Income tax charge                                        -             - 
-------------------------------------  ------  ------------  ------------ 
 Loss for the year from continuing 
  operations                                    (1,083,833)   (1,594,390) 
 Profit from discontinued 
  operation                                               -       448,741 
-------------------------------------  ------  ------------  ------------ 
 
 Loss for the year being total 
  comprehensive expense attributable 
  to owners of the parent                       (1,083,833)   (1,145,649) 
-------------------------------------  ------  ------------  ------------ 
 
 
                                       2022         2021 
                                        GBP          GBP 
 -----------------------------  -----------  ----------- 
Total comprehensive expense 
 for the year                   (1,083,833)  (1,145,649) 
------------------------------  -----------  ----------- 
 Continuing operations          (1,083,833)  (1,594,390) 
 Discontinued operations                  -      448,741 
Attributable to: 
Equity holders of the parent    (1,083,833)  (1,145,649) 
------------------------------  -----------  ----------- 
 
 
                                                2022        2021 
                                                       restated* 
-------------------------------------  -----  ------  ---------- 
Loss per share from continuing operations 
 attributed to equity holders of the 
 Company (in pence) 
Basic                                         (4.95)      (8.49) 
Diluted                                  6    (4.95)      (8.49) 
-------------------------------------  -----  ------  ---------- 
 

*Total ordinary shares for 2021 have been restated to provide a meaningful comparison with 2022. A share consolidation was completed in 2022, increasing the nominal value of the Group's ordinary shares.

CONSOLIDATED AND COMPANY STATEMENT OF FINANCIAL POSITION

 
                                        Group                Company 
                                 --------------------  -------------------- 
                                      2022       2021       2022       2021 
                                       GBP        GBP        GBP        GBP 
------------------------------   ---------  ---------  ---------  --------- 
TOTAL ASSETS 
Non-current assets 
Property, plant, and 
 equipment                          30,662     50,427          -          - 
Goodwill                         1,419,350  1,419,350          -          - 
Investment in subsidiaries               -          -  1,419,350  1,419,350 
Right-of-use assets              2,215,076  2,553,726          -          - 
-------------------------------  ---------  ---------  ---------  --------- 
Total non-current assets         3,665,088  4,023,503  1,419,350  1,419,350 
-------------------------------  ---------  ---------  ---------  --------- 
 
Current assets 
Trade receivables                  405,051    705,271          -          - 
Other receivables and 
 prepayments                     1,135,990    289,607     41,771    112,788 
Amounts due from subsidiaries            -          -          -    501,409 
Cash and cash equivalents        1,181,631    377,170     13,101     45,701 
-------------------------------  ---------  ---------  ---------  --------- 
Total current assets             2,722,672  1,372,048     54,872    659,898 
-------------------------------  ---------  ---------  ---------  --------- 
Total assets                     6,387,760  5,395,551  1,474,222  2,079,248 
-------------------------------  ---------  ---------  ---------  --------- 
 
 
 
                                                  Group                       Company 
                                        --------------------------  --------------------------- 
                                  Note          2022          2021          2022           2021 
                                                 GBP           GBP           GBP            GBP 
--------------------------------  ----  ------------  ------------  ------------  ------------- 
EQUITY AND LIABILITIES 
Non-current liabilities 
Term loan                          7       2,052,808     1,791,952     1,997,540      1,723,537 
Warrants                           7         189,762        72,801       189,762         72,801 
Lease liabilities                  7       2,624,792     3,075,517             -              - 
Deferred tax liabilities                      10,279        10,279             -              - 
--------------------------------  ----  ------------  ------------  ------------  ------------- 
Total non-current liabilities              4,877,641     4,950,549     2,187,302      1,796,338 
--------------------------------  ----  ------------  ------------  ------------  ------------- 
Current liabilities 
Trade payables                               416,944       413,297           788         31,896 
Contract liabilities                       2,199,570       899,137             -              - 
Other payables and accruals                1,640,517       598,253        96,984        108,294 
Amounts due to subsidiary                          -             -     1,262,410        661,326 
Convertible loan notes             8               -       275,885             -        275,885 
Lease liabilities                  7         450,726       278,961             -              - 
Term loan                          7         436,341       808,869       415,044        787,573 
Total current liabilities                  5,144,098     3,274,402     1,775,226      1,864,974 
--------------------------------  ----  ------------  ------------  ------------  ------------- 
Total liabilities                         10,021,739     8,224,951     3,962,528      3,661,312 
--------------------------------  ----  ------------  ------------  ------------  ------------- 
Equity attributable 
 to equity 
 holders of the Company 
Share capital                      9      11,330,956    11,216,991    11,330,956     11,216,991 
Share premium                              6,797,950     6,603,839     6,797,950      6,603,839 
Retained earnings                       (21,762,885)  (20,679,052)  (20,617,212)   (19,431,716) 
Convertible loan reserve                           -        28,822             -         28,822 
--------------------------------  ----  ------------  ------------  ------------   ------------ 
Total equity                             (3,633,979)   (2,829,400)   (2,488,306)    (1,582,064) 
--------------------------------  ----  ------------  ------------  ------------   ------------ 
Total equity and liabilities               6,387,760     5,395,551     1,474,222      2,079,248 
--------------------------------  ----  ------------  ------------  ------------   ------------ 
 
 

The loss for the year as per the financial statements of the parent company at 31 December 2022 was GBP1,185,496 (2021: Loss GBP1,103,278).

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 
                      Share       Share         Retained  Translation    Capital      Convertible 
                    capital     premium         earnings      reserve    reserve     loan reserve                Total 
                        GBP         GBP              GBP          GBP        GBP              GBP                  GBP 
---------------  ----------  ----------  ---------------  -----------  ---------  ---------------  ------------------- 
Balance at 1 
 January 2021    10,309,811   5,782,394     (19,703,963)      288,149    170,560           28,822          (3,124,227) 
Direct costs 
 relating to 
 issue of 
 shares                   -    (89,503)                -            -          -                -             (89,503) 
Total 
 comprehensive 
 expense for 
 the year                 -           -      (1,145,649)            -          -                -          (1,145,649) 
Capital reserve 
 transferred to 
 retained 
 earnings on 
 disposal of 
 Singapore                -           -          170,560            -  (170,560)                -                    - 
Translation 
 reserve 
 transferred to 
 retained 
 earnings on 
 disposal of 
 Singapore                -           -                -    (288,149)          -                -            (288,149) 
New Share Issue     891,702     898,598                -            -          -                -            1,790,300 
Share based 
 payments (inc. 
 EMI options)        15,478      12,350                -            -          -                -               27,828 
---------------  ----------  ----------  ---------------  -----------  ---------  ---------------  ------------------- 
Balance at 31 
 December 2021   11,216,991   6,603,839     (20,679,052)            -          -           28,822          (2,829,400) 
---------------  ----------  ----------  ---------------  -----------  ---------  ---------------  ------------------- 
Direct costs 
 relating to 
 issue of 
 shares                   -    (24,500)                -            -          -                -             (24,500) 
---------------  ----------  ----------  ---------------  -----------  ---------  ---------------  ------------------- 
Total 
 comprehensive 
 expense for 
 the year                 -           -      (1,083,833)            -          -                -          (1,083,833) 
Convertible 
 loan notes          85,211      14,789                             -          -                -              100,000 
Convertible 
 loan note 
 reserve 
 transferred to 
 share premium            -      28,822                -            -          -         (28,822)                    - 
New Share Issue      25,009     175,000                -            -          -                -              200,009 
Share based 
 payments (EMI 
 options)             3,745           -                -            -          -                -                3,745 
Balance at 31 
 December 2022   11,330,956   6,797,950     (21,762,885)            -          -                -          (3,633,979) 
---------------  ----------  ----------  ---------------  -----------  ---------  ---------------  ------------------- 
 

CONSOLIDATED STATEMENT OF CASH FLOWS

 
                                                      2022         2021 
                                                                    GBP 
---------------------------------------------  -----------  ----------- 
Cash flows from operating activities 
Loss after income tax from 
   Continuing activities                       (1,083,833)  (1,594,390) 
   Discontinued activities                               -      448,741 
Adjustments for: 
   Depreciation of tangible assets                 372,457      409,271 
   Fair value movements                           (40,019)       16,755 
Share based payments                                 3,745        3,128 
Profit/(loss) on disposal of tangible 
 assets                                                503        2,400 
Loss on disposal of discontinued operations              -    (503,040) 
Impairment of trade receivables                    113,583      311,102 
Finance cost                                       295,086      270,190 
Interest paid                                     (41,117)     (59,526) 
Tax paid                                                 -            - 
---------------------------------------------  -----------  ----------- 
                                                 (379,595)    (695,369) 
---------------------------------------------  -----------  ----------- 
Changes in working capital: 
   (Increase)/decrease in receivables            (659,746)    (110,781) 
   Increase/(decrease) in payables               2,171,471    (348,043) 
   Decrease in amounts due to related 
    parties                                              -     (40,000) 
---------------------------------------------  -----------  ----------- 
Net cash flows generated / (used) 
 in operating activities                         1,132,130  (1,194,193) 
---------------------------------------------  -----------  ----------- 
 
Cash Flows from Investing Activities 
   Purchases of property, plant, and 
    equipment                                     (14,545)     (11,280) 
---------------------------------------------  -----------  ----------- 
Net cash used in investing activities             (14,545)     (11,280) 
---------------------------------------------  -----------  ----------- 
 
Cash Flows from Financing Activities 
Repayment of lease liabilities                   (473,359)    (161,475) 
New equity issued                                  175,509    1,650,797 
Term Loan                                         (15,275)     (10,288) 
Net cash generated by financing activities       (313,125)    1,479,034 
Net change in cash and cash equivalents            804,461      273,561 
Cash and cash equivalents at the beginning 
 of the year                                       377,170      103,609 
Exchange losses on cash and cash equivalents             -            - 
Cash and cash equivalent at the end 
 of the year                                     1,181,631      377,170 
---------------------------------------------  -----------  ----------- 
 
 

Notes to the financial statements

1. General information

Malvern International plc (the "Company") is a public limited company incorporated in England and Wales on 8 July 2004. The Company was admitted to the AIM on 10 December 2004. Its registered office is 3rd Floor 1 Ashley Road, Altrincham, Cheshire, United Kingdom, WA14 2DT. The registration number of the Company is 05174452.

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 year.

2. Significant accounting policies

Basis of Preparation

These financial statements of the Group and Company are prepared on a going concern basis, under the historical cost convention (with the exception of goodwill) and in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations issued by the International Accounting Standards Board (IASB) and adopted by the United Kingdom, in accordance with the Companies Act 2006.

The Parent Company's financial statements have also been prepared in accordance with IFRS and the Companies Act 2006. The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.

The estimates and associated assumptions are based on historical experience and factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Going concern

The financial statements have been prepared on a going concern basis. The directors consider the going concern basis to be appropriate having paid due regard to the Group and Company's projected results during the twelve months from the date the financial statements are approved and the anticipated cash flows, availability of loan facilities and mitigating actions that can be taken during that period.

In March 2022, successful negotiations were finalised with BOOST&CO Limited (the Group's fund manager, acting on behalf of the Company's debtholder IL2 (2018) Sarl) to restructure the Group's GBP2.6m debt facility. Under the original agreement monthly payments were due to commence in April 2022 over a 24-month period. The new agreement provides for a 12-month payment and interest holiday with monthly payments commencing from March 2023, over a five-year period.

BOOST&CO Limited, acting on behalf of IL2 (2018) Sarl, have again provided a letter of comfort to provide ongoing financial support to the Group for any short-term working capital requirement should that become necessary. It is the present policy of BOOST&CO to ensure that the Group has adequate financial resources to meet their obligations and to enable it to continue as a going concern for a period of at least 12 months from the date of the signing of the financial statements. To assist with the uneven nature of our cash flow we have also agreed with BOOST&CO Limited to vary the timing of these payments during 2023.

The significant revenue growth seen in H2 2022, in combination with the visibility of University Pathway revenue in H1 2023, and no COVID-19 restrictions affecting students' ability to travel, gives the Board confidence about Malvern's short- and long-term prospects. The board expects to achieve growth in all divisions in 2023.

Student numbers in our language schools have returned to pre-pandemic levels and the pipeline for 2023 is encouraging. In our Pathway division, student numbers are up 247% on the prior academic year (21/22 vs. 22/23), which reflects the significant investment in this division. Finally, our summer camps successfully returned in 2022, delivering cGBP1.4m in revenue to the Group. Pre-bookings for 2023 summer camps are very encouraging and revenue growth is expected as an outcome.

Profit and cash flow projections for the Group indicate that the Group is moving towards profitable growth in its key operating entities. A large part of this assumed growth is driven by the more profitable pathways division of the Group.

Despite significant revenue growth in H2 and FY23 forecast, current UK and worldwide macroeconomic factors continue to create uncertainty in the profit and cash flow projections for the Group, in particular lecturers and staff wage inflation. The provision of the letter of comfort from the Group's lenders referred to above provides confidence to the Group with respect to future funding. However, there still remains a material uncertainty with respect to the going concern status of the Group..

3. Sale of services

 
                                                      2022       2021 
                                                       GBP        GBP 
-----------------------------------------------  ---------  --------- 
Course fees                                      5,338,335  2,189,651 
Accommodation fees                                 965,254    162,106 
Application fees, registration and examination 
 fees                                              143,148     50,264 
Course materials and student activities             64,865     15,503 
-----------------------------------------------  ---------  --------- 
                                                 6,511,602  2,417,524 
-----------------------------------------------  ---------  --------- 
 

Segments

The directors consider that the Group has a single business segment, being the sale of education services. The operations of the Group are managed centrally with group-wide functions covering sales and marketing, finance and administration. Geographically, operations are all UK based.

Other Income

 
                          2022     2021 
                           GBP      GBP 
----------------------  ------  ------- 
Rental income           44,020   23,595 
R&D credits                  -   48,758 
Government subsidies*   40,724  151,636 
----------------------  ------  ------- 
                        84,744  223,989 
----------------------  ------  ------- 
 

*Government subsidies includes the amount received from the furlough job retention scheme in 2021 and council grants in 2022.

4. Finance costs

 
                                        2022     2021 
                                         GBP      GBP 
-----------------------------------  -------  ------- 
Interest on leases (IFRS 16)         194,399  162,935 
Interest on term loan                 68,368   80,845 
Interest on convertible loan notes    24,555   21,503 
Other finance costs                    7,764   4, 907 
-----------------------------------  -------  ------- 
                                     295,086  270,190 
-----------------------------------  -------  ------- 
 

5. Operating expenses

 
                                                      2022       2021 
                                                       GBP        GBP 
-----------------------------------------------  ---------  --------- 
Auditors' remuneration: 
 Fees payable to the Group's auditors for 
  statutory audit                                   41,000     30,500 
 Fees payable to the Group's auditors and 
  associates for statutory audit of subsidiary 
  Companies                                         32,500     31,425 
 Non-audit fees for taxation compliance 
  fees                                               8,570      9,200 
 Administrative and marketing expenses           1,123,930    736,167 
 Expected credit losses - trade receivables        221,099    311,102 
 Fair value movements                             (40,019)     16,755 
-----------------------------------------------  ---------  --------- 
                                                 1,387,080  1,135,149 
-----------------------------------------------  ---------  --------- 
 

6. Loss per share

The basic and diluted loss per share attributable to equity holders of the Company was based on the loss attributable to shareholders of GBP1,083,833 (2021: loss of GBP1,145,649) and the weighted average number of ordinary shares in issue during the year of 21,915,119 shares (2021 restated*: 18,788,985 shares). The loss per share (in pence) attributed to shareholders is 4.95 (2021 restated*: loss per share of 8.49).

Calculations for dilutive EPS have not been made in respect of the convertible loan notes (note 25 of the financial statements) on the basis the impact would be anti-dilutive.

*Total ordinary shares for 2021 have been restated to provide a meaningful comparison with 2022. A share consolidation was completed in 2022, increasing the nominal value of the Group's ordinary shares.

7. Financial liabilities

 
                                  Group                Company 
                           --------------------  -------------------- 
                             2022       2021       2022       2021 
                              GBP        GBP        GBP        GBP 
-------------------------  ---------  ---------  ---------  --------- 
Non-current liabilities 
Term Loan                  2,052,808  1,791,952  1,997,540  1,723,537 
Warrants                     189,762     72,801    189,762     72,801 
Lease liabilities          2,624,792  3,075,517          -          - 
-------------------------  ---------  ---------  ---------  --------- 
                           4,867,362  4,940,270  2,187,302  1,796,338 
-------------------------  ---------  ---------  ---------  --------- 
Current liabilities 
Convertible Loan Notes             -    275,885          -    275,885 
Term Loan                    436,341    808,869    415,044    675,251 
Lease liabilities            450,726    278,961          -          - 
Trade and other payables   2,057,461  1,011,550     97,772    140,191 
-------------------------  ---------  ---------  ---------  --------- 
                           2,944,528  2,375,265    512,816  1,091,327 
-------------------------  ---------  ---------  ---------  --------- 
Total                      7,811,890  7,315,535  2,700,120  2,887,665 
-------------------------  ---------  ---------  ---------  --------- 
 

Convertible loan notes

The convertible loan note was redeemed in 2022 (See Note 25 of the financial statements).

Term loan

In August 2019, Malvern received a term loan from BOOST&Co Limited for GBP2,600,000. This loan originally carried an interest rate as the higher of (a) 10% per annum, or (b) 8% per annum plus LIBOR. The loan was restructured in March 2022, the new terms include a 12-month payment and interest holiday with monthly payments commencing from March 2023 over a five-year period, with the interest being set at 7% for the first two years and 10% for the subsequent three years. There are no early repayment penalties on this facility.

During 2020, the Group took advantage of the Government-backed Bounce Back Loan Scheme (BBLS), benefitting from a total of GBP100,000 to be repaid over a six year period with a 2.5% fixed rate of interest. The first 12 months of this lending facility are free of any obligation to pay capital or interest. The balance outstanding at 31 December 2022 is GBP76,566 (2021: GBP89,872).

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.

As at the date of financial position, the Group has fair valued these warrants at GBP189,762. The following estimates were used to calculate this fair value:

-- Annualised volatility of 109% and 144% at the inception of term loan and at the year end respectively, calculated using share price volatility over a preceding 3 year period.

-- Maturity of 10 years applied, reflecting the duration over which Boost & Co could exercise these warrants.

   --      Risk free rate of 0.50%, being the Yield on UK 10 year Government bonds. 

-- Strike price of GBP0.0015, being the 28-day average share price preceding the date (i.e. 27 Aug 2019) of drawdown.

*Restated for the share consolidation.

8. Convertible loan notes

In November 2022, the balance of the Convertible Loan Note was redeemed following a placing.

 
 
Issue Name                          Convertible Unsecured Loan Notes 
                                                   2020 
----------------------------------  ---------------------------------  ----- 
Date of Issue                               17 November 2017 
----------------------------------  ---------------------------------  ----- 
Date of Redemption                          31 December 2022 
----------------------------------  ---------------------------------  ----- 
Interest Payable                         1 Jan 2018-31 Dec 2018         3% 
----------------------------------  ---------------------------------  ----- 
                        1 Jan 2019-31 Dec 2019                          4% 
 --------------------------------------------------------------------  ----- 
                        1 Jan 2020-31 Dec 2020                          5% 
 --------------------------------------------------------------------  ----- 
                        1 Jan 2021-31 Dec 2022                            6% 
 --------------------------------------------------------------------  ----- 
Total Issued                                  GBP1,200,000 
----------------------------------  ---------------------------------  ----- 
Amount converted in 2017                      (GBP100,000) 
----------------------------------  ---------------------------------  ----- 
Balance at 31/12/2017                         GBP1,100,000 
----------------------------------  ---------------------------------  ----- 
Amount converted in 2018                      (GBP771,898) 
----------------------------------  ---------------------------------  ----- 
Fair value adjustment                          (GBP28,822) 
----------------------------------  ---------------------------------  ----- 
Balance at 31/12/2018                          GBP299,280 
----------------------------------  ---------------------------------  ----- 
Fair value adjustment                           GBP17,307 
----------------------------------  ---------------------------------  ----- 
Balance at 31/12/2019                          GBP316,587 
----------------------------------  ---------------------------------  ----- 
Unwinding Interest                              GBP6,230 
----------------------------------  ---------------------------------  ----- 
Balance at 31/12/2020                          GBP322,817 
----------------------------------  ---------------------------------  ----- 
Unwinding interest                              GBP3,068 
----------------------------------  ---------------------------------  ----- 
Share Conversion at 31/07/2021                 (GBP50,000) 
----------------------------------  ---------------------------------  ----- 
Balance at 31/12/2021                          GBP275,885 
----------------------------------  ---------------------------------  ----- 
Unwinding Interest                              GBP2,217 
----------------------------------  ---------------------------------  ----- 
Share Conversion                              (GBP100,000) 
----------------------------------  ---------------------------------  ----- 
Discount on payout and redemption             (GBP178,102) 
----------------------------------  ---------------------------------  ----- 
Balance at 31/12/2022                               - 
----------------------------------  ---------------------------------  ----- 
 

9. Share capital

 
                                                Allotted, called up and fully paid 
                             ------------------------------------------------------------------------- 
                             No of Ordinary  Nominal Value  No of deferred  Nominal value    Nominal 
                                 shares       of Ordinary       shares       of deferred     value of 
                                                 shares                         shares      All shares 
---------------------------  --------------  -------------  --------------  -------------  ----------- 
At 31 December 2021 
 - 0.1p ordinary shares 
 and 0.1p, 1p & 5p 
 deferred shares              2,109,018,964      2,109,019   2,828,138,750      9,104,659   11,213,678 
Additions during 
 the year - 18 February 
 2022 0.1p ordinary 
 shares                          35,211,724         35,212               -              -       35,212 
---------------------------  --------------  -------------  --------------  -------------  ----------- 
Additions during 
 the year - 20 August 
 2022 0.1p ordinary 
 shares                          50,000,000         50,000               -              -       50,000 
---------------------------  --------------  -------------  --------------  -------------  ----------- 
Additions during 
 the year - 3 November 
 2022 0.1p ordinary 
 shares                               9,312              9               -              -            9 
---------------------------  --------------  -------------  --------------  -------------  ----------- 
At 3 November 2022 
 - pre-share consolidation    2,194,240,000      2,194,240   2,828,138,750      9,104,659   11,298,899 
---------------------------  --------------  -------------  --------------  -------------  ----------- 
 

Share consolidation*

 
Share consolidation 
 - ordinary shares 
 0.1p to 1p - 3 November      21,942,400*  219,424   2,828,138,750   9,104,659    9,324,083 
----------------------------  -----------  -------  --------------  ----------  ----------- 
Additions during 
 the year - 3 November 
 2022 1p deferred 
 shares                                 -        -    *197,481,600   1,974,816    1,974,816 
----------------------------  -----------  -------  --------------  ----------  ----------- 
At 3 November 2022 
 - post-share consolidation    21,942,400  219,424   3,025,620,350  11,079,475   11,298,899 
----------------------------  -----------  -------  --------------  ----------  ----------- 
Additions during 
 the year - 14 November 
 2022 1p ordinary 
 shares                         2,500,000   25,000               -           -       25,000 
----------------------------  -----------  -------  --------------  ----------  ----------- 
At 31 December 2022 
 1p ordinary shares 
 and 0.1p, 1p & 5p 
 deferred shares               24,442,400  244,424   3,025,620,350  11,079,475  11,323,899* 
----------------------------  -----------  -------  --------------  ----------  ----------- 
 

*Excludes the accumulated share-based payment balance taken to equity, GBP7,057 (2021: GBP3,313).

On 18 February 2022, convertible loan notes of GBP50,000 were converted to shares at 0.142p, adding a further 35,211,724 0.1p ordinary shares.

On 20 August 2022, further convertible loan notes of GBP50,000 were converted to shares at 0.1p, adding a further 50,000,000 0.1p ordinary shares.

On 3 November 2022, 9,312 0.1p ordinary shares were issued as part of the preparation for the ordinary shares split. This was done to ensure that as part of the share reorganisation, an exact whole number of consolidated ordinary shares could be issued.

*All ordinary shares were then consolidated on the basis of one consolidated ordinary share for each 20,000 ordinary shares. Each consolidated ordinary share was then sub-divided into 200 new ordinary shares and 1,800 new deferred shares.

On 14 November 2022, the Group undertook a placing of 2,500,00 1p ordinary shares at 8p to raise GBP200,000 to redeem the balance of the convertible loan note.

The Company has Enterprise Management Incentive share option scheme for certain directors and employees. The cost related to it GBP3,745 (2021: GBP3,128) has been added to share capital in the financial statement.

10. Share-based payments and share options

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 following a 3-year vesting period if the Company's share price has met the pre-determined target conditions. There are two market-based conditions, each accounting for 50% of the share options awarded to the employee. In addition, the m id-market share price of the Company on the AIM Market of the London Stock Exchange, must stay at or above the exercise price, for 40 consecutive business days.

The Group used the Black Scholes valuation framework for all share options awarded pre 2022. These options have also been valued using the Monte Carlo valuation method to validate the reasonableness of the results. The results from the Monte Carlo valuation were not considered materially different from the Black Scholes valuation.

The inputs into the Black Scholes model as at 31 December 2022 are as follows:

 
                                                                                                            Deemed 
                                               Strike                                                     probability 
                                              price on                                                        of 
                                   Exercise    grant      Vesting                                          achieving 
                                    price       date      period      Expected    Risk free     Fair        market 
 Grant date      EMI options*      (pence)*   (pence)*    (years)    volatility     rate        value      condition 
------------  ------------------  ---------  ---------  ----------  -----------  ----------  ----------  ------------ 
  02/12/2020            336,250       50         15          3         12.30%       0.35%       0.34         5.02% 
  02/12/2020            336,250       90         15          3         12.30%       0.35%       0.74         0.37% 
  07/01/2021              50,000      50         15          3         11.98%       0.35%       0.35         5.30% 
  07/01/2021         50,000           90         15          3         11.98%       0.35%       0.75         0.37% 
  18/01/2021              60,000      50         15          3         11.98%       0.35%       0.35         5.30% 
  18/01/2021              60,000      90         15          3         11.98%       0.35%       0.75         0.37% 
  01/09/2021            283,750       60         22          3         10.45%       0.26%       0.38         1.10% 
  01/09/2021            283,750      110         22          3         10.45%       0.26%       0.87         0.00% 
-------------  -----------------  ---------  ---------  ----------  -----------  ----------  ----------  ------------ 
 
 

* Total EMI options have been restated due to the share consolidation that was completed in 2022. The share consolidation increased the nominal value of the Group's ordinary shares.

As with options containing performance-based market targets, the probability of achieving the set condition is factored into the determination of the value. These will not be re-measured at subsequent reporting dates.

The vesting probabilities presented are products of lognormal distribution modelling over a 3-year period to determine the likelihood of the vesting condition being reached, based off the scaled mean and standard deviation from a prior 365-day period

The Group has used the Monte Carlo valuation framework for all share options awarded in 2022.

The inputs into the Monte Carlo model as at 31 December 2022 are as follows:

 
    Grant           EMI options        Hurdles    Strike price     Expiry    Volatility    Option     Share 
     date                               (pence)      on grant      (years)                  price      price 
                                                   date (pence)                            (pence)    (pence) 
------------  ----------------------  ---------  --------------  ---------  -----------  ---------  --------- 
 30/11/2022                  287,500      60           10            5          50%         2.93        12 
 30/11/2022                  287,500     110           10            5          50%         1.34        12 
------------  ----------------------  ---------  --------------  ---------  -----------  ---------  --------- 
 

For options with hurdles, early exercise is assumed to take place as soon as the 40-day hurdle requirement is triggered after the 3-year vesting period. The Monte Carlo simulation uses 50,000 iterations to enhance the accuracy of the predicted outcome.

Year ended 31 December 2022

 
                                     Number of options   Weighted average 
                                                            s trike price 
---------------------------------   ------------------  ----------------- 
 Outstanding at 1 January 2022*             1 ,460,000            1 7.00p 
 
 Granted during the year                       575,000                10p 
 Forfeited during the year                      70,000                  - 
 
 Outstanding at 31 December 2022             1,965,000             15.54p 
 Exercisable                                         -                  - 
----------------------------------  ------------------  ----------------- 
 

* Total EMI options and weighted price have been restated due to the share consolidation that was completed in 2022. The share consolidation increased the nominal value of the Group's ordinary shares.

Of the options outstanding at 31 December 2022, 892,500 (2021: 892,500) options have an exercise price of 15 pence, 567,500 (2021: 567,500) options have an exercise price of 22 pence, and 575,000 (2021: nil) options have an exercise price of 10 pence.

The aggregate charge for share options recognised in the Group financial statements in the year was, GBP3,745 (2021: GBP3,128).

The annual report and accounts together with the notice of AGM to be held in May 2023 (date to be announced), are expected to be uploaded to the Company's website and posted to shareholders in due course.

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