Final Results

RNS Number : 3227M

Malvern International PLC

27 April 2018

 

27 April 2018

Malvern International Plc

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

Final Results for 12 months to 31 December 2017

Malvern International Plc, the global learning and skills development partner, is pleased to announce its final results for the 12 months to 31 December 2017. 

Highlights include:

·     Early signs of new growth strategy evident in Group performance

·     Strong second half

·     Momentum carried into 2018

·     Collaboration agreements established with Playware and Oxford University Press

·     Acquisition and integration of transformational SAA-GE in Singapore

·     Appointment of Dr Sam Malafeh as Chief Executive Officer

·     Launch of Malvern Online (post period end)

·     Partnership agreement to embed Malvern within University of East London (post period end)

Commenting on the results and prospects Gopinath Pillai, Chairman at Malvern, said:

"2017 as a whole, and in particular the second half, has seen a considerable improvement in the Group's performance and an upward trajectory is now discernible. This has been due to three main factors. Firstly, a stronger management has been in place which will be strengthened further as we go forward. Secondly, the agent network has been reorganised successfully. Thirdly, our offerings now cover a wider range of products. In addition to these factors, I am optimistic that the first major acquisition which we completed in November 2017 will have a significantly positive impact not only on the operations of Singapore but also for our global platform.  The Board continues to be active in discussions with potential acquisition partners."

"With the new acquisition of a four-year EduTrust licensed school in Singapore, the continuing new initiatives in London and the re-introduction of international student intakes in Malaysia, the Group is well positioned to benefit from the expected growth through acquisition and organic growth. We have taken big leaps in reducing our operating losses from £1.45 million in 2016 to £0.69 million in 2017."

"Trading in the current financial year has started well and the Board is now confident that with the reorganised and a more focused Group, the impact on the performance of the Group can only be positive going forward and that it will bring the Group to profitability in 2018."

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

 

For further information please contact:
Malvern International Plc	www.malverninternational.com
Dr Sam Malafeh - Chief Executive Officer	Via Walbrook PR
Navin Khattar - Non-Executive Director	[e-mail]
WH Ireland (NOMAD & Broker)	www.whirelandcb.com
Mike Coe / Ed Allsopp	[phone]
Walbrook PR	[phone]
Tom Cooper / Paul McManus	[phone]
	[e-mail]

Notes to Editors:

Malvern International is a global learning and skills development partner preparing students and learners to meet the demands of a professional life.  Courses are delivered on sites in London, Singapore, and Malaysia; with the option of studying across multiple campus' over the duration of the same course; and online through the Malvern Online Academy - making step change education accessible while taking part in the learner's journey to success.

Courses include:

·     Certificate, Diploma and pre-University programs;

·     University degree and post-graduate programs;

·     Courses for professional examinations;

·     Tuition services for secondary school students and English language teaching.

Established in the 1980's and admitted to AIM in 2004, Malvern employs approximately 250 people and delivers a wide range of courses.  Malvern's growth strategy is driven by organic growth initiatives complemented by strategic acquisitions. For further investor information go to www.malverninternational.com  www.walbrookpr.com/malvern 

 

CHAIRMAN'S STATEMENT

Overview and Group strategy

2017 was a pivotal year in the delivery of Malvern's growth plans.  Malvern's ambition is to be a global partner in learning and skills development and, building on its experience and infrastructure, has a clear strategy to achieve this.   

Malvern's growth strategy includes:

·     promoting Malvern's globally recognisable brand in education and training;

·     continuing to strengthen management and administrative systems to achieve world class delivery and quality standards;

·     innovating to improve and expand the range of products and services offered;

·     extending distribution through our agent network and collaborations;

·     delivering organic growth through making training accessible to an increasingly mobile student population using multi-location and technology options; and

·     making complementary acquisitions to broaden geographical reach and subject range.

Operational highlights

At the end of 2016 we announced our strategic objectives for 2017.  I am pleased to report that we made considerable progress in pursuit of these objectives. Highlights included completing collaboration agreements with Playware and Oxford University Press; the acquisition of SAA Global Education Centre Pte Ltd. ('SAA-GE') in Singapore; the appointment of Dr Sam Malafeh as Chief Executive Officer; and post the period end, the launch of the Malvern Online Academy. The strategy really started showing positive results from the second half of 2017 with London leading the growth across the Group. This is a milestone considering the difficult situation London has faced in the last few years. Also, the new systems helped to reduce the cost of the operations and improved the quality of operations across the Group.

The quality standards of training delivery remain a vital measure in our industry.  We have put considerable effort into raising our quality standards across the Group and our efforts have been recognised and rewarded. In Singapore we had our EduTrust certification re-instated; in Malaysia we have been classified as a 4 STAR provider (Very Good), and in London we have been assessed by the Independent Schools Inspector as a provider that "Exceeds expectations".     

By location, other highlights include:

·     In the UK, London saw significant improvement which has driven a 53% increase in revenue year-on-year. In particular, seasonal summer camps continued to attract more students and the school also managed to attract more of the long term students from the Far East and South America. 

·     In Singapore the school regained its EduTrust certificate and there was a consequential improvement in the performance. In addition, the acquisition of SAA-GE, was completed in November 2017. This acquisition provides a platform to attract professional students in the areas of business and accounting. 

·     In Malaysia a restructuring of the management team was undertaken and new quality systems were implemented. These changes have resulted in the school obtaining an improved STAR rating of its quality to 4 Star (Very Good). Also since the year end the school has received, for the first time, an international license which allows it to take international students for vocational training.  The operation now has the platform to perform significantly better during 2018.

Financial results and business review

Group

In 2017 the total income for the continuing operations of the Group was £4.1 million (2016: £4.0 millon).

For the 2017 financial year, the Group incurred a loss after tax of £701,328 on the continuing business as compared to the loss of £1,373,410 in 2016 which included impairment charges of £150,000 made against goodwill and intangible assets due to the uncertainty surrounding the EduTrust License during 2016. In FY 2017, there was a reversal of the 2016 impairment against intangible assets of £150,000 due to the subsequent award of the EduTrust license for the Singapore operations. Included within losses for the year were the HQ operational costs of £0.58 million (2016-£0.71 million) 

The Group loss for the year was £701,328. The 2016 loss of £799,610 includes the gain on the sale of shares in the Dublin operations and the six-month operating profit for Dublin totalling £573,800.   

Hence the net loss per share for the year on a continuing basis for 2017 was 0.66 compared to the 1.84p for 2016 and cash at the end of the year stood at £0.48 million (2016: £0.12 million). At the year end the Company had outstanding loans of approximately £1.0 million (2016: £1.22 million) and outstanding convertible loan notes of approximately £1.0 million (2016: nil). The Group continues to be well supported by its major shareholders, KSP Investments and CG Corp each of whom provided new loans in the period.  

The net assets of the Group as at 31 December 2017 were £1.20 million (2016: £0.97 million).

Subsidiaries

The European Sector comprises only the UK operations in London. The Asia Sector comprises Singapore and Malaysia. A brief summary of these two sectors is set out below:

United Kingdom (Malvern House)

The business in London has improved dramatically, as the restructuring and reorganisation plans that began in 2015 have started to take effect. Revenue for the year was up 53% to £2.02 million (2016: £1.32 million).  Due to the revenue improvement, EBITDA (Note 2) improved to a positive £17,000, as compared to a loss of £386,000 in 2016.

In 2018, the performance of London is expected to continue to improve. In addition to the current growing operational revenue streams, there are new initiatives that were commenced in 2017 which will start to contribute in 2018 and beyond. These includes new partnerships with other educational institutes and online revenue generation models.  

Post the period end, we are delighted to have announced a partnership agreement with the University of East London which will see Malvern established as an embedded college within UEL, delivering pre-sessional foundation and English language courses for international students at both Degree and Masters levels.

Asia - comprises Singapore and Malaysian operations.

The total revenue for Asian operations in 2017 was £1.94 million compared to £2.68 million in 2016, a decrease of 27%.  If the revenue from the new acquisition (£0.34 million) was excluded, on a like for like basis, the comparison would be £1.60 million in 2017 compared to £2.68 million in 2016, a decrease of 40%. On a like for like basis, the Asian operations incurred an EBITDA loss of £0.16 million in 2017, higher than the £0.15 million loss that was recorded in 2016. If the new acquisition was included, the EBITDA (Note 2) loss reduces to £0.05 million for 2017.

In Singapore revenue increased 119% to £0.54 million (2016: £0.24 million) due to revenue from the acquisition of SAA-GE of £0.34 million. The new acquisition in Singapore possesses a four-year license which affords a greater scope of revenue streams to the Group. Going forward, the new company will be the focal business operation in Singapore with its multi-year license.

The Malaysian operation struggled in 2017 due to the restructuring of management and operations undertaken by local and Group management. Revenue for the year decreased to £1.41 million (2016: £2.43 million). In 2017 revenue could only be generated in the local market but with the recently acquired international licence sales should increase in 2018. The Board is also looking at the possibility of further expansion of the operations to the different states in Malaysia to gain benefit from the rising educational hub status of Malaysia.

Acquisition of SAA-GE

In November 2017 the Company completed the acquisition of SAA-GE for a consideration of Singapore Dollars (SGD) $500,000 satisfied by the issue of 5,630,350 new ordinary shares of 5p each. SAA-GE has a 30 year history of providing diploma, undergraduate, postgraduate and professional programmes in the accountancy, finance and business related disciplines. It offers preparatory courses leading to ATTS, ACCA, FIA/CAT, ICAEW and Singapore Chartered Accountant qualification, as well as degrees from Plymouth University and the University of London in the UK.

SAA-GE has a reputation for providing high-quality, industry-recognised programmes that have also attracted international students from Japan, China, Vietnam and the Philippines. It continues to achieve high pass-rates and produces top-performing students and prize-winners for the ACCA and FIA/CAT programmes annually. SAA-GE has a four-year EduTrust Certification issued by the Committee for Private Education Singapore.

The acquisition of SAA-GE provides Malvern with fresh opportunities to reach and work with the large local partners, with a substantial student base of more than 1,000 SAA-GE students and provides access to its highly qualified trainers and lecturers. It will also broaden and strengthen Malvern's platform as an international hub for accountancy and finance education, adding to the existing/upcoming offerings in Malaysia and London.

Since its acquisition, SAA-GE's courses are now being more widely promoted through the Group and an improvement in sales is already being seen. In addition, the existing Singapore school has now been relocated to SAA-GE's premises which will bring cost savings.

Dividend

The Board does not propose the payment of a final dividend for the year ended 31 December 2017 (2016: nil).

Outlook and prospects

2017 as a whole, and in particular the second half, has seen a considerable improvement in the Group's performance and an upward trajectory is now discernible. This has been due to three main factors. Firstly, a stronger management has been in place which will be strengthened further as we go forward. Secondly, the agent network has been reorganised successfully. Thirdly, our offerings now cover a wider range of products. In addition to these factors, I am optimistic that the first major acquisition which we completed in November 2017 will have a significantly positive impact not only on the operations of Singapore but also for our global platform.  The Board continues to be active in discussions with potential acquisition partners.

With the new acquisition of a four-year EduTrust licensed school in Singapore, the continuing new initiatives in London and the re-introduction of international student intakes in Malaysia, the Group is well positioned to benefit from the expected growth through acquisition and organic growth. We have taken big leaps in reducing our operating losses from £1.45 million in 2016 to £0.69 million in 2017.

Trading in the current financial year has started well and the Board is now confident that with the reorganised and a more focused Group, the impact on the performance of the Group can only be positive going forward and that it will bring the Group to profitability in 2018.

Acknowledgements

On behalf of the Board I would like to thank all staff members for their continued dedication, commitment, and cooperation during what has been a period of significant change and activity. We look forward to their continuing support going forward in implementing the new plans to bring the Group back to profitability in the years ahead.

We would also like to extend our appreciation and thanks to all our business partners, students, associates and valued shareholders for their support throughout the year and look forward to the same in the years ahead.

Finally, I would like to personally thank all members of the Board for their time and guidance at the Board level and the various committee levels in which they serve.

Gopinath Pillai

Chairman

 

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2017

	2017	2016
	£	£
Revenue
Sale of services	3,959,506	3,992,581
Other income	119,383	52,104
	4,078,889	4,044,685
Cost of services sold	1,847,062	2,210,611
Salaries and employees' benefits	1,124,708	1,158,797
Amortisation of brand, licences and trademarks	158,583	158,333
Depreciation of plant and equipment	63,880	77,579
Other operating expenses	1,744,500	1,744,219
Impairment of goodwill	-	-
Impairment of intangible assets Impairment of loans and receivables	(150,000) (17,822)	150,000 -
Operating loss	(692,022)	(1,454,854)
Share of results of associated companies and joint ventures	-	49,898
Finance costs	(14,690)	61,919
Loss before income tax	(706,712)	(1,343,037)
Income tax charge	5,384	(30,373)
Loss for the year from continuing activities	(701,328)	(1,373,410)
Profit for the year from discontinued activities	-	573,800
Loss for the year	(701,328)	(799,610)
Attributable to:
Equity holders of the Company	(701,328)	(799,610)
Non-controlling interest	-	-
	(701,328)	(799,610)

	2017	2016 restated
Loss per share on continuing activities (in pence)
Basic	(0.66)	(1.84)
Diluted	(0.66)	(1.84)
Profit /(loss) per share on discontinued activities (in pence)
Basic	0.00	0.77
Diluted	0.00	0.77

Loss per share attributable to equity holders of the Company (in pence)
Basic	(0.66)	(1.07)
Diluted	(0.66)	(1.07)

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2017

				2017		2016
				£		£
Loss for the year				(701,328)		(799,610)
Foreign currency translation movements				(266,067)		(21,071)
Total comprehensive income for the year				(967,395)		(820,681)
Attributable to:
Equity holders of the parent				(967,395)		(820,681)
Non-controlling interest				-		-
Total comprehensive income for the year				(967,395)		(820,681)

 

STATEMENTS OF FINANCIAL POSITION

AS AT 31 DECEMBER

	Group
	2017		2016
	£		£
TOTAL ASSETS
Non-Current Assets
Property, plant and equipment	245,956		188,835
Intangible assets	2,382,291		2,144,264
Development Expenditure	1,505		1,505
Goodwill	474,207		1,312
	3,103,959		2,335,916
Current Assets
Inventories	6,100		3,129
Trade receivables	398,642		460,939
Other receivables and       prepayments	948,938		619,993
Tax recoverable	-		32,539
Amounts due from joint ventures	-		27,841
Cash and cash equivalents	479,565		116,541
	1,833,245		1,260,982
Total Assets	4,937,204		3,596,898
EQUITY AND LIABILITIES
Non-Current Liabilities
Financial liabilities - Leasing	20,320		24,447
Financial liabilities - Term Loan	159,178		-
Financial liabilities - Convertible Loan Note	995,813		-
	1,175,311		24,447
Current Liabilities
Trade payables	277,151		170,675
Deferred income	668,775		386,039
Other payables and accruals	748,072		809,824
Amounts due to related parties	835,853		1,223,256
Financial liabilities	31,524		4,823
Provision for income tax	-		9,626
	2,561,375		2,604,243
Total liabilities	3,736,686		2,628,690
Equity attributable to equity holders of the Company
Share capital	7,919,356		6,823,838
Share premium	896,111		896,111
Retained earnings	(8,629,151)		(7,927,823)
Translation reserve	739,455		1,005,522
Capital reserve	274,747		170,560
Total equity	1,200,518		968,208
Total Equity and Liabilities	4,937,204		3,596,898

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2017

	Share Capital	Share Premium	Retained Earnings	Translation Reserve	Capital Reserve	Convertible Loan Reserve	Attributable To Equity Holders of the Company	Non- controlling Interests	Total
	£	£	£	£	£	£	£	£	£
Balance at 1 January 2016	5,362,491	896,111	(7,107,142)	965,602	170,560	-	287,622	(108,000)	179,622
Loss for the year	-	-	(820,681)	-	-	-	(820,681)	108,000	(712,681)
Total other comprehensive income	-	-	-	39,920	-	-	39,920	-	39,920
Total comprehensive income for the year	-	-	(820,681)	39,920	-	-	(780,761)	108,000	(672,761)
New Share Issues	1,461,347	-	-	-	-	-	1,461,347	-	1,461,347
Balance at 31 December 2016 restated/ 1 January 2017	6,823,838	896,111	(7,927,823)	1,005,522	170,560	-	968,208	-	968,208
Loss for the year	-	-	(701,328)				(701,328)		(701,328)
Total other comprehensive income				(266,067)			(266,067)		(266,067)
Total comprehensive income for the year			(701,328)	(266,067)		104,187	(967,395)		(967,395)
New Share Issues	1,095,518						1,095,518		1,095,518
Balance at 31 December 2017	7,919,356	896,111	(8,629,151)	739,455	170,560	104,187	1,200,518	-	1,200,518

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2017

		2017		2016 restated
		£		£
Cash Flows from Operating Activities
Loss before income tax from continuing activities		(706,712)		(1,343,037)
Profit/(loss) before income tax from discontinued   activities		-		573,800
Adjustments for:
Amortisation of intangible assets		158,583		158,333
Depreciation of property, plant and equipment		63,880		77,579
Impairment of property, plant and equipment		2,169		-
Impairment of intangible assets		(150,000)		150,000
Loss on disposal of plant and equipment		-		43,533
Non-cash elements of profit on discontinued activities		-		(308,082)
Interest expense		(14,693)		61,919
Others		-		-
		(646,773)		(585,955)
Changes in working capital:
Receivables		(6,516)		120,356
Payables		(347,588)		(817,411)
Inventories		(2,970)		3,424
Related parties and associated companies		(1,173,550)		683,662
		(199,084)		(595,924)
Taxation		-		7,797
Net cash used from operating activities		(199,084)		(588,127)
Cash Flows from Investing Activities
Interest received		3		-
Dividends received     Purchases of property, plant and equipment		- (28,654)		- (45,899)
Acquisition of subsidiary		(82,531)		-
Net cash used in investing activities		(111,182)		(45,899)
Cash Flows from Financing Activities

Interest paid		(14,694)		(61,919)
Repayment of term loan		185,708		-
Finance leases       New Share Issues [1]		(3,956) 250,000		(9,605) 428,992
Net cash generated by/(used in) financing activities		417,067		357,468
Effect of foreign exchange rate changes on     consolidation		(150,474)		(23,169)
Net decrease in cash and cash equivalents		354,495		(299,727)
Cash and cash equivalents at the beginning of the   Year		116,541		416,268
Cash and cash equivalents at the end of the year		471,036		116,541

[1] This includes the cash portion of the capital injection. An amount of £408,000 was capitalized from shareholder loans. 

NOTES

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 Witan Gate House, 500-600 Witan Gate West, Milton Keynes MK9 1SH and its principal place of business is in Singapore. 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 year.

2.   Segmental Information

All revenue and profit before taxation arises from operations in the education sector. Reportable segments are based on the geographical area where operations are based comprising Europe (UK) and South East Asia/Middle East (Malaysia and Singapore).  These segments represent the respective sub-groups of Malvern House Group Limited (Europe) and Malvern Singapore (South East Asia/Middle East).

 The segmental analysis is as follows:

	Europe	Asia	Total
2017	£	£	£
Revenue from external customers	2,017,681	1,941,825	3,959,506
Depreciation, write offs and amortisation	82,500	(10,036)	72,464
Loss before taxation	(258,565)	(448,147)	(706,712)
Taxation charge	-	5,384	5,384
Profit on discontinued activities	-	-	-
Loss for the year	(258,565)	(442,763)	(701,328)
Segmental assets	1,207,264	3,729,940	4,937,204
Segmental liabilities	(1,263,520)	(2,473,166)	(3,736,686)
Additions to non-current assets	36,000	768,057	804,057
2016-restated
Revenue from external customers	1,314,904	2,677,677	3,992,581
Depreciation, write offs and amortisation	(92,852)	(293,060)	(385,912)
Loss before taxation	(528,355)	(814,683)	(1,343,037)
Taxation charge	-	(30,373)	(30,373)
Profit on discontinued activities	573,800	-	573,800
Profit/Loss for the year	45,445	(845,055)	(799,610)
Segmental assets	1,018,926	2,577,972	3,596,898
Segmental liabilities	(1,165,073)	(1,463,617)	(2,628,690)
Additions to non-current assets	3,653	42,246	45,899

Alternative performance measures reconciliation (EBITDA excluding HQ costs and discontinued activities)

	Europe	Asia	Total
2017 (including SAA acquisition in the year)	£	£	£
Loss for the year	(258,565)	(442,763)	(701,328)
Interest	19	14,691	14,690
Tax	-	(5,384)	(5,384)
Depreciation	15,000	48,880	63,880
Amortisation	67,500	91,083	158,583
Impairment reversal	-	(150,000)	(150,000)
EBITDA (incl. HQ costs and discontinued activities)	(176,046)	(443,513)	(619,559)
Discontinued Activities	-	-	-
Others - HQ Costs allocation	193,178	392,114	585,292
EBITDA (excl. HQ costs and discontinued activities)	17,132	(51,399)	(34,267)
2016	£	£	£
Loss for the year	45,445	(845,055)	(799,610)
Interest	(65,018)	3,099	(61,919)
Tax	-	30,373	30,373
Depreciation	10,352	67,227	77,579
Amortisation	82,500	75,833	158,333
Impairment charge	-	150,000	150,000
EBITDA (incl. HQ costs and discontinued activities)	73,279	(518,523)	(445,244)
Discontinued Activities	(573,800)	-	(573,800)
Others - HQ Costs allocation	114,784	369,085	483,869
EBITDA (excl. HQ costs and discontinued activities)	(385,737)	(149,438)	(535,175)

Note that the Segmental liabilities figure for South East Asia is shown as a net asset due to the treatment of the amount due from Europe to South East Asia for funding being shown as a liability in the former and an asset in the latter.

Group HQ costs of £585,292 (2016-£483,869) were allocated to each segment based on the revenue for each segment. In 2017, the allocation was 51% (2016-33%) for Europe and 49% (2016-67%) for Asia. 

3.   Earnings/(Loss) Per Share

The basic and diluted earnings/(loss) per share on continuing activities was based on the loss attributable to shareholders of £701,328 (2016: loss of £1,373,410) and the weighted average number of ordinary shares in issue during the year of 105,708,809 shares (2016: 74,592,510 shares).

The basic and diluted earnings/(loss) per share on discontinued activities was based on the profit attributable to shareholders of £0 (2016: £573,800) and the weighted average number of ordinary shares in issue during the year of 105,708,809 shares (2016: 74,592,510 shares).

The basic and diluted earnings/(loss) per share attributable to equity holders of the Company was based on the loss to shareholders of £701,328 (2016: loss of £799,610) and the weighted average number of ordinary shares in issue during the year of 105,708,809 shares (2016: 74,592,510 shares).

Calculations for dilutive EPS have not been made in respect of the convertible loan notes on the basis the impact would be anti-dilutive.

There were no outstanding options in 2017

4.   Annual Report

The Annual Report will be sent to shareholders shortly. Additional copies will be available to the public, free of charge, on the Company's website www.malverninternational.com.

 

END

 

 

FR UNAORWSASUUR