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

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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 business.  Cash balances as at 30 June 2021 were £1.28m (31 December 2020: £0.10m 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

UNAUDITED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021