Half-year Report

15 September 2022

Malvern International PLC

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

Interim results for the six months ended 30 June 2022

Malvern International plc (AIM: MLVN), the global learning and skills development partner, announces its interim results for the six months ended 30 June 2022 ("H1 2022").

H1 2022 results

·    Revenues from continuing operations increased 62% to £2.3m (H1 2021: £1.4m)

·    Operating loss (before depreciation, amortisation and finance charges) of £0.34m (H1 2021: profit £9k)

·    Loss before tax on continuing operations increased to £0.68m (H1 2021: loss £0.35m), largely due to an increase in strategic investment in the Company's current, new and targeted revenue streams including new geographies such as India and Nepal, China business development staff, key senior management positions and a Chinese website.

·    Loss per share on continuing activities of 0.03p (H1 2021: loss 0.02p).

·    Cash as at 30 June 2022 was £0.88m (FY 2021: £0.40m and H1 2021: £1.28m).

·    Successfully restructured the Company's £2.6m debt facility with BOOST&CO ("BOOST"), to free up working capital and support growth.

Operating highlights

·    University Pathways applications increased significantly in H1 2022 for the 2022/23 academic year versus H1 2021.

·    Entered a five-year collaborative partnership with UEL to be the preferred supplier of student recruitment services in mainland China.

·    English Language Training ("ELT") centre revenues were ahead of the 2019 pre-pandemic level during the peak summer period.

·    Junior summer camps successfully returned at the end of H1 for the first time since 2019. A total of 976 students signed up for our 2022 summer camps, providing a very encouraging base for an expected increase in 2023.

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

"The Company is seeing the benefits of its strategic investment over the last two years in its brand, sales and marketing, management team, processes, partnerships, products and student offering. The Board believes this investment puts Malvern in a strong position to grow its market share for the remainder of 2022 and beyond. Pre-booked and delivered revenues for H2 2022 are showing a three-fold increase on H2 2021 and are ahead of like-for-like pre-pandemic levels of H2 2019. Pre-bookings indicate that the Group can expect further growth in revenues in 2023."

This announcement contains inside information for the purposes of Article 7 of the UK version of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"). Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

For further information please contact:

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

Malvern has seen a significant improvement in student numbers and business pipeline in H1 2022 with revenues up 62% at £2.3m (H1 2021: £1.4m).

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

University Pathways starters for the 2021/22 academic year were lower than expectations due to the impact of global travel restrictions. As a result, revenue recognition for our Pathways division was down in H1 2022. However, momentum is building in the Pathways division and the South Asian market. This is a key region for Malvern and our partners and is recovering strongly. The bounce back, combined with strategic improvements and investment in the operational structure that underpins the division, has significantly increased the number of student applications passing through our sales and conversion pipeline.

In addition, the successful return of our Junior summer camps at the end of H1 2022, has resulted in  the full range of Malvern's revenue streams returning operationally in a very positive way. Developing momentum across these respective streams is encouraging.  Under difficult circumstances, the Juniors division was able to generate revenues of c.£1.35m, following two years of no activity.

Financial performance

Revenues from continuing operations for H1 2022 were £2.3m (H1 2021: £1.4m). The loss before tax was £0.68m (H1 2021: loss £0.35m). The loss per share on continuing activities was 0.03p (H1 2021: loss 0.02p).

Overall revenue in H1 2022 was still suppressed by the impact of Covid. Despite this, revenues in H1 2022 were up £0.88m on the comparison period. This was largely driven by the encouraging return of ELT, and to a lesser extent, our summer camps. Summer camp revenue is predominately recognised in July and August 2022. The deferred income for summer camps in 2022 (£0.87m) sits within contract liabilities on the balance sheet.

The increased operating loss in H1 2022 against the comparator period is driven by a number of factors and is largely due to increased investment to build our targeted revenue streams. This strategic expenditure included; additional sales resource and a new website in China, the return of travel to key markets around the world for sales activities and further investment in our sales and management teams. The investment has already started to bear fruit for the Company, most notably in UEL student numbers, and the encouraging levels of students from MENA in our ELT centres during the summer months. The launch of NCUK in H2 2021 during the height of Covid has also had an impact on our cost of delivery in the Pathways division (the cost of delivery is higher for smaller class sizes). NCUK student numbers and class sizes are expected to be higher in the 2022/23 academic year. Finally, we received less other income (£0.12m) in H1 2022 due to a drop in Covid grants. 

Cost control and cash flow management continues to be a focus for the Group. In March 2022 the Company announced the successful negotiation to restructure its £2.6m debt facility, following constructive discussions with BOOST the fund manager acting on behalf of the Company's debtholder IL2 2018. Following the debt restructure, the Board remains in regular contact with BOOST, the fund manager acting on behalf of the Company's debtholder. BOOST has reiterated its commitment to provide ongoing financial support to Malvern for its short-term working capital requirements should it become necessary.

Cash balances as at 30 June 2022 were £0.88m (31 December 2021: £0.34m and 30 June 2021: £1.3m).

Current trading and outlook

The Board is confident in the outlook for ELT in 2023 and beyond. Malvern is currently working with the biggest agencies in Brazil, Saudi Arabia, Kuwait and Italy, and the pipeline of bookings is strong. The focus for the remainder of 2022 is to capitalise on the Group's momentum, to continue to foster good relations and build Malvern's agent network across other key regions 

The MENA market was the first big market to return. This was helped by the Government's announcement in early May 2022 that Saudi Arabia and Bahrain 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 initiative has made it easier for visitors from the Gulf to enter the UK and is intended to deepen the UK's partnership with these countries, enhance diplomatic ties and economic prosperity.

Pleasingly, with travel restrictions removed in most key markets the 2022/23 Pathways academic year is shaping up to deliver a significant increase on previous years, with 230 UEL students booked for September 2022 vs. 46 new starters in the prior year). The increase is the result of the expansion of the international sales team, improved processes to manage and convert the student recruitment pipeline, and significant recruitment travel to key feeder markets including joint marketing trips to India and Nepal with UEL. Approximately one third of the income from the 2022/23 academic year will be recognised in Q4 2022.  The remaining two thirds will be recognised in H1 2023. The growth of the NCUK business is expected to move at a greater pace when the Chinese market fully re-opens. It is expected that there will be approximately 15 new starters in the September 2022 intake, with more expected to join in January 2023.

Overall student numbers across our Pathways division in the academic year 2022/23 are currently projected to be more than double the previous academic year.

In H1 2022 the Company announced the award of a five-year contract to be the preferred supplier to recruit students from China for UEL. The primary aim of the partnership is to rapidly increase the volume of Chinese students who will enrol onto Pre-Sessional English, Pathways, Undergraduate and Postgraduate degree programmes at UEL's three London campuses.

This is aligned with the Company's continued strategic, and considered, investment in China and represents a growth of our University Partnerships division. Some of this investment is being delayed due to operating constraints caused by Covid lockdowns and travel restrictions in that region. Malvern's first Chinese students are expected in January 2023 as part of the 2022/23 Pathways cohort, with growth projected for September 2023 after a full student recruitment campaign.

The Board believes the continued investment in the business puts Malvern a strong position to grow market share for the remainder of 2022 and beyond. Pre-booked and delivered revenues for H2 2022 are showing a three-fold increase on H2 2021 and are ahead of like-for-like pre-pandemic levels of H2 2019. Pre-bookings for 2023 are also healthy.  This positive momentum and strong indicators of a return to a pre-pandemic operating environment gives the Board confidence in the Company's outlook.

Richard Mace

Chief Executive Officer

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2022

UNAUDITED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022