Source - RNS
RNS Number : 2553H
Malvern International PLC
06 June 2017
 

6 June 2017

 

Malvern International PLC

 ("MLVN" or the "Company" and together with its subsidiaries, the" Group")

 

Final results for the year ended 31 December 2016

 

Malvern International plc (AIM: MLVN), the provider of educational services in the UK, Europe and Asia, announces its results for the year ended

 

Key Points

 

·    Revenues GBP4.0m (2015:GBP4.8m)

·    Operating loss of GBP1.45m (2015: loss of GBP1.61m)

·    Loss before tax of GBP 1.34m (2015: loss of GBP 1.65m)

·    Loss per share of 1.84p (2015: loss 2.84p)

 

 

This announcement contains inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

 

Enquiries:

 

Malvern International PLC


www.malverninternational.com

Haider Sithawalla

Dr Sam Malafeh


+65 641 20733

+65 838 60155




WH Ireland Limited (Nomad and Broker)


www.whirelandcb.com

Mike Coe

Ed Allsopp


+44 (0)117 945 3470


 

CHAIRMAN'S STATEMENT

 

Overview

2016 was both challenging and exciting. The company responded to the challenges which included severe competition, uncertainties created by Brexit in Britain and changing policies in other markets in three ways. First the two largest shareholders, namely KSP and CG Group made available substantial funding, without interest for the present to strengthen the balance sheet. Second, we recruited a dynamic young educationist from New Zealand Dr. Sam Malafeh, as the Deputy CEO of the Group in charge of operations. He has also invested GBP 450,000 to indicate his commitment to the company. Third, with new funding and new management we revamped our offerings and now stand poised to launch IT related subjects including courses related to cyber security and analytics in partnership with specialists in these areas. 

 

As part of the new strategy, the name of the Company was changed from AEC Education Plc to Malvern International Plc on 13th September 2016. This was to link the parent company to its subsidiaries which have been operating under Malvern name. The Mission of the group is to be a Global Learning and Skills Development Partner to those who come to us to improve their employable opportunities.

 

The new management team has also set up fresh guidelines on quality assurance to take Malvern International Plc to a higher international level that not only complies with the relevant territory's regulatory requirements but also exceeds consumer and market expectation. The quality improvement plan started in late 2016 and continues into 2017 with series of internal audits taking place to assure the improvement.

 

Malvern International has also as mentioned earlier set up a new learning technology division to offer technology based products to other education providers looking for new ways of teaching/learning methods and products. This is being done in collaboration with Playware Studios in Singapore, which has patented digital learning technology that has won several awards globally. At the same time, we are also developing a number of other new programmes and these will be announced as and when they are finalised for introduction to the market in 2017 and 2018. The new products are expected to bring additional returns to Malvern in 2017 and the years ahead.

 

The implementation of the new strategy takes time and requires investment towards improvement of the quality of the service provided in different countries; this would involve a change in management and operations, developing new programmes and new technology products, and establishing a larger and stronger international marketing team. Hence the performance of the Group for the year 2016 was not much different from that in 2015. However, the Board is confident that going forward we are on the right track and the performance of the Group in 2017 onwards should show significant improvement.

 

In July 2016, the Group disposed of its Dublin subsidiary in which it had 55% interest for €660,000 (equivalent to £554,909) to enable the Group to focus on its 100% owned UK operation. The activities for Dublin have been classified as a discontinued activity for the year ended 31 December 2016 and the comparatives have been restated accordingly.  The 50/50 partnership contract with Cyprus ended in August 2016 and this was not renewed.

 

Financial results and business review

 

Group

In 2016 the total revenue for the continuing operations of the Group was £3,992,581. This was 17% less than the Group revenue from continuing operations in 2015 of £4,794,168. The fall was mainly due to the fall of revenue in UK of £1.1m which was partially offset by the increase in revenue from Asia of £0.3m. As mentioned in previous reports, UK continued to be impacted by restrictions of working hours allowed under student visas, the terror threat and the uncertainty of the possible effects of Brexit.   

 

As a result of the decrease in revenue for the 2016 financial year, the Group incurred a loss after tax of £1,373,410 on the continuing business as compared to the loss of £1,669,763 in 2015 which included impairment charges of £900,000 made against goodwill and intangible assets. In FY 2016, the impairment was at £150,000

 

However, after taking the gain on the sale of shares in Dublin operations and the six-month operating profit for Dublin totalling £573,800, the Group comprehensive loss after tax in 2016 was £820,681 (2015 - £1,718,798). 

 

Hence net loss per share for the year on a continuing basis for 2016 was 1.84p compared to 2.84p for 2015 and the net cash at the end of the year stood at £0.12m  ( 2015 - £0.42m).

 

During 2016, the Board has undertaken an impairment review of the carrying value of its goodwill and intangible assets within the consolidated financial statements of the investments held within the Group in accordance to the process set out in 2015, which takes into consideration our business plan and growth strategies for the Group going forward. Based on this review, an impairment provision of £150,000 was made for the year 2016.

 

Subsidiaries

With the sale of shares in Dublin and the discontinued business arrangement in Cyprus, the European Sector now comprises only the UK operations. The Southeast East Asia/Middle East sector comprises Singapore and Malaysia. Brief summary of these two sectors is set out below:

 

United Kingdom (Malvern House)

 

The revenue of the United Kingdom operations in 2016 was down by 45% to £1.3m compared to the revenue of £2.4m in 2015. Despite this sharp drop in sales, UK was able to contain its operating losses before tax to £433k which was only worse than the operating losses in 2015 of £384k by £49k .  This was achieved through cost cutting measures that were undertaken during the past couple of years.

 

Despite the poor performance of the UK operations in 2016 and in the past years, the Board is still very positive about its potential going forward. It recognises that UK and especially London will continue to be a popular destination for education. Although the student numbers coming to UK have been falling because of the reasons already mentioned earlier in this and past statements, they can be increased again if the courses offered are widened to include skills development programmes This will attract not only overseas students but also UK residents. Hence the main thrust of the Strategic Plan mentioned earlier is to widen the scope of the programmes offered and strengthen the marketing network with strong management control and supervision.

 

Southeast Asia comprises Singapore and Malaysian operations.

 

The total revenue for Southeast Asian operations in 2016 was £2.7m compared to £2.3m in 2015. This was an increase of 14%. However, despite this increase in revenue the sector incurred an operating loss of £311K as compared to the operating loss for the 2015 financial year of £80k due to higher operating costs in Malaysia and further provisions for bad debts. The Malaysian operations made a marginal operating profit of £20K and the rest of the losses came from Singapore operations.

 

The Group has invested heavily in Singapore to prepare for the re-application of Edu Trust Certification which enables the operation not only to enrol overseas students but also to offer overseas diploma and degree programmes. The application for this certification has now been made and the inspection is expected to take place soon. Once this certification is obtained Singapore will be able to drive up its revenue by offering a wide range of programmes that have been developed or are in the process of being developed both to attract students in Singapore and from other countries.

 

The Malaysian operation is progressing well and is expected to continue to be profitable going forward. The Malaysia operation has also been through some changes to create a more sustainable business aligned with the new strategy of the group. The Board is also looking at the possibility of further expansion of the operations to the different states in Malaysia.

 

Dividend

The Board does not propose the payment of a final dividend for the year ended 31 December 2016 (2015: nil).

 

Prospects

The past few years have been difficult years for the Group. However, the Board is confident that with the reorganised management and marketing teams and proper and gradual implementation of the New Strategic Plan (which covers development and marketing of new and wider range of programmes), the impact on the performance of the Group will be positive going forward and bring the Group to profitability within a year or two.

 

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 very difficult period. We look forward to their continuing support going forward in implementing the new plans to bring back the Group to profitability in the years ahead.

 

We also would 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 2016

 

 

restated

 

£

£

Revenue

 

 

Sale of services

3,992,581

4,794,168

Other income

52,104

261,467

 

4,044,685

5,055,635

Cost of services sold

2,210,611

2,418,647

Salaries and employees' benefits

1,158,797

1,292,034

Amortisation of brand, licences and trademarks

158,333

165,165

Depreciation of plant and equipment

77,579

101,244

Other operating expenses

1,744,219

1,788,167

Impairment of goodwill

-

404,352

Impairment of intangible assets

150,000

495,648

Operating loss

(1,454,854)

(1,609,622)

Share of results of associated companies and joint ventures

49,898

965

Finance costs

61,919

(36,960)

Loss before income tax

 (1,343,037)

(1,645,617)

Income tax charge

(30,373)

(24,146)

Loss for the year from continuing activities

   (1,669,763)

Profit for the year from discontinued activities

573,800

262,431

Loss for the year

(799,610)

(1,407,332)

Attributable to:

 

 

Equity holders of the Company

(799,610)

(1,525,426)

Non-controlling interest

-

118,094

 

(799,610)

(1,407,332)

 

 

 

2016

Loss per share on continuing activities (in pence)

 

Basic

(1.84)

Diluted

(1.84)

 

 

Profit /(loss) per share on discontinued activities (in pence)

 

Basic

0.77

Diluted

0.77

 

Loss per share attributable to equity holders of the Company (in pence)

 

Basic

(1.07)

Diluted

(1.07)



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2016

 

 

 

 

 

2016

 

2015

 

 

 

 

 

£

 

£

Loss for the year

 

 

(799,610)

 

(1,407,332)

Foreign currency translation movements

 

 

(21,071)

 

(311,466)

Total comprehensive income for the year

 

 

(820,681)

 

(1,718,798)

Attributable to:

 

 

 

 

 

Equity holders of the parent

 

 

(820,681)

 

(1,857,769)

Non-controlling interest

 

 

-

 

138,971

Total comprehensive income for the year

 

 

(820,681)

 

(1,718,798)

 

 

 

 

 

 

 

 

 



 STATEMENTS OF FINANCIAL POSITION

 

 

Group

 

2016

 

 

 

£

 

£

TOTAL ASSETS

 

 

 

Non-Current Assets

 

 

 

Property, plant and equipment

188,835

 

348,251

Investment in subsidiary

companies

-

 

-

Investment in joint ventures

-

 

89,675

 Intangible assets

2,144,264

 

2,445,611

Development Expenditure

1,505

 

-

Goodwill

1,312

 

1,312

Deferred tax asset

-

 

17,120

 

2,335,916

 

2,901,969

Current Assets

 

 

 

Inventories

3,129

 

9,142

Trade receivables

460,939

 

575,952

Other receivables and

      prepayments

 

619,993

 

 

804,003

Tax recoverable

32,539

 

13,020

Amounts due from subsidiary companies

-

 

-

Amounts due from joint ventures

27,841

 

32,428

Amounts due from related parties

-

 

-

Cash and cash equivalents

116,541

 

416,268

 

1,260,982

 

1,850,813

Total Assets

3,596,898

 

4,752,782

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

 Non-Current Liabilities

 

 

 

Financial liabilities

24,447

 

7,492

Deferred taxation liability

-

 

3,323

 

24,447

 

10,815

Current Liabilities

 

 

 

Trade payables

170,675

 

535,940

Deferred income

243,297

 

756,282

Other payables and accruals

809,824

 

1,487,997

Amounts due to a subsidiary

-

 

-

 Amounts due to related parties

1,223,256

 

1,589,052

Financial liabilities

4,823

 

31,383

 Provision for income tax

9,626

 

18,949

 

2,461,501

 

4,419,603

 Total liabilities

2,485,948

 

4,430,418

 

 

 

 

Share capital

6,823,838

 

5,362,491

Share premium

896,111

 

896,111

Retained earnings

(7,785,081)

 

(6,964,400)

Translation reserve

1,005,522

 

965,602

Capital reserve

170,560

 

170,560

 

1,110,950

 

430,364

Non-controlling interests

-

 

(108,000)

Total equity

1,110,950

 

    322,364

Total Equity and Liabilities

3,596,898

 

4,752,782

 




CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2016

 

 

Share

Capital

Share

Premium

Share-Based

Payment

Reserve

Retained

Earnings

Translation

Reserve

Capital

Reserve

Attributable

To Equity

Holders of the Company

Non- controlling

Interests

 

Total

 

£

£

£

£

£

£

£

£

£

Balance at 1 January 2015

5,362,491

896,111

-

(5,444,476)

 

1,297,945

170,560

2,282,631

(246,971)

2,035,660

Loss for the year

-

-

-

(1,525,426)

-

-

(1,525,426)

118,094

(1,407,332)

Total other comprehensive income

 

-

 

-

 

-

 

-

 

(332,343)

 

-

 

(332,343)

 

20,877

 

(311,466)

 

Total comprehensive income for the year

 

-

 

-

 

-

 

(1,525,426)

 

(332,343)

 

-

 

(1,857,769)

 

138,971

 

(1,718,798)

Unclaimed dividends

 

-

 

-

 

-

5,502

-

-

5,502

 

-

 

5,502

 

Balance at 31 December 2015/ 1 January 2016

5,362,491

896,111

-

(6,964,400)

965,602

170,560

430,364

(108,000)

322,364

 

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

-

 

-

 

-

5,502

   -

-

5,502

 

-

 

5,502

 

1,461,347

-

-

-

-

-

1,461,347

-

1,461,347

 

Balance at 31 December 2016

 

6,823,838

 

896,111

 

-

 

(7,785,081)

 

1,005,522

 

170,560

 

1,110,950

 

-

 

1,110,950


CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2016



2016


2015

restated

 



£


£

 

Cash Flows from Operating Activities





 

Loss before income tax from continuing activities


(1,343,037)


(1,645,617)

Profit/(loss) before income tax from discontinued   activities


573,800


262,431

    Adjustments for:





    Amortisation of intangible assets


158,333


165,165

    Depreciation of property, plant and equipment


77,579


150,016

    Impairment of goodwill


-


404,352

    Impairment of intangible assets


150,000


495,648

    Loss on disposal of plant and equipment


43,533


9,920

    Non-cash elements of profit on discontinued activities 


(308,082)


-

    Interest expense


61,919


43,747

    Others         


-


965

   


(585,955)


(113,373)

    Changes in working capital:





    Receivables


120,356


(137,221)

    Payables


(817,411)


(63,954)

    Inventories


3,424


(2,424)

    Related parties and associated companies


683,662


632,497



(595,924)


315,525

    Taxation


7,797


(24,867)

 Net cash used from operating activities


(588,127)


290,658

 





 

Cash Flows from Investing Activities

 

 

 

 

    Interest received

 

-


-

 

    Dividends received

    Purchases of property, plant and equipment

 

-

(45,899)


-

(90,649)

 

    Purchase of trademarks and licences

 

-


-

 

 Net cash used in investing activities


(45,899)


(90,649)

 





 

Cash Flows from Financing Activities




 

    Interest paid


(61,919)


(43,747)

      Repayment of term loan


-


(37,204)

      Finance leases

      Unclaimed dividends returned

      New Share Issues


(9,605)

-

428,992


(38,964)

5,502

-

  Net cash generated by/(used in) financing activities


357,468


(114,413)

  Effect of foreign exchange rate changes on  

  consolidation


 

(23,169)


 

(30,074)

  Net decrease in cash and cash equivalents


(299,727)


55,522

Cash and cash equivalents at the beginning of the  

Year


 

416,268


 

360,746

  Cash and cash equivalents at the end of the year

 


116,541


416,268

 

 

 

 

 

 

 

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.   The specific principal activities of the subsidiary companies are set out in note 12 to the financial statements. 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 Cyprus) 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

2016

£

£

£

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)

(814,682)

(1,343,037)

Taxation charge

-

(30,373)

(30,373)

Profit on discontinued activities

573,800

-

573,800

Loss for the year

45,445

(845,055)

(799,610)





Segmental assets

1,018,926

2,577,972

3,596,898

Segmental liabilities

(1,022,332)

(1,463,617)

(2,485,948)

Additions to non-current assets

3,653

42,246

45,899

        

2015-restated




Revenue from external customers

2,446,734

2,347,434

4,794,168

Depreciation, write offs and amortisation

(1,044,024)

(122,384)

(1,166,408)

Loss before taxation

(1,548,300)

(97,317)

(1,645,617)

Taxation charge

(1,100)

(23,046)

(24,146)

Profit on discontinued activities

262,431

-

262,431

Loss for the year

(1,286,969)

(120,363)

(1,407,332)





Segmental assets

1,988,438

2,764,344

4,752,782

Segmental liabilities

(3,178,018)

(1,252,400)

(4,430,418)

Additions to non-current assets

17,120

-

17,120

 

Note that the Segmental liabilities figure for South East Asia and the Middle East 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.

 

 

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 £1,373,410 (2015-restated: loss of £1,787,857) and the weighted average number of ordinary shares in issue during the year of 74,592,510 shares (2015: 63,051,043 shares).

 

The basic and diluted earnings/(loss) per share on discontinued activities was based on the profit attributable to shareholders of £573,800 (2015-restated: £262,431) and the weighted average number of ordinary shares in issue during the year of 74,592,510 shares (2015: 63,051,043 shares).

 

There were no outstanding options in 2016.

 

4.   Annual Report

 

The Annual Report will be sent to shareholders by close of business on or around 6 June 2017. Additional copies will be available to the public, free of charge, from the Company's website www.malverninternational.co.uk.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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