M
a
v
e
l
r
n
I
n
t
e
r
n
a
t
i
o
n
a
l
l
P
c
A
n
n
u
a
l
R
e
p
o
r
t
a
n
d
A
c
c
o
u
n
t
s
2
0
2
1
MALVERN
INTERNATIONAL PLC
Annual Report
2021
Perivan 262798
Shareholder information
Registered office
3rd Floor
1 Ashley Road
Altrincham
Cheshire
WA14 2DT
Head office
200 Pentonville Road
London
N1 9JP
Website
www.malverninternational.com
Registered number
05174452
Listing information
AIM:MLVN
Date of Annual General Meeting
8 June 2022
Advisors and registrars
Nominated advisor and broker:
WH Ireland Limited
24 Martin Lane
London
EC4R 0DR
Solicitors
Knights Plc
Two St Peter’s Square
Manchester
M2 3AA
Auditor
Cooper Parry Group Limited
Sky View
Argosy Road
East Midlands Airport
Castle Donington
Derby
DE74 2SA
Registrar
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
B62 8HD
Shareholder enquiries
Our website contains a wide range of information
of interest to investors, including: latest news, press
releases and Annual Reports. For further information
please contact info.plc@malvernplc.com
Contents
Overview
Highlights
Strategic Report
Chairman’s Statement
At a Glance
Business Model
Markets
Our Strategic Priorities
Operating Review
Key Performance Indicators
Financial Review
Risk Management
Stakeholder Engagement
Corporate Governance
Board of Directors and Executive
Management Team
Chairman’s Corporate Governance
Statement
Corporate Social Responsibility
Directors’ Report
Nomination And Remuneration
Committee Report
Audit And Risk Committee Report
1
3
6
8
10
12
16
18
20
21
23
26
29
33
35
39
42
Visit our website for further information
https://www.malverninternational.com
Financial Statements
Independent Auditor’s Report to the
Shareholders Of Malvern International Plc 44
Consolidated Statement of
Comprehensive Income
Consolidated and Company Statement
of Financial Position
Consolidated Statement of
52
Changes in Equity
Consolidated Statement of Cash Flows
53
Company Statement of Changes in Equity 54
55
Company Statement of Cash Flows
56
Notes to the Financial Statements
49
50
HIGHLIGHTS
For the year ended 31 December 2021
1
Malvern International is a learning and language skills development partner.
Courses are delivered on sites in London, Brighton, and Manchester, at
partner campuses, and online through the Malvern Online Academy.
“Student numbers were rebuilding throughout 2021 and by Q4 we had reached 80 percent of pre-pandemic
levels, although ongoing international travel restrictions impacted higher education starts for the 2021/22
academic year. We have made strong progress in building our sales and marketing team to target key
territories such as China and Middle East and North Africa (“MENA”). All our language schools are now
approved by the Kuwaiti Cultural Office which presents a significant opportunity to attract a consistent
number of students and recurring income streams.
Since the year end, we successfully renegotiated the Company’s £2.6m debt facility which is now payable
over six years up to 2028.
We expect student numbers to reach pre-pandemic levels during this year and, with fewer international
student providers today than two years ago due to M&A activity and closures, we believe we are well placed
to build the business in 2022 and beyond.”
Richard Mace, Chief Executive Officer
2020
1.90
2020
2021
2021
2020
2020
2021
CONTINUING OPERATIONS1
2021
1.90
2.42
2.42
1.33
1.33
1.32
1.32
REVENUE (£M)
2020
2020
1.90
1.90
2021
2021
2.42
2.42
OPERATING LOSS (£M)
2020
2020
1.33
1.33
2021
2021
1.32
1.32
LOSS FOR THE YEAR (£M)
2020
1.66
2020
2021
2021
1.66
1.59
1.59
LOSS PER SHARE2
0.23
pence
0.23
pence
2020
2020
2021
2021
0.08 pence
0.08 pence
1
Continuing operations include activities in the UK only, following the closure of the Singapore operations in 2020. Further information relating to
the discontinued operation for the period to the date of the closure is set out in note 4(b) of the financial statements.
2020
2020
2 Calculated using weighted average number of shares in issue during the period 1,878,898,511 (2020: 735,661,044).
1.66
1.66
2021
2021
1.59
1.59
0.23
0.23
pence
pence
2020
2020
2021
2021
0.08 pence
0.08 pence
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 2 Malvern International Plc Annual Report and Accounts 2021
STRATEGIC
REPORT
CHAIRMAN’S STATEMENT
Mark Elliott, Non-Executive Chairman
3
Financing and debt restructure
To ensure we had the cash resources to trade
through the continued difficulties caused by
COVID-19 and to build on the very significant
progress made, the Company raised £1.70m in an
oversubscribed fundraising in April 2021.
Since the year end, the management successfully
renegotiated its £2.6m debt facility with BOOST&Co.,
providing for a 12-month payment and interest
holiday to March 2023, over a five-year period,
with revised interest terms and no early repayment
penalties. Full details of the new debt structure can
be found in the announcement of 4 March 2022.
Board appointment
We were delighted to appoint Daniel Fisher in
December 2021 to the Board of the Company as
an Executive Director and Chief Financial Officer.
Daniel joined the Board having acted as the
Company’s head of finance since January 2021.
Daniel has a wealth of experience in financial
leadership roles.
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. A total of 146,000,000
ordinary shares of 0.1 pence each were granted
in 2020 and 2021 to Directors and staff in three
tranches, representing 6.9 percent of the existing
issued share capital of the Company. The EMI
options will vest three years after the date they were
granted, once defined share price targets have
been attained.
Staff and staff appointments
Malvern has made a few strategic appointments
to the sales and marketing team to support the
growth in student numbers and target key territories,
including China, South East Asia and MENA.
I would like to take this opportunity to thank all
our colleagues for their continued dedication in
delivering quality education to our students.
Introduction
Student numbers were rebuilding throughout
2021 as we were able to reopen schools and
offer in-class teaching. However the dynamic
situation around international travel affected
student applications and bookings during crucial
windows, particularly for higher education
students for the start of the 2021/22 academic
year. English Language Training (“ELT”) student
numbers reached 80 percent of pre-pandemic
levels in Q4 2021.
Revenues increased 27 percent to £2.42m
(2020: £1.90m). The operating loss for the year
was £1.32m (2020: loss £1.33m) reflecting strong
cost control measures coupled with increased
investment in our sales and marketing team
to ramp-up student recruitment efforts in key
territories.
The loss for the year from continuing operations
was £1.59m (2020 loss: £1.66m), resulting in a
loss per share on continuing operations of 0.08
pence (2020 loss: 0.23 pence).
The total loss including discontinued operations
was £1.15m (2020 loss: £2.14m).
As at 31 December 2021, the cash position
was £0.38m (2020: £0.10m) and net debt was
£5.85m (2020: £5.59m). Net debt includes £3.35m
(2020: £2.84m) of lease liabilities (see note 28).
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS As a business, we have shown great resilience
in overcoming the challenges of the last 2 years
and are well positioned to take advantage of the
expected growth in overseas student numbers over
the coming years. We are confident in our ability
to rebuild the business in 2022 and beyond, whilst
recognising that some uncertainty remains with
Covid-19 and the war in Ukraine.
Mark Elliott, Chairman
3 May 2022
4 Malvern International Plc Annual Report and Accounts 2021
Chairman's Statement continued
Governance
We continue to make improvements to our
corporate governance systems. Following the
appointment of a dedicated, Group HR Manager
we have reviewed and updated our internal
policies, making them available to staff and
suppliers as appropriate.
The role of Company Secretary has been taken on
by our Chief Financial Officer, Daniel Fisher, with the
support of external advisors, Oakwood Corporate
Services Limited.
During the year we carried out an internal review
and audit to ensure that we continue to comply
with the Quoted Companies Alliance Corporate
Governance Code 2018. We also updated our
website to ensure continued compliance with the
AIM rules.
Outlook
The easing of travel restrictions is attracting
international students back into the UK.
We are making significant investments in our sales
and marketing function, expanding our global sales
operations and agency network, including growing
our South Asian and Chinese operations. We expect
this investment to benefit all areas of our business
particularly our partnerships with University of East
London (“UEL”), NCUK, and Wrexham Glyndwr
University.
The ELT market has continued to consolidate with
fewer providers today than two years ago due
to M&A activity and closures. We are focused on
building relationships with existing customers such
as the cultural offices of governments from the
MENA regions. We are in also investing in our lead-
management system to respond efficiently to an
increased number of enquiries which are the result
of these initiatives. Together, these factors are
enabling us to build student numbers at our Brighton
centre in its first full year of operation and are
supporting our expectations to reach pre-pandemic
levels in London and Manchester during 2022,
ahead of overall sector expectations.
5
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 6 Malvern International Plc Annual Report and Accounts 2021
AT A GLANCE
Every student is unique.
We offer something for
each one.
Malvern International is a learning and
language skills development partner.
We offer 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.
*
6Study locations
* Since foundation
Manchester
Brighton
Singapore
Online
*
Manchester
Brighton
Singapore
Online
7
University Pathways
Malvern House Schools
Offering
On and off-campus University Pathways
programmes helping students progress to a
range of universities.
Description
Pre-university, foundation, and pre-masters
level courses for international students joining
UK universities.
Courses
Undergraduate and Postgraduate Foundation
programmes in: Business and management,
Accounting and finance, Humanities and social
science, and Engineering and science.
Offering
British Council accredited, English UK registered
schools in London, Brighton, and Manchester.
Description
A range of interactive language programmes
ranging from General English to CLIL teaching
programmes.
Courses
General English, English for professionals, exam
preparation for IELTS and Cambridge.
Locations
Malvern House London, Communicate School
Manchester, Malvern House Brighton.
International Year One in Business
and engineering.
In-sessional and pre-sessional
courses.
Locations
UEL,
Wrexham Glyndwr University,
NCUK, Malvern House London.
Central Services:
Student recruitment, Admissions,
Quality control, Pastoral care,
Human resources, Finance,
Sales and
marketing
Malvern Online Academy
Juniors and summer camps
Offering
A British Council accredited online school, offering
supported tuition to students from around the world.
Description
Online, remote and blended English language,
higher education, and professional education.
Courses
General English, English for Juniors preparation
for International English Language Testing System
(“IELTS”).
Delivery options
Full time, part time, one to one.
Offering
English language and travel experience for
secondary school students.
Description
Fully-immersive summer residential language
camps and bespoke group programmes for
13 to 18 year olds.
Courses
General English and cultural experiences.
Locations
Summer study centres.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 8 Malvern International Plc Annual Report and Accounts 2021
BUSINESS MODEL
We are a student-centred organisation, putting the needs and academic progression
of our students first. In doing so, our business is able to thrive, providing new
opportunities to form partnerships, provide employment and career opportunities,
and deliver value to our investors.
Group inputs
What we offer
People
The Group employs over
80 members of staff.
Premises
Malvern’s education centres
provide a high-quality focus
point for our student body.
Technology
Malvern has developed its own
online education platform,
offering online courses and
additional learning support.
The Group has a central
student management and
accounting system.
Financial Investment
Access to the capital
markets enables the Group
to grow the business through
internal investment on new
products, new locations, and
acquisitions.
Excellent quality, accredited education
Long-term partnerships
Malvern’s success and growth is reliant on
maintaining its reputation as a quality educator.
We ensure all our staff have access to training and
development and we continually look for ways to
improve our educational services.
Flexibility for students
An inclusive community
Malvern’s courses are available in multiple
locations so that students can have a variety
of experiences during their learning. Students
can also choose the time they commit to their
education, whether it is part-time, full-time, or
evening classes.
Sustainable growth in student numbers
Strong cost control
The Group aims to grow its student body
organically by building its reputation as a
quality educator, and by acquiring established
complementary education providers and
providing an unrivalled student experience.
Underpinned by
A strong culture
of innovation and
efficiency with no
compromise to the
quality of education.
Targeting profitable
markets while
maintaining student
nationality mix.
The Group looks to improve and expand the range
of products and services offered directly or in
collaboration with its prestigious partners, including
Universities, corporate customers, and accreditors.
Its partnerships with regional distribution and sales
agent network are key to student recruitment.
Many of Malvern’s customers are students
living and learning in a foreign country. They
therefore look to Malvern to help guide them
find accommodation, organise outings and
social events, to make the most of their cultural
experience. Malvern education centres aim to be
a hub for their student and staff bodies.
The Group maintains tight cost controls across
all its operations to ensure efficient use of the
resources available.
Varied courses and
Embedded quality
high-quality, results-
control processes,
driven teaching.
formalised risk
management, and
strong IT infrastructure.
9
What we offer
Stakeholder outcomes
Excellent quality, accredited education
Long-term partnerships
Students
Flexibility for students
An inclusive community
Partners
The Group looks to improve and expand the range
of products and services offered directly or in
collaboration with its prestigious partners, including
Universities, corporate customers, and accreditors.
Its partnerships with regional distribution and sales
agent network are key to student recruitment.
We create value for students
by offering them qualifications
and language skills that
support them throughout their
lives. We are strongly student-
centred ensuring continued
progression in learning.
Many of Malvern’s customers are students
living and learning in a foreign country. They
therefore look to Malvern to help guide them
find accommodation, organise outings and
social events, to make the most of their cultural
experience. Malvern education centres aim to be
a hub for their student and staff bodies.
Sustainable growth in student numbers
Strong cost control
The Group maintains tight cost controls across
all its operations to ensure efficient use of the
resources available.
Varied courses and
high-quality, results-
driven teaching.
Embedded quality
control processes,
formalised risk
management, and
strong IT infrastructure.
Our education products and
services are an important
student recruitment tool for our
partners and expands their own
geographic reach. We are able
to ensure that students are better
prepared and have the right
qualifications and skills in order to
embark on their chosen courses.
Shareholders
Our aim is to deliver long-term
shareholder value through
capital gain and, in time,
through the payment of
dividends.
Staff
We offer long-term career
opportunities for our staff in
a rewarding and innovative
environment.
Malvern’s success and growth is reliant on
maintaining its reputation as a quality educator.
We ensure all our staff have access to training and
development and we continually look for ways to
improve our educational services.
Malvern’s courses are available in multiple
locations so that students can have a variety
of experiences during their learning. Students
can also choose the time they commit to their
education, whether it is part-time, full-time, or
evening classes.
The Group aims to grow its student body
organically by building its reputation as a
quality educator, and by acquiring established
complementary education providers and
providing an unrivalled student experience.
Underpinned by
A strong culture
of innovation and
efficiency with no
Targeting profitable
markets while
maintaining student
compromise to the
nationality mix.
quality of education.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 10 Malvern International Plc Annual Report and Accounts 2021
MARKETS
The UK remains the second most popular study destination for international students
after the US. The international education market in the UK can be defined broadly
into two groups: International Higher Education and ELT. Both benefit from long-term
growth prospects.
In February 2021, the UK Government published its UK International Education
Strategy, aiming to achieve £35bn in education exports per year.
International Higher Education (“IHE”)
605,130
international students enrolled
in 2020/21 academic year
(2019/20: 556,625)
75%
of international students
come from outside Europe
IHE is a growing market in the UK with Government-
set student number and revenue targets. The sector is
supported by the Government in the form of student
visas, aimed at making studying in the UK attractive
to international students. UK graduates have the
right to stay in the UK to work for two years once they
have completed a UK higher education qualification
(including Bachelor and Master’s degree), and three
years if they have completed a PhD.
The Government’s UK International Education
Strategy published in February 2021 aimed to have
600,000 IHE students enrolled each year by 2030. This
target was achieved well-ahead of schedule for the
first time in the 2020/21 academic year, leading to
calls to target one million IHE students in the UK by
2030.
Malvern’s sales and marketing strategy focuses
around the recruitment of non-European students
(which make up around 75 percent of total IHE
students in the UK). The Company targets the
largest and fastest-growing student sending
markets, including China, India and Nigeria among
others. Together these three countries account for
55 per cent. of non-European students. Since the
2016/17 academic year the number of Chinese
IHE student enrolments has grown from 95,595 to
143,820. While the numbers of student enrolments
from India are not as high as from China, there has
been a notable increase from 16,900 to 84,555 in
the same period. Nigeria, the third largest sending
market at 21,305 students in 2021/22, and Pakistan
(12,975 students) have also seen significant increases
in the last five years. Each of these markets are
expected to see continued growth.
OVERVIEW
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
11
English Language Training (“ELT”)
125%
increase in ELT student numbers
between Q1 and Q4 2021
69
fewer ELT centres in UK in 2020
compared to 2019
The current focus of ELT providers is to rebuild
student numbers to pre-pandemic levels
(c. 510,000 students in 2019). Recent research from
BONARD published in November 2021 suggests that
this is likely to take place in Q1 2023. However, since
this report, providers like Malvern experienced better
than expected enrolments in Q4 2021, improving
market sentiment.
To add to this, the number ELT schools has declined
due to M&A activity and closures. Today, there
are an estimated 69 fewer accredited centres
than there were at the start of the pandemic
in March 2020, giving the remaining providers
opportunities to grow their student numbers further.
The ELT market consists of two segments: adult
courses and Junior provision in the form of summer
camps. Market research typically combines these
two audiences, although they have different
recruitment strategies and business models. This
distinction is important in the current market climate
for Malvern. While the Junior market is proving slower
to recover, adult course enrolments are building at
a much faster rate, supported by a high number
of embassy-sponsored students who study for a
consistent number of student weeks and provide
high-quality income streams.
Longer term, the pace of the recovery will be
dependent on vaccination rates in source markets
and the receiving country’s recognition and
acceptance of proof of vaccination, as well as
evolving rules around under-18 travel for the Junior
market. However, the easing of visa requirements
are intended to support UK entry. Students from
Saudi Arabia and China, two key ELT markets for
Malvern, are able to study for up to six months on
a visitor visa, and Europeans can come and study
in the UK for six months without a visa, making the
UK an attractive destination.
Sources:
•
•
•
•
Higher Education Student Statistics: UK, 2020/21 – Where students come from and go to study, January 2022.
English UK, Student Statistics report 2021, May 2021.
BONARD, Quarterly Intelligence Cohort, 2021 Executive Summary, prepared on behalf of English UK.
BONARD, Navigating ELT Recovery: What are destinations doing to stimulate the market?, November 2021.
12 Malvern International Plc Annual Report and Accounts 2021
OUR STRATEGIC PRIORITIES
As a global learning and skills development partner, the Group’s vision is to invest in and develop its operating
businesses in the education sector, to establish centres of excellence, and to deliver long-term growth and
sustainable profit.
Strategic priorities for 2021
Progress in 2021
Strategic priorities for 2022
University Pathways
• Work with existing university
• Traffic light system for
partners to deliver pre-university
courses in line with university
re-openings and easing of travel
restrictions.
• Offer new courses at UEL
and capitalise on NCUK
accreditation to support the
rebuilding of student numbers
during 2021.
• Continue to develop
relationships with UEL, NCUK,
and Wrexham Glyndwr
University.
• Build sales from Chinese and
South East Asian markets.
• Explore new partnership
opportunities and broaden
scope of existing partnerships.
international travel affected
students applications process,
reducing the number of
Pathways students year on year
by c. 15 percent This was mainly
due to restrictions with the India
market in September 2021.
• Developed extra programmes
at UEL such as a short MBA
in-sessional programme.
• Realise the potential of our
International Study Centres
by evolving our governance
structures to broaden of scope
of our university partnerships.
• Further develop teaching
and learning excellence in
our Pathways programmes,
via targeted investment in
key academic staff at our
International Study Centres.
• Strengthened relations with
UEL with the development of
the governance board for
our International Study Centre
within UEL.
• Expand our UEL International
Study Centre via increased
recruitment to Pathways
at undergraduate and
postgraduate level.
• Appointed an experienced
• Launch new routes at our
Academic Director at UEL, to
drive academic provision.
• Launch of NCUK International
Study Centre in London.
Welcomed first academic year
with a cohort of 16 students.
Passed first full audit from NCUK.
• We are building our sales and
marketing capacity.
• We continue to look for new
university partnerships and
entered tender process for
different contracts.
NCUK London centre, offering
programmes in science and
engineering alongside the
business-focused International
Foundation Year launched in
2021.
• Work with Wrexham Glyndwr
University to establish a base on
campus and welcome students
to our Welsh International Study
Centre.
• Continue to diversify our key
student recruitment markets,
including capitalising on the
establishment of our China
regional office
13
Strategic priorities for 2021
Progress in 2021
Strategic priorities for 2022
English Language Training (“ELT”)
• Focus on targeting student
recruitment from within the UK.
• Continue to re-build and grow
international student numbers.
• Improved SEO for the language
school websites, which resulted
in more inbound requests for
Brighton, Manchester, and
London.
• Return our ELT student numbers
in Manchester and London
to return to pre-pandemic
levels, ahead of overall market
expectations
• Grow our Brighton centre in its
first full year of operations
• Focus on targeting student
recruitment from agent and
direct recruitment channels.
• Recruited a record number of
part-time students into London
school.
• 2021 benefited from all our
ELT schools gaining approval
from the Kuwait Cultural Office
in December 2020, enabling
Kuwaiti sponsored students
to be accepted in London,
Brighton, Manchester, and our
London NCUK programme.
• Language school student
numbers returned to 80 per cent.
of pre-pandemic levels in 2019
by the end of 2021.
• Brighton school achieved has
the highest number of students
since it opened in late 2019.
It also passed its first full British
Council Inspection 2021.
Malvern Online Academy (“MOA”)
• Review the technology platform
to grow the variety of courses
that can be offered and how
they are delivered.
• Expand the range of courses
offered to include add-on
subscription-based lessons to
support in-class teaching and
follow-on courses for students
that have completed class-
based studies.
• The system was moved to a
• Expand the range of products
delivered on MOA.
well-known and open-source
platform making the store easier
for customers to interact and
make purchases, while offering
a greater variety of course
options.
• MOA has been used primarily
for hybrid learning when
students have not been able
to attend classes during the
pandemic and has been a
crucial support.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 14 Malvern International Plc Annual Report and Accounts 2021
Our strategic priorities continued
Strategic priorities for 2021
Progress in 2021
Strategic priorities for 2022
Management Team
• Strengthen the management
structure and appoint a Chief
Financial Officer to the Board of
Directors.
• Group Head of Finance was
appointed to the Board of
Directors as Chief Financial
Officer.
• Identify additional skills gaps at
senior management level and
provide training as required.
• A UEL Centre Director joined
in January 2021 before
being promoted to Director
of University Partnerships,
strengthening relations at
UEL and developing our new
NCUK Pathways programme in
London.
• Whilst Junior programmes
haven’t been running, the
Director of Juniors has built
a team and developed
the Malvern House Brighton
language school.
• Appoint a Head of Operations
to provide leadership across ELT
and shared services.
• Appoint Head of Marketing
to drive digital strategy and
expansion of our China
operations.
• Identify additional skills gaps at
senior management level and
provide training as required.
Health and safety
• Safeguard the health and
safety of staff and students,
following government guidelines
regarding social distancing.
• Continued to follow health and
hygiene government guidelines
where required.
• Promoted success of UK’s
vaccination programme to
students looking to access
programmes in our centres.
• Continued to safeguard the
health and safety of staff and
students, following government
guidelines regarding social
distancing.
15
Strategic priorities for 2021
Progress in 2021
Strategic priorities for 2022
Central offices: student-bookings, customer relationship management, finance, sales and marketing
• Establish a Chinese and South
East Asia market sales function
with particular focus on Juniors
and NCUK students.
• Build on new branding and
develop the Company image
and perception amongst key
partners and students.
• Continue to improve internal
controls and financial reporting.
• Appointed two sales managers
in Chengdu and Beijing, China.
• Launched a China website to
build our brand presence in
the biggest higher education
student recruitment market.
• International student
recruitment markets are
reopening and our international
sales team visited agencies
and attended conferences in
late 2021, with the aim to build
our network and build new
opportunities with our existing
partners.
• Internal controls and reporting
improved further with the
appointment of the Group CFO.
• Establish a Chinese and South
East Asia market sales function
with particular focus on
Pathways and Junior students.
• Continue to develop the
Company image and
perception amongst key
partners and students.
• Further develop in-house
management information, CRM
and data to drive decision
making.
• Refine our systems and
processes to constantly improve
the student journey
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 16 Malvern International Plc Annual Report and Accounts 2021
OPERATING REVIEW
Richard Mace, Chief Executive Officer
Summary
• Executive Management Team appointments;
CFO and Director of University Partnerships
• ELT student numbers reached 80% of
pre-pandemic levels achieved in Q4 2021
• All language schools now approved by the
Kuwaiti Cultural Office
•
•
Expanded sales team to target key student
recruitment geographies
Pathway student numbers impacted by
pandemic but positioned to grow significantly
in 2022
•
£2.6m loan restructured over six years (post
year end)
English Language Training (“ELT”)
The English language schools provided a
mixture of in-class, online, and blended learning
throughout 2021, with MOA supporting students with
supplementary and hybrid learning where required.
In Q4 2021, all three schools had grown their student
bodies back to around 80 percent of pre-pandemic
levels. With fewer international students the
proportion of UK-based students increased as a result
of a concerted sales and marketing effort, including
upgrading our website. This audience will remain
important to us going forward.
All our schools are now approved by the Kuwait
Cultural Office (“KCO”) which allows us to accept
sponsored students into all our schools as well
as our NCUK programme. With an average of
8,000 sponsored students per year studying for an
average of 36 weeks, the KCO approval presents a
significant opportunity for us to attract a consistent
number of students and recurring income streams.
The focus to make profitable language schools is
to have a student acquisition model that balances
agency and embassy students combined with
students recruited directly via digital methods. With
our investment in systems and people, we are well
placed with this model for 2022 and beyond.
17
University Pathways
A total of 144 students enrolled in University
Pathways courses for the 2021/22 academic year
compared to 170 students in the previous year. Of
these, 16 students are part of our first ever NCUK
cohort based out of our London Kings Cross school,
a number on which we can build for the next
academic year. NCUK is a consortium of leading
universities dedicated to giving international students
guaranteed access to universities worldwide.
The lower overall figures are the result of the traffic
light system on international travel extending
into the autumn of 2021 which coincided with
application deadlines for key geographies. However
an increased intake in January 2022 of 80 students
compared to 43 students in January 2021 is indicative
of a gradual return of international students to the UK.
University of East London (“UEL”)
Since the year end, the governance of our
partnership with UEL has been enhanced with the
formation of a joint Strategic Management Group,
which met for the first time in March 2022. Within
the centre, an experienced Academic Director has
been appointed with primary responsibility for the
quality of all aspects of our learning and teaching,
building on structural and staffing changes made
within the study centre in 2021. Increased numbers
of students were recruited for the January cohort,
and the centre is now well placed to support the
projected significant growth in student numbers for
the 2022/23 academic year.
NCUK
2021 saw the launch of our NCUK International
Foundation Year programme, and we welcomed a
cohort of 16 students. For 2022/23 academic year we
are growing our NCUK portfolio by offering Science
and Engineering routes, in parallel with our Business
oriented programme, and look forward to welcoming
students looking to progress to high-quality universities
in our London centre.
Malvern Juniors
Due to Covid-19, all of our Junior language camps
were postponed into 2022. There remains strong
demand from Italian students with three camps
running in the summer of 2022. Hungarian groups will
resume in 2023.
In parallel, we have been building our sales and
marketing teams, targeting Junior students from
China and South East Asia in particular. We expect
this to reflect in significant growth in student numbers
for 2023.
Central services
The Group continued to make improvements to
its central shared services, which includes both
back-office and sales and marketing. More
positions have been brought into the head office
function in Manchester to strengthen the Executive
Management Team and supporting team including
a CFO, Management Accountant, Deputy Head of
Sales, Marketing Manager, Group HR Manager. The
transactional support team in Nepal has expanded
to support post pandemic growth in admissions.
Our continued investment in the development
of our HubSpot CRM has seen a tighter control
of all enquiries and management of service level
agreements. Further development, process controls,
and automation is planned for 2022.
We have continued to build our sales and marketing
capability. In China – the biggest international
student market to the UK for Higher Education and
Junior summer camps – we appointed two Regional
Sales Managers based in Chengdu and Beijing
and launched a Chinese website. In addition we
appointed a Sales Manager based in Indonesia and
a Regional Director for MENA and Turkey. We are in
late stages of appointing an international recruitment
advisor in India and one in Nepal. Both are growth
markets for Higher Education student recruitment. We
are expecting the new recruits to drive the growth
of a global partner network and in turn our student
numbers across University Pathways and ELT adult
and Junior programmes.
Richard Mace
Chief Executive Officer
3 May 2022
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 18 Malvern International Plc Annual Report and Accounts 2021
KEY PERFORMANCE INDICATORS
FINANCIAL KPIs – CONTINUING OPERATIONS*
2020
1.90
REVENUE (£M)
2020
1.90
2021
2.42
2020
2020
1.90
1.33
2021
2021
2.42
1.32
Performance: Revenues grew 27 percent during
the year reflecting a return of ELT student as travel
restrictions were eased and a concerted effort on
recruiting students from within the UK.
2020
2020
2021
1.33
1.66
1.32
LOSS FOR THE YEAR (£M)
2021
1.59
2020
1.66
1.59
0.23
pence
2020
2021
2021
0.08 pence
Performance: The loss for the year from continuing
operations remained steady.
2020
0.23
pence
2021
0.08 pence
2.42
2021
OPERATING LOSS (£M)
2020
1.90
2021
2020
2021
2020
2.42
1.33
1.32
1.33
2021
1.32
1.66
2020
Performance: The operating loss remained steady
as tight cost control measures continued to be
implemented in 2021. In parallel, the Company
2021
invested in its sales and marketing team to support
2020
recruitment efforts across key territories.
1.59
1.66
2021
1.59
0.23
2020
LOSS PER SHARE
pence
0.23
pence
2021
2020
2021
0.08 pence
0.08 pence
Performance: The loss per share is calculated
using weighted average number of shares in issue
during the period 1,878,898,511 (2020: 735,661,044).
The total loss per share including discontinued
activity was 0.06 pence (2020: 0.29 pence).
*
Continuing operations included activities in the UK only. Further information relating to the discontinued operation for the period is set out in
note 4(b) of the financial statements.
19
NON-FINANCIAL KPIs – UK ONLY
STUDENT NUMBERS
2019
3,366
2020
512
2021
455
STUDENT WEEKS
2019
18,658
2020
10,836
2021
11,004
2019
1,391 (56%)
88 (3%)
1,887 (41%)
2020
340 (66%)
2021
311 (68%)
172 (34%)
144 (32%)
English Language Teaching
University Pathways
Juniors
2019
11,760 (63%)
3,432 (18%)
3,466 (19%)
2020
4,128 (38%)
2021
5,388 (49%)
6,708 (62%)
5,616 (51%)
English Language Teaching
University Pathways
Juniors
Performance: The number of students is calculated as the number of full-time students who have
undergone tuition for a minimum of 10 hours per week during the course of the year. Student weeks are
defined as the total number of weeks delivered to students who undergo a minimum of 10 hours per
week including in-class and online courses. The overall number of students number and weeks delivered
continued to be affected by Covid-19, school closures, and the cancellation of Juniors camps in 2021.
Although there were fewer students, more student weeks were sold as a result of the earlier return of
MENA students who typically study for longer periods. The number of ELT students in Q4 had rebuilt to 80
percent of pre-pandemic levels, giving a strong indication of future performance.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 20 Malvern International Plc Annual Report and Accounts 2021
FINANCIAL REVIEW
Daniel Fisher, Chief Financial Officer
The trading landscape presented many
challenges for the Group in 2021 due to the
impacts of the pandemic. Despite these
challenges, significant progress was made in 2021
to stabilise our balance sheet. We continued to
demonstrate effective cash management under
very challenging trading conditions.
In the past twelve months, we forged strong
relationships with key suppliers and customers. All
historical debt was moved successfully onto long-
term payment plans, and in some cases, large
arrears have been waived or discounted. Strategic
and operational meetings have been established
with key customers. In addition to drastically
improving student recruitment and enrolment
conditions, these more frequent interactions
have enabled us to increase the efficiency of
the collection of receivables.
Revenues during the year increased 27 percent
to £2.42m (2020: £1.90m). The operating loss for
the year was £1.32m (2020: loss £1.33m) reflecting
strong cost control measures coupled with
increased investment in our sales and marketing
team to ramp up student recruitment efforts in key
territories.
Cost control continues to be a focus across the
Group. New systems and policies befitting a PLC
were implemented in 2021 to aid the control and
tracking of our spending. Our shared services function
based in Nepal has also been expanded, which
benefits the Group through lower staffing costs,
and helps us to achieve required synergies as the
Group continues to scale up. Additional smarter
spending strategies include our more targeted digital
approach to marketing, which will continue to bring
down customer acquisition costs. This approach is
accompanied by an increase in travel costs as our
sales staff return to key markets to build the Group’s
brands, and to enhance our relationships with key
agents.
The disposal of the main operating entity in Singapore
significantly reduced the expenditure in that region
and is another step towards a much healthier
balance sheet.
We continued to work closely with BOOST&Co, the
Group’s largest debt provider, to ensure that the
Group had sufficient working capital to operate
through periods of very difficult trading in 2021. In
March 2021, BOOST&Co invested in the Group as
part of a wider £1.70m fundraise that we undertook.
This investment was an indicator of BOOST&Co’s
confidence in the management and prospects for
the business. As described in the Strategic Report
and the Going Concern Statement, BOOST&Co has
committed to supporting the Group in 2022 and
beyond.
Looking forward, we will continue to invest
strategically for the future with the expectation of
higher revenue growth accompanied by increased
costs from our growing sales and marketing team,
along with continued investment in our new Chinese
student recruitment function and a resumption in staff
travel. This critical investment accelerates the Group’s
drive towards profitability.
Daniel Fisher
Chief Financial Officer
3 May 2022
RISK MANAGEMENT
21
The Board, through the Audit and Risk Management Committee, assesses the Group’s risks on an ongoing
basis and maintains a risk register which is updated quarterly. Risk governance culture is embedded across the
Company. There are four main types of risks faced by the Group financial exposures, regulatory and compliance
changes, competition and commercial changes, and reputational risks.
There are, from time to time, unprecedented risks that the Group faces outside of normal operations that can
become material, such as health, safety, and environmental risks.
Financial exposures
Description
Mitigation
Risk level: high
The Group faces a number of financial
risks which could potentially impact
future operations. These include liquidity
and credit risk.
The Board monitors options available to the Group to access
borrowing facilities and fundraising activities. These might be
attractive in certain circumstances to provide additional working
capital and fund growth opportunities.
The Group is exposed to credit risk primarily in respect of its trade
receivables, which are stated net of provision for estimated
impaired receivables as set out in note 16 of the financial
statements. Exposure to credit risk is mitigated by evaluation of
the granting of credit, close monitoring, and the management of
collections from trade receivables.
Regulatory and compliance changes
Risk level: low
Description
Mitigation
From time to time, Malvern is subject to
regulatory changes and enforcement,
which can have a significant impact to
the Group through diminished student
enrolments.
The Board is mindful that its partners
and governing bodies can potentially
withdraw accreditation if the Company
does not meet the required standards.
Management regularly assess exposures in each territory and for
each product offering.
The Company ensures it has the correct accreditations in place in
order to operate. A register of accreditations and renewal dates is
maintained.
Management regularly reviews the standards required for
each accreditation and receives updates on any future
changes to make plans and adjustments in order to reach the
standards required.
An ongoing programme of internal assessment is carried out
to ensure the Group maintains standards in an ‘always-ready’
approach for planned and un-planned assessments by governing
bodies. Each centre has an individual responsible for quality
assurance.
The Group has worked towards diversification of its courses and
target groups to reduce the risk of regulatory changes.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 22 Malvern International Plc Annual Report and Accounts 2021
Risk management continued
Competition and commercial changes
Risk level: low
Description
Mitigation
While the Board does not perceive
there to be any abnormal risk from
the dominance of competitors or
changes to consumer demand, the
Group can face strong short-term
competition in the form of intermittent
price discounting, which can have an
immediate and negative impact on
forward bookings.
The management monitors closely forward bookings to identify
any changes to anticipated sales. For short-term fluctuations in
competition, the Group maintains close dialogue with its sales agent
partners and monitors competitor pricing, in order to adjust its own
pricing and remain competitive.
The Board regularly assesses the portfolio of products available and
its exposure to changes in consumer demands.
The demand for the majority of the courses Malvern offers are not
subject to volatility in consumer tastes and this stability allows for
diversification into new areas of education.
Around 60 accredited English language centres have closed as
a result of COVID-19, and therefore the Group is likely to face less
competition in the short to medium term.
Reputational risks
Description
Mitigation
Risk level: low
Maintaining Malvern’s reputation as
a quality education provider is vital
to the success of the Company. A
loss in confidence from accreditors,
partners, and customers could have an
immediate and profound impact on
the business and its ability to recruit and
retain staff.
The Board ensures it has the required accreditation and licences to
operate (see above for Regulatory and compliance changes).
The Group has clear policies on responsible and ethical behaviour
and has a zero-tolerance policy on corruption and bribery. These
policies are displayed in every school and online. The Group
provides induction training and regular training to all staff.
The Group has clear incident management and crisis management
strategies and procedures.
Health, safety, or environmental incident
Risk level: high
Description
Mitigation
Covid-19 has affected all areas of the
Group and the impact and mitigation
of the risk presented to the Company
is reported in the outlook section of the
Chairman’s Statement of this report.
The impact and risk to the Group
includes:
• infection of its staff or students;
• a fall in forward-bookings,
cancellations, and delays to course
start-dates, resulting in a negative
impact on the Group’s financial
performance; and
The Board monitors and follow national and international health
and safety guidelines and provides regular updates to its staff and
student body.
In order to preserve cash, the following cost-saving plans were
implemented in 2020 and into 2021:
• the majority of staff and all Directors agreed to salary reductions;
• the Group took advantage of government support schemes
where they were available;
• rental payments were and, where possible, renegotiated;
• the existing debt with BOOST&Co. was restructured providing for
a two-year capital repayment holiday and interest free period;
and
• the closure of schools and operations,
significantly reducing revenues and
placing significant cash constraints on
the business.
• the Company raised a total of £2.75m (net) by way of two
fundraising rounds in June 2020 and March 2021 in order to
provide sufficient working capital until such time that business
returns to normal levels.
STAKEHOLDER ENGAGEMENT
23
Section 172(1) of the Companies Act obliges the
Directors to promote the success of the Company for
the benefit of the Company’s members as a whole.
The section specifies that the Directors must act
in good faith when promoting the success of the
Company and in doing so have regard (amongst
other things) to:
a. the likely consequences of any decision in the long
term;
b. the interests of the Company’s employees;
c. the need to foster the Company’s business
relationship with suppliers, customers, and others;
d. the impact of the Company’s operations on the
community and environment;
e. the desirability of the Company maintaining a
reputation for high standards of business conduct;
and
f. the need to act fairly as between members of the
Company.
The Board is collectively responsible for the decisions
made towards the long-term success of the
Company and how the strategic, operational, and
risk management decisions have been implemented
throughout the business is detailed in this Strategic
Report.
The Company’s main stakeholders are identified in
the Business Model on p. 8, being staff (employees),
students (customers), partners, (either customers or
joint venture partners), and shareholders.
We value the feedback we receive from our
stakeholders and we take every opportunity to
ensure that where possible their wishes are duly
considered in the Company’s decision making, and
the formulation of its strategy.
Employees
As an educational services business, Malvern strength
derives from the commitment, capability, and
cultural diversity of its employees. The Company aims
to adopt a policy of diversity at all levels including
candidate selection, role assignment, and individual
career development. The Company encourages
the participation of all employees in the operation
and development of the business by offering
open access to senior management, including
the Executive Directors, and adopting a policy of
regular communications through road shows and the
intranet.
The appointment of a dedicated HR manager
has centralised internal communications with staff.
Group policies have been reviewed and updated,
have been communicated to all staff and are easily
accessed via the Company intranet.
The Group incentivises employees through share
based incentives and the payment of bonuses and
commissions linked to performance objectives.
Where appropriate these objectives are linked to
profitability and performance targets. The Group
is currently reviewing its approach to performance
appraisal and career progression, with a view to
implementing an improved talent development
programme.
The Nomination and Remuneration Committee
oversees and makes recommendations of executive
remuneration and any long-term share based
incentives. The Board encourages management to
improve employee engagement and to provide
necessary training in order to use their skills in the
relevant areas in the business. The Board periodically
reviews the health and safety measures implemented
in the business premises and improvements are
recommended for better practices.
Partners, customers, and agents
The Board acknowledges that a strong business
relationship with partners, customer, and agents
is a vital part of the growth. Whilst day-to-day
business operations are delegated to the Executive
Management, the Board sets directions with regard
to new business ventures and initiatives.
In 2021, we entered into a more robust governance
practice with one of our key customers, UEL, meeting
with key stakeholders from the University Executive
Board (“UEB”) every quarter. Our meetings ensure
alignment between our role as a service provider
and UEL’s goals, and ensure that we can address key
issues collectively.
Suppliers
The Board upholds ethical business behaviour across
the Group and encourages management to seek
comparable business practices from all suppliers doing
business with the Company. For more information
please see the CSR section on p. 33.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS The importance of making all employees feel safe in
their environment is maintained and a Whistleblowing
policy is in place to enable staff to confidentially raise
any concerns freely and to discuss any issues that
arise. Strong financial controls are in place and are
well documented.
On behalf of the Board
Mark Elliott
Chairman
3 May 2022
24 Malvern International Plc Annual Report and Accounts 2021
Stakeholder engagement continued
Community
The Board recognises its responsibility towards the
community and environment and it is Group policy to
be a good corporate citizen wherever it operates.
The Group adopts a proactive approach towards
community education-driven initiatives, particularly
where they involve the education of those less
fortunate. The Group is currently involved with
RefuAid, offering free language courses.
More detail can be found in the Corporate Social
Responsibility Statement in this report on p. 33.
Shareholders and debtholders
The Board places equal importance on all investors
and recognises the significance of transparent and
effective communications. As an AIM listed company
there is a need to provide fair and balanced
information in a way that is understandable to all
stakeholders and particularly our shareholders.
Details of how the Company communicates with
its shareholders can be found in the Chairman’s
Corporate Governance Statement on p. 29.
Maintaining high standards
of business conduct
The Company is incorporated in the UK and
governed by the Companies Act 2006. The Company
has adopted the Quoted Companies Alliance
Corporate Governance Code 2018 (the “QCA
Code”) and the Board recognises the importance of
maintaining a good level of corporate governance,
which together with the requirements to comply
with the AIM Rules, ensures that the interests of the
Company’s stakeholders are safeguarded.
The Board seeks to ensure that ethical behaviour
and business practices are implemented across the
business. Anti-corruption and anti-bribery training
are compulsory for all staff and contractors and the
anti-bribery statement and policy is contained in the
Group’s Employee Manual. The Group’s expectation
of honest, fair, and professional behaviour is reflected
by this and there is zero tolerance for bribery and
unethical behaviour by anyone relating to the Group.
25
CORPORATE
GOVERNANCE
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 26 Malvern International Plc Annual Report and Accounts 2021
BOARD OF DIRECTORS AND EXECUTIVE
MANAGEMENT TEAM
The Board of Directors
The Board is responsible for formulating, reviewing, and approving the Group’s strategy, budget,
and corporate actions.
Mark Elliott,
Non-Executive Chairman
Alan Carroll,
Non-Executive Director
Date of appointment: 1 July 2019
Committees: Audit and Risk (Chairman) and
Nomination and Remuneration
Mark has had a long executive career in the
education, technology, and corporate finance
sectors, including finance and management roles
operating in Europe, the USA, and South Africa. He
has extensive AIM experience having brought two
technology companies to the market together with
associated fund raises. He brings with him a strong
knowledge in governance, public markets, and
investor relations.
External appointments: Chairman of AIM listed
Journeo Plc and trustee of two charities, the
National Benevolent Society of Watch and
Clockmakers, and the Metropolitan Drinking
Fountain and Cattle Trough Association
Date of appointment: 1 October 2019
Committees: Nomination and Remuneration
(Chairman) and Audit and Risk
Alan has over 25 years’ experience in the
information systems industry, including working in a
senior capacity in the development of the Ministry
of Defence’s Information System Strategy and as a
senior sales manager and advisor to a number of
major software and systems integration companies.
He is the founder and Managing Director of Ultris
Limited, a niche software and services organisation
operating in the confidential government sector.
In addition, he is the senior independent Non-
Executive Director at Ideagen Plc, a fast-growing
UK-based international software company. He has
been a Board member since Ideagen listed on
AIM in July 2012 and has chaired the audit and
remuneration committees throughout this time
He is also a non-executive director at Goal Group
Limited, a private UK listed company. Alan was
voted Non-Executive Director of the year in the May
2019 Money Week Mello awards.
External appointments: Ideagen Plc, Ultris, and Goal
Group Limited
Richard Mace,
Chief Executive Officer
Daniel Fisher,
Chief Financial Officer
Date of appointment: 30 June 2020
Richard Mace was formerly the co-owner of the
Communicate School of English, Manchester which
he co-founded in 2013 before it was acquired in July
2018 by Malvern. He was responsible for overseeing
year-on-year growth in the business in terms of
student numbers, revenue, and EBITDA. In addition
he successfully built a well-trusted brand, established
an international B2B sales agency network, set
up digital marketing strategies, introduced and
developed IT systems, and successfully gained British
Council and Independent Schools Inspectorate
accreditations.
Prior to founding Communicate, Richard worked in
telecoms for large organisations such as Vodafone.
External appointments: none
Date of appointment: 6 December 2021
Daniel Fisher was appointed to the Board of
Directors having worked as the Malvern’s head of
finance since January 2021. Before joining Malvern,
Daniel held a number of financial leadership roles
including European Financial Controller of Newell
Brands plc, Group Financial Controller of QANTM
Intellectual Property Ltd., and Head of Finance/
Financial Controller of FPA Patent Attorneys Pty. In
addition to leading an SME in Australia through a
successful IPO as Head of Finance, Daniel’s listed
company experience at group level also includes
management of audits for a multinational SME and
merger and acquisition transactions.
Daniel attends Audit and Risk Committee meetings
by invitation.
External appointments: none
27
Executive Management Team (“EMT”)
In addition to the CEO and CFO, the EMT consists of senior members of Malvern’s management team, who all
have significant experience in working the international education sector.
Each member has clear roles and responsibilities. The EMT is in daily communication and meets formally
fortnightly to discuss progress against set objectives, raise any concerns and potential risks to the business,
business development, and performance against internal budgets. Any material concerns are raised and
communicated to the Board and, where necessary, are discussed at scheduled Board meetings.
The Head of Operations role is currently carried out by the CEO, Head of Juniors and General Manager of
London and Brighton in order to maintain tight controls during the prolonged period of uncertainty due to the
pandemic. This role will be replaced in due course by a Director of Centres.
The CEO, Director of University Partnerships and Head of Sales and Marketing, Head of Juniors and General
Manager of London and Brighton are collectively responsible for business development.
Board
EMT
CEO
Head of
Operations
Head of Juniors
Director of University
Partnerships
Head of Sales and
Marketing
CFO
General Manager of
London
Shared business systems, for admissions, support, and quality control
Junior Centres
Language schools
London
Brighton
Manchester
Malvern Online
Academy
UEL Wrexham,
Glyndwyr University,
NCUK
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 28 Malvern International Plc Annual Report and Accounts 2021
Board of Directors and Executive Management Team continued
Executive Management Team
Richard Mace,
Chief Executive Officer
Daniel Fisher,
Chief Financial Officer
For details see p. 16
For details see p. 20
Simon Fitch,
Director of University
Partnerships
Ashleigh Veres,
Group Head of Sales
and Marketing
Date of appointment: 7 January 2021
Date of appointment: 6 January 2020
Simon is accountable for our provision of high-quality,
student-centred, operations at our UEL International Study
Centre and supporting the development of Pathways
programmes across the Group.
Simon has spent his career in a range of educational
settings, and has senior level experience in universities,
schools, and Pathways organisations, including having
previously directed a Foundation Student Centre. Simon is
also a board member of FOCUS, an organisation devoted
to simplifying the relocation journey for families and
students coming to the UK.
With more than eleven years in student recruitment and
marketing, Ashleigh works diligently to develop and
execute sales strategy for the Group.
Working closely with our university partners to realise shared
goals, and with a keen focus on the development of
partnerships with internationally-focused partners, Ashleigh
is a strong advocate for the opportunities that international
education provides students.
Ashleigh is responsible for leading the Global Recruitment
Unit and managing the marketing for the organisation.
Kris Hall,
General Manager
of London
Emiliano Sallustri,
Head of Juniors
and General Manager
of Brighton
Date of appointment: 7 August 2017
Date of appointment: 1 January 2019
With a focus on ensuring the success of our school and
working on key projects within the organisation, Kris
has a strong operational background in managing the
complexities of running language schools. Kris is passionate
about student welfare, and works with his teams diligently
to embed practices across the schools.
Kris completed his postgraduate studies at the University
of Westminster where he studied Health and Social Care
Management, and has been a senior manager in the
Private Sector, Third Sector, and Education Sector for over
20 years. Kris is the Safeguarding Lead at an organisational
level.
Emiliano is the strategic lead for the development and
execution of Malvern’s Junior and Summer Camp offering,
along with his General Manager responsibilities at our
Brighton adult language school. With a strong background
in the travel language industry, Emiliano works closely with
key sponsors and partners to ensure that we offer exciting
and innovative learning opportunities for individuals and
groups.
Emiliano ensures that all Malvern Summer and Juniors
programmes run smoothly and deliver exceptional
customer experience.
CHAIRMAN’S CORPORATE GOVERNANCE
STATEMENT
29
Dear Shareholder,
As Non-Executive Chairman, I am responsible for
instilling high standards of corporate governance
within the Company. It is my responsibility to
ensure the effectiveness of the Board on all
aspects, including good governance in dealing
with all of our stakeholders. This includes ensuring
that Board meetings are held in an open manner,
that the Directors receive accurate, timely,
and clear information and allowing sufficient
time for agenda items to be discussed. I am
also responsible for ensuring the Company has
effective communications with shareholders and
relaying any shareholder concerns
to fellow Directors.
The Board is committed to applying high standards
of corporate governance and evolving them as
the business grows. The Company has adopted
the Quoted Companies Alliance Code (“QCA”)
to provide a framework against which to do this, it
being the most appropriate recognised governance
code for the size and structure of the Company.
During the year, the Board completed a review of
the Company's compliance with the QCA code. As
the Group shifts into a growth phase post pandemic,
this review was another opportunity for the Board
to refine / reflect on our key governance principals.
More details on our corporate governance can
be found here; www.malverninternational.com/
corporate-governance.
Workings of the Board
The Directors consider seriously the effectiveness
of the Board, its Committees, and individual
performance. The Board is responsible for
formulating, reviewing, and approving the
Company’s strategy, budgets, and
corporate actions.
At the date of the report, the Board has four
members, comprising two Non-Executive Directors
and two Executive Directors. Biographies and roles
of the Directors are set out on p.26.
The Directors believe that the Board, as a whole has
a range of commercial and professional skills which
enable it to discharge its duties and responsibilities
effectively. The independent Non-Executive
Directors ensure that independent judgement is
brought to Board discussions and decisions. All
Directors are encouraged to use their independent
judgement and to challenge all matters whether
strategic or operational.
The Board meets formally at least 12 times a year
with additional ad-hoc Board meetings as the
business demands. The Board is responsible for
setting and monitoring Group strategy, reviewing
trading performance and formulating policy on
key issues. The time commitment formally required
by the Group is an overriding principle that each
Director will devote as much time as is required
to carry out the roles and responsibilities that the
Director has agreed to take on.
There is a strong flow of communication between
the Directors. Board meeting agendas are set in
consultation with both the CEO and Chairman,
with consideration being given to both standing
agenda items and the strategic and operational
needs of the business. Comprehensive Board papers
are circulated well in advance of meetings, giving
Directors ample time to review the documentation
and enabling an effective meeting. Minutes are
drawn up to reflect a true record of the discussions
and decisions made. Resulting actions are tracked
for appropriate delivery and follow up. The Board
maintains close dialogue by email, telephone, and
conference calls between scheduled meetings.
The frequency of communications at Board level in
2021 was maintained at similar level of the previous
year, as the Board continued to understand the
dynamic trading environment due to Covid-19. The
Board was in regular consultation with regards to the
Company’s cash resources in order to monitor and
manage cash outflows, implementing strict cash
control measures.
New Directors receive a comprehensive, formal,
and tailored induction to the Group’s operations
including corporate governance, the legislative
framework, and visits to Group premises. The
Non-Executive Directors endeavour to ensure that
their knowledge of best practices and regulatory
developments is continually up to date by attending
relevant seminars and conferences.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 30 Malvern International Plc Annual Report and Accounts 2021
Chairman’s Corporate Governance Statement continued
Attendance at meetings during 2021
Board
meetings
(12 meetings
held)
Audit and Risk
Committee
(4 meetings
held)
Nomination and
Remuneration
Committee
(3 meeting held)
12
12
12
4
4
0
3
3
0
Director
Mark Elliott
Alan Carroll
Richard Mace
Strategy and risk management
A description of the Group’s business model and
strategic priorities can be found on p. 8 and 12 and
the key challenges in their execution are detailed in
the Chairman’s Statement on p. 3 and Operational
Review on p. 16. The Board is responsible for
establishing and maintaining the Group’s systems of
internal financial controls and importance is placed
on maintaining robust operational controls.
The Audit Committee (see p. 42) has delegated
responsibility for the oversight of the Group’s risk
management and internal controls and procedures
and for determining the adequacy and efficiency
of internal control and risk management systems.
The Board continuously monitors and upgrades its
internal control procedures and risk management
mechanisms and conducts an annual review,
where it assesses both for effectiveness. This process
enables the Board to determine if the risk exposure
has changed during the year and these disclosures
are included in the Annual Report. In setting and
implementing the Group’s strategies, the Board,
having identified the risks, seeks to limit the extent of
the Group’s exposure to them having regard to both
its risk tolerance and risk appetite. Further details on
the Group’s risk management and internal controls
can be found on p. 21 to 22.
Matters reserved for the Board
The Board has a formal schedule of matters reserved
for its specific approval which includes:
• Strategy and management: review and approval
of long-term Group strategic, operational, and
financial matters such as proposed acquisitions
and divestments
• Financial reporting and controls: approval of the
annual accounts and interim report, the annual
budget, significant transactions, major capital
expenditure
• Internal controls: ensuring maintenance of
a sound system of internal control and risk
management
• Finance: raising new capital or major financing
facilities, operating and capital expenditure
budgets
• Communications: approval of resolutions put
forward to shareholders, approval of circulars,
and approval of press releases concerning
matters decided by the Board
• Board membership and other appointments
• Delegation of authority: division of responsibilities
between the Chairman, CEO and CFO, including
the CEO’s and CFO’s authority limits and the
establishment of Board committees and approval
of terms of reference of Board committees
The Board delegates specific responsibilities to two
Committees:
• the Audit and Risk Management Committee; and
• the Nomination and Remuneration Committee.
Both committees have formal written terms of
reference. These terms of reference are available on
the Group’s website.
The Audit and Risk Committee
The Audit and Risk Committee comprises the two
Non-Executive Directors, Mark Elliott (Chairman) and
Allan Carroll. The Audit and Risk Committee meets at
least three times a year. Details of the responsibilities
of the Audit and Risk Management Committee are
set on p. 42. Where necessary, specialist external
consultants are used to assist the Committee. The
Audit and Risk Committee Report is set out on p. 42.
The Nomination and
Remuneration Committee
The Nomination and Remuneration Committee
comprises of the two Non-Executive Directors, Mark
Elliott and Alan Carroll (Chairman). Details of the
responsibilities of the Nomination and Remuneration
Committee are set out on p. 39. Where necessary
external recruitment consultants are used to assist
the process. The Nomination and Remuneration
Committee Report is set out on p. 39.
31
Election and re-election of Directors
Directors appointed since the last Annual General
Meeting, and those retiring by rotation, will submit
themselves for election or re-election at the next
Annual General Meeting, as set out in the Directors’
Report on p. 35 and in the separate Notice of
Annual General Meeting sent to all shareholders.
Board evaluation
Annual appraisals are held of each Director,
providing feedback and reviewing any training or
development needs. Each member of the Board
takes responsibility for maintaining their skill set.
All Directors have the opportunity to undertake
relevant training and attend relevant seminars and
forums at the Company’s expense.
The Board are aware of the importance of attaining
greater diversity amongst its members, which
includes roles and experience with other boards
and organisations. This form part of any recruitment
consideration if the Board concludes that
replacement or additional Directors are required.
Corporate culture and social
responsibility
The Board recognises that its decisions regarding
strategy and risk will impact the corporate culture of
the Company as a whole and that this will impact
the performance of the Company. The Board is
aware that the tone and culture set by the Board
greatly impacts all aspects of the Company and the
way that employees behave.
The corporate governance arrangements that
the Board has adopted are designed to ensure
that shareholders have the opportunity to express
their views and expectations for the Company in a
manner that encourages open dialogue
with the Board.
The Group’s activities are centred on addressing
customer needs. Therefore, the importance of sound
ethical values and behaviours, as well as open and
respectful dialogue with employees, customers,
and other stakeholders, is crucial to the ability of
the Company to achieve its corporate objectives
successfully. The Board places great importance on
these aspects of corporate governance and seeks to
ensure that it flows through all the Group’s activities.
The Board assessment of the culture within the
Group at the present time is one where there is
respect for all individuals, open dialogue amongst
all levels of staff and individuals, and a commitment
to provide the best service possible to the
Group’s customers.
The Group is committed to ensuring that the highest
quality of teaching and education standards
are embedded in the services it provides. The
Group aims to provide the highest levels of
service standards in order to maintain long-term
partnerships with its customers and sales agents.
This is reflected in the growth of the customer base,
and the ability to maintain existing and form new
partnerships that support the overall growth
of the business.
The Group has in place a range of policies to ensure
the highest standards are maintained and that the
Group’s corporate culture is well understood by all
individuals and adopted into everyday behaviours.
These policies form part of the Group’s Employee
Handbook and are updated and reviewed on a
regular basis.
Details on corporate social responsibility can be
found on p. 33.
Internal controls
The Directors are responsible for the Group’s system
of internal control and for reviewing its effectiveness.
Internal control systems and procedures are
reviewed annually and are designed to meet
the needs of the Group and the risks to which
it is exposed. The procedures are designed to
manage rather than eliminate risk faced by the
Group, and can only provide reasonable but no
absolute assurance against material misstatement
or loss. The key procedures which the Directors
have established with a view to providing effective
internal controls are as follows:
Management structure and
delegated authority
Authority is delegated to the Executive
Management Team (“EMT”) through Group
authorisation limits on a structured basis, ensuring
that proper management oversight exists at the
appropriate level. The composition of the EMT
with biographies can be found on p. 28, along
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 32 Malvern International Plc Annual Report and Accounts 2021
Chairman’s Corporate Governance Statement continued
with an organisational chart. EMT meetings are
held fortnightly and are attended by other senior
management as required. Regular updates are
provided by the heads of divisions and operations.
Any key issues from these meetings are reported to
the Group Board.
Control environment
The Group’s control environment is the responsibility
of the Directors and managers at all levels.
A review of the key risks facing the business and the
effectiveness of the Group’s internal controls was
last performed in July 2020.
events to engage with retail shareholders. The
communication allows the Board to understand
shareholders’ views, and to ensure that the
strategies and objectives of the Group are aligned
with shareholders. In its decision making, the Board
has regard to the ascertained expectations and
needs of its shareholders in accordance with its
statutory and fiduciary duties.
The Company welcomes shareholder contact at
any time and contact details can be found on the
website at www.malverninternational.com.
Monitoring systems used by the Board
The Board reviews the Group’s performance against
budgets on a monthly basis. The Group’s cash flow is
monitored monthly by the Board.
Mark Elliott
Chairman
3 May 2022
Shareholder communications
The Board attaches great importance to providing
shareholders with clear and transparent information
on the Group’s activities, strategy, and financial
position, and regards regular communications with
shareholders as one of its key responsibilities. The
Group is committed to engaging with shareholders
and this effort is led by the Chairman and CEO.
A clearly laid out investor relationship strategy is
in place. The primary communication tool with
shareholders is through the Regulatory News Service
(“RNS”) on regulatory matters and matters of
material substance.
The Group’s website provides details of the
Company’s Annual Report and Notices of Annual
General Meetings (“AGM”) are available to all
shareholders along with the Interim Report and
investor presentations.
In order to gauge shareholder sentiment, the
Company meets with the key institutional
shareholders typically every six months, normally at
the time of the final and interim results and when
necessary. The Company solicits feedback from its
larger shareholders via its Nominated Advisor.
The Board is aware of the need to protect the
interests of minority shareholders and balancing
these interests with those of more substantial
shareholders. The Company holds an open
Q&A session at every AGM and attends investor
CORPORATE SOCIAL RESPONSIBILITY
33
Employment policies
As an educational services business, Malvern’s
strength derives from the commitment, capability,
and cultural diversity of its employees. We have a
policy of diversity at all employee levels including
candidate selection, job assignment, and career
development. We encourage all employees to
participate in the operation and development
of the business by offering open access to senior
management, including the Executive Directors,
and adopting a policy of regular communications
through road shows and the intranet.
We have a dedicated Group HR manager, who
works across the Company. In 2021, the Company
reviewed and updated all its staff policies, and
engaged staff on these to ensure compliance and
understanding.
Health and safety
The health and safety of our employees is
paramount. We provide and maintain healthy and
safe working conditions, equipment, and systems of
work for all employees and provide such information,
training, and supervision as is needed for this purpose.
Appropriate written health and safety information is
issued to all new employees. This includes:
• First aid: each office has at least one named
person qualified in first aid. First aid boxes are
readily accessible, and records are kept of all
accidents and injuries
• Fire safety: each office has an evacuation marshal
who liaises with building management or local
emergency authorities in the event of an incident.
Evacuation assembly points are agreed for every
location and a full evacuation drill is carried out
every six months. Fire alarms are tested regularly
• Employees’ health: any employee who believes
they are suffering from an illness or condition
related to their working environment, including
mental health issues, is encouraged to report this
to their line manager for investigation
Throughout 2021, we ensured that all Government
guidelines in relation to Covid-19 were followed to
protect staff and students from contracting and
spreading the virus. Remote, online, and blended
teaching was provided during school closures and
there were regular communications to staff and
students outlining expectations and health and
safety protocols. Reminders in the form of posters
are displayed in public areas. Sanitising equipment
is provided for the use of all regular cleaning of
classrooms and public areas is carried out.
Social responsibilities
The Company has a culture of good corporate
citizenship wherever it operates. In addition to
offering means-tested scholarships, Malvern has
partnered with the RefuAid 'Language: A Gateway'
project to increase access to English language
tuition for people who have claimed asylum in the
UK and those in the process of doing so. In 2021, we
offered 4 refugees free tuition places to improve
their English and take English language exams. The
exams provide the necessary qualification to go
onto work or further study.
Environmental policy
While our operations by their very nature have
minimal environmental impact, we recognise our
responsibilities to protect and sustain the environment
and its resources. Our policy is to meet or exceed
the statutory requirements in this area, and we have
adopted a code of good environmental practice,
particularly in our main areas of environmental
impact, namely energy efficiency, use, and recycling
of resources and transport
• Recycling: we recycle a high proportion of
materials used in our operations, such as paper,
ink cartridges and electrical waste which is sent to
recycling plants
• Paper usage: we implement paper-saving
practices to reduce wastage and encourage
staff and students to ‘think before you print’. Our
internal documentation is almost entirely digital
and our teaching practices are increasingly
paperless
• Electricity: we reduce our energy consumption by
encouraging staff and students alike to switch off
lights and computers when not in use. Signs and
reminders are posted in rooms requesting that
energy sources are switched off by the last person
leaving a room. In communal areas, movement
sensors and timed switches are fitted so that
electricity is used only when required
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 34 Malvern International Plc Annual Report and Accounts 2021
Corporate social responsibility continued
In 2021, our travel budget for sales and marketing
activities reduced dramatically as many events
were held online due to travel restrictions. Whilst we
expect business travel to increase once again, we
re-assessed our international student recruitment
methods going forward. We will continue to use
a combination of face-to-face and digital events
going forward taking lessons from our experience in
2021 to be more selective in overseas trips we make
and the number of people we send abroad.
The Company is not required to publish details of
its carbon emissions. However, management is
currently in the process of assessing the ways it can
capture the data required to report on its carbon
footprint and set targets for reducing its energy
consumption and energy intensity.
Ethics and values
A culture of teamwork, openness, integrity,
and professionalism forms a key element of the
Company’s principles and values, which sets out
the standards of behaviour we expect from all our
employees. The Board and management conduct
themselves ethically at all times and promote a
culture in line with the standards set out in the
employee handbook.
Our values that underpin our culture:
• Our approach should always reflect our deep
commitment to, and understanding of our
students, staff, and partners, and their aspirations,
expectations, and success.
• We are flexible and accountable. We act with
integrity and seek partnerships with organisations
who share our values.
• We aim for excellence in every aspect of our
operations, building on our rich history to underpin
the high-quality learning, teaching, and student
support we provide.
We are committed to maintaining the highest
standards of ethics, professionalism, and business
conduct as well as ensuring that we act in
accordance with the law at all times. We support
and promote the principles of equal opportunities in
employment and a culture where every employee is
treated fairly.
Anti-Bribery Act
The Company’s Anti-Bribery and Corruption policy
is written to follow the UK regulatory requirements
in relation to the Anti-Bribery Act. The policy is the
responsibility of the CEO and is available on the
Group’s intranet. Client and supplier arrangements
are regularly reviewed and guidance forms part of
each employee’s induction.
The Company maintains a preferred supplier list
(“PSL”) for payroll companies used by its contractors
and undertakes due diligence before allowing
companies on to its PSL.
Modern slavery
Malvern has a zero-tolerance approach to modern
slavery and is committed to acting ethically
and with integrity in all its business dealings and
relationships, and to implementing and enforcing
effective systems and controls to ensure modern
slavery is not taking place anywhere in its own
business, or its supply chain.
The Company operates a supply chain with a low
inherent risk of slave and human trafficking potential.
The supply chain is mainly made up of UK-based
suppliers of professional services, computer software
and equipment, office supplies, and contractor and
associate workers. Nevertheless, this assessment is
kept under continual review and due diligence is
conducted with any new suppliers.
During 2021, the Group has continued to provide
training to all new employees on the Modern
Slavery Act 2015 and its own Modern Slavery Policy
as part of its on-boarding programme to ensure all
employees are aware of their responsibilities.
No instances of modern slavery were reported or
identified in 2021.
General Data Protection Regulations
(“GDPR”)
The Company takes its data protection obligations
seriously. The Company has maintained and
makes available policies on Data Protection,
Privacy, Information Security, Cookies, and Data
Breach policies to comply with the regulations. The
processing and maintenance of personal data is
managed in line with GDPR regulations with strict
controls and IT security. Data is regularly updated
and obsolete data removed. Training and guidance
on the regulations are provided to all staff and form
part of each new employee’s induction.
DIRECTORS’ REPORT
35
The Directors present their report and the audited
accounts for the year ended 31 December 2021.
Principal activities
The principal activities of Malvern International Plc
are to provide quality education services, preparing
students and learners to meet the demands of a
professional life. Courses are delivered in the UK and
online, and focus on English language teaching and
preparing students for higher education.
A detailed explanation of the Company’s principal
activities can be found on p. 6.
Business model
The Company’s business model is to provide:
• Language teaching direct to its students through
its three UK-based language schools
• Grow its language student base through direct
sales and via third-party agents and
• Form long-term partnerships with higher education
institutions to deliver pre-university foundation
classes on behalf of its partners. We aim to offer
our services more efficiently that our partners can
themselves
We compete in the market by offering excellent
quality and competitive education. The Company’s
growth is driven by organic growth through the
acquisition of new customers and, when appropriate,
acquiring established businesses operating in the
same or related markets.
Additional details of the Company’s business model
can be found on p. 8. The Company benefits from
operating in a market which has long-term growth
prospects. More information on our markets can be
found on p. 10.
Strategic priorities
As a global learning and skills development partner,
the Group’s vision is to invest in and develop its
operating businesses in the education sector, to
establish centres of excellence, and to deliver
long-term growth and sustainable profit.
Each year the Board and management set strategic
priorities, and monitors performance against them
throughout the year. The strategic priorities are set
out on p. 12.
Review of the business and future
developments
A review of the business and its outlook, including
commentary on the key performance indicators can
be found in the Strategic Report on p. 2 to 24. The
principal risks and uncertainties facing the Company
are included on p. 21. The Company’s social,
environmental and ethical policies are set out in the
Chairman’s Corporate Governance Statement on
p. 29. A summary of the outlook for the Group is given
within the Chairman’s Statement on p. 3.
Group results
The Group’s loss including discontinued operations
before taxation for the year was £1.15m (2020: loss
£2.11m).
Dividends
The Directors do not recommend a final dividend
(2020: nil).
Capital structure
The Company has ordinary shares of 0.1 pence and
deferred shares of 5 pence, 1 pence and 0.1 pence
in issue. The shares are listed on AIM, a sub-market
of the London Stock Exchange. Holders of ordinary
shares are entitled to vote at Company meetings, to
receive dividends and to the return of their capital in
the event of liquidation.
Holders of deferred shares have limited rights.
Limitations on the rights of deferred shares include
no entitlement to vote at general meetings and
deferred shares are not freely transferrable.
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, the Group finalised negotiations with
BOOST&Co (the Group’s fund manager, acting on
behalf of the Company’s debtholder IL2 2018) to
restructure the Group’s £2.6m debt facility. Under the
original agreement monthly payments were due to
commence in April 2022 over a 24-month period.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 36 Malvern International Plc Annual Report and Accounts 2021
Directors’ Report continued
The new agreement provides for a twelve month
payment and interest holiday with monthly payments
commencing from March 2023, over a five-year period.
BOOST&Co have also 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 twelve months from the date of the signing
of the financial statements.
In making their assessment of going concern the
Group’s Directors have considered the impact on
the business of the Covid-19 pandemic. Whilst this has
been very disruptive to the Group’s operations, the
business was able to adapt its service offering through
online learning. The Government announcement to
remove testing for fully vaccinated arrivals into the UK,
provides the Directors with confidence that student
numbers will return to pre-pandemic levels in 2022.
In Q4 2021, the number of students across the
Group’s English language schools grew back to
approximately 80 percent of 2019 levels. In Q1 2022,
this figure increased, which supports the Directors’
2022 recovery assumptions.
Pathways numbers in January 2022 also indicate an
encouraging recovery from the impact of Covid-19,
with a 55 percent increase in students year on year
for one of the Group’s key partners. In addition,
Malvern Juniors are expected to return in the
summer of 2022 with three centres.
Profit and cash flow projections for the Group assume
profitable growth in its key operating entities once
operations return to normal. A large part of this
assumed growth is driven by the more profitable
Pathways division of the Group.
The global pandemic continues to create uncertainty
in the profit and cash flow projections for the Group.
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
going concern of the Group.
The above factors provide the Directors with
confidence that it is appropriate to prepare the
accounts on a going concern basis. Refer to
accounting policies on page 57 for further details.
Subsequent events
Details of subsequent events can be found in note 27
of the financial statements.
Directors
Biographical information for each of the Directors is
set out on p. 26, together with details of the date of
appointment, membership of the Board committees,
and any external appointments.
The Company’s Articles of Association requires
that each Director retire from office and seek
reappointment at the third AGM after the general
meeting at which they were last appointed. “There
are no Directors due for reappointment in 2021”.
Directors’ interests in shares
The Directors’ beneficial interest in the ordinary
share capital of the Company are set out within the
Remuneration Report on p. 39.
Substantial shareholders
As at 31 December 2021 the Company was aware
of the following major shareholders representing
3 percent or more of voting rights attached to the
issued ordinary share capital of the Company.
Lombard Odier Asset Mgt
IL2 (2018) - BOOST&Co
Mr Richard Mace
VIDACOS NOMINEES LIMITED Des:IGUKCLT
INTERACTIVE INVESTOR SERVICES NOMINEES LIMITED Des:SMKTNOMS
PERSHING NOMINEES LIMITED Des:WRCLT
THE BANK OF NEW YORK (NOMINEES) LIMITED Des:672938
HSBC CLIENT HOLDINGS NOMINEE (UK) LIMITED Des:731504
SPREADEX LIMITED
Chris Woodgate
HSBC GLOBAL CUSTODY NOMINEE (UK) LIMITED Des:941346
Number of
ordinary shares
0.1p
221,784,998
175,000,000
147,462,001
136,954,916
104,997,695
90,121,724
87,366,375
83,592,087
80,240,047
77,500,000
73,250,000
Percentage
held
10.52%
8.30%
6.99%
6.49%
4.98%
4.27%
4.14%
3.96%
3.80%
3.67%
3.47%
37
Directors’ and officers’ liability
insurance and indemnity
The Company has purchased insurance to cover its
Directors and officers against their costs in defending
themselves in any legal proceedings taken against
them in that capacity and in respect
of damages resulting from the unsuccessful defence
of any proceedings.
Corporate social responsibility
The Group recognises its corporate social
responsibilities and reports on these in a separate
statement of social, environmental, and ethical
policies on p. 33.
This statement covers the Group’s Employment
Policies, Environmental Policy, and Health
and Safety Policy.
Political donations
There were no political donations made by the
Group during the year (2020: none).
Directors’ responsibilities
The Directors are responsible for preparing the
Annual Report and the Group and Parent Company
financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare
Group and parent Company financial statements
for each financial year. Under that law the Directors
have elected to prepare the financial statements in
accordance with International Financial Reporting
Standards (“IFRS”) as adopted by the UK (IFRS as
adopted by the UK) and applicable law.
Under Company law the Directors must not approve
the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of
the Group and parent Company and of their profit or
loss for that period.
In preparing each of the Group and parent
Company financial statements, the Directors are
required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and estimates that are
reasonable and prudent;
• state whether applicable accounting standards
have been followed, subject to any material
departures disclosed and explained in the Group
and parent Company financial statements; and
• prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the Group and parent Company will continue
in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the parent Company’s transactions and
disclose with reasonable accuracy at any time the
financial position of the parent Company and enable
them to ensure that its financial statements and the
Directors’ Remuneration Report comply with the
Companies Act 2006.
The Directors are responsible for safeguarding the
assets of the Group and parent Company and
hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities. Under
applicable law and regulations, the Directors are
also responsible for preparing a Strategic Report
and a Directors’ Report that complies with that law
and those regulations. They are also responsible for
ensuring that the Strategic Report and the Directors’
Report and other information included in this Annual
Report and financial statements is prepared in
Accordance with applicable law in the
United Kingdom.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS Annual General Meeting
The resolutions to be proposed at the Annual General
Meeting will appear in the Notice of the Annual
General Meeting together with the explanatory
notes. This will be circulated with the Annual Report
when sent to all shareholders.
ON BEHALF OF THE BOARD
Mark Elliott
CHAIRMAN
3 May 2022
38 Malvern International Plc Annual Report and Accounts 2021
Directors’ Report continued
The maintenance and integrity of the Malvern
International Plc website is the responsibility of the
Directors; the work carried out by the auditor does
not involve the consideration of these matters and,
accordingly, the auditor accepts no responsibility
for any changes that may have occurred in the
accounts since they were initially presented
on the website.
Legislation in the United Kingdom governing the
preparation and dissemination of the accounts and
the other information included in annual reports may
differ from legislation in other jurisdictions.
Auditor
Cooper Parry Group Limited (“Cooper Parry”) is
the Company’s appointed external auditor and
responsible for auditing the Company’s financial
statements for the financial year to
31 December 2021.
Statement of disclosure to the
Independent Auditor
Each of the persons who are Directors at the
time when this Directors’ Report is approved has
confirmed that so far as that Director is aware, there is
no relevant audit information of which the Company
and the Group’s auditor is unaware. Each Director
has confirmed that they have taken all the steps that
ought to have been taken as a Director in order to
be aware of any relevant audit information and to
establish that the Company and the Group’s auditor
is aware of that information.
NOMINATION AND REMUNERATION
COMMITTEE REPORT
39
The Nomination and Remuneration Committee is a
standing committee of the Board of the Company
and is comprised of two Non-Executive Directors,
Alan Carroll (Chairman) and Mark Elliott.
The Committee’s primary objectives are to ensure
that remuneration arrangements are aligned with
the strategy and culture of the Company and its
subsidiaries. To this end, it ensures the Company’s
remuneration policy encourages and rewards
performance against strategic priorities, as well as
the right behaviours, values, and culture.
The Committee also ensures that there is a robust
process for the appointment of new Board Directors
and senior management positions. It works closely
with the Company’s Board of Directors and external
advisers to identify the skills, experience, personal
qualities, and capabilities required for the next stage in
the Company’s development, linking the Company’s
strategy to future changes on the Board.
Within the Terms of Reference for the Nomination
and Remuneration Committee as approved by the
Board, the responsibilities of the committee are as
follows:
• to consider the nomination and appointment,
increments and bonus plans of the Group CEO,
subsidiary General Manager and Group senior
management team members;
• to review any letter of resignation from the Group
CEO or Directors of the Company, and any
questions of resignation or dismissal;
• to review whether there is reason (supported by
grounds) to believe that the Senior Managers of
the Group or its subsidiaries are not suitable for
continued employment;
• to review the statement with regard to the
Remuneration and Nomination polices of the
Group for inclusion in the Annual Report and
report the same to the Board;
• to consider any other functions as may be agreed
between the Committee and the Board; and
• to review the Board and Board Committees’
effectiveness. The committee members
keep themselves fully informed of all relevant
developments and best practice by reference to
the QCA’s Remuneration Committee guide.
Attendance at meetings
Details of attendance at meetings by the
committee members can be found on p. 30.
Matters considered in 2021
During the year, the Committee considered the
following matters:
• The appointment of an additional Executive
Director of the Board of the Directors and Chief
Financial Officer
• The issuance of share option to key staff as part of
the Group incentive plan
Remuneration policy
Malvern aims to recruit, motivate, and retain
high-calibre executives capable of achieving
the objectives of the Group and to encourage
and reward appropriately superior performance
in a manner which enhances shareholder
value. Accordingly, the Company operates a
remuneration policy which ensures that there is a
clear link to business strategy and a close alignment
with shareholder interests and current best practice
and aims to ensure that senior executives are
rewarded fairly for, and commensurate to, their
respective individual contributions to the Group’s
performance. Details of all emoluments paid to
Directors of the Company are set out on p. 40.
Non-Executive Directors’ remuneration
The Board determines the remuneration of all
Independent Non-Executive Directors with the fees
being set at a level to attract individuals with the
necessary experience and ability to contribute to
the Group.
The Non-Executive Directors do not receive bonuses
and are entitled to be reimbursed for reasonable
expenses incurred by them in carrying out their
duties as Directors of the Company.
The Board, with the assistance of the Nomination
and Remuneration Committee, reviews the
remuneration level of Non-Executive Directors on
an annual basis to ensure it remains competitive in
attracting suitable talent. All Board appointments
are made subject to the Company’s Articles of
Association.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 40 Malvern International Plc Annual Report and Accounts 2021
Nomination and Remuneration Committee continued
Directors’ service contracts
Contractual arrangements for current Directors are as follows:
Richard Mace
Daniel Fisher
Contract date
Notice period
30 June 2020
6 December 2021
6 months
6 months
Contractual arrangements for current Non-Executive Directors are as follows:
Mark Elliott
Alan Carroll
Date of letter of
appointment
1 July 2019
1 October 2019
Notice period Appointment term
1 month
1 month
3 years
3 years
The Directors are required to retire by rotation and the appointment of new Directors has to be approved at
the next AGM subsequent to their appointment by the Board. No Directors are retiring by rotation in 2021.
Other than the notice periods afforded to the Directors, there are no special provisions for compensation in
the event of loss of office. The Remuneration Committee considers the circumstances of individual cases of
early termination and determines compensation payments accordingly.
Directors’ remuneration
Details of individual Directors emoluments and remuneration who served in 2021 are as follows:
Salary and
fees
£
50,000
97,916
30,000
6,250
—
184,166
Benefits
£
Pension
£
Other
£
Share based
payments
£
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,027
—
—
—
Total
2021
£
50,000
98,943
30,000
6,250
—
1,027
185,193
Total
2020
£
63,789
38,542
35,794
—
192,970
331,095
Mark Elliott1
Richard Mace2
Alan Carroll
Daniel Fisher3
Sam Malafeh4
Total
1 Appointed on 1 July 2019.
2 Appointed on 30 June 2020.
3 Appointed on 6 December 2021.
4 Resigned on 25 June 2020.
Share Option Scheme
In order to retain, incentivise and align the interests of employees with certain performance targets and
strategic goals, the Company introduced an EMI share option scheme in 2020. The Company awarded over
89,250,000 ordinary share options to Richard Mace and certain employees of the Company during December
2020 and January 2021 (Tranche 1 and Tranche 2). Further in September 2021, the Company awarded
56,750,000 ordinary share options (Tranche 3). The EMI options granted represent 6.9 percent of the existing
issued share capital of the Company. Of the total EMI options granted, 48,000,000 were granted to Executive
Director, Richard Mace.
41
The EMI options will vest after three years once defined share price levels have been attained for 40
consecutive business days. For Tranche 1 and Tranche 2, half of the individual EMI options awards will vest
when the mid-market share price of the Company reaches 0.5 pence and the remaining half will vest
when the mid-market share price of the Company reaches 0.9 pence. For Tranche 3, half of the individual
EMI options awards will vest when the mid-market share price of the Company reaches 0.6 pence and the
remaining half will vest when the mid-market share price of the Company reaches 1.1 pence.
The exercise price of Tranche 1 and Tranche 2 EMI Options is 0.15 pence each and for 0.22 pence each for
Tranche 3.
Non-Executive Directors’ annual fees
The below presents the annual fees to be paid to the current Non-Executive Directors in 2022:
Mark Elliott
Alan Carroll
Fees £
50,000
30,000
Directors’ interest in shares
The beneficial interests of the Directors who served during the year and their families in the ordinary share
capital of the Company are shown below:
Direct interests
Name of Director
Mark Elliott
Richard Mace
Alan Carroll
Indirect interests
Name of Director/Company
Marzena Mace
At beginning of the
Year/At date of
Appointment At end of the Year
10,332,000
86,361,334
8,063,333
31,582,000
147,462,001
18,063,333
At beginning of the
Year/At date of
Appointment At end of the Year
6,900,000
6,900,000
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 42 Malvern International Plc Annual Report and Accounts 2021
AUDIT AND RISK COMMITTEE REPORT
The Audit and Risk Committee is a sub-committee
of the Board and comprises two Non-Executive
Directors, with Mark Elliott as Chairman.
The Audit and Risk Management Committee meets
at least three times a year. The external auditor
and Executive Directors attend when appropriate
at the invitation of the Committee. The external
auditor meets separately with the Audit Committee
on request, without the presence of the Executive
Directors, to ensure open communication. The
primary objectives of the Committee are to assist
the Board in discharging its statutory duties and
responsibilities relating to accounting and financial
reporting practices of the Group and to assist the
Board in their responsibilities to identify, assess,
and monitor key business risks to mitigate adverse
impacts on achieving strategic objectives with a
view to safeguard shareholders’ investments and
the Group’s assets. In addition, the Committee
assists the Board in:
• complying with specified accounting standards
and required disclosure as administered by AIM,
relevant accounting standards bodies, and any
other Laws and regulations as amended from
time to time;
• presenting a balanced and understandable
assessment of the Group’s position and prospects;
• establishing a formal and transparent
arrangement for maintaining an appropriate
relationship with the Company’s auditor and
overseeing, appraising the quality of audit
conducted by the Company’s external auditor
and reviewing the independence of the external
auditor; and
• determining the adequacy of the Group’s
administrative, operating, accounting and
financial controls, and internal controls.
Attendance at meetings
Attendance at the meetings can be found in the
table on p. 30.
Matters considered in 2021
During the year, the Committee considered the
following matters:
• review of the monthly management accounts;
• reviewed the Annual and Interim Report and
financial statements of the Group, and the clarity
of disclosures made;
• oversaw the relationship with the external auditor,
including a review of the external auditor’s
findings during the audit in relation to the year
ended 31 December 2021;
• reviewed the Group’s Risk Register; and
• reviewed the external auditor’s Audit Plan in
relation to the year ended 31 December 2021.
External auditor
In order to ensure an appropriate balance between
audit quality, objectivity and independence, and
cost effectiveness the Audit and Risk Management
Committee reviews the nature of all services,
including non-audit work, is provided by the
external auditor each year. In 2021 the Company
reappointed Cooper Parry Group Limited (Cooper
Parry) as its auditor in order to conduct the audit of
the Company’s financial statements for the financial
year to 31 December 2021.
Significant issues relating to the
financial statements
The Audit Committee reviewed the following issues
in relation to the financial statements for the year
under review:
Going concern
The Committee reviewed a paper prepared
by Executive Management in support of the
Going Concern Statement and agreed with
management’s approach and findings.
43
FINANCIAL
STATEMENTS
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 44 Malvern International Plc Annual Report and Accounts 2021
INDEPENDENT AUDITOR’S REPORT TO THE
SHAREHOLDERS OF MALVERN INTERNATIONAL PLC
Our approach to the audit
We adopted a risk based audit approach. We
gained a detailed understanding of the group’s
business, the environment it operates in and the risks
it faces. The key elements of our audit approach
were as follows:
Of the group’s five reporting components, we
subjected three to audits for group reporting
purposes. The components within the scope of our
work covered: 100% of group revenue, 98% of group
loss before tax and 100% of group net assets.
In order to address the matters described in the Key
audit matters section we performed focused audit
procedures over these areas, including reference to
external market data and publicly available market
information in relation to assumptions used.
Key audit matters
Key audit matters are those matters that, in our
professional judgment, were of most significance in
our audit of the financial statements of the current
period and include the most significant assessed
risks of material misstatement (whether or not due
to fraud) we identified, including those which had
the greatest effect on: the overall audit strategy, the
allocation of resources in the audit; and directing
the efforts of the engagement team. These matters
were addressed in the context of our audit of the
financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate
opinion on these matters.
Opinion
We have audited the financial statements of
Malvern International plc (the ‘parent company’)
and its subsidiaries (‘the group’) for the year
ended 31 December 2021 which comprise the
Consolidated Statement of Comprehensive Income,
the Consolidated and Company Statements of
Financial Position, the Consolidated and Company
Statements of Changes in Equity, the Consolidated
and Company Statements of Cash Flows, and
notes to the financial statements, including
significant accounting policies. The financial
reporting framework that has been applied in their
preparation is applicable law and UK adopted
international accounting standards.
In our opinion the financial statements:
• give a true and fair view of the state of the
group’s and of the parent company’s affairs as at
31 December 2021 and of the group’s loss for the
year then ended;
• have been properly prepared in accordance
with UK adopted international accounting
standards; and
• have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities
under those standards are further described in
the Auditor’s responsibilities for the audit of the
financial statements section of our report. We are
independent of the group and the parent company
in accordance with the ethical requirements that
are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as
applied to listed entities, and we have fulfilled our
other ethical responsibilities in accordance with
these requirements. We believe that the audit
evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
45
Key Audit Matter
Revenue Recognition
The group operating revenues arise from the
provision of education services and have a number
of related income streams that are recognised as
outlined in note 3 (xvi).
Due to the timing of course payments there is
often an element of deferred income arising from
differences between the timings of cash flows
and provision of services. As a result there is some
complexity with regard to revenue recognition for
the group.
Going concern
The group has been heavily affected by the
Covid-19 pandemic and resulting restrictions, in
particular the restriction of travel into and out of the
UK which has severely impacted student numbers
attending college courses.
How our scope addressed this matter
We have understood the sales system and key
controls within the revenue cycle and assessed
revenue recognition policies used by the group;
A sample of course bookings throughout the
year has been vouched from the booking system
to attendance records, sales invoices and to
nominal postings, including recalculating any
deferred income required at year end across the
trading subsidiaries;
We tested for understatement of deferred income
in sales transaction testing and for overstatement of
deferred income in valuation testing of liabilities.
Manual journals impacting revenue nominal codes
have been selected for further testing when certain
risk criteria have been met.
We have:
Obtained the assessment made by management and
the Board regarding the Group’s ability to continue as
a going concern.
Reviewed the letter of support provided by third parties.
Reviewed the assumptions used in their assessment and
sensitised key assumptions used.
Reviewed debt agreements currently in place to assess
compliance with repayment terms.
Discussed with management and the Board any
additional industry factors or other issues which
could impact the Group’s ability to continue as a
going concern.
Reviewed relevant disclosures included in the
Annual Report for consistency with our knowledge of
the business.
Our application of materiality
The materiality for the Group financial statements as a whole was set at £24,000. This has been determined
with reference to the benchmark of the Group’s revenue which we consider to be an appropriate measure
for a group of companies such as these. Materiality represents 1% of Group revenue as presented in the
Consolidated Statement of Comprehensive Income.
The materiality for the parent company financial statements as a whole was set at £16,000. This has been
determined with reference to the parent company’s net assets, which we consider to be an appropriate
measure for a holding company with investments in trading subsidiaries. Materiality represents 1% of net assets
as presented on the face of the parent company’s Statement of Financial Position.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 46 Malvern International Plc Annual Report and Accounts 2021
Independent Auditor’s Report continued
Performance materiality
Performance materiality is the application of
materiality at the individual account or balance
level. It is set at an amount to reduce to an
appropriately low level the probability that the
aggregate of uncorrected and undetected
misstatements exceeds materiality. On the basis of
our risk assessments, together with our assessment
of the group’s overall control environment, our
judgement was that performance materiality
should be set at 80% of overall materiality, namely
£19,000. We have set performance materiality
at this percentage based on our assessment of
the likelihood of misstatements. Audit work at
component locations for the purpose of obtaining
audit coverage over significant financial statement
accounts is undertaken based on a percentage
of total performance materiality. The performance
materiality set for each component is based on
the relative scale and risk of the component to
the group as a whole and our assessment of the
risk of misstatement at that component. In the
current year, the range of performance materiality
allocated to components was £8,000 to £17,000,
including parent company performance materiality
of £13,000.
Material uncertainty relating to going
concern
We draw attention to note 2 (iv) in the financial
statements which indicates that the current and
developing impact on the business of the Covid-19
pandemic has caused significant disruption. As
stated in note 2 (iv), these events or conditions,
along with other matters set out in note 2 (iv),
indicate that a material uncertainty exists that
may cast significant doubt on the group’s ability
to continue as a going concern. Our opinion is not
modified in respect of this matter.
In auditing the financial statements, we have
concluded that the directors’ use of the going
concern basis of accounting in the preparation
of the financial statements is appropriate. Our
evaluation of the directors’ assessment of the
group’s and parent company’s ability to continue
to adopt the going concern basis of accounting
included:
• Challenging management on key assumptions
included in their forecasts including performing
sensitivity analysis;
• Considering the potential impact of forecast
scenarios on the forecast cash position;
• Reviewing debt agreements currently in place to
check terms have been appropriately considered
and modelled in the cash flow forecasts;
• Reviewing letter of support provided by
third parties;
• Reviewing management’s disclosures in the
financial statements.
From our work we noted that the group has positive
cash balances and forecasts indicate that the
group will continue to be able to meet its liabilities
as they fall due as long as borders to the UK remain
open and students are allowed to return.
Our responsibilities and the responsibilities of
the directors with respect to going concern are
described in the relevant sections of this report.
Other Information
The other information comprises the information
included in the annual report other than the
financial statements and our auditor’s report
thereon. The directors are responsible for the other
information contained within the annual report.
Our opinion on the financial statements does not
cover the other information and, except to the
extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion
thereon. Our responsibility is to read the other
information and, in doing so, consider whether the
other information is materially inconsistent with the
financial statements or our knowledge obtained
in the course of the audit, or otherwise appears to
be materially misstated. If we identify such material
inconsistencies or apparent material misstatements,
we are required to determine whether this gives
rise to a material misstatement in the financial
statements themselves. If, based on the work we
have performed, we conclude that there is a
material misstatement of this other information, we
are required to report that fact.
We have nothing to report in this regard.
47
Opinions on other matters prescribed
by the Companies Act 2006
In our opinion, based on the work undertaken in the
course of the audit:
• the information given in the strategic report and
the directors’ report for the financial year for
which the financial statements are prepared is
consistent with the financial statements; and
• the strategic report and the directors’ report have
been prepared in accordance with applicable
legal requirements.
Matters on which we are required to
report by exception
In the light of the knowledge and understanding
of the group and the parent company and their
environment obtained in the course of the audit,
we have not identified material misstatements in the
strategic report or the directors’ report.
We have nothing to report in respect of the
following matters in relation to which the Companies
Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not
been kept by the parent company, or returns
adequate for our audit have not been received
from branches not visited by us; or
• the parent company financial statements are not
in agreement with the accounting records and
returns; or
• certain disclosures of directors’ remuneration
specified by law are not made; or
• we have not received all the information and
explanations we require for our audit;
Responsibilities of directors
As explained more fully in the directors’
responsibilities statement set out on page 37, the
directors are responsible for the preparation of the
financial statements and for being satisfied that
they give a true and fair view, and for such internal
control as the directors determine is necessary to
enable the preparation of financial statements that
are free from material misstatement, whether due to
fraud or error. In preparing the financial statements,
the directors are responsible for assessing the
group’s and parent company’s ability to continue
as a going concern, disclosing, as applicable,
matters related to going concern and using the
going concern basis of accounting unless the
directors either intend to liquidate the group and
parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of
the financial statements
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a
high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the
aggregate, they could reasonably be expected to
influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of
non-compliance with laws and regulations. We
design procedures in line with our responsibilities,
outlined above, to detect material misstatements in
respect of irregularities, including fraud. The extent
to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
Our assessment focused on key laws and regulations
the group and parent company have to comply
with and areas of the financial statements we
assessed as being more susceptible to misstatement.
These key laws and regulations included but were
not limited to compliance with the Companies
Act 2006, UK adopted international accounting
standards, and relevant tax legislation.
We are not responsible for preventing irregularities.
Our approach to detecting irregularities included,
but was not limited to, the following:
• obtaining an understanding of the legal and
regulatory framework applicable to the entity and
how the entity is complying with that framework;
• obtaining an understanding of the entity’s policies
and procedures and how the entity has complied
with these, through discussions and sample testing;
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 48 Malvern International Plc Annual Report and Accounts 2021
Independent Auditor’s Report continued
• obtaining an understanding of the entity’s risk
assessment process, including the risk of fraud;
• designing our audit procedures to respond to our
risk assessment; and
• performing audit testing over the risk of
management override of controls, including
testing of journal entries and other adjustments for
appropriateness, evaluating the business rationale
of significant transactions outside the normal
course of business and reviewing accounting
estimates for bias.
A further description of our responsibilities is
available on the Financial Reporting Council’s
website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Use of our report
This report is made solely to the parent company’s
members, as a body, in accordance with Chapter
3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state
to the parent company’s members those matters
we are required to state to them in an auditors’
report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume
responsibility to anyone other than the parent
company and the parent company’s members, as
a body, for our audit work, for this report, or for the
opinions we have formed
Katharine Warrington
SENIOR STATUTORY AUDITOR
For and on behalf of Cooper Parry Group Limited
Chartered Accountants and Statutory Auditor
Sky View
Argosy Road
East Midlands Airport
Castle Donington
Derby
DE74 2SA
3 May 2022
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
for the year ended 31 December 2021
49
Revenue
Sale of services
Total Revenue
Cost of services sold
Gross Profit
Other Income
Salaries and employees’ benefits
Share based payments
Depreciation of property, plant and equipment
Other operating expenses
Operating Loss
Finance costs
Loss before tax
Income tax charge
Loss for the year from continuing operations
Profit/(Loss) from discontinued operations
Loss for the year
Attributable to:
Note
2021
£
2020
£
5
6
7
30
12
9
8
2,417,524
2,417,524
1,901,307
1,901,307
(1,071,679)
(1,016,393)
1,345,845
223,989
884,914
418,363
(1,346,486)
(1,095,012)
(3,128)
(409,271)
(1,135,149)
(169,278)
(414,349)
(950,745)
(1,324,200)
(1,326,107)
(270,190)
(302,066)
(1,594,390)
(1,628,173)
10
—
(31,300)
(1,594,390)
(1,659,473)
4(b)
448,741
(480,092)
(1,145,649)
(2,139,565)
Equity holders of the Company
(1,145,649)
(2,139,565)
Loss for the year
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation movements
Total comprehensive income/(expense) for the year
Continuing operations
Discontinued operations
Attributable to:
Equity holders of the parent
Loss per share from continuing operations attributed to equity holders of the
Company (in pence)
Basic
Diluted
2021
£
2020
£
(1,145,649)
(2,139,565)
—
15,575
(1,145,649)
(2,123,990)
(1,594,390)
(1,659,473)
448,741
(464,517)
(1,145,649)
(2,123,990)
2021
2020
(0.08)
(0.08)
(0.23)
(0.23)
Profit/(Loss) per share from discontinued operations attributed to equity
holders (in pence)
Basic and diluted
0.02
(0.06)
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
50 Malvern International Plc Annual Report and Accounts 2021
CONSOLIDATED AND COMPANY STATEMENT OF
FINANCIAL POSITION
as at 31 December 2021
TOTAL ASSETS
Non-current assets
Property, plant, and equipment
Goodwill
Investment in subsidiaries
Right-of-use assets
Total non-current assets
Current assets
Trade receivables
Other receivables and prepayments
Amounts due from subsidiaries
Cash and cash equivalents
Total current assets
Assets disposed
Total assets
Group
Company
Company
Group
2021
£
2020
£
2021
£
—
—
2020
£
—
—
—
1,419,350
1,419,350
—
—
1,419,350
1,419,350
50,427
80,781
1,419,350
1,419,350
—
2,553,726
4,023,503
705,271
289,607
—
2,612,614
4,112,745
1,033,105
162,093
—
377,170
103,609
1,372,048
1,298,807
659,898
4b(iii)
—
1,846
—
5,395,551
5,413,398
2,079,248
2,009,261
—
112,788
501,409
45,701
—
53,214
527,749
8,948
589,911
—
12
15
13
12
16
17
18
51
EQUITY AND LIABILITIES
Non-current liabilities
Term loan
Warrants
Convertible loan notes
Lease liabilities
Deferred tax liabilities
Total non-current liabilities
Current liabilities
Trade payables
Contract liabilities
Other payables and accruals
Amounts due to subsidiary
Amounts due to related parties
Convertible loan notes
Lease liabilities
Term loan
Total current liabilities
Liabilities directly associated
with assets disposed
Total liabilities
Group
2021
£
Group
Company
Company
2020
£
2021
£
2020
£
Note
23
23
23
23
10
19
20
21
22
23
23
23
1,791,952
2,532,115
1,723,537
2,432,115
72,801
—
63,701
272,817
3,075,517
2,491,486
10,279
10,279
72,801
—
—
—
63,701
272,817
—
—
4,950,549
5,370,398
1,796,338
2,768,633
413,297
899,137
598,253
—
—
275,885
278,961
808,869
603,631
676,287
1,229,743
—
40,000
50,000
350,829
31,896
—
108,294
661,326
—
275,885
—
—
787,573
182,274
—
140,219
1,035,546
40,000
50,000
—
—
3,274,402
2,950,490
1,864,974
1,448,039
4b(iii)
—
216,737
—
—
8,224,951
8,537,625
3,661,312
4,216,672
Equity attributable to equity holders of the
Company
Share capital
Share premium
Retained earnings
Translation reserve
Capital reserve
Convertible loan reserve
Total equity
Total equity and liabilities
24
25
25
25
25
29
11,216,991
10,309,811
11,216,991
10,309,811
6,603,839
5,782,394
6,603,839
5,782,394
(20,679,052)
(19,703,963)
(19,431,716)
(18,328,438)
—
—
28,822
288,149
170,560
28,822
—
—
—
—
28,822
28,822
(2,829,400)
(3,124,227)
(1,582,064)
(2,207,411)
5,395,551
5,413,398
2,079,248
2,009,261
The loss for the year as per the financial statements of the parent company at 31 December 2021 was £1,103,278
(2020: Loss £896,815).
The financial statements were approved by the Board of Directors on 3 May 2022 and were signed on its behalf by:
Richard Mace
Chief Executive Officer
Daniel Fisher
Chief Financial Officer
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
52 Malvern International Plc Annual Report and Accounts 2021
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
for the year ended 31 December 2021
Share
Capital
£
Share
Premium
£
Retained
Earnings
£
Translation
Reserve
£
Capital
Reserve
£
Convertible
Loan
Reserve
£
Attributable
to Equity
Holders
of the
Company
£
Total
£
9,363,236
5,431,449 (17,564,398)
272,574
170,560
28,822
(2,297,757) (2,297,757)
New Share Issue
833,333
416,667
—
—
(122,250)
—
—
— (2,139,565)
15,575
113,242
56,528
—
—
—
—
—
—
—
—
—
—
—
(122,250)
(122,250)
(2,123,990) (2,123,990)
1,250,000 1,250,000
—
169,770
169,770
10,309,811
5,782,394 (19,703,963)
288,149
170,560
28,822
(3,124,227) (3,124,227)
—
(89,503)
—
—
—
—
(89,503)
(89,503)
—
—
170,560
—
170,560
—
—
—
Balance at
1 January 2020
Direct costs relating
to issue of shares
Total comprehensive
income for the year
Share based
payments (inc. EMI
options)
Balance at
31 December 2020
Direct costs relating
to issue of shares
Capital reserve
transferred to
retained earnings on
disposal of
Singapore
Translation reserve
transferred to
retained earnings on
disposal of
Singapore
Total comprehensive
income for the year
—
—
—
—
(288,149)
— (1,145,649)
—
New share issue
891,702
898,598
Share based
payments
(EMI options)*
Balance at
31 December 2021
15,478
12,350
—
11,216,991
6,603,839 (20,679,052)
—
—
—
—
—
—
—
(288,149)
(288,149)
—
(1,145,649) (1,145,649)
1,790,300 1,790,300
—
27,828
27,828
28,822
(2,829,400)
(2,829,400)
*
The total share-based payments taken to equity during 2020 excluded the directors’ bonus accrual (£24,700) which was recognised as a
liability in 2020. The accrual was recognised in equity in 2021 when the bonus was paid in shares (see note 30 for more information).
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2021
53
Cash Flows from operating activities
Loss after income tax from
Continuing activities
Discontinued activities
Adjustments for:
Depreciation of tangible assets
Fair value movements
Share based payments
Profit/(loss) on disposal of tangible assets
Loss on disposal of discontinued operations
Impairment of trade receivables
Finance cost
Interest paid
Tax paid
Changes in working capital:
Decrease in stocks
(Increase)/decrease in receivables
Increase/(decrease) in payables
Decrease in amounts due to related parties
Net cash flows used in operating activities
Cash Flows from investing activities
Purchases of property, plant, and equipment
Net cash used in investing activities
Cash Flows from financing activities
Repayment of lease liabilities
New equity issued
Term Loan
Net cash generated by financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Exchange losses on cash and cash equivalents
Cash and cash equivalent at the end of the year
2021
£
2020
£
(1,594,390)
(1,659,473)
448,741
(480,092)
409,271
16,755
3,128
2,400
(503,040)
311,102
270,190
(59,526)
—
414,349
(61,939)
175,278
(115,587)
—
123,690
302,066
(51,583)
—
(695,369)
(1,353,291)
—
(110,781)
(348,043)
(40,000)
6,153
94,657
218,561
(6,646)
(1,194,193)
(1,040,566)
(11,280)
(11,280)
—
—
(161,475)
(194,801)
1,650,797
1,155,712
(10,288)
100,000
1,479,034
1,060,911
273,561
103,609
—
20,345
83,264
—
377,170
103,609
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
54 Malvern International Plc Annual Report and Accounts 2021
COMPANY STATEMENT OF
CHANGES IN EQUITY
Share
Capital
£
Share
Premium
£
Retained
Earnings
£
Convertible
loan reserve
£
Total
£
Balance at 1 January 2020
9,363,236
5,431,449
(17,431,623)
28,822
(2,608,116)
Direct costs relating to issue of
shares
Total comprehensive income/
(expense) for the year
—
—
(122,250)
—
—
(896,815)
New Share Issues
833,333
416,667
Share based payments (inc. EMI
options)
113,242
56,528
—
—
—
—
—
—
(122,250)
(896,815)
1,250,000
169,770
Balance at 31 December 2020
10,309,811
5,782,394
(18,328,438)
28,822
(2,207,411)
Direct costs relating to issue of
shares
Total comprehensive income/
(expense) for the year
—
—
(89,503)
—
—
(1,103,278)
New Share Issues
891,702
898,598
Share based payments (inc. EMI
options*)
15,478
12,350
—
—
—
—
—
—
(89,503)
(1,103,278)
1,790,300
27,828
Balance at 31 December 2021
11,216,991
6,603,839
(19,431,716)
28,822
(1,582,064)
*
The total share-based payments taken to equity during 2020 excluded the directors’ bonus accrual (£24,700) which was recognised as a
liability in 2020. The accrual was recognised in equity in 2021 when the bonus was paid in shares (see note 30 for more information).
The Company has taken advantage of section 408 of the Companies Act 2006 not to publish its own Statement of
Comprehensive Income.
COMPANY STATEMENT OF CASH FLOWS
55
Cash Outflows from operating activities
Loss before income tax
Adjustments for:
Share based payments
Fair value movements
Finance cost
Interest paid
Change in working capital
(Increase)/decrease in receivables
Decrease in payables
(Decrease)/Increase in amounts due to related parties
Decrease in amounts due from subsidiaries
Net cash used in operating activities
Cash Flows from financing activities
New equity issued
Net cash used in financing activities
Cash Flows from investing activities
Net cash generated from investing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
2021
£
2020
£
(1,103,278)
(896,815)
3,128
16,755
102,349
(58,143)
64,089
(59,574)
(127,402)
(40,000)
175,278
(61,939)
114,891
(51,583)
(720,168)
32,164
(17,328)
7,309
(347,879)
(449,605)
(574,855)
(1,597,233)
1,650,797
1,650,797
1,155,712
1,155,712
—
36,753
8,948
45,701
—
8,084
864
8,9488
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
56 Malvern International Plc Annual Report and Accounts 2021
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2021
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
Company head office is Murray House, 85 Piccadilly, Manchester, M1 2DA.
The principal activities of the Company are that of investment holding and the 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 13 to the financial statements. There have been no significant changes
in the nature of these activities during the year.
2. Significant accounting policies
i. 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 financial statements have been prepared in
the Group's functional currency, pounds sterling.
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.
ii. Basis of consolidation
The Group financial statements consolidate the accounts of Malvern International Plc and all of its subsidiary
undertakings made up to 31 December 2021. The Consolidated Statement of Comprehensive Income includes the
results of all subsidiary undertakings for the period from the date on which control passes. Control is achieved where
the Company (or one of its subsidiary undertakings) obtains the power to govern the financial and operating policies
of an investee entity so as to derive benefits from its activities.
iii. Adoption of new and revised International Financial Reporting Standards ("IFRS")
The Group has applied the following standards and amendments for the first time for their annual reporting period
commencing 1 January 2021:
– Amendments to IAS 1 Presentation of Financial Statements;
– Amendments to IFRS 3 Business Combinations;
– Amendments to IFRS Practice Statement 2 Making Materiality Judgements;
– Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors; and
– Amendments to IAS 12 Income Taxes.
Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial
statements.
Certain new accounting standards and interpretations have been published that are not mandatory for
31 December 2021 reporting periods and have not been early adopted by the Group. These standards are not
expected to have a material impact on the entity in the current or future reporting periods and on foreseeable
future transactions
iv. 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.
57
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 £2.6m 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 twelve-month payment and interest holiday with monthly payments commencing from March 2023,
over a five-year period.
BOOST&Co., acting on behalf of IL2 (2018) Sarl, have also 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 twelve months from the date of the signing of the
financial statements.
In making their assessment of going concern the Group's Directors have considered the impact on the business of the
Covid-19 pandemic. Whilst this has been very disruptive to the Group’s operations, the business was able to adapt its
service offering through online learning. The Government announcement to remove testing for fully vaccinated arrivals
into the UK, provides the Directors with confidence that student numbers will return to pre-pandemic levels in 2022.
In Q4 of 2021, the number of students across the Groups English language schools grew back to approximately 80%
of 2019 levels. In Q1 2022, this figure increased, which supports the Directors' 2022 recovery assumptions.
University Pathways numbers in January 2022 also indicate an encouraging recovery from the impact of Covid-19,
with a 55% increase in students year on year for one of the Group's key partners. In addition, Malvern Juniors are
expected to return in the summer of 2022 with three centres currently running.
Profit and cash flow projections for the Group assume profitable growth in its key operating entities once operations
return to normal. A large part of this assumed growth is driven by the more profitable Pathways division of the Group.
The global pandemic continues to create uncertainty in the profit and cash flow projections for the Group. 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 going concern of
the Group.
The above factors provide the Directors with confidence that it is appropriate to prepare the accounts on a going
concern basis, albeit there continues to be a material uncertainty as set out above.
v. Basis of combination
Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee
if all three of the following elements are present: power over the investee, exposure to variable returns from the
investee, and the ability of the investor to use its power to affect those variable returns. Control is re-assessed
whenever facts and circumstances indicate that they may be a change in any of these elements of control.
On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair values
at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets
acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable
net assets acquired (i.e. discount on acquisition) is credited to the Consolidated Statement of Comprehensive
Income in the period of acquisition.
The results of subsidiaries acquired or disposed of during the period are included in the Consolidated Statement of
Comprehensive Income from the effective date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies
used into line with those used by the Group. All significant intra-group transactions, balances, income, and expenses
are eliminated on consolidation.
vi. Subsidiary company
Investment in subsidiaries is stated in the financial statements of the Company at cost less any provision for impairment
losses. The financial statements of subsidiaries acquired are consolidated in the financial statements of the Group from
the date that control commences until the date control ceases, using the acquisition method of accounting.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 58 Malvern International Plc Annual Report and Accounts 2021
Notes to the Financial Statements continued
vii. Functional and presentational currency
The consolidated financial statements have been presented with Pounds Sterling as the presentational currency,
as the Company is incorporated in England and Wales with Sterling denominated shares which are traded on the
Alternative Investment Market (“AIM”).
Items included in the financial statements of each subsidiary of the Group are measured using the currency of the
primary economic environment in which the subsidiary operates (“the functional currency”). The primary functional
currencies of Group companies are Singapore Dollars and UK Pound Sterling.
viii. Foreign currency translation
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Foreign currency
monetary assets and liabilities are translated using the exchange rate prevailing at the date of the Statement of
Financial Position. Non-monetary assets and liabilities are measured using the exchange rates prevailing at the
transaction dates, or in the case of the items carried at fair value, the exchange rates ruling when the values were
determined. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions
and translation of foreign currency denominated assets and liabilities are recognised in the Statement of
Comprehensive Income.
Assets and liabilities of the entities having functional currency other than the presentational currency are translated into
Sterling equivalents at exchange rates ruling at the Statement of Financial Position date. Revenues and expenses are
translated at average exchange rates for the year, which approximates the exchange rates at the dates of transactions.
All resultant differences are taken directly to equity. On disposal of a foreign entity, accumulated exchange differences
are recognised in the Statement of Comprehensive Income as part of the gain or loss on disposal.
The following rates of exchange have been applied:
Pound Sterling to Singapore Dollar
Closing rate
Average rate
Dec 2021
Dec 2020
1.824
1.849
1.805
1.769
ix. Property, plant, and equipment
Property, plant, and equipment, are stated at cost less accumulated depreciation and any impairment losses.
Depreciation policy, useful lives, and residual values are reviewed at least annually, for all asset classes to ensure that
the current method is the most appropriate.
Expenditure incurred after the property, plant, and equipment have been put into operation, such as repairs and
maintenance are charged to the Statement of Comprehensive Income. Expenditure for additions, improvements,
and renewals is capitalised when it can be clearly demonstrated that the expenditure has resulted in an increase in
the future economic benefits expected to be realised from the use of the items of property, plant, and equipment
beyond their originally assessed standard of performance.
Depreciation is calculated based on the straight line method to write off the cost of property, plant, and equipment
less their estimated residual value over their estimated useful economic lives as follows:
•
Classroom and office equipment is depreciated over 3 to 10 years according to the estimated life of the asset
•
Leasehold improvements are depreciated over the period of the lease up to a maximum of 25 years
•
Property with lease terms of 50 years of less are depreciated over the remaining period of the lease
xii. Impairment of tangible and intangible assets excluding goodwill
An assessment is made at statement of financial position date as to whether there is any indication of impairment
of any asset, or whether there is any indication that an impairment loss previously recognised for an asset in prior
years may no longer exist or may have decreased. If any such indication exists, the asset’s recoverable amount is
estimated. An asset’s recoverable amount is calculated as the higher of the asset’s value in use or its fair value less
costs to sell. Value in use is the present value of estimated future cash flows expected to arise from the continuing
use of an asset and from its disposal at the end of its useful life. Intangible assets acquired or developed internally
are initially measured at cost. Subsequent expenditure on intangible assets is capitalised only if it is probable that
it will increase the future economic benefits associated with the specific asset. Other expenditure is recognised in
the statement of comprehensive income as incurred. Intangible fixed assets are amortised over the useful life of the
asset.
59
An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. An
impairment loss is charged to the Statement of Comprehensive Income in the period in which it arises unless the
relevant asset is carried at a revalued amount in which case the impairment loss is treated as a revaluation decrease.
A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine
the recoverable amount of an asset, however not to an amount higher than the carrying amount that would have
been determined (net of any depreciation) had no impairment loss been recognised for the asset in prior years.
A reversal of an impairment loss is credited to the Statement of Comprehensive Income in the period in which it
arises unless the relevant asset is carried at a revalued amount in which case the impairment loss is treated as a
revaluation increase.
xiii. Goodwill
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost
of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities, and
contingent liabilities recognised. After initial recognition, goodwill is measured at cost less accumulated impairment
losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating sub-groups
expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been
allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be
impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the
impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to
the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss
recognised for goodwill is not reversed in subsequent periods.
xiv. Financial assets, loans, and receivables
Financial assets
Financial assets are recognised on the Statement of Financial Position when the Group becomes a party to the
contractual provisions of the instrument. Financial assets are initially recognised at fair value plus, in the case of
financial assets not at fair value through profit or loss, directly attributable transaction costs. Financial assets are
derecognised when the contractual rights to the cash flows from the financial assets have expired or have been
transferred. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the
sum of the consideration received is recognised in the Statement of Comprehensive Income.
Financial assets at amortised cost
Financial assets held within a business model whose objective is to collect contractual cash flows which are solely
payments of principals and interest are classified and subsequently measured at amortised cost using the effective
interest method, less any impairment loss. Interest income is recognised by applying the effective interest rate,
except for short-term receivables when the recognition of interest would be immaterial. The Group’s financial assets
at amortised cost comprise ‘trade and other receivables’, related parties, and cash and cash equivalents included
in the Consolidated Statement of Financial Position.
xv. Impairment of financial assets
The Group assesses the expected credit losses for all debt instruments (other than those categorised at fair value
through profit or loss) on a forward-looking basis.
An impairment loss in respect of financial assets is recognised in the Statement of Comprehensive Income and
is measured as the difference between the asset’s carrying amount and the present value of estimated future
cash flows, discounted at the financial asset’s original effective interest rate. In a subsequent period, if the amount
of the impairment loss decreases and the decrease can be related objectively to an event occurring after the
impairment was recognised, the previously recognised impairment loss is reversed through the Statement of
Comprehensive Income.
The Group has adopted the simplified expected credit loss model for its trade receivables and contract assets, as
required by IFRS 9 to assess impairment, for further information see note 16.
xvi. Revenue recognition
Revenue is recognised on the following basis:
Courses are provided over time based on period stated on the contract with students. As such revenue for various
services is recognised in the following way:
•
Course/accommodation fees – revenue is spread over the duration of the course as stated in the contract,
as this fairly represents the value of services provided. Deposits received in respect of future courses/
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 60 Malvern International Plc Annual Report and Accounts 2021
Notes to the Financial Statements continued
accommodation fees are treated as deferred income at the point of receipt. Contract liabilities relate to course
and accommodation fees received in advance and are recognised in the Statement of Comprehensive Income
based on classes conducted and accommodation provided
Registration/application fees – revenue is spread over the duration of the course as stated in the contract, as this
fairly represents the value of services provided
All other course fees in respect of courses offered with no obligation to impart lessons are recognised when the
students register for the course and collect the study materials
•
•
xvii. Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and bank deposits with an initial maturity of less than three
months. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management
are included as a component of cash and cash equivalents for the purpose of the Statement of Cash Flows.
xviii. Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out
method. Allowance for impairment is made for obsolete, slow moving, and defective stocks.
xix. Trade and other payables
Trade and other payables, which are normally settled on 30 to 90 days' term, are initially measured at fair value, and
subsequently measured at amortised cost, using the effective interest method.
xx. Income tax
Income tax expense represents the sum of the tax currently payable and deferred tax movements.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in
the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are not taxable or tax deductible. The Group’s liability for
current tax is calculated using tax rates and tax laws that have been enacted or substantively enacted in countries
where the Company and its subsidiaries operate by the Statement of Financial Position.
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are
generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that
it is probable that taxable profits will be available against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither
the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and
associated companies, except where the Group is able to control the reversal of the temporary difference and it is
probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each Statement of Financial Position date and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the
asset realised based on tax rates and tax laws that have been enacted or substantially enacted by the statement
of financial position date. Deferred tax is charged or credited to the Statement of Comprehensive Income, except
when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with
in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities on a net basis.
xxi. Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a
reliable estimate can be made of the amount of the obligation.
Provisions are reviewed regularly and adjusted to reflect the current best estimate. Where the effect of the time
value of money is material, the amount of provision is the present value of the expenditures expected to be required
to settle the obligation.
61
xxii. Employees’ benefits
Defined contribution plans
Contributions to defined contribution plans are recognised as an expense in the Statement of Comprehensive
Income as incurred.
Employee leave entitlement
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the
estimated liability for annual leave because of services rendered by employees up to the year end.
xxiii. Equity instruments
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares
are deducted against share premium.
Where ordinary shares will be issued as part of deferred purchase consideration then:
•
•
Where the number of shares to be issued has been fixed, then such deferred consideration will be classified as
equity
Where the number of shares to be issued is dependent on certain performance criteria being met, then such
deferred consideration will be classified as liability at inception
xxiv. Borrowing costs
Borrowing costs incurred to finance the development of property, plant, and equipment are capitalised during the
period that is required to complete and prepare the asset for its intended use. The capitalised costs are depreciated
over the useful life of the property, plant, and equipment.
Other borrowing costs, including interest cost and foreign exchange differences, on short-term borrowings are recognised
on a time-apportioned basis in the Statement of Comprehensive Income using the effective interest method.
xxv. Segmental reporting
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s
other components. All operating segments’ operating results are regularly reviewed by the Board to make decisions
about resources to be allocated to the segment and assess its performance, and for which discrete financial
information is available.
Segmental results are reported to the Board and include items directly attributable to the segment as well as those
that can be allocated on a reasonable basis.
xxvi. Warrants
In certain circumstances the Group will issue warrants over shares. The warrants currently in issue are carried at fair
value through profit and loss (“FVPL”) and are categorised under level 3 of the fair value hierarchy. The judgements
and estimates made in respect of calculating the fair value for these warrants are disclosed further in this section.
xxvii. Share based payments and share options
Equity-settled share based payments to employees and others providing similar services are measured at the fair
value of the equity instruments at the grant date. The fair value determined at the grant date of the equity-settled
share based payments is expensed on a straight line basis over the vesting period, based on the Group's estimate or
the probability of equity instruments eventually vesting, with a corresponding increase in equity. Fair value is measured
using Black-Scholes derived pricing model. The resulting charge to the Statement of Comprehensive Income requires
assumptions to be made regarding future events and market conditions.
The number of options expected to vest is adjusted only for expectations of leavers prior to vesting. The impact of
the revision of the original estimates, if any, is recognised in the Statement of Comprehensive Income such that the
cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled employee
benefits reserve.
Equity-settled share based payment transactions with parties other than employees are measured at the fair value
of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are
measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or
the counterparty renders the service.
See note 30 for additional information on this scheme.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 62 Malvern International Plc Annual Report and Accounts 2021
Notes to the Financial Statements continued
xxviii. Other Income
Other income relates to all income not incurred in the ordinary trading activities of the Group.
Rental and related income is recognised on an accruals basis in the period it relates to.
Research and development credits are recognised in the period the benefit is received as that is considered to be
the point at which the amount can be reliably estimated.
Grants are accounted under the accruals model. Grants of a revenue nature are recognised in the consolidated
statement of comprehensive income in the same period as the related expenditure. Government grants relating
to the receipt of Coronavirus Job Retention Scheme income is included within other operating income in the
consolidated statement of comprehensive income.
xxix. Critical accounting judgements and key sources of estimation uncertainty
The preparation of the financial statements requires management to make judgements, estimates, and assumptions
that affect the reported amounts in the financial statements. Management continually evaluates its judgements
and estimates in relation to assets, liabilities, contingent liabilities, revenue, and expenses. Management bases
its judgements, estimates, and assumptions on historical experience and on other various factors, including
expectations of future events, management believes to be reasonable under the circumstances. The resulting
accounting judgements, and estimates will seldom equal the related actual results. The judgements, estimates,
and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities (refer to the respective notes) within the next financial year are discussed below.
Judgements
Useful lives of assets
The Group determines the estimated useful lives and related depreciation and amortisation charges for its property,
plant, and equipment and finite life intangible assets. The useful lives could change significantly as a result of
technical innovations or some other event. The depreciation and amortisation charge will increase where the
useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been
abandoned or sold will be written off or written down.
Goodwill and other indefinite life intangible assets
The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill
and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated
in note 2. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations.
These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital and
growth rates of the estimated future cash flows. The specific estimates used in calculating impairment are detailed in note 15.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The Group assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets
at each reporting date by evaluating conditions specific to the Group and to the particular asset that may lead to
impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value
less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions. The
specific estimates used in calculating impairment are detailed in note 14.
Evaluation of contract liabilities (deferred income)
The Group reviews the fees raised at the end of relevant periods to evaluate those amounts that cover the future
provision of education not yet delivered to estimate and evaluate the amount of contract liabilities/deferred income
to be recognised in a future period.
Impairment of receivables
The Group and Company reviews the impairment of its financial assets, including the trade receivables balance. The
Group estimates and evaluates impairment methodology using the simplified approach of the expected credit loss
model based on default rate percentage of similar product type assets (provision matrix) and grouping the trade
receivables based on shared characteristics, including line of business.
Income taxes
The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the
capital allowance, deductibility of certain expenses, and taxability of certain income during the estimation of the
provision for income taxes. There are many transactions and calculations for which the ultimate tax determination
is uncertain during the ordinary course of business. The Group recognises liabilities based on estimates of whether
additional taxes will be due. Where the final tax outcome is different from the amounts that were initially recorded,
such differences will impact the income tax and deferred income tax provisions in the period in which such
determination is made. Judgement is made in the evaluation in respect of the fair value of any deferred tax asset
recognised in respect of taxable losses carried forward.
63
Warrants
The Group determines the fair value of warrants using appropriate modelling. Judgement is required in determining
a model to use to fair value warrants. Based on the nature of warrants, the Group has determined that Black Scholes
model is an appropriate model to use. The specific estimates used in calculating fair value are detailed in note 23.
Share based payments
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the
equity instruments at the date at which they are granted. The resulting charge to the statement of comprehensive
income requires assumptions to be made regarding future events and market conditions. Judgement is required in
determining the most appropriate valuation model and the most appropriate inputs into the model including the
level of volatility of the Group’s share price, market conditions, and the expected life of the option.
3. Lessee accounting
The Group’s leases primarily relate to properties and office equipment. Lease terms are negotiated on an individual
basis and contain a wide range of different terms and conditions. Property leases will often include extension and
termination options, open market rent reviews, and uplifts.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the individual lessee company’s incremental borrowing rate considering
the duration of the lease.
The lease liability is subsequently measured at amortised cost using the effective interest method, with the finance
cost charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability. It is remeasured when there is a change in future lease payments arising from a
change in index or rate, or if the Group changes its assessment of whether it will exercise an extension or termination
option. The lease liability is recalculated using a revised discount rate if the lease term changes as a result of a
modification or re-assessment of an extension or termination option.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for
any lease payments made at or before the commencement date, plus any initial direct costs incurred. The right-of-
use asset is typically depreciated on a straight line basis over the lease terms.
i) Amounts recognised in the Statement of Comprehensive Income:
Interest expense and similar charges
Interest expense
Interest expense on disposed right-of-use assets
Operating and administrative expenses
Depreciation of right-of-use assets
Depreciation of disposed right-of-use assets
Total expensed to Statement of Comprehensive Income
ii) Right-of-use assets
Balance as at the beginning of the year
Net disposals
Adjustment to Opening Balance of Depreciation
Depreciation of right-of-use assets
Depreciation of disposed right-of-use assets
Changes from lease revaluations
FX movement
Balance as at the end of the year
2021
£
162,935
—
370,036
—
532,971
2020
£
184,897
103,302
374,149
283,353
945,701
At 31 December
2021
£
At 31 December
2020
£
2,612,614
4,912,511
—
(1,605,429)
33,614
(370,036)
—
277,534
—
—
(374,149)
(283,353)
—
(36,966)
2,553,726
2,612,614
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
64 Malvern International Plc Annual Report and Accounts 2021
Notes to the Financial Statements continued
iii) Lease liabilities
Current liability
Non-current liability
Total liability
iv) Lease payments
Total lease rent amount (Excl. VAT)
Amount paid during the year (Excl. VAT)
Rent free amount (Excl. VAT)
Balance amount at end of the year
At 31 December
2021
£
At 31 December
2020
£
278,961
3,075,517
3,354,478
350,829
2,491,486
2,842,315
At 31 December
2021
£
At 31 December
2020
£
536,365
(161,475)
(72,495)
302,395
519,501
(194,801)
(84,598)
240,102
In October 2020, the Group disposed of the lease relating to the office of the Singapore operations.
4. (a) Segmental information
The Group organises its operations based on geographical locations, as the services provided are similar in each
jurisdiction with both educational and language courses offered.
2021
Revenue from external customers
Depreciation and amortisation
Loss before taxation
Profit on disposal
Taxation charge
Profit/(Loss) for the year
Segmental assets
Segmental liabilities
2020
Revenue from external customers
Depreciation and amortisation
Loss before taxation
Taxation charge
Loss for the year
Segmental assets
Segmental liabilities
UK
£
Discontinued
Operations*
£
2,417,524
409,271
—
—
Total
£
2,417,524
409,271
(1,594,390)
(38,447)
(1,632,837)
—
—
487,188
487,188
—
—
(1,594,390)
448,741
(1,145,649)
5,395,551
8,224,951
—
—
5,395,551
8,224,951
1,901,307
(414,349)
(1,659,473)
—
648,167
(349,164)
(480,092)
—
2,549,474
(763,513)
(2,139,565)
—
(1,659,473)
(480,092)
(2,139,565)
5,411,552
8,320,888
1,846
216,737
5,413,398
8,537,625
*
Following the closure of the Singapore operations, 2021 figures have been presented as discontinued operations. SAA Global Education
Center filed an application for an inability to continue business operations on 9 April 2021, and liquidation commenced on 12 April 2021.
Malvern International Academy's application for liquidation is currently with the liquidators, all activities ceased on 31 December 2021.
65
(b) Discontinued operations
On 4 August 2020, the Group announced closure of Singapore operations and is reported in the current period as
a discontinued operation. Financial information relating to the discontinued operation for the period to the date of
disposal is set out below.
i) Financial performance of discontinued operations
The financial performance and cash flow of the discontinued operations are presented as the consolidated
Singapore entities, for the year ended 31 December 2021. The Singapore entities presented include: Malvern
International Academy (“MIA”), which ceased operating on 31 December 2021, and SAA Global Education Center
(“SAAGE”), which ceased operating on 9 April 2021 (SAAGE entered formal liquidation on 12 April).
Revenue
Other Income
Expenses
Profit/(Loss) before tax
Income tax expenses
2021
£
Singapore
—
—
(38,447)
(38,447)
—
2020
£
Singapore
648,167
118,279
(1,246,538)
(480,092)
—
Profit/(Loss) after income tax of discontinued operation
(38,447)
(480,092)
Profit on disposal of subsidiary
Profit/(Loss) from discontinued operations
Exchange differences on translation of discontinued operations
Other comprehensive income from discontinued operations
Net cash flow from operating activities
Net cash flow from investing activities
Net cash flow from financing activities
Net cash generated by subsidiary
ii) Details of the consideration on disposal of the subsidiaries
Consideration received or receivable:
Fair value of consideration
Carrying amount of net liabilities disposed of
Profit on sale of subsidiary before income tax and reclassification of foreign currency
translation reserve
Reclassification of foreign currency translation reserve
Profit on disposal of subsidiary
487,188
448,741
—
—
—
(480,092)
15,575
15,575
(54,299)
(24,299)
—
—
—
—
(54,299)
(24,299)
2021
£
—
196,678
196,678
290,510
487,188
2020
£
—
—
—
—
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 66 Malvern International Plc Annual Report and Accounts 2021
Notes to the Financial Statements continued
iii) The details of assets and liabilities of disposed subsidiary
The carrying amounts of assets and liabilities of Singapore operations as of 9 April 2021 for SAAGE and 31 Dec 2021
for MIA.
Property, plant, and equipment
Cash & cash equivalents
Total assets
Trade creditors
Other payables
Total liabilities
Net liabilities
5. Sale of services
Course fees
Accommodation fees
Application fees, registration, and examination fees
Training fees, course materials, and others
6. Other income
Rental and related income
R&D credits
Government subsidies*
* Government subsidies includes the amount received from the furlough job retention scheme.
7. Salaries and employees’ benefits
Staff salaries and related costs*
Directors’ remuneration (Executive Directors)
Directors’ fees (Non-Executive Directors)
Payment made to Director on loss of office
Staff training and welfare
Pension
Share based remuneration – staffs**
Share based remuneration – Directors
Highest paid Director
Remuneration and benefits
2021
£
—
18,049
18,049
(147,396)
(67,331)
(214,727)
(196,678)
2020
£
546
1,300
1,846
(161,254)
(55,483)
(216,737)
(214,891)
2021
£
2020
£
2,189,651
1,659,601
162,106
50,264
15,503
192,643
28,470
20,593
2,417,524
1,901,307
2021
£
23,595
48,758
151,636
223,989
2021
£
1,129,629
104,166
80,000
—
7,536
25,155
2020
£
23,346
15,185
379,832
418,363
2020
£
767,154
164,845
61,842
66,666
17,321
17,184
1,346,486
1,095,012
2,101
1,027
3,128
75,167
37,741
112,908
97,917
192,972
67
Average number of employees
Lecturers
Marketing staff
Operational and administration staff
Number
Number*
(restated)
38
12
39
89
37
12
32
81
*
Salaries and related costs are not inclusive of lecturers and Singapore employees. The average number of employees in 2020 are restated
to exclude Singapore. Average number of employees in Singapore in 2020 were 34 up to the point when trade ceased.
**
Share-based remuneration expenses related to EMI share options (ref Note 30)
The average number of employees is calculated based on the number of full or part time employees on the payroll
each month.
8. Finance costs
Interest on leases (IFRS 16)
Interest on term loan
Interest on convertible loan notes
Other finance costs
9. Operating expenses
Auditor’s remuneration:
Fees payable to the Group’s auditor for statutory audit
Fees payable to the Group’s auditor and associates for statutory audit of subsidiary
Companies
Administrative and marketing expenses
Expected credit losses – trade receivables
Fair value movements
10. Income tax
Tax expense attributable to the results is made up of:
Current year tax
Prior period*
Deferred taxation charge
2021
£
2020
£
162,935
184,897
80,845
21,503
4,097
90,125
24,766
2,278
270,190
302,066
2021
£
30,500
31,425
745,367
311,102
16,755
1,135,149
2021
£
—
—
—
—
2020
£
27,500
40,000
821,494
123,690
(61,939)
950,745
2020
£
—
(31,300)
—
(31,300)
*
Provision for corporate tax charges created for period ending 30 June 2019 for the communicate school as group relief was not applicable.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
68 Malvern International Plc Annual Report and Accounts 2021
Notes to the Financial Statements continued
The reconciliation of the current year tax expense and the product of accounting profit multiplied by the statutory
tax rate is as follows:
Accounting loss before tax from continuing
operations
Profit/(loss) before tax from discontinued
operations
Loss for the year before tax
Income tax at the statutory rate
2021
£
(1,594,390)
448,741
(1,145,649)
(217,673)
%
%
2020
£
(1,659,473)
(480,092)
(2,139,565)
19.0
(406,517)
19.0
Adjustments of income tax in respect of prior years
Deferred tax asset not recognised
217,673
Current year adjustment to deferred tax asset
Income tax charge attributable to continuing
operations
Income tax attributable to discontinued operations
Income tax charge in the Consolidated Statement
of Comprehensive Income
—
—
—
—
—
—
406,517
—
—
—
—
—
The Group’s income tax liability is subject to agreement by the tax authorities of the respective countries in which
the companies in the Group operate. Temporary differences arising from investment in subsidiary and associated
companies are considered as insignificant to the Group.
Analysis of provision for deferred taxation:
Balance at the beginning of the year*
Deferred taxation for the year
Balance at the end of the year
Deferred tax asset
Deferred tax liability
Balance at the end of the year
2021
£
10,279
—
10,279
—
10,279
10,279
2020
£
10,279
—
10,279
—
10,279
10,279
*
The deferred tax liability was recognised in 2019 in Communicate English School.
The amount of temporary differences for which no deferred tax asset has been recognised in the Statement of
Financial Position is as follows:
Unutilised capital allowance
Unutilised tax losses
2021
£
552,474
4,633,855
5,186,329
2020
£
552,474
4,725,788
5,278,262
Deferred tax assets have not been recognised as it is not sufficiently certain that taxable profit will be available
against which these available tax losses can be utilised in the future.
69
11. 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 £1,145,649 (2020: loss of £2,139,565) and the weighted average number of ordinary shares in
issue during the year of 1,878,898,511 shares (2020: 735,661,044 shares). The loss per share (in pence) attributed to
shareholders is 0.06 (2020: loss per share of 0.23).
Calculations for dilutive EPS have not been made in respect of the convertible loan notes (note 29) on the basis the
impact would be anti-dilutive.
12. Property, plant, and equipment
Leasehold
property and
improvements
Classroom and
office equipment
Right-of-use assets
Total
Equipment
Property
Cost
Opening balance, 1 Jan 2020
601,774
958,874
92,037
5,531,619
7,184,304
£
£
£
£
£
Additions
Disposals
Exchange differences
Closing balance, 31 Dec 2020
Additions
Remeasurement
Disposals
Exchange differences
Closing balance, 31 Dec 2021
Accumulated depreciation
—
(591,794)
(9,980)
—
—
—
—
—
—
—
(545,628)
(11,177)
402,069
11,280
—
(4,800)
—
—
—
—
—
—
(2,222,096)
(3,359,518)
(43,489)
(64,646)
92,037
3,266,034
3,760,140
—
—
—
—
391,613
(114,079)
—
—
402,893
(114,079)
(4,800)
—
408,549
92,037
3,543,568
4,044,154
Opening balance, 1 Jan 2020
401,968
Charge for the year – Continuing
operations
—
790,681
40,200
12,883
26,861
698,262
1,903,794
347,288
414,349
Charge for the year –
Discontinued operations
48,643
17,168
Disposals
(444,466)
(518,437)
Exchange differences
(6,145)
Closing balance, 31 Dec 2020
Charge for the year – Continuing
activities
Disposals
Remeasurement
Exchange differences
Closing balance, 31 Dec 2021
Net book value, At 31 December
2021
At 31 December 2020
—
—
—
—
—
—
—
—
(8,324)
321,288
39,235
(2,401)
—
—
358,122
50,427
—
—
—
39,744
22,747
—
—
—
62,491
29,546
283,353
349,164
(616,667)
(1,579,570)
(6,523)
(20,992)
705,713
1,066,745
347,289
409,271
—
(33,614)
—
1,019,388
2,524,180
(2,401)
(33,614)
—
1,440,001
2,604,153
80,781
52,293
2,560,321
2,693,395
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
70 Malvern International Plc Annual Report and Accounts 2021
Notes to the Financial Statements continued
13. Investment in subsidiary companies
Company
Investment in subsidiaries
Unquoted equity shares, at cost
As at the beginning of the year
Disposals**
As at the end of the year
Provision against the cost of investment in subsidiaries
As at the beginning of the year
Disposal**
As at the end of the year
Net book value at the end of the year
2021
£
2020
*restated
£
12,391,048
12,391,048
(4,709,201)
—
7,681,847
12,391,048
10,971,698
10,971,698
(4,709,201)
6,262,497
1,419,350
—
10,971,698
1,419,350
*
**
Cost amount of investment and impairment of investment are restated for 2020 to reflect actual carrying values (previously reported as
£11,205,720 and £9,786,370 respectively). The restated values do not impact the Net book value of investments.
Investments in SAA Global Education Center Pte Ltd and Malvern International Academy Pte Ltd were fully impaired during 2019. The
carrying value of investment and provision against investment related to Singapore operation are disposed following the disposal of
operations.
The Company owns 100% share capital of the following companies:
Communicate English School Limited (UK).
Malvern House Group Limited (UK).
Malvern House International Limited (UK) is 100% owned by Malvern House Group Limited.
Entering liquidation in 2022
Malvern International Academy Pte Ltd (Singapore).
Malvern Language Academy Pte Ltd (Singapore).
In liquidation
SAA Global Education Centre Pte Ltd (Singapore).
71
14. Intangible assets
Acquisition costs
Brands
£
Customer List
£
Domain
Name
£
Development
Assets
£
Contract
Assets
£
Total
£
Opening balance, 1 Jan 2020
Closing balance, 31 Dec 2020
2,639,886
2,639,886
362,860
362,860
Disposal – discontinued operations
(150,000)
(88,223)
12,242
12,242
—
434,545
434,545
—
508,000
3,957,533
508,000
3,957,533
—
(238,223)
Closing balance, 31 Dec 2021
2,489,886
274,637
12,242
434,545
508,000
3,719,310
Accumulated amortisation
Opening balance, 1 Jan 2020
Closing balance, 31 Dec 2020
2,639,886
2,639,886
362,860
362,860
Disposal – discontinued operations
(150,000)
(88,223)
12,242
12,242
—
434,545
434,545
—
508,000
3,957,533
508,000
3,957,533
—
(238,223)
Closing balance, 31 Dec 2021
2,489,886
274,637
12,242
434,545
508,000
3,719,310
Net book value, 31 Dec 2021
and 31 Dec 2020
—
—
—
—
—
—
In accordance with IAS 36, the Board has reviewed all ongoing cash-generating units, and have carried out full
impairment of the carrying value of the assets as at 31 December 2019, as a result there are no intangible assets
recorded in financial statements as of 31 December 2021. The disposal as of 31 December 2021 is in relation to
Singapore operations.
15. Goodwill
Cost
Balance as at the beginning of the year
Additions
Impairment
Balance as at the end of the year
2021
£
2020
£
1,419,350
1,419,350
—
—
—
—
1,419,350
1,419,350
Goodwill arose on the acquisition of Communicate English School Ltd in 2018. Annual impairment reviews are
undertaken each year using discounted future cash flows to ensure the carrying value is recoverable.
The recoverable amount of this CGU is in excess of the carrying value of £1,419,350, therefore no impairment is
required. The following assumptions were used to calculate the amount recoverable:
•
Discounted Cash Flow model produced modelling cash flow for Communicate over five years.
•
Terminal value applied to cashflow from year 6 onwards.
•
Discount rate of 12% applied reflecting the WACC of the Group.
•
Dynamic growth rate applied, ranging from 6% in 2023, reflecting additional growth of the anticipated bounce-
back from lockdown impacted trade, to 3% annual growth at the end of the five-year time horizon, consistent
with industry data.
•
Sensitivities around the model: a 0.1% increase in the discount rate has an impact of approximately £51k
in headroom.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 72 Malvern International Plc Annual Report and Accounts 2021
Notes to the Financial Statements continued
16. Trade receivables
Trade Receivables
At 31 December 2021, the exposure to credit risk for trade receivables was as follows:
Trade receivables are denominated in the following currencies:
UK – Pound Sterling
Not yet due and not impaired
Past due but not impaired
– Past due 0 to 3 months
– Past due 3 to 6 months
– Past due over 6 months
Impaired trade receivables
Less: Allowances for impairment loss
2021
£
2020
£
705,271
1,033,105
2021
£
2020
£
705,271
705,271
2021
£
36,742
402,585
179,128
86,816
705,271
336,930
(336,930)
705,271
1,033,105
1,033,105
2020
£
947,103
32,516
1,825
51,661
1,033,105
158,571
(158,571)
1,033,105
The following table provides information about the exposure to credit risk and expected credit losses for trade
receivables as at 31 December 2021:
Not yet due and not impaired
0%
36,742
—
36,742
Weighted
average loss
rate
Gross carrying
amount
Loss allowance
Net carrying
amount
Past due but not impaired
– Past due 0 to 3 months
– Past due 3 to 6 months
– Past due over 6 months
28%
12%
64%
561,544
203,014
240,901
1,042,201
(158,959)
(23,886)
(154,085)
(336,930)
402,585
179,128
86,816
705,271
A reconciliation of changes in the record of impairments of receivables is provided below.
Balance at the beginning of the year
Allowances reversed during the year
Allowances reversed during the year – Discontinued operations
Expected credit losses during the year
Receivables written off during the year as uncollectible
Balance as at the end of the year
2021
£
2020
£
158,571
133,547
—
—
354,714
(176,355)
336,930
—
—
123,690
(98,666)
158,571
73
Trade receivables are written off where there is no reasonable expectation of recovery. Indicators that there is no
reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan
with the Group, and a failure to make contractual payments for a period of greater than 120 days past due.
These are no contract assets within trade and other receivables.
17. Other receivables and prepayments
Rent deposits
Prepayment and accrued income
Other debtors
18. Cash and cash equivalents
Cash at bank and in hand
Cash and cash equivalents
19. Trade payables
Trade payables are denominated in the following
currencies:
Pound Sterling
Group
2021
£
36,500
253,107
—
2020
£
45,015
99,634
17,444
Company
2021
£
—
112,788
—
289,607
162,093
112,788
Group
Company
2021
£
377,170
377,170
2020
£
103,609
103,609
2021
£
45,701
45,701
Group
2021
£
2020
£
Company
2021
£
2020
£
—
35,770
17,444
53,214
2020
£
8,948
8,948
2020
£
413,297
413,297
603,631
603,631
31,896
31,896
182,274
182,274
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 74 Malvern International Plc Annual Report and Accounts 2021
Notes to the Financial Statements continued
20. Contract liabilities
Contract liabilities are deferred revenue representing amounts billed on account of revenues where performance
obligations have not been met for recognition of revenue. Contract liabilities relate to course fees received
in advance and recognised in the Statement of Comprehensive Income based on classes and examinations
conducted in the subsequent financial year.
The amount of £676,287 recognised in contract liabilities at the beginning of the period has been recognised as
revenue for the period ended 31 December 2021.
2021
£
2020
£
Contract liabilities denominated in the following currencies:
Pound Sterling
899,137
899,137
Opening balance
Deferred income recognised during the year
Course fees received in respect of subsequent financial year
Closing balance
21. Other payables and accruals
676,287
676,287
2021
£
676,287
(676,287)
899,137
899,137
2020
£
—
—
140,219
140,219
Group
2021
£
25,207
199,524
373,522
598,253
2020
£
196,553
200,416
832,774
1,229,743
Company
2021
£
—
—
108,294
108,294
Group
2021
£
2020
£
Company
2021
£
2020
£
—
40,000
—
40,000
Group
2021
£
—
—
2020
£
40,000
40,000
Company
2021
£
—
—
2020
£
40,000
40,000
Other payables
Payroll tax and other statutory liabilities
Accrued expenses
22. Due to related parties
Due to related parties
Non-trade
Due to related parties
Dr Sam Malafeh
All amounts due to related parties are unsecured, interest free, and due within the next twelve months.
75
Group
2021
£
2020
£
Company
2021
£
2020
£
—
272,817
—
272,817
1,791,952
2,532,115
1,723,537
2,432,115
72,801
3,075,517
4,940,270
275,885
808,869
278,961
63,701
2,491,486
5,360,119
50,000
—
350,829
72,801
—
63,701
—
1,796,338
2,768,633
275,885
675,251
—
50,000
—
—
322,493
40,000
412,493
3,181,126
23. Financial liabilities
Non-current liabilities
Convertible loan notes
Term loan
Warrants
Lease liabilities
Current liabilities
Convertible loan notes
Term loan
Lease liabilities
Trade and other payables
1,011,550
1,833,374
140,191
Related parties
Total
—
2,375,265
7,315,535
40,000
2,274,203
7,634,322
—
1,091,327
2,887,665
Convertible Loan Notes
At 31 December 2021, the Group has an obligation for £275,885 (See note 29).
Term Loan
In August 2019, Malvern received a Term Loan from BOOST&Co. for £2,600,000. 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 April 2022, the
new terms includes a twelve-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 £100,000 to be repaid over a six-year period with a 2.5% fixed rate of interest. The first twelve months
of this lending facility are free of any obligation to pay capital or interest. The balance outstanding at 31 December
2021 is £89,872 (2020: £100,000).
Warrants
As part of the term loan, BOOST&Co. was issued warrants over 45,500,464 shares. These warrants are exercisable at
the Strike Price at any time over the following ten 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 £72,801. The following estimates were
used to calculate this fair value:
•
Annualised volatility of 109% and 154% at the inception of term loan and at the year end respectively, calculated
using share price volatility over a preceding three-year period
•
Maturity of ten years applied, reflecting the duration over which BOOST&Co. could exercise these warrants
•
Risk free rate of 0.50%, being the Yield on UK ten-year Government bonds
•
Strike price of £0.0015, being the 28-day average share price preceding the date (i.e. 27 Aug 2019) of drawdown
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
76 Malvern International Plc Annual Report and Accounts 2021
Notes to the Financial Statements continued
24. Share capital
At 31 December 2020 – 0.1p
ordinary shares and 0.1p, 1p &
5p deferred shares
Additions during the year –
31 March 2021 0.1p ordinary
shares
At 31 July 2021 – 1p & 0.1p
ordinary shares and 1p & 5p
deferred shares
Additions during the year –
31 July 2021 0.1p ordinary shares
At 31 December 2021 0.1p
ordinary shares and 0.1p, 1p &
5p deferred shares
Allotted, called up and fully paid
No of
ordinary shares
Nominal
value of
ordinary shares
No of
deferred shares
Nominal
value of
deferred shares
Nominal
value of
all shares
1,204,967,240
1,204,968
2,828,138,750
9,104,659
10,309,627
882,500,000
882,500
—
—
882,500
2,087,467,240
2,087,468
2,828,138,750
9,104,659
11,192,127
21,551,724
21,552
—
—
21,552
2,109,018,964
2,109,020
2,828,138,750
9,104,659
11,213,679
During 31 March 2021, 882,500,000 0.1 pence ordinary shares were issued as a fundraising at 0.2 pence each giving a
total of 2,087,467,240 shares admitted to trading.
On 31 July 2021, convertible loan notes of £50,000 were converted to shares at 0.232 pence, adding a further 21,551,724
0.1 pence ordinary shares, bringing the total shares to 2,109,018,964 admitted for trading at 31 December 2021.
The Company has Enterprise Management Incentive share option scheme for certain Directors and employees.
The cost related to it £3,128 (2020: £184) has been added to share capital in financial statements, further details on
note 30.
25. Reserves
The Company has the following types of reserves:
(i) Share premium reserve
Balance as at the beginning of the year
Issue of new shares
Fundraising expenses
Balance as at the end of the year
2021
£
2020
£
5,782,394
5,431,449
910,948
(89,503)
473,195
(122,250)
6,603,839
5,782,394
The share premium reserve arises where shares have been issued at a price more than the nominal value of 0.1 pence
(formerly 5 pence/1 pence until division of the shares in June 2018 and June 2020 respectively) less any costs of the issue.
(ii) Retained earnings
At the beginning of the year
Profit/(Loss) for the year
Transfer from capital reserve
At the end of the year
Group
2021
£
2020
£
Company
2021
£
2020
£
(19,703,963)
(17,564,398)
(18,328,438)
(17,431,623)
(1,145,649)
(2,139,565)
(1,103,278)
(896,815)
170,560
—
—
—
(20,679,052)
(19,703,963)
(19,431,716)
(18,328,438)
Retained earnings represent the accumulated surplus or deficit of distributable reserves.
77
(iii) Translation reserve
At the beginning of the year
Translation difference on discontinued operations
Translation differences on continuing operations
At the end of the year
Group
2021
£
288,149
(288,149)
—
—
2020
£
272,574
15,575
—
288,149
Company
2021
£
—
—
—
—
2020
£
—
—
—
—
The translation reserve arises from translation differences arising from converting subsidiary operations’ Statement of
Comprehensive Incomes and statement of financial positions at the prevailing rates of exchange.
(iv) Convertible loan reserve
At the beginning of the year
Changes in the present value
At the end of the year
Group
Company
2021
£
28,822
—
28,822
2020
£
28,822
—
28,822
2021
£
28,822
—
28,822
2020
£
28,822
—
28,822
The convertible loan reserve arose on the issue of convertible loan notes in November 2017 (note 29).
(v) Capital reserve
The capital reserve arose on the merger of the Company, then AEC Plc, and AEC Edu Group Pte Limited in
2004. The balance of £170,560 related to this has been transferred to retained earnings following the disposal of
Singapore operations.
26. Related party transactions
There were no transactions of income/(expenses) with related parties, except the ones mentioned in note 22.
Details of key management personnel and Directors’ fees and emoluments were as follows:
Key management personnel
Directors’ remuneration:
– Salaries and bonuses
– Loss of office
– Directors’ fees
– Share based payments
2021
£
2020
£
104,166
164,846
—
80,000
1,027
185,193
66,666
61,842
37,741
331,095
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 78 Malvern International Plc Annual Report and Accounts 2021
Notes to the Financial Statements continued
Analysis of Directors’ fees and emoluments:
2021
Sam Malafeh
Mark Elliott
Alan Carroll
Richard Mace
Daniel Fisher**
Total
2020
Sam Malafeh
Mark Elliott
Alan Carroll
Richard Mace
Total
Salary & Fees
£
Share based
Payments
£
Fees
£
Other*
£*
Total
£
—
50,000
30,000
97,916
6,250
184,166
126,304
39,942
21,900
38,542
226,688
—
—
—
1,027
—
1,027
—
23,847
13,894
—
37,741
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
66,666
—
—
—
66,666
—
50,000
30,000
98,943
6,250
185,193
192,970
63,789
35,794
38,542
331,095
*
Includes compensation for loss of office.
** Daniel Fisher was appointed as Executive Director on 6 December 2021.
27. Subsequent events
The Directors are reporting the following subsequent events to the Statement of Financial Position which are
significant to these financial statements.
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) to restructure the Group's £2.6m debt facility.
Under the original agreement monthly payments were due to commence in April 2022 over a 24-month period at
an interest rate of 7 to 10%, dependent on quarterly revenues. The new agreement provides for a twelve-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.
In return, BOOST&Co. will receive warrants over 127,010,834 ordinary shares at an exercise price of 0.106 pence per
share, being 20% below the average market price. In addition, BOOST&Co. will receive additional warrants, fully
diluted, with the same exercise price, if the loan is not repaid by 1 March 2024.
Furthermore, it has been agreed that the exercise price of BOOST&Co.’s existing warrants over an aggregate of
45,500,464 shares be adjusted from 0.15 pence per share to 0.1 pence.
79
28. Financial instruments
Financial risk management objectives and policies
Risk management is integral to the whole business of the Group. The Group has a system of controls in place
to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The
management continually monitors the Group’s risk management process to ensure that an appropriate balance
between risk and control is achieved. Risk management policies and systems are reviewed regularly to reflect
changes in markets conditions and the Group’s activities.
The Group holds the following financial instruments:
2021
Financial assets at amortised cost
Cash and cash equivalent
Trade receivables
Other debtors
Total financial assets
Financial liabilities at amortised cost
Trade and other payables
Borrowings
Lease liabilities
Convertible loan notes
Financial liabilities at FVPL warrants
Total financial liabilities
Net position
2020
Financial assets at amortised cost
Cash and cash equivalent
Trade receivables
Other debtors
Total financial assets
Financial liabilities at amortised cost
Trade and other payables
Due to related parties
Borrowings
Lease liabilities
Convertible loan notes
Financial liabilities at FVPL warrants
Total financial liabilities
Net position
Notes
Pound Sterling
Total
(Pound Sterling)
18
16
17
19,21
23
23
23
23
18
16
17
377,170
705,271
36,500
377,170
705,271
36,500
1,118,941
1,118,941
1,011,550
2,600,821
3,354,478
275,885
72,801
1,011,550
2,600,821
3,354,478
275,885
72,801
7,315,535
7,315,535
(6,196,594)
(6,196,594)
103,609
103,609
1,033,105
1,033,105
62,459
62,459
1,199,173
1,199,173
19,21
1,833,374
1,833,374
22
23
23
23
23
40,000
2,532,115
2,842,315
322,817
63,701
40,000
2,532,115
2,842,315
322,817
63,701
7,634,322
7,634,322
(6,435,149)
(6,435,149)
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
80 Malvern International Plc Annual Report and Accounts 2021
Notes to the Financial Statements continued
(i) Credit risk
Exposure to the credit risks are monitored on an ongoing basis. The Group does not require collateral in respect of
financial assets.
The carrying amount of trade and other receivables and related party balances and cash represent the Group’s
maximum exposure to credit risk. Cash and cash balances are placed with reputable financial institutions. Therefore,
credit risk arises mainly from the inability of customers to make payments when due. 49% (2020: 13%) of the Group’s
account receivables are made up of individual students, 51% (2020: 84%) relates to large funding organisations such
as universities and other organisations. All trading activities are concentrated in Europe. The analysis of aging debtors
is provided in note 16.
(ii) Liquidity risk
The Group seeks to adopt a prudent liquidity risk management by maintaining sufficient cash and having adequate
amounts of credit facilities. Due to the nature of the Group’s operations, the Group aims at maintaining flexibility in
funding by keeping committed credit facilities available.
The following tables detail the remaining contractual maturity for non-derivative financial liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the
Group and Company can be required to pay.
2021
Trade payables
Other payables and Accruals
Due to related parties
Term Loan
Lease Liabilities
Convertible Loan Notes
Warrants
2020
Trade payables
Other payables and Accruals
Due to related parties
Term Loan
Lease Liabilities
Convertible Loan Notes
Warrants
On demand or
within one year
£
Within 2 to
10 years
£
413,297
598,253
—
808,869
278,961
275,885
—
—
—
—
1,791,952
3,075,517
—
72,801
2,375,265
4,940,270
603,631
1,229,743
40,000
—
350,829
50,000
—
—
—
—
2,532,115
2,491,486
272,817
63,701
2,274,203
5,360,119
81
(iii) Foreign currency risk
The Group’s investments in overseas subsidiaries and associated companies which have been closed/discontinued
after announcement in August 2020 and therefore Group exposure is no longer a material risk. The differences arising
from such translation are recorded under the foreign currency translation reserve. The Group does not use derivative
financial instruments to hedge against the volatility associated with foreign currency transactions as the Directors
believe that the risks arising from fluctuations in foreign currency exchange rates are not significant.
At 31 December 2021
Singapore Dollar
At 31 December 2020
Singapore Dollar
10% weakening of GBP
10% strengthening of GBP
Impact on
Equity
£
Impact on
income/
reserves
£
Impact on
Equity
£
Impact on
income/
reserves
£
—
19,688
—
(19,688)
49,387
278,870
(49,387)
(278,870)
(iv) Interest rate risk
The Group’s exposure to market risk for changes in interest rates relate primarily to the Group’s bank overdraft facility
and term loan. A change in interest rate at the reporting date would not materially affect income or reserves. For
2020, there was none to report.
The tables below set out the Group’s exposure to interest rate risks. Included in the tables are the assets and liabilities
at carrying amounts, categorised by the earlier of contractual repricing or maturity dates.
Fixed rate
interest bearing
Non-interest
bearing
£
Total
£
At 31 December 2021
Assets
Trade and other receivables
Cash and bank balances
Total assets
At 31 December 2021
Liabilities
Trade and other payables
Due to related parties
Borrowings
Lease liabilities
Warrants
Convertible loan notes
Total liabilities
At 31 December 2020
Assets
Trade and other receivables
Cash and bank balances
Non-financial assets
Total assets
—
—
—
994,878
377,170
994,878
377,170
1,372,048
1,372,048
—
1,011,550
1,011,550
2,600,821
3,354,478
275,885
—
—
—
72,801
—
2,600,821
3,354,478
72,801
275,885
6,231,184
1,084,351
7,315,535
—
—
—
1,095,564
1,095,564
103,609
103,609
1,199,173
1,199,173
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
82 Malvern International Plc Annual Report and Accounts 2021
Notes to the Financial Statements continued
At 31 December 2020
Liabilities
Trade and other payables
Due to related parties
Borrowings
Lease liabilities
Warrants
Convertible loan notes
Total liabilities
Fixed rate
interest bearing
Non-interest
bearing
£
Total
£
—
—
2,532,115
2,842,315
—
322,817
1,833,374
1,833,374
40,000
—
—
63,701
—
40,000
2,532,115
2,842,315
63,701
322,817
5,697,247
1,937,075
7,634,322
(v) Fair values of financial assets and financial liabilities
The carrying amounts of cash and cash equivalents, trade and other receivables, trade and other payables, and
short-term borrowings approximate their respective fair values due to the relatively short-term maturity of these
financial instruments. The fair values of other financial assets and liabilities are as disclosed in the respective notes.
(vi) Reconciliation of liabilities arising from financing activities
CASH
NON-CASH
1 January
2021
Modification
of lease
Term loan
Warrants
Convertible loan notes
2,532,115
63,701
322,817
—
—
—
Net
financing
cash flows
Interest
paid
(10,288)
(1,248)
—
—
—
(14,264)
IFRS 16 "Lease Liability"
2,842,315
862,993
(161,475)
—
Fair
value
movement Reclassified
Unwinding
of interest
31 December
2021
80,242
2,600,821
—
—
(50,000)
17,332
—
72,801
275,885
(352,290)
162,935
3,354,478
—
9,100
—
—
CASH
NON-CASH
Net
financing
cash flows
Interest
paid
Disposal
Fair
value
movement Reclassified
Interest
accrued
31 December
2020
Term loan
Warrants
Convertible loans notes
1 January
2020
2,438,573
75,640
316,587
—
—
—
IFRS 16 "Lease Liability"
5,185,028
(2,009,309)
(194,801)
100,000
(46,583)
—
(50,000)
90,125
2,532,115
—
—
—
—
—
(11,939)
—
—
—
—
—
63,701
6,230
322,817
(323,500)
184,897
2,842,315
(vii) Capital risk management policies and objectives
The Group manages its capital to ensure that entities within the Group will be able to continue as a going concern
while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital
structure of the Group consists of debt, cash and bank balances, and equity attributable to holders of ordinary
shares of the Company comprising issued capital, other reserves, and retained earnings as disclosed in the financial
statements. The Board of Directors reviews the capital structure regularly and at the minimum on a yearly basis.
83
The Group monitors its debt-to-equity ratio which was calculated as follows.
Loans
Lease Liabilities
Convertible loan notes
Total debt
Group
2021
£
2,600,821
3,354,478
275,885
2020
£
2,532,115
2,842,315
322,817
Company
2021
£
2020
£
2,511,109
2,432,115
—
—
275,885
322,817
6,231,184
5,697,247
2,786,994
2,754,932
Less: Cash and cash equivalents
(377,170)
(103,609)
(45,701)
(8,948)
Net debt
Total equity
Debt to equity
5,854,014
5,593,638
2,741,293
2,745,984
(2,829,400)
(3,124,227)
(1,582,064)
(2,207,411)
2.06
1.79
1.73
1.24
Financial assets are disclosed in notes 16 to 18. The Group's principal financial assets are bank balances, trade, and
other receivables.
Loan covenants
The Group’s does not have any specific financial covenants to comply with its major debt provider.
29. Convertible Loan Notes
The Company issued the following loan notes in 2017.
In November 2020, Convertible Loan Note holders agreed a variation of the redemption date from 16 November
2020 to 31 December 2022.
Convertible Loan Notes
Issue Name
Date of Issue
Date of Redemption
Interest Payable
Total Issued
Amount converted in 2017
Balance at 31/12/2017
Amount converted in 2018
Fair value adjustment
Balance at 31/12/2018
Fair value adjustment
Balance at 31/12/2019
Unwinding Interest
Balance at 31/12/2020
Unwinding interest
Share Conversion at 31/07/2021
Balance at 31/12/2021
Convertible Unsecured Loan Notes 2020
17 November 2017
31 December 2022
1 Jan 2018-31 Dec 2018
1 Jan 2019-31 Dec 2019
1 Jan 2020-31 Dec 2020
1 Jan 2021-31 Dec 2022
3%
4%
5%
6%
£1,200,000
(£100,000)
£1,100,000
(£771,898)
(£28,822)
£299,280
£17,307
£316,587
£6,230
£322,817
£3,068
(£50,000)
£275,885
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
84 Malvern International Plc Annual Report and Accounts 2021
Notes to the Financial Statements continued
30. 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
three-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
mid-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 has chosen to use the Black Scholes valuation framework. The options have also been valued using
the Monte Carlo valuation method. The results of which are not considered materially different from the valuation
methodology described in this note.
The inputs into the Black Scholes model as at 31 December 2021 are as follows.
Grant date
EMI options
Exercise
price
(pence)
Strike
price on
grant date
(pence)
Vesting
period
(years)
Expected
volatility
Risk free
rate
Fair value
02/12/2020
02/12/2020
07/01/2021
07/01/2021
18/01/2021
18/01/2021
01/09/2021
01/09/2021
33,625,000
33,625,000
5,000,000
5,000,000
6,000,000
6,000,000
28,375,000
28,375,000
0.5
0.9
0.5
0.9
0.5
0.9
0.6
1.1
0.15
0.15
0.15
0.15
0.15
0.15
0.22
0.22
3
3
3
3
3
3
3
3
12.30%
12.30%
11.98%
11.98%
11.98%
11.98%
10.45%
10.45%
0.35%
0.35%
0.35%
0.35%
0.35%
0.35%
0.26%
0.26%
0.34
0.74
0.35
0.75
0.35
0.75
0.38
0.87
Deemed
probability
of
achieving
market
condition
5.02%
0.37%
5.30%
0.37%
5.30%
0.37%
1.10%
0.00%
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.
85
Number of
options
69,500,000*
90,000,000
—
13,500,000
146,000,000
—
Weighted
average
exercise price
0.15p
0.19p
—
—
0.17p
—
Year ended 31 December 2021
Outstanding at 1 January 2021
Granted during the year
Exercised during the year
Forfeited during the year
Outstanding at 31 December 2021
Exercisable
*
The number of options outstanding at 31 December 2020 was incorrectly presented as 34,750,000 in the 2020 Group accounts. This did not
impact on the financial statements.
Of the options outstanding at 31 December 2021, 89,250,000 (2020: 69,500,000) options have an exercise price of
0.15 pence and 56,750,000 (2020: nil) options have an exercise price of 0.22 pence.
The aggregate charge for share options recognised in the Group financial statements in the year was £3,128 (2020: £184).
During 2020, the Company also made an equity settled share-based payment in lieu of fees to certain employees,
directors and a creditor. A total of 100,262,947 ordinary shares were issued at 0.15p per share. No vesting conditions
were attached to this share issue. The fair value at the grant date has been calculated as the total of the fees
owing for services provided. The cost recognised for 2020 in respect of these share-based payments is, £144,394 for
continuing operations, and £6,000 for discontinued operations.
In addition, a bonus was also awarded to certain directors as compensation for an additional and significant time
commitment during a change in Chief Executive Officer during the year. The bonus was not paid until 2021, therefore
an accrual was recognised through liabilities in 2020. The cost recognised for 2020 in respect of these share-based
payments was £24,700 (restated 2019: £19,192). The bonus was paid in 2021 when a total of 12,350,000 ordinary
shares were issued at 0.20p per share (2019: 12,794,667 ordinary shares at 0.15p per share). No vesting conditions
were attached to this share issue. The fair value at the grant date has been calculated as the total cash value of the
bonus awarded.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS [INTENTIONALLY LEFT BLANK]
Shareholder information
Registered office
3rd Floor
1 Ashley Road
Altrincham
Cheshire
WA14 2DT
Head office
200 Pentonville Road
London
N1 9JP
Website
www.malverninternational.com
Registered number
05174452
Listing information
AIM:MLVN
Date of Annual General Meeting
8 June 2022
Advisors and registrars
Nominated advisor and broker:
WH Ireland Limited
24 Martin Lane
London
EC4R 0DR
Solicitors
Knights Plc
Two St Peter’s Square
Manchester
M2 3AA
Auditor
Cooper Parry Group Limited
Sky View
Argosy Road
East Midlands Airport
Castle Donington
Derby
DE74 2SA
Registrar
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
B62 8HD
Shareholder enquiries
Our website contains a wide range of information
of interest to investors, including: latest news, press
releases and Annual Reports. For further information
please contact info.plc@malvernplc.com
Contents
Overview
Highlights
Strategic Report
Chairman’s Statement
At a Glance
Business Model
Markets
Our Strategic Priorities
Operating Review
Key Performance Indicators
Financial Review
Risk Management
Stakeholder Engagement
Corporate Governance
Board of Directors and Executive
Management Team
Chairman’s Corporate Governance
Statement
Corporate Social Responsibility
Directors’ Report
Nomination And Remuneration
Committee Report
Audit And Risk Committee Report
1
3
6
8
10
12
16
18
20
21
23
26
29
33
35
39
42
Visit our website for further information
https://www.malverninternational.com
Financial Statements
Independent Auditor’s Report to the
Shareholders Of Malvern International Plc 44
Consolidated Statement of
Comprehensive Income
Consolidated and Company Statement
of Financial Position
Consolidated Statement of
52
Changes in Equity
Consolidated Statement of Cash Flows
53
Company Statement of Changes in Equity 54
55
Company Statement of Cash Flows
56
Notes to the Financial Statements
50
49
M
a
v
e
l
r
n
I
n
t
e
r
n
a
t
i
o
n
a
l
l
P
c
A
n
n
u
a
l
R
e
p
o
r
t
a
n
d
A
c
c
o
u
n
t
s
2
0
2
1
MALVERN
INTERNATIONAL PLC
Annual Report
2021
Perivan 262798