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MALVERN
INTERNATIONAL PLC
Annual Report
2022
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
30 May 2023
Advisers and registrars
Nominated adviser 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
Our Markets
Our Strategy
Operating Review
Key Performance Indicators
Financial Review
Risk Management
Stakeholder Engagement: Directors’
Section 172(1) Statement
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
14
16
18
19
21
24
27
31
33
37
40
Visit our website for further information
https://www.malverninternational.com
42
Financial Statements
Independent Auditor’s Report to the
Members of Malvern International Plc
Consolidated Statement of
Comprehensive Income
Consolidated and Company Statement
of Financial Position
Consolidated Statement of
50
Changes in Equity
Company Statement of Changes in Equity 51
Consolidated Statement of Cash Flows
52
53
Company Statement of Cash Flows
Notes to the Financial Statements
54
47
48
HIGHLIGHTS
For the year ended 31 December 2022
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 (“MOA”).
“
2.42
Revenue
Student numbers continued to rebuild throughout 2022 as limitations on international travel eased. English
Language Training (“ELT”) bounced back in 2022 with three centres posting revenues ahead of the pre-
2021
pandemic period during the busy summer months. Our University Pathways saw a three-fold increase in
student numbers for the 2022/23 academic year start, contributing significantly to our overall University
2022
Pathways population of 500 students and giving a strong indication of the potential of this division. Juniors
delivered programmes to 976 students, generating revenues of c.£1.35m after two years of no activity.
Revenue
6.51
2021
2.42
Our forward bookings and revenue visibility for the start of 2023, combined with the removal of all COVID-19
restrictions, gives us confidence in Malvern’s near and longer-term prospects. We expect to move towards
profitable growth in all divisions in 2023.”
2022
6.51
EBITDA loss
Revenue
Richard Mace, Chief Executive Officer
2021
2021
0.91
2.42
2022
2022
6.51
0.42
Operating loss
CONTINUING OPERATIONS
Revenue
EBITDA loss
2.42
2021
2021
2022
6.51
2022
0.91
1.32
2021
EBITDA loss
Revenue
REVENUE (£M)
2022
2021
2021
2.42
0.78
0.91
2022
2022
6.51
Loss for the year
0.42
2021
OPERATING LOSS (£M)
Operating loss
1.59
2022
2021
2022
2021
1.32
EBITDA loss
1.08
0.78
0.91
2022
LOSS PER SHARE*
Loss per share*
Loss for the year
0.42
2021
2021
2022
2022
2021
8.49 pence
1.59
Operating loss
4.95 pence
1.08
1.32
Operating loss
EBITDA loss
EBITDA LOSS (£M)
2021
1.32
2021
2022
2022
0.91
0.78
Loss for the year
Operating loss
LOSS FOR THE YEAR
2021
2021
2022
2022
2021
2021
2022
2022
1.59
1.32
1.08
0.78
Loss for the year
Loss per share*
1.59
8.49 pence
1.08
4.95 pence
0.42
0.42
0.78
2022
* Calculated using weighted average number of shares in issue during the period 21,915,119 (2021 restated: 18,788,985). Total ordinary shares for
2021 have been restated to provide a meaningful comparison with 2022. A share consolidation was completed in 2022, increasing the nominal
value of the Group’s ordinary shares.
Loss per share*
Loss for the year
Loss per share*
8.49 pence
1.59
2021
2021
2022
2022
4.95 pence
1.08
2021
8.49 pence
2022
4.95 pence
Loss per share*
2021
8.49 pence
2022
4.95 pence
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 2 Malvern International Plc Annual Report and Accounts 2022
STRATEGIC
REPORT
CHAIRMAN’S STATEMENT
Mark Elliott, Chairman
3
Financial performance
Revenues increased 169% to £6.51m (2021: £2.42m).
The operating loss for the year reduced to £0.78m
(2021: loss £1.32m) reflecting continued strong cost
control measures together with ongoing investment
in our sales and marketing and central operations.
The loss for the year was £1.08m (2021 loss: £1.59m),
resulting in a loss per share of 4.95 pence (2021 loss:
8.49 pence).
Cash balances increased by £0.81m during the
year to £1.18m (2021: £0.37m) reflecting cash
inflow of £1.32m (2021: cash outflow of £1.19m).
This increase was due to the late invoicing to us of
accommodation costs. Net debt was £4.38m (2021:
£5.85m) including £3.08m (2021: £3.35m) of lease
liabilities (see note 24).
Financing and debt restructure
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 12-month payment and interest holiday with
monthly payments commencing from March 2023,
over a five-year period. To assist with the lumpy
nature of our cash flow we have also agreed with
them to vary the timing of these payments during
2023. At the same time BOOST&Co. provided a letter
of comfort to provide ongoing financial support
to the Group for any short-term working capital
requirement should that become necessary.
Introduction
Student numbers continued to rebuild
throughout 2022 as the limitations on
international travel eased. The second half
of the year saw more significant growth and
a return to pre-pandemic levels of student
numbers in our adult language schools. The
Juniors division, which runs two-week courses
mostly over the summer holidays, saw a c.50%
return of student numbers compared to
2019, which was in line with the wider market
performance since the majority of these courses
are booked many months in advance and at a
time where uncertainty around travel remained.
We welcomed our largest cohort of 500
students for University Pathways in the 2022/23
academic year.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 4 Malvern International Plc Annual Report and Accounts 2022
Chairman's Statement continued
Share option scheme
Outlook
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. The Company
awarded 575,000 ordinary shares of 1 pence each
in the capital of the Company, pursuant to the
Company’s EMI share option scheme (the “EMI
Options”) to Richard Mace, Daniel Fisher and certain
employees of the Company in December 2022. The
EMI Options granted, when added to the previously
granted EMI Options of 2,002,500, represent 8.2% of
the existing issued share capital of the Company.
More information, including the exercise prices, can
be found in note 26 of the financial statements.
Staff and staff appointments
Malvern continued to build and strengthen its sales
and marketing team, appointing an experienced
East Asia Director to manage the region’s agent
network primarily across China following our
February 2023 expansion of operations there. As the
business grows so does the need to continue to build
our excellent senior management team and this we
will continue to do to drive the business in 2023.
I would like to take this opportunity to thank all
our colleagues for their continued dedication in
delivering quality education to our students and in
the significant contribution they have made in the
post COVID-19 recovery of our business.
The significant revenue growth seen in H2 2022,
in combination with the visibility of University
Pathways revenue in H1 2023, and no COVID-19
restrictions affecting students’ ability to travel, gives
us confidence in Malvern’s near- and longer-term
prospects. We expect to achieve growth in all
divisions in 2023.
Student numbers in our language schools have
returned to pre-pandemic levels and the pipeline
for 2023 is encouraging. In our University Pathways
division, student numbers are up 247% on the prior
academic year (21/22 v 22/23), which reflects
the significant investment in this division. Finally,
pre-bookings for 2023 summer camps are very
encouraging and revenue growth is expected as an
outcome.
We have a great management team and the
services we offer are in demand. We expect to grow
and diversify our revenue by bringing on board new
educational establishments and attracting students
from more countries than ever before.
COVID-19 was a very difficult time for our industry but
with the support of all our stakeholders we survived.
We now see great opportunities for us to prosper in
2023 and beyond.
Mark Elliott
Chairman
6 April 2023
OVERVIEW
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
5
6 Malvern International Plc Annual Report and Accounts 2022
AT A GLANCE
Malvern International’s purpose is to provide,
with our partners, students from around the
world with opportunities to reach their full
potential via access to transformational
learning, teaching and support.
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.
4
Study locations
Manchester
Manchester
Brighton
Brighton
*
*
*
*
Malvern has experienced a great deal of change in recent years, refocusing the business on UK operations,
navigating through the challenging period of COVID-19 and restructuring the business. The Company has
emerged stronger than ever, with a clear strategy, a highly experienced Executive Management Team, sales
and marketing function, agent network, and improved governance structures.
Singapore
2020
Appointment of UK-focused Group
Head of Sales and Marketing
Singapore
2021
Appointment of Centre Director,
UEL International Student Centre
Temporary closure of UK schools in
response to COVID-19 with courses
delivered online
£1.70m raised via capital markets
in oversubscribed fundraising to
accelerate growth plans
Appointment of Daniel Fisher
as CFO, Daniel has served as
Financial Director since January
2021
Appointment of Richard Mace as CEO
Online
£1.25m raised via capital markets to
provide support during COVID-19
Online
Closure and disposal of non-UK
entities completed, allowing a clear
focus on UK operations
Launch of our NCUK International
Foundation Year programme at
Malvern House London
2023
Appointment of
Commercial Director of
ELT to drive growth of ELT
and Juniors division
2022
Malvern House Brighton first full
year of operations following delays
in opening due to COVID-19
Debt restructuring to facilitate
recovery and release financial
resources to enable business
development and investment
Contract award – Preferred
supplier to recruit students from
China for UEL for next five years
First Juniors programmes delivered
after two years of no activity
Highest number of students
recruited on university
programmes, 500
2018/19
Acquisition of
Communicate
Language School
Manchester
Sale of Malaysian
business and
increased focus on UK
operations
* Since foundation.
7
Malvern English Language
Schools
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
Malvern University Partnerships
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
• Engineering and science
International Year One in business
and engineering.
In-sessional and pre-sessional
courses.
Locations
UEL
NCUK
Malvern House London
Central Services:
Student recruitment, Marketing,
Human resources, Finance,
Quality assurance,
Pastoral care
Malvern Online Academy
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 for
closed groups.
Courses
General English, English for Juniors preparation
for International English Language Testing
System (“IELTS”).
Delivery options
Full time, part time, one to one.
Language in Action
juniors and summer camp
programmes (“Malvern Juniors”)
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 2022
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 counts over 117
members of staff, made
up of 52 teaching staff and
65 support and leadership
members.
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 its 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 and 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 its 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 and 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 expand 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 679,965
international students enrolled
in 2021/22 academic year
(2020/21: 605,130)
10 Malvern International Plc Annual Report and Accounts 2022
OUR 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: higher education and ELT. Both benefit from long-term growth prospects.
In February 2021, the UK Government published the UK International Education Strategy, aiming to achieve
£35 billion in education exports per year. The Government recognises that to achieve this ambition an average
3% increase per year in education export revenue is needed and therefore, promoting and sustaining
the growth of education exports and international student numbers remains a priority.
International Higher Education (“IHE”)
Chart 1: IHE student enrolments
Chart 2: IHE student enrolments
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
2017/18
2018/19
2019/20
2020/21
2021/22
European Union
160,000
Non-European Union
120,000
80,000
40,000
0
2017/18
2018/19
2019/20
2020/21
2021/22
Bangladesh
Pakistan
Nigeria
India
China
Non-European Union
European Union
China
India
Nigeria
Pakistan
Bangladesh
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
aims to have 600,000 IHE students enrolled each year
by 2030. This target was achieved well ahead of
schedule in the 2020/21 academic year, leading to
calls to raise the target to one million IHE students.
Malvern’s sales and marketing strategy focuses around
the recruitment of non-European students, which make
up over 80% of total IHE students in the UK (see Chart 1).
The Company targets the largest and fastest growing
student sending markets, including China, India, and
Nigeria. Together, these three countries account for 58%
of non-European students (2020/21: 55%).
Since the 2017/18 academic year the number of
Chinese IHE student enrolments has grown from
107,215 to 151,690. Having started from a much
lower base of 20,335 in 2017/18, student enrolments
from India are fast catching up with 126,535 students
enrolled in 2021/22, aided by the reintroduction of
priority and super priority visas in 2022. The number
enrolments from Nigeria, the third largest sending
market, more doubled year on year from 21,305
students in 2020/21 to 44,195 in 2021/22.
Higher Education Student Statistics: UK, 2021/22 - Where students come from and go to study
Sources:
•
• BONARD, Quarterly Intelligence Cohort, Executive Summary 2022 prepared on behalf of English UK for Q1, Q2, Q3, & Q4
• English UK COVID-19 Impact report: Second Edition, 2021
• HM Government International Education Strategy: global potential, global growth, March 2019
• HM Government International Education Strategy, 2022 progress update
• English UK, Student Statistics report 2022, May 2021
• ELGazette.com, The Covid fall-out on Centres of Excellence, October 2022
OVERVIEW
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
11
English Language Training (“ELT”)
Chart 3: Additional student weeks delivered each
quarter 2022 vs. 2021
Chart 4: ELT student weeks 2019 vs. 2022
80,000
60,000
40,000
20,000
0
Q1 movt.
Q2 movt.
Q3 movt.
Q4 movt.
Junior weeks
Adult weeks
Adult weeks
400,000
Junior weeks
Total weeks 2022
Total weeks 2019
300,000
200,000
100,000
0
Q1
Q2
Q3
Q4
Total weeks 2019
Total weeks 2022
The UK International Education Strategy also
recognises the opportunity for UK ELT to play a more
prominent role for international trade-led activity.
The Department for International Trade and the
British Council are using their networks to promote
and support ELT overseas in partnership with English
UK, of which Malvern are members.
This, combined with a reduction of 104 British
Council accredited ELT schools since March
2020, or 21% of its members, provides a significant
opportunity for Malvern to capture a greater
proportion of market share, review its pricing, and
consider increasing its footprint through acquisition
of or establishing new centres.
Figures relate to a like for like which is based on data
from 118 reporting centres.
The ELT market consists of two segments: adult
courses and juniors provision in the form of summer
camps. Market research typically combines these
two audiences, although they have different
recruitment strategies and business models. The
peak season for both audiences are the summer
months, however adult ELT tends to be more evenly
spread throughout the year.
In the aftermath of the pandemic, ELT providers are
focused on rebuilding student numbers to former
levels. There are positive signs that the industry is
recovering and student week volumes appear to be
steadily recovering. Centres are witnessing a marked
improvement on quarterly student weeks delivered
between 2021 and 2022 (Chart 3). However, there still
remains some way to go when comparing student
weeks delivered in 2022 to 2019 (Chart 4), with
quarterly figures for adults and juniors in 2022 running
at between 50% to 60% of 2019 levels.
Going into 2023, providers are more optimistic about
the recovery with around 40% anticipating that
the UK ELT sector will regain 100% of pre COVID-19
business volumes, while 11% of English UK members are
predicting a recovery of more than 100% – a view that
Malvern, and some of the Group’s key agents, shares.
12 Malvern International Plc Annual Report and Accounts 2022
OUR STRATEGY
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.
In 2022, the senior leadership
team worked to set out
the Group’s three-year
strategic plan. The strategy
has been developed in the
context of the recovery of
the international education
market since the COVID-19
pandemic and the Group’s
potential to take advantage
of the UK Government’s
UK International Education
Strategy which aims to
achieve £35 billion in
education exports per year,
recruiting over 600,000
students to the UK.
Company-wide priorities to 2025
Success metrics
Optimise the quality and standardisation of our education provision
• Student feedback
• Accreditation, review and compliance audits, results and findings
• Standardisation of operational processes across the Group
• Centralised QA expertise supporting each division
Expand our market share and brand reach
• Overall increase in student numbers
• Expansion of our sales and recruitment functions
• Diversification of source countries/nationality mix in centres
• Increased direct sales
• Increased effectiveness of lead generation, conversions, and admissions function
• Expansion of agent network and improved agent relationships
• Greatly expanded marketing collateral and overall outputs
• Substantive and consistent digital presence
Enhance centralised business process, technology and reporting
• Data-informed decision making and forward planning across the Group
• Improved and consistent service-level agreements
• Automation of processes
• Standardised, streamlined and consistent processes
• Commitment to best practice and continuous improvement
• Adoption of scalable IT systems and processes
Develop and engage our people to promote a positive and high-performance culture
• Reduced staff attrition rates
• Increased staff satisfaction, informally and formally recognised
• Regularly reviewed policies at every stage in the employee life cycle
• Training needs analysis
• Enhanced training and CPD opportunities for all staff
• Uptake of newly implemented performance management platform
• Regular review of staff objectives
• Commitment to talent and leadership development
Extend current social responsibility initiatives
• Increase number of free education places for refugees
• Develop a Company-wide giving-back culture
• Develop charity and fundraising activities for each centre
• Standardise environmental policies and practices across centres
13
Business segment priorities to 2025
Success metrics
Malvern University Partnerships
• Maximise the potential of our University of East London (“UEL”) partnership
• Seek new university partnerships
• Maximise opportunities that NCUK offers
• Meet or exceed recruitment targets and develop agent network to recruit
students from diversified sources
• Drive student attainment and quality metrics
• Strengthen internal review and feedback to drive quality improvements
• Simplify and improve student experience at every stage of their journey through
enquiry, application, admission, course experience, and progression options
• Expand student numbers from China
• Expand subject and course-level mix
Malvern English Language Schools
• Standardise teaching across schools to improve quality
• Invest in school environments to maximise centre occupancy and enhance
technology enabled learning
• Increase student diversity
• Develop new programmes offered during periods of low utilisation
• Explore potential to add additional centres to our portfolio to increase our
footprint
• Form and maintain excellent relationship with UK based sponsors to increase
number of sponsored students
• Create simple and effective direct sales system
• Expand agent network
• Diversify quality accommodation options at all price points
• Improve student interaction with admissions and improve responsiveness
Language in Action and juniors summer camps
• Expand number of centres and increase capacity to meet demand
• Develop brand and presence
• Diversify student recruitment by source country and national mix
• Target China market as second biggest juniors market
• Expand courses and offer low-season centres
• Improve staff retention by offering year-round or regular employment
• Increase automation of internal processes to enhance agent relations, service-
level agreements and improve efficiencies
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 14 Malvern International Plc Annual Report and Accounts 2022
OPERATING REVIEW
Richard Mace, Chief Executive Officer
Summary
•
Over three-fold increase in University Pathways
students for 2022/23 academic year with over
500 University Pathways students now enrolled
•
•
•
•
•
Revenues in ELT centres bounced back during
summer months ahead of pre-pandemic levels
Continued to strengthen and deepen
relationship with UEL with five-year partnership
aiming to increase rapidly the volume of
Chinese student enrolments
Strengthened senior management team
with promotions and appointments of
Director of University Partnerships, Director of
Student Recruitment, Commercial Director
of ELT, Head of Operations and a Group HR
Manager
Appointed an experienced East Asia Director
to manage and grow our agent network
across China
Juniors programmes relaunched in summer of
2022 with 976 students enrolled after two years
of no activity
English Language Training (“ELT”)
The ELT industry has bounced back after international
borders reopened following two years of travel
restrictions. This is evidenced through revenues across
the Group’s three ELT centres during the Group’s
busiest summer period, coming in slightly ahead of
the pre-pandemic level in 2019.
Adult ELT revenue increased in 2022, mainly coming
from the MENA and Latin America markets. This was
helped by the Government’s announcement in early
May 2022 that Saudi Arabia nationals can apply to
travel to the UK for tourism, business, study, or medical
treatment for up to six months with an electronic visa
waiver from 1 June 2022.
The English Language Schools provided a mixture
of in-class, online and blended learning in 2022,
although there is now a clear return to predominately
in-class learning.
The focus for the Group continues to be increasing
the volume of accommodation options for students,
which is a challenge across the industry, and
continuing to develop our student acquisition model.
Recruiting students via our growing agency network
and directly via our digital presence and processes is
a key strategy for this division. With our investment in
systems and appointment of a Commercial Director,
we are well placed to grow in 2023 and beyond.
University Partnerships
Underpinned by strong partnership structures with
UEL, including regular joint senior management group
meetings and excellent relationships with colleagues
from across UEL, our International Study Centre
welcomed a three-fold increase of students for the
2022/23 academic year, contributing significantly
to our overall University Pathways population of
500 students.
This increase in student numbers is being driven by
our expanded sales team and improved processes
to manage and convert potential students from
across the world. In parallel, staffing and operational
arrangements have developed rapidly in our
centre, driving our focus on learning and teaching
excellence and maximising student attainment
and progression to the University. These are built on
a continued focus on optimising quality assurance
within the centre, which has been recognised by
our University partners during a range of formal and
informal quality assurance processes.
15
We have formally launched a five-year strategic
collaborative partnership with UEL, significantly
extending our partnership with the University and
aiming to increase rapidly the volume of Chinese
students enrolled at UEL’s three London campuses.
Our centre is expected to expand further over the
next five years.
Following the appointment of an experienced East
Asia Director, we will manage an extensive education
agent network across China via our in-country
team and undertake extensive marketing, student
recruitment and conversion activities on behalf of
UEL in mainland China. Together with UEL colleagues,
we will support partnership development with
academic institutions in China. These partnerships
will support the identification and development of
articulation agreements (an articulation agreement
is a formal partnership with another institution, which
guarantees a UEL place on a particular programme,
or programmes, on successful completion at another
institution) and transnational education opportunities.
NCUK
Our NCUK centre at Malvern House London
continues to grow, playing its part within our
University Pathways division. We have attracted
an increased number of students to both the
September 2022 and January 2023 cohorts, aiming
to progress to high quality universities via their
International Foundation Year programme.
The building of our brand presence in key recruitment
regions such as China, Nigeria and Sub-Saharan
Africa, is expected to greatly increase the numbers
of students on the NCUK programme during 2023/24.
Delivery of further NCUK programmes, such as
Science and Engineering routes, is currently being
explored with our partners at NCUK, with both
organisations looking to our NCUK centre to support
their strong growth trajectories.
Malvern Juniors
As expected, the Italian funded INPS programmes
went ahead in July and August 2022. Our English
in Action junior and summer camps delivered
programmes to 976 students, generating revenues of
c.£1.35m after two years of no activity. The bulk of the
students originate from Italy.
This performance was in line with the wider juniors
market with 2022 programmes running at around 50%
to 60% of pre-pandemic levels.
The team had a very successful British Council
inspection in July 2022. The final result is excellent
and puts Malvern in the top quartile of inspections
in the industry. Our next full inspection of Juniors
programmes is due in 2026.
In China, the biggest international student market
to the UK for juniors summer camps, we are
expecting students to begin travelling again in 2023.
The Group’s strategic investment in this market is
expected to contribute significant growth from 2024.
The Group is well placed for growth in this division.
There remains a clear backlog of demand for 2023
based on pre-bookings, consequently we expect
significant growth in student numbers and revenues
in 2023.
Central services
We continue to make improvements to our shared
central services which includes both back-office
and sales and marketing. Our priority is to place
quality at the heart of our business, standardising and
optimising our education provision. This is backed by
a decision to centralise quality assurance in order to
support each division in managing student feedback
processes, accreditations, reviews and compliance.
The creation of our China recruitment function and
appointment of an experienced East Asia Director to
manage the agent network across China continues
to build on our sales and marketing capabilities. We
continue to work with our agent network as well as
supporting our direct student recruitment channels.
For the latter, we are improving lead generation
and conversion processes as well as expanding our
marketing collateral.
With the international student market re-stabilising we
are aware of the need to develop and engage our
staff to promote a positive and high-performance
team. Our HR team has been working to improve
remuneration packages to attract the best talent,
enhance training and CPD opportunities as well as
identifying future leaders within the business.
We are looking at ways to extend our current social
responsibility activities beyond offering scholarship
places, establishing charity days at each of our
centres and developing a company-wide giving
back culture.
Richard Mace
Chief Executive Officer
6 April 2023
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 16 Malvern International Plc Annual Report and Accounts 2022
KEY PERFORMANCE INDICATORS
FINANCIAL KPIs
Revenue
REVENUE (£M)
Revenue
2020
2020
1.90
1.90
2021
2021
2.42
2.42
OPERATING LOSS (£M)
Operating loss
Operating loss
2020
2020
1.33
1.33
2021
2021
1.32
1.32
2022
2022
6.51
6.51
2022
2022
0.78
0.78
Performance: Revenues grew 169% during the
year reflecting a return to near normal operations
and pent-up demand in the aftermath of
COVID-19. H2 saw significant growth compared
to H1 which continued to be impacted by
international travel restrictions.
Loss for the year
Revenue
Loss for the year
Revenue
2020
2020
1.66
1.66
Performance: The operating loss reduced following
a surge in revenue in H2, particularly from the
University Pathways and Malvern Juniors divisions.
Loss per share
Loss per share
In parallel, the Group invested in its sales and
Operating loss
Operating loss
marketing team to support recruitment efforts
across key territories.
2020
23
2020
23
2020
2021
2020
2021
2021
2022
2021
2022
2022
2022
1.90
1.90
1.59
1.59
2.42
2.42
1.08
1.08
6.51
6.51
1.33
1.33
1.32
1.32
2020
2021
2020
2021
2021
2022
2021
2022
2022
2022
8.49* restated
8.49* restated
4.95
4.95
0.78
0.78
Loss for the year
LOSS FOR THE YEAR (£M)
Loss for the year
LOSS PER SHARE (PENCE)
Loss per share
Loss per share
2020
2020
1.66
1.66
2021
2021
1.59
1.59
Student numbers
1.08
Student numbers
1.08
2022
2022
2020
2020
1.90
1.90
2021
2021
2.42
2.42
2022
2022
Performance: The loss for the year reduced in line
with management’s expectations. Operating
conditions are anticipated to be much more
favourable in 2023. Confirmed and pre-booked
revenue gives management confidence that
growth will be achieved across all divisions in 2023.
6.50
6.50
2020
2020
23
23
2021
2021
2022
2022
8.49* restated
8.49* restated
4.95
4.95
Performance: The loss per share is calculated
using weighted average number of shares in issue
during the period of 21,915,119 (2021 restated:
18,788,985). The total loss per share from continuing
operations was 4.95p (2021: 8.49p).
Student numbers
Student numbers
2020
2020
1.90
1.90
*
2021
2021
Total ordinary shares for 2021 have been restated to provide a meaningful comparison with 2022. A share consolidation was completed in
2022, increasing the nominal value of the Group’s ordinary shares.
2.42
2.42
2022
2022
6.50
6.50
17
English Language Schools
University Pathways
Juniors
3,366
3,366
2019
2019
1,391
1,391
88
88
1,887
3,366
1,887
3,366
2020
2020
340
2021
2021
311
340
172
172
311
144
144
3,365
3,365
2022
2022
1,893
1,893
500
500
975
975
3,365
3,365
NON-FINANCIAL KPIs
STUDENT NUMBERS
2019
2019
2020
2020
512
512
2021
2021
455
455
2022
2022
Number of students who have undergone tuition for a minimum of ten hours per week during the course
of the year.
Performance: ELT numbers performed ahead of pre-pandemic levels with a particularly strong summer
peak. This performance reflects the pent-up demand created by two consecutive years that were
impacted by COVID-19. The performance was also supported by the easing and simplification of the visa
process to students from certain countries.
University Pathways saw a significant jump in student numbers for the 2022/23 academic year, giving the
strongest indication of the potential of this segment to Malvern.
The Juniors division performed in-line with the wider market with a c.50% return to 2019 levels. We have
every expectation that these figures will continue to rebuild into 2023.
STUDENT WEEKS
English Language Schools
Juniors
2019
2019
15,226
15,226
2019
2019
88
2020
2020
4,128
4,128
2021
2021
5,388
5,388
2022
2022
2020
2020
4,128
4,128
2021
2021
5,388
5,388
17,417
17,417
2022
2022
0
0
4000
4000
8000
8000
12000
12000
16000
16000
20000
20000
88
11,760
11,760
3,466
3,466
15,457
15,457
1,960
1,960
Total number of weeks delivered to students who undergo a minimum of ten hours per week including in-
class and online courses. This metric is relevant to ELT students only.
Performance: As expected, the average number of student weeks for ELT reduced from 17 weeks in 2021
to 8 weeks in 2022 reflecting pre-pandemic trends and supported by greater freedom to travel.
The Juniors division typically offers students two weeks of immersive English language tuition and cultural
experiences.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 18 Malvern International Plc Annual Report and Accounts 2022
FINANCIAL REVIEW
Daniel Fisher, Chief Financial Officer
The trading landscape improved
markedly throughout the year. We
continued to maintain strong cash
controls while investing in sales and
marketing functions to build student
numbers.
Revenue
Revenues increased 169% to £6.51m (2021: £2.42m).
Revenues have increased across all areas of the
business. Student numbers recovered following a
long period of travel restrictions. Juniors ran for the first
time in 2019, generating c£1.35m in revenue, the bulk
of students coming from Italy. Freedom of travel and
continued investment in our pathway partnerships
resulted in a 247% increase in student numbers from
the prior academic year (21/22 v 22/23).
Operating costs
The reopening of international borders aside,
continued investment in the Group’s sales and
marketing functions has also been critical to the
growth of revenue in 2022. Spending on these
functions totalled c.£0.24m (excluding salaries) in
2022 (2021: c.£0.08m). Much of this increased spend
is the result of increased travel. Across all divisions,
student number growth is built on relationships with
the Group’s agent network. The relaxation of travel
restrictions allowed our people to travel to key
recruitment markets for the first time in two years.
Group salaries and benefits also increased in
2022, £2.06m v £1.34m in 2021. This increase can
be attributed to an increased number of student
facing staff to deal with the large increase in student
numbers during the year. As previously stated, the
Group continues to invest in the sales function,
including additional headcount, and as an extension
of the sales function, the Group has also invested
in the UEL admissions pipeline and student support
structure. These UEL functions have been key to
delivering growth in student numbers in this division.
As the staffing structure continues to take shape, the
Group is well positioned to scale effectively in 2023.
The loss for the year was £1.08m (2021 loss: £1.59m),
resulting in a loss per share of 4.95 pence (2021
loss: 8.49 pence). The reduced loss position is the
result of a strong H2 revenue performance. The total
loss in 2022 was significantly impacted by suppressed
revenue in H1 2022, caused by the impact of
COVID-19. An anticipated full year of normal
operating conditions in 2023, in combination with the
visibility of University Pathways revenue in H1 2023,
gives the Board confidence about Malvern’s near-
and longer-term prospects.
Consolidated Statement of Financial
Position
The Group continues to make incremental
improvements on the Consolidated Statement of
Financial Position. The convertible loan note, first
issued in 2017, was fully redeemed during the year
following a placing (2021: £0.27m). The levels of
historical creditor balances were also reduced in
2022. This included making the final payment of
a long payment plan to clear a c.£200k Juniors’
accommodation invoice from 2019.
The cash balance at the end of the financial
year was £1.18m (2021: £0.37m). This increase
was due to the late invoicing (c.£0.75m) to us of
accommodation costs. The Group has managed
expenditure tightly. In addition, debtor days have
reduced which is important for our working capital
and growth requirements. The Group’s £2.6m debt
was restructured in 2022, providing a 12-month
payment and interest holiday with monthly payments
commencing from March 2023, over a five-year
period. To assist with the uneven nature of our cash
flow we have also agreed with BOOST&Co Limited to
vary the timing of these payments during 2023.
Daniel Fisher
Chief Financial Officer
6 April 2023
RISK MANAGEMENT
19
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 Group.
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
Risk level: High
Description
Mitigation
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 14 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 20 Malvern International Plc Annual Report and Accounts 2022
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.
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.
The Group has clear incident management and crisis management
strategies and procedures.
Health, safety or environmental incident
Risk level: Medium
Description
Mitigation
The impact from COVID-19 on the
Group has significantly reduced in H2
2022. The 2022 results were affected
in H1, due to closed borders and staff
illness. This impact/risk to the Group has
continued to reduce and the Group is
continually monitoring the situation.
The Board monitors and follows national and international health
and safety guidelines and provides regular updates to its staff and
student body. To assist with cost and cash management in 2022,
the Group was able to access Government grants across our sites.
The Group has also agreed delayed and extended payment plans
with key suppliers and with our debt provider, BOOST&Co. Limited.
In addition, shorter payment terms were agreed with some key
customers to ensure that the Group’s working capital requirements
are met.
DIRECTORS’ SECTION 172(1) STATEMENT
21
Stakeholder engagement
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 page 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.
Staff
As an educational services business, Malvern’s
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 are regularly reviewed and updated and
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.
We continue to focus on enhancing our colleagues’
personal development at Malvern, with the
introduction of a renewed appraisal system in 2022
and integration of this scheme with a longer-term
staff development policy.
Our Executive Management Team (“EMT”) (see
page 26) is charged with driving the delivery of our
Strategic Plan as set out on page 12.
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.
Students
Our purpose, mission and values place our students
at the heart of all of our operations, and their success
is key to our future strategic developments. We
proactively seek student feedback around every
aspect of our operations, including regular surveys
and informal discussions with individuals and groups
of students.
We integrate this continual informal feedback
with more formal mechanisms, such as student
representative groups and course committees
and similar forums in our University Partnerships. We
report back to our students as to how their views
have informed developments within our centres via
regular two way dialogue, and ensure the closeness
of relationships between staff and students continues
to be identified within accreditation and inspection
reports as a strength within Malvern.
Partners
The Board acknowledges that a strong business
relationship with partners, customers, and agents is a
vital part of our growth strategy. These relationships
are informed by our interactions with our students as
detailed above.
Within our student recruitment function, we are in
continuous contact with our agent and sponsor
partners. We arrange to meet with key partners on a
regular basis, and take part in industry events to help
facilitate joint discussions.
We are members of a range of educational
organisations, such as English UK, where we meet with
peers and discuss areas of common concern and
key developments for our business. We are looking to
expand our reach in terms of partner organisations to
help realise our strategic goals.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 22 Malvern International Plc Annual Report and Accounts 2022
Directors’ Section 172(1) Statement continued
Within our University Partnerships division, we
will continue to solidify joint governance and
management arrangements with our partners. For
example, in 2022, we set up a regular joint China
operations meeting. This meeting will ensure that
recruitment, admissions and compliance are working
efficiently to maximise student numbers and to
ensure a quality student experience. Our meetings
ensure alignment between our role as a service
provider and UEL’s goals, and enable us to discuss
opportunities and challenges collectively.
Whilst day-to-day business operations are delegated
to the EMT, the Board sets directions with regard to
new business ventures and initiatives.
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 page 31.
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 to refugees.
More detail can be found in the CSR Statement in this
report on page 31.
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
we are required to provide fair and balanced
information in a way that is understandable to all
stakeholders and particularly our shareholders, with
clear information on the Group’s activity, strategy,
and financial position. Details of how the Company
communicates with its shareholders can be found in
the Chairman’s Corporate Governance Statement
on page 27.
Maintaining high standards
of business conduct
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. 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
in this and there is zero tolerance for bribery and
unethical behaviour by anyone relating to the Group.
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
6 April 2023
CORPORATE
GOVERNANCE
24 Malvern International Plc Annual Report and Accounts 2022
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
Date of appointment: 1 October 2019
Mark is a Chartered Accountant who 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.
Committees: Audit and Risk (Chairman) and
Nomination and Remuneration
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 then as
a senior sales manager and adviser 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 was appointed as an independent
Non-Executive Director at Ideagen Plc when it
listed in July 2012 at a market capitalisation of £13m
and was a Board member chairing the audit and
remuneration committees until the company was
acquired by HG Capital for £1.3 billion in July 2022.
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: Ultris Limited, and Goal
Group Limited
Committees: Nomination and Remuneration
(Chairman) and Audit and Risk
25
Richard Mace,
Chief Executive Officer
Daniel Fisher,
Chief Financial Officer
Date of appointment: 30 June 2020
Date of appointment: 6 December 2021
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.
Committees: n/a
Daniel Fisher was appointed to the Board of
Directors having worked as 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.
Committees: attends Audit and Risk Committee
meetings by invitation
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 26 Malvern International Plc Annual Report and Accounts 2022
Board of Directors and Executive Management Team continued
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 and are charged with
delivering the Strategy as set out on page 12.
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 CEO, Director of University Partnerships, Director
of Recruitment, Commercial Director of ELT, Head of
Operations, and General Manager of London are
collectively responsible for business development.
To facilitate the execution of the Strategic Plan, staff
accountable for our divisions and functional areas
hold Monthly Business Review (“MBR”) meetings,
involving staff from each area, to report and review
progress being made and key developments.
We envision that additional appointments will be
made to the EMT in key areas to realise our goals and
as the business grows.
Simon Fitch
Director of University
Partnerships, UEL
International Study Centre
Ashleigh Veres
Director of Student
Recruitment
Emiliano Sallustri
Commercial
Director of ELT
Kris Hall
General Manager &
Principal, Malvern House
London
Date of appointment:
7 January 2021
Date of appointment:
6 January 2020
Date of appointment:
1 January 2019
Date of appointment:
7 August 2017
Simon is accountable for
our provision of high quality,
student-centred, operations
at our UEL International
Study Centre and supporting
the development of
pathway programmes
across the Group.
Simon has spent his career
in a range of educational
settings, and has senior level
experience in universities,
schools and pathway
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 twelve 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.
Emiliano was promoted, in
January 2023, to become
the strategic lead for the
growth and development
of our English Language
Training (“ELT”) division;
adult and junior centres
(Language In Action). 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 was the co-founder
of the Language In Action
brand of junior schools that
came into the Malvern
Group in 2019.
With a focus on ensuring the
success of two of our schools
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.
CHAIRMAN’S CORPORATE GOVERNANCE
STATEMENT
27
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
Group.
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 page 24.
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 twelve 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 2022
was maintained at a similar level of the previous
year, as the Board managed the dynamic trading
environment due to COVID-19. The Board was in
regular consultation with regards to the Group’s
cash resources in order to monitor and manage
cash outflows, implementing strict cash control
measures and remaining in close contact with our
debt provider.
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 28 Malvern International Plc Annual Report and Accounts 2022
Chairman’s Corporate Governance Statement continued
Attendance at meetings during 2022
• Financial reporting: approval of the annual
Board
meetings
(12 meetings
held)
Audit and Risk
Committee
(4 meetings
held)
Nomination and
Remuneration
Committee
(3 meetings held)
12
12
12
12
4
4
—
—
3
3
—
—
Director
Mark Elliott
Alan Carroll
Richard Mace
Daniel Fisher
Strategy and risk management
A description of the Group’s business model and
strategic priorities can be found on pages 8 and
12 and the key challenges in their execution are
detailed in the Chairman’s Statement on page 3
and Operating Review on page 14. 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 and Risk Committee (see page 40) has
responsibility for the oversight of the Group’s risk
management, 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 pages 19 to 20.
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
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 Committee
• 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
Alan 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 page 40. Where necessary, specialist external
consultants are used to assist the Committee. The Audit
and Risk Committee Report is set out on page 40.
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 page 37. Where necessary
external recruitment consultants are used to assist
the process. The Nomination and Remuneration
Committee Report is set out on page 37.
29
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 page 33 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 diversity
amongst its members, which includes roles and
experience with other boards and organisations. This
forms 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 Group as a whole and that this will impact
the performance of the Group. The Board is aware
that the tone and culture set by the Board greatly
impacts all aspects of the Group 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 Group 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 Group 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
provides 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 these 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 page 31.
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 not
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 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 page 26, along
with an organisational chart. EMT meetings are
held fortnightly and are attended by other senior
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 30 Malvern International Plc Annual Report and Accounts 2022
Chairman’s Corporate Governance Statement continued
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.
Company’s Annual Report and Notices of Annual
General Meetings (“AGM”) are available to all
shareholders along with the Interim Report and
investor presentations.
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 is
performed annually.
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.
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
In order to gauge shareholder sentiment, the
Company meets with the key shareholders typically
every six months, normally at the time of the final
and interim results and when necessary.
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 events to
engage with retail shareholders. This 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.
Mark Elliott
Chairman
6 April 2023
CORPORATE SOCIAL RESPONSIBILITY
31
Employment policies
Environmental policy
While our operations 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. We
are rolling out a new environmental policy across our
schools to encourage reduced energy consumption,
reduced paper usage, and greater recycling.
As expected, international travel in 2022 increased
significantly and we were able to meet with clients
and conduct recruitment drives face to face once
again. With new staff, it is important that relationships
are developed and that we attend events. These
events are no longer being conducted online,
however we remain selective in our overseas trips.
The Company is not required to publish details of its
carbon emissions.
Ethics and values
A culture of teamwork, openness, integrity, and
professionalism forms a key element of the Group’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.
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.
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.
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.
Throughout 2022, we continued to monitor and
follow national and international health and safety
guidelines and provides regular updates to its staff
and student body. The impact from COVID-19
significantly reduced in H2 2022.
Social responsibilities
The Group 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 2022, we offered free ELT tuition to 33 refugees,
including 28 from Ukraine to improve their English
and take English language exams. We are looking
to increase the number of free places we can
offer by seeking part-funding for refugees from
local authorities. In addition we will begin offering
scholarships to under-represented groups in off peak
periods.
From 2023, each centre is selecting a charity to raise
money for throughout the year.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 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
to comply with the regulations. The processing
and maintenance of personal data is managed
in line with GDPR together 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.
32 Malvern International Plc Annual Report and Accounts 2022
Corporate Social Responsibility continued
Anti-Bribery Act
The Group’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 Group 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 Group 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 2022, 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 2022.
33
DIRECTORS’ REPORT
The Directors present their report and the audited
accounts for the year ended 31 December 2022.
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 page 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
• 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 page 8. The Company benefits
from operating in a market which has long-term
growth prospects. More information on our markets
can be found on page 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 page 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 page 2 to 22. The
principal risks and uncertainties facing the Company
are included on page 19. The Company’s social,
environmental, and ethical policies are set out in the
Chairman’s Corporate Governance Statement on
page 27. A summary of the outlook for the Group is
given within the Chairman’s Statement on page 3.
Group results
The Group loss before taxation for the year was
£1.08m (2021: loss £1.59m).
Dividends
The Directors do not recommend a final dividend
(2021: nil).
Capital structure
The Company completed a share reorganisation
in November 2022. Adjusting the nominal value of
the Company’s ordinary shares provides the market
with greater clarity of the Company’s share price.
The Company now has ordinary shares of 1p and
deferred shares of 5p, 1p and 0.1p 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 transferable.
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, successful negotiations were finalised
with BOOST&Co. Limited (the Group’s fund manager,
acting on behalf of the Company’s debtholder IL2
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 34 Malvern International Plc Annual Report and Accounts 2022
Directors’ Report continued
(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 again 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.
The significant revenue growth seen in H2 2022, in
combination with the visibility of University Pathways
revenue in H1 2023, and no COVID-19 restrictions
affecting students’ ability to travel, gives the Board
confidence about Malvern’s near- and longer-term
prospects. The Board expects to achieve growth in all
divisions in 2023.
Student numbers in our language schools have
returned to pre-pandemic levels and the pipeline
for 2023 is encouraging. In our University Pathways
division, student numbers are up 247% on the prior
academic year (21/22 v 22/23), which reflects
the significant investment in this division. Finally,
our summer camps successfully returned in 2022,
delivering c.£1.35m in revenue to the Group.
Pre-bookings for 2023 summer camps are very
encouraging and revenue growth is expected as an
outcome.
Profit and cash flow projections for the Group
indicate that the Group is moving towards profitable
growth in its key operating entities. A large part of
this assumed growth is driven by the more profitable
Lombard Odier Asset Management (Europe) Limited
IL2 (2018) – BOOST&Co.
Mr Richard Mace
Chris Woodgate
Edward Roskill
SPREADEX Limited
Alan Carroll
University Pathways division.
Despite significant revenue growth in H2 and FY23
forecast, current UK and worldwide macroeconomic
factors continue to create uncertainty in the profit
and cash flow projections for the Group, in particular
lecturers and staff wage inflation. 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 the going
concern position of the Group.
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 page 24, 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.
Directors’ interests in shares
The Directors’ beneficial interest in the ordinary
share capital of the Company are set out within the
Remuneration Report on page 37.
Substantial shareholders
As at 31 December 2022 the Company was aware
of the following major shareholders representing
3% or more of voting rights attached to the issued
ordinary share capital of the Company.
Number of
ordinary shares
1p
Percentage
held
2,292,850
1,996,187
1,844,802
1,520,380
1,201,754
787,400
745,126
9.38%
8.17%
7.55%
6.22%
4.92%
3.22%
3.05%
35
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 page 31.
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 (2021: 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 UK adopted international
accounting standards 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
• 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.
The maintenance and integrity of the Malvern
International Plc website is the responsibility of the
Directors; the work carried out by the auditor does
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 36 Malvern International Plc Annual Report and Accounts 2022
Directors’ Report continued
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 2022.
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.
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
6 April 2023
NOMINATION AND REMUNERATION
COMMITTEE REPORT
37
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
and Group CFO
• 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 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
• 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 page 28.
Matters considered in 2022
During the year, the Committee considered the
following matters:
• The issuance of share options to key staff as part
of the Group incentive plan
• Reviewed Executive Director remuneration
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. 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. At this
point in time the Group has undergone significant
reorganisation to ensure its short, medium, and
longer-term commercial viability. Remuneration has
been set at levels consistent with achieving this aim.
Accordingly, overall remuneration is below average
levels for those charged with ensuring the success of
the Group’s transition from a position of a continuum
of losses to one of sustainable and growing
profitability and will be subject to regular review as
the Group achieves its targets.
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. Details of all emoluments paid to
Directors of the Company are set out on page 38.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 38 Malvern International Plc Annual Report and Accounts 2022
Nomination and Remuneration Committee Report continued
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.
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
2 October 2019
Notice period Appointment term
1 month
1 month
3 years
3 years
The Directors are subject to re-election by rotation at intervals of no more than three years. Richard Mace is
required to submit himself for re-election by rotation at the next AGM.
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 the emoluments and remuneration of individual Directors who served in 2022 are as follows:
Salary and
fees
£
110,000
30,000
50,000
82,500
272,500
Richard Mace
Alan Carroll
Mark Elliott
Daniel Fisher
Total
Share option scheme
Benefits
£
Pension
£
Other
£
Share based
payments
£
Total
2022
—
—
—
—
—
—
—
—
—
—
—
—
Total
2021
£
98,943
30,000
50,000
6,250
1,080
111,080
—
—
610
1,690
30,000
50,000
83,110
274,190
185,193
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. All options are settled in equity,
automatically lapse five years after the date of grant and generally lapse if an option holder ceases to be a
Company employee.
The Company awarded 575,000 ordinary shares of 1p each in the capital of the Company, pursuant to
the Company’s EMI share option scheme (the “EMI Options”) to Richard Mace, Daniel Fisher, and certain
employees of the Company in December 2022. The EMI Options granted, when added to the previously
granted EMI Options of 2,002,500, represent 8.2% of the existing issued share capital of the Company.
39
As at 31 December options under these schemes, including those held by Directors, were outstanding over:
Outstanding at beginning of the year
Issued during the year
Forfeited during the year
2022
2021
Weighted
average
exercise
price
17.00p
10.00p
—
Options*
695,000
900,000
135,000
Weighted
average
exercise
price
15.00p
19.00p
—
Options
1,460,000
575,000
70,000
Outstanding at the end of the year
1,965,000
15.54p
1,460,000
17.00p
Non-Executive Directors’ annual fees
The below presents the annual fees to be paid to the current Non-Executive Directors in 2023:
Mark Elliott
Alan Carroll
Directors’ interest in shares
Fees £
50,000
30,000
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
Richard Mace
Alan Carroll
Mark Elliott
Daniel Fisher
Indirect interests
Marzena Mace
Louise Carroll
At beginning of the
year/At date of
appointment* At end of the year
1,474,620
1,775,802
180,633
315,820
50,000
480,600
582,277
68,750
At beginning of the
year/At date of
appointment* At end of the year
69,000
500
69,000
264,526
*
Adjusted by the share consolidation completed in 2022, increasing the nominal value of the Group’s ordinary shares, see note 21 for more
information.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
40 Malvern International Plc Annual Report and Accounts 2022
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 Auditors
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 and appraising the quality of audit
conducted by the Company’s External Auditor
and reviewing the independence of the External
Auditor
• 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 page 28.
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, provided by the
External Auditor each year. In 2022, 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 2022.
Significant issues relating to the financial
statements and Board reporting
The Audit Committee reviewed the following issues
for the year under review:
• Review of the information provided to monthly
Board meetings
• 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 2022
• Reviewed the Group’s Risk Register
• Reviewed the External Auditor’s Audit Plan in
relation to the year ended 31 December 2022
Going concern
The Committee reviewed forecasts and analysis
prepared by executive management in support
of the Going Concern Statement and agreed with
management’s approach and findings.
FINANCIAL
STATEMENTS
42 Malvern International Plc Annual Report and Accounts 2022
INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF MALVERN INTERNATIONAL PLC
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 2022 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
Statement of Cash Flows and the related notes to
the financial statements, including a summary of
significant accounting policies.
The financial reporting framework that has been
applied in the preparation of the group financial
statements 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 2022 and of
the group’s loss for the year then ended;
• the group financial statements have been
properly prepared in accordance with UK
adopted international accounting standards; and
• the financial statements 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 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.
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:
In order to assess the risks identified, the
engagement team performed an evaluation
of identified components and to determine the
planned audit responses based on a measure
of materiality, calculated by considering the
significance of components as a percentage of the
group’s total revenue and profit before taxation and
the group’s total assets.
From this, we determined the significance of each
component to the group as a whole and devised
our planned audit response. In order to address
the audit risks described in the key audit matters
section which were identified during our planning
process, we performed a full-scope audit of the
financial statements of the parent company, Malvern
International plc, and all of the group’s UK trading
subsidiaries, providing 100% coverage of revenues
and results before tax for these components. The
operations that were subject to full-scope audit
procedures made up 100% of consolidated revenues
and 100% of consolidated loss after tax. Malvern
House Group Limited is subject to review-scope audit
procedures which made up £Nil of the consolidated
revenue and £7,000 profit of consolidated loss
after tax. We applied analytical procedures to the
Balance Sheets and Income Statements of the entity
comprising the remaining operations of the group,
focusing on applicable risks identified as above, and
their significance to the group’s balances.
Key audit matters
Key audit matters are those matters that, in our
professional judgement, were of most significance in
our audit of the financial statements of the current
year 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.
43
Risk Description
Revenue recognition:
As detailed in note 3 to the financial statements,
Significant Accounting Policies, the Group’s revenue
is generated from the provision of education services
and comprises a number of related income streams.
Our response to the risk
We have assessed accounting policies for
appropriateness and consistency with the financial
reporting framework and in particular that revenue
was recognised when performance obligations were
fulfilled.
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 regards to revenue recognition for
the group.
Going concern
The Group has been heavily impacted by the global
pandemic and resulting restrictions, in particular the
travel restrictions which impacted student numbers
attending courses.
We have obtained an understanding of processes
through which the businesses initiate, record, process
and report revenue transactions.
We performed walkthroughs of the processes
as set out by management, to ensure controls
appropriate to the size and nature of operations are
designed and implemented correctly throughout the
transaction cycle.
A sample of course bookings throughout the year
have 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.
Our procedures did not identify any material
misstatements in the revenue recognised during
the year.
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
sensitized 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 the relevant disclosures included in the
Annual Report for consistency with our knowledge of
the business.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 44 Malvern International Plc Annual Report and Accounts 2022
Independent Auditor’s Report continued
Our application of materiality
We apply the concept of materiality in planning
and performing our audit, in determining the
nature, timing and extent of our audit procedures,
in evaluating the effect of any identified
misstatements, and in forming our audit opinion.
The materiality for the group financial statements
as a whole was set at £65,000. 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.
Performance materiality has been set at 80% of
group materiality. We agreed to report to the Audit
Committee any corrected or uncorrected identified
misstatements exceeding £3,300, in addition to other
identified misstatements that warranted reporting on
other qualitative grounds.
The materiality for the parent company financial
statements as a whole was set at £25,000
and performance materiality represents 80%
of materiality. 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.
Material uncertainty relating to going
concern
We draw attention to note 2 (iv) in the financial
statements which indicates that due to the
current and developing impact on the business of
the current UK and worldwide macroeconomic
environment, they create uncertainty in the profit
and cashflow projections of the group. 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 the 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.
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
included in 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 audit, or otherwise
appears to be materially misstated. If we identify
such material inconsistencies or apparent material
45
misstatements, we are required to determine
whether there is a material misstatement in the
financial statements or a material misstatement of
the other information. 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.
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, 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 35, 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 the 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
or the 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:
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 46 Malvern International Plc Annual Report and Accounts 2022
Independent Auditor’s Report continued
Our assessment focused on key laws and regulations
the company has 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, United
Kingdom Generally Accepted Accounting Practice
(UK GAAP) 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
of controls;
• 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.
Because of the inherent limitations of an audit,
there is a risk that we will not detect all irregularities,
including those leading to a material misstatement
in the financial statements or non-compliance
with regulation. This risk increases the more that
compliance with law or regulation is removed
from the events and transactions reflected in
the financial statements, as we will be less likely
to become aware of non-compliance. The risk
is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves
intentional concealment, forgery, collusion, omission
or misrepresentation. We are not responsible
for preventing non-compliance and cannot be
expected to detect non-compliance with all laws
and regulations.
A further description of our responsibilities for
the audit of the financial statements is located
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 auditor’s
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
Date: 6 April 2023
47
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
for the year ended 31 December 2022
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 from Discontinued Operation
Loss for the year being total comprehensive expense attributable to owners
of the parent
Total comprehensive expense for the year
Continuing operations
Discontinued operations
Attributable to:
Equity holders of the parent
Note
2022
£
2021
£
4
5
6
6, 26
11
8
7
9
6,511,602
6,511,602
2,417,524
2,417,524
(3,558,448)
(1,071,679)
2,953,154
1,345,845
84,744
223,989
(2,063,363)
(1,346,486)
(3,745)
(3,128)
(372,457)
(409,271)
(1,387,080)
(1,135,149)
(788,747)
(1,324,200)
(295,086)
(270,190)
(1,083,833)
(1,594,390)
—
—
(1,083,833)
(1,594,390)
—
448,741
(1,083,833)
(1,145,649)
2022
£
2021
£
(1,083,833)
(1,145,649)
(1,083,833)
(1,594,390)
—
448,741
(1,083,833)
(1,145,649)
Loss per share from continuing operations attributed to equity holders of the
Company (in pence)
Basic
Diluted
2022
(4.95)
(4.95)
2021
restated*
(8.49)
(8.49)
10
*
Total ordinary shares for 2021 have been restated to provide a meaningful comparison with 2022. A share consolidation was completed in
2022, increasing the nominal value of the Group’s ordinary shares.
The notes on pages 54 to 78 form an integral part of these financial statements.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
48 Malvern International Plc Annual Report and Accounts 2022
CONSOLIDATED AND COMPANY STATEMENT OF
FINANCIAL POSITION
as at 31 December 2022
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
Total Assets
11
13
12
11
14
15
16
Group
Company
Company
Group
2022
£
2021
£
2022
£
—
—
2021
£
—
—
30,662
50,427
1,419,350
1,419,350
—
2,215,076
3,665,088
405,051
1,135,990
—
1,181,631
2,722,672
6,387,760
—
1,419,350
1,419,350
2,553,726
4,023,503
705,271
289,607
—
377,170
1,372,048
5,395,551
—
—
1,419,350
1,419,350
—
41,771
—
13,101
54,872
—
112,788
501,409
45,701
659,898
1,474,222
2,079,248
49
EQUITY AND LIABILITIES
Non-Current Liabilities
Term loan
Warrants
Lease liabilities
Deferred tax liabilities
Total non-current liabilities
Current Liabilities
Trade payables
Contract liabilities
Other payables and accruals
Amounts due to subsidiary
Convertible Loan Notes
Lease liabilities
Term Loan
Total current liabilities
Total Liabilities
Equity attributable to equity holders of
the Company
Share capital
Share premium
Retained earnings
Convertible loan reserve
Total equity
Total Equity and Liabilities
Group
2022
£
Group
Company
Company
2021
£
2022
£
2021
£
Note
20
20
20
9
17
18
19
20
20
20
21
22
22
22
2,052,808
1,791,952
1,997,540
1,723,537
189,762
72,801
189,762
72,801
2,624,792
3,075,517
10,279
10,279
—
—
—
—
4,877,641
4,950,549
2,187,302
1,796,338
416,944
2,199,570
1,640,517
—
—
450,726
436,341
5,144,098
10,021,739
413,297
899,137
598,253
788
—
96,984
—
1,262,410
275,885
278,961
808,869
3,274,402
8,224,951
—
—
415,044
1,775,226
3,962,528
31,896
—
108,294
661,326
275,885
—
787,573
1,864,974
3,661,312
11,330,956
11,216,991
11,330,956
11,216,991
6,797,950
6,603,839
6,797,950
6,603,839
(21,762,885)
(20,679,052)
(20,617,212)
(19,431,716)
—
28,822
—
28,822
(3,633,979)
(2,829,400)
(2,488,306)
(1,582,064)
6,387,760
5,395,551
1,474,222
2,079,248
The loss for the year as per the financial statements of the parent company at 31 December 2022 was £1,185,496
(2021: Loss £1,103,278).
The notes on pages 54 to 78 form an integral part of these financial statements.
The financial statements were approved by the Board of Directors on 6 April 2023 and were signed on its behalf by:
Richard Mace
Director
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
50 Malvern International Plc Annual Report and Accounts 2022
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
for the year ended 31 December 2022
Share
Capital
£
Share
Premium
£
Retained
Earnings
£
Translation
Reserve
£
Capital
Reserve
£
Convertible
Loan
Reserve
£
Total
£
Balance at 1 January 2021
10,309,811
5,782,394 (19,703,963)
288,149
170,560
28,822 (3,124,227)
Direct costs relating to issue of
shares
Total comprehensive expense for
the year
Capital reserve transferred to
retained earnings on disposal of
Singapore
Translation reserve transferred to
retained earnings on disposal of
Singapore
—
—
—
—
(89,503)
—
— (1,145,649)
—
—
—
—
—
(89,503)
— (1,145,649)
—
170,560
—
(170,560)
New Share Issue
891,702
898,598
Share based payments
(incl. EMI options)
15,478
12,350
—
—
—
—
Balance at 31 December 2021
11,216,991
6,603,839 (20,679,052)
Direct costs relating to issue
of shares
Total comprehensive expense
for the year
—
—
(24,500)
—
— (1,083,833)
Convertible Loan Notes
85,211
14,789
Convertible Loan Note reserve
transferred to share premium
New Share Issue
Share based payments
(EMI options)
—
28,822
25,009
175,000
3,745
—
—
—
—
Balance at 31 December 2022
11,330,956
6,797,950 (21,762,885)
(288,149)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
The notes on pages 54 to 78 form an integral part of these financial statements.
—
—
—
—
—
(288,149)
1,790,300
27,828
28,822 (2,829,400)
—
(24,500)
— (1,083,833)
100,000
(28,822)
—
—
—
200,009
3,745
— (3,633,979)
COMPANY STATEMENT OF
CHANGES IN EQUITY
51
Share
Capital
£
Share
Premium
£
Retained
Earnings
£
Convertible
Loan Reserve
£
Total
£
Balance at 1 January 2021
10,309,811
5,782,394
(18,328,438)
28,822
(2,207,411)
Direct Costs relating to issue
of shares
Total Comprehensive expense
for the year
—
—
(89,503)
—
—
(1,103,278)
New Share Issue
891,702
898,598
New Share from share based
payments (incl. 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)
Direct costs relating to the issue
of shares
New Share Issue
New Share from share based
payment (incl. EMI options)
Convertible Loan Notes
CLN Reserve transferred to
Share Premium
Total Comprehensive expense
for the year
—
25,009
3,745
85,211
—
—
(24,500)
175,000
—
14,789
28,822
—
—
—
—
(1,185,496)
Balance at 31 December 2022
11,330,956
6,797,950
(20,617,212)
The notes on pages 54 to 78 form an integral part of these financial statements.
(24,500)
200,009
3,745
100,000
—
—
(28,822)
—
—
—
(1,185,496)
(2,488,306)
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
52 Malvern International Plc Annual Report and Accounts 2022
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2022
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:
(Increase)/decrease in receivables
Increase/(decrease) in payables
Decrease in amounts due to related parties
Net cash flows generated/(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
The notes on pages 54 to 78 form an integral part of these financial statements.
2022
£
2021
£
(1,083,833)
(1,594,390)
—
448,741
372,457
(40,019)
3,745
504
—
113,583
295,086
(41,117)
—
409,271
16,755
3,128
2,400
(503,040)
311,102
270,190
(59,526)
—
(379,594)
(695,369)
(659,746)
2,171,471
—
(110,781)
(348,043)
(40,000)
1,132,131
(1,194,193)
(14,545)
(14,545)
(11,280)
(11,280)
(473,359)
(161,475)
175,509
(15,275)
1,650,797
(10,288)
(313,125)
1,479,034
804,461
377,170
—
273,561
103,609
—
1,181,631
377,170
COMPANY STATEMENT OF CASH FLOWS
53
Cash Outflows from Operating Activities
Loss before income tax
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
The notes on pages 54 to 78 form an integral part of these financial statements.
2022
£
2021
£
(1,185,496)
(1,103,278)
3,745
(40,019)
90,701
(27,500)
3,128
16,755
102,349
(58,143)
(1,158,569)
(1,039,189)
71,018
(209,435)
—
1,088,877
(59,574)
(127,402)
(40,000)
(347,879)
(208,109)
(1,614,044)
175,509
175,509
1,650,797
1,650,797
—
(32,600)
45,701
13,101
—
36,753
8,948
45,701
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
54 Malvern International Plc Annual Report and Accounts 2022
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2022
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 principal activity of the Group is to provide an educational offering that is broad and geared principally towards
preparing students to meet the demands of business and management. There have been no significant changes in
the nature of these activities during the year.
2. 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 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 2022. 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
The Group has applied the following standards and amendments for the first time for their annual reporting period
commencing 1 January 2022:
– 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”;
– 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 2022 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.
In March 2022, successful negotiations were finalised with BOOST&Co. Limited (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
55
provides for a twelve month payment and interest holiday with monthly payments commencing from March 2023,
over a five-year period.
BOOST&Co. Limited, acting on behalf of IL2 (2018) Sarl, have again 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. To assist with the uneven nature of our cash flow we have also agreed with BOOST&Co.
Limited to vary the timing of these payments during 2023.
The significant revenue growth seen in H2 2022, in combination with the visibility of University Pathways revenue in H1
2023, and no COVID-19 restrictions affecting students’ ability to travel, gives the Board confidence about Malvern’s
short- and long-term prospects. The Board expects to achieve growth in all divisions in 2023.
Student numbers in our language schools have returned to pre-pandemic levels and the pipeline for 2023 is
encouraging. In our Pathways division, student numbers are up 247% on the prior academic year (21/22 v 22/23),
which reflects the significant investment in this division. Finally, our summer camps successfully returned in 2022,
delivering c.£1.4m in revenue to the Group. Pre-bookings for 2023 summer camps are very encouraging and revenue
growth is expected as an outcome.
Profit and cash flow projections for the Group indicate that the Group is moving towards profitable growth in its key
operating entities. A large part of this assumed growth is driven by the more profitable Pathways division of the Group.
Despite significant revenue growth in H2 and FY23 forecast, current UK and worldwide macroeconomic factors
continue to create uncertainty in the profit and cash flow projections for the Group, in particular lecturers and staff
wage inflation. 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 the
going concern status of the Group.
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 reassessed
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 year 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.
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
currency of the Group is UK Pound Sterling.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 56 Malvern International Plc Annual Report and Accounts 2022
Notes to the Financial Statements continued
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 were 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 2022
Dec 2021
—
—
1.824
1.849
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.
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 year 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.
57
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 years.
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 de-recognition 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 14.
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/
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/examination fees/course materials – revenue is spread over the duration of the course as
stated in the contract, as this fairly represents the value of services provided
• Student activities are recognised at the point in time that the activity takes place
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 58 Malvern International Plc Annual Report and Accounts 2022
Notes to the Financial Statements continued
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. 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.
xix. 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.
xxii. Employees’ benefits
Defined contribution plans
Contributions to defined contribution plans are recognised as an expense in the Statement of Comprehensive
Income as incurred.
59
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 a Black-Scholes and Monte Carlo pricing model. The resulting charge to the Statement of
Comprehensive Income requires assumptions to be made regarding future events and market conditions. Due to the
complexity of the Monte Carlo model, the Group utilises a third-party option valuation service to run the simulation.
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 26 for additional information on this scheme.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 60 Malvern International Plc Annual Report and Accounts 2022
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 and the Coronavirus Additional Relief Funding (“CARF”) income is
included within other 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 13.
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 27.
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.
61
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.
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 the
Black-Scholes model is an appropriate model to use. The specific estimates used in calculating fair value are detailed
in note 20.
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 Statement of Comprehensive Income 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
Operating and administrative expenses
Depreciation of right-of-use assets
Depreciation of disposed right-of-use assets
Total expensed to Statement of Comprehensive Income
2022
£
2021
£
194,399
162,935
338,650
—
533,049
370,036
—
532,971
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
62 Malvern International Plc Annual Report and Accounts 2022
Notes to the Financial Statements continued
ii) Right-of-use assets
Balance as at the beginning of the year
Adjustment to opening balance of depreciation
Depreciation of right-of-use assets
Changes from lease revaluations
Balance as at the end of the year
iii) Lease liabilities
Current liability
Non-current liability
Total liability
At 31 December
2022
£
At 31 December
2021
£
2,553,726
2,612,614
—
(338,650)
—
2,215,076
33,614
(370,036)
277,534
2,553,726
At 31 December
2022
£
At 31 December
2021
£
450,726
2,624,792
3,075,518
278,961
3,075,517
3,354,478
iv) Lease payments
The total lease rent amount payable (excl. VAT) in the year was £473,360 (2021: £536,365). The total amount paid in
the year (excl. VAT) was £473,359 (2021: £161,475).
4. (a) Sale of services
Course fees
Accommodation fees
Application fees, registration and examination fees
Course materials and student activities
2022
£
2021
£
5,338,335
2,189,651
965,254
143,148
64,865
162,106
50,264
15,503
6,511,602
2,417,524
(b) Segments
The Directors consider that the Group has a single business segment, being the sale of education services. The
operations of the Group are managed centrally with Group-wide functions covering sales and marketing, finance,
and administration. Geographically, operations are all UK based.
5. Other income
Rental income
R&D credits
Government subsidies*
2022
£
44,020
—
40,724
84,744
2021
£
23,595
48,758
151,636
223,989
*
Government subsidies includes the amount received from the furlough job retention scheme in 2021 and council grants in 2022.
6. Staff remuneration and benefits
Staff* salaries and related costs**
Directors’ remuneration (Executive Directors)
Directors’ fees (Non-Executive Directors)
Staff training and welfare
Pension
Share based remuneration – staff***
Share based remuneration – Directors***
Highest paid Director
Remuneration and benefits
Average number of employees
Lecturers
Marketing staff
Operational and administration staff
63
2022
£
1,760,920
192,500
80,000
5,518
26,115
2021
£
1,129,629
104,166
80,000
7,536
25,155
2,063,363
1,346,486
2,055
1,690
3,745
2,101
1,027
3,128
111,080
97,917
Number
Number
52
14
51
117
38
12
39
89
*
Staff here includes both employees and contract staff. While contract staff are not employees, they make up a significant portion of the
total workforce therefore the Directors consider it appropriate to include contractors within staff costs.
**
Salaries and related costs are not inclusive of lecturers.
*** Share based remuneration expenses related to EMI share options (ref note 26).
The average number of employees is calculated based on the number of full or part time employees on the payroll
each month.
7. Finance costs
Interest on leases (IFRS 16)
Interest on term loan
Interest on Convertible Loan Notes
Other finance costs
8. 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
Non-audit fees for taxation compliance fees
Administrative and marketing expenses
Expected credit losses – trade receivables
Fair value movements
2022
£
2021
£
194,399
162,935
68,368
24,555
7,764
80,845
21,503
4,907
295,086
270,190
2022
£
41,000
32,500
8,570
1,123,930
221,099
(40,019)
2021
£
30,500
31,425
9,200
736,167
311,102
16,755
1,387,080
1,135,149
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
2021
£
—
—
—
%
64 Malvern International Plc Annual Report and Accounts 2022
Notes to the Financial Statements continued
9. Income tax
Tax expense attributable to the results is made up of:
Current year tax
Deferred taxation charge
2022
£
—
—
The reconciliation of the current year tax expense and the product of accounting profit/(loss) 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
Adjustments of income tax in respect of prior years
2022
£
(1,083,833)
—
(1,083,833)
(205,298)
%
2021
£
(1,594,390)
448,741
(1,145,649)
19.0
(217,673)
19.0
Deferred tax asset not recognised
205,298
217,673
Current year adjustment to deferred tax asset
—
Income tax charge attributable to continuing
operations
Income tax charge in the Consolidated Statement
of Comprehensive Income
—
—
—
—
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
2022
£
10,279
—
10,279
—
10,279
10,279
2021
£
10,279
—
10,279
—
10,279
10,279
*
The deferred tax liability was recognised in 2019 in Communicate English School Limited.
The Group has tax losses in excess of £5.5m (2021: £4.4m) which are available to offset against future profits.
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.
65
10. 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 £1,083,833 (2021: loss of £1,145,649) and the weighted average number of ordinary shares in issue
during the year of 21,915,119 shares (2021 restated*: 18,788,985 shares). The loss per share (in pence) attributed to
shareholders is 4.95 (2021 restated*: loss per share of 8.49).
Calculations for dilutive EPS have not been made in respect of the Convertible Loan Notes (note 25) on the basis the
impact would be anti-dilutive.
*
Total ordinary shares for 2021 have been restated to provide a meaningful comparison with 2022. A share consolidation was completed in
2022, increasing the nominal value of the Group’s ordinary shares.
11. Property, plant and equipment
Cost
Opening balance, 01 Jan 2021
Additions
Remeasurement
Disposals
Closing balance, 31 Dec 2021
Adjustment to Opening Balance*
Additions
Disposals
Closing balance, 31 Dec 2022
Accumulated depreciation
Opening balance, 01 Jan 2021
Charge for the year
Remeasurement
Disposals
Closing balance, 31 Dec 2021
Adjustment to opening balance*
Charge for the year
Disposals
Closing balance, 31 Dec 2022
Net book value At 31 December 2022
At 31 December 2021
Classroom
and office
equipment
Equipment and property
Right-of-use
assets
£
£
Total
£
402,069
11,280
—
(4,800)
3,358,071
3,760,140
391,613
(114,079)
—
402,893
(114,079)
(4,800)
408,549
3,635,605
4,044,154
14,545
(1,373)
(90,950)
—
—
(90,950)
14,545
(1,373)
421,721
3,544,655
3,966,376
321,288
745,457
1,066,745
39,235
—
(2,401)
370,036
(33,614)
—
409,271
(33,614)
(2,401)
358,122
1,081,879
1,440,001
—
33,807
(870)
391,059
30,662
50,427
(90,950)
338,650
—
1,329,579
2,215,076
2,553,726
(90,950)
372,457
(870)
1,720,638
2,245,738
2,604,153
*
The Directors have reviewed the right-of-use asset and adjusted the opening balance to match the Group’s accounting records.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
66 Malvern International Plc Annual Report and Accounts 2022
Notes to the Financial Statements continued
12. 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
2022
£
2021
£
7,681,847
12,391,048
—
(4,709,201)
7,681,847
7,681,847
6,262,497
10,971,698
—
(4,709,201)
6,262,497
1,419,350
6,262,497
1,419,350
The principal activity of Malvern House International Limited and Communicate English Schools Limited is to provide
an educational offering that is broad and geared principally towards preparing students to meet the demands of
business and management. The principal activity of Malvern House Group Limited is that of a holding company.
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. For the purpose of Malvern
House Group Limited, the Group has decided to take advantage of parental corporate guarantees under s479A of
the Companies Act, allowing entities to take audit exemptions and present unaudited statutory financial statements.
In liquidation
SAA Global Education Centre Pte Ltd (Singapore).
Malvern International Academy Pte Ltd (Singapore).
Malvern Language Academy Pte Ltd (Singapore).
13. Goodwill
Cost
Balance as at the beginning of the year
Balance as at the end of the year
2022
£
2021
£
1,419,350
1,419,350
1,419,350
1,419,350
Goodwill arose on the acquisition of Communicate English School Limited 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 English Schools Limited over
five years
• Terminal value applied to cash flow 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 £38k in
headroom
67
2022
£
2021
£
405,051
705,271
2022
£
2021
£
405,051
705,271
2022
£
5,450
210,173
105,872
83,556
405,051
223,347
(223,347)
405,051
2022
£
336,930
(113,583)
223,347
2021
£
36,742
402,585
179,128
86,816
705,271
336,930
(336,930)
705,271
2021
£
158,571
178,359
336,930
14. Trade receivables
Trade Receivables
Trade receivables are denominated in the following currencies:
UK – Pound Sterling
At 31 December 2022, the exposure to credit risk for trade receivables was as follows:
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
A reconciliation of changes in the record of impairments of receivables is provided below.
Balance at the beginning of the year
Movement in the year
Balance as at the end of the year
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.
15. Other receivables and prepayments
Rent deposits
Prepayments and accrued income
Other debtors
Group
Company
2022
£
36,500
1,067,222
32,268
1,135,990
2021
£
36,500
253,107
—
289,607
2022
£
—
14,232
27,539
41,771
2021
£
—
112,788
—
112,788
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
68 Malvern International Plc Annual Report and Accounts 2022
Notes to the Financial Statements continued
16. Cash and cash equivalents
Group
2022
£
2021
£
Cash and cash equivalents
1,181,631
377,170
17. Trade payables
Trade payables
416,944
413,297
Group
2022
£
2021
£
Company
2022
£
13,101
Company
2022
£
788
2021
£
45,701
2021
£
31,896
18. 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 £899,137 recognised in contract liabilities at the beginning of the year has been recognised as
revenue for the year ended 31 December 2022.
Contract liabilities
Opening balance
Deferred income recognised during the year
Course fees invoiced in respect of subsequent financial year
Closing balance
19. Other payables and accruals
2022
£
2021
£
2,199,570
899,137
2022
£
899,137
(899,137)
2,199,570
2,199,570
Other payables
Payroll Tax and Other Statutory Liabilities
Accrued expenses
Group
2022
£
104,574
313,052
1,222,891
1,640,517
2021
£
25,207
199,524
373,522
598,253
Company
2022
£
17,608
50,310
29,066
96,984
2021
£
—
—
108,294
108,294
69
20. Financial liabilities
Non-current liabilities
Term Loan
Warrants
Lease liabilities
Current liabilities
Convertible Loan Notes
Term Loan
Lease liabilities
Trade and other payables
Total
Group
2022
£
2,052,808
189,762
2,624,792
4,867,362
—
436,341
450,726
2,057,461
2,944,528
7,811,890
2021
£
1,791,952
72,801
3,075,517
4,940,270
275,885
808,869
278,961
1,011,550
2,375,265
7,315,535
Company
2022
£
1,997,540
189,762
—
2021
£
1,723,537
72,801
—
2,187,302
1,796,338
—
415,044
—
97,772
512,816
2,700,120
275,885
675,251
—
140,191
1,091,327
2,887,665
Convertible Loan Notes
The Convertible Loan Note was redeemed in 2022 (see note 25).
Term Loan
In August 2019, Malvern received a Term Loan from BOOST&Co. Limited 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 March 2022, the new terms include 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
2022 is £76,566 (2021: £89,872).
Warrants
As part of the term loan, Boost & Co. was issued warrants over 1,725,113* 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 £189,762. The following estimates
were used to calculate this fair value:
•
Annualised volatility of 109% and 144% 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
* Restated for the share consolidation.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS
70 Malvern International Plc Annual Report and Accounts 2022
Notes to the Financial Statements continued
21. Share capital
At 31 December 2021 –
0.1p ordinary shares and 0.1p,
1p & 5p deferred shares
Additions during the year –
18 February 2022 0.1p
ordinary shares
Additions during the year –
20 August 2022 0.1p
ordinary shares
Additions during the year –
3 November 2022 0.1p
ordinary shares
At 3 November 2022 –
pre-share consolidation
Share consolidation**
Share consolidation – ordinary
shares 0.1p to 1p – 3 November
Additions during the year –
3 November 2022 1p
deferred shares
At 3 November 2022 –
post-share consolidation
Additions during the year –
14 November 2022 1p
ordinary shares
At 31 December 2022
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
2,109,018,964
2,109,019
2,828,138,750
9,104,659
11,213,678
35,211,724
35,212
50,000,000
50,000
9,312
9
—
—
—
—
—
—
35,212
50,000
9
2,194,240,000
2,194,240
2,828,138,750
9,104,659
11,298,899
21,942,400*
219,424
2,828,138,750
9,104,659
9,324,083
—
—
197,481,600*
1,974,816
1,974,816
21,942,400
219,424
3,025,620,350
11,079,475
11,298,899
2,500,000
25,000
—
—
25,000
24,442,400
244,424
3,025,620,350
11,079,475
11,323,899*
*
Excludes the accumulated share based payment balance taken to equity, £7,057 (2021: £3,313).
** All ordinary shares were then consolidated on the basis of one consolidated ordinary share for each 20,000 ordinary shares. Each
consolidated ordinary share was then sub-divided into 200 new ordinary shares and 1,800 new deferred shares.
On 18 February 2022, Convertible Loan Notes of £50,000 were converted to shares at 0.142p, adding a further
35,211,724 0.1p ordinary shares.
On 20 August 2022, further Convertible Loan Notes of £50,000 were converted to shares at 0.1p, adding a further
50,000,000 0.1p ordinary shares.
On 3 November 2022, 9,312 0.1p ordinary shares were issued as part of the preparation for the ordinary shares split.
This was done to ensure that as part of the share reorganisation, an exact whole number of consolidated ordinary
shares could be issued.
On 14 November 2022, the Group undertook a placing of 2,500,00 1p ordinary shares at 8p to raise £200,000 to
redeem the balance of the Convertible Loan Note.
The Company has an Enterprise Management Incentive share option scheme for certain Directors and employees.
The cost related to it £3,745 (2021: £3,128) has been added to share capital in financial statement, further details on
note 26.
71
22. 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
Convertible Loan Notes
Convertible Loan Note Reserve transferred to Share Premium
2022
£
2021
£
6,603,839
5,782,394
175,000
(24,500)
14,789
28,822
910,948
(89,503)
—
—
Balance as at the end of the year
6,797,950
6,603,839
The share premium reserve arises where shares have been issued at a price more than the nominal value of
1p (formerly 5p/1p/0.1p until restructuring of the share capital in June 2018, June 2020 and November 2022
respectively) less any costs of the issue.
(ii) Retained earnings
Group
2022
£
2021
£
Company
2022
£
2021
£
At the beginning of the year
(20,679,052)
(19,703,963)
(19,431,716)
(18,328,438)
Loss for the year
Transfer from capital reserve
At the end of the year
(1,083,833)
(1,145,649)
(1,185,496)
(1,103,278)
—
170,560
—
—
(21,762,885)
(20,679,052)
(20,617,212)
(19,431,716)
Retained earnings represent the accumulated surplus or deficit of distributable reserves.
(iii) Translation reserve
At the beginning of the year
Translation difference on discontinued operations
At the end of the year
Group
2022
£
—
—
—
2021
£
288,149
(288,149)
—
Company
2022
£
—
—
—
2021
£
—
—
—
The translation reserve arises from translation differences arising from converting subsidiary operations’ Statement of
Comprehensive Incomes and statements 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
2022
£
28,822
(28,822)
—
2021
£
28,822
—
28,822
2022
£
28,822
(28,822)
—
2021
£
28,822
—
28,822
The convertible loan reserve arose on the issue of Convertible Loan Notes in November 2017 (note 25).
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 72 Malvern International Plc Annual Report and Accounts 2022
Notes to the Financial Statements continued
(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 in the prior year.
23. Related party transactions
Details of key management personnel and Directors’ fees and emoluments were as follows:
Key management personnel
Directors’ remuneration:
– Salaries and bonuses
– Directors’ fees
– Share based payments
24. Financial instruments
2022
£
2021
£
192,500
80,000
1,690
274,190
104,166
80,000
1,027
185,193
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 market conditions and the Group’s activities.
The Group holds the following financial instruments:
2022
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
Financial liabilities at FVPL
Warrants
Total financial liabilities
Net position
Notes
Pound Sterling
16
14
15
17,19
20
20
20
1,181,631
405,051
1,135,990
2,722,672
2,057,461
2,489,149
3,075,518
189,762
7,811,890
(5,089,218)
73
Notes
Pound Sterling
16
14
15
17,19
20
20
20
20
377,170
705,271
36,500
1,118,941
1,011,550
2,600,821
3,354,478
275,885
72,801
7,315,535
(6,196,594)
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 Note
Financial liabilities at FVPL
Warrants
Total financial liabilities
Net position
(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. 82% (2021: 49%) of the Group’s
account receivables are made up of individual students, 18% (2021: 51%) relates to large funding organisations such
as universities. All trading activities are concentrated in Europe. The analysis of aging debtors is provided in note 14.
(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.
2022
Trade payables
Other payables and Accruals
Term Loan
Lease Liabilities
Warrants
Total
On demand or
within one year
£
Within 2 to
10 years
£
416,944
1,640,517
436,341
450,726
—
—
—
2,052,808
2,624,792
189,762
2,944,528
4,867,362
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 74 Malvern International Plc Annual Report and Accounts 2022
Notes to the Financial Statements continued
2021
Trade payables
Other payables and Accruals
Term Loan
Lease Liabilities
Convertible Loan Notes
Warrants
Total
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
(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 2022
Singapore Dollar
At 31 December 2021
Singapore Dollar
10% weakening of GBP
10% strengthening of GBP
Impact on
Equity
£
Impact on
income/
reserves
£
Impact on
Equity
£
—
—
—
19,688
—
—
Impact on
income/
reserves
£
—
(19,688)
(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
2022, 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.
At 31 December 2022
Assets
Trade and other receivables
Cash and bank balances
Total assets
At 31 December 2022
Liabilities
Trade and other payables
Borrowings
Lease liabilities
Warrants
Total liabilities
Fixed rate
interest bearing
£
Non-interest
bearing
£
Total
£
—
—
—
1,541,041
1,181,631
2,722,672
—
2,057,461
2,489,149
3,075,518
—
—
—
189,762
1,541,041
1,181,631
2,722,672
2,057,461
2,489,149
3,075,518
189,762
5,564,667
2,247,233
7,811,900
75
At 31 December 2021
Assets
Trade and other receivables
Cash and bank balances
Total assets
At 31 December 2021
Trade and other payables
Borrowings
Lease liabilities
Warrants
Convertible Loan Notes
Total liabilities
Fixed rate
interest bearing
£
Non-interest
bearing
£
Total
£
—
—
—
—
2,600,821
3,354,478
—
275,885
6,231,184
994,878
377,170
994,878
377,170
1,372,048
1,372,048
1,011,550
—
—
72,801
—
1,011,550
2,600,821
3,354,478
72,801
275,885
1,084,351
7,315,535
(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
2022
Modification
of lease
Net
financing
cash flows
Interest
paid
Fair
value
movement Reclassified
Unwinding
of interest
31 December
2022
Term loan
Warrants
Convertible Loan Notes*
2,600,821
72,801
275,885
IFRS 16 “Lease Liability”
3,354,478
—
—
—
—
(15,274)
—
(178,102)
(473,359)
—
—
—
—
(156,981)
—
60,583
2,489,149
(35,451)
152,412
—
189,762
—
—
(100,000)
2,217
—
—
194,399
3,075,518
*
The convertible loan was redeemed using funds generated from a placing.
Term loan
Warrants
Convertible Loan Notes
2,532,115
63,701
322,817
—
—
—
CASH
NON-CASH
1 January
2021
Modification
of lease
Net
financing
cash flows
Interest
paid
Fair
value
movement Reclassified
(10,288)
(1,248)
—
Unwinding
of interest
31 December
2021
80,242
2,600,821
—
—
—
—
—
9,100
—
(14,264)
(50,000)
17,332
72,801
275,885
—
—
IFRS 16 “Lease Liability”
2,842,315
862,993
(161,475)
—
(352,290)
162,935
3,354,478
(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.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 76 Malvern International Plc Annual Report and Accounts 2022
Notes to the Financial Statements continued
The Group monitors its debt-to-equity ratio which was calculated as follows.
Loans
Lease Liabilities
Convertible Loan Notes
Total debt
Group
2022
£
2,489,149
3,075,518
—
5,564,667
2021
£
2,600,821
3,354,478
275,885
6,231,184
Company
2022
£
2021
£
2,412,584
2,511,109
—
—
2,412,584
—
275,885
2,786,994
Less: Cash and cash equivalents
(1,181,631)
(377,170)
(13,101)
(45,701)
Net debt
Total equity
Debt to equity
4,383,036
5,854,014
2,399,483
2,741,293
(3,633,979)
(2,829,400)
(2,488,306)
(1,582,064)
1.21
2.06
0.96
1.73
Financial assets are disclosed in notes 14 to 16. 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.
25. Convertible Loan Notes
In November 2022, the balance of the Convertible Loan Note was redeemed following a placing.
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
Unwinding Interest
Share Conversion
Discount on payout and redemption
Balance at 31/12/2022
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
£2,217
(£100,000)
(£178,102)
—
77
26. 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 used the Black-Scholes valuation framework for all share options awarded pre-2022. These options have
also been valued using the Monte Carlo valuation method to validate the reasonableness of the results. The results
from the Monte Carlo valuation were not considered materially different from the Black-Scholes valuation.
The inputs into the Black-Scholes model as at 31 December 2022 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
336,250
336,250
50,000
50,000
60,000
60,000
283,750
283,750
50
90
50
90
50
90
60
110
15
15
15
15
15
15
22
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%
*
Total EMI options have been restated due to the share consolidation that was completed in 2022. The share consolidation increased the
nominal value of the Group’s ordinary shares.
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 log-normal distribution modelling over a three-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.
The Group has used the Monte Carlo valuation framework for all share options awarded in 2022.
The inputs into the Monte Carlo model as at 31 December 2022 are as follows:
Grant date
30/11/2022
30/11/2022
Strike
price on
grant date
(pence)
10
10
Hurdles
(pence)
60
110
EMI options
287,500
287,500
Expiry
(years)
5
5
Volatility
50%
50%
Option
price
(pence)
2.93
1.34
Share price
(pence)
12
12
For options with hurdles, early exercise is assumed to take place as soon as the 40-day hurdle requirement is triggered
after the three-year vesting period. The Monte Carlo simulation uses 50,000 iterations to enhance the accuracy of the
predicted outcome.
STRATEGIC REPORTOVERVIEWCORPORATE GOVERNANCEFINANCIAL STATEMENTS 78 Malvern International Plc Annual Report and Accounts 2022
Notes to the Financial Statements continued
Year ended 31 December 2022
Outstanding at 1 January 2022*
Granted during the year
Forfeited during the year
Outstanding at 31 December 2022
Exercisable
Number of
options
1,460,000
575,000
70,000
1,965,000
—
Weighted
average
strike price
17.00p
10p
—
15.54p
—
*
Total EMI options and weighted price have been restated due to the share consolidation that was completed in 2022. The share
consolidation increased the nominal value of the Group’s ordinary shares.
Of the options outstanding at 31 December 2022, 892,500 (2021: 892,500) options have an exercise price of 15p,
567,500 (2021: 567,500) options have an exercise price of 22p, and 575,000 (2021: nil) options have an exercise price
of 10p.
The aggregate charge for share options recognised in the Group financial statements in the year was £3,745 (2021: £3,128).
27. Intangible assets
Brands
£
Customer
List
£
Domain
Name
£
Development
Assets
£
Contract
Assets
£
Total
£
Acquisition costs
Balance at 1 Jan 2021 and 31 Dec 2021
Balance at 1 Jan 2022 and 31 Dec 2022
Accumulated amortisation
Balance at 1 Jan 2021 and 31 Dec 2021
Balance at 1 Jan 2022 and 31 Dec 2022
2,489,886
2,489,886
2,489,886
2,489,886
Net book value, 31 Dec 2022 and 31 Dec 2021
—
274,637
274,637
274,637
274,637
—
12,242
12,242
12,242
12,242
—
434,545
434,545
434,545
434,545
—
508,000
3,719,310
508,000
3,719,310
508,000
3,719,310
508,000
3,719,310
—
—
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 2022.
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
30 May 2023
Advisers and registrars
Nominated adviser 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
Our Markets
Our Strategy
Operating Review
Key Performance Indicators
Financial Review
Risk Management
Stakeholder Engagement: Directors’
Section 172(1) Statement
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
14
16
18
19
21
24
27
31
33
37
40
Visit our website for further information
https://www.malverninternational.com
42
Financial Statements
Independent Auditor’s Report to the
Members of Malvern International Plc
Consolidated Statement of
Comprehensive Income
Consolidated and Company Statement
of Financial Position
Consolidated Statement of
50
Changes in Equity
Company Statement of Changes in Equity 51
Consolidated Statement of Cash Flows
52
53
Company Statement of Cash Flows
Notes to the Financial Statements
54
47
48
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MALVERN
INTERNATIONAL PLC
Annual Report
2022