Nord Anglia Education Reports Second Quarter FY2014 Financial Results
HONG KONG, April 23, 2014 /PRNewswire/ -- Nord Anglia Education, Inc. (NYSE: NORD), the world's leading premium schools organization, today announced financial results for the second quarter of fiscal 2014 for the three months ended February 28, 2014.
Second Quarter FY2014 Highlights (compared to Second Quarter FY2013):
- Revenue increased 52.8% from $89.5 million to $136.8 million
- Revenue from premium schools increased 60.0% from $83.0 million to $132.8 million (of this increase $10.6 million came from our acquisitions in Guangzhou and Bangkok)
- Adjusted EBITDA increased 63.4% from $26.2 million to $42.8 million
- Adjusted Net Income increased 99.0% from $6.4 million to $12.7 million
Year to Date February 28, 2014 Highlights (compared to Year to Date February 28, 2013):
- Revenue increased 52.3% from $178.6 million to $271.9 million
- Revenue from premium schools increased 60.0% from $164.5 million to $263.3 million (of this increase $19.4 million came from our acquisitions in Guangzhou and Bangkok)
- Adjusted EBITDA increased 55.7% from $52.4 million to $81.6 million
- Adjusted Net Income increased 54.3% from $15.3 million to $23.7 million
"Following the successful completion of our initial public offering and refinancing transaction on March 31, 2014, Nord Anglia Education is pleased to report strong operating and financial results for the second quarter of fiscal 2014," said Andrew Fitzmaurice, Nord Anglia Education CEO. "Our performance is a reflection of our commitment to educational quality and to delivering the best outcomes for every student at a Nord Anglia Education school. We anticipate improvement in student grades across all age groups this academic year and an increase in the percentage of our students graduating to the world's top 30 universities. We are pleased with the Company's progress since our IPO which has seen further growth in enrollments from 17,161 full time equivalent students (FTEs) as of March 9, 2014 to 18,166 FTEs today. This increase was achieved through the acquisition of Dover Court School in Singapore on April 22, 2014, as well as growth at our existing schools. We have also seen excellent progress at our new greenfield schools in Hong Kong and Dubai which are scheduled to open in September 2014. We believe that our entry into the three gateway markets of Hong Kong, Dubai and Singapore strengthens our position as the world's leading premium schools organization and will provide significant momentum to our continued growth," Fitzmaurice continued.
Second Quarter FY2014 Results
Revenue increased by $47.3 million to $136.8 million in the second quarter of fiscal 2014 from the second quarter of fiscal 2013. This increase was due to the impact of the schools we acquired in North America, Qatar and Spain as part of the acquisition of WCL Group, the acquisition of our schools in Bangkok and Guangzhou as well as tuition fee increases and increased FTEs within existing schools.
Our gross profit margin increased to 54.2% in the second quarter of fiscal 2014 from 53.3% in the second quarter of fiscal 2013, largely due to the impact of tuition fee increases in excess of cost inflation and increased FTEs within existing schools.
Adjusted EBITDA increased by $16.6 million to $42.8 million in the second quarter of fiscal 2014 from the second quarter of fiscal 2013, primarily as a result of a $26.4 million increase in gross profit, partially offset by an increase in selling, general and administrative expenses. Adjusted net income increased by $6.3 million to $12.7 million in the second quarter of fiscal 2014 from the second quarter of fiscal 2013.
The average FTEs in the three months ended February 28, 2014 was 17,069, a 74.8% increase over the average FTEs in the three months ended February 28, 2013 of 9,764. Average capacity and utilization was 21,737 seats and 79% in the three months ended February 28, 2014 compared to 12,503 seats and 78% in the three months ended February 28, 2013.
Balance Sheet and Cash Flow
During the six months ended February 28, 2014, we used approximately $68.0 million of cash flow from operations compared to $51.0 million for the same period in fiscal 2013 and invested $14.9 million on the refurbishment of the new school in Hong Kong and maintenance capital expenditure at our other schools. Net cash provided by financing activities was $10.8 million in the six months ended February 28, 2014. During the six months ended February 28, 2014, our cash and cash equivalents increased by $34.7 million to $102.9 million when compared to the six months ended February 28, 2013.
On March 31, 2013, we used the proceeds from our initial public offering and the issuance of a new $515 million senior secured term loan to discharge all obligations under the indentures governing the $490 million senior secured notes and $150 million PIK toggle notes, both of which were fully repaid as of April 14, 2014. The refinancing will contribute to significant on-going interest savings of approximately $41.0 million per year.
FY2014 Business Outlook
We are providing certain targets regarding our FY2014 expectations, which reflect our results through February 28, 2014:
- Overall revenue in fiscal 2014 in the range of $468-$472 million
- Adjusted EBITDA in fiscal 2014 in the range of $125-$127 million
In addition, for the full fiscal year 2014, we estimate that our pro forma diluted weighted average shares would be approximately 97.8 million shares.
Conference Call Details
Nord Anglia Education will host an investor conference call today at 8:00 am ET. Interested parties are invited to listen to the conference call by dialling in using the following numbers:
United States/Canada Toll Free: 877 407 0784
International: +1 201 689 8560
An audio replay of the conference call will be available through May 7, 2014 by dialling the following:
United States/Canada Toll Free: 877 870 5176
International: +1 858 384 5517
Replay Conference ID: 13580148
A live webcast of the conference call will be available via the investor relations section of www.nordanglia.com and will be archived on the website for a limited time immediately following the call. A copy of this press release is also available on the web site.
Forward-Looking Statements
This press release includes statements that express our current opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, "forward looking statements". These forward looking statements can generally be identified by the use of forward-looking terminology, including the terms "believe," "expect," "may," "will," "should," "seek," "project," "approximately," "intend," "plan," "estimate" or "anticipate," or, in each case, their negatives or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this press release and include statements regarding our intentions, beliefs or current expectations concerning among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate.
By their nature, forward-looking statements relate to events that involve risks and uncertainties or that depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, those under "Risk Factors" in our most recent registration statement on Form F-1 filed with the SEC. These statements include, among other things, statements relating to: our future market opportunities; our goals and strategies; our competitive strengths; our future results of operations and financial condition; our future business developments; and our acquisition and expansion strategy.
Although we base these forward-looking statements on assumptions that we believe are reasonable when made, we caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this press release. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this report, those results or developments may not be indicative of results or developments in subsequent periods. Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. Any forward-looking statement that we make in this press release speaks only as of the date of such statement, and we undertake no obligation to update any forward-looking statements or to publicly announce the results of any revisions to any of those statements to reflect future events or developments.
Non-GAAP Supplemental Financial Measures
We use EBITDA, Adjusted EBITDA and Adjusted Net Income as supplemental financial measures of our operating performance. We define EBITDA as profit for the period plus income tax expense, net financing (expense)/income, exceptional items, impairment of goodwill, amortization and depreciation, and we define Adjusted EBITDA as EBITDA plus any loss/(gain) on disposal of PP&E, management fees paid to our Sponsor, foreign exchange (gains)/losses, the EBITDA losses attributable to our loss-making start-up schools and share based payments. Adjusted EBITDA excludes EBITDA losses attributable to loss-making start-up schools that have been open less than three years. We consider this a more directly comparable supplemental financial measure for evaluating the performance of our business. We define Adjusted Net Income as Adjusted EBITDA less depreciation, net financing expense, income tax expense and tax adjustments for the impact of the exclusion of exceptional items and amortization in calculating Adjusted Net Income. Please refer to "Nord Anglia Education, Inc. Supplemental Financial Information" below for further detail.
EBITDA, Adjusted EBITDA and Adjusted Net Income are not standard measures under IFRS. EBITDA, Adjusted EBITDA and Adjusted Net Income should not be considered in isolation or construed as alternatives to cash flows, net income or any other measure of financial performance or as indicators of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities. EBITDA, Adjusted EBITDA and Adjusted Net Income presented herein may not be comparable to similarly titled measures presented by other companies.
About Nord Anglia Education, Inc.
Nord Anglia Education is the world's leading international operator of premium schools, serving students from kindergarten through the end of secondary school (K-12). We have over 18,000 FTEs at our 28 premium schools in China, Europe, the Middle East and Southeast Asia and North America. We primarily operate in geographic markets with high foreign direct investment, large expatriate populations and rising disposable income. We believe that these factors contribute to high demand for premium schools and strong growth in our business. Nord Anglia Education is headquartered in Hong Kong SAR, China. Our website is www.nordanglia.com.
For further information, please contact:
Investors:
Vanessa Cardonnel
Corporate Finance and Investor Relations Director - Nord Anglia Education
Tel: +852 3977 0791
Email: [email protected]
Kevin Doherty
Director, Investor Relations - Solebury Communications Group LLC
Tel: +1 203 428 3233
Email: [email protected]
Media:
Sarah Doyle
Communications Manager – Nord Anglia Education
Tel: +852 3977 0798
Email: [email protected]
| NORD ANGLIA EDUCATION, INC. |
||||||||
| Three Months Ended |
Six Months Ended |
|||||||
| 2014 |
2013 |
2014 |
2013 |
|||||
| Revenue |
136.8 |
89.5 |
271.9 |
178.6 |
||||
| Cost of sales |
(62.7) |
(41.8) |
(124.6) |
(82.5) |
||||
| Gross Profit |
74.1 |
47.7 |
147.3 |
96.1 |
||||
| SG&A |
(26.6) |
(24.0) |
(64.9) |
(46.1) |
||||
| Depreciation |
(5.5) |
(2.4) |
(10.7) |
(5.0) |
||||
| Amortisation |
(2.5) |
(1.0) |
(4.9) |
(1.9) |
||||
| Exceptional expenses |
(0.8) |
(1.7) |
(2.5) |
(2.7) |
||||
| Total expenses |
(35.4) |
(29.1) |
(83.0) |
(55.7) |
||||
| Operating profit |
38.7 |
18.6 |
64.3 |
40.4 |
||||
| Finance income |
0.5 |
0.6 |
1.1 |
1.2 |
||||
| Finance expense |
(17.5) |
(11.0) |
(34.1) |
(20.6) |
||||
| Net finance expense |
(17.0) |
(10.4) |
(33.0) |
(19.4) |
||||
| Profit before income tax |
21.7 |
8.2 |
31.3 |
21.0 |
||||
| Income tax expense |
(7.1) |
(6.8) |
(13.2) |
(12.3) |
||||
| Profit |
14.6 |
1.4 |
18.1 |
8.7 |
||||
| Earnings per ordinary share(1) |
||||||||
| Basic |
0.10 |
0.01 |
0.13 |
0.06 |
||||
| Diluted |
0.10 |
0.01 |
0.13 |
0.06 |
||||
| (1) Earnings per ordinary share is calculated based on the weighted average ordinary shares outstanding for the period, without adjustment for subsequent events, such as the issuance of 21,850,000 ordinary shares in connection with our initial public offering and the related conversion of all preference shares and all classes of ordinary shares into 75,897,778 ordinary shares of par value $0.01 per share immediately prior to the closing of the initial public offering. |
||||||||
| NORD ANGLIA EDUCATION, INC. |
||||
| February 28, |
August 31, |
|||
| Non-current assets |
||||
| Property, plant and equipment |
99.1 |
90.5 |
||
| Intangible assets |
756.5 |
753.7 |
||
| Investments in jointly controlled entities |
0.5 |
0.5 |
||
| Trade and other receivables |
14.1 |
12.4 |
||
| Deferred tax assets |
12.5 |
13.6 |
||
| 882.7 |
870.7 |
|||
| Current assets |
||||
| Tax receivable |
- |
1.0 |
||
| Trade and other receivables |
61.4 |
83.2 |
||
| Cash and cash equivalents |
102.9 |
171.1 |
||
| 164.3 |
255.3 |
|||
| Total assets |
1,047.0 |
1,126.0 |
||
| Current liabilities |
||||
| Other interest-bearing loans and borrowings |
(38.0) |
(30.6) |
||
| Trade and other payables |
(238.5) |
(360.5) |
||
| Provisions for other liabilities and charges |
(3.5) |
(3.4) |
||
| Current tax liabilities |
(5.1) |
(4.2) |
||
| (285.1) |
(398.7) |
|||
| Non-current liabilities |
||||
| Other interest-bearing loans and borrowings |
(627.0) |
(630.4) |
||
| Other payables |
(34.8) |
(20.1) |
||
| Retirement benefit obligations |
(21.4) |
(22.2) |
||
| Provisions for other liabilities and charges |
(4.5) |
(1.7) |
||
| Deferred tax liabilities |
(33.0) |
(32.9) |
||
| (720.7) |
(707.3) |
|||
| Total liabilities |
(1,005.8) |
(1,106.0) |
||
| Net assets |
41.2 |
20.0 |
||
| Equity attributable to equity holders of the parent |
||||
| Share capital |
67.5 |
67.5 |
||
| Share premium |
260.3 |
256.5 |
||
| Other reserves |
7.4 |
6.9 |
||
| Currency translation reserve |
6.6 |
9.8 |
||
| Shareholders' deficit |
(300.6) |
(320.7) |
||
| Total shareholders' funds |
41.2 |
20.0 |
||
| NORD ANGLIA EDUCATION, INC. |
|||
| Six Months Ended |
|||
| 2014 |
2013 |
||
| Cash generated from operations |
(21.1) |
(22.5) |
|
| Interest paid |
(33.8) |
(17.9) |
|
| Tax paid |
(13.1) |
(10.6) |
|
| Net cash used in operating activities |
(68.0) |
(51.0) |
|
| Net cash used in investing activities |
(14.3) |
(5.7) |
|
| Net cash from financing activities |
10.8 |
11.9 |
|
| Net decrease in cash and cash equivalents |
(71.5) |
(44.8) |
|
| Cash and cash equivalents at beginning of year |
171.1 |
108.5 |
|
| Exchange gains on cash and cash equivalent |
3.3 |
4.5 |
|
| Cash and cash equivalents at end of quarter |
102.9 |
68.2 |
|
| NORD ANGLIA EDUCATION INC.
|
||||||||
| Key Operating Data |
||||||||
| Three Months Ended February 28, |
Six Months Ended February 28, |
|||||||
| 2014 |
2013 |
2014 |
2013 |
|||||
| Full-time equivalent students (average for the period)(1) |
||||||||
| China |
4,806 |
4,052 |
4,812 |
4,041 |
||||
| Europe |
4,501 |
3,766 |
4,501 |
3,764 |
||||
| Middle East/South East Asia |
5,026 |
951 |
4,964 |
944 |
||||
| North America |
2,638 |
- |
2,629 |
- |
||||
| Sub-total |
16,971 |
8,769 |
16,906 |
8,749 |
||||
| Loss making start-up schools(2) |
98 |
995 |
97 |
988 |
||||
| Total |
17,069 |
9,764 |
17,003 |
9,737 |
||||
| Capacity (average for the period)(3) |
||||||||
| China |
6,964 |
5,380 |
6,964 |
5,370 |
||||
| Europe |
5,322 |
4,423 |
5,322 |
4,417 |
||||
| Middle East/South East Asia |
5,691 |
1,200 |
5,691 |
1,200 |
||||
| North America |
3,280 |
- |
3,280 |
- |
||||
| Sub-total |
21,257 |
11,003 |
21,257 |
10,987 |
||||
| Loss making start-up schools(2) |
480 |
1,500 |
480 |
1,500 |
||||
| Total |
21,737 |
12,503 |
21,737 |
12,487 |
||||
| Utilization (average for the period)(4) |
||||||||
| China |
69% |
75% |
69% |
75% |
||||
| Europe |
85% |
85% |
85% |
85% |
||||
| Middle East/South East Asia |
88% |
79% |
87% |
79% |
||||
| North America |
80% |
- |
80% |
- |
||||
| Sub-total |
80% |
80% |
80% |
80% |
||||
| Loss making start-up schools(2) |
20% |
66% |
20% |
66% |
||||
| Total |
79% |
78% |
78% |
78% |
||||
| Revenue per FTE (in $ thousands) (5) |
||||||||
| China |
10.3 |
9.8 |
20.1 |
19.4 |
||||
| Europe |
8.9 |
8.9 |
17.8 |
17.9 |
||||
| Middle East/South East Asia |
4.6 |
5.2 |
9.3 |
10.2 |
||||
| North America |
7.5 |
- |
14.8 |
- |
||||
| Sub-total |
7.8 |
8.9 |
15.5 |
17.8 |
||||
| Loss making start-up schools |
9.2 |
4.7 |
18.4 |
9.3 |
||||
| Total |
7.8 |
8.5 |
15.5 |
16.9 |
||||
| (1) We calculate average FTEs for a period by dividing the total number of FTEs at each calendar month end in the period by the number of calendar months in the period.
(2) Loss making start-up schools are schools that have been open less than three years and incur an EBITDA loss. In the three and six months ended February 28, 2014 loss-making start-up schools include our school in New York. In the three and six months ended February 28, 2013 on an actual basis, our loss making start-up schools include The British School of Abu Dhabi.
(3) We calculate average capacity for a period as the total number of FTEs that can be accommodated in a school based on its existing classrooms at each academic calendar month divided by the number of months in such period.
(4) We calculate utilization during a period as a percentage equal to the ratio of average FTEs for the period divided by average capacity for the period.
(5) We calculate revenue per FTE for a period by dividing our revenue from our schools for the period by the average FTEs for the period. |
||||||||
| Supplementary Financial Data |
|||||||
| $ millions |
Three Months Ended February 28, |
Six Months Ended February 28, |
|||||
| 2014 |
2013 |
2014 |
2013 |
||||
| Actual |
Actual |
Actual |
Actual |
||||
| Revenue (segment) |
|||||||
| Premium Schools Division |
|||||||
| China |
49.3 |
39.7 |
96.7 |
78.3 |
|||
| Europe |
39.9 |
33.7 |
79.9 |
67.4 |
|||
| ME/SEA |
23.0 |
4.9 |
46.0 |
9.6 |
|||
| North America |
19.7 |
- |
38.9 |
- |
|||
| Sub Total |
131.9 |
78.3 |
261.5 |
155.3 |
|||
| Loss making start-up schools |
0.9 |
4.7 |
1.8 |
9.2 |
|||
| Total Premium Schools |
132.8 |
83.0 |
263.3 |
164.5 |
|||
| Other |
4.0 |
6.5 |
8.6 |
14.1 |
|||
| Total Revenue |
136.8 |
89.5 |
271.9 |
178.6 |
|||
| Adjusted EBITDA (segment) |
|||||||
| Premium Schools Division |
|||||||
| China |
24.6 |
20.5 |
46.3 |
39.4 |
|||
| Europe |
9.2 |
7.6 |
18.6 |
15.7 |
|||
| ME/SEA |
6.3 |
1.2 |
12.4 |
2.8 |
|||
| North America |
8.5 |
- |
15.7 |
- |
|||
| Total Premium Schools |
48.6 |
29.3 |
93.0 |
57.9 |
|||
| Other |
0.5 |
1.5 |
1.0 |
3.7 |
|||
| Central and regional expenses |
(6.3) |
(4.6) |
(12.4) |
(9.2) |
|||
| Adjusted EBITDA |
42.8 |
26.2 |
81.6 |
52.4 |
|||
| Loss making start-up schools |
(0.1) |
(0.4) |
(0.2) |
(0.9) |
|||
| Adjusted EBITDA including loss |
42.7 |
25.8 |
81.4 |
51.5 |
|||
| Adjusted Net Income |
12.7 |
6.4 |
23.7 |
15.3 |
|||
| NORD ANGLIA EDUCATION, INC. |
|||||||
| Three Months Ended February 28, |
Six Months Ended February 28, |
||||||
| $ millions |
2014 |
2013 |
2014 |
2013 |
|||
| Actual |
Actual |
Actual |
Actual |
||||
| Profit for the period |
14.6 |
1.4 |
18.1 |
8.7 |
|||
| Income tax expense |
7.1 |
6.8 |
13.2 |
12.3 |
|||
| Net financing expense(1) |
17.0 |
10.4 |
33.0 |
19.4 |
|||
| Exceptional items(2) |
0.8 |
1.7 |
2.5 |
2.7 |
|||
| Amortization |
2.5 |
1.0 |
4.9 |
1.9 |
|||
| Depreciation |
5.5 |
2.4 |
10.7 |
5.0 |
|||
| EBITDA |
47.5 |
23.7 |
82.4 |
50.0 |
|||
| Loss on disposal of PP&E(3) |
- |
0.1 |
- |
0.1 |
|||
| FX gain (4) |
(6.8) |
(0.3) |
(4.6) |
(0.8) |
|||
| Loss making start-up schools(5) |
0.1 |
0.4 |
0.2 |
0.9 |
|||
| Share based payments(6) |
1.3 |
- |
2.4 |
- |
|||
| Management fees – Sponsor(7) |
0.5 |
2.3 |
1.0 |
2.3 |
|||
| Other |
0.2 |
- |
0.2 |
(0.1) |
|||
| Adjusted EBITDA |
42.8 |
26.2 |
81.6 |
52.4 |
|||
| Depreciation |
(5.5) |
(2.4) |
(10.7) |
(5.0) |
|||
| Net Financing Expense(1) |
(17.0) |
(10.4) |
(33.0) |
(19.4) |
|||
| Income Tax Expense |
(7.1) |
(6.8) |
(13.2) |
(12.3) |
|||
| Tax Adjustments(8) |
(0.5) |
(0.2) |
(1.0) |
(0.4) |
|||
| Adjusted Net Income |
12.7 |
6.4 |
23.7 |
15.3 |
|||
| (1) On March 31, 2014 we drew down in full on a new $515 million term loan facility and using proceeds from the loan and our initial public offering, we discharged our obligations under the indentures governing the $490 million 10.25% senior secured notes and $150 million 8.50%/9.50% PIK toggle notes, both of which were fully redeemed on April 12, 2014. The new term loan facility will bear interest based on applicable margin percentages of 2.50% per annum for base rate loans and 3.50% per annum for LIBOR rate loans, provided that the base rate for base rate loans may not be lower than 2.00% and LIBOR may not be lower than 1.00%. Based on these interest rates, assuming our new term loan had been fully drawn during the three months and six months ended February 28, 2014, and that none of our notes were outstanding during the three months and six months ended February 28, 2014, our net interest expense, before tax, for the period would have decreased by approximately $10.6 million and $21.6 million, respectively. We expect to incur an exceptional charge of $77.2 million related to the redemption of our notes in the fiscal quarter ending May 31, 2014.
(2) Exceptional expenses primarily related to the acquisition of schools, including associated transaction and integration costs, and transaction management fees paid to Baring Private Equity Asia.
(3) Includes loss on disposal of property, plant and equipment associated with the termination of learning services contracts in the UK.
(4) Represents foreign currency translational gains primarily associated with our inter-company balances.
(5) Represents the EBITDA losses attributable to our school in New York in the three and six months ended February 28, 2014 and The British School of Abu Dhabi in the three and six months ended February 28, 2013.
(6) Represents non-cash charges associated with the equity investments in our company by members of management.
(7) Represents management fees paid to Premier Education Holdings.
(8) Represents the tax impact associated with the exclusion of exceptional items and amortization in calculating Adjusted Net Income. |
|||||||
SOURCE Nord Anglia Education, Inc.
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