Nord Anglia Education Reports Second Quarter FY2016 Financial Results
HONG KONG, April 26, 2016 /PRNewswire/ -- Nord Anglia Education, Inc. (NYSE: NORD), the world's leading premium schools organization, today announced financial results for the second quarter of fiscal 2016, the three month period ended February 29, 2016.
Second quarter FY2016 highlights (compared to second quarter FY2015)
- Average full time equivalent students (FTEs) increased 54.6% to 34,737
- Revenue increased 48.7% on a reported basis and 54.9% on a constant currency basis to $243.5 million
- Adjusted EBITDA increased 40.3% on a reported basis and 45.6% on a constant currency basis to $67.3 million
- Adjusted Net Income increased 16.9% to $28.0 million
- Adjusted EPS increased 9.8% to $0.27
Year to date February 29, 2016 highlights (compared to year to date February 28, 2015)
- Revenue increased 54.6% on a reported basis and 61.2% on a constant currency basis to $487.5 million
- Adjusted EBITDA increased 47.8% on a reported basis and 54.2% on a constant currency basis to $131.4 million
- Adjusted Net Income increased 25.6% to $54.3 million
- Adjusted EPS increased 18.0% to $0.52
"We are pleased with our second quarter results and trends across the business," said Andrew Fitzmaurice, Chief Executive Officer. "Revenue and Adjusted EBITDA were ahead of last year by 55% and 48% respectively, driven by acquisitions and strong organic enrollment growth. Our lead indicators of inquiries and visits remain positive and we are achieving in-year enrollment growth in line with our expectations. These results are made possible by our commitment to delivering the best possible education to our students around the world to support their academic, social and personal achievement."
Mr Fitzmaurice continued, "The opening of our new bilingual school in Shanghai and new Houston campus in September 2016 and our new schools in Abu Dhabi and Bangkok in September 2017 are tracking to plan. In particular we are very pleased with the demand trends for the new bilingual school in Shanghai opening in September 2016.
"In early April, we announced a sale and leaseback transaction for three of our schools in the United States. We are delighted to be partnering with W. P. Carey Inc. and look forward to working together to enhance and add capacity to all three campuses over the coming years. The sale and leaseback of these schools is in line with our asset light model and will provide additional capital to support the continued execution of our long term growth strategy."
Second quarter FY2016 results
Average FTEs increased 54.6% to 34,737 in the three months ended February 29, 2016 ("Q2 FY2016") from 22,470 in the three months ended February 28, 2015 ("Q2 FY2015"). Average capacity and utilization were 49,057 seats and 71%, respectively, in Q2 FY2016 compared to 31,888 seats and 70%, respectively, in Q2 FY2015.
Revenue increased 48.7%, or $79.8 million, to $243.5 million in Q2 FY2016 from $163.7 million in Q2 FY2015. This increase was due primarily to higher revenues from premium schools, partly offset by the impact of the strengthening United States Dollar ("USD") and a decrease in other revenue. On a constant currency basis, revenue increased 54.9% in Q2 FY2016 from Q2 FY2015. Revenue per FTE decreased 2.3% to $7,000 in Q2 FY2016 from $7,100 in Q2 FY2015. The decrease was driven by the negative currency translation impact of the strengthening USD.
Gross profit increased 45.8%, or $31.0 million, to $98.7 million in Q2 FY2016 from $67.7 million in Q2 FY2015. Gross profit margin decreased 80 basis points to 40.5% in Q2 FY2016 from 41.3% in Q2 FY2015 primarily due to the additional rent of our new school in Chicago and new employment related taxes in China.
Selling, general and administrative expenses increased 68.5% to $46.4 million in Q2 FY2016 from $27.5 million in Q2 FY2015. The increase was primarily driven by increased operating costs associated with the acquisitions in Vietnam, Switzerland, China, the United States and Mexico in fiscal 2015, as well as the new school opened in Chicago in September 2015.
Adjusted EBITDA increased 40.3%, or $19.3 million, to $67.3 million (27.6% Adjusted EBITDA margin) in Q2 FY2016 from $48.0 million (29.3% Adjusted EBITDA margin) in Q2 FY2015 due to growth in FTEs, tuition fee increases and the impact of the acquisitions in Vietnam, Switzerland, China, the United States and Mexico in fiscal 2015. The Adjusted EBITDA increase was less than the revenue increase primarily due to the adverse impact of the operating costs associated with the new school opened in Chicago in September 2015 and new employment related taxes in China.
Net financing expense increased to $22.9 million in Q2 FY2016 from $6.9 million in Q2 FY2015. The increase was primarily attributable to increased debt incurred to fund the acquisitions in fiscal year 2015 and an unrealized loss of $6.0 million from the revaluation of the CHF 200 million bonds.
Adjusted Net Income increased to $28.0 million in Q2 FY2016 from $24.0 million in Q2 FY2015.
Balance Sheet and Cash Flow
During the six months ended February 29, 2016, cash used in operating activities was $61.9 million compared to $66.5 million for six months ended February 28, 2015. Cash used in operations decreased by $32.9 million from $45.4 million for the six months ended February 28, 2015 to $12.6 million for the six months ended February 29, 2016 due to improved cash management initiatives. Payment of loan/bond expenses amounted to $4.9 million for the six months ended February 29, 2016. Interest paid increased from $12.5 million to $31.9 million and tax paid increased from $8.6 million to $12.5 million for the six months ended February 28, 2015 and February 29, 2016, respectively.
Cash used in investing activities increased from $19.7 million for the six months ended February 28, 2015 to $70.0 million for the six months ended February 29, 2016. This increase was primarily due to a $27.9 million final consideration payment for the acquisition of six schools in China, Mexico, Switzerland and the United States and capital expenditures of $43.0 million.
Net cash generated from financing activities was $67.3 million in the six months ended February 29, 2016 compared to $29.3 million in the same period in 2015. Cash and cash equivalents (net of a bank overdraft on our notional pooling accounts) as of February 29, 2016 were $155.1 million, compared to $97.3 million as of February 28, 2015.
Fiscal 2016 Outlook
Nord Anglia Education is updating its fiscal 2016 outlook for Revenue, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS. These changes reflect the impact of the sale and leaseback transaction, currency movements, a lower contribution from learning services, increased interest expense as a result of cross currency swaps entered into in March and additional central and regional costs to manage future growth and compliance.
For the full year fiscal 2016, the Company's new and previous guidance is as follows:
New FY16 Guidance |
Prior FY16 Guidance |
|
Revenue |
$845 - $855 million |
$850 - $870 million |
Adjusted EBITDA |
$205 - $210 million |
$215 - $225 million |
Adjusted Net Income |
$67 - $70 million |
$70 - $75 million |
Adjusted Diluted EPS |
$0.64 - $0.67 |
$0.67 - $0.72 |
We expect diluted weighted average shares of approximately 104.1 million.
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 Toll Free: 877.407.0784
International: 201.689.8560
An audio replay of the conference call will be available through May 3, 2016 via the investor relations section of nordangliaeducation.com or by dialling the following:
United States Toll Free: 877.870.5176
International: 858.384.5517
Replay Conference ID: 13632501
A live webcast of the conference call will be available via the investor relations section of nordangliaeducation.com and will be archived on the website.
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, anticipated school openings, 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 Annual Report on Form 20-F filed with the SEC.
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, liquidity, prospects, growth, strategies 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, liquidity, prospects, growth strategies and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this press release, 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, Adjusted Net Income, Adjusted Earnings per Ordinary Share, Adjusted Cost of Sales and Adjusted Gross Profit as supplemental financial measures of our operating performance. We define EBITDA as (loss)/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 adjusted for the items set forth in the reconciliation table elsewhere in this press release. We define Adjusted Net Income as Adjusted EBITDA adjusted for the items in the reconciliation table elsewhere in this press release. We define Adjusted Earnings per Ordinary share as Adjusted Net Income divided by the weighted average ordinary shares outstanding for the period. We define Adjusted Cost of Sales as cost of sales excluding Premium School land and building operating lease costs and depreciation charges arising from tangible assets owned by Premium Schools, and we define Adjusted Gross Profit as revenue less Adjusted Cost of Sales. EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Ordinary Share, Adjusted Cost of Sales and Adjusted Gross Profit are not standard measures under IFRS. These measures should not be considered in isolation or construed as alternatives to cash flows, net income, earnings per ordinary share 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. We may incur expenses similar to the adjustments in this presentation in the future and certain of these items could be recurring. EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Ordinary Share, Adjusted Cost of Sales and Adjusted Gross Profit presented herein may not be comparable to similarly titled measures presented by other companies. Nord Anglia Education is not able to provide a reconciliation of projected non-GAAP financial measures to expected reported results due to the uncertainty of the reported line items referred to above.
About Nord Anglia Education, Inc.
Nord Anglia Education (NYSE: NORD) is the world's leading premium schools organization. Our 42 international schools are located in China, Europe, the Middle East, Southeast Asia and North America. Together, they educate more than 35,300 students from kindergarten through to the end of secondary education. We are driven by one unifying philosophy – we are ambitious of our students, our people and our family of schools. Our schools deliver a high quality education through a personalized approach enhanced with unique global opportunities to enable every student to succeed. 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.nordangliaeducation.com.
For further information, please contact:
Investors:
Vanessa Cardonnel
Corporate Finance and Investor Relations Director – Nord Anglia Education
Tel: +852 3951 1130
Email: [email protected]
John Rouleau
Managing Director, Investor Relations – ICR
Tel: +1 203 682 8342
Email: [email protected]
Media:
Sarah Doyle
Head of Brand – Nord Anglia Education
Tel: +852 3951 1144
Email: [email protected]
NORD ANGLIA EDUCATION, INC. |
|||||||||
CONDENSED CONSOLIDATED INCOME STATEMENT |
|||||||||
(Unaudited) |
|||||||||
(in $ millions, except share data) |
|||||||||
Three Months Ended |
Six Months Ended |
||||||||
February 29, |
February 28, |
February 29, |
February 28, |
||||||
Revenue(1) |
243.5 |
163.7 |
487.5 |
315.3 |
|||||
Cost of sales |
(144.8) |
(96.0) |
(292.7) |
(188.7) |
|||||
Gross profit |
98.7 |
67.7 |
194.8 |
126.6 |
|||||
Selling, general and administrative expenses |
(46.4) |
(27.5) |
(92.3) |
(53.8) |
|||||
Depreciation |
(0.2) |
(0.2) |
(0.4) |
(0.4) |
|||||
Amortization |
(4.6) |
(4.0) |
(9.3) |
(6.9) |
|||||
Other gains/(losses) |
6.2 |
(0.7) |
6.9 |
(4.6) |
|||||
Exceptional expenses |
(2.5) |
(2.0) |
(4.9) |
(2.7) |
|||||
Total expenses |
(47.5) |
(34.4) |
(100.0) |
(68.4) |
|||||
Operating profit |
51.2 |
33.3 |
94.8 |
58.2 |
|||||
Finance income |
0.7 |
0.5 |
1.7 |
1.3 |
|||||
Finance expense |
(23.6) |
(7.4) |
(26.2) |
(14.6) |
|||||
Net finance expense |
(22.9) |
(6.9) |
(24.5) |
(13.3) |
|||||
Profit before income tax |
28.3 |
26.4 |
70.3 |
44.9 |
|||||
Income tax expense |
(6.1) |
(7.1) |
(15.2) |
(12.4) |
|||||
Profit for the period |
22.2 |
19.3 |
55.1 |
32.5 |
|||||
Profit attributable to: |
|||||||||
- Owners of the parent |
21.8 |
19.0 |
54.2 |
32.2 |
|||||
- Non-controlling interest |
0.4 |
0.3 |
0.9 |
0.3 |
|||||
Profit for the period |
22.2 |
19.3 |
55.1 |
32.5 |
|||||
Earnings per ordinary share(1) (in dollars) |
|||||||||
Basic |
0.21 |
0.20 |
0.52 |
0.34 |
|||||
Diluted |
0.21 |
0.20 |
0.52 |
0.33 |
|||||
(1) The company reassessed an accounting estimate related to non-tuition school fees in the fourth quarter of fiscal 2015. Please refer to the Form 6-K furnished with the SEC on January 26, 2016 for the quarterly impact of the reassessment on revenue in fiscal 2015. |
|||||||||
(2) Earnings per ordinary share is calculated by dividing profit for the period attributable to owners of the parent by the weighted average ordinary shares outstanding for the period. For the three and six months ended February 29, 2016 the basic and diluted weighted average ordinary shares outstanding were 104.1 million ordinary shares. For the three and six months ended February 28, 2015 the basic and diluted weighted average ordinary shares outstanding were 97.7 million and 97.8 million ordinary shares, respectively. |
NORD ANGLIA EDUCATION, INC. |
||||
CONDENSED CONSOLIDATED BALANCE SHEET |
||||
(Unaudited) |
||||
(in $ millions) |
||||
February 29, |
August 31, |
|||
2016 |
2015 |
|||
Non-current assets |
||||
Property, plant and equipment |
453.6 |
449.7 |
||
Intangible assets |
1,383.5 |
1,415.5 |
||
Investments in joint ventures and associates |
0.5 |
0.5 |
||
Trade and other receivables |
43.2 |
37.9 |
||
Deferred tax assets |
70.2 |
70.4 |
||
1,951.0 |
1,974.0 |
|||
Current assets |
||||
Tax receivable |
1.2 |
1.2 |
||
Trade and other receivables |
97.6 |
131.1 |
||
Cash and cash equivalents (excluding bank overdrafts) |
226.0 |
317.0 |
||
324.8 |
449.3 |
|||
Total assets |
2,275.8 |
2,423.3 |
||
Current liabilities |
||||
Trade and other payables |
(157.7) |
(170.9) |
||
Other interest-bearing loans and borrowings |
(150.4) |
(98.3) |
||
Finance lease liabilities |
(3.7) |
(3.7) |
||
Deferred revenue |
(310.5) |
(518.8) |
||
Provisions for other liabilities and charges |
(0.0) |
(0.0) |
||
Current tax liabilities |
(10.9) |
(2.9) |
||
(633.2) |
(794.6) |
|||
Non-current liabilities |
||||
Other interest-bearing loans and borrowings |
(1,056.6) |
(1,066.3) |
||
Derivative financial instruments |
(3.6) |
(3.0) |
||
Finance lease liabilities |
(42.9) |
(44.6) |
||
Other payables |
(56.7) |
(45.7) |
||
Deferred revenue |
(23.7) |
(27.4) |
||
Retirement benefit obligations |
(44.0) |
(46.6) |
||
Provisions for other liabilities and charges |
(1.5) |
(1.7) |
||
Deferred tax liabilities |
(109.4) |
(114.1) |
||
(1,338.4) |
(1,349.4) |
|||
Total liabilities |
(1,971.6) |
(2,144.0) |
||
Net assets |
304.2 |
279.3 |
||
Equity attributable to equity holders of the parent |
||||
Share capital |
1.0 |
1.0 |
||
Share premium |
735.4 |
735.2 |
||
Other reserves |
6.9 |
6.9 |
||
Currency translation reserve |
(84.5) |
(53.7) |
||
Shareholders' deficit |
(358.9) |
(414.0) |
||
299.9 |
275.4 |
|||
Non-controlling interest |
4.3 |
3.9 |
||
Total shareholders' funds |
304.2 |
279.3 |
NORD ANGLIA EDUCATION, INC. |
|||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS |
|||||||
(Unaudited) |
|||||||
(in $ millions) |
|||||||
Three months ended |
Six months ended |
||||||
February 29, |
February 28, |
February 29, |
February 28, |
||||
2016 |
2015 |
2016 |
2015 |
||||
Cash generated from/(used in) operations |
28.6 |
(25.9) |
(12.6) |
(45.4) |
|||
Payment of loan/bond expenses |
(1.0) |
- |
(4.9) |
- |
|||
Interest paid |
(18.8) |
(6.0) |
(31.9) |
(12.5) |
|||
Tax paid |
(8.8) |
(6.4) |
(12.5) |
(8.6) |
|||
Net cash used in operating activities |
(0.0) |
(38.3) |
(61.9) |
(66.5) |
|||
Net cash used in investing activities |
(14.1) |
(3.0) |
(70.0) |
(19.7) |
|||
Net cash generated from financing activities |
0.7 |
14.9 |
67.3 |
29.3 |
|||
Net decrease in cash and cash equivalents |
(13.4) |
(26.4) |
(64.6) |
(56.9) |
|||
Cash and cash equivalents at beginning of the period |
170.4 |
131.7 |
226.3 |
166.2 |
|||
Exchange losses on cash and cash equivalents |
(1.9) |
(8.0) |
(6.6) |
(12.0) |
|||
Cash and cash equivalents at the end of the |
155.1 |
97.3 |
155.1 |
97.3 |
|||
Bank overdrafts |
70.9 |
62.4 |
70.9 |
62.4 |
|||
Cash and cash equivalents at the end of the |
226.0 |
159.7 |
226.0 |
159.7 |
KEY OPERATING DATA AND SUPPLEMENTARY FINANCIAL DATA |
|||||||||||||||
Key Operating Data |
|||||||||||||||
We use the following key operating metrics to manage our schools: full-time equivalent students ("FTEs"), capacity, utilization and revenue per FTE. We monitor FTEs on a weekly basis and the other operating metrics on a monthly, quarterly and annual basis, as we believe that they are the most reliable metrics for measuring the profitability of our schools. The table below sets out our key operating data for the periods indicated: |
|||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||
February 29, |
February 28, 2015 |
February 29, 2016 |
February 28, 2015 |
||||||||||||
Full-time equivalent |
|||||||||||||||
China |
5,793 |
5,207 |
5,768 |
5,183 |
|||||||||||
Europe |
6,626 |
4,617 |
6,549 |
4,602 |
|||||||||||
Middle East |
5,316 |
4,363 |
5,299 |
4,270 |
|||||||||||
Southeast Asia |
7,487 |
5,476 |
7,404 |
4,335 |
|||||||||||
North America |
9,515 |
2,807 |
9,476 |
2,795 |
|||||||||||
Total |
34,737 |
22,470 |
34,496 |
21,185 |
|||||||||||
Capacity (average for the period)(2) |
|||||||||||||||
China |
8,926 |
7,756 |
8,926 |
7,756 |
|||||||||||
Europe |
8,617 |
6,084 |
8,617 |
6,084 |
|||||||||||
Middle East |
5,851 |
5,251 |
5,851 |
5,251 |
|||||||||||
Southeast Asia |
12,156 |
9,037 |
12,127 |
6,387 |
|||||||||||
North America |
13,507 |
3,760 |
13,507 |
3,760 |
|||||||||||
Total |
49,057 |
31,888 |
49,028 |
29,238 |
|||||||||||
Utilization (average for the period)(3) |
|||||||||||||||
China |
65% |
67% |
65% |
67% |
|||||||||||
Europe |
77% |
76% |
76% |
76% |
|||||||||||
Middle East |
91% |
83% |
91% |
81% |
|||||||||||
Southeast Asia |
62% |
61% |
61% |
68% |
|||||||||||
North America |
70% |
75% |
70% |
74% |
|||||||||||
Total |
71% |
70% |
70% |
72% |
|||||||||||
Revenue per FTE (in $ thousands)(4) |
|||||||||||||||
China |
9.3 |
9.9 |
18.9 |
20.1 |
|||||||||||
Europe |
8.9 |
8.2 |
18.7 |
16.8 |
|||||||||||
Middle East |
4.9 |
4.7 |
9.6 |
9.4 |
|||||||||||
Southeast Asia |
4.9 |
5.2 |
9.4 |
10.2 |
|||||||||||
North America |
7.0 |
7.7 |
14.0 |
15.3 |
|||||||||||
Total |
7.0 |
7.1 |
14.1 |
14.6 |
|||||||||||
(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) 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. |
|||||||||||||||
(3) 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. |
|||||||||||||||
(4) We calculate revenue per FTE by dividing our revenue from our schools for the period by the average FTEs for the period. |
Supplementary Financial Data |
|||||||||
The following table sets forth certain supplementary financial data for the periods indicated. |
|||||||||
$ millions |
Three Months Ended |
Variance |
|||||||
February 29, |
February 28, |
Reported |
Constant |
||||||
2016 |
2015 |
Currency |
|||||||
Revenue (segment) |
|||||||||
Premium Schools |
|||||||||
China |
54.0 |
51.7 |
4.3% |
8.9% |
|||||
Europe |
59.1 |
38.1 |
55.3% |
66.7% |
|||||
Middle East |
25.9 |
20.7 |
24.9% |
24.9% |
|||||
Southeast Asia |
36.6 |
28.4 |
28.8% |
36.9% |
|||||
North America |
66.8 |
21.6 |
209.4% |
209.4% |
|||||
Total Premium Schools |
242.4 |
160.5 |
51.0% |
57.3% |
|||||
Other |
1.1 |
3.2 |
(66.0%) |
(64.5%) |
|||||
Total Revenue |
243.5 |
163.7 |
48.7% |
54.9% |
|||||
Adjusted EBITDA (segment) |
|||||||||
Premium Schools |
|||||||||
China |
23.5 |
24.5 |
(4.1%) |
0.2% |
|||||
Europe |
13.3 |
8.1 |
65.5% |
70.5% |
|||||
Middle East |
6.1 |
4.5 |
33.4% |
33.4% |
|||||
Southeast Asia |
12.3 |
10.6 |
16.1% |
23.4% |
|||||
North America |
22.7 |
7.5 |
203.5% |
203.5% |
|||||
Total Premium Schools |
77.9 |
55.2 |
41.1% |
46.2% |
|||||
Other |
0.0 |
0.2 |
(87.2%) |
(83.0%) |
|||||
Central and regional expenses |
(10.6) |
(7.4) |
43.0% |
46.6% |
|||||
Adjusted EBITDA |
67.3 |
48.0 |
40.3% |
45.6% |
|||||
Adjusted Net Income |
28.0 |
24.0 |
|||||||
$ millions |
Six Months Ended |
% Variance |
|||||||
February 29, |
February 28, |
Constant |
|||||||
2016 |
2015 |
Reported |
Currency |
||||||
Revenue (segment) |
|||||||||
Premium Schools |
|||||||||
China |
109.3 |
104.1 |
5.0% |
8.9% |
|||||
Europe |
122.1 |
77.4 |
57.8% |
70.7% |
|||||
Middle East |
51.1 |
40.1 |
27.4% |
27.4% |
|||||
Southeast Asia |
69.9 |
44.3 |
57.9% |
69.4% |
|||||
North America |
132.9 |
42.6 |
211.6% |
211.6% |
|||||
Total Premium Schools |
485.3 |
308.5 |
57.3% |
64.0% |
|||||
Other |
2.2 |
6.8 |
(67.6%) |
(66.1%) |
|||||
Total Revenue |
487.5 |
315.3 |
54.6% |
61.2% |
|||||
Adjusted EBITDA (segment) |
|||||||||
Premium Schools |
|||||||||
China |
46.8 |
48.6 |
(3.8%) |
(0.1%) |
|||||
Europe |
29.1 |
15.7 |
84.6% |
97.2% |
|||||
Middle East |
11.5 |
7.9 |
45.9% |
45.9% |
|||||
Southeast Asia |
21.2 |
15.6 |
36.8% |
47.3% |
|||||
North America |
42.9 |
15.1 |
184.1% |
184.1% |
|||||
Total Premium Schools |
151.5 |
102.9 |
47.2% |
53.1% |
|||||
Other |
(0.1) |
0.8 |
(119.6%) |
(119.8%) |
|||||
Central and regional expenses |
(20.0) |
(14.8) |
34.8% |
37.6% |
|||||
Adjusted EBITDA |
131.4 |
88.9 |
47.8% |
54.2% |
|||||
Adjusted Net Income |
54.3 |
43.2 |
|||||||
We use EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Ordinary Share, Adjusted Cost of Sales and Adjusted Gross Profit as supplemental financial measures of our operating performance. We define EBITDA as (loss)/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 adjusted for the items set forth in the table below. We define Adjusted Net Income as Adjusted EBITDA adjusted for the items in the table below. We define Adjusted Earnings per Ordinary share as Adjusted Net Income divided by the weighted average ordinary shares outstanding for the period. We define Adjusted Cost of Sales as cost of sales excluding Premium School land and building operating lease costs and depreciation charges arising from tangible assets owned by Premium Schools, and we define Adjusted Gross Profit as revenue less Adjusted Cost of Sales. EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Ordinary Share, Adjusted Cost of Sales and Adjusted Gross Profit are not standard measures under IFRS. These measures should not be considered in isolation or construed as alternatives to cash flows, net income, earnings per ordinary share 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. We may incur expenses similar to the adjustments in this presentation in the future and certain of these items could be recurring. EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings per Ordinary Share, Adjusted Cost of Sales and Adjusted Gross Profit presented herein may not be comparable to similarly titled measures presented by other companies.
Reconciliation of Adjusted Cost of Sales, Adjusted Gross Profit, EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS |
|||||||
(Unaudited) |
Three Months Ended |
Six Months Ended |
|||||
$ millions |
February 29, 2016 |
February 28, |
February 29, 2016 |
February 28, |
|||
Revenue |
243.5 |
163.7 |
487.5 |
315.3 |
|||
Cost of Sales |
(144.8) |
(96.0) |
(292.7) |
(188.7) |
|||
Rent Premium Schools |
17.0 |
12.4 |
34.7 |
24.9 |
|||
Depreciation Premium Schools |
11.0 |
7.0 |
22.8 |
14.4 |
|||
Adjusted Cost of Sales |
(116.8) |
(76.6) |
(235.2) |
(149.4) |
|||
Adjusted Gross Profit |
126.7 |
87.1 |
252.3 |
165.9 |
|||
Profit for the period |
22.2 |
19.3 |
55.1 |
32.5 |
|||
Income tax expense |
6.1 |
7.1 |
15.2 |
12.4 |
|||
Net financing expense |
22.9 |
6.9 |
24.5 |
13.3 |
|||
Exceptional items(1) |
2.5 |
2.0 |
4.9 |
2.7 |
|||
Other (gains)/losses(2) |
(6.2) |
0.7 |
(6.9) |
4.6 |
|||
Amortization |
4.6 |
4.0 |
9.3 |
6.9 |
|||
Depreciation |
0.2 |
0.2 |
0.4 |
0.4 |
|||
Depreciation in Cost of Sales |
11.0 |
7.0 |
22.8 |
14.4 |
|||
EBITDA |
63.3 |
47.2 |
125.3 |
87.2 |
|||
Loss/(gain) on disposal of property, plant and equipment |
0.0 |
0.1 |
(0.0) |
0.3 |
|||
Share based payments(3) |
1.6 |
0.7 |
3.3 |
1.3 |
|||
Greenfield pre-opening costs(4) |
1.7 |
- |
1.8 |
- |
|||
Rollout of Juilliard Program(5) |
0.9 |
- |
1.2 |
- |
|||
Other |
(0.2) |
0.0 |
(0.2) |
0.1 |
|||
Adjusted EBITDA |
67.3 |
48.0 |
131.4 |
88.9 |
|||
Depreciation |
(11.2) |
(7.2) |
(23.2) |
(14.8) |
|||
Net Financing Expense |
(22.9) |
(6.9) |
(24.5) |
(13.3) |
|||
Financing Expense Adjustments(6) |
6.0 |
- |
(8.0) |
- |
|||
Income Tax Expense |
(6.1) |
(7.1) |
(15.2) |
(12.4) |
|||
Tax Adjustments(7) |
(4.7) |
(2.5) |
(5.3) |
(4.9) |
|||
Non-Controlling Interest |
(0.4) |
(0.3) |
(0.9) |
(0.3) |
|||
Adjusted Net Income |
28.0 |
24.0 |
54.3 |
43.2 |
|||
Adjusted earnings per ordinary share(8) (in $) |
|||||||
Basic |
0.27 |
0.25 |
0.52 |
0.44 |
|||
Diluted |
0.27 |
0.25 |
0.52 |
0.44 |
|||
(1) Exceptional expenses primarily relate to the acquisition of schools, including associated transaction and integration costs. |
|||||||
(2) Represents the fair value gains and losses on our various put/call options, an embedded lease derivative at our Chicago South Loop school and unrealized foreign exchange movements on our intercompany loans. |
|||||||
(3) Represents non-cash charges associated with equity investments in our company by members of management. |
|||||||
(4) Includes the pre-opening costs associated with the planned opening of various Greenfield schools. |
|||||||
(5) Represents the costs associated with the initial roll-out of The Juilliard-Nord Anglia Performing Arts Program which commenced in ten schools in September 2015. |
|||||||
(6) Adjustment for unrealized foreign exchange gain/(loss) arising from the revaluation of the CHF200 million senior secured notes to US dollar. |
|||||||
(7) Represents the tax impact associated with the exclusion of certain costs including exceptional items and amortization in calculating Adjusted Net Income. The effective tax rate for the year used in calculating the tax impact is 27.0%, which is the estimated effective tax rate for fiscal 2016 excluding an unrealized FX gain on the revaluation of the CHF200 million bonds outstanding in the six months ended February 29, 2016. |
|||||||
(8) Adjusted earnings per ordinary share is calculated by dividing Adjusted Net Income for the period by the weighted average ordinary shares outstanding for the period. For the three and six months ended February 29, 2016 the basic and diluted weighted average ordinary shares outstanding were 104.1 million ordinary shares. For the three and six months ended February 28, 2015 the basic and diluted weighted average ordinary shares outstanding were 97.7 million and 97.8 million ordinary shares, respectively. |
SOURCE Nord Anglia Education, Inc.
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