Nord Anglia Education Reports Second Quarter FY2017 Financial Results

04/27/2017

HONG KONG, April 27, 2017 /PRNewswire/ -- Nord Anglia Education, Inc. (NYSE: NORD), the world's leading premium schools organization, today announced financial results for the second quarter of fiscal 2017, the three month period ended February 28, 2017.

Second quarter FY2017 highlights (compared to second quarter FY2016)

  • Average full time equivalent students (FTEs) increased 7.1% to 37,194
  • Revenue increased 6.7% on a reported basis and 8.5% on a constant currency basis to $259.5 million
  • Adjusted EBITDA was unchanged on a reported basis and increased 2.2% on a constant currency basis to $66.9 million
  • Adjusted Net Income increased 4.5% to $28.9 million
  • Diluted Adjusted EPS increased 2.9% to $0.27

Year to date February 28, 2017 highlights (compared to year to date February 29, 2016)

  • Revenue increased 6.8% on a reported basis and 8.5% on a constant currency basis to $520.5 million
  • Adjusted EBITDA decreased 0.6% on a reported basis but increased 1.3% on a constant currency basis to $130.2 million
  • Adjusted Net Income increased 2.6% to $54.9 million
  • Diluted Adjusted EPS increased 1.2% to $0.52

"Nord Anglia Education delivered another strong performance in the second quarter," said Andrew Fitzmaurice, CEO of Nord Anglia Education. "We continue to add high quality schools to the Nord Anglia family and are pleased to welcome the Prague British School, in addition to the recent announcement of our greenfield school in Dublin, Ireland and an additional campus in Guangzhou, China. We have achieved a great deal as a public company, which has been an important period in Nord Anglia Education's development as the world's leading premium schools organization."

Second Quarter FY2017 Results

Average FTEs increased 7.1% to 37,194 in the three months ended February 28, 2017 ("Q2 FY2017") from 34,737 in the three months ended February 29, 2016 ("Q2 FY2016").  Average capacity and utilization were 54,813 seats and 68%, respectively, in Q2 FY2017 compared to 49,057 seats and 71%, respectively, in Q2 FY2016.

Revenue increased 6.7%, or $16.3 million, to $259.5 million in Q2 FY2017 from $243.2 million in Q2 FY2016.  This increase was due primarily to higher revenues from premium schools, partly offset by the impact of the strengthening US dollar on our premium schools revenue. On a constant currency basis, revenue increased 8.5% in Q2 FY2017 from Q2 FY2016. Revenue per FTE was $7.0k in Q2 FY2017, unchanged from Q2 FY2016.

Gross profit increased 2.1%, or $2.1 million, to $100.4 million in Q2 FY2017 from $98.3 million in Q2 FY2016. Gross profit margin was 38.7% for Q2 FY2017 compared to 40.4% for Q2 FY2016.  The reduction in gross profit margin in Q2 FY2017 was primarily due to the additional rent included in cost of sales from the sale and leaseback and the new school openings in September 2016, partially offset by tuition fee increases in excess of cost inflation and increased FTEs within our schools.

Selling, general and administrative (SG&A) expenses increased 9.0% to $50.5 million in Q2 FY2017 from $46.4 million in Q2 FY2016. The increase in SG&A expenses was mainly due to the operating expenses of the new schools opened in September 2016, pre-opening costs of the new greenfield schools expected to open in September of 2017 in Abu Dhabi, Bangkok and Hong Kong, Global Campus related costs and Sarbanes-Oxley project costs.

Other (losses)/gains changed by $7.9 million to a loss of $2.5 million in Q2 FY2017 from a gain of $5.4 million in Q2 FY2016.  In Q2 FY2017, other (losses)/gains included $0.7 million of non-cash foreign exchange losses on intercompany balances and $1.8 million non-cash losses on financial instruments, including a $0.2 million loss on the cross currency swaps and a $1.6 million loss on embedded lease derivatives.  In Q2 FY2016, other (losses)/gains included $6.7 million of non-cash foreign exchange gains on intercompany balances and a $1.3 million loss on embedded lease derivatives and other options.

Adjusted EBITDA was unchanged at $66.9 million in Q2 FY2017 from Q2 FY2016.  On a constant currency basis, adjusted EBITDA increased 2.2% in Q2 FY2017 from Q2 FY2016. 

Net financing expense decreased 23.2% to $17.7 million in Q2 FY2017 from $22.9 million in Q2 FY2016. The decrease was primarily due to an unrealized loss of $2.7 million in Q2 FY2017 compared to an unrealized loss of $6.0 million in Q2 FY2016, both due to the revaluation of the CHF 200.0 million bonds.

Adjusted Net Income increased 4.5% to $28.9 million in Q2 FY2017 from $27.7 million in Q2 FY2016.

Balance Sheet and Cash Flow

Cash used in operating activities was $128.5 million for the six months ended February 28, 2017, compared to $61.8 million for the six months ended February 29, 2016.  Cash used in operations increased by $75.2 million from $12.6 million for the six months ended February 29, 2016 to $87.8 million for the six months ended February 28, 2017 as a result of working capital changes, primarily a reduction in trade and other payables.  The increased outflow is primary due to the impact of a bigger cost base as the business has grown, a one-off cash payment relating to our new bilingual school in China of $11.3 million and the deferral of some payments in the prior fiscal year from the three months ended February 29, 2016 to the three months ended May 31, 2016.  Interest paid decreased from $31.9 million to $28.0 million and tax paid decreased from $12.4 million to $10.0 million for the six months ended February 29, 2016 and February 28, 2017, respectively.  The reduction in interest paid for the six months ended February 28, 2017 was primarily from our revolving credit facility remaining undrawn compared to a drawn balance of $74.0 million in the six months ended February 29, 2016.  The outflows were in line with expectations.

Cash used in investing activities was $40.3 million for the six months ended February 28, 2017 compared to $70.1 million used in investing activities for the six months ended February 29, 2016.  The outflow for the six months ended February 28, 2017 includes $13.5 million deferred consideration for our schools in Vietnam and Cambodia, $36.7 million of capital expenditure in relation to the new Houston campus, the new China bilingual school in Shanghai and general maintenance capital expenditure, offset by sale proceeds of $8.9 million in relation to the sale of the old Houston campus.  The outflow for the six months ended February 29, 2016 was due primarily to the $27.9 million final payment for the Meritas acquisition and $43.0 million of capital expenditure.

Cash used in financing activities was $5.8 million for the six months ended February 28, 2017 compared to cash generated from financing activities of $67.3 million for the six months ended February 29, 2016.  The outflow for the six months ended February 28, 2017 was due to repayment of borrowings of $4.6 million and the payment of dividends related to non-controlling interests of $1.3 million.  The inflow for the six months ended February 29, 2016 was primarily due to net drawings on the revolving credit facility of $74.0 million.

Cash and cash equivalents (excluding the bank overdraft on our notional pooling accounts) as of February 28, 2017 were $225.7 million, compared to $226.0 million as of February 29, 2016.

Cash and cash equivalents (including the bank overdraft on our notional pooling accounts) as of February 28, 2017 were $188.9 million, compared to $155.1 million as of February 29, 2016.

Recently Completed Acquisitions

On March 21, 2017, we completed the acquisition of the Prague British School in Prague, Czech Republic.  The consideration of $21.0 million for the school represents 6.3x expected fiscal 2017 EBITDA. 

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 dialing 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 4, 2017 via the investor relations section of nordangliaeducation.com or by dialing the following numbers:

United States Toll Free:                  

844.512.2921

International:                                   

412.317.6671

Replay Conference ID:                      

13657368

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, growth prospects, 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.  Factors or risks that could cause our actual results to differ materially from the results we anticipate include, but are not limited to: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; (2) the inability to complete the proposed merger due to the failure to obtain shareholder approval for the proposed merger or the failure to satisfy other conditions to completion of the proposed merger; and (3) the failure to obtain the necessary financing arrangements set forth in the debt and equity commitment letters delivered pursuant to the merger agreement.  Additional 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, growth prospects, 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, growth prospects, 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 and Adjusted Earnings per Ordinary Share, 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 loss/(gain) on disposal of property, plant and equipment, share based payments, realised gains or losses on hedging agreements and other items. We define Adjusted Net Income as Adjusted EBITDA adjusted for depreciation, net financing expense, income tax expense, tax adjustments and non-controlling interests. We define Adjusted Earnings per Ordinary share as Adjusted Net Income divided by the weighted average ordinary shares outstanding for the period.  EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per Ordinary Share 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 and Adjusted Earnings per Ordinary Share as presented herein may not be comparable to similarly titled measures presented by other companies. 

About Nord Anglia Education, Inc.

Nord Anglia Education (NYSE: NORD) is the world's leading premium schools organization. Our 44 international schools are located in China, Europe, the Middle East, Southeast Asia and North America. Together, they educate more than 38,400 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: vanessa.cardonnel@nordanglia.com

Media:
Brunswick Group
Tripp Kyle / Patricia Graue
Tel: +1 212 333 3810

Sarah Doyle
Head of Brand – Nord Anglia Education
Tel: +852 3951 1144
Email: sarah.doyle@nordanglia.com  

 

NORD ANGLIA EDUCATION, INC.
CONDENSED CONSOLIDATED INCOME STATEMENT
(Unaudited)
(in $ millions, except share data)








Three Months Ended


Six Months Ended



February 28,

2017


February 29,
2016(1)


February 28,

2017


February 29,
2016(1)

Revenue

259.5


243.2


520.5


487.4

Cost of sales

(159.1)


(144.9)


(323.0)


(293.0)

Gross profit

100.4


98.3


197.5


194.4










Selling, general and administrative
expenses

(50.5)


(46.4)


(102.2)


(92.3)

Depreciation

(0.2)


(0.2)


(0.3)


(0.4)

Amortization

(4.5)


(4.6)


(9.1)


(9.2)

Other (losses)/gains

(2.5)


5.4


18.3


5.3

Exceptional expenses

(0.8)


(2.5)


(1.3)


(4.9)

Total expenses

(58.5)


(48.3)


(94.6)


(101.5)










Operating profit

41.9


50.0


102.9


92.9









Finance income

0.8


0.7


1.9


1.7

Finance expense

(18.5)


(23.6)


(28.5)


(26.8)

Net finance expense

(17.7)


(22.9)


(26.6)


(25.1)










Profit before tax

24.2


27.1


76.3


67.8

Income tax expense

(5.4)


(5.7)


(17.5)


(14.1)

Profit for the period

18.8


21.4


58.8


53.7









Profit attributable to:








     -       Owners of the parent

18.3


21.0


57.7


52.8

     -       Non-controlling interest

0.5


0.4


1.1


0.9

Profit for the period

18.8


21.4


58.8


53.7










Earnings per ordinary share(2) (in dollars)









Basic

0.18


0.20


0.55


0.51


Diluted

0.17


0.20


0.55


0.51










(1) During the year ended August 31, 2016, we finalized the purchase price allocation accounting from the prior year, made voluntary presentation changes and made corrections of prior period errors, by adjusting the prior period information. The information included in this report on Form 6-K for the three and six months ended February 29, 2016 reflects these adjustments. For more information, see our annual report on Form 20-F filed with the SEC and our report on Form 6-K ("Prior Period Changes in Basis of Presentation and Correction of Errors") furnished to the SEC on November 29, 2016.

 

(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 months ended February 28, 2017 the basic and diluted weighted average ordinary shares outstanding were 104.1 million and 105.7 million ordinary shares, respectively. For the six months ended February 28, 2017 the basic and diluted weighted average ordinary shares outstanding were 104.1 million and 105.6 million ordinary shares, respectively. 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.

 

NORD ANGLIA EDUCATION, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
(in $ millions)






February 28,


August 31,

2017

2016






Non-current assets





Property, plant and equipment


325.8


328.5

Intangible assets


1,333.6


1,365.4

Investments in joint ventures and associates


0.4


0.5

Derivative financial instruments


4.0


-

Trade and other receivables


42.6


42.0

Deferred lease expense


29.8


30.6

Deferred tax assets


75.6


79.0



1,811.8


1,846.0

Current assets





Current tax assets


4.6


3.4

Inventories


3.3


4.3

Derivative financial instruments


2.4


-

Trade and other receivables


107.1


132.5

Deferred lease expense


2.3


1.7

Cash and cash equivalents (excluding bank
overdrafts)


225.7


371.9



345.4


513.8

Assets held for sale


-


8.3

Total assets


2,157.2


2,368.1






Current liabilities





Trade and other payables


(138.0)


(140.3)

Interest-bearing loans and borrowings


(41.3)


(5.0)

Finance lease liabilities


(1.2)


(1.2)

Deferred revenue


(292.7)


(550.0)

Deferred gain


(0.2)


(0.2)

Provisions for other liabilities and charges


-


(0.0)

Current tax liabilities


(12.3)


(4.5)



(485.7)


(701.2)

Non-current liabilities





Interest-bearing loans and borrowings


(1,050.0)


(1,058.2)

Derivative financial instruments


(26.8)


(25.2)

Finance lease liabilities


(61.3)


(63.3)

Other payables


(49.5)


(49.1)

Deferred revenue


(8.7)


(8.0)

Deferred gain


(11.7)


(12.1)

Retirement benefit obligations


(37.3)


(48.9)

Deferred tax liabilities


(107.6)


(110.2)



(1,352.9)


(1,375.0)

Total liabilities


(1,838.6)


(2,076.2)






Net assets


318.6


291.9






Equity attributable to equity holders of the
parent





Share capital


1.0


1.0

Share premium


736.2


736.0

Other reserves


6.9


6.9

Currency translation reserve


(133.2)


(91.7)

Shareholders' deficit


(297.5)


(365.7)



313.4


286.5

Non-controlling interest


5.2


5.4

Total Equity


318.6


291.9

 

NORD ANGLIA EDUCATION, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(in $ millions)






Three Months Ended


Six Months Ended


February 28,

2017


February 29,
2016


February 28,

2017


February 29,
2016









Cash (used in)/generated from operations

(33.3)


28.6


(87.8)


(12.6)

Payment of loan/bond expenses

(2.7)


(1.0)


(2.7)


(4.9)

 Interest paid

(16.3)


(18.8)


(28.0)


(31.9)

 Tax paid

(5.1)


(8.8)


(10.0)


(12.4)

Net cash used in operating activities

(57.4)


(0.0)


(128.5)


(61.8)









Net cash generated from/(used in)
investing activities

6.5


(14.1)


(40.3)


(70.1)









Net cash (used in)/generated from
financing activities

(2.2)


0.7


(5.8)


67.3









Net decrease in cash and cash
equivalents

(53.1)


(13.4)


(174.6)


(64.6)













Cash and cash equivalents at beginning of
the period

240.3


170.4


371.9


225.9









Exchange gains/(losses) on cash and cash
equivalents

1.7


(1.9)


(8.4)


(6.2)









Cash and cash equivalents at the end of
the period (including overdrafts)

188.9


155.1


188.9


155.1

Bank overdrafts

36.8


70.9


36.8


70.9

Cash and cash equivalents at the end of
the period (excluding overdrafts)

225.7


226.0


225.7


226.0

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 28,

2017


February 29,
2016


February 28,

2017


February 29,
2016

Full-time equivalent students (average
for the period)(1)








China

5,876


5,793


5,882


5,768

China-Bilingual

453


-


450


-

China total

6,329


5,793


6,332


5,768

Europe

6,917


6,626


6,888


6,549

Middle East

5,607


5,316


5,613


5,299

Southeast Asia

8,353


7,487


8,286


7,404

North America

9,988


9,515


9,945


9,476

Total

37,194


34,737


37,064


34,496









Capacity (average for the period)(2)








China

9,242


8,926


9,242


8,926

China-Bilingual

2,250


-


2,250


-

China total

11,492


8,926


11,492


8,926

Europe

9,691


8,617


9,691


8,617

Middle East

6,187


5,851


6,187


5,851

Southeast Asia

12,561


12,156


12,561


12,127

North America

14,882


13,507


14,882


13,507

Total

54,813


49,057


54,813


49,028









Utilization (average for the period)(3)








China

64%


65%


64%


65%

China-Bilingual

20%


-


20%


-

China total

55%


65%


55%


65%

Europe

71%


77%


71%


76%

Middle East

91%


91%


91%


91%

Southeast Asia

66%


62%


66%


61%

North America

67%


70%


67%


70%

Total

68%


71%


68%


70%









Revenue per FTE (in $ thousands)(4)








China

8.9


9.3


18.1


18.9

China-Bilingual

7.4


-


14.8


-

China total

8.8


9.3


17.9


18.9

Europe

8.8


8.9


18.0


18.5

Middle East

4.8


4.9


9.7


9.6

Southeast Asia

5.0


4.9


9.9


9.6

North America

7.3


7.0


14.5


14.0

Total

7.0


7.0


14.0


14.1









(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 28,

2017


February 29,
2016


Reported


Constant

Currency

Revenue (segment)
















Premium Schools








     China

52.3


54.0


(3.1%)


2.2%

     China-Bilingual

3.4


-


-


-

     China total

55.7


54.0


3.1%


8.7%

     Europe

61.2


59.1


3.4%


3.6%

     Middle East

27.2


25.9


5.1%


5.1%

     Southeast Asia

41.5


36.3


14.4%


14.9%

     North America

73.0


66.8


9.3%


10.5%

     Total Premium Schools

258.6


242.1


6.8%


8.5%

Other

0.9


1.1


(14.1%)


(0.1%)

Total Revenue

259.5


243.2


6.7%


8.5%









Adjusted EBITDA (segment)
















Premium Schools








     China

22.6


23.5


(3.9%)


1.5%

     China-Bilingual

0.3


-


-


-

     China total

22.9


23.5


(2.7%)


2.8%

     Europe

15.5


13.3


15.7%


16.3%

     Middle East

6.8


6.1


11.5%


11.5%

     Southeast Asia

14.4


12.0


20.9%


21.5%

     North America

19.7


22.6


(12.6%)


(11.8%)

     Total Premium Schools

79.3


77.5


2.3%


4.5%

Other

0.1


0.0


433.3%


275.9%

Central and regional expenses

(12.5)


(10.6)


17.8%


20.2%

Total Adjusted EBITDA

66.9


66.9


0.0%


2.2%

Adjusted Net Income

28.9


27.7


4.5%











$ millions

Six Months Ended


% Variance


February 28,

2017


February 29,
2016


Reported


Constant

Currency

Revenue (segment)
















Premium Schools








     China

106.5


109.3


(2.5%)


2.8%

     China-Bilingual

6.7


-


-


-

     China total

113.2


109.3


3.6%


9.3%

     Europe

124.2


120.9


2.7%


3.0%

     Middle East

54.7


51.1


7.2%


7.2%

     Southeast Asia

82.1


71.0


15.6%


15.2%

     North America

144.5


132.9


8.8%


10.0%

     Total Premium Schools

518.7


485.2


6.9%


8.5%

Other

1.8


2.2


(19.0%)


(4.0%)

Total Revenue

520.5


487.4


6.8%


8.5%









Adjusted EBITDA (segment)
















Premium Schools








     China

45.5


46.8


(2.7%)


2.9%

     China-Bilingual

0.5


-


-


-

     China total

46.0


46.8


(1.6%)


4.0%

     Europe

30.4


27.8


9.1%


9.6%

     Middle East

13.5


11.6


16.7%


16.7%

     Southeast Asia

27.6


22.4


23.8%


23.4%

     North America

36.1


42.7


(15.4%)


(14.5%)

     Total Premium Schools

153.6


151.3


1.6%


3.7%

Other

0.1


(0.2)


(181.5%)


(200.8%)

Central and regional expenses

(23.5)


(20.0)


17.6%


20.7%

Total Adjusted EBITDA

130.2


131.1


(0.6%)


1.3%

Adjusted Net Income

54.9


53.6


2.6%



We use EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per Ordinary Share as supplemental financial measures of our operating performance. We define EBITDA as profit for the period plus income tax expense, net financing expense, exceptional items, other losses/(gains), 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. EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings per Ordinary Share 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 and Adjusted Earnings per Ordinary Share presented herein may not be comparable to similarly titled measures presented by other companies.   

Reconciliation of EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS

(Unaudited)

Three Months Ended


Six Months Ended


February 28,

2017


February 29,
2016


February 28,

2017


February 29,
2016

$ millions
















Profit for the period

18.8


21.4


58.8


53.7

Income tax expense

5.4


5.7


17.5


14.1

Net financing expense

17.7


22.9


26.6


25.1

Exceptional items(1)

0.8


2.5


1.3


4.9

Other losses/(gains)(2)

2.5


(5.4)


(18.3)


(5.3)

Amortization

4.5


4.6


9.1


9.2

Depreciation

0.2


0.2


0.3


0.4

Depreciation in Cost of Sales

12.2


11.0


24.0


22.8

EBITDA

62.1


62.9


119.3


124.9









(Gain)/Loss on disposal of property, plant
and equipment

(0.4)


0.0


(0.4)


(0.0)

Share based payments(3)

2.0


1.6


4.2


3.2

Greenfield pre-opening costs(4)

1.3


1.7


2.8


2.0

China Bilingual division establishment

0.5


-


0.8


-

Rollout of Juilliard Program(5)

0.9


0.9


1.5


1.2

Rollout of MIT collaboration(6)

0.3


-


0.7


-

Global campus expedition facility(7)

(0.3)


-


0.1


-

SOX implementation

0.5


-


1.0


-

Other

-


(0.2)


0.2


(0.2)

Adjusted EBITDA

66.9


66.9


130.2


131.1









Depreciation

(12.4)


(11.2)


(24.3)


(23.2)

Net Financing Expense

(17.7)


(22.9)


(26.6)


(25.1)

Financing Expense Adjustments(8)

2.7


6.0


(4.3)


(8.0)

Income Tax Expense

(5.4)


(5.7)


(17.5)


(14.1)

Tax Adjustments(9)

(4.7)


(5.0)


(1.5)


(6.2)

Non-Controlling Interest

(0.5)


(0.4)


(1.1)


(0.9)

Adjusted Net Income

28.9


27.7


54.9


53.6









Adjusted earnings per ordinary share(10)   








(in $)

Basic

0.28


0.27


0.53


0.51

Diluted

0.27


0.27


0.52


0.51









(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 cross currency swaps, various put/call options, embedded lease derivatives at our Chicago South Loop school and the British International School of Houston and unrealized foreign exchange movements on our intercompany balances.          
(3)  Represents non-cash charges associated with share based payments to members of management.
(4)  Includes the pre-opening costs associated with the opening of new campuses in Abu Dhabi, Hong Kong, Bangkok and China Bilingual.
(5) Represents the costs associated with the development of dance and drama curricula as part of The Juilliard-Nord Anglia Performing Arts Program.
(6) Represents the costs associated with the roll-out of the MIT collaboration as this is the first pilot year of the program.
(7) Represents the reclassification of certain Global Campus costs incurred in the three months ended November 30, 2016 to operating costs.
(8) Adjustment for unrealized foreign exchange gain arising from the revaluation of the CHF200.0 million senior secured notes to US dollar.
(9)  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 25.32%, which is the estimated effective tax rate for fiscal 2017 excluding unrealized FX gains.
(10)  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 months ended February 28, 2017 the basic and diluted weighted average ordinary shares outstanding were 104.1 million and 105.7 million ordinary shares, respectively. For the six months ended February 28, 2017 the basic and diluted weighted average ordinary shares outstanding were 104.1 million and 105.6 million ordinary shares, respectively. 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.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/nord-anglia-education-reports-second-quarter-fy2017-financial-results-300447034.html

SOURCE Nord Anglia Education, Inc.

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+852 3951 1132

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