Post on 15-Apr-2017
Nord Anglia Education Full fiscal year 2015 results presentation
November 16, 2015For the period ended August 31, 2015
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Neither Nord Anglia Education Inc. (NYSE: NORD) nor any of its subsidiaries or affiliates is making any representation or warranty, expressed or implied, as to the accuracy or completeness of the attached materials.
Please note that the attached materials and our oral explanations of the attached materials may constitute forward-looking statements within the meaning of applicable U.S. securities laws and such forward-looking statements are made based on our current expectations. Forward-looking statements relate to events involving certain risks and uncertainties, and actual results may differ materially from the views expressed.
A number of potential risks and uncertainties are outlined in our public filings with the Securities and Exchange Commission. Nord Anglia Education Inc. does not undertake any obligation to update any forward-looking statement, except as required under applicable law. You are cautioned not to place undue reliance on any forward-looking statements.
Disclaimer
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The world’s leading premium schools organization
42 schools 15 countries 34,300 students 48,998 capacity
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2015 Outstanding Academic Outcomes
IGCSE Results 2015Students achieving 5A*- C (inc English and Math)
International Baccalaureate Results 2015Students’ Average Diploma Score (max. 45 points)
* UK average 53% as of 2014 (2015 data not yet released)
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Fiscal 2015 highlights
Financial Revenue up 21.6% (CC1 25.2%) from $474.6 million to $577.0 million Adjusted EBITDA up 8.6% (CC110.1%) from $127.4 million to $138.3 million Adjusted Net Income up from $22.8 million to $46.6 million Adjusted Diluted EPS up 77.7% from $0.27 to $0.47Operational Average full time equivalent students (FTEs) up 28.7% from 17,313 to 22,286 Capacity up 42.5% from 22,007 seats to 31,358 seats Revenue/FTE down 4.0% (CC1 0.8% down) from $26.4k to $25.3k
1 CC denotes Constant Currency
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Financial Performance
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Group performance summary – Q4 fiscal 2015 vs Q4 fiscal 2014
$ millions Q4FY15(1) Q4FY14 VariancePremium Schools 84.1 59.4 Actual: 41.6%
CC(2): 45.8%
Other 4.6 4.7
Total Revenue 88.7 64.1 Actual: 38.4%CC(2): 42.9%
Gross Profit 26.5 20.8 Actual: 27.4%CC(2): 32.8%
Gross Profit Margin 29.8% 32.4% (2.6%)
Adjusted EBITDA (3.6) 1.2 Actual: (392.3)%CC(2): (338.3)%
Adjusted EBITDA Margin (4.0%) 1.9% (5.9%)
Adjusted Net Income (23.0) (15.2)
Adjusted EPS (in $) (0.22) (0.16)
1 Q4 ends August 312 CC denotes Constant Currency
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Group performance summary – Fiscal 2015 vs Fiscal 2014
$ millions FY15(1) FY14 VariancePremium Schools 563.2 456.4 Actual: 23.4%
CC(2): 27.6%
Other 13.8 18.2
Total Revenue 577.0 474.6 Actual: 21.6%CC(2): 25.2%
Gross Profit 224.4 194.3 Actual: 15.5%CC(2): 18.0%
Gross Profit Margin 38.9% 40.9% (2.0%)
Adjusted EBITDA 138.3 127.4 Actual: 8.6%CC(2): 10.1%
Adjusted EBITDA Margin 24.0% 26.8% (2.8%)
Adjusted Net Income 46.6 22.8 104.8%
Adjusted EPS (in $) 0.47 0.27 77.7%
1 Fiscal year ends August 312 CC denotes Constant Currency
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Fiscal 2015 premium schools revenue bridge
$ millions
FY14 Revenue Actual
FY14 FX impact
FY14 Revenue (CC )
FY15 Revenue growth ex
acquisitions (CC )
FY15 Singapore, Cambodia,
Vietnam & Meritas Revenue
FY15 Revenue Actual
0.0
100.0
200.0
300.0
400.0
500.0
600.0
456.4441.3
(15.1)50
71.9
563.2
11%
16%
1
1
1 CC denotes Constant Currency
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China highlights
Commentary
FY15 Avg Revenue/FTE $35.0k up from $34.3k
Capacity 7,756 places up 11.4% from 6,964
FY15 Revenue $183.2m from $165.6m
+10.7%+11.3% CC
FY15 Adj. EBITDA$85.0m from $78.4m
+8.3%+9.1% CC
4,8275,228
Average FTEs
FY14 FY15
Financial Performance
The British School of Beijing, Shunyi (Shunyi, Beijing)
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Europe highlights
Commentary
FY15 Avg Revenue/FTE $28.8k down from $30.1k primarily due to FX impact
Capacity 6,084 places up 14.3% from 5,322
Financial Performance
FY15 Revenue$133.3m from $136.0m
(1.9%)+8.7% CC
FY15 Adj. EBITDA$17.1m from $26.0m
(34.1%)(28.6%) CC
Series1
4,514 4,624
Average FTEs
FY14 FY15
College du Leman, (Geneva, Switzerland)
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Middle East / South East Asia highlights
Commentary
FY15 Avg Revenue/FTE $17.1k up from $16.4k
Capacity 13,758 places up 130.8% from 5,961
BIS Vietnam integration completed
Financial Performance
British International School Ho Chi Minh City (HCMC, Vietnam)
FY15 Revenue$164.1m from $86.0m
+90.8%+92.7% CC
FY15 Adj. EBITDA$39.6m from $22.2m
+77.9%+78.8% CC
5,230
9,618
Average FTEs
FY14 FY15
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North America highlights
CommentaryFY15 Avg Revenue/FTE $29.3k up from $25.1k
Capacity unchanged at 3,760
FY15 Revenue $82.6m from $68.8m +19.9%FY15 Adj. EBITDA$25.8m from $23.2m +11.6%
2,742 2,816
Average FTEs
FY14 FY15
Financial Performance
The British School of Chicago South Loop (Chicago, Illinois, U.S.A.)
Twelve Months Ended August 31,
($ millions) 2015 2014Cash generated from operations 167.6 124.3
Payment of bond redemption expenses and commitment fees
(10.0) (77.0)
Interest paid (31.2) (73.4)
Tax paid (19.9) (25.2)Net cash generated from / (used in) operating activities
106.5 (51.3)
Net cash used in investing activities
(709.6) (87.3)
Net cash from financing activities
680.6 133.7
Net increase / (decrease) in cash and cash equivalents
77.5 (4.9)
Cash and cash equivalents at end of the period
226.3 166.2
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Balance sheet & cash flow
Q4FY15 Net Debt $926.0m1
LTM Q4FY15 PF Vietnam + Meritas Net Leverage2 4.3x down from 5.2x LTM Q2FY15 PF Vietnam + Meritas
Negative EBITDA impact from FX and loss making start-up schools in Aubonne and Dubai
Deleveraging profile
LTM Q2FY15 PF LTM Q3FY15 PF LTM Q4FY15 PF
5.2x 4.9x4.3x
Net Leverage
1 Net debt calculated as the principal debt outstanding including capital leases less cash (net of overdraft)2 LTM Q4FY15 Adjusted EBITDA pro forma Meritas, Vietnam and Cambodia $213.4m
Highlights Summary cash flow
Outlook
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20*Current FTEs as of November 15, 2015
Strong year on year starting enrollment growth of 73% and further progress in year
Europe
North AmericaMiddle East / South East Asia
China
4,7975,107
5,727 5,752
Sep-13 Sep-14 Sep-15 Current
4,494 4,568
6,456 6,492
Sep-13 Sep-14 Sep-15 Current
4,843
7,292
12,559 12,630
x Sep-14 Sep-15 Current
2,700 2,773
9,435 9,440
Sep-13 Sep-14 Sep-15 Current
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7,240
19,740
34,177 34,314
Sep-13 Sep-14 Sep-15 Current
NORD Group Total
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The Company is reiterating its outlook for the full fiscal year 2016 below:
Outlook for Fiscal 2016
Fiscal 2016 Guidance
Revenue $850 - $870m
Adjusted EBITDA $215 - $225m
Adjusted Net Income $70 - $75m
Adjusted EPS1 $0.67 - $0.72
1 Diluted weighted average shares of approximately 104.5 million
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Capital Allocation Strategy
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Our capital allocation strategy
Same school expansion Greenfields Acquisitions Lowest risk with in-market
demand visibility Developer funded preferred 1-2 years to breakeven 1-4 years payback period 3-6 years to maturity Target ROI 50%+
Developer funded preferred Enhances value of surrounding
real estate Target ROI 70%+ Time to breakeven, payback &
maturity varies by market
Low-risk market entry Buyer of choice in highly
fragmented market Clear plan pre-acquisition to
improve profitability
Total investment 1-2x EBITDA at maturity
Total investment 1-2x EBITDA at maturity
7-10x EBITDA multipleReduced to 3-5x after 3-4 years
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Greenfield opportunities generate the highest returns
Lower Higher
Hig
her
Low
er
Growth
Margin
3-4 years to breakeven2 6-8 years to maturity3
e.g. Aubonne (opened Sept 2014)
1-2 years to breakeven2
3-4 years to maturity3
e.g. Shanghai (opened Sept 2005)
4-5 years to breakeven2
7-10 years to maturity3
Not a strategic fit
2-3 years to breakeven2
3-5 years to maturity3
e.g. Dubai (opened Sept 2014)
Key factors : Market growth Supply/demand dynamics EBITDA margin at maturity
average breakeven utilization – c.30-35%
average margin of NORD schools at maturity – c.33%
1 ROI calculated as net cashflow at maturity divided by total capital investment.2 Breakeven means cashflow positive. 3 Maturity means 80% utilization.
Target ROI1 70+%
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Capital expected to be deployed in fiscal 2016
Expansion of c.1,400 seats expected including: Hong Kong Guangzhou Madrid Singapore Geneva Warsaw Miami Houston (Village) Budapest Bratislava
Completion capex on 1,100 seat Chicago South Loop campus opened Sept 2015 (c.$1.4m)
2,000 seat Houston campus for Sept 2016 (c.$7.0m)
2,250 seat dual-curriculum school Shanghai for Sept 2016 (c.$31.1m)
Intial capex on new 1,500 seat Bangkok campus for Sept 2017 (c.$1.0m)
Active pipeline:
Large fragmented market Opportunities vary in size –
tuck-ins, small groups Disciplined around price
FY16 expected same school expansion capex c.$27.3m
FY16 expected greenfield capex c.$40.5m
Target to deploy remaining available capital
Same school expansion Greenfields Acquisitions
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Available capital in fiscal 2016
LESS
PLUS
IFRS cash generated from operations = 108%1 Adjusted EBITDA (midpoint of guidance $220m) (c.$237m)
Cash Taxes (c.20m)2
Cash Net Interest (c.$57m)3
Capex ($110m)4: maintenance ($28m), acquisition catch up ($10m), one-off projects ($3m), same school expansion & greenfields ($68m)
Net proceeds from planned Sale & Leaseback (c.$175m)
1 Average percentage FY12-FY152 Fiscal 2016 expected effective tax rate 28.5%3 Fiscal 2016 expected interest expense net of expected non-cash interest expense4 Fiscal 2016 expected capital expenditure
Plus additional debt capacity up to net leverage ≤ 4.0x
LESS
c.$225m available
foracquisitions in FY16
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Appendix
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Our school network
Existing Under construction
NORTH AMERICAThe British International School of CharlotteBritish International School of BostonBritish International School of Houston(new campus to open September 2016)British International School of WashingtonNord Anglia International School, New YorkBritish International School of Chicago, Lincoln ParkBritish International School of Chicago, South Loop North Broward Preparatory SchoolWindermere Preparatory SchoolThe Village School San Roberto International School
CHINAThe British School of Beijing, SanlitunThe British School of Beijing, ShunyiThe British School of GuangzhouNord Anglia International School Shanghai, PudongThe British International School Shanghai, PuxiNord Anglia Bilingual School Shanghai (new greenfield to open September 2016)Nord Anglia International School Hong KongLéman International School, Chengdu
Nord Anglia International School, Al KhorCompass International School Doha, RayyanCompass International School Doha, GharaffaCompass International School Doha, Madinat KhalifaThe British International School Abu DhabiNord Anglia International School Dubai
MIDDLE EAST
SOUTHEAST ASIARegents International School PattayaSt Andrews International School BangkokNorthbridge International School CambodiaDover Court International School SingaporeBritish International School, HanoiBritish Vietnamese International School, HanoiBritish International School, Ho Chi Minh CityBritish Vietnamese International School, Ho Chi Minh City
Collège Beau Soleil, Villars-Sur-OllonCollège Champittet, NyonCollège Champittet, PullyInternational College SpainLa Côte International School, AubonneThe British International School BratislavaThe British International School BudapestThe British School WarsawThe English International School PragueCollège du Léman
EUROPE
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Our path to becoming the world’s leading premium schools organization
Listed on the main board
London Stock Exchange
Nord Anglia Education founded
Opened first school
Warsaw, Poland
Acquired new schools in SE Asia
Singapore and Cambodia
Taken private by Baring Private
Equity Asia
Andrew Fitzmauricejoins as CEO
Market cap: $40mm pre-appointment
Opened first school in China
Pudong, Shanghai
Acquired four schools in
Switzerland
Acquired first school in SE Asia
Pattaya, Thailand
Opened first school in the Middle East
Abu Dhabi, UAE
1972 1992 2002 2009 2012 20141989 2003 2008 2011 2013
Acquired WCL Group (11 Schools)
Listed on the NYSE
Opened three new greenfields
Hong Kong, Dubai and Aubonne, Switzerland
New greenfield
Chicago, USA
2015 2016
Acquired four schools in VietnamHo Chi Minh City and
Hanoi
Acquired six Meritas schools
New greenfield
Houston, USA
1 Pro forma for the acquisition of WCL.
Aug 31, 2008 FY09 FY10 FY11 FY12 FY13PF FY14 Nov 15, 2015
4,010 4,282 6,166 7,054 8,18014,378 17,313
34,314
Student enrollment
CAGR: 35%
No. of schools:
6 6 9 12 13 25 31 42
1
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Consolidated income statement
*Please refer to the footnotes and other information on our report on Form 6-K furnished to the SEC on November 16, 2015.
Three Months Ended August 31.
Twelve Months Ended August 31,
$ millions, except share data 2015 2014 2015 2014(unaudited) (unaudited) (unaudited)
Revenue 88.7 64.1 577.0 474.6Cost of sales (62.2) (43.3) (352.6) (280.3)Gross profit 26.5 20.8 224.4 194.3
Selling, general & administrative expenses (38.5) (27.9) (125.1) (92.9)Depreciation (0.2) (0.9) (0.7) (2.0)Amortization (2.2) (3.1) (13.7) (10.4)Other losses (3.0) - (3.0) -Exceptional expenses (15.6) (3.4) (20.1) (100.2)Total expenses (59.5) (35.3) (162.6) (205.5)
Operating (loss) / profit (33.0) (14.5) 61.8 (11.2) Finance income 1.1 0.6 2.8 2.0Finance expense (15.7) (7.7) (39.7) (55.5)Net finance expense (14.6) (7.1) (36.9) (53.5)
(Loss)/profit before income tax (47.6) (21.6) 24.9 (64.7)Income tax credit/(expense) 7.0 (3.0) (12.9) (25.7)(Loss)/profit for the period (40.6) (24.6) 12.0 (90.4)
(Loss)/profit attributable to: Owners of the parent (41.1) (24.6) 10.8 (90.4) Non-controlling interest 0.5 - 1.2 -(Loss)/profit for the period (40.6) (24.6) 12.0 (90.4)
(Loss)/earnings per ordinary share (in dollars) Basic (0.40) (0.25) 0.11 (1.07) Diluted (0.40) (0.25) 0.11 (1.07)
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Key operating data
Three Months Ended August 31,
Twelve Months Ended August 31,
2015 2014 2015 2014
Full-time equivalent students (average for the period)China 5,290 4,820 5,228 4,827Europe 4,668 4,535 4,624 4,514Middle East/South East Asia 11,141 6,029 9,618 5,230North America 2,857 2,770 2,816 2,742Total 23,956 18,154 22,286 17,313
Capacity (average for the period)China 7,756 6,964 7,756 6,964Europe 6,084 5,322 6,084 5,322Middle East/South East Asia 16,939 6,891 13,758 5,961North America 3,760 3,760 3,760 3,760Total 34,539 22,937 31,358 22,007
*Please refer to the footnotes and other information on our report on Form 6-K furnished to the SEC on November 16, 2015.
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Key operating data continued
Three Months Ended August 31,
Twelve Months Ended August 31,
2015 2014 2015 2014
Utilization (average for the period)China 68% 69% 67% 69%Europe 77% 85% 76% 85%Middle East/South East Asia 66% 87% 70% 88%North America 76% 74% 75% 73%Total 69% 79% 71% 79%
Revenue per FTE (in $ thousands)China 4.3 4.3 35.0 34.3Europe 4.0 3.5 28.8 30.1Middle East/South East Asia 2.2 2.5 17.1 16.4North America 6.3 2.7 29.3 25.1Total 3.5 3.3 25.3 26.4
*Please refer to the footnotes and other information on our report on Form 6-K furnished to the SEC on November 16, 2015.
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Supplemental financial data
Three Months Ended August 31,
% Variance
$ millions2015
2014 Reported
Constant Currency
(unaudited) (unaudited)Revenue (segment)
Premium SchoolsChina 22.9 20.9 9.9% 10.0%Europe 18.5 16.0 15.6% 25.1%ME/SEA 24.7 14.9 65.3% 71.0%North America 18.0 7.6 136.8% 136.8%Total Premium Schools 84.1 59.4 41.6% 45.8%Other 4.6 4.7 (2.1)% 4.4%Total Revenue 88.7 64.1 38.4% 42.9%
Adjusted EBITDA (segment)
Premium SchoolsChina 7.6 7.5 1.9% 1.9%Europe (6.1) (1.8) (248.3)% (298.5)%ME/SEA 1.2 2.3 (47.8)% (46.9)%North America 2.6 (0.2) 1938.2% 1937.7%Total Premium Schools 5.3 7.8 (33.5)% (34.9)%Other 0.4 1.3 (60.4)% (58.4)%Central and regional expenses (9.3) (7.9) (18.1)% (20.5)%Adjusted EBITDA (3.6) 1.2 (392.3)% (338.3)%
*Please refer to the footnotes and other information on our report on Form 6-K furnished to the SEC on November 16, 2015.
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Supplemental financial data continued
Twelve Months Ended August 31,
% Variance
$ millions2015
2014 Reported
Constant Currency
(unaudited) Revenue (segment)
Premium SchoolsChina 183.2 165.6 10.7% 11.3%Europe 133.3 136.0 (1.9)% 8.7%ME/SEA 164.1 86.0 90.8% 92.7%North America 82.6 68.8 19.9% 19.9%Total Premium Schools 563.2 456.4 23.4% 27.6%Other 13.8 18.2 (24.0)% (28.9)%Total Revenue 577.0 474.6 21.6% 25.2%
Adjusted EBITDA (segment)
Premium SchoolsChina 85.0 78.4 8.3% 9.1%Europe 17.1 26.0 (34.1)% (28.6)%ME/SEA 39.6 22.2 77.9% 78.8%North America 25.8 23.2 11.6% 11.6%Total Premium Schools 167.5 149.8 11.8% 13.8%Other 1.5 4.0 (60.9)% (59.1)%Central and regional expenses (30.7) (26.4) 16.3% 21.6%Adjusted EBITDA 138.3 127.4 8.6% 10.1%
*Please refer to the footnotes and other information on our report on Form 6-K furnished to the SEC on November 16, 2015.
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Reconciliation of non-GAAP financial data
Three Months Ended August 31,
Twelve Months Ended August 31,
$ millions 2015 2014 2015 2014(unaudited) (unaudited) (unaudited)
Revenue 88.7 64.1 577.0 474.6Cost of Sales (62.2) (43.3) (352.6) (280.3) Rent Premium Schools 13.7 9.8 53.0 44.4 Depreciation Premium Schools 11.7 4.9 33.9 21.4Adjusted Cost of Sales (36.8) (28.6) (265.7) (214.5)Adjusted Gross Profit 51.9 35.5 311.3 260.1
Profit/(loss) the period (40.6) (24.6) 12.0 (90.4)Income tax (credit)/expense (7.0) 3.0 12.9 25.7Net financing expense 14.6 7.1 36.9 53.5Exceptional items 15.6 3.4 20.1 100.2Other losses 3.0 - 3.0 -Amortization 2.2 3.1 13.7 10.4Depreciation 0.2 0.9 0.7 2.0Depreciation in Cost of Sales 11.7 4.9 33.9 21.4EBITDA (0.3) (2.2) 133.2 122.8(Gain)/loss on disposal of PP&E (0.1) - 0.3 -FX (gain)/loss (8.3) (1.3) (3.9) (4.0)Share based payments 0.7 0.6 2.8 3.1Management fees – Sponsor - - - 1.2Greenfield pre-opening costs 3.4 4.1 3.4 4.1Rollout of Juilliard program 0.4 - 0.7 -China expat taxes 0.0 - 1.1 -Other 0.6 0.0 0.7 0.2Adjusted EBITDA (3.6) 1.2 138.3 127.4*Please refer to the footnotes and other information on our report on Form 6-K furnished to the SEC on November 16, 2015.
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Reconciliation of non-GAAP financial data continued
Three Months Ended August 31,
Twelve Months Ended August 31,
$ millions 2015 2014 2015 2014(unaudited) (unaudited) (unaudited)
Adjusted EBITDA (3.6) 1.2 138.3 127.4
Depreciation (11.9) (5.8) (34.6) (23.4)Net financing expense (14.6) (7.1) (36.9) (53.5)Income tax (credit)/expense 7.0 (3.0) (12.9) (25.7)Tax adjustments 0.6 (0.5) (6.1) (2.0)Non-controlling interest (0.5) - (1.2) -Adjusted Net (Loss)/Income (23.0) (15.2) 46.6 22.8
Adjusted (Loss)/earnings per ordinary share (in dollars) Basic (0.22) (0.16) 0.48 0.27 Diluted (0.22) (0.16) 0.47 0.27
*Please refer to the footnotes and other information on our report on Form 6-K furnished to the SEC on November 16, 2015.
Thank you.
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