Nord Anglia Education Second Quarter Fiscal 2014 Results Presentation April 23, 2014 For the period ended February 28, 2014
Disclaimer Neither Nord Anglia Education Inc. 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. 2
Overview Nord Anglia Education (NYSE: NORD) is the leading international operator of premium schools serving students from kindergarten through the end of secondary (K-12). We have over 18,000 full time equivalent students (FTEs) at our 28 premium schools in China, Europe, the Middle East/South East Asia and North America. 28 12 18,166 22,637 $58bn Premium Schools Countries FTEs Capacity Global Market Nord Anglia Education is the world s leading premium schools organization 3
Educational Quality Outstanding Education Focus on a British style of education Distinctive educational features at all Nord Anglia Education schools Global Classroom for our students Nord Anglia University for our teachers Scale, reach and a contemporary approach Superior academic results with students outperforming national and global averages 4
Business Strategy Three growth methods Same school organic Greenfield organic Acquisitions quasi organic Expansion to meet increasing demand funded by a developer or landlord Example: recent addition of 300 pre-paid seats in one of our Qatar schools Development of a new school or campus funded by a developer Example: our new 1,500 seat greenfield school in Dubai opening in September 2014 Acquire at attractive multiple with the ability to significantly improve earnings Example: Dover Court School in Singapore completed April 22, 2014 5
Second Quarter Fiscal 2014 Highlights Financial - Revenue up 52.8% from $89.5 million to $136.8 million - Adjusted EBITDA up 63.4% from $26.2 million to $42.8 million - Adjusted Net Income up 99.0% from $6.4 million to $12.7 million Operational - Average full time equivalent students (FTEs) up 74.8% from 9,764 to 17,069 - Capacity up 73.9% from 12,503 seats to 21,737 seats - Utilization at 79% from 78% - Adjusted Revenue/FTE down 8.2% from $8.5k to $7.8k (mix impact) 6
Recent Developments IPO/Refinancing March 31, 2014 completed our IPO, issued $515 million Term Loan B ( TLB ) and refinanced our $640 million outstanding notes Same school - organic 300 seat expansion at Madinat Khalifa, Doha all pre-paid Continued organic growth within our other schools Greenfield - organic New schools in Hong Kong and Dubai opening September 2014 Applications received to date for September 2014 very strong New Chicago campus construction commenced Acquisition quasi-organic April 22, 2014 completed the acquisition of Dover Court School in Singapore Founded in 1972, Dover Court has approximately 650 FTEs with 900 seats of capacity Full Time Equivalent Students Increased from 17,161 FTEs as of March 9, 2014 to 18,166 FTEs as of April 22, 2014 7
Financial Performance Second Quarter Fiscal 2014 Results Presentation
Group Performance Summary $ millions Q2 FY14 (4) Q2 FY13 Variance Premium Schools (1) 131.9 78.3 68.5% Loss making start-up schools 0.9 4.7 (80.9%) Sub total Premium Schools 132.8 83.0 Actual: 60.0% CC (2) : 57.5% Other 4.0 6.5 (39.0%) Total Revenue 136.8 89.5 Actual: 52.8% CC (2) : 50.7% Gross Profit 74.1 47.7 55.4% Gross Profit Margin 54.2% 53.3% 0.9% Adjusted EBITDA 42.8 26.2 Actual: 63.4% CC (2) : 60.8% Adjusted EBITDA Margin (3) 31.5% 30.9% 0.6% Adjusted Net Income 12.7 6.4 99.0% (1) Premium schools excluding loss making start-up schools (2) CC denotes Constant Currency (3) Adjusted EBITDA margin calculated by excluding revenue and EBITDA from loss making start-up schools (4) Fiscal year end August 31 9
Q2 FY14 Premium Schools Revenue Bridge $ millions 140 10.6 132.8 120 27.8 110.8 11.4 100 80 83.0 60 40 20 0 Q2 FY13 Revenue Actual Q2 FY13 WCL Revenue Q2 FY13 Revenue Pro forma Q2 FY14 Revenue ex acquisitions Q2 FY14 Guangzhou and Bangkok Revenue Q2 FY14 Revenue Actual 10
Revenue & EBITDA Performance by Region China Europe Middle East / South East Asia North America REVENUE $49.3m 24% REVENUE $39.9m 18% REVENUE $23.0m 369% REVENUE $19.7m NEW REGION EBITDA EBITDA EBITDA $24.6 $9.2m $6.3m 20% 21% 425% EBITDA $8.5m NEW REGION 11
China Highlights Utilization at 69% down from 75% due to capacity expansion in Sanlitun and Pudong over the summer of 2013 Q2 FY14 Average Revenue/FTE $10.3k up from $9.8k China contribution to total Premium Schools EBITDA 50% Q2 FY14 vs 70% Q2 FY13 Acquired The British School of Guangzhou on July 25, 2013 Continued growth in student numbers with strong pricing power Financial Performance Q2 FY14 Revenue $49.3m from $39.7m 24% Q2 FY14 Adj. EBITDA $24.6 from $20.5m 20% 4,052 FTEs 4,806 Nord Anglia International School Hong Kong to open in September 2014 Q2 FY13 Q2 FY14 12
Europe Highlights Utilization unchanged at 85% Q2 FY14 Average Revenue/FTE unchanged at $8.9k Acquired International College Spain, Madrid as part of WCL Group on May 22, 2013 Moderate enrollment and fee growth in line with macroeconomic climate Financial Performance Q2 FY14 Revenue $39.9m from $33.7m 18% Q2 FY14 Adj. EBITDA $9.2m from $7.6m 21% FTEs 4,501 3,766 Q2 FY13 Q2 FY14 13
Middle East / South East Asia Highlights Utilization at 88% up from 79% Q2 Average Revenue/FTE $4.6k down from $5.2k due to acquisitions and growth in lower fee locations Financial Performance Q2 FY14 Revenue $23.0m from $4.9m 369% Q2 FY14 Adj. EBITDA $6.3m from $1.2m 425% Acquired four schools in Qatar as part of WCL Group on May 22, 2013 and St Andrew s Bangkok on August 2, 2013 Recent expansion of 300 seats at Madinat Khalifa, Doha in early Q3 FY14 all pre-paid FTEs 5,026 Acquired Dover Court School Singapore on April 22, 2014 Nord Anglia International School Dubai to open in September 2014 951 Q2 FY13 Q2 FY14 14
North America Highlights Financial Performance Utilization at 80% up from 76% pro forma Q2 Average Revenue/FTE $7.5k up from $6.9k pro forma Acquired six schools in North America as part of WCL Group on May 22, 2013: Boston, Charlotte, Chicago, Houston, New York, Washington New campus in Chicago to open in September 2015 with ~1,100 seats Continued growth across North America Q2 FY14 Revenue $19.7m Q2 FY14 Adj. EBITDA $8.5m FTEs NEW REGION NEW REGION 2,638 Q2 FY13 Q2 FY14 15
Balance Sheet & Cash flow Highlights Q2FY14 Net Debt $562.1m LTM Q2 FY14 Net Leverage 4.7x Pro forma for IPO/refinancing LTM Q2 FY14 Net Leverage 3.5x Senior secured notes, PIK toggle notes and RCF repaid with $515 million TLB and IPO proceeds Moody s and Standard & Poor s corporate ratings B1/B+ up from B3/B Pro forma for the refinancing, interest expense would have been approximately $10.6 million lower for Q2 FY14 Summary Cash flow Six Months Ended February 28, ($ millions) 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/(used in) financing activities 10.8 11.9 Net decrease in cash and cash equivalents (71.5) (44.8) Cash and cash equivalents at end of the period 102.9 68.2 16
Outlook Second Quarter Fiscal 2014 Results Presentation
Outlook for Fiscal 2014 Set out below are the Company s expectations for the full fiscal year 2014: $ millions Revenue $468m - $472m Adjusted EBITDA $125m - $127m 18
Appendix Second Quarter Fiscal 2014 Results Presentation
Reconciliation of Non-GAAP Financial Data Set forth below is a reconciliation of EBITDA, Adjusted EBITDA and Adjusted Net Income to the most directly comparable IFRS measure, loss/profit for the following periods. Three Months Ended February 28, Six Months Ended February 28, $ millions 2014 2013 2013 2014 2013 2013 (unaudited) Actual Actual Pro forma Actual Actual Pro forma Profit for the period 14.6 1.4 2.1 18.1 8.7 11.9 Income tax expense 7.1 6.8 5.1 13.2 12.3 10.1 Net financing expense (1) 17.0 10.4 13.2 33.0 19.4 25.0 Exceptional items (2) 0.8 1.7 1.7 2.5 2.7 2.7 Amortization 2.5 1.0 2.0 4.9 1.9 3.9 Depreciation 5.5 2.4 3.8 10.7 5.0 7.9 EBITDA 47.5 23.7 27.9 82.4 50.0 61.5 Loss on disposal of PP&E (3) - 0.1 0.1-0.1 0.1 FX gain (4) (6.8) (0.3) 2.2 (4.6) (0.8) 1.1 Loss making start-up schools (5) 0.1 0.4 0.7 0.2 0.9 1.5 Share based payments (6) 1.3 - - 2.4 - - Management fees Sponsor (7) 0.5 2.3 2.3 1.0 2.3 2.3 Other 0.2 - - 0.2 (0.1) (0.1) Adjusted EBITDA 42.8 26.2 33.2 81.6 52.4 66.4 *Please refer to the footnotes on our Form 6-K quarterly report. 20
Reconciliation of Non-GAAP Financial Data Continued Set forth below is a reconciliation of EBITDA, Adjusted EBITDA and Adjusted Net Income to the most directly comparable IFRS measure, loss/profit for the following periods. Three Months Ended February 28, Six Months Ended February 28, $ millions 2014 2013 2013 2014 2013 2013 (unaudited) Actual Actual Pro forma Actual Actual Pro forma Adjusted EBITDA 42.8 26.2 33.2 81.6 52.4 66.4 Depreciation (5.5) (2.4) (3.8) (10.7) (5.0) (7.9) Net Financing Expense (1) (17.0) (10.4) (13.2) (33.0) (19.4) (25.0) Income Tax Expense (7.1) (6.8) (5.1) (13.2) (12.3) (10.1) Tax Adjustments (8) (0.5) (0.2) (0.4) (1.0) (0.4) (0.8) Adjusted Net Income 12.7 6.4 10.7 23.7 15.3 22.6 *Please refer to the footnotes on our Form 6-K quarterly report. 21
Detailed Profit & Loss Three Months Ended February 28, Six Months Ended February 28, $ millions 2014 2013 2014 2013 (unaudited) 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 for the period 14.6 1.4 18.1 8.7 22
Key Operating Data Three Months Ended February 28, Six Months Ended February 28, 2014 2013 2013 2014 2013 2013 Actual Actual Pro forma Actual Actual Pro forma Full-time equivalent students (average for the period) (1) China 4,806 4,052 4,052 4,812 4,041 4,041 Europe 4,501 3,766 4,437 4,501 3,764 4,442 Middle East/South East Asia 5,026 951 2,347 4,964 944 2,314 North America 2,638-2,421 2,629-2,391 Sub-total 16,971 8,769 13,257 16,906 8,749 13,188 Loss making start-up schools (2) 98 995 1,063 97 988 1,056 Total 17,069 9,764 14,320 17,003 9,737 14,244 Capacity (average for the period) (3) China 6,964 5,380 5,380 6,964 5,370 5,370 Europe 5,322 4,423 5,147 5,322 4,417 5,147 Middle East/South East Asia 5,691 1,200 3,291 5,691 1,200 3,291 North America 3,280-3,180 3,280-3,180 Sub-total 21,257 11,003 16,998 21,257 10,987 16,988 Loss making start-up schools (2) 480 1,500 1,980 480 1,500 1,980 Total 21,737 12,503 18,978 21,737 12,487 18,968 *Please refer to the footnotes on our Form 6-K quarterly report. 23
Key Operating Data Continued Three Months Ended February 28, Six Months Ended February 28, 2014 2013 2013 2014 2013 2013 Actual Actual Pro forma Actual Actual Pro forma Utilization (average for the period) (4) China 69% 75% 75% 69% 75% 75% Europe 85% 85% 86% 85% 85% 86% Middle East/South East Asia 88% 79% 71% 87% 79% 70% North America 80% - 76% 80% - 75% Sub-total 80% 80% 78% 80% 80% 78% Loss making start-up schools (2) 20% 66% 54% 20% 66% 53% Total 79% 78% 75% 78% 78% 75% Revenue per FTE (in $ thousands) (5) China 10.3 9.8 9.8 20.1 19.4 19.4 Europe 8.9 8.9 8.5 17.8 17.9 17.0 Middle East/South East Asia 4.6 5.2 4.9 9.3 10.2 9.6 North America 7.5-6.9 14.8-14.0 Sub-total 7.8 8.9 8.0 15.5 17.8 15.9 Loss making start-up schools (2) 9.2 4.7 5.0 18.4 9.3 9.9 Total 7.8 8.5 7.7 15.5 16.9 15.5 *Please refer to the footnotes on our Form 6-K quarterly report. 24
Q3 and Q4 FY13 Key Operating Data Three Months Ended May 31, Three Months Ended August 31, 2013 2013 2013 2013 Actual Pro forma Actual Pro forma Full-time equivalent students (average for the period) (1) China 4,121 4,121 4,140 4,140 Europe 3,779 4,455 4,460 4,460 Middle East/South East Asia 992 3,451 3,472 3,472 North America - 2,469 2,466 2,466 Sub-total 8,892 14,496 14,538 14,538 Loss making start-up schools (2) 1,028 71 74 74 Total 9,920 14,567 14,612 14,612 Capacity (average for the period) (3) China 5,380 5,380 5,385 5,385 Europe 4,423 5,175 5,190 5,190 Middle East/South East Asia 1,200 4,791 4,791 4,791 North America - 3,180 3,180 3,180 Sub-total 11,003 18,526 18,546 18,546 Loss making start-up schools 1,500 480 480 480 Total 12,503 19,006 19,026 19,026 *Please refer to the footnotes on our Form 6-K quarterly report. 25
Q3 and Q4 FY13 Key Operating Data (continued) Three Months Ended May 31, Three Months Ended August 31, 2013 2013 2013 2013 Actual Pro forma Actual Pro forma Utilization (average for the period) (4) China 77% 77% 77% 77% Europe 85% 86% 86% 86% Middle East/South East Asia 83% 72% 72% 72% North America - 78% 78% 78% Sub-total 81% 78% 78% 78% Loss making start-up schools (2) 69% 15% 15% 15% Total 79% 77% 77% 77% Revenue per FTE (in $ thousands) (5) China 10.0 10.0 4.4 4.4 Europe 8.6 8.1 3.6 3.6 Middle East/South East Asia 5.4 5.0 1.9 1.9 North America - 7.6 3.1 3.1 Sub-total 8.9 7.8 3.3 3.3 Loss making start-up schools (2) 4.0 9.9 4.1 4.1 Total 8.4 7.8 3.3 3.3 *Please refer to the footnotes on our Form 6-K quarterly report. 26
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