2016 Full Year Results Investor Call December 2016 Investor Call Presentation GROUP 1 December 2016
Introduction Michael Uzielli – Group Chief Financial Officer Joined Cognita on 13th June 2016 Formerly the CFO of Heathrow Airport Holdings Prior to Heathrow, senior positions at British Gas, Schroders and British Airways Investor Call Presentation GROUP 2 December 2016
Significant strengthening of the management team Chris Jansen – Group Chief Executive Officer Michael Uzielli – Group Chief Financial Officer Joined Cognita in October 2015 Joined Cognita in June 2016 Former CEO of the AA and senior executive roles at Formerly the CFO of Heathrow Airport Holdings Centrica and British Airways Prior to Heathrow, senior positions at British Gas, Schroders and British Airways Stuart Rolland – Chief Executive Officer, Europe Dean Villa – Chief Operating Officer and Property Director Joined Cognita in March 2016 Founder member of Cognita 20 years of general management experience and Formerly Property Director for Thistle Hotels following people leadership for organisations including Hozelock 18 years as Development Director for Whitbread plc. and British Gas Helen Thornton – Group Director of Human Resources Josep Caubet – Chief Executive Officer, Latin America Joined Cognita in October 2016 Joined Cognita in November 2007 20 years in senior HR positions for organisations Appointed CEO, Latin America in April 2013 including British Airways, GNER and National Express Formerly Vice President of investment banking for East Coast Atlas Capital Close Brothers Michael Drake – Chief Executive Officer, Asia Kevin Mercer – Group General Counsel Joined Cognita in October 2016 Joined Cognita in November 2015 Formerly Regional Managing Director for TNT (Asia, Formerly Regional General Counsel for Ciena Middle East and Africa) Corporation (EMEA, Russia and CIS) Investor Call Presentation GROUP 3 December 2016
2015/16 - Financial Highlights Year Ended 31 August 2015 2016 Change Revenue £300.6m £330.9m +10.1% Group Adjusted EBITDA £53.5m £61.4m +14.8% Group Adjusted EBITDA margin 17.8% 18.6% +0.8 ppts Capex £42.0m £59.4m +41.5% Net Debt* £247.5m £352.6m +42.4% Net Leverage** 4.8x 5.9x +1.1x All numbers included in the presentation include joint venture (JV) (St. Nicholas), unless otherwise stated * Net Debt is shown excluding capitalised transaction costs. ** Net leverage is based on LTM Adjusted EBITDA (excluding 100% of JV) of £60.2m Investor Call Presentation GROUP 4 December 2016
2015/16 - Operational Highlights Year Ended 31 August 2015 2016 Change Students (ave FTE) Europe 13,642 13,817 +1.3% Asia 7,310 7,930 +8.5% Latin America 10,812 11,848 +9.6% Group 31,764 33,595 +5.8% Capacity 42,063 43,544 +3.5% Utilisation 75.5% 77.2% +1.7% Early Childhood Facility, Singapore on track and on budget Refurbishment and marketing in Hong Kong underway, education licence secured Construction ongoing on new campus in Vietnam Investor Call Presentation GROUP 5 December 2016
Diversified, global portfolio and robust education sector provides resilience vs Brexit uncertainty Weaker sterling 58% of Group revenue and 82% of EBITDA in non-sterling currencies Forward exchange contracts in place to cover Senior Secured Note repayments Broadly neutral impact on net leverage Student and staff recruitment and retention Potential impact on London’s status as a financial centre Visa requirements for students and staff may change UK schools should be more affordable and competitive internationally Regulatory environment to be clarified Use of British qualifications for Spanish university entrance Impact on Spanish students applying to British universities Investor Call Presentation GROUP 6 December 2016
Continued growth in enrolments and revenue per FTE Capacity Annualised Revenue* per Average FTE Student 20,000 79.7% £’000 per Average FTE 79.9% 18,000 76.4% 74.0% 16,000 14,000 4.5% 74.1% 70.4% 12,000 3.0% 10,000 8,000 15.6 6,000 12.1 8.8% 4,000 2,000 3.2 0 Europe Asia Latam FY15 FY16 FY15 FY16 FY15 FY16 Europe Asia Latam FY16 YoY Growth Utilised capacity Capacity Utilisation % Enrolment growth of 200 FTEs from Q3 to Q4 2016 driven by new Latam syllabus +126 * Annualised Revenue growth is calculated on a constant currency basis. Revenue includes fees, discounts and other income streams Investor Call Presentation GROUP 7 December 2016
Revenue growth across all regions Revenue FY15 FY16 10.5% 10.4% 34.5 31.5 Overall Growth 10.1% 36.4% 39.0% £330.9m £300.6m 167.4 159.6 109.5 129.0 53.1% Europe Asia Latam 50.6% Revenue Growth YoY Actual (%) Constant Currency (%) Organic (%) * Europe 4.9% 4.4% 4.8% Asia 17.7% 13.3% 13.2% Latam 9.8% 19.2% 12.3% Group 10.1% 9.2% 8.5% * Calculated on a constant currency basis and excludes acquisitions and divestments Investor Call Presentation GROUP 8 December 2016
Regional Adjusted EBITDA grew by over 15% Regional Adjusted EBITDA* FY16 FY15 10.7% 9.7% 42.1% 37.6% 6.6 6.9 Overall Growth Regional Regional 26.8 26.0 Adjusted Adjusted 15.4% £61.7m £71.2m EBITDA Margin EBITDA Margin 16.0% 16.3% 29.1 37.5 29.1% 26.6% Europe Asia Latam 19.9% 52.7% 21.0% 47.2% EBITDA Growth YoY Actual (%) Constant Currency (%) Organic (%) ** Europe 3.0% 2.4% 9.7% Asia 28.9% 24.0% 24.3% Latam 4.6% 12.1% 11.8% Regional 15.4% 13.6% 17.0% * Regional Adjusted EBITDA is calculated as Group Adjusted EBITDA of £61.4m (2015: £53.5m) before Group Central Costs of £9.8m (2015: £8.2m) ** Calculated on a constant currency basis and excludes acquisitions and divestments Investor Call Presentation GROUP 9 December 2016
Cost discipline and EBITDA growth Group Adjusted EBITDA Underlying Operating Costs £’m £’m 269.5 81.4% +0.8 ppts 247.0 18.6% 82.2% 17.8% 91.9 27.8% 83.6 27.8% +14.8% 61.4 53.5 177.6 163.4 54.4% 53.7% FY15 FY16 FY15 FY16 Staff Costs Other Op. Costs Costs % Group Revenue Group Adjusted EBITDA Margin Investor Call Presentation GROUP 10 December 2016
Operating Cash Flow remains robust Cash Flow Summary Operating Cash Flow FY 2015 (£'m) FY 2016 (£'m) Working capital movements drive cash flow Adjusted EBITDA 52.1 60.2 Non-underlying costs with cash impact (10.5) (11.7) Strong cash conversion at 70% for FY16 (97% Other movements (inc. working capital) 7.3 9.8 before operating capex) Net cash from operating activities 48.9 58.3 Investing Cash Flow Operating capital expenditure (14.8) (16.4) Development capex driven by the Singapore Operating free cash flow (OFCF) 34.1 41.9 Early Childhood Facility OFCF/Adjusted EBITDA % 65% 70% Thailand and Spain acquisitions and deferred Acquisitions (inc. Hong Kong) (17.5) (75.7) consideration payments for Brazil Development capital expenditure (24.1) (30.5) Interest received and proceeds from sale of PPE 1.4 1.3 Hong Kong property acquisition Unlevered free cash flow (6.1) (63.0) Financing Cash Flow Taxation paid (3.0) (5.8) Hong Kong local debt draw down (£39m) Interest paid (18.1) (29.7) Levered free cash flow (27.2) (98.5) RCF draw down (£65m) Net proceeds from financing activities 13.5 75.4 Offset by RCF repayments, local debt Increase in loan from Cognita Bondco Parent Ltd. 6.6 - movements in Latam and transaction costs Net cash (outflow)/inflow for the period (7.1) (23.1) Investor Call Presentation GROUP 11 December 2016
Higher development capex Operating Capex Development Capex* £’m £’m 16.4 43.0 14.8 1.4 2.4 1.4 4.8 27.2 4.6 2.1 34.1 20.6 10.2 8.8 6.5 4.5 FY15 FY16 FY15 FY16 Europe Asia Latam Europe Asia Latam FY16 development capex includes £27m (2015: £15m) for Singapore Early Childhood Facility * Development capex excludes £65m for HK property acquisition in April 2016 Investor Call Presentation GROUP 12 December 2016
Early Childhood Facility, Singapore Construction All in Singapore dollars FY16 On schedule, on time and on budget Total expected capital investment $209m Bespoke Early Years furniture, fixtures and equipment identified and sourced Total project expenditure to date $85m Construction completion by June 2017 FY16 project expenditure (FY15) $55m ($30m) Academics Opening date August 2017 STEMI programme structured curriculum, based on Capacity 2,100 early years research Specially designed learning spaces to include sensory and creativity zones Marketing and Admissions Marketing suite completed September 2016 Current parents informed and engaged Ongoing programme of marketing activity Operations New Campus Manager appointed Detailed plans for transition of students to new campus being developed Investor Call Presentation GROUP 13 December 2016
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