Nord Anglia Education : Announces Starting Student Enrollment, Update On China Dual Curriculum Strategy, And Initial Outlook For Fiscal 2017

HONG KONG, Oct. 10, 2016 /PRNewswire/ -- Nord Anglia Education, Inc. (NYSE: NORD), the world's leading premium schools organization, today announced its starting student enrollment for the 2016/2017 academic year, an update on its China dual curriculum strategy, and its initial outlook for fiscal 2017 Revenue, Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS.

Andrew Fitzmaurice, CEO of Nord Anglia Education, commented, 'We are very pleased with our starting student enrollment for 2016/2017, which shows continued strong organic enrollment growth. It is encouraging to see the impact that our collaborations with The Juilliard School and the Massachusetts Institute of Technology (MIT) are having on our students. We are opening our students' minds to the latest thinking from some of the world's best educators and this is certainly appreciated by parents. We believe Nord Anglia Education's growing scale and reputation are creating tremendous growth opportunities. We are investing in our future by expanding capacity at existing schools, opening new campuses, seeking to acquire more high quality schools and establishing a dedicated dual curriculum team to take advantage of our exciting opportunity in China.'

Starting Student Enrollment for 2016/2017 Academic Year

Starting student enrollment at Nord Anglia Education's 43 schools around the world totaled 36,848 full time equivalent students (FTEs) on September 30, 2016. This represents an 8% organic increase over starting enrollment of 34,177 FTEs on September 28, 2015.

In addition to strong organic enrollment growth, the Company implemented an average increase in tuition fees of 4% across its schools. The average increase in tuition was consistent with the Company's historical increases of 1.5 to 2 times inflation.

The Company opened two new schools for the start of the 2016/17 academic year - the first dual curriculum school in Shanghai and a new campus for the British International School of Houston. Both of these schools have new state-of-the-art facilities in high growth markets. Total capacity across all schools increased 12% to 54,813 seats from 48,998 seats last year. The additional 5,815 seats of capacity comprised 2,250 seats from the new dual curriculum school in Shanghai, 1,200 extra seats by moving the British International School of Houston to a new 2,200 seat campus and 2,365 seats added to the Company's existing schools across the five regions. The resulting utilization rate for the start of fiscal 2017 was 67%. Excluding the new dual curriculum school in Shanghai, the starting utilization rate was 69%.

The tables below set out the regional breakdown of enrollment and capacity as of September 28, 2015 and September 30, 2016:

Full Time Equivalent Students
	Sept 2015 FTEs	Organic FTE growth	Sept 2016 FTEs	Organic FTE growth %
China (ex Dual Curriculum)	5,727	131	5,858	2%
Europe	6,456	400	6,856	6%
Middle East	5,264	347	5,611	7%
Southeast Asia	7,295	895	8,190	12%
North America	9,435	452	9,887	5%
China Dual Curriculum	-	446	446	-
TOTAL	34,177	2,671	36,848	8%
Capacity
	Sept 2015 Capacity	Capacity Expansion	Sept 2016 Capacity	YoY Capacity Growth
China (ex Dual Curriculum)	8,926	316	9,242	4%
Europe	8,617	1,074	9,691	12%
Middle East	5,851	336	6,187	6%
Southeast Asia	12,097	464	12,561	4%
North America	13,507	1,375	14,882	10%
China Dual Curriculum	-	2,250	2,250	-
TOTAL	48,998	5,815	54,813	12%

China Dual Curriculum Strategy

In September 2016, Nord Anglia Education opened its first dual curriculum school in Shanghai, China. The Nord Anglia Chinese International School, Shanghai (NACIS) teaches the Shanghai National Curriculum alongside an international curriculum to students up to the age of 16, and then teaches the International Baccalaureate Diploma program after the age of 16. Starting enrollment at the school on September 30, 2016 was 446 FTEs, which exceeded the Company's initial expectations. Given the strong starting enrollment and early demand trends, the Company anticipates the school to be breakeven on an Adjusted EBITDA basis and cash flow positive in fiscal 2017, its first year, and reach maturity (80% utilization) in its third year. With expenditures to open the new school totaling approximately $31 million, the return on investment in the third year of operation is projected to be 74%.

The combination of our strong brand, academic outcomes, student acceptance into top universities around the world and collaborations with world leading education institutions such as Juilliard and MIT is valued highly by Chinese parents. As a result, Nord Anglia Education has seen an increasing number of opportunities to partner with developers and landlords to open new dual curriculum schools in China.

In order to better assess and pursue this exciting high growth sector, the Company has decided to establish a dedicated China Dual Curriculum team. The new China Dual Curriculum team will be led by Jian Tang, who has been Managing Director for Nord Anglia's China region for the past 15 years. Having co-founded Nord Anglia Education's first school for expats in 2002 and integrated all of the Company's schools in China, Ms Tang has significant experience in the K12 school sector.

The Company is targeting to open one additional China dual curriculum school in September 2017, two additional China dual curriculum schools in September 2018 and five additional China dual curriculum schools in September 2019.

The average capacity of the future China dual curriculum schools is expected to be 2,000 seats. The upfront investment by Nord Anglia Education to open future China dual curriculum schools is expected to be on average $20 million per school and the Company anticipates a similar ramp up and pricing to NACIS.

Beginning in the first quarter of fiscal 2017, the Company plans to report the China dual curriculum schools as a separate segment.

Initial Fiscal 2017 Outlook

Nord Anglia Education's initial guidance for fiscal 2017 Revenue, Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS is set out in the table below:

Revenue	$925 - $945 million
Adjusted EBITDA	$207 - $217 million
Adjusted Net Income	$67 - $72 million
Adjusted Diluted EPS	$0.64-$0.69

See 'Non-GAAP Supplemental Financial Measures' below for additional information.

The company expects diluted weighted average shares for fiscal 2017 of approximately 104.5 million.

The outlook for Adjusted EBITDA set out above includes the expected negative impact in fiscal 2017 when compared to fiscal 2016 of the following:

• approximately $8 million additional rent and property taxes on the new campus for the British International School of Houston opened September 2016;
• approximately $11 million additional rent and property taxes as a result of the sale and leaseback of three school properties in the United States; and
• approximately $6 million additional expenses following the roll out of the Juilliard collaboration to a further 28 schools in fiscal 2017 (38 schools in total), the first roll out of the MIT program to 10 schools and the new expedition centre in Switzerland.

The company's guidance does not include the impact of unannounced acquisitions. Nord Anglia Education may complete acquisitions at any time during fiscal 2017.

Nord Anglia Education ended fiscal 2016 with a cash balance of approximately $370 million.

Nord Anglia Education will release full year fiscal 2016 results on November 29, 2016 at 6:00am and host a conference call at 8:00am (Eastern Time) to discuss the results.

Conference call details for starting student enrollment, update on China dual curriculum strategy and fiscal 2017 guidance

Nord Anglia Education will host a conference call on October 10, 2016, at 8:00am (Eastern Time).

A live webcast of the conference call will be available via the investor relations section of nordangliaeducation.com.

Those interested in participating in the conference call should dial:

United States Toll Free 877.407.0784
International: 201.689.8560

An audio replay of the conference call will be available through October 24, 2016 via the investor relations section of nordangliaeducation.com or by dialing the following:

United States Toll Free 877.870.5176
International 858.384.5517
Replay Conference ID 13644927

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, our future enrollments, acquisitions, greenfield developments and strategies , including the discussion under the headings 'China Dual Curriculum Strategy' and 'Initial Fiscal 2017 Outlook'.

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 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 may differ materially from those made in or suggested by the forward-looking statements contained in this press release. 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 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, 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 without unreasonable effort because of the inherent uncertainty in forecasting and quantifying some of the amounts necessary for a reconciliation, such as exceptional items (which include transaction and integration costs related to school acquisitions), other (gains)/losses (which include the fair value gains and losses on our various put/call options, embedded lease derivatives and unrealized foreign exchange movements on our intercompany loans) and finance expense adjustments (which include adjustments for unrealized foreign exchange gain/(loss) arising from the revaluation of our CHF200 million senior secured notes to US dollars).

About Nord Anglia Education, Inc.

Nord Anglia Education (NYSE: NORD) is the world's leading premium schools organization. Our 43 international schools are located in China, Europe, the Middle East, Southeast Asia and North America. Together, they educate more than 36,800 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.

Investors:

Vanessa Cardonnel
Corporate Finance and Investor Relations Director - Nord Anglia Education
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John Rouleau
Managing Director, Investor Relations - ICR
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Media:

Sarah Doyle
Head of Brand - Nord Anglia Education
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SOURCE Nord Anglia Education, Inc.