TIDMAEC
RNS Number : 1593R
AEC Education plc
25 June 2015
AEC Education Plc
("AEC" or the "Company")
Final Results for the year ended 31 December 2014
Highlights:
-- Ireland demonstrated significant growth in sales and achieved
a small operating profit but results in London and Singapore offset
this success
-- Group revenue fell by 20% to GBP9.0 million (2013: GBP11.3
million) due largely to the reduction in business in Singapore
-- Losses before tax from continuing operations of GBP1.1
million (2013 (restated): loss before tax of GBP1.66 million)
-- Loss per share on continuing activities is 1.85p (2013 (restated): loss per share of 4.01p)
-- Net cash of GBP0.36 million (2013: GBP1.48 million)
-- Malaysia continued to recover lost ground following the
Middle East crisis and returned a profit before brand
amortisation
-- Cyprus returned a small loss driven by a slowdown in revenue from Russia
-- The Company exited operations in Oman in the year which had
returned losses up to the sale of shares to a local company
-- 2014 has been a difficult year, though the success in Ireland
demonstrates the strength of the Malvern brand internationally.
Liam Swords, Chairman of AEC, commented,
"The London and Singaporean markets continue to be challenging
but the Group implemented its strategy to centralise the European
operations and to focus Singapore on the local market. This creates
a new platform in Singapore from which we can build and helps to
reduce costs in London. It is satisfying to see the continued
growth in Ireland and the steady turnaround in Malaysia reflected
in these accounts".
ENDS
For further information, please contact:
AEC Education Plc
Liam Swords
Tel: 07725 836811
WH Ireland Limited (NOMAD & Broker)
Andrew Kitchingman
Liam Gribben
Tel: 0113 394 6600
CHAIRMAN'S STATEMENT
Overview
The year under review continued to show mixed fortunes. Trading
in London showed another downturn but by judicious cost reduction
London returned a small operating loss. Cyprus was also affected by
a slowing down in revenue from Russia, its largest summer school
market and, whilst showing a reasonable operating result, the
increased marketing costs to maintain revenue resulted in a small
operating loss on our share of the joint venture. Oman declined
further during the year to the point where the Board decided to
transfer the operation to a local company for a price that will
recover about one quarter of our original investment and advance.
The residual impact from the loss of EduTrust meant that Singapore
suffered a large operating loss but during the year made ground
towards restructuring a new business targeting the local market.
Ireland again grew substantially and showed an operating profit.
Malaysia continued to recover the ground lost following the Middle
East crisis and was again profitable before Malvern brand
amortisation.
The market in the UK continued to be severely impacted by
attitudes towards immigration and the withdrawal of the students'
ability to support their costs by temporary work. However, the
strategy to invest in Ireland to offset this has proven to be very
successful. Additionally the positive signs in Malaysia continued
during the year with strong gains in new markets and Singapore
began to see some traction in the local market.
Financial results
Group revenues on continuing activities for the year to 31
December 2014 reduced by 20% to GBP9.0m (2013: GBP11.3m). The
reduction was mainly due to the difficult trading conditions in
London and the substantially reduced capacity in Singapore.
Singapore's revenue decreased by 68% to GBP1.2m (2013: GBP3.8m) and
London's revenue reduced by 11% to GBP3.3m (2013 GBP3.7m). The
Group achieved significant reductions in operating costs during the
year by implementing effective cost control strategies in all
units. Because of this the Group's loss before tax from continuing
operations was reduced to GBP1.10m (2013: GBP1.66m).
The London operation recorded an operating loss of GBP245k after
brand impairment and amortisation of GBP395k which, after finance
charges, resulted in a loss of GBP414k before tax. Ireland recorded
turnover of GBP2.34m in 2014 (2013 - GBP1.41m), an operating profit
of GBP49k. In Asia, the Singapore College recorded an operating
loss of GBP420k and Malaysia returned an a profit of GBP23k before
brand amortisation and an operating loss of GBP2k after brand
amortisation. Additionally our share of the profit from our joint
venture in Cyprus was GBP54k, which after central charges, was
breakeven. Oman showed a loss of GBP81k (AEC's share GBP28k) until
31st July 2014, when the Group decided to exit the operations in
Oman by selling the shares to an interested party. We expect that
the initiatives we have taken in Singapore to reduce costs and to
focus on the local market should return it to profit in 2015. Steps
are also being taken to further reduce costs and to generate
revenue from non-traditional sources to improve the results in
London.
The loss per share was 1.40p (2013: Loss of 6.19p).
The net cash outflow from operating activities was GBP1.13m
(2013: outflow of GBP1.51m). Net cash at the end of the year stood
at GBP0.36m (2013: GBP1.48m).
Dividend
The Board does not propose the payment of a final dividend for
the year ended 31 December 2014 (2013: 0.00p per share).
Business Review
In Asia, our operations in Singapore continued to be impacted by
the withdrawal of EduTrust status. The revenue declined by 68% to
GBP1.2m (2013: GBP3.8m) and a loss of GBP0.3m before tax. They have
registered courses for diplomas / advanced diplomas in civil
engineering / electrical engineering / mechanical engineering,
higher diplomas in accounting and finance and Singapore Workforce
Development Agency related safety short courses that are tailored
and repositioned for the local market in 2015 and we expect will
help to return it to profitability.
In Malaysia, revenue was lower than the previous year by 10%
largely due to the fact that the contract with the University of
Wales to recruit students expired in September 2014. Because of
this decrease in revenue to GBP2.15m (2013: GBP2.40m), a small
operating loss of GBP2k was returned (2013: loss GBP1k). However, a
new contract with Leeds Beckett University will allow us to resume
the recruitment of students for both undergraduate and post
graduate programmes in the latter part of 2015. The introduction of
new programmes ranging from post graduate to vocational studies
combined with the focus on new markets should open up opportunities
for growth next year.
As we have previously reported, our English language teaching
operations in the UK have felt the significant effects of the
changing legislation and regulations regarding visas and work
permits for overseas students and the negative perception of this
overseas continued during 2014. This has caused the market in the
UK to drop significantly during the year with the result that
revenue in our Kings Cross school was down year on year by 11% to
GBP3.3m (2013: GBP3.7m). This and the consequent additional brand
impairment charge of GBP350k resulted in an operating loss of
GBP245k (2013: profit GBP45k). Steps have been taken to find new
sources of revenue both from new products and areas of distribution
which should stabilise London during 2015.
Ireland achieved revenue of GBP2.3m, a 66% increase on 2013 in
its second full year of trading and produced an operating profit of
GBP49k (2013: loss GBP48k). The strength of the summer school
market combined with continuing strong growth in the core EFL
business in Ireland leaves it with potential to show significantly
improved results in 2015.
Our joint venture in Cyprus showed a reduction in revenue in the
summer school mainly from Russia, its largest market. Operating
profits were affected such that our share of the joint venture
recorded a profit before tax of GBP54k and was breakeven before
brand amortisation. The market in Russia continues to be depressed
because of its political stance in Europe and the reduced value of
the Rouble and we expect these conditions to remain during
2015.
Oman declined further during the year and impacted the Group
results with a loss of GBP81k (AEC's share GBP28k). Due to earlier
losses including the loss until 31 July 2014, we see no future for
our investment in Oman. Consequently, the Board has decided to exit
the operation and sold the investment to a local company for GBP41k
which recovers approximately one quarter of our investment and
advance given.
Staff
On behalf of the Board I would like to thank all staff for their
hard work and efforts during what has been a very difficult period.
Their support as we continue to implement the necessary changes to
ensure the Group returns to sustainable profit is very much
appreciated by the Board.
Prospects
2014 was another very difficult year in Singapore and the market
in the UK remains constrained by visa restrictions and the negative
perception by overseas students of UK Government policy. Our
success in Ireland has demonstrated that the Malvern brand is still
a major strength in international markets and we continue to pursue
options to support further expansion overseas under the Malvern
brand. The restructuring of the operations in Singapore and London
is now almost complete and this combined with the return to profit
in Malaysia and the withdrawal from Oman creates a platform from
which AEC can begin to rebuild group profitability.
Liam Swords
Chairman
24 June 2015
AEC EDUCATION PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2014
2014 2013
(Restated)
GBP GBP
Revenue
Sale of services 8,520,196 10,989,755
Other income 457,972 314,123
8,978,168 11,303,878
------------- ---------------
Cost of services sold 5,136,220 6,906,791
Salaries and employees' benefits 2,059,555 2,770,010
Amortisation of brand, licences
and
trademarks 166,050 144,957
Depreciation of plant and equipment 203,710 437,778
Impairment or write-down of property,
plant and equipment - 287,390
Other operating expenses 2,176,610 2,213,560
Brand impairment 350,000 150,000
Total operating costs and expenses 10,092,145 12,910,486
------------- ---------------
Operating loss (1,113,977) (1,606,608)
------------- ---------------
Share of results of associated
companies and
joint ventures 53,829 (4,320)
Finance costs (41,201) (45,875)
Loss before income tax (1,101,349) (1,656,803)
Income tax charge (28,986) (235,459)
Loss for the year from continuing
activities (1,130,335) (1,892,262)
Profit/(loss) for the year from
discontinued activities 282,419 (998,323)
Loss for the year (847,916) (2,890,585)
------------- ---------------
Attributable to:
Equity holders of the Company (881,956) (2,832,688)
Non-controlling interest 34,040 (57,897)
------------- ---------------
(847,916) (2,890,585)
------------- ---------------
Loss per share on continuing
activities
(in pence)
------------- ---------------
Basic (1.85) (4.01)
------------- ---------------
Diluted (1.85) (4.01)
------------- ---------------
Profit /(loss) per share on discontinued
activities
(in pence)
------------- ---------------
Basic 0.45 (2.18)
------------- ---------------
Diluted 0.45 (2.18)
------------- ---------------
AEC EDUCATION PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2014
2014 2013
(Restated)
GBP GBP
Loss for the year (847,916) (2,890,585)
Foreign currency translation
movements 182,880 (19,465)
---------- ---------------
Other comprehensive (expense)/income
for the year 182,880 (19,465)
---------- ---------------
Total comprehensive income for
the year (665,036) (2,910,050)
---------- ---------------
Attributable to:
Equity holders of the parent (708,899) (2,845,515)
Non-controlling interest 43,863 (64,535)
---------- ---------------
Total comprehensive income for
the year (665,036) (2,910,050)
---------- ---------------
AEC EDUCATION PLC
STATEMENTS OF FINANCIAL POSITION
AS AT 31 DECEMBER 2014
Group Company
2014 2013 2014 2013
(Restated)
TOTAL ASSETS GBP GBP GBP GBP
Non-Current Assets
Property, plant and
equipment 450,042 763,033 - -
Investment in subsidiary
companies - - 5,260,107 5,760,107
Investment in associated - 16,668 - -
companies
Investment in joint
ventures 97,799 26,074 - 122,039
Intangible assets 3,101,851 3,603,250 - -
Goodwill 422,520 420,324 - -
Deferred tax asset - - - -
4,072,212 4,829,349 5,260,107 5,882,146
---------- -------------- ---------------- -----------
Current Assets
Inventories 6,718 9,229 - -
Trade receivables 677,573 908,710 - -
Other receivables
and
prepayments 445,670 990,959 5,218 131,010
Tax recoverable 51,844 9,806 51,844 -
Due from subsidiary
companies - - 692,752 442,304
Due from joint ventures 46,684 95,897 41,000 94,427
Due from related
parties 456 3,798 - -
Cash and cash equivalents 360,746 1,475,351 14,816 1,153,035
---------- -------------- -----------
1,589,691 3,493,750 805,630 1,820,776
---------- -------------- ---------------- -----------
Total Assets 5,661,903 8,323,099 6,065,737 7,702,922
---------- -------------- ---------------- -----------
EQUITY AND LIABILITIES
Non-Current Liabilities
Financial liabilities 38,185 63,048 23,000 23,000
Deferred taxation
liability 12,674 22,275 - -
---------- ------------ ------------ ------------
50,859 85,323 23,000 23,000
---------- ------------ ------------ ------------
Current Liabilities
Trade payables 514,951 263,303 35,934 -
Deferred income 620,389 2,160,688 - -
Other payables and
accruals 1,140,218 1,938,962 31,638 88,009
Due to subsidiary
companies - - 1,243,545 2,090,328
Due to joint ventures 38,673 - - -
Due to related parties 801,358 660,810 368,079 23,323
Financial liabilities 39,654 112,107 14,000 14,000
Provision for income
tax 26,667 7,736 - -
---------- ------------ ------------
3,181,910 5,143,606 1,693,196 2,215,660
---------- ------------ ------------ ------------
Total liabilities 3,232,769 5,228,929 1,716,196 2,238,660
---------- ------------ ------------ ------------
Equity attributable
to equity
holders of the Company
Share capital 5,362,491 5,362,491 5,362,491 5,362,491
Share premium 896,111 896,111 896,111 896,111
Reserves (3,699,184) (2,990,285) (1,909,061) (794,340)
-------------- ------------ ------------ ----------
2,559,418 3,268,317 4,349,541 5,464,262
Non-controlling interests (130,284) (174,147) - -
-------------- ------------ ------------ ----------
Total equity 2,429,134 3,094,170 4,349,541 5,464,262
-------------- ------------ ------------ ----------
Total Equity and
Liabilities 5,661,903 8,323,099 6,065,737 7,702,922
-------------- ------------ ------------ ----------
AEC EDUCATION PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2014
Share Share Other Other Other Other Attributable Non-
Capital Prem-ium Reserves Reserves Reserves Reserves Total To Equity controlling Total
Share-Based Retained Trans- Capital Of Holders Interests
Payment Earnings lation Reserve Other Of The
Reserve Reserve Reserves Company
GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP
Balance
at 1 January
2013 as
previously
reported 4,419,878 707,588 328,744 (2,018,789) 1,137,715 170,560 (381,770) 4,745,696 (43,415) 4,702,281
Prior
year adjustment - - - 237,000 - - 237,000 237,000 - 237,000
Balance
at 1 January
2013 as
restated 4,419,878 707,588 328,744 (1,781,789) 1,137,715 170,560 (144,700) 4,982,696 (43,415) 4,939,281
Loss for
the year - - - (2,832,688) - - (2,832,688) (2,832,688) (57,897) (2,890,585)
Total
other
comprehensive
income - - - - (12,827) - (12,827) (12,827) (6,638) (19,465)
------------ ---------- ------------ ------------------- ------------ ---------- -------------- -------------- ------------ --------------
Total
comprehensive
income
for the
year - - - (2,832,688) (12,827) - (2,845,515) (2,845,515) (64,535) (2,910,050)
------------ ---------- ------------ ------------------- ------------ ---------- -------------- -------------- ------------ --------------
Issue
of new
shares 942,613 188,523 - - - - - 1,131,136 - 1,131,136
Share
based
compensation
transfer - - (89,700) 89,700 - - - - - -
------------ ---------- ------------ ------------------- ------------ ---------- -------------- -------------- ------------ --------------
Total
transactions
with owners 942,613 188,523 (89,700) 89,700 - - - 1,131,136 - 1,131,136
------------ ---------- ------------ ------------------- ------------ ---------- -------------- -------------- ------------ --------------
Non-controlling
interest
acquired - - - - - - - - (125,489) (125,489)
Impairment
of carrying
value - - - - - - - - 59,292 59,292
Balance
at 31
December
2013 as
restated 5,362,491 896,111 239,044 (4,524,777) 1,124,888 170,560 (2,990,285) 3,268,317 (174,147) 3,094,170
------------ ---------- ------------ ------------------- ------------ ---------- -------------- -------------- ------------ --------------
Balance
at 1 January
2014 as
restated 5,362,491 896,111 239,044 (4,524,777) 1,124,888 170,560 (2,990,285) 3,268,317 (174,147) 3,094,170
------------ ---------- ------------ ------------------- ------------ ---------- -------------- -------------- ------------ --------------
Loss for
the year - - - (881,956) - - (881,956) (881,956) 34,040 (847,916)
Total
other
comprehensive
income - - - - 173,057 - 173,057 173,057 9,823 182,880
------------ ---------- ------------ ------------------- ------------ ---------- -------------- -------------- ------------ --------------
Total
comprehensive
income
for the
year - - - (881,956) 173,057 - (708,899) (708,899) 43,863 (665,036)
------------ ---------- ------------ ------------------- ------------ ---------- -------------- -------------- ------------ --------------
Share
based
compensation
transfer - - (239,044) 239,044 - - - - - -
------------ ---------- ------------ ------------------- ------------ ---------- -------------- -------------- ------------ --------------
Total
transactions
with owners - - (239,044) 239,044 - - - - - -
------------ ---------- ------------ ------------------- ------------ ---------- -------------- -------------- ------------ --------------
Balance
at 31
December
2014 5,362,491 896,111 - (5,167,689) 1,297,945 170,560 (3,699,184) 2,559,418 (130,284) 2,429,134
AEC EDUCATION PLC
CONSOLIDATED STATEMENT OF CASH
FLOWS
FOR THE YEAR ENDED 31 DECEMBER
2014
2014 2013
GBP GBP
(Restated)
Cash Flows from Operating Activities
Loss before income tax from continuing
activities (1,101,349) (1,656,803)
Profit/(loss) before income tax from
discontinued activities 282,419 (998,323)
Adjustments for:
Amortisation of intangible assets 166,050 169,957
Depreciation of property, plant and
equipment 203,710 437,778
Impairment and write down of property
plant and
equipment - 299,099
Impairment of intangible assets 350,000 600,000
Loss on disposal of plant and equipment 170,481 88,909
Profit on disposal of subsidiary - (215,308)
Non-cash elements of profit on discontinued (52,104) -
activities
Interest expense 41,201 45,875
Interest income (244) (375)
Impairment of goodwill and minority
interest - 59,292
Share of results of associated and joint
venture companies (53,829) 4,320
6,335 (1,165,579)
Changes in working capital:
Receivables 724,582 1,567,976
Payables (2,087,395) ( 2,551,785)
Inventories 2,511 12,629
Related parties and associated companies 231,777 668,427
(1,122,190) ( 1,468,332)
Taxation (4,741) ( 39,638)
Net cash used from operating activities (1,126,931) (1,507,970)
------------ ---------------
Cash Flows from Investing Activities
Interest received 244 375
Profit distribution received from associated 40,303 -
and joint
venture companies
Purchases of property, plant and equipment (68,254) (528,009)
Purchase of trademarks and licences (14,685) (16,099)
Disposal of subsidiary - (11,606)
Acquisition of subsidiary - (99,541)
Net cash used in investing activities (42,392) (654,880)
------------ ---------------
Cash Flows from Financing Activities
Share issue - 1,131,136
Interest paid (41,201) (45,875)
Repayment of term loan (62,378) (267,376)
Finance leases (34,939) 63,577
------------ -------------
Net cash generated by/(used in) financing
activities (138,518) 881,462
------------ -------------
Effect of foreign exchange rate changes
on consolidation 193,236 50,048
Net decrease in cash and cash equivalents (1,114,605) (1,231,340)
Cash and cash equivalents at the beginning
of the
Year 1,475,351 2,706,691
------------ -------------
Cash and cash equivalents at the end
of the year 360,746 1,475,351
------------ -------------
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
1 General
AEC Education plc is a public limited liability company
incorporated in England and Wales on 8 July 2004. The Company was
admitted to AIM on 10 December 2004. Its registered office is Witan
Gate House, 500-600 Witan Gate West, Milton Keynes MK9 1SH and its
principal place of business is in Singapore. The registration
number of the Company is 05174452.
The principal activities of the Company are that of investment
holding and provision of educational consultancy services. There
have been no significant changes in the nature of these activities
during the year.
The Board of Directors has authorised the issue of these
financial statements on 24 June 2015.
2 Segmental Information
Segmental analysis is as follows:
Europe South East Total
Asia/Middle
East
2014 GBP GBP GBP
Revenue from external customers 5,661,457 3,316,711 8,978,168
------------- ------------- --------------
Depreciation, write offs and amortisation (182,036) (537,724) (719,760)
------------- ------------- --------------
Loss before taxation (50,851) (1,050,498) (1,101,349)
------------- ------------- --------------
Taxation charge (4,685) (24,301) (28,986)
------------- ------------- --------------
Profit on discontinued activities 76,313 206,106 282,419
Loss for the year 20,777 (868,693) (847,916)
Segmental assets 3,706,133 1,955,770 5,661,903
------------- ------------- --------------
Segmental liabilities (4,567,440) 1,334,671 (3,232,769)
------------- ------------- --------------
Additions to non-current assets 38,970 43,969 82,939
------------- ------------- --------------
2013 (Restated)
Revenue from external customers 5,080,994 6,222,884 11,303,878
------------- ------------- --------------
Depreciation, write offs and amortisation (415,496) (604,629) (1,020,125)
------------- ------------- --------------
Loss before taxation (198,939) (1,457,864) (1,656,803)
------------- ------------- --------------
Taxation charge (6,460) (228,999) (235,459)
------------- ------------- --------------
Loss on discontinued activities (380,629) (617,694) (998,323)
------------- ------------- --------------
Loss for the year (586,028) (2,304,557) (2,890,585)
Segmental assets 4,194,708 4,128,391 8,323,099
------------- ------------- --------------
Segmental liabilities (4,655,567) (573,362) (5,228,929)
------------- ------------- --------------
Additions to non-current assets 170,478 347,682 518,160
------------- ------------- --------------
Note that the Segmental liabilities figure for South East Asia
and the Middle East is shown as a net asset due to the treatment of
the amount due from Europe to South East Asia for funding being
shown as a liability in the former and an asset in the latter.
3 Earnings/(Loss) Per Share
The basic earnings/(loss) per share on continuing activities was
based on the loss attributable to shareholders of GBP1,164,375
(2013: restated loss of GBP1,834,365) and the weighted average
number of ordinary shares in issue during the year of 63,051,043
shares (2013: 45,753,464 shares).
The basic earnings/(loss) per share on discontinued activities
was based on the profit attributable to shareholders of GBP282,419
(2013: loss of GBP998,323) and the weighted average number of
ordinary shares in issue during the year of 63,051,043 shares
(2013: 45,753,464 shares).
The diluted earnings/(loss) per ordinary share on continuing
activities and the diluted earnings/(loss) per share on
discontinued activities are based respectively on the loss
attributable to shareholders of GBP1,164,375 (2013 (restated): loss
of GBP1,834,365) and profit attributable to shareholders of
GBP282,419 (2013: loss of GBP998,323) and the weighted average
number of ordinary shares in issue at during the year of 63,051,043
shares (2013: 45,753,464 shares) diluted for the effect of share
options and warrants.
By 31 December 2014 all previously issued options had lapsed
(2013: 1,950,000 options were outstanding). At 31 December 2013 all
1,950,000 options were excluded from the diluted weighted average
number of ordinary shares calculation as their effect would have
been anti-dilutive.
9 Annual Report
The Annual Report will be sent to shareholders by close of
business on or around 25 June 2015. Additional copies will be
available to the public, free of charge, from the Company's website
ww.aeceducationplc.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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