TIDMAEC
RNS Number : 3541H
AEC Education plc
17 August 2016
AEC Education Plc
("AEC" or the "Company")
Final Results for the year ended 31 December 2015
AEC Education the provider of educational services in Europe and
the Far East announces its results for the year end 301 December
2015.
Key points
-- Revenues GBP7.7m (2014:GBP8.1m)
-- Operating loss of GBP1.4m (2014: loss of GBP1.5m)
-- Loss before tax of GBP 1.4m (2014: loss of GBP 1.5m)
-- Adjusted loss before tax and impairment charges GBP0.5m (2014: loss of GBP1.1m)
-- Loss per share of 2.42p (2014:2.18p)
Liam Swords, Chairman of AEC, commented:
"In summary, 2015 was another difficult year in Singapore as we
strived to regain revenue and profitability and the market in the
UK remained in turmoil. The restructuring of the operations in
Singapore and London is now complete and this combined with the
return to profit in Malaysia and the continuing investment enabled
by the sale of our operations in Ireland creates a platform from
which AEC can continue to rebuild group profitability.
"The report and accounts are expected to be posted to
shareholders shortly following which the Company will seek the
restoration of trading in its shares on AIM. The Notice of the AGM
of the Company to be held on 12 September 2016 will also be
despatched shortly."
This announcement contains inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations.
For further information, please contact:
AEC Education Plc
Liam Swords
Tel: 07725 836811
WH Ireland Limited (NOMAD & Broker)
Mike Coe
Liam Gribben
Tel: 0117 945 3470
CHAIRMAN'S STATEMENT
Overview
The year under review more or less mirrored the fortunes of the
previous year. This can be summarised as follows:
Europe
-- Trading in London continued to show a downturn and
consequently London suffered a significant loss.
-- Ireland again grew substantially and showed an operating
profit, albeit, as noted below, this entity has now been sold in
July 2016.
-- In Cyprus, where the group has a joint venture interest, the
market continued to be affected by the impact of the slowing
economy in Russia, its main market, but this entity showed a small
operating profit allowing our share of the joint venture to break
even.
South East Asia/Middle East
-- Singapore continued to recover and to gain some ground with
its new product initiatives but not sufficiently to avoid an
operating loss.
-- Malaysia continued to recover strongly through its new market
and new product initiatives and showed a good operating profit.
The market in the UK continued to be severely impacted by
attitudes towards immigration, the likely terror threat and looking
forward there will be increased uncertainty caused by the
referendum on the European Union. To offset the impact of this the
operation has been downsized and there is a strong focus on more
local products and a wider offering to overseas students. The
positive signs that begun to show in Malaysia last year continued
strongly during the year and lays a firm base for next year. A key
development since the year end was that in July 2016, Malvern House
Ireland has been sold to enable the revival of London and Singapore
to be supported.
During 2015, given the changes in the ongoing structure of the
Group, the Board has undertaken an impairment review of the
carrying value of its goodwill and intangible assets within the
consolidated financial statements and of the investments held
within the Plc entity.
Financial results and business review
Group revenues on continuing activities for the year to 31
December 2015 reduced by 5% to GBP7.7m (2014: GBP8.1m). The
reduction was mainly due to the difficult trading conditions in
certain jurisdictions including London. The Group continued with
its programme of reducing operating costs during the year by
continued focus on implementing effective cost control strategies
in all units. Because of this the Group's loss before tax from
continuing operations was GBP1.4m (2014: GBP1.5m). If the impact of
these impairment charges is excluded, the adjusted group loss
before tax and impairment charges is GBP0.5m (2014: GBP1.1m).
In evaluating our impairment assessment for goodwill and
intangibles across the group we have considered our future plans
and growth strategies for both Europe and South East Asia/Middle
East, and assumptions on the future opportunities in Singapore
regarding obtaining a new license for EduTrust which the group are
currently exploring. In addition, we have considered impact of the
disposal in July 2016 of Ireland and the future income streams
arising from the royalties for which a commitment for one year has
been obtained and an assumption has been made regarding renewal for
future years.
During 2015 there has been a restatement of the prior year
figures increasing the comparative loss by GBP0.4m from GBP1.1m
previously reported for 2014 to GBP1.5m. This adjustment relates to
an overstatement of income by GBP0.4m in 2014 in respect of the UK
and Irish entities within the group. The comparative figures
presented reflect this restatement.
A summary of performance across the two key operating segments,
defined by the two 'sub-groups' of Malvern House Group Limited
(Europe) and AEC Colleage Pte Limited (South East Asia/Middle
East), can be summarised as follows:
Europe
-- The London operation recorded an operating loss of GBP384k
which after finance charges resulted in a loss of GBP541k. As we
have previously reported, our 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 again during 2015.
Adding to this is the continuing threat from terrorism and looking
forward there will be increased uncertainty regarding the European
Market and the resulting reduced market is very challenging. This
has caused our London operation to drop significantly during the
year with the result that revenue in our Kings Cross school was
down year on year by 26% to GBP2.4m (2014: GBP3.3m). This resulted
in an operating loss of GBP384k (2014: profit of GBP89k). There has
been significant investment in restructuring the operation,
creating new products and new local market initiatives to find new
sources of revenue both from new products and new areas of
distribution which should begin to offset the negative effects in
the London market during 2016.
-- Ireland recorded turnover of GBP2.9m in 2015 (2014 - GBP2.1m)
and an operating profit of GBP252k.
-- Additionally, our share of the profit from our joint venture
in Cyprus was at GBP1k (2014: GBP54k), which after central charges,
would have resulted in a loss for 2015.
South East Asia/Middle East
-- The Singapore College recorded an operating loss of GBP559k
(2014: GBP761k) mainly due to special impairment of assets of
GBP495k (2014: GBP866k). Excluding impairment, the operating loss
was at GBP65k (2014: profit of GBP105k). In Asia, our operations in
Singapore have started to show small improvements but as yet have
been unable to return to profit. The revenue decreased by 77% to
GBP193k (2014: GBP858k). The loss before tax was at GBP578k mainly
due to impairment of investments of GBP495k . They have continued
to market the new courses for diplomas I advanced diplomas in civil
engineering I electrical engineering I mechanical engineering,
higher diplomas in accounting and finance and working towards their
recently acquired Approved Training Organization(ATO status)
through the Singapore Workforce Development Agency which are
tailored for the local market through government subsidies. Whilst
growth has been slower than expected there are signs that they can
return to profit in 2016.
-- Malaysia returned an operating profit of GBP123k (2014:
GBP47K). In Malaysia, revenue increased on the previous year by 19%
largely based on local currency due to new product and market
initiatives which commenced last year but the exchange rate decline
against the British Pound meant it only showed a 8% growth. Revenue
increased to GBP2.2m (2014: GBP2.0m) and profit before tax was
GBP118k (2014: GBP42k). The gains in this year have created a
strong platform and combined with initiatives that are being taken
to create new university partnerships should enable them to
continue the revenue and profit growth next year
The initiatives we have taken in Singapore to reduce costs and
to focus on the local market have been slower than expected but
should allow it to return to profit in 2016. Initiatives continue
to be developed to generate revenue from non-traditional sources to
improve the results in London.
The basic and diluted loss per share was 2.42p (2014: Loss of
2.18p).
Net cash at the end of the year stood at GBP0.42m (2014:
GBP0.36m). During the year there was a cash injection of GBP949K
from shareholders by means of an unguaranteed and zero interest
loan.
From an AEC Education Plc entity perspective an impairment
charge of GBP1.6m has been made in 2015 in respect of the carrying
value of investments.
Dividend
The Board does not propose the payment of a final dividend for
the year ended 31 December 2015 (2014: 0.00p per share).
Going concern
The Board has considered the preparation of the financial
statements on the basis that the Company and Group are going
concerns. The Group has good visibility on the various operations
and have identified those operations that have exposure to funding
requirements with those that are self-funding based on their
ability to generate positive operating cash.
The Group's main source of fund are internally generated fund
and shareholder loans which are unsecured and interest-free. Some
of these loans will be converted to Capital during 2016, subject to
shareholding limitations for conversions. These are further
explained in various disclosures within the Annual report.
In making this assessment to prepare the financial statements on
a going concern basis, the Board have additionally considered a
number of factors including:
-- Profit and cash flow projections for the group and its key
operating entities based upon their assessment and plans for the
operating entities in each of the key jurisdictions
-- Evaluation of the working capital requirements of the
business and its ability to meet liabilities as and when they fall
due
-- The proceeds arising from the disposal of Ireland in July 2016
-- The agreement reached in July 2016 with certain shareholders
to convert certain loans from them into ordinary shares in the
company
-- Plans for future raising of funds, probably through the issue
of equity, to fund the growth and strategic plans for the
business
The Directors recognise the need to raise further funding and
they believe and anticipate that this will be achieved within the
next 12 months. For this reason, they consider it appropriate to
prepare the financial statements on the going concern basis but
recognise that the reliance on future funding, which is not
guaranteed, represents a material uncertainty.
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 changes to ensure the
Group returns to sustainable profit is very much appreciated by the
Board.
Prospects
In summary, 2015 was another difficult year in Singapore as we
strived to regain revenue and profitability and the market in the
UK remained in turmoil. 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
complete and this combined with the return to profit in Malaysia
and the continuing investment enabled by the sale of our operations
in Ireland creates a platform from which AEC can continue to
rebuild group profitability.
Liam Swords
Chairman
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 31 DECEMBER 2015
2015 2014
(Restated)
GBP GBP
Revenue
Sale of services 7,699,469 8,126,722
Other income 261,467 457,972
7,960,936 8,584,694
------------- --------------
Cost of services sold 3,864,736 5,136,220
Salaries and employees' benefits 1,831,125 2,059,555
Amortisation of brand, licences and
trademarks 165,166 166,050
Depreciation of plant and equipment 150,016 203,710
Other operating expenses 2,405,482 2,176,610
Impairment of goodwill 404,352 -
Impairment of intangible assets 495,648 350,000
Total operating costs and expenses 9,317,560 10,092,145
------------- --------------
Operating loss (1,356,588) (1,507,451)
------------- --------------
Share of results of associated companies
and
joint ventures (965) 53,829
Finance costs (43,747) (41,202)
Loss before income tax (1,400,336) (1,494,824)
Income tax charge (6,996) (28,986)
Loss for the year from continuing activities (1,407,332) (1,523,810)
Profit/(loss) for the year from discontinued
activities - 282,420
Loss for the year (1,407,332) (1,241,390)
------------- --------------
Attributable to:
Equity holders of the Company (1,525,426) (1,158,743)
Non-controlling interest 118,094 (82,647)
------------- --------------
(1,407,332) (1,241,390)
------------- --------------
2015 2014
(Restated)
Loss per share on continuing activities
(in pence)
Basic (2.42) (2.18)
-------- ---------------
Diluted (2.42) (2.18)
-------- ---------------
Profit /(loss) per share on discontinued
activities (in pence)
Basic 0.00 0.45
-------- ---------------
Diluted 0.00 0.45
-------- ---------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2015
2015 2014
(Restated)
GBP GBP
Loss for the year (1,407,332) (1,241,390)
Foreign currency translation movements (311,466) 182,880
------------ ---------------
Other comprehensive (expense)/income
for the year (311,466) 182,880
------------ ---------------
Total comprehensive income for the year (1,718,798) (1,058,510)
------------ ---------------
Attributable to:
Equity holders of the parent (1,837,769) (985,686)
Non-controlling interest 138,971 (72,824)
------------ ---------------
Total comprehensive income for the year (1,718,798) (1,058,510)
------------ ---------------
STATEMENTS OF FINANCIAL POSITION
AS AT 31 DECEMBER 2015
Group Company
2015 2014 2015 2014
(Restated)
TOTAL ASSETS GBP GBP GBP GBP
Non-Current Assets
Property, plant and equipment 348,251 450,042 - -
Investment in subsidiary
companies - - 3,657,585 5,260,107
Investment in joint ventures 89,675 97,799 - -
Intangible assets 2,445,611 3,101,851 - -
Goodwill 1,312 422,520 - -
Deferred tax asset 17,120 - - -
----------
2,901,969 4,072,212 3,657,585 5,260,107
--- ------------ --- ---------------- --- -----------
Current Assets
Inventories 9,142 6,718 - -
Trade receivables 575,952 677,573 41,985 -
Other receivables and
prepayments 804,003 445,670 111,022 5,218
Tax recoverable 13,020 51,844 13,020 51,844
Amounts due from subsidiary
companies - - 622,442 692,752
Amounts due from joint
ventures 32,428 46,684 - 41,000
Amounts due from related - 456 - -
parties
Cash and cash equivalents 416,268 360,746 5,235 14,816
---------- ------------ -----------
1,850,813 1,589,691 793,704 805,630
---------- ------------ ---------------- -----------
Total Assets 4,752,782 5,661,903 4,451,289 6,065,737
---------- ------------ ---------------- -----------
Group Company
2015 2014 2015 2014
(Restated)
GBP GBP GBP GBP
EQUITY AND LIABILITIES
Non-Current Liabilities
Financial liabilities 7,492 38,185 - 23,000
Deferred taxation liability 3,323 12,674 - -
---------- ------------ ---------- ----------
10,815 50,859 - 23,000
---------- ------------ ---------- ----------
Current Liabilities
Trade payables 535,940 514,951 - 35,934
Deferred income 756,282 1,013,863 - -
Other payables and accruals 1,487,997 1,140,218 239,686 31,638
Amounts due to subsidiary
companies - - 60,039 1,243,545
Amounts due to joint ventures - 38,673 - -
Amounts due to related
parties 1,589,052 801,358 1,492,430 368,079
Financial liabilities 31,383 39,654 - 14,000
Provision for income tax 18,949 26,667 - -
---------- ------------ ----------
4,419,603 3,575,383 1,792,155 1,693,196
---------- ------------ ---------- ----------
Total liabilities 4,430,418 3,626,243 1,792,155 1,716,196
---------- ------------ ---------- ----------
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
Share based compensation - - - -
reserve
Retained earnings (6,964,400) (5,444,476) (3,599,468) (1,909,061)
Translation reserve 893,916 1,297,945 - -
Capital reserve 142,932 170,560 - -
327,177 2,282,631 2,659,134 4,349,541
Non-controlling interests (4,813) (246,971) - -
------------ ------------ ------------ ---------------
Total equity 322,364 2,035,660 2,659,134 4,349,541
------------ ------------ ------------ ---------------
Total Equity and Liabilities 4,752,782 5,661,903 4,451,289 6,065,737
------------ ------------ ------------ ---------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2015
Share Share Share-Based Translation Capital Attributable Non-
Capital Premium Payment Retained Reserve Reserve To Equity controlling Total
Reserve Earnings Holders Interests
Of The
Company
GBP GBP GBP GBP GBP GBP GBP GBP GBP
Balance at 1
January
2014 5,362,491 896,111 239,044 (4,524,777) 1,124,888 170,560 3,268,317 (174,147) 3,094,170
Loss for the
year (as
restated) - - - (1,158,743) - - (1,158,743) (82,647) (1,241,390)
Total other
comprehensive
income - - - - 173,057 - 173,057 9,823 182,880
------------ ---------- ------------ -------------- ------------ ---------- -------------- ------------ --------------
Total
comprehensive
income for
the year - - - (1,158,743) 173,057 - (985,686) (72,824) (1,058,510)
------------ ---------- ------------ -------------- ------------ ---------- -------------- ------------ --------------
Share based
compensation
transfer - - (239,044) 239,044 - - - - -
------------ ---------- ------------ -------------- ------------ ---------- -------------- ------------ --------------
Balance at 31
December
2014/ 1
January 2015
(as restated 5,362,491 896,111 - (5,444,476) 1,297,945 170,560 2,282,631 (246,971) 2,035,660
Loss for the
year - - - (1,525,426) - - (1,525,426) 118,094 (1,407,332)
Total other
comprehensive
income - - - - (332,343) - (332,343) 20,877 (311,466)
------------ ---------- ------------ -------------- ------------ ---------- -------------- ------------ --------------
Total
comprehensive
income for the
year - - - (1,525,426) (332,343) - (1,857,769) 138,971 (1,718,798)
------------ ---------- ------------ -------------- ------------ ---------- -------------- ------------ --------------
Unclaimed
dividends
returned - - - 5,502 - - 5,502 - 5,502
------------ ---------- ------------ -------------- ------------ ---------- -------------- ------------ --------------
Balance at 31
December
2015 5,362,491 896,111 - (6,964,400) 965,602 170,560 430,364 (108,000) 322,364
------------ ---------- ------------ -------------- ------------ ---------- -------------- ------------ --------------
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2015
2015 2014
GBP GBP
(Restated)
Cash Flows from Operating Activities
Loss before income tax from continuing
activities (1,400,336) (1,494,824)
Profit/(loss) before income tax from discontinued
activities - 282,419
Adjustments for:
Amortisation of intangible assets 165,166 166,050
Depreciation of property, plant and equipment 150,016 203,710
Impairment of goodwill 404,352 -
Impairment of intangible assets 495,648 350,000
Loss on disposal of plant and equipment 9,920 170,481
Non-cash elements of profit on discontinued
activities - (52,104)
Interest expense 43,747 41,201
Interest income -
Others 965 (244)
(130,522) (387,140)
Changes in working capital:
Receivables (137,221) 724,582
Payables (63,954) ( 1,693,920)
Inventories (2,424) 2,511
Related parties and associated companies 632,497 231,777
298,376 ( 735,050)
Taxation (7,718) ( 4,741)
Net cash used from operating activities 290,658 (739,791)
------------ -------------
Cash Flows from Investing Activities
Interest received - 244
Dividends received Purchases of property,
plant and equipment (90,649) 40,303
(68,254)
Purchase of trademarks and licences - (14,685)
Net cash used in investing activities (90,649) (42,392)
------------ -------------
Cash Flows from Financing Activities
Interest paid (43,747) (41,201)
Repayment of term loan (37,204) (62,378)
Finance leases (38,964) (34,939)
Dividends Refund 5,502
---------- ------------
Net cash generated by/(used in) financing
activities (114,413) (138,518)
---------- ------------
Effect of foreign exchange rate changes
on
consolidation (30,074) 193,236
Net decrease in cash and cash equivalents 55,522 (1,114,605)
Cash and cash equivalents at the beginning
of the Year 360,746 1,475,351
---------- ------------
Cash and cash equivalents at the end of
the year 416,268 360,746
---------- ------------
NOTES
1. General Information
AEC Education plc (the "Company") 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. The
principal activity of the group is to provide an educational
offering that is broad and geared principally towards preparing
students to meet the demands of business and management. The
specific principal activities of the subsidiary companies are set
out in note 12 to the financial statements. There have been no
significant changes in the nature of these activities during the
year.
2. Segmental Information
All revenue and profit before taxation arises from operations in
the education sector. Reportable segments are based on the
geographical area where operations are based comprising Europe (UK,
Ireland and Cyprus) and South East Asia/Middle East (Malaysia and
Singapore). These segments represent the respective sub-groups of
Malvern House Group Limited (Europe) and AEC Colleage Pte Limited
(South East Asia/Middle East).
The segmental analysis is as follows:
South East
Europe Asia/Middle Total
East
2015 GBP GBP GBP
Revenue from external customers 5,352,035 2,347,434 7,699,469
------------- ------------- -------------
Depreciation, write offs and amortisation (1,092,797) (122,384) (1,215,181)
------------- ------------- -------------
Loss before taxation (1,293,465) (106,871) (1,400,336)
------------- ------------- -------------
Taxation charge 16,050 (23,046) (6,996)
------------- ------------- -------------
Profit on discontinued activities - - -
Loss for the year (1,277,415) (129,917) (1,407,332)
Segmental assets 1,988,438 2,764,344 4,752,782
------------- ------------- -------------
Segmental liabilities (3,178,018) (1,252,400) (4,430,418)
------------- ------------- -------------
Additions to non-current assets 17,120 - 17,120
------------- ------------- -------------
2014 (Restated)
Revenue from external customers 5,267,983 3,313,711 8,584,693
------------- ------------- -------------
Depreciation, write offs and amortisation (182,036) (537,724) (719,760)
------------- ------------- -------------
Loss before taxation (444,326) (1,050,498) (1,494.824)
------------- ------------- -------------
Taxation charge (4,685) (24,301) (28,986)
------------- ------------- -------------
Profit on discontinued activities 76,313 206,106 282,419
------------- ------------- -------------
Loss for the year (372,697) (868,693) (1,241,391)
Segmental assets 3,706,133 1,955,770 5,661,903
------------- ------------- -------------
Segmental liabilities (4,906,914) 1,334,671 (3,626,242)
------------- ------------- -------------
Additions to non-current assets 38,970 43,969 82,939
------------- ------------- -------------
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 and diluted earnings/(loss) per share on continuing
activities was based on the loss attributable to shareholders of
GBP1,525,426 (2014: restated loss of GBP1,241,391) and the weighted
average number of ordinary shares in issue during the year of
63,051,043 shares (2014: 63,051,043 shares).
The basic and diluted earnings/(loss) per share on discontinued
activities was based on the profit attributable to shareholders of
GBP0 (2014: GBP282,419) and the weighted average number of ordinary
shares in issue during the year of 63,051,043 shares (2014:
63,051,043 shares).
By 31 December 2014, all previously issued options had lapsed .
There were no outstanding options in 2015.
4. Annual Report
The Annual Report will be sent to shareholders by close of
business on or around 18 August 2016. 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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