TIDMAEC
RNS Number : 9232S
AEC Education plc
30 September 2014
AIM: AEC
30 September 2014
AEC Education PLC
("AEC" or "the Company" and together with its subsidiaries, "the
Group")
Half year results for the six months to 30 June 2014
Key Points
-- Revenues on continuing activities of GBP4.33m (2013: GBP5.74m)
-- Operating loss of GBP0.07m (2013: loss of GBP0.53m)
-- Loss before tax of GBP0.10m (2013: loss of GBP0.56m)
-- Loss after tax from continuing activities of GBP0.11m (2013: loss of GBP0.58m)
-- Loss per share of 0.15p (2013: 1.64p)
-- Revenue decline in London offset by 53% growth in Ireland
-- Singapore College returns to profit.
-- Oman trading very difficult with operating losses for the half year
Liam Swords, Chairman, stated,
"The Group's results for the six months to 30 June 2014, as
expected, show a significant improvement in AEC's operations. Our
English language teaching operations in London showed an operating
profit and our new operation in Ireland continued to grow very
strongly offsetting the effect of the difficult trading conditions
in London. Singapore has returned to profit albeit at a very
reduced operating level.
We are encouraged by progress across our operations in London,
Dublin, Cyprus and Malaysia and have begun to implement a further
growth plan in Europe. Singapore is starting to build a local
market and is working hard to remain in profit whilst a range of
alternatives for growth are investigated. Oman has not lived up to
expectations and is impacting the group negatively whilst our
recovery is still in the early stages.
Nonetheless, we expect the progress achieved to date to continue
into the peak summer period and
as we begin to implement strong growth plans in Europe."
Enquiries:
AEC Education PLC Tel: +44 (0) 7725 836 811
Liam Swords
WH Ireland Limited (NOMAD) Tel: +44 (0)161 832 2174
Andrew Kitchingman
CHAIRMAN'S STATEMENT
Introduction
The Group's results for the six months to 30 June 2014, as
expected, show a significant improvement in AEC's operations. Most
importantly, our English language teaching operations in London
continued to show an operating profit and our new operation in
Ireland grew by 53% offsetting the effect of a very sluggish London
market which recorded a drop of 19%. Singapore has also returned to
profit albeit at a much reduced operating level. Malaysia has been
affected by a delay in renewing University partnerships and a more
competitive ACCA market and showed a small operating loss of 1% of
revenue. The progress made in this period is encouraging. Trading
is traditionally higher in the 2(nd) period so our predicted return
to profit this year is still on track.
Financial Results
Revenues on continuing activities for the six months reduced to
GBP4.33m. (2013: GBP5.74.m). The loss before tax was GBP0.07m
compared to a loss of GBP0.53m in the same period last year. All of
the operations, with the exception of Oman, were operating at about
break - even level in this period The loss after tax was GBP0.11m
(2013: GBP0.82m including GBP0.24m on discontinued activities) The
loss per share was 0.15p (2013: 1.10p and 1.64p per share including
discontinued activities). Cash balances as at 30 June 2014 stood at
GBP0.65m (2013: GBP1.42m).
Operational Review
In Europe, Ireland has continued to grow very strongly and will
benefit from the strong interest in the Summer Camp which was a
very profitable feature last year during the summer months. The
lower price business, from the mainly Latin markets, dominated this
period but now the higher value business from Europe and Eastern
Europe are beginning to feed through with order intake at the
higher margins increasing strongly. Strategicaly, Ireland was
developed to help to offset the difficult trading position in
London and this strategy is now beginning to pay off. London
remains difficult because of visa restrictions and the inability of
non EU students to work part time to subsidise their learning, with
the result that revenue reduced against last year. In view if this
we have begun to implement further saving by centralizing sales and
marketing, finance and general administration in Dublin. At the
same time we have begun to develop new products and new agreements
and increased the sales force across a wider range of markets. We
expect these initiatives to bring London back into a growth pattern
next year. The Malvern School in Limassol, Cyprus, has continued to
grow strongly, with order intake on track to achieve increased
revenue again this year. Additionally the Summer Camp, which just
commenced for this year at the end of June, looks like repeating
the success of last year and we expect our agreement with UCLAN in
Cyprus to continue to develop as we go through the 2(nd) period of
this year.
Oman did not achieve in this period. It generated very low
revenue and sustained heavy losses relative to its size. We have
not increased our investment in this venture and have been diluted
because of the funding requirements which have been supported by
our partners. The Board are actively seeking a solution to this
drain on our results.
In Singapore, as we previously reported, we cannot recruit
overseas students. The impact on our revenue is a reduction of 52%
on last year. The management have focused on building a local
market
and extending its range of products to suit this initiative.
This has enabled it to show a small operating profit during the
period and further initiatives are being developed to enable growth
in the coming period. We are unlikely to reapply for EDUTrust in
the near future but, instead, we are focusing on plans with
partners to seek and develop opportunities in the local market.
Revenue in Malaysia continues to be affected by the upheaval in
its North Africa markets, competition in its accounting markets and
delays in completing University agreements. Revenue is down
significantly on last year with the result it made a small
operating loss of 1%. Initiatives have been taken to return the
Accounting revenue to the budgeted level and the University
agreements are expected to be completed shortly. As mentioned
previously, Malaysia has diversified its markets and this
initiative is expected to gain traction as we go through the 2(nd)
period.
Outlook
Notwithstanding the issues in our market opportunities in
Singapore and London, we are encouraged by progress across all our
operations in very significantly improving the Group results
compared to the same period last year. We anticipate further
progress across all units during the next six months and all are
working on initiatives that will bring the Group back into a growth
pattern. In the meantime, we are pleased to have the continued
support of our shareholders as we evaluate potential financing
options to look to further strengthen the business.
Liam Swords
Chairman
UNAUDITED CONSOLIDATED INCOME STATEMENT
Note Six months Six months Twelve months
to 30 June to 30 June to 31 December
2014 2013 2013
GBP'000 GBP'000 GBP'000
Unaudited Unaudited Audited
Revenues
Sales of services and other
revenue 4 4,333 5,742 11,304
Cost of services sold &
operating
expenses (4,403) (6,267) (12,983)
Operating (loss) / profit (70) (525) (1,679)
(Loss) / profit from
operations (70) (525) (1,679)
Share of results of associated
companies
and joint venture (6) 22 (4)
Finance costs (20) (52) (46)
(Loss) / profit before
taxation (96) (555) (1,729)
Income tax credit / (charge) (9) (25) (235)
(Loss) / profit for the period /
year from continuing activities (105) (580) (1,964)
(Loss) / profit for the period /
year from discontinued activities - (241) (998)
(Loss) / profit for the period
/ year (105) (821) (2,962)
Minority interests 13 96 58
------------------------- ------------------------ -------------------------
(Loss) / profit attributable
to equity holders (92) (725) (2,904)
(Loss) / earnings per share
on continuing activities Pence Pence Pence
Basic (0.15) (1.10) (4.27)
Diluted (0.15) (1.10) (4.27)
(Loss) / earnings per share
on discontinued activities Pence Pence Pence
Basic (0.54) (2.24)
Diluted (0.54) (2.24)
UNAUDITED STATEMENT OF FINANCIAL POSITION
As at 30 As at 30 As at 31
June 2014 June 2013 December
Note 2013
GBP'000 GBP'000 GBP'000
Unaudited Unaudited Audited
Fixed assets
Intangible assets 3,951 4,764 4,023
Tangible assets 650 1,176 763
Investment in associated companies - 58 17
Investment in joint venture 17 59 26
Deferred taxation - 239
4,618 6,296 4,829
-------------------------- ----------------------------- ---------------------
Current assets
Inventory 9 22 9
Debtors 1,848 3,386 2,010
Cash at bank and in hand 645 1,421 1,475
-------------------------- ----------------------------- ---------------------
2,502 4,829 3,494
Total assets 7,120 11,125 8,323
========================== ============================= =====================
Creditors
Amounts falling due within
one year (4,375) (7,011) (5,453)
Net current liabilities (1,873) (2,182) (1,959)
-------------------------- ----------------------------- ---------------------
Non-current liabilities
Deferred income - - -
Finance lease (48) - (63)
Term loan (68)
Deferred taxation (22) (25) (22)
-------------------------- ----------------------------- ---------------------
(70) (93) (85)
Total liabilities (4,445) (7,104) (5,538)
-------------------------- ----------------------------- ---------------------
Equity attributable to equity
holders
of the Company
Share capital 5,362 4,420 5,362
Share premium 896 708 896
Reserves (3,403) (1,018) (3,299)
-------------------------- ----------------------------- ---------------------
2,855 4,110 2,959
Minority interest in equity (180) (89) (174)
2,675 4,021 2,785
-------------------------- ----------------------------- ---------------------
Total equity and liabilities 7,120 11,125 8,323
========================== ============================= =====================
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months Six months Twelve months
to 30 June to 30 June to 31 December
Note 2014 2013 2013
GBP'000 GBP'000 GBP'000
Unaudited Unaudited Audited
Cash Flows from operating
activities
(Loss) / profit before income
tax from continuing activities (96) (555) (1,729)
(Loss) / profit before income tax
from discontinued activities - (241) (998)
Adjustments for:
Depreciation & amortisation 176 304 608
Plant and equipment written-off - 2 299
Loss on disposal of plant and
equipment (11) - 89
Loss/(profit) on disposal of
a subsidiary - (215)
Loss/(profit) on disposal of
an associate (279) -
Impairment of goodwill - 59 59
Impairment of intangible assets - - 600
Interest paid (20) 52 46
Interest income - - -
Share of results of associated companies
and joint venture 6 (22) 4
(224) (401) (1,237)
------------------------- ------------------------- ---------------------
Changes in working capital
(Increase) / decrease in debtors 172 234 1,568
(Increase) / decrease in creditors (769) (644) (2,480)
(Increase) / decrease in inventories - - 13
(Increase) / decrease in related
parties (209) (1) 668
Cash flows from operating activities (1,030) (812) (1,468)
------------------------- ------------------------- ---------------------
Taxation
Taxes recovered / (paid) (20) (1) (40)
Net cash used in operating
activities (1,050) (813) (1,508)
------------------------- ------------------------- ---------------------
Cash flows from investing
activities
Interest income - - -
Purchase of property, plant
and equipment (21) (287) (528)
Purchase of intangible fixed
assets (7) - (16)
Acquisition of joint venture - - -
Acquisition of a subsidiary - - (100)
Disposal of property, plant
and equipment 27
Disposal of a subsidiary - (11)
Disposal of an associate 293 - -
292 (287) (655)
------------------------- ------------------------- ---------------------
Cash flows from financing
activities
Share issue - 1,131
Interest paid - (52) (46)
Dividend paid to minority
shareholders - - -
(Decrease) / increase in finance
lease liabilities (31) (20) 63
Repayment of term loan (62) (127) (267)
Dividend paid to shareholders - - -
(93) (199) 881
------------------------- ------------------------- ---------------------
Effect of foreign exchange
rate changes on consolidation 21 13 50
------------------------- ------------------------- ---------------------
Net increase in cash and cash
equivalents (830) (1,286) (1,232)
Cash and cash equivalents at
beginning of period / year 1,475 2,707 2,707
Cash and cash equivalents at
end of period / year 645 1,421 1,475
------------------------- ------------------------- ---------------------
NOTES TO ACCOUNTS
1. Publication of non-statutory accounts and basis of preparation.
The financial information contained in this interim report does
not constitute statutory accounts for the period ended 30 June
2014. The unaudited consolidated financial statements incorporate
the unaudited financial statements of the Company and entities
controlled by the Company (its subsidiaries) made up to 30 June
2014. The comparative figures for the period ended 30 June 2013 are
those as published in the Company's half year announcement made on
16 September 2013.
This report has been approved by the Board of Directors and is
unaudited. This report does not comprise statutory accounts within
the meaning of Section 240 of the Companies Act 1985.
2. General
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 principal activities of the
subsidiary companies during the period.
3. Accounting Policies
The unaudited results for the six months ended 30 June 2014 have
been prepared on the basis of International Financial Reporting
standards ("IFRS") and accounting policies consistent with those
adopted for the year ended 31 December 2013, and to be adopted in
respect of the year ending 31 December 2014.
4. Sale of Services
Six months Six months Twelve months
to 30 June to 30 June to 31 December
2014 2013 2013
GBP'000 GBP'000 GBP'000
Unaudited Unaudited Audited
Course fees and registration
fees 3,345 5,032 9,428
Examination fees 3 8 9
Students accommodation 578 514 1,393
Others 407 188 474
4,333 5,742 11,304
------------------- -------------------------- ----------------------------------
5. Dividend
No interim dividend for this financial year is proposed.
6. (Loss)/ earnings per share
The basic (loss)/earnings per share is calculated by dividing
the (loss)/profit attributable to ordinary shareholders by the
weighted average number of ordinary shares in issue during the
relevant period. The weighted average number of shares in issue
during the period was 63,051,043 (2013: 44,198, 781).
The diluted (loss)/earnings per share is calculated by dividing
the (loss)/profit attributable to ordinary shareholders by the
weighted average number of ordinary shares in issue during the
relevant period diluted for the effect of share options and
warrants in existence at the relevant period. The weighted average
number of shares in issue diluted for the effect of share options
and warrants in existence during the period was 63,051,043 (2013:
44,198, 781).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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