Final Results

RNS Number : 2897I

AEC Education plc

29 May 2014

 



29 May 2014

AIM: AEC

AEC EDUCATION PLC

("AEC" or "the Group")

Full Year Results

 for the 12 months ended 31 December 2013

Key Points

·      London returned to profitably and Ireland produced a small operating profit in this its first full year of trading but results in Singapore and residual costs from the funded operation closed last year impacted severely

·      Revenues on continuing activities of £11.3m (2012: £15.1m) showed a reduction of 25% due largely to the reduction  in business in Singapore

·      Losses before tax and discontinued activities of £1.73m  (2012: loss before tax of £3.58m)

·      Statutory loss before tax of £2.73m (2012: loss before tax of £3.84m)

·      Loss per share on continuing activities is 4.17p (2012: loss per share of 6.59p)

·      Statutory loss per share of 6.35p (2012: loss per share of 7.18.p)

·      Net cash of £1.48m (2012: £2.71m)

·      Malaysian revenue held up despite the troubles in Northern Africa  - one of its major markets and it was profitable

·      Cyprus returned reduced profits reflecting the impact of the banking crisis in the early part of the year

·      Oman failed to gain traction.

·      Cinnovation involvement and the wide range of developments now being pursued leads the Board to conclude that these will enable AEC to grow profitably in the immediate future.

Liam Swords, Chairman of AEC, commented,

"The year under review again proved to be very challenging with visa policies continuing to affect the market for London and the impact of the loss of EduTrust status impacting greatly on the results.  The fact that London has returned to profitably and our new operation in Dublin returned an operating profit in its first full year of trading augurs well for 2014.  Additionally, action taken to enable Singapore to target breakeven in 2014 and the opportunity for growth in profits in Malaysia and Cyprus are encouraging signs for a return to profit."

Enquiries

AEC Education Plc

Liam Swords tel: [phone]

W H Ireland

Andrew Kitchingman / James Bavister            tel: [phone]

AEC EDUCATION PLC

ANNUAL REPORT

YEAR ENDED 31 DECEMBER 2013

CHAIRMAN'S STATEMENT

Overview

The year under review proved to be one of very mixed fortunes. Trading in our London operation continued to be very challenging but did return a marginal operating profit. Cyprus was affected by the banking crisis in the first and second quarters which reduced its usual level of performance but it did provide a small operating profit. Ireland grew substantially and showed a small operating profit in this its first full year of trading and Malaysia fully regained the ground lost following the Middle East crisis and was profitable. Unfortunately these hard won successes were negated by Oman which continued to lack traction and recorded an Operating Loss. Also our Singaporean operation was severely affected by the withdrawal of its EduTrust status at the beginning of August resulting in very material provisions having to be made for teaching out its international student population.

The withdrawal of EduTrust in Singapore meant that it could no longer recruit overseas students and cost levels could not be reduced whilst we applied for reinstatement. The impact was severe in both profit and cash terms and is more fully quantified below. With London, Ireland, Malaysia and Cyprus now in a position to trade profitably and other initiatives taken to stabilize Singapore we should see a return to profitably this year. Additionally the introduction of Cinnovation as a major investor and their interest in assisting growth has meant we have planned some significant new initiatives in Europe in 2014.

Financial results

Group revenues on continuing activities for the year to 31 December reduced by 25% to £11.3m (2012: £15.1m). The reduction was partly due to the continuing impact of the closure of two schools in London the previous year and the continuing negative impact of the current visa policies on student recruitment in the UK. Also the cessation of student recruitment in Singapore caused their revenue to reduce by 36% year on year. The Group's loss before tax from continuing operations was £1.73m (2012: loss before tax £3.58m).

The London operation recorded an operating profit of £45k which after finance charges was a loss of £141k. Ireland also recorded an operating profit of £16k which after interest and central charges was a loss of £49k. In Asia, the Singapore college recorded a pre-tax loss of £1.19m and Malaysia returned a profit of £27k. Additionally our share of the profit from our joint venture in Cyprus was £8k which after finance and group charges was a loss of £20k and Oman showed an operating loss of £91k (£241k after charging £150k for the impairment of the Malvern House brand).  The initiatives we have taken in Singapore to reduce costs and to focus on the local market, following an unsuccessful application to regain EduTrust, should return it to breakeven or at worst a marginal loss in 2014.

The loss per share was 6.35p (2012: 7.18p). The net cash outflow from operating activities was £1.51m (2012: outflow of £2.42m).

Net cash at the end of the year stood at £1.48m (2012: £2.71m).

Dividend

Given the Group's trading results, the Board does not intend to propose the payment of a final dividend for the year ended 31 December 2013 (2012: 0.00p per share).

Business Review

In Asia, our operations in Singapore suffered a severe setback resulting from the withdrawal of EduTrust status. The impact was reduced revenue of 25% and a loss before tax of £1.19m - £1.42m after tax. We have reduced the operation down to a level consistent with servicing the local market with a range of vocational programmes with the expectation of breaking even in 2014.

Our operations in Malaysia maintained the level of student numbers and revenue generated last year despite the continuing troubles in its markets in Northern Africa. This was achieved by an increase in the revenue from the undergraduate and professional programmes in the local market.  Revenue in Malaysia was about the same as the previous year but profits before tax were reduced to £27k (2012 £70k) because of the need to compete more strongly in the local market. In 2014 we are introducing new Islamic Diplomas as well as a new range of undergraduate business degrees and two new post graduate degrees. All the Asian financial operations are now centred in Malaysia. We are continuing to invest in Malaysia and an ambitious growth programme is expected to show a significant increase in profits in 2014 and to take a further step towards achieving the ultimate objective of becoming a "deemed university" with its own campus.

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 views portrayed by this overseas continued during 2013. This made the market for our remaining UK school in Kings Cross difficult, and this, combined with the reduction in capacity implemented last year, reduced revenue year on year by 36%. The remaining operation produced a small operating profit of £45k (2012 loss £1.38m). The return to profit at operational level was a significant milestone and there is confidence that this success can be built on in 2014. We recorded a loss on discontinued activities of £0.38m due to writing off the residual costs relating to the funded training operation closed last year.

Ireland achieved revenue of £1.41m in this its first full year of trading and produced an operating profit of £16k. Finance and central charges created a loss before tax of £49k. Ireland trialled a Summer School last year which mirrored the strong results traditionally achieved in Cyprus so it will add a full Summer School during 2014. This combined with continuing strong growth in the core EFL business leaves it in a position to show significantly improved results in 2014.

Our joint venture in Cyprus was severely affected by the banking crisis in the first and second quarters but still achieved about the same revenue as the previous year. Operating profits were affected such that our share of the Joint Venture was £8k and we recorded a loss before tax of £20k after allocating a share of central costs. The agreement signed with UCLan (University of Central Lancashire) in 2014 to deliver pre-sessional English and a University Taster Programme combined with a return to growth provides a strong opportunity for Cyprus to return to its normal level of profit during 2014. 

Oman has not lived up to expectation. Student interest is low and it has not yet proved possible to expand into the surrounding regions. The result was an operating loss of £91k (£241k after charging £150k for the impairment of the Malvern House brand). Steps are being taken with our partners to improve the situation.

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. The level of support as we implemented the necessary changes to ensure the Group returns to sustainable profit growth is very much appreciated by the Board.

Prospects

2013 was a very difficult year in Singapore and the market in the UK remains constrained by visa restrictions and the negative attitude perceived by overseas students of Government policy. Our investment in the expansion of the Malvern brand internationally as well as London and Malaysia returning to profit leads the Board to expect the Group to show a significantly improved performance in 2014. The recent shareholding taken up by Cinnovation and their strong interest in supporting AEC to achieve its full potential leads the Board to conclude that the wide range of developments now being pursued will enable AEC to grow profitably in the immediate future.

Liam Swords

Chairman  

28 May 2014

AEC EDUCATION PLC
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2013
	2013	2012
	£	£
Revenue
Sale of services	10,989,755	14,776,108
Other income	314,123	317,086
	11,303,878	15,093,194
Cost of services sold	6,978,791	7,573,112
Salaries and employees' benefits	2,770,010	4,212,032
Amortisation of brand, licences and trademarks	144,957	172,593
Depreciation of plant and equipment	437,778	631,754
Other operating expenses	2,213,560	4,192,137
Restructuring of activities	-	729,937
Impairment or write-down of property, plant and equipment	287,390	220,217
Brand impairment	150,000	-
Goodwill impairment	-	882,163
Total operating costs and expenses	12,982,486	18,613,945
Operating loss	-1,678,608	-3,520,751
Share of results of associated companies and joint ventures	-4,320	15,398
Finance costs	-45,875	-70,804
Loss before income tax	-1,728,803	-3,576,157
Income tax (charge)/credit	-235,459	287,382
Loss for the year from continuing activities	-1,964,262	-3,288,775
Loss for the year from discontinued activities	-998,323	-262,007
Loss for the year	-2,962,585	-3,550,782
Attributable to:
Equity holders of the Company	-2,904,688	-3,174,361
Non-controlling interest	-57,897	-376,421
	-2,962,585	-3,550,782
Loss per share on continuing activities
(in pence)
Basic	-4.17	-6.59
Diluted	-4.17	-6.59
Loss per share on discontinued activities
(in pence)
Basic	-2.18	-0.59
Diluted	-2.18	-0.59

AEC EDUCATION PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2013
	2013	2012
	£	£
Loss for the year	-2,962,585	-3,550,782
Foreign currency translation movements	-19,465	185,517
Other comprehensive (expense)/income for the year	-19,465	185,517
Total comprehensive income for the year	-2,982,050	-3,365,265
Attributable to:
Equity holders of the parent	-2,917,515	-3,020,171
Non-controlling interest	-64,535	-345,094
Total comprehensive income for the year	-2,982,050	-3,365,265
AEC EDUCATION PLC
STATEMENTS OF FINANCIAL POSITION
AS AT 31 DECEMBER 2013
	2013	2012
TOTAL ASSETS	£	£
Non-Current Assets
Property, plant and equipment	763,033	1,090,213
Investment in associated companies	16,668	29,395
Investment in joint ventures	26,074	66,653
Intangible assets	3,603,250	4,357,956
Goodwill	420,324	446,558
Deferred tax asset	-	233,031
	4,829,349	6,223,806
Current Assets
Inventories	9,229	21,858
Trade receivables	908,710	1,948,591
Other receivables and prepayments	990,959	1,575,099
Tax recoverable	9,806	8,581
Due from joint ventures	95,897	105,438
Due from related parties	3,798	26,165
Cash and cash equivalents	1,475,351	2,706,691
	3,493,750	6,392,423
Total Assets	8,323,099	12,616,229
EQUITY AND LIABILITIES
Non-Current Liabilities
Financial liabilities	63,048	94,390
Deferred taxation liability	22,275	24,249
	85,323	118,639
Current Liabilities
Trade payables	263,303	652,045
Deferred income	2,160,688	3,813,401
Other payables and accruals	2,247,962	2,969,251
Due to related parties	660,810	24,291
Financial liabilities	112,107	284,564
Provision for income tax	7,736	51,757
	5,452,606	7,795,309
Total liabilities	5,537,929	7,913,948
Equity attributable to equity holders of the Company
Share capital	5,362,491	4,419,878
Share premium	896,111	707,588
Reserves	-3,299,285	-381,770
	2,959,317	4,745,696
Non-controlling interests	-174,147	-43,415
Total equity	2,785,170	4,702,281
Total Equity and Liabilities	8,323,099	12,616,229

AEC EDUCATION PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2013
	Share	Share	Other	Other	Other	Other		Attribut-	Non- controlling
	Capital	Premium	Reserves	Reserves	Reserves	Reserves	Total Of	able to	Interests	Total
			Share-Based	Retained	Trans-	Capital	Other	Equity
			Payment	Earnings	lation	Reserve	Reserves	Holders of
			Reserve		Reserve			The Company
	£	£	£	£	£	£	£	£	£	£
Balance at 1 January 2012	4,419,878	707,588	433,443	1,139,270	983,525	170,560	2,726,798	7,854,264	196,018	8,050,282
Loss for the year	-	-	-	-3,174,361	-	-	-3,174,361	-3,174,361	-376,421	-3,550,782
Total other comprehensive income	-	-	-	-	154,190	-	154,190	154,190	31,327	185,517
Total comprehensive income for the year	-	-	-	-3,174,361	154,190	-	-3,020,171	-3,020,171	-345,094	-3,365,265
Dividends	-	-	-	-88,397	-	-	-88,397	-88,397	-	-88,397
Share based compensation transfer	-	-	-104,699	104,699	-	-	-	-	-	-
Total transactions with owners	-	-	-104,699	16,302	-	-	-88,397	-88,397	-	-88,397
Non-controlling interest arising on business acquisition	-	-	-	-	-	-	-	-	-160,997	-160,997
Dividend paid to non-controlling interest	-	-	-	-	-	-	-	-	-23,768	-23,768
Impairment of carrying value	-	-	-	-	-	-	-	-	290,426	290,426
Balance at 31 December 2012	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
	Share	Share	Other	Other	Other	Other		Attribut-	Non-
	Capital	Premium	Reserves	Reserves	Reserves	Reserves	Total Of	able to	controlling	Total
			Share-Based	Retained	Trans-	Capital	Other	Equity	Interests
			Payment	Earnings	lation	Reserve	Reserves	Holders of
			Reserve		Reserve			The Company
	£	£	£	£	£	£	£	£	£	£
Balance at 1 January 2013	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
Loss for the year	-	-	-	-2,904,688	-	-	-2,904,688	-2,904,688	-57,897	-2,962,585
Total other comprehensive income	-	-	-	-	-12,827	-	-12,827	-12,827	-6,638	-19,465
Total comprehensive income for the year	-	-	-	-2,904,688	-12,827	-	-2,917,515	-2,917,515	-64,535	-2,982,050
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	5,362,491	896,111	239,044	-4,833,777	1,124,888	170,560	-3,299,285	2,959,317	-174,147	2,785,170

AEC EDUCATION PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2013
	2013	2012
	£	£
Cash Flows from Operating Activities
Loss before income tax from continuing activities	-1,728,803	-3,576,157
Loss before income tax from discontinued activities	-998,323	-262,007
Adjustments for:
Amortisation of intangible assets	169,957	172,593
Depreciation of property, plant and equipment	437,778	648,096
Impairment and write down of property plant and  equipment	299,099	220,217
Impairment of intangible assets	600,000	-
Loss on disposal of plant and equipment	88,909	24,334
(Profit)/loss on disposal of subsidiary	-215,308	190,609
Interest expense	45,875	70,804
Interest income	-375	-7,012
Impairment of goodwill and minority interest	59,292	882,163
Share of results of associated companies and joint ventures	4,320	-15,398
	-1,237,579	-1,651,758
Changes in working capital:
Receivables	1,567,976	-690,420
Payables	-2,479,785	-47,085
Inventories	12,629	12,404
Related parties and associated companies	668,427	-80,026
	-1,468,332	-2,456,885
Taxation	-39,638	40,510
Net cash used from operating activities	-1,507,970	-2,416,375
Cash Flows from Investing Activities
Interest received	375	7,012
Dividend income received from associated and joint venture companies	-	154,736
Purchases of property, plant and equipment	-528,009	-510,083
Purchase of trademarks and licences	-16,099	-9,594
Disposal of subsidiary	-11,606	2,260,270
Acquisition of subsidiary	-99,541	-133,630
Net cash (used in) /generated by investing activities	-654,880	1,768,711
Cash Flows from Financing Activities
Share issue	1,131,136	-
Interest paid	-45,875	-70,804
Repayment of term loan	-267,376	-255,608
Dividend paid to shareholders	-	-88,397
Dividends paid to non-controlling interests	-	-23,768
Finance leases	63,577	-86,039
Net cash generated by/(used in) financing activities	881,462	-524,616
Effect of foreign exchange rate changes on consolidation	50,048	68,596
Net decrease in cash and cash equivalents	-1,231,340	-1,103,684
Cash and cash equivalents at the beginning of the year	2,706,691	3,810,375
Cash and cash equivalents at the end of the year	1,475,351	2,706,691
Cash and cash equivalents consist of the following:
	2013	2012
	£	£
Cash and bank balances	1,475,351	2,700,140
Fixed deposits	-	6,551
	1,475,351	2,706,691

AEC EDUCATION PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2013
1      General
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.. 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 28 May 2014.
2      Significant Accounting Policies
Basis of Preparation
The consolidated financial statements of the Group and Company financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed and adopted for use in the European Union (EU).
The financial statements have been prepared on a going concern basis under the historical cost convention, except that certain financial instruments are accounted for at fair values

3       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.
	Europe	South East Asia/Middle East	Total
2013	£	£	£
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	-270,939	-1,457,864	-1,728,803
Taxation (charge)/credit	-6,460	-228,999	-235,459
Loss on discontinued activities	-380,629	-617,694	-998,323
Loss for the year	-658,028	-2,304,557	-2,962,585
Segmental assets	4,194,708	4,128,391	8,323,099
Segmental liabilities	-4,964,567	-573,362	-5,537,929
Additions to non-current assets	170,478	347,682	518,160
2012
Revenue from external customers	6,639,932	8,453,262	15,093,194
Depreciation, write offs and amortisation	-703,589	-320,975	-1,024,564
Restructuring costs	-729,937	-	-729,937
Impairment loss	-882,163	-	-882,163
Loss before taxation	-3,401,769	-174,388	-3,576,157
Taxation (charge)/credit	47,933	239,449	287,382
Loss on discontinued activities	-	-262,007	-262,007
Loss for the year	-3,353,836	-196,946	-3,550,782
Segmental assets	5,548,024	7,068,205	12,616,229
Segmental liabilities	-5,323,606	-2,590,342	-7,913,948
Additions to non-current assets	892,948	218,466	1,111,414

4      Earnings/(Loss) Per Share
The basic earnings/(loss) per share on continuing activities was based on the loss attributable to shareholders of £1,906,365 (2012: loss of £2,912,354) and the weighted average number of ordinary shares in issue during the year of 45,753,464 shares (2012: 44,198,781 shares).
The basic earnings/(loss) per share on discontinued activities was based on the loss attributable to shareholders of £998,323 (2012: loss of £262,007) and the weighted average number of ordinary shares in issue during the year of 45,753,464 shares (2012: 44,198,781 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 £1,906,365 (2012: loss of £2,912,354) and loss attributable to shareholders of £998,323 (2012: loss of £262,007) and the weighted average number of ordinary shares in issue at during the year of 45,753,464 shares (2012: 44,198,781 shares) diluted for the effect of share options and warrants.
At 31 December 2013 there were 1,950,000 options (2012: 2,840,000 options) outstanding. Of these all 1,950,000 options (2012: 2,840,000 options) were excluded from the diluted weighted average number of ordinary shares calculation as their effect would have been anti-dilutive.
5      Property, Plant and Equipment
	Leasehold property and improvements		Classroom and office equipment		Motor vehicle		Total
	£		£		£		£
Group 2013
Cost
As at 1 January 2013	1,205,755		1,979,193		35,602		3,220,550
Additions	111,182		416,827		-		528,009
Disposals	-348,506		-21,594		-36,248		-406,348
Disposals of subsidiary	-8,999		-17,576		-		-26,575
Currency realignment	-42,044		-77,312		646		-118,710
As at 31 December 2013	917,388		2,279,538		-		3,196,926
Accumulated depreciation
As at 1 January 2013	817,861		1,289,727		22,749		2,130,337
Charge for the year	15,698		417,914		4,166		437,778
Impairment in the year - continuing activities	104,705		182,685		-		287,390
Impairment in the year - discontinued activities	11,709		-		-		11,709
Disposals	-278,369		-11,749		-27,321		-317,439
Disposal of subsidiary	-8,999		-17,576		-		-26,575
Currency realignment	-33,907		-55,806		406		-89,307
As at 31 December 2013	628,698		1,805,195		-		2,433,893
Net book value
At 31 December 2013	288,690		474,343		-		763,033
An impairment charge of £100,325 during the year ended 31 December 2013 arose as a result of the decision made in London to cease using the student database during the ensuing year. The balance of £187,065 was a direct consequence of the decision to downsize the operation in Singapore following the loss of EduTrust status as was the £11,709 included within the loss on discontinued activities.
	Leasehold property and improvements		Classroom and office equipment		Motor vehicle		Total
	£		£		£		£
Group 2012
Cost
As at 1 January 2012	1,090,106		1,949,260		36,575		3,075,941
Additions	196,615		313,468		-		510,083
Additions on acquisition of subsidiary	-		9,998		-		9,998
Disposals	-7,650		-169,640		-		-177,290
Disposals on sale of subsidiary	-77,105		-114,848		-		-191,953
Currency realignment	3,789		-9,045		-973		-6,229
As at 31 December 2012	1,205,755		1,979,193		35,602		3,220,550
Accumulated depreciation
As at 1 January 2012	574,745		999,322		16,168		1,590,235
Charge for the year - continuing activities	234,071		390,523		7,160		631,754
Charge for the year - discontinued activities	6,564		9,778		-		16,342
Charge for impairment	68,621		151,596		-		220,217
Disposals	-7,650		-145,306		-		-152,956
Disposals on sale of subsidiary	-60,452		-108,445		-		-168,897
Currency realignment	1,962		-7,741		-579		-6,358
As at 31 December 2012	817,861		1,289,727		22,749		2,130,337
Net book value
At 31 December 2012	387,894		689,466		12,853		1,090,213
The impairment charge during the year ended 31 December 2012 arose as a result of the closure of two schools and separate offices in London as part of the restructuring.

6        Intangible Assets
Intangible assets are summarised as follows:
	Licences	Brands	Trademarks	Total
	£	£	£	£
Group 2013
Cost
As at 1 January 2013	847,494	3,750,000	20,797	4,618,291
Additions	14,317	-	1,782	16,099
Currency alignment	-8,238	-	-	-8,238
As at 31 December 2013	853,573	3,750,000	22,579	4,626,152
Accumulated amortisation
As at 1 January 2013	100,460	150,000	9,875	260,335
Charge for the year - continuing activities	15,589	125,000	4,368	144,957
Charge for the year - discontinued activities	-	25,000	-	25,000
Charge for impairment - continuing activities	-	150,000	-	150,000
Charge for impairment - discontinued activities	-	450,000	-	450,000
Currency alignment	-7,390	-	-	-7,390
As at 31 December 2013	108,659	900,000	14,243	1,022,902
Net book value
At 31 December 2013	744,914	2,850,000	8,336	3,603,250
Analysed as follows:
Indefinite life	734,046	-	-	734,046
Definite life	10,868	2,850,000	8,336	2,869,204
	744,914	2,850,000	8,336	3,603,250
There is an annual amortisation charge for the Malvern House brand made in accordance with the stated accounting policy. In addition, following the loss of EduTrust status by AEC College Pte Ltd and the consequent inability to recruit foreign students, teaching of English language in Singapore which was branded as Malvern House, has now ceased. As a direct consequence the Board has reassessed the carrying value of the Brand attributable to that cash generating unit and concluded that a permanent impairment took place on the cessation of that activity. Accordingly a charge of £450,000 has been made for that permanent impairment of the Malvern House brand within the loss on the discontinued activities in the current year.
In addition, the Board has reviewed all ongoing cash generating units in accordance using the detailed procedures adopted by th Board and concluded that one, the school in Oman, can also no longer support the carrying value of the Malvern House brand with which it was previously attributed. Therefore, as shown in the table above, a further provision of £150,000 was made during the year ended 31 December 2013 to reflect this change. This impairment charge is set out on the face of the Consolidated Income Statement as the entity concerned is a continuing activity.
	Licences	Brands	Trademarks	Total
	£	£	£	£
Group 2012
Cost
As at 1 January 2012	2,845,940	3,750,000	15,017	6,610,957
Additions	3,814	-	5,780	9,594
Disposal of subsidiary	-2,013,855	-	-	-2,013,855
Currency alignment	11,595	-	-	11,595
As at 31 December 2012	847,494	3,750,000	20,797	4,618,291
Accumulated amortisation
As at 1 January 2012	84,133	-	5,424	89,557
Charge	18,142	150,000	4,451	172,593
Currency alignment	-1,815	-	-	-1,815
As at 31 December 2012	100,460	150,000	9,875	260,335
Net book value
At 31 December 2012	747,034	3,600,000	10,922	4,357,956
Analysed as follows:
Indefinite life	734,046	-	-	734,046
Definite life	12,988	3,600,000	10,922	3,623,910
	747,034	3,600,000	10,922	4,357,956

7      Goodwill
	2013	2012
	£	£
Cost
Balance as at the beginning of the year	446,558	1,141,242
Acquisition of subsidiary	-25,948	591,737
Disposal of subsidiary	-	-678,040
Impairment loss	-	-591,737
Currency alignment	-286	-16,644
Balance as at the end of the year	420,324	446,558
Goodwill has arisen on acquisitions by the Group.
During the year ended 31 December 2013, the Group acquired the non-controlling interest in AEC Bilingual Pte Limited with negative goodwill of £25,948.
During the prior year, the Group acquired Malvern House Training Solutions Limited with goodwill on consolidation calculated as £591,737.
The goodwill relating to Malvern House Training Solutions Limited was reassessed and a provision to write this down to £nil was created at 31 December 2012.
In the prior year, in addition to the impairment loss of £591,737 a further £290,426 has been charged in the Consolidated Income Statement in respect of the non-controlling interest in Malvern House Training Solutions Limited which gives a total impairment of £882,163.

8     Share Capital
Allotted, called up and fully paid
		Nominal		Nominal	Nominal
	No of	value	No of	value	value
	ordinary	ordinary	deferred	deferred	All
	shares	shares	shares	shares	shares
At 1 January 2012 10p ordinary shares	44,198,781	4,419,878	-	-	4,419,878
At 1 January 2013 10p ordinary shares	44,198,781	4,419,878	-	-	4,419,878
Division of shares to 5p ordinary shares	-	-2,209,939	44,198,781	2,209,939	-
Shares issue on 23 December 2013	18,852,262	942,613	-	-	942,613
At 31 December 2013 5p ordinary shares	63,051,043	3,152,552	44,198,781	2,209,939	5,362,491
Until the division of the Company's shares on 20 December 2013 the par value of each existing ordinary share in the capital of the Company was 10p, which was the minimum price at which the Company's ordinary shares could be issued.
At that date the Company's existing ordinary shares had been trading at below the par value of 10p for quite some time, and in order to proceed with the planned subscription, the Company proposed to undertake a capital reorganisation so that the par value of its ordinary shares was reduced to 5p per ordinary share.
At the Extraordinary General Meeting held on 20 December 2013 the Shareholders approved splitting each issued existing ordinary share into one new ordinary share of 5p and one deferred share of 5p. As all rights remain with the new ordinary shares of 5p each these deferred shares are effectively valueless but remain part of the share capital of the Company.
9           Annual Report
The Annual Report will be sent to shareholders by close of business on or around 4 June 2014. Additional copies will be available to the public, free of charge, from the Company's website www.aeceducationplc.co.uk.

 

END

 

 

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