Half Year Results

RNS Number : 0154O

AEC Education plc

16 September 2013

 



AIM: AEC

AEC Education PLC

("AEC" or "the Company" and together with its subsidiaries, "the Group")

Half year results

for the six months to 30 June 2013

Key Points

·     Revenues on continuing activities of £5.74m (2012: £8.98m)

·     Operating loss of £0.53m (2012: loss of £0.65m)

·     Loss before tax of £0.56m (2012: loss of £0.67m) - including loss of £0.42m from Singapore operations

·     Loss after tax from continuing activities of £0.58m (2012: loss of £0.63m)

·     Loss from discontinued activities of £0.24m (2012: nil)

·     Loss after tax including discontinued activities of £0.82m (2012: 0.63m)

·     Loss per share of 1.64p (2012: 1.20p)

·    Progress in Europe, especially at London operations which returned to profitability, and in Malaysia were offset by the Singapore operations

·    Singapore College's EduTrust certification issues are being addressed and an application for a reinstatement of certification will be made at the earliest appropriate time.  Management changes have been made

Liam Swords, Chairman, stated,

"The Group's results for the six months to 30 June 2013, as expected, show a significant improvement in AEC's European operations. Most importantly, our English language teaching operations in London returned to profitability but our new operation in Ireland also moved into profit at the end of the period and our Cyprus joint venture continued to trade profitably.  While this is encouraging, as previously reported, overall results for the half year have been materially adversely affected by deficiencies which emerged at our Singapore operation.  These are being addressed but, as we previously stated, results for the year will be affected as we work through the issues and the Group's expected return to profitability will be delayed.

"Notwithstanding the issues at our operations in Singapore, we are encouraged by progress across our operations in London, Dublin, Cyprus and Malaysia.  We anticipate further progress across these units and will be working hard to address the challenges at our Singapore College.  In the meantime, we are pleased to have the continuing support of our shareholders as we evaluate potential financing options and look to further strengthen the business." 

Enquiries:

AEC Education PLC		Tel: [phone]
Liam Swords
WH Ireland Limited (NOMAD)		Tel: [phone]
Dan Bate
Biddicks		Tel: [phone]
Katie Tzouliadis / Alex Shilov

CHAIRMAN'S STATEMENT

Introduction

The Group's results for the six months to 30 June 2013, as expected, show a significant improvement in AEC's European operations.  Most importantly, our English language teaching operations in London returned to profitability but our new operation in Ireland also moved into profit at the end of the period and our Cyprus joint venture continued to trade profitably.  While this is encouraging, as previously reported, overall results for the half year have been materially adversely affected by deficiencies which emerged at our Singapore operation.  These are being addressed but, as we previously stated, results for the year will be affected as we work through the issues and the Group's expected return to profitability will be delayed.

Financial Results 

Revenues on continuing activities for the six months reduced to £5.74m (2012: £8.98m).  The loss before tax was £0.56m compared to a loss of £0.67m in the prior period, with the major part of the Group's loss for the period attributed to the performance of the Singapore operation, which recorded a loss before tax of £0.42m. The loss after tax from continuing activities was £0.58m (2012: £0.63m) and after taking account of the loss from discontinued activities of £0.24m (2012: nil) relating to the legacy losses arising from Malvern House Training Solutions, the loss for the period increased to £0.82m (2012: £0.63m).  The loss per share before discontinued activities was 1.10p and including discontinued activities, the loss per share was 1.64p per share (2012: 1.20 per share).  Cash balances as at 30 June 2013 stood at £1.42m (2012: £2.90m). 

Operational Review

In Singapore, as we previously reported, the Council of Private Education ("CPE"), which is the Singapore Government Body that regulates the Private Education sector, issued a six month suspension of our College's EduTrust certification. The suspension period started at the beginning of August and comes after issues around English language entry requirements of students enrolled to take the MBA programme were identified and other compliance weaknesses highlighted to the management. The suspension means that while the Singapore College will continue to operate to fulfil its obligations to current registered students and can continue to recruit local students to the College, it is unable to recruit foreign students, our typical applicants, during the suspension period. 

We are working hard to ensure that all regulatory and compliance issues are addressed fully and satisfactorily. Importantly, we have implemented an immediate change of management at the College. We will apply for an assessment of the College's eligibility for a reinstatement of the EduTrust certification at the earliest appropriate time but clearly in the intervening period there is a significant adverse financial impact and there already has been material impact in the first half of the financial year.  Elsewhere in Asia, our operations in Malaysia showed a year-on-year improvement.  Enrolments in the local market have been strong with increasing interest in our degree programmes. We also continued to increase enrolments from the Middle East and North Africa and the operations made a profitable contribution.   

In Europe, our main activity, which is our English language teaching operations in the UK, returned to profitability after the restructuring we undertook last year to consolidate all our activities into our Kings Cross site.  In May, we reported that we had closed our operation in the funded business and that we were reviewing our overall position in the UK government funded sector.  This discontinued business contributed a loss of £0.24m to the Group in the period and we have decided for the time being to withdraw from the funded sector in the UK so that we can focus our resources on our core business.  Our English language teaching operation in Ireland, Malvern House Dublin, moved into profit in June and continues to grow strongly in high value markets which is helping to offset weaker demand in Europe. Despite the economic crisis in Cyprus, we are pleased that the Malvern  School in Limassol has continued to grow, with revenues up by 20% in the period and the Summer School also showed a small increase in revenue. Our new operation in Oman is still trading at a loss but we have diversified into new product areas as planned in the first half which are beginning to show promise. 

Outlook

Notwithstanding the issues at our operations in Singapore, we are encouraged by progress across our operations in London, Dublin, Cyprus and Malaysia.  We anticipate further progress across these units and will be working hard to address the challenges at our Singapore College.  In the meantime, we are pleased to have the continued support of our shareholders as we evaluate potential financing options and look to further strengthen the business.  

Liam Swords

Chairman

AEC Education PLC

Unaudited Consolidated Income Statement

		Six months to 30 June 2013	Six months to 30 June 2012	Twelve months to 31 December 2012
	Note	Unaudited	Unaudited	Audited
		£'000	£'000	£'000
Revenues	4
Sales of services and other revenue		5,742	8,979	15,093
Cost of sales		(6,267)	(9,627)	(18,613)
Operating (loss) / profit		(525)	(648)	(3,520)
Share of results of associated companies and joint ventures		22	5	15
Finance costs		(52)	(27)	(71)
(Loss) / profit before income tax		(555)	(670)	(3,576)
Income tax (charge)/credit		(25)	38	287
(Loss) / profit for the period / year from continuing activities		(580)	(632)	(3,289)
(Loss) / profit for the period / year from discontinued activities		(241)	-	(262)
(Loss) / profit for the period / year		(821)	(632)	(3,551)
Non-controlling interests		96	103	376
(Loss) / profit attributable to equity holders		(725)	(529)	(3,175)
(Loss) / earnings per share		Pence	Pence	Pence
Basic	6	(1.64)	(1.20)	(7.15)
Diluted	6	(1.64)	(1.20)	(7.15)

AEC Education PLC

Unaudited Statement of Financial Position

	As at 30 June 2013	As at 30 June 2012	As at 31 December 2012
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
TOTAL ASSETS
Fixed assets
Intangible assets	4,764	8,111	4,804
Tangible assets	1,176	1,516	1,090
Investment in associated companies	58	90	29
Investment in joint venture	59	111	67
Deferred taxation	239	-	233
	6,296	9,828	6,223
Current assets
Inventory	22	54	22
Debtors	3,386	3,424	3,664
Cash at bank and in hand	1,421	2,903	2,707
	4,829	6,381	6,393
Total assets	11,125	16,209	12,616
EQUITY AND LIABILITIES
Non-current liabilities
Finance lease	-	22	28
Term loan	68	364	66
Deferred taxation	25	23	24
	93	409	118
Current liabilities
Creditors:
Amounts falling due within one year	7,011	8,743	7,795
Total liabilities	7,104	9,152	7,913
Equity attributable to equity holders of the Company
Share capital	4,420	4,420	4,420
Share premium	708	708	708
Reserves	(1,018)	1,985	(382)
	4,110	7,113	4,746
Non-controlling interests	(89)	(56)	(43)
	4,021	7,057	4,703
Total equity and liabilities	11,125	16,209	12,616

AEC Education PLC

Unaudited Consolidated Statement of Cash Flows

	Six months to 30 June 2013	Six months to 30 June 2012	Twelve months to 31 December 2012
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Cash Flows from operating activities
(Loss) / profit before income tax from continuing activities	(555)	(670)	(3,576)
(Loss) / profit before income tax from discontinued activities	(241)	-	(262)
Adjustments for:
Depreciation and amortisation	304	322	820
Plant and equipment written-off	2	-	220
Loss on disposal of plant and equipment	-	-	24
Loss on disposal of a subsidiary	-	-	191
Impairment of goodwill	59	-	882
Interest expense	52	27	71
Interest income	-	(22)	(7)
Share of results of associated companies and joint ventures	(22)	(5)	(15)
	(401)	(348)	(1,652)
Changes in working capital
Receivables	234	(76)	(690)
Payables	(644)	388	(47)
Inventories	-	-	12
Related parties	(1)	-	(80)
	(812)	(36)	(2,457)
Taxes recovered / (paid)	(1)	(22)	40
Cash used in operating activities	(813)	(58)	(2,417)

	Six months to 30 June 2013	Six  months to 30 June 2012	Twelve months to 31 December 2012
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Cash used in operating activities	(813)	(58)	(2,417)
Cash Flows from Investing Activities
Interest received	-	22	7
Dividend income received from an associated  and joint venture companies	-	-	155
Purchase of property, plant and equipment	(287)	(341)	(510)
Purchase of intangible fixed assets	-	(5)	(9)
Disposal of a subsidiary	-	-	2,260
Acquisition of a subsidiary	-	(135)	(133)
Net cash generation/(used) in investing activities	(287)	(459)	1,770
Cash Flows from Financing Activities
Interest paid	(52)	(27)	(71)
Repayment of term loan	(127)	(131)	(256)
Dividend paid to shareholders	-	-	(88)
Dividend paid to non-controlling interests	-	(25)	(24)
Finance leases	(20)	(28)	(86)
	(199)	(211)	(525)
Effect of foreign exchange rate changes on consolidation	13	(179)	69
Net decrease in cash and cash equivalents	(1,286)	(907)	(1,103)
Cash and cash equivalents at beginning of period / year	2,707	3,810	3,810
Cash and cash equivalents at end of period / year	1,421	2,903	2,707

AEC Education PLC

Notes

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 2013. 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 2013.  The comparative figures for the period ended 30 June 2012 are those as published in the Company's half year announcement made on 24 September 2012.  

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 2013 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 2012, and to be adopted in respect of the year ending 31 December 2012.

4.     Sale of Services

	Six months to 30 June 2013	Six  months to 30 June 2012	Twelve months to 31 December  2012
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Course fees and registration fees	5,032	7,068	12,156
Examination fees	8	844	108
Students accommodation	514	734	1,662
Others	188	333	1,167
	5,742	8,979	15,093

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 44,198,781 (2012: 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 46,213,781 (2012: 47,951,430).

 

END

 

 

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