Final Results - Replacement

RNS Number : 1577H
AEC Education plc
24 May 2011
 



This announcement is a duplicate of the Final Results announcement issued at 7.00am on 24 May 2011 under RNS No. 1380H save for an amendment to Note 9 of the Notes to the Financial Statements.  All other information remains the same.

 

AIM: AEC

AEC Education PLC

("AEC" or "the Company" or "the Group")

 

Final Results for the 12 months ended 31 December 2010

 

AEC provides educational courses up to post-graduate degree level in Asia and the UK as well as London Chamber of Commerce and Industry ("LCCI") examinations/qualifications in Asia.

 

KEY POINTS

 

·     Challenging year, especially in UK - but expectation of turnaround in 2011

 

·     Revenues of £18.1m (2009: £12.6m) - includes full year contributions from acquisitions (Malvern House , in UK acquired in July 2009, and Kasturi College, in Malaysia acquired in October 2009)

 

·     Underlying loss before tax excluding the cost of share options, of £0.22m (2009: profit before tax of £1.08m)

        Statutory loss before tax of £0.44m, including cost of cost of share options granted to management and staff of £0.22m (2009: statutory profit before tax of £1.08m)

 

·     Loss per share of 0.85p (2009: earnings per share of 2.50p) 

 

·     Healthy balance sheet with cash of £3.09m (2009 £3.22m)

 

·     Final and total dividend proposed of 0.2p per share (2009: 0.15p)

 

·     UK operations reorganised and restructured; platform in place for return to profitability

 

·     Investment in Asian operations (Singapore and Malaysia) - colleges well positioned to benefit from expected market consolidation and top level accredited status

 

·     Board expects Group to deliver materially improved performance in 2011

 

 

Enquiries:

 

AEC Education PLC


Tel: +44 (0) 20 3178 6378 (today)

Liam Swords


Tel: +44 (0) 20 8308 1202




WH Ireland Limited (NOMAD)


Tel: +44 (0)161 832 2174

Dan Bate



Stuart Forshaw






Biddicks


Tel: +44 (0) 20 3178 6378

Katie Tzouliadis



Sophie Lane





CHAIRMAN'S STATEMENT

 

Overview

 

The year ended 31 December 2010 was a challenging one for the Group and particularly for the UK operations which were severely affected by the uncertainty surrounding changes to regulations for student visas. In Asia, the picture was different and while there have also been major regulatory changes in the private education markets in Singapore and Malaysia, resulting in additional one-off costs in the year, these changes have presented further opportunities. We expect AEC's position to strengthen in these important markets as a result.

 

Underlying trading results for 2010 are in line with revised market expectations and reflect the challenges we have faced in the year, with the Group reporting an underlying loss before tax (excluding the cost of share options) of £221,583 on revenues of £18.1m.  We took decisive action in the UK to reduce the cost base and to reposition the business in the light of the forthcoming changes to overseas student visas. This should see the UK deliver a significantly improved performance in 2011 although clearly some uncertainty still remains until we see the trading situation normalise. In Asia, our operations in Singapore and Malaysia should see the benefits of their new high level accreditations and we expect the private education market in both countries to consolidate as a result of government regulation. We also expect our English Language provision in our Asian markets to gain from the unrolling of the Malvern House brand and model across all our centres.

 

Financially, the Group position remains strong.  Cash at the year end stood at £3.09m (2009: £3.22m) and this, together with our enhanced banking facilities, will support our expected return to profitability in 2011

 

Financial results

 

Revenues for the year to 31 December 2010 rose by 43% to £18.1m (2009: £12.6m).  This increase largely reflects the benefits of a full year's contribution from acquisitions, principally Malvern House, which was purchased in July 2009.  The underlying pre-tax loss for the year, excluding the cost of share options, was £221,583 (2009: profit of £1.08m). Including the cost of share options granted to management and staff of £217,026, the statutory loss before tax was £438,609. The loss after tax was £289,886 (2009: profit of £0.89m) and the loss per share was 0.85p (2009: earnings per share of 2.5p). 

 

The cash outflow from operating activities was £0.13m (2009: cash inflow of £2.62m). The actions to restructure the UK business, Malvern House, impacted our cash reserves by £0.92m.  Nevertheless, net cash at the end of the year stood at a healthy £3.09m (2009: £3.22m). Continued organic growth, in what was a difficult year, combined with the opportunities we see in 2011, have given the Board the confidence to recommend a final and total dividend of 0.20p per ordinary share.  Subject to shareholder approval at the Annual General Meeting, the dividend will be paid in August 2011 to shareholders on the register at 24 June 2011. The ex-dividend date is 22 June 2011.

 

Business Development

 

Whilst our UK business was adversely affected by the uncertainty surrounding student visa regulations, our Asian operations recorded growth in revenue ranging from 15% to 3% across its markets.   

 

The major highlight in the year for our flagship AEC College in Singapore was its award of the EduTrust Certificate for four years in September 2010 by the Council of Private Education in Singapore, making it one of the few private education institutions in Singapore to have gained this status. We expect it to have a material positive effect on our ability to recruit new students. There was some disruption to the Singapore marketplace while the new regulations were being developed and introduced by the Government but as 2010 closed, student numbers were strong. The University of Wales, Newport (UK), Master of Business Administration and Bachelor programmes introduced last year performed extremely well, recording a 100% increase in student numbers albeit from a small base. Diploma and Advanced Diploma in Business programmes and the new Advanced Diploma in Business taught in Mandarin have also been very successful.  However, we did see significant reductions in vocational programmes, especially in the Diploma in Interactive Media. The market in Singapore is beginning to show signs of consolidation and we expect to be able to gain significantly from this as we go through 2011 and 2012.

 

These accounts reflect the first full year contribution from Kasturi College in Malaysia, after we acquired the 70% balance of the business which we did not already own in October 2009. The business continued to grow strongly with volumes increasing by 9% over the last full year. Degree programmes have achieved robust growth and the College has now been expanded to three locations in Kuala Lumpur to meet the growing demand for these programmes. The College will continue to invest in marketing to recruit students in Northern Africa and the Middle East where demand has been high. It will also continue to raise the level of its programmes to prepare for the opportunities that are being granted to high performing education institutions in Malaysia to become 'deemed' universities, with their own university campuses.

 

The results also include the first full year contribution from Malvern House, our London based business. As previously stated, the UK Government's review of student visa regulations and the prolonged uncertainty surrounding further government action caused significant disruption and the business recorded a pre-tax loss for the year of £603,000. A trend for students to book shorter English Language courses became increasingly evident over the year and the average number of course weeks per student reduced from 15 weeks to 11.5 weeks. This switch to shorter courses looks, for the time being, to be firmly established and we are not anticipating a material improvement in 2011. In reacting to the changes in trading conditions, we have significantly realigned capacity and overheads in London. These actions should provide a platform for Malvern House to return to sustainable profitability and we expect the business to contribute profitably to first half results in the current financial year.  

 

During the year, we continued with our strategy to unroll the Malvern House brand and model across our Asian centres which teach English Language. The existing English Language centres in Singapore, Malaysia and Vietnam have now all been rebranded and their methodology and approach to teaching English Language now conforms to the Malvern House model. The expansion of the Malvern House brand, combined with the changes already made in the UK, gives us confidence that we will now begin to see a favourable return from our investment in the UK.

 

Educational Resources Ltd ("ER"), the Group's London Chamber of Commerce & Industry ("LCCI") examinations subsidiary, continued its programme of investment during the year. We added additional marketing and management resources to our operations in Hong Kong in order to develop new market segments as the changes to the schools syllabus impact and in Kuala Lumpur, we created a new Market Intelligence unit to support growth initiatives. Despite the decrease in ER's overall revenues of 2%, gross profit increased by 10% year on year and the certification numbers grew by 3%. Within the overall revenue result, we saw a decrease in contribution from Hong Kong because of changes in the schools system but all our other LCCI markets performed well. New agreements with universities in Asia to accept Level 3 LCCI students into the first year of Business, Accounting and Finance courses, along with new initiatives in India, will provide ER with additional opportunities going forward.

 

Staff

 

2010 has been a particularly difficult year, with significant change having to be managed effectively. On behalf of the Board I would like to thank all staff for their hard work and efforts during the period.  It was especially encouraging to see the positive attitude that has been apparent as we have implemented the necessary changes to ensure the Group returns to sustainable profit growth.  

 

Prospects

 

During 2010, the Board was focused on managing both the challenges and opportunities in our various markets, and on ensuring that, where necessary, we adapted our model to create the appropriate platform for growth. We believe we are now almost at the end of that programme and that we will see a turnaround in our performance in 2011.

 

We have the resources and cash balances to support the growth of our existing operations and are also returning to our strategy to acquire businesses, with a focus on growth in Asia. We are also continuing with the search for suitable university partners in the UK and hope to be in a position to report more fully on this towards the end of 2011.

 

With strong cash balances, AEC is well placed to continue its development and the Board remains confident that the Group will return to profitability in 2011. 

 

Liam Swords

Chairman  



Chief Executive's Report

 

The Group's activities cover the three core offerings listed below and my report below provides an overview of each activity:

 

·     pathways programmes;

·     examinations; and

·     the teaching of English.

 

Our pathway programmes and examinations provision are centred in Singapore and Malaysia principally, with a small presence in Vietnam.  These centres also offer English Language teaching, however, it is our London operation which currently forms the hub of our English Language provision.  Approximately 13,000 students passed through our schools in 2010 and the student base comprises a mix of students drawn from South East Asia, the Far East, South America, Europe, Africa and the Middle East. 

 

Our global footprint has been built up through a well established network of marketing agencies.  This network represents a valuable asset for the Group.  Our staff travel extensively across the globe to meet students, agents and partners and our Malvern House brand has established a particularly strong reputation in the English Language market across the world.  We believe that as we continue to develop, there will be further significant advantages to be derived from this network.

 

Technology is also important to us and we have a state-of-the-art IT system at Malvern House which enables both students and agents to engage actively with us and this will support our growth plans going forward.

 

Pathway Programmes

 

Following the award of the highly coveted EduTrust certificate covering the next four years, the second half of the year saw AEC achieve good progress in Singapore.  Business and accounting qualifications performed robustly during the year and the programmes introduced last year saw excellent uptake.  In addition, the three-year degree courses from the Manchester Metropolitan University and MBAs with the University of Wales are gradually gaining momentum.  With AEC being one of only 17 providers in Singapore to have achieved the four-year EduTrust certificate, we are well placed to participate fully in the consolidation of the private education market in the country.  We are currently expanding our premises, converting corporate offices into additional lecture rooms, and when fully operational, AEC College will have 28 lecture rooms.  We are also increasing our marketing efforts in China and India, both of which offer exciting growth potential.  

 

In Malaysia, degree programmes have also continued to perform well, including the University of Wales degree offering.   Uptake from students in Central Asia, North Africa and the Middle East, for whom Malaysia is an attractive destination, has remained strong and we are actively recruiting in these regions. New industry regulation has also been introduced in Malaysia and the newly created Malaysia Quality Agency has established more rigorous assessment and compliance requirements for education institutions.  We invested substantially in Malaysia in 2010 to ensure that our operations met the new requirements and part of our investment was in leasing additional space.  We achieved full compliance with the new regulations in the last quarter of the year.  As a result, the College is now benefiting from government loan sponsored programmes supporting less well-off local students.  We are also reviewing the potential for the college to qualify as a "deemed university" which would require significant investment in a campus for the college. 

 

Given the evolving landscape for UK universities, there are exciting new opportunities for additional partnerships.  AEC College in Singapore is launching a new law programme with Birmingham City University in 2011 and the Group is in active discussions with a number of other UK universities with a view to forming partnerships in London, Singapore and Malaysia.

 

Examinations (Educational Resources Pte Ltd ("ER"))

 

Overall, our examinations business, which offers London Chamber of Commerce & Industry ("LCCI") qualifications, showed a satisfactory performance. The Hong Kong market was affected by changes to the school syllabus but ER's operations elsewhere in Asia increased their market share.  In total 149,000 individual exams (entries) were taken by students across Asia in 2010 at both Certificate and Diploma levels, compared to 145,000 in 2009.

 

We continue to work together with Asian universities in order to ensure that the qualifications remain an attractive option for students and we now have in place a number of agreements with universities to accept Level 3 LCCI accounting students onto Business, Accounting and Finance courses.  The Group is also introducing new initiatives in India which should support our expansion in this large potential market.

 

Teaching of English

 

As we have previously reported, 2010 was especially challenging for our English Language business in London, with the Government's review of student visas creating major uncertainty and disruption in the marketplace. At the same time, the Government's new compliance requirements for all private education schools in UK also required management attention and additional investment. 

 

Although there is now greater clarity in the UK marketplace, some residual uncertainty remains and the shift to shorter term courses we saw in 2010 looks to be firmly established.  However, we believe that Malvern House in London is now better placed to operate profitably having removed cost and adjusted its model in 2010.  We expect to see a significantly better performance in 2011, with losses reversing.  In early 2011, Malvern House was awarded 'Highly Trusted Sponsor' status from the UK Borders Agency ("UKBA") and this will enable it to map its future in the changing UK landscape. 

 

We were also focused during the year on implementing the Malvern House model and branding across our English Language businesses in Asia.  We introduced the Malvern House English Language programmes in Malaysia, Vietnam and Singapore, and rebranded Kasturi College in Malaysia as Malvern International College.  This means that our students in Asia study English to the same high standards provided by Malvern House in London.   Over time, we see scope to use the Malvern House model and brand in other parts of Asia and potentially in South America and the Middle East.

 

Outlook

 

2010 was a challenging year and 2011 should see a turnaround in performance, driven by the changes we have implemented over last year both in the UK and in Asia.   Now that we have largely completed the reorganisation of our UK resources and adapted the model, we believe that the UK business should see a return to sustainable profits growth.  However, we are also aware that we have yet to see the English Language market in the UK fully settle since some UKBA regulation has yet to take effect.  In Singapore and Malaysia, our new accredited status should help our operations here to make strong progress and we believe that we are well placed to benefit from the expected market consolidation in both countries as new regulatory requirements reshape the private education sector. We are also refocusing our efforts on seeking complementary acquisitions which will assist us in achieving our growth ambitions. 

 

Going forward in 2011, I expect Group profitability to be restored and view prospects for growth positively. 

 

I am very grateful to all our partners in business for their co-operation and support and to our loyal staff for their hard work in this challenging year.

 

 

David Ho

Chief Executive



AEC EDUCATION PLC

 

CONSOLIDATED INCOME STATEMENT

 

FOR THE YEAR ENDED 31 DECEMBER 2010

 






2010


2009






£


£

Revenue







(Restated)*

Sale of services





17,398,279


11,954,647

Other income





737,867


686,239

 





18,136,146


12,640,886

Administrative expenses








Cost of services sold





8,872,015


6,072,230

Salaries and employees' benefits





 3,993,116  


 3,692,818  

Amortisation of development costs





9,677


8,555

Amortisation of licence costs





18,853


3,587

Depreciation of plant and equipment





452,821


229,642

Finance costs





48,050


36,161

Other operating expenses





5,278,709


1,769,370

Total operating costs and expenses





18,673,241


11,812,363









Operating (loss)/profit





(537,095)


828,523









Share of results of associated companies





98,486


253,318









(Loss)/profit before income tax





(438,609)


1,081,841









Income tax





148,723


(192,874)









(Loss)/profit for the year





(289,886)


888,967









Attributable to:








Equity holders of the Company





(376,291)


831,209

Minority interest





86,405


57,758






(289,886)


888,967









(Loss)/earnings per share (in pence)








Basic





(0.85)


2.50









Diluted





(0.79)


2.19

 

* Restated comparatives- see note 9



AEC EDUCATION PLC

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

FOR THE YEAR ENDED 31 DECEMBER 2010

 





2010


2009





£


£








(Loss)/Profit for the year




(289,886)


 888,967

 







Foreign currency translation movements




303,027


(186,340)








Other comprehensive income/ (expense) for the year




 

303,027


 

(186,340)








Total comprehensive income for the year




 13,141


   702,627








Attributable to:







Equity holders of the parent




(66,291)


630,804

Minority interest




  79,432


   71,823

Total comprehensive income for the year




  13,141


 702,627








 

 

 


AEC EDUCATION PLC

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 

AS AT 31 DECEMBER 2010

 



2010


2009




£


£


Non-Current Assets












Plant and equipment


1,349,078


1,299,556

 

Development expenditure


19,547


26,500

 

Investment in  subsidiary companies


-


         -          

 





 


40,681


23,548

 

Intangible assets


5,794,317


5,576,068

 

Goodwill


2,095,112


1,980,738

 



9,298,735


8,906,410

 






 

Current Assets





 






 

Inventories


59,241


93,709

 

Trade receivables


876,513


1,078,827

 

Other receivables


1,122,706


874,814

 

Prepaid education  expenditure


120,809


140,038

 

Due from subsidiary companies


-


-

 

Due from related parties


26,620


31,062

 

Cash and cash equivalents


3,091,912


3,219,622

 



5,297,801


5,438,072

 






 






 

Total Assets


14,596,536


14,344,482

 







 

 

 

AEC EDUCATION PLC

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 (CONTINUED)

 

AS AT 31 DECEMBER 2010

 



2010


2009



£


£

EQUITY AND LIABILITIES





Non-Current Liabilities





Deferred income


11,020


102,627

Financial liabilities


699,364


197,238

Deferred taxation


27,669


29,609



738,053


329,474






Current Liabilities





Trade payables


744,701


810,410

Deferred income


3,212,467


4,007,223

Other payables and accruals


1,462,622


1,059,244

Due to subsidiary companies


-


-

Due to related parties


123,220


112,512

Financial liabilities


412,065


205,847

Provision for income tax


74,908


124,383



6,029,983


6,319,619






Equity attributable to equity

holders of the Company





Share capital


4,419,878 


4,324,878

Share premium


707,588


693,338

Reserves


2,502,313


2,534,099



7,629,779


7,552,315

Minority interest in equity


198,721


143,074

Total equity


7,828,500


7,695,389






Total Equity and Liabilities


14,596,536


14,344,482

                                                                                                                                               

 



AEC EDUCATION PLC

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

FOR THE YEAR ENDED 31 DECEMBER 2010



 

 

Share

Capital

 

 

 

 

Share

Premium

Other

Reserves

Share-Based

Payment

Reserve

Other

Reserves

Retained

Earnings

Other

Reserves

Trans-

lation

Reserve

Other

Reserves

Capital

Reserve

 

Total Of

Other

Reserves

Attribut-able

To Equity

Holders

Of The Company

Minority

Interests

 

Total


£

£

      £

£

£

£

£

£

£

       £

 

 

Balance at 1 January 2009

 

 

 

1,800,874

 

 

 

286,415

 

 

 

154,220

 

 

 

517,533

 

 

 

897,511

 

 

 

170,560

 

 

 

1,739,824

 

 

 

3,827,113

 

 

 

93,126

 

 

 

 3,920,239

 











 

Profit

 

-

 

-

 

-

 

831,209

 

-

 

-

 

831,209

 

831,209

 

57,758

 

888,967

Total other

comprehensive  income

 

 

        -

 

 

       -

 

 

         -

 

 

           -

 

 

(200,405)

 

 

       -

 

 

(200,405)

 

 

(200,405)

 

 

14,065

 

 

(186,340)

 

Total comprehensive for the year

 

 

 

         -

 

 

 

        -

 

 

 

         -

 

 

 

831,209

 

 

 

(200,405)

 

 

 

       -

 

 

 

630,804

 

 

 

630,804

 

 

 

71,823

 

 

 

702,627

 











 

Issue of shares in the year

 

 

 

 

2,524,004

 

 

 

433,762

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,957,766

 

 

 

-

 

 

 

2,957,766

 

Warrants  granted

 

 

-

 

 

(26,839)

 

 

26,839

 

 

-

 

 

-

 

 

-

 

 

26,839

 

 

-

 

 

-

 

 

              -

 

Share based compensation

 

 

           -

 

 

            -

 

 

136,632

 

 

            -

 

 

          -

 

 

         -

 

 

136,632

 

 

136,632

 

 

        -

 

   

    136,632

Total transactions with owners

 

 

2,524,004

 

 

406,923

 

 

163,471

 

 

             -

 

 

           -

 

 

          -

 

 

163,471

 

 

3,094,398

 

 

          -

 

 

3,094,398

 

Premium paid on acquisition of minority interests

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

   

(853)

 

 

 

     

(853)

 

Dividend paid to minority interest

 

 

 

 

          -

 

 

 

  

       -

 

 

 

      

   -

 

 

 

 

-

 

 

 

   

      -

 

 

 

     

     -

 

 

 

 

-

 

 

 

 

-

 

 

 

       

 (21,022)

 

 

 

 

   (21,022)

 

Balance at 31 December 2009

 

 

 

4,324,878

 

 

 

693,338

 

 

 

317,691

 

 

 

1,348,742

 

 

 

697,106

 

 

 

170,560

 

 

 

2,534,099

 

 

 

7,552,315

 

 

 

143,074

 

 

 

 7,695,389

 

 

AEC EDUCATION PLC

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

FOR THE YEAR ENDED 31 DECEMBER 2010

 


Share

Capital

Share

Premium

Other

Reserves

Share-Based

Payment

Reserve

Other

Reserves

Retained

Earnings

Other

Reserves

Trans-

lation

Reserve

Other

Reserves

Capital

Reserve

 

Total Of

Other

Reserves

Attribut-able

To Equity

Holders

Of The Company

Minority

Interests

 

Total


£

£

£

£

£

£

£

£

£

       £

 

 

Balance at 1 January 2010

 

 

 

4,324,878

 

 

 

693,338

 

 

 

317,691

 

 

 

1,348,742

 

 

 

697,106

 

 

 

170,560

 

 

 

2,534,099

 

 

 

7,552,315

 

 

 

143,074

 

 

 

 7,695,389

 











 

Profit

 

-

 

-

 

-

 

(376,291)

 

-

 

-

 

(376,291)

 

(376,291)

 

86,405

 

(289,886)

Total other

comprehensive  income

 

 

        -

 

 

       -

 

 

         -

 

 

           -

 

 

303.027

 

 

       -

 

 

303,027

 

 

303,027

 

 

(6,973)

 

 

   296,054

 

Total comprehensive

for the year

 

 

 

         -

 

 

 

        -

 

 

 

         -

 

 

 

(376,291)

 

 

 

303.027

 

 

 

       -

 

 

 

(73,264)

 

 

 

(73,264)

 

 

 

79,432

 

 

 

     6,168

 











 

Issue of shares in the year

 

 

95,000

 

 

14,250

 

 

(109,250)

 

 

-

 

 

-

 

 

-

 

 

(109,250)

 

 

-

 

 

-

 

 

          -

 

Dividends

 

 

-

 

 

 

-

 

 

 

-

 

(66,298)

 

 

 

-

 

-

 

(66,298)

 

 

(66,298)

 

-

 

(66,298)

               

Share based compensation

 

           -

 

            -

 

217,026

 

            -

 

          -

 

         -

 

217,026

 

217,026

 

        -

 

217,026

Total transactions with owners

 

 

95,000

 

 

14,250

 

 

107,776

 

 

   (66,298)         

 

 

           -

 

 

          -

 

 

41,478

 

 

150,728

 

 

          -

 

 

150,728

 

Dividend paid to minority interest

 

 

 

          -

 

 

 

       -

 

 

  

   -

 

 

 

-

 

 

   

      -

 

 

     

     -

 

 

 

-

 

 

 

-

 

 

       

 (23,785)

 

 

 

   (23,785)

 

 

Balance at 31 December 2010

 

 

 

 

4,419,878

 

 

 

 

707,588

 

 

 

 

425,467

 

 

 

 

906,153

 

 

 

 

1,000,133

 

 

 

 

170,560

 

 

 

 

2,502,313

 

 

 

 

7,629,779

 

 

 

 

198,721

 

 

 

 

 7,828,500












 



AEC EDUCATION PLC

 

CONSOLIDATED CASH FLOW STATEMENT

 

FOR THE YEAR ENDED 31 DECEMBER 2010






2010


2009



£


£

 Cash Flows from Operating Activities





 (Loss)/Profit before income tax


(438,609)


1,081,841






 Adjustments for:





 Amortisation of deferred expenditure


9,677


8,555

 Amortisation of intangibles


18,853


3,587

 Depreciation of plant and equipment


452,821


229,642

 Share-based payment charge


217,026


136,632

 Loss on disposal of plant and equipment


-


5,520

 Interest expense


48,050


36,161

 Interest income


(2,874)


(15,862)

 Share of results of associated companies


(98,486)


(253,318)

 Operating cash flow before working capital changes


206,458


1,232,758






 Changes in working capital:





 Receivables


215,199


322,042

 Payables


(548,692)


788,965

 Inventories


34,468


(1,724)

 Related parties and associates


15,147


371,538

 Net cash (used) / generated from operations


(77,420)


2,713,579






 Taxation


(49,868)


(91,840)

 Net cash (used) / generated from operating activities


(127,288)


2,621,739

 

 

 


 

 Cash Flows from Investing Activities

 

 


 

 Interest income

 

2,874


15,862

 Dividend income received from an associated company

 

89,058


111,600

 Purchase of plant and equipment

 

(438,332)


(677,810)

 Purchase of licence

 

(16,797)


(10,629)

 Issue of shares

 

-


1,999,184

 Acquisitions of associated companies

 

-


166,399

 Acquisitions of subsidiaries net of cash acquired

 

-


(3,100,111)

 Development expenditure

 

-


(500)

 Net cash used in investing activities


(363,197)


(1,496,005)






 

 

 

AEC EDUCATION PLC

 

CONSOLIDATED CASH FLOW STATEMENT (CONTINUED)

 

FOR THE YEAR ENDED 31 DECEMBER 2010

 



2010


2009



£


£

Cash Flows from Financing Activities





Interest paid


(48,050)


(36,161)

Proceed of  term loan


775,457


(97,927)

Dividend paid to minority shareholders


(23,785)


(21,022)

Finance leases


(67,112)


315,924

Net cash generated in financing activities


636,510


160,814






Effect of foreign exchange rate changes on consolidation


 

(273,735)


 

(12,279)






Net increase in cash and cash equivalents


(127,710)


1,274,269

Cash and cash equivalents at beginning of the year


3,219,622


1,945,353

Cash and cash equivalents at end of the year 


3,091,912


3,219,622






 

Cash and cash equivalents consist of the following:




2010


2009


£


£





Cash and bank balances

3,086,894


3,215,149

Fixed deposits

5,018


4,473


3,091,912


3,219,622

 



AEC EDUCATION PLC

 

NOTES TO THE FINANCIAL STATEMENTS

 

FOR THE YEAR ENDED 31 DECEMBER 2010

 

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 5174452.

 

The principal activities of the Company are that of investment holding and provision of educational consultancy services. The principal activities of the subsidiary companies are set out in Note 13 to the financial statements. There have been no significant changes in the nature of these activities during the year.

 

The Board of Directors have authorised the issue of these financial statements on the date of the Statement by directors set out above.

 

2          Significant Accounting Policies

 

(1)          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").

 

The financial statements have been prepared on the historical cost basis 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.

 

Segmental analysis is as follows:

 

 

 

UK


South East Asia


 

Total

           2010

£


£


£

          






           Revenue from external customers

9,154,823


8,981,323


18,136,146







           Depreciation and amortisation

249,048


232,203


481,351







          (Loss)/profit before taxation

(938,282)


499,673


(438,609)

    






           Taxation

(136,238)


(12,485)


(148,723)







           Segmental assets

5,816,412


8,780,124


14,596,536







           Segmental liabilities

3,470,119


3,297,917


6,768,036







           2009












           Revenue from external customers

5,474,392


7,166,494


12,640,886







           Depreciation and amortisation

111,034


130,750


241,784







           Profit before taxation

387,261


694,580


1,081,841

    






           Taxation

117,084


75,790


192,874







           Segmental assets

6,776,622


7,567,860


14,344,482







           Segmental liabilities

3,949,904


2,699,189


6,649,093



















 

4          (Loss)/Earnings Per Share

 

The basic (loss)/earnings per share was based on (loss)/profit attributable to shareholders of loss of (£376,291) (2009: earnings of £831,209) and the weighted average number of ordinary shares in issue at the year end of 44,146,726 (2009: 33,223,897) shares.

 

The diluted (loss)/earnings per ordinary share was based on (loss)/profit attributable to shareholders of loss of (£376,291) (2009: earnings of £831,209) and the weighted average number of ordinary shares in issue at the year end  diluted  for the effect of share options and warrants in existence at the year end of 47,899,375 (2009: 37,926,546) shares.   

                                                       

5       Intangible assets




Licences






2010


2009






£


£

Cost








At beginning of the year





1,864,424


1,896,021

Additions





16,797


9,922

Additions on acquisition of subsidiary





-


84,954

Currency alignment





227,412


(126,473)

At end of the year





2,108,633


1,864,424









Accumulated amortisation








At beginning of the year





45,633


-

Charge





16,107


3,198

Accumulated amortisation at date of acquisition





-


41,784

Currency alignment





7,107


651

At end of the year





68,847


45,633

 








Net book value





2,039,786


1,818,791









Analysed as follows:








Indefinite life





2,000,005


1,776,768

Definite life





39,781


42,023






2,039,786


1,818,791









 


 




Brands






2010


2009






£


£

Cost








At beginning of the year





3,750,000


-

Acquisition of Malvern House Brand





-


3,750,000

At end of the year





3,750,000


3,750,000









Net book value





3,750,000


3,750,000

 








Analysed as follows:








Indefinite life





3,750,000


3,750,000

 

 




Trade  Marks






2010


2009






£


£

Cost








At beginning of the year





8,099


-

Additions





-


707

Additions on acquisition of subsidiary





-


7,392

At end of the year





8,099


8,099









Accumulated amortisation








At beginning of the year





822


-

Charge





2,746


389

Accumulated amortisation at date of acquisition





-


433

At end of the year





3,568


822

 








Net book value





4,531


7,277









Analysed as follows:








Definite life





4,531


7,277









Total net book value





5,794,317


5,576,068

 

 

Intangible assets comprise licence fee, brands and trademarks.

 

In the previous year, the Company acquired 100% interest in Malvern House Group Limited and the purchase consideration included "Malvern Brand" which the directors estimated the value to be £3,750,000.  The directors are of the opinion that the Company has acquired for an indefinite duration, the right to use the brand name and accordingly, the brand name is not subject to amortisation and is shown at cost less any impairment.

 

On 8 January 2008, in connection with the disposal of the entire equity interest by Educational Development International plc ("EDI") in Educational Resources Pte Ltd ("ER"), ER entered into a new agency agreement with EDI for the right to continue to act as agent to sell and market LCCI International Qualification. Under the new agreement, ER is required to pay an additional sum of £450,000 in return for right to use and market the LCCI International Qualification for an indefinite duration subject to certain termination clauses and conditions. In accordance with the terms of the new agreement with EDI, the directors are of the opinion that ER has acquired for an indefinite duration, the right to use the licence. Accordingly, the licence fee is shown at cost less any impairment. 

 

6          Goodwill






2010


2009



£


£

Cost





Balance as at beginning of the year


1,980,738


926,102

Transfer of goodwill on associate becoming a subsidiary (see note 14)


 

-


 

99,582

Goodwill  arising on acquisition of  subsidiary


-


404,352

Existing goodwill in  acquired  subsidiary  (see note 13)


-


649,831

Currency alignment


114,374


(99,129)

Balance as at end of the year


2,095,112


1,980,738






Goodwill arose as a result of acquisitions by the Group.

 

In the previous year, the Company acquired the entire issued of share capital of Malvern House Group Limited, a London-based educational courses provider which gave rise to goodwill on acquisition of £404,352.

 

In the previous year, the Group acquired the entire issued share capital of Smart Eduprocess Group Sdn Bhd whose assets included goodwill of £649,831. Negative goodwill arose on the acquisition of Smart Eduprocess Group Sdn Bhd of £226,854 and was written off to the income statement.

  

7          Share Capital

 






2010


2009






£


£

Authorised








50,000,000 ordinary shares of 10p each





5,000,000


5,000,000









Allotted, called up and fully paid








At beginning of the year








 - 43,248,781 (2009: 18,008,738) ordinary shares of 10p each


4,324,878


1,800,874






Issued during the year








- 950,000 ordinary shares of 10p each issued at 11.5p each for acquisition of 65.04% share capital of Educational Resources Pte Ltd


 

 

95,000


 

 

-

-  28,441 ordinary shares of 10p each issued at 13p each for the acquisition of the outstanding balance of 5% share capital of Brainbox Ltd


 

 

-


 

 

2,844

- 17,187,656 ordinary shares of 10p each issued at 12p each


-


1,718,765

- 7,500,000 ordinary shares of 10p each issued at 12p each for the acquisition of 100% share capital of Malvern House Group Ltd


 

 

-


 

 

750,000

- 25,000 ordinary shares of 10p each issued at par on exercise of share options


 

-


 

2,500

 - 498,946 ordinary shares of 10p each issued at 11p each for the acquisition of 51% share capital of AEC Bilingual Pte Ltd


 

-

 


 

49,895

 






At end of the year








 - 44,198,781 (2009: 43,248,781) ordinary shares of 10p each


4,419,878


4,324,878

  

8              Dividends






2010


2009






£


£

Final one-tier dividend paid in respect of the previous financial year of 0.15p (2009: NIL) per share





 

 

66,298


 

 

-

 

After the balance sheet date, the directors of the Company proposed a one-tier tax-exempt final dividend of 0.2p per share totalling £88,397 based on issued shares as at 24 June 2011.  The dividends have not been provided for and are subject to shareholders' approval at the forthcoming Annual General Meeting of the Company.

 

9            Restated Adjustments

 

The revenue in financial year 2009 of a subsidiary company, Educational Resources Pte Ltd was reported in gross examination fee instead of net commission received.  The revenue is restated to reflect more appropriately the way in which economic benefits are derived.  Below is the detailed restated adjustment movement to be reflected during this year 2010. There is no change to net profit.

 



2009

£


2009

£



(Restated)




Revenue





Course fees

8,335,972


8,335,972


Examination fee

1,864,941


3,186,737


Accommodation fees

993,559


-


Publication fee

197,405


197,405


Application fees and registration fees

309,220


309,220


Sale of course materials

186,203


186,203


Training income

67,347


67,347


Other

-


993,559



11,954,647


13,276,443

 

 

 






2009


2009






£


£






         (Restated)



Other Revenue








Accounting fee





72,447


72,447

Interest income





15,862


15,862

Rental and related income





190,257


190,257

Miscellaneous income





407,673


458,944






686,239


737,510









Cost of Sales





6,072,230


7,445,297














6,568,656


6,568,656

 

10           Annual Report

 

The Annual Report will be sent to shareholders by close of business on or before 2 June 2011. Additional copies will be available to the public, free of charge, from the Company's website www.aeceducationplc.co.uk 

 

 

 


This information is provided by RNS
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