Interim results

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 £4.33m (2013: £5.74m)

·     Operating loss of £0.07m (2013: loss of £0.53m)

·     Loss before tax of £0.10m (2013: loss of £0.56m)

·     Loss after tax from continuing activities of £0.11m (2013: loss of £0.58m)

·     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: [phone]
Liam Swords
WH Ireland Limited (NOMAD)		Tel: [phone]
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 £4.33m. (2013: £5.74.m). The loss before tax was £0.07m compared to a loss of £0.53m 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 £0.11m (2013: £0.82m including £0.24m 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 £0.65m (2013: £1.42m). 

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 to 30 June 2014	Six months to 30 June 2013	Twelve months to 31 December 2013
		£'000	£'000	£'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

	Note	As at 30 June 2014	As at 30 June 2013	As at 31 December 2013
		£'000	£'000	£'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

	Note	Six months to 30 June 2014	Six months to 30 June 2013	Twelve months to 31 December 2013
		£'000	£'000	£'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 to 30 June 2014	Six months to 30 June 2013	Twelve months to 31 December 2013
		£'000	£'000	£'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).

 

END

 

 

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