Last checked at 29 May 2014 07:00
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: 07725 836 811
W H Ireland
Andrew Kitchingman / James Bavister tel: 0207 220 1666
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. | |||||