Malvern Intl Regulatory News (MLVN)

AEC Education Plc("AEC" or the "Company")

Final Results for the year ended 31 December 2014

Highlights:

· Ireland demonstrated significant growth in sales and achieved a small operating profit but results in London and Singapore offset this success

· Group revenue fell by 20% to £9.0 million (2013: £11.3 million) due largely to the reduction in business in Singapore

· Losses before tax from continuing operations of £1.1 million (2013 (restated): loss before tax of £1.66 million)

· Loss per share on continuing activities is 1.85p (2013 (restated): loss per share of 4.01p)

· Net cash of £0.36 million (2013: £1.48 million)

· Malaysia continued to recover lost ground following the Middle East crisis and returned a profit before brand amortisation

· Cyprus returned a small loss driven by a slowdown in revenue from Russia

· The Company exited operations in Oman in the year which had returned losses up to the sale of shares to a local company

· 2014 has been a difficult year, though the success in Ireland demonstrates the strength of the Malvern brand internationally.

Liam Swords, Chairman of AEC, commented,

"The London and Singaporean markets continue to be challenging but the Group implemented its strategy to centralise the European operations and to focus Singapore on the local market. This creates a new platform in Singapore from which we can build and helps to reduce costs in London. It is satisfying to see the continued growth in Ireland and the steady turnaround in Malaysia reflected in these accounts".

ENDS

For further information, please contact:

AEC Education Plc

Liam Swords

Tel: 07725 836811

WH Ireland Limited (NOMAD & Broker)

Andrew Kitchingman

Liam Gribben

Tel: 0113 394 6600

CHAIRMAN'S STATEMENT

Overview

The year under review continued to show mixed fortunes. Trading in London showed another downturn but by judicious cost reduction London returned a small operating loss. Cyprus was also affected by a slowing down in revenue from Russia, its largest summer school market and, whilst showing a reasonable operating result, the increased marketing costs to maintain revenue resulted in a small operating loss on our share of the joint venture. Oman declined further during the year to the point where the Board decided to transfer the operation to a local company for a price that will recover about one quarter of our original investment and advance. The residual impact from the loss of EduTrust meant that Singapore suffered a large operating loss but during the year made ground towards restructuring a new business targeting the local market. Ireland again grew substantially and showed an operating profit. Malaysia continued to recover the ground lost following the Middle East crisis and was again profitable before Malvern brand amortisation.

The market in the UK continued to be severely impacted by attitudes towards immigration and the withdrawal of the students' ability to support their costs by temporary work. However, the strategy to invest in Ireland to offset this has proven to be very successful. Additionally the positive signs in Malaysia continued during the year with strong gains in new markets and Singapore began to see some traction in the local market.

Financial results

Group revenues on continuing activities for the year to 31 December 2014 reduced by 20% to £9.0m (2013: £11.3m). The reduction was mainly due to the difficult trading conditions in London and the substantially reduced capacity in Singapore. Singapore's revenue decreased by 68% to £1.2m (2013: £3.8m) and London's revenue reduced by 11% to £3.3m (2013 £3.7m). The Group achieved significant reductions in operating costs during the year by implementing effective cost control strategies in all units. Because of this the Group's loss before tax from continuing operations was reduced to £1.10m (2013: £1.66m).

The London operation recorded an operating loss of £245k after brand impairment and amortisation of £395k which, after finance charges, resulted in a loss of £414k before tax. Ireland recorded turnover of £2.34m in 2014 (2013 - £1.41m), an operating profit of £49k. In Asia, the Singapore College recorded an operating loss of £420k and Malaysia returned an a profit of £23k before brand amortisation and an operating loss of £2k after brand amortisation. Additionally our share of the profit from our joint venture in Cyprus was £54k, which after central charges, was breakeven. Oman showed a loss of £81k (AEC's share £28k) until 31st July 2014, when the Group decided to exit the operations in Oman by selling the shares to an interested party. We expect that the initiatives we have taken in Singapore to reduce costs and to focus on the local market should return it to profit in 2015. Steps are also being taken to further reduce costs and to generate revenue from non-traditional sources to improve the results in London.

The loss per share was 1.40p (2013: Loss of 6.19p).

The net cash outflow from operating activities was £1.13m (2013: outflow of £1.51m). Net cash at the end of the year stood at £0.36m (2013: £1.48m).

Dividend

The Board does not propose the payment of a final dividend for the year ended 31 December 2014 (2013: 0.00p per share).

Business Review

In Asia, our operations in Singapore continued to be impacted by the withdrawal of EduTrust status. The revenue declined by 68% to £1.2m (2013: £3.8m) and a loss of £0.3m before tax. They have registered courses for diplomas / advanced diplomas in civil engineering / electrical engineering / mechanical engineering, higher diplomas in accounting and finance and Singapore Workforce Development Agency related safety short courses that are tailored and repositioned for the local market in 2015 and we expect will help to return it to profitability.

In Malaysia, revenue was lower than the previous year by 10% largely due to the fact that the contract with the University of Wales to recruit students expired in September 2014. Because of this decrease in revenue to £2.15m (2013: £2.40m), a small operating loss of £2k was returned (2013: loss £1k). However, a new contract with Leeds Beckett University will allow us to resume the recruitment of students for both undergraduate and post graduate programmes in the latter part of 2015. The introduction of new programmes ranging from post graduate to vocational studies combined with the focus on new markets should open up opportunities for growth next year.

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 perception of this overseas continued during 2014. This has caused the market in the UK to drop significantly during the year with the result that revenue in our Kings Cross school was down year on year by 11% to £3.3m (2013: £3.7m). This and the consequent additional brand impairment charge of £350k resulted in an operating loss of £245k (2013: profit £45k). Steps have been taken to find new sources of revenue both from new products and areas of distribution which should stabilise London during 2015.

Ireland achieved revenue of £2.3m, a 66% increase on 2013 in its second full year of trading and produced an operating profit of £49k (2013: loss £48k). The strength of the summer school market combined with continuing strong growth in the core EFL business in Ireland leaves it with potential to show significantly improved results in 2015.

Our joint venture in Cyprus showed a reduction in revenue in the summer school mainly from Russia, its largest market. Operating profits were affected such that our share of the joint venture recorded a profit before tax of £54k and was breakeven before brand amortisation. The market in Russia continues to be depressed because of its political stance in Europe and the reduced value of the Rouble and we expect these conditions to remain during 2015.

Oman declined further during the year and impacted the Group results with a loss of £81k (AEC's share £28k). Due to earlier losses including the loss until 31 July 2014, we see no future for our investment in Oman. Consequently, the Board has decided to exit the operation and sold the investment to a local company for £41k which recovers approximately one quarter of our investment and advance given.

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. Their support as we continue to implement the necessary changes to ensure the Group returns to sustainable profit is very much appreciated by the Board.

Prospects

2014 was another very difficult year in Singapore and the market in the UK remains constrained by visa restrictions and the negative perception by overseas students of UK Government policy. Our success in Ireland has demonstrated that the Malvern brand is still a major strength in international markets and we continue to pursue options to support further expansion overseas under the Malvern brand. The restructuring of the operations in Singapore and London is now almost complete and this combined with the return to profit in Malaysia and the withdrawal from Oman creates a platform from which AEC can begin to rebuild group profitability.

Liam Swords

Chairman

24 June 2015

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

1 General

AEC Education plc 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 24 June 2015.

2 Segmental Information

Segmental analysis is as follows:

Note that the Segmental liabilities figure for South East Asia and the Middle East is shown as a net asset due to the treatment of the amount due from Europe to South East Asia for funding being shown as a liability in the former and an asset in the latter.

3 Earnings/(Loss) Per Share

The basic earnings/(loss) per share on continuing activities was based on the loss attributable to shareholders of £1,164,375 (2013: restated loss of £1,834,365) and the weighted average number of ordinary shares in issue during the year of 63,051,043 shares (2013: 45,753,464 shares).

The basic earnings/(loss) per share on discontinued activities was based on the profit attributable to shareholders of £282,419 (2013: loss of £998,323) and the weighted average number of ordinary shares in issue during the year of 63,051,043 shares (2013: 45,753,464 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 £1,164,375 (2013 (restated): loss of £1,834,365) and profit attributable to shareholders of £282,419 (2013: loss of £998,323) and the weighted average number of ordinary shares in issue at during the year of 63,051,043 shares (2013: 45,753,464 shares) diluted for the effect of share options and warrants.

By 31 December 2014 all previously issued options had lapsed (2013: 1,950,000 options were outstanding). At 31 December 2013 all 1,950,000 options were excluded from the diluted weighted average number of ordinary shares calculation as their effect would have been anti-dilutive.

9 Annual Report

The Annual Report will be sent to shareholders by close of business on or around 25 June 2015. Additional copies will be available to the public, free of charge, from the Company's website ww.aeceducationplc.co.uk.