Last checked at 29 Sep 2015 12:53
AEC Education PLC
("AEC" or the "Company" and together with its subsidiaries, the" Group")
Half year results for the six months ended 30 June 2015
Key Points
· Revenues on continuing activities of £3.58m (2014: £4.33m)
· Operating loss of £0.57m (2014: loss of £0.07m)
· Loss before tax of £0.52m (2014: loss of £0.10m)
· Loss after tax from continuing activities of £0.52m (2014: loss of £0.11m)
· Loss per share of 0.86p (2014: 0.15p)
· Ireland, Malaysia and our Cyprus JV continue to contribute profits but the London market is still in decline with losses reported for the first half.
· New initiatives have been implemented in London to assist recovery starting from the second half of 2015.
Liam Swords, Chairman, stated,
"The Group's results for the six months ended 30 June 2015 were disappointing with London and, to a lesser extent, Singapore, offsetting the total gains generated by all the other operating units. We have initiated and implemented a number of strategic plans for these two units to gain traction in student acquisition. These positive measures will start to take effect from the latter months of 2015 and continue into 2016 and beyond. Nevertheless, we are also very encouraged by the improvement generated in Dublin and Malaysia. We are also initiating a licensing model for non-traditional markets to expand our revenue base beyond the current sources. These measures are expected to positively drive the Group forward."
Enquiries:
AEC Education PLC |
| Tel: +44 (0) 7725 836 811 |
Liam Swords |
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WH Ireland Limited (NOMAD) |
| Tel: +44 (0)117 945 3470 |
Mike Coe |
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CHAIRMAN'S STATEMENT
Introduction
The Group's results for the six months ended 30 June 2015 were disappointing with London and, to a lesser extent, Singapore, offsetting the total gains generated by all the other operating units. We have initiated and implemented a number of strategic plans for these two units to gain traction in student acquisition. These positive measures will start to take effect from the latter months of 2015 and continue into 2016 and beyond. Nevertheless, we are also very encouraged by the improvement generated in Dublin and Malaysia. The strategic decision to build an operation in Ireland to offset the expected decline in London is beginning to work but visa and work restrictions in the UK have driven the market down much quicker and with much greater impact than expected London. We are introducing a licensing model for non-traditional markets to expand our revenue base beyond the current sources.
Financial Results
Revenues on continuing activities for the six months reduced to £3.58m. (2014: £4.33.m). The loss before tax was £0.52m compared to a loss of £0.10m in the same period last year. London and Singapore continue to struggle, a result of the previously reported visa work ban (non-EU) and loss of the EduTrust accreditation. Malaysia is showing a small profit and Dublin continues to show positive numbers. The loss after tax was £0.52m (2014: £0.11m). The loss per share was 0.86p (2014: 0.15p). Cash balances as at 30 June 2015 stood at £0.36m (2014: £0.65m).
Operational Review
In Europe, the London revenue has been impacted greatly by the change of policy to the working capability of non-EU students and the continuing tightening of student visa controls. An initial upside in the first half of 2014 was not sustained as the market declined further. With this in mind, Management have taken the initiative to introduce some robust programs that would force the widening of the revenue base to cater for students outside the visa-working requirements. This program kicked off in September this year and we hope to see some positive outcomes over the coming months. Ireland continues to grow strongly and to show improved results but not sufficient to offset the very rapid decline in London. Cyprus revenue has been affected by the decline in the Russian market because of the current political tensions with Europe but has grown its local adult market strongly which has largely offset the decline in its Summer School seasonal numbers. Cyprus had already started to focus on Europe and achieved some success during this first period which also helped to offset some of the decline in the Summer School numbers.
The Asian units are also experiencing mixed results. Singapore has the same underlying revenue issues as London. The loss of EduTrust reduced the Singapore revenue opportunities dramatically and it has taken time to shift the focus and re-design a new product base. A number of new programmes have been introduced which are expected to provide increasing revenue in the coming months.
Malaysia remains, the most diversified of all the business units. Moreover, market conditions, especially with the weak Ringgit should give the Malaysia a stronger position in the Asia market and assist in its drive to increase student numbers in the next period and continue to make a contribution.
Outlook
We look forward positively as we restructure the revenue generation models of all our operating units to include a wider range of products. We have also begun discussions with various parties on the development of online teaching platforms as a supplement to the traditional teaching methods. Further, we have started to re-introduce licensing models to offer our educational content and brand to non-traditional markets in Asia and the Middle East. We strongly believe that by early 2016, all our new initiatives and programs will begin to show an overall Group return.
Liam Swords
Chairman
UNAUDITED CONSOLIDATED INCOME STATEMENT
| Note | Six months to 30 June 2015 | Six months to 30 June 2014 | Twelve months to 31 December 2014 |
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| £'000 | £'000 | £'000 |
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| Unaudited | Unaudited | Audited |
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Revenues |
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Sales of services and other revenue | 4 | 3,579 | 4,333 | 8,978 |
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Cost of services sold & operating expenses |
| (4,148) | (4,403) | (10,092) |
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Operating (loss) / profit |
| (569) | (70) | (1,114) |
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(Loss) / profit from operations |
| (569) | (70) | (1,114) |
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Share of results of associated companies and joint venture |
| 85 | (6) | 54 |
Finance costs |
| (33) | (20) | (41) |
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(Loss) / profit before taxation |
| (517) | (96) | (1,101) |
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Income tax credit / (charge) |
| - | (9) | (29) |
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(Loss) / profit for the period / year from continuing activities |
| (517) | (105) | (1,130) |
(Loss) / profit for the period / year from discontinued activities |
| - | - | 282 |
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(Loss) / profit for the period / year |
| (517) | (105) | (848) |
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Minority interests |
| (24) | 13 | (34) |
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(Loss) / profit attributable to equity holders |
| (541) | (92) | (882) |
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(Loss) / earnings per share on continuing activities |
| Pence | Pence | Pence |
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Basic |
| (0.86) | (0.15) | (1.85) |
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Diluted |
| (0.86) | (0.15) | (1.85) |
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(Loss) / earnings per share on discontinued activities |
| Pence | Pence | Pence |
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Basic |
| - | - | 0.45 |
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Diluted |
| - | - | 0.45 |
UNAUDITED STATEMENT OF FINANCIAL POSITION
| As at 30 June 2015 | As at 30 June 2014 | As at 31 December 2014 |
| £'000 | £'000 | £'000 |
| Unaudited | Unaudited | Audited |
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Fixed assets |
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Intangible assets |
3,240 | 3,951 | 3,524 |
Tangible assets | 411 | 650 | 450 |
Investment in joint venture | 182 | 17 | 98 |
| 3,833 | 4,618 | 4,072 |
Current assets |
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Inventory | 7 | 9 | 7 |
Debtors | 1,391 | 1,848 | 1,221 |
Cash at bank and in hand | 364 | 645 | 361 |
| 1,762 | 2,502 | 1,589 |
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Total assets | 5,595 | 7,120 | 5,661 |
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Creditors |
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Amounts falling due within one year | (3,936) | (4,375) | (3,563) |
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Net current liabilities | (2,174) | (1,873) | (1,974) |
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Non-current liabilities |
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Finance lease | (27) | (48) | (38) |
Deferred taxation | (13) | (22) | (13) |
| (40) | (70) | (51) |
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Total liabilities | (3,976) | (4,445) | (3,614) |
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Equity attributable to equity holders of the Company |
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Share capital | 5,362 | 5,362 | 5,362 |
Share premium | 896 | 896 | 896 |
Reserves | (4,564) | (3,403) | (4,080) |
| 1,694 | 2,855 | 2,178 |
Minority interest in equity | (75) | (180) | (130) |
| 1,619 | 2,675 | 2,048 |
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Total equity and liabilities | 5,595 | 7,120 | 5,662 |
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
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| Six months to 30 June 2015 | Six months to 30 June 2014 | Twelve months to 31 December 2014 |
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| £'000 | £'000 | £'000 |
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| Unaudited | Unaudited | Audited |
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Cash Flows from operating activities |
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(Loss) / profit before income tax from continuing activities |
| (517) | (96) | (1,101) |
(Loss) / profit before income tax from discontinued activities |
| - | - | 282 |
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Adjustments for: |
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Depreciation & amortisation |
| 153 | 176 | 370 |
Loss on disposal of plant and equipment |
| - | (11) | 170 |
Loss/(profit) on disposal of an associate |
| - | (279) | (52) |
Impairment of intangible assets |
| - | - | 350 |
Interest paid |
| (20) | (20) | 41 |
Share of results of associated companies and joint venture |
| (85) | 6 | (54) |
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| (469) | (224) | 6 |
Changes in working capital |
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(Increase) / decrease in debtors |
| (151) | 172 | 725 |
(Increase) / decrease in creditors |
| 200 | (769) | (2,087) |
(Increase) / decrease in inventories |
| - | - | 2 |
(Increase) / decrease in related parties |
| 235 | ( 209) | 232 |
Cash flows from operating activities |
| (185) | (1,030) | (1,122) |
Taxation |
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Taxes recovered / (paid) |
| (14) | (20) | (5) |
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Net cash used in operating activities |
| (199) | (1,050) | (1,127) |
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Cash flows from investing activities |
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Purchase of property, plant and equipment |
| (39) | (21) | (68) |
Purchase of intangible fixed assets |
| - | (7) | (14) |
Acquisition of joint venture |
| - | - | 40 |
Disposal of property, plant and equipment |
| - | 27 | - |
Disposal of an associate |
| - | 293 | - |
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| (39) | 292 | (42) |
Cash flows from financing activities |
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Dividend paid to minority shareholders |
| - | - | (41) |
(Decrease) / increase in finance lease liabilities |
| (21) | (31) | - |
Repayment of term loan |
| (37) | (62) | (97) |
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| (58) | (93) | (138) |
Effect of foreign exchange rate changes on consolidation |
| 299 | 21 | 193 |
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Net increase in cash and cash equivalents |
| 3 | (830) | (1,114) |
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Cash and cash equivalents at beginning of period / year |
| 361 | 1,475 | 1,475 |
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Cash and cash equivalents at end of period / year |
| 364 | 645 | 361 |
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 2015. 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 2015. The comparative figures for the period ended 30 June 2014 are those as published in the Company's half year announcement made on 28 September 2014.
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 2015 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 2014, and to be adopted in respect of the year ending 31 December 2015.
4. Sale of Services
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| Six months to 30 June 2015 | Six months to 30 June 2014 | Twelve months to 31 December 2014 | |
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| £'000 | £'000 | £'000 | |
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| Unaudited | Unaudited | Audited | |
Course fees and registration fees |
| 2,564 | 3,348 | 6,874 | |
Examination fees |
| - | - | - | |
Students accommodation |
| 733 | 578 | 1,541 | |
Others |
| 282 | 407 | 563 | |
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| 3,579 | 4,333 | 8,978 | |
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 (2014: 63,051,043).
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 (2014: 63,051,043).