Malvern Intl Regulatory News (MLVN)

23 May 2005 07:01

AEC Education plc23 May 2005 Press Release 23 May 2005 AEC Education plc Unaudited Results for the year ended 31 December 2004 AEC Education plc ("AEC Education", "AEC" or the "Company"), the provider ofeducational courses up to postgraduate degree level in Singapore and Malaysia,announces its maiden unaudited results for the year ended 31 December 2004. Highlights • In December, became the first Singapore company to be admitted to AIM and the 1,000th company to be listed on AIM • Share placing raised £500k after expenses • Group revenue on continuing operations up 22.3% from 2003 with total revenue of £1.51m for 2004 against £1.24m in 2003 • Profit before tax on continuing operations for the year up 66.8% from £347k in 2003 to £579k in 2004 • Dividend of 1.6p per share recommended • Management strengthened by the appointment of Associate Professor Chan Yoke Kai as President and Chief Operating Officer of the Singapore subsidiary. Commenting on the results, William Swords, Chairman of AEC Education, said: "AECEducation is entering an exciting new era and the Board are confident that wecan continue to grow the business through building and strengthening ourrelations with strategic partners in both the Asia-Pacific region and furtherafield to maximise returns for our shareholders". For further information:AEC Education plcRavi Manchanda, Finance Director Tel: +44 (0) 20 7522 6004 Media enquiries:Abchurch CommunicationsPeter Curtain Tel: +44 (0) 20 7398 7700peter.curtain@abchurch-group.com www.abchurch-group.com Notes to Editors Founded in 1985 in Singapore and Malaysia, AEC is the UK holding company for anumber of companies that provide business educational services to approximately16,000 students in the Asia-Pacific region: the fastest-growing source marketfor international students. The group offers class-based instruction at thelargest educational campus in Singapore's Central Business District, anddistance learning up to postgraduate level. In addition, it provides degreequalifications on behalf of several leading international universities,targeting the large volumes of overseas students which the Singaporeangovernment aims to increase as stated in the Global Schoolhouse Vision. AEC's aim is to be a leader in quality education through facilitating learning,fostering creativity and developing knowledge, skills and confidence in itsstudents. Its recognition by the Singaporean Government as a prestigious andforward-moving company is shown by its receipt of four rare Singapore QualityClass Awards. Chairman's Statement On 10th December 2004, AEC Education plc successfully listed on AIM, becomingthe first Singaporean business and the 1,000th company to be introduced to theAIM market. This was an historic event for AEC Education plc which greatlyincreased its profile within the international education industry. Since the business was created in the mid-1980s, it has grown through strategicmergers and acquisitions within the Asian Continent and has delivered consistentannual returns. The last financial year is no exception, with profits fromcontinuing operations increasing by 66.8% to £579k. AEC will use its successful AIM listing and fundraising as a platform tostrengthen its position in the global education sector. The business is led byan experienced and strong executive management team and is focused on drivingrevenues up, costs down and generating consistent returns for its shareholders. Financial Review and Dividend Policy Group revenue from continuing operations for 2004 increased by 22.3% to £1.51m(2003: £1.24m). Profit before tax for continuing operations increased 66.8% from £347k in 2003to £579k in 2004. AEC proposes to recommend an interim dividend of 1.6p per Ordinary Share payablein July 2005. Outlook The results for this year demonstrate the strength of the underlying businessand commercial strategy. A significant amount of progress has been made in thelast two years in developing the group. The executive management is committedto maintaining this pace of development and strategy in the forthcoming year. The group will continue to seek to build and strengthen its relations withstrategic partners and expand its geographical footprints. Although theAsia-Pacific region is the fastest-growing source market for internationalstudents in the world, AEC has also recognised the demographic and economicchanges in Eastern Europe and Africa. The group is looking to broaden itsservice offering and will seek to pursue opportunities as they become available. AEC is entering a new era and I am pleased to report our business is performingwell. The Board is confident that we can continue to grow the business into thefuture and deliver enhanced shareholder value. William Swords UNAUDITED CONSOLIDATED PROFIT AND LOSS STATEMENT FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2004 Note 2004 2003 £'000 £'000 Unaudited AuditedTurnoverContinuing Operations (4) 1511 1235Discontinued Operations (4) - 290Total turnover 1511 1525 Cost of Sales 1033 1310 Operating Profit 478 215 Exceptional items (5) 72 269 Profit from operations (6) 550 484 - Continuing operations 550 327- Discontinuing operations - 157 Share of results of associated companies 29 20 Profit on ordinary activities before taxation 579 504 Tax on profit on ordinary activities (31) (13) Profit on ordinary activities after taxation 548 491 Minority interest - (1) Profit for the period 548 490 Retained Profits brought forward 790 280Profit for the period 548 490Dividends (7) (1271) - Retained Profits carried forward 67 790 Earnings per ordinary Share Pence Pence Basic (8) 4.4 4.2 UNAUDITED CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2004 Group Note 2004 2003 £'000 £'000 Unaudited AuditedFixed assetsIntangible Assets 34 43Tangible Assets 51 70Investments in associated companies (9) 1249 (34) 1334 79 Current AssetsDebtors 918 3110Cash at bank and in hand 421 21 1339 3131 CreditorsAmounts falling due within one year (10) 724 1244 Net Current Assets 615 1887 Total Assets less current liabilities 1949 1966Provisions for liabilities and charges (13) (13) 1936 1953 Capital and ReservesCalled up share capital 1491 1240Share Premium 384 0Reserves 61 712Minority Interest 1Total Equity Shareholders funds 1936 1953 UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2004 Year ended 31 December Unaudited Audited 2004 2003 £'000 £'000 Cash flow from operating activities (104) 63 Returns on investment and servicing of financeInterest paid (2) (4) TaxationTaxes paid (2) (4) Capital expenditure and financial investmentPurchase of tangible fixed assets (4) (63)Purchase of intangible fixed assets (15) -Proceeds from disposal of tangible fixed assets - 11Proceeds from disposal of subsidiary companies 1 5 (18) (47) Cash flows financing activitiesReceipts from borrowings 106 -Repayment of finance leases - (7)Issue of share capital 625 -Expenses paid in connection with share issues (198) - 533 (7) Net increase in cash 407 1 Cash at beginning of year 21 41 Exchange movements (7) (21) Cash at end of year 421 21 UNAUDITED CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2004 CONTINUED Reconciliation of profit before tax to cash flow From operating activitiesProfit before tax 579 504Depreciation & amortisation 32 56Profit on disposal of assets (263) (7)Interest paid 2 3Income from associated undertakings (29) (20)Increase in debtors (203) (822)Decrease/(increase) in creditors (478) 605 Cash flow from operating activities (104) 63 Notes 1. Publication of non-statutory accounts and basis of preparation. The financial information contained in this maiden preliminary announcement doesnot constitute statutory accounts for the period ended 31st Dec 2004. Thefinancial information for the period ended 31st Dec 2004 is derived from theaudited statutory consolidated accounts of AEC Edu Group Pte Ltd for the yearended 31 December 2004 consolidated with the unaudited accounts of the Companyfor the period from incorporation to that date on a merger basis. Thecomparative figures for the year ended 31 December 2003 are those of theconsolidated audited accounts of AEC Edu Group Pte Ltd. The report has been approved by the Board of Directors and is unaudited. Thereport does not comprise statutory accounts within the meaning of Section 240 ofthe Companies Act 1985. 2. General The principal activities of the Company are that of investmentholding and provision of educational consultancy services. There have been nosignificant changes in the principal activities of the subsidiary companiesduring the year. The Group operates in 2 countries (2003: 2) and employed 27 employees (2003: 83)as at 31st Dec 2004. 3. Significant Accounting Policies a. Basis of Consolidation The consolidated financial statements comprise the financialstatements of the Company and its subsidiary companies, (collectively, the "Group"), after elimination of material intra-group balances and transactions. Subsidiary companies are consolidated from the date on which control istransferred to the Company and cease to be consolidated from the date on whichcontrol of the subsidiary companies are transferred out of the Company.Accordingly, the results of subsidiary companies acquired and disposed of duringthe financial year are included in the consolidated financial statements fromthe effective date of acquisition and disposal, respectively. The consolidated financial statements have been prepared using uniformaccounting policies for like transactions and other events in similarcircumstances. b. Subsidiary Companies Subsidiary companies are entities in which the Company, directly or indirectly,holds more than 50% of the issued share capital, or controls more than half ofthe voting power, or controls the composition of the Board of Directors. Investments in subsidiaries are stated in the financial statements of theCompany at cost less impairment losses. c. Associated Companies An associated company is an entity, not being a subsidiary, in which the Grouphas a long-term interest of not less than 20% nor more than 50% of the equityand in whose financial and operating policy decisions the Group exercisessignificant influence. The Group's investment in associated companies is accounted for using the equitymethod. The Group's investments in associated companies include goodwill (netof accumulated amortisation) on acquisition, which is treated in accordance withthe accounting policy for goodwill. The most recent available audited financial statements of the associatedcompanies are used by the Group in applying the equity method. Where theaudited financial statements are not co-terminus with those of the Group, theshare of results is arrived at from the last audited financial statementsavailable and unaudited management financial statements to the end of theaccounting year. d. Goodwill Goodwill represents the excess of the cost of acquisition over the fair value ofthe Group's share of the net identifiable assets of the acquired subsidiary/associated company at the date of acquisition. Goodwill is tested annually forimpairment and carried at cost less any impairment losses. Gains or losses onthe disposal of the subsidiary/associated company include the carrying amount ofthe related goodwill. e. Foreign Currency Translations Measurement and presentation currency Items included in the financial statements of each subsidiary of the Group aremeasured using the currency of the primary economic environment in which thesubsidiary operates ("the measurement currency"). The consolidated financialstatements are presented in Sterling. Transactions and balances Foreign currency transactions are recorded into the measurement currency basedon the exchange rates prevailing at transaction dates. Foreign currencymonetary assets and liabilities are translated using the exchange rateprevailing at balance sheet date. Non-monetary assets and liabilities aremeasured using the exchange rates prevailing at transaction dates, or in thecase of the items carried at fair value, the exchange rates ruling when thevalues were determined. Foreign exchange gains and losses resulting from thesettlement of foreign currency transactions and translation of foreign currencydenominated assets and liabilities are recognised in the profit and lossstatement. Group companies Assets and liabilities of the entities having measurement currency other thanthe presentation currency (Sterling) are translated into Sterling equivalents atexchange rates ruling at balance sheet date. Revenues and expenses aretranslated at average exchange rates for the year, which approximates theexchange rates at the dates of transactions. All resultant differences aretaken directly to equity. On disposal of a foreign entity, accumulated exchangedifferences are recognised in the profit and loss statement as part of the gainor loss on disposal. f. Revenue Recognition Revenue from sale of services is recognised when services are rendered. Course fees in respect of courses offered with no obligation to impart lessonsare recognised when the students register for the course and collect the studymaterials. All other course fees are recognised as income based on classes conducted duringthe year. g. Fixed Assets and Depreciation Fixed assets are stated at cost less accumulated depreciation and any impairmentlosses. The initial cost of fixed assets comprises the purchase price and anydirectly attributable costs of bringing the asset to working condition andlocation for its intended use. Expenditure incurred after the fixed assets havebeen put into operation, such as repairs and maintenance is charged to theprofit and loss account. Expenditure for additions, improvements and renewalsis capitalised when it can be clearly demonstrated that the expenditure hasresulted in an increase in the future economic benefits expected to be realisedfrom the use of the items of fixed assets beyond their originally assessedstandard of performance. When assets are sold, retired or disposed of, theircost and the related accumulated depreciation and any impairment losses areremoved from the account, and any gain or loss resulting from their disposal isincluded in the profit and loss statement. Depreciation is calculated based on the straight-line method to write off thecost of fixed assets over their estimated useful lives as follows: Furniture and fittings 5 - 10 yearsClassroom and office equipment 4 - 10 yearsComputers 4 - 5 yearsRenovation 5 yearsMotor vehicles 5 yearsLibrary books 5 - 10 years The depreciation method and estimated useful lives are reviewed periodically toensure that the method and period of depreciation are consistent with therespective pattern of economic benefits from items of fixed assets. h. Cash and Cash Equivalents Cash and cash equivalents comprise cash on hand, bank deposits and short-term,highly liquid investment that are readily convertible to known amounts of cashand which are subject to an insignificant risk of changes in value. For purposes of the cash flow statement, cash and cash equivalents are shown netof outstanding bank overdrafts which are repayable on demand and which form anintegral part of the Group's cash management. i. Trade and Other Receivables Trade receivables, which generally have 30-day terms, are recognised and carriedat original invoice amount less provision for doubtful debts. Receivables from related parties are recognised and carried at cost less anyprovision for doubtful debts. An estimate for doubtful debts is made when collection of the full amount is nolonger probable. Bad debts are written off against provision for doubtful debtswhen collectibility is determined to be unlikely. j. Deferred Income Tax Current tax is the expected tax payable on the taxable income for the year basedon the tax rate enacted or substantively enacted at the balance sheet date, andany adjustment to tax payable in respect of prior years. Deferred income tax is provided, using the liability method, on all temporarydifferences arising between the tax bases of assets and liabilities and theircarrying amounts in the financial statements. Deferred tax assets andliabilities are offset when they relate to income taxes levied by the same taxauthority. Tax rates enacted or substantively enacted by the balance sheet dateare used to determine deferred income tax. Deferred tax assets are recognised to the extent that it is probable that futuretaxable profit will be available against which the temporary differences can beutilised. Deferred income tax is provided on temporary differences arising on investmentsin subsidiary companies and associated companies, except where the timing of thereversal of the temporary difference can be controlled by the Group and it isprobable that the temporary difference will not reverse in the foreseeablefuture. k. Development Expenditure Development expenditure represents direct expenditure and related costs incurredin developing new courses and are capitalised and deferred only when there is aclearly defined project and the outcome of the project has been assessed withreasonable certainty as to its technical feasibility and its ultimate commercialviability. These costs are amortised over the expected course duration of notmore than five years, starting in the year when the course commences. l. Impairment of Assets An assessment is made at each balance sheet date of whether there is anyindication of impairment of an asset, or whether there is any indication that animpairment loss previously recognised for an asset in prior years may no longerexist or may have decreased. If any such indication exists, the asset'srecoverable amount is estimated. An asset's recoverable amount is calculated asthe higher of the asset's value in use or its net selling price. Where it is not possible to estimate the recoverable amount of an individualasset, the Group estimates the recoverable amount of the cash-generating unit towhich the asset belongs. If the recoverable amount of an asset (orcash-generating unit) is estimated to be less than its carrying amount, thecarrying amount of the asset (cash-generating unit) is reduced to itsrecoverable amount. Impairment losses are recognised as an expense immediately,unless the relevant asset is at a revalued amount, in which case the impairmentloss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset(cash-generating unit) is increased to the revised estimate of its recoverableamount, but so that the increased carrying amount does not exceed the carryingamount that would have been determined had no impairment loss been recognisedfor the asset (cash-generating unit) in prior years. A reversal of animpairment loss is recognised as income immediately, unless the relevant assetis carried at a revalued amount, in which case the reversal of the impairmentloss is treated as a revaluation increase. m. Trade and Other Payables Trade and other amounts payable, including amounts due to related parties, arecarried at cost, which is the fair value of the consideration to be paid forgoods and service received. n. Operating Leases Leases where the lessor effectively retains substantially all the risks andrewards of ownership of the leased item are classified as operating leases.Operating lease payments are recognised as rental expenses in the profit andloss statement in equal annual amounts over the lease terms. o. Provisions Provisions are recognised when the Group has a present legal or constructiveobligation as a result of past events, it is probable that an outflow ofresources embodying economic benefits will be required to settle the obligation,and a reliable estimate can be made of the amount of the obligation. 4 Sale of Services Group 2004 2003 £'000 £'000Course fees 916 769Sales of systems and support services 501 453Consultancy services - 6Sale of textbooks - 39Other income 94 258 1511 1525 5 Exceptional Items Group 2004 2003 £'000 £'000 Write-back of trade creditor balance 65 -Gain on disposal of investment in subsidiary companies 7 120Gain on disposal of investment in associated companies - 149 72 269 The write-back of trade creditor balance relates to commission payable recordedin prior years which has been agreed with the third party as no longer payable. 6 Profit from Operations 2004 2003 £'000 £'000This was arrived at after charging/(crediting): Bad debts written off 7 - Exchange difference 11 17 Fixed assets written off - 4 Office and classroom rental 26 Provision for doubtful debt - 13 7 Dividends AEC Edu Group Pte Ltd paid a special dividend of £1,271k in April 2004 relatingto the restructuring of the Singapore Group. This dividend was paid prior to theacquisition of the entire share capital by AEC Education plc and has beendisclosed in the Prospectus at the time of floatation 8 Earnings per share Basic earnings per share is calculated by dividing the earnings attributable toordinary shareholders by the weighted average number of ordinary shares in issueduring the year. The weighted number of shares issued during the year was12,548,883 (2003: 11, 706,414). 9 Investments in Associated Companies Group 2004 2003 £'000 £'000 Unquoted shares, at cost 1387 115Goodwill transferred to capital reserves 14 14Share of post-acquisition reserves (152) (163) 1249 (34) The carrying amount of the investment in associated companies includes goodwillof £908k. Movement in goodwill during the year is as follows: Group 2004 £'000CostBalance as at beginning of the year -Addition arising from acquisition of associated company during the year 908Balance as at end of the year 908 Details of associated companies held by AEC Edu Group Pte Ltd are as follows:Associatedcompanies andCountry of Principal activities Cost of Equity held byIncorporation (Place of business) investment the Subsidiary 2004 2003 2004 2003 £'000 £'000 % % Keris Murni Sdn Provides education services 115 115 30 30Bhd and the operation of education(Malaysia) tuition centers (Malaysia) Pusat Tuisyen Provides education services 0 0 30 30Kasturi Sdn Bhd and the operation of education(Malaysia) tuition centres (Malaysia) Educational Provides consultancy services in 1271 - 34.96 -Resources Pte Ltd education, related services and(Singapore) business training 1386 115 On 26 July 2004, the Group through it's 100% Singapore Subsidiary AEC Edu GroupPte Ltd acquired a 34.96% interest in Educational Resources Pte Ltd for aconsideration of £1,271k from a related party (common directors/shareholders).The consideration was settled by a novation of related party balances, amountingto £1,257k with the balance paid in cash. The amounts due from associated companies are trade in nature, unsecured,interest-free and payable within the next twelve months. 10 On 19 November 2004, the whole of the issued share capital of the AEC EduGroup Pte Limited, a company registered in Singapore was acquired by AECEducation plc, in consideration for the issue of 13,086,394 Ordinary Shares of10p each in AEC Education plc. AEC Education plc is the ultimate holdingcompany. AEC Education plc placed a further 1,829,628 new Ordinary Shares of10p each at 41p per Ordinary Share and was admitted to trading on AIM on 10December 2004. This information is provided by RNS The company news service from the London Stock Exchange