16th Dec 2015 08:42
LONDON (Alliance News) - AEC Education PLC Wednesday said it has been provided a loan for up to GBP1.0 million with very favourable terms from one of its major shareholders to support the company's attempts to return to profitability.
AEC shares were up 60% to 2.0 pence per share on Wednesday morning.
The education consultancy firm has taken up the loan after reporting a substantially wider pretax loss in the first half of 2015 and a lowly cash balance of only GBP360,000 at the end of June.
AEC Education reported a GBP520,000 pretax loss in the first six months of 2015, widening from a GBP100,000 loss a year earlier after revenue tanked by around GBP700,000 year-on-year. The company was hit by its UK business being affected by changes to immigration policies and tightening control over student visas.
KSP Investments Pte Ltd, which holds a 17.5% stake in AEC Education, has now signed a loan agreement to provide up to GBP1.0 million in funding to the company, with AEC drawing down an initial GBP650,000.
The funds will be used to "fund working capital and to support the plans of subsidiary companies to return to profitability and sustainable growth," AEC said.
Despite the disappointing first half results announced back in September, AEC said it was confident it could widen its UK revenue base to mitigate the ongoing problems and expected some form of improvement in the second half of 2015, suggesting it could begin paying dividends in 2016.
The loan provided by KSP Investments is unsecured, has no interest and no fixed repayment date, with the two parties agreeing the loan will be repaid "as soon as possible out of the future profits of the business," said AEC.
By Joshua Warner; [email protected]; @JoshAlliance
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