Final Results

AIM: AEC

AEC EDUCATION PLC

("AEC" or "the Group")

Final results for the year ended 31 December 2011

Key Points

·; Group returned to profit - reflecting very strong performance in Singapore and turnaround of UK operations

·; Revenues increased by 6% to £19.1m (2010: £18.1m)

·; Pre-tax profit of £360,000 - stated after £526,000 of one-off costs (2010: pre-tax loss of £439,000)

·; Earnings per share of 0.73p (2010: loss per share of 0.85p)

·; Net cash rose by 23% to £3.81m (2010: £3.09m)

·; Full and final dividend proposed of 0.20p (2010: 0.20p)

·; Further progress post-year end:

- two new colleges opened in Ireland and Oman

- entry into UK government funded sector with acquisition of Skye Training Ltd in March 2012

- appointment of CEO of Singapore operations to head growth in May 2012

·; Board continues to view growth prospects positively

Liam Swords, Chairman of AEC, commented,

"I am pleased to report that AEC returned to profit during the year ended 31 December 2011. This result was underpinned by a particularly strong performance in our Singapore operations as well as the return to profitability of our English language teaching business in London.

Our plans to develop the Malvern House English language teaching brand outside the UK progressed well and, during the year, we brought our English language offering in Singapore and Malaysia under the Malvern House brand. After the year end, we opened Malvern House English language colleges in Ireland and Oman. In March 2012, we also expanded into a new market in the UK, the government funded sector, with the acquisition of Skye Training Ltd.

These recent corporate initiatives should provide additional growth potential for the Group and we believe that, with strong cash balances, AEC is well placed to take advantage of the opportunities available. The Board therefore continues to view growth prospects positively."

Enquiries:

CHAIRMAN'S STATEMENT

I am pleased to report that AEC returned to profit during the year ended 31 December 2011. This result was underpinned by a particularly strong performance in our Singapore operations as well as the return to profitability of our English language teaching business in London despite the ongoing challenging trading conditions in the UK.

Revenues were up by 6% to £19.1m and profit before tax of £0.36m represented a £0.80m turnaround on last year's loss before tax of £0.44m. This profit was delivered after one-off costs totalling £0.53m, which comprised a £0.35m investment in the expansion of the Malvern House brand overseas together with goodwill impairment of £0.18m relating to the Group's withdrawal from non-core areas.

Our plans to develop the Malvern House English language teaching brand outside the UK progressed well and, during the year, we brought our English language offering in Singapore and Malaysia under the Malvern House brand. After the year end, we opened Malvern House English language colleges in Ireland and Oman. In March 2012, we also expanded into a new market in the UK, the government-funded sector, with the acquisition of Skye Training Ltd ("Skye Training").

The Group's financial position remains strong and net cash at 31 December 2011 was up 23% year on year to £3.81m (30 June 2011: £3.19m and 31 December 2010: £3.09m). We believe that AEC is well placed to take advantage of the opportunities available to us and the Board continues to view growth prospects positively.

Financial results

Revenues for the year to 31 December 2011 rose by 6% to £19.1m (2010: £18.1m). The pre-tax profit for the year was £360k compared with a loss of £439k in 2010. Profits are stated after exceptional costs of £350k relating to investment in the overseas expansion of the Malvern House brand and a goodwill impairment of £176k, following the withdrawal from non-core areas. The profit after tax was £342k (2010: loss after tax of £290k) and earnings per share was 0.73p (2010: loss per share of 0.85p).

The cash inflow from operating activities was £1.1m (2010: £0.2m) whilst net cash inflow generated from operations was £2.0m (2010: outflow of £0.1m). Net cash at the end of the year stood at a healthy £3.81m (31 December 2010: £3.09m).

Dividend

The positive outlook for AEC has given the Board the confidence to recommend a final and total dividend of 0.20p per ordinary share (2010: 0.20p). This will be paid on 24th August 2012 to shareholders on the register at 13th July 2012, subject to shareholder approval at the Annual General Meeting. The ex-dividend date is 11th July 2012.

Business Development

AEC has performed well despite mixed market conditions across its territories. In Asia, our Singapore operations outperformed, delivering record results, while in Malaysia student numbers were adversely affected by the turmoil in North Africa. Our London operations, which form the hub of our English language teaching provision, returned to growth and profitability although the uncertainty surrounding student visas, especially the entitlement to work while studying, continued to have an impact. We completed the implementation of the Malvern House brand across our overseas English language teaching operations in Singapore and Malaysia, and invested in the establishment of new colleges in Oman and Ireland, which opened post-year end, as well as in Cyprus. These corporate initiatives should provide additional growth opportunities for us.

A major highlight in the year was the performance of our Singapore operations, where revenues increased by over 25% year-on-year. This was supported by structural changes in the private education market which have followed the Singapore government's introduction of new quality standards in 2010 requiring education providers to achieve the EduTrust certification. As one of only 40 providers to have attained the EduTrust Certificate for a four year period, we have been able to take advantage of the market consolidation and expect to see students numbers continue to rise during the course of 2012. Our University of Wales Bachelor and MBA programmes performed exceptionally well with student numbers more than doubling. This is particularly pleasing as we implement strategies to increase our Higher Education provision in Singapore. We are seeking to establish relationships with other UK universities and have also strengthened our recruitment resources in China and the rest of the region. On 1 May 2012, we were pleased to appoint Dr Chong Chee Leong as head of our Singapore operations. He brings over 25 years' experience in the academic sector and previously was deputy chief executive officer and academic dean of one of Singapore's largest independent education and training institutions.

The colleges in Malaysia were affected by a significant drop in the number of students, especially for English language training, from the high volume markets in Northern Africa but were broadly able to maintain overall revenues. Despite this drop and the cost of replacing volumes, operations in Malaysia were breakeven at the pre-tax profit level. The professional programmes all performed well, particularly ACCA and CFA. Our Malvern House brand is now the market leader in Malaysia for the provision of these programmes and was awarded the Gold Standard by ACCA in recognition of its achievements. We have been working on the development of new areas of opportunity during the year and invested further in the markets in Northern Africa where we are beginning to see some return to growth. Malvern House Malaysia now offers a full degree programme with the University of Wales, which is based 'in country'. The college will also continue to raise the level of its programmes to prepare for the opportunities being granted to high performing education institutions in Malaysia to become 'deemed' universities, with their own university campuses.

Malvern House in the UK grew by 5% and returned to profit, reflecting the benefits of the remedial actions taken in the second half of 2010. The market in the UK remained difficult as overseas students in private institutions are now unable to subsidise their study costs by working part time and this has affected long term courses in particular. We expect this will continue to affect our UK performance during 2012 however we are implementing a new business plan to support profitability. After the year-end, in March 2012, we took the decision to expand into the government-funded training sector with the acquisition of Skye Training. Skye Training adds a complementary revenue stream to our UK business and we anticipate the business growing strongly in 2012 and beyond, albeit from a small base.

The expansion of English language teaching overseas under the Malvern House brand continued strongly during the year, with our operations in both Singapore and Malaysia successfully rebranded. Our English language teaching joint venture in Cyprus is profitable and will continue to contribute in 2012. We opened our two new Malvern House colleges in Ireland and Oman in March 2012 and expect both to be in profit in early 2013. The Malvern House results were achieved after the investment of £0.35m in the new locations in Oman and Ireland and in continuing to research potential UK university partnerships. The underlying turnaround from a loss in 2010 to a profit before tax in 2011 was therefore approximately £1.3m.

During the year, the Board also took the decision to scale down activities in Vietnam, following a review of operations and we have reduced costs and the operations to a minimum level.

Educational Resources Ltd ("ER"), the Group's London Chamber of Commerce & Industry examinations subsidiary, experienced a difficult year and investment was increased to seek new opportunities in both new and existing markets. In particular, we are focusing on new markets in India, Pakistan, Nepal and the Philippines. Hong Kong continued to be slow as changes to the education market there impacted further and the market in Malaysia remained very competitive. These conditions resulted in a reduction in revenue of 16% compared to the previous year and profits also declined compared to the previous year. As we grow our college activities, examinations become less of a strategic focus and now represent only 10.8% of our overall revenue.

Staff

On behalf of the Board I would like to welcome the staff from our new operations to the Group and to thank all staff for their hard work and efforts during the period. It is rewarding to see the positive attitude as we have implemented the necessary changes to ensure the Group returns to sustainable profit growth.

Prospects

During 2011, the Board focused on returning the Group to profit and establishing the platform for sustainable growth, including expansion into new geographic locations. In 2012, our focus is on the expansion of the Malvern House brand overseas as well as the growth of our operations in Singapore and Malaysia. In the UK, we are concentrating on the implementation of the new business model at Malvern House in London and the integration of our newly acquired government-funded training business, whose order books show significant growth potential.

With strong cash balances, AEC is well placed for ongoing development and the Board remains confident that the Group will record increased profitability in 2012.

Liam Swords

Chairman  

30 May 2012

AEC EDUCATION PLC AND ITS SUBSIDIARY COMPANIES

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2011

AEC EDUCATION PLC AND ITS SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2011

Explanatory note on foreign currency translation movements

The foreign currency translation movements for the prior year have been corrected from £303,027 to £296,054 to include minority interests which were omitted from the table in the Consolidated Statement of Comprehensive Income reported last year. The total comprehensive income for the year was accordingly restated form £13,141 to £6,168.

AEC EDUCATION PLC AND ITS SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2011

AEC EDUCATION PLC AND ITS SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 (CONTINUED)

AS AT 31 DECEMBER 2011

AEC EDUCATION PLC AND ITS SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2011

AEC EDUCATION PLC AND ITS SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

AEC EDUCATION PLC AND ITS SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2011

AEC EDUCATION PLC AND ITS SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENT OF CASH FLOWS

 (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2011

Cash and cash equivalents consist of the following:

* These figures have been restated due to the inclusion of the prior year dividend within foreign exchange in error.

AEC EDUCATION PLC AND ITS SUBSIDIARY COMPANIES

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2011

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 have authorised the issue of these financial statements on the date of the Statement by Directors set out above.

2 Significant Accounting Policies

(1) 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) and IFRS as issued by the International Accounting Standards Board (IASB). References to IFRS should be construed as references to both IFRS as adopted by the EU and IFRS as issued by the IASB.

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.

Segmental analysis is as follows:

4 Earnings/(Loss) Per Share

The basic earnings/(loss) per share was based on profit attributable to shareholders of £321,514 (2010: loss of £376,291) and the weighted average number of ordinary shares in issue during the year of 44,198,781 (2010: 44,146,726) shares.

The diluted earnings/(loss) per ordinary share was based on profit attributable to shareholders of £321,514 (2010: loss of £376,291) and the weighted average number of ordinary shares in issue at during the year diluted for the effect of share options and warrants in existence at the year end of 47,899,375 (2010: 47,899,375) shares.

The fully diluted loss per share reported for the prior year has been restated. In 2010 the fully diluted loss per share was stated as 0.79p which was lower than the basic loss of 0.85p. This treatment was not in accordance with IAS 33 - Earnings per Share.

5. Intangible assets

6 Goodwill

Goodwill has arisen on acquisitions by the Group.

The impairment of goodwill on acquisitions arises on the provision made against BrainBox Limited of £24,831 on its closure and Smartworks Learning Centre Pte Ltd of £150,932 since it is no longer a profit generating company. The provision of £175,763 was made as at 31 December 2011 and no currency realignment arises.

7 Share Capital