AEC Education plc has taken the market by surprise announcing large losses in its Malvern House English language business. In the six months ending June 30, 2012, the division ran up losses of £939k pushing the Company into the red. The news sent the share price reeling by 25% to 8.5p valuing the Company’s equity at £3.7m and its enterprise value (equity value less net cash) at just £850k.
The poor performance of its UK based English language business was partially offset by a resilient performance elsewhere. In particular, the professional training and higher education businesses in Singapore and Malaysia made good progress and were profitable.
In the six months ended June 2012, the Company generated a pre-tax loss of £670k (H1 2011: £298k profit) on revenues of £8.9m (H1 2011: £8.9m). The losses included exceptional restructuring costs at the Malvern House UK operation totalling £272k and set up costs for the newly opened Malvern House colleges in Oman and Ireland of £292k.
Liam Swords, Chairmen of AEC Education, commented, “Results across the Group's two key trading regions, Asia and the UK, show two contrasting pictures. In Asia, Singapore has continued to perform strongly while Malaysia has seen a significant strengthening in student numbers. However, in the UK the impact of the well-documented uncertainty surrounding student visas has continued to adversely impact our English language teaching business in London. As a result, overall results for the Group in the first half are disappointing and full year profitability will be significantly affected”.
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