AEC Education Final Results

Aec Education Final Results

RNS Number:0623Z
AEC Education plc
26 June 2007

26th June 2007

                               AEC EDUCATION PLC

                            ("AEC" or "the Company")



              Audited Results for the Year Ended 31 December 2006



Set out below is a summary of the audited financial results for AEC for the year
ended 31 December 2006.




CHAIRMAN'S STATEMENT - DECEMBER 2006



Introduction



It is my pleasure to announce the financial results of the Company for the
financial year ended 31st December 2006.



The Company operates in an increasingly competitive Asian environment and faced
especially tough trading conditions in 2006.  Overall revenues increased during
the year by 2.4% to #1,579,204, compared to #1,542,684 in the year 2005 but an
increase in operating expenses, due to a number of strategic program launches
during the year, as well as the costs of winding down the unprofitable ones, led
to a loss of #271,934 (2005 - profit of #202,346).



The Board remains confident that AEC can  meet its working capital requirements,
including its plans for future growth.  I am also delighted to state that the
major shareholders have declared their full funding support for any synergistic
acquisition oppportunities that may arise in the future.



Review of 2006 Operations



Acquisition of BrainBox Limited



Vietnam has quietly been experiencing tremendous economic growth in the Asian
region.



In order to take advantage of this growth, the Company acquired 64.8% of the
equity of BrainBox Limited in April 2006.  Brainbox is a private education
provider, based in Ho Chi Minh City ( the financial capital of Vietnam),
specialising in Language training and Management Studies.  Vietnam has opened
its doors  to the flood of global influences and its citizens are eager to be a
part of this new world.  This is driving an ever-increasing demand for
English-language skilled management professionals and this acquisition positions
us to take full advantage of these opportunities.



In addition to the current programs running at BrainBox, the Company has
launched new cross-border programs ( please see the Program Development section)
in Vietnam.  Of equal importance is the fact that this acquisition provides the
Company with another channel for student recruitment for its programs in
Singapore.



Acquisition of Smartworks Learning Center Pte. Ltd. (SLC)



The Asian region has been experiencing a surge in the real-estate and property
market.  Consequently, there is an increasing demand for qualified real-estate
advisors and consultants.  In order to leverage on this demand, AEC Edu Group
Pte Ltd, a wholly-owned Singapore-based subsidiary of the Company, acquired 100%
of Smartworks Learning Center Pte. Ltd.(SLC) , a private education provider
focussed on real-estate marketing programs.



SLC provides a distance learning program in real estate and marketing in
collaboration with the University of South Australia and the College of Estate
Management in the UK.  SLC also conducts similar programs in partnership with
Singapore Polytechnic.



With this acquisition, AEC will be able to widen the range of education services
it offers and take full advantage of the growing demand for such programs.



Program Development



During 2006, AEC Edu Group developed a number of programs to meet the increasing
demand for courses focused on creative media/ arts and professional reskilling.



Diploma/ Advanced Diploma Programs in Interactive Media



With increasing government encouragement of gaming and digital media/content
development in Singapore, there has been a surge of demand for professionals
with skills in these technologies.  In order to meet this demand, AEC has
developed a Diploma and an Advanced Diploma program in Interactive Media and is
currently running its fifth batch of students in Singapore.  The program is
accredited by Napier University in the UK.  There are also plans to recruit
international students for these programs.



Diploma in Pre-School Teaching - Leadership



In the wake of rising affluence and living standards in the communities that AEC
serves, there is an increasing need to provide childcare support services to
families where both parents work.  AEC's Diploma program in Pre-School Teaching
- Leadership is accredited by the Singapore Ministry of Community and Youth
Services and the Singapore Ministry of Education and provides candidates with
the necessary skills to manage pre-school centers and provide curriculum and
operational support.  The program is targetted at bringing older workers back
into the workforce while utilising their earlier experiences in operational and
managerial roles.



Diploma /Advanced Diploma in Hospitality Management



The enormous growth in tourism in Singapore and other regions in South-East Asia
has created an increasing demand for Hospitality Management professionals.  To
meet this demand, AEC has recently launched the Diploma and Advanced Diploma
programs in Hospitality Management in Vietnam through an innovative cross-border
delivery mechanism.  The students start the course in Vietnam and complete it in
Singapore, thereby creating bi-lingual professionals who are at ease in the
burgeoning global world.



Future Plans



The last couple of years have been spent consolidating and restructuring our
business activities whilst identifying new strategic areas of opportunity in the
ASEAN, with specific focus on Singapore and Malaysia.  We have launched new
programs to coincide with the economic growth patterns in the region whilst
taking the hard decisions to close down those that have become obsolete.  Given
the slightly longer business cycles in the Education market your directors now
expect  to see a return on these initiatives over the next 2 -3 years.



China and India are two of the most important markets in Asia and they provide
enormous opportunities for AEC to grow.



China is rapidly expanding its education umbrella in preparation for the Beijing
Olympics in 2008 and the Shanghai World Expo in 2010.  The country is urgently
preparing its citizens for the bilingual requirements of these two mammoth
events. AEC is currently evaluating how best to avail of the opportunities
arising from this demand.



With the rapid increase in demand for trained professionals by the
service-industries, India requires a much larger talent pipeline than it
currently possesses.  AEC is well-poised to provide a series of skill-building
and career-enhancing programs.  We are, therefore exploring alliances and
partnerships in the Indian market that will enable our programs and ongoing
development to be fully exploited.



Outlook



The Board remains confident that the Company's plans for growth and a rapid
return to profitability will provide shareholders with a steady growth in value.
  We believe that we have now taken the tough, yet practical decisions, which
will yield these results in the future.



We will continue to seek acquisitions that are synergistic with our operations
and provide a coherent addition to our growth strategy.



Our greatest asset is the commitment and creativity of our loyal employees.  The
Board would like to express its gratitude for their unstinting and steadfast
support.




William Swords
Chairman





DIRECTORS REPORT



The directors present their report and the audited financial statements of AEC
Education Plc (the "Company") and its subsidiary companies for the year ended
31st December 2006.



PRINCIPAL ACTIVITIES



The principal activities of the Company are that of investment holding and
provision of educational consultancy services.  The principal activities of the
subsidiary companies are set out in Note 13 to the financial statements.  There
have been no significant changes in the nature of these activities during the
year.



REVIEW OF BUSINESS AND FUTURE DEVELOPMENTS



The markets that the Company operate in were challenging and increasingly
competitive in 2006.   As shown in the consolidated profit and loss account on
page 12, the Group's revenue increased by 2.4% to #1,579,204 compared to
#1,542,684 in the year 2005 but an increase in operating expenses, investment in
staff for product development and marketing, combined with the slow growth in
the market caused earnings to fall to a loss of #271,934 (2005: profit of
#202,346).  The Board expect the new products for launch during 2006 to provide
steady growth in revenue and earnings while it continues to seek suitable niche
acquisitions.



A review of the year's operations and future prospects is given in the
Chairman's Statement.



PRINCIPAL RISKS AND UNCERTAINTIES FACING THE GROUP



The Group operates in an increasingly challenging environment mainly in
Singapore and Malaysia.   The principal risks it faces are similar to other
businesses. Specifically, keen competition, changes in government policy on
education, funding and accreditation are some of the factors that could affect
the operations of the Group. Also the general economic and political environment
and the exchange rate fluctuations play an important part in determining the
risk the Group is exposed to.



The Group manages these risks by monitoring the situation carefully and working
closely with all the parties concerned to minimise the impact of any changes on
the operations.



FINANCIAL INSTRUMENTS



The risks faced by the Group, including financial risk, credit risk, liquidity
risk and cash flow interest rate risk and the Group's management of these risks
are detailed in note 30 of the accounts.



KEY PERFORMANCE INDICATORS


                                                                        2006                    2005

Sales growth                                                             2.4%                    2.1%
Gross Margin                                                           42.0%                    58.0%
Operating (loss) / profit                                           (#292,563)                #135,059
(Loss) / Earnings per share                                           (1.8) pence                1.4 pence




As explained in the Chairman's Statement on page 1, due to a number of strategic
program launches during the year as well as the costs of winding down the
unprofitable ones, this has resulted in a drop in gross margin by 16% in the
year and the resulting operating loss of #292,563 as compared to an operating
profit of #135,059 in the year 2005.



CREDITOR PAYMENT POLICY AND PRACTICE



Group policy is to pay creditors in line with agreed credit terms and generally
this policy is adhered to.  On average, creditors were settled within 60 days of
their due date except on disputed items.  Trade creditor days of the Group for
the year ended 31 December 2006 were 52 days (2005: 52 days), calculated in
accordance with the requirements set down in the Companies Act 1985.  This
represents the ratio, expressed in days, between amounts invoiced to the Group
by its suppliers in the year and in the amounts due, at the year end to trade
creditors within one year. The Company has no trade creditors.



DIVIDENDS



The directors do not recommend the payment of a dividend for the year ended 31st
December 2006 (2005: #NIL).



DIRECTORS



The names of the directors who held office during the year and to date were:



William Joseph Swords (Chairman)

Tunku Iskandar Bin Tunku Abdullah

Ramasamy Jayapal

Gopinath Pillai

Ho Peng Cheong (Appointed on 6th March 2007)



DIRECTORS' INTERESTS



The directors holding office at the end of the financial year and their
interests in the share capital of the Company and its related corporations as
recorded in the register of directors' shareholdings were as follows:


                                                                          At beginning         At end
Name of director and company in which interests are held                   of the year       of the year
                                                                             Shares of         Shares of
                                                                            #0.10 each        #0.10 each

William Joseph Swords                                                                -                 -
Tunku Iskandar Bin Tunku Abdullah                                                    -                 -
Ramasamy Jayapal                                                               574,047           574,047
Gopinath Pillai                                                                      -                 -


Indirect Interest
William Joseph Swords                                                                -                 -
Tunku Iskandar Bin Tunku Abdullah                                              399,000           399,000
Ramasamy Jayapal                                                                     -                 -
Gopinath Pillai                                                                 25,000            25,000




SUBSTANTIAL SHAREHOLDING



At 18th April 2007, notification had been received of the following holdings of
more than 3% of the issued capital of the Company.  Apart from these, the
directors are not aware of any individual interests or group of interests held
by persons acting together, which exceeds 3% of the Company's issued share
capital.


                                                                                Shares of           %
                                                                               #0.10 each

KSP Investments Pte Limited                                                     5,526,048       37.05
Pershing Keen Nominees Limited *                                                2,428,319       16.28
Ranch House Limited                                                             2,000,000       13.41
Naboobalan s/o Ramansamy Naidu                                                    874,968        5.87
Vidacos Nominees Limited                                                          554,318        3.72
WB Nominees Limited                                                               475,828        3.19



*Ramasamy Jayapal is deemed to have an interest in the shares held as follows:

Pershing Keen Nominees Limited    574,047



DISCLOSURE OF INFORMATION TO AUDITORS



At the date of making this report each of the persons who are directors at the
time when this Report is approved confirms that:



(a)        so far as each director is aware, there is no relevant audit
information of which the Company's auditors are unaware; and



(b)        each director has taken all the steps that ought to have been taken
as a director, including making appropriate enquiries of fellow directors and of
the Company's auditors for that purpose, in order to be aware of any information
needed by the Company's auditors in connection with preparing their Report and
to establish that the Company's auditors are aware of that information.



AUDITORS



A resolution to reappoint Moore Stephens LLP as the Company's auditors will be
proposed at the annual general meeting.



BY ORDER OF THE BOARD





William Swords



DIRECTOR
25 June 2007





STATEMENT OF DIRECTORS' RESPONSIBILITIES



Company law requires the directors to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of the
Company and of the Group and of the profit and loss of the Group for that
period. In preparing those financial statements, the directors are required to:



  * select suitable accounting policies and then apply them consistently;



  * make judgements and estimates that are reasonable and prudent;



  * state whether applicable accounting standards have been followed, subject
    to any material departures disclosed and explained in the financial
    statements;



  * prepare the financial statements on the going concern basis unless it is
    inappropriate to presume that the company will continue in business.



The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Company and of the Group and to enable them to ensure that the financial
statements comply with International Financial Reporting Standards and with the
Companies Act 1985. They are also responsible for the system of internal
control, safeguarding the assets of the Group and hence for taking reasonable
steps for the prevention and detection of fraud, error and non-compliance with
laws and regulations.



INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF THE AEC EDUCATION PLC



Independent Auditors' Report to the Shareholders of AEC Education plc

We have audited the group and parent company financial statements (the "
financial statements") of AEC Education plc for the year ended 31 December 2006
which are set out pages 12 to 51. These financial statements have been prepared
under the accounting policies set out therein.

This report is made solely to the company's members, as a body, in accordance
with Section 235 of the Companies Act 1985.  Our audit work has been undertaken
so that we might state to the company's members those matters we are required to
state to them in an auditor's report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company's members as a body, for our audit work,
for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

The directors' responsibilities for preparing the financial statements in
accordance with applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union are set out in the Statement of
Directors' Responsibilities.

Our responsibility is to audit the financial statements in accordance with
relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true
and fair view and whether the financial statements have been properly prepared
in accordance with the Companies Act 1985. We also report to you whether in our
opinion the information given in the Directors' Report is consistent with the
financial statements.

In addition we report to you if, in our opinion,  the company has not kept
proper accounting records, if we have not received all the information and
explanations we require for our audit, or if information specified by law
regarding directors' remuneration and other transactions is not disclosed.

We read other information contained in the Annual Report and consider whether it
is consistent with the audited financial statements.  This other information
comprises only the Directors' Report and the Chairman's Statement.  We consider
the implications for our report if we become aware of any apparent misstatements
or material inconsistencies with the financial statements.  Our responsibilities
do not extend to any other information.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the
significant estimates and judgements made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate
to the group's and company's circumstances, consistently applied and adequately
disclosed.

We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other
irregularity or error.  In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.

Opinion

In our opinion:

  * the financial statements give a true and fair view, in accordance with
    IFRSs as adopted by the European Union, of the state of the group's and the
    parent company's affairs as at 31 December 2006 and of the group's and the
    parent company's result for the year then ended;

  * the financial statements have been properly prepared in accordance with
    the Companies Act 1985 and, as regards the group financial statements,
    Article 4 of the IAS Regulation; and
  * the information given in the Directors' Report is consistent with the
    financial statements.





                                    MOORE STEPHENS LLP

St. Paul's House                    Registered Auditors
London, EC4M 7BP
England                            Chartered Accountants


                                                                    25 June 2007



                                    CONSOLIDATED INCOME STATEMENT

                                  FOR THE YEAR ENDED 31 DECEMBER 2006





                                                    Note                                 2006             2005
                                                                                            #                #
Revenue
Sale of services                                     (4)                            1,463,782        1,439,824

Other income                                         (5)                              115,422          102,860

                                                                                    1,579,204        1,542,684

Administrative expenses

Cost of services sold                                                                 911,220          635,763

Salaries and employees' benefits                     (6)                              416,513          334,426
Amortisation of deferred expenditure                                                   11,644            9,135
Depreciation of plant and equipment                                                    42,478           32,055
Exchange loss                                                                          16,547                -
Finance costs                                        (7)                                8,074            2,939
Other operating expenses                                                              465,291          393,307
Total operating costs and expenses                                                
                                                                                    1,871,767        1,407,625

Operating (loss) / profit                            (8)                            (292,563)          135,059

Share of results of associated companies                                               25,834           67,620

(Loss) / profit  before income tax                                                  (266,729)          202,679

Income tax                                           (9)                              (5,205)            (333)

(Loss) / profit for the year                                                        (271,934)          202,346

Attributable to:
 Equity holders of the Company                                                      (271,934)          202,346
 Minority interest                                                                          -                -
                                                                                    (271,934)          202,346

(Loss) / Earnings per share (in pence)
Basic                                               (10)                                (1.8)              1.4






                                        BALANCE SHEETS

                                      AS AT 31 DECEMBER 2006


                                                               Group                          Company
                                          Note           2006            2005            2006            2005
                                                            #               #               #               #
Non-Current Assets

Plant and equipment                       (11)        125,076         128,815               -               -
Development expenditure                   (12)         49,511          28,414                               -
Investment in a subsidiary company        (13)              -               -       1,308,639       1,308,639
Investment in associated companies        (14)      1,300,058       1,393,934               -               -
Goodwill                                  (15)        117,855               -               -

                                                    1,592,500       1,551,163       1,308,639       1,308,639
                                                      
                                                    

Current Assets
Inventories                               (16)          5,936          86,370               -               -
Trade receivables                         (17)        460,036         252,288               -               -
Other receivables                         (18)         84,132          55,260           8,049          52,140
Deferred expenditure                      (19)         23,762          31,054               -               -
Due from subsidiary companies             (13)              -               -         236,970         343,000
Due from associated companies             (14)        169,098          67,106               -               -
Due from other related parties            (20)          1,607         484,210               -               -
Cash and bank balances                    (21)        161,998          89,679             512           4,280

                                                      906,569       1,065,967         245,531         399,420

                                                      

Total Assets                                        2,499,069       2,617,130       1,554,170       1,708,059

EQUITY AND LIABILITIES
Non Current Liabilities
Finance lease obligations                 (26)          1,200               -               -               -
Deferred taxation                         (9)              75             480               -               -
                                                                            
                                                        1,275             480               -               -
                                                        

Current Liabilities
Trade payables                            (22)        129,916          90,283               -               -
Deferred income                           (23)        244,630         156,478               -               -
Other payables and accruals               (24)        274,655         111,174          46,811          23,598
Bank overdraft                            (25)         85,958         120,549               -               -
Due to other related parties              (20)         39,613          50,639               -               -
Finance lease obligations                 (26)          1,900           1,755               -               -
Provision for income tax                               29,554          35,511               -               -
                                                      806,226         566,389          46,811          23,598
                                                      
                                                      
Share Capital and Reserves
Share capital                             (27)      1,491,604       1,491,604       1,491,604       1,491,604
Share premium                                         242,519         242,519         242,519         242,519
Reserves                                             (42,555)         316,138       (226,764)        (49,662)
                                                                                                    
                                                    1,691,568       2,050,261      1,507,359        1,684,461
                                                    
Minority interest in equity                                 -               -               -
Total Equity and Liabilities                        2,499,069       2,617,130       1,554,170       1,708,059



The financial statements were approved by the Board of Directors on 25 June 2007
and were signed on its behalf by:





William Swords Chairman





                                 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2006





                                           Share     Share      Retained    Translation       Capital
                                          Capital   Premium     Earnings      Reserves       Reserves       Total
                                                #         #            #             #              #           #
Group

Balance at 1 January 2005              1,491,604    238,094       66,133      (29,824)         170,560  1,936,567


Profit for the year                            -          -      202,346             -               -    202,346

Dividend paid (a)                              -          -    (238,657)             -               -  (238,657)

Cost of share issue - prior year               -      4,425            -             -               -      4,425
overstated
Gains not recognised in the income
statement - Currency translation               -          -            -       145,580               -    145,580
difference


Balance at 31 December 2005            1,491,604    242,519       29,822       115,756         170,560  2,050,261



Balance at 1 January 2006              1,491,604    242,519       29,822       115,756         170,560  2,050,261


Loss for the year                              -          -    (271,934)             -               -  (271,934)

Loss not recognised in the income              -          -            -      (86,759)               -   (86,759)
 statement - Currency translation
difference

Balance at 31 December 2006            1,491,604    242,519    (242,112)        28,997         170,560  1,691,568


(a) In 2005, the Company paid an interim dividend of 1.6 pence per share 
    amounting to #238,657.



                                        CONSOLIDATED CASH FLOW STATEMENT
                                  FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2006


                                                                                             Group
                                                                      Note            2006              2005
                                                                                         #                 #
Cash Flows from Operating Activities
(Loss) / Profit before income tax                                                 (266,729)           202,679

Adjustments for:
 Amortisation of deferred expenditure                                                11,644             9,135
 Depreciation of plant and equipment                                                 42,478            32,055
 Loss on disposal of plant and equipment                                                934                 -
 Interest expense                                                                     8,074             2,939
 Interest income                                                                      (353)                 -
 Exchange gain                                                         14           (1,725)                 -

 Currency alignment                                                    14            63,090         (123,068)

 Share of results of associated companies                                          (25,834)          (67,620)
Operating cash flow before working capital changes                                (168,421)            56,120

Changes in working capital:
 Receivables                                                                      (286,565)         (145,770)
 Payables                                                                           190,647          (49,990)
 Inventories                                                                         80,434             1,742
 Related parties                                                                    471,577            71,059
Net cash generated from/(used in)operations                                         287,672          (66,839)
 Interest paid                                                                      (8,074)           (2,939)
 Interest received                                                                      353                 -
 Tax paid                                                                          (15,931)           (5,678)
Net cash generated from/(used in)operating activities                               264,020          (75,456)


Cash Flows from Investing Activities

 Dividend income received from an associated company                                 58,344            45,263

 Purchase of plant and equipment                                                   (41,568)         (103,130)

 Development expenditure                                                           (34,627)                 -

 Acquisitions of subsidiaries net of cash acquired                     15          (58,394)                 -



Net cash used in investing activities                                              (76,245)          (57,867)







                                                                                               Group
                                                                                        2006              2005
                                                                                           #                 #
Cash Flows from Financing Activities
 Proceeds from issue of shares                                                              -          100,031
 Costs of issue of shares                                                                   -        (126,174)
 Dividend paid                                                                              -        (238,657)
 Receipt / (repayment) of loan from third parties                                           -        (105,828)
 Repayment of finance lease creditor                                                  (2,451)          (2,671)
 Repayment of amount due to a director                                                      -          (7,611)

Net cash generated from  / (used in) financing activities                             (2,451)        (380,910)


Effect of foreign exchange rate changes on consolidation                             (78,414)           62,222

Net increase / (decrease) in cash and cash equivalents                                106,910        (452,011)
Cash and cash equivalents at beginning of the year                                   (30,870)          421,141

Cash and cash equivalents at end of the year                                      =SUM(ABOVE)         (30,870)
                                                                                       76,040





Cash and cash equivalents consist of the following:
                                                                                        2006              2005
                                                                                           #                 #

Cash and bank balances                                                               161,998            89,679
Bank overdraft                                                                      (85,958)         (120,549)

                                                                                      76,040          (30,870)
                                                                                      


                            COMPANY INCOME STATEMENT
                         FOR THE YEAR ENDED 31 DECEMBER 2006






                                                   Note

                                                                                                   Period from
                                                                                                  Incorporation
                                                                                                   on 8th July
                                                                                                     2004 to
                                                                                                  31st December
                                                                             Year ended 31st          2005
                                                                              December 2006

                                                                                          #                   #

Administrative expenses
Other operating expenses                                                           (187,896)           (136,801)

Operating loss                                      (8)                            (187,896)           (136,801)


Other operating income

Consultancy fee                                                                       10,000                   -
Interest receivable                                                                      716               3,799
Dividends received                                                                         -             321,997
Miscellaneous income                                                                      78                   -
(Loss) / profit before taxation                                                    (177,102)             188,995

Income tax expense                                  (9)                                    -                   -
(Loss) / profit after taxation                                                     (177,102)             188,995

Dividends paid                                                                             -           (238,657)
(Loss) / profit for the year                                                       (177,102)              49,662



                     COMPANY STATEMENT OF CHANGES IN EQUITY
                   FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2006




                                                              Share         Share       Retained
                                                            Capital       Premium       Earnings         Total
                                                                  #             #              #             #

Issue of shares on incorporation                                  2             -               -            2


Issue of shares in consideration for the acquisition
of the entire share capital of AEC Edu Group Pte Ltd
                                                          1,308,639             -               -    1,308,639

Issue of shares for cash on admission to AIM                182,963       567,185               -      750,148

Cost of share issue                                               -     (324,666)               -    (324,666)

Profit for the period                                             -             -         188,995      188,995

Dividends paid                                                    -             -       (238,657)    (238,657)

Balance at 31 December 2005                               1,491,604       242,519        (49,662)    1,684,461


As at 1 January 2006                                      1,491,604       242,519        (49,662)    1,684,461


Loss for the year                                                 -             -       (177,102)    (177,102)

Balance at 31 December 2006                               1,491,604       242,519       (226,764)    1,507,359



                          COMPANY CASH FLOW STATEMENT
                  FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2006






                                                                                           Company


                                                                                                   Period from
                                                                                                  Incorporation
                                                                                  Year ended       on 8th July     
                                                                                     31st            2004 to
                                                                                   December       31st December
                                                                                     2006               2005
                                                                                          #                  #

Cash Outflows from Operating Activities
Loss from operations                                                              (177,102)           (133,002)
                                                                                  (177,102)           (133,002)
Change in working capital
Receivables                                                                          44,091            (27,120)
Payables                                                                             23,213              23,598
Related parties                                                                     106,030           (343,000)
Net cash generated used in operating activities                                     (3,768)           (479,524)


Cash Flows from Financial Activities
Proceeds from issue of shares                                                             -             725,130
Costs of issue of shares                                                                  -           (324,666)
Dividends received                                                                        -             321,997
Dividends paid                                                                            -           (238,657)
Net cash generated by financial activities                                                -             483,804


Net (decrease) / increase in cash and cash equivalents                              (3,768)               4,280
Cash and cash equivalents at beginning of the year                                    4,280                   -

Cash and cash equivalents at end of the year                                            512               4,280


NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2006



1   General



AEC Education plc (the "Company") is a 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 1 Park Row, Leeds LS1 5AB and its principal place
of business is in Singapore.


The principal activities of the Company are that of investment
holding and provision of educational consultancy services. The principal
activities of the subsidiary companies are set out in Note 13 to the financial
statements. 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 on page 8.



2  Significant Accounting Policies



(a)  Basis of Preparation



The financial statements have been prepared in accordance with applicable
International Financial Reporting Standards ("IFRS") as adopted by the European
Union.



(b)  Basis of Consolidation



The consolidation of AEC Edu. Group Pte Ltd has been prepared on the
basis of the pooling of interest method to reflect the effective Group
re-structure by way of a share for share exchange with common shareholders
during the period ended 31 December 2005. On this basis, the Company has been
treated as the holding company of its subsidiary company for the financial years
presented rather than from the date of its acquisition.



Acquisitions since the Group re-structure are accounted for applying
the purchase method.



All significant intercompany transactions and balances within the
Group are eliminated in the preparation of the consolidated financial
statements.



(c)    Subsidiary Company



A subsidiary company is an entity in which the Group, directly or indirectly,
holds more than 50% of the issued share capital, or controls more than half of
the voting power, or controls the composition of the board of directors or has
the power to govern the financial and operating policies.



Investment in subsidiaries is stated in the financial statements of the Company
at cost less impairment losses. The financial statements of subsidiaries
acquired are consolidated in the financial statements of the Group from the date
that control commences until the date control ceases, using the purchase method
of accounting.



(d) Associated Companies



Associates are those entities in which the Group has an interest of not less
than 20% of the equity and over whose financial and operating policy decisions
the Group exercises significant influence.



The consolidated financial statements include the Group's share of the total
recognised gains and losses of associates on an equity accounted basis, from the
date that significant influence commences until the date that significant
influence ceases.



When the audited financial statements of associated companies are
not co-terminous with those of the Group, the Group's share of profits and
losses is arrived at based on the last audited financial statements available
and unaudited management accounts to the end of the accounting period.



In the Company's balance sheet, investments in associates are stated
at cost less any provision for impairment losses.



(e) Functional and Presentation Currency



The consolidated financial statements have been presented with United Kingdom

sterling as the presentation currency as the Company is incorporated in England
and Wales with sterling denominated shares which are traded on AIM.



Items included in the financial statements of each subsidiary of the Group are
measured using the currency of the primary economic environment in which the
subsidiary operates ("the functional currency").  The primary functional
currency of Group companies is Singapore Dollars.



(f) Foreign Currency Translations



Transactions in foreign currencies are recorded at the rate ruling at the date
of the transaction. Foreign currency monetary assets and liabilities are
translated using the exchange rate prevailing at the balance sheet date.
Non-monetary assets and liabilities are measured using the exchange rates
prevailing at the transaction dates, or in the case of the items carried at fair
value, the exchange rates ruling when the values were determined. Foreign
exchange gains and losses resulting from the settlement of foreign currency
transactions and translation of foreign currency denominated assets and
liabilities are recognised in the income statements.



Assets and liabilities of the entities having a functional currency other than
the presentation currency are translated into sterling equivalents at exchange
rates ruling at the balance sheet date. Revenues and expenses are translated at
average exchange rates for the year, which approximates the exchange rates at
the dates of transactions. All resultant differences are taken directly to
equity. On disposal of a foreign entity, accumulated exchange differences are
recognised in the income statement as part of the gain or loss on disposal.



The following rates of exchange have been applied:


                                                            2006                 2005
1 # to 1 Singapore Dollar
              Closing rate                                  3.00                 2.87
              Average rate                                  2.93                 2.97
1 Malaysian Ringgit to 1 Singapore Dollar
              Closing rate                                  2.31                 2.25
              Average rate                                  2.31                 2.27


(g)  Revenue Recognition



     Revenue is recognised on the following basis:



(i)    Course fees are recognised as income based on classes
       conducted during year.



(ii)   All other course fees in respect of courses offered with no
       obligation to impart lessons are recognised when the students register for 
       the course and collect the study materials.



(iii)  Revenue from sub-letting of office space is recognised over
       the period of the lease.



(iv)   Consulting income is recognised on an accrual basis based on
       agreed amounts between parties.



(v)    Commission income is recognised when services are rendered.



(vi)   Management fee income is recognised when services are rendered.



(vii)  Dividend income from investments in associated companies is
       recognised when the shareholders' rights to receive payment have been
       established.



(viii) Interest income is accrued on a time basis, by reference to the
       principal outstanding and at the effective interest rate applicable.



(h)    Borrowing Costs



Borrowing costs incurred to finance the development of plant and equipment are
capitalised during the period of time that is required to complete and prepare
the asset for its intended use. The capitalised costs are depreciated over the
useful life of the plant and equipment.



Other borrowing costs including interest cost and foreign exchange differences,
on short term borrowings are recognised on a time-apportioned basis in the
profit and loss account using the effective interest method.



(i)    Plant and Equipment



Plant and equipment are stated at cost less accumulated depreciated and any
impairment losses. Depreciation policy, useful lives and residual values are
reviewed at least annually, for all asset classes to ensure that the current
method is the most appropriate.



Expenditure incurred after the plant and equipment have been put into operation,
such as repairs and maintenance is charged to the income statement. Expenditure
for additions, improvements and renewals is capitalized when it can be clearly
demonstrated that the expenditure has resulted in an increase in the future
economic benefits expected to be realized from the use of the items of plant and
equipment beyond their originally assessed standard of performance.



Depreciation is calculated based on the straight-line method to write off the
cost of plant and equipment over their estimated useful lives as follows:



Furniture and fittings                             -      5 - 10 years

Classroom and office equipment                     -      4 - 10 years

Computers                                          -      4 - 5  years

Renovation                                         -      5 years

Motor vehicles                                     -      5 years

Library books                                      -      5 - 10 years



Plant and equipment held under finance leases are depreciated over their
estimated useful lives on the same basis as owned assets or, where shorter, term
of the relevant leases.



(j)    Cash and Cash Equivalents



Cash and cash equivalents comprise cash in hand and bank deposits. Bank
overdrafts that are repayable on demand and form an integral part of the Group's
cash management are included as a component of cash and cash equivalents for the
purpose of the cash flow statement.



(k)    Trade and Other Receivables



Trade and other receivables, which generally have 30 to 90 days terms, are
initially measured at fair value, and subsequently measured at amortised cost,
using the effective interest method, less allowance for impairment. An allowance
for impairment of trade receivables is established when there is objective
evidence that the Group will not be able to collect all amounts due according to
the original term of the receivables. The amount of the allowance is the
difference between the asset's carrying amount and the present value of the
estimated cash flows discounted at the original effective interest rate. The
amount of the allowance is recognised in the income statement.



(l)    Inventories



Inventories are stated at the lower of cost and net realisable value. Cost is
determined using the first-in, first-out method. Cost comprises all costs of
purchase, cost of conversion and other costs incurred in bringing the
inventories to their present location and conditions. Net realisable value
represents the estimated selling price less all estimated costs of completion
and costs to be incurred in marketing, selling and distribution.



Allowance or impairment is made for obsolete, slow moving and defective stocks.



(m)    Trade and Other Payables



Trade and other payables, which are normally settled on 30 to 90 days term, are
initially measured at fair value, and subsequently measured at amortised cost,
using the effective interest method.



(n)    Deferred Income



Deferred income relates to course fees received in advance and is recognised in
the income statement based on classes conducted.



(o)    Income Tax



Current tax is the expected tax payable on the taxable income for the year based
on the tax rate enacted or substantively enacted at the balance sheet date, and
any adjustment to tax payable in respect of prior years.



Deferred income tax is provided, using the liability method, on all temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. Deferred tax assets and
liabilities are offset when they relate to income taxes levied by the same tax
authority.  Tax rates enacted or substantively enacted by the balance sheet date
are used to determine deferred income tax.



Deferred income tax is provided on temporary differences arising on investments
in subsidiary companies and associated companies, except where the timing of the
reversal of the temporary difference can be controlled by the Group and it is
probable that the temporary difference will not reverse in the foreseeable
future.



Deferred tax assets are recognised to the extent that it is probable that future
taxable profit will be available against which the temporary differences can be
utilised.



(p)    Development Expenditure



Development expenditure represents direct expenditure and related costs incurred
in developing new courses and are capitalised and deferred only when there is a
clearly defined project and the outcome of the project has been assessed with
reasonable certainty as to its technical feasibility and its ultimate commercial
viability. These costs are amortised over the expected course duration of not
more than five years, starting in the year when the course commences.



(q)    Impairment of Assets



An assessment is made at each balance sheet date of whether there is any
indication of impairment of an asset, or whether there is any indication that an
impairment loss previously recognised for an asset in prior years may no longer
exist or may have decreased.  If any such indication exists, the asset's
recoverable amount is estimated.  An asset's recoverable amount is calculated as
the 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 individual
asset, the Group estimates the recoverable amount of the cash-generating unit to
which the asset belongs.  If the recoverable amount of an asset (or
cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is reduced to its
recoverable amount.



Impairment losses are recognised as an expense immediately, unless the relevant
asset is at a revalued amount, in which case the impairment loss 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 recoverable amount, but so that the increased carrying amount
does not exceed the carrying amount that would have been determined had no
impairment loss been recognised for the asset (cash-generating unit) in prior
years.  A reversal of an impairment loss is recognised as income immediately,
unless the relevant asset is carried at a revalued amount, in which case the
reversal of the impairment loss is treated as a revaluation increase.



(r)    Leases



Leases where the lessor effectively retains substantially all the risks and
rewards of ownership of the leased item are classified as operating leases.
Operating lease payments are recognised as rental expenses in the income
statement in equal annual amounts over the lease terms.



(s)    Provisions



Provisions are recognised when the Group has a present legal or constructive
obligation as a result of past events, it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation,
and a reliable estimate can be made of the amount of the obligation.



(t)    Employees' Benefits



Defined contribution plans



Contributions to defined contribution plans are recognised as an expense in the
income statement as incurred.



Employee leave entitlement



Employee entitlements to annual leave are recognised when they accrue to
employees. A provision is made for the estimated liability for annual leave as a
result of services rendered by employees up to the balance sheet date.



(u)    Goodwill



Goodwill arising on a business combination represents the excess of the cost of
acquisition over the Group's interest in the fair value of the identifiable
assets and liabilities of the acquired subsidiary/associated company at the date
of acquisition. All business combinations are accounted for using the purchase
method. Goodwill is recognised as an asset and is tested annually for impairment
and carried at cost less any impairment losses. Any impairment is recognised
immediately as a charge to the income statement and is not subsequently
reversed.



(v)   Deferred expenditure



Deferred expenditure relates to course fees and related expenses paid in advance
and is recognised in the income statement based on classes conducted.



(w)   Minority Interests



Minority interests are that part of the net results of operations and of net
assets of a subsidiary attributable to interests which are not owned directly or
indirectly by the Group. It is measured at the minorities' share of the fair
value of the subsidiaries' identifiable assets and liabilities at the date of
acquisition by the Group and the minorities' share of changes in equity since
the date of acquisition, except when the losses applicable to minority interest
in a subsidiary exceed the minority interests in the equity of that subsidiary,
in which case, the losses are absorbed by the Group except to the extent that
the minority has a binding obligation and is able to make an additional
investment to cover its share of those losses.



Critical Accounting Judgements and Key Sources of Estimation Uncertainty



In the process of applying the Group's accounting policies above, management
necessarily make judgements and estimates that have a significant effect on the
amounts recognised in the financial statements. Changes in the assumptions
underlying the estimates could result in a significant impact to the financial
statements. The most critical of these accounting judgement and estimation areas
are noted.



(i)  Estimated Impairment of Goodwill



The Group tests annually whether goodwill has suffered any
impairment, in accordance with the accounting policy stated in Note 2(u). The
recoverable amount of goodwill of #907,680 stated in Note 14 is determined from
value in use calculation. The key assumption for the value in use calculation
are those regarding expected discounted future cash flows of the associated
company. In the opinion of the directors, as at 31 December 2006 there is no
indication of impairment in the value of goodwill.



(ii)  Income Taxes



The Group is subject to income taxes in numerous jurisdictions.
Significant judgement is required in determining the capital allowance,
deductibility of certain expenses and taxability of certain income during the
estimation of the provision for income taxes. There are many transactions and
calculations for which the ultimate tax determination is uncertain during the
ordinary course of business. The Group recognises liabilities based on estimates
of whether additional taxes will be due. Where the final tax outcome is
different from the amounts that were initially recorded, such differences will
impact the income tax and deferred income tax provisions in the period in which
such determination is made.



(iii) Trade receivables



The directors exercise their judgement in making allowances for
trade receivables. Trade receivable are stated at their nominal value as reduced
by appropriate allowances for estimated irrecoverable amounts.



(iv)  Impairment of assets/(other than goodwill)



The Group reviews the carrying amounts of assets as at each balance
sheet date to determine whether there is any indication of impairment in
accordance with the accounting policy stated in note 2(p). If any such
indication exists, the assets' recoverable amount or value in use is estimated.
Determining the value in use of plant and equipment, which requires the
determination of future cash flows expected to be generated from the continued
use and ultimate disposition of such asset, requires the company to make
estimates and assumptions can materially affect the financial statements. Any
resulting impairment loss could have a material adverse impact on the Group's
financial condition and results of operations.



3  Segmental Information



All revenue and profit before taxation arises from operations in the
education sector, and in South East Asia.



4  Sale of Services




                                                                                          Group

                                                                                  2006                   2005
                                                                                     #                      #

          Course fees                                                        1,412,760                926,503
          Sales of systems and support services                                 14,741                476,015
          Application fees and registration fees                                36,281                 37,306
                                                                           
                                                                             1,463,782              1,439,824


In 2005, application fees and registration fees was classified as
other income.



5  Other Income


                                                                                            Group

                                                                                       2006               2005
                                                                                          #                  #

          Commission income                                                                -               344
          Consultancy fees                                                                 -            40,404
          Exchange gain                                                                  647                 -
          Interest income                                                              1,069                 -
          Rental and related income                                                   92,746            20,816
          Sale of material and textbooks

                                                                                       9,664             2,698
          Summer camp income                                                               -            22,980
          Miscellaneous income                                                        11,296            15,618
                                                                                     115,422           102,860



6  Salaries and Employees' Benefits


                                                                                            Group

                                                                                        2006            2005
                                                                                           #               #

          Staff salaries and related costs                                           290,032         246,978
          Director's fee                                                              45,000          22,500
          Directors' remuneration                                                     81,481          64,948
                                                                                        
                                                                                     416,513         334,426

          Average number of employees:
          Administration                                                                  46              40
                                                                                          46              40



7  Finance Costs


                                                                                                Group

                                                                                          2006            2005
                                                                                             #               #

         Interest on bank overdraft                                                      7,120           1,303
         Interest on loan from third party                                                   -           1,536
         Interest on finance lease                                                         206             100
         Others                                                                            748               -
                                                                                         8,074           2,939




8  Operating (loss) / profit



Operating (loss) / profit is stated after charging the following:




                                                                 Group                            Company

                                                           2006             2005             2006             2005
                                                              #                #                #                #

         Auditor's remuneration:
         - Fees payable to the Company's auditors        34,526           22,940           15,000           12,000
         and their associates for statutory audits
         - Fees payable to the Company's auditors         5,696            5,479            3,540            1,000
         and their associates for taxation
         services
          - Fees payable to the Company's                 8,318            9,778            5,239            7,375
         auditors' and their associates for other
         services
          Bad debts written off                           7,628           48,452                -                -
          Exchange loss / (gain)                         16,547         (22,752)                -                -
          Inventory written off                          47,482                -                -                -
          Loss on disposal of plant and equipment           934                -                -                -
          Amortisation of pre-operating expenses              -           16,748
          Office and equipment rental                   146,373           39,916            1,200            3,500
          Allowance for/(write-back of)
         impairment of trade receivables - net


                                                          (854)          (1,703)                -                -




9 Income tax



Tax expense attributable to the results is made up of:



                                               Group                              Company

                                        2006             2005             2006             2005
                                           #                #                #                #

 Current income tax                    1,049                -                -                -
 Deferred tax                              -                -                -                -
                                       1,049                -                -                -

(Over)/underprovision

in respect of prior years:-


 Current income tax                    4,156           13,464                -                -
 Deferred tax                              -         (13,131)                -                -
                                       5,205              333                -                -




The reconciliation of the current year tax expense and the product of accounting
profit multiplied by the Singapore statutory tax rate is as follows:
                                                                                 Group

                                                                     2006                     2005
                                                                        #        %               #          %

         (Loss) / profit before income tax                      (266,730)                   202,679

         Income tax at the statutory rate of 30%                 (80,019)     30.0           60,804       30.0
         Difference arising from foreign tax rate                  19,983    (7.5)           17,734        8.7
         Non allowable items                                       49,990   (18.7)           23,375       11.5
         Tax exempted income                                     (68,214)     25.6         (95,296)     (47.0)
         Group relief set-off                                     (7,347)      2.8
         Singapore statutory stepped income exemption                   -                   (2,040)      (1.0)
         Future tax benefits not recognised                        86,580   (32.5)          (4,577)      (2.2)
         Underprovision of income tax in respect of prior           4,155    (1.6)           13,464        6.6
         years
         Under provision of deferred tax in prior years                77        -         (13,131)      (6.5)
                                                                    5,205    (2.0)              333      (0.1)



At the balance sheet date, the Group had unutilised tax losses and unabsorbed
capital allowances amounting to approximately #153,445 (2005: #22,577) and
#35,956 (2005: #Nil) respectively available for offsetting against future
taxable profit for subsidiary companies in Singapore.



The Group has unutilised tax losses amounting to #9,579 (2005: #16,727) from
pre-pioneer status year carried forward available for off-setting against future
taxable profits for its subsidiary company in Malaysia. The utilisation of these
tax losses is subject to the agreement with the tax authorities and compliance
with certain provisions of the tax legislation. The deferred tax benefit

arising from the unutilised tax losses has not been recognised in accordance
with the accounting policy in Note 2(n) to the financial statements.



Temporary differences arising from investment in subsidiary and associated
companies are considered to be insignificant to the Group.
                                                              Group                              Company
                                                        2006             2005              2006             2005
                                                           #                #                 #                #
         Composition of deferred taxation:
          On the excess of the net book value
          over tax written down value of
          plant and equipment                             75               480                 -               -


         Analysis of provision for deferred taxation:
          Balance at the beginning of the year           480            12,877                 -               -
          Overprovision of deferred taxation           (405)          (12,397)                 -               -
          Balance at the end of the year                  75               480                 -               -



10  (Loss) / Earnings Per Share



The (loss) / earnings per ordinary share is based on (loss) / profit
attributable to shareholders amounting to #(271,934)  (2005: profit of #202,346)
and the weighted average number of ordinary shares in issue of 14,916,062 (2005:
14,916,062) shares.



There is no dilution as the Group did not have any potential ordinary shares
outstanding as at 31 December 2006 and 2005.



11   Plant and Equipment

                                                                         
                                                                         Classroom
                                                              Furniture  and office    Motor    Library
                                      Renovation   Computers  & fittings  equipment   vehicle    books     Total
         Group                                 #           #          #           #         #        #         #
         2006
         Cost
          As at 1 January 2006            88,101      51,022     25,694      80,482       422     2,226    247,947
          Additions                       27,294       5,435      9,657       1,950         -         -     44,336
          Disposals                            -     (1,006)          -           -         -         -    (1,006)
          Acquisition of subsidiary            -         497          -           -         -         -        497
          Currency realignment           (4,243)      40,126      8,959    (57,231)      (24)     (176)   (12,589)
          As at 31 December 2006         111,152      96,074     44,310      25,201       398     2,050    279,185

         Accumulated depreciation
          As at 1 January 2006            18,689      34,942      4,634      59,047       296     1,524    119,132
          Charge for the year             21,342       9,803      7,742       3,092        81       418     42,478
          Disposal                             -        (96)          -           -         -         -       (96)
          Currency realignment           (1,637)      36,508      6,846    (49,006)      (19)      (97)    (7,405)
          As at 31 December 2006          38,394      81,157     19,222      13,133       358     1,845    154,109

         Net book value
          At 31 December 2006             72,758      14,917     25,088      12,068        40       205    125,076



                                                                         Classroom
                                                             Furniture  and office      Motor    Library
                                      Renovation   Computers  & fittings  equipment    vehicle    books     Total
         Group                                 #           #          #           #         #         #         #
         2005
         Cost
          As at 1 January 2005            15,658      34,888      3,522      73,346       392     1,993    129,799
          Additions                       71,199      12,716     21,776       1,865         -         -    107,556
          Currency realignment             1,244       3,418        396       5,271        30       233     10,592
          As at 31 December 2005          88,101      51,022     25,694      80,482       422     2,226    247,947

         Accumulated depreciation
          As at 1 January 2005             6,929      27,295      2,194      41,366       196     1,010     78,990
          Charge for the year             10,692       4,798      2,147      13,916        82       420     32,055
          Currency realignment             1,068       2,849        293       3,765        18        94      8,087
          As at 31 December 2005          18,689      34,942      4,634      59,047       296     1,524    119,132

         Net book value
          At 31 December 2005             69,412      16,080     21,060      21,435       126       702    128,815




At the balance sheet date, the Group's net book value of computers under finance
lease arrangements amounted to #3,504 (2005: #3,615).



12  Development Expenditure
                                                                                              Group
                                                                                      2006              2005
                                                                                         #                 #
          Cost

          As at beginning of the year                                               47,351            43,125
          Addition                                                                  33,754                 -
          Currency realignment                                                     (2,173)             4,226
          As at end of the year                                                     78,932            47,351
                                                                                    


          Amortisation

          As at beginning of the year                                               18,937             8,624
          Charge for the year                                                       11,644             9,135
          Currency realignment                                                     (1,160)             1,178
          As at end of the year                                                     29,421            18,937
                                                                                    

          Net Book Value
          As at end of the year                                                     49,511            28,414




13  Investment in Subsidiary Company


                                                                                              Company

                                                                                        2006              2005
                                                                                           #                 #
         Investment in a subsidiary  - AEC.Edu Group Pte Ltd

         Unquoted equity shares, at cost                                           1,308,639         1,308,639

         Due from subsidiary company                                                 236,970           343,000




AEC Edu Group Pte Ltd is the Company's immediate subsidiary. The details of AEC
Edu Group Pte Ltd and the subsidiaries companies it held at 31 December 2006 are
as follows:


       Subsidiary companies
       and country of                              Principal activities                 Equity held by
       incorporation                               (Place of business)                    the Company
                                                                                       2006          2005
                                                                                        %              %
       AEC.Edu Group Pte Ltd                       Investment holding and
       (Singapore)                                 provision of education
                                                   consultancy services                 100           100
                                                   (Singapore)

       Subsidiaries  held by AEC Edu.Group Pte Ltd

       AEC Resource Development Pte Ltd            Education, training and              100           100
       (Singapore)                                 human resource consultancy
                                                   (Singapore)

       AEC Accountancy & Business School Pte Ltd   Education, training and              100           100
       (Singapore)                                 human resource consultancy
                                                   (Singapore)



       The McGregorr Consultants Pte Ltd             Advisors and consultants for       100           100
       (Singapore)                                   further learning and dealing
                                                     in study kits and manuals
                                                     (Singapore)


       Flexi Learning Systems Pte Ltd                Operator and agent of schools,     100           100
       (Singapore)                                   colleges, institutions, and
                                                     professional associations in
                                                     promoting training and
                                                     educational programmes and
                                                     courses
                                                     (Singapore)

       AEC Internet Education Technology Pte Ltd     E-learning applications            100            100
                                                     service
       (Singapore)                                   provider to develop,
                                                     distribute
                                                     and implement dynamic
                                                     educational content and
                                                     innovative learning processes
                                                     and software tools
                                                     (Singapore)


The details of the subsidiary company as at 31 December 2006 are as follows:


       Subsidiary companies
       and country of                              Principal activities                   Equity held by
       incorporation                               (Place of business)                      the Company
                                                                                       2006              2005
                                                                                         %                 %
       Subsidiaries  held by AEC Edu.Group Pte Ltd
       AEC Edutech Sdn Bhd                         Development, management,             100               100
       (Malaysia)                                  and provision of consultancy
                                                   and market educational
                                                   technology solutions
                                                   related products
                                                   (Malaysia)

       Brighton Commercial Training Centre Pte Ltd Technical, vocational and            100                 -
       (Singapore)                                 commercial education
                                                   (Singapore)


       AEC Business School Pte Ltd                 Technical, vocational and            100                 -
       (Singapore)                                 commercial education
                                                   (Singapore)

       Brainbox Limited                            Consulting & marketing in           64.8                 -
       (British Virgin Island)                     education, training and
                                                   related services
                                                   (Vietnam)

       Smartworks Learning Centre Pte Ltd          Commercial education and             100                 -
       (Singapore)                                 provide training in property
                                                   investments, consultancy and
                                                   maintenance
                                                   (Singapore)

       Held by AEC Edutech Sdn Bhd                 Dormant                              100               100
       ST Synergy (Malaysia)
       Sdn Bhd
       (Malaysia)

       Held by Brainbox Limited
       Brainbox Foreign                            Training courses in foreign         64.8                 -
                                                   languages and business
       Language &                                  administration
       Management Studies                           (Vietnam)
       Training Center
       (Vietnam)



In 2005, AEC Edu Group Pte Ltd converted 2 sole-proprietors, Brighton Commercial
Training Centre and AEC Business School to limited liability companies with paid
up capital of S$1 each respectively.



In the opinion of the directors, the recoverable amount of the investment in
subsidiary companies is not less than the carrying amount of the investment on
the basis that the present value of the estimated future cash flows expected to
arise from the subsidiaries' operations over the next few year will exceed the
carrying amount of the investment in these subsidiaries.





14  Investment in Associated Companies

                                                                                            Group
                                                                                     2006              2005
                                                                                        #                 #

           Unquoted shares, at cost                                             1,386,694         1,386,694
           Goodwill transferred to capital reserves                                14,038            14,038

           Share of net post-acquisition reserves

              Balance at beginning of year                                        (6,798)         (152,223)
              Exchange gain                                                         1,725                 -
              Share in profits for the year                                        31,562            99,283
              Share of taxes                                                      (5,729)          (31,663)
              Dividends received                                                 (58,344)          (45,263)
              Currency alignment                                                 (63,090)           123,068
              Balance at end of year                                            (100,674)           (6,798)

                                                                                1,300,058         1,393,934

          Due from associated company                                             169,098            67,106




The carrying amount of the investment in associated companies includes goodwill
of #907,680 (2005: #907,680). The amounts due from associated companies are
trade in nature, unsecured, interest-free and payable within the next twelve
months.



Summarised financial information in respect of the Company's associated
companies is set out below:
                                                                                        2006              2005
                                                                                           #                 #

         Total assets                                                              2,433,122         2,558,434
         Total liabilities                                                       (1,112,103)         (984,883)
         Net assets                                                                1,321,019         1,573,551
                                                                                   

         Revenue                                                                   2,459,957         2,952,900

         Profit for the year                                                          70,687           220,462






Details of associated companies are as follows:


        Associated
        companies and
        country of                  Principal activities                               Equity held by
        incorporation               (Place of business)                                   the Group
                                                                                        2006            2005
                                                                                           %               %
        Held by AEC.Edu Group Pte Ltd

        Keris Murni Sdn Bhd         Provides education services and the                   30              30
                                    operation
        (Malaysia)                  of education tuition centers
                                     (Malaysia)

        Pusat Tuisyen Kasturi Sdn   Provides education services and the                   30              30
                                    operation
        Bhd                         of education tuition centre
        (Malaysia)                  (Malaysia)

        Educational Resources Pte   Provides consultancy services in education         34.96           34.96
        Ltd                         related services and business training
        (Singapore)                 (Singapore)





In the opinion of the directors, the recoverable amount of the investment in
associated companies is not less than the carrying amount of the investment on
the basis that the present value of the estimated future cash flows expected to
arise from the associated companies' operations over the next few years will
exceed the carrying amount of the investment in these associated companies.



15   Goodwill


                                                                                              Group
                                                                                       2006              2005
                                                                                          #                 #
          Cost
          At beginning of the year                                                        -                 -
          Additions                                                                 117,855                 -
          At end of the year                                                        117,855                 -

          Provision for impairment in value

          At beginning and end of year                                                    -                 -


          At end of the year                                                        117,855                 -





Goodwill arose in the year as a result of acquisitions by the Group.



On 27 April 2006, the Group acquired 64.8% of Brainbox Limited, a company
incorporated in British Virgin Island for a consideration of #16,650.



The fair values of net assets acquired were as follows:



                                                                                         #
         Net assets acquired                                                             -

         Goodwill                                                                   16,650

         Total purchase price                                                       16,650

         Less: Cash of Brainbox Limited                                                  -

         Cash flow on acquisition net of cash acquired                              16,650




On 5 September 2006, the Group acquired the entire share capital of Smartworks
Learning Centre Pte Ltd ("Smartworks"), a company incorporated and operating in
Singapore, which provides a distance learning programme in real estate and
marketing in collaboration with the University of South Australia and the
College of Estate Management in the UK, for a total consideration of #147,180.
The consideration comprised cash and #73,590 was paid on completion from
existing cash resources and #73,590 is to be paid six months after completion
date.  The deferred consideration of #73,590 was paid on 5 March 2007.



The fair values of net assets acquired were as follows:


                                                                                 #

Cash and cash equivalent                                                   105,436
Trade receivables                                                           13,370
Other receivables                                                           31,385
Plant and equipment                                                            745
Trade and other payables                                                 (104,961)
Net assets acquired                                                         45,975
Goodwill                                                                   101,205
Total purchase price                                                       147,180
Less: Cash of Smartworks                                                 (105,436)
Cash flow on acquisition net of cash acquired                               41,744



16   Inventories



Inventories pertains to the net realisable value of goods received in exchange
for the rendering of training services in 2004.



17   Trade Receivables

                                                                                             Group

                                                                                      2006               2005
                                                                                         #                  #
         Trade receivables are stated after deducting allowance for

         impairment of                                                              24,331               37,529





                                                                                             Group

                                                                                       2006                2005
                                                                                          #                   #
         Trade receivables are denominated
           in the following currencies:
           Singapore dollars                                                        300,725             250,728
           Pound sterling                                                               714                   -
           Malaysian ringgit                                                        158,597               1,560
                                                                                    460,036             252,288
                                                                                    


18 Other Receivables

                                                                  Group                         Company

                                                           2006           2005            2006            2005
                                                              #              #               #               #

          Deposits                                        1,618          1,795               -               -
          Prepayments                                    24,194            227               -               -
          Other debtors                                  58,320         53,238           8,049          52,140
                                                         84,132         55,260           8,049          52,140
                                                        
                                                         


          Other  receivables are denominated in

          the following currencies:

            Singapore dollars                            18,315          2,145               -               -
            Vietnamese dong                              57,156              -               -               -
            Pound sterling                                7,335         52,140           8,049          52,140
            Malaysian ringgit                             1,326            975               -               -
                                                         84,132         55,260           8,049          52,140
                                                        
                                                         


19  Deferred Expenditure



Deferred expenditure relates to consultancy and course fees paid in advance.


                                                                Group                          Company

                                                         2006            2005            2006            2005
                                                            #               #               #               #
       Deferred expenditure is denominated
         in the following currencies:
         Singapore dollars                             23,762          31,054               -               -




20  Due from/(to) Other Related Parties



Related parties are entities (except for subsidiary companies and associated
companies) with common direct/indirect shareholders and directors. Parties are
considered to be related (directly or indirectly) if one party has the ability
to control or exercise significant influence over the other party in making
financial and operating decision by virtue of such common interests.


                                                                                     Group

                                                                                2006         2005
                                                                                   #             #

        Due from related parties
        Trade                                                                       -      223,567
        Non-trade                                                               1,607      260,643

                                                                                1,607      484,210




       Due to related parties
       Trade                                                                 (16,391)     (27,407)
       Non-trade                                                             (23,222)     (23,232)
                                                                             (39,613)     (50,639)

       Total                                                                 (38,006)      433,571

       Balances with related parties are denominated in the following
       currencies:

       Singapore dollar                                                      (38,006)      186,920
       Malaysian ringgit                                                            -      246,651
                                                                             (38,006)      433,571



The amounts due (to) / from related parties are unsecured, interest-free and due
within the next twelve months.



21  Cash and Bank Balances

                                                               Group                           Company

                                                         2006            2005            2006            2005
                                                            #               #               #               #

       Cash and bank balances are denominated

       in the following currencies:

         Singapore dollars                            149,886          65,764               -               -
         Vietnamese dong                                3,745               -               -               -
         Pound sterling                                   512           4,280             512           4,280
         Malaysian ringgit                              7,855          19,635               -               -
                                                      161,998          89,679             512           4,280
                                                      
                                                      



22  Trade Payables

                                                                Group                          Company

                                                         2006            2005            2006            2005
                                                            #               #               #               #
       Trade payables balances are denominated
        in the following currencies:
         Singapore dollars                            129,916          90,283               -               -





23 Deferred Income



Deferred income relates to course fees received in advance.


                                                                Group                          Company

                                                         2006            2005            2006            2005
                                                            #               #               #               #

       Deferred income is denominated

       in the following currencies:

         Singapore dollars                            244,630         156,478               -               -





24        Other Payables

                                                                 Group                          Company

                                                           2006           2005            2006            2005
                                                              #              #               #               #

          Other creditors                               152,470         61,480          22,061          23,598
          Accrued expenses                              122,185         49,694          24,750               -

                                                        274,655        111,174          46,811          23,598
                                                                                
                                                                                 

          Other payables are denominated

          in the following currencies:

            Singapore dollars                           189,964         84,329               -               -
            Vietnamese dong                              35,430              -               -               -
            Pound sterling                               46,809         23,598          46,811          23,598
            Malaysian ringgit                             2,452          3,247               -               -

                                                        274,655        111,174          46,811          23,598
                                                        
                                                        



25        Bank Overdraft



The bank overdraft facility of the Group is secured by a personal guarantee by a
director and incurs interest of prime rate plus 2% per annum. The bank overdraft
is payable within 12 months from the balance sheet date.



26        Finance Lease Obligations

                                                          Group                             Group
                                                                                        Present value
                                                         Minimum                          of minimum
                                                     lease payments                     lease payments
                                                     2006             2005              2006             2005
                                                        #                #                 #                #

          Within one year                           2,124             1,806             1,900            1,755
          Due after one year                        1,239                 -             1,200                -

                                                    3,363             1,806             3,100            1,755
                                                                                 
                                                    
          Less: Future finance charges              (263)              (51)                 -                -
          Present value of lease obligations        3,100             1,755             3,100            1,755

          Effective rate of interest per
           annum for finance lease                                                       5.4%             4.5%

          Finance lease creditors are denominated in the following currency:

            Singapore dollars                                                             -            1,755
            Malaysian ringgit                                                         3,100                -
                                                                                      3,100            1,755





27        Share Capital

                                                                                             Group and Company

                                                                                            2006            2005
                                                                                               #               #
         Authorised
         50,000,000 ordinary shares of 10p each                                        5,000,000       5,000,000

         Allotted, called up

         14,916,042 ordinary shares of 10p each                                        1,491,604       1,491,604



28        Related Party Transactions



In addition to the related party information disclosed elsewhere in the
consolidated financial statements, there were the following significant
transactions with related parties on terms agreed between the parties:
                                                                           Group                     Company
                                                                    2006           2005          2006            2005
                                                                       #              #             #               #

         With subsidiary

         AEC Edu Group Pte Ltd

          - Consultancy fee income                                     -              -        10,000                -
          - Management fee paid                                        -              -      (25,000)                -

         With a related party with common directors
         OLOL Management Service Pte Ltd
          - Commission paid and payable                        (411,687)      (343,748)             -                -

         Savant Infocomm Pte Ltd

          - Consultancy fees income                                    -       (41,880)             -                -
          - Accounting fees                                     (28,598)              -       (6,000)                -

         AEC Property Management Pte Ltd

          - Office rental expenses                                     -          (904)              -             -
          - Air-conditioning and electricity charges                   -              -              -             -
         expenses

         Integrative Organisational Learning Sdn Bhd -
         revenue

          - Royalty and Licensing                                      -          1,563              -             -
          - Computer software and hardware                             -          2,863              -             -
          - Implementation, training and testing                       -          2,978              -             -
          - Management and consultancy fees                            -            391              -             -

         Open Learning Agency Malaysia Sdn Bhd - revenue

          - Royalty and Licensing                                      -         16,877              -             -
          - Computer software and hardware                             -         30,920              -             -
          - Implementation, training and testing                       -         32,159              -             -
          - Management and consultancy fees                            -          4,219              -             -


         QLA Learning Associates Malaysia Sdn Bhd -revenue

          - Royalty and Licensing                                    121            199              -             -
          - Computer software and hardware                           170            365              -             -
          - Implementation, training and testing                     282            379              -             -
          - Management and consultancy fees                           30             50              -             -




         Intellectual Challenge Sdn Bhd -revenue

          - Royalty and Licensing                                      -        3,128              -               -
          - Computer software and hardware                             -        5,731              -               -
          - Implementation, training and testing                       -        5,961              -               -
          - Management and consultancy fees                            -          782              -               -


         With associated companies and its related companies

         Genting Mutiara Sdn Bhd -revenue

          - Royalty and Licensing                                  8,731       10,238              -               -
          - Computer software and hardware                        12,270       18,756              -               -
          - Implementation, training and testing                  20,364       19,507              -               -
          - Management and consultancy fees                        2,183        2,559              -               -

         Indopelangi Sdn Bhd - revenue

          - Royalty and Licensing                                  4,941        5,417              -               -
          - Computer software and hardware                         6,943        9,924              -               -
          - Implementation, training and testing                  11,524       10,321              -               -
          - Management and consultancy fees                        1,235        1,354              -               -

         Jaguh Suria  Sdn Bhd - revenue

          - Royalty and Licensing                                  4,431        3,608              -               -
          - Computer software and hardware                         6,226        6,609              -               -
          - Implementation, training and testing                  10,333        6,874              -               -
          - Management and consultancy fees                        1,108          902              -               -


         Keris Murni Sdn Bhd -revenue

          - Royalty and Licensing                                 23,472       28,688              -               -
          - Computer software and hardware                        32,984       52,557              -               -
          - Implementation, training and testing                  54,743       54,663              -               -
          - Management and consultancy fees                        5,868        7,172              -               -

         Pusat Tiusyen Kasturi Sdn Bhd -revenue

          - Royalty and Licensing                                 17,376       19,422              -               -
          - Computer software and hardware                        24,418       35,582              -               -
          - Implementation, training and testing                  40,525       37,008              -               -
          - Management and consultancy fees                        4,344        4,856              -               -

         Pelangi Tegas Sdn Bhd - revenue

          - Royalty and Licensing                                  5,862        6,376              -               -
          - Computer software and hardware                         8,237       11,681              -               -
          - Implementation, training and testing                  13,671       12,149              -               -
          - Management and consultancy fees                        1,465        1,594              -               -




                                                                                               Group
                                                                                       2006               2005
                                                                                          #                  #
          Key management personnel
           - Short term benefits                                                    123,417             87,420
           - Post employment benefit                                                  3,063              1,102
                                                                                    126,480             88,522



A director, Mr Ho Peng Cheong, had an interest in contracts of the company
during the year by reason of his 1% shareholding in the ultimate holding company
of the following:



Integrative Organisation Learning Sdn Bhd

Open Learning Agency Malaysia Sdn Bhd

QLA Learning Associates Malaysia Sdn Bhd

Intellectual Challenge Sdn Bhd



29        Operating Lease Commitments



The Group leases its office premises for a period of 2 years, renewable for such
period and under such terms and conditions as may be agreed upon with the
lessor. There are no restrictions placed upon the Group in entering into these
lease arrangements.



The Group also leases various plant and machinery under non-cancellable
operating lease arrangements. The lease expenditure charged to the income
statement during the financial year is disclosed in Note 8.



At the balance sheet date, the future minimum rental payable under these
non-cancellable operating leases are as follows:-
                                                                                                Group

                                                                                        2006              2005
                                                                                           #                 #
         Payable:
          Within one year                                                            117,544           119,472
          Between two to five years                                                   10,081            99,560
                                                                                 
                                                                                     127,625           219,032



30       Financial Instruments



IFRS 7 Financial Instruments: Disclosure was issued in August 2005, but comes
into force for accounting periods beginning on or after 1 January 2007.  IFRS 7
will have no impact on the net assets of the Company or Group, but will require
increased disclosure in respect of the credit, liquidity and market risks faced
by the Company and Group.



At the same time as IFRS 7 comes into force, IAS 1 has also been amended to
require additional disclosure in respect of capital. The impact of the revision
of IAS 1 on the Company and Group will be limited, as neither the Company nor
the Group is subject to externally imposed capital requirements.



(a)                Financial Risk Management Objectives and Policies



The Group does not have written risk management policies and guidelines.
Generally, the Group adopts conservative strategies in its risk management. The
directors believe that the Group's exposure associated with these risks is
minimal.



(i)                 Credit risk



The carrying amount of trade and other receivables, subsidiary companies and
related parties balances and cash represent the Group's maximum exposure to
credit risk.



The Group has no significant concentration of credit risk.



(ii)  Liquidity risk



The Group adopts prudent liquidity risk management by maintaining sufficient
cash and having adequate amount of credit facilities. Due to the nature of the
Group's operations, the Group aims at maintaining flexibility in funding by
keeping committed credit facilities available.



(iii) Foreign exchange risk



The Group incurs foreign currency risk on commission payable to universities,
the sale of system and support services, and loans advanced from third parties
that are primarily denominated in currencies other than Singapore dollars. The
currencies giving rise to this risk are Australian dollar, Singapore dollar and
Malaysian ringgit.



The Group does not use derivative financial instruments to hedge against the
volatility associated with foreign currency transactions as the directors
believe that the risks arising from fluctuations in foreign currency exchange
rates are not significant.



(iv)  Interest rate risk



The Group's exposure to market risk for changes in interest rates relate
primarily to the Group's bank overdraft facility.



The tables below set out the Group's exposure to interest rate risks. Included
in the tables are the assets and liabilities at carrying amounts, categorised by
the earlier of contractual repricing or maturity dates.

                                                            Fixed rates
                                                                   Less      Non-interest
                                                                   than
                                                                     6           Bearing         Total
                                                                months
                                                                                       #             #
                                                                      #
At 31.12.2006
Assets
 Trade and other receivables                                           -         714,873        714,873
 Cash and bank balances                                                -         161,998        161,998
 Non-financial assets                                                  -       1,622,198      1,622,198
Total assets                                                           -       2,499,069      2,499,069
                                                                               

At 31.12.2006
Liabilities
 Trade and other payables                                              -         473,738        473,738
 Borrowings                                                       89,058               -         89,058
 Non-financial liabilities                                             -         244,705        244,705
Total Liabilities                                                 89,058         718,443        807,501




                                                            Fixed rates
                                                                   Less     Non-interest
                                                                   than
                                                                     6          Bearing           Total
                                                                months
                                                                                      #               #
                                                                      #
At 31.12.2005
Assets
 Trade and other receivables                                           -         858,864        858,864
 Cash and bank balances                                                -          89,679         89,679
 Non-financial assets                                                  -       1,668,587      1,668,587
Total assets                                                           -       2,617,130      2,617,130

At 31.12.2005
Liabilities
 Trade and other payables                                              -         287,607        287,607
 Borrowings                                                      122,304               -        122,304
 Non-financial liabilities                                             -         156,958        156,958
Total Liabilities                                                122,304         444,565        566,869





(b)        Fair Values



The fair value of financial assets and liabilities are not materially different
from their carrying amounts because of the immediate or short-term maturity of
these financial instruments.



31       Comparative figures



Certain comparative figures have been reclassified to confirm with the current
year's presentation as follows:


                                                           2005                2005
                                                          Before               After
                                                     reclassification    reclassification          Effect
                                                                   #                   #                #

Group
Income Statement
Sale of services                                            (1,402,518)         (1,439,824)       (37,306)
Other income                                                  (140,166)           (102,860)         37,306






The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 December 2006, but is derived from
those accounts.  Statutory accounts for the period have been delivered to the
Registrar of Companies.



Copies of the accounts will be posted to shareholders very shortly.





                                    **End**





For further information please visit www.aec.edu.sg or enquire to:



Liam Swords, Chairman                 020 8308 1202 / 07775 787427
AEC Education plc



David Nabarro / Anthony Rowland       020 7710 7400
Nabarro Wells & Co Limited







                      This information is provided by RNS
            The company news service from the London Stock Exchange

END

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