AEC Education plc
                                            ("AEC" or "the Company")

                                          Final Results of the Company
                                       for the year ended 31 December 2007

Highlights
- Revenue up 74% to £2.7 million (2006 £1.6 million)
- Post tax profits £220,498 (2006 Loss (£271,934))
- Management and product restructuring completed
- Move to new modern Campus on time and within budget
- Acquisitions made during the year successfully integrated

CHAIRMAN'S STATEMENT - DECEMBER 2007

Review of Results 

It is my pleasure to announce the financial results of the Company for the year ended 31 December 2007.

The changes in the management structure, the success of new product offerings and certain small synergistic 
acquisitions, have all contributed to this year's positive results. Revenues increased during the year by 
74.3% to £2,752,440 compared to £1,579,204 in the year 2006, while Profit after Tax and Minority Interest 
for the year was £199,095 compared to a loss of £271,934 in 2006. Earnings per share were 1.3 p for 2007 
compared to a loss of 1.8 p in 2006.

Business Development

A significant development during the year was the move, last November, to Jalan Bukit Merah in Singapore 
which has been refurbished to provide a modern and easily accessed campus.  The 25,000 square foot campus has 
12 classrooms, computer labs specially designed for the graphic design programmes run by the school, a well 
resourced library and welcoming student meeting areas that complement the working areas of the building. The 
transfer of the operations and the refurbishment was completed on time and to budget. 

We also secured our status as a holder of the Singaporean Quality Class Awards for a further 3 years which 
demonstrates that the Company continues to be recognised by the Singaporean Government as a prestigious and 
forward thinking organisation.

The successful Diploma in Hospitality Management was extended into Vietnam and Myanmar. The student population 
attending the hospitality programmes continues to grow and to support this growth we have recruited a new 
Deputy Principal, a new Head of Academics and a new Internship Executive for the school.

Our decision to enter the Association of Chartered and Certified Accountants (ACCA) training market has been 
very successful.  We now have 300 full time and 50 part time students following these courses and enrolments 
continue to grow.  The academic success of the students attending the school for ACCA studies is contributing to 
this growth and recruitment has now been extended to China, Sri Lanka, India, Nepal and Myanmar.

The acquisition of 51% of the AASM School of Management Pte Ltd ("AASM") has greatly strengthened our position 
in China and has enabled us to introduce business management and hospitality and tourism programmes in Mandarin. 
We are now adding an Advanced Diploma in Business in Mandarin for full time students and we expect to see further 
growth in programmes delivered in Mandarin as the synergies between AEC and AASM strengthen.   

Our acquisition of Smartworks, which focuses on professional qualifications for Real Estate executives, has 
coincided with the drive for more recognised qualifications in the property market and has given impetus to 
recruitment for these programmes.  Smartworks' range of programmes, some of which are run in conjunction with 
Singapore Polytechnic, place us in a strong position in this niche market.

The acquisition of Brainbox in Vietnam has now been integrated and the range of programmes from AEC has been 
extended. We have introduced the London Chamber of Commerce and Industry (LCCI) qualification in English and we 
are launching the Smartworks Real estate programmes in the near future. These initiatives give us a strong 
foothold in a market that should provide significant opportunity as it continues to build its economy.

Prospects

The acquisition of the balance of 65% of Educational Resources Pte. Ltd. (ER) was announced in January 2008. 
The mainstay of ER's business is the management of the delivery of LCCI examinations concentrated in Hong Kong, 
Malaysia and Singapore but offered throughout Asia.  The synergy of markets combined with the opportunity for 
students to progress to other AEC programmes will be developed as we progress through 2008.

2007 was a year of consolidation and expansion of our successful programmes.  We now have the structure and 
management team to grow and expand the products we have developed and the acquisitions we have made.  We will 
continue to look for synergistic and affordable acquisitions and we expect organic growth combined with the impact 
of further synergistic acquisitions to provide further growth in revenues and profits in 2008.


Board and Staff

I would like to thank my colleagues on the Board for their support during the year, particularly David Ho, 
the CEO, who has provided the real drive for the Company's positive results.  David is supported by a team of 
highly committed staff who have worked tirelessly to achieve the Company's objectives.  On behalf of the Board I 
record our appreciation of their creativity, energy and commitment. 


William Swords
Chairman


DIRECTORS' REPORT - DECEMBER 2007

The directors present their report and the audited financial statements of AEC Education Plc (the "Company") and 
its subsidiary companies for the year ended 31 December 2007.


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 year in review was significant for the Group in terms of growth and the achievement of new milestones.  

As shown in the consolidated income statement on page 12, Group revenue increased during the year by 74.3% to 
£2,752,440 compared to £1,579,204 in the year 2006.  Singapore operations performed well with the 
successful launch of new programs introduced in 2006.  The Group's overseas operations in Vietnam and Malaysia 
also contributed positive results.  As a result, profit after tax and minority interest rose to a profit of 
£199,095 for the year (2006: loss of £271,934). Earnings per share also increased to 1.3 pence from 
loss per share of 1.8 pence in 2006.

In January 2008, the Group successfully acquired the remaining 65% interest in Educational Resources Pte Ltd 
(a 34.96% associated company in 2006 and 2007), which provides consultancy services in education, related services 
and business training, for a consideration of £410,000.  Following the acquisition, the Group will hold 100% 
of the issued share capital of Educational Resources Pte Ltd.  The consideration comprised the issue of 2,593,750 
new ordinary shares at 11.50p per share at the time of completion and further 950,000 ordinary shares to be issued 
as deferred consideration 2 years after completion.

On 15 April 2008, the Company acquired a 30% interest in both Kasturi Management Consultancy Sdn Bhd and IMS 
Professional Training Services Sdn Bhd for a consideration of £63,594 and £17,272 respectively from a 
related party (common directors/shareholders).  The consideration was settled by a novation of related party 
balances.

The financial risks for the Group are set out in Note 31.

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. 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 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 31 of the accounts.


KEY PERFORMANCE INDICATORS

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 2007 were 78 days (2006: 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.


DIVIDENDS

The directors do not recommend the payment of a dividend for the year ended 31 December 2007 (2006: £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 6 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:

SUBSTANTIAL SHAREHOLDING

At 10 July 2008, 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.

*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.


BY ORDER OF THE BOARD

William Swords

DIRECTOR
17 July 2008


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 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 2007 which are set out on pages 12 to 56.  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 Annual Report, and 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 and, as regards the group financial 
statements, Article 4 of the IAS Regulation. 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 parent company 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 group 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 2007 and of the group's and the parent 
company's profit and loss respectively 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
Warwick Lane                                      Chartered Accountants
LONDON EC4M 7BP                                   18 July 2008


CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2007

BALANCE SHEETS
AS AT 31 DECEMBER 2007

The financial statements were approved by the Board of Directors on 17 July 2008 and were signed on its behalf by:

William Swords
Chairman


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2007

CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2007

Cash and cash equivalents consist of the following:

COMPANY INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2007

COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2007

COMPANY CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2007

NOTES TO THE FINANCIAL STATEMENTS  - 31 DECEMBER 2007
 

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 consolidated financial statements of the Group and company financial statements have been prepared in 
accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and 
the Companies Act 1985 and therefore comply with Article 4 of the EU IAS Regulation. The principal accounting 
policies are set out below.

Changes in accounting policy and disclosures
The accounting policies adopted are consistent with those of the previous financial year except as follows: 
The Group has adopted the following new and amended IFRS and IFRIC interpretations during the year. Adoption 
of these revised standards and interpretations did not have any effect on the financial performance or position 
of the group. They did however give rise to additional disclosures.

-IFRS 7 Financial Instruments: Disclosures;
-IAS 1 Amendment: Capital disclosures – Presentation of Financial Statements;
-IFRIC 8 Scope of IFRS 2;
-IFRIC 9 Reassessment of Embedded Derivatives;
-IFRIC 10 Interim Financial Reporting and Impairment;

New standards and interpretations not applied
The IASB and IFRIC have issued the following standards and interpretations which are not effective and 
have not been early adopted for these financial statements:

Effective for financial year beginning 
International Accounting Standards (IAS/IFRSs)
IFRS 2 (amended) Share-Based Payment Vesting Conditions and Cancellations                   1 January 2009
IFRS 8 Operating segments                                                                   1 January 2009
IAS 1 (revised) Presentation of Financial Statements                                        1 January 2009
IAS 23 (revised) Borrowing costs                                                            1 January 2009
International Financial Reporting Interpretations Committee (IFRIC)
IFRIC 12 Service Concession Arrangements                                                    1 January 2008
IFRIC 13 Customer Loyalty Programmes                                                        1 July 2008
IFRIC 14 IAS 19 The limit on a defined benefit asset, minimum funding requirement and 
their interaction.                                                                          1 January 2008

The directors do not anticipate that adoption of these standards and interpretations will have a material 
impact on the group and company's financial position or performance other than additional disclosure 
requirements in the period of initial application, although IAS 1 (revised) will change the manner in 
which the statements are presented.

	
(b)	Basis of Consolidation

The consolidated financial statements have 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 year ended 31 December 2007. 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. 
	
All significant intercompany transactions and balances within the Group are eliminated in the preparation 
of the consolidated financial statements.

For transactions in which combining entities are controlled by the same party or parties before and after 
the transaction and that control is not transitory are referred to as common control transactions. There is 
currently no guidance under IFRS for the accounting treatment of such transactions. In terms of IAS8 
–Accounting Policies, Changes in Accounting Estimates and Errors, the group may either apply IFRS3 
–Business Combinations or a similar framework. US GAAP uses the predecessor values with restatement of 
comparatives method for such transactions and the group has elected to apply this as the policy for common 
control transactions. Therefore no purchase price allocation is performed and any difference between the net 
asset value and the amount paid (i.e. the purchase consideration) is recorded directly in the merger 
reserve in equity.

The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an 
acquisition is measured as the fair value of the assets given up, shares issued, or liabilities undertaken 
at the date of acquisition plus costs directly attributable to the acquisition. Identifiable assets acquired 
and liabilities and contingent liabilities assumed in a business combination are measured initially at their 
fair values at the acquisition date, irrespective of the extent of any minority interest.


(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 in which the Group has power to govern the financial and operating policies.

Investment in subsidiaries is stated in the financial statements of the Company at cost less any provision 
for 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 
acquisition 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 
in whose financial and operating policy decisions the Group exercise significant influence.

Significant influence is defined as the "power to participate in the financial and operating policy 
decisions of the investee, but is not control or joint control over those policies".

The consolidated financial statements include the Group's share of the total recognised gains and losses of 
associates on an equity accounting 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.

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


(e)	Functional and Presentation Currency

The consolidated financial statements have been presented in 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 Translation

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 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:

(g)	Revenue Recognition

Revenue is recognised on the following basis:

(i)	Course fees are recognised as income based on classes conducted during the 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)	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 income statement using the effective interest method. 

(i)	Plant and Equipment

Plant and equipment are stated at cost less accumulated depreciation 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 
capitalised when it can be clearly demonstrated that the expenditure has resulted in an increase in the 
future economic benefits expected to be realised 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 
less their estimated residual value over their estimated useful economic 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, the term of the relevant leases.

(j)	Cash and Cash Equivalents

Cash and cash equivalents comprise cash in hand and bank deposits with an initial maturity of less than 
three months. 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 is 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. 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 term.

(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 business combinations 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. 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.

(x)	Intra-group Financial Guarantees

Financial guarantees are financial instruments issued by the Group that requires the issuer to make 
specified payments to reimburse the holder for the loss it incurs because a specified debtor fails to meet 
payment when due in accordance with the original or modified terms of a debt instrument.

Financial guarantees are recognised initially at fair value and are classified as financial liabilities. 
Subsequent to initial measurement, the financial guarantees are stated at the higher of the initial fair 
value less cumulative amortisation and the amount that would be recognised if they were accounted for as 
contingent liabilities.  When financial guarantees are terminated before their original expiry date, the 
carrying amount of the financial guarantees is transferred to the income statement. 



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 as follows:

	(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 £1,001,446 stated in Note 14 is 
	determined from value in use calculations. 	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 2007 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)	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(q). 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 disposal of the asset, requires the company to make estimates and 
	assumptions that can materially affect the financial statements. Any resulting impairment loss could have 
	a material adverse impact on the Group's financial position 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

5	Other Income

6	Salaries and Employees' Benefits

7	Finance Costs

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

9	Income tax
 	Tax expense attributable to the results is made up of:

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

10	Earnings / (Loss) Per Share

The earnings / (loss) per ordinary share is based on profit / (loss) attributable to shareholders amounting 
to £199,095 (2006: loss of £271,934) and the weighted average number of ordinary shares in issue 
of 15,082,357 (2006: 14,916,042) shares.

There is no dilution as the Group did not have any potential ordinary shares outstanding as at 31 December 
2007 and 2006.

11	Plant and Equipment

At the balance sheet date, the Group's net book value of computers under finance lease arrangements 
amounted to £23,211 (2006: £3,575). The depreciation charge in the year amounted to £5,127 
(2006: £1,191).

12	Development Expenditure

13	Investment in Subsidiary Companies

On 8 June 2007, the Company acquired a 51% interest in AASM School of Management Pte Ltd ("AASM"), a 
company incorporated in Singapore. AASM is a private education provider based in Singapore which recruits 
students from China for its Business Management and Logistics program. It has operations in Shenzhen and 
Changchun in China which are focused on student recruitment, adult education and placement and advisory 
services. 

The total consideration for the acquisition was S$331,500 (£109,768). This was settled by the 
allotment of 498,946 ordinary shares at a price of 11p per share at an exchange rate of £1 = S$ 3.02 
on completion date in September 2007 and the balance of 498,946 ordinary shares is to be paid in equal 
tranches over the next two years subject to the achievement of a target profit of SGD$185,000 per year 
over the next two years. If the profit target is not achieved, the number of shares will be reduced 
proportionately.  Based on the budgets provided, 172,878 ordinary shares have been estimated to be paid 
over in the next two years. The estimated deferred consideration of £19,017 is included in other 
payables.

AEC Edu Group Pte Ltd and AASM School of Management Pte Ltd are the Company's immediate subsidiaries. The 
details of AEC Edu Group Pte Ltd and the subsidiary companies it held at 31 December 2007 are as follows:

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 years will exceed the 
carrying amount of the investment in these subsidiaries.

14	Investment in Associated Companies

The amounts due from associated companies are trade in nature, unsecured, interest-free and payable 
within the next twelve months.

The carrying amount of the investment in associated companies includes goodwill of £1,001,446 
(2006: £907,680). 

Movement in goodwill during the year is as follows:

Summarised financial information in respect of the Group's associated companies is set out below:

Details of associated companies are as follows:

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

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

During the year, the Group acquired an additional 23.4% of Brainbox Limited, a company incorporated in 
the British Virgin Islands by the take up of a rights issue of 100,000 shares by Brainbox Limited. The 
consideration of the rights issue was by way of capitalisation of intercompany debt. No goodwill has 
been recognised as the consideration was deemed to be at fair value.

On 8 June 2007, the Company acquired 51% interest of AASM School of Management Pte Ltd, a company 
incorporated in Singapore for a consideration of £77,604, as shown in note 13. 

An analysis of the consideration paid, fair values of net assets acquired and goodwill arising in relation 
to the above acquisition is set out below:

The effect of the acquisition on the income statement is an increase in revenue of £299,770 and 
increase in operating profit of £47,066 covering the period 8 June 2007 to 31 December 2007.

If the acquisition had occurred on 1 January 2007, the increase in Group revenue would have been £459,259 
and operating profit would have been £35,444.

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

18	Other Receivables

19	Deferred Expenditure

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

20	Due from/(to) 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 decisions by virtue of such common interests.

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

21	Cash and Cash Equivalents

22	Trade Payables

23	Deferred Income

Deferred income relates to course fees received in advance.

24	Other Payables

25	Financial Liabilities

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.
	
Finance Lease Obligations
At 31 December 2007, the Group and the Company has obligations under finance leases that are payable as 
follows: 

Term Loan

The term loan is used specifically for renovation works of the new office at Block 167, Jalan Bukit Merah, 
Connection 1 Tower 4 #02-13 Singapore 150167.  

The term loan is secured by the corporate guarantee of the holding company, AEC Education plc and a first 
fixed and floating charge over all the assets of AEC Education plc.

The term loan shall be repaid by 30 monthly installments, together with the interest charged at 2% per annum 
over the prevailing average lending rate or lender's S$ base rate, whichever is higher.

Interest ranges from 7.33% to 7.38% per annum (2006: nil).

Intra-group guarantee 

Intra-group financial guarantee relates to the corporate guarantee granted by the holding company in respect 
of the term loan facility granted to a subsidiary.  The fair value of the guarantee amounts to £4,000 
(2006: NIL).  The periods in which the financial guarantee expires are as follows:

26	Share Capital

27	Related Party Transactions

In addition to the related party information disclosed in note 20, there were the following significant transactions with 
related parties on terms agreed between the parties:

Post employment benefits relate to the Group's contribution to the Central Provident Fund, a defined 
contribution plan which is mandatory in Singapore.

The director Mr Ho Peng Cheong had an interest in contracts with the following related parties during 
the year by reason of his 1% effective interest in the following companies:

Kasturi Management Consultancy Sdn Bhd (Formerly known as Open Learning Agency Malaysia Sdn Bhd)
QLA Learning Associates Malaysia Sdn Bhd
IMS Professional Training Services Sdn Bhd (Formerly known as Intellectual Challenge Sdn Bhd)

28	Operating Lease Commitments

The Group leases its office premises for a period of 3 years, renewable for such period and under such 
terms and conditions as may be agreed upon with the lessor. 

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 rentals payable under these non-cancellable operating leases 
are as follows:-

29	Contingent Liability 

The company is incorporated in England & Wales, although its principal place of business is Singapore. 
The company is seeking the agreement of the tax authorities in United Kingdom and Singapore that the company 
is resident in Singapore for tax purposes as the central management and control is exercised in Singapore. 
On this basis, the company has no tax liability to United Kingdom corporation tax.  In the event that the 
company is unsuccessful in its submissions, and the company is deemed to be resident in United Kingdom 
(by virtue of its place of incorporation) then the maximum liability to United Kingdom Corporation tax is 
estimated at £70,000.


30	Subsequent events
	
a.	In January 2008, the Company acquired the remaining 65% interest in Educational Resources Pte Ltd, a 
company incorporated in Singapore, which provides consultancy services in education, related services and 
business training, for a consideration of £410,000.  Following the acquisition, the Group will hold 
100% of the issued share capital of Educational Resources Pte Ltd. The consideration comprised the issue of 
2,593,750 new ordinary shares at 11.5p per share at the time of completion and a further 950,000 ordinary 
shares are to be issued as deferred consideration 2 years after completion.

b.	The AEC Education plc Unapproved Executive Share Option Scheme (the "ESOS") was adopted by the Directors 
on 21 February 2008.

The ESOS is a share incentive scheme to give recognition to employees whose contributions have been essential 
to the well-being and prosperity of the Group. On 3 March 2008, a total of 1,220,000 non-transferable options 
to subscribe for ordinary shares of £0.10 each in the Company were granted to Executive Directors, 
Managerial Staff and Specially Selected Employees. Options are granted for a term of 5 years to purchase 
AEC Education plc ordinary shares.

The exercise price was fixed at market value less 20% discount or par value per share whichever is higher. 
All options have an 18-month vesting period. 
The issue of options on 3 March 2008 is expected to give rise to a charge of £57,000 in 2008.
	 
c.	On 15 April 2008, the Group acquired a 30% interest in both Kasturi Management Consultancy Sdn Bhd and 
IMS Professional Training Services Sdn Bhd for a consideration of £63,594 and £17,272 respectively 
from a related party (common directors/indirect shareholders).  The consideration was settled by a novation 
of related party balances.
	
d.	On 30 April 2008, the Group acquired an additional 3.4% interest in Brainbox Limited from the minority 
shareholders for a cash consideration of US$5,100. Together with those shares held by Educational Resources 
Pte Ltd, the group now holds a 95% interest in Brainbox Limited. 

31	Financial Instruments


(a)	Financial Risk Management Objectives and Policies

Risk management is integral to the whole business of the Group.  The Group has a system of controls in 
place to create an acceptable balance between the cost of risks occurring and the cost of managing the 
risks. The management continually monitors the Group's risk management process to ensure that an appropriate 
balance between risk and control is achieved.  Risk management policies and systems are reviewed regularly 
to reflect changes in market conditions and the Group's activities. 


(i)	Credit risk

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

75% of the Group's accounts receivables is made up of individual students and 25% relates to two large 
funding organisations.

All trading activity is concentrated in South East Asia.
 
The Groups current accounts were concentrated with four financial institutions, which held credit ratings 
ranging from AA- to A-.


(ii)	Liquidity risk

The Group adopts prudent liquidity risk management by maintaining sufficient cash and having adequate 
amounts 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  currency risk

The Group's investments in overseas subsidiaries and associates which are held for long-term investment 
purposes are exposed to currency translation risk.  The differences arising from such translation are 
recorded under the foreign currency translation reserve.  

The Group does not use derivative financial instruments to hedge against the volatility associated with 3
foreign currency transactions as the directors believe that the risks arising from fluctuations in foreign 
currency exchange rates are not significant.

The Group's exposures to foreign currencies are as follows: 

Sensitivity analysis for foreign exchange risk

The following analyses illustrate the effect that specific changes could have had on our income and equity 
for Sterling to Singapore Dollar exchange movements. This analysis is for illustrative purposes only, as in 
practice market rates rarely change in isolation. Actual results in the future may differ materially from 
these results due to developments in the global financial markets which may cause fluctuations in interest 
and exchange rates to vary from the hypothetical amounts disclosed in the following table, which therefore 
should not be considered a projection of likely future events and losses.

(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 and term loan.  A change in interest rate at the reporting date would not materiality 
affect income or reserves.

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.

(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.

AEC advises that its 2007 Annual Report for the year ended 31 December 2007, was mailed to shareholders on 
? and is available from the Company's website at www.aeceduplc.co.uk


For further information please visit www.aeceduplc.co.uk or enquire to:

Mr David Ho
AEC Edu Group Pte Ltd
Tel: (65) 64120718
Email: davidho@aec.edu.sg

Nabarro Wells & Co Limited		
Tel: +44 (0) 20 7634 4700
David Nabarro, Natasha Reed