Raffles Education profit plunges 68% to S$5.4m as operating expenses soar

Revenues improved but not nearly enough.

In a release announcing its FY2013Q1 results ended 30 September 2012, Raffles Education Corporation Limited, the largest private education provider in the Asia Pacific region, reported a revenue of S$32.8 million and a net profit of S$5.4 million.

Revenue for FY2013Q1 increased from S$32.7 million a year ago to S$32.8 million due mainly to an increase in Asia Pacific (“Ex-PRC”) revenues as the Group’s geographic diversification strategy and investments in new markets bring forth positive results to offset the decline in PRC revenues.

"Though not significant, the increment signifies a gradual turnaround and affirms that the Group’s focus on developing and investing in Ex-PRC over the last few years is bearing fruit," noted Raffles Education.

The Group recorded other operating income of S$19.9 million in FY2013Q1 due to gains on sale of investment properties in Oriental University City (“OUC”) as it continues to divest its non-core assets to realise returns for investment into its education business.

FY2013Q1 net profit was S$5.4 million from a net profit of S$16.9 million reported a year ago due primarily to an increase in other operating expenses of S$9.3 million which mainly comprised of provisions for potential compensation and demolition in OUC. Other operating expenses also increased due to foreign exchange loss resulting from the appreciation of Singapore Dollar against the Renminbi and Australia Dollar.

Raffles Education said the performance this quarter included the gain on disposal of the 118 mu of investment properties in OUC.

"We do not expect further disposal of investment properties in this current financial year. Nevertheless, should opportunities arise, the Group will consider divesting its non-core assets to realize returns on investments," Raffles Education said.

Chew Hua Seng, Chairman and CEO of RafflesEducationCorp, said, “Although PRC revenue is declining due to the challenging operating conditions, the Group has been repositioning and implementing new strategies in PRC. However, our geographic diversification and expansion strategies in Ex-PRC are bringing in positive results.”