Raffles Education profit up 8.2% to S$55.8mln

Group established eight new colleges despite revenue fell 6.9% to S$188.1mln mainly behind lower enrolments in China.

Raffles Education Corporation Limited (“RafflesEducationCorp” or “the Group”), the largest private education provider in the Asia Pacific region, on Tuesday reported an 8.2% increase in net profit to S$55.8 million for the financial year ended 30 June 2010 (“FY2010”).

Revenue for FY2010 decreased 6.9% to S$188.1 million from the S$202.0 million reported in FY2009 due mainly to lower enrolments resulting from a reduction in the allocation of National Education School students to the Group as a result of the decline in the overall number of students in China taking the Gao Kao. The Gao Kao or National Higher Education Entrance Examination is an academic examination held annually for students seeking admission into institutions of higher learning in the People’s Republic of China.

FY2010 net profit after tax was S$55.8 million, an 8.2% increase from S$51.6 million a year ago, according to a Raffles Education report.

Commenting on the results, Mr Chew Hua Seng, Chairman and CEO of RafflesEducationCorp, said, “The results are encouraging in spite of the higher initial expenses incurred with the rapid expansion of colleges in the region. The Group has continued to grow its strategic presence across Asia amidst the uncertain economic conditions. This expansion will put us in good stead as global economies strengthen.”

During the year, the Group established eight new colleges in Colombo, Dhaka, Phnom Penh, Ahmedabad, Chandigarh, Hyderabad, Chennai and Kolkata, bringing the Groups’ international portfolio to 36 colleges in 33 cities across 13 countries.

“New colleges usually require a two-year gestation period. Hence, the five colleges the Group added in FY2009 are expected to contribute positively from FY2011. The eight new colleges set up in FY2010 are expected to deliver positive returns from FY2012 onwards,” he added.

The Group ended FY2010 with a strong balance sheet. Cash and cash equivalents as at 30 June 2010 were $101.6 million with a net gearing ratio of 0.13 times.

Outlook and Prospects
The investments made by the Group have strengthened its portfolio, expanded its geographic presence and will provide profitable returns going forward. With a robust balance sheet, the Group will continue to invest organically through its new colleges, the development of proprietary courseware, value creation of Oriental University City and through strategic acquisitions.