Forex losses, lower China enrolment cited as reasons

 

RAFFLES Education Corporation turned in a poorer performance for the second quarter ended Dec 31, 2010, compared to a year ago, which it attributed to foreign-exchange losses and a lower enrolment of students in China.

 

The private education provider's net profit attributable to equity-holders fell 24 per cent to $5.65 million, from $7.45 million. Earnings per share fell to 0.22 cents from 0.27 cents.

Its comprehensive income attributable to equity-holders, after taking into account the foreign-exchange losses from its foreign operations, amounted to $3.92 million - a 35 per cent drop from the $6 million a year earlier.

The group reported revenues of $41.4 million in the December 2010 quarter, a 12 per cent decrease from the $47.2 million the year before.

Raffles Education said this was due partly to a foreign-exchange translation loss on its Chinese yuan-denominated revenue from the strengthening of Singapore dollar, as it reports its results in the latter. It said the lower revenues were also due to lower enrolment from a reduction in the allocation of National Education System students, as a result of a decline in the number of students in China taking the Gao Kao or National Higher Education Entrance Examination, which is an academic examination held annually for students seeking admission into institutions of higher learning in China.

The group said its other operating income surged 348 per cent to $3.5 million - due mainly to the gain on the sale of land, worth $2.2 million, in its Oriental University City in Langfang, in the Hebei province in China. The sale of the land was to the Langfang government as part of the city's re-planning and re-development work, it said. For the first six months, net profit attributable to shareholders dropped 45 per cent to $11.48 million while revenue fell 15 per cent to $83.6 million.

Raffles Education declared an interim dividend of 0.15 cents per share, which it said would effectively be 0.45 cents per share after a three-into-one share consolidation exercise proposed earlier this month.

It said it expects to continue to grow its business by setting up more colleges in the region, developing proprietary courseware, and through 'value creation' in its Oriental University City and strategic acquisitions. The company also said that the five colleges it added in FY2009 and the eight new colleges it set up in FY2010 are expected to contribute to the group positively from FY2011 and FY2012, respectively.

Chew Hua Seng, chairman and CEO of Raffles Education, said: 'The group has a comprehensive and sustainable education business model that will propel its growth for many years to come. We are also starting to see results from the expansion of our network of colleges in the region as our new colleges take root. We are therefore confident and are pleased to announce the resumption of dividends starting with the declaration of an interim dividend of 0.15 cents per share for this half year.'

Raffles Education shares closed trading yesterday at 29.5 cents, down one cent.