Raffles Education Limited FY2025 Financial Review: Navigating Headwinds and Uncertainties

Raffles Education Limited (“Raffles Education” or the “Group”) has released its unaudited consolidated financial statements for the half year and full year ended 30 June 2025. This article provides a structured analysis of the Group’s financial performance, key developments, and outlook, based strictly on the disclosures in the official report.

Key Financial Metrics & Performance Overview

Detailed Financial Commentary

• Revenue: The Group’s revenue for FY2025 was \$111.71 million, a marginal decrease of 1% YoY. Revenue for the second half remained stable at \$55.16 million, indicating subdued growth across all operating segments.
• Profitability: After a significant loss in FY2024, the Group returned to a net profit of \$4.36 million in FY2025. However, the second half saw a net loss of \$3.00 million, highlighting volatility in profitability.
• Total Comprehensive Loss: Despite the improvement in net profit, total comprehensive loss ballooned to \$41.42 million, up from \$14.36 million in FY2024. This was mainly due to adverse foreign currency translation effects as the Chinese Renminbi weakened against the Singapore Dollar, impacting reported equity.
• EPS: Earnings per share rebounded to 0.55 cents for FY2025 from a loss per share of 1.39 cents in FY2024. No EPS was reported for the latest half-year due to a net loss.
• Dividend: No dividend was declared or recommended for FY2025, consistent with the prior year, as the board cited the need to preserve working capital.

Segmental Highlights and Exceptional Items

• Personnel Expenses: Increased by 14% YoY, mainly due to higher staff headcount and increase in average salaries.
• Other Operating Expenses: Increased by 10% YoY, driven by losses on disposal of investment properties, higher camp expenses, and increased provision for doubtful debts, partially offset by lower professional fees.
• Finance Costs: Decreased by 18% YoY due to repayments of borrowings and lower interest costs following a fall in SORA rates.
• Fair Value Loss on Investment Properties: Notable decrease to \$5.7 million from \$14.5 million in FY2024, mainly due to revaluation losses in China, partially offset by gains in Thailand and Sri Lanka.
• Foreign Exchange: The Group reported a net foreign exchange gain of \$24.14 million for the year, but this was offset by large translation losses recorded under other comprehensive income, affecting equity.
• Impairment Losses: An impairment loss of \$0.6 million was recognized on an associate (Axiom Properties Limited) due to a decrease in its fair value less cost of disposal.
• Asset Sales: The Group completed the sale of certain properties in China and reclassified others as held for sale. Deposits received for failed asset sales were forfeited and recognized as income.
• Fundraising: The Group issued \$21 million in non-convertible bonds during FY2025. A further \$2 million was raised from new bond subscribers after year-end.
• Gearing and Liquidity: Net debt decreased to \$208.7 million from \$225.3 million. However, the current ratio fell to 0.6 (from 0.9), and net current liabilities widened to \$85.8 million, mainly due to the classification of a \$93.6 million mortgage as current, pending the sale of the 51 Merchant Road property.

Balance Sheet and Asset Revaluation

• Property, Plant & Equipment (PPE): Decreased slightly to \$465.0 million, reflecting depreciation and FX translation, partly offset by asset reclassification and new additions.
• Investment Properties: Fell to \$316.4 million due to asset disposal, reclassification to PPE, and FX losses.
• Intangible Assets: Dropped to \$96.2 million due to currency translation. No impairment of goodwill was deemed necessary based on management’s value-in-use calculations.
• Net Asset Value (NAV): NAV per share for equity holders slipped to 39.97 cents from 42.52 cents, reflecting lower equity due to translation losses and continued absence of dividend payouts.

Corporate Actions and Shareholder Matters

• Share Capital and Buybacks: 2,815,000 treasury shares were transferred to directors as part of their remuneration. Share-based payment expense for the year was \$125,000. No new shares were issued in FY2025.
• No Dividend Policy: The board has again opted not to declare a dividend for FY2025, preferring to conserve cash amidst ongoing uncertainties.
• Related Party Disclosure: Several management roles are held by family members of Chairman and CEO Chew Hua Seng, but no new related party transactions mandate was sought.

Major Risks, Outlook & Chairman’s Statement

• Going Concern: Despite net current liabilities, management asserts the Group remains a going concern due to recurring deferred income, ongoing asset sales, continued lender support, and ability to raise capital.
• Macroeconomic Headwinds: The Group highlights risks from global geopolitical tensions, restrictive education policies, currency volatility, and rising interest rates, all of which could impact student recruitment and borrowing costs.
• Operational Restructuring: The Group continues to streamline operations for better cost management.

Chairman’s Statement

“The economic and geo-political uncertainty including tariffs imposed by USA and retaliatory tariffs by the respective countries, will influence our recruitment of foreign students.
The challenging global education landscape, with increasing competition and increasing restrictive policies in the countries that we operate in will continue to affect the Group.
Prevailing interest rate environment continue to influence our cost of borrowing and increasing currency volatility will continue to affect the Group.
The Group continues to streamline and restructure its operations for better cost management.”

The tone of the Chairman’s statement is cautious and defensive, emphasizing external challenges, cost management, and the need for ongoing adaptation.

Conclusion & Investment Recommendations

Overall, Raffles Education’s FY2025 performance signals a fragile recovery from last year’s deep losses, with profitability restored at the net level but undermined by adverse currency effects and persistent operational headwinds. Liquidity remains a key concern, with a weak current ratio and reliance on asset sales and refinancing to meet obligations.

The absence of dividends, rising comprehensive losses, and ongoing macroeconomic risks suggest a cautious outlook. However, the Group has demonstrated its ability to access capital markets and continues to execute on cost management and asset monetization plans.

Recommendations

• If you currently hold the stock: Hold with caution. The company has returned to profitability, but there are significant risks related to liquidity, FX exposure, and the macro environment. Monitor progress on asset sales, refinancing, and further restructuring. A clear improvement in current ratio and more stable comprehensive income would be positive triggers.
• If you do not currently hold the stock: Wait and watch. The risks currently outweigh the rewards, given the lack of dividend, volatile earnings, and macroeconomic uncertainties. Entry could be reconsidered if the Group demonstrates sustained profitability, improved liquidity, and a return to dividend payments.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please consult your own financial adviser before making any investment decisions.

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