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Financials

First Quarter Results Financial Statement And Related Announcement For the Financial Period Ended: 31-03-2017

Financials Archive

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Consolidated Statements Of Comprehensive Income

Consolidated Statements Of Comprehensive Income

Balance Sheets

Consolidated Statements Of Comprehensive Income

Review of performance

Review of Income statement

The Group posted a total revenue of $22.08 million for the first quarter ended 31 March 2017 (Q1 2017) compared to $23.71 million for the corresponding quarter ended 31 March 2016 (Q1 2016). The overall decrease of 6.9% was due to lower student enrolments compared to the same period last year.

Details of revenue lines are as follows:

Tuition fees revenue was lower at $21.54 million in Q1 2017 compared to $23.06 million in Q1 2016.

Revenue from registration fees was $0.24 million in Q1 2017 compared to $0.27 million in Q1 2016.

School shop revenue was $0.10 million in Q1 2017 compared to $0.11 million in Q1 2016. Enrichment programme revenue was $0.12 million in Q1 2017 compared to $0.14 million in Q1 2016.

Interest income was $0.07 million in Q1 2017 compared to $0.14 million in Q1 2016.

Total expenses before depreciation and amortisation was lower at $17.44 million in Q1 2017 compared to $18.68 million in Q1 2016. The decrease was due to lower personnel expenses, finance costs on the bonds borrowings and other operating expenses as explained below.

Personnel expenses decreased to $13.25 million in Q1 2017 from $14.19 million in Q1 2016 due to non-renewal of contracts of academic staff from second half of last year. The cost-cutting measure was implemented due to the lower student numbers.

Utilities expenses decreased to $0.21 million in Q1 2017 from $0.26 million in Q1 2016. The increase in upkeep and maintenance expenses from $0.20 million in Q1 2016 to $0.44 million in Q1 2017 was due to renewal of several maintenance contracts after the expiry of the maintenance free period which ended in first half of last year.

Finance costs – Bonds of $1.94 million in Q1 2017 was lower than the $2.05 million in Q1 2016 as a result of the interest savings arising from the repurchase of $7,000,000 Bonds in Q3 2016.

Other operating expenses were lower at $1.44 million in Q1 2017 compared to $1.84 million in Q1 2016 due mainly to the revision of property tax for the new school campus in Q1 2016. The property tax was revised from $0.23 million per annum to $1.08 million per annum with effect from the issuance of the Temporary Occupancy Permit in May 2015, and the backdated upward property tax adjustment was charged to the Group in Q1 2016.

Depreciation and amortisation expenses was constant at $2.62 million in Q1 2017 as compared to $2.67 million in Q1 2016.

Profit before taxation ended at $2.02 million in Q1 2017 compared to $2.36 million in Q1 2016.

Income tax expense for Q1 2017 comprised mainly of the accrual of net deferred tax liabilities of $0.57 million compared to $1.00 million for Q1 2016. The net deferred tax liabilities arose from the recognition of capital allowances on new assets acquired for the new school campus.

Net profit after taxation for Q1 2017 ended at $1.44 million compared to $1.34 million for Q1 2016.

Review of Balance Sheet as at 31 March 2017

Total property, plant and equipment as at 31 March 2017 amounted to $273.26 million compared to $275.71 million as at 31 December 2016. The decrease of $2.45 million was due mainly to the depreciation charge during this quarter.

Inventories for school uniforms, books and stationery supplies for sale at the school bookshop were $0.44 million as at end of Q1 2017 compared to $0.47 million as at 31 December 2016.

Trade receivables comprised amounts attributable to tuition fees, registration fees, school shop revenue and other revenue. Trade receivables balance as at 31 March 2017 decreased to $0.90 million due to collection of outstanding receivables at 31 December 2016.

Other receivables and deposits was constant at $0.38 million as at 31 March 2017 and as at 31 December 2016.

Prepayments increased by $1.12 million due to increase in prepaid expenses incurred at the beginning of the year.

The Group's cash and cash equivalents amounted to $48.58 million at 31 March 2017 and $53.91 million at 31 December 2016. The decrease was due to cash used in operating and investing activities as explained in the review of Group cash flow below.

Trade and other payables and liabilities was slightly higher at $1.54 million as at 31 March 2017 compared to $1.43 million as at 31 December 2016 due to timing of payments.

Fees received in advance decreased to $22.16 million as at 31 March 2017 from $30.75 million as at 31 December 2016. The fees received in advance as at 31 December 2016 were for tuition fees collected for the second semester commencing in January 2017. Fees received in advance, together with fees collected during the school term, are recognised as revenue over the duration of the course.

Bonds – Interest Payable as at 31 March 2017 was for the interest accrued on the remaining balance of $143 million bonds at 5.20% p.a. for the period from 17 October 2016 to 31 March 2017. Bonds - Interest Payable as at 31 December 2016 was for the bonds interest for the period from 17 October 2016 to 31 December 2016.

The GST payable of $2.36 million as at 31 December 2016 was mainly related to the billing of semester two 2016/2017 tuition fees and was paid in Q1 2017.

Deferred tax liabilities amounted to $6.07 million at 31 March 2017 compared to $5.51 million at 31 December 2016. The net deferred tax liabilities arose from the tax effect on temporary differences between the net book value and the tax-written-down-value of qualifying assets, offset by deferred tax asset from unabsorbed capital allowances.

Review of Group cash flow for the first quarter ended 31 March 2017

The net cash used in operating activities in Q1 2017 was $5.20 million, which consisted of cash inflow from operating activities before working capital changes of $6.52 million, net working capital outflow of $11.79 million and interest received of $0.07 million.

The above-mentioned net working capital outflow of $11.79 million arose mainly from cash outflow relating to the decrease in trade payables, other payables, liabilities and fees received in advance of $10.87 million. There was also the increase in cash outflow from other receivables, deposits and prepayments of $1.21 million, offset by the cash inflow from trade receivables of $0.31 million.

The net cash used in investing activities of $0.13 million was for the capital expenditure in the normal course of business.

Commentary

Current economic outlook expects to remain challenging. The Group will continue to focus on quality school programmes, and will maintain a conservative stance on its expenditure.

The foreign system schools (FSS) in Singapore are to a large extent dependent upon the ability of Singapore to continue to attract foreign direct investments, and the Group is well placed in the FSS market to compete and to support any expansion of foreign investments into Singapore.

Overseas Education Limited
81 Pasir Ris Heights, Singapore 519292 | Tel (65) 6738 0211 | Fax (65) 6733-8825