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Unaudited Condensed Interim Financial Statements For The Six Months Ended: 30-06-2024

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Condensed interim consolidated statement of comprehensive income For the six-month financial period ended 30 June 2024

Condensed interim balance sheets As at 30 June 2024

Review of performance

Review of Income statement

The Group recorded total revenue of $45.55 million for the first half year ended 30 June 2024 (H1 2024) compared to $43.59 million for the corresponding period ended 30 June 2023 (H1 2023). The increase in total revenue was due to an improvement in student enrolment for the current financial period reported on.

Details of revenue lines are as follows:

Revenue from tuition fees was higher at $43.78 million in H1 2024 compared to $42.25 million in H1 2023 due to the increase in student enrolment.

Revenue from registration fees was $0.61 million in H1 2024 compared to $0.56 million in H1 2023.

School shop revenue at $0.16 million in H1 2024 was comparable to H1 2023.

Enrichment programme revenue was $0.58 million in H1 2024 compared to $0.47 million in H1 2023.

Interest income increased to $0.41 million in H1 2024 compared to $0.14 million in H1 2023 due to the placement of fixed deposits at better interest rates.

Operating expenses before depreciation and amortisation was higher at $31.79 million in H1 2024 compared to $30.87 million in H1 2023.

Details of expenses are as follows:

Personnel expenses were $24.80 million in H1 2024 compared to $24.19 million in H1 2023.

School shop costs were $0.08 million in H1 2024 compared to $0.11 million in H1 2023.

Enrichment programme costs were $0.39 million in H1 2024 compared to $0.31 million in H1 2023.

Utilities expenses were marginally higher at $0.70 million in H1 2024 compared to $0.65 million in H1 2023.

Upkeep and maintenance expenses were $0.82 million in H1 2024 compared to $0.79 million in H1 2023.

Finance costs at $2.16 million in H1 2024 were comparable to H1 2023.

Other operating expenses were higher at $2.83 million in H1 2024 compared to $2.65 million in H1 2023, mainly due to the increase in property tax arising from the revision of the property annual value and higher operating expenses due to costs inflation.

Depreciation and amortisation expenses were higher at $7.17 million in H1 2024 compared to $6.97 million in H1 2023 due to the increase in depreciation on leased assets to $2.51 million in H1 2024 as compared to $2.01 million during the same corresponding period last year.

The fair value gain of $0.29 million in H1 2024 and the gain of $0.16 million in H1 2023 both arose from fair value changes of the interest-rate-swap contracts that the Group entered to hedge against rising interest rates on bank borrowings. More information is provided in Note 10 of the Condensed Interim Consolidated Financial Statements.

Profit before taxation ended higher at $6.88 million in H1 2024 compared to $5.90 million in H1 2023.

Income tax expense was $1.63 million in H1 2024 compared to $1.46 million in H1 2023. The H1 2024 income tax expense comprised the provision for current tax of $1.88 million and reversal of net deferred tax of $0.25 million. The income tax expense in H1 2023 comprised the current tax of $1.83 million and reversal of net deferred tax of $0.36 million.

Net profit after taxation ended higher at $5.25 million in H1 2024 compared to $4.44 million in H1 2023.

Review of Balance Sheet as at 30 June 2024

Total property, plant and equipment and right-of-use assets at 30 June 2024 amounted to $215.94 million compared to $221.57 million at 31 December 2023. The decrease of $5.63 million was due mainly to the depreciation charge for the reporting period, offset by the additional right-of-use assets of $1.09 million during the reporting period.

Derivatives (current and non-current) at 30 June 2024 of $1.70 million and $1.41 million at 31 December 2023 represent the fair values of the interest-rate-swap contracts entered into by the Group to hedge against rising interest rates on bank borrowings. Please refer to Note 10 of the Condensed Interim Consolidated Financial Statements for further details.

Inventories for school uniforms, books and stationery supplies for sale at the school shop was $0.50 million at 30 June 2024 compared to $0.45 million at 31 December 2023.

Trade receivables comprised amounts attributable to tuition fees, registration fees, school shop revenue and other revenue. Trade receivables at 30 June 2024 were higher at $2.53 million compared to $0.92 million at 31 December 2023 due mainly to the timing of collection of the receivables.

Other receivables and deposits of $0.50 million at 30 June 2024 was comparable to 31 December 2023.

Prepayments were $1.23 million at 30 June 2024 compared to $1.62 million at 31 December 2023.

The Group's cash and cash equivalents amounted to $34.35 million at 30 June 2024 and $55.68 million at 31 December 2023. The decrease was due to cash used in operating, investing and financing activities as explained in the Review of Group cash flow section below.

Trade and other payables and liabilities were lower at $1.36 million at 30 June 2024 compared to $1.82 million at 31 December 2023 due mainly to timing of payments of operating expenses.

Total fees received in advance (current and non-current) was $15.56 million at 30 June 2024 and $36.11 million at 31 December 2023. Total fees received in advance at 30 June 2024 and 31 December 2023 comprised tuition fees collected before the commencement of the next semester in August and January 2024 respectively, and registration fees collected upon enrolment. As at 30 June 2023, the tuition fees for the new semester commencing in August 2024 were not due yet.

Lease liabilities (current and non-current) were $4.97 million at 30 June 2024 compared to $6.41 million at 31 December 2023. The variation in the lease liabilities was due to the expiration and renewal for teachers' apartments.

Borrowings - Bank Loan (current and non-current) was reduced to $87.39 million at 30 June 2024 compared to $90.48 million at 31 December 2023 due to the payments of quarterly instalments in January and April 2024. More information on the bank loan facility is disclosed in Note 15 of the Condensed Interim Consolidated Financial Statements.

Goods and Services Tax payable of $3.55 million and $3.19 million at 30 June 2024 and 31 December 2023 respectively arose mainly from the billing of next semester's tuition fees.

Deferred tax liabilities amounted to $5.70 million at 30 June 2024 compared to $5.96 million at 31 December 2023. 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.

Review of Group cash flow for the first half year ended 30 June 2024

The net cash used in operating activities in H1 2023 was $7.60 million, which consisted of cash inflow from operating activities before working capital The net cash used in operating activities in H1 2024 was $7.93 million, which consisted of cash inflow from operating activities before working capital changes of $15.51 million, net working capital outflow of $22.09 million and interest received of $0.36 million, income tax paid of $1.57 million and lease interest paid of $0.14 million.

The above-mentioned net working capital outflow of $22.09 million arose mainly from the cash outflow relating to the decrease in trade payables, other payables and liabilities and fees received in advance (current and non-current) of $20.70 million. There were also the cash outflows from the increase in trade receivables of $1.61 million.

The net cash used in investing activities of $0.40 million was for the capital expenditure in the normal course of business.

The net cash used in financing activities of $13.00 million comprised lease payments of $2.52 million, payment of bank loan interest of $2.01 million, bank loan repayment of $3.08 million, and dividends payment of $5.40 million during the reporting period.

Commentary

We expect the inflow of expatriate families to continue to recover as Singapore strives to attract talent and create new jobs via its foreign direct (and fixed asset) investments ("FDI") policies.

The Group is cautiously optimistic that the student enrolment will improve in tandem with Singapore's FDI policies despite the ongoing geopolitical tensions and challenging global economic environment.

However, the Group expects the foreign system schools' landscape and the operating environment to remain competitive and challenging amid new entrants, rising costs and a high inflationary environment.