raffles edu 2011

Towards a Sustainable Education Enterprise

Annual Report

2011

CONTENTS 02 Corporate Profile 04 The Raffles Network 06 Financial Highlights 08 Letter to Stakeholders 12 Corporate Milestones 14 Board of Directors 16 Management Team 18 Business Overview 26 Strategy 28 Raffles Designers Speak

32 Raffles Designer Wins 38 Corporate Governance

49 Financials

CORPORATE PROFILERaffles Education Corporation Limited (“RafflesEducationCorp”) is the largest private education group in Asia-Pacific. Since establishing its first college in Singapore in 1990, the Group has grown to operate 38 colleges in 35 cities across 14 countries in the Asia-Pacific: Australia, Bangladesh, Cambodia, China, India, Indonesia, Malaysia, Mongolia, New Zealand, Philippines, Singapore, Sri Lanka, Thailand and Vietnam.

More than 24,900 students enrolled in RafflesEducationCorp’s tertiary programmes benefit from a quality education that provides graduates with a well-rounded hands-on experience that is relevant to the industry.

The Group also owns the Oriental University City in Langfang, Hebei Province, China – a 3.31 million square metre self-contained campus. Within this campus, Oriental University City provides education services to 9 colleges with an additional student population of over 28,700.

Headquartered in Singapore, RafflesEducationCorp employs over 2,900 academic and administrative

staff, and is listed on the Mainboard of the Singapore Exchange.

RAFFLES EDUCATION CORPORATION ANNUAL REPORT 2011 03RafflesEducationCorp, Singapore

RMU

15

2028

1613

01

06

09

19

26

11

17

10

30

31

03

04

23

24

18

05

33

32

25

21

12

07

08

02

22

29

1427

RUI

OUC

OUC

RUI

RMU

IRM

01

02

03

04

05

06

07

08

09

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

Ahmedabad

Auckland

Bangalore

Bangkok

Beijing

Chandigarh

Changchun

Changzhou

Chennai

Colombo

Dhaka

Guangzhou

Hanoi

Hefei

Ho Chi Minh City

Hong Kong

Hyderabad

Jakarta

Kolkata

Kuala Lumpur

Langfang

Manila

Mumbai

New Delhi

Ningbo

Phnom Penh

Shanghai

Singapore

Surabaya

Sydney

Tianjin

Ulaanbaatar

Wuhan

* Pending Approvals

38 Colleges of Higher Education

(2 Colleges)

(2 Colleges)

(2 Colleges)

RAFFLES EDUCATION CORPORATION ANNUAL REPORT 2011 05RAFFLES EDUCATION CORPORATION ANNUAL REPORT 201104

FINANCIAL HIGHLIGHTS

For the year ended 30 June (S$ thousands) For the year ended 30 June (S$ thousands)2007 2008 2009 2010 20102011 2011

Operating Results Operating Results

Financial Position Financial Position

Return On Shareholders Funds

RevenueProfit EBITDA Operating Before Tax After Tax Attributable to shareholdersOperating CashflowEarnings per Share (cents)- Basic* - Diluted*Shares used in calculating EPS (millions) -Basic* -Diluted*

RevenueProfit EBITDA Operating Before Tax After Tax Attributable to shareholdersOperating CashflowEarnings per Share (cents)- Basic* - Diluted*Shares used in calculating EPS (millions) -Basic* -Diluted*

Issued Share Capital**Shareholders FundsNon-current AssetsCurrent AssetsCurrent Liabilities Non-current LiabilitiesNet Asset Value per Share (cents)*

Issued Share Capital**Shareholders FundsNon-current AssetsCurrent AssetsCurrent Liabilities Non-current LiabilitiesNet Asset Value per Share (cents)*

Return on Equity (%)Net Profit Margin (%)

Note:* Comparatives are restated to take into consideration for the share consolidation of three (3) existing shares held by shareholders into one (1) consolidated share during the current financial year on 1 April 2011.** Net of treasury shares

Note:* Comparatives are restated to take into consideration for the share consolidation of three (3) existing shares held by shareholders into one (1) consolidated share during the current financial year on 1 April 2011.** Net of treasury shares

29.8%39.8%

26.5%52.0%

9.9%25.3%

9.5% 27.9%

7.5% 26.6%

131,626165,811164,654139,078120,156

2,98922.80

294,170372,719770,306145,396350,653183,517

48.18

437,196518,960772,185278,031311,297199,393

60.22

441,281551,874838,885207,969257,417191,319

64.16

436,696561,894966,509169,349256,499272,610

65.76

441,281551,874838,885207,969257,417191,319

64.16

436,696561,894966,509169,349256,499272,610

65.76

-1.0%1.8%

15.2%-18.6%

-0.4%42.5%

2.5%

Revenue Contribution by Region

AseanNorth AsiaAustralasiaSouth Asia

Total

25.2%62.6%11.4%

0.8%

100.0%

19.1%74.1%

5.7%1.1%

100.0%

20.1%73.7%

4.8%1.4%

100.0%

21.6%69.1%

7.1%2.2%

100.0%

23.5%63.8%

9.5%3.2%

100.0%

124,053

58,92553,87154,00950,75049,33135,909

7.016.99704706

188,069

92,44973,74963,33055,82052,56059,723

6.046.04870870

157,577

104,41715,48476,60951,27141,91729,549

4.894.89857857

-16.2%

12.9%-79.0%21.0%-8.1%

-20.2%-50.5%-19.0%-19.0%

-1.5%-1.5%

190,020

121,18885,740

105,35499,40698,82150,856

12.9912.96

761762

201,956

97,952113,878

72,88651,59151,12070,147

6.526.52784785

188,069

92,44973,74963,33055,82052,56060,526

6.046.04870870

157,577

104,41715,48476,60951,27141,91729,331

4.894.89857857

As at 30 June

Student Population

Private Education SchoolsNational Education Schools

Total Student Population

9,6858,400

18,085

10,70019,115

29,815

11,24421,584

32,828

11,10819,427

30,535

9,09515,858

24,953

2007 2008 2009 2010 2011

Revenue Contribution by Segments Earnings Contribution by Segments

Private Education SystemNational Education SystemOUC Campus ManagementCorporate & Others

Total

Private Education SystemNational Education SystemOUC Campus ManagementCorporate & Others

Total

117,27839,82230,813

156

188,069

98,48732,68125,786

623

157,577

29,96313,48031,132

(18,755)

55,820

12,6608,255

49,454(19,098)

51,271

2010(S$’000) (S$’000) 20102011 2011

FY070

50

100

150

200

250

S$ millions

124.1

190.0202.0

188.1157.6

FY08 FY09 FY10 FY11

Revenue

FY070

20

40

60

80

120

100

S$ millions

50.8

99.4

51.655.8

51.3

FY08 FY09 FY10 FY11

Net Profit After Tax


LETTER TO STAKEHOLDERS

The development of Raffles University Iskandar and Raffles Millennium University is significant in that it raises the profile of the Group from that of a higher education provider to that of a fully-fledged university group.

“

”

Dear Stakeholders,

In FY2011, Raffles Education Corporation Limited (“RafflesEducationCorp” or “the Group”) continued to build on its infrastructure to be the leading pan-Asian private education provider.

During the year, we established our maiden college in the Philippines. We also obtained the approvals to establish our first self-accrediting university, Raffles University Iskandar in EduCity@Iskandar.

Through enhancing and unlocking the value of some of its assets for reinvestment, the Group develops a sustainable education growth model that will ensure its resilience and steady growth for years to come. The partnership secured by Value Vantage in Shanghai in July 2011 to develop an underutilised site is such an example.

Today, the RafflesEducationCorp’s brand is synonymous with reliability for quality higher education. The four university level institutions in the Group attest to how far RafflesEducationCorp has developed itself to be a credible higher education provider since its establishment 21 years ago. Our success did not come easily. It is also noteworthy that during these difficult years, amidst the global financial crisis, the Group made even greater strides to develop itself into a pan-Asian platform. Armed with a sound and asset-backed balance sheet, the Group is poised to face the current financial turmoil with confidence.

The development of Raffles University Iskandar (“RUI”) and Raffles Millennium University (“RMU”) is significant in that it raises the profile of the Group from that of a higher education provider to that of a fully-fledged university group. This will lead to an increase in market acceptance of our courses and hence, should translate to a larger market share for RafflesEducationCorp. It is our aim for RUI and RMU to be catalysts in their respective domains and become centres of excellence to further spearhead the Group’s expansion in the region.

Mr Chew Hua Seng, Chairman and CEO, RafflesEducationCorpRAFFLES EDUCATION CORPORATION ANNUAL REPORT 2011 09

FINANCIAL REVIEW For the financial year ended 30 June 2011 (“FY2011”), the Group registered a 16% decrease in revenue to S$157.6 million and an 8% decrease in net profit to S$51.3 million. Earnings per share were at 4.89 cents for FY2011.

The financial performance was impacted strongly by the negative effects of foreign exchange translation loss as a result of the strengthening of the Singapore dollar against regional currencies and by the structural changes that were taking place in China, our key market. The results were also affected by costs incurred due to the Group’s expansion into emerging markets. We are confident these colleges will contribute to the Group after their respective gestation periods.

GEOGRAPHIC DIVERSIFICATION

Whilst China remains a key market for the Group, our strategy of geographic diversification will start to bear fruit. Our investments in Asia’s other emerging markets have reinforced the Group’s ability to engage, operate and expand into new markets. Our footprint of 38 colleges across 35 cities in Asia Pacific puts us in an enviable position to fulfill the demand for education from Asia’s growing middle-class and large youthful population.

India

Our wholly-owned college in Mumbai is into its sixth year of operations and has been making profits over the last three years. The other seven joint venture colleges under the Raffles Millennium brand were developed over the last two years and we expect some of them to begin contributing positively to the Group. In 2009, we invested in RMU, our joint venture university campus located on 44-acres of land in Greater Noida, Uttar Pradesh, India. RMU has completed its first phase of development and welcomed its maiden student intake of 200 students into its Post-Graduate Diploma in Management and Bachelor of Technology in Engineering programmes in August 2011. We believe, upon the award of university status, RMU should be able to grow its student population rapidly.

A SUSTAINABLE EDUCATION GROWTH MODEL

The Group’s ability to enhance and realise the value of its education assets will help to provide additional capital for reinvestment into the Group’s education business. Shareholders should note that the Group now owns significant education assets acquired in 2007/2008.

The huge potential of OUC is particularly relevant to enable the Group to realise its value and build a recurring income model in line with its aim to become a sustainable education enterprise.

IN APPRECIATION

We would like to thank our shareholders, students, business partners, staff and all stakeholders for the trust and confidence in us.

We also acknowledge the guidance and wise counsel of our Board members.

Oriental University City (“OUC”) is a vast asset with strong growth potential for the Group. It is currently in a stable state and we are confident that we will be able to realise and enhance the value of some of its assets in the near term for reinvestment into our education business. We will continue to invest in OUC to develop its brand and make OUC a choice educational destination. An example of improving our branding is our collaboration with Hunan TV for the production of “Music Live” where we welcomed well-known national and regional artistes to perform in our OUC concert hall for students as well as for nationwide broadcast, all produced in OUC. The Group will be exploring with other specialist providers of higher education to form joint ventures in OUC, in line with our vision to develop OUC into an international university township.

Our colleges in OUC - Langfang Oriental Institute of Technology and Langfang Oriental College of Arts were both started in 2009 and have collectively seen strong student take-up from an initial 175 students in 2009 to 2,561 students today. With another 28,700 students studying in nine collaborative colleges in OUC, the total student population at OUC now stands at 31,261.

Malaysia – RUI commenced operations in September 2011, out of leased premises at Kotaraya, Johor Bahru and plans to take in students from January 2012. Its permanent 65-acre multi-faculty campus in EduCity@Iskandar is expected to be ready by 2013. RUI is the Group’s first self-accrediting university and will offer a range of undergraduate and postgraduate programmes in areas of business, technology, arts and design, education, health and social sciences. The establishment of RUI validates the Group’s academic credibility and epitomizes the Group’s achievements since its humble beginnings as a fashion college in Singapore in 1990 to a reputable pan-Asian university group.

China Over the last three years, the Group has faced structural changes in China brought about by more students pursuing education overseas and the decline in the number of students taking the Gao Kao. These changes have started to bring about a consolidation in the Chinese private education market, resulting in a reduced number of competitors.

We have responded to these changes well, putting across strategies to help us grow again. Most of the issues associated with these changes are also largely behind us and we are currently on a steady course to recovery. Going through this consolidation and having established our presence in China since the 1990s, the Group has improved its operational and competitive advantage.


Yours Sincerely,

CHEW HUA SENGChairman and CEO22 September 2011

Revenue S$ millions

FY 2007

124.1

190.0

202.0

188.1

157.6

FY 2008 FY 2009 FY 2010 FY 2011

1990199219962001200220042005

20072008200920102011

2006

April 1990: Established Ra�es Design Institute-Singapore

March 1992: Established Ra�es Design Institute-Kuala Lumpur, Malaysia

August 2001: Established Ra�es Design Institute-Bangkok, Thailand

July 2004: Established Ra�es Design International in Mumbai, India

January 2005: Ra�esEducationCorp stepped up to the Main Board of SGX

January 2006: Acquired Thames Business School in Auckland, New Zealand

March 2007: Acquired China Education Limited

June 2007: Acquired Zhongfa College in Shanghai, China

March 2008: Acquired Oriental University City Development Co., Ltd in Langfang, Hebei, China

March 2008: Acquired Wanbo Education Management Co., Ltd in Hefei, China

January 2010: Established New College in Phnom Penh, Cambodia

February 2009: Established New College in Jakarta, Indonesia

January 2010: Established New Colleges in India (Ahmedabad, Chandigarh, Chennai and Hyderabad)

April 2010: Established New College in Dhaka, Bangladesh

March 2010: Established New College in Colombo, Sri Lanka

September 2010: Established New College in Manila, Philippines

August 2011: First student intake at Ra�es Millennium University (”RMU”), Uttar Pradesh, Greater Noida, India

2011: OUC, RUI, RMU & 38 colleges in 35 cities across 14 countries

May 2008: Established JV with Educomp Solutions Ltd, India

September 2008: Established a joint cooperative education project with Tianjin University of CommerceBoustead College in Tianjin, China

October 1996: Established Ra�es-BICT in Beijing, China

CORPORATE MILESTONES

from little acorns grow

(17 Colleges in 17 Cities across 9 Countries)July 2007: Established Ra�es Design Training Centre in Hanoi, Vietnam

(OUC & 29 Colleges in 25 Cities across 10 Countries)April 2009: Established New College in Bangalore, India

May 2011: Signed JVA with Education@Iskandar Sdn Bhd to establish Ra�es University Iskandar (”RUI”)

July 2011: Established Value Vantage Partnership

January 2002: Listed on SGX-SESDAQ with a market capitalisation of S$16 million(6 Colleges in 6 cities across 3 countries)

July 2004: Acquired KvB Institute of Technology, Sydney(Rebranded as Ra�es College of Design and Commerce in August 2007)

Mightyoaks

13RAFFLES EDUCATION CORPORATION ANNUAL REPORT 2011

Mr Chew Hua Seng is the Founder, Chairman and CEO of Raffles Education Corporation Limited (”RafflesEducationCorp” or “the Group”). Under his astute leadership, RafflesEducationCorp has grown to become Asia’s largest private tertiary education provider with 38 colleges in 35 cities across 14 countries in Asia-Pacific. Mr Chew has led RafflesEducationCorp to achieve an excellent track record of growth since founding the Group in 1990. Apart from leading the Group through its highly successful initial public offering on the Singapore Exchange in 2002, the Group was also ranked amongst the Top 200 Asia-Pacific companies on Forbes Asia’s “Best Under a Billion” list for four consecutive years under his keen leadership. Mr Chew holds a Bachelor’s Degree in Business Administration from the University of Singapore and was awarded the National University of Singapore

Business School Eminent Business Alumni Awards for his outstanding achievements. He is a board member of Donghua University Foundation and is also Vice President of the China Textile and Fashion Education Society. Mr Chew established the Chew Hua Seng Foundation (the “Foundation”) in 2007 to further charitable causes, predominantly in education with the motto “Compassion Through the Generations”. Conferred the Public Service Medal by the President of the Republic of Singapore for his contribution to community service in 2010, Mr Chew has aligned the Foundation’s mission with RafflesEducationCorp’s overarching principle to providethe invaluable gift of education to needy youths, with a special focus to support poor students in the Asia-Pacific region.

BOARD OF DIRECTORS

Mr Chew Hua SengChairman and Chief Executive Officer

SITTING (FROM LEFT TO RIGHT): Mr Henry Tan Song Kok, Mr Chong Ee Yong, Mr Chew Hua SengSTANDING (FROM LEFT TO RIGHT): Mr Lim Tien Lock Christopher, Mr Chew Kok Chor, Mr Teo Cheng Lok John, Mr Yap Kim Wah, Dr Tan Chin Nam

RAFFLES EDUCATION CORPORATION ANNUAL REPORT 201114

Mr Chong Ee Yong joined RafflesEducationCorp in July 2004 as Director (Mergers & Acquisitions) and was subsequently appointed Vice President overseeing the Group’s operations in Asia-Pacific (ex-China). Mr Chong joined the Ministry of Defence, Singapore upon his graduation from the Royal Military College, Duntroon, UNSW, Canberra Australia with a Bachelor of Engineering (Civil). He also holds a Master of Science (Finance) from Baruch College, Zicklin School of Business. Mr Chong has extensive experience in setting up, managing and re-structuring business operations.

His past appointments included establishing and managing operations abroad for multi-national companies including Singapore Technologies, JIT Electronics, Flextronics Plastics and Hyflux Ltd. Mr Chong will continue to be responsible for the operations and business development of RafflesEducationCorp in Asia-Pacific and also oversees the Group’s Finance functions.

Mr Yap joined Esso Refinery in 1972 after graduating with First Class Honours in Mechanical Engineering from the then University of Singapore, and left as a Senior Engineer to join Singapore Airlines in 1975. A registered professional engineer, Mr Yap has over the next 35 years held a range of senior management positions at Singapore Airlines covering Marketing, Cabin Crew, Human Resource, Regional Director West Asia & Africa, Chief Executive SATS Catering and his last position, as Senior Vice President for Product & Services for 12 years. In this position, he was responsible for product design and innovation, worldwide airport and reservation services and operations, inflight services and catering, inflight entertainment, customer servicing, staff training and development.

Mr Yap was the Chairman of Tradewinds Tours & Travel, and had served as a Board Member of the Singapore Land Authority, Singapore Sports School, Virgin Holidays Ltd and as a Management Committee member for the Singapore Turf Club. He is a member of the Quality Service Advisory Council, Public Service Division.

Dr Tan Chin Nam had 33 years of distinguished service in the Singapore Civil Service, having held key appointments such as Managing Director, Economic Development Board, Chief Executive, Singapore Tourism Board, General Manager and Chairman, National Computer Board, Chairman, National Library Board and Permanent Secretary, Ministry of Manpower and Ministry of Information, Communications and the Arts. He is currently Chairman of Media Development Authority International Advisory Panel and Temasek Management Services Pte Ltd, and Senior Adviser to Salim Group and LiTMUS Group. Dr Tan is also a director of Stamford Land Corporation Ltd, Yeo Hiap Seng Ltd and Gallant Venture Ltd, all listed on the SGX, and PSA international Pte Ltd. Dr Tan graduated from the University of Newcastle, Australia with first degrees in Industrial Engineering and Economics and a Master of Business Administration degree from the University of Bradford, UK. He has an Honorary Doctor of Letters Degree conferred by the University of Bradford and an Honorary Doctor of Engineering Degree conferred by the University of Newcastle.

Dr Tan Chin NamIndependent Director

Mr Chong Ee YongExecutive Director

Mr Yap Kim WahExecutive Director

Mr Chew Kok Chor joined RafflesEducationCorp in 1998 and assumed the role of Executive Vice-Dean, Raffles Design Institute (Shanghai), before his subsequent appointments as Vice-President of the Group’s China Operations in May 2001, as Chief Operating Officer in August 2004 and as Deputy CEO, in April 2005. He holds a Bachelor’s Degree (2nd Class Hon), Mechanical & Production Engineering from the National University of Singapore and was a scholar with Exxon Mobil Singapore. Mr Chew will continue to be overall in charge of the operations of the Group and directly responsible for Greater China.

Mr Chew Kok ChorExecutive Director and Deputy CEO

Mr Henry Tan Song Kok is the Managing Director of Nexia TS Public Accounting Corporation and the Chairman of Nexia China. He is also the Asia-Pacific Regional Chairman and Board member of Nexia International, an international accounting network. He graduated with a First Class Honours Degree in Accountancy from the National University of Singapore. He is a fellow of the Institute of Certified Public Accountants of Singapore, Insolvency Practitioners Associations of Singapore Ltd and the Institute of Chartered Accountants in Australia, member of Institute of Internal Auditors, Inc (Singapore Chapter), Singapore Institute of Accredited Tax Professional Limited and Singapore Institute of Directors. Mr Tan is also director of YHI International Limited, Chosen Holdings Limited, Pertama Holdings Limited, China New Town Development Co Ltd and Ascendas Funds Management (S) Ltd (Manager of Ascendas Real Estate Investment Trust).

Mr Henry Tan Song KokLead Independent Director

Mr John Teo was in public accounting practice from 1981 to 2010. He was a Founder and a Senior Partner of TeoFoongWongLCLoong and Baker Tilly TFWLCL. Mr Teo qualified as a Chartered Accountant with the Institute of Chartered Accountants in England and Wales. He is a Fellow of the Institute of Chartered Accountants in England & Wales, Institute of Certified Public Accountants in Singapore, Institute of Certified Public Accountants in Australia and a member of the Chartered Management Institute, UK.

Mr Lim Tien Lock, Christopher is the Group Executive Director of Hotel Properties Limited. He graduated from the National University of Singapore with a Bachelor’s Degree in Business Administration. He is principally responsible for finance, property, business development and investment functions of the HPL Group. Prior to joining HPL in 1989, Mr Lim held the position of Director and Head of Corporate Finance of N M Rothschild & sons (Singapore) Limited with 10 years of experience in the field of investment banking.

Mr Lim Tien Lock, ChristopherIndependent Director

Mr Teo Cheng Lok JohnIndependent Director

RAFFLES EDUCATION CORPORATION ANNUAL REPORT 2011 15

MANAGEMENT TEAM

Mr Chew Hua SengChairman and CEO

Mr Yeo Cheow Tong Chairman, Board of GovernorsRaffles University System

Prof Graeme BrittonVice President, Vocational & Technical Education (VTE), Raffles University System

Mr Chew Kok ChorExecutive Director and Deputy CEO

Prof Branson KwokActing President & Vice President, Academics Raffles University System

Mr Kenneth Ho Kah ChuanChief Financial Officer

Mr Mike Yam Keong CheePresident, India Colleges Operations

Mr Gan Chin HuatDirector, Special Projects

Mr Anthony Poon Chief Operating Officer, Oriental University City

Mr Issac Ng CEO, Raffles College of Design and Commerce, Sydney

Mr Edmund Hwong Kee HongVice President, Indochina Operations

Mr Yap Kim Wah Executive Director

Mr Chong Ee YongExecutive Director


Mr Liu YingchunDeputy CEO, Oriental University City

Mr Harjanto Kwek Director of Human Capital

Ms Karen Grace Lam Kar YanVice President, South East Asia Operations


BUSINESS OVERVIEWRafflesEducationCorp is a premier tertiary education provider committed to provide high quality education through its extensive network of colleges across Asia-Pacific.

Our strategic goal is to nurture and groom skilled professionals through the transfer of industry-relevant knowledge and technical know-how to succeed in the globalised economy. The Group strives to provide a well-balanced education that encourages creative and critical thinking; allowing students to realise their potential and aspirations, while enjoying the learning process at our colleges.

Since its founding in 1990, RafflesEducationCorp has grown its portfolio from its maiden college in Singapore to 38 colleges in 35 cities across 14 countries in Asia-Pacific.

Our colleges offer a comprehensive range of internationally recognised programmes leading to Diploma, Advanced Diploma, Degree and Masters qualifications. The RafflesEducationCorp enterprise comprises several components:

Private Education System (“PES”) colleges are RafflesEducationCorp’s premium offering. The Group’s PES colleges provide a range of degree, diploma and certificate programmes in various professional disciplines including design, information technology, business, biomedical sciences and psychology. PES students are afforded robust quality programmes conducted in English language by an international faculty. The Group currently has 31 PES colleges, with close to 10,000 students across Asia-Pacific.

The Group has one University and two Vocational and Technical colleges under the National Education System (“NES”) in China. NES colleges provide education courses and skills training programmes that lead to nationally recognised tertiary qualifications.

Students are offered a sound and mainstream education taught in Chinese language by quality local faculty and accorded qualifications accredited by the Education Ministry, China. There are currently over 15,800 students studying at the Group’s NES colleges.

PRIVATE EDUCATION

NATIONAL EDUCATION

* Pending Approvals

15 Colleges

Beijing

Guangzhou

Hongkong

Shanghai

Tianjin

PES

Changchun

Changzhou

Ningbo

Wuhan

PNES

3 National EducationSchools

Shanghai ZhongfaCollege

Wanbo College

Auckland

Bangkok

Colombo

Dhaka

Hanoi

Ho Chi Minh City

Jakarta

Kuala Lumpur

Manila

Phnom Penh

Singapore

Surabaya

Sydney

Ulaanbaatar

India

7 RMI Colleges

Ahmedabad

Bangalore

Chandigarh

Chennai

Hyderabad

Kolkata

New Delhi

Mumbai

K - 12 Development

Oriental UniversityCity

Oriental Institute of Technology (NES)

Oriental College of Arts (PES)

Higher Education

9 collaborativeschools: 28,700students

Education Services

14 IAO OFFICES

3 IAO OFFICES (SINGAPORE, INDOCHINA)

(CHINA)

(INDIA)

(MALAYSIA, BANGLADESH)

(THAILAND, VIETNAM, MONGOLIA)

ChangshaChengduChongqingGuangzhouHefeiJinanNanjingShanghaiShenyangShenzhenWuhanXiamenZhengzhouTaipei

JakartaSingapore & InternationalColombo

6 IAO OFFICESDhakaSuvaJohor BahruKuala LumpurKuchingPenang

6 IAO OFFICES YangonUlaanbaatarBangkokChiang MaiHanoiHCMC

3 IAO OFFICES BangaloreDelhiKolkata

9 Colleges 1 School* 2 Colleges 12 Colleges

15 Cities 9 Cities 1 City 10 Cities

RAFFLES MILLENNIUM INTERNATIONAL

Raffles Millennium International (“RMI”) colleges are established through a joint venture (“JV”) between RafflesEducationCorp and Educomp Solutions Ltd (“Educomp”), India’s largest publicly-listed education company.

With over 600 million youths, India is a fast-growing market with the largest youth population in the world. This 50:50 JV brings the Group’s entire suite of award-winning programmes in Design, Business and Hospitality to India, providing meaningful higher education alternatives for its large student population.

To date, seven RMI colleges have been established across seven Indian cities: Ahmedabad, Bangalore, Chandigarh, Chennai, Hyderabad, Kolkata and New Delhi, offering RafflesEducationCorp’s Advanced Diploma and Degree programmes. With the Group’s increased presence in India, this JV has certainly created a new growth engine for the Group.

RAFFLES UNIVERSITY SYSTEM

UNIVERSITY-LEVEL INSTITUTIONS

At the heart of all RafflesEducationCorp’s education programmes are curricula and student experiences that encourage the development of creativity, entrepreneurship and socially responsible practice, empowering graduates to realise their full potential in a globalised economy. Our focus is on our students - their individual ambition and talent, and their professional and personal development.

Raffles University System (”RUS”) holds overall responsibility for the Group’s curriculum development, quality assurance, accreditation and faculty development. It also develops the Group’s universities in the region as well.

Tianjin University of Commerce Boustead College

Tianjin University of Commerce Boustead College (“Boustead College”) was officiated on October 2002 and offers higher education and skills training programmes that lead to nationally recognised and internationally recognised tertiary qualifications. Boustead College also offers degree programmes in Business Administration, Computer Science & Information Technology, and Literature & Arts. It also has a well-located state-of-the-art campus that provides facilities to students from living quarters and sporting fields to technical laboratories and a comprehensive library.

Raffles College of Design and Commerce

Raffles College of Design and Commerce, Sydney (“RCDC”) has a rich heritage of over 30 years in providing high quality, university-level education. Primarily a higher education provider offering Bachelor and Masters degrees in multiple fields of Design and Business, the college also provides Certificate and Diploma courses as great pathways to attaining a Bachelor’s degree.

The curriculum is developed to keep pace with current industry demands and is taught by industry professionals, giving students a clear industry edge. Class sizes are intentionally kept small, giving students plenty of individual attention from the faculty. The learning environment boasts an optimal mix of academic rigour and fun. RCDC graduates have gone on to very successful careers in the fields of Design and Business.

RCDC awards university-level degrees that are accredited by the New South Wales Government Department of Education and Communities (“DEC”), are registered with the Australian Government Department of Education, Employment and Workplace Relations (“DEEWR”) and the Australian Government Tertiary Education Quality and Standards Agency (“TEQSA”). They are also approved by the internationally recognised Australian Qualifications Framework (“AQF”).

RafflesEducationCorp’s platform of higher education institutions includes four university-level institutions that are strategically located in Australia, Malaysia, China and India. These university-level institutions validate the extraordinary academic development and pedagogical advancement of the Group, driven by its overarching aim to provide high quality education across its network of colleges.

ABOVE & BELOW: Tianjin University of Commerce Boustead College, Tianjin, China

ABOVE: Raffles College of Design and Commerce, Sydney, Australia


Building Creativity and Innovation...

RafflesEducationCorp established Raffles University Iskandar (“RUI” or “the University”), its 80:20 joint venture (“JV”) with Education@Iskandar Sdn Bhd (“EISB”), a member of the Iskandar Investment Group, in 2011.

RUI, estimated to cost RM 200 million, will be located in Educity, Iskandar Malaysia (“EduCity@Iskandar”) and is the Group’s first government approved self-accrediting University in its portfolio of colleges of higher education.

The University will begin operations out of leased premises at Kotaraya, Johor Bahru, while its permanent campus in Educity@Iskandar is being built. The 65-acre campus, complete with state-of-the-art facilities, hostels and amenities, is expected to be ready by 2013.

RUI will be a multi-faculty, self-accrediting university and will initially provide undergraduate and postgraduate programmes in

four schools namely School of Design, School of Business, School of Education and Social Sciences, and School of Infocomm Technology. These will be subsequently expanded to five faculties to include Health Sciences.

The RUI campus will be located in EduCity@Iskandar – an area that is secure and holds promising potential in both economic and cultural development. Its strategic location, together with the successful history of RafflesEducationCorp’s programmes will serve RUI students well in a promising and vibrant environment.

Raffles University Iskandar

BELOW: AN ARCHITECT’S IMPRESSION OF RUI

ABOVE: AN ARCHITECT’S IMPRESSION OFFOOD AND RETAIL OUTLETS IN RUI


The Group owns and operates Oriental University City (”OUC”), a 3.31 million square metre self-contained campus located in Langfang, Hebei Province, China. Located approximately 50 km outside of Beijing, OUC enjoys good transport connectivity to the two major Chinese cities of Tianjin and Beijing.

OUC provides education services to the universities and colleges located on campus. In addition to RafflesEducationCorp’s Langfang Oriental Institute of Technology and Langfang Oriental College of Arts, nine other leading universities and colleges are currently situated at OUC with a student population of over 28,700. Notable education institutions include the Beijing University of Chinese Medicine, China Civil Aviation Management Institute, Beijing University Founder Technology College, as well as Beijing City University.

The Group continues to develop OUC into a university township. Higher education and auxiliary education services will be incorporated into the OUC business model to establish it as a tertiary vocational and technical education campus. This extension in business model allows OUC to meet the strong and increasing demand in China for highly skilled employees with professional qualifications.

Oriental University City

The partnership with Educomp includes the development of Raffles Millennium University campus (“RMU”) at a 44-acre site in Greater Noida on the outskirts of Delhi, India. With the first phase of the campus’ construction completed, RMU received its first batch of students in its Post-Graduate Diploma in Management (“PGDM”) and Bachelor of Technology in Engineering (“B.Tech Engineering”) programmes in August 2011.

All programmes are approved by the All India Council for Technical Education (“AICTE”), an Indian statutory body and national-level council for technical education, and are designed to provide a robust, quality education through which students are empowered and effectively prepared for the workplace or higher education.

The PGDM is the equivalent of a Master of Business Administration (“MBA”) programme, and it offers three tracks in the key areas of Marketing, Finance and Human Resources. To meet the huge demand for engineers in India, RMU’s B.Tech Engineering offers specialisations in Computer Science & Engineering, Information Technology, Electronics & Communication Engineering, Applied Electronics & Instrumentation Engineering, and Electrical Engineering.

RMU has applied for university status from the University Grant’s Commission of India (“UGC”) and is currently pending final approval.

Raffles Millennium University

ABOVE: Oriental University City, Langfang, China

ABOVE: Oriental Institute of Technology, OUC, Langfang, China

BELOW: Raffles Millennium University, Greater Noida, India


STRATEGY

BUILD DEPTH AT EXISTING COLLEGES

STRENGTHEN ACADEMIC CREDIBILITY

CLARITY OF GROWTH AND VALUE CREATION

EDUCATION ASSETS ENHANCEMENT

CREATE VALUE AT UNIVERSITY CITY

Underpinning the Group’s performance are several key growth impetuses that have helped the Group retain its position as the premier education group in Asia-Pacific over the years. These strategic growth drivers provide clarity of growth and create value for long-term shareholders of the Group:

Over the years, the Group’s existing colleges have grown in scale and depth. With presence in many major cities across Asia-Pacific today, the brand name of RafflesEducationCorp has become synonymous with quality education with the widespread acceptance of our graduates by industries globally.

To ensure continued enhancement of its programmes and performance, the Group continues to place emphasis on the operations and processes at individual colleges to improve operational efficiencies.

The Group will also step up its programme offerings and expand its marketing reach to capitalise on the demands of specific markets and boost same college sales.

RafflesEducationCorp has also made significant headway in building up a formidable strategic platform with its unmatched geographical reach across Asia-Pacific over the years.

A total of 15 new colleges were established between FY2009 and FY2011, as the Group embarked on an expansion strategy to grow new markets throughout the region. Today, RafflesEducationCorp has established significant beachhead in these emerging growth markets. These investments have strengthened its portfolio, expanded its geographic reach and will provide profitable returns going forward. Importantly, with an international portfolio of 38 colleges in 35 cities across 14 countries in

With the acquisition of Oriental University City (“OUC”) in 2008, the Group has transformed its asset-light business model to become an asset-backed higher education provider. Creating value through the University City model has become a salient component of the Group’s growth trajectory.

In OUC, apart from revenue derived from educational services rendered to schools located on its campus, the Group seeks to increase fee revenue from the direct provision of higher education through the formation of new schools and partnerships to be located on campus.

The vast resource of land and buildings at OUC also enables the Group to further develop a world-class, large scale university city in Langfang, China complete with amenities, accommodation and high quality education. Developing OUC has become a strategic growth area for the Group as is enhancing the value and maximising the returns on the Group’s other education assets across the Asia-Pacific.

Raffles University System (”RUS”) is central to the successful development of relevant high quality education for RafflesEducationCorp’s network of colleges.

RUS’ quality assurance systems and academic standards are attested by rigorous and stringent reporting requirements and audits. Oversight of RUS’ standards is undertaken through a Senate, including experienced senior academics from Australia, China, Hong Kong, South-east Asia, Singapore and other countries. The establishment of Raffles University Iskandar and Raffles Millennium University in 2011 are strong validations of the Group’s academic credibility and corporate progress over the years.

The Group’s colleges and programmes are registered, accredited and certified by various government bodies, state and federal authorities. In June 2011, Raffles College of Higher Education (“RCHE”) was successfully registered with the Council of Private Education, Singapore (“CPE”) and granted a 4-year registration under Section 36 (1) of the Private Education Act with effect from 13 June 2011 to 12 June 2015. This registration is only granted to private education institutions that have met a stringent set of requirements put forward by the Singapore Government.

Through RUS, the Group will continue to grow its intellectual property portfolio via developing new universities and curriculum, and strengthening its accreditations and academic credibility. Curriculum is constantly reviewed and enhanced to offer professionally relevant education programmes that equip our students with the necessary skillset to compete successfully in a globalised business community.

The learning environment at RafflesEducationCorp’s network of colleges is uniquely characterised by the promotion of deep learning. Comprehensive skill and knowledge outcomes and employability of students are emphasised, as are creative and analytical approaches that encourage individual judgment and self-awareness.

RafflesEducationCorp seeks to pave the way for its students to a successful career via an educational experience that emphasises:

• Creativity and innovation in all programmes

• Enterprise and entrepreneurship

• Relevance and employability

• Professional excellence

• Socially responsible professional practice

To seize growth opportunities, the Group has embarked on strategies to enhance and realise the value of its education assets for reinvestment into its education business. Today, the Group has built a sustainable education business growth model that will ensure steady growth for the long run. The Group’s extraordinary corporate progress and vast platform has enabled it to now own valuable education assets across Asia. This in turn paves the way for a compelling education growth model that will see to the sustainability of the Group for many years to come.

RafflesEducationCorp’s extensive portfolio across Asia-Pacific positions the Group as a key player in the global education market today. The Group’s unmatched geographic reach will ensure the Group’s continued growth for the future.

EXPAND COLLEGE NETWORK

SUSTAINABLE EDUCATION GROWTH MODEL

Asia-Pacific, the Group is well positioned to tap on Asia’s large youthful population.

The Group will continue to expand its college network geographically; organically and through strategic acquisitions. With such an extensive and strong network, RafflesEducationCorp is able to create new global opportunities for our students to enrich their personal outlook and learning experiences at our colleges.


RAFFLES DESIGNERS SPEAK

“The lecturers are very receptive to students’ opinions and I have learnt a lot from them.”

“Raffles offers an internationally recognised Degree as well as opportunities to study at any of its network of colleges across 35 cities...”

I came running straight to Raffles International College, Bangkok after hearing a lot of positive comments about it from my friends. Raffles’ demanding but accommodating curriculum allows me to juggle my hectic work schedule and studies at the same time. Raffles enjoys a good reputation here, as the Best Design School in Thailand. The lecturers are very receptive to students’ opinions and I have learnt a lot from them. At Raffles, learning is not restricted to the classroom; the college provides us with many opportunities to hone our skills and broaden our horizons from local and overseas field trips and industry collaborations.

Namcha – Sheranut YusanandaPopular Thai Actress/SingerStudent at Raffles International College, BangkokBachelor of Design in Graphic DesignClass 2013

We learn design philosophies, rather than just pure software techniques at Raffles Design Institute, Shanghai. I was very lucky to have chosen such a unique educational path in this international college. The native English environment and international courses at Raffles has helped to improve my English communication skills; I can deliver a professional presentation in fluent English now. Raffles has also taught me how to be an excellent designer, one who never stops creating by drawing inspiration from life. The life-long career provision from the school’s Center of Professional Development fills me with confidence for the future.

SNap HuangArt Director of MailMan China & Founder of Pointed Design StudioAlumni of Raffles Design Institute, ShanghaiBachelor of Design in Graphic Design Class of 2010

There are only two words that I can say about my studies at Raffles, Sydney – amazing and fun! The faculty are always there to help us lift our designs to a new level and get them “market-ready”. I met a lot of wonderful, creative people throughout my journey at Raffles. My qualification has given me an exciting opportunity to enter theworld of international high fashion.I’ve been selected to work full-timeas a designer by Zuhair Murad,a world-renowned Beirut-basedcouturier, who dresses internationalmega-celebrities like Beyonce, Shakira, Whitney Houston, among others. It’s such a privilege, as Zuhair is one of my idols.

Natalie RizkAlumni of Raffles College of Design and Commerce, SydneyBachelor of Design in Fashion Design (Associate Degree) Class of 2011

The knowledge and the experiences that I have gained from the Fashion Marketing and Management programmes at Raffles Design Institute were the very best. It was here that I learnt about the financial, marketing, operational, and management aspects of a business. We were often divided into teams to create business plans that incorporate different aspects of fashion and business. Those were valuable experiences and I’ve learned many things that will be beneficial to me as I prepare to enter the workforce. Studying at Raffles has inculcated more confidence in me, made me a better team player and a good communicator. Grishma JariwalaStudent at Raffles Design Institute, MumbaiBachelor of Design in Fashion Marketing Class of 2011

Raffles’ reputation for academic excellence in Asia-Pacific was a key reason behind my decision to further my studies at Raffles Institute of Higher Education, Sri Lanka. It offers an internationally recognised Degree as well as opportunities to study at any of its network of colleges across 35 cities during my course of study. Studying at Raffles is a great experience; a lot of hard work is involved but the learning process is highly enjoyable. The campus is a hotbed for creativity with the quality of students it has attracted, creating a vibrant student-centered institute ideal for active learning. The lecturers and staff are also very friendly and helpful. Maleesa JayatilakeStudent at Raffles Institute of Higher Education, ColomboAdvanced Diploma in Fashion Marketing & Management Class of 2011

The international learning environment at Raffles ChangChun (RCU) is underpinned by an interactive teaching methodology and a strong commitment to academic excellence. At RCU, I learnt design philosophies and gained a lot of opportunities to hone my design techniques and teamwork skills. Our lecturers taught us how to turn our design concepts into realities at the workshops. The college also frequently organises field-trips to keep us updated of market demands related to product designing. I would like to express my heartfelt gratitude to RCU for providing me with an excellent education and wish RCU continued success as it continues to grow as atop-notched design institute in China!

Xu Shi Wei (Roy)Recipient of Certificate of Design Patent by the ‘State Intellectual Property Office of the People’s Republic of China’ for his furniture designAlumni of Raffles–C.U. International CollegeDiploma in Product Design Class of 2011

Changchun, China

Mumbai, India

Bangkok, Thailand Sydney, Australia

Colombo, Sri Lanka

Shanghai, China


“I also had a lot more opportunities to befriend people from diverse cultural backgrounds and this gave me an invaluable international perspective .”

Raffles College of Higher Education, Singapore (“RCHE Singapore”) is a place where I spent the most enjoyable and yet stressful moments of my life. I gained a depth of understanding and knowledge about the fashion world through its demanding school curriculum and vigorous internship exposure. RCHE Singapore’s professional and experienced lecturers guided me closely along the way. They are truly one of a kind, giving me insights into the international fashion world and this is priceless to any aspiring fashion designer. I also had a lot more opportunities to befriend people from diverse cultural backgrounds and this gave me an invaluable international perspective. I will always remember my days with RCHE Singapore… for RCHE has nurtured and groomed me to take on the world of fashion!

Maureen OktavianaStudent at Raffles College of Higher Education, SingaporeBachelor of Design in Fashion Marketing Class of 2012

I did not have any formal training in fashion design so I had to spend a lot more time and effort compared to my peers when I first joined Raffles. But my professors and lecturers were very patient with me and gave me a lot of encouragement and advice. My confidence grew and this was reflected in my projects and designs. After studying at Raffles, I’ve come to believe that anyone can unlock their potential and achieve their dreams with persistent effort. He QiongAlumni of Raffles-BIFT International CollegeBachelor of Design in Fashion DesignClass 2010

I’ve gained extensive knowledge of interior design in my two years of study at Raffles College of Higher Education, Kuala Lumpur. It was tough initially for I had neither prior knowledge of interior design nor the ability to think out of the box! However, after attending classes diligently, receiving consultations from lecturers and exchanging pointers with my classmates, interior design was no longer daunting. I now possess the necessary skills and knowledge of the profession, thanks to Raffles and its lecturers’ guidance and support. Demy Septiana KrismadiAlumni of Raffles College of Higher Education, Kuala LumpurAdvanced Diploma in Interior DesignClass of 2011

My formal education in fashion marketing at Raffles Design Institute, Jakarta has not only been fulfilling but also landed me a job at the prestigious Alleira Batik! My knowledge of fashion marketing, an expertise hot in demand with fashion companies in Indonesia, helped me gained an instant advantage when I was interning at Alleria Batik. My superiors were so impressed that they offered me a job as an International Relations Official at the conclusion of my one-month internship programme. I will definitely tell those who are interested in fashion marketing to study at Raffles because its curriculum really prepares one for the fashion industry and offers many windows of opportunities for its students.

Christina MulyaInternational Relations Official, Alleira BatikAlumni of Raffles Design Institute, JakartaAdvanced Diploma in Fashion MarketingClass of 2011

To fulfill my passion for multimedia design, I continued my studies at Raffles International College, Ho Chi Minh City after working at Clipsal for one year. It was a wise decision for Raffles not only provided me with a dynamic learning environment but also an internationally recognised Degree. Using what I have learnt at Raffles and with encouragement of my lecturers, I led my team to win the first prize (Thriller category) at the 7th Hollywood International Student Film Festival with our film ‘The 4th”. Receiving the award has greatly boosted my confidence; I am ever more encouraged to conceptualise radical film themes for my future projects.

Nguyen Do KhoaDeputy Director of thriller film “The 4th”Alumni of Raffles International College, Ho Chi Minh CityAdvanced Diploma in Interactive Media DesignClass of 2009

Studying at Raffles has helped me tremendously to succeed and progress in my career. In my role as the Customer Product Manager at SAP, the biggest business applications software vendor globally, I continue to leverage every bit that I have learnt at Raffles to continuously create an overall customer experience that is second to none. In my vision to communicate the broader customer experience, I often draw on these “Raffles experiences” to visually express and communicate thought leadership programmes to the market. I am very thankful and grateful for the cutting-edge education that Raffles has given me. Michael ScholzCustomer Product Manager, SAPAlumni of Raffles College of Design and Commerce, SydneyMaster of Design in Graphic Design Class of 2010

“I often draw on these ‘Raffles experiences’ to visually express and communicate to the market.”

RAFFLES DESIGNERS SPEAK

Singapore

Ho Chi Minh City, Vietnam

Kuala Lumpur, Malaysia Beijing, China

Sydney, Australia

Jakarta, Indonesia


RAFFLES DESIGNER WINS

“Your Postcard Perfect, Maritime Moments” Design Competition 20113rd Prize: David Adi Chandra

Changshu Fashion Design Competition 2011Third Award:

Du Juan

Creative Sky Design Competition 2010The Jury Grand Prize:

Wang Hao

Art & Building International Photography CompetitionHighly Commended:

Ho Quang Huynh

Australian Wool Fashion Awards 2011Raffles College Sponsored Scholarship:

Tessa Simpson2nd place, Evening Wear: Jessica Wainwright Medal: Hoi Ling Tsoi (Crystal)

Bumiputera Designers Association Award - Young Designer Search 2010 1st Runner-up:

Annette Liew Foong Aun

Czech Republic Young Package Competition 2011Works Worth Mentioning:

Bui My AnNguyen Thanh Phuong

Design for Singapore: National Day Parade Banner Design Competition 2011Winners:

Michael LeangPiyatida Makagul

Evian “Live Young” T-shirt Design Challenge 2011Winner:

David Adi Chandra

Expressions of the Malayan Tiger by MaybankGrand Prize Winner: Sashtri Vivekanandan

Fashion in Play 2011Finalists (Best Runway Show): Chia PeilingChua Yuan HanTimothy Ernest KesumaSesarina PrameswariAngelineMarshiella Apriani Jayapranata

Fashion Reglammed! @ Wisma Atria 2011Winner:

Muhammad Firdaus Bin Mohd ArisAleksey Chigasov1st Runner-up: Nesya Silviany SendjajaChristina Tanujaya2nd Runner-up:

Khoh Siow LinLin Yu JingMichelle Onggo Wijoyo

2011 Furniture Design AwardsMerit Award: Samir Wadekar

2011 REDA Green Art Design CompetitionFirst Award:

Kelvin WenasSecond Award:

Wang ChenqingHuang FanThird Award:

Elizabeth HuangMinisha Aziz SheweenKerenna Trywahyuningsih Na

Alvotor.com T-Shirt DesignWinner:

Sansiani Martin

2011 Furniture Design Awards

2011 REDA Green Art Design Competition

Changshu Fashion Design Competition 2011

Czech Republic Young Package Competition 2011

Expressions of the Malayan Tiger by Maybank

Fashion Reglammed! @ Wisma Atria 2011

Evian “Live Young” T-Shirt Design Challenge 2011

Creative Sky Design Competition 2010



Greg Parsons AwardOutstanding Professional Approach:

Josephine Rozman

HSBC Women’s Champions 2011 Caddy Design Competition Winner:

Priyatna Sungkono2nd Prize: Ng Shu Ling3rd Prize:

Sabrina Lau

International Design Awards 2011Emerging Graphic Designer of the Year: Tiffany Chui

International Epson Pano Awards5 Bronze Awards:

Harshal Desai

iStyle Fashion KLIA 20102nd Runner Up: Vivienne Khong Zhi YiDaniel Lau Wee LiangLewis Foo Kiew HongConsolation:

Brad Paik Seung-HoGoh Yen YiOoi Yen Yon

Kronenbourg 1664 French Art of Pleasure Fashion ContestWinner:

Kuan Yit Ying

Malaysia International Jewellery Fair Jewellery Design Awards 2011Finalist:

Park Seoyun

Mercedes-Benz Stylo Emerging Designers CompetitionFinalists:

Chow Yao XianLee Sook Yee

National Day Parade Flip Video Competition 2011Winner: Cherlyn NgAlexis FloresHo Jun Hui

Malaysian International Fashion Award (MIFA) 2010Winner (Most Promising Designer of the Year):

Silas Liew Chuan MinFinalists (Most Promising Designer of the Year):

Chow Yao XianOoi Hau Yau

Parkson Style Passport Visual Merchandising Display ChallengeGrand Prize Winner:

Sashtri VivekanandanPorchea Gan Ee LingSiti Balqis NatasyrahAnnette Liew Foong Aun

Radiance Hospitality Group-ID CompetitionWinner:

Patricia RimbaDevina SetianyElisabeth ThengNicholas WongDemy Septiana

Red Dot Design Awards 2010Concept Design Winner:

Karan Gandhi Singh

Re-Style Design Contest 2011The Most Popular Award:

Wu XintongThe Best Green Award:

Wang YiyiThe Best Design Award:

Li Yichu

International Design Awards 2011

International Epson Pano Awards

Malaysian International Fashion Award (MIFA) 2010Parkson Style Passport Visual Merchandising Display Challenge

Radiance Hospitality Group-ID Competition

Re-Style Design Contest 2011



Selangor Turf Club Horse Transformation Competition 2010Winner:

Alex Tan Yong ChoonHow Wei ZhongJamie Chua Wan ShinMiru Lim Siau TengNick Ferranie YaphariVince Chee Ven HuiMerit Award:

Carissa Janine BakerJanuar RiantoSashtri VivekanandanTang Sing KongWong Ze AunYuliana Panjayana

Singapore GP Recycle Challenge 2010First Runner up:

Philippe FaureRohan Kumar VermaJil Lin Li

Star Creation-Audi Young Designer Award 2010Finalist: Stephanie SeowKuan Yit Ying

Star Creation-Audi Young Designer Award 2011Winners: Tsai Ming HuangTiang Boon TieonChen Zhi Gang

State Library of NSW Design CompetitionWinner:

Shahid Asif

The 4th Mainland and Taiwan Strait Creative Space Design Contest2nd Prize (Poster Category): Zhang Ying (Ann) 3rd Prize (Poster Category): Zhu Teng Biao (Edison)Liu Tong Tong (Felix)Liu Na (Candice)Yu Ying Ying (Michelle)3rd Prize (Product Design):

Zhang Long HuiShen Jia Qi (Vincent)Xu Shi Wei (Roy)Li Dan Ni (Ada)Li Wen Ting

War of DesignerTop Honours: Sangay Negi

YourSingapore United Teddy Bear 2011National Winner:

Jacqueline Harliman Honorary Mention:

Seah Wei Wen Russell Gerard Nur Irani Binti Abdul RahmanWee Choong Wee Leonard

YTL’s Climate Change Week Eco Tips Video CompetitionWinner:

Vince Chee Ven HuiAlex Tan Yong Choon

Triumph Inspiration Awards 2011National Winner (Singapore):

Winnie SetioSecond runner up (Singapore):

Sophia Eng Finalists: Khoh Siow LinStefaniKoh Nyat MienAce Chia Xie Jie YingKartika SariNathaphol Sirivitpakdikul

Rosemount Australian Fashion Week - Raffles Runway ShowParticipants:

Byron McGilvrayPeggy HartantoWinston TanHoi Ling Tsoi (Crystal)Erin LohZhigang ‘Del’ Chen

Samsung Corby Colour Me ChallengeWinner:

Sashtri Vivekanandan

Rosemount Australian Fashion Week - Raffles Runway Show

Selangor Turf Club Horse Transformation Competition 2010

Triumph Inspiration Awards 2011

War of Designer

YourSingapore United Teddy Bear 2011


XXXXXXXXXXXXXXXXXXXX

Report of the DirectorsStatement by DirectorsIndependent Auditors’ ReportStatements of Financial PositionConsolidated Statement of Comprehensive IncomeStatements of Changes in EquityConsolidated Statement of Cash FlowsNotes to the Financial StatementsStatistics of ShareholdingsNotice of Annual General Meeting

FINANCIALS

50 Report of the Directors59 Statement by Directors60 Independent Auditor’s Report62 Statements of Financial Position63 Consolidated Statement of Comprehensive Income64 Statements of Changes in Equity67 Consolidated Statement of Cash Flows70 Notes to the Financial Statements141 Statistics of Shareholdings143 Notice of Annual General Meeting


REPORT OF THE DIRECTORS

The Directors of the Company present their report to the members together with the audited consolidated financial statements of the Group for the financial year ended 30 June 2011.

1. Directors

The Directors of the Company in office at the date of this report are:

Chew Hua SengHenry Tan Song KokTan Chin NamTeo Cheng Lok JohnLim Tien Lock, ChristopherChew Kok Chor (appointed 24 January 2011)Chong Ee Yong (appointed 24 January 2011)Yap Kim Wah (appointed 24 January 2011)

2. Arrangements to enable Directors to acquire shares or debentures

Except as disclosed in this report, neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object is to enable the Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

3. Directors’ interests in shares or debentures

According to the register of directors’ shareholdings kept by the Company for the purposes of Section 164 of the Singapore Companies Act, Cap. 50 (the “Act”), none of the Directors who held office at the end of the financial year had any interests in the shares or debentures of the Company and its related corporations except as follows:

Shareholdings registeredin the name of Directors

Shareholdings in which Directors are deemed

to have an interest

At beginning of the year

or date of appointment,

if later* At end

of the year

At beginning of the year


if later*At end

of the year

(a) Interests in Raffles Education Corporation Limited

Number of ordinary shares

Chew Hua Seng 810,314,651 274,438,214 65,467,618 21,822,539 Henry Tan Song Kok 1,745,224 581,741 520,094 173,364 Tan Teck Meng (1) 1,135,282 - - 378,427 Teo Cheng Lok John 672,813 224,271 - -

Chew Kok Chor 1,310,000 470,000 - -Chong Ee Yong 300,000 100,000 950,000 316,666Yap Kim Wah - - 160,402 53,467



3. Directors’ interests in shares or debentures (Continued)

Shareholdings registeredin the name of Directors

Shareholdings in which Directors are deemed

to have an interest

At beginningof the year


if later*At end

of the year

At beginningof the year


if later*At end

of the year

(a) Interests in Raffles Education Corporation Limited (Continued)

Number of options to subscribe for ordinary shares

Henry Tan Song Kok 600,000 266,998 - -Teo Cheng Lok John 200,000 133,666 - -Tan Teck Meng (1) 600,000 266,998 (1) - -Lim Tien Lock, Christopher 200,000 133,666 - -Tan Chin Nam 200,000 133,666 - -Chew Kok Chor 250,000 370,000 - -Chong Ee Yong 33,332 100,332 - -

* The number of ordinary shares and options disclosed are before the share consolidation of every three existing shares held by shareholders into one consolidated share. Following the approval by shareholders at Extraordinary General Meeting on 23 March 2011 and completion of the shares and options consolidation on 1 April 2011, the number of shares and options of the Company was 874,401,361 consolidated shares and 5,565,523 consolidated options respectively, fractional entitlements having been disregarded.

(1) Tan Teck Meng passed away on 7 July 2011 and his options lapsed upon his demise.

(b) Related corporations

Interests in Raffles College of Higher Education Sdn Bhd (formerly known as Raffles Design Institute Sdn Bhd)

Number of ordinary shares

Chew Hua Seng - - 800,000 800,000

Interest in Raffles K12 Sdn Bhd

Chew Hua Seng - - - 60,000

In accordance with the continuing listing requirements of the Singapore Exchange Securities Trading Limited (“SGX-ST”), the Directors of the Company state that, according to the register of Directors’ shareholdings, the Directors’ interests as at 21 July 2011 in the shares of the Company have not changed from those disclosed as at 30 June 2011.

By virtue of Section 7 of the Act, Chew Hua Seng is deemed to have interests in the shares of all the related

companies of the Company as at the beginning and end of the financial year.



4. Directors’ contractual benefits

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the Director or with a firm of which he is a member, or with a company in which he has a substantial financial interest except as disclosed in the financial statements.

5. Share options and performance shares

5.1 Share options

(a) Options to take up unissued shares

The Raffles 2000 Employees’ Share Option Scheme (Year 2000) (“the Scheme”) was approved by the shareholders of the Company at an Extraordinary General Meeting held on 28 August 2000. Following the Company’s change of name on 8 June 2001 to Raffles Lasalle Limited, the Scheme came to be known as “Raffles Lasalle Employees’ Share Option Scheme (Year 2001)”. On 30 November 2004, the Scheme was renamed as “Raffles Education Corp Employees’ Share Option Scheme (Year 2001)” (the “REC Scheme”). After the expiration of the REC scheme on 27 August 2010, the Company has, by way of a shareholders’ approval at an extraordinary general meeting held on 23 March 2011, adopted a new scheme “Raffles Education Corporation Employees’ Share Option Scheme (Year 2011)” (the “REC ESOS Scheme”).

The REC ESOS Scheme is administered by the Remuneration Committee whose members are:

Lim Tien Lock, Christopher (Chairman)Teo Cheng Lok JohnTan Chin Nam

A member of the Remuneration Committee who is also a Participant of the REC Scheme and REC ESOS Scheme must not be involved in its deliberations in respect of options granted or to be granted to him.

Statutory and other information regarding the REC ESOS Scheme is set out below:

(i) The Committee may at its discretion, fix the subscription price at a discount up to 20% off market price, or a price equal to the average of the last dealt market prices for the 5 consecutive market days on which the shares of the Company were traded on the SGX-ST immediately preceding the date of grant of the options.

(i) Consideration for the grant of an option is $1.00.

(ii) Options can be exercised 1 year after grant for market price options and 2 years for discounted options.

(iii) Options granted expire after 5 years for participants not holding a salaried office or employment in the Group, and 10 years for employees of the Group.

(iv) Options granted will lapse when participant ceases to be a full-time employee with the Group, subject to certain exceptions at the discretion of the Company.

(v) The aggregate number of shares over which options may be granted on any date, when added to the number of shares issued and issuable in respect of all options granted under the REC ESOS Scheme, shall not exceed 15% of the total number of issued shares excluding treasury shares of the Company on the day preceding that date of grant.



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At 1

July

201

0 or

dat

e of

gra

nt,

whi

chev

er is

late

r

Adj

ustm

ent

for s

hare

cons

olid

atio

n*Ex

erci

sed

Expi

red/

ca

ncel

led

Bala

nce

as a

t 30

June

20

11Su

bscr

iptio

npr

ice*

Exer

cise

per

iod

Dat

e of

gra

nt(’0

00)

(‘000

)(’0

00)

(’000

)(’0

00)

$

REC

Sche

me

21 S

epte

mbe

r 20

0460

(40)

--

200.

4200

21 S

epte

mbe

r 200

5 to20

Sep

tem

ber 2

014

12 O

ctob

er 2

005

488

(325

)-

-16

30.

6675

12 O

ctob

er 2

006 to

11 O

ctob

er 2

015

23 N

ovem

ber

2006

294

(160

)-

(54)

802.

4450

23 N

ovem

ber 2

007 to

22 N

ovem

ber 2

016

7 Ja

nuar

y 20

0860

0(2

67)

-(2

00)

133

4.48

507

Janu

ary

2009 to

6 Ja

nuar

y 20

13

31 Ja

nuar

y 20

081,

214

(668

)-

(230

)31

63.

7050

31 Ja

nuar

y 20

09 to30

Janu

ary

2018


REPORT OF THE DIRECTORS5.

Sh

are

opti

ons

and

perf

orm

ance

sha

res

(Con

tinue

d)

5.1

Shar

e op

tion

s (C

ontin

ued)

(b)

Uni

ssue

d sh

ares

und

er o

ptio

n an

d op

tions

exe

rcis

ed (C

ontin

ued)

At 1

July

201

0 or

dat

e of

gra

nt,

whi

chev

er is

late

r

Adj

ustm

ent

for s

hare

cons

olid

atio

n*Ex

erci

sed

Expi

red/

ca

ncel

led

Bala

nce

as a

t 30

June

20

11Su

bscr

ipti

onpr

ice*

Exer

cise

per

iod

Dat

e of

gra

nt(’0

00)

(‘000

)(’0

00)

(’000

)(’0

00)

$

REC

Sche

me

8 Ja

nuar

y 20

0940

0(2

67)

--

133

1.78

508

Janu

ary

2010 to

7 Ja

nuar

y 20

14

2 Fe

brua

ry 2

009

2,35

1(1

,357

)-

(320

)67

41.

5450

2 Fe

brua

ry 2

010 to

1 Fe

brua

ry 2

019

10 N

ovem

ber

2009

1,00

0(6

66)

--

334

1.30

5010

Nov

embe

r 201

0 to9

Nov

embe

r 201

4

9 Fe

brua

ry 2

010

3,91

7(1

,835

)-

(1,2

01)

881

1.03

509

Febr

uary

201

1 to8

Febr

uary

202

0RE

C ES

OS

Sche

me

23 M

arch

201

11,

005

(670

)-

-33

50.

8100

23 M

arch

201

2 to22

Mar

ch 2

016

23 M

arch

201

17,

314

(4,8

76)

-(5

66)

1,87

20.

8100

23 M

arch

201

2 to22

Mar

ch 2

021

18,6

43(1

1,13

1)-

(2,5

71)

4,94

1



5.

Shar

e op

tion

s an

d pe

rfor

man

ce s

hare

s (C

ontin

ued)

5.1

Shar

e op

tion

s (C

ontin

ued)

(c)

Shar

e op

tions

pur

suan

t to

the

REC

Sche

me

and

REC

ESO

S Sc

hem

e (t

he “S

chem

es”)

Aggr

egat

e op

tions

gra

nted

to D

irect

ors a

nd c

ontr

ollin

g sh

areh

olde

rs o

f the

Com

pany

und

er th

e RE

C Sc

hem

e an

d RE

C ES

OS

Sche

me

sinc

e th

eir c

omm

ence

men

t, ad

just

ed fo

r the

sha

re s

plits

in fi

nanc

ial y

ears

200

5, 2

007

and

2008

and

sha

re c

onso

lidat

ion

in fi

nanc

ial y

ear 2

011,

ar

e as

follo

ws:

Opt

ions

gra

nted

du

ring

the

finan

cial

yea

r en

ded

30 Ju

ne 2

011

Adj

ustm

ent f

or

shar

eCo

nsol

idat

ion*

Agg

rega

te

opti

ons

gran

ted

sinc

e th

e co

mm

ence

men

t of

the

Sche

me

to

30 Ju

ne 2

011

Agg

rega

te

opti

ons

exer

cise

d/ca

ncel

led

sinc

e th

e co

mm

ence

men

t of

the

Sche

me

to

30 Ju

ne 2

011

Agg

rega

te

opti

ons

outs

tand

ing

as a

t 30

June

201

1(‘0

00)

(‘000

)(‘0

00)

(‘000

)(‘0

00)

Chew

Hua

Sen

g-

-1,

500

(1,5

00)

-H

enry

Tan

Son

g Ko

k20

1(1

34)

557

(290

)26

7Li

m T

ien

Lock

, Chr

isto

pher

201

(134

)13

4-

134

Tan

Chin

Nam

201

(134

)13

4-

134

Teo

Chen

g Lo

k Jo

hn20

1(1

34)

134

-13

4Ch

ew K

ok C

hor

360

(240

)1,

723

(1,3

53)

370

Chon

g Ee

Yon

g20

1(1

34)

160

(60)

100

Yap

Kim

Wah

--

--

-D

oris

Chu

ng G

im L

ian

--

300

(300

)-

1,36

5(9

10)

4,64

2(3

,503

)1,

139

* D

urin

g th

e fin

anci

al y

ear,

the

Com

pany

con

solid

ated

thr

ee e

xist

ing

optio

ns h

eld

into

one

con

solid

ated

opt

ion

on 1

Apr

il 20

11, a

ll fr

actio

nal e

ntitl

emen

ts h

avin

g be

en d

isre

gard

ed.



5. Share options and performance shares (Continued)

5.1 Share options (Continued)

(d) During the financial year, no options were granted at a discount to market price.

(e) During the financial year, no employee received 5% or more of the total number of options, available under the Schemes.

(f ) There were no options granted to participants who are controlling shareholders of the Company and their associates except for options granted to Chew Hua Seng and Doris Chung Gim Lian, as disclosed above.

(g) These options do not entitle the holder to participate by virtue of the options, in any share issue of any other corporations.

Save as disclosed above, there were no unissued shares of the Company or its subsidiaries under options as at the end of the financial year.

5.2 Performance Shares

The Raffles Education Corporation Performance Share Plan (the “Share Plan”) was approved by the shareholders at an Extraordinary General Meeting held on 5 March 2008.

The Share Plan is administered by the Remuneration Committee whose members are:

Lim Tien Lock, Christopher (Chairman)Teo Cheng Lok JohnTan Chin Nam

No member of the Remuneration Committee shall participate in any deliberation or decision in respect of performance shares to be granted to him or held by him.

Chew Hua Seng, who is a controlling shareholder, and his associates are not eligible to participate in the Share Plan.

The Share Plan contemplates award of fully-paid shares to participants after satisfaction of certain pre-determined benchmarks. Group executives and Non-executive Directors who, in the opinion of the Remuneration Committee, have contributed to the success and development of the Group, shall be eligible to participate.

Awards granted under the Share Plan may be time-based or performance-related, and in each instance, shall vest only:

- where the award is time-based, after the satisfactory completion of time-based service conditions; or

- where the award is performance-related, after the participant achieves a pre-determined performance target.

Participants are not required to pay for the awards.



5. Share options and performance shares (Continued)

5.2 Performance Shares (Continued)

The Company will have the flexibility to deliver existing shares (including treasury shares) and new shares to holders of awards granted under the Share Plan. The aggregate number of shares to be issued and/or transferred under the Share Plan and any other share-based incentive schemes of the Company shall not exceed 15% of the total number of issued shares of the Company (excluding treasury shares).

No award was granted during the financial year ended 30 June 2011.

6. Audit Committee

The members of the Audit Committee as at the end of the financial year and at the date of this report are as follows:

Henry Tan Song Kok (Chairman)Teo Cheng Lok JohnLim Tien Lock, ChristopherChong Ee Yong (resigned from Audit Committee on 25 August 2011) The Audit Committee performs the functions specified in Section 201B(5) of the Singapore Companies Act. In performing those functions, the Audit Committee reviewed:

- the scope and the results of internal audit procedures with the internal auditors;

- the audit plans and the overall scope of examination by the external auditors of the Group;

- the independence of the external auditors of the Company and the nature and extent of non-audit services provided by the external auditors;

- the assistance provided by the Company’s officers to the external auditors; and

- the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company for the financial year ended 30 June 2011, as well as the independent auditors’ report on these financial statements thereon prior to their submission to the Directors of the Company for adoption.

The Audit Committee has recommended to the Board of Directors the nomination of BDO LLP, for re-appointment as external auditors of the Company at the forthcoming Annual General Meeting.



7. Auditors

The auditors, BDO LLP have expressed their willingness to accept re-appointment.

On behalf of the Board of Directors

Chew Hua Seng Henry Tan Song KokDirector Director

Singapore22 September 2011


STATEMENT BY DIRECTORS

In the opinion of the Board of Directors,

(a) the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Singapore Companies Act, Cap. 50 and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2011 and of the results, changes in equity and the cash flows of the Group and the changes of equity of the Company for the financial year then ended; and

(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

The Board of Directors has, on the date of this statement, authorised these financial statements for issue.

On behalf of the Board of Directors

Chew Hua Seng Henry Tan Song KokDirector Director



INDEPENDENT AUDITOR’S REPORTTO THE MEMBERS OF RAFFLES EDUCATION CORPORATION LIMITED

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of Raffles Education Corporation Limited (the “Company”) and its subsidiaries (the “Group”) which comprise the statements of financial position of the Group and of the Company as at 30 June 2011, and the consolidated statement of comprehensive income, statements of changes in equity of the Group and of the Company and consolidated statement of cash flows of the Group for the financial year then ended and a summary of significant accounting policies and other explanatory information as set out on page 62 to 140.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the “Act”) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.


INDEPENDENT AUDITOR’S REPORTTO THE MEMBERS OF RAFFLES EDUCATION CORPORATION LIMITED

Report on the Consolidated Financial Statements (Continued)

Opinion

In our opinion, the consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 30 June 2011 and of the results, changes in equity and cash flows of the Group and changes in equity of the Company for the financial year ended on that date.

Report on Other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors, have been properly kept in accordance with the provisions of the Act.

BDO LLPPublic Accountants andCertified Public Accountants



STATEMENTS OF FINANCIAL POSITIONAS AT 30 JUNE 2011

Group CompanyNote 2011 2010 2011 2010

$’000 $’000 $’000 $’000

Non-current assetsProperty, plant and equipment 4 163,147 137,557 - -Investment properties 5 592,548 467,251 - -Investments in subsidiaries 6 - - 363,932 362,942Investments in associates 7 1,242 1,285 - -Available-for-sale financial assets 9 4,411 4,738 - -Intangible assets 10 205,161 228,054 191 127

966,509 838,885 364,123 363,069

Current assetsInventories 122 658 - -Trade and other receivables 11 77,068 105,673 238,913 193,022Cash and cash equivalents 12 64,768 101,638 1,227 461

141,958 207,969 240,140 193,483Assets classified as held for sale 13 27,391 - - -

169,349 207,969 240,140 193,483

Less:Current liabilitiesTrade and other payables 14 81,140 86,739 54,237 44,411Income tax payable 10,989 14,293 708 200Borrowings 15 164,370 156,385 132,000 90,980

256,499 257,417 186,945 135,591Net current (liabilities)/assets (87,150) (49,448) 53,195 57,892

Less:Non-current liabilitiesTrade and other payables 14 185,458 172,736 - -Borrowings 15 66,394 16,480 - -Deferred tax liabilities 16 20,758 2,103 - -

272,610 191,319 - -Net assets 606,749 598,118 417,318 420,961

Share capital and reservesShare capital 17 458,079 458,079 458,079 458,079Treasury shares 18 (21,383) (16,798) (21,383) (16,798)Reserves 19 125,198 110,593 (19,378) (20,320)Equity attributable to equity holders of the Company 561,894 551,874 417,318 420,961Non-controlling interests 44,855 46,244 - -

606,749 598,118 417,318 420,961

The accompanying notes form an integral part of these financial statements


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011

GroupNote 2011 2010

$’000 $’000

Revenue 20 157,577 188,069Other operating income 21 5,605 40,077Personnel expenses 22 (60,529) (56,448)Depreciation and amortisation expenses (16,426) (14,852)Other operating expenses (70,743) (83,097)Fair value gain on investment properties 5 76,795 5,775Impairment of goodwill 10 (4,648) (2,306)Finance costs 23 (11,382) (14,267)Share of results of associates 360 379Profit before income tax 24 76,609 63,330Income tax expense 25 (25,338) (7,510)Net profit for the financial year 51,271 55,820

Other comprehensive incomeCurrency translation differences arising from consolidation of foreign operations (31,988) (10,282)

Total comprehensive income for the financial year 19,283 45,538

Attributable to:Equity holders of the Company 41,917 52,560Non-controlling interests 9,354 3,260Net profit for the financial year 51,271 55,820

Attributable to:Equity holders of the Company 13,201 42,834Non-controlling interests 6,082 2,704Total comprehensive income for the financial year 19,283 45,538

Earnings per share (cents)- Basic 26 4.89 6.04*

- Diluted 26 4.89 6.04*

* Adjusted for share consolidation



STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011

The

acco

mpa

nyin

g no

tes f

orm

an

inte

gral

par

t of t

hese

fina

ncia

l sta

tem

ents

Att

ribu

tabl

e to

equ

ity

hold

ers

of th

e Co

mpa

ny

Fore

ign

curr

ency

Shar

e-ba

sed

Capi

tal

tran

slat

ion

paym

ents

Non

–Sh

are

Trea

sury

rese

rve

rese

rve

rese

rve

Acc

umul

ated

cont

rolli

ngTo

tal

capi

tal

shar

es(N

ote

19)

(Not

e 19

)(N

ote

19)

profi

tsTo

tal

inte

rest

seq

uity

Gro

upN

ote

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

$’00

0

Bala

nce

at 1

July

201

045

8,07

9(1

6,79

8)-

(1,6

28)

1,79

611

0,42

555

1,87

446

,244

598,

118

Tota

l com

preh

ensi

ve

inco

me

--

-(2

8,71

6)-

41,9

1713

,201

6,08

219

,283

Shar

e-ba

sed

paym

ents

--

--

293

-29

3-

293

Repu

rcha

se o

f sha

res

18-

(4,5

85)

--

--

(4,5

85)

-(4

,585

)Ac

quis

ition

of n

on-

cont

rolli

ng in

tere

st-

--

--

4,98

64,

986

(4,9

86)

-In

tere

st in

sub

sidi

ary

--

--

--

-42

42Tr

ansf

er-

--

42-

(42)

--

-D

ispo

sal o

f sub

sidi

ary

--

-(3

0)-

-(3

0)-

(30)

Div

iden

ds27

--

--

-(3

,845

)(3

,845

)(2

,527

)(6

,372

)Ba

lanc

e at

30

June

201

145

8,07

9(2

1,38

3)-

(30,

332)

2,08

915

3,44

156

1,89

444

,855

606,

749


STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011 (Continued)

The

acco

mpa

nyin

g no

tes f

orm

an

inte

gral

par

t of t

hese

fina

ncia

l sta

tem

ents

Att

ribu

tabl

e to

equ

ity

hold

ers

of th

e Co

mpa

ny

Fore

ign

curr

ency

Shar

e-ba

sed

Capi

tal

tran

slat

ion

paym

ents

Non

–Sh

are

Trea

sury

rese

rve

rese

rve

rese

rve

Acc

umul

ated

cont

rolli

ngTo

tal

capi

tal

shar

es(N

ote

19)

(Not

e 19

)(N

ote

19)

profi

tsTo

tal

inte

rest

seq

uity

Gro

upN

ote

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

$’00

0$’

000

$’00

0

Bala

nce

at 1

July

200

943

9,51

7(2

,321

)17

,637

8,09

81,

048

54,9

8151

8,96

020

,566

539,

526

Fair

valu

e ad

just

men

t on

inte

rest

-free

loan

--

(17,

637)

--

17,6

37-

--

Dis

posa

l of i

nter

est i

n su

bsid

iarie

s-

--

--

11,1

0211

,102

22,9

7434

,076

Tota

l com

preh

ensi

ve

inco

me

--

-(9

,726

)-

52,5

6042

,834

2,70

445

,538

Shar

e-ba

sed

paym

ents

--

--

767

-76

7-

767

Issu

e of

sha

res

1718

,453

--

--

-18

,453

-18

,453

Shar

e op

tions

exe

rcis

ed10

9-

--

(19)

-90

-90

Repu

rcha

se o

f sha

res

18-

(14,

477)

--

--

(14,

477)

-(1

4,47

7)D

ivid

ends

27-

--

--

(25,

855)

(25,

855)

-(2

5,85

5)Ba

lanc

e at

30

June

201

045

8,07

9(1

6,79

8)-

(1,6

28)

1,79

611

0,42

555

1,87

446

,244

598,

118


STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011 (Continued)


Share Treasury

Share-based payments

reserveAccumulated

(losses)/ Totalcapital shares (Note 19) profits

Company Note $’000 $’000 $’000 $’000 $’000

Balance at 1 July 2010 458,079 (16,798) 1,796 (22,116) 420,961Total comprehensive income - - - 4,494 4,494Share-based payments - - 293 - 293Repurchase of shares 18 - (4,585) - - (4,585)Dividends 27 - - - (3,845) (3,845)Balance at 30 June 2011 458,079 (21,383) 2,089 (21,467) 417,318

Balance at 1 July 2009 439,517 (2,321) 1,048 (15,905) 422,339Total comprehensive income - - - 19,644 19,644Share-based payments - - 767 - 767Issue of shares 17 18,453 - - - 18,453Share options exercised 109 - (19) - 90Repurchase of shares 18 - (14,477) - - (14,477)Dividends 27 - - - (25,855) (25,855)Balance at 30 June 2010 458,079 (16,798) 1,796 (22,116) 420,961


CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011


GroupNote 2011 2010

$’000 $’000

Cash flows from operating activitiesProfit before income tax 76,609 63,330Adjustments for:

Allowance for doubtful trade receivables 5 5,890Reversal of allowance for doubtful trade receivables (2,754) -Amortisation of intangible assets 1,869 2,224Bad debts written off 554 3,709Depreciation for property, plant and equipment 14,557 12,628Fair value gain on investment properties (76,795) (5,775)Gain on disposal of a subsidiary 12 (131) -Impairment of goodwill 4,648 2,306Impairment of property, plant and equipment - 218Interest expense 11,382 14,267Interest income (1,332) (812)Net loss on disposal of property, plant and equipment 15 4Property, plant and equipment written off 3 12Share of results of associates (360) (379)Write off of prepaid Initial Public Offering expenses of a subsidiary - 2,273Share-based payments 293 767

Operating profit before working capital changes 28,563 100,662

Working capital changes: Trade and other receivables 9,292 (13,280) Inventories 402 (61) Course fees and management fees received in advance 2,568 (2,601) Trade and other payables 1,220 (7,965)Cash generated from operations 42,045 76,755 Interest paid (5,015) (8,945) Interest received 1,332 812 Income tax paid (9,031) (8,096)Net cash from operating activities 29,331 60,526


CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011 (Continued)


GroupNote 2011 2010

$’000 $’000

Cash flows used in investing activities Proceeds from sales of plant and equipment 25 21 Proceeds from sales of investment properties - 58,106 Proceeds from disposal of interest in subsidiaries 9,590 61,969 Purchases of property, plant and equipment A (29,133) (7,597) Proceeds from disposal of subsidiary 12 3,783 - Acquisition of associate, net of cash acquired 7 - (1,070) Payment of remaining purchase consideration for acquisition of subsidiaries (25,716) (93,614) Investment in available-for-sale financial asset (9) - Additions of development costs A (1,987) (2,090) Additions of computer software (500) (393) Additions of investment properties A (68,140) (81,424) Additions of trademarks (64) (42) Investment in subsidiary by non-controlling interests 42 - Dividends received from associates 362 361Net cash used in investing activities (111,747) (65,773)

Cash flows from financing activities Proceeds from issue of new ordinary shares - 90 Purchase of treasury shares 18 (4,585) (14,477) Share issuance expenses 17 - (41) Draw down of borrowings 54,920 38,395 Draw down of long term mortgage borrowing facility for investment properties financing 54,650 - Repayment of borrowings (46,680) (20,080) Dividend payments to non-controlling interests (2,527) - Dividend payments to equity holders of the Company 27 (3,845) (25,855) Scrip dividends issued to equity holders of the Company 17 - 18,494Net cash from/(used in) financing activities 51,933 (3,474)

Net change in cash and cash equivalents (30,483) (8,721)Cash and cash equivalents at beginning of financial year 101,638 115,314Effect of exchange rate changes in cash and cash equivalents (6,387) (4,955)Cash and cash equivalents at end of financial year 12 64,768 101,638


CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011 (Continued)


Note A Group

Note 2011 2010$’000 $’000

Additions of property, plant and equipment 4 53,276 7,597Increase in non-current other payables in relation to

property, plant and equipment 14 (24,143) -Purchase of property, plant and equipment

per consolidated statement of cash flows 29,133 7,597

Additions of development costs 10 2,445 2,090Decrease in prepayment in relation to development costs 11 (458) -Additions of development costs


Additions of investment properties 5 95,253 81,424Decrease in prepayment in relation to investment properties 11 (27,113) -Additions of investment properties



NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011

1. General corporate information

Raffles Education Corporation Limited (the “Company”) is incorporated in the Republic of Singapore (Registration Number: 199400712N), and has registered office and principal place of business at 99 Beach Road, Singapore 189701. The Company is listed on the Singapore Exchange Securities Trading Limited (“SGX-ST”).

The principal activities of the Company are those of an investment holding and provision of office support services.

The principal activities of significant subsidiaries are set out in Note 6 to the accompanying financial statements.

The consolidated financial statements relate to the Company and its subsidiaries (collectively referred to as the “Group”) and the Group’s interests in associates and joint venture.

The consolidated financial statements of the Group, the statement of financial position and statement of changes in equity of the Company for the financial year ended 30 June 2011 were authorised for issuance by the Board of Directors of the Company on 22 September 2011.

2. Summary of significant accounting policies

2.1 Basis of preparation of financial statements

The financial statements have been prepared in accordance with the provisions of the Singapore Companies Act, Cap. 50 and the Singapore Financial Reporting Standards (“FRS”), including related interpretation of FRS (“INT FRS”).

The financial statements have been prepared under the historical cost convention, except as disclosed in the accounting policies below. The consolidated financial statements of the Group and the statement of financial position of the Company are presented in Singapore Dollar (“$”) which is the Company’s functional currency. All financial information presented in Singapore Dollar has been rounded to the nearest thousands, unless otherwise stated. The financial statements of the subsidiaries are prepared for the same reporting date as the Company.

For the financial year ended 30 June 2011, the Group’s current liabilities exceeded its current assets by approximately $87.2 million (2010: net current liabilities position of $49.4 million). Current liabilities comprise mainly current borrowings for the Group’s long-term investment activities. The Directors are of the opinion that based on the Group’s expected near-term profitability and positive prospects, its healthy operational cash flow and support from bankers and creditors, the use of going concern basis in the preparation and presentation of the Group’s financial statements is appropriate.

The preparation of financial statements in conformity with FRS requires management to exercise judgements in the process of applying the Group’s accounting policies. It also requires the use of certain critical accounting estimates and assumptions.

Information about significant sources of estimation uncertainty and critical accounting judgements that are significant to the financial statements are disclosed in Note 3 to the financial statements.


NOTES TO THE FINANCIAL STATEMENTSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2011 (Continued)

2. Summary of significant accounting policies (Continued)

2.1 Basis of preparation of financial statements (Continued)

During the current financial year beginning 1 July 2010, the Group has adopted all applicable new and revised FRS and INT FRS that are relevant to its operations and effective for the current financial year. The adoption of these new and revised FRS and INT FRS does not result in any changes to the Group’s accounting policies and has no material effect on the amounts reported for the current or prior financial years.

FRS and INT FRS issued but not yet effective

At the date of authorisation of these financial statements, the Group has not adopted the following new/revised FRS (including their consequential amendments) and INT FRS which are potentially relevant to the Group that have been issued but not yet effective for the current financial year.

Effective date (Annual periods beginning on or

after)FRS 12 (Amendments) - Deferred Tax: Recovery of Underlying Assets 1 January 2012

FRS 24 - Related Party Disclosure (Revised) 1 January 2011

FRS 107 (Amendments) - Disclosure: Transfer of Financial Assets 1 July 2011

The initial adoption of these new/revised FRS (and their consequential amendments) and INT FRS is not expected to have material impact on the Group’s financial statements, except as disclosed below:

FRS 12 (Amendments) Deferred Tax: Recovery of Underlying Assets

The Amendments to FRS 12 Deferred Tax: Recovery of Underlying Assets are effective for the Group for annual period beginning on or after 1 July 2012.

The Amendment to FRS 12 apply to the measurement of deferred tax liabilities and assets arising from investment properties measured using the fair value model under FRS 40 Investment Property, including investment property acquired in a business combination and subsequently measured using the fair value model. For the purposes of measuring deferred tax, the Amendments introduce a rebuttable presumption that the carrying amount of an investment property measured at fair value will be recovered entirely through sale. The presumption can be rebutted if the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits over time, rather than through sale. The management is in process of making an assessment of the impact of this Amendment upon initial application.




2.1 Basis of preparation of financial statements (Continued)

FRS and INT FRS issued but not yet effective (Continued)

FRS 24 Related Party Disclosures (Revised)

FRS 24 changes certain requirements for related party disclosures for entities under control, joint control or significant influence of a government (“government-related entities”). FRS 24 also made related party relations symmetrical between each of the related parties and new relationships were included and clarified in the definition of a related party. The Group will apply the amendments to FRS 24 retrospectively for annual periods beginning on or after 1 July 2011 and is currently determining the impact of the changes to the definition of a related party on the related disclosures. As this is a disclosure standard, it will have no impact on the financial position or financial performance of the Company or the Group when implemented in financial year beginning 1 July 2011.

2.2 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries.

Subsidiaries are entities over which the Group has power to govern the financial and operating policies, generally accompanying a shareholding giving rise to a majority of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are consolidated from the date on which control commences until the date on which control ceases.

Investments in subsidiaries are stated at cost on the Company’s statement of financial position less any accumulated impairment losses.

In preparing the consolidated financial statements, intra-group transactions, balances and any unrealised gains arising from intra-group transactions are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company using consistent accounting policies. Where necessary, accounting policies of subsidiaries are adjusted to ensure consistency with the policies adopted by other members of the Group.




2.2 Basis of consolidation (Continued)

Non-controlling interests in subsidiaries are that part of the net results of operations and of net assets of subsidiaries attributable to interests which are not owned directly or indirectly by the Group. Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein.

Non-controlling interests in the acquiree may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiable net assets. The choice of measurement is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities or the subsidiary and any non-controlling interests. Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for (i.e. reclassified to consolidated statement of comprehensive income or transferred directly to retained earnings) in the same manner as would be required if the relevant assets or liabilities were disposed of. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under FRS 39 Financial Instruments: Recognition and Measurement or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity.

2.3 Business combination

Business combination on or before 30 June 2009

The purchase method of accounting is used to account for business combination. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values on the date of acquisition, irrespective of the extent of any non-controlling interests.

Any excess of the cost of business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill, accounted for in accordance with Note 2.8(i) to the financial statements.

Any excess of the Group’s interest over the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognised as negative goodwill, credited in the consolidated statement of comprehensive income of the Group on the date of acquisition.




2.3 Business combination (Continued)

Business combination on or after 1 July 2009

The acquisition of subsidiaries and businesses is accounted for using the acquisition method. The consideration of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in consolidated statement of comprehensive income as incurred.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognised in accordance with FRS 39 either in statement of comprehensive income or change to other comprehensive income.

The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts and circumstances that existed as of the acquisition date and is subject to a maximum of one year.

Goodwill arising on acquisition is recognised as an asset at the acquisition date and initially measured at cost, being the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer previously held equity interest (if any) in the entity over net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognised immediately in consolidated statement of comprehensive income as a bargain purchase gain.

2.4 Associates

Associates are entities over which the Group has significant influence, but not control, over their financial and operating policies. Significant influence is presumed to exist when the Group holds a shareholding of between and including 20% and 50% of the voting rights of another entity.

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for under FRS 105 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, investments in associates are carried in the consolidated statement of financial position at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the associate, less any impairment loss of individual investments. Losses of an associate in excess of the Group’s interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate) are not recognised, unless the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

Where the Group transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group’s interest in the relevant associate. This applies to unrealised losses which are also eliminated but only to the extent that there is no impairment.




2.4 Associates (Continued)

The latest audited financial statements of the associates are used by the Group in applying the equity method of accounting. Where audited financial statements are not available, the share of results are included by reference to their latest interim and annual management financial statements, adjusted for any effects of significant transactions or events made up to the end of the financial year 30 June.

2.5 Joint ventures

Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions.

The Group recognises its interest in joint ventures using the proportionate consolidation method. Proportionate consolidation involves combining the Group’s share of the joint venture’s income, expenses, assets and liabilities on a line-by-line basis with similar items in the Group’s financial statements.

After application of the proportionate consolidation method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the joint venture company. The joint venture company is proportionately consolidated from the date the Group obtains joint control until the date that joint control ceases.

Any goodwill arising on the acquisition of the Group’s interest in a joint venture is accounted for in accordance with the Group’s accounting policy for goodwill arising on the acquisition of a subsidiary (Note 2.8 (i)).

Where the Group transacts with its joint venture, unrealised profits and losses are eliminated to the extent of the Group’s interest in the joint venture.

The most recent available financial statements of the joint venture entities are used by the Group in applying the proportionate consolidation method. The reporting dates of the joint venture entities and the Group are identical.

2.6 Property, plant and equipment

Property, plant and equipment held for use in the supply of goods and services or administrative purposes, are initially recorded at cost and subsequently carried at cost less accumulated depreciation and accumulated impairment losses.

Cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and necessary condition for its intended use, and the cost of dismantlement and removing the item and restoring the site on which they are located.

Subsequent expenditure relating to the property, plant and equipment that has already been recognised is added to the carrying amount of the asset only when it is probable that the future economic benefits, in excess of standard performance of the asset before the expenditure was made, will flow to the Group, and the cost can be reliably measured. All other repair and maintenance expenses is recognised in the consolidated statement of comprehensive income when incurred.




2.6 Property, plant and equipment (Continued)

Freehold land has an unlimited useful life and therefore is not depreciated.

Depreciation on other items of property, plant and equipment is calculated and recognised in the consolidated statement of comprehensive income using the straight-line basis over their estimated useful lives as follows:

Useful lives

Leasehold land, buildings and leasehold improvements 3 - 50 years

Plant and equipment 10 years

Furniture, fittings and equipment 3 - 5 years

Computer equipment 3 - 5 years

Motor vehicles 1 - 7 years

The assets’ residual values, estimated useful lives and depreciation method are reviewed, and adjusted as appropriate, at each reporting date.

Construction in-progress represents buildings under construction, which is stated at cost. Cost comprises the direct costs incurred during the period of construction, installation and testing. Construction in-progress is reclassified to the appropriate category of property, plant and equipment when completed and ready for use. No depreciation is provided on construction in-progress.

Gain or loss on disposal of an item of property, plant and equipment is determined as the difference between the net disposal proceeds and its carrying amount and is recognised in the consolidated statement of comprehensive income.

Fully depreciated property, plant and equipment are retained in the financial statements until they are no longer in use.

2.7 Investment properties

Investment properties, which are properties held to earn rentals and/or for capital appreciation, are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at fair value with any changes therein recognised in the consolidated statement of comprehensive income.

Investment properties are subject to renovations or improvements at regular intervals. The cost of major renovations and improvements are capitalised as additions and carrying amounts of the replaced components are written off to the consolidated statement of comprehensive income. The cost of maintenance, repairs and minor improvement are charged to the consolidated statement of comprehensive income when incurred.

If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment and its fair value at the date of reclassification become its cost for accounting purposes.

On disposal of an investment property, the difference between the net disposal proceeds and carrying amount is recognised to the consolidated statement of comprehensive income.

Properties that are being constructed or developed for future use as investment properties are classified as properties under development until development or construction are completed, at which time they are transferred and accounted for as investment properties.




2.8 Intangible assets

An intangible asset that is acquired separately is capitalised at cost. Intangible asset from a business acquisition is capitalised at fair value at date of acquisition. After initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment loss. (i) Goodwill on acquisitions

Goodwill on acquisitions represents the excess of the cost of the acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree. Goodwill is initially measured at cost and is subsequently measured at cost less any accumulated impairment loss. Goodwill arising on acquisition of subsidiaries or jointly controlled entities is presented separately as intangible assets. Goodwill on acquisition of associates is included in carrying amount of the investments.

With effect from 1 July 2009, acquisition of non-controlling interests in a subsidiary are accounted for as transactions with owners in their capacity as owners and therefore no goodwill is recognised as a result of such transactions. The adjustments to non-controlling interests are based on proportional amount of the net assets of the subsidiary.

Prior to 1 July 2009, goodwill arising on the acquisition of a non-controlling interest in a subsidiary represents the excess of the cost of the additional investment over the carrying amount of the interest in the net assets acquired at the date of exchange.

On disposal of a subsidiary or a jointly controlled entity, the attributable amount of goodwill is included in the determination of the gain or loss on disposal.

(ii) Trademarks

Trademarks with definite useful lives are stated at cost less accumulated amortisation and accumulated impairment loss. They are assessed for impairment annually or whenever there are indications of impairment. The useful lives are reviewed on an annual basis, and amortised using the straight-line method from the date on which they are available for use, over the estimated useful lives of up to 10 years.

(iii) Acquired students population

Intangible assets arising from the acquisition of existing student’s population are amortised over 3 years based on the expected benefits from the acquired population and assessed for impairment whenever there is an indication of impairment.

(iv) Development costs

Expenditures on development activities, being the application of technical findings and or other knowledge to a plan or design for the production of new or substantially improved products or services before commercial production or use, is capitalised if the products or services are technically and commercially feasible; adequate resources available to complete development and sufficient certainty of future economic benefits to the Group will cover not only the usual operation and administrative costs but also the development costs themselves.




2.8 Intangible assets (Continued)

(iv) Development costs (Continued)

Expenditure capitalised comprises all directly attributable costs, including materials, services and appropriate proportion of overhead costs. Other development expenditure is recognised in the consolidated statement of comprehensive income as expense when incurred.

Capitalised development expenditure is stated at cost less accumulated amortisation and assessed for impairment whenever there is an indication of impairment. Amortisation is calculated under straight-line method to allocate cost over the expected period of benefits, varying between useful lives of 3 to 7 years.

(v) Computer software

Computer software are initially capitalised at costs which include purchase price and other directly attributable cost of preparing the assets for its intended use. Direct expenditure, which enhances or extends the performance of computer software beyond its specifications and which can be reliably measured, is recognised as a capital improvement and added to the original cost of the software. Maintenance costs are recognised as an expense when incurred.

Computer software are subsequently carried at cost less accumulated amortisation and accumulated impairment loss. These costs are amortised using the straight-line method over their estimated useful lives of 3 years.

2.9 Impairment of non-financial assets

Non-financial assets other than goodwill

The carrying amounts of non-financial assets are reviewed at end of each financial year for impairment loss and whenever events or changes in circumstances or objective evidence indicate that the carrying amount may not be recoverable. If any such indication exists, the assets’ recoverable amounts are estimated.

An impairment loss is recognised if the carrying amount of the asset or its cash-generating unit (“CGU”) exceeds its recoverable amount. A CGU is the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups. Impairment loss is recognised in the consolidated statement of comprehensive income, unless the asset is carried at revalued amount, in which case such impairment loss is treated as a revaluation decrease.

Recoverable amount is the higher of fair value less cost to sell and value in use. The fair value less cost to sell is the amount obtainable from the sale of an asset in an arm’s length transaction. Value in use is the estimated future cash flows discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Recoverable amounts are estimated for individual assets or, if it is not possible, for the CGU to which the asset belongs.




2.9 Impairment of non-financial assets (Continued)

Non-financial assets other than goodwill (Continued)

An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s (CGU’s) carrying amount does not exceed the carrying amount of the asset that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised for the assets in prior years. Reversals of impairment loss are recognised in the consolidated statement of comprehensive income, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation increase.

Goodwill

Goodwill recognised separately as an intangible asset is tested annually for impairment, and whenever there is indication that the goodwill may be impaired.

For the purpose of impairment testing, goodwill is allocated to each of the Group’s CGUs expected to benefit from the synergies arising from the business combination. If the recoverable amount of the CGU is less than the carrying amount of the unit, including the goodwill, impairment loss is recognised in the consolidated statement of comprehensive income and allocated first to reduce the carrying amount of any goodwill allocated to the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the CGU. An impairment loss on goodwill is recognised as an expense and is not reversed in subsequent periods.

2.10 Inventories

Inventories comprising mainly teaching materials are measured at the lower of cost (first-in first-out method) and net realisable value. Cost includes all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less selling expenses.

2.11 Financial instruments

Financial assets and financial liabilities are recognised on the Group’s statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

Financial assets

All financial assets are recognised on a trade date where the purchase of a financial asset is under a contract whose terms require delivery of the financial asset within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.

Financial assets are classified into “loans and receivables” and “available-for-sale financial assets”. The classification depends on the nature and purpose of these financial assets and is determined at initial recognition. Management will re-evaluate this designation at each reporting date.




2.11 Financial instruments (Continued)

Financial assets (Continued)

Effective interest method

The effective interest method calculates the amortised cost of a financial instrument and allocates the interest income or expense over the relevant period. The effective interest rate exactly discounts estimated future cash receipts or payments (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial instrument, or where appropriate, a shorter period. Income and expense are recognised on an effective interest basis for debt instruments to the net carrying amount of the financial instrument other than those financial instruments at fair value through profit or loss.

Loans and receivables

These are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides goods and services directly to receivables with no intention of trading the receivables. Loans and receivables are measured at amortised cost, where applicable, using the effective interest method less impairment. Interest is recognised by applying the effective interest method, except for short-term receivables when the recognition of interest would be immaterial. Loans and receivables are presented as “trade and other receivables” (excluding prepayments) and “cash and cash equivalents” on the statements of financial position.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in values. These also include bank overdrafts that form an integral part of the Group’s cash management.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories.

Investments in equity securities are designated in this category. They are presented as non-current assets unless management intends to dispose of the investment within 12 months after the reporting date.

After initial recognition, available-for-sale financial assets are measured at fair value with gain or losses being recognised as a separate component of equity until the investments is derecognised or until the investment to be impaired at which time the cumulative gain or loss previously reported in equity is included in the consolidated statement of comprehensive income. The fair value of investment that are actively traded in organised financial markets is determined by reference to the relevant Exchange’s quoted market bid prices at the close of business on each reporting date.

Investment in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss, if any.





Financial assets (Continued)

Impairment of financial assets

Financial assets, other than those at fair value through profit or loss, are assessed for impairment at the end of each financial year. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the assets have been adversely impacted.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amounts of all financial assets are reduced by the impairment losses directly.

If an available-for-sale financial asset is impaired, an amount comprising the difference between its cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in the consolidated statement of comprehensive income, is transferred from equity to the consolidated statement of comprehensive income. Reversal of impairment loss in respect of equity instruments classified as available-for-sale is recognised through equity. Reversal of impairment loss on debt instruments is recognised in the consolidated statement of comprehensive income if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment loss was recognised in the consolidated statement of comprehensive income.

With the exception of available-for-sale equity instruments (as described in preceding paragraph), if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through the consolidated statement of comprehensive income to the extent the carrying amount of the financial asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

If there is objective evidence that an impairment loss on an unquoted equity instrument that is not carried at fair value because its fair value cannot be reliably measured, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed in subsequent periods.

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds receivables.





Financial liabilities and equity instruments

Classification as debt or equity

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

Financial liabilities are classified as “other financial liabilities” and the accounting policies adopted for “other financial liabilities” are set out below.

(i) Trade and other payables

Trade and other payables are initially recorded at the fair value of the consideration to be paid in the future, less transaction cost, for goods received or services rendered, whether or not billed to the Group, and are subsequently measured at amortised cost, where applicable, using the effective interest method.

The fair values of other classes of financial liabilities are disclosed in the respective notes to the financial statements.

The fair values of financial liabilities are determined as follows:

- fair value of financial liabilities with standard terms and conditions and traded on active liquid markets are determined with reference to quoted market prices; and

- the fair value of other financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flows analysis using price from observable current market transactions and dealer quotes for similar instruments.

(ii) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred, and are subsequently recognised at amortised cost. Any difference between the proceeds (net of transaction costs) and the settlement or redemption value is recognised in the consolidated statement of comprehensive income over the period of the borrowings, where possible, using the effective interest method.

Borrowings which are due to be settled within 12 months after the reporting date are presented as current borrowings even though the original term was for a period longer than 12 months and an agreement to refinance, to reschedule payments, on a long-term basis is completed after the reporting date and before the financial statements are authorised for issue. Other borrowings due to be settled more than 12 months after the reporting date are presented as non-current borrowings in the statements of financial position.





Financial liabilities and equity instruments (Continued)

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or expired. On derecognition of a financial liability, the difference between the carrying amount and consideration paid is recognised in the consolidated statement of comprehensive income.

Equity instruments and treasury shares

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Ordinary shares are classified as equity instruments and are recorded at the proceeds received, net of direct issue costs.

When a share recognised as equity is repurchased, it is classified as treasury shares. The consideration paid, including any directly attributable incremental cost is presented as a deduction from total equity, until they are subsequently cancelled, sold or reissued.

When the treasury shares are subsequently cancelled, the cost of the treasury shares are deducted against the share capital account if the shares are purchased out of capital of the Company, or against the retained earnings of the Company if the shares are purchased out of earnings of the Company.

When the treasury shares are subsequently sold or reissued pursuant to the performance share plan, the cost of treasury shares is reversed from the treasury share account and the realised gain or loss on sale or reissue, net of any directly attributable incremental transaction costs and related income tax, is recognised as a change in equity of the Company.

2.12 Non-current assets held for sale

Non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Non-current assets are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a complete sale within one year from the date of classification. A component of the Group is classified as a “discontinued operation” when the criteria to be classified as held for sale have been met or it has been disposed of and such a component represents a separate major line of business or geographical area of operations or is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations.

Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised.




2.13 Provisions

Provisions are recognised if as a result of a past event the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. The expense relating to any provision is recognised in the consolidated statement of comprehensive income.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

2.14 Operating leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

When the Group is the lessee

Payments made and rental payable under operating lease (net of any incentives received from the lessor) are recognised in the consolidated statement of comprehensive income on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which the economic benefits for the leased assets are consumed. Contingent rentals arising under operating leases, if any, are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases such incentives are recognised as a liability. The aggregate benefits of incentives is recognised as a reduction of rental expense on a straight-line basis except where another systematic basis is more representative of the time pattern in which the economic benefits for the leased assets are consumed.

When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the financial year in which termination takes place.

When the Group is the lessor

Rental income from operating leases (net of any incentives given to leasee) is recognised on a straight-line basis over the lease term. Assets subject to operating leases are included in investment properties and are stated at fair values and not depreciated.

2.15 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.




2.15 Revenue recognition (Continued)

Course fees and related instruction costs are recognised over the period of instruction. Amounts of fees relating to future periods of instruction are included in tuition fees received in advance.

Revenue from rendering of management and registration services are recognised when the services are rendered. Revenue from provision of canteen operations is recognised as and when such services are rendered.

Interest income is accrued on time basis, by reference to the principal outstanding and at the effective interest rate applicable, on an effective yield basis.

Dividend income from investments is recognised when the shareholders’ right to receive payment has been established.

Rental income received and receivable from investment properties is recognised in the consolidated statement of comprehensive income on a straight-line basis over the term of the relevant operating leases. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.

2.16 Government grants

Grants in recognition of specific expenses are recognised in the consolidated statement of comprehensive income over the periods necessary to match them with the relevant expenses they are intended to compensate. Grants related to depreciable assets are deferred and recognised in the consolidated statement of comprehensive income over the period in which such assets are depreciated and used in the projects subsidised by the grants.

2.17 Income tax expense

Income tax expense represents the sum of current and deferred taxes.

Current income tax is the expected amount of tax payable on taxable income for the financial year to tax authorities, using tax rates enacted or substantively enacted by the reporting date in countries where the Group operate.

Deferred income tax is provided using the liability method, for all temporary differences arising between the carrying amounts and tax bases of assets and liabilities in the financial statements at the reporting date. Deferred tax liability is not recognised on temporary differences associated with investments in subsidiaries, associates, and interests in joint venture to the extent that the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The amount of deferred tax provided is based on the manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted by the reporting date. Deferred tax liabilities are generally recognised for all taxable temporary differences.




2.17 Income tax expense (Continued)

Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will be available against which the temporary differences can be utilised.

Current and deferred income taxes are recognised in the consolidated statement of comprehensive income except to the extent that it relates to items or transactions which are recognised directly in equity, in which case such income tax is recognised in equity. In the case of a business combination, the tax effect is taken into account in calculating goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over cost.

Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same tax authority and the Group intends to settle its current tax assets and liabilities on a net basis.

2.18 Employee benefits

Employee benefits are recognised as an expense, unless the cost qualifies to be capitalised as an asset.

Defined contribution plans

Defined contribution plans are post-employment benefits plans under which the Group pays fixed contribution into separate entities such as Central Provident Funds on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid.

Employee leave entitlement

Employee entitlements to annual leave are recognised when they accrue to employees. An accrual is made for the estimated liability for unutilised annual leave as a result of services rendered by employees up to the reporting date.

Share-based payment

The Company operates the following equity-settled share-based payment plans: Share option plan and Performance share plan.

(i) Share option plan

The fair value of the employee services received in exchange for the grant of option is recognised as an expense in the consolidated statement of comprehensive income with a corresponding increase in the share-based payments reserve over the vesting period.

The total amount to be recognised over the vesting period is determined by reference to the fair value of the options granted on the date of grant. In the valuation process, no account is taken of any performance conditions except of conditions linked to the price of the shares of the Company (“market conditions”), if applicable.

The expense recognised in the consolidated statement of comprehensive income at each reporting date reflects the manner in which the benefits will accrue to employees under the option plan over the vesting period. The profit or loss charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.




2.18 Employee benefits (Continued)

Share-based payment (Continued)

(i) Share option plan (Continued)

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vested irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.

When the options are exercised and new ordinary shares issued, the proceeds received (net of any attributable transaction costs) and the corresponding amount of share-based payments reserve are credited to share capital, or to the treasury shares account, when treasury shares are re-issued to employees.

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification, which increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

(ii) Performance share plan

The fair value of employee services received in exchange for the grant of the awards would be recognised as a charge to the consolidated statement of comprehensive income over the vesting period is determined by reference to the fair value of each award granted on the date of the award with a corresponding credit to equity.

The expense recognised in the consolidated statement of comprehensive income at each reporting date reflects the manner in which the benefits will accrue to employees under the share plan over the vesting period. The charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of the period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon market condition, which are treated as vested irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied.

2.19 Finance costs

Finance costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the finance costs eligible for capitalisation.




2.19 Finance costs (Continued)

All other finance costs are recognised as an expense in the periods in which they are incurred.

2.20 Foreign currencies

Functional and presentation currency

Individual financial statements of each entity in the Group are measured and presented using the currency of the primary economic environment in which the entity operates (“functional currency”).

The consolidated financial statements of the Group and the statement of financial position and statement of changes in equity of the Company are presented in Singapore Dollar, which is the functional currency of the Company and the presentation currency of the consolidated financial statements.

Transactions and balances

Transactions in currencies other than the entity’s functional currency (“foreign currency”) are translated to the respective functional currencies of the Group’s entities at the exchange rates prevailing on the date of the transactions.

At each reporting date, monetary assets and liabilities denominated in foreign currencies are re-translated to the functional currency at the rates prevailing on the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are re-translated using the exchange rates prevailing on the date on which the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-translated.

Exchange differences arising on the settlement and on re-translation of monetary assets and liabilities are recognised in the consolidated statement of comprehensive income for the financial year. Exchange differences arising on settlement and on re-translation of non-monetary assets and liabilities are recognised in the consolidated statement of comprehensive income except for differences arising on the re-translation of items of which gains and losses are recognised directly in equity.

Foreign operations

For the purpose of presenting consolidated financial statements, the results and financial positions of the Group’s foreign operations (none of which has the currency of a hyperinflationary economy) are translated into Singapore Dollar as follows:

- assets and liabilities are translated at exchange rates prevailing at the reporting date;

- income and expenses are translated at average exchange rates for the financial year;

- all resulting foreign exchange differences, if any, are transferred to the foreign currency translation reserve. Such exchange differences are recognised in the consolidated statement of comprehensive income and as part of the gain or loss on disposal in the period in which the foreign operation is disposed of; and




2.20 Foreign currencies (Continued)

Foreign operations (Continued)

- Goodwill and fair value adjustments arising on the acquisition of foreign operation are treated as assets and liabilities of the foreign operation and translated at exchange rates prevailing at the reporting date.

2.21 Dividends

Equity dividends are recognised when they become legally payable. Interim dividends are recorded in the financial year in which they are declared payable. Final dividends are recorded in the financial year in which the dividends are approved by the shareholders. Dividends proposed or declared after the reporting date are not recognised as a liability at the reporting date.

2.22 Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenue and incur expenses, including revenue and expenses relating to transactions with the Group’s other components. All operating segment’s operating results are reviewed by the Group’s Chief Executive Officer to make decisions about resources allocation to the segment and assess its performance, and for which discrete financial information is available.

2.23 Earnings per share

The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares.

Basic EPS is calculated by dividing the Group’s net profit or loss attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the financial year.

Diluted EPS is determined by adjusting the weighted average numbers of ordinary shares outstanding for the effects of all dilutive potential ordinary shares. The Company has one category of potentially dilutive ordinary shares: share options.

For share options, the weighted average number of ordinary shares in issue is adjusted to include the dilutive effect arising from the exercise of all outstanding share options granted to employees where such shares would be assumed to be issued at a price lower than the fair value (average share price during the year). The difference between the weighted average number of shares to be issued at the exercise prices under the options scheme and the weighted average number of shares that would have been issued at the fair value based on assumed proceeds from the issue of these shares are treated as ordinary shares issued for no consideration. The number of such shares issued for no consideration is added as the dilutive effect to the number of ordinary shares outstanding for diluted EPS calculation. Adjustment, if any, will be made to the net profit or loss attributable to equity holders when calculating diluted EPS.

The average fair value of the Company’s shares for the purpose of calculating dilutive effect of shares options was based on quoted market prices for the period during which the options were outstanding.



3. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group’s accounting policies, which are described in Note 2, management made judgements, estimates and assumptions about the carrying amounts of assets and liabilities that were not readily apparent from other sources. The estimates and associated assumptions were based on historical experience and other factors that were considered to be reasonable under the circumstances. Actual results may differ from these estimates.

3.1 Critical judgements made in applying the accounting policies

These estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The following are the critical judgements, apart from those involving estimations (see below) that management has made in the process of applying the Group’s accounting policies and which have the significant effect on the amounts recognised in the consolidated financial statements.

(i) Impairment of financial assets

The Group follows the guidance of FRS 39 - Financial Instruments: Recognition and Measurement, in determining whether a financial asset is impaired. This determination requires significant judgement. The Group evaluates, among other factors, the duration and extent to which the fair value of a financial asset is less than its cost and other near-term business outlook, including industry and sector performance, changes in technology, operational and financing cash flow.

(ii) Impairment of non-financial assets

Non-financial assets are tested for impairment when there are indications that the carrying amounts may not be recoverable. The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date.

Determining whether the asset is impaired requires an estimation of the value in use of the assets or cash-generating unit. The value in use calculation requires management to estimate the future cash flows expected from the asset or cash-generating unit and a suitable discount rate in order to calculate present value.

(iii) Recognition of development costs

The Group follows the recognition criteria as set out in FRS 38 - Intangible Assets, in determining whether development expenditure can be recognised as development costs. This determination requires significant judgement as the Group evaluates factors such as the technical feasibility and availability of resources to complete the development work, the ability to use the intangible assets to generate future economic benefits, and the ability to measure reliably the expenditure attributable to the intangible assets during its development.



3. Critical accounting judgements and key sources of estimation uncertainty (Continued)

3.1 Critical judgements made in applying the accounting policies (Continued)

(iv) Litigation provisions

As a global company with a diverse business portfolio, the Group is exposed to numerous legal risks, particularly in the areas of commercial transactions, tax assessments and employee matters. The outcome of the currently pending and future proceedings cannot be predicted with certainty. Thus, an adverse decision in a lawsuit could result in additional costs that are not covered, either wholly or partially, under insurance policies and that could significantly impact the business and results of operations of the Group and of the Company.

Litigation and other judicial proceedings as a rule raise difficult and complex legal issues and are subject to many uncertainties and complexities including, but not limited to, the facts and circumstances of each particular case, issues regarding the jurisdiction in which each suit is brought and differences in applicable law. Upon resolution of any pending legal matter, the Group may be forced to incur charges in excess of the presently established provisions and related insurance coverage. It is possible that the financial position, results of operations or cash flows of the Group could be materially affected by unfavourable outcome of litigation.

Litigation and administrative proceedings are evaluated on a case-by-case basis considering the available information, including that from legal counsel, to assess potential outcomes. Where it is considered probable that a future obligation will result in an outflow of resources, which can be reliable measured, a provision is recorded in the amount of the present value of the expected cash outflows. These provisions cover the estimated payments to plaintiffs, court fees, attorney costs and the cost of potential settlements. The Group has in the past adjusted existing provisions as proceedings have continued, been settled or otherwise provided with further information on which the likelihood of outflows of resources can be reviewed and measured. Management expects to continue to do so in future periods.

For the financial year 2011 and 2010, management has determined there is no requirement to provide for any litigation provisions in the consolidated financial statements.

(v) Acquisition accounting

The Group accounts for the businesses/companies acquired on or before 30 June 2009 using the purchase method of accounting which requires that assets acquired and liabilities assumed be recorded at their respective fair values at the date of acquisition. The application of the purchase method requires certain estimates and assumptions especially concerning the determination of fair values of acquired intangible assets, investment properties and property, plant and equipment and the liabilities assumed at the date of the acquisition.

The judgments made in the context of the purchase price allocation can materially impact the Group’s future results of operations. Accordingly, for significant acquisitions, the Group engages the expert services and assistance of independent valuation specialists. These independent valuation specialists used subjective assumptions and estimates to determine the fair value of the identified net assets of the acquired companies. Changes in the assumption and estimates in the fair values may potentially affect fair value of the identified assets and liabilities. The valuations are based on information available at the acquisition date.




3.1 Critical judgements made in applying the accounting policies (Continued)

(v) Acquisition accounting (Continued)

In accordance with FRS 103 – Business Combinations, adjustments may be made to provisional values of identifiable assets and liabilities as a result of ongoing due diligence or upon receipt of additional information. If these adjustments arise within 12 months following the date of acquisition, they are recognised as a retrospective adjustment to the goodwill on the acquisition. Once this 12-months’ period elapsed, the effect of any adjustments is recognised in the consolidated statement of comprehensive income unless it involves the correction of an error which will then, be accounted for under FRS 8 – Accounting Policies, Changes in Accounting Estimates and Errors.

(vi) Operating lease commitments – as lessor

The Group has entered into commercial property leases on its investment properties. The Group has determined, based on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards of ownership of these properties and has accounted for the contracts as operating leases.

(vii) Income tax position

The Group has exposure to income taxes in various jurisdictions. Significant judgement is involved in determining the provisions for income taxes on a group basis.

The Group recognised liabilities for expected tax issues based on estimates of additional liable taxes. Where the final tax outcome of these matters is different from the tax position by the Group, such differences will impact the income tax and deferred tax provision in the financial year in which such determination is made. The carrying amount of the Group’s income tax payable and deferred tax liabilities as at 30 June 2011 were approximately $10,989,000 (2010: $14,293,000) and $20,758,000 (2010: $2,103,000) respectively.

Some of the Group’s People’s Republic of China (“PRC”) subsidiaries did not recognise any income tax liabilities on its education related income. Management is of the opinion such education related income is tax exempted according to the tax practices in PRC and their experience as education operators in PRC. Further, there are no specific tax implementation measures applicable for such income in PRC yet and tax liabilities cannot be reliably quantified as at year end. Where the final outcome of these matters is different, such differences may impact significantly the income tax provisions in the period in which such determination is made.

The Group currently has a potential tax exposure of approximately $7,600,000 (2010: $7,600,000) which was not recognised as a liability at the reporting date as the relevant tax authority has not finalised the tax position. Management has engaged tax lawyers to submit the bases to support its position.




3.2 Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

(i) Depreciation of property, plant and equipment and amortisation of computer software

Property, plant and equipment and computer software are depreciated and amortised respectively on a straight-line basis over their estimated useful lives. Management estimates the useful lives of these assets to be within 1 to 50 years. The carrying amounts of the Group’s property, plant and equipment and computer software as at 30 June 2011 were approximately $163,147,000 and $1,106,000 (2010: $137,557,000 and $846,000) respectively. Future changes in the expected level of usage and technological developments could impact the economic useful lives and the residual values of these assets, therefore future depreciation and/or amortisation charges could be revised.

(ii) Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating units (“CGU”) to which the goodwill is allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the CGU and suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of the Group’s goodwill at 30 June 2011 was $196,607,000 (2010: $220,413,000). More details on the impairment testing of goodwill are given in Note 10 to the financial statements.

(iii) Amortisation of intangible assets: development costs and acquired students population

Development costs and acquired students population are amortised over their estimated useful lives. Management estimates the useful lives of these assets based on the expected product life cycle of the assets. Future changes in the market demand or technological advancements could impact the product life cycle, and therefore, the future useful lives of the assets and their future amortisation patterns. The carrying amounts of development costs and acquired students population for the Group as at 30 June 2011 was $7,257,000 (2010: $6,668,000) and $Nil (2010: $ Nil) respectively.

(iv) Impairment of trade and other receivables

The management establishes allowance for doubtful receivables on a case-by-case basis when it believes that payment of amounts owed is unlikely to occur. In establishing these allowances, the management considers its historical experience and changes to its customers’ financial position. If the financial conditions of receivables were to deteriorate, resulting in impairment of their abilities to make the required payments, additional allowances may be required. The carrying amounts of trade and other receivables for the Group and the Company as at 30 June 2011 was $77,068,000 (2010: $105,673,000) and $238,913,000 (2010: $193,022,000) respectively.




3.2 Key sources of estimation uncertainty (Continued)

(v) Method and assumption used to determine fair value of interest-free non-current liabilities

Arising from the acquisition of certain subsidiaries of Oriental University City Limited during the financial year ended 30 June 2008, the Group has a non-current interest-free purchase consideration payable to a vendor over the period from 2010 to 2011. In May 2009, the Group entered into a supplementary agreement with the vendor to extend the repayment period of the balance of the purchase consideration. Management has assessed the fair value of the purchase consideration based on projected cash outflows and repayment terms agreed in May 2009. The discount rate of 2.63% used is the Group’s incremental lending rates for similar types of lending. Details are disclosed in Note 14 to the financial statements.

(vi) Impairment of investments in subsidiaries, associates and joint venture

Management follows the guidance of FRS 36 – Impairment of Assets, in determining whether investments in subsidiaries, associates and joint venture are impaired. This requires assumption to be made regarding the duration and extent to which the fair value of an investment is less than its costs, the financial health, and near-term business outlook of the investments including factors such as industry and sector performance, changes in technology and operational and financing cash flow.

Management’s assessment for impairment of investments in subsidiaries is based on the estimation of value in use of the cash-generating unit (“CGU”) by forecasting the expected future cash flows for a period of up to 10 years, using a suitable discount rate to calculate the present value of those cash flows. The Company’s carrying amount of investments in subsidiaries and associates at 30 June 2011 was $363,932,000 and $Nil (2010: $362,942,000 and $Nil) respectively. Investment in an associate was fully provided for impairment in prior year as disclosed in Note 7 to the financial statements.

(vii) Equity-settled share-based payments

The charge for equity-settled share-based payment is calculated in accordance with estimates and assumptions described in Note 28 to the financial statements. The option valuation model used requires subjective assumptions including the future volatility of the Company’s share price, expected dividend yields, risk-free interest rates. Management draws upon a variety of external sources to determine the appropriate data to use in such calculations. The carrying amounts of share-based payments reserve for the Group and the Company as at 30 June 2011 was $2,089,000 (2010: $1,796,000) and $2,089,000 (2010: $1,796,000) respectively.



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4. Property, plant and equipment (Continued)

During the previous financial year, certain subsidiaries conducted a review of the recoverable amount of its properties. An impairment loss of $218,000 was recognised and included within “Other Operating Expenses” in the consolidated statement of comprehensive income.

As at 30 June 2011, certain properties of the Group with a combined carrying amount of $Nil million (2010: $14.92 million), have been mortgaged to secure borrowings as referred to Note 15 to the financial statements. As of 30 June 2011, legal ownership and title deeds of these properties of carrying amount $Nil (2010: $14.92 million) have not been formally transferred from vendor to the Group due to delay in the completion of certain formal procedures.

Land, buildings and leasehold improvements consist of certain land use rights. As these land use rights could not be reliably allocated between land, buildings and leasehold improvements, the rights were not separately disclosed.

5. Investment properties

Group2011 2010

$’000 $’000

Balance at beginning of financial year, at valuation 467,251 391,534Additions 95,253 81,424Fair value gain recognised in consolidated statement of comprehensive income 76,795 5,775Transfer from property, plant and equipment 3,503 -Transfer to property, plant and equipment (15,378) -Foreign currency realignment (34,876) (11,482)Balance at end of financial year, at valuation 592,548 467,251

(a) The investment properties relate to land and properties of certain subsidiaries held under Oriental University City Limited (“OUC”), and Raffles Assets (Singapore) Pte Ltd acquired by the Group in financial year 2008 and 2011 respectively. Located in the Langfang Economic and Development Zone, Langfang City, Hebei Province, PRC, OUC owns and leases out investment properties to colleges within its self-contained campus. Raffles Assets (Singapore) Pte Ltd leases out the properties in Singapore for commercial office purposes.

Rental income from the Group’s investment properties which are leased out under operating leases, amounted to $20.14 million (2010: $25.13 million). Direct operating expenses arising from rental and non-rental-generating investment properties amounted to $8.37 million and $28.4 million respectively (2010: $9.72 million and $24.56 million).

(b) Investment properties are stated at fair value, determined based on professional valuation carried out on 2 August 2011 by Chesterton Suntec International Pte Ltd, a firm of independent professional valuers having appropriately recognised professional qualifications and recent experience in the locations and categories of the properties being valued.

The valuations are made on the basis of market value and performed in accordance with the International Valuation Standards.

In relying on the valuation reports, management has exercised its judgement and is satisfied that the valuation methods and estimates are reflective of current market conditions.



5. Investment properties (Continued)

(c) Fair value gain of $76.8 million (2010: $5.8 million) relates to the investment properties in OUC.

During the financial year 2011, the Land Bureau of Langfang, People’s Republic of China (“Land Bureau”) resumed approximately 150mu of educational land (equivalent to approximately 100,000 sqm) from OUC. As represented by the Land Bureau, such resumption of land was conducted in accordance with OUC’s proposed City Re-Development Master Plan whereby this 150mu land will be re-zoned and have its use changed to commercial/residential land. The land is pending the change in use and will be subsequently offered for public auction as part of the process of re-zoning in People’s Republic of China. As at year end, a fair value gain of $42.8 million arising from this land has been included in the $76.8 million fair value gain.

(d) All of the Group’s investment properties are held under leasehold interests between 38 to 81 years (2010: 39 to 44 years).

(e) Certain investment properties with carrying values totalling $116.6 million (2010: $156.9 million) were mortgaged to secure borrowings as referred to in Note 15 to the financial statements.

(f ) Investment properties of the Group are held mainly for leasing to tenants under operating leases.

(g) As at reporting date, the legal ownership and title deeds of a portion of properties with carrying amount approximately $48.5 million (2010: $74.97 million) are not formally transferred from the vendor to the Group, either due to delay in the completion of certain formal procedures, or the underlying properties have been mortgaged for bank borrowings.

6. Investments in subsidiaries

Company2011 2010

$’000 $’000

Unquoted equity shares, at cost 374,905 373,915Allowance for impairment loss (10,973) (10,973)

363,932 362,942

Analysis of allowance for impairment loss on investments in subsidiaries during the financial year was as follows:

Company2011 2010

$’000 $’000

Balance at beginning of financial year 10,973 1,418Allowance made during the financial year - 9,555Balance at end of financial year 10,973 10,973



6. Investments in subsidiaries (Continued)

Allowance for impairment loss on investments in subsidiaries was recognised in the income statement of the Company as certain subsidiaries of the Group ceased operations in the previous financial year.

Particulars of the significant subsidiaries are as follows:

Effective equity interest held by the Group Country of

incorporation/ operation Principal activities

2011 2010Subsidiaries % %

Raffles College of Higher Education Pte Ltd 100 100 Singapore Investment holding

Hartford Education Corporation Pte Ltd 100 100 Singapore Investment holding

China Education Limited 100 100 Bermuda Investment holding

Oriental University City Limited (a) 90 90 Cayman Islands Investment holding

Path Education Corporation Pte Ltd 100 100 Singapore Investment holding

Raffles Design Institute Shanghai (a) 100 100 People’s Republic of China

Provision of training programmes and courses in various areas of design and management

Raffles-BICT International College (a) 100 100 People’s Republic of China


Raffles-C.U. International Design College (a) 100 100 People’s Republic of China


Raffles-Ningbo International College (a) 55 55 People’s Republic of China


Raffles-Changzhou International College (a) (h) 50 50 People’s Republic of China





Particulars of the significant subsidiaries are as follows: (Continued)

Effective equity interest held by

the Group Country of incorporation/ operation

2011 2010Subsidiaries % % Principal activities

Raffles-Wuhan Design Institute (a)(h) 50 50 People’s Republic of China


Yunnan Nationalities University - Raffles College Singapore (a)

100 100 People’s Republic of China


Raffles College Pty Ltd (b) 100 100 Australia Provision of training programmes and courses in various areas of design and commerce

Raffles Design International (India) Pty Ltd (a)

100 100 India Provision of training programmes and courses in various areas of design and management

Raffles Design International (Thailand) Limited (c)(h)

49 49 Thailand Provision of training programmes and courses in various areas of design and management

Raffles Design Training Centre (Vietnam) (a)

100 100 Vietnam Provision of training programmes and courses in various areas of design and management

PT Raffles Design Institute(a) 100 100 Indonesia Provision of training programmes and courses in various areas of design and management

Raffles College of Design and Commerce (New Zealand) Limited (d)

100 100 New Zealand Provision of training programmes and courses in various areas of design and management








Shanghai Zhonghua Vocation Institute(a)


Provision of vocational and technical training

Wanbo Technology Vocation Institute(a) 100 100 People’s Republic of China

Provision of vocational and technical training

Raffles Assets (Singapore) Pte Ltd (formerly known as Anise (S) Pte Ltd)

100 100 Singapore Investment holding

Raffles Education Malaysia Pte. Ltd. 100 100 Singapore Investment holding

Raffles Design Institute (Private) Limited (a)

100 100 Sri Lanka Provision of training programmes and courses in various areas of design and management

Raffles Design Institute Limited (g) 100 100 Bangladesh Provision of training programmes and courses in various areas of design and management

Raffles Design Institute Inc (a) 100 - Philippines Provision of training programmes and courses in various areas of design and management

Raffles International College (Cambodia) Limited (a)

100 100 Cambodia Provision of training programmes and courses in various areas of design and management

Subsidiary of Raffles Education Malaysia Pte Ltd

Raffles Iskandar Sdn Bhd (a) 100 100 Singapore Provider of education services

Raffles K12 Sdn Bhd (a) 54 - Singapore Provider of education services








Subsidiary of Raffles Design Institute Shanghai

Raffles Design Institute Guangzhou (a) 100 100 People’s Republic of China


Subsidiaries of Hartford Education Corporation Pte Ltd

Raffles International College (HK) Ltd (e) 100 100 Hong Kong Provider of education services

Raffles International Mongolia Co., Ltd (f ) 75 75 Mongolia Provider of education services

Raffles International Training Centre Hanoi (a)

100 100 Vietnam Provider of education services

Raffles Education Beijing (a) 100 100 People’s Republic of China

Provider of education services

Subsidiaries of China Education Limited

Tianjin University of Commerce Boustead College (a)


Operation of education business

Subsidiaries of Raffles College of Higher Education Pte Ltd

Raffles Design Institute Pte Ltd 100 100 Singapore Provider of education services

Raffles School of Business Pte Ltd 100 100 Singapore Provider of education services








Subsidiaries of Oriental University City Limited

Langfang Development Zone Oriental University City Higher Education Co., Ltd (a)

81 81# People’s Republic of China

Provider of education services

Langfang Development Zone Oriental University City Education Consultancy Co., Ltd (a)


Provider of education supporting services

Hebei Oriental Zhuyun Property Development Co., Ltd (formerly known as Langfang Development Zone Oriental University City Education Development Co., Ltd) (a)


Provision of accommodation

Subsidiaries of Langfang Develop-ment Zone Oriental University City Higher Education Co., Ltd

Langfang Development Zone Oriental University City Education Facilities Development Co., Ltd (formerly known as Langfang Development Zone Oriental University City Educa-tion Facilities Co., Ltd) (a)

81* 61# People’s Republic of China

Provider of accommodation and management services

Langfang Oriental College of Arts (for-merly known as Langfang Oriental College) (a)






Notes on subsidiaries:

All the subsidiaries are audited by BDO LLP, Singapore except for the following:

(a) Audited by overseas member firms of BDO (b) Audited by other firm of auditors, RSM Bird Cameron, Australia (c) Audited by other firm of auditors, Sunantanawat Audit Company Limited, Thailand (d) Audited by other firm of auditors, RSM Prince, New Zealand (2010: Gilligan Sheppard Chartered

Accountants) (e) Audited by other firm of auditors, Morison Heng CPA, Hong Kong (2010: NHL CPA Limited) (f ) Audited by other firm of auditors, Ulaanbaatar Audit Corporation LLC, Mongolia (g) Audited by other firm of auditors, ACNABIN Chartered Accountant, Bangladesh (h) Deemed to be subsidiaries of the Company by virtue of management control # During financial year ended 30 June 2010, the Company disposed 10% of the issued and paid up capital

of its subsidiary - Oriental University City Limited (“OUC”) to a wholly-owned subsidiary of Khazanah Nasional Berhad (“Khazanah”), for a consideration of RMB 300,000,000 (approximately $61,969,000). Accordingly the effective equity interest held by the Group in the subsidiaries of OUC had been reduced by 10%. The disposal transaction of 10% equity interest in OUC to non-controlling interests had given rise to a net gain on disposal of approximately $11.1 million for the Group which had been recognised directly in equity.

* Effective controlling interest increase due to acquisition of non-controlling interests during the financial year ended 30 June 2011.

In accordance with Rule 716 of the SGX-ST listing manual, the Audit Committee and Board of Directors of the Company confirmed that they are satisfied that the appointment of different auditors for its subsidiaries would not compromise the standard and effectiveness of the audit of the Group.

7. Investments in associates

Group Company2011 2010 2011 2010

$’000 $’000 $’000 $’000

Unquoted equities, at cost 34,337 34,337 30,203 30,203Share of post-acquisition profits net of dividend received (22) 21 - -Allowance for impairment (33,073) (33,073) (30,203) (30,203)

1,242 1,285 - -

During the previous financial year 2010, the Group acquired an equity interest of approximately 37.5% in an entity incorporated in Mongolia for a consideration of approximately $1,070,000.



7. Investments in associates (Continued)

The summarised financial information of the Group’s associates is set out as follows:

Group2011 2010

$’000 $’000

Assets 8,800 8,887Liabilities 6,280 6,234Revenue 5,605 4,949Profit for the financial year 1,934 1,882

Details of associates as at 30 June 2011 are as follows:


the GroupCountry ofincorporation/operation

2011 2010

Associates % % Principal activities

Raffles College of Higher Educa-tion Sdn. Bhd. (formerly known as Raffles Design Institute Sdn Bhd) (a)

20.0 20.0 Malaysia Provision of training programmes and courses in various areas of design and management

Oriental Century Limited (b) 29.9 29.9 Singapore Investment holding

KHID Co., Ltd (c) 37.5 37.5 Mongolia Investment holding

Notes on associates:

(a) Audited by overseas member firm of BDO (b) In process of voluntary liquidation. (2010: audited by other firm of auditors, KPMG LLP, Singapore) (c) Audited by other firm of auditors, IKH Nayad Audit LLC, Mongolia (2010: San Audit)

Updates on Oriental Century Limited (“OCL”)

During the financial year 2009, OCL, an associate which the Company owns an equity shareholding of 30% reported that a former key executive has made claims of the falsification of certain accounting records of certain entities within OCL group over a number of years, and diverting unspecific sums of money to an interested party. Trading of OCL’s shares on the Singapore Stock Exchange has been suspended voluntarily since then.

Following OCL’s Special Accountant’s Report and in the absence of reliable information, accounting records and practicable procedures, OCL’s Board had not been able to prepare and present the consolidated financial statements of OCL and its subsidiaries, and have expressed doubt of OCL as a going concern. Accordingly OCL’s independent auditor (KPMG LLP, Singapore) issued a disclaimer opinion on OCL’s financial statements for the financial year ended 31 December 2009.



7. Investments in associates (Continued)

Updates on Oriental Century Limited (“OCL”) (Continued)

During financial year 2010, the Company entered into a non-binding term sheet with OCL and the owners of ISS Holdings Ltd (“ISS”) whereby:

1) The Company will acquire 50% shareholding interest in ISS (“REC-ISS” transaction), subject to the Company’s due diligence on the ISS group with satisfactory results.

2) Upon completion of the REC-ISS transaction, ISS will seek a listing on the Catalist Board of the Singapore Stock Exchange via the transfer of listing status from OCL to ISS, in consideration for which new shares in ISS will be issued to shareholders’ and creditors’ of OCL (“proposed transaction”).

On 26 October 2010, ISS notified the Company they are not proceeding with the proposed REC-ISS transaction.

Due to the non-proceeding of the proposed REC-ISS transaction, SGX-ST has directed OCL for a reasonable exit offer and subsequent delisting. As OCL is insolvent and has very limited resources, it proposed a voluntary liquidation and obtained shareholders’ and creditors’ approval at an Extraordinary General Meeting and Creditors Meeting, both held respectively on 2 December 2010.

On 30 May 2011, the shares of OCL were delisted from Catalist, Singapore Exchange Limited.

8. Investment in joint venture During the financial year ended 30 June 2009, the Group acquired 50% equity interest in a jointly-controlled

entity, Educomp-Raffles Higher Education Limited via its wholly-owned subsidiary – REC India (BVI) Ltd.

The Group’s share of income and expense, and assets and liabilities of the joint venture at the end of the financial year are as follows:

Group2011 2010

$’000 $’000Income and expensesShare of income 1,665 783Share of expenses (6,124) (3,425)

Assets and liabilitiesShare of current assets 17,317 14,164Share of non-current assets 2,932 3,540Share of total assets 20,249 17,704

Share of current liabilities, representing share of total liabilities 846 489



8. Investment in joint venture (Continued)

Details of joint venture as at 30 June 2011 are as follows:


the Group Country ofincorporation/operation

2011 2010Joint venture % % Principal activities

Educomp-Raffles Higher Education Limited (a)

50 50 India Provision of training programmes and courses in various areas of design and management

Note on joint venture:

(a) Audited by overseas member firm of BDO

9. Available-for-sale financial assets

Group2011 2010

$’000 $’000

Unquoted equity interest, at cost 4,411 4,738

The unquoted equity interests were acquired as part of the assets in certain subsidiaries of Oriental University City Limited (“OUC”) during the financial year 2008.

As these equity interests in unquoted corporations in the People’s Republic of China are not similar in size and activity to any quoted entities and there is no active market for these equity interests, it is not practicable to determine the fair value of these unquoted equity interests with sufficient reliability. Consequently, these unquoted equity interests are carried at cost less impairment loss, if any, recoverable amounts based on management’s assessment.



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10. Intangible assets (Continued)

Goodwill acquired in a business combination is allocated to the cash-generating units (“CGUs”) that are expected to benefit from that business combination. Before recognition of impairment loss, the carrying amount of goodwill had been allocated to the CGUs which are the various subsidiaries as follows:

Group2011 2010

$’000 $’000

Hartford Education Corporation Pte Ltd 50,485 50,485Shanghai Zhongfa Education Investment Co., Ltd 14,066 28,313China Education Limited 94,164 94,164Educomp-Raffles Higher Education Limited 10,780 10,780Others (#) 34,066 38,977

203,561 222,719

(#) individually insignificant

The Group tests the CGUs annually for impairment or more frequently when there are indications that the CGUs might be impaired.

Impairment testing of goodwill

The recoverable amounts of the CGUs are determined from value in use calculations.

For value in use calculations, the recoverable amounts are determined by applying the discounted cash flow model using cash flow projections based on financial budgets and forecasts approved by the management covering a period of up to ten-years. Management is of the opinion that, ten-year cash flow projections are more reflective of the business prospective in which the CGUs are operating in.

The pre-tax discount rate applied to the cash flow projections is 5% (2010: 5%) and reflects specific risks relating to the business segment and cash flows beyond the one-year period. The growth rates used are based on the industry growth forecast and for cash flow projections beyond a five-year period, no growth is projected after the fifth year.

For valuation performed on the fair value of the business, the recoverable amounts are determined based on valuation performed by independent professionals on the fair value of the businesses. The valuations considered the offer prices by the Group to acquire the non-controlling interests in these units with a range of market indicators across similar privatisation deals of comparable companies.

An impairment charge of $4,648,000 (2010: $2,306,000) was recognised in the consolidated statement of comprehensive income. This impairment charge, solely related to “Others” category, has arisen mainly due to the reason that certain subsidiaries’ operations have ceased or were in the process of ceasing operations or disposed. Included in this charge was an impairment loss of $1 million (2010: $Nil) recognised for one of the operating CGU under “Others” category. This is because the impairment test carried out for this CGU as at year–end revealed that the recoverable amount of this CGU is $1 million lower than the carrying amount of goodwill allocated to this CGU.



10. Intangible assets (Continued)

Sensitivity analysis

The management estimated that if the projected net cash inflows had been 10% lower than or if the estimated discounted rate applied to the discounted cash flows had been 6% instead of 5%, there is no impact to the carrying amount of goodwill allocated to the significant CGUs/subsidiaries as shown in the table above except for the goodwill allocated to the CGUs/subsidiaries under the category “Others” whereby its recoverable amount will be reduced by approximately $21,000 (2010: $267,000) and $2,000 (2010: $126,000) respectively.

11. Trade and other receivables

Group Company2011 2010 2011 2010

$’000 $’000 $’000 $’000Trade receivables:Trade receivables 5,669 12,908 - -Allowance for doubtful trade receivables (1,534) (6,142) - -

4,135 6,766 - -Other receivables:Third parties 1,975 1,953 - -Advance payment for development in university project 12,106 6,826 - -Deposits 4,810 5,661 - 16Prepayments 13,203 38,831 9,499 932Advance payment for development in joint venture project 3,252 4,646 - -Recoverable from previous owners 29,779 38,173 - -Advances to employees 214 526 - -Subsidiaries - - 228,140 191,334Associates 146 88 45 78Others 7,448 2,203 1,229 662

72,933 98,907 238,913 193,02277,068 105,673 238,913 193,022

Activities that give rise to credit risk include granting credit to customers.

Credit risk is managed through regular collection and monitoring procedures.

Trade receivables are non-interest bearing and are generally on 30 days credit term (2010: 30 days).

Included in the Group’s prepayment is an amount of approximately $9.5 million (2010: $27.9 million) made by the Company for land purchased by certain subsidiary (2010: by the Company for land acquisition by certain subsidiaries of Oriental University City Limited).

Recoverable from previous owners mainly related to the payment made on behalf of the previous owners and are recoverable from them based on the contractual terms of the agreements associated with the acquisition of certain subsidiaries. The amounts are unsecured, non-interest bearing and do not have fixed terms of repayment.

Included in amount due from subsidiaries is a loan of $5,835,000 (2010: $5,392,000) plus interest receivable of $120,000 (2010: $297,000). This loan bears interest at an average rate of 5.5% (2010: 5.5 %) per annum, unsecured and repayable on demand.



11. Trade and other receivables (Continued)

Included in Others was an input tax recoverable of approximately $4.4 million arising from purchase of Merchant Square property by a wholly-owned subsidiary of the Group during the current financial year.

The amounts due from subsidiaries and associates are non-trade in nature, unsecured and repayable on demand. Except for the loan of $5,835,000 (2010: $5,392,000) as mentioned in the preceding paragraph, all amount due from subsidiaries and associates are interest-free. The amounts with subsidiaries had been intended to be settled on net basis.

Analysis of trade receivables during the financial year was as follows:

Group

2011 2010

$’000 $’000

Not past due and not impaired 1,513 2,847

Past due but not impaired 2,622 3,919

Impaired, individually assessed 1,534 6,142

Less: allowance for doubtful trade receivables (1,534) (6,142)

Total trade receivables, net 4,135 6,766

The maximum exposure to credit risk in the event that the customers fail to perform their obligations as at end of financial year in relation to each class of recognised financial assets is the carrying amounts of those assets stated in the statements of financial position. There are no collaterals held as securities or other credit enhancements. The concentration of credit risk is limited due to the large, diversed and unrelated customer base.

Trade receivables that are neither past due nor impaired are substantially students with good collection track record with the Group.

Included in the Group’s trade receivables are receivables with a carrying amount of approximately $2.6 million (2010: $3.9 million) which are past due at reporting date. The Group has assessed that the credit qualities of these unsecured amounts have not changed and the amounts are still considered recoverable. Accordingly, the Group believes that there is no further impairment required in excess of the allowance for doubtful trade receivables.

The age analysis of trade receivables past due but not impaired was as follows:

Group2011 2010

$’000 $’000

0 - 30 days 149 194

31 - 60 days 60 483

Over 61 days 2,413 3,242

2,622 3,919



11. Trade and other receivables (Continued)

The carrying amount of trade receivable individually determined to be impaired and the movements in the allowance for impairment of receivables were as follows:

Group2011 2010

$’000 $’000

Balance at beginning of financial year 6,142 1,258Allowance made for the financial year 5 5,890Allowance utilised (1,521) (972)Allowance reversed (2,754) -Foreign currency realignment (338) (34)Balance at end of financial year 1,534 6,142

12. Cash and cash equivalents

Group Company2011 2010 2011 2010

$’000 $’000 $’000 $’000

Fixed deposits with banks 26,815 29,041 - -Cash and bank balances 37,953 72,597 1,227 461

64,768 101,638 1,227 461

Fixed deposits at the reporting date have an average maturity of 1 month (2010: 1 month) from the end of the financial year with the following weighted average effective interest rates:

2011 2010Chinese Renminbi 1.42% - 2.85% 1.35% - 2.25%Australian Dollar 4.95% 4.79%Vietnam Dong 13% 11%New Zealand Dollar 3.5% 3%

Disposal of subsidiary

On 2 January 2011, the Company disposed of its entire interest in Shaanxi Electronic Information Institute, in the People’s Republic of China for a consideration of $5,508,000. The effects of the disposal on the cash flows of the Group were:

Group$’000

Disposal of subsidiaryCash and cash equivalents 1,725Trade and other receivables 4,896Non-current assets* 6,095Total assets 12,716Trade and other payables 2,397Reserves 30Total liabilities 2,427Net assets disposed 10,289



12. Cash and cash equivalents (Continued)

* Non-current assets consists of property, plant and equipment amounting to $1,188,000 and goodwill amounting $4,907,000.

The aggregate cash inflows arising from disposal of Shaanxi Electronic Information Institute, in the People’s Republic of China were:

GroupDisposal of subsidiary $’000

Net assets disposed (as above) 10,289Prior purchase consideration outstanding to vendor waived (4,912)

5,377Gain on disposal 131Cash disposed (1,725)Net cash inflow on disposal 3,783

13. Assets classified as held for sale

On 23 June 2011, the Group has entered into a Sales and Purchase Agreement to dispose 50% equity interest in one of its wholly-owned subsidiaries - Value Vantage Pte. Ltd. (“Value Vantage”). According to the terms of the Sales and Purchase Agreement, the date of the completion for this transaction is set on 28 July 2011.

Therefore, as at 30 June 2011, the assets related to Value Vantage have been presented as “Assets held for sale”. The disposal of Value Vantage was completed on 28 July 2011.

The major classes of assets of Value Vantage classified as held for sale as at 30 June are as follows:

Group

2011 2010

$’000 $’000

Assets:

Property, plant and equipment (Note 4) 13,144 -

Goodwill (Note 10) 14,247 -

Assets of disposal group classified as held for sale representing the net assets directly associated with assets classified as held for sale 27,391 -



14. Trade and other payables

Group Company2011 2010 2011 2010

$’000 $’000 $’000 $’000Current:Trade payables 2,866 4,825 - -Subsidiaries - - 24,953 13,815Associates 55 80 - -Course fees received in advance 10,721 9,644 - -Management fees received in advance 861 993 - -Accruals 46,133 41,539 29,284 30,596Purchase consideration payable - 25,941 - -Former related parties 182 1,502 - -Others 20,322 2,215 - -

81,140 86,739 54,237 44,411Non-current:Purchase consideration payable 161,264 172,730 - -Others 24,194 6 - -

185,458 172,736 - -266,598 259,475 54,237 44,411

Current payables

Current trade payables are non-interest bearing and are normally settled on 30 to 60 days’ term (2010: 30 to 60 days’ term).

The amounts due to subsidiaries and former related parties are unsecured, interest-free and repayable on

demand. The amounts with subsidiaries had been intended to be settled on net basis.

Included in the accruals is an amount of $26.2 million (2010: $26.2 million) which relates to contractual commitments to increase in investment in a subsidiary.

Included in other payables were an amount of $9.6 million refundable deposit received in connection with the disposal of 50% of equity interest of Value Vantage Pte Ltd (Note 13) and $7.4 million relating to the current portion of the amount due to third party vendor arising from land purchase (see “Non-current other payables” disclosed below).

Included in the purchase consideration payable is an amount of $Nil (2010: $8.2 million) of payable assumed by the Group in its acquisition of certain subsidiaries of Oriental University City Limited (“OUC”) under the terms of the relevant sales and purchase agreement.

Non-current payables

Non-current purchase consideration

During the financial year ended 30 June 2008, as part of the acquisition of certain subsidiaries of OUC on 1 January 2008, the Group assumed the liabilities of RMB1.45 billion, to be payable to the vendor during the period from 2009 to 2011. No interest is payable on the amount. Management has assessed the fair value based on discounted cash flow using its borrowing rate of 1.90%.



14. Trade and other payables (Continued)

Non-current payables (Continued)

Non-current purchase consideration (Continued)

At inception, the principal sum of the payable is recognised at fair value and is subsequently measured at amortised cost using the effective interest method, with the imputed interest expenses recognised in the consolidated statement of comprehensive income over the expected repayment period.

Subsequently, during financial year ended 30 June 2009, management entered into a deferred payment agreement with the vendor to adjust the interest-free repayment period between 2011 and 2013. This deferment also included an RMB120 million consideration to be paid together with the last instalment payment in 2013.

Management had derecognised the initial amortised cost owing to the vendor (based on original terms of repayment as of 1 January 2008) and recognised the new long term liability effected as at the start of the deferment agreement on 21 May 2009. Management used the Group’s current borrowing rate (2.63% per annum) in the discounted cash flow computation to arrive at the fair value of the liability in accordance with FRS 39. Subsequent to the initial recognition, the payable was measured at amortised cost in accordance with FRS39.

Non-current other payables

Other non-current payable relates to amount due to third party vendor arising from the purchase of land for the Raffles University Iskandar project.

During the financial year ended 30 June 2011, one of the subsidiaries -Raffles Iskandar Sdn Bhd (“RISB”) entered into Sale and Purchase Agreement (“SPA”) with Education@Iskandar Sdn Bhd (“EISB”) for the purchase of land in EduCity, Iskandar Johor, Malaysia to construct, build and develop the Raffles University Iskandar.

Pursuant to the term of the SPA, RISB purchased the land from EISB for $37,050,000 (RM90,605,000). On 31 May 2011, RISB paid 10% of the purchase price $3,705,000 (RM9,060,000) to EISB. The outstanding amount is repayable equally over 48 months period and is non-interest bearing.

At inception, the difference between fair value and the principal sum of the payable, $33,343,000 (RM81,545,000) is recognised as reduction in the cost of the freehold land acquired. The payable is subsequently measured at amortised cost using the effective interest method, with an imputed interest expense recognised in the consolidated statement of comprehensive income over the expected repayment period.

15. Borrowings

Group Company2011 2010 2011 2010

$’000 $’000 $’000 $’000Borrowings:- Secured 75,748 57,165 - -- Unsecured 155,016 115,700 132,000 90,980

230,764 172,865 132,000 90,980



15. Borrowings (Continued)

Group Company2011 2010 2011 2010

$’000 $’000 $’000 $’000Repayable:- within 1 financial year 164,370 156,385 132,000 90,980- from 2 to 5 financial years 66,394 16,480 - -

230,764 172,865 132,000 90,980

Secured borrowings repayable:- within 1 financial year 9,354 40,685 - -- from 2 to 5 financial years 66,394 16,480 - -

75,748 57,165 - -

Unsecured borrowings repayable:- within 1 financial year 155,016 115,700 132,000 90,980- from 2 to 5 financial years - - - -

155,016 115,700 132,000 90,980

Bank borrowings are secured by:

- $54.7 million on letter of guarantee by the Group (2010: $33.0 million on letter of credit and letter of guarantee by the Group); and

- $75.7 million on certain investment properties (Note 5) (2010: $24.2 million on certain properties and investment properties).

The current borrowings have an average maturity of 1 month (2010: 1 month) from the end of the financial year. The non-current borrowing has a maturity of 1.5 to 4.75 years (2010: 2.5 years) from the end of the financial year.

The weighted average effective interest rates of the borrowings in Chinese Renminbi and Singapore Dollar during the financial year were 5.23% to 8.1% and 1.20% to 2.57% (2010: 4.86% to 12.85% and 1.84% to 2.76%) respectively.



16. Deferred tax liabilities

The following are the major deferred tax liabilities recognised by the Group and movements thereon during the financial year.

Group

Accelerated tax depreciation on property, plant and equipment

Fair value adjustment on

investment properties Others Total

$’000 $’000 $’000 $’000

Balance at 1 July 2009 99 1,887 4 1,990Charge in consolidated statement of comprehensive income 4 144 21 169Foreign currency realignment - (56) - (56)Balance at 30 June 2010 103 1,975 25 2,103Charge in consolidated statement of comprehensive income (31) 19,199 (296) 18,872Foreign currency realignment - (211) (6) (217)Balance at 30 June 2011 72 20,963 (277) 20,758

17. Share capital

Group and Company2011 2010 2011 2010

Number of ordinary shares $’000 $’000Issued and paid up:Balance at beginning of financial year 2,623,219,702 2,588,471,156 458,079 439,517Share options exercised - 500,000 - 109Scrip dividends - 34,248,546 - 18,494Share issuance expenses - - - (41)Adjustment for share consolidation (1,748,818,341) - - -Balance at end of financial year 874,401,361 2,623,219,702 458,079 458,079

The Company has one class of ordinary shares which carry no right to fixed income.

All newly issued ordinary shares rank pari-passu with the existing ordinary shares.

Paid up ordinary shares, which have no par value, carry one vote per share and carry a right to dividends.

(a) During the current financial year 2011, the Company:

(i) On 1 April 2011, consolidated three existing shares held by shareholders into one consolidated share, fraction entitlements disregarded.

(ii) Repurchased 17,000,000 ordinary shares between November 2010 to December 2010 as referred to in Note 18 to the financial statements.



17. Share capital (Continued)

(b) During the previous financial year 2010, the Company:

(i) Issued 34,248,546 new ordinary shares under the Raffles Education Corporation Scrip Dividend Scheme in August 2009.

(ii) Issued 500,000 new ordinary shares under the Raffles Education Corp Employees’ Share Option Scheme (2001).

(iii) Repurchased 39,824,000 ordinary shares in May and June 2010 as referred to in Note 18 to the financial statements.

18. Treasury shares

Group and Company

2011 2010 2011 2010Number of treasury shares $’000 $’000

Balance at beginning of the financial year 42,796,000 2,972,000 16,798 2,321Repurchased during the financial year 17,000,000 39,824,000 4,585 14,477Adjustment for share consolidation * (39,864,000) - - -Balance at end of the financial year 19,932,000 42,796,000 21,383 16,798

The total amount paid to repurchase the shares has been deducted from shareholders’ equity. The shares are held as “treasury shares”. The Company intends to reissue these shares as awards to executives under the Raffles Education Corporation Performance Share Plan.

* Adjusted for share consolidation (refer to Note 17(a)(i)).

19. Reserves

Share-based payments reserve

Share-based payments reserve represents the cumulative value of services received from employees and directors recorded in respect of the grants of equity-settled share options over the vesting period commencing from grant date of equity-settled share options, and is reduced by the expiry or exercise of the share options.

Foreign currency translation reserve

The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of foreign operations whose functional currencies are different from that of the Group’s presentation currency.

Capital reserve

Capital reserve in financial year 2009 represents the present value adjustment of the interest-free long term payable under FRS 39.



20. Revenue

Group2011 2010

$’000 $’000

Course fees 127,758 151,296Rental income from investment properties 20,142 25,128Utility income from investment properties 4,974 5,291Registration fee 1,212 1,650Other fees 3,491 4,704

157,577 188,069

21. Other operating income

Group2011 2010

$’000 $’000

Interest income 1,332 812Gain on disposal of property, plant and equipment 18 10Non-course related fees 608 449Foreign exchange gain 2,656 1,029Canteen operations 43 45Government grant 42 36,686Others 906 1,046

5,605 40,077

Government grant for the previous financial year 2010 relates mainly to grant received by the subsidiaries of Oriental University City Limited (“OUC”) from government authorities as funds for education development during the previous financial year ended 30 June 2010.

22. Personnel expenses

Group

2011 2010

$’000 $’000

Salaries, bonuses and allowances 53,296 49,771

Contributions to defined contribution plans 4,737 4,041

Other social expenses 2,203 1,869

Share-based payments to Directors and employees 293 767 60,529 56,448

Personnel expenses include Directors’ remuneration as shown in Note 31(b) to the financial statements.



23. Finance costs

Group2011 2010

$’000 $’000Interest expenses:- Bank borrowings 6,412 8,944- Unwinding of effect of discounting 4,970 5,323

11,382 14,267

24. Profit before income tax

Group2011 2010

$’000 $’000The above is arrived at after charging/(crediting):

Allowance for doubtful trade receivables 5 5,890Bad trade receivables written off 554 3,709Non-audit fee paid to:- Auditors of the Company 42 24- Other auditors 33 15Foreign exchange loss, net 3,925 2,533Write-off of prepaid Initial Public Offering expenses of subsidiary - 2,273Loss on disposal of property, plant and equipment 15 14Operating lease expenses- rental of premises 13,651 12,814- rental of equipment 188 249Plant and equipment written off 3 12Reversal of allowance for doubtful trade receivables (2,754) -Share-based payments 293 767

25. Income tax expense

Group2011 2010

$’000 $’000Income tax- Current financial year 5,898 7,100- Underprovision in prior financial years 568 241

6,466 7,341Deferred tax- Current financial year 18,900 173- Overprovision in prior financial years (28) (4)

25,338 7,510



25. Income tax expense (Continued)

Reconciliation of effective tax rate

Group2011 2010

$’000 $’000

Profit before income tax 76,609 63,330

Income tax calculated at statutory rate of 17% (2010: 17%) 13,024 10,766Income not taxable (139) (263)Tax exemption (2,901) (7,409)Non-allowable items 5,719 5,866Utilisation of deferred tax assets not recognised previously (28) (11)Deferred tax assets not recognised for current financial year 125 125Effect of different tax rates of overseas operations 9,013 (1,674)Effect of concessionary tax rate of 10% (15) (127)Underprovision in prior financial years 540 237Total income tax expense 25,338 7,510

Subject to the agreement by relevant tax authorities, at the reporting date, the Group has unutilised tax losses of $4.4 million (2010: $3.72 million) available for offset against future profits. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profits will be available against which the Group can utilise the benefits.

26. Earnings per share

The calculation of the basic and diluted earnings per share (EPS) attributable to the ordinary shareholders of the Company is based on the following data:

Group2011 2010

Basic and Diluted$’000 $’000

Profit attributable to equity holders of the Company 41,917 52,560



26. Earnings per share (Continued)

Group2011 2010

Number of shares Number of sharesBasic Diluted Basic* Diluted*

Weighted average number of ordinary shares (‘000) 856,666 856,666 869,636 869,636Effects for potentially dilutive ordinary shares

- share option (‘000) - 34 - 69Weighted average number of ordinary shares used (‘000) 856,666 856,700 869,636 869,705

Earnings per share (cents) 4.89 4.89 6.04 6.04

2,551,000 (2010: 4,859,000) share options granted under the existing share option plan have not been included in the calculation of diluted earnings per share because they are anti-dilutive.


27. Dividends

Group and Company

2011 2010

$’000 $’000

Interim tax exempt dividends paid in respect of current financial year of 0.45 cents (2010: 3.0 cents for previous financial year#) per ordinary share * 3,845 25,855

# Interim tax exempt dividends paid included scrip dividends of $Nil (2010: $18,494,000).* Adjusted for share consolidation (refer to Note 17(a)(i)).

28. Share-based payments

Raffles Education Corporation Employees’ Share Options Scheme (Year 2011)(“REC ESOS Scheme”)

Statutory and other information regarding the REC ESOS Scheme is set out below:

(i) The Remuneration Committee may at its discretion, fix the subscription price at a discount up to 20% off market price, or a price equal to the average of the last dealt market prices for the 5 consecutive market days on which the shares of the Company were traded on the SGX-ST immediately preceding the grant of the options.

(ii) Consideration for the grant of an option is $1.00.

(iii) Options can be exercised 1 year after grant for market price options and 2 years for discounted options.



28. Share-based payments (Continued)

Raffles Education Corporation Employees’ Share Options Scheme (Year 2011) (“REC ESOS Scheme”) (Continued)

Statutory and other information regarding the REC ESOS Scheme is set out below: (Continued)

(iv) Options granted expire after 5 years for participants not holding a salaried office or employment in the Group, and 10 years for employees of the Group.

(v) Options granted will lapse when participant ceases to be a full-time employee with the Group, subject to certain exceptions at the discretion of the Company.

(vi) The aggregate number of shares over which options may be granted on any date, when added to the number of shares issued and issuable in respect of all options granted under the REC Scheme, shall not exceed 15% of the issued share capital of the Company on the day preceding that date of grant.

Information in respect of the share options granted under the REC ESOS Scheme was as follows:

2011 2010

Number of share

options

Weighted average exercise

price

Number of share

options

Weighted average exercise

price(’000) $ (’000) $

Outstanding at beginning of financial year 10,324 0.59 7,559 0.75Granted 8,319 0.77 4,917 0.39Exercised - - (500) 0.18Expired/cancelled (1,946) 0.62 (1,652) 0.81Number of options before share consolidation 16,697 - 10,324 0.59Share consolidation (11,131) - - -Number of options after share consolidation 5,566 2.03 - 0.59Expired/cancelled (625) 0.76 - -Outstanding at end of financial year 4,941 2.10 10,324 0.59Exercisable as at end of financial year 2,734 1,802*

During the current financial year, 2,773,000* (2010: 1,639,002*) share options were granted. The estimated fair values of the share options granted are $677,000 (2010: $693,000) for the vesting period from March 2011 to March 2012 (2010: from November 2009 to February 2011).




28. Share-based payments (Continued)

Raffles Education Corporation Employees’ Share Options Scheme (Year 2011) (“REC ESOS Scheme”) (Continued)

The fair value of share options as at the date of grant is estimated by an external independent valuer using the Binomial option-pricing model, taking into account the terms and conditions upon which the options were granted. The significant inputs into the model were share prices at date of grant, exercise price, yield, expected volatility, risk-free interest rate and option life expected. Volatility, measured as the standard deviation of expected share price returns, was based on the average 10-day volatility over one year observation period in accordance with convention laid down by Bank for International Settlements. The inputs to the model used are shown below.

Date of grant

Expecteddividend

yield Expectedvolatility

Risk-freeinterest

rate

Expectedlife of

options Exercise

price*

Share price at date of

grant*(%) (%) (%) (years) $ $

21.9.2004 4.5 30 3.24 10 0.4200 0.42007.2.2005 3.6 25 2.95 10 0.5250 0.525012.10.2005 5.6 21 2.90 10 0.6675 0.667514.3.2006 2.5 29 3.50 10 1.4850 1.485023.11.2006 2.3 34 3.08 5 2.4450 2.445023.11.2006 2.3 34 3.08 10 2.4450 2.44507.1.2008 2.1 30 2.08 5 4.4850 4.485031.1.2008 2.1 30 2.41 10 3.7050 3.70508.1.2009 5.3 30 1.47 5 1.7700 1.78502.2.2009 5.3 30 2.07 10 1.5900 1.545010.11.2009 0.0 30 1.37 5 1.3500 1.30509.2.2010 0.0 30 2.55 10 1.1100 1.035024.3.2011 2.5 39 0.43 3 0.7800 0.810024.3.2011 2.5 38 1.32 5.5 0.7800 0.8100

* Subscription prices are adjusted for the share splits in the financial years 2005, 2007, 2008, and share consolidation in financial year 2011.



29. Contingent liabilities

(a) As at the reporting date, the Company has undertaken to provide continued financial support to 35 (2010: 21) of its subsidiaries which had accumulated losses of $50,350,000 (2010: $9,578,000) in excess of their issued and paid-up share capital at the reporting date.

(b) The Company and certain of its subsidiaries are involved in arbitration proceedings relating to commercial transactions. Although the ultimate disposition of asserted claims and proceedings cannot be predicted with certainty and the amounts involved cannot be reasonably estimated, it is the opinion of the management that the outcome of any such claims, either individually or on a combined basis, will not have a material adverse effect on the consolidated statement of financial position, but may be material to the statement of financial position of the Company for a particular period.

(c) The People’s of Republic of China’s (“PRC”) tax system can be characterised by numerous taxes and frequently changing legislation. Tax regulations are often unclear, open to wide interpretation, and in some instances, conflicting. Instances of inconsistent opinion between local, regional and national tax authorities are not unusual. Tax declarations are subject to review and investigation by a number of authorities that are enacted by law to impose significant penalties and interest charges. These factors create substantially more significant tax risks in PRC than that typically found in countries with more developed tax systems. Management believes that it has complied with all existing tax legislation.

As at 30 June 2011 and 2010, no provision for potential tax assessments for some of the Group’s PRC subsidiaries has been made in the consolidated financial statements as management is of the opinion that according to the tax practices in PRC and based on their experience as education operators in PRC, such education related income is exempted from tax in PRC.

(d) The Group has a potential tax exposure of approximately $7,600,000 (2010: $7,600,000) which was not

recognised as a liability at the reporting date as the relevant tax authority has not finalised the tax position. Management has engaged tax lawyers to submit the bases to support its position.

(e) In financial year 2010, one of the subsidiaries of the Group (“Subsidiary”), entered into a sales and purchase agreement to acquire a PRC incorporated institute (“institute”). This transaction was backed by a separate agreement (“transfer agreement”) between this Subsidiary and one of its director to confirm that the acquisition of this institute was made on behalf of this director and that all risk and rewards associated with this acquisition will be undertaken by the director in entirety, including all purchase consideration paid/payable and liabilities, and that this Subsidiary agreed to waive and transfer all benefits and responsibilities associated with the assets and liabilities acquired in the institute to the director. Accordingly, this institute is not included in the consolidated financial statements.

During the current financial year, a law suit was filed by a PRC company against 3 defendants, of which the main defendant is the above-mentioned institute, for breach of contract and claiming for settlement of outstanding service payment of approximately RMB19 million, plus all litigation costs to be incurred. The other 2 defendants being brought into the suit are the former owner of the institute and the Subsidiary, being the present legal owner of the institute. The legal suit is currently in the preliminary trial and no ruling has been made by the PRC Court.

The Group is of the view that despite the above-mentioned legal suit being brought against the Subsidiary, based on the transfer agreement signed with the director, the Subsidiary is entitled to seek indemnification and claim all losses, if any, from the director.

In the opinion of the Directors, no significant actual losses are expected to arise from these contingent liabilities.



30. Commitments

(a) Capital commitments

Capital expenditure contracted for as at the end of the reporting period but not recognised in the financial statements are as follows:

Group2011 2010

$’000 $’000Capital commitments in respect of property, plant and equipment 5,281 20,746Share of joint venture’s capital commitment in relation to its joint

education venture in India with Educomp Solution Limited* 62,090 69,935Share of joint venture’s capital commitment in relation to its joint

cooperative education project 575 61867,946 91,299

* As at the financial year end, the cost of investment in the joint education venture amounted to $40.2 million (2010: $32.0 million).

(b) Operating lease commitments (when the Group is a lessee)

At the reporting date, the commitments in respect of non-cancellable operating leases for rental of premises, equipments and management fees were as follows:

Group2011 2010

$’000 $’000Future minimum lease payments payable:

Within one financial year 12,039 13,419After one year but within five financial years 18,428 34,156After five financial years 17,858 22,801

48,325 70,376

These leases have no escalation clauses, restriction and do not provide contingent rents. Renewals are at the option of the specific entity that holds the lease.



30. Commitments (Continued)

(b) Operating lease commitments (when the Group is a lessor)

The future minimum lease receivables under non-cancellable operating leases contracted for at the reporting date but not recognised as receivables, are as follows:

Group

2011 2010$’000 $’000

Future minimum lease payments receivables:

Within one financial year 2,644 1,998After one year but within five financial years 1,780 1,529After five financial years 287 1,151

4,711 4,678

The Group leased out commercial space to non-related parties under non-cancellable operating leases. The leases are renewable on annual basis.

31. Significant related party transactions

For the purposes of these financial statements, parties are considered to be related to the Group or the Company if the Group or the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

(a) Transactions with related parties

In addition to the information disclosed elsewhere in the financial statements, significant related party transactions between the Group and the Company and its related parties during the financial year were as follows:

Group Company2011 2010 2011 2010

$’000 $’000 $’000 $’000With associatesSettlement of liabilities on behalf

of related companies (4) (1) (4) (1)Management service fee income 35 16 - -Dividend income - - 403 361Fees received on behalf - (35) - -Transfer of intercompany balances from subsidiary (21) - (21) -



31. Significant related party transactions (Continued)

(a) Transactions with related parties (Continued)

Group Company2011 2010 2011 2010

$’000 $’000 $’000 $’000With subsidiariesSettlement of liabilities on behalf

by subsidiaries - - (1,830) (3,922)Transfer of intercompany balances from subsidiaries - - (2,356) 1Interest income - - 120 308Dividend income - - 18,911 17,945Management service fee income - - 5,095 3,849Registration fee income - - 9,050 4,185Recharge of rental and utilities - - 1,192 963Waiver of intercompany debt - - (10,497) (680)Consultancy fees - - (66) -

With a Director of the CompanyAcquisition of shares in an associate - (1,070) - -

(b) Compensation of key management personnel

The remuneration of Directors and other key members of management of the Group during the financial year are as follows:

Group2011 2010

$’000 $’000

Directors’ fees 272 280Salaries and other short-term employee benefits 3,675 2,532Share-based payments 134 80

4,081 2,892

Key management personnel are directors and those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. The above amounts for key management personnel compensation are for the Directors of the Company (including directors’ fees of Non-Executive Directors).



32. Report by segments The Group has four reportable segments, as described below, which are the Group’s strategic business units.

The strategic business units offer different products and services, and are managed separately because they require different skill sets and marketing strategies.

For each of the strategic business units, the Group’s Chief Executive Officer reviews internal management reports on a regular basis. The following summary describes the operations in each of the Group’s reportable segments:

Private Education System (“PES”)

The Group offer students a range of degree, diploma and full-time certification programmes in design and business-oriented disciplines at post-secondary level. Students pay fees on a quarterly basis to attend courses at the group’s campuses, where they are taught in English by an overseas faculty. The Group confers graduating students under PES with its own accredited proprietary qualifications.

National Education System(“NES”)

The Group runs programmes within the Chinese national public school system. Colleges under this scheme collect fees once a year in advance directly from students under the Chinese government’s national fees guidelines. Students are taught by a local faculty and the language of instruction is Chinese. The qualifications awarded by these colleges are recognised by the Chinese government.

Oriental University City Campus Management (“OUC Campus Management”)

Located in the Langfang Economic and Development Zone in Langfang city, Hebei province, China, between the cities of Beijing and Tianjin, Oriental University City (“OUC”) currently owns and leases out investment properties to colleges within its self-contained 3.3 million square metres campus site. Besides earning rental income in the capacity of a landlord, OUC also operates its own colleges.

Corporate and Others

Includes corporate headquarter, and consolidation adjustments which are not directly attributable to a particular reportable segment above.

The accounting policies of the reportable segments are the same as described in the summary of significant accounting policies in Note 2.

Information regarding the results of each reportable segment is included below.

Operating results of the reportable segments are independently evaluated for performance measurement and resource allocation decisions. Segment performance is evaluated based on operation profit or loss which is similar to the accounting profit or loss as included in the internal management reports reviewed by the Group’s Chief Executive Officer.



32. Report by segments (Continued)

The Group accounts for inter-segment sales and transfers as if the sales or transfers were to third parties, which approximate market prices. These inter-segment transactions are eliminated on consolidation.

Segment revenue and expenses are the operating revenue and expenses reported in the Group’s consolidated statement of comprehensive income that are directly attributable to a reportable segment and the relevant portion of such revenue and expenses that can be allocated on a reasonable basis to the reportable segment.

Segment assets and liabilities: Segment assets include all operating assets used by a reportable segment and consist principally of operating receivables, inventories and property, plant and equipment, investment properties, net of allowances and provisions. Segment liabilities include all operating liabilities and consist principally of accounts payable and accrued expenses.

Capital expenditure includes the total cost incurred to acquire property, plant and equipment, investment properties, and intangible assets directly attributable to the segment.

Private Education

System

National Education

System

OUC Campus

ManagementCorporate

& Others Total2011 $’000 $’000 $’000 $’000 $’000

Revenue from external customers 98,487 32,681 25,786 623 157,577

Inter-segment revenue 5,949 12,401 - 58,990 77,340

Interest income 806 526 - - 1,332Fair value gain on investment

properties - - 76,795 - 76,795Finance cost (37) - (8,367) (2,978) (11,382)Depreciation and amortisation (4,772) (4,600) (5,264) (1,790) (16,426)Impairment of goodwill (3,461) (1,187) - - (4,648)Reportable segment profit/(loss)

before income tax 15,443 9,343 69,117 (17,294) 76,609Share of results from associates (45) - - 405 360

Net profit/(loss) for the financial year 12,660 8,255 49,454 (19,098) 51,271

Other information:Additions to property, plant and equipment 4,510 3,232 9,394 36,140 53,276Additions to investment properties - - 28,135 67,118 95,253Additions to intangibles 465 - - 2,544 3,009Investment in associates 1,025 - - 217 1,242Segment assets 46,179 110,674 598,898 108,343 864,094Segment liabilities (30,672) (3,785) (214,577) (248,328) (497,362)




Private Education

System

National Education

System

OUC Campus

ManagementCorporate

& Others Total2010 $’000 $’000 $’000 $’000 $’000

Revenue from external customers 117,278 39,822 30,813 156 188,069

Inter-segment revenue 11,749 - - 41,115 52,864

Interest income 396 416 - - 812Fair value gain on investment properties - - 5,775 - 5,775Finance cost (1,384) (221) (10,292) (2,370) (14,267)Depreciation and amortisation (3,955) (5,746) (3,629) (1,522) (14,852)Impairment of goodwill (2,306) - - - (2,306)Impairment of property, plant and equipment - - (218) - (218)Reportable segment profit/(loss) before income tax 33,832 13,836 33,216 (17,554) 63,330Share of results from associates - - - 379 379Net profit/(loss) for the financial year 29,963 13,480 31,132 (18,755) 55,820

Other information:Additions to property, plant and equipment 4,968 2,056 573 - 7,597Additions to investment properties - - 81,424 - 81,424Additions to intangibles 508 - - 2,017 2,525Additions to goodwill 1,883 - - - 1,883Investment in associates 1,070 - - 215 1,285Segment assets 38,089 115,625 560,204 1,691 715,609Segment liabilities (59,123) (7,651) (243,903) (121,663) (432,340)

Reconciliations of reportable segment revenues, profit or loss, assets and liabilities:

2011 2010$’000 $’000

RevenueTotal revenues for reportable segments 234,917 240,933Elimination of inter-segment revenues (77,340) (52,864)Consolidated revenue 157,577 188,069

AssetsTotal assets for reportable segments 864,094 715,609Investments in associates 1,242 1,285Unallocated assets 270,522 329,960Consolidated total assets 1,135,858 1,046,854




Reconciliations of reportable segment revenues, profit or loss, assets and liabilities: (Continued)

2011 2010

$’000 $’000

Liabilities

Total liabilities for reportable segments (497,362) (432,340)

Unallocated liabilities (31,747) (16,396)

Consolidated total liabilities (529,109) (448,736)

Geographical Segments

The Group operates in four main geographical regions, namely Asean, North Asia, Australasia and South Asia.

Segment revenue is based on the region where the services are rendered and the region where the customer is located. Non-current assets are shown by geographical region in which the assets are located.

Non-current assets consist of property, plant and equipment, investment properties, investment in associates and intangible assets.

Asean North Asia South Asia Australasia Total$’000 $’000 $’000 $’000 $’000

2011Revenue from external customers 37,051 100,477 5,069 14,980 157,577

Non-current assets 170,301 765,850 14,914 11,033 962,098

2010Revenue from external customers 40,548 129,968 4,134 13,419 188,069

Non-current assets 73,156 734,885 14,846 11,260 834,147

33. Financial risk management

The Group and the Company are exposed to financial risks arising in the normal course of business. The Group and the Company do not hold or issue derivative financial instruments for trading purposes or to hedge against fluctuation, if any.

Risk management is integral to the whole business of the Group. The Group has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks.

The management continually monitors the Group’s risk management process to ensure that an appropriate balance between risk and cost is achieved.



33. Financial risk management (Continued)

(a) Credit risk

Credit risk is the potential financial loss resulting from students defaulting on their obligations to pay course fees when due, resulting in a loss to the Group.

The Group has credit policies in place and the exposure to credit risk is monitored on an ongoing basis. The maximum exposure to credit risk is represented by the carrying amount of each financial asset on the statements of financial position.

Cash and fixed deposits are placed with banks and approved financial institutions which are regulated. Management does not expect counterparty to fail to meet its obligations.

(b) Interest rate risk

Interest rate risk is the risk that the fair value future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to interest rate risk arises primarily from their borrowings and fixed deposits with financial institutions.

The table below shows the sensitivity analysis of interest rate risk showing the effect on profit or loss if interest rates had increased by 100 basis point (2010: 100 basis point), with all other variables held constant.

2011 2010

Increase in interest rate (basis point)

Decrease

in profit$’000

Increase in interest rate (basis point)

Decrease

in profit$’000

GroupFixed deposits 100 - 100 -Borrowings 100 (1,867) 100 (1,157)

CompanyFixed deposits 100 - 100 -Borrowings 100 (1,320) 100 (910)

A 100 basis point decrease in interest rates would have an equal but opposite effect.

(c) Foreign currency risk

The Group operates in several countries with dominant operations in Singapore, People’s Republic of China, South-east Asia and Australia. Exposure to foreign currency risk is monitored on an ongoing basis to ensure that the net exposure is at an acceptable level, as the Group manages its transactional exposure by matching, as far as possible, receipts and payments in each individual currency. As the entities in the Group transact substantially in their respective functional currencies, the Group’s exposure to currency risk is not significant.

In relation to the Group’s overseas investments in foreign operations where net assets are exposed to currency translation risks, they are not hedged as currency positions in these foreign currencies are considered to be long-term in nature. Differences arising from such translation are recorded under the foreign currency translation reserves.




(c) Foreign currency risk (Continued)

The Group’s and Company’s exposure to foreign currencies such as Singapore Dollar (“SGD”), Chinese Renminbi (“RMB”), United States Dollar (“USD”) and Australian Dollar (“AUD”) at 30 June 2011 and 30 June 2010 were as follows:

Note SGD RMB USD AUD Others

Total in SGD

equivalentsGroup $’000 $’000 $’000 $’000 $’000 $’0002011Available-for-sale financial

assets 9 - 4,411 - - - 4,411Trade and other receivables 11 5,622 14,011 50 969 18,149 38,801Cash and cash equivalents 12 3,453 50,069 194 2,831 8,221 64,768Trade and other payables 14 (31,236) (185,414) (28) (2,071) (33,233) (251,982)Borrowings 15 (186,650) (44,114) - - - (230,764)

(208,811) (161,037) 216 1,729 (6,863) (374,766)Less: net (assets)/liabilities

denominated in respective entities’ functional currencies 209,049 161,035 (115) (1,986) 6,543 374,526

Currency exposure 238 (2) 101 (257) (320) (240)

2010Available-for-sale financial

assets 9 - 4,738 - - - 4,738Trade and other receivables 11 1,287 22,692 45 1,102 15,705 40,831Cash and cash equivalents 12 1,976 89,701 854 2,398 6,709 101,638Trade and other payables 14 (31,743) (212,045) (45) (1,516) (825) (246,174)Borrowings 15 (90,980) (81,885) - - - (172,865)

(119,460) (176,799) 854 1,984 21,589 (271,832)Less: net (assets)/liabilities

denominated in respective entities’ functional currencies 119,497 176,828 (672) (1,906) (20,916) 272,831

Currency exposure 37 29 182 78 673 999

It is estimated that a five percentage point strengthening in foreign currencies against the Singapore Dollar would increase the Group’s profit before income tax by approximately $1,000 (2010: approximately $50,000). A five percentage point weakening in the foreign currencies against the Singapore Dollar would have an equal but opposite effect. The analysis assumes that all other variables, in particular interest rates, remain constant and does not take into account associated tax effects and share of non-controlling interests.




(c) Foreign currency risk (Continued)

CompanyNote SGD RMB USD AUD Others

Total in SGD

equivalents$’000 $’000 $’000 $’000 $’000 $’000

2011Trade and other receivables 11 182,230 18,406 25,138 (835) 3,588 228,527Cash and cash equivalents 12 1,188 - 10 - 29 1,227Trade and other payables 14 (46,045) (6,082) - - (2,110) (54,237)Borrowings 15 (132,000) - - - - (132,000)

5,373 12,324 25,148 (835) 1,507 43,517Less: net assets (5,373) - - - - (5,373)Currency exposure - 12,324 25,148 (835) 1,507 38,144

2010Trade and other receivables 11 130,485 26,135 31,046 529 3,609 191,804Cash and cash equivalents 12 452 - 9 - - 461Trade and other payables 14 (38,731) (4,155) - (541) (984) (44,411)Borrowings 15 (90,980) - - - - (90,980)

1,226 21,980 31,055 (12) 2,625 56,874Less: net assets (1,226) - - - - (1,226)Currency exposure - 21,980 31,055 (12) 2,625 55,648

It is estimated that a five percentage point strengthening in foreign currencies against the Singapore Dollar would increase the Company’s profit before income tax by approximately $1,907,000 (2010: $2,782,000). A five percentage point weakening in the foreign currencies against the Singapore Dollar would have an equal but opposite effect. The analysis assumes that all other variables, in particular interest rates remain constant.

(d) Liquidity risk

Liquidity risk is the risk that the Group and the Company will not be able to meet its financial obligations as they fall due. The Group and the Company monitor its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s and the Company’s operations and to mitigate the effects of fluctuations in cash flows.

Short-term funding is obtained from bank overdraft and borrowing facilities from banks and financial institutions.

The table below summarises the maturity profile of the Group’s financial liabilities at the reporting date based on contractual undiscounted cash flows.




(d) Liquidity risk (Continued)

Contractual undiscounted cash flows (including interest payments)

Within 1 financial

year

Within 2 to 5

financial years Total

Carrying amount

Group $’000 $’000 $’000 $’0002011Trade and other payables 66,579 196,573 263,152 252,037Borrowings 165,526 71,585 237,111 230,764

232,105 268,158 500,263 482,801

2010Trade and other payables 73,358 187,975 261,333 246,094Borrowings 159,076 19,779 178,855 172,865

232,434 207,754 440,188 418,959

Company2011Trade and other payables 54,237 - 54,237 54,237Borrowings 132,172 - 132,172 132,000

186,409 - 186,409 186,237

2010Trade and other payables 44,411 - 44,411 44,411Borrowings 91,164 - 91,164 90,980

135,575 - 135,575 135,391

(e) Equity price risk

The Group is not exposed to any equity price risk as its available-for-sale investments are unquoted and are carried at cost less impairment loss.

(f) Fair values

The carrying amount of the financial assets and financial liabilities in the consolidated financial statements approximate their fair values due to the relative short term maturity of these financial instruments. The fair values of other classes of financial assets and liabilities are disclosed in the respective notes to the financial statements.



34. Capital management

The Group’s and the Company’s objectives when managing capital are to safeguard the Group’s and the Company’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value.

The Group and the Company maintains an optimum capital structure by various means such as adjusting the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debts, as it deems beneficial to the interests of its shareholders.

In the current and previous financial years the Company purchase its own shares from the market and the timing of these purchases depends on market prices. Primarily, such actions are intended to stabilise the market price of the Company’s shares and the purchased shares are to be used for issuing shares under the Company’s performance share plan. Buy and sell decisions by management are made on a specific transaction basis. The Group and the Company do not have a defined share buy-back plan.

Since financial year 2009, the Company had adopted the scrip dividend scheme and issued new ordinary shares via share placements to conserve cash resources and to pay down bank borrowings. The scrip dividend scheme also allows shareholders to reinvest in the growth of the Company.

The Group and the Company manage overall capital structure by leveraging the advantages and security afforded by a sound capital position while preserving a sustainable level of returns which also seek to meet certain capital requirements imposed by the banks. These requirements include maintaining minimum level of tangible net worth (defined as issued shares capital plus accumulated profits) and a RMB20 million ($3.84 million equivalent) (2010: RMB30 million ($6.18 million equivalent)) balance with a specific bank.

The Group also monitors capital based on a gearing ratio which is net debt divided by total capital. Net debt includes borrowings less cash and cash equivalents. Total capital refers to equity attributable to the equity holders of the Company. The Group’s gearing ratio for the financial year ended 30 June 2011 was 30% (2010: 13%).

The Group and the Company are in compliance with all externally imposed capital requirements for both the financial year ended 30 June 2011 and 30 June 2010.

Apart from the above, the Group’s current overall strategy remains unchanged from last financial year ended 30 June 2010.



35. Events after the reporting period

Subsequent to 30 June 2011, the following events have taken place:

(a) The Directors of the Company proposed the following dividends:

Group and Company2011 2010

$’000 $’000Final tax exempt dividends of 0.45 cents (2010: Nil cents) per ordinary share under one-tier system 3,845 -

The proposed dividends:

(i) are subject to the approval by the members of the Company at the forthcoming Annual General Meeting;

(ii) are not accrued as liability in the statement of financial position in the respective financial years; and

(iii) will be based on the issued share capital of the Company as at the respective book closure date.

(b) Disposal of ordinary shares in a subsidiary

On 28 July 2011, the Company completed the disposal of 22,109,501 ordinary shares in the capital of Value Vantage, representing 50% of the issued and paid-up share capital of Value Vantage, which has been classified as held for sale (Note 13) as at 30 June 2011, for a cash consideration of $46,000,000.

36. Properties of the Group

Location Description Existing use Tenure

Unexpired lease term

(years)

Site area

(‘000 sqm)

Gross floor area

(‘000 sqm)

(a) No. 5225, Daye Road, Fengxian District,Shanghai City,the People’s Republic of China (“PRC”)

Education college

Education facilities and hostels

Lease-hold

41 255 68

(b) No. 1 Chuangye Road, Hefei City, Anhui Province, the PRC

Education college


Lease-hold

32 - 56 111 94

(c) No. 28, Jinjing Road, Xiqing District, Tianjin City, the PRC

Education college


Lease-hold

33 112 31



36. Properties of the Group (Continued)

Location Description Existing use Tenure

Unexpired lease term

(years)

Site area

(‘000 sqm)

Gross floor area

(‘000 sqm)

(d) Oriental University City, Langfang Economic and Development Zone, Hebei Province, the PRC#

Education campus city

Facilities for educational, recreational, hostels, com-mercial, retail and utility activities

Lease-hold

39 - 44 1,742 995

(e) Merchant Square51 Merchant RoadSingapore

Commercial develop-ment of multi storey office block and con-servative shophouses

Rental of commercial offices

Lease-hold

81 3 6

(f ) Mukim of Pulai, Dis-trict of Johor Bahru, State of Johor, Malaysia

University Campus de-velopment

Construction and develop-ment phase

Free-hold

- 263 -

Land held under:H.S.(D) 458289, PTD 154973,H.S.(D) 458290, PTD 154974 andH.S.(D) 458292, PTD 154973

# Valuation performed in financial years 2010 and 2011 by independent professional valuer, as referred to Note 5 to the financial statements.


STATISTICS OF SHAREHOLDINGSAS AT 15 SEPTEMBER 2011

Size ofShareholdings

No. ofShareholders Percentage

No. of Shares Held (excluding treasury shares) Percentage

1 - 999 1,284 9.68% 486,026 0.06%1,000 - 10,000 8,010 60.35% 38,492,775 4.50%10,001 - 1,000,000 3,931 29.62% 169,788,865 19.87%1,000,001 and above 47 0.35% 645,701,695 75.57%

13,272 100.00% 854,469,361 100.00%

Issued and fully paid-up capital : S$462,447,399.782Number of issued and paid-up shares : 874,401,361Number of treasury shares held : 19,932,000Class of shares : OrdinaryVoting rights : one vote per share

The percentage of treasury shares held against the total issued shares (excluding treasury shares) is 2.33%

Based on information available to the Company as at 15 September 2011, approximately 65.10% of the issued shares (excluding treasury shares) of the Company is held by the public and, therefore, Rule 723 of the Listing Manual issued by the Singapore Exchange Securities Trading Limited is complied with.

Top Twenty Shareholders As At 15 September 2011

S/No. Name No. of Shares Percentage

1 CHEW HUA SENG OR DORIS CHUNG GIM LIAN 181,621,644 21.26%2 HSBC (SINGAPORE) NOMS PTE LTD 64,236,318 7.52%3 CITIBANK NOMS S’PORE PTE LTD 49,097,270 5.75%4 OEI HONG LEONG 30,000,000 3.51%5 UNITED OVERSEAS BANK NOMINEES 24,946,179 2.92%6 CHEW HUA SENG 23,396,268 2.74%7 DBS NOMINEES PTE LTD 23,229,259 2.72%8 TOMMIE GOH THIAM POH 22,628,108 2.65%9 DORIS CHUNG GIM LIAN 21,822,539 2.55%10 CIMB SEC (S’PORE) PTE LTD 17,795,713 2.08%11 PHILLIP SECURITIES PTE LTD 17,406,544 2.04%12 BANK OF EAST ASIA NOMS PTE LTD 16,666,666 1.95%13 OCBC SECURITIES PRIVATE LTD 15,982,217 1.87%14 LIM & TAN SECURITIES PTE LTD 14,824,641 1.73%15 HL BANK NOMINEES (S) PTE LTD 11,852,994 1.39%16 OEI HONG LEONG ART MUSEUM LIMITED 10,974,000 1.28%17 KIM ENG SECURITIES PTE. LTD. 10,316,166 1.21%18 DBSN SERVICES PTE LTD 9,609,144 1.12%19 WATERWORTH PTE LTD 8,450,000 0.99%20 UOB KAY HIAN PTE LTD 6,013,009 0.70%

580,868,679 67.98%


STATISTICS OF SHAREHOLDINGSAS AT 15 SEPTEMBER 2011

Substantial Shareholders

As shown in the Register of Substantial Shareholders

No of SharesName of Shareholders Direct Interest Deemed Interest

Chew Hua Seng(1)(2) 274,438,214 21,822,539Doris Chung Gim Lian(1)(2) 203,444,183 92,816,570

Notes: -

(1) Ms Doris Chung Gim Lian is the spouse of Mr Chew Hua Seng. In this regards, Ms Doris Chung Gim Lian is deemed to have an interest in the shareholdings of Mr Chew Hua Seng and vice versa.

(2) Includes 181,621,644 shares which are held jointly by Mr Chew Hua Seng and Ms Doris Chung Gim Lian.


NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Raffles Education Corporation Limited (the “Company”) will be held on 21 October 2011 at 3.00 p.m. at Ballroom II & III, Level 2, InterContinental Singapore, 80 Middle Road, Singapore 188966, to transact the following business:

AS ORDINARY BUSINESS

1. To receive and adopt the Directors’ Report and Audited Accounts of the Company for the financial year ended 30 June 2011 together with the Auditors’ Report thereon. [Resolution 1]

2. To declare a final dividend (tax exempt one-tier) of 0.45 cents per ordinary share for the financial year ended 30 June 2011 [2010: Nil]. [Resolution 2]

3. To approve the proposed Directors’ fee of S$271,248/- for the financial year ended 30 June 2011 [2010: S$280,000/-]. [Resolution 3]

4. To re-elect the following Directors retiring pursuant to the Company’s Articles of Association:-

(a) Mr Teo Cheng Lok John {retiring pursuant to Article 91} [Resolution 4] (b) Mr Chew Kok Chor {retiring pursuant to Article 97} [Resolution 5] (c) Mr Chong Ee Yong {retiring pursuant to Article 97} [Resolution 6] (d) Mr Yap Kim Wah {retiring pursuant to Article 97} [Resolution 7]

5. To re-appoint Messrs BDO LLP, as the Company’s Auditors and to authorise the Directors to fix their remuneration. [Resolution 8]

6. To transact any other ordinary business which may properly be transacted at an Annual General Meeting of the Company.

AS SPECIAL BUSINESS

To consider and, if thought fit, to pass the following Ordinary Resolutions with or without any modifications:-

7. Authority for Directors to issue shares and to make or grant instruments pursuant to Section 161 of the Companies Act, Cap. 50

“THAT pursuant to Section 161 of the Companies Act, Cap. 50 of Singapore (the "Companies Act") and the listing rules of the Singapore Exchange Securities Trading Limited (“SGX-ST”), the Directors of the Company be and are hereby authorized to issue and allot new shares and convertible securities in the capital of the Company (whether by way of rights, bonus or otherwise) at any time and upon such terms and conditions and with such rights and restrictions as they may think fit to impose and for such purposes and to such persons as the Directors may in their absolute discretion deem fit provided that:

(a) the aggregate number of shares and convertible securities to be issued pursuant to this Resolution shall not exceed fifty per cent (50%) of the total number of issued shares excluding treasury shares in the capital of the Company, of which the aggregate number of shares to be issued other than on a pro-rata basis to existing shareholders of the Company does not exceed twenty per cent (20%) of the total number of issued shares excluding treasury shares in the capital of the Company.

(b) such authority shall, unless revoked or varied by ordinary resolution of the shareholders of the Company in a general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is the earlier.”[See Explanatory Note (i)] [Resolution 9]



8. Authority for Directors to grant options and awards, and to allot and issue shares pursuant to the Raffles Education Corporation Employees’ Share Option Scheme (Year 2011) and the Raffles Education Corporation Performance Share Plan

“THAT the Directors of the Company be and are hereby authorised to:

(a) grant options and awards to non-executive directors and employees who are eligible to participate in the Raffles Education Corporation Employees’ Share Option Scheme (Year 2011) (“the Scheme”) and Raffles Education Corporation Performance Share Plan (the “Share Plan”) in accordance with the Scheme and the Share Plan (as the case may be);

(b) allot and issue from time to time such number of fully paid shares in the capital of the Company as may be required to be issued upon exercise of such options or vesting of such share awards in accordance with the terms and conditions of the Scheme and the Share Plan

provided always that the aggregate number of ordinary shares to be allotted and issued pursuant to the Scheme and the Share Plan shall not exceed fifteen per cent (15%) of the total number of issued shares excluding treasury shares of the Company from time to time.”[See Explanatory Note (ii)] [Resolution 10]

9. Renewal of the Share Purchase Mandate

"THAT

(a) for the purpose of the Companies Act, the exercise by the Directors of the Company of all powers of the Company to purchase or otherwise acquire ordinary shares in the capital of the Company (“ordinary shares”) not exceeding in aggregate the Maximum Limit (as hereafter defined), at such price(s) as may be determined by the Directors of the Company from time to time up to the Maximum Price (as hereafter defined), whether by way of:

(i) market purchase(s) (each a "Market Purchase") on the SGX-ST; and/or

(ii) off-market purchase(s) (each an "Off-Market Purchase") in accordance with any equal access scheme(s) as may be determined or formulated by the Directors as they consider fit, which scheme(s) shall satisfy all the conditions prescribed by the Companies Act;

and otherwise in accordance with all other laws and regulations, including but not limited to, the provisions of the Companies Act and listing rules of the SGX-ST as may for the time being be applicable, be and is hereby authorised and approved generally and unconditionally (the "Share Purchase Mandate");

(b) unless varied or revoked by the members of the Company in a general meeting, the authority conferred on the Directors of the Company pursuant to the Share Purchase Mandate may be exercised by the Directors of the Company at any time and from time to time during the period commencing from the date of the passing of this Resolution and expiring on the earlier of:

(i) the date on which the next Annual General Meeting of the Company is held or required by law to be held; or

(ii) the date on which the purchases or acquisitions of shares by the Company pursuant to the Share Purchase Mandate are carried out to the full extent mandated, whichever is the earlier.



In this Resolution:

"Maximum Limit" means that number of ordinary shares representing ten per cent (10%) of the issued ordinary shares as at the date of the passing of this Resolution unless the Company has effected a reduction of the share capital of the Company in accordance with the applicable provisions of the Companies Act, at any time during the Relevant Period, in which event the total number of ordinary shares shall be taken to be the number of the ordinary shares as altered (excluding any treasury shares that may be held by the Company from time to time);

"Relevant Period" means the period commencing from the date on which the last Annual General Meeting of the Company was held and expiring on the date the next Annual General Meeting of the Company is held or is required by law to be held, whichever is the earlier, after the date of this Resolution; and

"Maximum Price", in relation to an ordinary share to be purchased or acquired, means the purchase price (excluding brokerage, stamp duties, commission, applicable goods and services tax and other related expenses) which shall not exceed:

(a) in the case of a Market Purchase, 105 per cent (105%) of the Average Closing Price of the ordinary shares; and

(b) in the case of a Off-Market Purchase pursuant to an equal access scheme, 120 per cent (120%) of the Average Closing Price of the ordinary shares,

where:

"Average Closing Price" means the average of the closing market prices of an ordinary share for the five (5) consecutive Market Days (a "Market Day" being a day on which the SGX-ST is open for trading in securities), on which the ordinary shares are transacted on the SGX-ST or, as the case may be, the date of the making of the offer pursuant to the Off-Market Purchase, and deemed to be adjusted in accordance with the listing rules of the SGX-ST for any corporate action that occurs after the relevant five (5) Market Days period; and

(c) the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) as they and/or he may consider necessary, expedient, incidental or in the interests of the Company to give effect to the transactions contemplated and/or authorised by this Resolution.[See Explanatory Note (iii)] [Resolution 11]

10. Authority to allot and issue shares pursuant to the Raffles Education Corporation Scrip Dividend Scheme

“THAT the Directors of the Company be and are hereby authorized to allot and issue from time to time such number of shares in the capital of the Company as may be required to be allotted and issued pursuant to the Raffles Education Corporation Scrip Dividend Scheme.”[See Explanatory Note (iv)] [Resolution 12]



BY ORDER OF THE BOARD

Keloth Raj Kumar (Mr)Company Secretary

Singapore,5 October 2011

Note:

A Member is entitled to appoint a proxy to attend and vote in his place. A proxy need not be a Member of the Company. Members wishing to vote by proxy at the meeting may use the proxy form enclosed. The completed proxy form must be lodged at the Registered Office of the Company at 99 Beach Road, Singapore 189701 not less than 48 hours before the time appointed for the Meeting.

Notes to item no. 4

(a) Mr Teo Cheng Lok John is an Independent Director and a member of the Remuneration and Audit Committees. He will continue in the said capacities upon re-election as a Director of the Company.

(b) Mr Chew Kok Chor is an Executive Director and the Deputy Chief Executive Officer. He will continue in the said capacities upon re-election as a Director of the Company.

(c) Mr Chong Ee Yong is an Executive Director. He will continue in the said capacity upon re-election as a Director of the Company.

(d) Mr Yap Kim Wah is an Executive Director. He will continue in the said capacity upon re-election as a Director of the Company.



EXPLANATORY NOTES ON SPECIAL BUSINESS TO BE TRANSACTED:

(i) In the proposed Resolution 9, the percentage of total number of issued shares is calculated based on the total number of issued shares excluding treasury shares at the time of the passing of the resolution approving the mandate after adjusting for:- (a) issue of new shares arising from the conversion or exercise of convertible securities; (b) issue of new shares arising from the exercise of share options or vesting of share awards outstanding or subsisting at the time of the passing of the resolution approving the mandate; and (c) any subsequent bonus issue, consolidation or subdivision of shares. The proposed Resolution 9, if passed, will empower the Directors of the Company from the date of the Annual General Meeting of the Company until the date of the next Annual General Meeting of the Company, to allot and issue new shares in the capital of the Company (whether by way of rights, bonus or otherwise).

The number of shares which the Directors may issue under this Resolution shall not exceed fifty per cent (50%) of the total number of issued shares excluding treasury shares of the Company. For issue of shares other than on a pro-rata basis to all existing shareholders of the Company, the aggregate number of shares and convertible securities to be issued shall not exceed twenty per cent (20%) of the total number of issued shares excluding treasury shares of the Company. This authority will, unless previously revoked or varied at a general meeting, expire at the next Annual General Meeting of the Company.

(ii) The proposed Resolution 10, if passed, will empower the Directors of the Company from the date of the above Meeting until the next Annual General Meeting to grant options and awards to eligible non-executive directors and employees of the Company under the Scheme and the Share Plan and to allot and issue shares up to an amount in aggregate not exceeding fifteen per cent (15%) of the total number of issued shares excluding treasury shares of the Company from time to time pursuant to the exercise of the options under the Scheme or the vesting of the awards under the Share Plan.

(iii) The proposed Resolution 11, if passed, will empower the Directors of the Company from the date of the

above meeting until the next Annual General Meeting, or the day by which the next Annual General Meeting is required by law to be held or when varied or revoked by the Company in a general meeting, whichever is the earlier, to purchase or otherwise acquire ordinary shares not exceeding ten per cent (10%) of the total number of issued shares in the capital of the Company as at the date of passing of this Resolution, whether by way of market purchase(s) or off-market purchase(s), on the terms of the Share Purchase Mandate. Detailed information on the Share Purchase Mandate (as defined in Resolution 11 above) is set out in the Appendix dated 5 October 2011 accompanying this Notice of Annual General Meeting.

(iv) The proposed Resolution 12, if passed, will empower the Directors of the Company from the date of the above meeting until the next Annual General Meeting, or the day by which the next Annual General Meeting is required by law to be held or when varied or revoked by the Company in general meeting, whichever is the earlier, to allot and issue new shares in the Company from time to time as may be required pursuant to the RAFFLES EDUCATION CORPORATION SCRIP DIVIDEND SCHEME.


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PROXY FORM

RAFFLES EDUCATION CORPORATION LIMITED(Incorporated in the Republic of Singapore) Company Registration No. 199400712N

IMPORTANT

1. For investors who have used their CPF monies to buy Raffles Education Corporation Limited’s shares, this Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF Investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

I/We

of

being a *member/members of Raffles Education Corporation Limited, hereby appoint

Name Address NRIC / Passport No.

Proportion of Shareholdings (%)

and/or (delete as appropriate)

as my/our proxy/proxies to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held on 21 October 2011 at 3.00 p.m. at Ballroom II & III, Level 2, InterContinental Singapore, 80 Middle Road, Singapore 188966 and at any adjournment thereof.

The proxy is required to vote as indicated with an “X” on the resolutions set out in the Notice of Meeting and summarised below. If no specific direction as to voting is given, the proxy/proxies may vote or abstain at his discretion.

No. Resolution For Against

1. To receive and adopt the Directors’ Report and Audited Accounts for the financial year ended 30 June 2011 together with the Auditors’ Report thereon

2. To declare a final dividend (tax exempt one-tier) of 0.45 cents per ordinary share

3. To approve the proposed Directors’ Fees for the financial year ended 30 June 2011

4. To re-elect Mr Teo Cheng Lok John as a Director

5. To re-elect Mr Chew Kok Chor as a Director

6. To re-elect Mr Chong Ee Yong as a Director

7. To re-elect Mr Yap Kim Wah as a Director

8. To re-appoint Messrs BDO LLP as the Company’s Auditors and to authorise the Directors to fix their remuneration

9. Authority for Directors to issue shares and to make or grant instruments pursuant to Section 161 of the Companies Act, Cap. 50

10. Authority for Directors to grant options and awards, and to allot and issue shares, pursuant to the Raffles Education Corporation Employees’ Share Option Scheme (Year 2011) and the Raffles Education Corporation Performance Share Plan

11 Renewal of the Share Purchase Mandate

12. Authority to allot and issue shares pursuant to the Raffles Education Corporation Scrip Dividend Scheme

Signed this day of 2011 Total No. of Shares in: No. of Shares

1) CDP Register

2) Register of Members

Signature(s) of Member(s)/Common Seal

Notes:

a) Where a member appoints two proxies, the appointments shall be invalid unless he specifies the proportion (expressed as a percentage of the whole) of his shareholding to be represented by each proxy.

b) The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or if such appointor is a corporation under its common seal or under the hand of its attorney.

c) An instrument appointing a proxy must be deposited at the Registered Office of the Company at 99 Beach Road, Singapore 189701 not less than 48 hours before the time appointed for holding the meeting.

d) The Company shall be entitled to reject a Proxy Form which is incomplete, improperly completed, illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified on the Proxy Form. In addition, in the case of shares entered in the Depository Register, the Company may reject a Proxy Form if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.

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