CEO's Message


Dear Shareholders,


When Raffles Design Institute was first established in Singapore in 1990, it was symbolic of an empty loom, set up in readiness to weave a tapestry of educational institutions across multiple regions. Just as in weaving with yarn, working with colours and fabrics to form beautiful designs, the RafflesEducation tapestry has evolved into a colourful pattern of educational institutions across the Asia-Pacific and Europe.


Today, RafflesEducation operates 30 colleges in 29 cities across 13 countries in the Asia-Pacific: Australia, Cambodia, China, India, Indonesia, Malaysia, Mongolia, Philippines, Saudi Arabia, Singapore, Sri Lanka, Switzerland and Thailand.


Every year, more than 20,000 students are enrolled in our tertiary programmes, benefitting from a quality education that provides graduates with a well-rounded hands-on experience relevant to the industry.


Weaving involves an intricate three-step process that harnesses the different yarns tightly together into a secure pattern of colours, which forms the intended design when the tapestry is completed.


Likewise at RafflesEducation, we have been weaving in related businesses - adding the Management of Education Assets and Facilities and the Education-Linked Real Estate Investment and Development to strengthen our core business as a Premier Education Provider. RafflesEducation has morphed into a business with three related growth engines.


Premier Education Provider


Our core business remains focused on a full range of education services from K-12 to tertiary programmes. Backed by over two decades of expertise, coupled with a good track record and strong branding in Asia’s vibrant education space, we believe RafflesEducation is well-positioned to tap on opportunities across the globe. Especially in Asia, where nearly 40% of students in higher education are enrolled in the private institutions1.


In this regard, we are proud to be well-established beyond the confines of Singapore and China, where we have a large and strong presence, to new markets in India and the Middle East and most recently, Switzerland.


We are also honoured to have received prestigious accreditation from the Western Association of Schools and Colleges (“WASC”), USA, for the Raffles American School (“RAS”) in Johor, Malaysia. The accreditation is significant on several fronts - the RAS being conferred this accolade as a young institution, just two years into its academic year, with the unanimous affirmative endorsement of the WASC Executive Committee. As only the most accomplished schools received immediate accreditation by the WASC Executive Committee without delay for a full Commission vote, this is a clear signal of the confidence in RAS’ ability to provide quality education, backed by our strength that accompanies the vision.


In September 2014, we expanded our footprint to Europe with an upcoming hospitality management school in Nendaz, Switzerland. We are excited by the prospects of establishing our presence in the famed tourism and hospitality education choice destination of Switzerland, marking our maiden step into Europe. By intertwining our hospitality management school with the acquisition of a hotel and other related facilities, we aim to provide our students around the world with an opportunity of a holistic and invaluable internship at the hotel. Our strategy of building a pool of newly trained talent will then cascade down to meet the human capital needs of the hospitality industry, and set in motion a virtuous cycle of enhancing student intakes across our colleges worldwide.


These developments will provide us with opportunities to implement other exciting initiatives, such as the establishment of a design school and a Swiss International Baccalaureate School in Nendaz, Switzerland.


Management of Education Assets and Facilities


We have acquired invaluable expertise and gained traction as a manager of education assets and facilities from the acquisition of Oriental University City (“OUC”) in Langfang, Hebei, China since 2008. That first step has borne fruits for RafflesEducation. We now have 10 colleges with a student population of over 19,000 within the campus, providing a strong recurring income for RafflesEducation.


Riding on the success of OUC, we acquired a commercial property in Parramatta, situated in Sydney, Australia in July 2014. The six-storey commercial building with a net lettable area of 9,782 sq m is an ideal permanent campus for our Raffles College Design and Commerce (“RCDC”) which is currently operating out of leased premises in North Sydney. In doing so, we will avoid the unpredictability of rental increases. In addition to the rental savings and permanency for RCDC, we also expect to derive rental income from retail facilities where food & beverage operators and retailers operate to support the lifestyle of our student population.


The cost substitution measure is a strategy that we have started to implement selectively throughout RafflesEducation – OUC, our flagship Raffles College of Higher Education in Singapore’s Raffles Education Square, RCDC in Sydney and soon our new Bangna Campus for Raffles Bangkok. Not only will these investments provide cost savings but will also improve our competitive advantage and enhance our brand image as a premier education provider of choice.


The Bangna Campus for Raffles Bangkok will be completed in October 2014, and commence operations in January 2015. This S$33 million investment has a total built-up area of 20,194 sq m, consisting of an academic building of 10,103 sq m and a commercial building with a retail and office space of 10,091 sq m. The commercial building will serve as an incubator for our graduates’ start-up businesses as well as to bring in other creative industries to co-locate with us in order to capitalise on the talents that are flowing out of the college. This in turn will provide opportunities of internship for our students and employment for our graduates.


This holistic education model epitomises our mission of “a quality education that provides graduates with a well-rounded hands-on experience relevant to the industry” which we believe is the right formula to merge “study and work”. This model will be deployed throughout our upcoming developments across RafflesEducation, as it will certainly uplift the quality of education that we provide.


Education-Linked Real Estate Investment and Development


The focus of our holistic approach of integrating education into different aspects of “learn, live, work and play” has opened up many new opportunities for RafflesEducation.


With the experience gained in running and developing OUC, an education township, where education is intertwined with commercial and residential activities, building of new academic and residential buildings in Tianjin Boustead College, our recent acquisition of a commercial property in Parramatta and the upcoming completion of the Bangna Campus, RafflesEducation is ready to explore more education-linked real estate investment and development.


With good investment foresight, we were able to divest about S$500 million of our education-linked real estate over the past three years, thereby turning our balance sheet from negative assets to an asset-backed balance sheet. The realisation of these funds allowed us to recycle and reinvest our capital into value-accretive businesses within our three engines of growth. Where opportunity arises, RafflesEducation will further develop the concept of “learn, live, work and play”, including the building of residences on Group-owned land to optimise returns for our Shareholders.


Our recent acquisitions in Switzerland will incorporate all these synergies that will increase the value of the collective assets compared to their respective standalone values. In addition, the rental revenue generated from the hotel property also serves as an additional stream of stable and recurring income for RafflesEducation.


We are also delighted to announce that the Board has recommended a final one-tier tax exempt cash dividend of 1 cent per ordinary share as a reward to our Shareholders.


In Closing


I would like to extend my deep appreciation to the Board for their wise and invaluable counsel.


Lastly, I would also like to thank our Shareholders, students, business partners, staff and all stakeholders for their support, trust and confidence in RafflesEducation.


Yours Sincerely,


Chew Hua Seng

Chairman and CEO
20 September 2014


Note: FY2014 refers to the Financial Year Ended 30 June 2014
1Source: Higher Education in Asia – Expanding Out, Expanding Up, UNESCO Institute for Statistics, 2014