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Quarterly Earnings at Overseas Education Limited Up 6%

Overseas Education Limited (SGX: RQ1), or OEL, released its first quarter earnings on Friday.

OEL is a holding company of Overseas Family School Limited, which operates Overseas Family School, a private foreign system school in Singapore. The school offers the K-12 International Baccalaureate curriculum for children aged between 3 and 18 years old. It has around 3,700 students of over 70 nationalities, supported by about 500 staff members of over 30 nationalities.

Revenue increased 1.1% year-on-year from $25.2 million in the first quarter of last year to $25.5 million in the latest quarter. This was mainly due to increase in revenue from tuition fees, which went up 1.4% to $24.5 million, on the back of revision in the fees across all grades of the school for the academic year that commenced in August 2013.

Personnel expenses went up 6.9% to S$14.3 million but overall operating expenses was down 0.5% to S$18.8 million. Net profit climbed 6.1% from S$5.2 million last year to S$5.5 million.

As of 31 March 2014, the firm had a total of $99.1 million in cash and no debt. However, it had issued bonds of $150 million on 17 April 2014. The bonds are for a tenor of five years and bear interest at 5.2% per annum.

For the quarter, operating cash flow was a negative S$6.5 million while that last year was a negative S$8 million. It also spent S$19.1 million in capital expenditure due to development of a new school campus at Pasir Ris Drive 3.

OEL said inflation continues to be of concern as it could translate into higher personnel expenses. Since these expenses form the largest component of the operating expenses, the inability to pass on any such increase to its clients could affect its operational results.

The shares closed at S$0.96 on Friday. This translates to a historical PE ratio of 18 and a dividend yield of around 3%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.