Dear Fellow Shareholders,

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.

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.

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.

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.

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.

Chew Hua Seng
Chairman and CEO
September 2011