FIL Fairview International Plc

Fairview International PLC

("Fairview" or the "Company")

Combined Pro forma results for the period to 30 June 2024

Fairview, the operator of international schools following the International Baccalaureate curriculum, is pleased to announce its pro forma financial results for the 12 months ended 30 June 2024.

Highlights

·    Student numbers increase by 12% to 773 (2023: 689)

·    Gross profit increased by 32% to £2,395,000 (2023: £1,814,000)

·    Profit before tax increased by 4% to £1,897,000 (2023: £1,820,000)

The results set out below do not constitute Fairview's statutory accounts but are derived from the combination of the financial statements for the pre-acquisition 12-month period to 30 June 2024 for its two Malaysian subsidiaries (the "Operating Group") which have been audited locally under IFRS and reviewed by the Company's UK auditors.

Further details regarding the acquisition of the two schools in Malaysia can be found in the Company's prospectus dated 4 October 2024, which is available on the Company's website: www.fairviewplc.uk.

Daniel Chian, Chairman of Fairview, said: "I am pleased to report Fairview's first financial results published since our IPO in October.  These results of the Operating Group are a pro forma of our two subsidiary companies but are representative of Fairview International's performance for the period under review.

"As education establishments around the world recover from the restrictions during the Covid period, our performance illustrates the financial capabilities of our schools.  The key driver for everything we do is student numbers and a 12% increase across the year is particularly pleasing.

"Two key metrics of our business model are the inherent scalability of our business in line with student numbers and the security of our customer base.  Put simply, each new student provides incrementally higher profitability and, once a child starts at a new school, they will very probably stay there until the end of their secondary education.

"We pride ourselves on the breadth of educational and extra-curricular activities that our schools offer but, as well as benefitting the children at our schools, they of course also provide our Company with the ability to earn further revenue from our customer base.  Schools are first and foremost a nurturing environment but, as today's results demonstrate, they can also be a very successful business."

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About Fairview International PLC

Fairview owns and operates two private independent schools in Malaysia that offer the International Baccalaureate programme. One of these schools is located in Kuala Lumpur, the capital of Malaysia, and the other is located in the southern state of Johor close to the border with Singapore.  These schools trade under the Fairview brand which was founded in 1978, and were subsequently acquired by Agodeus Sdn Bhd, a company owned by the Chian family, in 2012. 

There are three other schools in Malaysia and one in the United Kingdom that also trade under the Fairview brand, which are outside of the Company's group.  All schools in the Fairview network are individually recognised by the International Baccalaureate Organisation as fully accredited to offer the IB programme across the primary and middle years; ages 5 to 16, with Fairview Kuala Lumpur also offering the diploma programme for 16 to 19 year olds.  Each of the schools not owned by the Company use the Fairview brand under licence from the Company accessing the resources of the Fairview Network. 

The school in Kuala Lumpur is the largest and flagship school that uses the Fairview brand, whilst the school in Johor focuses on the expatriate market in Singapore and so is internationally focused.

The Company plans to acquire more schools which can offer international education including the International Baccalaureate programmes both in Asia and the UK.  The Company in particular believes there is an opportunity to acquire underperforming private independent schools in the UK and adapt its product offering to be authorised to offer the International Baccalaureate programme.  With a rise in popularity of the International Baccalaureate programme in both the independent and state sector in the UK, with a growing acceptance of International Baccalaureate graduates by UK universities, the Directors believe that the Company's schools will appeal particularly to the ASEAN, China and Hong Kong market; particularly families looking for an educational foundation in the UK prior to studying at a UK University.

Website

www.fairviewplc.uk

Social media

https://x.com/fairviewplc

https://www.linkedin.com/company/fairview-international-plc/

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ''believe'', ''could'', "should" ''envisage'', ''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', "expect", ''will'' or the negative of those, variations or comparable expressions, including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors.

Review of results for the year

The Operating Group  has reported improvements in both revenue and profit before tax for the year ended 30 June 2024. Revenue of £5.0 million and profit before tax of £1.9 million, each showing growth of 4.2% on the prior year equivalents. The  financial results of the Operating Group reflect the substantial improvement in its most important Key Performance Indicator (KPI), namely student numbers, which finished the year at 773 representing an increase of 84 new students over the preceding 12 months.

The Company achieved a significant milestone after the year end with its shares being successfully admitted to the London Stock Exchange's Main Market and commencing trading on 11 October 2024.

Fairview was incorporated on 28 February 2024 with a financial year end of 30 June to match its subsidiary companies.  The Company's first statutory accounts will be for the period from 28 February to 30 June 2025. The effective date for the purchase of its two subsidiary companies, Fairview Schools Berhad and Fairview International School Nusajaya Sdn Bhd, was 11 October 2024, being the date on which the Company gained control of the management and equity of those companies.

The Directors are presenting the combined results for the Operating Group for the financial year ended 30 June 2024 on a pro-forma basis on the assumption that the Operating Group has been trading as a combined entity for the full 12 months ended 30 June 2024. Accordingly, the pro-forma combined results herein have been prepared based on the 12-month results of Fairview Schools Berhad and Fairview International School Nusajaya Sdn Bhd, ended on 30 June 2024.

Revenue

Revenue is primarily driven by student numbers which increased by 12% during the year.  The Directors consider that this increase is primarily attributable to the post covid recovery where traveling is no longer subject to any restrictions. This has brought expatriate families back to Malaysia and, with that, additional student enrolments.  The Operating Group has implemented various sales and marketing strategies to appeal to these families and so it is pleasing to see these initiatives succeed in the schools' local communities.

Both of the Operating Group's schools have the ability to take on greater numbers of students, with overall capacities of 1,500 and 750 in Kuala Lumpur and Johor Bharu respectively.  With the Group therefore only operating at around one third of its maximum capacity, this trend of parents enrolling their children back into International schools is encouraging and the Directors are accordingly optimistic for further increases during the financial year ending 30 June 2025.

Revenues did not rise in proportion to student numbers - revenue of £5.0 million represents a 4.2% increase over the previous year - due to a continuation of higher rates of financial assistance that were offered to students through bursaries.  This was a considered policy of the schools in recognition of the financial difficulty many parents had suffered during the Covid pandemic and a show of appreciation to those parents who had remained supportive of the schools during that period.  By their nature, schools provide a long term relationship with their customers - namely families - and the Group determined that the gestures made during this past year would be repaid through the ongoing loyalty of its customer base.

Average fees per student remained largely consistent at around £5,900 as the Operating Group prioritised new enrolments over inflation-linked tuition fee increases during the year. However, the Directors are mindful that Fairview offers very competitive education costs, alongside a leading International Baccalaureate curriculum, and therefore would guide investors to expect increases in school fees in future financial years.

Gross Profit

Gross profit of £2,395,000 showed a 32.0% improvement on the previous year (2023: £1,814,000).  This improvement of over £500,000 was achieved as a result of tighter cost controls, referred to below.

Other Operating Income

Other income  comprises enrolment fees, examinations, excursions and expeditions as well as canteen and bookshop sales. The reduction in the current year reflects the accounting treatment of the restructuring of debt within the Fairview network prior to the Company's IPO in October 2024.  This led to a reduction in intercompany interest income of around £350,000 and the application of an unrealised foreign exchange loss.

Costs of Operations and Administration Expenses

The biggest contributor to costs of operations are the teachers and other academic staff. Savings during the year of £210,000 predominantly reflect a headcount reduction of 13 staff, of which 3 were academic staff.

Administration expenses decreased to £586,000 (2023: £597,000) during the year, reflecting efforts to manage the cost base.

Profit before tax

Profit before tax of £1,897,000 showed a 4.2% improvement on the previous year (2023: £1,820,000) illustrating the overall gearing effect in the Operating Group of increasing student numbers, despite the accounting treatment of the pre-IPO reorganisation that itself exceeded the increase in top line revenues.  The fact that this improvement was achieved despite the challenging business and education environment post Covid is particularly pleasing.

Taxation for the year is disproportionately high as it includes £245,000 which relates to the prior year. Tax charges in Malaysia are estimated on a pay-as-you-earn basis with the final tax liabilities usually being determined in the following financial year following completion of the final tax return and audit.

Cash and cash equivalents

Cash balances as at 30 June 2024 of over £1 million do not reflect the net proceeds of Fairview's IPO on 11 October 2024, of £1.8 million.

Risks

The principal risks and uncertainties associated with the business and operations of Fairview are set out in the prospectus of the Company dated 4 October 2024. The Directors believe that these risks and uncertainties remain relevant to the business at the time of finalising these accounts for the year ended 30 June 2024.

Combined Income Statements for 12 months ended 30 June 2024

NOTES TO THE FINANCIAL INFORMATION

1.    General information

FSB is a public limited company incorporated and domiciled in Malaysia.

The registered office and principal place of business are as follows:

●     The registered office is located at 62-2, Jalan 2A/27A, Section 1, Wangsa Maju, 53300 Kuala Lumpur.

●     The principal place of business is located at Lot 4178, Jalan 1/27D, Section 6, Wangsa Maju, 53300 Kuala Lumpur.

FJB is a private limited company incorporated and domiciled in Malaysia.

The registered office and principal place of business are as follows:

●     The registered office is located at 62-2, Jalan 2A/27A, Section 1, Wangsa Maju, 53300 Kuala Lumpur.

The Operating Group is principally engaged in the operation of an English-Medium private international school. There have been no significant changes in the nature of the activities during the year.

The aggregate financial statements of the Operating Group are presented in the British pound sterling (£) currency, which is the presentation currency of the Company. The functional currency of FSB and FJB is Ringgit Malaysia (RM) as the sales and purchases are mainly denominated in Ringgit Malaysia and receipts from operations are usually retained in Ringgit Malaysia and funds from financing activities are generated in Ringgit Malaysia.

The Ringgit Malaysia is translated to British pound sterling based on the following exchange rate:

2. Basis of preparation 

This combined Financial Information presents the financial track record of the Operating Group for each of the two years ended 30 June 2024 and 2023, and the basis of preparation is summarised below.

The Combined Financial Information has been prepared in accordance with IFRS, issued by the International Accounting Standards Board, including interpretations issued by the International Financial Reporting Interpretations Committee, applicable to companies reporting under IFRS. The directors of the Company are responsible for the preparation of this Combined Financial Information.

The Operating Group did not form a legal group in the periods presented in the Combined Financial Information. However, they have been under common management and control in those years. Accordingly, a consolidation under the requirements of IFRS 3, Business Combination and IFRS  10, Consolidated Financial Statements have not been complied with.

The Combined Financial Information has been prepared by aggregating the assets, liabilities, results, share capital, share premium and reserves of the entities, after eliminating intercompany transactions, balances and unrealised gains on transactions between the combined entities. "Share capital" and "share premium" represent the aggregated share capital and share premiums of the companies comprising the Combined Financial Information.

The financial information for the FSB and FJB has been audited by Messrs TKNP International, Chartered Accountants and Messrs YPK & Associates, Chartered Accountants, respectively have been prepared under the historical cost convention and modified to include other bases of valuation and in accordance with the Malaysian Accounting Standards ("MFRS") issued by the Malaysian Accounting Standards Board ("MASB"). The Malaysian Financial Reporting Standards (MFRS) framework is fully compliant with the International Financial Reporting Standards (IFRS) framework. The MFRS framework was introduced by the Malaysian Accounting Standards Board (MASB) and came into effect on 1 January 2012. It is fully compliant with the International Financial Reporting Standards (IFRS) framework.

There are also a number of new standards and amendments to standards and interpretations have been issued but are not yet effective and, in some cases, have not yet been adopted by the UK/EU. The Directors do not expect that the adoption of these standards will have a material impact on this Financial Information.

3. Accounting policies

3.1 Property, Plant and Equipment

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Subsequent to recognition, property, plant and equipment other than freehold land are measured at cost less accumulated depreciation and accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts as individual assets with specific useful lives and depreciation. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the property, plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.

Purchase of software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

Motor vehicles are depreciated on a revaluation model basis less its estimated residual value based on observable market data. The gross carrying amount is restated by reference to observable market data and the accumulated depreciation at the date of the revaluation is adjusted to equal the difference between the gross carrying amount and the carrying amount of the asset.

No depreciation is provided on freehold land.

Depreciation on other property, plant and equipment is computed on a straight-line basis over the estimated useful lives of the assets at the following rates:

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

The residual value, useful life and depreciation method are reviewed at each financial year end, and adjusted prospectively, if appropriate.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised.

Fully depreciated plants and equipment are retained in the financial statements until they are no longer in use and no further charge for depreciation is made in respect of these plants and equipment.

3.2 Impairment of non-financial assets

The Operating Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Operating Group makes an estimate of the asset's recoverable amount.

An asset's recoverable amount is the higher of its fair value, less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash-generating units ("CGU").

In assessing value in use, the estimated future cash flows expected to be generated by the asset are 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. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

Impairment losses are recognised in profit or loss.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss.

3.3 Functional and foreign currency

a)            Functional and presentation currency

The individual financial statements of each entity in the Operating Group are measured using the British pound sterling (£) currency, which is the presentation currency.

b)            Foreign currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Group and are recorded on initial recognition in the functional currencies at exchange rates approximating those prevailing at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange prevailing at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.

3.4 Financial Instruments

Financial assets and financial liabilities are recognised in the statements of financial position when the Operating Group has become a party to the contractual provisions of the instruments.

Financial instruments are classified as financial assets, financial liabilities or equity instruments in accordance with the substance of the contractual arrangement and their definitions in IAS32. Interest, dividends, gains and losses relating to a financial instrument classified as a liability are reported as an expense or income. Distributions to holders of financial instruments classified as equity are charged directly to equity.

A financial instrument is recognised initially at its fair value (other than trade receivables without significant financing component which are measured at transaction price as defined in IFRS 15 - Revenue from Contracts with Customers at inception). Transaction costs that are directly attributable to the acquisition or issue of the financial instrument (other than a financial instrument at fair value through profit or loss) are added to/deducted from the fair value on initial recognition, as appropriate. Transaction costs on the financial instrument at fair value through profit or loss are recognised immediately in profit or loss.

Financial instruments recognised in the statements of financial position are disclosed in the individual policy statement associated with each item.

a) Financial assets

All recognised financial assets are measured subsequently in their entirety at either amortized cost or fair value (through profit or loss, or other comprehensive income), depending on the classification of the financial assets.

The Group determines the classification of their financial assets at initial recognition, and designates all the financial assets at amortized cost. The Operating Group does not have any financial assets carried at fair value (through profit or loss, or other comprehensive income).

Amortised cost (debt instruments)

The financial asset is held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest. Interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial asset. When the asset has subsequently become credit-impaired, the interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset.

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that discounts estimated future cash receipts (including all fees and points paid or received that for GBP an integral part of the effective interest rate, transaction costs and other premiums or discounts), excluding expected credit losses, through the expected life of the financial asset or a shorter period (where appropriate).

b) Financial liabilities

Other financial liabilities are subsequently measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period.

The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and 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 liability or a shorter period (where appropriate).

c) Derecognition

A financial asset or part of it is derecognised when, and only when, the contractual rights to the cash flows from the financial asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. On derecognition of a financial asset measured at amortised cost, the difference between the carrying amount of the asset and the sum of the consideration received and receivable is recognised in profit or loss.

A financial liability or a part of it is derecognised when, and only when, the obligation specified in the contract is discharged or cancelled or expires. On derecognition of a financial liability, the difference between the carrying amount of the financial liability extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

d) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

3.5 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand and short-term deposits with a maturity of three months or less, which are subject to an insignificant risk of changes in value, net of outstanding bank overdrafts and fixed deposits pledged. For the purpose of the statement of cash flows, cash and cash equivalents are presented net of bank overdrafts and fixed deposits pledged.

3.6 Equity instruments

Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are approved for payment. The transaction costs of an equity transaction are accounted for as a deduction from equity. Equity transaction costs comprise only those incremental external costs directly attributable to the equity transaction which would otherwise have been avoided.

3.7 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour costs and overheads, where applicable, that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.

3.8 Use of assumptions and estimates

In preparing the Financial Information, the Directors have to make judgments on how to apply the accounting policies and make estimates about the future. The Directors do not consider there to be any critical judgments that have been made in arriving at the amounts recognised in the Operating Group's Financial Information.

The balance of the shares represents the capital of FSB and FJB that have not yet been eliminated.

Nature of the financial information

The financial information presented above does not constitute statutory accounts for the period under review.