Chen Lin education group forecasts significant FY2025 loss due to impairments

Chen Lin Education Group Holdings Limited has issued a profit warning, forecasting a loss of at least 320.0 million yuan for the year ended August 31, 2025 (FY2025). This is a significant downturn from the 15.4 million yuan profit recorded in FY2024. Despite this, the company expects revenue to remain stable at approximately 600.0 million yuan, an increase over FY2024.

The projected loss is primarily attributed to a one-off, non-cash impairment of at least 200.0 million yuan on goodwill and non-current assets. This results from revised operating estimates for cash-generating units acquired in 2020 and 2021. Additionally, a 43.0 million yuan non-cash impairment loss is expected from the reversal of deferred revenue related to government grants, following the withdrawal of an application to convert a college from not-for-profit to for-profit status.

The company also anticipates a year-on-year increase of approximately 25 million yuan in non-cash depreciation and amortization costs due to completed infrastructure and equipment upgrades. However, these impairment losses and depreciation are non-cash, meaning they will not impact the group's operating profit or cash flow. The board expects adjusted non-IFRS net profit (EBITDA, after adjusting for specific impairments and losses) to range between 170.0 million yuan and 200.0 million yuan.