Raffles Education responds to SGX queries on annual report; tycoon cuts stake in firm to less than 1%
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SGX RegCo queried Raffles Education on the valuation of its investment properties after recording a fair value gain of $13.8 million.
PHOTO: RAFFLES-COLLEGE.EDU.SG
Tay Peck Gek
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SINGAPORE (THE BUSINESS TIMES) - Billionaire Oei Hong Leong has cut his stake in Raffles Education Corporation (REC) to less than 1 per cent after dumping around 90 million shares in the company, according to an exchange filing on Tuesday (Oct 26).
Mr Oei sold 56.2 million shares and dumped a further 34.2 million held through his art museum for a total consideration of around $55 million, according to market data. This means that he is no longer a substantial shareholder in REC.
The company has also responded to Singapore Exchange Regulation's (SGX RegCo) queries last Friday on a number of items in its annual report.
In a separate bourse filing on Tuesday, the mainboard-listed private school operator listed interested persons transactions tables according to Listing Rule 907. The company also answered questions on significant related party transactions, interested party loans and valuation of properties, among other things.
SGX RegCo pointed out that loans from chairman and chief executive Chew Hua Seng were not fully disclosed, with $9.5 million recorded but only $1.2 million accounted for by Raffles Education. The company disclosed that the remaining $8.3 million was loaned to Wanbo Institute of Science and Technology in China.
Raffles Education also disclosed the loan balance owed to Mr Chew, which SGX RegCo had asked for. On the group level, Mr Chew had been repaid $6.3 million in FY21 and $17 million in FY20. The director is still owed $10.9 million and $5.8 million at the end of FY21 and FY20 respectively.
On the company level, Mr Chew has been repaid $5.8 million in FY21 and $17 million in FY20. He is still owed $2.6 million and $5.45 million at the end of FY21 and FY20 respectively.
SGX RegCo also queried Raffles Education on the valuation of its investment properties after recording a fair value gain of $13.8 million. The Langfang investment properties in question, comprising education facilities and commercial spaces, were valued at 1.3 billion yuan (S$274 million)as at June 30 by independent valuer Cushman & Wakefield.
An income capitalisation approach was used in valuing the properties as most of them were held for letting and receiving rental income. The market comparison approach was also used as a check. This approach assumes the sale of each property in its existing state by referencing comparable sales evidence in the relevant market.
"The Langfang investment properties were valued at higher fair value due to the improved long-term income capitalisation profiles, taking into account the generally improved property market profile in (the) Langfang property market," said Raffles Education in the filing.
The salary paid by Raffles Education to former non-executive director Liu Ying Chun, who retired on Oct 30 last year, was also queried by the regulator on the basis that Oriental University City Hong Kong, where he is employed as chief executive officer, should have paid his salary.
Raffles Education explained that the $168,000 salary was paid to Mr Liu due to his capacity as a Raffles Education employee from July 2020 to June 2021, with no director's fees being paid to him.
SGX RegCo also queried the independence of the appointed internal auditor, Baker Tilly Consultancy, requiring the audit committee (AC) of Raffles Education to state the auditor's independence, effectiveness and if any internal control deficiencies were noted.
The AC responded by confirming Baker Tilly's independence and effectiveness based on its unfettered access to documents, records, properties, management and the AC. Baker Tilly also does not provide any other services to the private school operator.
Furthermore the AC reviews and approves the annual internal audit plans and reviews the scope and results of the auditor. Baker Tilly did not find any material control deficiencies and all minor control deficiencies were rectified, according to Raffles Education.
Supplemental information on directors seeking re-election was also disclosed at the prompting of SGX RegCo.
Mr Chew and non-executive director Ng Kwan Meng are currently involved in an investigation by the Monetary Authority of Singapore and Commercial Affairs Department into a potential offence under Section 203 of the Securities and Futures Act concerning disclosures.
