SINGAPORE (THE BUSINESS TIMES) - The board of Raffles Education Corporation is of the view that the group and company can continue as a going concern, and it sees no need to suspend the trading of its shares as its operations are generating positive cash flows, the education provider said in a bourse filing on Wednesday (Oct 13).
This was in response to queries raised by the Singapore Exchange following an auditor's report, which highlighted a material uncertainty that may cast significant doubt on the ability of the group and company to continue as a going concern.
Raffles Education said there is no intention for the company or for any material group entity to be liquidated or to cease trading due to the inability to pay their debts, as they fall due in the next 12 months.
Auditors earlier noted that the group's current liabilities exceeded its current assets by $196.4 million for the financial year ended June this year.
Raffles Education said the group as a whole is generating positive free cash flows in its operations.
Furthermore, it has not received a notice alleging default on any of its loans, save for a loan with Affin Bank, in which the group has receivables due to it over the next 12 months that can satisfy its repayment obligations, it added.
These receivables include 274 million yuan (S$57.5 million) from the disposal of Langfang Development Zone Oriental University City Sino-Singapore Education Investment Co - of which Raffles Education had already received 100 million yuan on Sept 28.
Raffles Education expects to collect 100 million yuan on Friday and the remaining 74 million yuan on Sept 30 next year.
The receivables also include 216.3 million yuan from the disposal of land and buildings of Wanbo Institute of Science & Technology's (Wist) old campus, which will likely be received before Nov 30 this year.
As for Raffles Education's other loans, Oriental University City Holdings - as a separately listed subsidiary - will repay its $7 million loans, while Boustead College and Wist will pay for their loans amounting to $12.3 million using collected tuition fees. The remaining bank loans will be paid from Raffles Education's subsidiaries' positive cash flows.
Regarding the potential sale of its corporate office and college campus at 51 Merchant Road for around $200 million that was announced in August, Raffles Education said the sale has not been taken into account by the group for the repayment of its loans as they fall due over the next 12 months.
Furthermore, the potential sale will not affect the operations of the college as it will rent another premises upon the sale, and net proceeds of the sale - when completed - will be used for further repayment of loans, working capital and/or opportunistic acquisition, the company said.
It added that it currently has no plans to dispose of any other assets, "but is always on the lookout when the opportunity arises".
Shares of Raffles Education were trading at 8.8 cents as at 1.59pm on Wednesday, up 0.1 cent or 1.2 per cent.