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MAINBOARD-LISTED Cacola Furniture International said that it disagrees with the Singapore Exchange's assessment that its operation is not in a healthy cash flow position, and continues to engage the regulator to seek the best options for shareholders.
The sofa maker, whose appeal for extra time to exit the watch-list has been rejected, said that it has an actual positive operating cash flow of about 1.4 million yuan (S$286,486) for the fiscal year ended Dec 31, 2016. This is after excluding the major non-cash transaction comprising debt settlement of 19.7 million yuan involving the issue of new shares to certain creditors in October 2016. Cacola said that compared with FY2015, it has cash outflow of about 6.2 million yuan. It said that the non-cash debt equity settlement has improved its cash flow position by capitalising on the debt to equity of the group.
Earlier, SGX informed Cacola that its decision took into account, among other things, that the company had recorded a negative operating cash flow of 18.2 million yuan in its latest announced unaudited full-year results and did not meet the requirement for a healthy cash flow from its operating activities. Cacola's market value is around S$2 million on March 14, 2017, significantly below the S$40 million threshold for the removal from the watch-list.
Cacola further argued that apart from the major non-cash transaction, its inventory level has "increased dramatically" to about 37.3 million yuan on Dec 31, 2016, compared with 25.9 million yuan a year ago.
"As such, an operating cash outflow of 11,305,000 yuan was reported in the operating activities. In fact, this increment is a positive and healthy signal to the group, representing increase in sales order to be delivered to its customers," the company said.
Cacola has been on the watch-list since 2014 and will be delisted on April 3. It is required to present an exit offer no later than the delisting date.