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Raffles Edu Corp answers Sias queries on operations and finances

RAFFLES Education Corporation (Raffles Edu) responded on Sunday to a slew of queries by the Securities Investors Association (Singapore) (Sias) about its operations and finances.

Asked to explain a steep decrease in its education business profit to S$5.43 million and share plans to improve that segment’s profitability, Raffles Edu said this was due to the completion of Raffles American School (RASJB)’s campus. This increased finance costs as it stopped capitalising the interest related to the construction, and resulted in depreciation commencing.

It also said that Raffles College’s (RCDC) application for re-registration of Commonwealth Register of Institutions and Courses for Overseas Students  (CRICOS) is "still pending".

The company had earlier said that it was confident of receiving the registration in early 2018.

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Sias also asked if the audit committee considers the group’s accreditation systems and processes to be a high risk area for the group and whether a review would be prudent, given the re-registration delay for RCDC and that it has, according to Sias, "affected the group’s ability to admit foreign students to its higher education courses". 

Raffles Edu replied: "The company has a department, known as Raffles University Systems, directly responsible for academic quality assurance, including accreditation. This department advises senior management and the Audit Committee of risks, if any, that would affect the accreditation or continuing accreditation of our colleges and university."

Raffles Edu said that it recognises that its “its total borrowings of S$366 million, relative to cash flows, is a concern” in a response to a Sias question about how its current capital structure can remain viable. “As the generation of revenue is primarily from student numbers, the group is working to increase these numbers. It should be noted that the majority of the group’s borrowings are property mortgages, secured by valuable real estate,” the company said. “Currently, there is no requirement for additional equity from its shareholders and the group has the intention to monetise some of its assets.”

When asked for information on its key academic and operational staff, Raffles Edu said such disclosure would “compromise confidentiality and would likely affect the retention of competent personnel”.

But it did explain the role of one Doris Chung Gim Lian as an executive director in charge of the day-to-day responsibilities of Raffles University in Johor, Malaysia and the Raffles American School in Johor and Bangkok respectively. A Chew Han Wei is a vice-president, in charge of the operations of the colleges in Milan and Mumbai, and is also IT director for Raffles Edu.

The company also elaborated on its financial review in its annual report to explain, among other items, a net fair value gain on investment properties of S$64.9 million recognised in FY2018, to properties in Thailand, Australia and OUCL and Oriental University of City Holdings (HK).

But in response to Sias’ suggestion to provide a detailed chief executive or executive management report, Raffles Edu said “such report is meant for the board”. It also said that providing an operational and financial review which includes includes market developments and trends, key performance indicators, challenges and prospects and outlook “ would invariably contain highly sensitive information which would pose risks to the company if made known to or discovered by competitors.”

Raffles Edu closed on Friday 0.8 Singapore cent, or 5 per cent, lower at S$0.15.