Raffles Education Corporation (REC) has reported a loss of $9.6 million for the first quarter ended Sept 30, deepening into the red from the $1.6 million loss it registered in the same period a year ago.
Loss per share stood at 69 cents in the 1QFY2022, from the 12 cents a year ago.
Revenue, however, increased 10% y-o-y to $23.3 million.
See: Raffles Education subsidiary claiming RM89.3 mil from contractor in legal proceedings
This was mainly due to the higher revenue from colleges in China, which grew 23% y-o-y to $12.3 million on higher student enrolments.
This was offset by lower revenue from the leasing of education facilities of Oriental University City Holding (OUCHK), which fell 24% y-o-y to $1.9 million for the 1QFY2022 mainly due to the reduced leasing space of education facilities.
See also: Trump wins Republican nomination, setting up rematch with Biden
Other operating income plunged 88.5% y-o-y to $0.6 million mainly due to the net bargain purchase of $3.3 million on the acquisition of additional 35.9% equity interest in Hezhong Real Estate Development.
The lower other operating income is also due to the write back of accrued capital expenditure of $1.7 million by Raffles Assets in the 1QFY2021.
Meanwhile, REC reported higher operating expenses of $7.9 million from $5.7 million the year before in the 1QFY2022.
This was mainly due to higher royalty expenses and registration fees payable to its partner universities with higher numbers of students’ enrollment, as well as higher non-governmental scholarship awarded by Wanbo Institute of Science & Technology.
Finance costs nearly doubled to $6.1 million in the 1QFY2022 from $3.6 million in the 1QFY2021 on higher interest expenses incurred by OUCHK for additional borrowings, default interest recognised by Raffles K12 and Raffles Iskandar, as well as interest charged on outstanding tax liabilities of Raffles Assets Australia.
Major contributors of cash inflows were due to subsequent payment received from the disposal of LOIT of $20.9 million and the redemption of pledged deposit with a bank of $24.7 million.
Major cash outflows included payments for property, plant & equipment of $7.2 million, as well as the $2.6 million repayment to a director and the $29.2 million in terms of repayment of bank borrowings.
As at end-September, REC’s cash and cash equivalents stood at $61.2 million.
There were no dividends declared for the quarter.
As at end-September, the group and company’s current liabilities have exceeded their current assets by $210.1 million and $107.1 million respectively.
For more stories about where money flows, click here for Capital Section
All the borrowings from Affin Bank, together with the other bank borrowings with possible cross default were classified as current borrowings in FY2021.
In the same statement, REC says it has reached a settlement with Affin Bank, where the latter has discontinued the writs.
REC is to repay the settlement amount of RM138.2 million ($44.6 million) from June to March 2022.
As at Nov 12, RM108.2 million has already been repaid with the balance of RM30 million due to be repaid from November to March 2022.
The group expects to collect RMB216.3 million ($45.1 million) from the disposal of land and buildings of Wanbo Institute of Science & Technology’s old campus before Nov 30.
Furthermore, REC says it is confident that the lenders will continue to support the group.
For more stories about where the money flows, click here for our Capital section
The group is also in discussions with a few banks to re-finance Affin Bank’s loans.
“Should the group and the company be unable to achieve the above-mentioned plans and measures and operate as a going concern, adjustments may have to be made to reflect the situation that assets may need to be realised other than in the normal course of business and at amounts which may differ significantly from the amounts at which they are currently recorded in the financial statements,” says the group in an SGX filing on Nov 12.
Shares in REC closed 0.1 cent higher or 1.45% up at 7 cents on Nov 12.
Photo: REC
