Raffles Education: Auditor cites material uncertainty related to going concern

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Raffles Education said Friday its independent auditor, BDO LLP, has cited the financial statements for the fiscal year ended 30 June for a material uncertainty over whether the company can continue as a going concern.

Extracts from the auditor’s report, which Raffles Education filed to SGX, pointed to the financial statements showing that as of end-June, the group’s and the company’s current liabilities exceeded current assets by S$196.4 million and S$96.8 million, respectively.

The auditor noted that after Affin Bank submitting writs and statements of claim, all borrowings from Affin Bank, together with all other bank borrowings with possible cross default, were classified as current borrowings at end-June.

These conditions “indicate that a material uncertainty exists that may cast significant doubt on the ability of the group and of the company to continue as going concerns,” the auditor’s note said.

However, the company’s directors are of the opinion the net current liabilities position likely won’t pose material uncertainty, the filing said.

Raffles Education has noted it reached a settlement with Affin Bank, which has since discontinued the writs.

In addition, Raffles Education cited the collection of receivables from the disposal of Langfang Development Zone Oriental University City Sino-Singapore Education Investment, positive cash flow generation from operations and collection of consideration from the disposal of Wanbo Institute of Science & Technology’s land and buildings, expected by end-November.

The company expects to realise certain of its assets, remains confident lenders will continue to give support and it has the ability to refinance existing borrowings when necessary, the filing said.

Raffles Education advised, “Shareholders and investors are reminded to exercise caution when dealing or trading in the securities of the company and should consult their stockbrokers, bank managers, solicitors, accountants or other professional advisers if they are in doubt about the actions that they should take.”