SINGAPORE (THE BUSINESS TIMES) – Despite cumulative losses to the tune of more than $150 million from its core operating business over the past 10 years, mainboard-listed Raffles Education said it will not exit the education business, even though it has been making significant fair value gains and realised gains on investment properties.
In a 13-page statement on Wednesday (Oct 27), in response to shareholders’ questions ahead of its annual general meeting on Oct 30, Raffles Education clarified that its businesses include management of education assets and facilities, and education-linked real estate investment, when asked if any shareholders’ approval had been obtained for changing the core business into property investment from education.
It said that it will not quit education, though shareholders pointed out that the core business would have incurred significant losses amounting to $152.2 million over the past 10 years, including an estimated pre-tax loss of $12.4 million for FY2021, were it not for the fair value gains on investment properties and one-off gains on disposal of assets.
In contrast, the shareholders noted, the total fair value gains on investment properties amounted to $208.6 million and cumulative one-off net gains from disposals of investment properties, subsidiaries and securities amounted to $157.3 million during the 10-year period.
The company said chief executive and founder Chew Hua Seng has had his profit-sharing as the helmsman consistently based on Raffles Education’s pre-tax profit, which included the unrealised fair value gains and one-off gains. Mr Chew had waived his profit sharing for 2018.
Independent consultants were engaged by the remuneration committee (RC) to perform compensation benchmarking in April 2021, and this was taken into account when the RC approved Mr Chew’s total remuneration. The RC will review his remuneration on a yearly basis, added Raffles Education, although the last review was in FY2015.
The company was explaining its basis for rewarding Mr Chew $2.89 million in total remuneration, as shareholders have questioned the justification when Raffles Education has been flagged by external auditors as having a going-concern issue.
On its proposal to furnish performance shares to independent directors as a reward, some shareholders questioned whether this would compromise their independence and give rise to conflicts of interest, as independent directors themselves might be determining the key parameters for the performance shares they would receive.
The RC and audit committee, as well as the board, have given due consideration to the rationale and approved the proposal “in line with existing guidelines and corporate governance objectives, and (this) has been approved in principle by SGX (Singapore Exchange)”, said Raffles Education.
This, however, needs approval by shareholders at the upcoming meeting.
Also, it was highlighted by shareholders that “the long-running feud” between shareholder Oei Hong Leong and Mr Chew “is of deep concern as we see our valuation falling precipitously”. Hence, they asked that Mr Chew reconcile with the billionaire shareholder “in the interest of Raffles Education and all her stakeholders”.
The company suggested that Mr Oei be asked the question as the issue between the duo is “personal”.
The counter rose 0.8 cent to 6.7 cents on Wednesday, a day after Raffles Education disclosed that Mr Oei had sold down his stakes to 0.78 per cent.