Raffles Education

Raffles Education: update to 1 Mar ’12 announcement on sale of 4 land parcels with total area of 635mu in Langfang Devt Zone, for Rmb 1.047b (Rmb 703m payable in novation of debt, Rmb 344m payable in cash). The co discloses that an additional sale of 10mu was sold to the same Purchaser for Rmb 11m, back in 22 Dec ’11. The co says the transaction is expected to significantly strength the Group’s financial position as this will result in full payment of the debts owing to OUCDC. Additional cash of Rmb 344m can be re-invested into its education business. The co adds after the transaction, the Group will still own a significant amount of land and buildings in the Langfang Devt Zone. Nevertheless, the deficit from proceeds of the 635 mu land sale over the book value is ~$41.1m. Based on FYJun11 numbers, the financial effects of the 635 mu land sale is as follows, i) NTA decrease from 41.75cts to 36.94cts ii) EPS decrease from 4.89cts to 1.01cts.