Hailiang Education Group Inc. Announces Financial Results for the Second Quarter of Fiscal Year 2021
Hailiang Education Group Inc. (Nasdaq: HLG) reported strong financial results for the second quarter and first half of fiscal 2021, with revenue reaching RMB937.0 million (US$143.6 million), up 25.0% year-over-year. Net profit attributable to shareholders increased 31.3% to RMB268.0 million (US$41.1 million). The gross margin improved to 38.6%, reflecting higher tuition and student enrollments. Hailiang plans to drive growth through strategic acquisitions, enhancing educational services, and technology integration, despite ongoing uncertainties from the COVID-19 pandemic.
- Revenue increased 25.0% to RMB937.0 million for the first half of fiscal 2021.
- Net profit attributable to shareholders rose 31.3% to RMB268.0 million.
- Gross margin improved to 38.6%, a rise of 6.5 percentage points.
- Earnings per share increased by 31.3% to RMB0.65.
- Operating profit up 38.6% to RMB336.8 million.
- Revenue from study trip services plummeted 74.2% due to COVID-19 travel restrictions.
- Other income decreased 70.6% in Q2 2021 primarily due to reduced government grants.
HANGZHOU, China, March 9, 2021 /PRNewswire/ -- Hailiang Education Group Inc. (Nasdaq: HLG) ("Hailiang Education", the "Company" or "we"), an education and management service provider of primary, middle, and high schools in China, announced its financial results for the second quarter and first half of fiscal year 2021 ended December 31, 2020.
"We are very pleased to see that the Company's business has shown strong resilience during the COVID-19 pandemic. With the stabilization of the COVID-19 pandemic in China, the Company's business has gradually returned to normal and achieved encouraging results for the reporting periods. In the first half of fiscal year 2021, we recorded revenue of RMB937.0 million (US
"Benefiting from the effective control of COVID-19 and the gradual recovery of economy in China, as well as the flexible measures adopted by the Company and the application of more educational technology products, the Company's growth momentum in the first half of fiscal 2021 was remarkable. Our revenue increased by
Dr. Chen continued, "Looking forward, Hailiang Education will continue to adhere to four strategic paths. First, we will drive endogenous growth through the rapid improvement of school utilization rate and the steady rise in tuition with the help of the Company's brand that has been gradually established and expanded in East China and across the country. Second, we will continue our efforts to seek suitable acquisition opportunities in China and overseas countries to achieve external expansion. Third, we will focus on the development of ancillary educational services, especially educational training business as a new direction to drive our growth. Last, we will continue to vigorously promote the two strategic projects announced earlier this fiscal year -- "The Project of Invigorating Education with Talents" and "The Project of Revitalizing Education through Technology, to solve the two bottlenecks of "talents supply" and "Resource Replication" during the rapid, high-quality and standardized remote expansion of schools."
Dr. Chen concluded, "We are very excited about Hailiang Education's development opportunities in the near future along with the gradual economy recovery and stable COVID-19 control in China, although the impact of COVID-19 is still ongoing and recovery of the global economy remains uncertain. We are confident that our abundant talent pool and innovative education technology applications will facilitate Hailiang Education's rapid expansion in China and overseas countries with our promotion of the two strategic projects of 'Invigorating Education with Talents' and 'Revitalizing Education through Technology'. At the same time, we also see opportunities for educational training of 'online merging offline integration'. We expect educational training to become a new revenue source by utilizing the Company's nationwide school network. We expect that the Company's healthy debt-to-asset ratio and sufficient cash flow will support the implementation of these growth strategies for long-term growth and success."
Second Quarter of Fiscal Year 2021 Financial and Operational Highlights
For the Quarter Ended December 31, | |||||
(RMB millions, except per share data) | 2020 | 2019 | % Change | ||
Revenue | 638.5 | 519.5 | |||
Primary, middle and high school educational | 561.5 | 445.5 | |||
Basic educational program | 385.2 | 292.1 | |||
International program | 176.3 | 153.4 | |||
Educational training services | 39.6 | 34.4 | |||
Study trip services | 9.3 | 21.9 | - | ||
Education and management services | 21.2 | 11.2 | |||
Others | 6.9 | 6.5 | |||
Gross Profit | 316.9 | 244.0 | |||
Gross Margin | 2.6pp* | ||||
Operating Profit | 298.2 | 253.8 | |||
Operating Margin | -2.1pp* | ||||
Net Profit | 245.6 | 219.2 | |||
Net Profit Attributable to the Company's Shareholders | 241.1 | 219.4 | |||
Earnings Per Share | 0.58 | 0.53 |
*Notes: pp represents percentage points
- Revenue was RMB638.5 million (US
$97.9 million ), an increase of22.9% from RMB519.5 million for the same period of last year. - Gross profit was RMB316.9 million (US
$48.6 million ), an increase of29.9% from RMB244.0 million for the same period of last year. - Gross margin was
49.6% , compared with47.0% for the same period of last year. - Net profit attributable to the Company's shareholders was RMB241.1 million (US
$37.0 million ), an increase of9.9% from net profit attributable to the Company's shareholders of RMB219.4 million for the same period of last year. - Basic and diluted earnings per share were RMB0.58 (US
$0.09) , compared with basic and diluted earnings per share of RMB0.53 for the same period of last year. - As of early February 2020, the senior high school students in the Company's international program had received more than 300 formal and conditional offers from universities. About
60% of the students in the Victoria Certificate of Education ("VCE") class formally accepted to the top 50 universities in the world, and about75% of the students in the General Certificate of Education Advanced Level ("A-Level") class had been conditionally accepted to the top 100 universities in the world, such as University College London and University of Manchester. - In the second quarter of fiscal year 2021, we launched some educational technology systems as pioneering achievements of our "The Project of Revitalizing Education through Technology". Star Teacher Training platform, a platform that provides growth training courses for our teachers, Hailiang Cloud Exercise system, an electronic homework and precise teaching system, and Home-School Co-education platform, a home-school communication service platform. The Company will continue to promote the use of educational technology in its school network.
First Half of Fiscal Year 2021 Financial and Operational Highlights
For the Six Months Ended December 31, | |||||
(RMB millions, except per share data) | 2020 | 2019 | % Change | ||
Revenue | 937.0 | 749.4 | |||
Primary, middle and high school educational | 824.6 | 638.8 | |||
Basic educational program | 564.6 | 426.1 | |||
International program | 260.0 | 212.7 | |||
Educational training services | 59.4 | 43.4 | |||
Study trip services | 11.1 | 43.1 | - | ||
Education and management services | 33.1 | 15.7 | |||
Others | 8.8 | 8.4 | |||
Gross Profit | 361.4 | 240.6 | |||
Gross Margin | 6.5pp* | ||||
Operating Profit | 336.8 | 243.0 | |||
Operating Margin | 3.5pp* | ||||
Net Profit | 270.9 | 199.8 | |||
Net Profit Attributable to the Company's Shareholders | 268.0 | 204.1 | |||
Earnings Per Share | 0.65 | 0.49 |
*Notes: pp represents percentage points
- Revenue was RMB937.0 million (US
$143.6 million ), an increase of25.0% from RMB749.4 million for the same period of last year. - Gross profit was RMB361.4 million (US
$55.4 million ), an increase of50.2% from RMB240.6 million for the same period of last year. - Gross margin was
38.6% , compared with32.1% for the same period of last year. - Net profit attributable to the Company's shareholders was RMB268.0 million (US
$41.1 million ), an increase of31.3% from net profit attributable to the Company's shareholders of RMB204.1 million for the same period of last year. - Basic and diluted earnings per share were RMB0.65 (US
$0.10) , compared with basic and diluted earnings per share of RMB0.49 for the same period of last year. - As of December 31, 2020, we had 41 schools in our school network, 13 of which being affiliated schools that we owned or sponsored, and 28 of which being managed schools that we provided education and management services to. The aggregate number of students enrolled in both affiliated and managed schools were 72,893. The number of students enrolled in our affiliated schools was 26,936, an increase of
14.0% compared to the same period of last year. The number of students enrolled in the basic educational programs of our affiliated schools was 21,636, an increase of15.4% compared to the same period of last year. The number of students enrolled in the international programs of our affiliated schools was 5,300, an increase of8.7% compared to the same period of last year. - The Company has obtained the operating license for "Xianghu Future School (Xianghu Public School)" in Xiaoshan District, Hangzhou, and expects to start operating the school in the fall of 2021 with enrollment capacity of approximately 1,152 students. The current progress of Ninghai Public School (tentative name) has been in line with expectations, and it is expected to start operating in the fall of 2021 with enrollment capacity of approximately 4,500 students. The Company expects to start operating Pingyin Binhu New District Nine-Year School (tentative name), a managed school in the fall of 2022."
- In the first half of fiscal year 2021, the educational training business served a total of 54,055 student attendances, including 28,424 student attendances taking our online educational training services and 25,631 student attendances taking our onsite educational training services. In addition to the existing four training centers in Zhejiang Province, the Company expects that at least five new training centers will be opened during fiscal years 2021 and 2022.
- In the first half of fiscal year 2021, our students won more than 100 provincial and national level academic, arts and sports competition awards. For example, our students won four gold medals and one bronze medal in the 2020 Chinese Mathematical Olympiad (national level), and one silver medal in the 2020 37th National Middle School Physics Competition Finals (national level).
Second Quarter and First Half of Fiscal Year 2021 Financial Results
Revenue
Revenue increased by
Revenue from primary, middle and high school educational services increased by
Revenue from educational training services increased by
Revenue from study trip services decreased by
Revenue from education and management services increased by
Other revenue mainly represented revenue derived from overseas study consulting services and hotel management services. Other revenue was RMB8.8 million (US
Cost of Revenue
Cost of revenue increased by
Gross Profit and Gross Margin
Gross profit increased by
Gross margin was
Other Income, net
Other income decreased by
Operating Expenses
Operating expenses increased by
Selling expenses increased by
Administrative expenses increased by
Administrative expenses increased slightly by
Finance Income and Finance Costs
Finance income increased by
Finance costs was RMB0.39 million (US
Finance costs decreased by
Income Tax Expense
Income tax expense was RMB63.0 million (US
Net Profit and Net Profit Attributable to the Company's Shareholders
Net profit increased by
Net profit attributable to the Company's shareholders increased by
Net profit increased by
Net profit attributable to the Company's shareholders increased by
Basic and Diluted Earnings per Share
Basic and diluted earnings per share were RMB0.58 (US
Basic and diluted earnings per share were RMB0.65 (US
Cash Flow
Net cash provided by operating activities was RMB835.4 million (US
Balance Sheet
As of December 31, 2020, the Company had cash and cash equivalents of RMB191.3 million (US
Business Combination Between Entities Under Common Control
On July 15, 2020, the Company entered into a sponsorship transfer agreement with its affiliate Hailiang Education Investment Group Co., Ltd. ("Hailiang Investment") to acquire
Exchange Rate
This announcement contains conversion of certain Renminbi (RMB) amounts into U.S. dollars (US$) at a specified rate solely for the convenience of the reader. Unless otherwise noted, the conversion of RMB into US$ was made at the rate of RMB6.5250 to US
The Company will host its second quarter of fiscal year 2021 financial results conference call at 8:00 am Eastern Time (5:00 am Pacific Time/9:00 pm Beijing Time) on March 10, 2021. To attend the call, please use the information below for either dial-in access or webcast access. When prompted on dial-in, ask for "Hailiang Education Group/HLG".
Conference Call | |
Date: | March 10, 2021 |
Time: | 8:00 am ET, U.S. |
International Toll Free:
| United States: +1 888-346-8982 Mainland China: +86 400-120-1203 Hong Kong: +852 800-905-945 |
International: | International: +1 412-902-4272 |
Conference ID: | Hailiang Education Group/HLG |
Please dial in at least 15 minutes before the commencement of the call to ensure timely participation. For those unable to participate, an audio replay of the conference call will be available from approximately one hour after the end of the live call until March 17, 2021. The dial-in for the replay is +1-877-344-7529 within the United States or +1-412-317-0088 internationally. The replay access code is No. 10152749.
A live webcast and archive of the conference call will be available at http://ir.hailiangedu.com.
About Hailiang Education Group Inc.
Hailiang Education (Nasdaq: HLG) is one of the largest primary, middle, and high school educational service providers in China. The Company primarily focuses on providing distinguished, specialized, and internationalized education. Hailiang Education is dedicated to providing students with high-quality primary, middle, and high school, and international educational services and strives to maintain the high quality of its students' life, study, and development. Hailiang Education adapts its educational services based upon its students' individual aptitudes. Hailiang Education is devoted to improving its students' academic capabilities, cultural accomplishments, and international perspectives. Hailiang Education operates multilingual programs including Chinese, English, Spanish, Japanese, Korean, and French. In addition, Hailiang Education has launched various diversified high-quality courses, such as Mathematical Olympiad courses, A-level courses, Australia Victorian Certificate of Education (VCE) courses, IELTS courses, TOEFL courses, as well as SAT courses. The Company also has an extensive cooperative network with more than 200 educational institutions and universities globally. Hailiang Education is committed to providing its students with greater opportunities to enroll in well-known domestic and international universities to further their education. For more information, please visit http://ir.hailiangedu.com.
Forward-Looking Statement
This press release contains information about Hailiang Education's view of its future expectations, plans, and prospects that constitute forward-looking statements. These forward-looking statements are made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts in this announcement are forward-looking statements, including but not limited to the following: general economic conditions in China, competition in the education industry in China, the expected growth of the Chinese private education market, Chinese governmental policies relating to private educational services and providers of such services, health epidemics and other outbreaks in China, the Company's business plans, the Company's future business development, results of operations, and financial condition, expected changes in the Company's revenue and certain cost or expense items, its ability to raise additional funding, its ability to maintain and grow its business, variability of operating results, its ability to maintain and enhance its brand, its development and introduction of new products and services, the number of students entrusted by schools, the successful integration of acquired companies, technologies and assets into its portfolio of software and services, marketing and other business development initiatives, dependence on key personnel, the ability to attract, hire, and retain personnel who possess the technical skills and experience necessary to meet the requirements of its clients, and its ability to protect its intellectual property, the outcome of ongoing, or any future, litigation or arbitration, including those relating to copyright and other intellectual property rights, and other risks detailed in the Company's filings with the U.S. Securities and Exchange Commission (the "SEC"). Hailiang Education may also make written or oral forward-looking statements in its periodic reports to the SEC, in its annual report to shareholders, in press releases and other written materials, and in oral statements made by its officers, directors, or employees to third parties. Statements that are not historical facts, including statements about Hailiang Education's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, whether known or unknown, and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy, and financial needs. Investors can identify these forward-looking statements by words or phrases such as "may," "will," "will make," "will be," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "endeavor to," "is/are likely to," or other similar expressions. Further information regarding these and other risks is included in our annual report on Form 20-F and other filings with the SEC. All information provided in this press release is as of the date of this press release, and Hailiang Education undertakes no obligation to update any forward-looking statements, except as may be required under applicable law.
Contacts:
Mr. Litao Qiu
Board Secretary
Hailiang Education Group Inc.
Phone: +86-571-5812-1974
Email: ir@hailiangeducation.com
Ms. Tina Xiao
Ascent Investor Relations LLC
Phone: +1-917-609-0333
Email: tina.xiao@ascent-ir.com
Hailiang Education Group Inc. | ||||||
Unaudited Condensed Consolidated Statements of Profit and Other Comprehensive Income | ||||||
(Amounts in thousands, except per share data) | ||||||
For the Six Months Ended December 31 | For the Three Months Ended December 31 | |||||
2020 | 2019 (Restated) | 2020 | 2019 (Restated) | |||
RMB | USD | RMB | RMB | USD | RMB | |
Revenue | 936,997 | 143,601 | 749,401 | 638,470 | 97,850 | 519,520 |
Cost of revenue | (575,550) | (88,207) | (508,829) | (321,552) | (49,280) | (275,492) |
Gross profit | 361,447 | 55,394 | 240,572 | 316,918 | 48,570 | 244,028 |
Other income, net | 28,394 | 4,352 | 49,801 | 10,159 | 1,557 | 34,566 |
Selling expenses | (20,293) | (3,110) | (15,611) | (10,918) | (1,673) | (9,621) |
Administrative expenses | (32,711) | (5,013) | (31,783) | (17,947) | (2,750) | (15,228) |
Operating profit | 336,837 | 51,623 | 242,979 | 298,212 | 45,704 | 253,745 |
Finance income | 18,340 | 2,811 | 13,900 | 10,743 | 1,646 | 5,814 |
Finance costs | (674) | (103) | (3,910) | (385) | (59) | (217) |
Net finance income | 17,666 | 2,708 | 9,990 | 10,358 | 1,587 | 5,597 |
Profit before tax | 354,503 | 54,331 | 252,969 | 308,570 | 47,291 | 259,342 |
Income tax expenses | (83,646) | (12,819) | (53,145) | (63,003) | (9,656) | (40,138) |
Net profit for the | 270,857 | 41,512 | 199,824 | 245,567 | 37,635 | 219,204 |
Profit attributable to: | ||||||
Net profit | 267,977 | 41,070 | 204,131 | 241,083 | 36,948 | 219,434 |
Net profit/(loss) | 2,880 | 442 | (4,307) | 4,484 | 687 | (230) |
Earnings per share | ||||||
Basic and diluted | 0.65 | 0.10 | 0.49 | 0.58 | 0.09 | 0.53 |
Other comprehensive (loss)/income | ||||||
Other comprehensive | (5,521) | (846) | 1,223 | (2,708) | (415) | (1,137) |
Total comprehensive | 265,336 | 40,666 | 201,047 | 242,859 | 37,220 | 218,067 |
Total comprehensive income/(loss) | ||||||
Total comprehensive | 262,456 | 40,224 | 205,354 | 238,375 | 36,533 | 218,297 |
Total comprehensive | 2,880 | 442 | (4,307) | 4,484 | 687 | (230) |
Hailiang Education Group Inc. | ||||
Unaudited Condensed Consolidated Statements of Financial Position | ||||
(Amounts in thousands) | ||||
As of December 31, 2020 | As of June 30, 2020 (Restated) | |||
RMB | USD | RMB | ||
Assets | ||||
Property and equipment, net | 664,546 | 101,846 | 652,726 | |
Intangible assets and goodwill, net | 96,715 | 14,822 | 97,806 | |
Right-of-use assets | 506,965 | 77,696 | 517,609 | |
Contract costs | 16,675 | 2,556 | 10,924 | |
Prepayments to third party suppliers | 131 | 20 | 75 | |
Term deposits held at a related party finance | 510,000 | 78,161 | - | |
Deferred tax assets | 1,019 | 156 | 568 | |
Non-current assets | 1,796,051 | 275,257 | 1,279,708 | |
Other receivables due from related parties | 53,332 | 8,173 | 76,646 | |
Other current assets | 39,862 | 6,109 | 37,259 | |
Term deposits held at a related party finance | 1,478,319 | 226,562 | 921,601 | |
Restricted bank deposits | 3,324 | 509 | 324 | |
Cash and cash equivalents | 191,324 | 29,322 | 515,297 | |
Current assets | 1,766,161 | 270,675 | 1,551,127 | |
Total assets | 3,562,212 | 545,932 | 2,830,835 | |
Equity | ||||
Share capital | 268 | 41 | 268 | |
Share premium | 134,583 | 20,626 | 134,583 | |
Contributed capital | 218,034 | 33,415 | 252,034 | |
Reserves | 439,884 | 67,415 | 396,053 | |
Retained earnings | 1,466,387 | 224,734 | 1,247,762 | |
Total Hailiang Education Group Inc. | 2,259,156 | 346,231 | 2,030,700 | |
Non-controlling interests | 13,678 | 2,096 | 10,797 | |
Total equity | 2,272,834 | 348,327 | 2,041,497 | |
Liabilities | ||||
Contract liabilities | 2,635 | 404 | 3,159 | |
Deferred tax liabilities | 5,138 | 787 | 4,607 | |
Lease liabilities | 22,068 | 3,382 | 18,749 | |
Non-current liabilities | 29,841 | 4,573 | 26,515 | |
Trade and other payables due to third parties | 248,272 | 38,049 | 270,207 | |
Other payables due to related parties | 138,483 | 21,223 | 148,363 | |
Contract liabilities | 821,352 | 125,878 | 293,643 | |
Income tax payable | 48,725 | 7,467 | 48,857 | |
Lease liabilities | 2,705 | 415 | 1,753 | |
Current liabilities | 1,259,537 | 193,032 | 762,823 | |
Total liabilities | 1,289,378 | 197,605 | 789,338 | |
Total equity and liabilities | 3,562,212 | 545,932 | 2,830,835 |
The foreign exchange of RMB into US$ has been made at RMB6.5250 to US
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