BEIJING, December 17, 2013 /PRNewswire/ -- ChinaEdu Corporation (NASDAQ: CEDU) ("ChinaEdu" or the "Company"), a leading online educational services provider in China, today announced its unaudited financial results for the third quarter ended September 30, 2013.[1]
Third Quarter 2013 Highlights
[1] The reporting currency of the Company is RMB, but for the convenience of the reader, the amounts for the three months ended September 30, 2013 are presented in U.S. dollars. Unless otherwise stated, all translations from RMB to U.S. dollars were made at the rate of RMB6.1200 to $1.00, the noon buying rate in effect on September 30, 2013 in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or U.S. dollar amounts referred could be converted into U.S. dollars or RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release. An explanation of the Company's non-GAAP financial measures is included in the section entitled "Non-GAAP Financial Measures" below, and the related reconciliations to GAAP financial measures are presented in the accompanying financial statements. |
[2] "Adjusted net income attributable to ChinaEdu" is a non-GAAP measure defined as net income attributable to ChinaEdu excluding share-based compensation net of non-controlling interests' portion, amortization of intangible assets and land use rights, and intangible assets impairment. |
[3] "ADS" is American Depositary Share. Each ADS represents three ordinary shares. |
[4] "Adjusted net income attributable to ChinaEdu per diluted ADS" is a non-GAAP measure which is computed using adjusted net income attributable to ChinaEdu over the number of ADSs used in net income attributable to ChinaEdu per diluted ADS calculation. |
[5] "Revenue students" refers to students of university online degree programs who have paid tuitions. The numbers for the three months ended September 30, 2013 and 2012 are revenue students in Spring 2013 and Spring 2012, respectively. |
Julia Huang, executive chairman of ChinaEdu commented, "We are pleased with our financial performance in the third quarter of 2013, particularly our ability to increase gross margin to 61.9 percent. We continue to see healthy growth in our core online degree programs as well as our K-12 offerings. Following execution of technological upgrade plans laid out at the beginning of 2013, we have developed a trial version of our next generation technology platform and associated interactive and mobile learning applications. Once rolled out, these should enable us to penetrate the market further. At the same time, we continue to closely monitor and control costs across our businesses. As we look towards the close of 2013, we are confident in our full year results while we maintain a conservative outlook on the upcoming Fall enrollment."
Financial Results for the Third Quarter Ended September 30, 2013
Net Revenue
Total net revenue for the third quarter of 2013 was $23.0 million, a 13.6 percent increase from $20.2 million in the corresponding period of 2012.
Net revenue from online degree programs for the third quarter of 2013 was $18.4 million, a 13.6 percent increase over $16.2 million in the corresponding period of 2012. The increase in net revenue from online degree programs was primarily due to organic growth in revenue students enrolled in online degree programs, and continued expansion and optimization of the Company's learning centers network. Enrollment for 2013 Spring semester online degree programs was approximately 221,000 revenue students, a 14.5 percent increase from approximately 193,000 revenue students enrolled in the Spring semester in 2012.
By the end of the third quarter of 2013, ChinaEdu's learning centers network was providing recruiting services for 23 universities with 131 operational learning centers, of which 59 were proprietary centers[6] and 72 were contracted centers[7]. This compares to 118 operational learning centers as of September 30, 2012, of which 57 were proprietary and 61 were contracted centers.
Net revenue from non-degree programs, including online tutoring programs, private primary and secondary schools and international curriculum programs in the third quarter of 2013 was $4.6 million, a 13.5 percent increase from $4.0 million in the third quarter of 2012. Of that, approximately $0.4 million was attributable to enrollment growth and increased tuition at our private school in Anqing.
[6] Proprietary centers refer to self-owned learning centers operated either under the Company's own brand name or the brand name of a university pursuant to a licensing arrangement with that university. |
[7] Contracted centers refer to agreement with third party learning centers pursuant to which the Company only provides assistance applying for approval from provincial level education authorities as well as securing additional university online degree programs. In return, the Company receives a percentage of the tuition earned by these third party learning centers. |
Cost of Revenue
Total cost of revenue for the third quarter of 2013 was $8.8 million, an increase of 10.8 percent, from $7.9 million in the corresponding period of 2012.
Cost of revenue for online degree programs in the third quarter of 2013 was $6.3 million, an increase of 13.8 percent compared to $5.6 million in the corresponding period of 2012. The increase in cost of revenue was primarily related to staff costs increasing by $0.2 million, service station fees increasing by $0.1 million and conference costs increasing by $0.3 million.
Cost of revenue for non-degree programs in the third quarter of 2013 was $2.4 million, a slight increase of 3.7 percent from $2.3 million in the third quarter of 2012. The increase in cost of revenue for non-degree programs was primarily related to increased maintenance costs associated with our private primary and secondary schools programs.
Gross Profit and Gross Margin
Gross profit for the third quarter of 2013 was $14.2 million, compared to $12.3 million in the corresponding period of 2012. Gross margin increased to 61.9 percent, compared to 61.0 percent for the corresponding period of 2012.
Gross margin for online degree programs was 65.7 percent, flat with the corresponding period of 2012.
Gross margin for online tutoring programs increased to 64.7 percent from 63.9 percent in the third quarter of 2012.
Gross margin for private schools in the third quarter of 2013 increased to 41.8 percent, compared to 40.3 percent in the corresponding period of 2012. The increase in gross margin was primarily the result of increased net revenue at our Anqing school.
Operating Expenses
Total operating expenses were $8.8 million in the third quarter of 2013, a decrease of 3.9 percent from $9.2 million in the corresponding period of 2012. As a percentage of net revenue, total operating expenses decreased to 38.5 percent, compared to 45.5 percent in the corresponding period in 2012. The decrease in total operating expense was the result of the following:
Income from Operations
Income from operations in the third quarter of 2013 was $5.4 million, an increase of 72.2 percent compared to $3.1 million in the corresponding period of 2012. Operating margin increased to 23.5 percent in the third quarter of 2013, compared to 15.5 percent in the corresponding period of 2012.
Adjusted income from operations, a non-GAAP measure defined as income from operations excluding share-based compensation, amortization of intangible assets, land use rights and intangible assets impairment, increased 29.0 percent in the third quarter of 2013 compared to $4.6 million in the corresponding period of 2012.
Adjusted operating margin, a non-GAAP measure defined as the ratio of adjusted income from operations (non-GAAP) over net revenue, for the third quarter of 2013 increased to 25.8 percent, compared to 22.7 percent in the corresponding period of 2012.
Interest expense
Interest expense for the third quarter of 2013 was $0.9 million, which was primarily related to loans of $36.0 million with The Bank of East Asia, Limited.
Income Tax Expense
In the third quarter of 2013, the income tax expense was $1.0 million and the effective income tax rate was 21.2 percent.
Net Income Attributable to ChinaEdu
Net income attributable to ChinaEdu, which is net income, excluding net income attributable to non-controlling interests, was $1.6 million in the third quarter of 2013, representing an increase of 207.3 percent from $0.5 million in the corresponding period of 2012. The increase was primarily the result of a significant increase in gross profit, as well as effective cost and expense control.
Net income attributable to ChinaEdu per basic and diluted ADS was $0.187 and $0.167, respectively, for the third quarter of 2013, compared to $0.033 and $0.031, respectively, for the corresponding period of 2012. The increase was the result of a significant increase in net income attributable to ChinaEdu as well as a significant decrease in the number of diluted ADS after a share repurchase of 23,624,376 ordinary shares in aggregate between January and July 2013.
Adjusted net income attributable to ChinaEdu (non-GAAP) was $2.1 million in the third quarter of 2013, compared to $2.0 million in the corresponding period of 2012. Adjusted net margin, a non-GAAP measure defined as the ratio of adjusted net income attributable to ChinaEdu (non-GAAP) over net revenue, was 9.2 percent in the third quarter of 2013, compared to 9.7 percent in the corresponding period of 2012.
Adjusted net income attributable to ChinaEdu per basic and diluted ADS (non-GAAP) was $0.251 and $0.224 respectively, for the third quarter of 2013, compared to $0.124 and $0.118, respectively, for the corresponding period of 2012.
Deferred Revenue
As of September 30, 2013, deferred revenue was $10.1 million, consisting of current deferred revenue in the amount of $8.4 million and non-current deferred revenue in the amount of $1.7 million.
In general, Spring semester tuition for online degree programs is received during the second quarter but is recognized both in the second quarter and the third quarter of the fiscal year. Private school revenue is received in September, but amortized over 6 or 12 months while online tutoring program revenue is mostly received at program enrollment and is amortized within 12 months.
Cash and Cash Equivalents and Term Deposits
As of September 30, 2013, the Company reported cash and cash equivalents and term deposits of $59.0 million, which primarily consisted of cash and cash equivalents, and term deposits with original maturity terms of greater than three months but less than one year.
Amounts Due from Related Parties
Amounts due from related parties, which represents cash owed to the Company by collaborative alliance partners, were $51.4 million as of September 30, 2013 compared to $49.4 million as of December 31, 2012.
2013 Year-to-Date Financial Results
Net Revenue
For the nine months ended September 30, 2013, total net revenue was $65.4 million, representing an increase of 13.5 percent over $57.6 million in the corresponding period of 2012. Net revenue from online degree programs for the first nine months of 2013 was $52.4 million, representing a 13.3 percent increase from $46.3 million in the corresponding period of 2012. Net revenue from non-online degree programs for the first nine months of 2013 was $13.0 million, compared to $11.4 million in 2012, a 14.3 percent increase. Growth in total net revenue in the first nine months of 2013 was the result of strong enrollment in online degree programs in the Fall semester of 2012 as well as the Spring semester of 2013. Net revenue at the Anqing School increased by $1.1 million compared to the corresponding period in 2012, while the Company saw a continued decrease in revenue contributed by international and elite curriculum programs.
Cost of Revenue
For the nine months ended September 30, 2013, total cost of revenue was $24.7 million, an increase of 7.4 percent compared to $23.0 million in the corresponding period of 2012. Cost of revenue for online degree programs in the first nine months of 2013 was $17.4 million, an increase of 11.9 percent compared to $15.6 million in the corresponding period of 2012. The increase in cost of revenue in the first nine months of 2013 was primarily the result of cost increases associated with a larger headcount and the expansion of the Company's learning centers network.
Cost of revenue for non-online degree programs in the first nine months of 2013 was $7.3 million, a slight decrease of 2.0 percent compared to $7.4 million in the corresponding period of 2012. The decrease in cost of revenue was primarily related to the decrease in leasing costs and the decrease in depreciation and amortization costs associated with international curriculum programs.
Gross Profit
Gross profit for the nine months ended September 30, 2013 was $40.7 million, an increase of 17.5 percent compared with $34.6 million for the corresponding period in 2012.
Income from Operations
Income from operations was $16.5 million for the nine months ended September 30, 2013, representing an increase of 57.5 percent from $10.5 million for the corresponding period of 2012. Operating margin was 25.2 percent for the nine months ended September 30, 2013 compared to 18.2 percent for the corresponding period of 2012. The increase was primary due to increase in total net revenue as well as the intangible assets impairment in the third quarter of 2012.
Adjusted income from operations (non-GAAP) was $18.2 million for the first nine months of 2013, representing an increase of 39.6 percent, compared to $13.0 million in the corresponding period of 2012. Adjusted operating margin (non-GAAP) for the nine months ended September 30, 2013 was 27.7 percent, compared to 22.6 percent for the corresponding period in 2012.
Interest expense
Interest expense for the first nine months of 2013 was $1.6 million, which was primarily related to loans with The Bank of East Asia, Limited.
Income Tax Expense
Income tax expense for the first nine months of 2013 was $3.6 million, as compared with $3.4 million for the corresponding period of in 2012.
Net Income Attributable to Non-controlling Interests
Net income attributable to non-controlling interests was $6.3 million in the first nine months of 2013, an increase of 12.0 percent compared to $5.6 million in the same period of 2012. The increase was primarily attributable to the non-controlling interest impact related to the increase in net income from online degree programs in the first nine months of 2013.
Net Income attributable to ChinaEdu
Net income attributable to ChinaEdu was $6.2 million for the nine months ended September 30, 2013. This represents an increase of 68.2 percent from $3.7 million for the corresponding period of 2012. Net margin was 9.6 percent for the nine months ended September 30, 2013, compared to 6.4 percent for the corresponding period of 2012.
Adjusted net margin was 12.1 percent for the nine months ended September 30, 2013, compared to 10.7 percent for the corresponding period of 2012. The increase was primarily due to increased net income in the first nine months of 2013.
Fourth Quarter 2013 Guidance
ChinaEdu management expects total net revenue in the fourth quarter of 2013 to range from RMB145 million to RMB150 million or $23.7 million to $24.5 million, representing a 7 to 10 percent increase from RMB136 million or $22.1 million recorded in the fourth quarter of 2012.
Conference Call
ChinaEdu's management will hold an earnings conference call at 8:00 a.m. U.S. Eastern Time on December 17, 2013 (9:00 p.m. Beijing/Hong Kong Time on December 17, 2013).
Dial-in details for the earnings conference call are as follows:
China | 400 120 0539 |
Hong Kong | 800 905 927 |
United Kingdom | 0800 015 9725 |
United States | 1 855 298 3404 |
New York City (Toll) | 1 631 514 2526 |
Conference Title: | ChinaEdu Q3 2013 Earnings Conference Call |
Conference Passcode: | ChinaEdu |
A live and archived webcast of the conference call will be available on the investor relations page of ChinaEdu's website at http://ir.chinaedu.net and a replay of the conference call may be accessed by phone until December 24, 2013.
Dial-in numbers for the replay are as follows:
China | 4001842240 |
Hong Kong | 800 966 697 |
United Kingdom | 0800 169 7301 |
United States | 1 866 846 0868 |
Conference Title: | ChinaEdu Q3 2013 Earnings Conference Call |
Replay Passcode: | 3208385 |
Non-GAAP Financial Measures
To supplement the unaudited condensed consolidated financial information presented in accordance with Generally Accepted Accounting Principles in the United States of America ("GAAP"), the Company uses non-GAAP measures of income from operations and net income attributable to ChinaEdu, which are adjusted from results based on GAAP to exclude certain non-cash items of share-based compensation, amortization of intangible assets and land use rights and intangible assets impairment. Adjusted operating margin is defined as the ratio of adjusted income from operations over net revenue. Adjust net margin is defined as the ratio of adjusted net income attributable to ChinaEdu over net revenue. Adjusted net income attributable to ChinaEdu per basic and diluted ADS are a non-GAAP measure which are computed using adjusted net income attributable to ChinaEdu over the number of ADSs used in net income attributable to ChinaEdu per basic and diluted ADS calculation.
These non-GAAP financial measures are provided to enhance the investors' overall understanding of the Company's current and past financial performance in on-going core operations as well as prospects for the future. These measures should be considered in addition to results prepared and presented in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. Management considers the non-GAAP information as important measures internally and therefore deems it important to provide all of this information to investors.
About ChinaEdu
ChinaEdu Corporation is an educational services provider in China, incorporated as an exempted limited liability company in the Cayman Islands. Established in 1999, the Company's primary business is to provide comprehensive services to the online degree programs of leading Chinese universities. These services include academic program development, technology services, enrollment marketing, student support services and finance operations. The Company's other lines of businesses include the operation of private primary and secondary schools, online interactive tutoring services and providing marketing, support for international curriculum programs and online learning community for adult students.
The Company believes it is the largest service provider to online degree programs in China in terms of the number of higher education institutions that are served and the number of student enrollments supported. The Company currently provides technical, recruiting and other services to 27 universities with online degree programs and provides services and support to 11 additional universities that are awaiting regulatory approval to launch their online programs. Of these 38 universities, 13 of them have entered into collaborative alliances with ChinaEdu, ranging from 15 to 50 years in length. Eight of them have entered into technology service agreements, ranging from 3 to 20 years in length. ChinaEdu also performs recruiting services through its nationwide learning center network for 23 universities, including 6 with which the Company has either established collaborative alliances or entered into technology service agreements.
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including certain plans, expectations, goals, and projections, which are subject to numerous assumptions, risks, and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and contingencies, many of which are beyond our control which may cause actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. The Company's actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including those described under the heading "Risk Factors" in the Company's Annual Report on Form 20-F for the year ended December 31, 2012, and in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. Unless required by law, the Company undertakes no obligation to (and expressly disclaim any such obligation to) update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
For investor and media inquiries, please contact:
Helen Plummer
Senior Investor Relations Coordinator
ChinaEdu Corporation
Phone: +1 908-442-9395
E-mail: helen@chinaedu.net
Simon Mei
Chief Financial Officer
ChinaEdu Corporation
Phone: +86 (10) 84187301
E-mail: simon@chinaedu.net
ChinaEdu Corporation | ||||
Unaudited Condensed Consolidated Balance Sheets | ||||
(in thousands, unaudited) | December | September | September | |
RMB | RMB | US$ | ||
Current assets: | ||||
Cash and cash equivalents | 385,922 | 234,976 | 38,395 | |
Term deposits | 92,028 | 126,373 | 20,649 | |
Short-term investments | 23,575 | 9,498 | 1,552 | |
Accounts receivable | 34,917 | 30,340 | 4,958 | |
Prepaid expenses and other current assets | 23,455 | 24,998 | 4,085 | |
Amounts due from related parties-current | 260,184 | 272,431 | 44,515 | |
Deferred tax assets-current | 9,571 | 2,479 | 405 | |
Total current assets | 829,652 | 701,095 | 114,559 | |
Term deposits -non current | - | 95,850 | 15,662 | |
Property and equipment, net | 238,563 | 235,409 | 38,466 | |
Amounts due from a related party-non-current | 41,979 | 41,979 | 6,859 | |
Land use rights | 26,049 | 25,593 | 4,182 | |
Deposits paid for acquisition of property and equipment | 3,873 | - | - | |
Deferred tax assets-non-current | 2,085 | 2,607 | 426 | |
Long-term investments | 801 | 731 | 119 | |
Rental deposits | 1,497 | 1,483 | 242 | |
Acquired intangible assets, net | 54,499 | 52,148 | 8,521 | |
Goodwill | 43,255 | 43,255 | 7,068 | |
Total assets | 1,242,253 | 1,200,150 | 196,104 | |
Liabilities and equity | ||||
Current liabilities: | ||||
Short-term loan | - | 4,578 | 748 | |
Accounts payable (including accounts payable of the consolidated VIE without recourse to the | 2,401 | 11,611 | 1,897 | |
Deferred revenues-current (including deferred revenues of the consolidated VIE without recourse to | 134,175 | 51,659 | 8,441 | |
Accrued expenses and other current liabilities (including accrued expenses and other current | 113,558 | 131,669 | 21,515 | |
Amounts due to related parties-current (including amounts due to related parties of the consolidated | 35,507 | 41,678 | 6,810 | |
Income taxes payable (including income taxes payable of the consolidated VIE without recourse to the | 49,294 | 43,237 | 7,066 | |
Other taxes payable (including other taxes payable of the consolidated VIE without recourse to the | 27,294 | 24,285 | 3,968 | |
Total current liabilities | 362,229 | 308,717 | 50,445 | |
Long-term loan | - | 215,516 | 35,215 | |
Deferred revenues-non-current (including deferred revenues of the consolidated VIE without recourse | 10,654 | 10,342 | 1,690 | |
| 13,473 | 13,319 | 2,176 | |
Unrecognized tax benefit (including unrecognized tax benefit of the consolidated VIE without | 8,795 | 10,666 | 1,743 | |
Total liabilities | 395,151 | 558,560 | 91,269 | |
Total ChinaEdu Corporation shareholders' equity | 650,191 | 418,089 | 68,315 | |
Noncontrolling interests | 196,911 | 223,501 | 36,520 | |
Total equity | 847,102 | 641,590 | 104,835 | |
Total liabilities and equity | 1,242,253 | 1,200,150 | 196,104 | |
ChinaEdu Corporation | ||||||||||||
Unaudited Condensed Consolidated Statements of Operations | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
(in thousands,except for percentage, share, and per share information) | September | September | September | September | September | September | ||||||
RMB | RMB | US$ | RMB | RMB | US$ | |||||||
Gross Revenue * | 129,012 | 143,116 | 23,385 | 368,163 | 408,880 | 66,811 | ||||||
Business Tax | 5,192 | 2,440 | 399 | 15,383 | 8,507 | 1,391 | ||||||
Net Revenue: | ||||||||||||
Online degree programs | 99,097 | 112,620 | 18,402 | 283,113 | 320,751 | 52,410 | ||||||
Online tutoring programs | 6,025 | 7,160 | 1,170 | 18,423 | 21,538 | 3,519 | ||||||
Private primary and secondary schools | 16,311 | 18,776 | 3,068 | 43,662 | 51,205 | 8,367 | ||||||
International curriculum programs | 2,387 | 2,120 | 346 | 7,582 | 6,879 | 1,124 | ||||||
Total net revenue | 123,820 | 140,676 | 22,986 | 352,780 | 400,373 | 65,420 | ||||||
Cost of revenue: | ||||||||||||
Online degree programs | 33,982 | 38,676 | 6,320 | 95,336 | 106,666 | 17,429 | ||||||
Online tutoring programs | 2,178 | 2,529 | 413 | 7,599 | 7,452 | 1,218 | ||||||
Private primary and secondary schools | 9,740 | 10,930 | 1,786 | 29,751 | 33,132 | 5,414 | ||||||
International curriculum programs | 2,422 | 1,417 | 232 | 8,105 | 3,967 | 648 | ||||||
Total cost of revenue | 48,322 | 53,552 | 8,751 | 140,791 | 151,217 | 24,709 | ||||||
Gross profit: | ||||||||||||
Online degree programs | 65,115 | 73,944 | 12,082 | 187,777 | 214,085 | 34,981 | ||||||
Online tutoring programs | 3,847 | 4,631 | 757 | 10,824 | 14,086 | 2,301 | ||||||
Private primary and secondary schools | 6,571 | 7,846 | 1,282 | 13,911 | 18,073 | 2,953 | ||||||
International curriculum programs | (35) | 703 | 114 | (523) | 2,912 | 476 | ||||||
Total gross profit | 75,498 | 87,124 | 14,235 | 211,989 | 249,156 | 40,711 | ||||||
Online degree programs | 65.7% | 65.7% | 65.7% | 66.3% | 66.7% | 66.7% | ||||||
Online tutoring programs | 63.9% | 64.7% | 64.7% | 58.8% | 65.4% | 65.4% | ||||||
Private primary and secondary schools | 40.3% | 41.8% | 41.8% | 31.9% | 35.3% | 35.3% | ||||||
International curriculum programs | (1.5%) | 33.2% | 33.2% | (6.9%) | 42.3% | 42.3% | ||||||
Gross margin | 61.0% | 61.9% | 61.9% | 60.1% | 62.2% | 62.2% | ||||||
Operating expenses: | ||||||||||||
General and administrative | 27,182 | 28,825 | 4,710 | 77,243 | 77,927 | 12,733 | ||||||
Selling and marketing | 12,315 | 11,711 | 1,914 | 34,094 | 33,668 | 5,501 | ||||||
Research and development | 10,914 | 13,554 | 2,215 | 30,585 | 36,494 | 5,963 | ||||||
Intangible assets impairment | 5,901 | - | - | 5,901 | - | - | ||||||
Total operating expenses | 56,312 | 54,090 | 8,839 | 147,823 | 148,089 | 24,197 | ||||||
Income(loss) from operations | 19,186 | 33,034 | 5,396 | 64,166 | 101,067 | 16,514 | ||||||
Operating margin | 15.5% | 23.5% | 23.5% | 18.2% | 25.2% | 25.2% | ||||||
Interest income | 3,352 | 1,600 | 261 | 9,923 | 8,191 | 1,338 | ||||||
Interest expense | - | (5,403) | (883) | - | (10,082) | (1,647) | ||||||
Gain on disposal of assets | 1,303 | - | - | 1,303 | - | - | ||||||
Investment income | - | - | - | 1,460 | 368 | 60 | ||||||
Other income | 404 | 487 | 80 | 917 | 1,350 | 221 | ||||||
Foreign exchange loss | - | (592) | (97) | - | (2,728) | (446) | ||||||
Income before income tax and equity method investments | 24,245 | 29,126 | 4,757 | 77,769 | 98,166 | 16,040 | ||||||
Income tax expense | (9,510) | (6,172) | (1,008) | (20,824) | (22,015) | (3,597) | ||||||
Net income before income from equity method investments | 14,735 | 22,954 | 3,749 | 56,945 | 76,151 | 12,443 | ||||||
Income from equity method investments, net of taxes | - | (93) | (15) | - | 410 | 67 | ||||||
Net income | 14,735 | 22,861 | 3,734 | 56,945 | 76,561 | 12,510 | ||||||
Net income attributable to the noncontrolling interests | (11,611) | (13,262) | (2,167) | (34,204) | (38,315) | (6,261) | ||||||
Net income attributable to ChinaEdu | 3,124 | 9,599 | 1,567 | 22,741 | 38,246 | 6,249 | ||||||
Net margin | 2.5% | 6.8% | 6.8% | 6.4% | 9.6% | 9.6% | ||||||
Net income attributable to ChinaEdu per ADS: | ||||||||||||
Basic | 0.20 | 1.15 | 0.187 | 1.44 | 3.93 | 0.642 | ||||||
Diluted | 0.19 | 1.02 | 0.167 | 1.36 | 3.56 | 0.582 | ||||||
Weighted average aggregate number of ADSs outstanding: | ||||||||||||
Basic | 15,884,264 | 8,373,355 | 8,373,355 | 15,827,795 | 9,730,559 | 9,730,559 | ||||||
Diluted | 16,625,395 | 9,374,564 | 9,374,564 | 16,771,477 | 10,745,260 | 10,745,260 | ||||||
* Gross revenue are detailed as follows | ||||||||||||
Online degree programs | 103,920 | 114,723 | 18,746 | 297,506 | 328,482 | 53,674 | ||||||
Online tutoring programs | 6,181 | 7,398 | 1,209 | 18,849 | 22,046 | 3,602 | ||||||
Private primary and secondary schools | 16,382 | 18,839 | 3,078 | 43,777 | 51,329 | 8,387 | ||||||
International curriculum programs | 2,529 | 2,156 | 352 | 8,031 | 7,023 | 1,148 | ||||||
ChinaEdu Corporation | ||||||||||||
Unaudited Condensed Consolidated Statements of Cash Flow | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
(in thousands, unaudited) | September | September | September | September | September | September | ||||||
RMB | RMB | US$ | RMB | RMB | US$ | |||||||
Operating activities: | ||||||||||||
Net income | 14,735 | 22,861 | 3,734 | 56,945 | 76,561 | 12,510 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Share-based compensation | 1,885 | 2,371 | 387 | 5,996 | 7,217 | 1,179 | ||||||
Depreciation and amortization of property and equipment | 6,355 | 6,370 | 1,041 | 18,963 | 19,126 | 3,125 | ||||||
Amortization of land use rights | 152 | 152 | 25 | 456 | 456 | 75 | ||||||
Amortization of acquired intangible assets | 1,035 | 758 | 124 | 3,056 | 2,351 | 384 | ||||||
Intangible assets impairment | 5,901 | - | - | 5,901 | - | - | ||||||
Investment income | - | - | - | (227) | (368) | (60) | ||||||
Amortization of debt discount | - | 3,014 | 492 | - | 3,601 | 588 | ||||||
Exchange loss | - | 592 | 97 | - | 2,728 | 446 | ||||||
Gain on disposal of assets | (1,303) | - | - | (1,303) | - | - | ||||||
Loss from equity method investment | - | 93 | 15 | - | 70 | 11 | ||||||
Provision for accounts receivables | - | - | - | 340 | 261 | 43 | ||||||
Loss(gain) from disposal of property and equipment | 586 | 15 | 2 | 1,414 | (29) | (5) | ||||||
Changes in assets and liabilities | ||||||||||||
Accounts receivable | 8,242 | 8,125 | 1,328 | (7,851) | 4,316 | 705 | ||||||
Prepaid expenses and other current assets | 1,239 | 6,662 | 1,090 | (1,351) | 3,584 | 586 | ||||||
Amounts due from related parties | 40,792 | 79,645 | 13,015 | (23,351) | (12,290) | (2,008) | ||||||
Rental deposits | 296 | (99) | (16) | 733 | 14 | 2 | ||||||
Accounts payable | 2,951 | 3,118 | 509 | 7,789 | 9,210 | 1,505 | ||||||
Deferred revenues | (74,887) | (86,903) | (14,200) | (74,508) | (82,787) | (13,527) | ||||||
Accrued expenses and other current liabilities | 17,532 | 20,872 | 3,410 | 26,673 | 18,619 | 3,041 | ||||||
Amounts due to related parties | 8,265 | 7,944 | 1,298 | 11,621 | (13,728) | (2,243) | ||||||
Income taxes payable | 3,462 | 2,121 | 347 | (3,119) | (6,056) | (990) | ||||||
Other taxes payable | 5,559 | (5,119) | (836) | 2,157 | (3,009) | (492) | ||||||
Deferred income taxes | 2,909 | 870 | 142 | 5,873 | 6,416 | 1,048 | ||||||
Unrecognized tax benefit | 637 | 680 | 111 | 1,863 | 1,871 | 306 | ||||||
Net cash provided by operating activities | 46,343 | 74,142 | 12,115 | 38,070 | 38,134 | 6,229 | ||||||
Investing activities: | ||||||||||||
Purchase of property and equipment | (6,283) | (4,810) | (786) | (9,157) | (12,209) | (1,995) | ||||||
Proceeds from discontiued operations | 4,000 | - | - | 4,000 | - | - | ||||||
Purchase of term deposits | (3,000) | (6,635) | (1,084) | (100,865) | (130,254) | (21,283) | ||||||
Purchase of investments | - | - | - | (12,571) | - | - | ||||||
Proceeds from sale of investments | - | - | - | 24,952 | 5,482 | 896 | ||||||
Proceeds from disposal of exclusive partnership with universities | - | - | - | (980) | - | - | ||||||
Proceeds from disposal of property and equipment | 94 | 2 | - | 95 | 140 | 23 | ||||||
Proceeds from disposal of equity method investments | - | - | - | - | 8,000 | 1,307 | ||||||
Net cash used in investing activities | (5,189) | (11,443) | (1,870) | (94,526) | (128,841) | (21,052) | ||||||
Financing activities: | ||||||||||||
Cash dividends paid to noncontrolling shareholders | (16,799) | (7,533) | (1,231) | (21,441) | (7,533) | (1,231) | ||||||
Capital contributions by noncontrolling shareholders | - | - | - | 980 | - | - | ||||||
Proceeds from exercise of share options | 16 | 2,524 | 412 | 3,738 | 2,790 | 456 | ||||||
Financing cost in connection with loans | - | (4,806) | (785) | - | (8,557) | (1,398) | ||||||
Prepayment for shares repurchase | - | - | - | (886) | - | - | ||||||
Proceeds from borrowings of short-term debt | - | - | - | - | 68,410 | 11,178 | ||||||
Proceeds from borrowings of long-term debt | - | 220,511 | 36,031 | - | 380,261 | 62,134 | ||||||
Repurchase and cancellation of ordinary shares | (2,343) | (32,316) | (5,280) | (2,728) | (285,603) | (46,667) | ||||||
Repayment of borrowings of short-term debt | - | (62,815) | (10,264) | - | (62,815) | (10,264) | ||||||
Repayment of borrowings of long-term debt | - | (159,750) | (26,103) | - | (159,750) | (26,103) | ||||||
Repayment of loan from related party | (5,500) | (68,900) | (11,258) | (5,500) | (68,900) | (11,258) | ||||||
Loan from related party | - | 55,200 | 9,020 | 5,500 | 81,200 | 13,268 | ||||||
Net cash used in financing activities | (24,626) | (57,885) | (9,458) | (20,337) | (60,497) | (9,885) | ||||||
Effect of foreign exchange rate changes | 9 | (179) | (29) | (2) | 258 | 44 | ||||||
Cash and cash equivalents, beginning of period | 180,414 | 230,341 | 37,637 | 273,746 | 385,922 | 63,059 | ||||||
Cash and cash equivalents, end of period | 196,951 | 234,976 | 38,395 | 196,951 | 234,976 | 38,395 | ||||||
Net decrease (increase) in cash and cash equivalents | 16,537 | 4,635 | 758 | (76,795) | (150,946) | (24,664) | ||||||
ChinaEdu Corporation | ||||||||||||
Unaudited Condensed Consolidated Statements of Comprehensive Income | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
(in thousands, unaudited) | September | September | September | September | September | September | ||||||
RMB | RMB | US$ | RMB | RMB | US$ | |||||||
Net income (loss) | 14,735 | 22,861 | 3,734 | 56,945 | 76,561 | 12,510 | ||||||
Other comprehensive income, net of taxes | ||||||||||||
Foreign currency translation adjustments | (121) | 504 | 82 | 6 | 3,834 | 626 | ||||||
Change in fair value of available for sale investments | 515 | 215 | 35 | 957 | (787) | (129) | ||||||
Comprehensive income | 15,129 | 23,580 | 3,851 | 57,908 | 79,608 | 13,007 | ||||||
Less: comprehensive income attributable to the noncontrollng interest | 13,591 | 13,842 | 2,262 | 35,143 | 41,923 | 6,850 | ||||||
Comprehensive income attributable to ChinaEdu | 1,538 | 9,738 | 1,589 | 22,765 | 37,685 | 6,157 | ||||||
ChinaEdu Corporation | ||||||||||||||||||||||||
Unaudited reconciliations from income from operations to adjusted income from operations (non-GAAP) and adjusted operating margin (non-GAAP) | ||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
(in thousands, unaudited) | September | September | September | September | September | September | ||||||||||||||||||
RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||||||||||
Net revenue | 123,820 | 140,676 | 22,986 | 352,780 | 400,373 | 65,420 | ||||||||||||||||||
Income(loss) from operations | 19,186 | 33,034 | 5,396 | 64,166 | 101,067 | 16,514 | ||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||
Share-based compensation | 1,885 | 2,371 | 387 | 5,996 | 7,217 | 1,179 | ||||||||||||||||||
Amortization of intangible assets and land use rights | 1,187 | 910 | 149 | 3,512 | 2,807 | 459 | ||||||||||||||||||
Intangible assets impairment | 5,901 | - | - | 5,901 | - | - | ||||||||||||||||||
Adjusted income from operations (non-GAAP) | 28,159 | 36,315 | 5,932 | 79,575 | 111,091 | 18,152 | ||||||||||||||||||
Adjusted operating margin (non-GAAP) | 22.7% | 25.8% | 25.8% | 22.6% | 27.7% | 27.7% | ||||||||||||||||||
ChinaEdu Corporation | ||||||||||||||||||||||||
Unaudited reconciliations from net income attributable to ChinaEdu to adjusted net income attributable to ChinaEdu (non-GAAP), adjusted net margin (non-GAAP) and adjusted net income per ADS (non-GAAP) | ||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
(in thousands, unaudited) | September | September | September | September | September | September | ||||||||||||||||||
RMB | RMB | US$ | RMB | RMB | US$ | |||||||||||||||||||
Net revenue | 123,820 | 140,676 | 22,986 | 352,780 | 400,373 | 65,420 | ||||||||||||||||||
Net income(loss) attributable to ChinaEdu | 3,124 | 9,599 | 1,567 | 22,741 | 38,246 | 6,249 | ||||||||||||||||||
Adjustments: | ||||||||||||||||||||||||
Share-based compensation | 1,885 | 2,371 | 387 | 5,996 | 7,217 | 1,179 | ||||||||||||||||||
Share-based compensation attributable to the noncontrolling interest | (82) | - | - | (369) | - | - | ||||||||||||||||||
Amortization of intangible assets and land use rights | 1,187 | 910 | 149 | 3,512 | 2,807 | 459 | ||||||||||||||||||
Intangible assets impairment | 5,901 | - | - | 5,901 | - | - | ||||||||||||||||||
Adjusted net income attributable to ChinaEdu (non-GAAP) | 12,015 | 12,880 | 2,103 | 37,781 | 48,270 | 7,887 | ||||||||||||||||||
Adjusted net margin (non-GAAP) | 9.7% | 9.2% | 9.2% | 10.7% | 12.1% | 12.1% | ||||||||||||||||||
Adjusted net income attributable to ChinaEdu per ADS (non-GAAP): | ||||||||||||||||||||||||
Basic | 0.76 | 1.54 | 0.251 | 2.39 | 4.96 | 0.811 | ||||||||||||||||||
Diluted | 0.72 | 1.37 | 0.224 | 2.25 | 4.49 | 0.734 | ||||||||||||||||||
Weighted average aggregate number of ADSs outstanding: | ||||||||||||||||||||||||
Basic | 15,884,264 | 8,373,355 | 8,373,355 | 15,827,795 | 9,730,559 | 9,730,559 | ||||||||||||||||||
Diluted | 16,625,395 | 9,374,564 | 9,374,564 | 16,771,477 | 10,745,260 | 10,745,260 | ||||||||||||||||||
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