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HQ Global Education Announces FY2011 First Nine Months and Third Quarter Financial Results

2011-07-15 21:09 1025

CHANGSHA, China, July 15, 2011 /PRNewswire-Asia/ -- HQ Global Education Inc. (OTCBB: HQGE) ("HQ" or the "Company"), which operates 10 vocational schools in China under the "HQ" brand and is one of China's leading providers of customized vocational education, today announced its financial results for the FY2011 first nine months and third quarter ended May 31, 2011.

Nine Months and Third Quarter of Fiscal 2011 Financial and Operating Highlights

  • Revenue generated in this quarter was $16.9 million, which was a decrease of 2% as compared to $17.2 million for the three months ended May 31, 2010.  
  • Net income for the quarter decreased 10% to $4.9 million, compared with $5.6 million for the same period of last year. $.15 per share basic and diluted earnings based on 33 million shares outstanding for the quarter.
  • Total revenue for the first nine months of fiscal year 2011 achieved $46 million, representing an increase of $8.9 million, or 24% as compared to $37.1 million for the same period of 2010.
  • For the nine months ended May 31, 2011, our net income increased $3.4 million or 29% to $15.1 million, as compared to $11.7 million for the same period of last year.
  • Cash and total assets were $10.6 million and $69.0 million, respectively, as of May 31, 2011.

Mr. Guangwen He, Chairman and CEO of HQ Global Education stated, "Most of our businesses did quite well in the third quarter and past nine months, meeting or exceeding expectations. Despite the unclear international financial market, we believe that our business is solid and our operating strategy is sound in China, we intend to focus on operating our "Order-oriented Education" at our ten schools utilizing our existing and accessible resources and will continue to put great efforts into business development, service quality and brand recognition."

Third Quarter Fiscal Year 2011 Results of Operations

Revenue

For the three months ended May 31, 2011, we achieved total revenue of $16.9 million representing a decrease of 2%, as compared to $17.2 million for the same period in 2010. The decrease was mainly attributable to the second semester of fiscal 2011 began in February for four of our schools in Hunan province (Changsha HQ, Shaoshan HQ, Shaoshan and Shaoyang), as a result, the tuition and fees were proportionately recognized in five months from February to June. In fiscal 2010, the second semester began in March to June in all of our schools and tuition and fees were proportionately recognized in four months from March to June 2010. This also led to decrease of revenue from vocational education for the three months ended May 31, 2011 over the same period of the prior year.

During the quarter, approximately 59.3% of our revenue, or $10 million, was generated from vocational education services. Campus service fee improved to $6.9 million for the three months ended May 31, 2011, an increase of 32% compared to $5.2 million in the same period of 2010.

For the nine months ended May 31, 2011, we achieved total revenue of $46 million, representing an increase of $8.9 million, or 24% as compared to $37.1 million for the nine months ended May 31, 2010. Our revenue for the first nine months of fiscal year 2011 is very close to the revenue of $47.1 million that we achieved in the full fiscal year 2010.

Gross Profit

Gross profit for the third quarter of fiscal year 2011 ended May 31, 2011 was $6.0 million as compared to $6.4 million for the period ended May 31, 2010. The decrease of $0.4 million, or 6%, was primarily due to the decrease of revenue from vocational education and the increase of cost of campus services.

Net Income

Our net income for the three months ended May 31, 2011 was $4.9 million, representing a decrease of $0.6 million or 10% as compared to $5.5 million. For the nine months ended May 31, 2011, our net income increased $3.4 million or 29% to $15.1 million, as compared to $11.7 million for the same period of last year. Our net income for the past nine months has already exceeded the $13.6 million that we earned in the twelve months of fiscal year 2010. Basic and diluted earnings per share were $0.15 per share based on 33 million shares outstanding for the quarter, compared with basic and diluted earnings per share of $0.17 achieved in the same period a year ago.

Change in Liquidity and Capital Resources

As of May 31, 2011, we had approximately $10.6 million in cash, up $5.4 million from $5.2 million as of August 31, 2010. Total current assets and total assets were $28.1 million and $69.0 million as of May 31, 2011. Total current liabilities and total liabilities were $7.7 million and $10.9 million as of May 31, 2011. Total shareholders' equity was approximately $58.2 million, an increase of $17.5 million compared to $40.6 million as of August 31, 2010.

About HQ Global Education Inc. ("HQ")

HQ Global Education, Inc. provides customized vocational training and private education services to students through private and public vocational schools in China. The HQ Global brand has become increasingly synonymous throughout China with superior vocational training to meet employer needs and career fulfillment for students who aspire to become technical and skilled workers. As of the second semester of fiscal 2011, the enrollment totaled 36,926 students from 25 provinces throughout China. Through "Order-oriented" customized educational model, HQ Global has established contractual relationships with approximately 128 employers to provide training and internship arrangements for students and therefore has maintained 100% job placement for graduates. HQ Global generates revenue from tuition, campus service and order-oriented service.

For more information please visit: http://www.hq-education.com

Information Regarding Forward-Looking Statements

Except for historical information contained herein, the statements in this press release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, product demand, market competition, and risks inherent in our operations. These and other risks are described in our filings with the U.S. Securities and Exchange Commission.

Company Contact:

 

 

 

HQ Global Education, Inc.

 

 

 

Mr. Guangwen He

 

 

 

Founder, Chairman & CEO

 

 

 

Email: gw.he@hq-education.com

 

 

 

Tel: +86-731-8887-3727

 

 

 

www.hq-education.com

 

 

 

 

 



HQ GLOBAL EDUCATION INC.

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

(UNAUDITED)

 

 

 

 

 

 

May 31,

 

 

August 31, 

 

 

 

 

 

 

2011

 

 

2010

 

 

ASSETS 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS  

 

 

 

 

 

 

 

Cash 

 

$

 

10,607,514

 

$

 

5,225,764

 

 

 

Accounts receivable

 

 

11,310,848

 

 

9,023,824

 

 

 

Other receivables  

 

 

188,569

 

 

40,972

 

 

 

Inventory

 

 

431,679

 

 

674,200

 

 

 

Advances to vendors

 

 

5,574,896

 

 

552,344

 

 

 

 

Total current assets  

 

 

28,113,506

 

 

15,517,104

 

 

 

 

 

 

 

 

 

 

PROPERTY AND EQUIPMENT, NET

 

 

33,804,257

 

 

29,009,794

 

 

 

 

 

 

 

 

 

 

INTANGIBLE ASSETS, NET

 

 

7,120,450

 

 

2,029,519

 

 

 

 

 

 

 

 

 

 

 

 

       TOTAL ASSETS  

 

$

 

69,038,213

 

$

 

46,556,417

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY 

 

 

 

 

CURRENT LIABILITIES 

 

 

 

 

 

 

 

Short-term loans

 

$

 

702,280

 

$

 

1,314,744

 

 

 

Long-term loans - current portion

 

 

671,411

 

 

235,038

 

 

 

Accounts payable

 

 

1,034,147

 

 

2,278,346

 

 

 

Payroll tax payable 

 

 

3,969

 

 

3,232

 

 

 

Payroll payable

 

 

720,414

 

 

341,098

 

 

 

Unearned revenues

 

 

3,076,602

 

 

-

 

 

 

Due to stockholder

 

 

523,062

 

 

-

 

 

 

Other payables and accrued liabilities

 

 

936,183

 

 

850,905

 

 

 

 

Total current liabilities 

 

 

7,668,068

 

 

5,023,363

 

 

 

 

 

 

 

 

 

 

Long-term Loans, less current portion

 

 

-

 

 

477,421

 

 

 

 

 

 

 

 

 

 

Due to stockholder, net of current portion

 

 

3,086,944

 

 

310,000

 

 

 

 

 

 

 

 

 

 

Other long-term payables

 

 

100,171

 

 

96,757

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES 

 

 

10,855,183

 

 

5,907,541

 

 

 

 

 

 

 

 

 

 

COMMITMENT AND  CONTINGENCIES   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value, 40,000,000 shares authorized, 

 

 

 

 

 

 

 

  none issued and outstanding

 

 

-

 

 

-

 

 

 

Common Stock, $0.0001 par value, 100,000,000 shares authorized,

 

 

 

 

 

 

 

  33,000,000 shares issued and outstanding

 

 

3,300

 

 

3,300

 

 

 

Additional paid-in capital

 

 

1,226,674

 

 

1,226,674

 

 

 

Accumulated other comprehensive income 

 

 

4,205,379

 

 

1,785,928

 

 

 

Statutory reserve 

 

 

14,128,209

 

 

10,339,551

 

 

 

Retained earnings   

 

 

38,619,468

 

 

27,293,423

 

 

 

 

Total stockholders' equity   

 

 

58,183,030

 

 

40,648,876

 

 

 

 

 

 

 

 

 

 

 

 

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

 

69,038,213

 

$

 

46,556,417

 

 

 

 

 

 

 

 

 



HQ GLOBAL EDUCATION INC.

 

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

 

 

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

For the nine months ended

 

 

 

 

 

 

May 31,

 

 

May 31,

 

 

 

 

 

 

2011

 

 

2010

 

 

2011

 

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

-Fee based

 

$

 

10,001,591

 

$

 

12,020,167

 

$

 

32,430,966

 

$

 

26,151,610

 

 

 

-Service based

 

 

6,864,329

 

 

5,215,749

 

 

13,571,232

 

 

10,958,480

 

 

 

 

 

 

16,865,920

 

 

17,235,916

 

 

46,002,198

 

 

37,110,090

 

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

-Fee based

 

 

(5,217,384)

 

 

(6,560,027)

 

 

(16,442,695)

 

 

(13,334,478)

 

 

 

-Service based

 

 

(5,631,626)

 

 

(4,242,786)

 

 

(11,453,793)

 

 

(8,983,353)

 

 

 

 

 

 

(10,849,010)

 

 

(10,802,813)

 

 

(27,896,488)

 

 

(22,317,831)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit 

 

 

6,016,910

 

 

6,433,103

 

 

18,105,710

 

 

14,792,259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling expenses  

 

 

(259,593)

 

 

(268,893)

 

 

(599,303)

 

 

(512,651)

 

 

General and administrative expenses 

 

 

(741,108)

 

 

(567,662)

 

 

(2,275,550)

 

 

(1,495,898)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations  

 

 

5,016,209

 

 

5,596,548

 

 

15,230,857

 

 

12,783,710

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expenses

 

 

 

 

 

 

 

 

 

 

 

Interest expenses, net

 

 

(21,631)

 

 

(38,711)

 

 

(83,276)

 

 

(83,838)

 

 

 

Other expenses  

 

 

(3,512)

 

 

(8,877)

 

 

(32,878)

 

 

(978,827)

 

 

Total other expenses

 

 

(25,143)

 

 

(47,588)

 

 

(116,154)

 

 

(1,062,665)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes  

 

 

4,991,066

 

 

5,548,960

 

 

15,114,703

 

 

11,721,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income  

 

 

4,991,066

 

 

5,548,960

 

 

15,114,703

 

 

11,721,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income  

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

813,369

 

 

(10,268)

 

 

2,419,451

 

 

9,359

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Income 

 

$

 

5,804,435

 

$

 

5,538,692

 

$

 

17,534,154

 

$

 

11,730,404

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted income per common share

 

$

 

0.15

 

$

 

0.17

 

$

 

0.46

 

$

 

0.46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average common

 

 

 

 

 

 

 

 

 

shares outstanding

 

 

33,000,000

 

 

33,000,000

 

 

33,000,000

 

 

25,673,993

 

 

 

 

 

 

 

 

 

 

 

 

 




 

HQ GLOBAL EDUCATION INC.

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the nine months ended

 

 

 

 

 

 

 

 

 

May 31,

 

 

 

 

 

 

 

 

 

2011

 

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:  

 

 

 

 

 

 

 

 

            Net income  

 

 

 

$    15,114,703

 

 

$     11,721,045

 

 

 

            Adjustments to reconcile net income to net cash  

 

 

 

 

 

 

 

 

            provided by operating activities:  

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization  

 

 

 

1,914,997

 

 

1,409,368

 

 

 

 

 

 

Loss on disposal of property & equipment

 

 

 

-

 

 

969,369

 

 

 

            Changes in assets and liabilities 

 

 

 

 

 

 

 

 

            (Increase) decrease in -

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable   

 

 

 

(1,793,442)

 

 

(5,313,198)

 

 

 

 

 

 

Other receivables

 

 

 

(113,109)

 

 

(372,119)

 

 

 

 

 

 

Inventory

 

 

 

271,257

 

 

1,173,255

 

 

 

 

 

 

 

 

 

 

 

 

 

 

            Increase (decrease) in -

 

 

 

 

 

 

 

 

 

 

 

Accounts payables

 

 

 

(1,332,941)

 

 

314,443

 

 

 

 

 

 

Payroll Payable

 

 

 

354,890

 

 

513,828

 

 

 

 

 

 

Payroll Taxes payable  

 

 

 

561

 

 

31,185

 

 

 

 

 

 

Unearned revenues

 

 

 

3,016,006

 

 

3,229,791

 

 

 

 

 

 

Other payables and accrued liabilities

 

 

 

249,451

 

 

750,937

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Net cash provided by operating activities   

 

 

 

17,682,373

 

 

14,427,904

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:  

 

 

 

 

 

 

 

 

 

 

 

Acquisition of intangible assets   

 

 

 

(4,952,859)

 

 

(265,109)

 

 

 

 

 

 

Advance to vendor for acquisition of property and equipment

 

 

 

(4,896,174)

 

 

-

 

 

 

 

 

 

Acquisition of property and equipment  

 

 

 

(5,109,996)

 

 

(7,639,799)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Net cash used in investing activities   

 

 

 

(14,959,029)

 

 

(7,904,908)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:  

 

 

 

 

 

 

 

 

 

 

 

Proceeds from short-term loan

 

 

 

234,526

 

 

578,508

 

 

 

 

 

 

Repayments on short-term loan

 

 

 

(900,278)

 

 

-

 

 

 

 

 

 

Proceeds from long term loan

 

 

 

-

 

 

234333

 

 

 

 

 

 

Repayments on long term loan

 

 

 

(75,655)

 

 

(556,540)

 

 

 

 

 

 

Proceeds from shareholders' loans

 

 

 

3,026,143

 

 

310,000

 

 

 

 

 

 

Collection of loans to related party

 

 

 

-

 

 

2,448,629

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Net cash provided by financing activities 

 

 

 

2,284,736

 

 

3,014,930

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE CHANGE ON CASH 

 

 

 

373,670

 

 

(24)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCREASE IN CASH 

 

 

 

5,381,750

 

 

9,537,902

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH, BEGINNING OF PERIOD

 

 

 

5,225,764

 

 

3,848,040

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH, END OF PERIOD

 

 

 

$    10,607,514

 

 

$    13,385,942

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

 

 

 

Interest paid  

 

 

 

$        89,639

 

 

$        93,735

 

 

 

 

 

 

 

 

 

 

 

 




Source: HQ Global Education Inc.
Related Stocks:
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Keywords: Education
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