-- Full Year Revenues of RMB400.2 million, up 13.7%
year-over-year
-- Full Year Student
Enrollments from Continuing Operations of 21,247, up
3.0% year-over-year
-- Total Number of
School Programs from Continuing Operations of 22, up
4.8% year-over-year
BEIJING, April 13,
2022 /PRNewswire/ -- First High-School Education
Group Co., Ltd. ("First High-School Education Group" or the
"Company") (NYSE: FHS), an education service provider primarily
focusing on high schools in Western
China, today announced its unaudited financial results for
the fiscal year ended December 31,
2021.
Fiscal Year 2021 Financial and Operational Highlights –
Continuing Operations
- Total revenues were RMB400.2
million (US$62.8 million), an
increase of 13.7% from RMB351.9
million in 2020.
- Gross profit was RMB126.5
million (US$19.8 million), a
decrease of 18.1% from RMB154.5
million in 2020.
- Income from continuing operations was RMB50.7 million (US$7.4
million), a decrease of 37.9% from RMB81.7 million in 2020.
- Net income was RMB39.9
million (US$6.3 million), a
decrease of 51.3% from RMB81.9
million in 2020.
- Adjusted net income[1]
(Non-GAAP) was RMB39.9 million
(US$6.3 million), a decrease of 51.3%
from RMB81.9 million in 2020.
- The total number of students enrolled at our school
programs and public schools that we provide management services as
of December 31, 2021 was 21,247, an
increase of 3.0% from 20,637 as of December
31, 2020.
- The total number of school programs at our school
programs and public schools that we provide management services as
of December 31, 2021 was 22, an
increase of 4.8% from 21 as of December 31,
2020.
[1] Adjusted net income is
a non-GAAP measure. See "Non-GAAP measure" in this
press release. A reconciliation of the Company's most directly
comparable GAAP measure to historical non-GAAP financial
measure has been provided in the tables captioned "Reconciliation
of GAAP to Non-GAAP Measure" included at the end of this
press release, and investors are encouraged to review the
reconciliation.
|
CFO Comments
Mr. Tommy Zhou, Chief Financial
Officer of First High-School Education Group, commented:
In 2021, under high market uncertainty and changing regulatory
environment, First High-School Education Group achieved stable and
high-quality development. Compared with 2020, the Company's revenue
from continuing operation increased by 13.7% to RMB400.2 million. The total number of school
programs from continuing operations at our school programs and
public schools that we provide management services was 22, and
respective student enrollments was 21,247, as of December 31, 2021. We are extremely proud of the
quality of the education service we provide. For the 2021
graduation year, we grouped top in similar schools with students
scored above 700 or 600, and schools with students of most
increased scores from entrance to graduation in China.
The Company's fiscal year 2021 profit margin decreased
comparatively with 2020, mainly due to non-recurring expenses
caused by our initial public offering, and costs related with new
school openings. School management must be balanced and long-time
focused. We strongly believe our profitability will be greatly
increased in 2022 along with the ramp-up of our new schools and
overall efficiency improvements.
In 2022, the Company has three specific goals. First, the
Company expects to have all the school programs currently in
operation yielding improved financial results compared with last
year. Second, the Company plans to open certain new high school
programs and new vocational education school programs. Third, the
Company plans to further extend its service offerings to fully
cover the entire educational system, primarily comprising of
rendering education auxiliary materials, education human resources,
education logistic and boarding services, and education technology.
We expect the newly established services to complement our existing
school programs and yield greater profitability.
In compliance with the amended Implementation Regulations of the
Law on the Promotion of Private Education of the People's Republic
of China and other applicable PRC regulations, the Company has
determined to cease to recognize revenues for all activities
related to schools providing compulsory education and the sponsor
entities after September 1, 2021
within China that are affected by
the Implementation Rules, and classified such Affected Entities as
discontinued operations.
The discontinued operations of the Affected Entities had certain
impact on the Company's financials conditions for the year ended
December 31, 2021. Loss from
discontinued operations was RMB10.9
million (US$1.7 million) for
the year ended December 31,
2021.
Fiscal Year 2021 Financial Results – Continuing
Operations
Total Revenues
Total revenues were RMB400.2
million (US$62.8 million), an
increase of 13.7% from RMB351.9
million in 2020. The increase was primarily driven by
greater student enrollment due to the opening of new schools and
the increased number of students enrolled in our existing schools,
along with the higher tuition income and boarding fees.
Revenues from customers were RMB349.3 million (US$54.8
million), an increase of 12.4% from RMB310.6 million in 2020. The increase was
primarily driven by greater student enrollment due to the opening
of new schools and the increased number of students enrolled in our
existing schools, along with the higher tuition income and boarding
fees.
Revenues from government cooperative agreements were
RMB50.9 million (US$8.0 million), an increase of 23.4% from
RMB41.3 million in 2020, primarily
due to increased number of publicly-sponsored students served.
Cost of revenues
Cost of revenues were RMB273.7
million (US$43.0 million), an
increase of 38.7% from RMB197.4
million in 2020. The increase was primarily due to the
increased staff cost from opening of new schools and enlarged
curriculum coverage in arts and sports.
Gross profit
Gross profit was RMB126.5 million (US$19.8 million), a decrease of 18.1% from
RMB154.5 million in 2020.
Gross margin was 31.6%, compared with 43.9% in 2020. The
decreased gross margin was primarily due to the higher cost of
revenues resulted from (1) increased staff costs due to increased
number of employees and increased compensation level to attract
more talents; and (2) increased school operating expenses,
especially for new schools with relatively lower cost efficiency
than our existing schools.
Net operating expenses
Net operating expenses were RMB66.0
million (US$10.4 million), an
increase of 20.1% from RMB54.9
million in 2020.
- Selling and marketing expenses were RMB7.1 million (US$1.1
million), an increase of 8.6% from RMB6.5 million in 2020. The increase was
primarily due to the increased expenses in brand promotion and
marketing activities in relation to the opening of new schools and
assertive school opening plan made in 2021.
- General and administrative expenses were RMB61.8 million (US$9.7
million), an increase of 17.4% from RMB52.7 million in 2020. The increase was
primarily due to certain non-recurring expenses in relation to the
Company's initial public offering in March
2021.
- Government grants were RMB2.9
million (US$0.5 million), a
decrease of 31.1% from RMB4.2 million
in 2020, primarily due to certain delay in payments from
governments in 2021.
Income from operations
Income from operations was RMB60.5
million (US$9.5 million), a
decrease of 39.2% from RMB99.6
million in 2020.
Income from continuing
operations
Income from continuing operations was RMB50.7 million (US$8.0
million), a decrease of 37.9% from RMB81.7 million in 2020.
Loss from discontinued
operations
Loss from discontinued operations was RMB10.9 million (US$1.7
million), compared with an income of RMB0.1 million in 2020.
Net income
Net income was RMB39.9 million
(US$6.3 million), a decrease of 51.3%
from RMB81.9 million in 2020.
Adjusted net
income[2]
(Non-GAAP)
Adjusted net income (Non-GAAP) was RMB39.9 million (US$6.3
million), a decrease of 51.3% from RMB81.9 million in 2020.
[2] Adjusted net income is
a non-GAAP measure. See "Non-GAAP measure" in this
press release. A reconciliation of the Company's most directly
comparable GAAP measure to historical non-GAAP financial
measure has been provided in the tables captioned "Reconciliation
of GAAP to Non-GAAP Measure" included at the end of this
press release, and investors are encouraged to review the
reconciliation.
|
Business Outlook
For the full fiscal year 2022, the Company expects total
revenues of continuing operations to be between RMB480.0 million to RMB520.0 million, representing an increase of 15%
to 24% on a year- over- year basis. This outlook reflects the
Company's current and preliminary views on the market and
operational conditions, and the outlook ranges for fiscal year 2022
reflect a number of assumptions that are subject to change based on
uncertainties.
Impact of Implementation Rules for Private Education
Laws
On May 14, 2021, the State
Council of the People's Republic of
China promulgated the amended Implementation Regulations of
the Law on the Promotion of Private Education of the People's Republic of China
(中华人民共和国民办教育促进法实施条例) (the "Implementation Rules"), which became
effective on September 1, 2021. The
Implementation Rules prohibit social organizations and individuals
from controlling private schools that provide compulsory education
through, among other methods, mergers, acquisitions and contractual
arrangements. Additionally, the Implementation Rules prohibit any
private schools providing compulsory education from conducting
transactions with its related parties. As a result, the
Implementation Rules affected the Company's control over the
affiliated entities providing compulsory education as well as the
sponsor entities (collectively referred to as the "Affected
Entities").
In compliance with the Implementation Rules and other applicable
PRC regulations and based on the relevant accounting standard in
accordance with U.S. GAAP, the Company has determined to cease to
recognize revenues for all activities related to schools providing
compulsory education and the sponsor entities after September 1, 2021 within China that are affected by the Implementation
Rules, and classified such Affected Entities as discontinued
operations. The discontinued operations of the Affected Entities
had certain impact on the Company's financial conditions for the
year ended December 31, 2021. Loss
from discontinued operations was RMB10.9
million (US$1.7 million) for
the year ended December 31, 2021.
There still exist uncertainties with respect to the
interpretation and enforcement of the Implementation Rules. The
Company will closely monitor the developments related to the
Implementation Rules, and continue to assess the possible impacts
on the Company and make any applicable actions to keep in
compliance with the Implementation Rules and other applicable PRC
regulations.
Conference Call
First High-School Education Group's management will hold an
earnings conference call on Wednesday, April
13, 2022, at 8:00 AM U.S.
Eastern Time (8:00 PM April 13, 2022, Beijing/Hong Kong Time). Please dial in 15
minutes before the conference is scheduled to begin using below
numbers.
International
|
1-646-828-8199
|
United
States
|
1-800-581-5838
|
Hong Kong
|
800-961-113
|
Mainland
China
|
4001-209107
|
Passcode
|
4750951
|
A telephone replay of the conference call may be accessed by
phone at the following numbers until April
20, 2022.
International
|
1-719-457-0820
|
United
States
|
1-888-203-1112
|
Replay Access
Code
|
5111348
|
A live and archived webcast of the conference call will be
available on the Company's investors relations website at
https://ir.diyi.top/
About First High-School Education Group
First High-School Education Group is an education service
provider primarily focusing on high schools in Western China. The Company aspires to become a
leader and innovator of private high school education in
China, with the focuses on a
comprehensive education management integrating education
information consulting, education research project development,
education talent management, education technology management,
education service management, and general vocational integration
development services. For more information, please visit
https://ir.diyi.top/.
Non-GAAP Measure
The Company has provided in this press release financial
information that has not been prepared in accordance with U.S.
generally accepted accounting principles, or U.S. GAAP. The Company
considers and uses one non-GAAP measure, adjusted net income, as a
supplemental measure to review and assess its operating
performance. Adjusted net income enables the Company's management
to assess the Company's operating results without considering the
impact of non-cash charges, including share-based compensation
expenses, and without considering the impact of donation expenses
and transaction costs in relation to previous financing activities.
The Company also believes that the use of the non-GAAP measure
facilitates investors' assessment of its operating performance.
The presentation of the non-GAAP financial measure is not
intended to be considered in isolation or as a substitute for the
financial information prepared and presented in accordance with
U.S. GAAP. Adjusted net income is a non-GAAP measure. A
reconciliation of the Company's most directly comparable GAAP
measure to historical non-GAAP financial measure has been provided
in the tables captioned "Reconciliation of GAAP to Non-GAAP
Measure" included at the end of this press release, and investors
are encouraged to review the reconciliation.
Exchange Rate
The Company's business is primarily conducted in China and all of the revenues are denominated
in Renminbi ("RMB"). This announcement contains translations of
certain RMB amounts into U.S. dollars ("USD" or "US$") at specified
rates solely for the convenience of the readers. Unless otherwise
noted, all translations from RMB to USD are made at the rate of
RMB6.3726 to US$1.00, the exchange rate set forth in the H.10
statistical release of the Federal Reserve Board on December 30, 2021. No representation is made that
the RMB amounts could have been, or could be, converted, realized
or settled into US$ at that rate on December
30, 2021, or at any other rate.
Statement Regarding Preliminary Unaudited Financial
Information
The unaudited financial information set out in this earnings
release is preliminary and subject to potential adjustments.
Adjustments to the consolidated financial statements may be
identified when audit work has been performed for the Company's
year-end audit, which could result in significant differences from
this preliminary unaudited financial information.
Forward-Looking Statements
Statements in this press release about future expectations,
plans and prospects, as well as any other statements regarding
matters that are not historical facts, may constitute
"forward-looking statements" within the meaning of Section 21E of
the Securities Exchange Act of 1934, as amended, and as defined in
the U.S. Private Securities Litigation Reform Act of 1995. These
statements include, but are not limited to, statements relating to
the expected trading commencement and closing dates. The words
"anticipate," "believe," "continue," "could," "estimate," "expect,"
"intend," "may," "plan," "potential," "predict," "project,"
"should," "target," "will," "would" and similar expressions are
intended to identify forward-looking statements, although not all
forward-looking statements contain these identifying words. Actual
results may differ materially from those indicated by such
forward-looking statements as a result of various important
factors, including: the uncertainties related to market conditions
and the completion of the public offering on the anticipated terms
or at all, and other factors discussed in the "Risk Factors"
section of the preliminary prospectus filed with the SEC. Any
forward-looking statements contained in this press release speak
only as of the date hereof, and the Company specifically disclaims
any obligation to update any forward-looking statement, whether as
a result of new information, future events or otherwise.
For Investor and Media Inquiries Please Contact:
First High-School Education Group
Tommy Zhou
Chief Financial Officer
E-mail: tommyzhou@dygz.com
Customer Service
E-mail: FHS_info@dygz.com
Phone: 010-62555966 (9:30-12:00, 13:30-16:00
CST)
First High-School
Education Group Co., Ltd.
|
Unaudited Condensed
Consolidated Statements of Comprehensive Income
|
(All amounts in
thousands, except share data and per share data, or otherwise
noted)
|
|
|
Years Ended December
31,
|
2020
|
|
2021
|
|
2021
|
RMB
|
|
RMB
|
|
US$
|
Revenues
|
|
|
|
|
|
Revenue from
customers
|
310,640
|
|
349,280
|
|
54,810
|
Revenue from
governments cooperative agreements
|
41,272
|
|
50,947
|
|
7,995
|
Total
revenues
|
351,912
|
|
400,227
|
|
62,804
|
Cost of
revenues
|
(197,412)
|
|
(273,746)
|
|
(42,957)
|
Gross
profit
|
154,501
|
|
126,481
|
|
19,848
|
|
|
|
|
|
|
Operating expenses and
income
|
|
|
|
|
|
Selling and marketing
expenses
|
(6,517)
|
|
(7,076)
|
|
(1,110)
|
General and
administrative expenses
|
(52,656)
|
|
(61,819)
|
|
(9,701)
|
Government
grants
|
4,245
|
|
2,924
|
|
459
|
Income from
operations
|
99,572
|
|
60,509
|
|
9,495
|
|
|
|
|
|
|
Other income
(expenses):
|
|
|
|
|
|
Interest income
|
1,155
|
|
1,125
|
|
177
|
Interest expense
|
(5,747)
|
|
(12,913)
|
|
(2,026)
|
Foreign currency exchange loss, net
|
469
|
|
-
|
|
-
|
Others, net
|
1,689
|
|
3,576
|
|
561
|
Income from
Continuing Operations before Income Tax
|
97,139
|
|
52,298
|
|
8,207
|
Income tax
expenses
|
(15,404)
|
|
(1,577)
|
|
(247)
|
Income (loss)
from
Continuing
Operations
|
81,735
|
|
50,721
|
|
7,959
|
Discontinued
Operations
|
123
|
|
(10,863)
|
|
(1,705)
|
Net
Income
|
81,858
|
|
39,859
|
|
6,255
|
|
|
|
|
|
|
Comprehensive income - Continuing Operations
|
81,735
|
|
50,721
|
|
7,959
|
Comprehensive income (loss) - Discontinued Operations
|
123
|
|
(10,863)
|
|
(1,705)
|
|
|
|
|
|
|
Attributable
to
|
|
|
|
|
|
Shareholder of the Company
|
81,633
|
|
50,635
|
|
7,946
|
Non-controlling interests
|
101
|
|
86
|
|
13
|
|
|
|
|
|
|
Earnings per
ordinary share Basic and diluted
|
1.16
|
|
0.69
|
|
0.11
|
|
|
|
|
|
|
Weighted average
number of ordinary share outstanding Basic and
diluted
|
70,488,700
|
|
73,234,944
|
|
73,234,944
|
First High-School
Education Group Co., Ltd.
|
Unaudited Condensed
Consolidated Balance Sheets
|
(All amounts in
thousands, except share data and per share data, or otherwise
noted)
|
|
Assets
|
As of December
31,
|
2020
|
|
2021
|
|
2021
|
RMB
|
|
RMB
|
|
US$
|
Current
assets
|
|
|
|
|
|
Cash
|
111,978
|
|
144,409
|
|
22,661
|
Restricted
cash
|
59,600
|
|
-
|
|
-
|
Accounts receivable,
net of allowance for doubtful accounts
|
30,779
|
|
39,975
|
|
6,273
|
Amounts due from
related parties
|
1,964
|
|
217,238
|
|
34,089
|
Prepaid expenses and
other current assets
|
45,383
|
|
29,653
|
|
4,653
|
Other receivables from
the controlling shareholder
|
78,500
|
|
-
|
|
-
|
Total current
assets
|
328,203
|
|
431,275
|
|
67,677
|
|
|
|
|
|
|
Property and equipment,
net
|
127,007
|
|
140,670
|
|
22,074
|
Intangible assets,
net
|
48,975
|
|
47,523
|
|
7,457
|
Goodwill
|
40,218
|
|
164,873
|
|
25,872
|
Deferred tax
assets
|
12,271
|
|
42,193
|
|
6,621
|
Amounts due from
related parties
|
500
|
|
-
|
|
-
|
Other non-current
assets
|
18,045
|
|
56,488
|
|
8,864
|
Total
assets
|
575,220
|
|
883,022
|
|
138,565
|
Liabilities and
Equities
Current
liabilities
|
As of December
31,
|
2020
|
|
2021
|
|
2021
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
Contract
liabilities
|
164,191
|
|
152,448
|
|
23,922
|
Deferred revenue from
governments
|
-
|
|
-
|
|
-
|
Bank loans
|
110,778
|
|
-
|
|
-
|
Other payables due to
the controlling shareholder
|
218,313
|
|
-
|
|
-
|
Accounts
payable
|
8,063
|
|
13,616
|
|
2,137
|
Accrued expenses and
other payables
|
68,163
|
|
350,829
|
|
55,053
|
Income tax
payables
|
15,195
|
|
31,639
|
|
4,965
|
Amounts due to related
parties
|
682
|
|
-
|
|
-
|
Total current
liabilities
|
585,385
|
|
548,532
|
|
86,077
|
|
|
|
|
|
|
Borrowings
|
28,643
|
|
-
|
|
-
|
Deferred revenue from
governments
|
26,140
|
|
29,328
|
|
4,602
|
Other long-term
liabilities
|
16,881
|
|
84,256
|
|
13,222
|
Deferred tax
liabilities
|
11,933
|
|
25,914
|
|
4,067
|
Total
liabilities
|
668,982
|
|
688,030
|
|
107,967
|
|
|
|
|
|
|
Equity/(Deficit)
|
|
|
|
|
|
Ordinary
shares
|
-
|
|
6
|
|
1
|
Additional paid-in
capital
|
52,567
|
|
340,872
|
|
53,490
|
Statutory
reserves
|
36,390
|
|
40,441
|
|
6,346
|
Accumulated
deficit
|
(183,052)
|
|
(200,312)
|
|
(31,433)
|
Accumulated other
comprehensive income
|
144
|
|
462
|
|
72
|
Total
(deficit)/equity attributable to the shareholders of the
Company
|
(93,950)
|
|
181,469
|
|
28,476
|
Non-controlling
interests
|
187
|
|
13,523
|
|
2,122
|
Total
(deficit)/equity
|
(93,762)
|
|
194,992
|
|
30,599
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
and (deficit)/equity
|
575,220
|
|
883,022
|
|
138,565
|
First High-School
Education Group Co., Ltd.
|
Reconciliation of
GAAP to non-GAAP Measure
|
(All amounts in
thousands)
|
|
|
Years Ended December
31,
|
|
2020
|
|
2021
|
|
2021
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
|
|
|
|
Reconciliation of net
income to adjusted net income:
|
|
|
|
|
|
|
|
Net
income
|
|
|
81,858
|
|
39,859
|
|
6,255
|
Add:
|
|
|
|
|
|
|
|
Share-based
compensation expenses
|
|
|
-
|
|
-
|
|
-
|
Donation
expenses
|
|
|
-
|
|
-
|
|
-
|
Transaction costs in
relation to previous financing
activities
|
|
|
-
|
|
-
|
|
-
|
Tax effects of
adjustments*
|
|
|
-
|
|
-
|
|
-
|
Adjusted net
income
|
|
|
81,858
|
|
39,859
|
|
6,255
|
*
|
Tax effects were
determined based upon the nature, as well as the jurisdiction, of
each reconciliation adjustment at the respective applicable income
tax rate.
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SOURCE First High-School Education Group Co., Ltd