Financial Performance - The company's revenue for Q3 2022 was ¥1,667,177,321.53, representing a 15.36% increase compared to the previous quarter, but a 38.20% decrease year-to-date[5]. - Net profit attributable to shareholders was ¥68,240,054.31, showing a significant increase of 108.60% from the previous quarter, while year-to-date it remained at a loss of ¥822,691,656.02[5]. - The net profit excluding non-recurring gains and losses was ¥62,707,787.41, up 107.86% quarter-over-quarter, with a year-to-date loss of ¥840,931,516.85[5]. - Operating revenue decreased by 38.20% to CNY 3,893,882,283.64 compared to CNY 6,301,194,119.42 in the previous period, primarily due to the ongoing pandemic and postponed provincial examinations[10]. - The company reported a 143.19% increase in taxes payable, amounting to CNY 30,560,896.71, due to the accrual of VAT and additional taxes for Q1 2022[10]. - Net profit for the current period is approximately -¥822.70 million, compared to -¥890.90 million in the previous period, showing an improvement[22]. - Basic and diluted earnings per share for the current period are both -¥0.13, slightly better than -¥0.14 in the previous period[23]. Cash Flow and Liquidity - The net cash flow from operating activities for the year-to-date was ¥1,589,638,866.89, reflecting a substantial increase of 143.60%[5]. - Cash received from sales and services increased by 52.23% to CNY 5,730,000,312.04, mainly due to a negative cash flow in the previous year[10]. - Cash paid for purchasing goods and services decreased by 52.39% to CNY 605,787,718.06, influenced by the impact of the pandemic on in-person classes[10]. - Cash flow from operating activities increased to approximately ¥5.73 billion, up 52.3% from ¥3.76 billion in the previous period[24]. - The ending cash and cash equivalents balance was $457,143,336.88, down from $1,969,806,009.56 at the beginning of the period[26]. - Cash outflows for employee compensation were $2,994,758,849.49, compared to $4,999,319,418.01 in the previous period[25]. - Total cash outflow from operating activities was $4,190,454,946.32, a decrease from $7,492,754,618.10 in the prior period[25]. Assets and Liabilities - Total assets at the end of the reporting period were ¥8,225,666,651.05, down 20.18% from the previous year-end[6]. - Shareholders' equity attributable to the company was ¥1,066,127,098.18, a decrease of 43.56% compared to the previous year-end[6]. - The company's total equity attributable to shareholders decreased to approximately ¥1.07 billion from ¥1.89 billion in the previous period[20]. - The company's current liabilities decreased to approximately 6.530 billion yuan from 7.687 billion yuan at the beginning of the year[19]. - Total liabilities and equity amount to approximately ¥8.23 billion, down from ¥10.31 billion in the previous period[20]. Cost Management - Operating costs fell by 32.54% to CNY 2,420,963,306.46, attributed to reduced in-person classes and lower personnel costs due to staff reductions[10]. - R&D expenses decreased by 42.30% to CNY 482,232,337.63, resulting from optimization of the R&D team and reduced personnel costs[10]. - The company reduced sales expenses by 25.45% and management expenses by 49.75% in Q3 2022, indicating effective cost control measures[14]. Shareholder Information - The number of ordinary shareholders at the end of the reporting period was 162,755, with the largest shareholder holding 41.36% of the shares[12]. - The largest shareholder, Lu Zhongfang, holds 2,550,549,260 shares, representing 41.36% of the total shares, with a significant portion pledged[12]. Regulatory and Compliance Issues - The company has faced regulatory scrutiny regarding undisclosed related party transactions totaling approximately 1.232 billion yuan, which constituted 6.65% and 30.19% of the company's latest audited net assets for 2019 and 2020, respectively[15]. - The third quarter report was not audited, indicating a potential area for further scrutiny in financial reporting[27]. Future Outlook - The company plans to accelerate the digital transformation of vocational education through the enhancement of online course systems and the exploration of new vocational skill training[14]. - The company aims to implement a management model that adapts to the internet era, focusing on cost reduction and efficiency improvement[14]. - The company is actively managing market risks and adjusting structural products to mitigate the impacts of the pandemic[14].

Financial Performance - The company's operating revenue for the first half of 2022 was approximately ¥2.23 billion, a decrease of 54.15% compared to ¥4.86 billion in the same period last year[11]. - The net loss attributable to shareholders was approximately ¥890.93 million, representing a significant increase in loss of 816.95% compared to a loss of ¥97.16 million in the previous year[11]. - The basic and diluted earnings per share were both -¥0.14, a decrease of 600.00% compared to -¥0.02 in the previous year[11]. - The company reported total revenue of CNY 2,226,704,962.11, a decrease of 54.15% compared to the same period last year[27]. - The net profit attributable to shareholders was CNY -890,931,710.33, representing a decline of 816.95% year-on-year[29]. - Face-to-face training revenue fell by 56.15% to CNY 1,368,356,235.83 compared to the previous year[29]. - Online training revenue decreased by 50.34% to CNY 848,295,633.45 compared to the previous year[29]. - The company reported a significant operational restructuring, including the transfer of 33 non-profit schools to a third party, which is expected to be completed within 12 months following the new regulations[66]. Cash Flow and Liquidity - The net cash flow from operating activities was approximately ¥1.03 billion, an increase of 210.00% compared to a negative cash flow of ¥939.09 million in the same period last year[11]. - The company achieved a 210% year-on-year increase in net cash flow from operating activities[28]. - The company reported a net increase in cash and cash equivalents of -¥844,613,120.63, an improvement of 64.66% compared to -¥2,389,826,403.94 in the previous year[39]. - The ending balance of cash and cash equivalents was ¥1,125,192,888.93, down from ¥3,560,210,085.18 at the end of the first half of 2021[115]. - The company reported a significant decrease in cash paid to employees, totaling ¥2,255,984,012.14, compared to ¥3,545,895,731.44 in the previous year[114]. Assets and Liabilities - The total assets at the end of the reporting period were approximately ¥8.96 billion, a decrease of 13.04% from ¥10.31 billion at the end of the previous year[11]. - The company's total liabilities were CNY 7,964,050,733.13, down from CNY 8,416,402,445.24, reflecting a reduction in overall debt[103]. - The company's short-term borrowings decreased to CNY 1,251,590,694.36 from CNY 3,152,945,812.59, indicating a significant reduction in reliance on short-term financing[103]. - Contract liabilities increased by 23.64% to ¥4,783,136,184.36 from ¥3,063,721,290.28, primarily due to delayed revenue recognition from postponed provincial examinations[42]. Operational Challenges and Risks - The company has faced significant financial challenges, as indicated by the drastic decline in both revenue and net profit[11]. - The company faced risks related to industry policies, market competition, and operational management due to the ongoing pandemic and economic conditions[54][56][57]. - The first half of 2022 saw a significant impact on business operations due to pandemic-related restrictions, affecting both revenue and training demand[53][56]. Corporate Governance and Compliance - The company is under investigation by the China Securities Regulatory Commission for failing to disclose related party transactions as required[2]. - The company faced administrative penalties for failing to disclose related party transactions, resulting in fines totaling 400,000 RMB for the company and various amounts for individuals involved[72][73]. - The company has committed to improving internal governance and compliance management to prevent similar issues in the future[73]. - The company has not reported any significant environmental issues or penalties during the reporting period[61]. Strategic Initiatives and Future Outlook - The company plans to enhance operational management efficiency through cost reduction and structural product adjustments in the second half of the year[28]. - The company plans to enhance its digital transformation and optimize product structures to mitigate market risks and improve operational efficiency[56][57]. - Future outlook remains cautious due to ongoing market challenges and the need for strategic adjustments to improve financial performance[111]. Employee and Organizational Structure - As of the end of the reporting period, the company had approximately 28,992 employees and 12,097 teaching staff[17]. - The number of employees decreased by 19.79% to 28,992 from 36,143 at the end of the previous year[29]. - The company had over 5,000 party members as of June 30, 2022, accounting for approximately 20% of the total workforce[37]. Related Party Transactions - The company reported a total of 5,382.7 million yuan in related party transactions, accounting for 7.15% of similar transaction amounts[75]. - The approved transaction amount for related party transactions was 7,800 million yuan, and the company did not exceed this limit[75]. - The company did not have any significant guarantees during the reporting period[80]. Research and Development - The company has a dedicated R&D team of over 2,000 people, focusing on continuous innovation and market responsiveness[32]. - Research and development expenses decreased by 39.66% to ¥327,590,103.90 from ¥542,875,812.43, reflecting a reduction in R&D personnel and related costs[38]. Market Position and Business Segments - The company operates in three main business segments: recruitment exam training, academic improvement, and vocational skills training, targeting individuals aged 18 to 45[17]. - The demand for skilled talent is increasing due to the rapid transformation of China's industrial structure, necessitating enhanced vocational education[23]. - The company is positioned to benefit from the growing emphasis on vocational education and the legal recognition of its importance in the education system[23].

[Report Overview](index=1&type=section&id=I.%20Report%20Overview) [Important Notice](index=1&type=section&id=1.1%20Important%20Notice) The company's Board of Directors, Supervisory Board, and senior management guarantee the truthfulness, accuracy, and completeness of this quarterly report, assuming corresponding legal responsibilities, while the company principal, head of accounting, and head of accounting department declare the financial information is true, accurate, and complete - The Board of Directors, Supervisory Board, and senior management guarantee the truthfulness, accuracy, and completeness of the quarterly report, free from false statements, misleading representations, or material omissions, and assume individual and joint legal liabilities[1](index=1&type=chunk) - The company principal, head of accounting, and head of accounting department declare that the financial information in the quarterly report is true, accurate, and complete[1](index=1&type=chunk) [Audit Status](index=1&type=section&id=1.2%20Audit%20Status) This first-quarter report has not been audited - The first-quarter report is unaudited[1](index=1&type=chunk)[17](index=17&type=chunk) [Key Financial Data and Indicators](index=1&type=section&id=II.%20Key%20Financial%20Data%20and%20Indicators) [Key Accounting Data and Financial Indicators](index=1&type=section&id=2.1%20Key%20Accounting%20Data%20and%20Financial%20Indicators) In Q1 2022, operating revenue significantly decreased by 40.89% year-on-year, net profit attributable to shareholders turned from profit to loss, decreasing by 429.59%, with basic EPS of -0.08 yuan, while net cash flow from operating activities significantly improved, turning positive with a 342.74% increase, and total assets and owners' equity attributable to shareholders both declined Key Accounting Data and Financial Indicators (Current Period vs. Prior Year) | Indicator | Current Period (Yuan) | Prior Year (Yuan) | Year-on-Year Change (%) | | :--------------------------------------------------- | :----------------------- | :------------------- | :---------------------- | | Operating Revenue | 1,212,740,311.93 | 2,051,691,383.47 | -40.89% | | Net Profit Attributable to Shareholders | -463,824,594.93 | 140,729,639.84 | -429.59% | | Net Profit Attributable to Shareholders (Excl. Non-recurring Items) | -469,727,159.08 | 92,213,329.43 | -609.39% | | Net Cash Flow from Operating Activities | 598,889,061.73 | -246,724,873.67 | 342.74% | | Basic Earnings Per Share (Yuan/share) | -0.08 | 0.02 | -500.00% | | Diluted Earnings Per Share (Yuan/share) | -0.08 | 0.02 | -500.00% | | Weighted Average Return on Net Assets | -27.99% | 3.24% | -31.23% | Key Accounting Data and Financial Indicators (Period-end vs. Year-end) | Indicator | Period-end (Yuan) | Year-end (Yuan) | Change (%) | | :--------------------------------------- | :----------------- | :----------------- | :--------- | | Total Assets | 9,200,482,823.27 | 10,305,183,525.70 | -10.72% | | Owners' Equity Attributable to Shareholders | 1,424,994,159.27 | 1,888,818,754.20 | -24.56% | [Non-recurring Gains and Losses](index=1&type=section&id=2.2%20Non-recurring%20Gains%20and%20Losses) Total non-recurring gains and losses for the period were 5.90 million yuan, primarily including government subsidies, gains/losses from entrusted investments, and fair value changes of financial assets Non-recurring Gains and Losses Items | Item | Current Period Amount (Yuan) | | :--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :--------------------------- | | Government subsidies included in current profit and loss (excluding those closely related to the company's normal operations, compliant with national policies, and continuously enjoyed at fixed or quantitative standards) | 1,220,048.81 | | Gains and losses from entrusted investments or asset management | 2,749,712.23 | | Gains and losses from changes in fair value of trading financial assets, trading financial liabilities, and investment income from disposal of trading financial assets, trading financial liabilities, and available-for-sale financial assets (excluding effective hedge accounting related to normal business operations) | 2,674,975.31 | | Other non-operating income and expenses apart from the above | -152,921.74 | | Less: Income tax impact | 589,250.46 | | **Total** | **5,902,564.15** | [Analysis of Financial Data Changes](index=2&type=section&id=2.3%20Analysis%20of%20Financial%20Data%20Changes) The company's balance sheet, income statement, and cash flow statement show significant changes in key indicators, with monetary funds, trading financial assets, and short-term borrowings decreasing due to loan repayments and wealth management product redemptions, while contract liabilities and taxes payable increased due to seasonal collections and VAT accruals, and operating revenue declined significantly due to the pandemic, leading to a deterioration in profit and loss indicators, and operating cash flow turning positive despite increased investment and financing outflows [Balance Sheet Item Changes](index=2&type=section&id=2.3.1%20Balance%20Sheet%20Item%20Changes) Cash and cash equivalents and trading financial assets significantly decreased due to loan repayments and redemption of wealth management products, while short-term borrowings declined, and contract liabilities and taxes payable increased due to seasonal collections and VAT accruals Balance Sheet Item Changes | Balance Sheet Item | Period-end Amount (Yuan) | Period-start Amount (Yuan) | Change (%) | Explanation | | :----------------------- | :----------------------- | :------------------------- | :--------- | :------------------------------------------------------------------------------------------------------- | | Cash and Cash Equivalents | 1,129,779,804.27 | 1,970,361,272.64 | -42.66% | Primarily due to repayment of short-term borrowings in the current period | | Trading Financial Assets | 118,374,738.18 | 346,726,621.74 | -65.86% | Primarily due to redemption of matured wealth management products | | Other Current Assets | 22,946,171.86 | 36,959,129.80 | -37.91% | Primarily due to a decrease in unsettled payments in the current period | | Short-term Borrowings | 1,651,209,492.99 | 3,152,945,812.59 | -47.63% | Primarily due to repayment of short-term borrowings in the current period | | Contract Liabilities | 4,034,759,242.27 | 3,063,721,290.28 | 31.69% | Primarily due to increased seasonal collections for civil servant and postgraduate entrance examinations in Q1 2022 | | Taxes Payable | 28,432,694.84 | 12,566,751.84 | 126.25% | Primarily due to accrual of VAT and surcharges on Q1 2022 revenue | | Other Current Liabilities | 121,042,777.27 | 91,925,853.39 | 31.67% | Primarily due to an increase in contract liabilities balance at the end of Q1 2022 compared to the beginning of the year | - **Cash and cash equivalents** decreased by **42.66%**, primarily due to repayment of short-term borrowings in the current period[4](index=4&type=chunk) [Income Statement Item Changes](index=2&type=section&id=2.3.2%20Income%20Statement%20Item%20Changes) Operating revenue significantly decreased by 40.89% due to the pandemic, while taxes and surcharges and credit impairment losses significantly increased, and financial expenses, other income, and investment income substantially decreased, with income tax expense turning negative, reflecting a deterioration in the company's profitability Income Statement Item Changes | Income Statement Item | Current Period Amount (Yuan) | Prior Period Amount (Yuan) | Change (%) | Explanation | | :---------------------- | :--------------------------- | :------------------------- | :--------- | :--------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | Operating Revenue | 1,212,740,311.93 | 2,051,691,383.47 | -40.89% | Primarily due to the impact of epidemic prevention and control, resulting in fewer in-person classes and delayed provincial joint examinations in Q1 2022 compared to the prior year | | Taxes and Surcharges | 8,798,438.13 | 3,125,104.09 | 181.54% | Primarily due to tax benefits enjoyed in the prior year | | Financial Expenses | 69,571,481.28 | 108,656,990.19 | -35.97% | Primarily due to reduced interest expenses on short-term borrowings in the current period | | Other Income | 8,268,197.61 | 60,454,036.43 | -86.32% | Primarily due to tax benefits included in other income in the prior year | | Investment Income | 2,755,592.22 | 32,350,483.88 | -91.48% | Primarily due to reduced income from redemption of wealth management products and time deposits | | Credit Impairment Losses | -1,005,625.25 | -239,123.84 | 320.55% | Primarily due to increased accounts receivable and higher bad debt provisions | | Income Tax Expense | -81,122,491.94 | 24,090,187.92 | -436.74% | Primarily due to accrual of deferred income tax assets in the current period | - **Operating revenue** declined by **40.89%**, primarily due to the impact of epidemic prevention and control measures, leading to fewer in-person classes and delayed provincial examinations[4](index=4&type=chunk) [Cash Flow Statement Item Changes](index=2&type=section&id=2.3.3%20Cash%20Flow%20Statement%20Item%20Changes) Cash inflow from operating activities increased due to deposit recovery, but cash outflows for purchasing goods, paying employee compensation, and taxes all significantly decreased, leading to a positive net cash flow from operating activities, while investment cash outflow decreased due to reduced wealth management product redemptions and land use right purchases, and financing cash outflow significantly decreased due to no new short-term borrowings and reduced housing lease payments Cash Flow Statement Item Changes | Cash Flow Statement Item | Current Period Amount (Yuan) | Prior Period Amount (Yuan) | Change (%) | Explanation | | :--------------------------------------- | :--------------------------- | :------------------------- | :--------- | :--------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | Cash received from other operating activities | 22,063,195.70 | 8,365,632.60 | 163.74% | Primarily due to deposit recovery in the current period | | Cash paid for goods and services | 210,528,840.27 | 389,263,578.68 | -45.92% | Primarily due to the impact of the epidemic in multiple provinces and cities in the current quarter, resulting in fewer in-person classes and a corresponding reduction in operating costs | | Cash paid to and on behalf of employees | 1,224,818,887.78 | 1,788,537,241.10 | -31.52% | Primarily due to a reduction in company personnel and lower employee performance due to operating losses | | Taxes paid | 25,331,722.29 | 81,728,859.56 | -69.01% | Primarily due to no corporate income tax payment in the current quarter due to losses in Q4 of the prior year | | Cash received from investment redemption | 344,776,858.87 | 4,234,310,000.00 | -91.86% | Primarily due to reduced purchases of short-term wealth management products and corresponding reduction in redemptions in the current period | | Cash received from investment income | 2,764,585.77 | 11,192,589.09 | -75.30% | Primarily due to reduced purchases of wealth management products and corresponding reduction in wealth management income in the current period | | Cash paid for fixed, intangible, and other long-term assets | 8,768,861.04 | 2,774,248,578.57 | -99.68% | Primarily due to the purchase of land use rights in the prior year | | Cash paid for investments | 116,700,000.00 | 4,226,550,000.00 | -97.24% | Primarily due to reduced purchases of short-term wealth management products in the current period | | Cash received from borrowings | - | 2,670,000,000.00 | -100.00% | Primarily due to no new short-term borrowings in the current period | | Cash paid for dividends, profits, or interest | 26,787,416.64 | 46,324,162.51 | -42.17% | Primarily due to reduced interest expenses on short-term borrowings in the current period | | Cash paid for other financing activities | 134,755,697.06 | 354,129,507.17 | -61.95% | Primarily due to reduced housing lease payments in the current period | - **Net cash flow from operating activities** increased by **342.74%**, primarily due to reduced operating costs from fewer in-person classes and lower employee compensation due to the pandemic and reduced performance[4](index=4&type=chunk)[5](index=5&type=chunk)[16](index=16&type=chunk) [Shareholder Information](index=3&type=section&id=III.%20Shareholder%20Information) [Total Number of Common Shareholders and Top Ten Shareholders' Holdings](index=3&type=section&id=3.1%20Total%20Number%20of%20Common%20Shareholders%20and%20Top%20Ten%20Shareholders'%20Holdings) As of the end of the reporting period, the company had 153,843 common shareholders, with the top three shareholders, Lu Zhongfang, Li Yongxin, and Wang Zhendong, collectively holding over 73% of shares, and all having significant portions of their shares pledged - The total number of common shareholders at the end of the reporting period was **153,843**[6](index=6&type=chunk) Top Ten Shareholders' Holdings | Shareholder Name | Shareholder Nature | Shareholding Percentage | Number of Shares Held (shares) | Number of Restricted Shares Held (shares) | Share Status | Number (shares) | | :----------------------------------------- | :----------------- | :---------------------- | :----------------------------- | :---------------------------------------- | :----------- | :-------------- | | Lu Zhongfang | Domestic Natural Person | 41.36% | 2,550,549,260 | 2,550,549,260 | Pledged | 1,157,543,359 | | Li Yongxin | Domestic Natural Person | 18.35% | 1,131,415,121 | 1,131,070,121 | Pledged | 543,150,000 | | Wang Zhendong | Domestic Natural Person | 13.83% | 852,885,418 | 639,664,063 | Pledged | 328,193,884 | | Beijing Aerospace Industry Investment Fund (Limited Partnership) | Domestic Non-State-owned Legal Person | 3.24% | 199,611,483 | 0 | | | | Beijing Zhonggong Future Information Consulting Center (Limited Partnership) | Domestic Non-State-owned Legal Person | 1.30% | 80,000,000 | 0 | | | | Zhou Xiayun | Domestic Natural Person | 1.28% | 78,848,640 | 0 | Pledged | 69,000,000 | | Zhou Hui | Domestic Natural Person | 1.17% | 72,277,920 | 0 | Pledged | 26,490,000 | | Beijing Jirui Kechuang Investment Center (Limited Partnership) | Domestic Non-State-owned Legal Person | 1.04% | 64,100,323 | 0 | | | | Zhou Li | Domestic Natural Person | 0.78% | 48,185,280 | 0 | | | | Beijing Guangyin Venture Capital Center (Limited Partnership) | Domestic Non-State-owned Legal Person | 0.71% | 43,750,952 | 0 | | | [Related Party Relationships and Concerted Action Explanation](index=3&type=section&id=3.2%20Related%20Party%20Relationships%20and%20Concerted%20Action%20Explanation) The company's controlling shareholder and actual controller, Lu Zhongfang and Li Yongxin, are mother and son, while Wang Zhendong and Wang Zhenhua are brothers, and Zhou Xiayun and Zhou Li are father and daughter, with the existence of related party relationships or concerted action among other shareholders remaining unknown - The company's controlling shareholder and actual controller, **Lu Zhongfang** and **Li Yongxin**, are mother and son[6](index=6&type=chunk) - **Wang Zhendong** and **Wang Zhenhua** are brothers, and **Zhou Xiayun** and **Zhou Li** are father and daughter[7](index=7&type=chunk) [Other Significant Matters](index=4&type=section&id=IV.%20Other%20Significant%20Matters) [Overview of Q1 2022 Business Discussion](index=4&type=section&id=4.1%20Overview%20of%20Q1%202022%20Business%20Discussion) In Q1 2022, the company faced severe pandemic challenges, leading to class suspensions and exam delays, impacting enrollment and revenue, but actively implemented an Amoeba management reform, reducing costs and expenses, resulting in a year-on-year decrease in total operating costs and improved cost control, and by adjusting product structure and reducing high-refund products, net operating cash flow turned positive quarter-on-quarter, with the company continuing prudent and stable operations, enhancing efficiency through internal optimization, product adjustments, and new business development - The persistent and escalating COVID-19 pandemic control measures created a more severe external operating environment in Q1 2022 compared to 2021, leading to phased class suspensions at hundreds of direct branches and delays in provincial civil service, national civil service interview, and public institution examinations, significantly disrupting enrollment and teaching[8](index=8&type=chunk) - The company implemented an Amoeba management reform plan internally, striving to reduce costs and expenses, resulting in a year-on-year decrease in total operating costs and demonstrating effective lean cost control[8](index=8&type=chunk) - By adjusting its product structure and continuously reducing high-refund products, the company's cash received from sales of goods and services remained largely flat year-on-year, and **net operating cash flow turned positive quarter-on-quarter**[8](index=8&type=chunk) [Progress of CSRC Investigation](index=4&type=section&id=4.2%20Progress%20of%20CSRC%20Investigation) The company was investigated by the CSRC in December 2021 for alleged failure to disclose related party transactions, and in April 2022, the company and relevant parties received administrative penalty decisions, confirming the non-disclosure of 1.232 billion yuan in related party transactions in 2019 and 2020, representing 6.65% and 30.19% of the latest net assets, constituting a material omission, leading to rectification orders, warnings, and fines [Background and Progress of Investigation](index=4&type=section&id=4.2.1%20Background%20and%20Progress%20of%20Investigation) The company was investigated by the China Securities Regulatory Commission in December 2021 for alleged failure to disclose related party transactions and received administrative penalty notices and decisions in April 2022 - On December 15, 2021, the company received a "Notice of Case Filing" from the China Securities Regulatory Commission (CSRC) (No. ZJLAZ0232021010), due to suspected violations in disclosing related party transactions[9](index=9&type=chunk) - On April 24, 2022, the company and relevant parties received the "Advance Notice of Administrative Penalty", and on April 27, 2022, received the "Administrative Penalty Decision" issued by the Anhui Regulatory Bureau[9](index=9&type=chunk) [Determination of Related Party Transaction Disclosure Violations](index=4&type=section&id=4.2.2%20Determination%20of%20Related%20Party%20Transaction%20Disclosure%20Violations) The administrative penalty decision found that Zhonggong Education and its subsidiaries failed to disclose 1.232 billion yuan in related party transactions with associated entities, constituting a material omission - The decision determined that Zhonggong Education and its subsidiaries Beijing Zhonggong, Zhongcheng Zhidi had undisclosed related party transactions totaling **1.232 billion yuan** with related parties Shaanxi Guancheng, Beijing Chuangsheng, Shanghai Beiding, Ji'an Lixiangxue, and Liaoning Hanhui[9](index=9&type=chunk) - These transactions amounted to **196.34 million yuan in 2019** and **1.036 billion yuan in 2020**, accounting for **6.65%** and **30.19%** of Zhonggong Education's latest net assets, respectively[9](index=9&type=chunk) - The company's failure to disclose these matters as required constituted a material omission[9](index=9&type=chunk) [Details of Related Party Transactions](index=4&type=section&id=4.2.3%20Details%20of%20Related%20Party%20Transactions) Undisclosed related party transactions primarily involved accepting entrusted decoration, accepting asset transfers from related parties, and purchasing products/goods from related parties, totaling 1.415 billion yuan between 2019 and 2021 Undisclosed Related Party Transaction Details | Related Party Transaction Category | Related Party | Transaction Content | 2019 Contract Amount (Yuan) | 2020 Contract Amount (Yuan) | 2021 Contract Amount (Yuan) | Total (Yuan) | | :-------------------------------- | :---------------------------------------------------------- | :------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :--------------- | | Accepting entrusted decoration | Beijing Chuangsheng Architectural Decoration Engineering Co., Ltd. | Decoration Fees | 161,747,000.00 | 242,000,000.00 | 0 | 403,747,000.00 | | Accepting asset transfer from related party | Shaanxi Guancheng Industrial Co., Ltd. | Asset Purchase | 0 | 383,060,000.00 | 0 | 383,060,000.00 | | Accepting asset transfer from related party | Liaoning Hanhui Industrial Co., Ltd. | Asset Purchase | 0 | 200,000,000.00 | 0 | 200,000,000.00 | | Purchasing products/goods from related party | Ji'an Jingkai District Lixiangxue Financial Information Service Co., Ltd. / Shanghai Beiding Network Technology Co., Ltd. | Service Fees | 34,588,038.03 | 210,728,611.86 | 183,144,220.00 | 428,460,869.89 | | **Total** | | | **196,335,038.03** | **1,035,788,611.86** | **183,144,220.00** | **1,415,267,869.89** | - On December 15, 2021, the company received a "Notice of Case Filing" from the China Securities Regulatory Commission (CSRC) due to suspected violations in disclosing related party transactions[9](index=9&type=chunk) - On April 27, 2022, the company and relevant parties received the "Administrative Penalty Decision" from the Anhui Regulatory Bureau, which determined that Zhonggong Education and its subsidiaries had undisclosed related party transactions totaling **1.232 billion yuan**, with **196.34 million yuan in 2019** and **1.036 billion yuan in 2020**, representing **6.65%** and **30.19%** of the company's latest net assets, respectively, constituting a material omission[9](index=9&type=chunk) - The company and relevant responsible persons were ordered to rectify, issued warnings, and fined[9](index=9&type=chunk) [Financial Statements](index=5&type=section&id=V.%20Financial%20Statements) [Consolidated Balance Sheet](index=5&type=section&id=5.1%20Consolidated%20Balance%20Sheet) As of March 31, 2022, total assets were 9.20 billion yuan, a 10.72% decrease from the beginning of the year, with total current assets at 1.53 billion yuan and total non-current assets at 7.67 billion yuan, while total liabilities were 7.78 billion yuan, including 7.30 billion yuan in current liabilities, and owners' equity attributable to the parent company was 1.42 billion yuan, a 24.56% decrease from the beginning of the year - As of March 31, 2022, the company's **total assets** were **9.20 billion yuan**, a **10.72% decrease** from the beginning of the year[13](index=13&type=chunk) - **Owners' equity attributable to the parent company** was **1.42 billion yuan**, a **24.56% decrease** from the beginning of the year[14](index=14&type=chunk) Consolidated Balance Sheet | Project | Period-end Balance (Yuan) | Year-start Balance (Yuan) | | :---------------------- | :------------------------ | :------------------------ | | **Current Assets:** | | | | Cash and Cash Equivalents | 1,129,779,804.27 | 1,970,361,272.64 | | Trading Financial Assets | 118,374,738.18 | 346,726,621.74 | | Accounts Receivable | 39,875,287.62 | 40,374,842.27 | | Other Receivables | 216,682,824.68 | 219,501,061.83 | | Other Current Assets | 22,946,171.86 | 36,959,129.80 | | **Total Current Assets** | **1,528,896,928.61** | **2,615,361,278.28** | | **Non-current Assets:** | | | | Debt Investments | 10,000,000.00 | 7,058,993.55 | | Long-term Equity Investments | 46,850,364.40 | 46,850,364.40 | | Investment Properties | 639,856,778.18 | 644,936,541.46 | | Fixed Assets | 1,745,084,201.78 | 1,770,372,338.85 | | Right-of-use Assets | 1,291,850,352.33 | 1,342,280,387.08 | | Intangible Assets | 859,956,886.83 | 866,627,549.85 | | Deferred Tax Assets | 505,810,798.69 | 424,027,271.38 | | Other Non-current Assets | 1,654,777,770.41 | 1,652,164,395.78 | | **Total Non-current Assets** | **7,671,585,894.66** | **7,689,822,247.42** | | **Total Assets** | **9,200,482,823.27** | **10,305,183,525.70** | | **Current Liabilities:** | | | | Short-term Borrowings | 1,651,209,492.99 | 3,152,945,812.59 | | Contract Liabilities | 4,034,759,242.27 | 3,063,721,290.28 | | Employee Compensation Payable | 357,995,173.17 | 422,886,856.60 | | Taxes Payable | 28,432,694.84 | 12,566,751.84 | | Non-current Liabilities Due Within One Year | 739,942,968.01 | 531,876,007.31 | | Other Current Liabilities | 121,042,777.27 | 91,925,853.39 | | **Total Current Liabilities** | **7,303,007,566.85** | **7,686,999,087.75** | | **Non-current Liabilities:** | | | | Lease Liabilities | 379,061,479.40 | 635,691,184.87 | | Deferred Tax Liabilities | 93,458,605.44 | 93,712,172.62 | | **Total Non-current Liabilities** | **472,520,084.84** | **729,403,357.49** | | **Total Liabilities** | **7,775,527,651.69** | **8,416,402,445.24** | | **Owners' Equity:** | | | | Share Capital | 103,807,623.00 | 103,807,623.00 | | Capital Reserve | 1,225,481,049.50 | 1,225,481,049.50 | | Retained Earnings | 37,505,486.77 | 501,330,081.70 | | **Total Owners' Equity Attributable to Parent Company** | **1,424,994,159.27** | **1,888,818,754.20** | | **Total Owners' Equity** | **1,424,955,171.58** | **1,888,781,080.46** | | **Total Liabilities and Owners' Equity** | **9,200,482,823.27** | **10,305,183,525.70** | [Consolidated Income Statement](index=7&type=section&id=5.2%20Consolidated%20Income%20Statement) In Q1 2022, total operating revenue was 1.21 billion yuan, a 40.89% year-on-year decrease, with total operating costs at 1.77 billion yuan, and the company turned from profit to loss, reporting a net profit of -463.83 million yuan, with net profit attributable to parent company owners of -463.82 million yuan, and basic EPS of -0.08 yuan - In Q1 2022, **total operating revenue** was **1.21 billion yuan**, a **40.89% year-on-year decrease**[15](index=15&type=chunk) - **Net profit** was **-463.83 million yuan**, and **net profit attributable to parent company owners** was **-463.82 million yuan**[15](index=15&type=chunk) - **Basic earnings per share** was **-0.08 yuan**[16](index=16&type=chunk) Consolidated Income Statement | Project | Current Period Amount (Yuan) | Prior Period Amount (Yuan) | | :----------------------------------------- | :--------------------------- | :------------------------- | | **I. Total Operating Revenue** | **1,212,740,311.93** | **2,051,691,383.47** | | Including: Operating Revenue | 1,212,740,311.93 | 2,051,691,383.47 | | **II. Total Operating Costs** | **1,770,228,930.90** | **1,979,436,277.98** | | Including: Operating Costs | 749,351,241.84 | 824,615,510.04 | | Taxes and Surcharges | 8,798,438.13 | 3,125,104.09 | | Selling Expenses | 396,015,900.26 | 435,647,726.75 | | Administrative Expenses | 320,087,116.49 | 340,240,393.35 | | Research and Development Expenses | 226,404,752.90 | 267,150,553.55 | | Financial Expenses | 69,571,481.28 | 108,656,990.19 | | Add: Other Income | 8,268,197.61 | 60,454,036.43 | | Investment Income (Losses indicated by "-") | 2,755,592.22 | 32,350,483.88 | | Gains from Changes in Fair Value (Losses indicated by "-") | 2,674,975.31 | 12,156.21 | | Credit Impairment Losses (Losses indicated by "-") | -1,005,625.25 | -239,123.84 | | **III. Operating Profit (Loss indicated by "-")** | **-544,795,479.08** | **164,888,914.29** | | Less: Non-operating Expenses | 152,921.74 | 69,002.90 | | **IV. Total Profit (Total Loss indicated by "-")** | **-544,948,400.82** | **164,819,911.39** | | Less: Income Tax Expense | -81,122,491.94 | 24,090,187.92 | | **V. Net Profit (Net Loss indicated by "-")** | **-463,825,908.88** | **140,729,723.47** | | Net Profit Attributable to Parent Company Owners | -463,824,594.93 | 140,729,639.84 | | **VII. Total Comprehensive Income** | **-463,825,908.88** | **140,729,723.47** | | Total Comprehensive Income Attributable to Parent Company Owners | -463,824,594.93 | 140,729,639.84 | | **VIII. Earnings Per Share:** | | | | (I) Basic Earnings Per Share | -0.08 | 0.02 | | (II) Diluted Earnings Per Share | -0.08 | 0.02 | [Consolidated Cash Flow Statement](index=8&type=section&id=5.3%20Consolidated%20Cash%20Flow%20Statement) In Q1 2022, net cash flow from operating activities was 598.89 million yuan, a significant improvement from -246.72 million yuan in the prior year, while net cash flow from investing activities was 222.07 million yuan, turning positive, and net cash flow from financing activities was -1.66 billion yuan, mainly due to no new short-term borrowings and debt repayment, resulting in a net increase in cash and cash equivalents of -840.58 million yuan - **Net cash flow from operating activities** was **598.89 million yuan**, a significant improvement from **-246.72 million yuan** in the prior year[16](index=16&type=chunk) - **Net cash flow from investing activities** was **222.07 million yuan**, turning positive from **-2.76 billion yuan** in the prior year[17](index=17&type=chunk) - **Net cash flow from financing activities** was **-1.66 billion yuan**, primarily due to no new short-term borrowings and debt repayment[17](index=17&type=chunk) Consolidated Cash Flow Statement | Project | Current Period Amount (Yuan) | Prior Period Amount (Yuan) | | :------------------------------------- | :--------------------------- | :------------------------- | | **I. Cash Flows from Operating Activities:** | | | | Cash received from sales of goods and services | 2,249,268,010.73 | 2,257,705,337.11 | | Cash received from other operating activities | 22,063,195.70 | 8,365,632.60 | | **Subtotal of Cash Inflows from Operating Activities** | **2,271,331,206.43** | **2,266,070,969.71** | | Cash paid for goods and services | 210,528,840.27 | 389,263,578.68 | | Cash paid to and on behalf of employees | 1,224,818,887.78 | 1,788,537,241.10 | | Taxes paid | 25,331,722.29 | 81,728,859.56 | | Cash paid for other operating activities | 211,762,694.36 | 253,266,164.04 | | **Subtotal of Cash Outflows from Operating Activities** | **1,672,442,144.70** | **2,512,795,843.38** | | **Net Cash Flow from Operating Activities** | **598,889,061.73** | **-246,724,873.67** | | **II. Cash Flows from Investing Activities:** | | | | Cash received from investment redemption | 344,776,858.87 | 4,234,310,000.00 | | Cash received from investment income | 2,764,585.77 | 11,192,589.09 | | **Subtotal of Cash Inflows from Investing Activities** | **347,541,444.64** | **4,245,558,845.21** | | Cash paid for acquisition of fixed assets, intangible assets, and other long-term assets | 8,768,861.04 | 2,774,248,578.57 | | Cash paid for investments | 116,700,000.00 | 4,226,550,000.00 | | **Subtotal of Cash Outflows from Investing Activities** | **125,468,861.04** | **7,000,798,578.57** | | **Net Cash Flow from Investing Activities** | **222,072,583.60** | **-2,755,239,733.36** | | **III. Cash Flows from Financing Activities:** | | | | Cash received from borrowings | | 2,670,000,000.00 | | **Subtotal of Cash Inflows from Financing Activities** | **0.00** | **2,670,000,000.00** | | Cash paid for debt repayment | 1,500,000,000.00 | 2,090,000,000.00 | | Cash paid for dividends, profits, or interest | 26,787,416.64 | 46,324,162.51 | | Cash paid for other financing activities | 134,755,697.06 | 354,129,507.17 | | **Subtotal of Cash Outflows from Financing Activities** | **1,661,543,113.70** | **2,490,453,669.68** | | **Net Cash Flow from Financing Activities** | **-1,661,543,113.70** | **179,546,330.32** | | **V. Net Increase in Cash and Cash Equivalents** | **-840,581,468.37** | **-2,822,418,276.71** | | Add: Beginning Balance of Cash and Cash Equivalents | 1,969,806,009.56 | 5,950,395,089.12 | | **VI. Ending Balance of Cash and Cash Equivalents** | **1,129,224,541.19** | **3,127,976,812.41** |

Financial Performance - The company's operating revenue for 2021 was ¥6,911,723,331.79, a decrease of 38.30% compared to ¥11,202,494,295.04 in 2020[13]. - The net profit attributable to shareholders was -¥2,369,509,039.00, representing a decline of 202.83% from a profit of ¥2,304,357,742.74 in 2020[13]. - The net cash flow from operating activities was -¥4,097,961,548.90, down 183.93% from ¥4,882,469,101.91 in the previous year[13]. - The total assets at the end of 2021 were ¥10,305,183,525.70, a decrease of 28.53% from ¥14,418,850,027.27 at the end of 2020[13]. - The net assets attributable to shareholders decreased by 55.82% to ¥1,888,818,754.20 from ¥4,275,127,793.20 in 2020[13]. - The total revenue for the reporting period was CNY 6,911,723,331.79, a decrease of 38.30% compared to the previous year[32]. - The net profit attributable to shareholders was CNY -2,369,509,039.00, representing a decline of 202.83% year-on-year[32]. - The revenue from face-to-face training was CNY 4,380,182,147.02, down 46.80% from CNY 8,233,444,798.58 in the previous year[32]. - The revenue from online training was CNY 2,480,100,224.28, a decrease of 14.64% compared to CNY 2,905,456,920.13 in the previous year[32]. - The company reported non-recurring gains and losses totaling ¥116,121,413.04 for 2021, compared to ¥437,068,262.89 in 2020[19]. Corporate Governance - The company reported no cash dividends, stock bonuses, or capital reserve transfers for the year[3]. - The company faced an investigation by the China Securities Regulatory Commission for failing to disclose related party transactions, resulting in a warning and a fine[3]. - The company’s financial report was confirmed as true, accurate, and complete by the management team, including the CEO and accounting head[3]. - The company maintains a complete and independent business structure, ensuring no substantial competition with its controlling shareholder[94]. - The company has established a robust internal control system and governance structure, complying with relevant laws and regulations[84]. - The company did not report any dissent from directors regarding company matters during the reporting period[113]. - The company has established a remuneration management system for its directors and senior management to enhance work motivation[108]. - The company has committed to maintaining a complete and independent corporate governance structure post-transaction[137]. Strategic Focus and Future Outlook - The company emphasizes the importance of rational investment and awareness of investment risks in its forward-looking statements[3]. - The company has detailed its future development outlook and potential risks in the management discussion section of the report[3]. - The company is positioned to benefit from the "14th Five-Year Plan," which emphasizes improvements in education and healthcare services, potentially driving growth in recruitment sectors[21]. - The company aims to address the growing demand for skilled talent in the manufacturing sector, aligning with national workforce development goals[23]. - The company plans to implement a business recovery plan for 2022, focusing on internal optimization and new business development[31]. - The company plans to explore new business areas in vocational skills training, leveraging partnerships with government, enterprises, and universities[76]. - The company is focusing on building a technology R&D center and an integrated education demonstration center to improve its R&D capabilities and brand image[59]. - The company plans to deepen the integration of technology and business, enhancing digital transformation and operational efficiency[70]. Operational Efficiency and Workforce - The company has a dedicated R&D team of over 2,000 professionals and a teaching staff of more than 14,000, with total employees exceeding 36,000[25]. - The company has established several new training schools during the reporting period, indicating a strategy for market expansion[37]. - The number of employees decreased by 19.80% to 36,143 from 45,066 at the end of the previous year[32]. - The company has successfully reduced operational costs by 10% through efficiency improvements[105]. - The company is optimizing its vertically integrated management system to enhance operational efficiency and align human resources with its expansion strategy[80]. Related Party Transactions and Compliance - The company reported a total of CNY 3.597 million in related party transactions for procurement of products and services[152]. - The company has engaged in significant related party transactions, including 428,460,869.89 CNY in service fees from 2019 to 2021[169]. - The company faced administrative penalties, including fines totaling 2 million CNY for Chairman Li Yongxin and Director Shi Lei[107]. - The company has no overdue loans or other financial transactions with related parties[155]. - The company has reported no instances of asset or fund occupation by related parties post-transaction[137]. Shareholder Engagement - During the reporting period, the company held two shareholder meetings, ensuring equal treatment of all shareholders, especially minority shareholders[85]. - The first temporary shareholder meeting in 2021 had an investor participation rate of 78.68%[95]. - The annual shareholder meeting in 2020 had an investor participation rate of 80.10%[95]. - The company reported a total of 1,232,395,000 CNY in related party transactions, with 196,335,000 CNY in 2019 and 1,036,060,000 CNY in 2020, representing 6.65% and 30.19% of the company's latest net assets respectively[167]. Risk Management - The company faces risks from industry policies and market competition, but will leverage its IT capabilities and digital transformation to mitigate these risks[79]. - The company faces operational management risks due to the mismatch between business expansion and management capabilities, leading to decreased profit levels and margins[80]. - The ongoing pandemic has caused a decline in market training demand, particularly in regions where offline training cannot proceed smoothly[80]. - The company’s internal audit plan for 2022 aims to mitigate operational risks and improve management standards[118]. Audit and Financial Reporting - The audit opinion for the financial statements was a standard unqualified opinion, issued on April 28, 2022[191]. - The financial statements fairly reflect the company's financial position as of December 31, 2021[192]. - The audit identified revenue recognition as a key audit matter due to the significant amount and high risk of misstatement[196]. - Management is responsible for preparing financial statements in accordance with accounting standards and maintaining necessary internal controls[198].

[Report Overview](index=1&type=section&id=%E6%8A%A5%E5%91%8A%E6%A6%82%E8%A7%88) This section provides an overview of the report, including important disclaimers and assurances regarding information accuracy [Important Notice](index=1&type=section&id=%E9%87%8D%E8%A6%81%E5%86%85%E5%AE%B9%E6%8F%90%E7%A4%BA) This unaudited quarterly report includes assurances from the board, supervisory board, and management regarding the truthfulness and completeness of disclosed financial information - This quarterly report is unaudited[2](index=2&type=chunk) - The board of directors, supervisory board, and senior management guarantee the truthfulness, accuracy, and completeness of information disclosure[2](index=2&type=chunk) - The company's responsible person, chief accountant, and head of the accounting department declare the financial information is true, accurate, and complete[2](index=2&type=chunk) [Key Financial Data](index=1&type=section&id=%E4%B8%80%E3%80%81%E4%B8%BB%E8%A6%81%E8%B4%A2%E5%8A%A1%E6%95%B0%E6%8D%AE) This section presents the company's key financial performance indicators and their changes during the reporting period [Key Accounting Data and Financial Indicators](index=1&type=section&id=%E4%B8%BB%E8%A6%81%E4%BC%9A%E8%AE%A1%E6%95%B0%E6%8D%AE%E5%92%8C%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87) The company experienced significant declines in key financial indicators for Q3 and year-to-date 2021, with net profit attributable to shareholders turning into a loss Key Financial Data for Q3 2021 and Year-to-Date (Unit: Yuan) | Indicator | Current Period (Q3) | YoY Change (Q3) | Year-to-Date (YTD) | YoY Change (YTD) | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 1,445,195,855.92 | -68.79% | 6,301,194,119.42 | -15.29% | | Net Profit Attributable to Shareholders | -793,735,635.02 | -151.08% | -890,898,144.05 | -167.45% | | Net Cash Flow from Operating Activities | —— | —— | -3,645,820,183.72 | -154.27% | | Basic Earnings Per Share (Yuan/share) | -0.12 | -148.00% | -0.14 | -166.67% | | Weighted Average ROE | -20.96% | -72.31% | -23.26% | -65.61% | | Total Assets | 12,213,130,982.14 | -15.30% (vs. prior year-end) | | | | Owners' Equity Attributable to Shareholders | 3,384,229,649.15 | -20.84% (vs. prior year-end) | | | [Non-Recurring Gains and Losses](index=2&type=section&id=%E9%9D%9E%E7%BB%8F%E5%B8%B8%E6%80%A7%E6%8D%9F%E7%9B%8A%E9%A1%B9%E7%9B%AE%E5%92%8C%E9%87%91%E9%A2%9D) Non-recurring gains and losses totaled **4.37 million Yuan** for the quarter and **77.12 million Yuan** year-to-date, mainly from government subsidies and investment income Non-Recurring Gains and Losses (Unit: Yuan) | Item | Amount for Current Period | Amount Year-to-Date | | :--- | :--- | :--- | | Government subsidies recognized in current profit/loss | 1,985,280.70 | 3,415,309.40 | | Gains/losses from entrusted investments or asset management | 1,463,134.23 | 30,374,103.00 | | Gains/losses from fair value changes of trading financial assets and investment income | 1,973,101.86 | 11,041,967.01 | | Other gains/losses meeting the definition of non-recurring | | 45,101,048.40 | | Total | 4,372,727.07 | 77,115,241.82 | [Changes and Reasons for Key Accounting Data and Financial Indicators](index=2&type=section&id=%E4%B8%BB%E8%A6%81%E4%BC%9A%E8%AE%A1%E6%95%B0%E6%8D%AE%E5%92%8C%E8%B4%A2%E5%8A%A1%E6%8C%87%E6%A0%87%E5%8F%91%E7%94%9F%E5%8F%98%E5%8A%A8%E7%9A%84%E6%83%85%E5%86%B5%E5%8F%8A%E5%8E%9F%E5%9B%A0) Significant changes occurred across the balance sheet, income statement, and cash flow statement, driven by shifts in assets, liabilities, revenues, expenses, and operational cash flows [Changes in Balance Sheet Items](index=2&type=section&id=%E8%B5%84%E4%BA%A7%E8%B4%9F%E5%80%BA%E8%A1%A8%E9%A1%B9%E7%9B%AE%E5%8F%98%E5%8A%A8) Cash, trading financial assets, and non-current assets due within one year decreased, while other current assets, right-of-use assets, and other non-current assets increased due to various operational and accounting adjustments - Cash decreased by **66.81%**, primarily due to increased intangible asset purchases, reduced peak collection periods from earlier multi-province joint exams, and changes in recruitment and training participant numbers[5](index=5&type=chunk) - Trading financial assets decreased by **63.65%**, mainly due to structural adjustments in asset allocation during the period[5](index=5&type=chunk) - Non-current assets due within one year decreased by **98.99%**, primarily due to the maturity of the company's time deposits[5](index=5&type=chunk) - Other current assets increased by **302.65%**, mainly due to an increase in the company's purchase of time deposits within one year[5](index=5&type=chunk) - Right-of-use assets increased by **100.00%**, primarily due to the adoption of new lease standards effective January 1, 2021[5](index=5&type=chunk) - Contract liabilities decreased by **53.05%**, mainly due to reduced peak collection periods from earlier multi-province joint exams, and impacts from changes in teacher and comprehensive segment recruitment and exam postponements[6](index=6&type=chunk) [Changes in Income Statement Items](index=3&type=section&id=%E5%88%A9%E6%B6%A6%E8%A1%A8%E9%A1%B9%E7%9B%AE%E5%8F%98%E5%8A%A8) Taxes and surcharges, credit impairment losses, and financial expenses increased, while other income, investment income, and income tax expenses decreased, with fair value change gains newly recognized - Taxes and surcharges increased by **134.41%**, primarily due to a reduction in tax incentives enjoyed by the company[6](index=6&type=chunk) - Other income decreased by **69.36%**, primarily due to a reduction in tax incentives enjoyed by the company[6](index=6&type=chunk) - Investment income decreased by **60.19%**, primarily due to structural adjustments in asset allocation and a decline in wealth management product yields during the period[6](index=6&type=chunk) - Gains from fair value changes increased by **100.00%**, primarily due to the recognition of fair value change gains from wealth management products in the current reporting period[6](index=6&type=chunk) - Income tax expense decreased by **100.10%**, primarily due to the company's periodic losses in the current reporting period, with major subsidiaries not accruing corporate income tax[6](index=6&type=chunk) [Changes in Cash Flow Statement Items](index=3&type=section&id=%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8%E9%A1%B9%E7%9B%AE%E5%8F%98%E5%8A%A8) Cash inflows from operations and investments decreased significantly, while cash outflows for employee compensation, asset acquisition, and debt repayment increased substantially - Cash received from sales of goods and services decreased by **70.20%**, primarily due to reduced peak collection periods from earlier multi-province joint exams, and the combined impact of changes in teacher, public institution, and comprehensive recruitment, fewer training participants, and exam postponements[6](index=6&type=chunk) - Cash paid to and for employees increased by **30.40%**, primarily due to increased employee compensation paid during the period[6](index=6&type=chunk) - Cash received from investment recovery decreased by **64.79%**, primarily due to structural adjustments in asset allocation during the period[6](index=6&type=chunk) - Cash paid for the acquisition of fixed assets, intangible assets, and other long-term assets increased by **214.92%**, primarily due to the acquisition of fixed and intangible assets[6](index=6&type=chunk) - Cash received from borrowings increased by **45.54%**, primarily due to an increase in bank borrowings during the period[6](index=6&type=chunk) - Other cash paid related to financing activities increased by **167,587.80%**, primarily due to the adoption of new lease standards effective January 1, 2021, reclassifying rent payments to this item[6](index=6&type=chunk) [Shareholder Information](index=4&type=section&id=%E4%BA%8C%E3%80%81%E8%82%A1%E4%B8%9C%E4%BF%A1%E6%81%AF) This section details the company's shareholder structure, including major common shareholders and their equity holdings [Total Number of Common Shareholders and Top Ten Shareholders' Holdings](index=4&type=section&id=%E6%99%AE%E9%80%9A%E8%82%A1%E8%82%A1%E4%B8%9C%E6%80%BB%E6%95%B0%E5%92%8C%E8%A1%A8%E5%86%B3%E6%9D%83%E6%81%A2%E5%A4%8D%E7%9A%84%E4%BC%98%E5%85%88%E8%82%A1%E8%82%A1%E4%B8%9C%E6%95%B0%E9%87%8F%E5%8F%8A%E5%89%8D%E5%8D%81%E5%90%8D%E8%82%A1%E4%B8%9C%E6%8C%81%E8%82%A1%E6%83%85%E5%86%B5%E8%A1%A8) The company has **132,029** common shareholders, with key individuals and entities holding significant stakes, and several major shareholders' shares are pledged - Total number of common shareholders at period-end: **132,029**[7](index=7&type=chunk) - Lu Zhongfang holds **41.36%** of shares, with **620 million** shares pledged[7](index=7&type=chunk) - Li Yongxin holds **18.35%** of shares, with **387.15 million** shares pledged[7](index=7&type=chunk) - Lu Zhongfang and Li Yongxin are mother and son, and together with Beijing Zhonggong Future Information Consulting Center (Limited Partnership), they constitute persons acting in concert[7](index=7&type=chunk) - Among the top ten shareholders, shares held by Lu Zhongfang, Li Yongxin, Wang Zhendong, Zhou Xiayun, and Zhou Hui are pledged[7](index=7&type=chunk) [Total Number of Preferred Shareholders and Top Ten Preferred Shareholders' Holdings](index=5&type=section&id=%E5%85%AC%E5%8F%B8%E4%BC%98%E5%85%88%E8%82%A1%E8%82%A1%E4%B8%9C%E6%80%BB%E6%95%B0%E5%8F%8A%E5%89%8D%2010%20%E5%90%8D%E4%BC%98%E5%85%88%E8%82%A1%E8%82%A1%E4%B8%9C%E6%8C%81%E8%82%A1%E6%83%85%E5%86%B5%E8%A1%A8) The company does not have any preferred shareholders - The company has no preferred shareholders[8](index=8&type=chunk) [Other Significant Matters](index=5&type=section&id=%E4%B8%89%E3%80%81%E5%85%B6%E4%BB%96%E9%87%8D%E8%A6%81%E4%BA%8B%E9%A1%B9) This section covers other material events and developments impacting the company, including financing activities and strategic partnerships [Progress of Non-Public Issuance](index=5&type=section&id=%E5%85%B3%E4%BA%8E%E5%85%AC%E5%8F%B8%E9%9D%9E%E5%85%AC%E5%BC%80%E5%8F%91%E8%A1%8C%E4%BA%8B%E9%A1%B9%E7%9A%84%E8%BF%9B%E5%B1%95%E6%83%85%E5%86%B5) The non-public issuance of A-shares was approved by the CSRC but subsequently suspended due to an investigation into the hired law firm - The non-public issuance of A-shares was approved by the CSRC Issuance Examination Committee on **June 16, 2021**[9](index=9&type=chunk) - The non-public issuance application was suspended on **August 24, 2021**, due to an investigation into the hired law firm[10](index=10&type=chunk) [Transfer of Partial Equity in Wholly-Owned Subsidiary and Cooperative Development](index=5&type=section&id=%E5%85%B3%E4%BA%8E%E8%BD%AC%E8%AE%A9%E5%85%A8%E8%B5%84%E5%AD%90%E5%85%AC%E5%8F%B8%E9%83%A8%E5%88%86%E8%82%A1%E6%9D%83%E6%9A%A8%E5%90%88%E4%BD%9C%E5%BC%80%E5%8F%91%E4%BA%8B%E9%A1%B9) The company transferred **51%** equity of a subsidiary for **51 million Yuan** to Longfor Party, which also provided **1.379 billion Yuan** in shareholder loans for debt repayment and will develop an innovative education headquarters - The company transferred **51%** equity of its wholly-owned subsidiary, Beijing Zhonggong Future Education Technology Co., Ltd., to Longfor Party for **51 million Yuan**[11](index=11&type=chunk) - Longfor Party injected **1.379 billion Yuan** in shareholder loans into the target company to repay its debt to the company[11](index=11&type=chunk) - The target company will construct an online technology R&D center and integrated online-offline education demonstration centers as innovative education headquarters[11](index=11&type=chunk) - The target company has repaid all its debts to the company[11](index=11&type=chunk) [Quarterly Financial Statements](index=6&type=section&id=%E5%9B%9B%E3%80%81%E5%AD%A3%E5%BA%A6%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8) This section provides detailed quarterly financial statements, including the consolidated balance sheet, income statement, and cash flow statement [Consolidated Balance Sheet](index=6&type=section&id=%E5%90%88%E5%B9%B6%E8%B5%84%E4%BA%A7%E8%B4%9F%E5%80%BA%E8%A1%A8) As of September 30, 2021, total assets decreased by **15.30%** to **12.21 billion Yuan**, with total liabilities at **8.83 billion Yuan** and owners' equity at **3.38 billion Yuan** Key Consolidated Balance Sheet Data (Unit: Yuan) | Item | Sep 30, 2021 | Dec 31, 2020 | Change | | :--- | :--- | :--- | :--- | | Total Assets | 12,213,130,982.14 | 14,418,850,027.27 | -15.30% | | Total Current Assets | 3,474,191,035.48 | 9,422,670,784.59 | -63.14% | | Total Non-Current Assets | 8,738,939,946.66 | 4,996,179,242.68 | 74.92% | | Total Liabilities | 8,828,937,271.71 | 10,143,754,230.46 | -12.96% | | Total Owners' Equity | 3,384,193,710.43 | 4,275,095,796.81 | -20.84% | [Consolidated Income Statement Year-to-Date](index=8&type=section&id=%E5%90%88%E5%B9%B6%E5%B9%B4%E5%88%9D%E5%88%B0%E6%8A%A5%E5%91%8A%E6%9C%9F%E6%9C%AB%E5%88%A9%E6%B6%A6%E8%A1%A8) Year-to-date total operating revenue decreased by **15.29%** to **6.30 billion Yuan**, with operating profit and net profit attributable to the parent company turning into a loss of **891 million Yuan** Key Consolidated Income Statement Data Year-to-Date (Unit: Yuan) | Item | Amount for Current Period (Jan-Sep 2021) | Amount for Prior Period (Jan-Sep 2020) | Change | | :--- | :--- | :--- | :--- | | Total Operating Revenue | 6,301,194,119.42 | 7,438,969,829.81 | -15.29% | | Total Operating Costs | 7,342,893,996.86 | 6,264,315,976.76 | 17.22% | | Operating Profit | -890,306,904.53 | 1,582,444,807.62 | -156.26% | | Total Profit | -891,151,814.37 | 1,582,007,607.04 | -156.33% | | Net Profit | -890,902,086.38 | 1,320,886,289.98 | -167.45% | | Net Profit Attributable to Owners of Parent Company | -890,898,144.05 | 1,320,893,510.33 | -167.45% | | Basic Earnings Per Share (Yuan/share) | -0.14 | 0.21 | -166.67% | [Consolidated Cash Flow Statement Year-to-Date](index=10&type=section&id=%E5%90%88%E5%B9%B6%E5%B9%B4%E5%88%9D%E5%88%B0%E6%8A%A5%E5%91%8A%E6%9C%9F%E6%9C%AB%E7%8E%B0%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) Year-to-date net cash flow from operating activities was **-3.65 billion Yuan**, a **154.27%** decrease, with net cash flow from investing activities at **-488 million Yuan** and financing activities at **158 million Yuan** Key Consolidated Cash Flow Statement Data Year-to-Date (Unit: Yuan) | Item | Amount for Current Period (Jan-Sep 2021) | Amount for Prior Period (Jan-Sep 2020) | Change | | :--- | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -3,645,820,183.72 | 6,717,830,100.05 | -154.27% | | Net Cash Flow from Investing Activities | -487,867,448.94 | -3,134,801,926.83 | 84.44% | | Net Cash Flow from Financing Activities | 158,471,707.74 | -1,237,939,444.31 | 112.80% | | Net Increase in Cash and Cash Equivalents | -3,975,215,924.92 | 2,345,088,728.91 | -269.52% | | Cash and Cash Equivalents at Period-End | 1,974,820,564.20 | 5,069,423,730.49 | -61.04% | [Explanation of Financial Statement Adjustments](index=11&type=section&id=%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8%E8%B0%83%E6%95%B4%E6%83%85%E5%86%B5%E8%AF%B4%E6%98%8E) The company adopted new lease standards on January 1, 2021, leading to adjustments in opening balance sheet items, including increases in right-of-use assets and lease liabilities, with no impact on owners' equity [Adjustments for First-Time Adoption of New Lease Standards](index=11&type=section&id=2021%20%E5%B9%B4%E8%B5%B7%E9%A6%96%E6%AC%A1%E6%89%A7%E8%A1%8C%E6%96%B0%E7%A7%9F%E8%B5%81%E5%87%86%E5%88%99%E8%B0%83%E6%95%B4%E9%A6%96%E6%AC%A1%E6%89%A7%E8%A1%8C%E5%BD%93%E5%B9%B4%E5%B9%B4%E5%88%9D%E8%B4%A2%E5%8A%A1%E6%8A%A5%E8%A1%A8%E7%9B%B8%E5%85%B3%E9%A1%B9%E7%9B%AE%E6%83%85%E5%86%B5) First-time adoption of new lease standards on January 1, 2021, significantly altered opening balance sheet items such as right-of-use assets and lease liabilities - New lease standards were first adopted effective **January 1, 2021**[23](index=23&type=chunk) - Other current assets decreased by **130.32 million Yuan**[24](index=24&type=chunk) - Right-of-use assets increased by **1.491 billion Yuan**[24](index=24&type=chunk) - Non-current liabilities due within one year increased by **699.37 million Yuan**[25](index=25&type=chunk) - Lease liabilities increased by **632.87 million Yuan**[25](index=25&type=chunk) - Total assets and total liabilities both increased by **1.332 billion Yuan**, with no change to owners' equity[26](index=26&type=chunk) [Audit Report](index=14&type=section&id=%E5%AE%A1%E8%AE%A1%E6%8A%A5%E5%91%8A) This section confirms the audit status of the quarterly financial statements [Audit Report](index=14&type=section&id=%E5%AE%A1%E8%AE%A1%E6%8A%A5%E5%91%8A) This quarterly report has not been audited - The company's third-quarter report is unaudited[26](index=26&type=chunk)

Financial Performance - The total revenue for the first half of 2021 was ¥4,855,998,263.50, representing a 72.94% increase compared to ¥2,807,980,480.60 in the same period last year[22]. - The net profit attributable to shareholders was a loss of ¥97,162,509.03, an improvement of 58.30% from a loss of ¥233,026,645.16 in the previous year[22]. - The basic earnings per share were -¥0.02, showing a 50.00% improvement from -¥0.04 in the previous year[22]. - The net profit after deducting non-recurring gains and losses was a loss of ¥169,905,023.78, which is 53.77% better than the loss of ¥367,542,382.83 in the same period last year[22]. - The company's total operating revenue reached ¥4,855,998,263.50, representing a year-on-year growth of 72.94%[42]. - The net profit attributable to shareholders was -¥97,162,509.03, a reduction in loss of 58.30% compared to the same period last year[42]. - The company reported a net cash flow from operating activities of -¥939,091,457.95, a significant decrease of 123.11% compared to ¥4,063,675,504.19 in the previous year, mainly due to strategic investments and reduced peak charging periods[61]. - The company reported a net loss for the first half of 2021 was ¥97,164,597.74, an improvement from a net loss of ¥233,032,328.60 in the same period of 2020[185]. Revenue Breakdown - The revenue from the civil servant sector was ¥2,314,794,227.86, up 90.02% year-on-year, and 12.31% compared to 2019[43]. - The revenue from the public institution sector increased by 148.37% year-on-year, reaching ¥618,725,582.65[43]. - Online training revenue grew by 46.48% year-on-year, totaling ¥1,708,087,123.01[47]. - The comprehensive sector achieved revenue of ¥1,360,062,898.84, marking a 40.10% increase year-on-year[48]. - The education and training segment accounted for 99.43% of total revenue, with a significant contribution from the civil servant series, which generated ¥2,314,794,227.86, up 90.02% year-on-year[64]. Operational Metrics - The total assets at the end of the reporting period were ¥14,170,766,300.30, a decrease of 1.72% from ¥14,418,850,027.27 at the end of the previous year[22]. - The net assets attributable to shareholders decreased by 2.27% to ¥4,177,965,284.17 from ¥4,275,127,793.20 at the end of the previous year[22]. - The weighted average return on net assets was -2.30%, an improvement of 6.70% from -9.00% in the previous year[22]. - The company has a total of 999,900 CNY in other types of wealth management products, all of which are accounted for[131]. - The company has a total of 126,155,000 CNY in bank wealth management products, with an occurrence of 14,060,000 CNY during the reporting period[131]. Research and Development - The company has a dedicated R&D team of over 3,000 members and a teaching staff exceeding 18,000, totaling more than 45,000 employees[31]. - Research and development expenses rose by 41.66% to ¥542,875,812.43, reflecting the company's expanded R&D scale and increased investment[61]. - The company is focusing on increasing investment in R&D, teaching, and market expansion to enhance market share and operational efficiency[81]. - Research and development investments have increased by 40% to enhance technology capabilities and product offerings[105]. Market Expansion and Strategy - The company operates over 1,800 direct outlets across more than 300 cities, with plans for further expansion into thousands of counties and universities[31]. - The company is positioned to benefit from the "14th Five-Year Plan," which emphasizes educational equity and aims to create over 6 million new urban jobs[33]. - The company anticipates continued growth in the recruitment training sector, particularly in teacher and healthcare recruitment due to policy support[37]. - The company is expanding its market presence in Southeast Asia, targeting a 10% market share by 2023[103]. - The company plans to introduce a subscription model, aiming for a 50% increase in recurring revenue streams[105]. Risk Management - The company has outlined potential risks and countermeasures in the report, emphasizing the importance of investor awareness regarding investment risks[5]. - The company faces risks related to policy changes in the vocational education sector, which may impact future business operations[83]. - To mitigate competition risks, the company plans to strengthen R&D and explore new market segments in vocational education[85]. - The company emphasizes talent retention strategies to address the risk of core talent loss, including performance evaluation and diverse compensation paths[87]. Corporate Governance and Compliance - The company commits to maintaining an independent corporate governance structure, with its shareholders' meeting, board of directors, and supervisory board operating independently according to laws and regulations[106]. - The company has maintained a normal compliance status regarding all commitments made by shareholders and related parties[100]. - The semi-annual financial report was not audited, which may impact the reliability of the financial data presented[165]. - The company did not engage in any daily operational related party transactions during the reporting period[119]. Future Outlook - The company provided a future outlook, projecting a revenue growth of 25% for the next fiscal year[103]. - The company has set a performance guidance of 1.8 billion RMB for the second half of 2021, indicating strong demand[103]. - The company expects a revenue guidance of 2.5 billion RMB for the full year 2021, indicating a projected growth of 10%[105]. - The company aims to launch three new educational products by the end of 2021, anticipating a revenue contribution of 200 million RMB[110].

Financial Performance - The net profit attributable to the parent company for 2020 was 1,902.68 million RMB, achieving a performance commitment rate of 122.28% over three years[5]. - The company reported a non-recurring net profit of 1,902.68 million RMB for 2020, compared to 1,719.20 million RMB in 2019, reflecting a year-over-year growth of approximately 10.6%[5]. - The company has achieved net profits of 1,122.78 million RMB in 2018, 1,719.20 million RMB in 2019, and 1,902.68 million RMB in 2020, meeting the performance commitments set during the major asset restructuring[5]. - The company's operating revenue for 2020 was ¥11,202,494,295.04, representing a 22.08% increase compared to ¥9,176,129,995.89 in 2019[18]. - The net profit attributable to shareholders for 2020 was ¥2,304,357,742.74, a 27.70% increase from ¥1,804,548,688.01 in 2019[18]. - The basic earnings per share for 2020 was ¥0.37, up 27.59% from ¥0.29 in 2019[18]. - The company achieved total revenue of ¥11,202,494,295.04, representing a year-on-year growth of 22.08%[50]. - Net profit attributable to shareholders reached ¥2,304,357,742.74, an increase of 27.70% compared to the previous year[50]. Market Expansion and Strategy - The company is focused on expanding its market presence and enhancing its product offerings in the education technology sector[5]. - The company operates over 1,600 direct outlets and is expanding rapidly into thousands of counties and universities across China[28]. - The company plans to continue channel innovation and expansion, focusing on lower-tier cities and universities[109]. - The company is positioned to benefit from increased public service investments in education and healthcare as outlined in the "14th Five-Year Plan"[32]. - The company plans to expand its market presence in tier-2 and tier-3 cities, targeting a 30% increase in user acquisition in these regions[135]. - The company aims to minimize and regulate related party transactions with its subsidiaries after the completion of the transaction[140]. Research and Development - The company has a dedicated R&D team of over 3,000 and a teaching staff of more than 18,000, totaling over 45,000 employees[29]. - The company has established a dedicated research and development team of over 3,000 professionals, enhancing innovation and efficiency in product development[40]. - The company maintains a heavy investment in R&D to strengthen its leading position in the vocational education innovation platform[105]. - The company emphasized the importance of technology innovation, allocating 10% of its revenue towards R&D in 2021[135]. Operational Efficiency - The digital transformation efforts have significantly improved operational efficiency, enabling near real-time responsiveness to market changes[43]. - The vertical integration and rapid response capabilities of the company support sustained high growth and operational efficiency, with over 1,600 operational outlets covering 300 prefecture-level cities[41]. - The company has integrated online and offline product offerings to effectively respond to challenges posed by the pandemic[119]. - The company is committed to management innovation to enhance digital operational potential and integrate online and offline business models[114]. Employee and Corporate Governance - The company has maintained a focus on employee rights and performance evaluation to foster a supportive work environment[118]. - The company commits to independent bank account management, avoiding shared accounts with related parties[137]. - The company guarantees independent financial decision-making and tax compliance after the transaction[137]. - The company has outlined a commitment to uphold the independence of its labor, personnel, and compensation systems post-transaction[136]. Future Outlook - The company provided a positive outlook for 2021, projecting a revenue growth of 15% to 20% based on expanding user base and new product launches[135]. - The company plans to issue A-shares through a non-public offering, with the proposal approved by the board and submitted to the China Securities Regulatory Commission[174]. - The company anticipates intensified market competition due to the influx of capital and the proliferation of training institutions[117]. Compliance and Regulatory Matters - The company is focused on maintaining compliance with regulatory requirements to avoid any legal repercussions[134]. - The company reported no violations of environmental protection laws during the reporting period, emphasizing its commitment to sustainability and green initiatives[172]. - The company has committed to avoiding competitive business engagements with related parties during the transition period[137]. Subsidiaries and Acquisitions - The company established several new subsidiaries, enhancing its operational capacity and market reach[61]. - The company has established 14 new subsidiaries during the reporting period, all with a 100% ownership stake[148]. - The company is considering strategic acquisitions to enhance its market position, with potential targets identified in the education sector[138]. Financial Liabilities and Investments - The company’s total financial liabilities remained at ¥0.00, indicating no outstanding debts[79]. - The company made significant equity investments totaling ¥561,283,300.00 during the reporting period[83]. - The company has ongoing non-equity investments with a total actual investment of ¥741,287,691.52[85].

Financial Performance - Net profit attributable to shareholders rose by 233.58% to ¥1,553,920,155.49 for the reporting period[3] - Operating revenue reached ¥4,630,989,349.21, reflecting a year-on-year increase of 83.65%[3] - Basic earnings per share increased by 212.50% to ¥0.25[3] - The company reported a net profit excluding non-recurring gains and losses of ¥1,445,848,093.32, an increase of 247.44%[3] - Operating profit for the period was CNY 1,806,348,087.50, compared to CNY 552,468,399.13 in the previous year, reflecting a strong growth in profitability[35] - Net profit attributable to the parent company was CNY 1,553,920,155.49, up from CNY 465,837,656.14 year-on-year, indicating robust financial performance[37] - The company reported a net profit margin of 12% for Q3 2020, compared to 10% in the same period last year[16] Asset and Liability Management - Total assets increased by 54.12% to ¥15,351,254,073.24 compared to the end of the previous year[3] - The total current liabilities increased to CNY 11,947,072,633.97 from CNY 6,422,233,270.59, marking a rise of approximately 86.0%[28] - The company's total liabilities reached CNY 12,052,103,752.30, compared to CNY 6,529,165,543.62, indicating an increase of approximately 84.0%[28] - The company's total equity attributable to shareholders decreased to CNY 3,299,163,560.79 from CNY 3,431,545,903.82, a decline of about 3.8%[29] Cash Flow and Investments - Net cash flow from operating activities surged by 302.28% to ¥2,654,154,595.86[3] - Cash and cash equivalents increased by 86.08% to CNY 5,069,423,730.49 due to the recovery of recruitment exams and normalizing enrollment[9] - The total cash outflow for investment payments was CNY 28,265,198,090.00, a 45.36% increase, attributed to increased financial product purchases[10] - Cash flow from operating activities increased significantly to CNY 6,717,830,100.05 from CNY 3,042,659,709.78, showing strong operational cash generation[46] - Cash inflow from investment activities totaled CNY 26,027,955,822.54, compared to CNY 18,334,972,859.12 in the previous period, indicating robust investment returns[47] Shareholder Information - The number of ordinary shareholders at the end of the reporting period was 30,880[6] - The largest shareholder, Lu Zhongfang, holds 41.36% of the shares, totaling 2,550,549,260 shares[6] - The company did not engage in any repurchase transactions among the top 10 shareholders during the reporting period[7] Research and Development - The company has allocated 100 million RMB for R&D in new technologies aimed at enhancing online education platforms[14] - Research and development expenses increased by 25% to 300 million RMB, focusing on AI-driven educational tools[16] Market Expansion and Strategy - The company is expanding its market presence in Southeast Asia, targeting a 10% market share by the end of 2021[14] - A strategic acquisition of a local education firm is anticipated to close by the end of Q4 2020, expected to add 300 million RMB in annual revenue[14] - The company plans to implement a new marketing strategy focusing on digital channels, aiming for a 20% increase in customer acquisition[14] Compliance and Governance - The company has committed to reducing and standardizing related party transactions, ensuring fair pricing and compliance with legal requirements[18] - The company has not disclosed any new product or technology developments in the current report[18] - The compensation obligations must be fulfilled within the stipulated time frame, with penalties for late payments[12]

Financial Performance - The company reported a significant increase in revenue for the first half of 2020, with total revenue reaching RMB 1.2 billion, representing a year-on-year growth of 15%[6]. - The company's operating revenue for the reporting period was ¥2,807,980,480.60, a decrease of 22.80% compared to the same period last year[11]. - The net profit attributable to shareholders was -¥233,026,645.16, representing a decline of 147.26% year-over-year[11]. - The net profit attributable to shareholders after deducting non-recurring gains and losses was -¥367,542,382.83, down 177.80% from the previous year[11]. - The total operating revenue for the first half of 2020 was CNY 2,807,980,480.60, a decrease of 22.8% compared to CNY 3,637,419,515.48 in the same period of 2019[135]. - The net profit for the first half of 2020 was a loss of CNY 233,032,328.60, compared to a profit of CNY 493,025,465.15 in the same period of 2019, representing a significant decline[136]. - The company reported a comprehensive income loss of CNY 26,685,644.60 for the first half of 2020[156]. User Growth and Market Expansion - User data indicates that the number of enrolled students increased to 1.5 million, up 20% compared to the same period last year[6]. - The company is expanding its market presence, targeting a 25% increase in the number of physical training centers by the end of 2021[6]. - The company plans to expand its market presence by opening 50 new training centers across various provinces in the next year[75]. - The company plans to expand its graduate enrollment by over 170,000, with a 20% increase in master's degree admissions[37]. - The company is expanding its market presence in Southeast Asia, targeting a 25% increase in user acquisition in the region[71]. Product Development and Innovation - New product development includes the launch of an online learning platform, which has seen a 30% increase in user engagement since its introduction[6]. - Investment in new technology development reached 200 million RMB, focusing on online education platforms[71]. - The company is committed to heavy R&D investment to enhance technological infrastructure and maintain core competitiveness in the vocational education sector[59]. - R&D investment rose by 26.05% to ¥383.23 million, driven by an increase in the number of R&D personnel[39]. Financial Guidance and Stability - The company has provided a forward-looking performance guidance, expecting a revenue growth of 10-15% for the second half of 2020[6]. - The management highlighted a commitment to maintaining financial stability and ensuring accurate financial reporting amidst market uncertainties[2]. - The company aims to leverage its vertical integration and rapid response capabilities to maintain high growth in the competitive vocational education market[20]. Risk Management and Compliance - The company is facing risks from macroeconomic fluctuations, particularly due to the ongoing COVID-19 pandemic, which may affect the vocational education sector[57]. - The company is enhancing its rapid response capabilities and risk management systems to mitigate external market changes[57]. - The company has established a policy research team to track and analyze relevant regulations, ensuring timely adjustments to mitigate policy risks[58]. - The company is in the process of ensuring compliance with all relevant laws and regulations regarding related party transactions[78]. Employee and Operational Metrics - The company has over 2,700 dedicated R&D personnel and a teaching team of more than 18,000, totaling over 41,000 employees[18]. - The total number of employees increased to 41,911, a growth of 19.03% from 35,209 in 2019, with teaching staff rising by 33.85% to 18,036[35]. - The number of direct branches increased by 20.92% to 1,335 from 1,104 at the end of the previous year[33]. Cash Flow and Investments - The net cash flow from operating activities was ¥4,063,675,504.19, a decrease of 6.68% compared to the same period last year[11]. - Cash and cash equivalents increased by 157.05% to approximately ¥1.94 billion, mainly due to the redemption of financial products[40]. - The total investment amount for the reporting period was ¥18,542,275,652.81, representing a 54.21% increase compared to ¥12,023,712,775.12 in the same period last year[46]. Shareholder and Equity Information - The company has no plans to distribute cash dividends or issue bonus shares for the current fiscal year[2]. - The total equity attributable to the parent company at the end of the first half of 2020 was CNY 3,431,539,884.32[147]. - The total equity at the end of the reporting period was CNY 1,745,231,702.36[147]. Regulatory and Legal Matters - The company is under investigation by regulatory authorities for potential misinformation, which may impact future operations[71]. - The company has no significant litigation or arbitration matters during the reporting period, with the total amount involved in settled cases being 3,962,000 CNY and pending cases amounting to 14,719,700 CNY, which is 0.43% of the net assets attributable to shareholders as of the end of 2019[83].