Financial Performance - Total revenue for 2023 fiscal year reached RMB 4,509.8 million, a significant increase from RMB 898.5 million in 2022[4] - Net profit for 2023 fiscal year was RMB 971.3 million, compared to a net loss of RMB 533.9 million in 2022[4] - Adjusted EBITDA for 2023 fiscal year was RMB 1,207.5 million, a substantial improvement from a loss of RMB 322.3 million in 2022[4] - Gross profit for 2023 fiscal year was RMB 1,954.8 million, up from RMB 413.5 million in 2022[5] - Operating profit for 2023 fiscal year was RMB 1,070.8 million, compared to an operating loss of RMB 579.6 million in 2022[5] - Total revenue from continuing operations increased by 651.0% from RMB 600.5 million in FY2022 to RMB 4.5 billion in FY2023, driven by strong growth in self-operated products and live e-commerce business[34] - Self-operated products and live e-commerce business generated total revenue of RMB 3.9 billion in FY2023, with self-operated products contributing over RMB 2.6 billion[35] - University education revenue increased from RMB 517.5 million in FY2022 to RMB 590.8 million in FY2023, with paid student enrollments rising from 546,000 to 581,000[36] - Revenue from institutional clients decreased by 34.7% from RMB 58.4 million in FY2022 to RMB 38.2 million in FY2023[37] - Gross profit from continuing operations increased by 400.1% from RMB 390.9 million in FY2022 to RMB 2.0 billion in FY2023, with gross margin decreasing from 65.1% to 43.3%[38] - Self-operated products and live e-commerce business gross margin improved from 37.8% in FY2022 to 38.2% in FY2023, with gross profit increasing to RMB 1.5 billion[39] - University education gross margin increased from 64.5% in FY2022 to 74.6% in FY2023, driven by strong market demand recovery and adoption of smart learning systems[40] - Net profit from continuing operations turned around from a loss of RMB 71.0 million in FY2022 to a profit of RMB 971.3 million in FY2023[48] - Adjusted profit for the year reached RMB 1,089,333 thousand, compared to RMB 109,997 thousand in the previous year[51] - Adjusted EBITDA for the year was RMB 1,207,454 thousand, up from RMB 55,567 thousand in the previous year[52] Assets and Liabilities - Total assets increased to RMB 3,852.9 million in 2023, up from RMB 2,059.4 million in 2022[8] - Equity attributable to owners of the company rose to RMB 2,803.8 million in 2023, compared to RMB 1,641.0 million in 2022[8] - Non-current assets increased to RMB 416.0 million in 2023, up from RMB 367.9 million in 2022[8] - Current assets grew to RMB 3,436.9 million in 2023, compared to RMB 1,691.5 million in 2022[8] - Total liabilities decreased to RMB 1,049.1 million in 2023, down from RMB 1,276.4 million in 2021[8] - The company's asset-liability ratio increased to 27.2% at the end of 2023, up from 20.3% in 2022[53] - Cash and cash equivalents increased to RMB 1.165 billion as of May 31, 2023, from RMB 547.4 million in the previous year[53] - Net cash generated from operating activities was RMB 1.264 billion, compared to a net cash used of RMB 918.1 million in the previous year[54] - Net cash used in investing activities was RMB 737.5 million, primarily due to the purchase of financial assets at fair value through profit or loss[56] - Net cash generated from financing activities was RMB 55.6 million, mainly from the issuance of shares upon exercise of share options[57] - Capital expenditures for property and equipment were RMB 12.8 million in 2023, down from RMB 20.3 million in 2022[58] Live E-commerce and Self-Operated Products - The company's live e-commerce business achieved a GMV of RMB 10.0 billion in FY2023, compared to RMB 4.8 billion in the six months ending November 30, 2022[13] - The number of followers on Douyin increased to 41.8 million in FY2023, up from 35.2 million in the six months ending November 30, 2022[13] - The number of paid orders on Douyin reached 136.3 million in FY2023, compared to 70.2 million in the six months ending November 30, 2022[13] - The company's total GMV reached RMB 10.0 billion in FY2023, with the majority coming from Douyin[20] - The number of self-operated products exceeded 120 in FY2023, covering categories from food and beverages to standardized daily necessities[20] - The company established a self-operated product R&D platform, the Nutrition Research Institute, to enhance long-term independent R&D capabilities and develop healthier products[26] - The company will launch live-streaming e-commerce activities on Taobao starting from August 29, 2023, aiming to reach more new consumer groups[26] - The company plans to introduce a membership card system to provide more discounts and comprehensive services to customers, enhancing user satisfaction[27] - The company expanded its live e-commerce business in 2021, establishing "Oriental Selection" as a well-known platform for high-quality agricultural products[85] - The company is positioned as a live-streaming platform focused on carefully selecting quality products, with a core focus on self-operated agricultural products under the "Oriental Selection" brand[85] Education Business - The number of paid student enrollments for university education was 581,000 in FY2023, up from 546,000 in FY2022[14] - The average spending per paid student enrollment for university education increased to RMB 1,544 in FY2023, compared to RMB 1,308 in FY2022[15] - The average spending per paying student in the domestic university entrance exam preparation business increased to RMB 1,544 during the reporting period, up from RMB 1,308 in FY2022[21] - The overseas exam preparation business achieved strong results in revenue, enrollment, and profitability, surpassing historical highs and returning to a healthy and rapid development trajectory[21] - The number of paying students in the university education division increased by 6.4% to 581,000 during the reporting period, compared to 546,000 in FY2022[21] - The company will continue to develop a smart learning system for university education, offering personalized learning plans and real-time progress tracking[28] - The company is upgrading its IT infrastructure and exploring the integration of AI with business scenarios to improve student learning experiences and efficiency[21] - The company is collaborating with China Digital Library to establish smart reading spaces and classrooms using virtual reality technology in schools and public libraries[22] - The company plans to continue investing in AI integration, improving intelligent scoring, error correction, and adaptive learning systems, and maintaining exclusive rights to IELTS and TOEFL materials in mainland China[30] Corporate Governance and Shareholder Information - The board of directors consists of seven members, including two executive directors, two non-executive directors, and three independent non-executive directors[73] - The company monitors currency exchange rate fluctuations and takes necessary measures to mitigate the impact of exchange rate risks[63] - The company's top five customers accounted for approximately 0.8% of total revenue, with the largest customer contributing about 0.6%[89] - The top five suppliers accounted for approximately 2.4% of total procurement, with the largest supplier contributing about 0.9%[89] - No director or their associates, or any shareholder with 5% or more of the company's issued share capital, had any interests in the top five customers or suppliers during the 2023 fiscal year[89] - The company's subsidiaries are listed in Note 39 of the consolidated financial statements[85] - The net proceeds from the global offering amounted to approximately HKD 1.783 billion, with the funds being utilized for sales and marketing, technology infrastructure, teacher and business-related personnel, and working capital[90] - As of the 2023 fiscal year, the company had utilized HKD 145.8 million out of the total HKD 823.6 million net proceeds, leaving a balance of HKD 677.8 million[90] - The company did not repurchase any shares on the Hong Kong Stock Exchange during the 2023 fiscal year, nor did it purchase, sell, or redeem any listed securities[92][93] - No debt instruments were issued by the group during the 2023 fiscal year[94] - The board did not recommend the payment of a final dividend for the 2023 fiscal year[96] - The total revenue from the consolidated affiliated entities was RMB 4,509,849 thousand, accounting for 100% of the group's total revenue during the reporting period[103] - The company's directors and senior management did not receive any discretionary bonuses during the 2023 fiscal year[97] - The company's directors and senior management are eligible to participate in the 2023 plan under the pre-IPO plan and the 2019 plan[97] - The company's directors and senior management did not waive or agree to waive any remuneration during the 2023 fiscal year[97] - The company's directors and senior management did not receive any remuneration as an incentive for joining or leaving the group during the 2023 fiscal year[97] - The company's contractual arrangements involve exclusive management and business cooperation agreements, exclusive subscription option agreements, equity pledge agreements, and irrevocable power of attorney, ensuring control over its operating entities and economic benefits[106][107][108][109] - The company's operating entities, including Beijing Xuncheng and its subsidiaries, are controlled through contractual arrangements with foreign-invested enterprises (FIEs) such as Dexin Dongfang, Zhuhai Chongsheng, Xi'an Ruiying, Hainan Haiyue, and Wuhan Dongfang[105][112] - The company's contractual arrangements are designed to comply with Chinese foreign investment restrictions, which limit foreign ownership in certain sectors, such as value-added telecommunications services and radio/TV program production[114] - The company's contractual arrangements were established to maintain actual control over its operating entities and to receive economic benefits generated by its online education and live e-commerce businesses[114] - The company's contractual arrangements are considered fair, reasonable, and in the best interests of the company and its shareholders, as they were entered into on normal commercial terms or better[114] - The company faces risks related to contractual arrangements in China, including potential penalties from the Chinese government, uncertainties in the interpretation of the Foreign Investment Law, and reliance on contractual arrangements with affiliated entities for business operations[115] - The company's contractual arrangements are subject to regulatory scrutiny by Chinese tax authorities, which could result in additional tax liabilities and significantly reduce the company's consolidated net income[116] - The company's contractual arrangements with affiliated entities are considered continuing connected transactions under the Listing Rules, with a maximum applicable percentage ratio expected to exceed 5% and HKD 10 million, requiring exemptions from strict compliance[117] - The company entered into a 2022 New Oriental Framework Agreement with New Oriental Group, involving non-exempt continuing connected transactions such as advertising, marketing, and promotion services, with annual caps and actual transaction amounts provided[118] - The company's transactions with New Oriental Group in 2023 included advertising and marketing services (RMB 39.39 million cap, RMB 34.92 million actual), TPO exam material licensing (RMB 20 million cap, RMB 8.27 million actual), and procurement of goods (RMB 39.13 million cap, RMB 11.22 million actual)[119] - The company entered into a Tigerstep Framework Agreement in 2019, leasing properties for office, recording studio, and administrative use, with annual caps and actual transaction amounts provided for 2023[121] - The company's 2021 Tigerstep Framework Agreement involved leasing properties and property management services, with annual caps and actual transaction amounts provided for 2023[122] - The company has implemented internal control measures for continuous connected transactions, including regular monitoring of transaction terms and comparison with third-party terms[123] - Independent non-executive directors confirmed that all continuous connected transactions in FY2023 were conducted under normal commercial terms and were fair and reasonable[125] - The external auditor confirmed that the disclosed continuous connected transactions did not exceed the annual limits set by the company[126] - No significant contracts or management agreements were entered into with the controlling shareholder during FY2023[127] - The company's consolidated financial statements were audited by Deloitte Touche Tohmatsu, which will retire at the upcoming annual general meeting[128] - No significant events occurred between the end of the reporting period and the date of the FY2023 annual results announcement[129] - The company is committed to fulfilling social responsibilities, promoting employee welfare, protecting the environment, and achieving sustainable development[130] - The company has complied with all relevant laws and regulations that have a significant impact on the group[131] - The annual general meeting will be held on November 3, 2023, with a suspension of share transfer registration from October 31 to November 3, 2023[133] - As of the end of FY2023, directors and key executives held approximately 1.48% to 2.68% of the company's shares[136] - The total number of shares that may be issued under the Pre-IPO Plan and 2019 Plan for Mr. Sun is 8,639,000 shares, and under the 2023 Plan, 3,000,000 shares were awarded to Mr. Sun[137] - Mr. Yu holds a total of 201,788,600 shares in New Oriental, representing 11.8% of the company's equity, including shares held through Tigerstep and ADS[139] - Mr. Yu has a 100% interest in Beijing Xuncheng, valued at RMB 122,351,229, and a 99% interest in Century Friendly, valued at RMB 9,900,000[140] - New Oriental holds a 54.95% beneficial interest in the company, with 557,160,500 ordinary shares[143] - A total of 30,459,000 new shares, approximately 3.02% of the company's weighted average issued share capital, may be issued under the 2019 Plan (before termination) and the 2023 Plan[145] - The maximum number of shares available for issuance under the Pre-IPO Plan is 47,836,985 shares, with 27,084,385 shares still exercisable as of May 31, 2023[147][148] - The exercise price for the pre-IPO share option plan is HK1.13 per share before listing)[151] - The pre-IPO share option plan has a remaining term of approximately 1 year and 8 months, expiring on March 27, 2025[152] - As of June 1, 2022, 16,695,285 options granted to Mr. Yu under the pre-IPO plan remained unexercised[154] - Under the 2019 plan, a total of 40,462,810 options remained unexercised as of May 31, 2023, representing approximately 3.93% of the total issued share capital[159] - During the reporting period, 4,315,008 options were exercised under the 2019 plan, while 140,000 were canceled and 1,076,275 expired[159] - The maximum number of shares that may be issued under the 2019 plan and other plans cannot exceed 10% of the total issued shares as of the listing date (91,395,910 shares)[159] - The weighted average closing price of shares immediately before the exercise date in FY2023 was HK$52.01[163] - Under the 2019 plan, 6,000,000 options granted to Mr. Yu remained unexercised as of the end of FY2023[163] - The 2019 plan was terminated on March 9, 2023, and no further options will be granted under this plan[161] - Each grantee must pay RMB 1.00 as consideration for the options granted under the 2019 plan[162] - The 2023 plan allows for the issuance of up to 101,351,871 shares, representing 10% of the company's issued shares as of the plan's adoption date[169] - 30,459,000 share rewards were granted under the 2023 plan between March 9, 2023, and May 31, 2023, with 61,000 share rewards canceled and 84,000 share rewards forfeited during the same period[170] - The 2023 plan has a service provider sub-limit of 2,027,037 shares, which is 2% of the total plan authorization[169] - The 2023 plan has a validity period of 10 years, from March 9, 2023, to March 8, 2033[175] - The vesting period for share rewards under the 2023 plan is at least 12 months, with exceptions for certain limited circumstances[174] - The exercise price for share options under the 2023 plan cannot be lower than the higher of the closing price on the grant date or the average closing price over the five trading days preceding the grant date[172] - The 2023 plan allows for the issuance of share rewards or share options, with the total number of shares available for issuance under the plan being 101,290,871 as of May 31, 2023[169] - The 2023 plan includes a performance-based vesting condition, where a portion of the share rewards will vest if the participant meets the performance evaluation criteria in the year preceding the vesting date[177] - The 2023 plan provides flexibility in determining the exercise period for share options, with a maximum exercise period of 10 years from the grant date[173] - The 2023 plan aims to align the interests of eligible participants with those of the company and its shareholders by offering them the opportunity to acquire equity in the company[166] - The company was registered as an exempted company in the Cayman Islands on February 7, 2018, and its shares were listed on the Main Board of the Stock Exchange on March
东方甄选(01797) - 2023 - 年度财报