卓越教育集团(03978) - 2024 - 中期业绩

Financial Highlights Financial Highlights The Group achieved robust performance in H1 2024, with total revenue reaching RMB 317 million, gross profit doubling to RMB 143 million, and net profit surging by 170.0% to RMB 54.415 million Key Financial Indicators for H1 2024 | Metric | For the six months ended June 30, 2024 (RMB thousands) | For the six months ended June 30, 2023 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 317,444 | 188,860 | 68.1% | | Gross Profit | 142,723 | 69,780 | 104.5% | | Net Profit | 54,415 | 20,152 | 170.0% | | Adjusted Net Profit | 54,415 | 20,234 | 168.9% | Consolidated Financial Statements Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income The statement shows a significant increase in profitability, with H1 2024 revenue growing to RMB 317 million and profit for the period rising from RMB 20.15 million to RMB 54.41 million, driven by strong revenue growth and fair value gains on financial assets H1 2024 Statement of Profit or Loss Summary | Item | For the six months ended June 30, 2024 (RMB thousands) | For the six months ended June 30, 2023 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 317,444 | 188,860 | | Gross Profit | 142,723 | 69,780 | | Profit Before Tax | 74,167 | 23,238 | | Profit for the Period | 54,415 | 20,152 | | Basic Earnings Per Share | RMB 7.25 cents | RMB 2.78 cents | Interim Condensed Consolidated Statement of Financial Position As of June 30, 2024, the Group's balance sheet shows expanded assets and strengthened equity, with total assets increasing from RMB 1.046 billion to RMB 1.408 billion and contract liabilities doubling to RMB 458 million, reflecting strong pre-sales Key Balance Sheet Item Changes | Item | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Total Assets | 1,408,272 | 1,046,376 | | Total Liabilities | 883,907 | 549,841 | | Contract Liabilities | 458,425 | 211,784 | | Cash and Cash Equivalents | 495,735 | 281,928 | | Net Assets | 524,265 | 496,435 | Notes to the Interim Condensed Consolidated Financial Statements These notes provide detailed information on the company's operations, accounting policies, revenue breakdown, taxation, dividends, EPS, and financial assets, highlighting its VIE structure, rapid growth in quality-oriented education, and fair value gains Notes 1-2: Company Information and Basis of Preparation The company, a Cayman Islands investment holding entity, operates education businesses in mainland China via a VIE structure due to regulatory restrictions, with financial statements prepared under the going concern assumption in RMB - Core businesses include full-time review programs, quality-oriented education, self-study programs, vocational education, and after-school tutoring for high school students[6] - The Group operates through a VIE structure due to foreign ownership restrictions on extracurricular education in mainland China[6] - Effective January 1, 2022, the company's functional currency changed from USD to RMB[7] Notes 3-4: Revenue and Operating Segments The Group's revenue primarily stems from full-time review, quality-oriented education, and tutoring programs, with quality-oriented education revenue surging by 320.9% in H1 2024, driving overall growth as the Group is managed as a single operating segment Revenue by Major Products and Services | Business Segment | H1 2024 (RMB thousands) | H1 2023 (RMB thousands) | Year-on-Year Growth | | :--- | :--- | :--- | :--- | | Full-time Review Programs | 123,927 | 103,573 | 19.7% | | Quality-oriented Education | 117,969 | 28,025 | 320.9% | | Tutoring Programs | 75,548 | 57,262 | 31.9% | | Total | 317,444 | 188,860 | 68.1% | Notes 5-8: Taxation, Profit for the Period, Dividends, and Earnings Per Share Income tax expense for the period was RMB 19.75 million, with profit for the period derived after deducting expenses like depreciation and staff costs; the company paid a final dividend for 2023 but proposed no interim dividend for 2024, resulting in basic EPS of RMB 7.25 cents - Income tax expense for H1 2024 was RMB 19.75 million, a significant increase from RMB 3.09 million in the prior period[14] - A final dividend of RMB 3.2 cents per share for the year ended December 31, 2023, was paid on June 6, 2024, with no interim dividend proposed for the reporting period[18] - Basic earnings per share was RMB 7.25 cents, compared to RMB 2.78 cents in the prior period[19] Notes 9-11: Financial Assets and Share Capital As of June 30, 2024, the Group held RMB 71.87 million in financial assets at fair value through profit or loss, which generated a gain of RMB 2.89 million for the period, reversing a prior-year loss of RMB 17.94 million, while the company's share capital remained unchanged - Total financial assets at fair value through profit or loss amounted to RMB 71.87 million, comprising RMB 64.47 million in current assets and RMB 7.39 million in non-current assets[21] - Fair value changes in financial assets resulted in a gain of RMB 2.89 million for the period, primarily from listed equity investments, reversing a loss of RMB 17.94 million in the prior period[23] Management Discussion and Analysis Performance Review In H1 2024, the Group achieved excellent results by adhering to compliance, successfully transforming into quality-oriented education, and embracing AI, with revenue growing 68.1% to RMB 317 million and net profit surging 170.0% to RMB 54.4 million H1 2024 Performance Highlights | Metric | H1 2024 (RMB millions) | Year-on-Year Growth | | :--- | :--- | :--- | | Revenue | 317.4 | 68.1% | | Net Profit | 54.4 | 170.0% | | Contract Liabilities | 458.4 | 116.5% | - Key growth drivers include the successful transformation to quality-oriented products, which have gained significant market recognition from parents and students[26] Core Strategies and Operational Highlights The Group focused on four core areas: maintaining compliance with zero penalties, deepening quality-oriented education transformation, leveraging AI for efficiency and talent retention through equity incentives, and fulfilling social responsibility via "Party Building + Public Welfare" initiatives Compliance Operations The Group strictly adheres to national policies like "Double Reduction," upgrading compliance in all operational aspects, achieving zero penalties across 65 inspections, and actively pursuing non-academic for-profit school licenses in Guangzhou to ensure business continuity - Strict adherence to the "Double Reduction" policy and other education laws ensures a foundation of compliant operations[27] - The Group underwent 65 inspections by various levels of government during the reporting period, achieving a zero penalty record[28] Quality-Oriented Education Transformation The Group achieved significant progress in quality-oriented education, launching nine officially certified products like "Excellent Programming" and "Dida Literature," and introducing the "Kunpeng Youth Growth Camp" based on its "Six-Ability Model," gaining strong market recognition - Launched 9 quality-oriented products, including "Excellent Programming" and "Dida Literature," which were among the first non-academic products certified by education authorities in Guangdong Province[29] - Introduced the "Kunpeng Youth Growth Camp Project" based on its proprietary "Six-Ability Model" (learning, critical thinking, aesthetic appreciation, creativity, communication, and health)[29] AI Empowerment and Talent Incentives The Group increased AI investment to enhance personalized learning, teaching assistance, and campus management efficiency, while expanding its talent pool through recruitment and granting restricted share units to 552 employees in April 2024 to foster shared growth - Increased investment in AI to provide personalized error management for students and teaching assistance for teachers, enhancing organizational efficiency[32] - On April 30, 2024, restricted share units were granted to 552 employees under the Restricted Share Unit Scheme to incentivize staff[33] Social Responsibility Upholding its "education with warmth" philosophy, the Group actively engages in educational philanthropy, supporting rural schools and donating resources to promote educational equity, while also exploring a "Party Building + Public Welfare" model to foster social responsibility - Actively engaged in charitable activities to support disadvantaged rural schools, promoting balanced urban-rural educational resources[34] - Actively explored the "Party Building + Public Welfare" model to fulfill social responsibilities[34] Future Development Looking ahead, the Group will maintain compliance and focus on five key areas: deepening quality-oriented education, expanding in the Greater Bay Area, prioritizing talent development, embracing AI for efficiency, and promoting healthy industry growth for sustainable high-quality development - Future strategy will focus on maintaining compliance, deepening quality-oriented education, expanding in South China, prioritizing talent development, and embracing AI technology[35][36][38][39][41] Strategic Outlook The Group's clear future strategy involves strict compliance, continuous deepening of quality-oriented education, focused expansion in the Greater Bay Area (especially Shenzhen and Foshan), prioritizing talent development, and leveraging AI for innovative teaching and operational efficiency to achieve sustainable high-quality growth - Adhere to compliance operations, closely follow national education policy guidance, and promote healthy industry development[35] - Deepen the transformation to quality-oriented education, conducting in-depth R&D and continuous upgrades of existing products[36] - Focus on the Greater Bay Area, particularly the Shenzhen and Foshan markets, to localize and innovate educational services[38] Financial Review In H1 2024, the Group demonstrated strong financial performance, with total revenue growing 68.1% driven by a 320.9% surge in quality-oriented education, leading to an improved gross margin of 45.0% and a 170.0% increase in net profit to RMB 54.4 million Profit or Loss Statement Analysis During the period, revenue grew 68.1% to RMB 317 million, significantly boosted by quality-oriented education, while sales costs increased slower than revenue, improving gross margin to 45.0%, and profit for the period surged 170.0% Revenue Breakdown by Business Segment | Business Segment | H1 2024 (RMB thousands) | H1 2023 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Full-time Review | 123,927 | 103,573 | 19.7% | | Tutoring Programs | 75,548 | 57,262 | 31.9% | | Quality-oriented Education | 117,969 | 28,025 | 320.9% | | Total | 317,444 | 188,860 | 68.1% | - Gross profit margin increased from 36.9% in H1 2023 to 45.0% in the reporting period, primarily due to improved operating efficiency[46] - Profit increased by 170.0% from approximately RMB 20.2 million in H1 2023 to approximately RMB 54.4 million in the reporting period[55] Financial Position and Liquidity Analysis As of June 30, 2024, the Group maintained a robust financial position with approximately RMB 496 million in cash and equivalents, a current ratio of 1.09, a leverage ratio of 0.63, no bank loans, and RMB 104 million in financial assets for treasury management - As of June 30, 2024, the Group's cash and cash equivalents amounted to approximately RMB 495.7 million[58] - The current ratio was approximately 1.09, and the leverage ratio was 0.63[59] - The Group holds financial assets totaling approximately RMB 104.2 million, including debt investments of RMB 70.9 million and equity investments of RMB 33.3 million[61] Other Information Human Resources As of June 30, 2024, the Group's total number of employees more than doubled to 1,785, with the company attracting and retaining talent through regular salary reviews, continuous training, and the implementation of restricted share unit and share option schemes - As of June 30, 2024, the Group had a total of 1,785 employees, compared to 846 as of December 31, 2023[64] Dividends and Share Schemes The Board resolved not to declare an interim dividend for 2024, while 58 million restricted share units were granted to 552 employees on April 30, 2024, with the trustee holding approximately 7.5% of the company's issued shares for the scheme - The Board resolved not to declare an interim dividend for the six months ended June 30, 2024[64] - On April 30, 2024, 58 million restricted share units were granted to 552 employees[65] Corporate Governance The company largely complied with corporate governance codes, with the chairman and CEO being the same person for leadership consistency, though a recent independent non-executive director resignation temporarily impacts board composition, and the audit committee has reviewed the interim results - The company complied with the Corporate Governance Code, except for the Chairman and Chief Executive Officer being the same person (a deviation from Code Provision C.2.1)[66] - Due to the resignation of an independent non-executive director on July 31, 2024, the company temporarily does not meet Listing Rules requirements regarding the number and proportion of INEDs and the composition of the Nomination Committee[68] - The Audit Committee reviewed the interim results, confirming compliance with applicable accounting principles and adequate disclosure[71]