Financial Performance - In the fiscal year 2019, the total net revenue increased by approximately 41%, rising from RMB 650 million to RMB 919 million[11]. - Total revenue for the fiscal year 2019 increased by 41.3% to RMB 918.9 million, compared to RMB 650.5 million in 2018[18]. - The net loss for the fiscal year 2019 was RMB 64.1 million, a decline of 178.2% from a profit of RMB 82.0 million in 2018[18]. - The EBITDA for the fiscal year 2019 was a loss of RMB 122.0 million, compared to a profit of RMB 40.8 million in 2018, reflecting a decline of 399.3%[18]. - The gross profit rose by 27.3% to RMB 506.4 million, while the gross margin decreased from 61.2% to 55.1%[36]. - The company reported a net amount of approximately HKD 1.78 billion from its global offering, with no funds utilized in the fiscal year 2019[91]. - The company’s distributable reserves at the end of the fiscal year 2019 were approximately RMB 2.4 billion[98]. Student Enrollment and Segments - The number of students enrolled in the university education segment reached approximately 1.3 million, representing a growth of about 12% compared to fiscal year 2018[9]. - The K-12 business segment saw a significant increase in student enrollment, growing by approximately 209% compared to fiscal year 2018[11]. - The preschool education segment reported a net revenue increase of approximately 206%, driven by interactive educational content for children aged 3 to 10[11]. - The number of paid students in the university education segment increased to 1,293 thousand in 2019 from 1,158 thousand in 2018, representing an increase of 11.6%[24]. - K-12 education segment revenue grew by 80.8%, with paid student numbers increasing by 209.2%[26]. - Average spending per paid student in the preschool education segment rose from RMB 44 to RMB 185, leading to a revenue increase of 205.8%[26]. Cost and Expenses - The total cost of revenue increased by 63.3% to RMB 412.5 million, primarily due to higher teaching staff and course research personnel costs[36]. - Sales and marketing expenses surged by 98.2% from RMB 224.0 million in FY2018 to RMB 443.9 million in FY2019, driven by investments in promoting university courses and K-12 segment[43]. - R&D expenses increased by 46.9% from RMB 100.4 million in FY2018 to RMB 147.5 million in FY2019, due to the need for hiring qualified R&D personnel[44]. - Administrative expenses rose by 155.5% from RMB 40.5 million in FY2018 to RMB 103.4 million in FY2019, mainly due to share-based compensation expenses[45]. Cash Flow and Financing - As of May 31, 2019, the company's cash and cash equivalents amounted to RMB 2,497.6 million, a significant increase from RMB 709.4 million at the end of 2018[54]. - The net cash used in operating activities for the fiscal year 2019 was RMB 24.7 million, compared to RMB 149.4 million generated in 2018[55]. - The net cash generated from financing activities in fiscal year 2019 was approximately RMB 1,702.4 million, primarily due to proceeds from the issuance of shares[59]. - The company's total liabilities to total assets ratio improved to 21.4% at the end of fiscal year 2019, down from 38.2% at the end of fiscal year 2018[54]. Strategic Plans and Market Outlook - The company plans to expand its K-12 courses into more cities and provinces in China, enhancing localized curriculum offerings[12]. - The company anticipates continued growth in the online tutoring and exam preparation market in China, with a focus on retaining existing students and attracting new ones[12]. - Future outlook indicates a projected revenue growth of 10-15% for the upcoming fiscal year, driven by new product launches and market expansion strategies[73]. - The company is exploring potential mergers and acquisitions to strengthen its market position and diversify its offerings[75]. Corporate Governance and Compliance - The company has adopted the corporate governance code and has been compliant with all provisions except for the requirement of holding four board meetings annually[165]. - The company has established a remuneration committee to determine the remuneration policy for directors and senior management[94]. - The board consists of nine members, including three executive directors, three non-executive directors, and three independent non-executive directors, complying with listing rules[164]. - The company has established arrangements for employees to confidentially raise concerns regarding financial reporting and internal controls[175]. Risks and Challenges - The company identified significant risks, including market competition and innovation risks, due to the highly fragmented and competitive nature of the online education sector in China[184]. - Regulatory and compliance risks are significant due to strict regulations in the internet and education sectors in China, prompting the company to monitor legal developments closely[186]. - Risks associated with the contractual arrangements include potential non-compliance with Chinese laws and the possibility of significant adverse impacts on business operations[114]. Shareholder Information - The board has the discretion to call special general meetings as deemed appropriate[198]. - Shareholders holding at least 10% of the paid-up capital can request a special general meeting, which must be held within two months of the request[198]. - The company does not have a fixed dividend payout ratio, and the board will review and amend the dividend policy as appropriate[193].
东方甄选(01797) - 2019 - 年度财报