中国通才教育(02175) - 2021 - 年度财报

Financial Highlights and Overview Financial Performance and Ratios In FY2021, revenue grew 6.7% to RMB 289 million, but profit for the year decreased 9.1% to RMB 130 million due to listing expenses, while total assets and equity significantly increased post-IPO FY2021 Key Financial Performance (As of August 31) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | 289,262 | 271,083 | +6.7% | | Gross Profit | 171,927 | 163,936 | +4.9% | | Profit Attributable to Owners of the Company for the Year | 129,759 | 142,761 | -9.1% | FY2021 Assets and Liabilities (As of August 31) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | Change | | :--- | :--- | :--- | :--- | | Current Assets | 1,090,196 | 420,532 | +159.3% | | Total Non-current Assets | 795,185 | 751,725 | +5.8% | | Total Equity | 1,574,121 | 1,069,201 | +47.2% | FY2021 Key Financial Ratios | Indicator | 2021 | 2020 | | :--- | :--- | :--- | | Gross Profit Margin | 59.4% | 60.5% | | Net Profit Margin | 44.9% | 52.7% | | Return on Assets | 6.9% | 12.2% | | Return on Equity | 8.2% | 13.3% | | Current Ratio | 350.3% | 408.1% | Chairman's Statement Annual Results and Achievements The Group achieved a significant milestone with its successful listing on the Main Board of the Stock Exchange on July 16, 2021, while student enrollment grew 3.7% to 17,233, and despite revenue and gross profit growth, net profit declined 9.0% due to increased staff costs and listing expenses - The Group successfully listed on the Main Board of the Stock Exchange on July 16, 2021, becoming the first higher education stock listed in Shanxi Province in 2021[12] FY2021 Performance Highlights | Indicator | Data | Year-on-year Change | | :--- | :--- | :--- | | Student Enrollment | 17,233 | +3.7% | | Revenue | - | Increased by approx. RMB 18.2 million (+6.7%) | | Gross Profit | - | Increased by approx. RMB 8.0 million (+4.9%) | | Net Profit | - | Decreased by approx. RMB 12.9 million (-9.0%) | - The Group continued to optimize its academic program structure, with 5 new undergraduate programs approved during the reporting period, including Nursing and Cross-border E-commerce, bringing the total undergraduate programs to 47, covering 8 major disciplines[18] Core Initiatives and Social Responsibility The Group actively promotes industry-education integration by co-establishing industry colleges and undertaking key provincial planning, while Chairman Mr. Niu Sanping received multiple honors for social responsibility, including being elected as an Executive Director of the China Association for Non-Government Education - The Group actively promotes industry-education integration by co-establishing industry colleges with enterprises, such as Huayou Industry College and Smart Finance Industry College, and was approved to establish a Cross-border E-commerce Industry College[20] - Group Chairman Mr. Niu Sanping was elected as an Executive Director of the China Association for Non-Government Education and received titles such as 'Advanced Individual in Poverty Alleviation in Shanxi Province', demonstrating the Group's commitment to social responsibility[21] Future Outlook and Development Strategy The Group's future strategy combines organic growth with external mergers and acquisitions, focusing on deepening industry-education integration, enhancing profitability through optimized tuition and increased enrollment, exploring vocational education, and seeking M&A opportunities in North and Northeast China - The core of the Group's development strategy is a dual approach of 'organic growth + external M&A' and 'academic education + vocational education'[21] - Four key future development strategies include deepening industry-education integration, enhancing profitability through optimized tuition and increased enrollment, expanding course diversification with a focus on vocational education, and actively seeking M&A opportunities in North and Northeast China[23] Management Discussion and Analysis Business Review The Group, a leading private higher education institution in Shanxi, ranked first in full-time student enrollment in FY2020/2021 with a 15.6% market share, achieving a 90.3% initial graduate employment rate, and plans growth through new facilities, acquisitions, curriculum enrichment, and overseas expansion - The Group ranked first among all private higher education institutions in Shanxi Province by total full-time student enrollment, holding a 15.6% market share in the 2020/2021 academic year[25] - The Group focuses on providing application-oriented programs, with an initial graduate employment rate of 90.3% in the 2020/2021 academic year, a significant recovery from the 72.5% recorded in the prior academic year affected by the pandemic[27] - The Group plans to establish a degree-granting higher education institution in California, USA (the US School), to expand its overseas presence, with an application submitted in June 2021[44] COVID-19 Pandemic and Its Impact on Our Business The COVID-19 pandemic led to campus delays and online teaching, resulting in RMB 5.4 million in refunded accommodation fees in FY2019/2020, yet FY2021 revenue grew 6.7% to RMB 289 million, with adjusted profit up 2.3% after excluding listing expenses, and cash and cash equivalents significantly increased to RMB 595 million - To cope with the pandemic, the Group conducted teaching through multiple online platforms like WeChat and Tencent Classroom since March 2020, supplemented by third-party online course resources[31][33] Financial Impact of Pandemic and Adjusted Profit | Indicator | 2021 (RMB millions) | 2020 (RMB millions) | Change | | :--- | :--- | :--- | :--- | | Revenue | 289.3 | 271.1 | +6.7% | | Profit | 129.8 | 142.7 | -9.0% | | Listing Expenses | 20.1 | 3.9 | - | | Adjusted Profit (Excluding Listing Expenses) | 149.9 | 146.6 | +2.3% | Tuition Fees and Student Enrollment In FY2021, average tuition remained stable at RMB 15,333.9, while total student enrollment grew 3.7% to 17,233, with the college fully transitioning its focus to undergraduate programs by the 2020/2021 academic year, eliminating all junior college enrollments Student Enrollment Changes (Academic Year) | Program Type | 2020/2021 Academic Year | 2019/2020 Academic Year | Change | | :--- | :--- | :--- | :--- | | Undergraduate Programs | 17,233 | 16,337 | +5.5% | | Junior College Programs | 0 | 279 | -100% | | Total | 17,233 | 16,616 | +3.7% | - Since the 2020/2021 academic year, the college has no junior college program students, with its business focus entirely shifted to undergraduate programs[42] Latest Regulatory Developments Under the Private Education Promotion Law, private schools must register as for-profit or non-profit; the Group expects to register Shanxi Business College as for-profit, allowing autonomous fee setting but potentially impacting land and tax benefits, though Shanxi Province has not yet issued specific conversion rules or begun accepting applications - According to the 2016 revised Private Education Promotion Law, sponsors of private schools can choose to register their schools as either for-profit or non-profit[47] - The Group currently expects to register the college as a for-profit private school, which could allow for operating profits and autonomous pricing, but may also lead to uncertainties regarding government support such as land and tax benefits[51] - As of the reporting period end, Shanxi Province has not yet issued specific implementation rules for the conversion of existing private schools to for-profit entities, and relevant application procedures have not commenced[55] Financial Review In FY2021, total revenue grew 6.7% to RMB 289 million, driven by increased enrollment, while sales costs rose 9.5%, leading to a slight decline in gross profit margin to 59.4% despite a 4.9% gross profit increase; administrative expenses surged 54.5% due to listing fees, but adjusted net profit grew 2.3% to RMB 150 million, with strong liquidity and a 0% gearing ratio Revenue, Costs and Profit Revenue grew 6.7% to RMB 289 million, driven by tuition and accommodation fees, while sales costs rose 9.5%, leading to a 4.9% gross profit increase to RMB 172 million but a slight margin decline to 59.4%, and profit for the year decreased 9.0% to RMB 130 million due to a RMB 20.1 million surge in listing-related administrative expenses FY2021 Revenue Composition | Item | 2021 (RMB millions) | 2020 (RMB millions) | Year-on-year Growth | | :--- | :--- | :--- | :--- | | Tuition Fees | 264.3 | 255.2 | +3.6% | | Accommodation Fees | 25.0 | 15.9 | +57.2% | | Total Revenue | 289.3 | 271.1 | +6.7% | - Gross profit margin decreased from 60.5% last year to 59.4%, primarily because the growth rate of cost of sales (+9.5%) exceeded that of revenue (+6.7%)[60] - Administrative expenses increased 54.5% year-on-year to RMB 61.5 million, mainly due to RMB 20.1 million in listing expenses incurred this year (compared to RMB 3.9 million in the prior year)[67] Adjusted Net Profit To accurately assess operating performance, management uses adjusted net profit as a supplementary financial measure; excluding RMB 20.1 million in non-recurring listing expenses, the Group's FY2021 adjusted net profit was approximately RMB 149.9 million, a 2.3% increase from RMB 146.6 million last year, reflecting robust growth in core operations Reconciliation of Adjusted Net Profit | Indicator | 2021 (RMB millions) | 2020 (RMB millions) | Year-on-year Growth | | :--- | :--- | :--- | :--- | | Profit for the Year | 129.8 | 142.7 | -9.0% | | Add: Listing Expenses | 20.1 | 3.9 | - | | Adjusted Net Profit | 149.9 | 146.6 | +2.3% | Liquidity, Capital and Commitments As of August 31, 2021, the Group's net current assets significantly increased to RMB 779 million, with cash and cash equivalents surging to RMB 595 million due to IPO proceeds and tuition fees, maintaining a 0% gearing ratio with no bank borrowings, while capital commitments for the Beige Campus Phase IV project substantially increased to RMB 207 million - Cash and cash equivalents increased 567.5% year-on-year to RMB 595 million, primarily due to net proceeds from the IPO of approximately RMB 385 million and increased tuition fee income[75] - The Group's gearing ratio (bank borrowings/total equity) is 0%, indicating no bank borrowings and a robust financial structure[73] Capital Commitments | Item | August 31, 2021 (RMB thousands) | August 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Buildings | 195,262 | 14,669 | | Teaching Facilities | 11,607 | 1,491 | | Total | 206,869 | 16,160 | Significant Investments As of August 31, 2021, the Group held approximately RMB 473 million in financial assets at fair value through profit or loss, primarily low-risk fund products from Hong Kong institutions and wealth management products from mainland Chinese banks, with RMB 403 million invested in a structured deposit product from Shanghai Pudong Development Bank, representing 21.4% of total assets - As of August 31, 2021, the Group held approximately RMB 473 million (2020: RMB 312 million) in financial assets at fair value through profit or loss, primarily short-term investments aimed at enhancing returns on idle cash reserves[92] Major Financial Asset Investments (Over 5% of Total Assets) | Issuer | Nature of Investment | Investment Cost (RMB thousands) | Fair Value of Investment as of August 31, 2021 (RMB thousands) | Percentage of Total Assets | | :--- | :--- | :--- | :--- | :--- | | Shanghai Pudong Development Bank Co., Ltd. | Structured Deposit Product | 400,000 | 403,305 | 21.4% | Report of the Directors Corporate Reorganization, Listing and Business Review The Company, incorporated in the Cayman Islands in 2018, listed on the HKEX Main Board on July 16, 2021, operating as an investment holding company primarily engaged in higher education services in China, facing key risks including regulatory changes, campus compliance, intense competition, reliance on reputation, and enrollment/tuition limitations - The Company's shares were listed on the Main Board of the Stock Exchange on July 16, 2021, with stock code 2175[122] - Key risks faced by the Group include changes in regulatory policies, campus property compliance issues, intense industry competition, reliance on reputation, and limitations on student enrollment quotas and tuition fee levels[125] Compliance and Internal Control The Group has compliance issues, including unobtained land use rights or property ownership certificates for some campus land and buildings lacking necessary approvals, with per-student land area below Ministry of Education recommendations; however, the Group is actively addressing these issues with authorities, and directors believe they will not materially adversely affect overall operations - The Group has three parcels of land (totaling approximately 125,000 square meters, representing 25.9% of total land area) for which land use rights certificates or property ownership certificates have not yet been obtained, with applications currently in progress[130] - There are several deficiencies in 81 buildings across Longcheng and Beige campuses, such as unobtained property ownership certificates and incomplete fire and environmental acceptance procedures; the Group has engaged third-party companies for rectification[134] - The college's per-student land area (27.9 square meters/student) does not meet the Ministry of Education's recommended standard (54 square meters/student), but Chinese legal counsel believes the risk of penalties is low[137] Use of Net Proceeds from Initial Public Offering The Group raised approximately RMB 385 million in net proceeds from its IPO and partial exercise of the over-allotment option; as of August 31, 2021, RMB 66 million was utilized, primarily for the Beige Campus Phase IV library project, with most funds for acquisitions, campus renovation, and equipment remaining unutilized and planned for gradual deployment between 2023 and 2024 Use of IPO Net Proceeds and Progress (As of August 31, 2021) | Purpose | Net Proceeds (RMB millions) | Amount Utilized (RMB millions) | Unutilized Amount (RMB millions) | Expected Time of Utilization | | :--- | :--- | :--- | :--- | :--- | | Beige Campus Phase IV Construction Project (Teaching Building and Library) | 173.3 | 51.3 | 122.0 | March 2024 | | Acquisition or Investment in Private Education Institutions | 96.3 | 0 | 96.3 | December 2023 | | Renovation of Longcheng Campus | 43.9 | 0.5 | 43.4 | December 2023 | | Purchase of Teaching Equipment and Furniture | 33.1 | 4.3 | 28.8 | December 2023 | | General Working Capital | 38.5 | 9.9 | 28.6 | Not Applicable | | Total | 385.1 | 66.0 | 319.1 | - | Continuing Connected Transactions (VIE Structure) Due to Chinese foreign investment restrictions in higher education, the Group controls its PRC operating entities via contractual arrangements (VIE structure), enabling effective financial and operational control and economic benefits; the Board and independent auditor confirmed compliance with agreements, and the Group is establishing a US school to meet potential future Sino-foreign cooperative education requirements and mitigate regulatory risks - To circumvent Chinese foreign investment restrictions, the Group operates its core education business through contractual arrangements (VIE structure) with its PRC affiliated entities and their shareholders (Mr. Niu Sanping, Mr. Niu Jian)[178][179] - Both the independent non-executive directors and the Company's auditor have reviewed and confirmed that, for the year ended August 31, 2021, the implementation of the contractual arrangements complied with the relevant agreement terms and the transactions were fair and reasonable[200][201] - To address potential 'qualification requirements' for Sino-foreign cooperative education, the Group has applied to establish a degree-granting higher education institution in California, USA, with a provisional license expected by the end of 2022[209][210] Corporate Governance Report Governance Structure and Practices The Company adheres to high corporate governance standards, adopting the HKEX Corporate Governance Code, with a Board comprising four executive and three independent non-executive directors, separating Chairman and CEO roles, and establishing Audit, Remuneration, and Nomination Committees predominantly composed of independent non-executive directors, ensuring full compliance since listing - From its listing on July 16, 2021, to August 31, the Company fully complied with the code provisions of the Corporate Governance Code[237] - The roles of Board Chairman (Mr. Niu Sanping) and Chief Executive Officer (Mr. Niu Jian) are separate, ensuring a balance of power[240][243] - The Audit Committee, Remuneration Committee, and Nomination Committee have all been established, with their composition meeting Listing Rules requirements and a majority of independent non-executive directors[261][266][272] Risk Management, Internal Control and Auditor's Remuneration The Board oversees risk management and internal control systems; post-reporting period, the Company identified an internal control deficiency regarding the delayed announcement of three structured deposit agreements, for which remedial actions were taken, though other aspects of risk management and internal control remain effective, with RMB 5.053 million paid to auditor Ernst & Young in FY2021, including RMB 3.053 million for listing services - The Company failed to timely publish announcements for three structured deposit agreements entered into post-listing, revealing a compliance deficiency in its internal control system; the Company has since taken remedial actions and proactively made announcements[278] FY2021 Auditor's Remuneration | Service Type | Fees Paid/Payable (RMB thousands) | | :--- | :--- | | Audit Services | | | - Listing-related Services | 3,053 | | - Annual Audit Services | 2,000 | | Non-audit Services | – | | Total | 5,053 | Shareholder Rights and Communication The Company prioritizes shareholder communication through various channels like general meetings and its website, with articles of association clearly defining shareholder rights, including the ability for shareholders holding at least 10% of paid-up capital to requisition an extraordinary general meeting, and Mr. Zhang Senquan, an external professional, serves as Company Secretary - Shareholders holding not less than one-tenth of the Company's paid-up capital have the right to request the Board to convene an extraordinary general meeting[292] - The Company maintains communication with shareholders and investors through its website (http://chinageg.cn) and general meetings, among other channels[287][290] Independent Auditor's Report Audit Opinion Auditor Ernst & Young issued an unmodified opinion, confirming that the consolidated financial statements fairly present the Group's financial position as of August 31, 2021, and its financial performance and cash flows for the year then ended, in accordance with International Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance - The auditor believes that the consolidated financial statements fairly present the Group's financial position, performance, and cash flows, and have been properly prepared[298] Key Audit Matters The auditor identified 'Income Tax' as a key audit matter due to the Group's non-provision for corporate income tax on academic education service revenue, stemming from unclear tax preferential policies for private schools in China, a matter involving significant management judgment, which the auditor assessed through discussions, past tax filings, and internal tax expert consultation - The key audit matter is 'Income Tax' treatment; due to unclear tax preferential policies, the Group did not provide for corporate income tax on academic education service revenue, a treatment involving significant management judgment[300][304] - The auditor's response procedures included discussions with management, reviewing past tax filings, assessing the impact of new policies, and involving internal tax experts in the evaluation[304] Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended August 31, 2021, the Group reported RMB 289 million in revenue and RMB 172 million in gross profit; however, due to increased administrative expenses including listing fees, profit before tax and profit for the year both amounted to RMB 130 million, representing a 9.0% year-on-year decrease, with basic and diluted earnings per share at RMB 0.33 FY2021 Consolidated Statement of Profit or Loss Summary | Indicator (RMB thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Revenue | 289,262 | 271,083 | | Gross Profit | 171,927 | 163,936 | | Profit Before Tax | 129,759 | 142,735 | | Profit for the Year | 129,759 | 142,735 | | Basic Earnings Per Share | 0.33 | 0.38 | Consolidated Statement of Financial Position As of August 31, 2021, the Group's total assets were RMB 1.885 billion, total liabilities RMB 311 million, and total equity RMB 1.574 billion, with non-current assets primarily comprising RMB 648 million in property, plant, and equipment, and current assets significantly increasing to RMB 1.090 billion, including RMB 595 million in cash and cash equivalents and RMB 473 million in financial assets at fair value through profit or loss Consolidated Statement of Financial Position Summary as of August 31, 2021 | Indicator (RMB thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Assets | | | | Total Non-current Assets | 795,185 | 751,725 | | Total Current Assets | 1,090,196 | 420,532 | | Total Assets | 1,885,381 | 1,172,257 | | Liabilities and Equity | | | | Total Current Liabilities | 311,260 | 103,056 | | Total Equity | 1,574,121 | 1,069,201 | Consolidated Statement of Cash Flows For the year ended August 31, 2021, net cash flows from operating activities were RMB 351 million, while net cash flows used in investing activities amounted to RMB 228 million, primarily for financial assets and property, plant, and equipment, and net cash flows from financing activities were RMB 384 million from IPO proceeds, resulting in cash and cash equivalents significantly increasing from RMB 89 million to RMB 595 million at year-end FY2021 Consolidated Statement of Cash Flows Summary | Indicator (RMB thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash Flows from Operating Activities | 351,398 | (25,439) | | Net Cash Flows Used in Investing Activities | (228,092) | (105,576) | | Net Cash Flows from Financing Activities | 384,037 | 8,316 | | Net Increase in Cash and Cash Equivalents | 507,343 | (122,699) | | Cash and Cash Equivalents at End of Year | 594,687 | 89,127 |