Le Lézard
Classified in: Science and technology, Business, Covid-19 virus
Subjects: ERN, CCA, ERP

China Distance Education Holdings Limited Reports Financial Results for Third Quarter Fiscal Year 2020


BEIJING, Aug. 26, 2020 /PRNewswire/ -- China Distance Education Holdings Limited (NYSE: DL) ("CDEL", or the "Company"), a leading provider of online education and value-added services for professionals and corporate clients in China, today announced unaudited financial results for the third quarter of fiscal year 2020 ended June 30, 2020.

Third Quarter Fiscal 2020 Financial and Operational Highlights

[1] For more information about the non-GAAP financial measures contained in this press release, please see "Use of Non-GAAP Financial Measures" below.

Mr. Zhengdong Zhu, Chairman and CEO of CDEL, said, "In the third quarter of fiscal 2020, we reported net revenue of $50.7 million, within our guidance range. During the onset of the COVID-19 pandemic, in order to support our students across China with high-quality online professional education at a time when offline classes were suspended, we provided free online courses to students in Hubei province and significant discounts for certain online exam preparation courses to students outside Hubei. Our socially responsive actions resulted in a surge in enrollment in our second fiscal quarter as previously disclosed, effectively pulling forward the demand for our courses and thus dampening enrollment and cash receipts growth in our third fiscal quarter."

"We believe in the long-term growth prospects of online professional education in China, and expect online education will continue to transform how knowledge is delivered and how students learn. We remain committed to serving students with our high-quality courseware and compelling online educational solutions during this challenging time. We are confident that our comprehensive lifelong learning ecosystem will enable us to reach a broad and growing student audience, and extend convenience, flexibility and engagement to their learning experience," Mr. Zhu concluded.

Mr. Mark Marostica, Co-Chief Financial Officer of CDEL, added, "As anticipated, the decrease in cash receipts for our courses due to our socially responsive actions, together with the postponement of certain professional certification examinations, negatively impacted our revenue growth for the third fiscal quarter. In addition, a delay in the publication of certain legal exam preparation books further weakened our third quarter revenue growth. Despite these headwinds, we maintained a disciplined cost structure and achieved a non-GAAP operating margin of 6.2% for the quarter. With our fourth fiscal quarter well underway, we are further impacted by the postponement of a number of core professional certification examinations held in Beijing and several other cities. We remain focused on balancing growth with a keen focus on profitability."

Third Quarter Fiscal 2020 Financial Results

Net Revenue. Total net revenue decreased by 17.9% to $50.7 million in the third quarter of fiscal 2020 from $61.7 million in the third quarter of fiscal 2019. Net revenue from online education services, books and reference materials, and other sources contributed 78.9%, 12.8% and 8.3%, respectively, of total net revenues for the third quarter of fiscal 2020.

Online education services. Net revenue from online education services decreased by 8.1% to $40.0 million in the third quarter of fiscal 2020 from $43.5 million in the third quarter of fiscal 2019, primarily attributable to the decrease in revenue from the Company's healthcare and accounting verticals due to the impact of COVID-19, stemming from the postponement of certain professional certification examinations across China and the aforementioned socially responsive actions the Company adopted, which resulted in a significant decline in cash receipts from online course registration in both the second and third fiscal quarters of 2020.

Books and reference materials. Net revenue from books and reference materials decreased by 33.8% to $6.5 million in the third quarter of fiscal 2020 from $9.8 million in the third quarter of fiscal 2019, primarily attributable to the delay in the publication of certain Legal Professional Qualification Examination books, due to the promulgation of new laws.

Others. Net revenue from other sources decreased by 49.8% to $4.2 million in the third quarter of fiscal 2020 from $8.4 million in the third quarter of fiscal 2019, primarily due to a significant decrease in revenue from the sale of college-related learning simulation software, and a significant decrease in the provision of offline training courses, resulting from the impact of COVID-19.

Cost of Sales. Cost of sales decreased by 12.8% to $26.6 million in the third quarter of fiscal 2020, from $30.6 million in the third quarter of fiscal 2019. Non-GAAP[1] cost of sales decreased by 13.0% to $26.6 million in the third quarter of fiscal 2020, from $30.6 million in the third quarter of fiscal 2019. The decrease in cost of sales was primarily attributable to a decrease in cost of books and reference materials and lecture fees.

Gross Profit and Gross Margin. Gross profit was $24.1 million in the third quarter of fiscal 2020, down 22.8% from $31.2 million in the prior year period. Non-GAAP[1] gross profit was $24.1 million, decreasing by 22.7% from $31.2 million in the prior year period. Gross margin was 47.5% in the third quarter of fiscal 2020, compared with 50.5% in the third quarter of fiscal 2019. Non-GAAP[1] gross margin was 47.5% in the third quarter of fiscal 2020, compared with 50.5% in the third quarter of fiscal 2019.

Operating Expenses. Total operating expenses increased by 5.6% to $23.2 million in the third quarter of fiscal 2020, from $22.0 million in the prior year period. Non-GAAP[1] total operating expenses increased by 5.0% to $22.6 million in the third quarter of fiscal 2020, from $21.5 million in the prior year period.

Selling expenses. Selling expenses increased by 4.6% to $17.8 million in the third quarter of fiscal 2020 from $17.0 million in the prior year period. Non-GAAP[1] selling expenses increased by 4.5% to $17.8 million in the third quarter of fiscal 2020, from $17.0 million in the prior year period. The increase was primarily driven by higher advertising and promotional expenses, and the increase in commission to agents.

General and administrative expenses. General and administrative expenses increased by 8.8% to $5.4 million in the third quarter of fiscal 2020 from $4.9 million in the prior year period. Non-GAAP[1] general and administrative expenses increased by 7.0% to $4.8 million in the third quarter of fiscal 2020, from $4.4 million in the prior year period. The increase was mainly due to the increase in share-based compensation expenses.

Income Tax Expenses. Income tax expense decreased by 77.1% to $0.6 million in the third quarter of fiscal 2020 from $2.5 million in the prior year period, primarily due to the decrease in taxable income in the third quarter of fiscal 2020.

Net Income Attributable to CDEL. As a result of the foregoing, net income attributable to CDEL was $3.0 million in the third quarter of fiscal 2020, compared with net income attributable to CDEL of $9.4 million in the prior year period. Non-GAAP[1] net income attributable to CDEL was $3.7 million in the third quarter of fiscal 2020, compared with non-GAAP[1] net income attributable to CDEL of $10.0 million in the prior year period.

Operating Cash Flow. Net operating cash inflow decreased by 59.2% to $7.2 million in the third quarter of fiscal 2020 from $17.6 million in the prior year period. The operating cash inflow was mainly attributable to net income before non-cash items generated in the third quarter of fiscal 2020. The increase in accrued expenses and other liabilities also contributed to the operating cash inflow. The operating cash inflow was partially offset by the decrease in deferred revenue and the decrease/increase in amount due to/from related parties.

Cash and Cash Equivalents, Term Deposits, Restricted Cash and Short-term Investments. Cash and cash equivalents, term deposits, restricted cash and short-term investments as of June 30, 2020 increased by 2.7% to $133.7 million from $130.2 million as of March 31, 2020, mainly due to the operating cash inflow generated in the third quarter of fiscal 2020 and the drawdown of an offshore loan of $20.0 million. The increase was partially offset by (i) the dividend distribution of $19.6 million, (ii) the repayment of an onshore loan of $2.8 million, (iii) the payment of an investment of $0.7 million and (iv) the capital expenditure of $0.6 million.

First Nine Months of Fiscal 2020 Financial Results

Net Revenue. Total net revenue increased by 0.6% to $144.0 million in the first nine months of fiscal 2020 from $143.1 million in the first nine months of fiscal 2019. Net revenue from online education services, books and reference materials, and other sources contributed 75.0%, 10.9% and 14.1%, respectively, of total net revenues for the first nine months of fiscal 2020.

Online education services. Net revenue from online education services increased by 11.9% to $107.9 million in the first nine months of fiscal 2020 from $96.5 million in the first nine months of fiscal 2019.

Books and reference materials. Net revenue from books and reference materials decreased by 27.2% to $15.8 million in the first nine months of fiscal 2020 from $21.6 million in the first nine months of fiscal 2019.

Others. Net revenue from other sources decreased by 18.9% to $20.3 million in the first nine months of fiscal 2020 from $25.0 million in the first nine months of fiscal 2019.

Cost of Sales. Cost of sales decreased by 8.4% to $72.8 million in the first nine months of fiscal 2020 from $79.5 million in the first nine months of fiscal 2019. Non-GAAP[1] cost of sales decreased by 8.5% to $72.7 million in the first nine months of fiscal 2020, from $79.4 million in the first nine months of fiscal 2019.

Gross Profit and Gross Margin. Gross profit was $71.2 million in the first nine months of fiscal 2020, up 11.9% from $63.7 million in the prior year period. Non-GAAP[1] gross profit was $71.3 million, increasing by 12.0% from $63.7 million in the prior year period. Gross margin was 49.5% in the first nine months of fiscal 2020, compared with 44.5% in the first nine months of fiscal 2019. Non-GAAP[1] gross margin was 49.5% in the first nine months of fiscal 2020, compared with 44.5% in the first nine months of fiscal 2019.

Operating Expenses. Total operating expenses increased by 9.7% to $69.3 million in the first nine months of fiscal 2020, from $63.2 million in the prior year period. Non-GAAP[1] total operating expenses increased by 9.4% to $67.5 million in the first nine months of fiscal 2020, from $61.7 million in the prior year period.

Selling expenses. Selling expenses increased by 15.3% to $52.3 million in the first nine months of fiscal 2020 from $45.3 million in the prior year period. Non-GAAP[1] selling expenses increased by 15.3% to $52.2 million in the first nine months of fiscal 2020, from $45.3 million in the prior year period.

General and administrative expenses. General and administrative expenses decreased by 4.7% to $17.0 million in the first nine months of fiscal 2020 from $17.9 million in the prior year period. Non-GAAP[1] general and administrative expenses decreased by 7.0% to $15.2 million in the first nine months of fiscal 2020, from $16.4 million in the prior year period.

Income Tax Expenses. Income tax expense was $1.3 million in the first nine months of fiscal 2020, compared with income tax expense of $2.1 million in the prior year period.

Net Income Attributable to CDEL. As a result of the foregoing, net income attributable to CDEL was $5.6 million in the first nine months of fiscal 2020, compared with net income attributable to CDEL of $7.5 million in the prior year period. Non-GAAP[1] net income attributable to CDEL was $7.5 million in the first nine months of fiscal 2020, compared with non-GAAP[1] net income attributable to CDEL of $9.0 million in the prior year period.

Operating Cash Flow. Net operating cash inflow decreased by 33.8% to $41.0 million in the first nine months of fiscal 2020 from $61.9 million in the prior year period.

Recent Developments Regarding the Non-binding "Going Private" Proposal

On June 8, 2020, the board of directors of the Company (the "Board") received a preliminary non-binding proposal letter (the "Proposal Letter") from Mr. Zhengdong Zhu, co-founder, chairman of the Board and chief executive officer of the Company ("Mr. Zhu"), Ms. Baohong Yin, co-founder of the Company, deputy chairman of the Board and the spouse of Mr. Zhu and their affiliated entity (collectively, the "Buyer Group") to acquire all of the outstanding ordinary shares of the Company, including ordinary shares represented by American depositary shares (the "ADSs", each representing four ordinary shares), for $2.27 in cash per ordinary share, or $9.08 in cash per ADS (the "Proposal"). On June 22, 2020, the Company announced that the Board had formed a special committee of independent directors (the "Special Committee") consisting of Ms. Carol Yu and Ms. Annabelle Yu Long to review and evaluate the Proposal, and the Special Committee had retained Goulston & Storrs PC as its United States legal counsel in connection with its review and evaluation of the Proposal. On July 29, 2020, the Company announced that the Special Committee had retained Duff & Phelps, LLC as its financial advisor in connection with its review and evaluation of the Proposal.

The Company cautions its shareholders and others considering trading in its securities that neither the Board nor the Special Committee has made any decision with respect to the Company's response to the Proposal. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated. The Company does not undertake any obligation to provide any updates with respect to this or any other transaction, except as required under applicable law.

Outlook

For the fourth quarter of fiscal 2020, the Company expects to generate total net revenue in the range of $58.4 million to $61.8 million, representing year-over-year decline of approximately 15% to 10%, respectively.

For fiscal year 2020, the Company expects to generate total net revenue in the range of $202.4 million to $205.8 million, representing year-over-year decline of approximately 4.4% to 2.8%, respectively.

The above guidance reflects the Company's current and preliminary view, which is subject to change, particularly in consideration of uncertainties related to the impact of COVID-19, including the postponement of certain professional examinations, the schedule of reopening of schools, and the schedule of resumption of provision of offline training courses, among others.

Conference Call

Management will hold a conference call at 8:00 a.m. Eastern Time on Thursday, August 27, 2020 (8:00 p.m. Beijing Time on Thursday, August 27, 2020) to discuss financial results and answer questions from investors and analysts. Details for the conference call are as follows:

Event Title:

China Distance Education Holdings Limited Third Quarter of Fiscal Year 2020 Earnings Conference Call

Conference ID:

9952634

Registration Link:

http://apac.directeventreg.com/registration/event/9952634

All participants must use the link provided above to complete the online registration process at least 20 minutes in advance of the conference call. Upon registering, each participant will receive a participant dial-in number, Direct Event passcode, and a unique registrant ID, which will be used to join the conference call.

A telephone replay will be available two hours after the call until September 3, 2020 by dialing:

US Toll Free:

+1-855-452-5696

International:

+61-2-8199-0299

Mainland China:

400-632-2162

Hong Kong, China:

800-963-117

United Kingdom:

0808-234-0072

Replay Passcode:

9952634

Additionally, a live and archived webcast of the conference call will be available at http://ir.cdeledu.com.

About China Distance Education Holdings Limited

China Distance Education Holdings Limited is a leading provider of online education and value-added services for professionals and corporate clients in China. The courses offered by the Company through its websites are designed to help professionals seeking to obtain and maintain professional licenses and to enhance their job skills through our professional development courses in China in the areas of accounting, healthcare, engineering & construction, legal and other industries. The Company also offers online test preparation courses for self-taught learners pursuing higher education diplomas or degrees, and practical accounting training courses for college students and working professionals. In addition, the Company provides business services to corporate clients, including but not limited to tax advisory and accounting outsourcing services. For further information, please visit http://ir.cdeledu.com.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "may," "should," "potential," "continue," "expect," "predict," "anticipate," "future," "intend," "plan," "believe," "is/are likely to," "estimate" and similar statements. Among other things, the outlook for the fourth quarter and full fiscal year 2020 and quotations from management in this announcement, as well as the Company's strategic and operational plans (in particular, the impact of COVID-19 on our businesses; the solutions we adopt to address such impact of COVID-19; balancing growth and profitability; the growth prospects of online professional education in China; as well as the anticipated benefits of our strategic growth initiatives, including the promotion of the Company's life-long learning ecosystem) contain forward-looking statements. The Company may also make written or oral forward-looking statements in its periodic and annual reports to the SEC, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the impact of the COVID-19 outbreak, the potential impact of the Proposal and any transaction in connection with the Proposal, our goals and growth strategies; future prospects and market acceptance of our courses and other products and services; our future business development and results of operations; projected revenues, profits, earnings and other estimated financial information; projected enrollment numbers; our plans to expand and enhance our courses and other products and services; anticipated benefits of acquisition or disposal of businesses, competition in the education and test preparation markets; and Chinese laws, regulations and policies, including those applicable to the Internet, Internet content providers, the education and telecommunications industries, mergers and acquisitions, taxation and foreign exchange. In addition, with respect to the "going private" Proposal, there can be no assurance that the Buyer Group will make any definitive offer to the Company, that any definitive agreement relating to the Proposal will be entered into between the Company and the Buyer Group or that a transaction based on the Proposal or any other similar transaction will be approved or consummated.

Further information regarding these and other risks is included in the Company's annual report on Form 20-F and other documents filed or furnished with the SEC. All information provided in this press release is as of the date of this press release. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Statement Regarding Unaudited Financial Information

The unaudited financial information set forth in this press release is preliminary and subject to adjustments. Adjustments to the financial statements may be identified when audit work is performed for the year-end audit, which could result in significant differences from this preliminary unaudited financial information.

Use of Non-GAAP Financial Measures

To supplement the Company's consolidated financial results presented in accordance with U.S. generally accepted accounting principles, or GAAP, the Company uses the following measures defined as non-GAAP financial measures: non-GAAP net income attributable to CDEL, operating income, gross profit, cost of sales, selling expenses, general and administrative expenses, net income margin attributable to CDEL, operating margin, gross profit margin, and basic and diluted earnings per ADS and per share attributable to CDEL. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of non-GAAP measures to comparable GAAP measures" set forth at the end of this release.

The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance by excluding share-based compensation expenses. However, non-GAAP financial measures may not be indicative of the Company's operating performance from a cash perspective. The Company believes that both management and investors benefit from these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to the Company's historical performance and liquidity. The Company computes its non-GAAP financial measures using the same consistent method from quarter to quarter. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of excluding share-based compensation expenses from the above-mentioned line items and presenting these non-GAAP measures is that such items may continue to be for the foreseeable future a significant recurring expense in our business. Management compensates for this limitation by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying table at the end of this release provides more detail on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.

Contacts:

In China:

China Distance Education Holdings Limited
Jiao Jiao
Tel: +86-10-8231-9999 ext. 1826
Email: [email protected]

The Piacente Group, Inc. 
Xi Zhang 
Tel: +86-10-6508-0677
E-mail: [email protected]

In the United States: 

The Piacente Group, Inc.    
Brandi Piacente
Tel: +1 212-481-2050
Email: [email protected]

 

 

(Financial Tables on Following Pages)

 

 

China Distance Education Holdings Limited

Unaudited Condensed Consolidated Balance Sheets

(in thousands of US Dollars, except number of shares and per share data)









September 30, 2019


June 30, 2020


Assets:





Current assets:






Cash and cash equivalents

67,977


83,927



Term deposits

-


4,954



Restricted cash

38,358


20,241



Short-term investments

22,118


24,550



Accounts receivable, net of allowance for doubtful accounts of US$1,648 and
US$1,282 as of June 30, 2020 and September 30, 2019, respectively

7,330


6,182



Inventories

4,232


5,713



Prepayment and other current assets

26,732


30,143



Amounts due from related parties

515


908



Deferred cost

1,427


2,104



   Total current assets

168,689


178,722








Non-current assets:






Property, plant and equipment, net

37,935


40,732



Operating lease right of use asset

-


30,074



Goodwill, net

74,829


75,704



Long term investments

25,379


25,572



Other intangible assets, net

30,113


24,318



Deposit for purchase of non-current assets

4,448


1,552



Deferred tax assets

3,865


3,713



Other non-current assets

10,092


7,579



   Total non-current assets

186,661


209,244









   Total assets

355,350


387,966








Liabilities and equity:





Current liabilities:






Bank borrowings

38,502


7,199



Accrued expenses and other liabilities (including accrued expenses and other
liabilities of the consolidated VIE without recourse to China Distance Education
Holdings Limited of US$47,280 and US$35,491 as of June 30, 2020 and September
30, 2019, respectively)

38,267


49,950



Amount due to related parties

600


687



Income tax payable (including income tax payable of the consolidated VIE without
recourse to China Distance Education Holdings Limited of US$6,942 and US$8,188
as of June 30, 2020 and September 30, 2019, respectively)

10,899


8,579



Deferred revenue, current portion (including deferred revenue of the consolidated
VIE without recourse to China Distance Education Holdings Limited of US$71,477
and US$93,364 as of June 30, 2020 and September 30, 2019, respectively)

94,202


72,253



Refundable fees - current portion (including refundable fees of the consolidated VIE
without recourse to China Distance Education Holdings Limited of US$24 and
US$435 as of June 30, 2020 and September 30, 2019, respectively)

435


24



Operating lease liability - current portion (including operating lease liability of the
consolidated VIE without recourse to China Distance Education Holdings Limited
of US$3,614 and nil as of June 30, 2020 and September 30, 2019, respectively)

-


3,967



   Total current liabilities

182,905


142,659








Non-current liabilities:






Deferred revenue, non-current portion (including deferred revenue of the
consolidated VIE without recourse to China Distance Education Holdings Limited
of US$80,430 and US$33,564 as of June 30, 2020 and September 30, 2019,
respectively)

33,564


80,430



Refundable fees - non-current portion (including refundable fees of the consolidated
VIE without recourse to China Distance Education Holdings Limited of US$3,944
and US$2,440 as of June 30, 2020 and September 30, 2019, respectively)

2,440


3,944



Long-term bank borrowing

-


16,000



Deferred tax liabilities

12,695


6,410



Operating lease liability - non-current portion (including operating lease liability of
the consolidated VIE without recourse to China Distance Education Holdings
Limited of US$24,536 and nil as of June 30, 2020 and September 30, 2019,
respectively)

-


24,927



Total non-current liabilities

48,699


131,711



   Total liabilities

231,604


274,370








 

Equity:






Ordinary shares (par value of US$0.0001 per share; 500,000,000 shares authorized; 
135,320,433 and 134,210,745 shares issued and outstanding at June 30, 2020 and
September 30, 2019, respectively)

13


14



Additional paid-in capital

24,507


26,629



Accumulated other comprehensive loss

(12,357)


(8,805)



Retained earnings

60,668


46,612



   Total China Distance Education Holdings Limited shareholder's equity

72,831


64,450


Noncontrolling interests

50,915


49,146



   Total equity

123,746


113,596



   Total liabilities and equity

355,350


387,966








 

 

China Distance Education Holdings Limited

Unaudited Condensed Consolidated Statements Of Operations

(in thousands of US dollars, except number of shares, per share and per ADS data)



Three Months Ended June 30,


2019


2020





Sales, net of business tax, value-added tax and related surcharges:





Online education services

43,529


39,996


Books and reference materials

9,826


6,507


Others

8,392


4,211


-  Sale of learning simulation software

2,665


833


-  Business start-up training services

886


175


-  Others

4,841


3,203


   Total net revenues

61,747


50,714






Cost of sales





Cost of services and others

(20,836)


(19,767)


Cost of tangible goods sold

(9,735)


(6,882)


   Total cost of sales

(30,571)


(26,649)






Gross profit

31,176


24,065





Operating expenses





Selling expenses

(17,043)


(17,828)


General and administrative expenses

(4,947)


(5,383)


   Total operating expenses

(21,990)


(23,211)

Other operating income

665


1,607






Operating income 

9,851


2,461





Interest income

526


582

Interest expense

(703)


(216)

Gain from disposal of an investment

318


-

Exchange gain/(loss)

1,996


(243)






Income before income taxes

11,988


2,584

Income tax expense

(2,460)


(564)

Loss from equity method investments

(656)


(570)





Net income

8,872


1,450

Net loss attributable to noncontrolling interest

575


1,566

Net income attributable to China Distance Education Holdings Limited

9,447


3,016

 

Net income per share attributable to China Distance Education Holdings
Limited:




Net income attributable to China Distance Education Holdings Limited 
shareholders





Basic

0.070


0.022


Diluted

0.070


0.022

 

Net income per ADS attributable to China Distance Education Holdings
Limited:




Net income attributable to China Distance Education Holdings Limited 
shareholders





Basic

0.282


0.089


Diluted

0.281


0.088





Weighted average shares used in calculating net income per share
attributable to China Distance Education Holdings Limited:





Basic

133,037,866


134,005,063


Diluted

134,342,150


135,441,737


 

 

China Distance Education Holdings Limited

Unaudited Condensed Consolidated Statements Of Operations

 (in thousands of US dollars, except number of shares, per share and per ADS data)



Nine Months Ended June 30,


2019


2020





Sales, net of business tax, value-added tax and related surcharges:





Online education services

96,450


107,939


Books and reference materials

21,632


15,751


Others

25,049


20,322


-  Sale of learning simulation software

9,630


7,295


-  Business start-up training services

2,258


1,826


-  Others

13,161


11,201


   Total net revenues

143,131


144,012






Cost of sales





Cost of services and others

(62,461)


(57,938)


Cost of tangible goods sold

(16,997)


(14,840)


   Total cost of sales

(79,458)


(72,778)






Gross profit

63,673


71,234





Operating expenses





Selling expenses

(45,327)


(52,273)


General and administrative expenses

(17,855)


(17,016)


Total operating expenses

(63,182)


(69,289)

Change in fair value of contingent consideration payable

695


-

Other operating income

2,434


3,932






Operating income 

3,620


5,877





Interest income

1,714


1,952

Interest expense

(2,294)


(901)

Gain from disposal of an investment

318


-

Gain from deconsolidation of a subsidiary

6,869


-

Exchange loss

(104)


(1,154)






Income before income taxes

10,123


5,774

Income tax expense

(2,077)


(1,259)

Loss from equity method investments

(1,019)


(847)





Net income

7,027


3,668

Net loss attributable to noncontrolling interest

457


1,897

Net income attributable to China Distance Education Holdings Limited

7,484


5,565

 

Net income per share attributable to China Distance Education Holdings
Limited:




Net income attributable to China Distance Education Holdings Limited 
shareholders





Basic

0.056


0.041


Diluted

0.056


0.041

 

Net income per ADS attributable to China Distance Education Holdings
Limited:




Net income attributable to China Distance Education Holdings Limited 
shareholders





Basic

0.224


0.165


Diluted

0.223


0.165





Weighted average shares used in calculating net income per share
attributable to China Distance Education Holdings Limited:





Basic

132,946,829


133,808,589


Diluted

134,072,148


135,124,141

 

 

China Distance Education Holdings Limited

Reconciliations of non-GAAP measures to comparable GAAP measures

(In thousands of US Dollars, except number of shares, per share and per ADS data)






Three Months Ended June 30,



2019


2020



(Unaudited)


(Unaudited)






Cost of sales


30,571


26,649

Share-based compensation expense in cost of sales


-


45

Non-GAAP cost of sales


30,571


26,604






Selling expenses


17,043


17,828

Share-based compensation expense in selling expenses


-


19

Non-GAAP selling expenses


17,043


17,809






General and administrative expenses


4,947


5,383

Share-based compensation expense in general and administrative expenses


503


626

Non-GAAP general and administrative expenses


4,444


4,757






Gross profit


31,176


24,065

Share-based compensation expenses


-


45

Non-GAAP gross profit


31,176


24,110






Gross profit margin


50.5%


47.5%

Non-GAAP gross profit margin


50.5%


47.5%






Operating income


9,851


2,461

Share-based compensation expenses


503


690

Non-GAAP operating income


10,354


3,151






Operating margin


16.0%


4.9%

Non-GAAP operating margin


16.8%


6.2%






Net income attributable to CDEL


9,447


3,016

Share-based compensation expense


503


690

Non-GAAP net income attributable to CDEL


9,950


3,706






Net income margin attributable to CDEL


15.3%


5.9%

Non-GAAP net income margin attributable to CDEL


16.1%


7.3%






Net income per share attributable to CDEL?basic


0.070


0.022

Net income per share attributable to CDEL?diluted


0.070


0.022

Non-GAAP net income per share attributable to CDEL?basic


0.075


0.028

Non-GAAP net income per share attributable to CDEL?diluted


0.074


0.027






Net income per ADS attributable to China Distance Education Holdings Limited
      shareholders?basic (note 1)


0.282


0.089

Net income per ADS attributable to China Distance Education Holdings Limited
      shareholders?diluted (note 1)


0.281


0.088

Non-GAAP net income per ADS attributable to China Distance Education Holdings
      Limited shareholders?basic (note 1)


 

0.299


0.111

Non-GAAP net income per ADS attributable to China Distance Education Holdings
      Limited shareholders?diluted (note 1)


 

0.296


0.109






Weighted average shares used in calculating basic net income per share attributable
      to China Distance Education Holdings Limited


133,037,866


134,005,063

Weighted average shares used in calculating diluted net income per share
      attributable to China Distance Education Holdings Limited


134,342,150


135,441,737

Weighted average shares used in calculating basic non-GAAP net income per share
      attributable to China Distance Education Holdings Limited


133,037,866


134,005,063

Weighted average shares used in calculating diluted non-GAAP net income per share
      attributable to China Distance Education Holdings Limited


134,342,150


135,441,737






Note 1: Each ADS represents four ordinary shares

 

 

China Distance Education Holdings Limited

Reconciliations of non-GAAP measures to comparable GAAP measures

(In thousands of US Dollars, except number of shares, per share and per ADS data)






Nine Months Ended June 30,



2019


2020



(Unaudited)


(Unaudited)






Cost of sales


79,458


72,778

Share-based compensation expense in cost of sales


23


95

Non-GAAP cost of sales


79,435


72,683






Selling expenses


45,327


52,273

Share-based compensation expense in selling expenses


10


39

Non-GAAP selling expenses


45,317


52,234






General and administrative expenses


17,855


17,016

Share-based compensation expense in general and administrative expenses


1,482


1,795

Non-GAAP general and administrative expenses


16,373


15,221






Gross profit


63,673


71,234

Share-based compensation expenses


23


95

Non-GAAP gross profit


63,696


71,329






Gross profit margin


44.5%


49.5%

Non-GAAP gross profit margin


44.5%


49.5%






Operating income


3,620


5,877

Share-based compensation expenses


1,515


1,929

Non-GAAP operating income


5,135


7,806






Operating margin


2.5%


4.1%

Non-GAAP operating margin


3.6%


5.4%






Net income attributable to CDEL


7,484


5,565

Share-based compensation expense


1,515


1,929

Non-GAAP net income attributable to CDEL


8,999


7,494






Net income margin attributable to CDEL


5.2%


3.9%

Non-GAAP net income margin attributable to CDEL


6.3%


5.2%






Net income per share attributable to CDEL?basic


0.056


0.041

Net income per share attributable to CDEL?diluted


0.056


0.041

Non-GAAP net income per share attributable to CDEL?basic


0.068


0.056

Non-GAAP net income per share attributable to CDEL?diluted


0.067


0.055






Net income per ADS attributable to China Distance Education Holdings Limited
      shareholders?basic (note 1)


0.224


0.165

Net income per ADS attributable to China Distance Education Holdings Limited
      shareholders?diluted (note 1)


0.223


0.165

Non-GAAP net income per ADS attributable to China Distance Education Holdings
      Limited shareholders?basic (note 1)


 

0.271


0.224

Non-GAAP net income per ADS attributable to China Distance Education Holdings
      Limited shareholders?diluted (note 1)


 

0.269


0.222






Weighted average shares used in calculating basic net income per share attributable
      to China Distance Education Holdings Limited


132,946,829


133,808,589

Weighted average shares used in calculating diluted net income per share
      attributable to China Distance Education Holdings Limited


134,072,148


135,124,141

Weighted average shares used in calculating basic non-GAAP net income per share
      attributable to China Distance Education Holdings Limited


132,946,829


133,808,589

Weighted average shares used in calculating diluted non-GAAP net income per
      share attributable to China Distance Education Holdings Limited


134,072,148


135,124,141






 Note 1: Each ADS represents four ordinary shares


 

SOURCE China Distance Education Holdings Ltd.


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