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Form 6-K China Distance Education For: Nov 21

November 21, 2018 6:07 AM
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SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2018

Commission File Number: 001-34122

 

 

CHINA DISTANCE EDUCATION

HOLDINGS LIMITED

 

 

18th Floor, Xueyuan International Tower

1 Zhichun Road, Haidian District

Beijing 100083, People’s Republic of China

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F  ☒            Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ☐            No  ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- N/A

 

 

 


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China Distance Education Holdings Limited

Form 6-K

TABLE OF CONTENTS

 

     Page  

Signature

     3  

Exhibit 99.1 — Press Release dated November 20, 2018

     4  

 

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

China Distance Education Holdings Limited
By:  

/s/ Mark Marostica

Name:   Mark Marostica
Title:   Co-Chief Financial Officer
By:  

/s/ Philip Chan

Name:   Philip Chan
Title:   Co-Chief Financial Officer

Date: November 21, 2018

 

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Exhibit 99.1

 

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China Distance Education Holdings Limited Reports Financial Results for

Fourth Quarter and Fiscal Year 2018

- Fourth Quarter 2018 Net Revenue Up 28.6% Year-Over-Year to $53.6 Million -

- Fourth Quarter 2018 Non-GAAP Net Income Up 73.9% Year-Over-Year to $12.5 Million -

- Fourth Quarter 2018 Cash Receipts from Online Course Registration

Up 61.7% Year-Over-Year to $36.0 Million -

- Completion of further acquisition of Beijing Ruida in July 2018 -

BEIJING —November 20, 2018— 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 fourth quarter and fiscal year 2018 ended September 30, 2018.

Fourth Quarter Fiscal 2018 Financial and Operational Highlights

 

   

Net revenue increased by 28.6% to $53.6 million from $41.7 million in the prior year period.

 

   

Total course enrollments were 805,500, a decrease of 2.9% from the fourth quarter of fiscal 2017.

 

   

Cash receipts from online course registration were $36.0 million, a 61.7% increase from the fourth quarter of fiscal 2017.

 

   

Gross profit increased by 8.9% to $27.4 million from $25.2 million in the prior year period.

 

   

Non-GAAP1 gross profit increased by 8.9% to $27.4 million from $25.2 million in the prior year period.

 

   

Gross margin was 51.1%, compared with 60.3% in the prior year period. Non-GAAP1 gross margin was 51.2%, compared with 60.4% in the prior year period.

 

   

Operating income increased by 15.6% to $12.2 million from $10.5 million in the prior year period.

 

   

Non-GAAP1 operating income increased by 14.5% to $12.8 million from $11.2 million in the prior year period.

 

   

Net income increased by 64.8% to $9.7 million from $5.9 million in the prior year period.

 

   

Non-GAAP1 net income increased by 73.9% to $12.5 million from $7.2 million in the prior year period.

 

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

 

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Basic and diluted net income per American Depositary Share (“ADS”) were $0.290 compared with basic and diluted net income per ADS of $0.178 and $0.177, respectively, for the fourth quarter of fiscal 2017. Each ADS represents four ordinary shares.

 

   

Basic and diluted non-GAAP1 net income per ADS were $0.377 and $0.375, respectively, compared with basic and diluted non-GAAP1 net income per ADS of $0.219 and $0.218, respectively, for the fourth quarter of fiscal 2017.

 

   

Cash flow from operations increased by 471.9% to $16.7 million from $2.9 million in the fourth quarter of fiscal 2017.

 

   

Completion of acquisition of additional 11% equity interest in Beijing Ruida in July 2018, bringing the Company’s total equity interest in Beijing Ruida to 51%.

Fiscal Year 2018 Financial and Operational Highlights

 

   

Net revenue increased by 27.2% to $166.7 million from $131.0 million in fiscal year 2017.

 

   

Total course enrollments were 3.2 million, a decrease of 7.0% from fiscal year 2017.

 

   

Cash receipts from online course registration were $158.9 million, a 45.1% increase from fiscal year 2017.

 

   

Gross profit increased by 7.1% to $78.8 million from $73.6 million in fiscal year 2017.

 

   

Non-GAAP1 gross profit increased by 7.1% to $78.9 million from $73.7 million in fiscal year 2017.

 

   

Gross margin was 47.3%, compared with 56.2% in fiscal year 2017. Non-GAAP1 gross margin was 47.4%, compared with 56.3% in fiscal year 2017.

 

   

Operating income decreased by 24.4% to $15.9 million from $21.1 million in fiscal year 2017.

 

   

Non-GAAP1 operating income decreased by 21.4% to $18.3 million from $23.2 million in fiscal year 2017.

 

   

Net income decreased by 22.2% to $11.6 million from $14.9 million in fiscal year 2017.

 

   

Non-GAAP1 net income decreased by 8.9% to $16.1 million from $17.7 million in fiscal year 2017.

 

   

Basic and diluted net income per American Depositary Share (“ADS”) were $0.347, compared with basic and diluted net income per ADS of $0.453 and $0.448, respectively, for fiscal year 2017. Each ADS represents four ordinary shares.

 

   

Basic and diluted non-GAAP1 net income per ADS were $0.488 and $0.485, respectively, compared with basic and diluted non-GAAP1 net income per ADS of $0.539 and $0.532, respectively, for fiscal year 2017.

 

   

Cash flow from operations increased by 33.6% to $50.4 million from $37.7 million in fiscal year 2017.

 

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Mr. Zhengdong Zhu, Chairman and CEO of CDEL, said, “We concluded the fiscal year with fourth quarter revenue growth of 28.6% year-over-year, modestly below our guidance range, mainly due to a higher-than-expected mix of cash receipts from our refundable accounting elite classes, representing 26.8% of cash receipts from online course registration in the fourth quarter. The revenue from elite classes can be recognized only upon the release of related exam results and the expiration of the students’ right to receive a refund, under current U.S. GAAP ASC605. However, fourth quarter revenue growth was still driven primarily by our accounting vertical in addition to newly acquired Beijing Ruida.”

Mr. Zhu added, “We continued to see strong growth momentum of cash receipts from online course registration, which were up a robust 61.7% year-over-year during the fourth quarter, primarily due to strong cash receipts from our core accounting test preparation courses, and more student enrollments in our longer duration premium and elite classes. The popularity of these longer duration classes is a testament to the high degree of confidence and trust students place in us. Total course enrollments were down 2.9% year-over-year in the fourth quarter, mainly due to a decrease in enrollments of our continuing education courses. However, excluding the enrollments of continuing education courses, our total course enrollments were up 8.3% year-over-year in the fourth quarter.”

Mr. Zhu concluded, “We continue to look for opportunities to further develop our business, drive growth, and strengthen our lifelong learning ecosystem. Our July 2018 acquisition of an additional 11% equity interest in Beijing Ruida brings our total equity interest in Beijing Ruida to 51%. Beijing Ruida, a leading provider of exam preparation services for participants in China’s national legal profession qualification examination, further diversifies our business model by elevating our position in China’s legal education market. In our healthcare vertical, we recently established a partnership with Tencent, aimed at improving our healthcare educational products and services, providing our students with creative learning tools, and allowing us to explore new teaching approaches in healthcare education.”

Mr. Mark Marostica, Co-Chief Financial Officer of CDEL, said, “Our fourth quarter non-GAAP operating margin was down year-over-year yet up sequentially as expected. The year-over-year decline in operating margin was primarily due to the impact of a higher mix of cash receipts from refundable accounting elite classes on our revenue as mentioned by Mr. Zhu, while the related student acquisition costs were incurred up front. The amortization of intangibles arising from the acquisition of Beijing Ruida and an increase in rental expenses from our new Anhui Qiao office location in Beijing, also adversely impacted our fourth quarter operating margin to some extent.”

Mr. Marostica, continued, “Despite the fourth quarter operating margin decline, our headcount remained relatively steady compared with fourth quarter fiscal 2017, excluding Jiangsu Asset, acquired in November 2017, and Beijing Ruida. And we are encouraged by the continued momentum of our cash receipts growth in both our fourth quarter fiscal 2018, as well as our first quarter fiscal 2019 to date. As we begin fiscal 2019, we remain steadfast in continuing to balance growth with a keen focus on profitability and prudent cost control.”

Disposal of “Tax School Program”

On November 12, 2018, the Board of directors approved to dispose 60% equity interest in Beijing Champion Tax Management and Advisory Co., Ltd. (“Champion Tax Advisory”), which operates the “Tax School Program,” to the entity’s operating team in consideration of RMB30 million ($4.3 million), subject to changes according to the cash level of Champion Tax Advisory upon execution of transaction documents. The “Tax School Program” offers tax classes for tax and accounting professionals and provides them with subscription-based access to the Company’s vast databank of tax, finance, and legal course materials and information. The disposal of Champion Tax Advisory is expected to close in the first quarter of fiscal 2019.

 

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Mr. Zhengdong Zhu, Chairman and CEO of CDEL, said, “We’ve operated the “Tax School Program” since 2013. This business has not yet generated reasonable returns after several years of investments. Therefore, we decided to dispose of 60% equity interest to the entity’s operating team, which can be more flexible in formulating future business development strategies.”

CEO Share Purchase Plan

As announced on June 25, 2018 by the Company, Mr. Zhengdong Zhu, Chairman and CEO of CDEL, had informed the Company of his intention to use his personal funds to purchase the Company’s shares for an amount up to a maximum of $25 million within one year. As of October 31, 2018, Mr. Zhu had bought a total of approximately $8.2 million of the Company’s ordinary shares and ADSs pursuant to a 10b5-1 plan in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended.

Fourth Quarter Fiscal 2018 Financial Results

Net Revenue. Total net revenue increased by 28.6% to $53.6 million in the fourth quarter of fiscal 2018 from $41.7 million in the fourth quarter of fiscal 2017. Net revenue from online education services, books and reference materials, and other sources contributed 68.1%, 2.1% and 29.8%, respectively, of total net revenues for the fourth quarter of fiscal 2018.

Online education services. Net revenue from online education services increased by 14.0% to $36.5 million in the fourth quarter of fiscal 2018 from $32.0 million in the fourth quarter of fiscal 2017, mainly due to revenue growth from the accounting vertical and revenue from the legal vertical contributed by Beijing Ruida.

Books and reference materials. Net revenue from books and reference materials decreased by 46.2% to $1.1 million in the fourth quarter of fiscal 2018, from $2.1 million in the fourth quarter of fiscal 2017.

Others. Net revenue from other sources increased by 110.9% to $16.0 million in the fourth quarter of fiscal 2018 from $7.6 million in the fourth quarter of fiscal 2017, primarily due to revenue growth from offline accounting professional training courses, business start-up training services, revenue from offline legal professional training courses contributed by Beijing Ruida, as well as revenue from accounting and related advisory services contributed by Jiangsu Asset.

Cost of Sales. Cost of sales increased by 58.5% to $26.2 million in the fourth quarter of fiscal 2018 from $16.6 million in the fourth quarter of fiscal 2017. Non-GAAP1 cost of sales increased by 58.6% to $26.2 million in the fourth quarter of fiscal 2018 from $16.5 million in the fourth quarter of fiscal 2017. The increase was mainly due to increased salaries and related expenses, increased lecture fees for the expansion of online and offline course offerings, increased rental and related expenses associated with the Company’s new office space in Beijing and offline training courses, expenses associated with Beijing Ruida, as well as other miscellaneous expenses.

 

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Gross Profit and Gross Margin. Gross profit was $27.4 million in the fourth quarter of fiscal 2018, up 8.9% from $25.2 million in the prior year period. Non-GAAP1 gross profit was $27.4 million, increasing by 8.9% from $25.2 million in the prior year period. Gross margin was 51.1% in the fourth quarter of fiscal 2018, compared with 60.3% in the fourth quarter of fiscal 2017. Non-GAAP1 gross margin was 51.2% in the fourth quarter of fiscal 2018, compared with 60.4% in the fourth quarter of fiscal 2017.

Operating Expenses. Total operating expenses increased by 34.4% to $20.1 million in the fourth quarter of fiscal 2018, from $14.9 million in the prior year period. Non-GAAP1 total operating expenses increased by 36.0% to $19.5 million in the fourth quarter of fiscal 2018, from $14.3 million in the prior year period.

Selling expenses. Selling expenses increased by 60.4% to $14.3 million in the fourth quarter of fiscal 2018 from $8.9 million in the prior year period. Non-GAAP1 selling expenses increased by 60.6% to $14.3 million in the fourth quarter of fiscal 2018 from $8.9 million in the prior year period. The increase was primarily driven by an increase in salaries and related expenses, higher commissions to agents, and expenses associated with Beijing Ruida. The increase was partially offset by a decrease in advertising and promotional expenses.

General and administrative expenses. General and administrative expenses decreased by 4.0% to $5.8 million in the fourth quarter of fiscal 2018 from $6.0 million in the prior year period. Non-GAAP1 general and administrative expenses decreased by 4.1% to $5.2 million in the fourth quarter of fiscal 2018 from $5.5 million in the prior year period. The decrease was mainly due to decreased provision for doubtful debts, and other general administrative expenses, and was partially offset by expenses associated with Beijing Ruida.

Impairment loss from long-term investments. Impairment loss from long-term investments increased to $2.8 million in the fourth quarter of fiscal 2018 from $0.7 million in the prior year period, due to impairment of value of the Company’s investment in investee companies, Beijing Piyingke Technology Co., Ltd. and Mayi White-Collar Investment Management Co., Ltd.

Income Tax Expense. Income tax expense decreased by 16.2% to $1.7 million in the fourth quarter of fiscal 2018 from $2.1 million in the prior year period, primarily due to a decrease in taxable income.

Net Income. As a result of the foregoing, net income increased by 64.8% to $9.7 million in the fourth quarter of fiscal 2018 from $5.9 million in the prior year period. Non-GAAP1 net income increased by 73.9% to $12.5 million in the fourth quarter of fiscal 2018 from $7.2 million in the prior year period.

Operating Cash Flow. Net operating cash inflow increased by 471.9% to $16.7 million in the fourth quarter of fiscal 2018 from $2.9 million in the prior year period. The operating cash inflow was mainly attributable to net income before non-cash items generated in the fourth quarter of fiscal 2018. The decrease in inventories, prepayments and other assets, and the increase in income tax payable and refundable fees generated from our longer duration elite classes, also contributed to the operating cash inflow. The operating cash inflow was partially offset by the increase in accounts receivable and the decrease in deferred revenue.

 

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Cash and Cash Equivalents, Restricted Cash and Short-term Investments. Cash and cash equivalents, restricted cash and short-term investments as of September 30, 2018 increased by 8.9% to $99.6 million from $91.5 million as of June 30, 2018, mainly due to the operating cash inflow generated in the fourth quarter of fiscal 2018, which was partially offset by the capital expenditure of $8.5 million.

Fiscal Year 2018 Financial Results

Net Revenue. Total net revenue increased by 27.2% to $166.7 million in fiscal year 2018 from $131.0 million in fiscal year 2017. Net revenue from online education services, books and reference materials, and other sources contributed 70.2%, 6.1% and 23.7%, respectively, of total net revenues for fiscal year 2018.

Online education services. Net revenue from online education services increased by 22.5% to $117.0 million in fiscal year 2018 from $95.5 million in fiscal year 2017.

Books and reference materials. Net revenue from books and reference materials increased by 13.7% to $10.2 million in fiscal year 2018, from $9.0 million in fiscal year 2017.

Others. Net revenue from other sources increased by 48.8% to $39.4 million in fiscal year 2018 from $26.5 million in fiscal year 2017.

Cost of Sales. Cost of sales increased by 53.1% to $87.9 million in fiscal year 2018 from $57.4 million in fiscal year 2017. Non-GAAP1 cost of sales increased by 53.2% to $87.7 million in fiscal year 2018 from $57.2 million in fiscal year 2017.

Gross Profit and Gross Margin. Gross profit was $78.8 million in fiscal year 2018, up 7.1% from $73.6 million in fiscal year 2017. Non-GAAP1 gross profit was $78.9 million, up 7.1% from $73.7 million in fiscal year 2017. Gross margin was 47.3% in fiscal year 2018, compared with 56.2% in fiscal year 2017. Non-GAAP1 gross margin was 47.4% in fiscal year 2018, compared with 56.3% in fiscal year 2017.

Operating Expenses. Total operating expenses increased by 21.3% to $66.0 million in fiscal year 2018, from $54.4 million in fiscal year 2017. Non-GAAP1 total operating expenses increased by 21.7% to $63.8 million in fiscal year 2018, from $52.4 million in fiscal year 2017.

Selling expenses. Selling expenses increased by 28.1% to $44.7 million in fiscal year 2018 from $34.9 million in fiscal year 2017. Non-GAAP1 selling expenses increased by 28.2% to $44.6 million in fiscal year 2018 from $34.8 million in fiscal year 2017.

General and administrative expenses. General and administrative expenses increased by 9.2% to $21.3 million in fiscal year 2018 from $19.5 million in fiscal year 2017. Non-GAAP1 general and administrative expenses increased by 9.0% to $19.2 million in fiscal year 2018 from $17.6 million in fiscal year 2017.

Impairment loss from long-term investments. Impairment loss from long-term investments increased to $2.8 million in fiscal year 2018 from $0.7 million in fiscal year 2017.

Income Tax Expense. Income tax expense decreased by 50.1% to $2.3 million in fiscal year 2018 from $4.6 million in fiscal year 2017.

 

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Net Income. As a result of the foregoing, net income decreased by 22.2% to $11.6 million in fiscal year 2018 from $14.9 million in fiscal year 2017. Non-GAAP1 net income decreased by 8.9% to $16.1 million in fiscal year 2018 from $17.7 million in fiscal year 2017.

Operating Cash Flow. Net operating cash inflow increased by 33.6% to $50.4 million in fiscal year 2018 from $37.7 million in fiscal year 2017.

Outlook

For the first quarter of fiscal 2019, the Company expects to generate total net revenue in the range of $38.7 million to $40.5 million, representing year-over-year growth of approximately 8% to 13%.

For fiscal year 2019, the Company expects to generate total net revenues in the range of $208.3 million to $216.7 million, representing year-over-year growth of approximately 25% to 30%.

The above guidance reflects the Company’s current and preliminary view, which is subject to change.

Conference Call

Management will hold a conference call at 8:00 a.m. Eastern Time on Wednesday, November 21, 2018 (9:00 p.m. Beijing Time on Wednesday, November 21, 2018) to discuss financial results and answer questions from investors and analysts. Listeners may access the call by dialing:

US Toll Free: +1-866-519-4004

International: +65-6713-5090

Mainland China: 400-620-8038

Hong Kong: +852-3018-6771

United Kingdom: +44-203-6214-779

Passcode: CDEL or DL

A telephone replay will be available two hours after the call until November 28, 2018 by dialing:

US Toll Free: +1-855-452-5696

International: +61-2-8199-0299

Mainland China: 400-632-2162

Hong Kong: 800-963-117

United Kingdom: 0808-234-0072

Replay Passcode: 7085869

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

 

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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 professional education courses for participants in the national judicial examination, online test preparation courses for self-taught learners pursuing higher education diplomas or degrees, practical accounting training courses for college students and working professionals, as well as third-party developed online courses. 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 first quarter and full fiscal year 2019 and quotations from management in this announcement, as well as the Company’s strategic and operational plans (in particular, the anticipated benefits of strategic growth initiatives, including the acquisition of Beijing Ruida, the partnership with Tencent, the promotion of the Company’s lifelong learning ecosystem, as well as cost control) 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: 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; 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.

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.

 

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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, operating income, gross profit, cost of sales, selling expenses, general and administrative expenses, net income margin, operating margin, gross profit margin and basic and diluted earnings per ADS and per share. 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 and liquidity by excluding share-based compensation expenses and impairment loss of long-term investments. 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 and impairment loss of long-term investments 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:

 

China Distance Education Holdings Limited

Investor Relations Department

Tel: +86-10-8231-9999 ext. 1826

Email: [email protected]

  

The Piacente Group | Investor Relations

Brandi Piacente

Tel: +1 212-481-2050

Email: [email protected]

(Financial Tables on Following Pages)

 

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China Distance Education Holdings Limited

Consolidated Balance Sheets

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

 

    September 30, 2017     September 30, 2018  
    (Derived from Audited)     (Unaudited)  

Assets:

   

Current assets:

   

Cash and cash equivalents

    60,526       30,826  

Restricted cash

    34,855       51,736  

Short term investments

    5,261       17,073  

Accounts receivable, net of allowance for doubtful accounts of US$1,342 and US$1,191 as of September 30, 2018 and September 30, 2017, respectively

    5,525       7,243  

Inventories

    864       2,782  

Prepayment and other current assets

    10,439       17,013  

Deferred tax assets, current portion

    1,654       —    

Deferred cost

    711       1,125  
 

 

 

   

 

 

 

Total current assets

    119,835       127,798  

Non-current assets:

   

Property, plant and equipment, net

    14,022       27,972  

Goodwill

    29,459       79,910  

Long term investments

    43,631       33,837  

Other intangible assets, net

    9,947       39,106  

Deposit for purchase of non-current assets

    641       8,126  

Deferred tax assets, non-current portion

    —         5,711  

Other non-current assets

    7,016       6,428  
 

 

 

   

 

 

 

Total non-current assets

    104,716       201,090  
 

 

 

   

 

 

 

Total assets

    224,551       328,888  
 

 

 

   

 

 

 

Liabilities and equity:

   

Current liabilities:

   

Bank borrowings

    29,965       50,538  

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$33,957 and US$31,684 as of September 30, 2018 and September 30, 2017, respectively)

    38,767       42,141  

Amount due to a related party

    1,648       —    

Income tax payable (including income tax payable of the consolidated VIE without recourse to China Distance Education Holdings Limited of US$4,847 and US$3,641 as of September 30, 2018 and September 30, 2017, respectively)

    6,750       9,293  

Deferred revenue (including deferred revenue of the consolidated VIE without recourse to China Distance Education Holdings Limited of US$77,262 and US$49,575 as of September 30, 2018 and September 30, 2017, respectively)

    50,506       78,157  

Refundable fees (including refundable fees of the consolidated VIE without recourse to China Distance Education Holdings Limited of US$13,837 and US$1,074 as of September 30, 2018 and September 30, 2017, respectively)

    1,074       13,837  
 

 

 

   

 

 

 

Total current liabilities

    128,710       193,966  

Non-current liabilities:

   

Deferred tax liabilities, non-current portion

    3,099       12,693  

Long-term bank borrowing

    19,930       12,464  
 

 

 

   

 

 

 

Total non-current liabilities

    23,029       25,157  
 

 

 

   

 

 

 

Total liabilities

    151,739       219,123  
 

 

 

   

 

 

 

Equity:

   

Ordinary shares (par value of US$0.0001 per share at September 30, 2018 and September 30, 2017, respectively; Authorized –500,000,000 shares at September 30, 2018 and September 30, 2017, respectively; Issued and outstanding –133,275,521 and 131,854,773 shares at September 30, 2018 and September 30, 2017, respectively)

    13       13  

Additional paid-in capital

    19,097       21,557  

Accumulated other comprehensive loss

    (3,367     (7,013

Retained earnings

    33,040       29,717  
 

 

 

   

 

 

 

Total China Distance Education Holdings Limited shareholder’s equity

    48,783       44,274  

Noncontrolling interest

    24,029       65,491  
 

 

 

   

 

 

 

Total equity

    72,812       109,765  
 

 

 

   

 

 

 

Total liabilities and equity

    224,551       328,888  
 

 

 

   

 

 

 

 

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China Distance Education Holdings Limited

Unaudited Consolidated Statements Of Operations

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

 

     Three Months Ended September 30,  
     2017     2018  

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

    

Online education services

     32,045       36,539  

Books and reference materials

     2,093       1,125  

Others

     7,570       15,962  

- Sale of learning simulation software

     2,930       2,974  

- Business start-up training services

     1,102       1,724  

- Others

     3,538       11,264  
  

 

 

   

 

 

 

Total net revenues

     41,708       53,626  

Cost of sales

    

Cost of services and others

     (14,513     (24,798

Cost of tangible goods sold

     (2,042     (1,442
  

 

 

   

 

 

 

Total cost of sales

     (16,555     (26,240

Gross profit

     25,153       27,386  

Operating expenses

    

Selling expenses

     (8,906     (14,287

General and administrative expenses

     (6,037     (5,793
  

 

 

   

 

 

 

Total operating expenses

     (14,943     (20,080

Change in fair value in connection with business combination

     —         3,950  

Other operating income

     328       926  
  

 

 

   

 

 

 

Operating income

     10,538       12,182  

Impairment loss from long-term investments

     (679     (2,835

Interest income

     375       717  

Interest expense

     (615     (809

Exchange gain/(loss)

     (1,429     2,973  
  

 

 

   

 

 

 

Income before income taxes

     8,190       12,228  

Income tax expense

     (2,051     (1,720

Loss from equity method investment

     (34     (21
  

 

 

   

 

 

 

Net income

     6,105       10,487  

Net income attributable to noncontrolling interest

     (239     (821
  

 

 

   

 

 

 

Net income attributable to China Distance Education Holdings Limited

     5,866       9,666  
  

 

 

   

 

 

 

Net income per share:

    

Net income attributable to China Distance Education Holdings Limited shareholders

    

Basic

     0.044       0.073  

Diluted

     0.044       0.072  

Net income per ADS:

    

Net income attributable to China Distance Education Holdings Limited shareholders

    

Basic

     0.178       0.290  

Diluted

     0.177       0.290  

Weighted average shares used in calculating net income per share:

    

Basic

     131,517,541       132,731,579  

Diluted

     132,197,374       133,396,825  

 

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China Distance Education Holdings Limited

Unaudited Consolidated Statements Of Operations

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

 

     Year Ended September 30,  
     2017     2018  
     (Derived from Audited)        

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

    

Online education services

     95,503       117,026  

Books and reference materials

     8,980       10,213  

Others

     26,505       39,429  

- Sale of learning simulation software

     11,522       11,576  

- Business start-up training services

     5,223       4,582  

- Others

     9,760       23,271  
  

 

 

   

 

 

 

Total net revenues

     130,988       166,668  

Cost of sales

    

Cost of services and others

     (50,540     (78,936

Cost of tangible goods sold

     (6,872     (8,947
  

 

 

   

 

 

 

Total cost of sales

     (57,412     (87,883

Gross profit

     73,576       78,785  

Operating expenses

    

Selling expenses

     (34,910     (44,717

General and administrative expenses

     (19,468     (21,253
  

 

 

   

 

 

 

Total operating expenses

     (54,378     (65,970

Change in fair value in connection with business combination

     —         84  

Other operating income

     1,912       3,051  
  

 

 

   

 

 

 

Operating income

     21,110       15,950  

Impairment loss from long-term investments

     (679     (2,835

Interest income

     1,531       2,522  

Interest expense

     (1,049     (3,331

Exchange gain

     128       2,476  
  

 

 

   

 

 

 

Income before income taxes

     21,041       14,782  

Income tax expense

     (4,620     (2,307

Loss from equity method investment

     (153     (172
  

 

 

   

 

 

 

Net income

     16,268       12,303  

Net income attributable to noncontrolling interest

     (1,333     (677
  

 

 

   

 

 

 

Net income attributable to China Distance Education Holdings Limited

     14,935       11,626  
  

 

 

   

 

 

 

Net income per share:

    

Net income attributable to China Distance Education Holdings Limited shareholders

    

Basic

     0.113       0.087  

Diluted

     0.112       0.087  

Net income per ADS:

    

Net income attributable to China Distance Education Holdings Limited shareholders

    

Basic

     0.453       0.347  

Diluted

     0.448       0.347  

Weighted average shares used in calculating net income per share:

    

Basic

     131,432,211       132,363,620  

Diluted

     133,203,255       133,117,155  

 

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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 September 30,  
     2017     2018  
     (Unaudited)     (Unaudited)  

Cost of sales

     16,555       26,240  

Share-based compensation expense in cost of sales

     43       45  

Non-GAAP cost of sales

     16,512       26,195  

Selling expenses

     8,906       14,287  

Share-based compensation expense in selling expenses

     22       20  

Non-GAAP selling expenses

     8,884       14,267  

General and administrative expenses

     6,037       5,793  

Share-based compensation expense in general and administrative expenses

     581       560  

Non-GAAP general and administrative expenses

     5,456       5,233  

Gross profit

     25,153       27,386  

Share-based compensation expenses

     43       45  

Non-GAAP gross profit

     25,196       27,431  

Gross profit margin

     60.3     51.1

Non-GAAP gross profit margin

     60.4     51.2

Operating income

     10,538       12,182  

Share-based compensation expenses

     646       625  

Non-GAAP operating income

     11,184       12,807  

Operating margin

     25.3     22.7

Non-GAAP operating margin

     26.8     23.9

Net income

     5,866       9,666  

Share-based compensation expense

     646       625  

Impairment loss from long-term investments, net of tax

     679       2,212  

Non-GAAP net income

     7,191       12,503  

Net income margin

     14.1     18.0

Non-GAAP net income margin

     17.2     23.3

Net income per share—basic

     0.044       0.073  

Net income per share—diluted

     0.044       0.072  

Non-GAAP net income per share—basic

     0.055       0.094  

Non-GAAP net income per share—diluted

     0.054       0.094  

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

     0.178       0.290  

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

     0.177       0.290  

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

     0.219       0.377  

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

     0.218       0.375  

Weighted average shares used in calculating basic net income per share

     131,517,541       132,731,579  

Weighted average shares used in calculating diluted net income per share

     132,197,374       133,396,825  

Weighted average shares used in calculating basic non-GAAP net income per share

     131,517,541       132,731,579  

Weighted average shares used in calculating diluted non-GAAP net income per share

     132,197,374       133,396,825  

 

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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)

 

     Year Ended September 30,  
     2017     2018  
     (Unaudited)     (Unaudited)  

Cost of sales

     57,412       87,883  

Share-based compensation expense in cost of sales

     164       161  

Non-GAAP cost of sales

     57,248       87,722  

Selling expenses

     34,910       44,717  

Share-based compensation expense in selling expenses

     85       80  

Non-GAAP selling expenses

     34,825       44,637  

General and administrative expenses

     19,468       21,253  

Share-based compensation expense in general and administrative expenses

     1,862       2,065  

Non-GAAP general and administrative expenses

     17,606       19,188  

Gross profit

     73,576       78,785  

Share-based compensation expenses

     164       161  

Non-GAAP gross profit

     73,740       78,946  

Gross profit margin

     56.2     47.3

Non-GAAP gross profit margin

     56.3     47.4

Operating income

     21,110       15,950  

Share-based compensation expenses

     2,111       2,306  

Non-GAAP operating income

     23,221       18,256  

Operating margin

     16.1     9.6

Non-GAAP operating margin

     17.7     11.0

Net income

     14,935       11,626  

Share-based compensation expense

     2,111       2,306  

Impairment loss from long-term investments, net of tax

     679       2,212  

Non-GAAP net income

     17,725       16,144  

Net income margin

     11.4     7.0

Non-GAAP net income margin

     13.5     9.7

Net income per share—basic

     0.113       0.087  

Net income per share—diluted

     0.112       0.087  

Non-GAAP net income per share—basic

     0.135       0.122  

Non-GAAP net income per share—diluted

     0.133       0.121  

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

     0.453       0.347  

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

     0.448       0.347  

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

     0.539       0.488  

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

     0.532       0.485  

Weighted average shares used in calculating basic net income per share

     131,432,211       132,363,620  

Weighted average shares used in calculating diluted net income per share

     133,203,255       133,117,155  

Weighted average shares used in calculating basic non-GAAP net income per share

     131,432,211       132,363,620  

Weighted average shares used in calculating diluted non-GAAP net income per share

     133,203,255       133,117,155  

Note 1: Each ADS represents four ordinary shares

 

17

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