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China Distance Education Holdings Limited Reports Financial Results for Fourth Quarter and Fiscal Year 2019

- Fourth Quarter 2019 Net Revenue Up 28.1% Year-Over-Year to $68.7 Million -

- Fourth Quarter 2019 Non-GAAP Net Income Attributable to CDEL Up 48.8% Year-Over-Year to $18.6 Million -

- Fiscal Year 2019 Net Income Attributable to CDEL Up 82.8% Year-Over-Year to $21.3 million -

BEIJING, Nov. 19, 2019 /PRNewswire/ -- China Distance Education Holdings Limited (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 2019 ended September 30, 2019.

Fourth Quarter Fiscal 2019 Financial and Operational Highlights

  • Net revenue increased by 28.1% to $68.7 million from $53.6 million in the prior year period.
  • Total course enrollments were 1,132,300, an increase of 40.6% from the fourth quarter of fiscal 2018.
  • Cash receipts from online course registration were $43.8 million, a 21.6% increase from the fourth quarter of fiscal 2018.
  • Gross profit increased by 58.5% to $43.4 million from $27.4 million in the prior year period.
  • Non-GAAP1 gross profit increased by 58.2% to $43.4 million from $27.4 million in the prior year period.
  • Gross margin was 63.2%, compared with 51.1% in the prior year period. Non-GAAP1 gross margin was 63.2%, compared with 51.2% in the prior year period.
  • Operating income increased by 70.3% to $20.7 million from $12.2 million in the prior year period.
  • Non-GAAP1 operating income increased by 65.8% to $21.2 million from $12.8 million in the prior year period.
  • Net income attributable to CDEL increased by 42.4% to $13.8 million from $9.7 million in the prior year period.
  • Non-GAAP1 net income attributable to CDEL increased by 48.8% to $18.6 million from $12.5 million in the prior year period.
  • Basic and diluted net income per American Depositary Share ("ADS") attributable to CDEL were both $0.411, compared with basic and diluted net income per ADS attributable to CDEL of $0.290 for the fourth quarter of fiscal 2018. Each ADS represents four ordinary shares.
  • Basic and diluted non-GAAP1 net income per ADS attributable to CDEL were $0.558 and $0.554, respectively, compared with basic and diluted non-GAAP1 net income per ADS attributable to CDEL of $0.377 and $0.375, respectively, for the fourth quarter of fiscal 2018.
  • Cash flow from operations increased by 20.2% to $20.0 million from $16.7 million in the fourth quarter of fiscal 2018.

Fiscal Year 2019 Financial and Operational Highlights

  • Net revenue increased by 27.1% to $211.8 million from $166.7 million in fiscal year 2018.
  • Total course enrollments were 3,793,100, an increase of 18.9% from fiscal year 2018.
  • Cash receipts from online course registration were $211.7 million, a 33.1% increase from fiscal year 2018.
  • Gross profit increased by 35.9% to $107.1 million from $78.8 million in fiscal year 2018.
  • Non-GAAP1 gross profit increased by 35.7% to $107.1 million from $78.9 million in fiscal year 2018.
  • Gross margin was 50.6%, compared with 47.3% in fiscal year 2018. Non-GAAP1 gross margin was 50.6%, compared with 47.4% in fiscal year 2018.
  • Operating income increased by 52.8% to $24.4 million from $16.0 million in fiscal year 2018.
  • Non-GAAP1 operating income increased by 44.5% to $26.4 million from $18.3 million in fiscal year 2018.
  • Net income attributable to CDEL increased by 82.8% to $21.3 million from $11.6 million in fiscal year 2018.
  • Non-GAAP1 net income attributable to CDEL increased by 71.0% to $27.6 million from $16.1 million in fiscal year 2018.
  • Basic and diluted net income per American Depositary Share ("ADS") attributable to CDEL were both $0.635, compared with basic and diluted net income per ADS attributable to CDEL of $0.347 for fiscal year 2018. Each ADS represents four ordinary shares.
  • Basic and diluted non-GAAP1 net income per ADS attributable to CDEL were $0.830 and $0.823, respectively, compared with basic and diluted non-GAAP1 net income per ADS attributable to CDEL of $0.488 and $0.485, respectively, for the fiscal year 2018.
  • Cash flow from operations increased by 45.7% to $73.0 million from $50.1 million in the fiscal year 2018.

Mr. Zhengdong Zhu, Chairman and CEO of CDEL, said, "We ended fiscal 2019 on a positive note, with fourth quarter revenue growth of 28.1% year-over-year, above our guidance range. Our fourth quarter revenue performance was primarily driven by continued strength from our industry-leading accounting vertical, together with higher-than-anticipated revenue from our legal vertical, primarily due to the earlier release of exam results for the objective section of the Legal Professional Qualification Exam compared with the same period last year. Total course enrollments were up 40.6% year-over-year in the fourth quarter, primarily due to significant enrollment growth in accounting continuing education courses. Cash receipts from online course registration grew 21.6% year-over-year in the fourth quarter, contributing to the robust growth of cash receipts of 33.1% in fiscal 2019, due in large part to the popularity of our longer duration premium and elite classes."

Mr. Zhu concluded, "During fiscal 2019, we continued our efforts to enhance our comprehensive lifelong learning ecosystem. Through our acquisition of Beijing Ruida, we have established our fourth key industry vertical – legal, while solidifying our market position in accounting, healthcare, and engineering & construction (E&C) professional education with extensive and diversified educational offerings, such as our popular longer duration premium and elite classes. Overall, we remain focused on providing students with best-of-breed educational content and value-added services to guide them in their pursuit of professional licensure in their chosen fields. We are dedicated to serving a broader base of students at different stages of their careers to help them achieve positive learning outcomes and career advancement."

Mr. Mark Marostica, Co-Chief Financial Officer of CDEL, added, "The healthy fourth quarter revenue growth, together with continued effective expense control and leverage of our cost structure, contributed to the significant expansion of our fourth quarter non-GAAP operating margin, which came in at 30.9%, up from 23.9% in the prior year period."

Mr. Marostica, continued, "With fiscal 2020 well underway, we aim to continue to focus on balancing growth with diligent expense control, in an effort to build on the momentum of our operating margin improvement in the second half of fiscal 2019, and drive higher levels of profitability in fiscal 2020."

Fourth Quarter Fiscal 2019 Financial Results

Net Revenue. Total net revenue increased by 28.1% to $68.7 million in the fourth quarter of fiscal 2019 from $53.6 million in the fourth quarter of fiscal 2018. Net revenue from online education services, books and reference materials, and other sources contributed 72.0%, 8.4% and 19.6%, respectively, of total net revenues for the fourth quarter of fiscal 2019.

Online education services. Net revenue from online education services increased by 35.4% to $49.5 million in the fourth quarter of fiscal 2019 from $36.5 million in the fourth quarter of fiscal 2018, mainly due to revenue growth from the accounting vertical. Revenue from the legal vertical generated by Beijing Ruida also contributed to the growth.

Books and reference materials. Net revenue from books and reference materials increased by 410.2% to $5.7 million in the fourth quarter of fiscal 2019 from $1.1 million in the fourth quarter of fiscal 2018, mainly due to book sale revenue from the Legal Professional Qualification Examination contributed by Beijing Ruida.

Others. Net revenue from other sources decreased by 15.5% to $13.5 million in the fourth quarter of fiscal 2019 from $16.0 million in the fourth quarter of fiscal 2018, primarily due to the decrease in revenue from the "Tax School Program," which the Company disposed in the first quarter of fiscal 2019; and the decrease in revenue from business start-up training services. This decrease in revenue was partially offset by the increase in offline training revenue from the Legal Professional Qualification Examination contributed by Beijing Ruida, and the increase in revenue from the sale of learning simulation software.

Cost of Sales. Cost of sales decreased by 3.6% to $25.3 million in the fourth quarter of fiscal 2019 from $26.2 million in the fourth quarter of fiscal 2018. Non-GAAP1 cost of sales decreased by 3.5% to $25.3 million in the fourth quarter of fiscal 2019 from $26.2 million in the fourth quarter of fiscal 2018. The decrease was mainly due to the decrease in salaries and related expenses, and rental and related expenses. This decrease was partially offset by the increase in cost of books and reference materials, and lecture fees.

Gross Profit and Gross Margin. Gross profit was $43.4 million in the fourth quarter of fiscal 2019, up 58.5% from $27.4 million in the prior year period. Non-GAAP1 gross profit was $43.4 million, increasing by 58.2% from $27.4 million in the prior year period. Gross margin was 63.2% in the fourth quarter of fiscal 2019, compared with 51.1% in the fourth quarter of fiscal 2018. Non-GAAP1 gross margin was 63.2% in the fourth quarter of fiscal 2019, compared with 51.2% in the fourth quarter of fiscal 2018.

Operating Expenses. Total operating expenses increased by 15.5% to $23.2 million in the fourth quarter of fiscal 2019, from $20.1 million in the prior year period. Non-GAAP1 total operating expenses increased by 16.4% to $22.7 million in the fourth quarter of fiscal 2019, from $19.5 million in the prior year period.

Selling expenses. Selling expenses increased by 12.9% to $16.1 million in the fourth quarter of fiscal 2019 from $14.3 million in the prior year period. Non-GAAP1 selling expenses increased by 13.1% to $16.1 million in the fourth quarter of fiscal 2019 from $14.3 million in the prior year period. The increase was primarily driven by higher advertising and promotional expenses, the increase in rental and related expenses and other miscellaneous selling expenses. This increase was partially offset by the decrease in commission to agents and, salaries and related expenses.

General and administrative expenses. General and administrative expenses increased by 21.9% to $7.1 million in the fourth quarter of fiscal 2019 from $5.8 million in the prior year period. Non-GAAP1 general and administrative expenses increased by 25.6% to $6.6 million in the fourth quarter of fiscal 2019 from $5.2 million in the prior year period. The increase was mainly due to the provision for doubtful debts related to the Company's investee company, Hangzhou Wanting Technology Co., Ltd., and the sale of learning simulation software.

Impairment loss from long-term investments. Impairment loss from long-term investments increased to $6.9 million in the fourth quarter of fiscal 2019 from $2.8 million in the prior year period, due to impairment of the value of the Company's investment in investee companies, Hangzhou Wanting Technology Co., Ltd. and Amdon Consulting Pte Ltd of $6.4 million and $0.5 million, respectively.

Impairment of goodwill. Impairment of goodwill was $1.5 million in the fourth quarter of fiscal 2019, due to impairment of the value of the Company's business start-up training services segment.

Income Tax Expense. Income tax expense increased by 251.5% to $6.0 million in the fourth quarter of fiscal 2019 from $1.7 million in the prior year period, primarily due to an increase in taxable income.

Net Income Attributable to CDEL. As a result of the foregoing, net income attributable to CDEL was $13.8 million in the fourth quarter of fiscal 2019, up 42.4% compared with $9.7 million in the prior year period. Non-GAAP1 net income attributable to CDEL was $18.6 million in the fourth quarter of fiscal 2019, up 48.8% compared with $12.5 million in the prior year period.

Operating Cash Flow. Net operating cash inflow increased by 20.2% to $20.0 million in the fourth quarter of fiscal 2019 from $16.7 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 2019. The decrease in deferred tax assets, other non-current assets, and the increase in accrued expenses and other liabilities, income tax payable, and refundable fees also contributed to the operating cash inflow. The operating cash inflow was partially offset by the increase in accounts receivable, prepayments and other current assets, and the decrease in deferred revenue.

Cash and Cash Equivalents, Restricted Cash and Short-term Investments. Cash and cash equivalents, restricted cash and short-term investments as of September 30, 2019 increased by 2.9% to $128.5 million from $124.9 million as of June 30, 2019, mainly due to the operating cash inflow generated in the fourth quarter of fiscal 2019. The increase was partially offset by (i) the repayment of an offshore loan of $6.0 million and (ii) the capital expenditure of $2.0 million.

Fiscal Year 2019 Financial Results

Net Revenue. Total net revenue increased by 27.1% to $211.8 million in fiscal year 2019 from $166.7 million in fiscal year 2018. Net revenue from online education services, books and reference materials, and other sources contributed 68.9%, 12.9% and 18.2%, respectively, of total net revenues for fiscal year 2019.

Online education services. Net revenue from online education services increased by 24.7% to $145.9 million in fiscal year 2019 from $117.0 million in fiscal year 2018.

Books and reference materials. Net revenue from books and reference materials increased by 168.0% to $27.4 million in fiscal year 2019 from $10.2 million in fiscal year 2018. 

Others. Net revenue from other sources decreased by 2.2% to $38.5 million in fiscal year 2019 from $39.4 million in fiscal year 2018.

Cost of Sales. Cost of sales increased by 19.2% to $104.7 million in fiscal year 2019 from $87.9 million in fiscal year 2018. Non-GAAP1 cost of sales increased by 19.4% to $104.7 million in fiscal year 2019 from $87.7 million in fiscal year 2018.

Gross Profit and Gross Margin. Gross profit was $107.1 million in fiscal year 2019, up 35.9% from $78.8 million in fiscal year 2018. Non-GAAP1 gross profit was $107.1 million, increasing by 35.7% from $78.9 million in fiscal year 2018. Gross margin was 50.6% in the fiscal year 2019, compared with 47.3% in fiscal year 2018. Non-GAAP1 gross margin was 50.6% in fiscal year 2019, compared with 47.4% in fiscal year 2018.

Operating Expenses. Total operating expenses increased by 30.9% to $86.4 million in fiscal year 2019 from $66.0 million in fiscal year 2018. Non-GAAP1 total operating expenses increased by 32.2% to $84.4 million in fiscal year 2019 from $63.8 million in fiscal year 2018.

Selling expenses. Selling expenses increased by 37.4% to $61.5 million in fiscal year 2019 from $44.7 million in fiscal year 2018. Non-GAAP1 selling expenses increased by 37.7% to $61.5 million in fiscal year 2019 from $44.6 million in fiscal year 2018.

General and administrative expenses. General and administrative expenses increased by 17.2% to $24.9 million in fiscal year 2019 from $21.3 million in fiscal year 2018. Non-GAAP1 general and administrative expenses increased by 19.6% to $22.9 million in fiscal year 2019 from $19.2 million in fiscal year 2018.

Change in fair value in connection with business combination. Change in fair value in connection with business combination was $0.7 million in fiscal year 2019, compared with $0.1 million in fiscal year 2018, attributable to the decrease in fair value of contingent consideration with respect to the Company's equity interest investment in Beijing Ruida.

Gain from Deconsolidation of a Subsidiary. Gain from deconsolidation of a subsidiary of $6.9 million related to the gain on the disposal of 60% equity interest, and fair value change of the remaining 40% equity interest, in Champion Tax Advisory or "Tax School Program."

Impairment loss from long-term investments. Impairment loss from long-term investments increased to $6.9 million in fiscal year 2019 from $2.8 million in fiscal year 2018.

Impairment of goodwill. Impairment of goodwill was $1.5 million in fiscal year 2019, due to impairment of the value of the Company's business start-up training services segment.

Income Tax Expense. Income tax expense increased by 252.0% to $8.1 million in fiscal year 2019 from $2.3 million in fiscal year 2018.

Net Income Attributable to CDEL. As a result of the foregoing, net income attributable to CDEL was $21.3 million in fiscal year 2019, up 82.8% compared with net income attributable to CDEL of $11.6 million in fiscal year 2018. Non-GAAP1 net income attributable to CDEL was $27.6 million in fiscal year 2019, up 71.0% compared with non-GAAP1 net income attributable to CDEL of $16.1 million in fiscal year 2018.

Operating Cash Flow. Net operating cash inflow increased by 45.7% to $73.0 million in fiscal year 2019 from $50.1 million in fiscal year 2018.

Outlook

For the first quarter of fiscal 2020, the Company expects to generate total net revenue in the range of $51.1 million to $53.3 million, representing year-over-year growth of approximately 20% to 25%.

For fiscal year 2020, the Company expects to generate total net revenues in the range of $254.2 million to $264.8 million, representing year-over-year growth of approximately 20% to 25%.

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 20, 2019 (9:00 p.m. Beijing Time on Wednesday, November 20, 2019) 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, China: +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 27, 2019 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: 3816479

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

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

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, 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 2020 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 promotion of the Company's lifelong learning ecosystem, as well as cost control and year-over-year improvement of operating margins, revenue and profitability) 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.

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, impairment loss of long-term investments net of noncontrolling interests and taxes calculated using specific tax treatments applicable to the adjustments based on their respective jurisdictions, and impairment of goodwill. 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, impairment loss of long-term investments net of noncontrolling interests and taxes calculated using specific tax treatments applicable to the adjustments based on their respective jurisdictions, and impairment of goodwill 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: IR@cdeledu.com

The Piacente Group, Inc. 
Xi Zhang 
Tel: +86-10-6508-0677
E-mail: dl@tpg-ir.com

In the United States: 

The Piacente Group, Inc.    
Brandi Piacente
Tel: +1 212-481-2050
Email: dl@tpg-ir.com

(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, 2018


September 30, 2019



(Derived from Audited)


(Unaudited)


Assets:





Current assets:






Cash and cash equivalents

30,826


67,977



Restricted cash

51,736


38,358



Short term investments 

17,073


22,118



Accounts receivable, net of allowance for doubtful accounts of
US$1,282 and US$1,342 as of September 30, 2019 and September 30, 2018, respectively

 

7,280


7,330



Inventories

2,782


4,232



Prepayment and other current assets

17,054


27,247



Deferred cost

1,125


1,427



   Total current assets

127,876


168,689








Non-current assets:






Property, plant and equipment, net

27,972


37,935



Goodwill

79,516


74,829



Long term investments 

33,837


25,155



Other intangible assets, net

39,500


30,113



Deposit for purchase of non-current assets

8,126


4,448



Deferred tax assets

5,711


3,497



Other non-current assets

6,387


10,092



   Total non-current assets

201,049


186,069









   Total assets

328,925


354,758








Liabilities and equity:





Current liabilities:






Bank borrowings

50,975


38,502



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$32,401 and US$34,993 as of September 30, 2019 and
September 30, 2018, respectively)

42,141


38,867



Income tax payable (including income tax payable of the consolidated VIE without
recourse to China Distance Education Holdings Limited of US$9,948 and
US$$4,847 as of September 30, 2019 and September 30, 2018, respectively)

9,293


11,924



Deferred revenue - current portion (including deferred revenue of the consolidated
VIE without recourse to China Distance Education Holdings Limited of US$90,747 
and US$77,299 as of September 30, 2019 and September 30, 2018, respectively)

78,194


91,585



Refundable fees - current portion (including refundable fees of the consolidated VIE
without recourse to China Distance Education Holdings Limited of US$5,728 and
US$13,837 as of September 30, 2019 and September 30, 2018, respectively)

13,837


5,728



   Total current liabilities

194,440


186,606








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$32,930 and nil as of September 30, 2019 and September 30, 2018, respectively)

-


32,930



Refundable fees - non-current portion (including refundable fees of the consolidated
VIE without recourse to China Distance Education Holdings Limited of US$398 and
nil as of September 30, 2019 and September 30, 2018, respectively)

-


398



Deferred tax liabilities 

12,693


11,254



Long-term bank borrowing

12,027


-



Total non-current liabilities

24,720


44,582















   Total liabilities

219,160


231,188








Equity






Ordinary shares (par value of US$0.0001 per share; 500,000,000 shares authorized; 
134,210,745 and 133,275,521 shares issued and outstanding at September 30, 2019
and September 30, 2018, respectively)

13


13



Additional paid-in capital

21,557


24,507



Accumulated other comprehensive loss

(7,013)


(12,533)



Retained Earnings

29,717


60,668



   Total China Distance Education Holdings Limited shareholder's equity

44,274


72,655



Noncontrolling interest

65,491


50,915



 Total equity

109,765


123,570



  Total liabilities and equity

328,925


354,758








 

 

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,


2018


2019





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





Online education services

36,539


49,467


Books and reference materials

1,125


5,740


Others

15,962


13,484


-  Sale of learning simulation software

2,974


3,366


-  Business start-up training services

1,724


483


-  Others

11,264


9,635


   Total net revenues

53,626


68,691






Cost of sales





Cost of services and others

(24,798)


(22,791)


Cost of tangible goods sold

(1,442)


(2,492)


   Total cost of sales

(26,240)


(25,283)






Gross profit

27,386


43,408





Operating expenses





Selling expenses

(14,287)


(16,133)


General and administrative expenses

(5,793)


(7,064)


   Total operating expenses

(20,080)


(23,197)

Change in fair value in connection with business combination

3,950


-

Other operating income

926


535






Operating income 

12,182


20,746





Impairment of goodwill

-


(1,517)

Impairment loss from long-term investments

(2,835)


(6,920)

Interest income

717


493

Interest expense

(809)


(525)

Exchange gain

2,973


3,399






Income before income taxes

12,228


15,676

Income tax expense

(1,720)


(6,044)

Loss from equity method investments

(21)


(465)





Net income

10,487


9,167

Net income/(loss) attributable to noncontrolling interest

821


(4,602)

Net income attributable to China Distance Education Holdings Limited

9,666


13,769

 

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




Net income attributable to China Distance Education Holdings Limited 
shareholders





Basic

0.073


0.103


Diluted

0.072


0.103

 

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




Net income attributable to China Distance Education Holdings Limited 
shareholders





Basic

0.290


0.411


Diluted

0.290


0.411





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





Basic

132,731,579


133,399,392


Diluted

133,396,825


134,333,486


 

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,


2018


2019





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





Online education services

117,026


145,917


Books and reference materials

10,213


27,372


Others

39,429


38,533


-  Sale of learning simulation software

11,576


12,996


-  Business start-up training services

4,582


2,741


-  Others

23,271


22,796


   Total net revenues

166,668


211,822






Cost of sales





Cost of services and others

(78,936)


(85,252)


Cost of tangible goods sold

(8,947)


(19,489)


   Total cost of sales

(87,883)


(104,741)






Gross profit

78,785


107,081





Operating expenses





Selling expenses

(44,717)


(61,460)


General and administrative expenses

(21,253)


(24,919)


Total operating expenses

(65,970)


(86,379)

Change in fair value in connection with business combination

84


695

Other operating income

3,051


2,968






Operating income 

15,950


24,365





Impairment of goodwill

-


(1,517)

Impairment loss from long-term investments

(2,835)


(6,920)

Interest income

2,522


2,207

Interest expense

(3,331)


(2,819)

Gain from disposal of an investment

-


318

Gain from deconsolidation of a subsidiary

-


6,869

Exchange gain

2,476


3,296






Income before income taxes

14,782


25,799

Income tax expense

(2,307)


(8,121)

Loss from equity method investments

(172)


(1,484)





Net income

12,303


16,194

Net income/(loss) attributable to noncontrolling interest

677


(5,060)

Net income attributable to China Distance Education Holdings
Limited

11,626


21,254

 

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




Net income attributable to China Distance Education Holdings Limited 
shareholders





Basic

0.087


0.159


Diluted

0.087


0.159

 

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




Net income attributable to China Distance Education Holdings Limited 
shareholders





Basic

0.347


0.635


Diluted

0.347


0.635





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





Basic

132,363,620


133,060,900


Diluted

133,117,155


134,138,117

 

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,



2018


2019



(Unaudited)


(Unaudited)






Cost of sales


26,240


25,283

Share-based compensation expense in cost of sales


45


-

Non-GAAP cost of sales


26,195


25,283






Selling expenses


14,287


16,133

Share-based compensation expense in selling expenses


20


-

Non-GAAP selling expenses


14,267


16,133






General and administrative expenses


5,793


7,064

Share-based compensation expense in general and administrative expenses


560


490

Non-GAAP general and administrative expenses


5,233


6,574






Gross profit


27,386


43,408

Share-based compensation expenses


45


0

Non-GAAP gross profit


27,431


43,408






Gross profit margin


51.1%


63.2%

Non-GAAP gross profit margin


51.2%


63.2%






Operating income


12,182


20,746

Share-based compensation expenses


625


490

Non-GAAP operating income


12,807


21,236






Operating margin


22.7%


30.2%

Non-GAAP operating margin


23.9%


30.9%






Net income attributable to CDEL


9,666


13,769

Share-based compensation expense


625


490

Impairment loss from long-term investments, net of tax effect of nil and US$623 
     for the year ended September 30, 2019 and September 30, 2018, respectively


2,212


 

6,920

Impairment loss from goodwill


-


1,517

Noncontrolling interests impact on adjustments


-


(4,094)

Non-GAAP net income attributable to CDEL


12,503


18,602






Net income margin attributable to CDEL


18.0%


20.0%

Non-GAAP net income margin attributable to CDEL


23.3%


27.1%






Net income per share attributable to CDEL—basic


0.073


0.103

Net income per share attributable to CDEL—diluted


0.072


0.103

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


0.094


0.139

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


0.094


0.138






Net income per ADS attributable to CDEL shareholders—basic (note 1)


0.290


0.411

Net income  per ADS attributable to CDEL shareholders—diluted (note 1)


0.290


0.411

Non-GAAP net income per ADS attributable to CDEL shareholders—basic (note 1)


 

0.377


 

0.558

Non-GAAP net income per ADS attributable to CDEL shareholders—diluted (note 1)


 

0.375


 

0.554






Weighted average shares used in calculating basic net income per share 
     attributable to CDEL


132,731,579


133,399,392

Weighted average shares used in calculating diluted net income per share 
     attributable to CDEL


133,396,825


134,333,486

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


132,731,579


133,399,392

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


133,396,825


134,333,486






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)






Year Ended September 30,



2018


2019



(Unaudited)


(Unaudited)






Cost of sales


87,883


104,741

Share-based compensation expense in cost of sales


161


23

Non-GAAP cost of sales


87,722


104,718






Selling expenses


44,717


61,460

Share-based compensation expense in selling expenses


80


10

Non-GAAP selling expenses


44,637


61,450






General and administrative expenses


21,253


24,919

Share-based compensation expense in general and administrative expenses


2,065


1,972

Non-GAAP general and administrative expenses


19,188


22,947






Gross profit


78,785


107,081

Share-based compensation expenses


161


23

Non-GAAP gross profit


78,946


107,104






Gross profit margin


47.3%


50.6%

Non-GAAP gross profit margin


47.4%


50.6%






Operating income


15,950


24,365

Share-based compensation expenses


2,306


2,005

Non-GAAP operating income


18,256


26,370






Operating margin


9.6%


11.5%

Non-GAAP operating margin


11.0%


12.4%






Net income attributable to CDEL


11,626


21,254

Share-based compensation expense


2,306


2,005

Impairment loss from long-term investments, net of tax effect of nil and US$623 
     for the year ended September 30, 2019 and September 30, 2018, respectively


2,212


 

6,920

Impairment loss from goodwill


-


1,517

Noncontrolling interests impact on adjustments


-


(4,094)

Non-GAAP net income attributable to CDEL


16,144


27,602






Net income margin attributable to CDEL


7.0%


10.0%

Non-GAAP net income margin attributable to CDEL


9.7%


13.0%






Net income per share attributable to CDEL—basic


0.087


0.159

Net income per share attributable to CDEL—diluted


0.087


0.159

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


0.122


0.207

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


0.121


0.206






Net income per ADS attributable to CDEL shareholders—basic (note 1)


0.347


0.635

Net income  per ADS attributable to CDEL shareholders—diluted (note 1)


0.347


0.635

Non-GAAP net income per ADS attributable to CDEL shareholders—basic (note 1)


 

0.488


0.830

Non-GAAP net income per ADS attributable to CDEL shareholders—diluted (note 1)


 

0.485


0.823






Weighted average shares used in calculating basic net income per share attributable
to CDEL


132,363,620


133,060,900

Weighted average shares used in calculating diluted net income per share
attributable to CDEL


133,117,155


134,138,117

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


132,363,620


133,060,900

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


133,117,155


134,138,117






Note 1: Each ADS represents four ordinary shares


 

Cision

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