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Hailiang Education Group Inc. Reports Fiscal Year 2019 Financial Results

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HANGZHOU, China, Sept. 23, 2019 /PRNewswire/ -- Hailiang Education Group Inc. (Nasdaq: HLG) ("Hailiang Education" or the "Company" or "we" or "us"), an education and management service provider of primary, middle, and high schools in the PRC, announced its financial results for the fiscal year ended June 30, 2019.

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"In fiscal year 2019, we expedited our asset-light strategy persistently and focused on enhancing our educational service offerings to our students. By sponsoring additional schools and providing education and management services to a variety of public and private schools, Hailiang Education has extended its school network from 23 schools in fiscal year 2018 to 36 schools in fiscal year 2019. As of June 30, 2019, we sponsored 9 affiliated schools and provided education and management services to 27 managed schools, and the aggregate number of students enrolled in both our affiliated and managed schools reached 61,109 students. In addition, our international programs continued to grow rapidly, with an increase of enrollment from 3,860 students as of June 30, 2018 to 4,553 students as of June 30, 2019," said Mr. Ming Wang, Chairman and Chief Executive Officer of Hailiang Education. "We achieved record revenues and net profit for fiscal year 2019, which represented a year-over-year increase of 28.2% and 36.8%, respectively. Our excellent financial performance was mainly attributed to the increase in the number of schools and students, the increase in tuition fees and diversified ancillary education service offerings. We look forward to implementing our hybrid development strategy, a combination of asset-light mode and strategic acquisitions, to expand our affiliated and managed school network among major metropolitan areas, improving the quality of our faculty, attracting more talented students, and diversifying our educational service offerings in the next fiscal year. We strive to provide excellent K-12 education services to our students."


 For the year ended June 30 

 (RMB millions, except per share data) 

2019


2018


 % Change 

 Revenue 

1,499.0


1,169.3


28.2%

Basic educational program 

805.7


764.2


5.4%

International program 

411.3


329.8


24.7%

Educational training services

144.2


36.4


296.2%

Study trip services

81.5


13.8


490.6%

Education and management services

40.9


19.0


115.3%

Others 

15.4


6.1


152.5%

 Gross Profit 

472.1


364.7


29.4%

 Gross Margin 

31.5%


31.2%


0.3pp*

 Operating Profits 

399.6


280.5


42.5%

 Operating Margin 

26.7%


24.0%


2.7pp*

 Net Profit 

315.8


230.9


36.8%

 EPS 

0.71


0.54


31.5%

*Notes: pp represents percentage points






Fiscal Year 2019 Financial Highlights

  • Revenue was RMB1,499.0 million (US$218.4 million), an increase of 28.2% from RMB1,169.3 million in fiscal year 2018.
  • Gross profit was RMB472.1 million (US$68.8 million), an increase of 29.4% from RMB364.7 million in fiscal year 2018.
  • Gross margin was 31.5% compared with 31.2% in the same period last year.
  • Net profit was RMB315.8 million (US$46.0 million), an increase of 36.8% from RMB230.9 million in fiscal year 2018.
  • Basic and diluted earnings per share were RMB0.71 (US$0.10) compared with RMB0.54 in fiscal year 2018.

Fiscal Year 2019 Operational Highlights

  • As of June 30, 2019, the scale of the Company's school network was expanded to 36 schools, 9 of which were affiliated schools that we sponsored and 27 of which were managed schools that we provided education and management services. The aggregate number of enrollments in both our affiliated and managed schools were 61,109 students.
  • As of June 30, 2019, the total enrollment of students in our affiliated schools which we sponsored was 22,819.
  • As of June 30, 2019, the number of students enrolled in the basic educational programs of our affiliated schools were 18,266, and the number of students enrolled in the international programs of our affiliated schools was 4,553.

Fiscal Year 2019 Financial Results

Revenue

Revenue increased by 28.2% to RMB1,499.0 million (US$218.4 million) in fiscal year 2019, from RMB1,169.3 million in fiscal year 2018. It was mainly driven by the increase in revenue from both our basic educational program and international program, as well as our educational training services, study trip services, education and management services during the same periods.

Revenue from the basic educational programs increased by RMB41.5 million (US$6.0 million), or 5.4% to RMB805.7 million (US$117.4 million) in fiscal year 2019, from RMB764.2 million in fiscal year 2018. This was primarily driven by an increase in the average tuition charged in basic educational programs during the same periods.

Revenue from the international programs increased by RMB81.5 million (US$11.9 million), or 24.7%, to RMB411.3 million (US$59.9 million) in fiscal year 2019, from RMB329.8 million in fiscal year 2018. This was mainly due to an increase in the number of students enrolled in our international programs as well as an increase in the average tuition charged in our international programs.

Revenue from educational training services increased by RMB107.8 million (US$15.7 million), or 296.2%, to RMB144.2 million (US$21.0 million) in fiscal year 2019, from RMB36.4 million in fiscal year 2018. This was mainly derived from the increase in student attendances in educational training programs resulting from the expansion of our affiliated and managed schools.

Revenue from study trip services increased by RMB67.7 million (US$9.9 million), or 490.6%, to RMB81.5 million (US$11.9 million) in fiscal year 2019, from RMB13.8 million in fiscal year 2018. This was mainly derived from the increase in the number of students participate in study trips.

Revenue from education and management services increased by RMB21.9 million (US$3.2 million), or 115.3%, to RMB40.9 million (US$6.0 million) in fiscal year 2019, from RMB19.0 million in fiscal year 2018. This was mainly due to the increase of number of our managed schools during the same periods.

Other revenue mainly represents revenue derived from overseas study consulting services and hotel management services. Revenue from others was RMB15.4 million (US$2.2 million) in fiscal year 2019.

Cost of Revenue

Cost of revenue increased by RMB222.2 million (US$32.4 million) or 27.6%, to RMB1,026.9 million (US$149.6 million) in fiscal year 2019, from RMB804.7 million in fiscal year 2018. The increase was primarily due to an increase in labor costs resulting from an increase in the total number of teachers and educational staffs and a general increase in the compensation levels as well as the increase in student related cost and transportation cost.

Gross Profit and Gross Margin

Gross profit increased by 29.4% to RMB472.1 million (US$68.8 million) in fiscal year 2019, from RMB364.7 million in fiscal year 2018.

Gross margin increased by 0.3 percentage points to 31.5% in fiscal year 2019, compared with 31.2% in fiscal year 2018.

Operating Expenses

Operating expenses increased by RMB9.8 million (US$1.4 million) or 11.1%, to RMB97.7 million (US$14.2 million) in fiscal year 2019, from RMB87.9 million in fiscal year 2018.

Selling expenses slightly increased by RMB0.5 million (US$0.07 million) or 2.0%, to RMB25.0 million (US$3.6 million) in fiscal year 2019, from RMB24.5 million in fiscal year 2018.

Administrative expenses increased by RMB9.3 million (US$1.4 million) or 14.7%, to RMB72.7 million (US$10.6 million) in fiscal year 2019 from RMB63.4 million in fiscal year 2018. This increase was primarily due to the increase in labor cost resulting from the increase in the compensation level of our office and administrative staff.

Other Income, net

Other income consists of government grants and other miscellaneous income. Other income increased by RMB21.4 million (US$3.1 million), or 578.4%, to RMB25.1 million (US$3.7 million) in fiscal year 2019, from RMB3.7 million in fiscal year 2018, primarily due to the increase of government grants in fiscal year 2019.

Net Finance Income

Net finance income increased by RMB13.5 million (US$2.0 million), or 118.4%, to RMB24.9 million (US$3.6 million) in fiscal year 2019, from RMB11.4 million in fiscal year 2018, which was primarily due to the increase in interest income caused by more funds deposited with a related party in the 2019 fiscal year compared to the 2018 fiscal year.

Income Tax Expense

Income tax expense increased by RMB42.4 million (US$6.2 million) or 64.0%, to RMB108.7 million (US$15.8 million) in fiscal year 2019, from RMB66.3 million in fiscal year 2018. The increase was mainly driven by the growth of taxable profits.

Net Profit

Net profit increased by 36.8% to RMB315.8 million (US$46.0 million) in fiscal year 2019, from RMB230.9 million in fiscal year 2018.

Basic and Diluted Earnings per Share

Basic and diluted earnings per share were RMB0.71 (US$0.10) in fiscal year 2019, compared with basic and diluted earnings per share of RMB0.54 in fiscal year 2018.

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