REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
ordinary shares, par value $0.0001 per share |
. |
Large accelerated filer | ☐ | ☒ | ||||
Non-accelerated filer |
☐ | Emerging growth company |
International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ |
Other ☐ |
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49 |
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89 |
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89 |
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121 |
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144 |
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151 |
• | all references to years are to the calendar year from January 1 to December 31 and references to our fiscal year or years are to the fiscal year or years ended September 30; |
• | “we,” “us,” “our company,” “our,” and “CDEL” refer to China Distance Education Holdings Limited and its subsidiaries and PRC affiliated entity, Beijing Champion Hi-Tech Co., Ltd., or Beijing Champion, and its subsidiaries, and Beijing Champion Healthcare Education Technology Co., Ltd., or Champion Healthcare Education, as the context requires; |
• | “Zhengbao Yucai” refers to Beijing Zhengbao Yucai Education Technology Company Limited by Shares. |
• | “course enrollment” for a period refers to the cumulative total number of fee-based courses enrolled in by our course participants during such period, counting each and every course enrolled in by a single student as one course enrollment; |
• | “China,” “Chinese” and “PRC” refers to the People’s Republic of China, excluding, for purposes of this annual report only, Taiwan and the Special Administrative Regions of Hong Kong and Macau; |
• | all references to “Renminbi” or “RMB” are to the legal currency of China, and all references to “U.S. dollar,” “dollar,” “$” or “US$” are to the legal currency of the United States; and |
• | “U.S. GAAP” refers to generally accepted accounting principles in the United States. |
• | our goals and growth strategies; |
• | our 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; |
• | the anticipated benefits of acquisition of Jiangsu Zhengbao Asset Financial Advisory Co., Ltd. (formerly known as Nanjing Xin Asset Financial Advisory Co., Ltd.), or Jiangsu Asset, and Beijing Ruida Chengtai Education Technology Co., Ltd., or Beijing Ruida, and other strategic investments; |
• | the anticipated benefits of the disposal of Beijing Champion Tax Management and Advisory Co., Ltd., or Champion Tax Advisory, or “Tax School Program” (now known as Beijing Champion Yuanjian Education Technology Co., Ltd., or Champion Yuanjian); |
• | competition in the education and test preparation markets; |
• | 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; |
• | the impact of the outbreak of the coronavirus disease (“COVID-19”); and |
• | the impact of the completion or termination of the currently pending going-private transaction with respect to the Company described in “Item 4.A. History and Development of the Company — Proposed Going-private Transaction.” |
ITEM 3. |
KEY INFORMATION |
Years Ended September 30, |
||||||||||||||||||||
2016 |
2017 |
2018 |
2019 |
2020 |
||||||||||||||||
(In thousands of $, except share, per share and per ADS data) |
||||||||||||||||||||
Selected Consolidated Statement of Operations Data: |
||||||||||||||||||||
Net revenues: |
||||||||||||||||||||
Online education services |
93,923 | 95,503 | 117,026 | 145,917 | 159,338 | |||||||||||||||
Books and reference materials |
8,067 | 8,980 | 10,213 | 27,372 | 22,061 | |||||||||||||||
Others |
15,558 | 26,505 | 39,429 | 38,533 | 28,159 | |||||||||||||||
Total net revenues |
117,548 | 130,988 | 166,668 | 211,822 | 209,558 | |||||||||||||||
Cost of sales: |
||||||||||||||||||||
Cost of services and others (5) |
(43,796 | ) | (50,540 | ) | (78,936 | ) | (85,252 | ) | (81,976 | ) | ||||||||||
Cost of tangible goods sold |
(4,538 | ) | (6,872 | ) | (8,947 | ) | (19,489 | ) | (19,622 | ) | ||||||||||
Total cost of sales |
(48,334 | ) | (57,412 | ) | (87,883 | ) | (104,741 | ) | (101,598 | ) | ||||||||||
Gross profit |
69,214 | 73,576 | 78,785 | 107,081 | 107,960 | |||||||||||||||
Operating expenses: |
||||||||||||||||||||
Selling expenses (5) |
(24,517 | ) | (34,910 | ) | (44,717 | ) | (61,460 | ) | (69,848 | ) | ||||||||||
General and administrative expenses (5) |
(16,778 | ) | (19,468 | ) | (21,253 | ) | (24,919 | ) | (25,478 | ) | ||||||||||
Impairment of goodwill |
— | — | — | (1,517 | ) | — | ||||||||||||||
Total operating expenses |
(41,295 | ) | (54,378 | ) | (65,970 | ) | (87,896 | ) | (95,326 | ) | ||||||||||
Change in fair value in connection with business combination |
— | — | 84 | 695 | — | |||||||||||||||
Other operating income |
806 | 1,912 | 3,051 | 2,968 | 6,155 | |||||||||||||||
Operating income |
28,725 | 21,110 | 15,950 | 22,848 | 18,789 | |||||||||||||||
Interest income (expense), net |
1,465 | 482 | (809 | ) | (612 | ) | 1,534 | |||||||||||||
Exchange gain (loss) |
2,462 | 128 | 2,476 | 3,296 | (5,261 | ) | ||||||||||||||
Impairment loss from long-term investments |
— | (679 | ) | (2,835 | ) | (6,920 | ) | (910 | ) | |||||||||||
Gain from disposal of an investment |
— | — | — | 318 | — | |||||||||||||||
Gain from deconsolidation of a subsidiary |
— | — | — | 6,869 | — | |||||||||||||||
Income before income taxes |
32,652 | 21,041 | 14,782 | 25,799 | 14,152 | |||||||||||||||
Income tax expense |
(6,150 | ) | (4,620 | ) | (2,307 | ) | (8,121 | ) | (5,460 | ) | ||||||||||
Loss from equity method investments |
(91 | ) | (153 | ) | (172 | ) | (1,484 | ) | (555 | ) | ||||||||||
Net income |
26,411 | 16,268 | 12,303 | 16,194 | 8,137 | |||||||||||||||
Less: Net income (loss) attributable to noncontrolling interest |
121 | 1,333 | 677 | (5,060 | ) | (2,293 | ) | |||||||||||||
Net income attributable to China Distance Education Holdings Limited |
26,290 | 14,935 | 11,626 | 21,254 | 10,430 | |||||||||||||||
Net income per ordinary share: |
||||||||||||||||||||
Net income attributable to China Distance Education Holdings Limited shareholders |
||||||||||||||||||||
Basic |
0.19 | 0.11 | 0.09 | 0.16 | 0.08 | |||||||||||||||
Diluted |
0.19 | 0.11 | 0.09 | 0.16 | 0.08 | |||||||||||||||
Dividends declared per share |
0.225 | 0.1125 | 0.1125 | — | 0.145 |
Years Ended September 30, |
||||||||||||||||||||
2016 |
2017 |
2018 |
2019 |
2020 |
||||||||||||||||
(In thousands of $, except share, per share and per ADS data) |
||||||||||||||||||||
Net income per ADS: |
||||||||||||||||||||
Net income attributable to China Distance Education Holdings Limited shareholders (1) |
||||||||||||||||||||
Basic |
0.77 | 0.45 | 0.35 | 0.64 | 0.31 | |||||||||||||||
Diluted |
0.76 | 0.45 | 0.35 | 0.64 | 0.31 | |||||||||||||||
Weighted average shares used in calculating net income per share: |
||||||||||||||||||||
Basic |
136,497,929 | 131,432,211 | 132,363,620 | 133,060,900 | 133,984,929 | |||||||||||||||
Diluted |
138,465,944 | 133,203,255 | 133,117,155 | 134,138,117 | 135,232,224 | |||||||||||||||
Other Consolidated Financial Data |
||||||||||||||||||||
Gross Margin (2) |
58.9 | % | 56.2 | % | 47.3 | % | 50.6 | % | 51.5 | % | ||||||||||
Operating Margin (3) |
24.4 | % | 16.1 | % | 9.6 | % | 10.8 | % | 9.0 | % | ||||||||||
Net Margin (4) |
22.4 | % | 11.4 | % | 7.0 | % | 10.0 | % | 5.0 | % |
(1) |
One ADS represents four ordinary shares. |
(2) |
Gross margin represents gross profit as a percentage of net revenues. |
(3) |
Operating margin represents operating income as a percentage of net revenues. |
(4) |
Net margin represents net income attributable to CDEL as a percentage of net revenues. |
(5) |
Includes the following amounts of share-based compensation expenses for the periods indicated: |
Years Ended September 30, |
||||||||||||||||||||
2016 |
2017 |
2018 |
2019 |
2020 |
||||||||||||||||
(in thousands of $) |
||||||||||||||||||||
Cost of services and others |
162 | 164 | 161 | 23 | 139 | |||||||||||||||
Selling expenses |
84 | 85 | 80 | 10 | 58 | |||||||||||||||
General and administrative expenses |
1,769 | 1,862 | 2,065 | 1,972 | 2,421 | |||||||||||||||
Total share-based compensation expenses |
2,015 | 2,111 | 2,306 | 2,005 | 2,618 |
As of September 30, |
||||||||||||||||||||
2016 |
2017 |
2018 |
2019 |
2020 |
||||||||||||||||
(in thousands of $) |
||||||||||||||||||||
Selected Consolidated Balance Sheet Data: |
||||||||||||||||||||
Cash and cash equivalents |
53,677 | 60,526 | 30,826 | 67,977 | 80,056 | |||||||||||||||
Term deposits |
— | — | — | — | 13,440 | |||||||||||||||
Restricted cash – current |
15,547 | 34,855 | 51,736 | 38,358 | 4,212 | |||||||||||||||
Restricted cash – non-current |
— | — | — | — | 16,849 | |||||||||||||||
Short-term investments |
1,278 | 5,261 | 17,073 | 22,118 | 20,343 | |||||||||||||||
Long-term investments |
3,079 | 43,631 | 33,837 | 25,379 | 26,324 | |||||||||||||||
Total assets |
148,920 | 224,551 | 328,925 | 355,350 | 398,139 | |||||||||||||||
Short-term bank borrowings |
15,551 | 29,965 | 50,975 | 38,502 | 4,012 | |||||||||||||||
Deferred revenue – current |
36,332 | 50,506 | 78,194 | 94,202 | 105,953 | |||||||||||||||
Refundable fees – current |
862 | 1,074 | 13,837 | 435 | 1,729 | |||||||||||||||
Deferred revenue – non-current |
— | — | — | 33,564 | 33,928 | |||||||||||||||
Refundable fees – non-current |
— | — | — | 2,440 | 2,602 | |||||||||||||||
Long-term bank borrowing |
— | 19,930 | 12,027 | — | 16,000 | |||||||||||||||
Total liabilities |
92,448 | 151,739 | 219,160 | 231,604 | 271,195 | |||||||||||||||
Total China Distance Education Holdings Limited shareholders’ equity |
45,236 | 48,783 | 44,274 | 72,831 | 77,975 | |||||||||||||||
Total noncontrolling interest |
11,236 | 24,029 | 65,491 | 50,915 | 48,969 | |||||||||||||||
Total liabilities and equity |
148,920 | 224,551 | 328,925 | 355,350 | 398,139 | |||||||||||||||
Ordinary shares |
13 | 13 | 13 | 13 | 14 |
• | If we are unable to continue to attract course participants to enroll in our courses, or to charge our course participants competitive but profitable fees, our revenues may decline and we may not be able to maintain profitability. |
• | If we fail to develop and introduce new courses, services and products that meet our target course participants’ expectations, or adopt new technologies important to our business, our competitive position and ability to generate revenues may be materially and adversely affected. |
• | If we fail to maintain and enhance recognition of our brands, we may face difficulty in obtaining new business partners and course participants, and our business reputation and operating results may be harmed. |
• | Our business could be adversely affected if there are changes in the perceived difficulty, requirements or formats of professional examinations, courses and continuing education in China, or if certain professional qualifications and certificates are cancelled by the government authorities. |
• | Our business could be adversely affected if there are changes in the timing of release of examination policies. |
• | Our business is dependent on our lecturers comprised primarily of academics and experienced practitioners within their respective industries who are typically engaged on a part-time contractual basis. |
• | Our business, financial condition and results of operations have been and are likely to continue to be materially and adversely affected by the outbreak of COVID-19. |
• | The consummation of the proposed going-private transaction is uncertain, and the announcement and pendency of the transaction could have an adverse effect on our business, results of operations and financial condition. |
• | Failure to attract and retain qualified personnel and experienced senior management could disrupt our operations and adversely affect our business and competitiveness. |
• | Our financial performance and prospects could be affected by natural calamities or health epidemics. |
• | Substantial uncertainties and restrictions exist with respect to the interpretation and application of PRC laws and regulations relating to the distribution of Internet content in China. If the PRC government finds that the structure we have adopted for our business operations does not comply with PRC laws and regulations, we could be subject to severe penalties, including the shutting down of our websites. |
• | Our contractual arrangements may be subject to national security review under PRC laws and regulations and, thus, be challenged by relevant regulatory authorities. |
• | We rely on contractual arrangements with our affiliated PRC entities and their shareholders for our China operations, which may not be as effective in providing operating control as direct ownership. |
• | New legislation or changes in the PRC regulatory requirements regarding private education may affect our business operations and prospects. |
• | The shareholders of our affiliated PRC entities may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition. |
• | We may rely principally on dividends and other distributions on equity paid by our PRC subsidiaries for our cash requirements. Limitations on the ability of our PRC subsidiaries to transfer funds to us could materially and adversely affect our ability to grow, make investments or acquisitions, pay dividends, and otherwise fund and conduct our businesses. |
• | If any of our affiliated entities fails to obtain and maintain the licenses and approvals required to conduct its internet related business in China, our business, financial condition and results of operations may be materially and adversely affected. |
• | Any changes in the PRC foreign investment legal regime may materially and adversely affect our operations and the contractual arrangements. |
• | PRC economic, political and social conditions, as well as changes in any government policies, laws and regulations, could adversely affect the overall economy in China or the prospects of the education market, which in turn could adversely affect our business. |
• | Evolution of and uncertainties in the interpretation and enforcement of PRC laws and regulations could adversely impact our corporate structure and business and limit the legal protections available to you and us. |
• | Fluctuations in exchange rates could result in foreign currency exchange losses. |
• | The discontinuation of any of the preferential tax treatments currently available us could materially increase our tax liabilities. |
• | The audit reports included in this annual report are prepared by an auditor who is not inspected by the Public Company Accounting Oversight Board and, as such, you are deprived of the benefits of such inspection. In addition, various legislative and regulatory developments related to U.S.-listed China-based companies due to lack of PCAOB inspection and other developments may have a material adverse impact on our listing and trading in the U.S. and the trading prices of our ADSs. |
• | Stock prices of companies with business operations primarily in China have fluctuated widely in recent years, and the trading prices of our ADSs are likely to be volatile, which could result in substantial losses to investors. |
• | The sale or availability for sale of substantial amounts of our ADSs could adversely affect their market price. |
• | The voting rights of holders of ADSs must be exercised in accordance with the terms of the deposit agreement, and the procedures established by the depositary. The process of voting through the depositary may involve delays that limit the time available to you to consider proposed shareholders’ actions and also may restrict your ability to subsequently revise your voting instructions. |
• | We are a Cayman Islands company and, because judicial precedent regarding the rights of shareholders is more limited under Cayman Islands law than under U.S. federal or state laws, holders of ADSs may have less protection of shareholder rights than they would under U.S. federal or state laws. |
• | Certain judgments obtained against us by our shareholders may not be enforceable. |
• | breakdowns or system failures resulting in a prolonged shutdown of our servers, including failures attributable to power shutdowns, or attempts to gain unauthorized access to our systems, which may cause loss or corruption of data or malfunctions of software or hardware; |
• | disruption or failure in the national backbone network, which would make it impossible for visitors and course participants to log on to our websites; |
• | damage from fire, flood, power loss and telecommunications failures; and |
• | any infection by or spread of computer virus. |
• | investors’ perception of, and demand for, securities of companies which primarily provide professional education and test preparation courses; |
• | conditions of the U.S. and other capital markets in which we may seek to raise funds; |
• | our future results of operations, financial condition and cash flows; |
• | PRC governmental regulation of foreign investment in Internet, educational services and professional training services companies; |
• | economic, political and other conditions in China; and |
• | PRC governmental policies relating to foreign currency borrowings. |
• | revoking the business and operating licenses of our PRC subsidiaries, Beijing Champion or its subsidiaries, or Champion Healthcare Education, which business and operating licenses are essential to the operation of our business; |
• | levying fines; |
• | confiscating our income, the income of our PRC subsidiaries or that of Beijing Champion or its subsidiaries or Champion Healthcare Education; |
• | shutting down our servers or blocking our websites; |
• | discontinuing or restricting our operations or the operations of our PRC subsidiaries, Beijing Champion or its subsidiaries or Champion Healthcare Education; |
• | imposing conditions or requirements with which we, our PRC subsidiaries, Beijing Champion or its subsidiaries or Champion Healthcare Education may not be able to comply; |
• | requiring us, our PRC subsidiaries, Beijing Champion or its subsidiaries or Champion Healthcare Education to restructure our relevant ownership structure, operations or contractual arrangements; and |
• | taking other regulatory or enforcement actions that could be harmful to our business. |
• | opposes the fundamental principles of the PRC constitution; |
• | compromises state security, divulges state secrets, subverts state power or damages national unity; |
• | harms the dignity or interests of the state; |
• | incites ethnic hatred or racial discrimination or damages inter-ethnic unity; |
• | sabotages China’s religious policy or propagates heretical teachings or feudal superstition; |
• | disseminates rumors, disturbs social order or disrupts social stability; |
• | propagates obscenity, pornography, gambling, violence, murder, fear or abets the commission of crimes; |
• | insults or slanders a third party or infringes upon the lawful rights of a third party; and |
• | includes other content prohibited by laws or regulations. |
• | provisions that restrict the ability of our shareholders to call meetings and to propose special matters for consideration at shareholder meetings; |
• | provisions that authorize our board of directors, without action by our shareholders, to issue preferred shares and to issue additional ordinary shares, including ordinary shares represented by ADSs; and |
• | provisions that provide for a staggered board, whereby our board will be divided into three classes of directors, with directors in each class serving staggered three-year terms. With a staggered board, at least two annual shareholders’ meetings, instead of one, would generally be required to effect a change in a majority of the board. A staggered board tends to discourage proxy contests for the election of directors and purchases of a substantial block of shares because a staggered board operates to prevent a third party from obtaining control of our board in a relatively short period of time. See “Item 6.C. Directors, Senior Management and Employees — Board Practices.” |
• | we do not wish to receive a discretionary proxy; |
• | we think there is substantial shareholder opposition to the particular question; or |
• | we think the subject of the particular question would have a material adverse impact on our shareholders. |
ITEM 4. |
INFORMATION ON THE COMPANY |
Discipline |
Website |
Contribution to Revenue (%) |
Number of Course Offerings |
Number of Classes |
||||||||||||
Accounting |
www.chinaacc.com www.ck100.com |
53.8 | % | 45 | 2,796 | |||||||||||
Healthcare |
www.med66.com |
12.4 | % | 38 | 858 | |||||||||||
Engineering & Construction |
www.jianshe99.com |
4.5 | % | 85 | 2,471 | |||||||||||
Legal |
www.ruidaedu.com |
2.9 | % | 5 | 205 | |||||||||||
Others |
2.4 | % | 92 | 1,315 | ||||||||||||
Total |
76.0 | % | 265 | 7,645 |
• | Elementary, Intermediate and Advanced Level Accounting Professional Qualification Examinations. |
• | CPA Qualification Examination. |
• | Continuing Education for Accounting Personnel. |
• | Tax Agent Qualification Examination. |
• | Professional development courses. |
• | International Professional Qualification Examinations. |
• | National Practicing Medical Doctor Qualification Examination |
• | Healthcare Professional Technical Qualification Examination. |
• | National Pharmacist Qualification Examination. |
• | National Nursing Qualification Examination. |
• | Health Manager Examination. |
• | Foundation Classes: |
• | Intensified Focus Classes: |
• | Exam Questions Analysis Classes: |
• | Crash-Course Classes: |
• | Exam Simulation System and/or Professional Development Courses: |
• | Live Streamed Courses: |
• | online and mobile payment on computers, tablets or smart phones using credit or debit cards, or via third-party payment networks; |
• | purchase of prepaid study cards; |
• | cash payment made at our offices; or |
• | installment loans offered by other institutions. |
• | Online-Offline Blended Learning: we work hand-in-hand |
• | Practical Training: we provide students accounting practical skills training courses to prepare them for real-world accounting work. |
• | Internship: we assist students in obtaining virtual internships in accounting where interns can handle real accounting tasks from our enterprise customers using our accounting cloud services. |
• | Employment Advisory & Recruitment: we offer students employment guidance services to help them prepare for job opportunities. Using our big data analysis, we can match the employment goals of students with the recruitment needs of employers. |
• | The Telecommunications Regulations (2014, as amended in 2016); |
• | The Administrative Measures for Telecommunications Business Operating Licenses (2017); and |
• | The Internet Information Services Administrative Measures (2000, as amended in 2011). |
• | the ownership structures of Beijing Champion and its subsidiaries, Champion Healthcare Education and our wholly owned subsidiaries in China are in compliance with existing published PRC laws and regulations; and |
• | our contractual arrangements among our wholly owned subsidiaries in China, Beijing Champion, Champion Healthcare Education and their shareholders, are valid and binding, will not result in any violation of published PRC laws or regulations currently in effect, and are enforceable in accordance with their terms and conditions. |
(1) | Equity pledge agreements, powers of attorney, acknowledgement letters, tri-party agreement re VIE structure and letter of undertaking |
(2) | Technical support and consultancy services agreement, courseware license agreement and letter of undertaking |
(3) | Software license agreement and courseware production entrustment agreement |
(4) | Equity pledge agreement, exclusive option agreement, powers of attorney, tri-party agreement re VIE structure and letter of undertaking |
(5) | Exclusive business cooperation agreement and letter of undertaking |
• | Number of enrollments in our courses |
• | Fees for our courses |
• | Our ability to expand the range of courses and other services. |
• | Impact of business acquisitions and strategic investments. |
Year Ended September 30, |
||||||||||||||||||||||||
2018 |
2019 |
2020 |
||||||||||||||||||||||
$ |
% of net revenues |
$ |
% of net revenues |
$ |
% of net revenues |
|||||||||||||||||||
(In thousands, except for percentages) |
||||||||||||||||||||||||
Net Revenues |
||||||||||||||||||||||||
Online education services |
117,026 | 70.2 | % | 145,917 | 68.9 | % | 159,338 | 76.0 | % | |||||||||||||||
Books and reference materials |
10,213 | 6.1 | % | 27,372 | 12.9 | % | 22,061 | 10.5 | % | |||||||||||||||
Others |
39,429 | 23.7 | % | 38,533 | 18.2 | % | 28,159 | 13.5 | % | |||||||||||||||
Total net revenues |
166,668 | 100.0 | % | 211,822 | 100.0 | % | 209,558 | 100.0 | % |
For the Year Ended September 30, |
||||||||||||||||||||||||
2018 |
2019 |
2020 |
||||||||||||||||||||||
$ |
% of net revenues |
$ |
% of net revenues |
$ |
% of net revenues |
|||||||||||||||||||
(In thousands of $, except for percentages) |
||||||||||||||||||||||||
Net Revenues |
166,668 | 100.0 | % | 211,822 | 100.0 | % | 209,558 | 100.0 | % | |||||||||||||||
Cost of sales: |
||||||||||||||||||||||||
Cost of services and others |
(78,936 | ) | (47.4 | )% | (85,252 | ) | (40.2 | )% | (81,976 | ) | (39.1 | )% | ||||||||||||
Cost of tangible goods sold |
(8,947 | ) | (5.3 | )% | (19,489 | ) | (9.2 | )% | (19,622 | ) | (9.4 | )% | ||||||||||||
Total cost of sales |
(87,883 | ) | (52.7 | )% | (104,741 | ) | (49.4 | )% | (101,598 | ) | (48.5 | )% | ||||||||||||
Gross profit and gross margin 1 |
78,785 | 47.3 | % | 107,081 | 50.6 | % | 107,960 | 51.5 | % |
1 |
Gross profit is equal to net revenues less cost of sales. Gross margin is equal to gross profit divided by net revenues. |
Years ended September 30, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
$ |
$ |
$ |
||||||||||
(in thousands) |
||||||||||||
Current tax expense |
5,717 | 7,060 | 10,543 | |||||||||
Deferred tax expense (benefit) |
(3,410 | ) | 1,061 | (5,083 | ) | |||||||
2,307 | 8,121 | 5,460 |
• | our critical accounting policies discussed below; |
• | the related judgments made by us and other uncertainties affecting the application of these policies; |
• | the sensitivity of our reported results to changes in prevailing facts and circumstances and our related estimates and assumptions; and |
• | the risks and uncertainties described under “Item 3.D. Key Information — Risk Factors.” |
Professional education service |
Business start-up training service(*) |
Sale of learning simulation software |
Total |
|||||||||||||
(in thousands of $) |
||||||||||||||||
Estimated fair value |
276,533 | N/A | 48,604 | 325,137 | ||||||||||||
Carrying value net |
87,710 | N/A | 41,399 | 129,109 |
* | Because the carrying amount of business start-up training service reporting unit as of September 30, 2019 exceeds its fair value, we recorded an impairment charge of $1.5 million related to business start-up training services during the fiscal year ended September 30, 2019. |
Years Ended September 30, |
||||||||||||||||||||||||
2018 |
2019 |
2020 |
||||||||||||||||||||||
$ |
% of net revenues |
$ |
% of net revenues |
$ |
% of net revenues |
|||||||||||||||||||
(In thousands, except for percentages) |
||||||||||||||||||||||||
Net Revenues |
||||||||||||||||||||||||
Online education services |
117,026 | 70.2 | % | 145,917 | 68.9 | % | 159,338 | 76.0 | % | |||||||||||||||
Books and reference materials |
10,213 | 6.1 | % | 27,372 | 12.9 | % | 22,061 | 10.5 | % | |||||||||||||||
Others |
39,429 | 23.7 | % | 38,533 | 18.2 | % | 28,159 | 13.5 | % | |||||||||||||||
Total net revenues |
166,668 | 100.0 | % | 211,822 | 100.0 | % | 209,558 | 100.0 | % | |||||||||||||||
Cost of sales: |
||||||||||||||||||||||||
Cost of services and others |
(78,936 | ) | (47.4 | )% | (85,252 | ) | (40.2 | )% | (81,976 | ) | (39.1 | )% | ||||||||||||
Cost of tangible goods sold |
(8,947 | ) | (5.3 | )% | (19,489 | ) | (9.2 | )% | (19,622 | ) | (9.4 | )% | ||||||||||||
Total cost of sales |
(87,883 | ) | (52.7 | )% | (104,741 | ) | (49.4 | )% | (101,598 | ) | (48.5 | )% | ||||||||||||
Gross profit |
78,785 | 47.3 | % | 107,081 | 50.6 | % | 107,960 | 51.5 | % | |||||||||||||||
Operating expenses: |
||||||||||||||||||||||||
Selling expenses |
(44,717 | ) | (26.8 | )% | (61,460 | ) | (29.0 | )% | (69,848 | ) | (33.3 | )% | ||||||||||||
General and administrative expenses |
(21,253 | ) | (12.8 | )% | (24,919 | ) | (11.8 | )% | (25,478 | ) | (12.2 | )% | ||||||||||||
Impairment of goodwill |
— | — | % | (1,517 | ) | (0.7 | )% | — | — | % | ||||||||||||||
Total operating expenses |
(65,970 | ) | (39.6 | )% | (87,896 | ) | (41.5 | )% | (95,326 | ) | (45.5 | )% | ||||||||||||
Change in fair value in connection with business combination |
84 | 0.1 | % | 695 | 0.3 | % | — | — | % | |||||||||||||||
Other operating income |
3,051 | 1.8 | % | 2,968 | 1.4 | % | 6,155 | 2.9 | % | |||||||||||||||
Operating income |
15,950 | 9.6 | % | 22,848 | 10.8 | % | 18,789 | 9.0 | % | |||||||||||||||
Interest income |
2,522 | 1.5 | % | 2,207 | 1.0 | % | 2,555 | 1.2 | % | |||||||||||||||
Interest expense |
(3,331 | ) | (2.0 | )% | (2,819 | ) | (1.3 | )% | (1,021 | ) | (0.5 | )% | ||||||||||||
Exchange gain (loss) |
2,476 | 1.5 | % | 3,296 | 1.6 | % | (5,261 | ) | (2.5 | )% | ||||||||||||||
Impairment loss from long-term investments |
(2,835 | ) | (1.7 | )% | (6,920 | ) | (3.3 | )% | (910 | ) | (0.4 | )% | ||||||||||||
Gain from disposal of an investment |
— | — | % | 318 | 0.2 | % | — | — | % | |||||||||||||||
Gain from deconsolidation of a subsidiary |
— | — | % | 6,869 | 3.2 | % | — | — | % | |||||||||||||||
Income before income taxes |
14,782 | 8.9 | % | 25,799 | 12.2 | % | 14,152 | 6.8 | % | |||||||||||||||
Income tax expense |
(2,307 | ) | (1.4 | )% | (8,121 | ) | (3.8 | )% | (5,460 | ) | (2.6 | )% | ||||||||||||
Loss from equity method investment |
(172 | ) | (0.1 | )% | (1,484 | ) | (0.7 | )% | (555 | ) | (0.3 | )% | ||||||||||||
Net income |
12,303 | 7.4 | % | 16,194 | 7.6 | % | 8,137 | 3.9 | % | |||||||||||||||
Less: Net income (loss) attributable to noncontrolling interest |
677 | 0.4 | % | (5,060 | ) | (2.4 | )% | (2,293 | ) | (1.1 | )% | |||||||||||||
Net income attributable to China Distance Education Holdings Limited |
11,626 | 7.0 | % | 21,254 | 10.0 | % | 10,430 | 5.0 | % |
For the Year Ended September 30, |
||||||||||||
(in thousands of $) |
2018 |
2019 |
2020 |
|||||||||
Net revenues of reportable segments: |
|
|||||||||||
Professional education services |
150,484 | 196,047 | 197,835 | |||||||||
Business start-up training services |
4,608 | 2,796 | 2,207 | |||||||||
Sale of learning simulation software |
11,576 | 12,979 | 9,516 | |||||||||
Total net revenues of reportable segments |
166,668 | 211,822 | 209,558 | |||||||||
Total net revenues of our company |
166,668 | 211,822 | 209,558 | |||||||||
Operating costs and expenses of reportable segments: |
|
|||||||||||
Cost of sales: |
|
|||||||||||
Professional education services |
(79,168 | ) | (96,044 | ) | (94,162 | ) | ||||||
Business start-up training services |
(2,644 | ) | (1,777 | ) | (1,033 | ) | ||||||
Sale of learning simulation software |
(6,071 | ) | (6,920 | ) | (6,403 | ) | ||||||
Selling expenses: |
|
|||||||||||
Professional education services |
(39,698 | ) | (56,334 | ) | (65,474 | ) | ||||||
Business start-up training services |
(1,127 | ) | (1,226 | ) | (915 | ) | ||||||
Sale of learning simulation software |
(3,892 | ) | (3,900 | ) | (3,459 | ) | ||||||
General and administrative expenses: |
|
|||||||||||
Professional education services |
(14,548 | ) | (16,745 | ) | (16,773 | ) | ||||||
Business start-up training services |
(896 | ) | (1,930 | ) | (584 | ) | ||||||
Sale of learning simulation software |
(1,316 | ) | (1,389 | ) | (1,171 | ) | ||||||
Impairment of goodwill |
||||||||||||
Business start-up training services |
— | (1,517 | ) | — | ||||||||
Unallocated corporate expenses |
(4,493 | ) | (4,855 | ) | (6,950 | ) | ||||||
Total operating costs and expense: |
|
|||||||||||
Professional education services |
(133,414 | ) | (169,123 | ) | (176,409 | ) | ||||||
Business start-up training services |
(4,667 | ) | (6,450 | ) | (2,532 | ) | ||||||
Sale of learning simulation software |
(11,279 | ) | (12,209 | ) | (11,033 | ) | ||||||
Unallocated corporate expenses |
(4,493 | ) | (4,855 | ) | (6,950 | ) | ||||||
Other operating income: |
|
|||||||||||
Professional education services |
643 | 1,053 | 4,976 | |||||||||
Business start-up training services |
76 | 102 | 5 | |||||||||
Sale of learning simulation software |
2,332 | 1,813 | 1,174 | |||||||||
Operating income (loss): |
|
|||||||||||
Professional education services |
17,797 | 28,672 | 26,402 | |||||||||
Business start-up training services |
17 | (3,552 | ) | (320 | ) | |||||||
Sale of learning simulation software |
2,629 | 2,583 | (343 | ) | ||||||||
Unallocated corporate expenses |
(4,493 | ) | (4,855 | ) | (6,950 | ) |
For the Year Ended September 30, |
||||||||||||
2018 |
2019 |
2020 |
||||||||||
$ |
$ |
$ |
||||||||||
(In thousands) |
||||||||||||
Net cash generated from operating activities |
50,094 | 81,795 | 40,961 | |||||||||
Net cash (used in) investing activities |
(55,497 | ) | (25,058 | ) | (16,149 | ) | ||||||
Net cash (used in) financing activities |
(3,302 | ) | (24,219 | ) | (40,254 | ) | ||||||
Exchange rate effect on cash and cash equivalents and restricted cash |
(4,114 | ) | (8,745 | ) | 10,224 | |||||||
Net (decrease) increase in cash and cash equivalents and restricted cash |
(12,819 | ) | 23,773 | (5,218 | ) | |||||||
Cash and cash equivalents and restricted cash at beginning of the year |
95,381 | 82,562 | 106,335 | |||||||||
Cash and cash equivalents and restricted cash at end of the year |
82,562 | 106,335 | 101,117 |
Payment Due by Period |
||||||||||||||||||||||||
Total |
Within 1 Year |
1-3 Years |
3-5 Years |
More than 5 Years |
Others |
|||||||||||||||||||
(In thousands of $) |
||||||||||||||||||||||||
Operating lease obligations (1) |
32,379 | 5,411 | 9,565 | 8,597 | 8,806 | — | ||||||||||||||||||
Others (2) |
160 | — | — | — | — | 160 | ||||||||||||||||||
Short term borrowing (3) |
4,045 | 4,045 | — | — | — | — | ||||||||||||||||||
Long term borrowing (3) |
16,319 | 248 | 16,071 | — | — | — | ||||||||||||||||||
Total |
52,903 | 9,704 | 25,636 | 8,597 | 8,806 | 160 |
(1) |
Our operating lease obligations primarily relate to our leased servers and bandwidth as well as our leased offices, training center and staff quarters in China and Hong Kong. The office, training center and staff quarter leases expire at different times over the period from the date of this annual report through 2030 and will become subject to renewal. We will evaluate the need to renew each office, training center and staff quarter lease on a case-by-case basis prior to its expiration. |
(2) |
Liabilities for unrecognized tax benefits. The balance disclosed under “Others” represents liabilities for which reasonable estimates about the timing of the payment cannot be made. |
(3) |
CDEL Hong Kong drew down a two-year term loan of $20.0 million from a bank in April 2020. The loan is effective from April 2020 to April 2022. The balances include the principal and unpaid interest payment of the loan as of September 30, 2020. See “-Indebtedness” for the repayment schedules of the above loan. |
Name |
Age |
Position | ||||
Zhengdong Zhu |
53 | Chairman of the Board of Directors, Chief Executive Officer | ||||
Baohong Yin |
54 | Deputy Chairman of the Board of Directors | ||||
Feijia Ji |
48 | Senior Executive Vice President, Director | ||||
Xiaoshu Chen |
58 | Independent Director | ||||
Annabelle Yu Long |
48 | Independent Director | ||||
Liankui Hu |
71 | Independent Director | ||||
Carol Yu |
59 | Independent Director | ||||
Mark Marostica |
60 | Co-Chief Financial Officer | ||||
Philip Chan |
50 | Co-Chief Financial Officer |
Name of Recipient |
Type of Incentive Securities |
Number of Ordinary Shares Issued or to be Issued |
Exercise Price per Ordinary Share |
Date of Grant or Issue |
Vesting Start Date |
Date of Expiration | ||||||
Carol Yu | nonvested ordinary shares | 25,000 ordinary shares |
not applicable | December 3, 2017 | restriction removed on the first anniversary of the issue date |
not applicable | ||||||
nonvested ordinary shares | 30,000 ordinary shares |
not applicable | December 3, 2018 | restriction removed on the first anniversary of the issue date |
not applicable | |||||||
nonvested ordinary shares | 35,000 ordinary shares |
not applicable | December 3, 2019 | restriction removed on the first anniversary of the issue date |
not applicable | |||||||
Baohong Yin | nonvested ordinary shares | 25,000 ordinary shares |
not applicable | December 3, 2017 | restriction removed on the first anniversary of the issue date |
not applicable | ||||||
nonvested ordinary shares | 30,000 ordinary shares |
not applicable | December 3, 2018 | restriction removed on the first anniversary of the issue date |
not applicable | |||||||
nonvested ordinary shares | 35,000 ordinary shares |
not applicable | December 3, 2019 | restriction removed on the first anniversary of the issue date |
not applicable | |||||||
Xiaoshu Chen |
nonvested ordinary shares | 25,000 ordinary shares |
not applicable | December 3, 2017 | restriction removed on the first anniversary of the issue date |
not applicable | ||||||
nonvested ordinary shares | 30,000 ordinary shares |
not applicable | December 3, 2018 | restriction removed on the first anniversary of the issue date |
not applicable |
nonvested ordinary shares | 35,000 ordinary shares |
not applicable | December 3, 2019 | restriction removed on the first anniversary of the issue date |
not applicable | |||||||
Annabelle Yu Long | nonvested ordinary shares | 25,000 ordinary shares |
not applicable | December 3, 2017 | restriction removed on the first anniversary of the issue date |
not applicable | ||||||
nonvested ordinary shares | 30,000 ordinary shares |
not applicable | December 3, 2018 | restriction removed on the first anniversary of the issue date |
not applicable | |||||||
nonvested ordinary shares | 35,000 ordinary shares |
not applicable | December 3, 2019 | restriction removed on the first anniversary of the issue date |
not applicable | |||||||
Liankui Hu | nonvested ordinary shares | 25,000 ordinary shares |
not applicable | December 3, 2017 | restriction removed on the first anniversary of the issue date |
not applicable | ||||||
nonvested ordinary shares | 30,000 ordinary shares |
not applicable | December 3, 2018 | restriction removed on the first anniversary of the issue date |
not applicable | |||||||
nonvested ordinary shares | 35,000 ordinary shares |
not applicable | December 3, 2019 | restriction removed on the first anniversary of the issue date |
not applicable | |||||||
Feijia Ji | nonvested ordinary shares | 14,000 ordinary shares |
not applicable | January 17, 2018 | The vesting period is two years, with four equal semi-annual installments |
not applicable | ||||||
nonvested ordinary shares | 20,760 ordinary shares |
not applicable | December 28, 2018 | The vesting period is two years, with four equal semi-annual installments |
not applicable | |||||||
nonvested ordinary shares | 22,540 ordinary shares |
not applicable | December 20, 2019 | The vesting period is one year, with two equal semi-annual installments |
not applicable |
nonvested ordinary shares | 8,476 ordinary shares |
not applicable | November 13, 2020 | The vesting period is one year, with two equal semi-annual installments |
not applicable | |||||||
Mark Marostica | nonvested ordinary shares | 33,680 ordinary shares |
not applicable | January 17, 2018 | The vesting period is two years, with four equal semi-annual installments |
not applicable | ||||||
nonvested ordinary shares | 36,480 ordinary shares |
not applicable | December 28, 2018 | The vesting period is two years, with four equal semi-annual installments |
not applicable | |||||||
nonvested ordinary shares | 291,968 ordinary shares |
not applicable | January 12, 2019 | The vesting period is one year, with two equal semi-annual installments |
not applicable | |||||||
nonvested ordinary shares | 42,120 ordinary shares |
not applicable | December 20, 2019 | The vesting period is one year, with two equal semi-annual installments |
not applicable | |||||||
nonvested ordinary shares | 220,504 ordinary shares |
not applicable | January 12, 2020 | The vesting period is one year, with two equal semi-annual installments |
not applicable | |||||||
Philip Chan | nonvested ordinary shares | 33,680 ordinary shares |
not applicable | January 17, 2018 | The vesting period is two years, with four equal semi-annual installments |
not applicable | ||||||
nonvested ordinary shares | 35,280 ordinary shares |
not applicable | December 28, 2018 | The vesting period is two years, with four equal semi-annual installments |
not applicable |
nonvested ordinary shares | 160,000 ordinary shares |
not applicable | January 1, 2019 | The vesting period is one year, with two equal semi-annual installments |
not applicable | |||||||
nonvested ordinary shares | 41,856 ordinary shares |
not applicable | December 20, 2019 | The vesting period is one year, with two equal semi-annual installments |
not applicable | |||||||
nonvested ordinary shares | 173,052 ordinary shares |
not applicable | January 1, 2020 | The vesting period is one year, with two equal semi-annual installments |
not applicable | |||||||
nonvested ordinary shares | 41,236 ordinary shares |
not applicable | November 13, 2020 | The vesting period is one year, with two equal semi-annual installments |
not applicable | |||||||
Zhengdong Zhu | nonvested ordinary shares | 38,160 ordinary shares |
not applicable | January 17, 2018 | The vesting period is two years, with four equal semi-annual installments |
not applicable | ||||||
nonvested ordinary shares | 58,360 ordinary shares |
not applicable | December 28, 2018 | The vesting period is two years, with four equal semi-annual installments |
not applicable | |||||||
nonvested ordinary shares | 109,904 ordinary shares |
not applicable | December 20, 2019 | The vesting period is one year, with two equal semi-annual installments |
not applicable | |||||||
nonvested ordinary shares | 133,968 ordinary shares |
not applicable | November 13, 2020 | The vesting period is one year, with two equal semi-annual installments |
not applicable |
• | convening shareholders’ meetings and reporting its work to shareholders at such meetings; |
• | implementing shareholders’ resolutions; |
• | determining our business plans and investment proposals; |
• | formulating our profit distribution plans and loss recovery plans; |
• | determining our debt and finance policies and proposals for the increase or decrease in our registered capital and the issuance of debentures; |
• | formulating our major acquisition and disposition plans, and plans for merger, division or dissolution; |
• | proposing amendments to our second amended and restated memorandum of association and articles of association; and |
• | exercising any other powers conferred by the shareholders’ meetings or under our second amended and restated memorandum of association and articles of association. |
• | appointing the independent auditor; |
• | pre-approving all auditing and non-auditing services permitted to be performed by the independent auditor; |
• | setting clear hiring policies for employees and former employees of the independent auditor; |
• | reviewing with the independent auditor any audit problems or difficulties and management’s responses; |
• | reviewing and approving all related party transactions on an ongoing basis; |
• | reviewing and discussing the annual audited financial statements with management and the independent auditor; |
• | reviewing and discussing with management and the independent auditor major issues regarding accounting principles and financial statement presentations; |
• | reviewing reports prepared by management relating to significant financial reporting issues and judgments; |
• | discussing earnings press releases with management, as well as financial information and earnings guidance provided to analysts and rating agencies; |
• | reviewing with management and the independent auditor the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on our financial statements; |
• | discussing policies with respect to risk assessment and risk management with management, internal auditors and the independent auditor; |
• | timely reviewing reports from management regarding all critical accounting policies and practices to be used by our company, all alternative treatments of financial information within U.S. GAAP that have been discussed with management and all other material written communications between the independent auditor and management; |
• | establishing procedures for the receipt, retention and treatment of complaints received from our employees regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; |
• | annually reviewing and reassessing the adequacy of our audit committee charter; |
• | such other matters that are specifically delegated to our audit committee by our board of directors from time to time; |
• | meeting separately, periodically, with management, internal auditors and the independent auditor; and |
• | reporting regularly to the full board of directors. |
• | reviewing and approving our overall compensation policies; |
• | reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer, evaluating our chief executive officer’s performance in light of those goals and objectives, reporting the results of such evaluation to the board of directors and determining our chief executive officer’s compensation level based on this evaluation; |
• | determining the compensation level of our other executive officers; |
• | making recommendations to the board of directors with respect to our incentive-compensation plan and equity-based compensation plans; |
• | administering our equity-based compensation plans in accordance with the terms thereof; and |
• | such other matters that are specifically delegated to the compensation committee by our board of directors from time to time. |
• | seeking and evaluating qualified individuals to become new directors as needed; |
• | reviewing and making recommendations to the board of directors regarding the independence and suitability of each board member for continued service; and |
• | evaluating the nature, structure and composition of other board committees. |
• | our directors and executive officers as a group; |
• | each person known to us to own beneficially more than 5% of our ordinary shares; |
Ordinary Shares Beneficially Owned |
||||||||
Number (1) |
Percent (2) |
|||||||
Directors and Executive Officers: |
||||||||
Zhengdong Zhu (3) |
53,119,017 | 38.84 | % | |||||
Baohong Yin (4) |
53,119,017 | 38.84 | % | |||||
Xiaoshu Chen (5) |
2,234,800 | 1.63 | % | |||||
Mark Marostica |
* | * | ||||||
Philip Chan |
* | * | ||||||
Feijia Ji |
* | * | ||||||
Annabelle Yu Long |
* | * | ||||||
Liankui Hu |
* | * | ||||||
Carol Yu |
* | * | ||||||
Directors and Executive Officers Combined |
58,117,548 | 42.50 | % | |||||
Principal Shareholders: |
||||||||
Champion Shine Trading Limited (6) |
52,752,617 | 38.58 | % | |||||
YM Investment Limited, The Li Family (PTC) Limited and Ms. Lam Lai Ming (7) |
25,814,468 | 18.88 | % | |||||
Zhangxing Wang, Qi Wang, and Home Value Holding Co., Ltd. (8) |
13,213,740 | 9.66 | % | |||||
Wells Fargo & Company and Wells Capital Management Incorporated (9) |
9,430,972 | 6.90 | % |
* | Beneficially owns less than 1% of our outstanding ordinary shares. |
(1) |
The number of ordinary shares beneficially owned by each of the listed persons includes ordinary shares that such person has the right to acquire within 60 days after January 15, 2021. |
(2) |
Percentage of beneficial ownership for each of the persons listed above is determined by dividing (i) the number of ordinary shares beneficially owned by such person by (ii) the total number of ordinary shares outstanding, plus the number of ordinary shares such person has the right to acquire within 60 days after January 15, 2021. The total number of ordinary shares outstanding as of January 15, 2021 is 136,747,601. |
(3) |
Includes (i) 44,800,245 ordinary shares, and 7,952,372 ordinary shares represented by 1,988,093 ADSs, held by Champion Shine Trading Limited, (ii) 65,000 ordinary shares represented by 16,250 ADSs held by Baohong Yin, and (iii) 152,840 ordinary shares held by Zhengdong Zhu, and (iv) 148,560 ordinary shares consisting of restricted share awards of our company by Zhengdong Zhu. Champion Shine Trading Limited is a British Virgin Islands company whose sole shareholder is Zhengdong Zhu. The Chairman and the Deputy Chairman are husband and wife. Therefore, Zhengdong Zhu may be deemed to share the voting and dispositive power over the ordinary shares owned or beneficially owned by the Deputy Chairman. The business address of Zhengdong Zhu is 18th Floor, Xueyuan International Tower 1, Zhichun Road, Haidian District, Beijing 100083, China. |
(4) |
Includes (i) 44,800,245 ordinary shares, and 7,952,372 ordinary shares represented by 1,988,093 ADSs, held by Champion Shine Trading Limited, (ii) 65,000 ordinary shares represented by 16,250 ADSs held by Baohong Yin, and (iii) 152,840 ordinary shares held by Zhengdong Zhu, and (iv) 148,560 ordinary shares consisting of restricted share awards of our company. Zhengdong Zhu is the sole shareholder of Champion Shine Trading Limited. Zhengdong Zhu and Baohong Yin are husband and wife. Therefore, Baohong Yin may be deemed to share the voting and dispositive power over the ordinary shares held by Zhengdong Zhu. The business address of Baohong Yin is 18th Floor, Xueyuan International Tower, 1 Zhichun Road, Haidian District, Beijing 100083, China. |
(5) |
Includes (i) 1,000,000 ordinary shares, and 899,800 ordinary shares represented by 224,950 ADSs, held by Jetlong Investments Limited, (ii) 255,000 ordinary shares held by Xiaoshu Chen, and (iv) options to purchase 80,000 ordinary shares held by Xiaoshu Chen. Jetlong Investments Limited is a British Virgin Islands company whose sole shareholder and sole director is Xiaoshu Chen. The business address of Xiaoshu Chen is Southeastern University, No. 2 Sipailou, Nanjing 210096, China. |
(6) |
Includes 44,800,245 ordinary shares and 1,988,093 ADSs representing 7,952,372 ordinary shares held by Champion Shine Trading Limited, a British Virgin Islands company whose sole shareholder and sole director is Zhengdong Zhu. The address of Champion Shine Trading Limited is Suites 1501-1503, 15th Floor, Gloucester Tower, The Landmark, 15 Queen’s Road Central, Hong Kong. |
(7) |
The number of ordinary shares beneficially owned is as reported in a Schedule 13D filed by YM Investment Limited, The Li Family (PTC) Limited and Ms. Lam Lai Ming on February 14, 2020. The business address of YM Investment Limited reported on the Schedule 13D is c/o Vistra Corporate Services Center, Wickhams Cay II, Road Town, Tortola, VG1110, British Virgin Islands. The business address of The Li Family (PTC) Limited reported on the Schedule 13D is 80 Main Street, P.O. Box 3200, Road Town, Tortola, VG 1110, British Virgin Islands. The residential address of Ms. Lam Lai Ming reported on the Schedule 13D is c/o Suite 2901, 29th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong. |
(8) |
The number of ordinary shares beneficially owned is as reported in a Schedule 13D filed by Zhangxing Wang, Qi Wang, Home Value Holding Co., Ltd. on December 2, 2020. Zhangxing Wang and Qi Wang’s principal business addresses as reported in the Schedule 13D is 42/F, World Trade Tower, No. 500 Guangdong Road, Shanghai, People’s Republic of China. The principal office of the Home Value as reported in the Schedule 13D is the offices of Offshore Incorporations Limited, P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Island. |
(9) |
The number of Ordinary Shares beneficially owned is as reported in a Schedule 13G filed by Wells Fargo & Company on February 4, 2020. The business address of Wells Fargo & Company as reported in the Schedule 13G is 420 Montgomery Street, San Francisco, CA 94163. The business address of Wells Capital Management Incorporated as reported in the Schedule 13G is 525 Market St, 10th Floor, San Francisco, CA 94105. |
ITEM |
7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
ITEM |
8. FINANCIAL INFORMATION |
ITEM |
9. THE OFFER AND LISTING |
ITEM |
10. ADDITIONAL INFORMATION |
• | the statutory provisions as to the required majority vote have been met; |
• | the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class; |
• | the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and |
• | the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Law. |
• | a company is acting or proposing to act illegally or beyond the scope of its authority; |
• | the act complained of, although not beyond the scope of its authority, could be effected duly if authorized by more than a simple majority vote which has not been obtained; and |
• | those who control the company are perpetrating a “fraud on the minority.” |
• | that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits or income or gains or appreciations shall apply to CDEL Cayman or its operations; and |
• | that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not be payable on the shares, debentures or other obligations of CDEL Cayman. |
• | dealers in securities or currencies; |
• | traders in securities that elect to use a mark-to-market method of accounting for securities holdings; |
• | banks or certain financial institutions; |
• | insurance companies; |
• | tax-exempt organizations; |
• | partnerships or other entities treated as partnerships or other pass-through entities for U.S. federal income tax purposes or persons holding ADSs or ordinary shares through any such entities; |
• | regulated investments companies or real estate investment trusts; |
• | persons that hold ADSs or ordinary shares as part of a hedge, straddle, constructive sale, conversion transaction or other integrated investment; |
• | persons whose functional currency for tax purposes is not the U.S. dollar; |
• | persons liable for alternative minimum tax; or |
• | persons who actually or constructively own 10% or more of the total combined voting power of all classes of our shares entitled to vote (including ADSs and ordinary shares). |
• | An individual citizen or resident of the United States for U.S. federal income tax purposes; |
• | a corporation, or other entity taxable as a corporation, that was created or organized in or under the laws of the United States or any state thereof or the District of Columbia; |
• | an estate the income of which is subject to U.S. federal income tax regardless of its source; or |
• | a trust if (a) a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (b) the trust has a valid election in effect to be treated as a U.S. person. |
ITEM |
12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
• | Expenses incurred by the depositary, the custodian or their respective agents in connection with inspections of the relevant share register maintained by the local registrar and/or performing due diligence on the central securities depository: an annual fee of US$1.00 per 100 ADSs (such fee to be assessed against holders of record as at the date or dates set by the depositary as it sees fit and collected at the discretion of the depositary, subject to our prior consent, by billing such holders for such fee or by deducting such fee from one or more cash dividends or other cash distributions) |
• | Taxes and other governmental charges incurred by the depositary or the custodian on any ADR or ordinary shares underlying an ADR, including any applicable interest and penalties thereon, and any share transfer or other taxes and other governmental charges |
• | Cable, telex, electronic transmission and delivery expenses |
• | Transfer or registration fees for the registration of transfer of deposited securities on any applicable register in connection with the deposit or withdrawal of deposited securities including those of a central depository for securities (where applicable) |
• | Expenses of the depositary in connection with the conversion of foreign currency into U.S. dollars |
• | Fees and expenses incurred by the depositary in connection with compliance with exchange control regulations and other regulatory requirements applicable to the shares, deposited securities and ADSs; and |
• | Any other fees, charges, costs or expenses that may be incurred by the depositary from time to time |
ITEM |
13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
ITEM |
14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
Fiscal Year ended September 30, |
||||||||||||||||
2019 |
2020 |
|||||||||||||||
RMB |
US$ |
RMB |
US$ |
|||||||||||||
Audit fees (1) |
5,574,400 | 832,000 | 5,915,000 | 845,000 | ||||||||||||
Audit-related fees (2) |
3,001,600 | 448,000 | 3,185,000 | 455,000 | ||||||||||||
Tax and accounting consulting fees (3) |
320,000 | 47,761 | 80,000 | 11,429 |
(1) |
“Audit fees” means the aggregate fees billed or payable for professional services rendered by our independent auditors in connection with the audit of our consolidated financial statements or the review of our interim consolidated financial statements required for statutory or regulatory filings. |
(2) |
“Audit-related fees” means the aggregate fees billed or payable for professional services rendered by our independent auditors in connection with the review of our interim consolidated financial statements not required for statutory or regulatory filings. |
(3) |
“Tax and accounting consulting fees” means the aggregate fees billed or payable for tax compliance services, transfer pricing and requests for rulings or technical advice from taxing authorities and tax planning services, and accounting consulting services for the application of generally accepted accounting principles. |
• | We are not required to obtain shareholder approval for the adoption of, or material revisions to, our equity-compensation plans where our directors consider it in the best interests of the company to do so and when the issue price of shares issued pursuant to such plans is otherwise fair. |
• | Our compensation committee of our board of directors is not comprised entirely of independent directors. |
• | Our nomination committee of our board of directors is not comprised entirely of independent directors. |
8.1* | —Subsidiaries of Registrant. | |
11.1 | —Code of Business Conduct and Ethics of the Registrant. (1) | |
12.1* | —CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
12.2* | —CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
13.1** | —CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
13.2** | —CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
15.1* | —Consent of Deloitte Touche Tohmatsu Certified Public Accountants LLP. | |
15.2* | —Consent of Jingtian & Gongcheng. | |
101.INS* | —Inline XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
101.SCH* | —Inline XBRL Taxonomy Extension Schema Document | |
101.CAL* | —Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | —Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | —Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | —Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104* | Cover Page Interactive Data File — the cover page XBRL tags are embedded within the Exhibit 101 Inline XBRL document set |
(1) | Incorporated by reference to Exhibit 4.2 to the Registrant’s registration statement on Form F-1 (File No. 333-152167) filed with the SEC on July 7, 2008, as amended. |
(2) | Incorporated by reference to the Registration Statement on Form F-6 (File No. 333-152345) furnished with the SEC with respect to American depositary shares representing our ordinary shares on July 15, 2008. |
(3) | Incorporated by reference to Exhibit 2.4 to the Registrant’s Annual Report on Form 20-F (File No. 001-34122) for the year ended September 30, 2010 filed with the SEC on March 25, 2011. |
(4) | Incorporated by reference to the Registrant’s Annual Report on Form 20-F (File No. 001-34122) for the year ended September 30, 2008 filed with the SEC on March 16, 2009. |
(5) | Incorporated by reference to the Registrant’s Annual Report on Form 20-F (File No. 001-34122) for the year ended September 30, 2012 filed with the SEC on January 31, 2013. |
(6) | Incorporated by reference to Exhibit A to the Form 6-K (File No. 001-34122) furnished with the SEC on April 20, 2018. |
(7) | Incorporated by reference to the Registrant’s Annual Report on Form 20-F (File No. 001-34122) for the year ended September 30, 2015 filed with the SEC on January 27, 2016. |
(8) | Incorporated by reference to Exhibit 99.2 to the Form 6-K (File No. 001-34122) furnished with the SEC on December 1, 2020. |
* | Filed herewith |
** | Furnished herewith |
China Distance Education Holdings Limited | ||
/s/ Mark Marostica | ||
Name: Title: |
Mark Marostica Co-Chief Financial Officer |
/s/ Philip Chan | ||
Name: Title: |
Philip Chan Co-Chief Financial Officer |
CONTENTS |
PAGE | |
F-2 | ||
F-4 | ||
F-6 | ||
F-7 | ||
F-8 | ||
F-9 | ||
F-11 | ||
F-82 |
As of September 30, | ||||||||
2019 | 2020 | |||||||
US$ | US$ | |||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
||||||||
Term deposits |
— | |||||||
Restricted cash - current |
||||||||
Short-term investments |
||||||||
Accounts receivable, net of allowance for doubtful accounts of US$ |
||||||||
Inventories |
||||||||
Prepayment and other current assets |
||||||||
Amounts due from related parties |
||||||||
Deferred costs |
||||||||
Total current assets |
||||||||
Non-current assets |
||||||||
Restricted cash – non-current |
— | |||||||
Property, plant and equipment, net |
||||||||
Operating lease right-of-use assets |
— | |||||||
Goodwill, net |
||||||||
Other intangible assets, net |
||||||||
Deposit for purchases of non-current assets |
||||||||
Long-term investments |
||||||||
Deferred tax assets |
||||||||
Other non-current assets |
||||||||
Total non-current assets |
||||||||
Total assets |
||||||||
LIABILITIES AND EQUITY |
||||||||
Current liabilities |
||||||||
Bank borrowings |
||||||||
Accrued expenses and other liabilities (including accrued expenses and other liabilities of the consolidated variable interest entities or VIEs without recourse to China Distance Education Holdings Limited of US$ |
||||||||
Amount s due to related parties |
||||||||
Income tax payable (including income tax payable of the consolidated VIEs without recourse to China Distance Education Holdings Limited of US$ |
||||||||
Deferred revenue – current (including deferred revenue – current of the consolidated VIEs without recourse to China Distance Education Holdings Limited of US$ |
||||||||
Operating lease liabilities, current (including operating lease liabilities, current of the consolidated VIE s without recourse to China Distance Education Holdings Limited of |
— | |||||||
Refundable fees – current (including refundable fees – current of the consolidated VIEs without recourse to China Distance Education Holdings Limited of US$ |
||||||||
Total current liabilities |
||||||||
As of September 30, | ||||||||
2019 | 2020 | |||||||
US$ | US$ | |||||||
Non-current liabilities |
||||||||
Deferred revenue – non-current (including deferred revenue – non-current of the consolidated VIEs without recourse to China Distance Education Holdings Limited of US$ |
||||||||
Refundable fees – non-current (including refundable fees– non-current of the consolidated VIEs without recourse to China Distance Education Holdings Limited of US$ |
||||||||
Deferred tax liabilities |
||||||||
Long-term bank borrowing |
— | |||||||
Operating lease liabilities, non-current (including operating lease liabilities, non-current of the consolidated VIE of s without recourse to China Distance Education Holdings Limited |
— | |||||||
Total non-current liabilities |
||||||||
Total liabilities |
||||||||
Commitments and contingencies (Note 22) |
||||||||
Equity |
||||||||
Ordinary shares (par value of US$ |
||||||||
Additional paid-in capital |
||||||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Retained earnings |
||||||||
Total China Distance Education Holdings Limited shareholder’s equity |
||||||||
Noncontrolling interests |
||||||||
Total equity |
||||||||
Total liabilities and equity |
||||||||
For the years ended September 30, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
US$ | US$ | US$ | ||||||||||
Revenues, net of value-added tax and related surcharges |
||||||||||||
Online education services |
||||||||||||
Books and reference materials |
||||||||||||
Others |
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Total net revenues |
||||||||||||
|
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|
|||||||
Cost of sales |
||||||||||||
Cost of services and others |
( |
) | ( |
) | ( |
) | ||||||
Cost of tangible goods sold |
( |
) | ( |
) | ( |
) | ||||||
|
|
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|||||||
Total cost of sales |
( |
) | ( |
) | ( |
) | ||||||
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|||||||
Gross profit |
||||||||||||
Operating expenses |
||||||||||||
Selling expenses |
( |
) | ( |
) | ( |
) | ||||||
General and administrative expenses |
( |
) | ( |
) | ( |
) | ||||||
Impairment of goodwill |
— | ( |
) | — | ||||||||
|
|
|
|
|
|
|||||||
Total operating expenses |
( |
) | ( |
) | ( |
) | ||||||
Change in fair value in connection with business combination |
— | |||||||||||
Other operating income |
||||||||||||
|
|
|
|
|
|
|||||||
Operating income |
||||||||||||
Interest income |
||||||||||||
Interest expense s |
( |
) | ( |
) | ( |
) | ||||||
Gain from deconsolidation of a subsidiary |
— | — | ||||||||||
Impairment loss from long-term investments |
( |
) | ( |
) | ( |
) | ||||||
Other income |
— | — | ||||||||||
Exchange gain (loss) |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Income before income taxes and loss from equity method investments |
||||||||||||
Income tax expense s |
( |
) | ( |
) | ( |
) | ||||||
Loss from equity method investments |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Net income |
||||||||||||
Less: Net income (loss) attributable to noncontrolling interests |
( |
) | ( |
) | ||||||||
Net income attributable to China Distance Education Holdings Limited |
||||||||||||
|
|
|
|
|
|
|||||||
Net income per share: |
||||||||||||
Net income attributable to ordinary shareholders |
||||||||||||
Basic |
||||||||||||
Diluted |
||||||||||||
|
|
|
|
|
|
|||||||
Weighted average shares used in calculating net income per share |
||||||||||||
Basic |
||||||||||||
Diluted |
||||||||||||
|
|
|
|
|
|
For the years ended September 30, | |||||||||||||
2018 | 2019 | 2020 | |||||||||||
US$ | US$ | US$ | |||||||||||
Net income |
|||||||||||||
Other comprehensive (loss) income, net of tax |
|||||||||||||
Foreign currency translation adjustments |
( |
) | ( |
) | |||||||||
Unrealized gain on available-for-sale investments, net of tax effect of US$ for the years ended September 30, 2018, 2019 and 2020, respectively |
|||||||||||||
|
|
|
|
|
|
||||||||
Comprehensive income |
|||||||||||||
Less: comprehensive (loss) income attributable to noncontrolling interests |
( |
) | ( |
) | |||||||||
|
|
|
|
|
|
||||||||
Comprehensive income attributable to China Distance Education Holdings Limited |
|||||||||||||
|
|
|
|
|
|
China Distance Education Holding Limited shareholders | ||||||||||||||||||||||||||||||||
Number of ordinary shares |
Ordinary shares |
Additional paid-in capital |
Accumulated other comprehensive loss |
Retained earnings |
Total China Distance Education Holding Limited shareholders’ equity |
Noncontrolling interests |
Total equity |
|||||||||||||||||||||||||
US$ | US$ | US$ | US$ | US$ | US$ | US$ | ||||||||||||||||||||||||||
Balance as of September 30, 2017 |
( |
) | ||||||||||||||||||||||||||||||
Net income for the year |
— | — | — | — | ||||||||||||||||||||||||||||
Foreign currency translation adjustments |
— | — | — | ( |
) | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||
Options exercised |
— | — | — | — | ||||||||||||||||||||||||||||
Share-based compensation expenses (Note 26) |
— | — | — | — | ||||||||||||||||||||||||||||
Dividends to shareholders (Note 27) |
— | — | — | — | ( |
) | ( |
) | — | ( |
) | |||||||||||||||||||||
Capital contribution from noncontrolling interests |
— | — | — | — | ||||||||||||||||||||||||||||
Noncontrolling interest arising from acquisitions |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Unrealized gain on available-for-sale investments, net of tax effect of US$ |
— | — | — | — | — | |||||||||||||||||||||||||||
Loan to optionees in connection with exercise of options |
— | — | ( |
) | — | — | ( |
) | — | ( |
) | |||||||||||||||||||||
Repayment of loan to optionees in connection with exercise of options |
— | — | — | — | — | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance as of September 30, 2018 |
( |
) | ||||||||||||||||||||||||||||||
Net income (loss) for the year |
— | — | — | — | ( |
) | ||||||||||||||||||||||||||
Foreign currency translation adjustments |
— | — | — | ( |
) | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||
Share-based compensation expenses (Note 26) |
— | — | — | — | ||||||||||||||||||||||||||||
Dividends paid by a subsidiary to its noncontrolling interests shareholders |
— | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
Capital contribution from noncontrolling interests |
— | — | — | — | ||||||||||||||||||||||||||||
Unrealized gain on available-for-sale investments, net of tax effect of US$ |
— | — | — | — | — | |||||||||||||||||||||||||||
Repayment of loan to optionees in connection with exercise of options |
— | — | — | — | — | |||||||||||||||||||||||||||
Purchase of noncontrolling interests of a consolidated subsidiary |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||
Modified retrospective adjustment of upon adoption of |
||||||||||||||||||||||||||||||||
Topic 606 (Note 2) |
— | — | — | — | — | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance as of September 30, 2019 |
( |
) | ||||||||||||||||||||||||||||||
Net income (loss) for the year |
— | — | — | — | ( |
) | ||||||||||||||||||||||||||
Foreign currency translation adjustments |
— | — | — | — | ||||||||||||||||||||||||||||
Share-based compensation expenses (Note 26) |
— | — | — | |||||||||||||||||||||||||||||
Dividends to shareholders (Note 27) |
— | — | — | — | ( |
) | ( |
) | — | ( |
) | |||||||||||||||||||||
Dividends paid by a subsidiary to its noncontrolling interests shareholders |
— | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
Capital contribution from noncontrolling interests |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Unrealized gain on available-for-sale investments, net of tax effect of US$ |
— | — | — | — | — | |||||||||||||||||||||||||||
Repayment of loan to optionees in connection with exercise of options |
— | — | — | — | — | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance as of September 30, 2020 |
( |
) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended September 30, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
US$ | US$ | US$ | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||||||
Net income |
||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||
Share-based compensation |
||||||||||||
Depreciation of property, plant and equipment |
||||||||||||
Amortization of other intangible assets |
||||||||||||
Non-cash operating lease cost |
— | — | ||||||||||
Provision of inventories |
||||||||||||
Change in allowance for doubtful accounts |
( |
) | ||||||||||
Impairment loss on goodwill |
— | — | ||||||||||
Losses on disposition of property, plant and equipment |
||||||||||||
Loss from equity method investments |
||||||||||||
Impairment loss from long-term investments |
||||||||||||
Gain from disposal of an investment |
— | ( |
) | — | ||||||||
Change in fair value in connection with a business combination |
( |
) | ( |
) | — | |||||||
Gain from deconsolidation of a subsidiary |
— | ( |
) | — | ||||||||
Changes in operating assets and liabilities: |
||||||||||||
Accounts receivable |
( |
) | ( |
) | ||||||||
Inventories |
( |
) | ( |
) | ( |
) | ||||||
Prepayments and other current assets |
( |
) |
( |
) |
( |
) | ||||||
Amounts due from related parties |
( |
) | ( |
) | ||||||||
Deferred costs |
( |
) | ( |
) | ( |
) | ||||||
Operating lease right-of-use assets |
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets |
( |
) | ( |
) | ||||||||
Other non-current assets |
( |
) | ( |
) | ||||||||
Accrued expenses and other liabilities |
( |
) | ||||||||||
Amount s due to related parties |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax payable |
||||||||||||
Deferred revenue |
||||||||||||
Operating lease liabilities |
|
|
|
|
|
|
|
|
|
|
|
) |
Refundable fees |
( |
) | ||||||||||
Deferred tax liabilities |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Net cash provided by operating activities |
||||||||||||
|
|
|
|
|
|
|||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||||||
Purchase of businesses, net of cash acquired of US$ 2020, respectively |
( |
) | — | — | ||||||||
Disposal of a consolidated subsidiary, net of cash disposed of 2020, respectively |
— | ( |
) | — | ||||||||
Purchase of term deposits |
— | — | ( |
) | ||||||||
Maturity of term deposits |
— | — | ||||||||||
Purchase of short-term investments |
( |
) | ( |
) | ( |
) | ||||||
Maturity of short-term investments |
||||||||||||
Acquisition of property, plant and equipment |
( |
) | ( |
) | ( |
) | ||||||
Purchase of additional equity interests of a consolidated subsidiary |
— | ( |
) | — | ||||||||
Settlement of contingent consideration related to previously acquired equity interests of a consolidated subsidiary |
— | ( |
) | — | ||||||||
Proceeds from disposition of property, plant and equipment |
— | — | ||||||||||
Proceeds from disposal of equity securities without readily determinable fair value |
— |
Years ended September 30, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
US$ | US$ | US$ | ||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES - continued |
||||||||||||
Acquisition of other intangible assets |
( |
) | ( |
) | ( |
) | ||||||
Payment of deposit for the acquisition of non-current assets |
( |
) | ( |
) | ( |
) | ||||||
Payment of deposit for the purchase of investments |
— | ( |
) | — | ||||||||
Purchase of equity method investments |
( |
) | ( |
) | ( |
) | ||||||
Purchase of equity securities without readily determinable fair value |
( |
) | — | ( |
) | |||||||
Purchase of available-for-sale investments |
( |
) | — | — | ||||||||
|
|
|
|
|
|
|||||||
Net cash used in investing activities |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||||||
Capital contribution from noncontrolling interests |
||||||||||||
Loan repayments |
( |
) | ( |
) | ( |
) | ||||||
Bank borrowings |
— | |||||||||||
Repayment of short-term loan to a related party |
( |
) | — | — | ||||||||
Proceeds from share options exercised by employees |
— | — | ||||||||||
Loan to optionees in connection with exercise of options |
( |
) | — | — | ||||||||
Repayment of loan to optionees in connection with exercise of options |
||||||||||||
Dividends paid to shareholders |
( |
) | — | ( |
) | |||||||
Dividends paid by a subsidiary to its noncontrolling interests shareholders |
— | ( |
) | ( |
) | |||||||
|
|
|
|
|
|
|||||||
Net cash used in financing activities |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Exchange rate effect on cash and cash equivalents and restricted cash |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Net (decrease) increase in cash and cash equivalents and restricted cash |
( |
) | ( |
) | ||||||||
Cash and cash equivalents and restricted cash at beginning of the year |
||||||||||||
|
|
|
|
|
|
|||||||
Cash and cash equivalents and restricted cash at end of the year |
||||||||||||
|
|
|
|
|
|
|||||||
Supplemental schedule of cash flow information: |
||||||||||||
Income tax paid |
( |
) | ( |
) | ( |
) | ||||||
Supplemental schedule of non-cash activities: |
||||||||||||
Acquisition of property, plant and equipment and other intangible assets through utilization of deposits |
||||||||||||
Income tax reversal |
||||||||||||
|
|
|
|
|
|
1. |
ORGANIZATION AND BASIS OF PRESENTATION |
Company name |
Later of date of incorporation or acquisition |
Place of incorporation (or establishment) /operation |
Percentage of legal ownership by the Company |
Principal activities | ||||
Major Subsidiaries: |
||||||||
China Distance Education Limited (“CDEL Hong Kong”) |
Investment holding and provision of education services | |||||||
Beijing Champion Distance Education Technology Co., Ltd. (“Champion Technology”) |
||||||||
Beijing Champion Education Technology Co., Ltd. (“Champion Education Technology”) |
||||||||
Beijing Zhengbao Yucai Education Technology Co., Ltd. (“Zhengbao Yucai”) |
(Note |
|||||||
Xiamen NetinNet Software Co., Ltd (“Xiamen NetinNet”) |
||||||||
Variable interest entities: |
||||||||
Beijing Champion Hi-Tech Co., Ltd. (“Beijing Champion”) |
|
|||||||
Beijing Champion Healthcare Education Technology Co., Ltd. (“Champion Healthcare Education”) |
|
|||||||
Major subsidiaries of variable interest entities : |
|
|
|
|
|
|
|
|
Beijing Caikaowang Company Ltd. (“Caikaowang”) |
||||||||
Beijing Champion Wangge Education Technology Co., Ltd. (“Champion Wangge”) |
||||||||
Beijing Champion Culture Development Co., Ltd. (“Champion Culture”) |
||||||||
Jiangsu Zhengbao Asset Financial Advisory Co., Ltd. (“Jiangsu Asset”) |
||||||||
Beijing Ruida Chengtai Education Technology Co., Ltd. (“Beijing Ruida”) |
||||||||
Beijing Youbang Culture and Art Training School (“Beijing Youbang”) |
||||||||
Jiangsu Champion Healthcare Education Technology Co., Ltd. (“Jiangsu Healthcare”) |
||||||||
Jiangsu Champion E&C Education Technology Co., Ltd. (“Jiangsu E&C”) |
||||||||
Jiangsu Champion Self-taught Education Co., Ltd. (“Jiangsu Self-taught”) |
||||||||
Beijing Champion H&E Technology Co., Ltd. (“Beijing H&E”) |
||||||||
Beijing Champion E&C Education Technology Co., Ltd. (“Beijing E&C”) |
||||||||
Beijing Champion Self-taught Education Co., Ltd. (“Beijing Self-taught”) |
||||||||
*Note: The entity is the subsidiary of Zhengbao Yucai. |
1. |
ORGANIZATION AND BASIS OF PRESENTATION |
1. |
ORGANIZATION AND BASIS OF PRESENTATION |
• | Agreements that transfer economic benefits to Champion Technology |
1. |
ORGANIZATION AND BASIS OF PRESENTATION |
• | Agreements that provide the Company effective control over Beijing Champion |
1. |
ORGANIZATION AND BASIS OF PRESENTATION |
• | Agreements that provide the Company effective control over Beijing Champion - continued |
• | Agreements that transfer economic benefits to Zhongxi Healthcare Education |
1. |
ORGANIZATION AND BASIS OF PRESENTATION |
• | Agreements that transfer economic benefits to Zhongxi Healthcare Education - continued |
1. |
ORGANIZATION AND BASIS OF PRESENTATION |
• | Agreements that provide the Company effective control over Zhongxi Healthcare Education |
1. |
ORGANIZATION AND BASIS OF PRESENTATION |
• |
Risks in relation to the VIE structure |
• |
revoke the business and operating licenses of the Company’s PRC subsidiaries or consolidated affiliated entities; |
• |
restrict the rights to collect revenues from any of the Company’s PRC subsidiaries; |
• |
discontinue or restrict the operations of any related-party transactions among the Company’s PRC subsidiaries or consolidated affiliated entities; |
• |
require the Company’s PRC subsidiaries or consolidated affiliated entities to restructure the relevant ownership structure or operations; |
• |
take other regulatory or enforcement action, including levying fines that could be harmful to the Company’s business; or |
• |
impose additional conditions or requirements with which the Company may not be able to comply. |
1. |
ORGANIZATION AND BASIS OF PRESENTATION |
• |
Risks in relation to the VIE structure - continued |
1. |
ORGANIZATION AND BASIS OF PRESENTATION |
As of September 30, | ||||||||
2019 | 2020 | |||||||
US$ | US$ | |||||||
Cash and cash equivalents |
||||||||
Prepayment and other current assets |
||||||||
Total current assets |
||||||||
Total assets |
||||||||
Deferred revenue – current |
||||||||
Total current liabilities |
||||||||
Deferred revenue – non-current |
||||||||
Total non-current liabilities |
||||||||
Total liabilities |
||||||||
|
|
|
|
For the years ended September 30, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
US$ | US$ | US$ | ||||||||||
Net revenues |
||||||||||||
|
|
|
|
|
|
|||||||
Net income |
||||||||||||
|
|
|
|
|
|
|||||||
Net cash provided by operating activities |
||||||||||||
|
|
|
|
|
|
|||||||
Net cash used in investing activities |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Net cash used in financing activities |
( |
) | — | ( |
) | |||||||
|
|
|
|
|
|
|||||||
Effects of exchange rate changes |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
2. |
SIGNIFICANT ACCOUNTING POLICIES |
2. |
SIGNIFICANT ACCOUNTING POLICIES |
2. |
SIGNIFICANT ACCOUNTING POLICIES |
2. |
SIGNIFICANT ACCOUNTING POLICIES |
2. |
SIGNIFICANT ACCOUNTING POLICIES |
Category |
Estimated useful life | Estimated residual value | ||||||
Buildings |
% | |||||||
Electronic and office equipment |
% | |||||||
Motor vehicles |
% | |||||||
Leasehold improvement and building improvement |
— |
2. |
SIGNIFICANT ACCOUNTING POLICIES |
Category |
Estimated useful life | |
Computer software |
||
Trademarks and domain names |
||
Courseware |
||
Business contracts |
||
Copyrights |
||
Others |
2. |
SIGNIFICANT ACCOUNTING POLICIES |
(a) |
Equity securities without readily determinable fair values |
(b) | Equity method investments |
2. |
SIGNIFICANT ACCOUNTING POLICIES |
(b) |
Equity method investments - continued |
(c) | Available-for-sale securities investments |
2. |
SIGNIFICANT ACCOUNTING POLICIES |
Over-time | A point-in-time | Total | ||||||||||
US$ | US$ | US$ | ||||||||||
Online education services |
||||||||||||
Books and reference materials |
— | |||||||||||
Other professional education services |
||||||||||||
|
|
|
|
|
|
|||||||
Professional education services |
||||||||||||
Sales of learning simulation software |
— | |||||||||||
Business start-up training services |
— | |||||||||||
|
|
|
|
|
|
|||||||
Total |
||||||||||||
|
|
|
|
|
|
|||||||
Refundable course model |
Non-refundable course model |
Total | ||||||||||
US$ | US$ | US$ | ||||||||||
Online education services |
||||||||||||
Books and reference materials |
— | |||||||||||
Other professional education services |
— | |||||||||||
|
|
|
|
|
|
|||||||
Professional education services |
||||||||||||
Sales of learning simulation software |
— | |||||||||||
Business start-up training services |
— | |||||||||||
|
|
|
|
|
|
|||||||
Total |
||||||||||||
|
|
|
|
|
|
Over-time |
A point-in-time |
Total |
||||||||||
US$ |
US$ |
US$ |
||||||||||
Online education services |
||||||||||||
Books and reference materials |
— |
|||||||||||
Other professional education services |
||||||||||||
|
|
|
|
|
|
|||||||
Professional education services |
||||||||||||
Sales of learning simulation software |
— |
|||||||||||
Business start-up training services |
— |
|||||||||||
|
|
|
|
|
|
|||||||
Total |
||||||||||||
|
|
|
|
|
|
|||||||
Refundable course model |
Non-refundable course model |
Total |
||||||||||
US$ |
US$ |
US$ |
||||||||||
Online education services |
||||||||||||
Books and reference materials |
— |
|||||||||||
Other professional education services |
— |
|||||||||||
|
|
|
|
|
|
|||||||
Professional education services |
||||||||||||
Sales of learning simulation software |
— |
|||||||||||
Business start-up training services |
— |
|||||||||||
|
|
|
|
|
|
|||||||
Total |
||||||||||||
|
|
|
|
|
|
2. |
SIGNIFICANT ACCOUNTING POLICIES |
US$ | ||||
Years ending September 30, |
||||
2021 |
||||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
|
|
|||
|
|
US$ |
||||
Years ending September 30, |
||||
2020 |
||||
2021 |
||||
2022 |
||||
2023 |
||||
2024 |
||||
|
|
|||
|
|
2. |
SIGNIFICANT ACCOUNTING POLICIES |
2. |
SIGNIFICANT ACCOUNTING POLICIES |
2. |
SIGNIFICANT ACCOUNTING POLICIES |
2. |
SIGNIFICANT ACCOUNTING POLICIES |
2. |
SIGNIFICANT ACCOUNTING POLICIES |
2. |
SIGNIFICANT ACCOUNTING POLICIES |
2. |
SIGNIFICANT ACCOUNTING POLICIES |
2. |
SIGNIFICANT ACCOUNTING POLICIES |
2. |
SIGNIFICANT ACCOUNTING POLICIES |
2. |
SIGNIFICANT ACCOUNTING POLICIES |
2. |
SIGNIFICANT ACCOUNTING POLICIES |
2. |
SIGNIFICANT ACCOUNTING POLICIES |
3. |
BUSINESS ACQUISITIONS |
US$ | Amortization period |
|||||||
Cash |
||||||||
Other current assets |
||||||||
Property, plant and equipment |
||||||||
Intangible assets |
||||||||
Customer relationship |
||||||||
Others |
||||||||
Goodwill |
||||||||
Other current liabilities |
( |
) | ||||||
Deferred tax liabilities |
( |
) | ||||||
Noncontrolling interest |
( |
) | ||||||
|
|
|||||||
Total |
||||||||
|
|
3. |
BUSINESS ACQUISITIONS |
Year September 30, |
||||||
2018 | ||||||
US$ | ||||||
Pro forma net revenues |
||||||
Pro forma net loss attributable to the Company |
( |
) | ||||
Pro forma net income per ordinary share-basic |
||||||
Pro forma net income per ordinary share-diluted |
3. |
BUSINESS ACQUISITIONS |
3. |
BUSINESS ACQUISITIONS |
US$ | Amortization period |
|||||||
Cash |
||||||||
Other current assets |
||||||||
Property, plant and equipment |
||||||||
Intangible assets |
||||||||
Supplier contracts |
||||||||
Trademark |
||||||||
Courseware |
||||||||
Software |
||||||||
Others |
||||||||
Goodwill |
||||||||
Other current liabilities |
( |
) | ||||||
Deferred tax liabilities |
( |
) | ||||||
Noncontrolling interest |
( |
) | ||||||
|
|
|||||||
Total |
||||||||
|
|
3. |
BUSINESS ACQUISITIONS |
Year ended September 30, |
||||
2018 | ||||
US$ | ||||
Pro forma net revenues |
||||
Pro forma net income attributable to the Company |
||||
Pro forma net income per ordinary share-basic |
||||
Pro forma net income per ordinary share-diluted |
4. |
SHORT-TERM INVESTMENTS |
4. |
SHORT-TERM INVESTMENTS |
As of September 30, | ||||||||
2019 | 2020 | |||||||
US$ | US$ | |||||||
Held-to-maturity investments |
— | |||||||
Available-for-sale investments |
||||||||
|
|
|
|
|||||
|
|
|
|
5. |
ACCOUNTS RECEIVABLE, NET |
As of September 30, | ||||||||
2019 | 2020 | |||||||
US$ | US$ | |||||||
Accounts receivable |
||||||||
Less: allowance for doubtful accounts |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Accounts receivable, net |
||||||||
|
|
|
|
As of September 30, | ||||||||
2019 | 2020 | |||||||
US$ | US$ | |||||||
Balance at beginning of the year |
||||||||
(Reversal) provision of the allowance for doubtful accounts |
( |
) | ||||||
Foreign currency adjustment |
( |
) | ||||||
|
|
|
|
|||||
Balance at end of the year |
||||||||
|
|
|
|
6. |
INVENTORIES |
As of September 30, |
||||||||
2019 | 2020 | |||||||
US$ | US$ | |||||||
Books and other goods |
||||||||
Paper and other raw materials |
||||||||
Less: inventory provisions for slow-moving and obsolescence |
( |
) | ( |
) | ||||
Total |
||||||||
7. |
PREPAYMENT AND OTHER CURRENT ASSETS |
As of September 30, | ||||||||||||
Notes | 2019 | 2020 | ||||||||||
US$ | US$ | |||||||||||
Prepaid expenses |
||||||||||||
Capitalized commission fees |
(1 | ) | ||||||||||
Advance to suppliers |
(2 | ) | ||||||||||
Funds receivable |
(3 | ) | ||||||||||
Staff advances |
(4 | ) | ||||||||||
Receivable from disposal of a subsidiary |
(5 | ) | ||||||||||
Others |
||||||||||||
Prepayment and other current assets, net |
||||||||||||
(1) | Capitalized commission fees primarily consist of the incremental sales commission relating to obtaining the customer contracts as described in Note 2. |
7. |
PREPAYMENT AND OTHER CURRENT ASSETS |
(2) |
Advance to suppliers represents interest-free cash deposits paid to suppliers for future purchase of raw materials and finished goods. The risk of loss arising from non-performance by or bankruptcy of the suppliers is assessed prior to making the deposits and is monitored on a regular basis by management. A charge to cost of sales will be recorded in the period in which a loss becomes probable. As of September 30, 2020, the Group has not experienced any loss of advance to suppliers. |
(3) |
Funds receivable arise due to the time taken to clear customers’ payment transactions through external payment networks. When customers remit fees to the Group via external payment networks using their bank accounts or credit cards, there is a clearing period before the cash is received by the Group which usually takes one to three business days. These course fees are treated as a receivable until the cash is received. |
(4) |
Staff advances were provided to staff for travelling and business related use which were subsequently expensed when incurred. |
(5) |
Receivable from disposal of a subsidiary refers to the remaining consideration receivable due from the buyers of Beijing Champion Tax Management and Advisory Co., Ltd. (“Champion Tax Advisory”), a previously consolidated subsidiary of the Group. The balance as of September 30, 2019 and 2020 was received on January 8, 2020 and January 8, 2021, respectively. |
8. |
PROPERTY, PLANT AND EQUIPMENT, NET |
As of September 30, | ||||||||
2019 | 2020 | |||||||
US$ | US$ | |||||||
Buildings |
||||||||
Electronic and office equipment |
||||||||
Leasehold improvement and building improvement |
||||||||
Motor vehicles |
||||||||
Total |
||||||||
Less: Accumulated depreciation |
( |
) | ( |
) | ||||
Construction in progress |
||||||||
9. |
GOODWILL, NET |
For the years ended September 30 | ||||||||||||||||||||||||||||||||
2019 | 2020 | |||||||||||||||||||||||||||||||
Professional education services |
Business start-up training services |
Sales of learning simulation software |
Total | Professional education services |
Business start-up training services |
Sales of learning simulation software |
Total | |||||||||||||||||||||||||
US$ | US$ | US$ | US$ | US$ | US$ | US$ | US$ | |||||||||||||||||||||||||
Gross amount |
||||||||||||||||||||||||||||||||
Beginning balance |
||||||||||||||||||||||||||||||||
Exchange difference |
( |
) | ( |
) | ( |
) | ( |
) | — | |||||||||||||||||||||||
Ending balance |
||||||||||||||||||||||||||||||||
Accumulated impairment loss |
— | ( |
) | — | ( |
) | — | ( |
) | — | ( |
) | ||||||||||||||||||||
Goodwill, net |
— | — | ||||||||||||||||||||||||||||||
10. |
OTHER INTANGIBLE ASSETS, NET |
As of September 30, | ||||||||
2019 | 2020 | |||||||
US$ | US$ | |||||||
Computer software |
||||||||
Trademarks and domain names |
||||||||
Courseware |
||||||||
Business contracts |
||||||||
Copyrights |
||||||||
Others |
||||||||
Total intangible assets |
||||||||
Less: Accumulated amortization |
||||||||
Computer software |
( |
) | ( |
) | ||||
Trademarks and domain names |
( |
) | ( |
) | ||||
Courseware |
( |
) | ( |
) | ||||
Business contracts |
( |
) | ( |
) | ||||
Copyrights |
( |
) | ( |
) | ||||
Others |
( |
) | ( |
) | ||||
Accumulated amortization |
( |
) | ( |
) | ||||
Intangible assets, net |
||||||||
Amortization | ||||
US$ | ||||
2021 |
||||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
2026 and thereafter |
||||
11. |
LONG-TERM INVESTMENTS |
As of September 30, | ||||||||
2019 | 2020 | |||||||
US$ | US$ | |||||||
Equity securities without readily determinable fair value: |
||||||||
Beijing teacheredu.cn Science & Technology Co., Ltd. (“Beijing teacheredu”) (a) |
||||||||
Other equity securities without readily determinable fair value |
||||||||
Equity method investments: |
||||||||
Beijing Champion Yuanjian Education Technology Co., Ltd. (“Yuanjian”) (b) |
||||||||
Other equity method investments (c) |
||||||||
Available-for-sale securities investments: |
||||||||
Chongqing Moses Robots Co., Ltd. (“Chongqing Moses Robots”) (d) |
||||||||
Beijing Niuke Technology Co., Ltd (“Niuke Technology”) (e) |
||||||||
Other available-for-sale investments (f) |
||||||||
Total |
||||||||
(a) | In December 2017, the Group entered into a share transfer agreement with certain shareholders of Beijing teacheredu, an organization specialized in teacher’s continuing education, to purchase In October 2020, Beijing teacheredu completed its share issuance plan and the equity interest held by the Group was reduced from |
11. |
LONG-TERM INVESTMENTS |
(b) | On December 29, 2018, the Group entered into a Share Transfer Agreement with Beijing Zhengbao TongChuang Technology Co., Ltd (“TongChuang”) and Beijing Zhengbao TongCheng Co., Ltd (“TongCheng”), to transfer N ote 17). Upon the completion of the share transfer, the Group holds ( loss) income amounting to US$( ) and US$ |
(c) | The other equity method investments represent several insignificant investments classified as equity method investments as of September 30, 2019 and 2020. During the years ended September 30, 2018, 2019 and 2020, the Group recorded share of net income ( loss) amounting to US$( ) and US$( ) , respectively. During the years ended September 30, 2018, 2019 and 2020, the Group recorded impairment loss from long-term investments amounting to, respectively . |
(d) | In November 2017, the Group entered into a capital contribution agreement with Chongqing Moses Robots, an industrial automation solution provider, and its shareholders to purchase |
(e) | In September 2016, the Group purchased income (loss) for the years ended September 30, 2019 and 2020, respectively. |
(f) | Other investments represent several insignificant investments classified as available-for-sale investments as of September 30, 2019 and 2020. Unrealized holding gains (loss) of US$ i (loss) for the years ended September 30, 2019 and 2020, respectively. ncome |
12. |
FAIR VALUE MEASUREMENT |
For the year ended September 30, 2020 | ||||||||||||||||
Fair value of September 30, 2020 |
Quoted prices in active markets for identical assets |
Significant other observable inputs |
Significant unobservable inputs |
|||||||||||||
(Level 1) | (Level 2) | (Level 3) | ||||||||||||||
|
|
|
US$ |
|
|
|
US$ |
|
|
|
US$ |
|
|
|
US$ |
|
Fair value measured |
||||||||||||||||
Cash and cash equivalents |
— | — | ||||||||||||||
Short-term investments: |
||||||||||||||||
Available-for-sale securities |
— | — | ||||||||||||||
Long-term investments: |
||||||||||||||||
Available-for-sale securities |
— | |||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets measured at fair value |
||||||||||||||||
|
|
|
|
|
|
|
|
For the year ended September 30, 2019 | ||||||||||||||||
Fair value of September 30, 2019 |
Quoted prices in active markets for identical assets |
Significant other observable inputs |
Significant unobservable inputs |
|||||||||||||
(Level 1) | (Level 2) | (Level 3) | ||||||||||||||
|
|
|
US$ |
|
|
|
US$ |
|
|
|
US$ |
|
|
|
US$ |
|
Fair value measured |
||||||||||||||||
Cash and cash equivalents |
— | — | ||||||||||||||
Short-term investments: |
||||||||||||||||
Available-for-sale securities |
— | — | ||||||||||||||
Long-term investments: |
||||||||||||||||
Available-for-sale securities |
— | |||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets measured at fair value |
||||||||||||||||
|
|
|
|
|
|
|
|
12. |
FAIR VALUE MEASUREMENT |
12. |
FAIR VALUE MEASUREMENT |
Available-for-sale Investments |
||||
US$ | ||||
Balance as of September 30, 2018 |
||||
|
|
|||
Transfer from L evel 2 fair value measurement |
||||
Transfer to L evel 2 fair value measurement |
( |
) | ||
Unrealized gain |
||||
Exchange loss |
( |
) | ||
|
|
|||
Balance as of September 30, 2019 |
||||
|
|
|||
Transfer from L evel 2 fair value measurement |
||||
Transfer to L evel 2 fair value measurement |
( |
) | ||
Unrealized gain |
||||
Exchange gain |
||||
|
|
|||
Balance as of September 30, 2020 |
||||
|
|
12. |
FAIR VALUE MEASUREMENT |
13. |
OTHER NON-CURRENT ASSETS |
As of September 30, | ||||||||||||
Notes | 2019 | 2020 | ||||||||||
US$ | US$ | |||||||||||
Long-term prepaid expenses |
(1 | ) | ||||||||||
Rental deposits |
(2 | ) | ||||||||||
Long-term capitalized commission fees |
(3 | ) | ||||||||||
Long-term receivables |
||||||||||||
Others |
||||||||||||
|
|
|
|
|||||||||
|
|
|
|
13. |
OTHER NON-CURRENT ASSETS |
(1) | Long-term prepaid expenses represent golf club membership fees. Such fees are amortized over are recorded as general and administrative expenses on the consolidated statements of operations. |
(2) | Rental deposits represent office rental deposits for the Group’s daily operations, which will not be refunded within one year. |
(3) | Long-term capitalized commission fees primarily consist of the long-term incremental sales commission relating to obtaining the customer contract s as described in Note 2. |
14. |
ACCRUED EXPENSES AND OTHER LIABILITIES |
As of September 30, | ||||||||||||
Note | 2019 | 2020 | ||||||||||
US$ | US$ | |||||||||||
Tuition fee payable to government agencies |
(1 | ) | ||||||||||
Salary and welfare payable |
||||||||||||
Accrued expenses |
||||||||||||
Remuneration payable to lecturers |
||||||||||||
Uncertain income tax liabilities (Note 19) |
||||||||||||
Other payable |
||||||||||||
|
|
|
|
|||||||||
|
|
|
|
(1) | Tuition fee payable to government agencies mainly represents the portion of tuition fee s collected by the Group on behalf of the government agencies which provide certain continuing education courses. The Group is only responsible for the student enrollment and provision of online platform and shares certain percentage of tuition fees as service fees . |
15. |
BANK BORROWINGS |
• | On June 22, 2018, the loan originally drawn down in 2017 was subsequently renewed in an amount of US$ |
• | On June 27, 2019, the loan was terminated and replaced by a new loan agreement, for an amount of RMB 2019 and March 27, 2020, US $and US$ |
15. |
BANK BORROWINGS |
• | On December 18, 2017, US$ 3.59 % annual interest rate, subject to adjustment each quarter. Part of the loan in an amount of US$2019. The term deposit used to secure the loan was subsequently released upon the settlement. |
• | On January 5, 2018, US$ 3.59 % annual interest rate, subject to adjustment each quarter. The balance of the loan amounting to US$respectively. The term deposit used to secure the loan was subsequently released upon the settlement. |
• | On April 15, 2020, US$ f acility was drawn down at approximately 24 months. The loan was secured by a term deposit of RMBZhongxi Healthcare Education . The loan is scheduled to be repaid in three installments before the following dates: |
15. |
BANK BORROWINGS |
• | On July 21, 2017, Zhengbao Yucai and BSB signed an equity pledge agreement, pursuant to which Zhengbao Yucai agreed to provide a pledge of |
• | On January 31, 2018, Zhengbao Yucai elected to early repay an amount of RMB The outstanding loan balance as of September 30, 2019 amounting to RMB was fully paid in the year ended September 30, 2020. |
16. |
RELATED-PARTY TRANSACTIONS |
17. |
DECONSOLIDATION OF A SUBSIDIARY |
18. |
RESTRICTED NET ASSETS |
18. |
RESTRICTED NET ASSETS |
19. |
INCOME TAX |
19. |
INCOME TAX - |
19. |
INCOME TAX - |
For the years ended September 30, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
US$ | US$ | US$ | ||||||||||
Non - PRC |
( |
) | ( |
) | ( |
) | ||||||
PRC |
||||||||||||
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
For the years ended September 30, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
US$ | US$ | US$ | ||||||||||
Current tax expense s |
||||||||||||
Deferred tax (benefit) expense s |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
19. |
INCOME TAX - |
For the years ended September 30, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
US$ | US$ | US$ | ||||||||||
Income before taxes |
||||||||||||
|
|
|
|
|
|
|||||||
Income tax expense s computed at applicable tax rates of |
||||||||||||
Effect of different tax rates in different jurisdictions |
||||||||||||
Non-deductible expenses |
||||||||||||
Effect of tax holidays |
( |
) | ( |
) | ( |
) | ||||||
Effect of valuation allowances |
||||||||||||
Withholding tax on undistributed earnings |
||||||||||||
Income tax reversal |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|||||||
Effective income tax rate |
% | % | % | |||||||||
|
|
|
|
|
|
For the years ended September 30, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
US$ | US$ | US$ | ||||||||||
The aggregate amount of tax holidays |
||||||||||||
|
|
|
|
|
|
|||||||
The aggregate increase on basic and diluted net income per share: |
||||||||||||
- Basic |
||||||||||||
|
|
|
|
|
|
|||||||
- Diluted |
||||||||||||
|
|
|
|
|
|
19. |
INCOME TAX |
As of September 30, | ||||||||
2019 | 2020 | |||||||
US$ | US$ | |||||||
Deferred tax assets |
||||||||
Advertising expenses carry-forwards |
||||||||
Accrued expenses |
||||||||
Allowance for doubtful accounts |
||||||||
Impairment loss from long-term investments |
||||||||
Property, plant and equipment |
||||||||
Net operating loss carry-forwards |
||||||||
|
|
|
|
|||||
|
||||||||
Less: valuation allowance |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total deferred tax assets |
|
|
|
|
|
|
|
|
Deferred tax assets, net |
||||||||
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
Deferred tax liabilities |
||||||||
Intangible assets |
||||||||
Withholding tax on undistributed earnings |
||||||||
Unrealized gain on available-for-sale investments |
||||||||
Capitalized commission fees |
||||||||
|
|
|
|
|||||
Total deferred tax liabilities |
||||||||
Deferred tax liabilities, net |
|
|
|
|
|
|
|
|
|
|
|
|
19. |
INCOME TAX |
Unrecognized tax benefits |
||||
US$ | ||||
Balance as of September 30, 2018 |
||||
Foreign currency adjustment |
( |
) | ||
Balance as of September 30, 2019 |
||||
Foreign currency adjustment |
||||
Balance as of September 30, 2020 |
||||
20. |
EMPLOYEE DEFINED CONTRIBUTION PLAN |
21. |
LEASES |
For the year ended September 30, 2020 |
||||
US$ | ||||
Cash payments for the operating leases |
||||
ROU assets obtained in exchange for the new operating lease liabilities |
||||
21. |
LEASES |
US$ | ||||
Years ending September 30, 2021 |
||||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
2026 and thereafter |
||||
Total future lease payments |
||||
Less: Imputed interest |
( |
) | ||
Present value of operating lease liabilities |
US$ | ||||
Years ending September 30, 2020 |
||||
2021 |
||||
2022 |
||||
2023 |
||||
2024 |
||||
2025 and thereafter |
||||
Total future lease payments |
||||
22. |
COMMITMENTS AND CONTINGENCIES |
22. |
COMMITMENTS AND CONTINGENCIES |
23. |
NONCONTROLLING INTERESTS |
Zhengbao Yucai |
NetinNet | Jiangsu Asset |
Beijing Ruida |
Total | ||||||||||||||||
US$ | US$ | US$ | US$ | US$ | ||||||||||||||||
Balance as of September 30, 2018 |
||||||||||||||||||||
Capital contribution from noncontrolling interest shareholders |
— | — | — | |||||||||||||||||
Purchase of equity interests from noncontrolling interest shareholders |
— | — | — | ( |
) | ( |
) | |||||||||||||
Foreign currency translation adjustment attributed to noncontrolling interest shareholders |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||
Cash dividends paid to noncontrolling interests by a subsidiary |
— | ( |
) | — | — | ( |
) | |||||||||||||
(Loss) gain attributed to noncontrolling interest shareholders |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
Balance as of September 30, 2019 |
||||||||||||||||||||
Capital contribution from noncontrolling interest shareholders |
— | — | — | |||||||||||||||||
Foreign currency translation adjustment attributed to noncontrolling interest shareholders |
||||||||||||||||||||
Cash dividends paid to noncontrolling interests by a subsidiary |
— | ( |
) | — | ( |
) | ( |
) | ||||||||||||
(Loss) gain attributed to noncontrolling interest shareholders |
( |
) | ( |
) | ( |
) | ||||||||||||||
Balance as of September 30, 2020 |
||||||||||||||||||||
23. |
NONCONTROLLING INTERESTS |
For the years ended September 30, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
US$ | US$ | US$ | ||||||||||
Net income attributable to the Company |
||||||||||||
Transfers from noncontrolling interest: |
||||||||||||
Increase in the Group’s additional paid-in capital in relation to capital contribution made by Jiangsu Asset’s noncontrolling interest |
— | — | ||||||||||
Increase in the Group’s additional paid-in capital in relation to share purchase from noncontrolling interests of Beijing Ruida |
— | — | ||||||||||
Changes from net income attributable to the Company’s shareholders and transfer from noncontrolling interests |
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
24. |
SEGMENT REPORTING |
For the years ended September 30, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
US$ | US$ | US$ | ||||||||||
Net revenues |
||||||||||||
Professional education services |
||||||||||||
Business start-up training services |
||||||||||||
Sales of learning simulation software |
||||||||||||
|
|
|
|
|
|
|||||||
Operating costs and expenses: |
||||||||||||
Cost of sales |
( |
) | ( |
) | ( |
) | ||||||
Professional education services |
( |
) | ( |
) | ( |
) | ||||||
Business start-up training services |
( |
) | ( |
) | ( |
) | ||||||
Sales of learning simulation software |
( |
) | ( |
) | ( |
) | ||||||
Selling and marketing |
( |
) | ( |
) | ( |
) | ||||||
Professional education services |
( |
) | ( |
) | ( |
) | ||||||
Business start-up training services |
( |
) | ( |
) | ( |
) | ||||||
Sales of learning simulation software |
( |
) | ( |
) | ( |
) | ||||||
General and administrative |
( |
) | ( |
) | ( |
) | ||||||
Professional education services |
( |
) | ( |
) | ( |
) | ||||||
Business start-up training services |
( |
) | ( |
) | ( |
) | ||||||
Sales of learning simulation software |
( |
) | ( |
) | ( |
) | ||||||
Impairment of goodwill |
— | ( |
) | — | ||||||||
Business start-up training services |
— | ( |
) | — | ||||||||
Unallocated corporate expenses |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Total operating costs and expenses |
( |
) | ( |
) | ( |
) | ||||||
Professional education services |
( |
) | ( |
) | ( |
) | ||||||
Business start-up training services |
( |
) | ( |
) | ( |
) | ||||||
Sales of learning simulation software |
( |
) | ( |
) | ( |
) | ||||||
Unallocated corporate expenses |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Other operating income |
||||||||||||
Professional education services |
||||||||||||
Business start-up training services |
||||||||||||
Sales of learning simulation software |
||||||||||||
|
|
|
|
|
|
|||||||
Operating income (loss) |
||||||||||||
Professional education services |
||||||||||||
Business start-up training services |
( |
) | ( |
) | ||||||||
Sales of learning simulation software |
( |
) | ||||||||||
Unallocated corporate expenses |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
24. |
SEGMENT REPORTING |
For the years ended September 30, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
US$ | US$ | US$ | ||||||||||
Segment assets |
||||||||||||
Professional education services |
||||||||||||
Business start-up training services |
||||||||||||
Sales of learning simulation software |
||||||||||||
|
|
|
|
|
|
|||||||
Total assets |
||||||||||||
|
|
|
|
|
|
|||||||
Amortization and depreciation |
||||||||||||
Professional education services |
||||||||||||
Business start-up training services |
||||||||||||
Sales of learning simulation software |
||||||||||||
|
|
|
|
|
|
|||||||
(Loss) gain from equity method investments |
( |
) | ( |
) | ( |
) | ||||||
Professional education services |
( |
) | ( |
) | ||||||||
Business start-up training services |
( |
) | ( |
) | — | |||||||
|
|
|
|
|
|
25. |
NET INCOME PER SHARE |
For the years ended September 30, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
US$ | US$ | US$ | ||||||||||
Numerator: |
||||||||||||
Net income |
||||||||||||
- allocated to ordinary share - basic |
||||||||||||
- allocated to nonvested share - basic |
||||||||||||
|
|
|
|
|
|
|||||||
Denominator: |
||||||||||||
Weighted average number of ordinary shares outstanding |
||||||||||||
Weighted average number of nonvested share |
||||||||||||
Plus incremental weighted average ordinary shares from assumed exercise of share options using the treasury stock method |
||||||||||||
|
|
|
|
|
|
|||||||
Weighted average ordinary shares outstanding used in computing diluted net income per share |
||||||||||||
|
|
|
|
|
|
|||||||
Basic net income per share |
||||||||||||
|
|
|
|
|
|
|||||||
Basic net income per nonvested share |
||||||||||||
|
|
|
|
|
|
|||||||
Diluted net income per share |
||||||||||||
|
|
|
|
|
|
|||||||
Diluted net income per nonvested share |
||||||||||||
|
|
|
|
|
|
26. |
SHARE INCENTIVE PLAN |
26. |
SHARE INCENTIVE PLAN |
Share option granted to employees and non-executive directors |
Number of shares |
Weighted- average exercise price |
Weighted- average remaining contractual term (years) |
Aggregated intrinsic value |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
US$ |
|
|
|
US$ |
|
Outstanding as of September 30, 2017 |
— | |||||||||||||||
|
|
|||||||||||||||
Exercised |
( |
) | ||||||||||||||
Forfeited |
( |
) | ||||||||||||||
|
|
|||||||||||||||
Outstanding as of September 30, 2018 |
||||||||||||||||
|
|
|||||||||||||||
Forfeited |
( |
) | — | |||||||||||||
|
|
|||||||||||||||
Outstanding as of September 30, 2019 |
— | |||||||||||||||
|
|
|||||||||||||||
Forfeited |
( |
) | — | |||||||||||||
|
|
|||||||||||||||
Outstanding as of September 30, 2020 |
||||||||||||||||
|
|
|||||||||||||||
Expected to vest as of September 30, 2020 |
— | — | — | |||||||||||||
|
|
|||||||||||||||
Exercisable as of September 30, 2020 |
||||||||||||||||
|
|
26. |
SHARE INCENTIVE PLAN |
26. |
SHARE INCENTIVE PLAN |
26. |
SHARE INCENTIVE PLAN |
Number of Nonvested shares outstanding |
Weight average grant-date fair value |
Aggregated intrinsic value |
||||||||||
US$ | US$ |
|||||||||||
Nonvested shares outstanding as of September 30, 2017 |
||||||||||||
Granted |
||||||||||||
Vested |
( |
) | ||||||||||
Nonvested shares outstanding as of September 30, 2018 |
||||||||||||
Granted |
||||||||||||
Forfeited |
( |
) | ||||||||||
Vested |
( |
) | ||||||||||
Nonvested shares outstanding as of September 30, 2019 |
||||||||||||
Granted |
— | |||||||||||
Vested |
( |
) | — | |||||||||
Nonvested shares outstanding as of September 30, 2020 |
||||||||||||
Nonvested shares expected to vest as of September 30, 2020 |
||||||||||||
25. |
SHARE INCENTIVE PLAN |
As of September 30, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
US$ | US$ | US$ | ||||||||||
Cost of sales |
||||||||||||
General and administrative expenses |
||||||||||||
Selling expenses |
||||||||||||
27. |
CASH DIVIDEND |
28. |
SUBSEQUENT EVENTS |
(1) |
On November 13, 2020, the Company granted |
(2) |
On December 1, 2020, the Company announced that it has entered into a definitive agreement and plan of merger (the “Merger Agreement”) with Champion Distance Education Investments Limited (“Parent”) and China Distance Learning Investments Limited (“Merger Sub”), a wholly owned subsidiary of Parent, pursuant to which, subject to the terms and conditions thereof, Merger Sub will merge with and into the Company, with the Company continuing as the surviving entity and becoming a wholly-owned subsidiary of Parent (the “Merger”). If completed, the Merger will result in the Company becoming a privately-held company, the Company’s ADSs will no longer be listed on the NYSE, and its ADS program will be terminated. |
(3) |
On January 15, 2021, the outstanding loan balance amounting to US$ |
As of September 30, | ||||||||
2019 | 2020 | |||||||
US$ | US$ | |||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
||||||||
Prepayment and other current assets |
||||||||
Amounts due from subsidiaries |
||||||||
|
|
|
|
|||||
Total current assets |
||||||||
|
|
|
|
|||||
Non-current assets |
||||||||
Long-term investments |
||||||||
Investment in subsidiaries |
||||||||
|
|
|
|
|||||
Total non-current assets |
||||||||
|
|
|
|
|||||
Total assets |
||||||||
|
|
|
|
|||||
LIABILITIES AND EQUITY |
||||||||
Current liabilities |
||||||||
Accrued expenses and other liabilities |
||||||||
Amounts due to subsidiaries |
||||||||
Bank borrowings |
— | |||||||
|
|
|
|
|||||
Total current liabilities |
||||||||
|
|
|
|
|||||
Total liabilities |
||||||||
|
|
|
|
|||||
Shareholders’ equity |
||||||||
Ordinary shares (par value of US$ |
||||||||
Additional paid-in capital |
||||||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Retained earnings |
||||||||
|
|
|
|
|||||
Total equity |
||||||||
|
|
|
|
|||||
Total liabilities and equity |
||||||||
|
|
|
|
For the years ended September 30, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
US$ | US$ | US$ | ||||||||||
Cost of sales |
( |
) | ( |
) | ( |
) | ||||||
Selling expenses |
( |
) | ( |
) | ( |
) | ||||||
General and administrative expenses |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Operating loss |
( |
) | ( |
) | ( |
) | ||||||
Share of equity income in its subsidiaries and the VIEs |
||||||||||||
Interest income |
||||||||||||
Interest expense s |
( |
) | ( |
) | ( |
) | ||||||
Exchange gain (loss) |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net income |
||||||||||||
|
|
|
|
|
|
For the years ended September 30, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
US$ | US$ | US$ | ||||||||||
Net income |
||||||||||||
Other comprehensive (loss) income Foreign currency translation adjustment |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Total comprehensive income |
||||||||||||
|
|
|
|
|
|
For the years ended September 30, | ||||||||||||
2018 | 2019 | 2020 | ||||||||||
US$ | US$ | US$ | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||||||
Net cash (used in) provided by operating activities |
( |
) | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||||||
Proceeds from share options exercised by employees |
— | — | ||||||||||
Loan to optionees in connection with exercise of options |
( |
) | — | — | ||||||||
Repayment of loan to optioneesin connection with exercise of options |
||||||||||||
Capital contribution from noncontrolling interests |
— | — | ||||||||||
New short-term loans drawn down |
— | — | ||||||||||
Loan repayments |
— |
( |
) | ( |
) | |||||||
Dividends paid to shareholders |
( |
) | — | ( |
) | |||||||
Net cash provided by (used in) financing activities |
( |
) | ( |
) | ||||||||
Net decrease in cash and cash equivalents and restricted cash |
( |
) | ( |
) | ( |
) | ||||||
Cash and cash equivalents and restricted cash at beginning of the year |
||||||||||||
Cash and cash equivalents and restricted cash at end of the year |
||||||||||||
1. |
BASIS FOR PREPARATION |
2. |
INVESTMENTS IN SUBSIDIARIES AND THE VIEs |