EX-99.1 2 tm2038407d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

Confidential Draft

 

 

Ambow Education Announces Third Quarter 2020 Financial Results

 

BEIJING, December 17, 2020 -- Ambow Education Holding Ltd. (“Ambow” or the “Company”) (NYSE American: AMBO), a leading national provider of educational and career enhancement services in China, today announced its unaudited financial and operating results for the three-month and nine-month periods ended September 30, 2020.

 

“While our business continued to be impacted by COVID-19-related macro headwinds during the third quarter of 2020, I am pleased to report that after a solid start to the new fall semester, revenue from the K-12 schools segment increased 18.8% year-over-year. Encouragingly, deferred revenue related to tuition and course fees and our education service platform increased 12.4% to US$37.9 million from the year-ago period and reached its highest level since 2015, reflecting the resilience of our business. Supported by ample cash resources and a healthy balance sheet, our core strength and fundamentals remain solid across our key segments,” noted Dr. Jin Huang, Ambow’s President and Chief Executive Officer. “We are excited that in September we won the bid for a Technical and Vocational Education and Training (TVET) Center project that is financially supported by the Asian Development Bank as a part of its inclusive growth project in Ziyang City of Sichuan Province. This achievement demonstrates our exceptional capabilities and leading position in the vocational and technical education sector.”

 

“We continued to execute our key strategies to pursue more balanced growth, while providing high quality educational services that better engage students against the challenging backdrop of the COVID-19 environment. Leveraging our 20-year proven track record in curriculum development, professional training, job placement and education technology innovation, we are making massive progress in building out our online-to-offline education SaaS platform, Huanyujun Education Hub. We have gradually started rolling out Amazon Web Services (AWS) and Cisco-authorized certification and training courses on the Huanyujun Education Hub, which is already supported by our cutting-edge educational solutions such as Ambow Panorama Digital Teaching System and Ambow Cloud Platform. We believe these best-in-class educational services and course offerings will broaden our appeal to a wider student base as they pursue professional certifications for their technology careers. ”

 

“Going forward, we will maintain our strategic efforts to enrich our educational service offerings, optimize operating efficiencies, and increase student enrollments and engagement. We remain confident that our efforts will support the long-term sustainability of our overall business,” concluded Dr. Huang.

 

Third Quarter 2020 Financial Highlights

 

·Net revenues for the third quarter of 2020 decreased by 6.2% to US$16.6 million from US$17.7 million in the same period of 2019. The decrease was primarily from fewer services provided at the Company’s tutoring centers, training offices and college campuses. This was partially offset by the increase in the revenue from K-12 schools driven by higher enrollment and the revenue from NewSchool of Architecture and Design, LLC (“NewSchool”), acquired in the first quarter of 2020.

 

 

 

 

 

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·Gross profit for the third quarter of 2020 decreased by 77.8% to US$1.0 million from US$4.5 million in the same period of 2019. Gross profit margin was 6.0%, compared with 25.4% for the third quarter of 2019. The decreases in gross profit and margin were mainly attributable to the decrease in net revenues from CP&CE Programs.

 

·Operating expenses for the third quarter of 2020 decreased by 3.4% to US$14.0 million from US$14.5 million for the same period of 2019. The decrease was primarily attributable to stringent expense controls to improve operating efficiency, and partially offset by operating expenses related to NewSchool.

 

·Net loss attributable to ordinary shareholders was US$12.5 million, or US$0.29 per basic and diluted share, compared with a net loss of US$10.2 million, or US$0.23 per basic and diluted share, for the third quarter of 2019.

 

·As of September 30, 2020, Ambow maintained strong cash resources of US$44.0 million, comprised of cash and cash equivalents of US$12.7 million and short-term investments of US$31.3 million.

 

·As of September 30, 2020, the Company’s deferred revenue balance was US$37.9 million, representing a 59.9% increase from US$23.7 million as of December 31, 2019, mainly attributable to the tuition and fees collected at K-12 schools for the fall semester of the 2020-2021 academic year, and deferred revenue collected from our colleges for the fall semester of 2020.

 

First Nine Months 2020 Financial Highlights

 

·Net revenues for the first nine months of 2020 decreased by 8.0% to US$52.8 million from US$57.4 million in the same period of 2019. The decrease was primarily from fewer boarding and other ancillary services provided for K-12 schools as result of temporary COVID-19-related campus closures in the first half of 2020, and fewer services provided at the Company’s tutoring centers, training offices and college campuses. This was partially offset by the revenue from NewSchool which was acquired in the period.

 

·Gross profit for the first nine months of 2020 decreased by 40.5% to US$11.6 million from US$19.5 million in the same period of 2019. Gross profit margin was 22.0%, compared with 34.0% for the first nine months of 2019. The decreases in gross profit and margin were mainly attributable to the decrease in net revenues from CP&CE Programs.

 

·Operating expenses for the first nine months of 2020 decreased by 1.9% to US$30.4 million from US$31.0 million for the same period of 2019. The decrease was primarily attributable to lower expenditures due to the temporary suspension of operations at training offices and tutoring centers in the period as a part of the national pandemic containment efforts, as well as stringent expense controls to improve operating efficiency, and partially offset by NewSchool’s operating expenses.

 

 

 

 

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·Net loss attributable to ordinary shareholders was US$10.9 million, or US$0.25 per basic and diluted share, compared with a net loss of US$12.3 million, or US$0.28 per basic and diluted share, for the first nine months of 2019.

 

On October 5, 2020, the Company completed a registered direct offering of 1,507,538 American Depositary Shares (“ADSs”, representing 3,015,076 Class A Ordinary Shares), at a purchase price of $3.98 per ADS. The Company also issued to investors registered warrants to purchase up to an aggregate amount of 603,016 ADSs (representing 1,206,032 Class A Ordinary Shares). Net proceeds from this offering were approximately US$5.2 million.

 

The Company's financial and operating results for the third quarter and first nine months of 2020 can also be found on its Form 6-K filed with the U.S. Securities and Exchange Commission at www.sec.gov.

 

Exchange Rate Information

 

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted, all amounts translated from RMB to U.S. dollars for the third quarter and first nine months of 2020 are based on the effective exchange rate of 6.7896 as of September 30, 2020; all amounts translated from RMB to U.S. dollars for the third quarter and first nine months of 2019 are based on the effective exchange rate of 7.1477 as of September 30, 2019; all amounts translated from RMB to U.S. dollars as of December 31, 2019 are based on the effective exchange rate of 6.9618 as of December 31, 2019. The exchange rates were according to the middle rate as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.

 

About Ambow Education Holding Ltd.

 

Ambow Education Holding Ltd. is a leading national provider of educational and career enhancement services in China, offering high-quality, individualized services and products. With its extensive network of regional service hubs complemented by a dynamic proprietary learning platform and distributors, Ambow provides its services and products to students in 15 out of the 34 provinces and autonomous regions within China.

 

Follow us on Twitter: @Ambow_Education

 

 

 

 

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Safe Harbor Statement

 

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the outlook and quotations from management in this announcement, as well as Ambow’s strategic and operational plans, contain forward-looking statements. Ambow may also make written or oral forward-looking statements in its reports filed or furnished to the U.S. Securities and Exchange Commission, in its annual reports to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statements, including but not limited to the following: the Company’s goals and strategies, expansion plans, the expected growth of the content and application delivery services market, the Company’s expectations regarding keeping and strengthening its relationships with its customers, and the general economic and business conditions in the regions where the Company provides its solutions and services. Further information regarding these and other risks is included in the Company’s filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and Ambow undertakes no duty to update such information, except as required under applicable law.

 

For investor and media inquiries please contact:

 

Ambow Education Holding Ltd.

Tel: +86-10-6206-8000

 

The Piacente Group | Investor Relations

Tel: +1-212-481-2050 or +86-10-6508-0677

E-mail: ambow@tpg-ir.com

 

 

 

 

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AMBOW EDUCATION HOLDING LTD.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except for share and per share data)

 

   As of September 30,   As of December 31, 
   2020   2019 
   US$   RMB   RMB 
ASSETS               
Current assets:               
Cash and cash equivalents   12,677    86,072    157,600 
Restricted cash   2,006    13,621    - 
Short term investments, available for sale   26,898    182,629    57,487 
Short term investments, held to maturity   4,419    30,000    31,000 
Accounts receivable, net   3,616    24,549    17,939 
Amounts due from related parties   907    6,159    2,318 
Prepaid and other current assets, net   23,150    157,177    133,296 
Total current assets   73,673    500,207    399,640 
Non-current assets:               
Property and equipment, net   21,603    146,678    157,463 
Land use rights, net   254    1,726    1,759 
Intangible assets, net   8,168    55,458    56,607 
Goodwill   3,787    25,710    60,353 
Deferred tax assets, net   538    3,653    10,195 
Operating lease right-of-use asset   38,704    262,787    257,361 
Finance lease right-of-use asset   884    6,000    6,450 
Other non-current assets, net   12,429    84,388    70,971 
Total non-current assets   86,367    586,400    621,159 
                
Total assets   160,040    1,086,607    1,020,799 
                
LIABILITIES               
Current liabilities:               
Short-term borrowings  *   2,948    20,013    - 
Deferred revenue  *   37,906    257,368    165,111 
Accounts payable  *   2,284    15,500    14,718 
Accrued and other liabilities  *   27,277    185,203    192,957 
Income taxes payable, current  *   27,060    183,729    180,715 
Amounts due to related parties  *   718    4,876    1,971 
Operating lease liability, current  *   7,459    50,642    53,512 
Total current liabilities   105,652    717,331    608,984 
Non-current liabilities:               
Income taxes payable, non-current  *   5,094    34,589    32,152 
Operating lease liability, non-current  *   34,723    235,756    216,067 
Total non-current liabilities   39,817    270,345    248,219 
                
Total liabilities   145,469    987,676    857,203 
                
EQUITY               
Preferred shares               
(US$ 0.003 par value;1,666,667 shares authorized, nil issued and outstanding as of December 31, 2019 and September 30, 2020)   -    -    - 
Class A Ordinary shares               
(US$0.003 par value; 66,666,667 and 66,666,667 shares authorized, 38,858,199 and 38,895,700 shares issued and outstanding as of December 31, 2019 and September 30, 2020, respectively)   108    731    730 
Class C Ordinary shares               
(US$0.003 par value; 8,333,333 and 8,333,333 shares authorized, 4,708,415 and 4,708,415 shares issued and outstanding as of December 31, 2019 and September 30, 2020, respectively)   13    90    90 
Additional paid-in capital   516,868    3,509,330    3,508,745 
Statutory reserve   620    4,210    20,185 
Accumulated deficit   (505,202)   (3,430,122)   (3,371,815)
Accumulated other comprehensive income   2,420    16,429    6,341 
Total Ambow Education Holding Ltd.’s equity   14,827    100,668    164,276 
Non-controlling interests   (256)   (1,737)   (680)
Total equity   14,571    98,931    163,596 
Total liabilities and equity   160,040    1,086,607    1,020,799 

 

*  All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets.

 

 

 

 

 

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AMBOW EDUCATION HOLDING LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(All amounts in thousands, except for share and per share data)

 
   For the nine months ended September 30,   For the three months ended September 30, 
   2020   2020   2019   2020   2020   2019 
   US$   RMB   RMB   US$   RMB   RMB 
NET REVENUES                              
Educational program and services   52,742    358,098    409,367    16,560    112,439    126,729 
Intelligent program and services   52    352    1,193    40    269    (173)
Total net revenues   52,794    358,450    410,560    16,600    112,708    126,556 
COST OF REVENUES                              
Educational program and services   (40,898)   (277,683)   (265,454)   (15,518)   (105,359)   (92,934)
Intelligent program and services   (345)   (2,340)   (5,818)   (130)   (882)   (1,109)
Total cost of revenues   (41,243)   (280,023)   (271,272)   (15,648)   (106,241)   (94,043)
                               
GROSS PROFIT   11,551    78,427    139,288    952    6,467    32,513 
Operating expenses:                              
Selling and marketing   (5,576)   (37,861)   (40,778)   (2,011)   (13,655)   (15,607)
General and administrative   (18,739)   (127,230)   (140,510)   (6,331)   (42,987)   (48,116)
Research and development   (656)   (4,456)   (1,555)   (259)   (1,758)   (1,087)
Impairment loss   (5,405)   (36,699)   (38,754)   (5,405)   (36,699)   (38,754)
Total operating expenses   (30,376)   (206,246)   (221,597)   (14,006)   (95,099)   (103,564)
                               
OPERATING LOSS   (18,825)   (127,819)   (82,309)   (13,054)   (88,632)   (71,051)
                               
OTHER INCOME (EXPENSES)                              
Interest income   1,053    7,150    3,343    444    3,015    1,823 
Foreign exchange gain (loss), net   5    31    46    (1)   (4)   45 
Other income (loss), net   124    840    193    (105)   (712)   7 
Gain from deregistration of subsidiaries   584    3,967    1,279    10    70    - 
Gain on disposal of subsidiaries   111    752    -    111    752    - 
Gain on the bargain purchase   5,932    40,273    -    -    -    - 
Gain on sale of investment available for sale   365    2,477    422    209    1,421    3 
Total other income   8,174    55,490    5,283    668    4,542    1,878 
LOSS BEFORE INCOME TAX AND NON-CONTROLLING INTEREST   (10,651)   (72,329)   (77,026)   (12,386)   (84,090)   (69,173)
Income tax expense   (353)   (2,399)   (11,032)   (114)   (776)   (3,634)
                               
NET LOSS   (11,004)   (74,728)   (88,058)   (12,500)   (84,866)   (72,807)
Less: Net (loss)/income attributable to non-controlling interest   (153)   (1,040)   (269)   (49)   (332)   4 
                               
NET LOSS ATTRIBUTABLE TO ORDINARY SHAREHOLDERS   (10,851)   (73,688)   (87,789)   (12,451)   (84,534)   (72,811)
                               
NET LOSS   (11,004)   (74,728)   (88,058)   (12,500)   (84,866)   (72,807)
                               
OTHER COMPREHENSIVE INCOME, NET OF TAX                              
Foreign currency translation adjustments   1,581    10,731    (3,267)   354    2,403    (93)
Unrealized gains on short term investments                              
Unrealized holding gains arising during period   224    1,518    1,238    85    578    538 
Less: reclassification adjustment for gains included in net income   318    2,161    489    220    1,493    37 
Other comprehensive income (loss)   1,487    10,088    (2,518)   219    1,488    408 
                               
TOTAL COMPREHENSIVE LOSS   (9,517)   (64,640)   (90,576)   (12,281)   (83,378)   (72,399)
                               
Net loss per share – basic and diluted   (0.25)   (1.69)   (2.02)   (0.29)   (1.94)   (1.67)
                               
Weighted average shares used in calculating basic and diluted net loss per share   43,583,448    43,583,448    43,496,848    43,595,871    43,595,871    43,512,447 

 

 

 

 

AMBOW EDUCATION HOLDING LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(All amounts in thousands, except for share and per share data)

         
   Attributable to Ambow Education Holding Ltd.’s Equity     
                   Retained   Accumulated         
   Class A Ordinary   Class C Ordinary   Additional       Earnings   other   Non-     
   shares   shares   paid-in   Statutory   (Accumulated   comprehensive   controlling   Total 
   Shares   Amount   Shares   Amount   capital   reserves   deficit)   income   Interest   Equity 
       RMB       RMB   RMB   RMB   RMB   RMB   RMB   RMB 
Balance as of January 1, 2020   38,858,199    730    4,708,415    90    3,508,745    20,185    (3,372,409)    6,341    (680)    163,002 
Share-based compensation   -    -    -    -    238    -    -    -    -    238 
Issuance of ordinary shares for restricted stock award   12,500    0    -    -    (0)    -    -    -    -    - 
Foreign currency translation adjustment   -    -    -    -    -    -    -    433    -    433 
Unrealized gain on investment, net of income taxes   -    -    -    -    -    -    -    154    -    154 
Net income/(loss)   -    -    -    -    -    -    6,039    -    (412)    5,627 
Balance as of March 31, 2020   38,870,699    730    4,708,415    90    3,508,983    20,185    (3,366,370)    6,928    (1,092)    169,454 
Share-based compensation   -    -    -    -    242    -    -    -    -    242 
Issuance of ordinary shares for restricted stock award   12,500    1    -    -    (1)   -    -    -    -    - 
Foreign currency translation adjustment   -    -    -    -    -    -    -    7,895    -    7,895 
Unrealized gain on investment, net of income taxes   -    -    -    -    -    -    -    118    -    118 
Deregistration of subsidiaries   -    -    -    -    -    (15,473)    15,473    -    -    - 
Net income/(loss)   -    -    -    -    -    -    4,807    -    (297)    4,510 
Balance as of June 30, 2020   38,883,199    731    4,708,415    90    3,509,224    4,712    (3,346,090)    14,941    (1,389)    182,219 
Share-based compensation   -    -    -    -    239    -    -    -    -    239 
Issuance of ordinary shares for restricted stock award   12,501    0    -    -    (0)    -    -    -    -    - 
Foreign currency translation adjustment   -    -    -    -    -    -    -    2,403    -    2,403 
Unrealized gain on investment, net of income taxes   -    -    -    -    -    -    -    (915)    -    (915) 
Deregistration of subsidiary   -    -    -    -    -    -    -    -    (16)    (16) 
Disposal of subsidiaries   -    -    -    -    (133)    (502)    502    -    -    (133) 
Net loss   -    -    -    -    -    -    (84,534)   -    (332)    (84,866) 
Balance as of September 30, 2020   38,895,700    731    4,708,415    90    3,509,330    4,210    (3,430,122)    16,429    (1,737)    98,931 
                                                   
Balance as of January 1, 2019   38,756,289    728    4,708,415    90    3,507,123    20,149    (3,271,838)    8,305    (1,786)    262,771 
Share-based compensation   -    -    -    -    872    -    -    -    -    872 
Issuance of ordinary shares for restricted stock award   28,646    1    -    -    (1)    -    -    -    -    - 
Foreign currency translation adjustment   -    -    -    -    -    -    -    (2,428)    -    (2,428) 
Unrealized gain on investment, net of income taxes   -    -    -    -    -    -    -    75    -    75 
Net loss   -    -    -    -    -    -    (23,756)    -    (93)    (23,849) 
Balance as of March 31, 2019   38,784,935    729    4,708,415    90    3,507,994    20,149    (3,295,594)    5,952    (1,879)    237,441 
Share-based compensation   -    -    -    -    266    -    -    -    -    266 
Issuance of ordinary shares for restricted stock award   19,097    0    -    -    (0)    -    -    -    -    - 
Foreign currency translation adjustment   -    -    -    -    -    -    -    (746)    -    (746) 
Unrealized gain on investment, net of income taxes   -    -    -    -    -    -    -    173    -    173 
Addition of noncontrolling interests resulting from new subsidiaries   -    -    -    -    -    -    -    -    502    502 
Net income (loss)   -    -    -    -    -    -    8,778    -    (180)   8,598 
Balance as of June 30, 2019   38,804,032    729    4,708,415    90    3,508,260    20,149    (3,286,816)   5,379    (1,557)   246,234 
Share-based compensation   -    -    -    -    244    -    -    -    -    244 
Foreign currency translation adjustment   -    -    -    -    -    -    -    (93)   -    (93)
Unrealized gain on investment, net of income taxes   -    -    -    -    -    -    -    501    -    501 
Net (loss) / income   -    -    -    -    -    -    (72,811)   -    4    (72,807)
Balance as of September 30, 2019   38,804,032    729    4,708,415    90    3,508,504    20,149    (3,359,627)   5,787    (1,553)   174,079 

 

 

 

 

 

Confidential Draf

 

 

Discussion of Segment Operations

(All amounts in thousands)

 

   For the nine months ended September 30,   For the three months ended September 30, 
   2020   2020   2019   2020   2020   2019 
   US$   RMB   RMB   US$   RMB   RMB 
NET REVENUES                              
K-12 Schools   27,360    185,766    203,214    8,685    58,966    52,256 
CP&CE Programs   25,434    172,684    207,346    7,915    53,742    74,300 
Total net revenues   52,794    358,450    410,560    16,600    112,708    126,556 
COST OF REVENUES                              
K-12 Schools   (17,670)   (119,972)   (128,887)   (6,692)   (45,430)   (38,794)
CP&CE Programs   (23,573)   (160,051)   (142,385)   (8,956)   (60,811)   (55,249)
Total cost of revenues   (41,243)   (280,023)   (271,272)   (15,648)   (106,241)   (94,043)
GROSS PROFIT                              
K-12 Schools   9,690    65,794    74,327    1,993    13,536    13,462 
CP&CE Programs   1,861    12,633    64,961    (1,041)   (7,069)   19,051 
Total gross profit   11,551    78,427    139,288    952    6,467    32,513