Ambow Education Announces Fourth Quarter and Full Year 2020 Financial Results

BEIJING, April 8, 2021 /PRNewswire/ — Ambow Education Holding Ltd. («Ambow» or the «Company») (NYSE American: AMBO), a leading national…

BEIJING, April 8, 2021 /PRNewswire/ — 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 fourth quarter and audited financial and operating results for the fiscal year ended December 31, 2020, respectively.

«In the fourth quarter of 2020, we remained focused and diligent in our efforts to help students achieve positive learning outcomes, especially as they navigate these challenging times,» noted Dr. Jin Huang, Ambow’s President and Chief Executive Officer. «We’re pleased to report improved operating profitability in the fourth quarter, driven by healthy top-line performance and effective control over operating costs and expenses. Notably, gross margin increased 590 basis points year-over-year to 38.1%, reflecting the resilience of our business model in the wake of a weakened global economy due to COVID-19. With two decades of experience in education technology under our belt and powerful growth initiatives in place, we are confident in our ability to drive solid growth and further cement our leading position in China’s career enhancement market.»

«We recognize the increasingly pivotal role of advanced technologies and solutions as these uncertain times have reshaped the way education is delivered and received. The outbreak of COVID-19 further accelerated the integration of technology into classroom learning and significantly boosted the demand for online education from both students and education professionals. Through innovative solutions such as Huanyujun Education Hub, we are cultivating an online-to-offline education ecosystem that is built on cloud-based infrastructure to empower teaching and address both in-school and after-school learning needs. In December 2020, Ambow won approval to establish a postdoctoral scientific research workstation specialized in next-generation education tech research and development, a further testament to our strong capabilities in technology advancement and innovation. Heading into 2021, we look forward to executing our growth initiatives with the goal of consistently driving shareholder value,» concluded Dr. Huang.

Fourth Quarter 2020 Financial Highlights

  • Net revenues for the fourth quarter of 2020 remained flat at RMB173.5 million (US$26.6 million) compared to RMB173.3 million in the same period of 2019.
  • Gross profit for the fourth quarter of 2020 increased by 18.7% to RMB66.1 million (US$10.1 million) from RMB55.7 million in the same period of 2019. Gross profit margin was 38.1%, compared with 32.1% for the fourth quarter of 2019. The increases in gross profit and gross profit margin were mainly attributable to stringent cost management.
  • Operating expenses for the fourth quarter of 2020 decreased by 11.7% to RMB62.8 million (US$9.6 million) from RMB71.1 million in the same period of 2019. The decrease was primarily attributable to stringent expense controls to improve operating efficiency, partially offset by operating expenses related to NewSchool of Architecture and Design, LLC («NewSchool») which was acquired in the first quarter of 2020.
  • Operating income for the fourth quarter of 2020 was RMB3.3 million (US$0.5 million), compared to operating loss of RMB15.4 million in the same period of 2019.
  • Net income attributable to ordinary shareholders was RMB11.0 million (US$1.7 million), or RMB0.23 (US$0.04) per basic and diluted share, compared with a net loss of RMB12.2 million, or RMB0.28 (US$0.04) per basic and diluted share, for the fourth quarter of 2019.
  • As of December 31, 2020, Ambow maintained strong cash resources of RMB282.5 million (US$43.3 million), comprised of cash and cash equivalents of RMB118.8 million (US$18.2 million), restricted cash of RMB0.8 million (US$0.1 million) and short-term investments of RMB162.9 million (US$25.0 million).

Fiscal Year 2020 Financial Highlights

  • Net revenues for fiscal year 2020 decreased by 8.9% to RMB532.0 million (US$81.5 million) from RMB583.9 million in 2019. The decrease was primarily due to fewer boarding and other ancillary services provided for K-12 schools, and fewer services provided at the Company’s tutoring centers, training offices and college campuses as a result of the outbreak of COVID-19. This was partially offset by the revenues from NewSchool.
  • Gross profit for fiscal year 2020 decreased by 25.9% to RMB144.5 million (US$22.1 million) from RMB195.0 million in 2019. Gross profit margin was 27.2%, compared with 33.4% in 2019. The decreases in gross profit and margin were mainly attributable to the decrease in revenue while keeping cost deployment to weather the COVID-19 pandemic in 2020.
  • Operating expenses for fiscal year 2020 decreased by 8.1% to RMB269.0 million (US$41.2 million) from RMB292.7 million in 2019. The decrease was primarily attributable to lower expenditures due to the temporary suspension of operations at training offices and tutoring centers during the period as part of the national pandemic containment efforts and stringent expense controls to improve operating efficiency. The decrease was partially offset by NewSchool’s operating expenses.
  • Operating loss for fiscal year 2020 was RMB124.6 million (US$19.1 million), compared to operating loss of RMB97.7 million in 2019.
  • Net loss attributable to ordinary shareholders was RMB62.7 million (US$9.6 million), or RMB1.41 (US$0.22) per basic and diluted share, compared with a net loss of RMB99.9 million, or RMB2.30 (US$0.33) per basic and diluted share, in 2019.

The Company’s fourth quarter and fiscal year 2020 financial and operating results can also be found on its Form 6-K and Form 20-F 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 fourth quarter and the twelve months of 2020 are based on the effective exchange rate of 6.5250 as of December 31, 2020; all amounts translated from RMB to U.S. dollars for the fourth quarter and the twelve months of 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

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

Email: ir@ambow.com

The Piacente Group | Investor Relations

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

E-mail: ambow@tpg-ir.com

 

 

 

AMBOW EDUCATION HOLDING LTD.

AUDITED CONSOLIDATED BALANCE SHEETS

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
















As of December 31,


As of December 31,





2020


2019





US$


RMB


RMB


ASSETS









Current assets:









Cash and cash equivalents



18,210


118,821


157,600


Restricted cash



126


824



Short term investments, available for sale



18,062


117,854


57,487


Short term investments, held to maturity



6,897


45,000


31,000


Accounts receivable, net



3,214


20,972


17,939


Amounts due from related parties



463


3,024


2,318


Prepaid and other current assets, net



18,028


117,634


133,296


Total current assets



65,000


424,129


399,640


Non-current assets:









Property and equipment, net



22,144


144,492


157,463


Land use rights, net



263


1,715


1,759


Intangible assets, net



8,400


54,808


56,607


Goodwill



3,940


25,710


60,353


Deferred tax assets, net



971


6,338


10,195


Operating lease right-of-use asset



37,948


247,608


257,361


Finance lease right-of-use asset



897


5,850


6,450


Other non-current assets, net



21,313


139,067


70,971


Total non-current assets



95,876


625,588


621,159











Total assets



160,876


1,049,717


1,020,799











LIABILITIES









Current liabilities:









Short-term borrowing  *



1,533


10,000



Deferred revenue  *



25,088


163,699


165,111


Accounts payable  *



2,976


19,423


14,718


Accrued and other liabilities  *



32,121


209,590


192,957


Income taxes payable, current  *



28,297


184,638


180,715


Amounts due to related parties  *



390


2,543


1,971


Operating lease liability, current  *



8,230


53,702


53,512


Total current liabilities



98,635


643,595


608,984


Non-current liabilities:









Long-term borrowing 



1,470


9,594



Other non-current liabilities  *



45


292



Income taxes payable, non-current  *



5,328


34,763


32,152


Operating lease liability, non-current  *



33,765


220,319


216,067


Total non-current liabilities



40,608


264,968


248,219











Total liabilities



139,243


908,563


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 2020) 






Class A Ordinary shares









(US$0.003 par value; 66,666,667 and

    66,666,667 shares authorized, 38,858,199

    and  41,923,276 shares issued and

    outstanding as of December 31, 2019 and

    2020, respectively)



122


794


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 2020, respectively)



14


90


90


Additional paid-in capital



543,306


3,545,073


3,508,745


Statutory reserve



645


4,210


20,185


Accumulated deficit



(524,007)


(3,419,146)


(3,371,815)


Accumulated other comprehensive income



1,855


12,101


6,341


Total Ambow Education Holding Ltd.’s equity



21,935


143,122


164,276


Non-controlling interests



(302)


(1,968)


(680)


Total equity



21,633


141,154


163,596


Total liabilities and equity



160,876


1,049,717


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.



 

 

 

AMBOW EDUCATION HOLDING LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

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



For the years ended December 31,


For the three months ended December 31,


2020


2020


2019


2020


2020


2019


US$


RMB


RMB


US$


RMB


RMB


Audited


Audited


Audited


Unaudited


Unaudited


Unaudited













NET REVENUES












 Educational program and

   services

80,571


525,727


582,706


25,690


167,629


173,339

Intelligent program and

   services

958


6,253


1,203


904


5,901


10

Total net revenues

81,529


531,980


583,909


26,594


173,530


173,349

COST OF REVENUES












 Educational program and

    services

(58,172)


(379,571)


(383,635)


(15,615)


(101,888)


(118,181)

Intelligent program and

    services

(1,214)


(7,919)


(5,259)


(855)


(5,579)


559

Total cost of revenues

(59,386)


(387,490)


(388,894)


(16,470)


(107,467)


(117,622)













GROSS PROFIT

22,143


144,490


195,015


10,124


66,063


55,727

Operating expenses:












Selling and marketing

(8,024)


(52,355)


(55,721)


(2,221)


(14,494)


(14,943)

General and administrative

(26,710)


(174,283)


(194,417)


(7,211)


(47,053)


(53,907)

Research and development

(874)


(5,703)


(3,793)


(191)


(1,247)


(2,238)

Impairment loss

(5,624)


(36,699)


(38,754)




Total operating expenses

(41,232)


(269,040)


(292,685)


(9,623)


(62,794)


(71,088)













OPERATING (LOSS)

INCOME

(19,089)


(124,550)


(97,670)


501


3,269


(15,361)













OTHER INCOME

   (EXPENSES)












Interest income, net

1,456


9,501


5,379


360


2,351


2,036

Foreign exchange gain (loss),

   net

150


980


23


145


949


(23)

Other (loss) income, net

(191)


(1,244)


396


(319)


(2,084)


203

Gain from derecognition of

   liabilities

602


3,926



602


3,926


Gain from deregistration of

   subsidiaries

608


3,967


1,841




Gain on disposal of

   subsidiaries

115


752





562

Gain on the bargain purchase

6,172


40,273





Gain from fair value change of

   contingent consideration

   payable



1,322




1,322

Gain on sale of investment

   available for sale

533


3,476


1,200


153


999


778

Total other income

9,445


61,631


10,161


941


6,141


4,878

(LOSS) INCOME BEFORE

   INCOME TAX AND NON-

   CONTROLLING

   INTEREST

(9,644)


(62,919)


(87,509)


1,442


9,410


(10,483)

Income tax (expense) benefit

(163)


(1,062)


(12,917)


205


1,337


(1,885)













NET (LOSS) INCOME

(9,807)


(63,981)


(100,426)


1,647


10,747


(12,368)

Less: Net loss attributable to

   non-controlling interest

(194)


(1,269)


(485)


(35)


(229)


(216)













NET (LOSS) INCOME

   ATTRIBUTABLE TO

   ORDINARY

   SHAREHOLDERS

(9,613)


(62,712)


(99,941)


1,682


10,976


(12,152)













NET (LOSS) INCOME

(9,807)


(63,981)


(100,426)


1,647


10,747


(12,368)













OTHER

   COMPREHENSIVE

   INCOME, NET OF TAX












Foreign currency translation

   adjustments

955


6,234


(2,924)


(689)


(4,497)


343

Unrealized gains on short term

   investments












  Unrealized holding gains 

   arising during period

377


2,458


2,046


144


940


808

  Less: reclassification 

   adjustment for gains

   included in net income

449


2,932


1,086


118


771


597

Other comprehensive income

   (loss)

883


5,760


(1,964)


(663)


(4,328)


554













TOTAL

   COMPREHENSIVE

   (LOSS) INCOME

(8,924)


(58,221)


(102,390)


984


6,419


(11,814)













Net (loss) income per share –

    basic and diluted

(0.22)


(1.41)


(2.30)


0.04


0.23


(0.28)













Weighted average shares used

   in calculating basic and

   diluted net (loss) income

   per share

44,372,326


44,372,326


43,505,175


46,721,812


46,721,812


43,529,884

 

 

 

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






















Accumulated








 Class A Ordinary

Class C Ordinary


Additional






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


(3,371,815)


6,341


(680)


163,596


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


Impact on adoption of ASC

   326








(594)




(594)


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



(296)


4,511


Balance as of June 30,

   2020


38,883,199


731


4,708,415


90


3,509,224


4,712


(3,346,090)


14,941


(1,388)


182,220


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


(1,736)


98,932


Share-based compensation






228






228


Issuance of ordinary shares

   for restricted stock award


12,500


0




(0)







Issuance of ordinary shares

   in a registered direct

   offering


3,015,076


63




35,515






35,578


Foreign currency translation

   adjustment









(4,497)



(4,497)


Unrealized gain on

   investment, net of income

   taxes









169



169


Deregistration of subsidiary










(3)


(3)


Net income/(loss)








10,976



(229)


10,747


Balance as of

   December 31, 2020


41,923,276


794


4,708,415


90


3,545,073


4,210


(3,419,146)


12,101


(1,968)


141,154
























Balance as of January 1,

   2019


38,756,289


794


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


Share-based compensation






242






242


Issuance of ordinary shares

   for restricted stock award


54,167


1




(1)







Foreign currency translation

   adjustment









343



343


Appropriation to statutory

   reserves







36


(36)





Unrealized gain on

   investment, net of income

    taxes









211



211


Deregistration of

   subsidiaries










306


306


Noncontrolling interests

   from new subsidiaries










783


783


Net loss








(12,152)



(216)


(12,368)


Balance as of

   December 31, 2019


38,858,199


730


4,708,415


90


3,508,745


20,185


(3,371,815)


6,341


(680)


163,596


 

 

 

Discussion of Segment Operations

(All amounts in thousands)



For the years ended December 31,


For the three months ended December 31,


2020


2020


2019


2020


2020


2019


US$


RMB


RMB


US$


RMB


RMB













NET REVENUES












K-12 Schools

44,680


291,539


313,747


16,210


105,773


110,533

CP&CE Programs 

36,849


240,441


270,162


10,384


67,757


62,816

Total net revenues

81,529


531,980


583,909


26,594


173,530


173,349

COST OF REVENUES












K-12 Schools

(28,909)


(188,628)


(197,064)


(10,522)


(68,656)


(68,177)

CP&CE Programs 

(30,477)


(198,862)


(191,830)


(5,948)


(38,811)


(49,445)

Total cost of revenues

(59,386)


(387,490)


(388,894)


(16,470)


(107,467)


(117,622)

GROSS PROFIT












K-12 Schools

15,771


102,911


116,683


5,688


37,117


42,356

CP&CE Programs 

6,372


41,579


78,332


4,436


28,946


13,371

Total gross profit

22,143


144,490


195,015


10,124


66,063


55,727

 

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SOURCE Ambow Education Holding Ltd.