China Distance Education Holdings Limited Reports Third Quarter 2009 Results
Posted on: Monday, 17 August 2009, 15:30 CDT
Recent Business Developments:
During the quarter, the Company signed contracts with China Engineering Cost Association ("CECA") and China Association of Plant Engineering Consultants ("CAPEC"), respectively, to provide accredited continuous education courses to their certified members. The Company was also appointed by various provincial and regional divisions of the China Institute of Real Estate Appraisers and Agents ("CIREA") to provide accredited continuous education courses to their certified members.
Commenting on the results, Mr.
Mr. Zhu continued, "In addition, our strategy to offer differentiated pricing options to our students has begun to yield solid returns as we achieved a significant increase in average student payment during the quarter.
"While we continue to maintain our leading position in the online market for professional education, we also made steady progress in the fast growing primary/secondary school supplementary education market. In addition, we are actively pursuing acquisition opportunities in this market. While our programs are still in the early stages of development, we are excited about the long-term growth opportunities in this market.
"With our focused growth strategy and competitive advantages, including a well-recognized brand name, diversified and high quality course offerings, superior services and a strong technology platform, we are well positioned to continue our strong track record of success as we capitalize on the growth opportunities in the Chinese education market."
Ms.
"In order to capitalize on the growth opportunities in the education market in China, we have continued investing in our business as well as the acquired business of Yucai. This ongoing investment in personnel, technology, teaching and tutoring services and support and customer services has allowed us to continue to deliver the high quality products and services our students depend on, while at the same time expanding into new segments of the education market and growing our existing course offerings. Nonetheless, we remain focused on controlling our costs and expenses."
Fiscal Third Quarter 2009 Unaudited Financial Results
Net Revenues. Total net revenues for the third quarter of fiscal 2009 were
Online education services net revenues for the third quarter of fiscal
2009 were
The Company's complementary businesses continued to grow rapidly in the
third quarter of fiscal 2009. Revenues from books and reference materials
sales increased by 143.6% to
Cost of Sales. Cost of sales for the third quarter of fiscal 2009 was
The increase in cost of sales as compared to the same quarter of fiscal 2008 was primarily due to higher salaries and welfare expenses and rental and utilities expenses as we added more personnel and increased rental space to accommodate our headcount growth. Higher share-based compensation charge due to a re-pricing in the year also contributed to the increase.
Gross Profit and Gross Margin. Gross profit for the third quarter of
fiscal 2009 was
Operating Expenses. Total operating expenses for the third quarter of
fiscal 2009 were
Selling expenses amounted to
General and administrative expenses were
Income Tax Expense. Income tax expense for the third quarter of fiscal
2009 was
Net Income. Net income was
Operating Cash Flow. Net operating cash outflow for the third quarter of
fiscal 2009 was
Cash and Cash Equivalents and Term Deposits. Cash and cash equivalents and
term deposits as of
Fourth Quarter Fiscal 2009 Guidance -- Due to the seasonality of our
business, we typically experience fluctuations in our results. As such, CDEL
expects to generate total net revenues for the fourth quarter of fiscal 2009
in the range of
Conference Call
China Distance Education Holdings Limited senior management will host a
conference call at
A live webcast of the conference call and replay will be available on the investor relations page of China Distance Education Holdings Limited's website at: http://ir.cdeledu.com/versions/Financials_en/EarningsAnnouncements_en.html
About China Distance Education Holdings Limited
China Distance Education Holdings Limited is a leading provider of online education in China focusing on professional education. The courses offered by the Company through its websites are designed to help professionals and other course participants obtain and maintain the skills, licenses and certifications necessary to pursue careers in China in the areas of accounting, law, healthcare, construction engineering, information technology and other industries. The Company also offers online test preparation courses to self-taught learners pursuing higher education diplomas or degrees and to secondary school and college students preparing for various academic and entrance exams. In addition, the Company offers online foreign language courses.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "may," "should," "potential," "continue," "expect," "anticipate," "future," "intend," "plan," "believe," "is/are likely to," "estimate" and similar statements. Among other things, the outlook for the fourth quarter of the fiscal year 2009 and quotations from management in this announcement, as well as the Company's strategic and operational plans contain forward-looking statements. The Company may also make written forward-looking statements in its periodic reports to the US Securities and Exchange Commission, or SEC, in its annual report to shareholders, in press releases and other written materials and oral forward-looking statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: the Company's goals and growth strategies; its future prospects and market acceptance of its online courses and other products and services; its future business development and results of operations; projected revenues, profits, earnings and other estimated financial information; projected enrollment numbers; its plans to expand and enhance its online courses and other products and services; competition in the online education and test preparation markets; and Chinese laws, regulations and policies, including those applicable to the Internet and Internet content providers, the education and telecommunications industries, mergers and acquisitions, taxation and foreign exchange.
Further information regarding these and other risks is included in the Company's annual report on Form 20-F and other documents filed with the SEC. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law. All information provided in this press release and in the attachments is as of the date of this press release.
Statement Regarding Unaudited Financial Information
The unaudited financial information set forth above is preliminary and subject to adjustments. Adjustments to the financial statements may be identified when audit work is performed for the year-end audit, which could result in significant differences from this preliminary unaudited financial information.
Use of Non-GAAP Financial Measures
To supplement the Company's consolidated financial results presented in accordance with U.S. generally accepted accounting principles, or GAAP, the Company uses the following measures defined as non-GAAP financial measures by the SEC: net income excluding share-based compensation expenses, operating income excluding share-based compensation expenses, gross profit excluding share-based compensation expenses, cost of sales excluding share-based compensation expenses, selling expenses excluding share-based compensation expenses, general and administrative expenses excluding share-based compensation expenses, net income margin excluding share-based compensation expenses, operating margin excluding share-based compensation expenses, gross profit margin excluding share-based compensation expenses and basic and diluted earnings per ADS and per share excluding share-based compensation expenses, and the effect of Series A Shares. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliations of GAAP to non-GAAP measures" set forth at the end of this release. The Company believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based expenses that may not be indicative of its operating performance from a cash perspective. The Company believes that both management and investors benefit from these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to the Company's historical performance and liquidity. The Company computes its non-GAAP financial measures using the same consistent method from quarter to quarter, except basic and diluted earnings per ADS and per share excluding share-based compensation expenses, and the effect of Series A shares. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of excluding share-based compensation expenses from the above-mentioned line items and presenting these non-GAAP measures is that share-based compensation charges will continue to be for the foreseeable future a significant recurring expense in our business. Management compensates for this limitation by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying table at the end of this release provides more detail on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.
China Distance Education Holdings Limited Unaudited Consolidated Balance Sheets (in thousands of US Dollars, except number of shares and per share data) September 30, 2008 June 30, 2009 (derived from audited) (unaudited) Assets: Current assets: Cash and cash equivalents 66,223 31,193 Term deposits -- 26,000 Accounts receivable 715 4,305 Inventories 177 354 Prepayment and other current assets 1,469 1,940 Deferred tax assets, current portion 2,297 1,699 Deferred cost 448 1,451 Total current assets 71,329 66,942 Non-current assets: Property, plant and equipment, net 7,089 8,105 Goodwill 5,278 5,775 Other intangible assets, net 1,390 4,408 Other non-current assets -- 126 Deposit for non-current assets 151 24 Deposit for business acquisition -- 732 Deferred tax assets, non-current portion 89 264 Total non-current assets 13,997 19,434 Total assets 85,326 86,376 Liabilities and shareholders' equity: Current liabilities: Accrued expenses and other liabilities 2,983 3,002 Income tax payable 1,014 165 Deferred revenue, current portion 3,728 6,755 Refundable fees 4,688 1,887 Total current liabilities 12,413 11,809 Non-current liabilities: Deferred revenue, non-current portion 163 93 Deferred tax liabilities, non-current portion -- 465 Total non-current liabilities 163 558 Total liabilities 12,576 12,367 Commitments and contingencies -- -- Minority interest -- 2,057 Shareholders' equity Ordinary shares (par value of US$0.0001 per share at September 30, 2008 and June 30, 2009, respectively; Authorized - - 480,000,000 shares at September 30, 2008 and June 30, 2009; Issued and outstanding - -141,897,737 and 138,791,797 shares at September 30, 2008 and June 30, 2009, respectively) 14 14 Additional paid-in capital 76,811 76,167 Foreign currency translation 1,717 1,684 Cumulative deficit (5,792) (5,913) Total shareholders' equity 72,750 71,952 Total liabilities and shareholders' equity 85,326 86,376 China Distance Education Holdings Limited Unaudited Consolidated Statements Of Income (in thousands of US dollars, except number of shares, per share and per ADS data) Three Months Ended June 30, 2008 2009 Sales, net of business tax, value- added tax and related surcharges: Online education services 3,712 5,398 Books and reference materials 450 1,096 Others 464 1,769 Total net revenues 4,626 8,263 Cost of sales Cost of services (1,769) (3,683) Cost of tangible goods sold (212) (756) Total cost of sales (1,981) (4,439) Gross profit 2,645 3,824 Operating expenses Selling expenses (883) (2,016) General and administrative expenses (1,046) (1,874) Total operating expenses (1,929) (3,890) Other expense (144) -- Operating income (loss) 572 (66) Interest income 39 204 Interest expense (8) -- Exchange loss (11) (1) Equity in loss of an affiliated company (18) -- Income before income taxes 574 137 Income tax expense (30) (53) Minority interest, net of taxes -- 8 Net income 544 92 Accretion of Series A convertible contingently redeemable preferred shares to redemption amount and accretion of beneficial conversion feature of Series A convertible contingently redeemable preferred shares (399) -- Net income attributable to ordinary shareholders 145 92 Earnings per share Basic 0.001 0.001 Diluted 0.001 0.001 Earnings per ADS Basic 0.004 0.003 Diluted 0.004 0.003 Weighted average number of ordinary shares outstanding: Basic and diluted shares 91,877,000 139,679,440 China Distance Education Holdings Limited Reconciliation of GAAP to non-GAAP measures (In thousands of US Dollars, except number of shares, per share and per ADS data) Three Months Ended June 30, 2008 2009 (Unaudited) (Unaudited) Cost of sales 1,981 4,439 Share-based compensation expense in cost of sales 275 552 Non-GAAP cost of sales 1,706 3,887 Selling expenses 883 2,016 Share-based compensation expense in selling expenses 64 152 Non-GAAP selling expenses 819 1,864 General and administrative expenses 1,046 1,874 Share-based compensation expense in general and administrative expenses 202 513 Non-GAAP general and administrative expenses 844 1,361 Gross profit 2,645 3,824 Share-based compensation expenses 275 552 Non-GAAP gross profit 2,920 4,376 Gross profit margin 57.2% 46.3% Non-GAAP gross profit margin 63.1% 53.0% Operating income (loss) 572 -66 Share-based compensation expenses 541 1,217 Non-GAAP operating income 1,113 1,151 Operating margin 12.4% (0.8%) Non-GAAP operating margin 24.1% 13.9% Net income 544 92 Share-based compensation expense 541 1,217 Non-GAAP net income 1,085 1,309 Net income margin 11.8% 1.1% Non-GAAP net income margin 23.5% 15.8% Earnings per share-basic 0.001 0.001 Earnings per share-diluted 0.001 0.001 Non-GAAP earnings per share-basic 0.006 0.009 Non-GAAP earnings per share-diluted 0.006 0.009 Earnings per ADS-basic (note 1) 0.004 0.003 Earnings per ADS-diluted (note 1) 0.004 0.003 Non-GAAP earnings per ADS-basic (note 1) 0.024 0.037 Non-GAAP earnings per ADS-diluted (note 1) 0.024 0.037 Weighted average shares used in calculating basic earnings per share 91,877,000 139,679,440 Weighted average shares used in calculating diluted earnings per share 91,877,000 139,679,440 Weighted average shares used in calculating basic non-GAAP earnings per share 91,877,000 139,679,440 Weighted average shares used in calculating diluted non-GAAP earnings per share 91,877,000 139,679,440 Note 1: Each ADS represents four ordinary shares. For further information, please contact: Company Contact: CDEL Ping Wei, CFO Tel: +86-10-8231-9999 Email: IR@cdeledu.com Investor Relations (US): Taylor Rafferty Mahmoud Siddig, Director Tel: +1-212-889-4350 Email: cdel@taylor-rafferty.com Investor Relations (HK): Taylor Rafferty Ruby Yim, Managing Director Tel: +852-3196-3712 Email: cdel@taylor-rafferty.comSOURCE China Distance Education Holdings Limited
Source: PR Newswire
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