PR Newswire | Apr 8, 2021 05:50PM EDT

04/08 16:50 CDT

Ambow Education Announces Fourth Quarter and Full Year 2020 Financial Results BEIJING, April 8, 2021

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: +86-10-6206-8000Email: ir@ambow.com

The Piacente Group | Investor RelationsTel: +1-212-481-2050 or +86-10-6508-0677E-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 122 794 730 outstanding as of December 31, 2019 and 2020, respectively)

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 14 90 90 shares issued and outstanding as of December 31, 2019 and 2020, respectively)

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 80,571 525,727 582,706 25,690 167,629 173,339 services

Intelligent program and 958 6,253 1,203 904 5,901 10 services

Total net revenues 81,529 531,980 583,909 26,594 173,530 173,349

COST OF REVENUES

Educational program and (58,172) (379,571) (383,635) (15,615) (101,888) (118,181) services

Intelligent program and (1,214) (7,919) (5,259) (855) (5,579) 559 services

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) (19,089) (124,550) (97,670) 501 3,269 (15,361)INCOME

OTHER INCOME (EXPENSES)

Interest income, net 1,456 9,501 5,379 360 2,351 2,036

Foreign exchange gain (loss), 150 980 23 145 949 (23) net

Other (loss) income, net (191) (1,244) 396 (319) (2,084) 203

Gain from derecognition of 602 3,926 - 602 3,926 - liabilities

Gain from deregistration of 608 3,967 1,841 - - - subsidiaries

Gain on disposal of 115 752 - - - 562 subsidiaries

Gain on the bargain purchase 6,172 40,273 - - - -

Gain from fair value change of contingent consideration - - 1,322 - - 1,322 payable

Gain on sale of investment 533 3,476 1,200 153 999 778 available for sale

Total other income 9,445 61,631 10,161 941 6,141 4,878

(LOSS) INCOME BEFORE INCOME TAX AND NON- (9,644) (62,919) (87,509) 1,442 9,410 (10,483) CONTROLLING INTEREST

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 (194) (1,269) (485) (35) (229) (216) non-controlling interest

NET (LOSS) INCOME ATTRIBUTABLE TO (9,613) (62,712) (99,941) 1,682 10,976 (12,152) ORDINARY SHAREHOLDERS

NET (LOSS) INCOME (9,807) (63,981) (100,426) 1,647 10,747 (12,368)

OTHER COMPREHENSIVE INCOME, NET OF TAX

Foreign currency translation 955 6,234 (2,924) (689) (4,497) 343 adjustments

Unrealized gains on short term investments

Unrealized holding gains 377 2,458 2,046 144 940 808 arising during period

Less: reclassification adjustment for gains 449 2,932 1,086 118 771 597 included in net income

Other comprehensive income 883 5,760 (1,964) (663) (4,328) 554 (loss)

TOTAL COMPREHENSIVE (8,924) (58,221) (102,390) 984 6,419 (11,814) (LOSS) INCOME

Net (loss) income per share - (0.22) (1.41) (2.30) 0.04 0.23 (0.28) basic and diluted

Weighted average shares used in calculating basic and 44,372,326 44,372,326 43,505,175 46,721,812 46,721,812 43,529,884 diluted net (loss) income per share

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, 38,858,199 730 4,708,415 90 3,508,745 20,185 (3,371,815) 6,341 (680) 163,596 2020

Share-based compensation - - - - 238 - - - - 238

Issuance of ordinary shares 12,500 0 - - (0) - - - - - for restricted stock award

Foreign currency translation - - - - - - - 433 - 433 adjustment

Unrealized gain on investment, net of income - - - - - - - 154 - 154 taxes

Impact on adoption of ASC - - - - - - (594) - - (594) 326

Net income/(loss) - - - - - - 6,039 - (412) 5,627

Balance as of March 31, 38,870,699 730 4,708,415 90 3,508,983 20,185 (3,366,370) 6,928 (1,092) 169,454 2020

Share-based compensation - - - - 242 - - - - 242

Issuance of ordinary shares 12,500 1 - - (1) - - - - - for restricted stock award

Foreign currency translation - - - - - - - 7,895 - 7,895 adjustment

Unrealized gain on investment, net of income - - - - - - - 118 - 118 taxes

Deregistration of - - - - - (15,473) 15,473 - - - subsidiaries

Net income/(loss) - - - - - - 4,807 - (296) 4,511

Balance as of June 30, 38,883,199 731 4,708,415 90 3,509,224 4,712 (3,346,090) 14,941 (1,388) 182,220 2020

Share-based compensation - - - - 239 - - - - 239

Issuance of ordinary shares 12,501 0 - - (0) - - - - - for restricted stock award

Foreign currency translation - - - - - - - 2,403 - 2,403 adjustment

Unrealized gain on investment, net of income - - - - - - - (915) - (915) taxes

Deregistration of subsidiary - - - - - - - - (16) (16)

Disposal of subsidiaries - - - - (133) (502) 502 - - (133)

Net loss - - - - - - (84,534) - (332) (84,866)

Balance as of 38,895,700 731 4,708,415 90 3,509,330 4,210 (3,430,122) 16,429 (1,736) 98,932 September 30, 2020

Share-based compensation - - - - 228 - - - - 228

Issuance of ordinary shares 12,500 0 - - (0) - - - - - for restricted stock award

Issuance of ordinary shares in a registered direct 3,015,076 63 - - 35,515 - - - - 35,578 offering

Foreign currency translation - - - - - - - (4,497) - (4,497) adjustment

Unrealized gain on investment, net of income - - - - - - - 169 - 169 taxes

Deregistration of subsidiary - - - - - - - - (3) (3)

Net income/(loss) - - - - - - 10,976 - (229) 10,747

Balance as of 41,923,276 794 4,708,415 90 3,545,073 4,210 (3,419,146) 12,101 (1,968) 141,154 December 31, 2020

Balance as of January 1, 38,756,289 794 4,708,415 90 3,507,123 20,149 (3,271,838) 8,305 (1,786) 262,771 2019

Share-based compensation - - - - 872 - - - - 872

Issuance of ordinary shares 28,646 1 - - (1) - - - - - for restricted stock award

Foreign currency translation - - - - - - - (2,428) - (2,428) adjustment

Unrealized gain on investment, net of income - - - - - - - 75 - 75 taxes

Net loss - - - - - - (23,756) - (93) (23,849)

Balance as of March 31, 38,784,935 729 4,708,415 90 3,507,994 20,149 (3,295,594) 5,952 (1,879) 237,441 2019

Share-based compensation - - - - 266 - - - - 266

Issuance of ordinary shares 19,097 0 - - (0) - - - - - for restricted stock award

Foreign currency translation - - - - - - - (746) - (746) adjustment

Unrealized gain on investment, net of income - - - - - - - 173 - 173 taxes

Addition of noncontrolling interests resulting from - - - - - - - - 502 502 new subsidiaries

Net income (loss) - - - - - - 8,778 - (180) 8,598

Balance as of June 30, 38,804,032 729 4,708,415 90 3,508,260 20,149 (3,286,816) 5,379 (1,557) 246,234 2019

Share-based compensation - - - - 244 - - - - 244

Foreign currency translation - - - - - - - (93) - (93) adjustment

Unrealized gain on investment, net of income - - - - - - - 501 - 501 taxes

Net (loss) / income - - - - - - (72,811) - 4 (72,807)

Balance as of 38,804,032 729 4,708,415 90 3,508,504 20,149 (3,359,627) 5,787 (1,553) 174,079 September 30, 2019

Share-based compensation - - - - 242 - - - - 242

Issuance of ordinary shares 54,167 1 - - (1) - - - - - for restricted stock award

Foreign currency translation - - - - - - - 343 - 343 adjustment

Appropriation to statutory - - - - - 36 (36) - - - reserves

Unrealized gain on investment, net of income - - - - - - - 211 - 211 taxes

Deregistration of - - - - - - - - 306 306 subsidiaries

Noncontrolling interests - - - - - - - - 783 783 from new subsidiaries

Net loss - - - - - - (12,152) - (216) (12,368)

Balance as of 38,858,199 730 4,708,415 90 3,508,745 20,185 (3,371,815) 6,341 (680) 163,596 December 31, 2019

Discussion of Segment Operations

(All amounts in thousands)

For the years ended December For the three months ended 31, 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 81,529 531,980 583,909 26,594 173,530 173,349revenues

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 (59,386) (387,490) (388,894) (16,470) (107,467) (117,622)revenues

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 22,143 144,490 195,015 10,124 66,063 55,727profit

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SOURCE Ambow Education Holding Ltd.