PR Newswire | Sep 20, 2021 09:02AM EDT

09/20 08:00 CDT

Ambow Education Announces Second Quarter 2021 Financial Results BEIJING, Sept. 20, 2021

BEIJING, Sept. 20, 2021 /PRNewswire/ -- Ambow Education Holding Ltd. ("Ambow" or the "Company") (NYSE American: AMBO), a leading cross-border career educational and technology service provider, today announced its unaudited financial and operating results for the three-month and six-month periods ended June 30, 2021.

"In the second quarter of 2021, we remained focused on technology-driven educational and career enhancement services, embracing the national strategy of improving collaborative and coordinated development across education, talents and industry and promoting high-quality economic growth," noted Dr. Jin Huang, Ambow's President and Chief Executive Officer. "We're pleased to report solid financial performance and further improved operating efficiency in the second quarter, highlighted by a 10.8% year-over-year growth in net revenues and an increase in gross margin of 530 basis points year-over-year to 44.1%."

"Additionally, during the quarter, we made a number of strides that helped to expand our role as a leading innovator in the Chinese career education market. Building on our 20-year proven track record in the vocational and technical education sector, in June we cooperated with Nanchang Vocational University, one of the 15 first batch of undergraduate vocational education pilot schools in China, to co-found the Smart Manufacturing Modern Industrial College, underscoring China's pilot program for the integration between industry and education. Meanwhile, we formed a strategic cooperation with the Talent Exchange Center of the Ministry of Industry and Information Technology to strengthen international communication in various information technology-related disciplines. More excitingly, in July we launched an open education platform, OOOK, which incorporates our in-house developed technologies, enabling teachers to provide high-quality, cross-device live and recorded courses with immersive and interactive learning experiences. Notably, with its groundbreaking technology and solutions, OOOK won the '2021 Best Product Technology Innovation' award at the 10th Annual China Finance Summit."

"Moving into the second half of 2021, we remain committed to delivering innovative educational products and services that will be at the forefront of the industry by continuingly capitalizing on technology trends. We are confident that our strategic efforts will continue to drive the long-term growth of our overall business," concluded Dr. Huang.

Second Quarter 2021 Financial Highlights

* Net revenues for the second quarter of 2021 increased by 10.8% to RMB 172.3 million (US$ 26.7 million) from RMB 155.5 million (US$ 22.0 million) in the same period of 2020. The increase was primarily due to the full business recovery from the impact of the COVID-19 pandemic. * Gross profit for the second quarter of 2021 increased by 25.7% to RMB 75.9 million (US$ 11.8 million) from RMB 60.4 million (US$ 8.5 million) in the same period of 2020. Gross profit margin was 44.1%, compared with 38.8% for the first second quarter of 2020. The increases in gross profit and margin were mainly attributable to faster growth of net revenues in the period. * Operating expenses for the second quarter of 2021 decreased by 7.8% to RMB 55.6 million (US$ 8.6 million) from RMB 60.3 million (US$ 8.5 million) in the same period of 2020. The decrease was primarily attributable to stringent expense controls to improve operating efficiency. * Operating income for the second quarter of 2021 was RMB 20.3 million (US$ 3.1 million), compared to operating income of RMB 0.1 million (US$ 0.02 million) in the same period of 2020. * Net income attributable to ordinary shareholders was RMB 22.4 million (US$ 3.5 million), or RMB 0.48 (US$ 0.07) per basic and diluted share, compared with a net income of RMB 4.8 million (US$ 0.7 million), or RMB 0.11 (US$ 0.02) per basic and diluted share, in the same period of 2020. * As of June 30, 2021, Ambow maintained strong cash resources of RMB 257.7 million (US$ 39.9 million), comprised of cash and cash equivalents of RMB 168.4 million (US$ 26.1 million), short-term investments of RMB 87.6 million (US$ 13.5 million) and restricted cash of RMB 1.7 million (US$ 0.3 million).

First Six Months 2021 Financial Highlights

* Net revenues for the first six months of 2021 increased by 22.9% to RMB 301.9 million (US$ 46.8 million) from RMB 245.7 million (US$ 34.8 million) in the same period of 2020. The increase was primarily due to the full business recovery from the impact of the COVID-19 pandemic and higher revenue contribution from our new U.S. business. * Gross profit for the first six months of 2021 increased by 67.5% to RMB 120.6 million (US$ 18.7 million) from RMB 72.0 million (US$ 10.2 million) in the same period of 2020. Gross profit margin was 39.9%, compared with 29.3% in the same period of 2020. The increases in gross profit and margin were mainly attributable to faster growth of net revenues in the period. * Operating expenses for the first six months of 2021 slightly increased by 3.9% to RMB 115.4 million (US$ 17.9 million) from RMB 111.1 million (US$ 15.7 million) in the same period of 2020. * Operating income for the six months of 2021 was RMB 5.2 million (US$ 0.8 million), compared to operating loss of RMB 39.2 million (US$ 5.5 million) in the same period of 2020. * Net income attributable to ordinary shareholders was RMB 8.1 million (US$ 1.3 million), or RMB 0.17 (US$ 0.03) per basic and diluted share, compared with a net income of RMB 10.8 million (US$ 1.5 million), or RMB 0.25 (US$ 0.04) per basic and diluted share, in the same period of 2020. Excluding the one-time gain from bargain purchase of NewSchool of Architecture and Design, LLC of RMB 40.3 million (US$ 5.7 million), net loss for the first six months of 2020 was RMB 29.5 million (US$ 4.2 million) or RMB 0.68 (US$ 0.10) per basic and diluted share.

The Company's financial and operating results for the second quarter and first half of 2021 can also be found on its Current Report on Form 6-K to be furnished with the U.S. Securities and Exchange Commission at www.sec.gov.

Regulatory Policy Update

The Standing Committee of the National People's Congress promulgated an amendment to the Implementation Rules of the Law for Promoting Private Education on April 7, 2021, which has been effective since September 1, 2021 (the "Implementation Rules"). The Implementation Rules stipulated, among other provisions, that (1) sponsors of private schools may choose to establish schools as either non-profit or for-profit schools, but nine-year compulsory education schools cannot be operated as for-profit schools; (2) foreign-invested enterprises established in China and social organizations whose actual controllers are foreign parties shall not sponsor, participate in or actually control private schools that provide compulsory education; (3) group-based education organizations shall not control non-profit private schools through mergers and acquisitions, franchise agreements and contractual arrangements; and (4) related party transactions entered into by private schools shall be open, fair and just, and shall not harm national interests, school interests, or student or teacher interests. The Company is assessing the impact of the Implementation Rules and formulating different scenarios as compliance measures.

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 second quarter and first half of 2021 are based on the effective exchange rate of 6.4566 as of June 30, 2021; all amounts translated from RMB to U.S. dollars for the second quarter and first half of 2020 are based on the effective exchange rate of 7.0651 as of June 30, 2020; all amounts translated from RMB to U.S. dollars as of December 31, 2020 are based on the effective exchange rate of 6.5250 as of December 31, 2020. 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. Fluctuations in financial highlights are based on RMB amounts.

About Ambow Education Holding Ltd.

Ambow Education Holding Ltd. is a leading cross-border career educational and technology service provider, 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 China and United States of America.

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

The Piacente Group | Investor RelationsTel: +1-212-481-2050 or +86-10-6508-0677E-mail: ambow@tpg-ir.com

AMBOW EDUCATION HOLDING LTD. UNAUDITED CONSOLIDATED BALANCE SHEETS (All amounts in thousands, except for share and per share data)



As of June 30, As of December 31,

2021 2020

US$ RMB RMB

ASSETS

Current assets:

Cash and cash equivalents 26,086 168,424 118,821

Restricted cash 256 1,650 824

Short-term investments, available for sale 13,266 85,652 117,854

Short-term investments, held to maturity 310 2,000 45,000

Accounts receivable, net 3,289 21,234 20,972

Amounts due from related parties 501 3,235 3,024

Prepaid and other current assets, net 18,858 121,757 117,634

Total current assets 62,566 403,952 424,129

Non-current assets:

Property and equipment, net 21,989 141,972 144,492

Land use rights, net 262 1,693 1,715

Intangible assets, net 8,403 54,252 54,808

Goodwill 3,982 25,710 25,710

Deferred tax assets, net 883 5,704 6,338

Operating lease right-of-use asset 35,522 229,353 247,608

Finance lease right-of-use asset 860 5,550 5,850

Other non-current assets 21,805 140,786 139,067

Total non-current assets 93,706 605,020 625,588



Total assets 156,272 1,008,972 1,049,717



LIABILITIES

Current liabilities:

Short-term borrowings * 3,020 19,498 10,000

Deferred revenue * 21,106 136,274 163,699

Accounts payable * 3,320 21,425 19,423

Accrued and other liabilities * 31,473 203,207 209,590

Income taxes payable, current * 28,669 185,105 184,638

Amounts due to related parties * 429 2,771 2,543

Operating lease liability, current * 7,620 49,198 53,702

Total current liabilities 95,637 617,478 643,595

Non-current liabilities:

Long-term borrowing - - 9,594

Other non-current liabilities * 47 304 292

Income taxes payable, non-current * 5,316 34,322 34,763

Operating lease liability, non-current * 32,196 207,877 220,319

Total non-current liabilities 37,559 242,503 264,968



Total liabilities 133,196 859,981 908,563



EQUITY

Preferred shares

(US$ 0.003 par value;1,666,667 shares authorized, nil issued and outstanding as of - - - June 30, 2021 and December 31, 2020)

Class A Ordinary shares

(US$0.003 par value; 66,666,667 and 66,666,667 shares authorized, 41,948,276 and 41,923,276 shares issued and 123 794 794 outstanding as of June 30, 2021 and December 31, 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 June 30, 2021 and December 31, 2020, respectively)

Additional paid-in capital 549,130 3,545,512 3,545,073

Statutory reserve 652 4,210 4,210

Accumulated deficit (528,302) (3,411,035) (3,419,146)

Accumulated other comprehensive income 1,844 11,907 12,101

Total Ambow Education Holding Ltd.'s equity 23,461 151,478 143,122

Non-controlling interests (385) (2,487) (1,968)

Total equity 23,076 148,991 141,154

Total liabilities and equity 156,272 1,008,972 1,049,717



* 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.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

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

For the six months ended June 30, For the three months ended June 30,

2021 2021 2020 2021 2021 2020

US$ RMB RMB US$ RMB RMB

NET REVENUES

Educational program and 46,635 301,104 245,659 26,576 171,590 155,392 services

Intelligent program and 116 752 83 102 661 71 services

Total net revenues 46,751 301,856 245,742 26,678 172,251 155,463

COST OF REVENUES

Educational program and (27,782) (179,375) (172,324) (14,797) (95,536) (94,891) services

Intelligent program and (299) (1,930) (1,458) (122) (786) (160) services

Total cost of revenues (28,081) (181,305) (173,782) (14,919) (96,322) (95,051)

GROSS PROFIT 18,670 120,551 71,960 11,759 75,929 60,412

Operating expenses:

Selling and marketing (3,782) (24,422) (24,206) (2,079) (13,422) (13,657)

General and (13,220) (85,357) (84,243) (5,949) (38,412) (45,042) administrative

Research and development (868) (5,602) (2,698) (582) (3,757) (1,567)

Total operating expenses (17,870) (115,381) (111,147) (8,610) (55,591) (60,266)

OPERATING INCOME 800 5,170 (39,187) 3,149 20,338 146(LOSS)

OTHER INCOME(EXPENSES)

Interest income 621 4,008 4,135 302 1,948 2,145

Foreign exchange gain 31 203 35 (2) (12) 9 (loss), net

Other (loss) income, net (183) (1,180) 1,552 (37) (240) 146

Gain from deregistration 205 1,325 3,897 183 1,181 3,897 of subsidiaries

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

Gain on sale of investment 189 1,221 1,056 73 474 530 available for sale

Total other income 863 5,577 50,948 519 3,351 6,727

INCOME BEFORE INCOME TAX AND 1,663 10,747 11,761 3,668 23,689 6,873 NON-CONTROLLING INTEREST

Income tax expense (489) (3,155) (1,623) (236) (1,526) (2,362)

NET INCOME 1,174 7,592 10,138 3,432 22,163 4,511

Less: Net loss attributable to non-controlling (80) (519) (708) (43) (277) (296) interest

NET INCOME ATTRIBUTABLE TO 1,254 8,111 10,846 3,475 22,440 4,807 ORDINARY SHAREHOLDERS

NET INCOME 1,174 7,592 10,138 3,432 22,163 4,511

OTHER COMPREHENSIVE INCOME, NET OF TAX

Foreign currency (65) (417) 8,328 (82) (532) 7,895 translation adjustments

Unrealized gains on short- term investments

Unrealized holding gains 166 1,075 940 76 493 499 arising during period

Less: reclassification adjustment for gains 132 852 668 48 308 381 included in net income

Other comprehensive (31) (194) 8,600 (54) (347) 8,013 (loss) income

TOTAL COMPREHENSIVE 1,143 7,398 18,738 3,378 21,816 12,524 INCOME

Net income per share - 0.03 0.17 0.25 0.07 0.48 0.11 basic and diluted

Weighted average shares used in calculating 46,642,280 46,642,280 43,577,168 46,648,495 46,648,495 43,583,418 basic and diluted net 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, 2021 41,923,276 794 4,708,415 90 3,545,073 4,210 (3,419,146) 12,101 (1,968) 141,154

Share-based compensation - - - - 219 - - - - 219

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

Foreign currency translation adjustment - - - - - - - 115 - 115

Unrealized gain on investment, net of - - - - - - - 38 - 38 income taxes

Net loss - - - - - - (14,329) - (242) (14,571)

Balance as of March 31, 2021 41,935,776 794 4,708,415 90 3,545,292 4,210 (3,433,475) 12,254 (2,210) 126,955

Share-based compensation - - - - 220 - - - - 220

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

Foreign currency translation adjustment - - - - - - - (532) - (532)

Unrealized gain on investment, net of - - - - - - - 185 - 185 income taxes

Net income/(loss) - - - - - - 22,440 - (277) 22,163

Balance as of June 30, 2021 41,948,276 794 4,708,415 90 3,545,512 4,210 (3,411,035) 11,907 (2,487) 148,991

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 12,500 0 - - (0) - - - - - stock award

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

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

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 12,500 1 - - (1) - - - - - stock award

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

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

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

Discussion of Segment Operations

(All amounts in thousands)

For the six months ended June For the three months ended 30, June 30,

2021 2021 2020 2021 2021 2020

US$ RMB RMB US$ RMB RMB

NET REVENUES

K-12 Schools 27,205 175,650 126,800 16,223 104,748 85,389

CP&CE Programs 19,546 126,206 118,942 10,455 67,503 70,074

Total net 46,751 301,856 245,742 26,678 172,251 155,463revenues

COST OF REVENUES

K-12 Schools (15,161) (97,886) (74,542) (8,100) (52,297) (41,113)

CP&CE Programs (12,920) (83,419) (99,240) (6,819) (44,025) (53,938)

Total cost of (28,081) (181,305) (173,782) (14,919) (96,322) (95,051)revenues

GROSS PROFIT

K-12 Schools 12,044 77,764 52,258 8,123 52,451 44,276

CP&CE Programs 6,626 42,787 19,702 3,636 23,478 16,136

Total gross 18,670 120,551 71,960 11,759 75,929 60,412profit

View original content: https://www.prnewswire.com/news-releases/ambow-education-announces-second-quarter-2021-financial-results-301379897.html

SOURCE Ambow Education Holding Ltd.