BEIJING, Oct. 19,
2023 /PRNewswire/ -- China Liberal Education Holdings
Limited (Nasdaq: CLEU) ("China Liberal," the "Company," or "we"), a
China-based company that provides
smart campus solutions and other educational services, today
announced its unaudited financial results for the first six months
of fiscal year 2023 ended June 30,
2023.
Ms. Ngai Ngai Lam, Chairwoman and
CEO of China Liberal, commented, "We are delighted to report our
solid financial results for the first half of fiscal year 2023 with
a 229.6% year-over-year increase in revenue and a 13.2%
year-over-year increase in gross profit. Our strong results
demonstrate our efforts to focus on executing our expansion
strategies and build continued momentum toward our objective of
revenue growth. We expect to maintain continued revenue growth by
diversifying service offerings, improving service quality, and
scaling our business. We are confident that we are well-positioned
to execute on our strategy to deliver strong growth and performance
for the rest of the fiscal year and beyond. Leveraging our
management's keen industry insights and extensive industry
experience, we have been actively optimizing our strategic
initiatives to ensure our healthy and sustainable development. We
plan to continue our search for potential acquisition targets to
extend our business reach in the education industry while remaining
committed to improving our existing services. We are very pleased
with our progress to date, and we are even more excited about the
significant opportunity ahead. We believe that the resiliency of
our business model and laser focus on execution will drive
sustained improvement and create shareholder value."
First Six Months of Fiscal Year 2023 Financial
Highlights
|
|
For the Six Months
Ended June 30,
|
($ millions, except
for percentages or per share data)
|
|
2023
|
|
2022
|
|
%Change
|
Revenue
|
|
9.02
|
|
2.74
|
|
229.6 %
|
Gross profit
|
|
2.59
|
|
2.28
|
|
13.2 %
|
Gross margin
|
|
28.7 %
|
|
83.5 %
|
|
-54.8pp
|
(Loss) income from
operations
|
|
(0.02)
|
|
1.49
|
|
NM
|
Net income
|
|
0.38
|
|
1.50
|
|
-75.0 %
|
Basic and diluted
earnings per share
|
|
0.01
|
|
0.09
|
|
-88.9 %
|
Note: pp represents percentage points; NM represents not
meaningful.
- Revenue increased by 229.6% year-over-year to $9.02 million for the six months ended
June 30, 2023, from $2.74 million for the same period last year.
- Gross profit increased by 13.2% to $2.59
million for the six months ended June
30, 2023, from $2.28 million
for the same period last year.
- Gross margins were 28.7% and 83.5% for the six months ended
June 30, 2023 and 2022,
respectively.
- Loss from operations was $0.02
million for the six months ended June
30, 2023, compared to income from operations of $1.49 million for the same period last year.
- Net income was $0.38 million for
the six months ended June 30, 2023,
compared to $1.50 million for the
same period last year.
- Basic and diluted earnings per share were $0.01 for the six months ended June 30, 2023, compared to $0.09 for the same period last year.
First Six Months of Fiscal Year 2023 Financial
Results
Revenue increased by 229.6%, to $9.02
million for the first six months of 2023, from $2.74 million for the same period of last year.
The increase in revenue was mainly attributable to revenue
contributions from acquired entities in 2022.
Revenue from course fees is primarily derived from providing
educational programs to college students. On September 2, 2022, the Company closed the
transactions contemplated by that certain stock purchase agreement
entered into on February 1, 2022 by
and among the Company, Wanwang Investment Limited ("Wanwang"), the
acquired company, Xiaoshi Huang, and
Thrive Shine Limited, the sellers of the acquired company, and
completed its acquisition of Wanwang. Wanwang, through its
subsidiaries, operates two colleges, Fuzhou Melbourne Polytechnic
("FMP") and Strait College of Mingjiang University ("Strait
College"). Course fees are generally received in advance prior to
the beginning of each applicable course or program. Course fees are
recognized proportionately over the terms of the applicable course
or program because the students simultaneously receive and consume
the benefits provided by the Company. The portion of course fees
received from students but not earned is recorded as deferred
revenue in contract liabilities. Since the completion of
acquisition in September 2022, both
FMP and Strait College collectively enrolled 4,967 students, and
$6.4 million in course fees were
earned from September 2022 to
December 2022. The remaining course
fees of $7.7 million, which was
received in advance, were recognized as revenue from January 2023 to June
2023. The average course fee per student from September 2022 to June
2023 was $2,794, of which an
average course fee of $1,285 per
student was earned from September
2022 to December 2022 and the
remaining average course fee of $1,509 per student was earned from January 2023 to June
2023.
Revenues from the Sino-foreign Jointly Managed Academic Programs
are primarily generated from the share of tuition fees and service
fees we charged to students in FMP and Strait College. Since the
completion of the aforementioned acquisition of Wanwang, revenue
generated from FMP and Strait College was eliminated upon
consolidation against cost of revenue of FMP and Strait College. As
a result, the Company did not generate revenue from Sino-foreign
Jointly Managed Academic Programs for the six months ended
June 30, 2023. Revenue from
Sino-foreign Jointly Managed Academic Program was $2.15 million for the same period of last
year.
Revenue from providing smart campus related technological
consulting services increased by $0.25
million, or 148.2%, to $0.41
million for the six months ended June
30, 2023 from $0.17 million
for the same period of last year. The increase was primarily
because six projects were completed for the six months ended
June 30, 2023 as compared to three
completed projects for the same period of last year.
The Company didn't have revenue from Overseas Study Consulting
Services for the six months ended June 30,
2023. Revenue from Overseas Study Consulting Services was
$0.33 million for the same period of
last year. The decrease was mainly because our performance
obligations for our service contract with Beijing Foreign Studies
University were satisfied for the six months ended June 30, 2022. Following administration
guidelines issued by General Office of the Ministry of Education in
December 2021, universities and
colleges shall cease projects and cooperation with external parties
and, as a result, all existing contracts with Beijing Foreign
Studies University came to completion and all existing performance
obligations were completely satisfied, we discontinued our Overseas
Study Consulting Services in January
2023.
Revenue from tailored job readiness training services increased
by $0.85 million, or 910.8% to
$0.94 million for the six months
ended June 30, 2023 from $0.09 million for the same period of last year,
which was mainly attributed to the revenue contribution from our
newly acquired entity, Oriental Wisdom Cultural Development Co.,
Ltd. ("Oriental Wisdom"). On July 14,
2022, the Company closed the transactions contemplated by
that certain stock purchase agreement entered into on June 9, 2022 by and among the Company, China
Liberal Beijing, Oriental Wisdom, the acquired company, and Beijing
Cloud Class Technology Co., Ltd., the seller of the acquired
company, and completed its acquisition of Oriental Wisdom, an
integrated education services provider focusing on operating
jointly-managed academic programs in the vocational higher
education industry in China.
Cost of Revenues
Cost of revenue increased by $5.98
million, or 1,322.1%, to $6.44
million for the six months ended June
30, 2023, from $0.45 million
for the same period of last year, primarily due to $5.9 million cost associated with providing
educational programs to college students.
Gross Profit
Gross profit increased by $0.30
million, or 13.2%, to $2.59
million for the six months ended June
30, 2023 from $2.28 million
for the same period of last year, while gross profit margin
decreased by 54.8% to 28.7% for the six months ended June 30, 2023 from 83.5% for the same period of
last year. The increase in gross profit was primarily due to
$1.6 million in gross profit
contributed from two colleges and an additional $0.6 million in gross profit contributed from
tailored job readiness training services, arising from newly
acquired entity, Oriental Wisdom. The increase was partially offset
by the decrease of $2.0 million gross
profit associated with Sino-foreign Jointly Managed Academic
Programs, of which was eliminated on consolidation for the six
months ended June 30, 2023.
Operating Expenses
Selling expenses increased by $0.12
million, or 108.2%, to $0.23
million for the six months ended June
30, 2023 from $0.11 million
for the same period of last year. The increase in selling expenses
was primarily attributable to $0.1
million in cost incurred in recruiting new students for two
colleges.
General and administrative expenses increased by $1.67 million, or 241.7%, to $2.35 million for the six months ended
June 30, 2023 from $0.69 million for the same period of last year,
primarily due to $0.9 million in
general and administrative expense incurred in running the two
colleges and $0.8 million in general
and administrative expenses incurred by the newly acquired entity,
Oriental Wisdom.
Interest Expenses
Interest expenses was $0.12
million for the six months ended June
30, 2023, and the Company did not incur interest expenses
for the same period of last year. The increase was primarily due to
interest expenses on short-term bank loan, loans from third parties
and loans from a related party.
Government Subsidy Income
Government subsidy income was $0.16
million for the six months ended June
30, 2023, and the Company did not generate government
subsidy income for the same period of last year, primarily due to
government grant for teacher development received by FMP.
Other Income
Other income increased by $0.35
million, or 3,797.1%, to $0.36
million for the six months ended June
30, 2023 from $0.01 million
for the same period of last year, primarily due to forfeiture of
advance from supplier of $0.3 million
due to project cancellation.
Income Tax Provision
Income tax provision was $1,966
and $42 for the six months ended
June 30, 2023 and 2022, respectively.
Effective income tax rate was 0.5% and 0% for the six months ended
June 30, 2023 and 2022, respectively.
The effective income tax rates were low for the two periods are
mainly due to the fact that China Liberal Beijing is entitled to a
reduced income tax rate of 15% and claimed additional tax
deductions for certain expenses.
Net Income
Net income was $0.38 million for
the six months ended June 30, 2023,
compared to $1.50 million for the six
months ended June 30, 2022. Basic and
diluted earnings per share were $0.01
for the six months ended June 30,
2023, compared to $0.09 for
the same period last year.
Financial Condition
As of June 30, 2023, the Company
had cash of $12.17 million, compared
to $13.65 million as of December 31, 2022.
Net cash used in operating activities was $5.09 million for the six months ended
June 30, 2023, compared to net cash
provided by operating activities of $6.70
million for the same period last year.
Net cash used in investing activities was $0.06 million for the six months ended
June 30, 2023, compared to
$39.14 million for the same period
last year.
Net cash provided by financing activities was $3.71 million for the six months ended
June 30, 2023, compared to
$12.30 million for the same period
last year.
About China Liberal Education Holdings Limited
Headquartered in Beijing, China
Liberal is an educational services provider in China. Currently, China Liberal operates two
colleges, Fuzhou Melbourne Polytechnic and Strait College of
Mingjiang University, and provides a wide range of services,
including overseas study consulting services and technological
consulting services for Chinese universities to improve their
campus information and data management system and to optimize their
teaching, operating and management environment, creating a "smart
campus"; and tailored job readiness training to graduating
students. For more information, please visit the Company's website
at ir.chinaliberal.com/.
Forward-Looking Statements
This document contains forward-looking statements. These
forward-looking statements involve known and unknown risks and
uncertainties and are based on the Company's expectations and
projections about future events, which the Company derives from the
information currently available to the Company. Such
forward-looking statements relate to future events or our future
performance, including: our financial performance and projections;
our growth in revenue and earnings; and our business prospects and
opportunities. You can identify forward-looking statements by those
that are not historical in nature, particularly those that use
terminology such as "may," "should," "expects," "anticipates,"
"contemplates," "estimates," "believes," "plans," "projected,"
"predicts," "potential," or "hopes" or the negative of these or
similar terms. In evaluating these forward-looking statements, you
should consider various factors, including: our ability to change
the direction of the Company; our ability to keep pace with new
technology and changing market needs; and the competitive
environment of our business. These and other factors may cause our
actual results to differ materially from any forward-looking
statement. Forward-looking statements are only predictions. The
forward-looking events discussed in this press release and other
statements made from time to time by us or our representatives, may
not occur, and actual events and results may differ materially and
are subject to risks, uncertainties and assumptions about us. The
Company undertakes no obligation to update forward-looking
statements to reflect subsequent occurring events or circumstances,
or changes in its expectations, except as may be required by law.
Although the Company believes that the expectations expressed in
these forward-looking statements are reasonable, it cannot assure
you that such expectations will turn out to be correct, and the
Company cautions investors that actual results may differ
materially from the anticipated results and encourages investors to
review risk factors that may affect its future results in the
Company's registration statement and in its other filings with the
U.S. Securities and Exchange Commission.
Investor Relations Contact
China Liberal Education Holdings Limited
Email: ir@chinaliberal.com
Ascent Investor Relations LLC
Tina Xiao
President
Phone: +1 646-932-7242
Email: investors@ascent-ir.com
China Liberal
Education Limited
|
Condensed
Consolidated Balance Sheets
|
|
|
As
of
|
|
As
of
|
|
June
30,
|
|
December
31,
|
|
2023
|
|
2022
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
CURRENT
ASSETS
|
|
|
|
Cash
|
$12,167,658
|
|
$13,650,071
|
Account
receivables, net
|
645,530
|
|
1,047,809
|
Advance to
suppliers
|
-
|
|
44,105
|
Inventories,
net
|
180,774
|
|
193,738
|
Prepaid expenses
and other current assets, net
|
423,284
|
|
3,475,714
|
TOTAL CURRENT
ASSETS
|
$13,417,246
|
|
$18,411,437
|
NON-CURRENT
ASSETS
|
|
|
|
Goodwill on
acquisitions
|
73,676,370
|
|
73,676,370
|
Property and equipment,
net
|
8,762,072
|
|
10,194,930
|
Land use right,
net
|
1,185,530
|
|
1,269,436
|
Intangible assets,
net
|
375,151
|
|
423,272
|
Right-of-use
assets
|
-
|
|
13,107
|
TOTAL NON-CURRENT
ASSETS
|
83,999,123
|
|
$85,577,115
|
|
|
|
|
TOTAL
ASSETS
|
$97,416,369
|
|
$103,988,552
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
Account
payables
|
$405,331
|
|
$878,429
|
Contract
liabilities
|
-
|
|
7,772,227
|
Short-term bank
loans
|
31,519
|
|
20,784
|
Taxes
payable
|
1,346,780
|
|
1,354,965
|
Due to a related
party
|
2,848,203
|
|
390,550
|
Lease
liability
|
-
|
|
10,887
|
Loans from third
parties
|
2,013,776
|
|
975,716
|
Accrued expenses
and other current liabilities
|
6,336,987
|
|
8,584,892
|
TOTAL CURRENT
LIABILITIES
|
$12,982,596
|
|
$19,988,450
|
|
|
|
|
NON-CURRENT
LIABILITY
|
|
|
|
Contingent
consideration
|
21,515,801
|
|
21,515,801
|
TOTAL
LIABILITY
|
$34,498,397
|
|
$41,504,251
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES
|
|
|
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
Ordinary shares, $0.001
par value, 50,000,000 shares authorized, 31,598,333
shares issued and outstanding at June 30, 2023 and December 31,
2022,
respectively
|
$31,598
|
|
$31,598
|
Additional
paid-in capital
|
63,191,010
|
|
63,191,010
|
Statutory
reserve
|
1,083,661
|
|
1,006,384
|
Accumulated
deficits
|
(1,529,271)
|
|
(1,828,205)
|
Accumulated other
comprehensive income
|
140,974
|
|
83,514
|
Total
shareholders' equity
|
$62,917,972
|
|
$62,484,301
|
|
|
|
|
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY
|
$97,416,369
|
|
$103,988,552
|
China Liberal
Education Holdings Limited
|
Condensed
Consolidated Statements of Operations and Comprehensive Income
(Loss)
|
(Unaudited)
|
|
|
For the six
months ended June 30,
|
|
2023
|
2022
|
|
|
|
REVENUE
|
$9,023,504
|
$2,737,410
|
COST OF
REVENUE
|
(6,437,408)
|
(452,663)
|
GROSS
PROFIT
|
2,586,096
|
2,284,747
|
|
|
|
OPERATING
EXPENSES
|
|
|
Allowance for
doubtful accounts
|
(24,554)
|
-
|
Selling
expenses
|
(230,290)
|
(110,612)
|
General and
administrative expenses
|
(2,354,472)
|
(689,001)
|
Total operating
expenses
|
(2,609,316)
|
(799,613)
|
|
|
|
(LOSS) INCOME
FROM OPERATIONS
|
(23,220)
|
1,485,134
|
|
|
|
OTHER
INCOME
|
|
|
Interest
income
|
1,848
|
8,673
|
Interest
expenses
|
(119,479)
|
-
|
Government
subsidy income
|
164,006
|
-
|
Other income,
net
|
355,022
|
9,110
|
Total other
income, net
|
401,397
|
17,783
|
|
|
|
INCOME BEFORE
INCOME TAXES
|
378,177
|
1,502,917
|
INCOME TAX
EXPENSE
|
(1,966)
|
(42)
|
NET
INCOME
|
$376,211
|
$1,502,875
|
|
|
|
COMPREHENSIVE
INCOME
|
|
|
Total currency
translation differences arising from consolidation
|
57,460
|
(551,890)
|
TOTAL COMPREHENSIVE
INCOME
|
$433,671
|
$950,985
|
|
|
|
Earnings per
share
|
|
|
Basic and
diluted
|
$0.01
|
$0.09
|
|
|
|
Weighted average
number of shares outstanding
|
|
|
Basic and
diluted
|
31,598,333
|
17,627,339
|
China Liberal
Education Holdings Limited
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
|
|
For the six
months ended June 30,
|
|
2023
|
2022
|
Cash flows from
operating activities
|
|
|
Net
income
|
$376,211
|
$1,502,875
|
Adjustments to
reconcile net income to net cash (used in) provided by
operating activities:
|
|
|
Allowance for accounts
receivable
|
(53,507)
|
-
|
Allowance for
inventory
|
3,645
|
-
|
Allowance for prepaid
expenses and other current assets
|
78,061
|
-
|
Depreciation of
property and equipment
|
1,034,004
|
7,402
|
Amortization of
intangible assets
|
32,064
|
-
|
Amortization of land
use right
|
22,805
|
-
|
Changes in
operating assets and liabilities:
|
|
|
Accounts
receivable, net
|
418,853
|
(858,161)
|
Contract
receivable, net
|
-
|
1,972,732
|
Advance to
suppliers
|
43,652
|
4,415,107
|
Inventory,
net
|
-
|
(25,401)
|
Prepaid expenses
and other current assets
|
3,561,065
|
40,899
|
Accounts
payable
|
(447,642)
|
(77,703)
|
Contract
liabilities
|
(8,330,439)
|
(285,832)
|
Taxes
payable
|
60,333
|
11,175
|
Operating lease
liabilities
|
2,197
|
-
|
Accrued expenses
and other current liabilities
|
(1,891,144)
|
99
|
Net cash (used in)
provided by operating activities
|
(5,089,842)
|
6,703,192
|
|
|
|
Cash flows from
investing activities
|
|
|
Purchase of
property and equipment
|
(64,586)
|
-
|
Prepayment for
acquisitions
|
-
|
(39,137,623)
|
Net cash used in
investing activities
|
(64,586)
|
(39,137,623)
|
|
|
|
Cash flows from
financing activities
|
|
|
Proceeds from
advance from a related party
|
2,454,258
|
313,966
|
Proceeds from
loans from third parties
|
1,252,108
|
-
|
Net proceeds from
issuance of ordinary shares
|
-
|
11,989,949
|
Net cash provided by
financing activities
|
3,706,366
|
12,303,915
|
|
|
|
Effect of changes of
foreign exchange rates on cash
|
(34,351)
|
(298,326)
|
Net decrease in
cash
|
(1,482,413)
|
(20,428,842)
|
Cash, beginning of
period
|
13,650,071
|
32,678,421
|
Cash, end of
period
|
$12,167,658
|
$12,249,579
|
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SOURCE China Liberal Education Holdings Limited