UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of
September 2023
Commission File Number: 001-40150
First High-School Education Group Co., Ltd.
(Exact
name of registrant as specified in its charter)
No. 1-1, Tiyuan Road, Xishan District,
Kunming, Yunnan Province 650228,
The People’s Republic of China
(Address of principal executive offices)
Indicate by check mark whether the registrant files
or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| |
FIRST HIGH-SCHOOL EDUCATION GROUP CO., LTD. |
| |
|
|
| Date: September 19, 2023 |
By: |
/s/ Shaowei Zhang |
| |
Name: |
Shaowei Zhang |
| |
Title: |
Chairman of the Board of Directors and
Chief Executive Officer |
EXHIBIT INDEX
2
Exhibit 99.1
First
High-School Education Group Announces First Half 2023 Unaudited Financial Results
BEIJING,
CHINA / ACCESSWIRE / September 19, 2023 / First High-School Education Group Co., Ltd. (“First High-School Education Group”
or the “Company”) (OTCQB: FHSEY), an education service provider primarily focusing on high schools in Western China, today
announced its unaudited financial results for the first half ended June 30, 2023.
First
Half 2023 Financial and Operational Highlights – Continuing Operations
| ● | Total
revenues were RMB161.9 million (US$22.3 million), a decrease of 13.9% from RMB188.0 million
in the first half of 2022. |
| ● | Gross
profit was RMB63.2 million (US$8.7 million), a decrease of 23.7% from RMB82.8 million
in the first half of 2022. |
| ● | Income
from operations was RMB39.7 million (US$5.5 million), a decrease of 18.7% from RMB48.8
million in the first half of 2022. |
| ● | Net
income was RMB36.7 million (US$5.1 million), a decrease of 14.1% from RMB42.7 million
in the first half of 2022. |
| ● | Adjusted
net income1 (Non-GAAP) was RMB36.7 million (US$5.1 million), a decrease
of 14.1% from RMB42.7 million in the first half of 2022. |
| ● | The
total number of students enrolled at our school programs and public schools that we provide
management services as of September 1, 2023 was 33,275, an increase of 12.0% from 29,718
as of September 1, 2022. |
| ● | The
total number of school programs at our school programs and public schools that we provide
management services as of September 1, 2023 was 25, an increase of 4.2% from 24 as of September
1, 2022. |
CFO
Comments
Mr.
Tommy Zhou, Chief Financial Officer of First High-School Education Group, commented:
Compared
with last year’s results of the same period, the Company experienced declines in revenue and net income, primarily due to continuation
of the negative factors as previously disclosed: cost associated with discontinued schools, and reduced student-related services. The
Company adjusted to the decline in revenue by reducing our cost of revenues and net operating expenses in our business operations. As
a result, we were able to produce comparable gross margin and net margins with the previous year.
| 1 | Adjusted net income is a non-GAAP measure. See “Non-GAAP
measure” in this press release. A reconciliation of the Company’s most directly comparable GAAP measure to historical non-GAAP
financial measure has been provided in the tables captioned “Reconciliation of GAAP to Non-GAAP Measure” included at the
end of this press release, and investors are encouraged to review the reconciliation. |
As
of September 1, 2023, The Company has completed our 2023 fall semester student recruitment program. As of the same date, the total number
of students enrolled at our school programs and public schools that we provide management services was 33,275, and the total number of
school programs was 25. For this new semester, we welcomed the addition of three new school programs under our management. We look forward
to serving these students and school programs with our operating expertise and creating value for all stakeholders.
First
Half 2023 Financial Results – Continuing Operations
Total
Revenues
Total
revenues were RMB161.9 million (US$22.3 million), a decrease of 13.9% from RMB188.0 million in the first half of 2022. The decrease was
primarily due to mixed factors including reduced sales of education materials and income from meal catering services, and the discontinuance
and limited operation of some schools in our network.
Revenues
from customers were RMB139.6 million (US$19.3 million), a decrease of 15.2% from RMB164.6 million in the first half of 2022. The
decrease was primarily due to mixed factors including reduced sales of education materials and income from meal catering services, and
the discontinuance and limited operation of some schools in our network.
Revenues
from government cooperative agreements were RMB22.3 million (US$3.1 million) which remained relatively stable compared to RMB23.4
million in the first half of 2022.
Cost
of revenues
Cost
of revenues were RMB98.7 million (US$13.6 million), a decrease of 6.2% from RMB105.2 million in the first half of 2022. The decrease
was primarily due to reduction in rental expenses for discontinued schools, and decreased staff compensation.
Gross
profit
Gross
profit was RMB63.2 million (US$8.7 million), a decrease of 23.7% from RMB82.8 million in the first half of 2022.
Gross
margin was 39.0%, compared with 44.0% in the first half of 2022. The decrease was due fluctuations in (1) school operating efficiency,
such as utility usage limits, and budget control; and (2) the number of staff and their compensations.
Total
operating expenses
Total
operating expenses were RMB23.6 million (US$3.3 million), a decrease of 30.8% from RMB34.0 million in the first half of 2022.
| ● | Selling
and marketing expenses were RMB0.9 million (US$0.1 million), a decrease of 62.2% from RMB2.4
million in the first half of 2022. The decrease was primarily due to the decreased expenses
in brand promotion and marketing activities for our relatively mature school operation. |
| ● | General
and administrative expenses were RMB22.7 million (US$3.1 million), a decrease of 28.4% from
RMB31.6 million in the first half of 2022. The decrease was primarily due to improved cost
control. |
Income
from operations
Income
from operations was RMB39.6 million (US$5.5 million), a decrease of 18.7% from RMB48.8 million in the first half of 2022.
Net
Income from continuing operations
Net
income from continuing operations was RMB37.6 million (US$5.2 million), a decrease of 15.6% from RMB44.6 million in the first half of
2022.
Net
Loss from discontinued operations
Net
loss from discontinued operations was RMB0.9 million (US$0.1 million), compared with net loss of RMB1.9 million in the first half of
2022.
Net
income
Net
income was RMB36.7 million (US$5.1 million), a decrease of 14.1% from RMB42.7 million in the first half of 2022.
Adjusted
net income2 (Non-GAAP)
Adjusted
net income (Non-GAAP) was RMB36.7 million (US$5.1 million), a decrease of 14.1% from RMB42.7 million in the first half of 2022.
| 2 | Adjusted
net income is a non-GAAP measure. See “Non-GAAP measure” in this press release.
A reconciliation of the Company’s most directly comparable GAAP measure to historical
non-GAAP financial measure has been provided in the tables captioned “Reconciliation
of GAAP to Non-GAAP Measure” included at the end of this press release, and investors
are encouraged to review the reconciliation. |
Impact
of Implementation Rules for Private Education Laws
On
May 14, 2021, the State Council of the People’s Republic of China promulgated the amended Implementation Regulations of the Law
on the Promotion of Private Education of the People’s Republic of China (中华人民共和国民办教育促进法实施条例)
(the “Implementation Rules”), which became effective on September 1, 2021. The Implementation Rules prohibit social organizations
and individuals from controlling private schools that provide compulsory education through, among other methods, mergers, acquisitions
and contractual arrangements. Additionally, the Implementation Rules prohibit any private schools providing compulsory education from
conducting transactions with its related parties. As a result, the Implementation Rules affected the Company’s control over the
affiliated entities providing compulsory education as well as the sponsor entities (collectively referred to as the “Affected Entities”).
In
compliance with the Implementation Rules and other applicable PRC regulations and based on the relevant accounting standard in accordance
with U.S. GAAP, the Company has determined to cease to recognize revenues for all activities related to schools providing compulsory
education and the sponsor entities after September 1, 2021 within China that are affected by the Implementation Rules, and classified
such Affected Entities as discontinued operations. The discontinued operations of the Affected Entities had certain impact on the Company’s
financial conditions for the first half ended June 30, 2023. Net loss from discontinued operations was RMB0.9 million (US$0.1 million)
for the first half ended June 30, 2023.
There
still exist uncertainties with respect to the interpretation and enforcement of the Implementation Rules. The Company will closely monitor
the developments related to the Implementation Rules, and continue to assess the possible impacts on the Company and make any applicable
actions to keep in compliance with the Implementation Rules and other applicable PRC regulations.
Conference
Call
First
High-School Education Group’s management will hold an earnings conference call on Tuesday, September 19, 2023, at 8:00 AM U.S.
Eastern Time (8:00 PM September 19, 2023, Beijing/Hong Kong Time). Please dial in 15 minutes before the conference is scheduled to begin
using below numbers.
|
International |
+1-973-528-0011 |
| United
States |
+1-888-506-0062 |
| Hong
Kong |
+852
3018 4049 |
| Mainland
China |
+86
400 120 3199 |
| Passcode |
264091 |
| Webcast
URL |
https://www.webcaster4.com/Webcast/Page/2967/49061 |
A
telephone replay of the conference call may be accessed by phone at the following numbers until October 3, 2023.
|
International |
+1-973-528-0005 |
| United
States |
+1-800-332-6854 |
| Replay
Access Code |
264091 |
A
live and archived webcast of the conference call will be available on the Company’s investors relations website at https://ir.diyi.top/
About
First High-School Education Group
First
High-School Education Group is an education service provider primarily focusing on high schools in Western China. The Company aspires
to become a leader and innovator of private high school education in China, with the focuses on a comprehensive education management
integrating education information consulting, education research project development, education talent management, education technology
management, education service management, and general vocational integration development services. For more information, please visit
https://ir.diyi.top/.
Non-GAAP
Measure
The
Company has provided in this press release financial information that has not been prepared in accordance with U.S. generally accepted
accounting principles, or U.S. GAAP. The Company considers and uses one non-GAAP measure, adjusted net income, as a supplemental measure
to review and assess its operating performance. Adjusted net income enables the Company’s management to assess the Company’s operating
results without considering the impact of non-cash charges, including share-based compensation expenses, and without considering the
impact of donation expenses and transaction costs in relation to previous financing activities. The Company also believes that the use
of the non-GAAP measure facilitates investors’ assessment of its operating performance.
The
presentation of the non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information
prepared and presented in accordance with U.S. GAAP. Adjusted net income is a non-GAAP measure. A reconciliation of the Company’s most
directly comparable GAAP measure to historical non-GAAP financial measure has been provided in the tables captioned “Reconciliation
of GAAP to Non-GAAP Measure” included at the end of this press release, and investors are encouraged to review the reconciliation.
Exchange
Rate
The
Company’s business is primarily conducted in China and all of the revenues are denominated in Renminbi (“RMB”). This announcement
contains translations of certain RMB amounts into U.S. dollars (“USD” or “US$”) at specified rates solely for the
convenience of the readers. Unless otherwise noted, all translations from RMB to USD are made at the rate of RMB7.2513 to US$1.00, the
exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on June 30, 2023. No representation is made that
the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on June 30, 2023, or at any other
rate.
Statement
Regarding Preliminary Unaudited Financial Information
The
unaudited financial information set out in this earnings release is preliminary and subject to potential adjustments. Adjustments to
the consolidated financial statements may be identified when audit work has been performed for the Company’s year-end audit, which
could result in significant differences from this preliminary unaudited financial information.
We
have made rounding adjustments to reach some of the figures included in this earning release. Consequently, numerical figures shown as
totals in some tables may not be arithmetic aggregations of the figures that precede them.
Forward-Looking
Statements
Statements
in this press release about future expectations, plans and prospects, as well as any other statements regarding matters that are not
historical facts, may constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These statements include, but are
not limited to, statements relating to the expected trading commencement and closing dates. The words “anticipate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,”
“potential,” “predict,” “project,” “should,” “target,” “will,”
“would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements
contain these identifying words. Actual results may differ materially from those indicated by such forward-looking statements as a result
of various important factors, including: the uncertainties related to market conditions and the completion of the public offering on
the anticipated terms or at all, and other factors discussed in the “Risk Factors” section of the preliminary prospectus
filed with the SEC. Any forward-looking statements contained in this press release speak only as of the date hereof, and the Company
specifically disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events
or otherwise.
For
Investor and Media Inquiries Please Contact:
First
High-School Education Group
Tommy
Zhou
Chief
Financial Officer
E-mail:
tommyzhou@dygz.com
Customer
Service
E-mail:
FHS_info@dygz.com
Phone:
010-62555966 (9:30-12:00, 13:30-16:00 CST)
First
High-School Education Group Co., Ltd.
Unaudited
Condensed Consolidated Statements of Comprehensive Income
(All
amounts in thousands, except share data and per share data, or otherwise noted)
| | |
Six month ended June 30, | |
| | |
2022 | | |
2023 | | |
2023 | |
| | |
RMB | | |
RMB | | |
US$ | |
| | |
Restated | | |
| | |
| |
| Revenues | |
| | |
| | |
| |
| Revenue from customers | |
| 164,645 | | |
| 139,593 | | |
| 19,251 | |
| Revenue from governments cooperative agreements | |
| 23,373 | | |
| 22,283 | | |
| 3,073 | |
| Total revenues | |
| 188,018 | | |
| 161,877 | | |
| 22,324 | |
| Cost of revenues | |
| (105,219 | ) | |
| (98,680 | ) | |
| (13,609 | ) |
| Gross profit | |
| 82,798 | | |
| 63,197 | | |
| 8,715 | |
| | |
| | | |
| | | |
| | |
| Operating expenses and income | |
| | | |
| | | |
| | |
| Selling and marketing expenses | |
| (2,416 | ) | |
| (913 | ) | |
| (126 | ) |
| General and administrative expenses | |
| (31,628 | ) | |
| (22,652 | ) | |
| (3,124 | ) |
| Total operating expenses | |
| (34,044 | ) | |
| (23,565 | ) | |
| (3,250 | ) |
| Income from operations | |
| 48,755 | | |
| 39,632 | | |
| 5,465 | |
| | |
| | | |
| | | |
| | |
| Other income (expenses) | |
| | | |
| | | |
| | |
| Interest income | |
| 367 | | |
| 452 | | |
| 62 | |
| Interest expense | |
| (2,636 | ) | |
| (2,503 | ) | |
| (345 | ) |
| Government grants | |
| 646 | | |
| 23 | | |
| 3 | |
| Others, net | |
| 791 | | |
| 897 | | |
| 124 | |
| Income from continuing operations before income tax | |
| 47,188 | | |
| 38,501 | | |
| 5,310 | |
| | |
| | | |
| | | |
| | |
| Income tax expenses | |
| (2,602 | ) | |
| (889 | ) | |
| (123 | ) |
| Income (loss) from continuing operations | |
| 44,586 | | |
| 37,612 | | |
| 5,187 | |
| Income (loss) from discontinued operations | |
| (1,886 | ) | |
| (947 | ) | |
| (131 | ) |
Net income (loss) | |
| 42,700 | | |
| 36,664 | | |
| 5,056 | |
| Foreign currency translation adjustment | |
| 1,332 | | |
| 3,356 | | |
| 463 | |
| Comprehensive income (loss) - continuing operations | |
| 45,919 | | |
| 48,229 | | |
| 6,651 | |
| Comprehensive income (loss) - discontinued operations | |
| (1,886 | ) | |
| (8,209 | ) | |
| (1,132 | ) |
| Comprehensive income (loss) | |
| 44,032 | | |
| 40,020 | | |
| 5,519 | |
| | |
| | | |
| | | |
| | |
| Earnings per share: | |
| | | |
| | | |
| | |
| Basic earnings per share from continuing operation | |
| 0.52 | | |
| 0.52 | | |
| 0.07 | |
| Basic earnings per share from discontinued operation | |
| (0.02 | ) | |
| (0.10 | ) | |
| (0.01 | ) |
| | |
| | | |
| | | |
| | |
| Diluted Earnings per share: | |
| | | |
| | | |
| | |
| Diluted earnings per share from continuing operation | |
| 0.48 | | |
| 0.49 | | |
| 0.07 | |
| Diluted earnings per share from discontinued operation | |
| (0.02 | ) | |
| (0.09 | ) | |
| (0.01 | ) |
| | |
| | | |
| | | |
| | |
| Weighted average number of ordinary share outstanding | |
| | | |
| | | |
| | |
| Basic | |
| 86,838,700 | | |
| 86,838,700 | | |
| 86,838,700 | |
| Diluted | |
| 92,388,700 | | |
| 92,388,700 | | |
| 92,388,700 | |
First
High-School Education Group Co., Ltd.
Unaudited
Condensed Consolidated Balance Sheets
(All
amounts in thousands, except share data and per share data, or otherwise noted)
| | |
As of
December 31, | | |
As of June 30, | |
| | |
2022 | | |
2023 | | |
2023 | |
| | |
RMB | | |
RMB | | |
US$ | |
| | |
Restated | | |
| | |
| |
| Current assets | |
| | |
| | |
| |
| Cash | |
| 105,258 | | |
| 71,800 | | |
| 9,902 | |
| Accounts receivable, net of allowance for doubtful accounts | |
| 87,247 | | |
| 113,290 | | |
| 15,623 | |
| Amounts due from related parties | |
| 73,450 | | |
| 161,117 | | |
| 22,219 | |
| Prepaid expenses and other current assets | |
| 144,708 | | |
| 153,985 | | |
| 21,235 | |
| Assets related to discontinued operation | |
| 65,815 | | |
| 27,875 | | |
| 3,844 | |
| Total current assets | |
| 476,479 | | |
| 528,067 | | |
| 72,824 | |
| | |
| | | |
| | | |
| | |
| Non-current Assets | |
| | | |
| | | |
| | |
| Property and equipment, net | |
| 128,163 | | |
| 116,873 | | |
| 16,118 | |
| Intangible assets, net | |
| 5,995 | | |
| 6,370 | | |
| 878 | |
| Goodwill | |
| 30,348 | | |
| 30,348 | | |
| 4,185 | |
| Deferred tax assets | |
| 13,309 | | |
| 12,492 | | |
| 1,723 | |
| Amounts due from related parties | |
| - | | |
| - | | |
| - | |
| Other non-current assets | |
| 47,176 | | |
| 47,176 | | |
| 6,506 | |
| Assets related to discontinued operation | |
| 11,010 | | |
| 10,956 | | |
| 1,511 | |
| Total non-current assets | |
| 236,000 | | |
| 224,215 | | |
| 30,921 | |
| Total assets | |
| 712,479 | | |
| 752,282 | | |
| 103,744 | |
| | |
As of December 31, | | |
As of June 30, | |
| | |
2022 | | |
2023 | | |
2023 | |
| | |
RMB | | |
RMB | | |
US$ | |
| | |
Restated | | |
| | |
| |
| Current liabilities | |
| | |
| | |
| |
| Contract liabilities | |
| 141,574 | | |
| 27,122 | | |
| 3,740 | |
| Bank loan | |
| 33,572 | | |
| 116,563 | | |
| 16,075 | |
| Borrowings under financing arrangements | |
| 20,540 | | |
| 19,409 | | |
| 2,677 | |
| Accounts payable | |
| 13,809 | | |
| 23,737 | | |
| 3,273 | |
| Accrued expenses and other payables | |
| 52,463 | | |
| 124,268 | | |
| 17,137 | |
| Income tax payables | |
| 29,622 | | |
| 22,266 | | |
| 3,071 | |
| Amounts due to related parties | |
| 53,807 | | |
| 52,771 | | |
| 7,277 | |
| Liability related to discontinued operation | |
| 104,641 | | |
| 74,856 | | |
| 10,323 | |
| Total current liabilities | |
| 450,028 | | |
| 460,992 | | |
| 63,574 | |
| | |
| | | |
| | | |
| | |
| Deferred revenue | |
| 113 | | |
| - | | |
| - | |
| Borrowings under financing arrangements | |
| 24,987 | | |
| 18,544 | | |
| 2,557 | |
| Other long-term liabilities | |
| 1,532 | | |
| 358 | | |
| 49 | |
| Deferred tax liabilities | |
| 5,155 | | |
| 5,200 | | |
| 717 | |
| Liability related to discontinued operation | |
| - | | |
| - | | |
| - | |
| Total non-current liabilities | |
| 31,787 | | |
| 24,103 | | |
| 3,324 | |
| Total liabilities | |
| 481,815 | | |
| 485,095 | | |
| 66,898 | |
| | |
| | | |
| | | |
| | |
| Equity/(Deficit) | |
| | | |
| | | |
| | |
| Ordinary shares (US$0.00001 par value; 5,000,000,000 shares authorized; and 86,838,700 shares issued and outstanding as of December 31, 2022, and 86,838,700 shares issued and outstanding as of June 30, 2023, respectively) | |
| 6 | | |
| 6 | | |
| 1 | |
| Additional paid-in capital | |
| 349,658 | | |
| 348,591 | | |
| 48,073 | |
| Statutory reserves | |
| 53,833 | | |
| 53,833 | | |
| 7,424 | |
| Accumulated other comprehensive income | |
| 2,430 | | |
| 3,356 | | |
| 463 | |
| Accumulated deficit | |
| (175,694 | ) | |
| (141,064 | ) | |
| (19,454 | ) |
| Non-controlling interests | |
| 431 | | |
| 2,466 | | |
| 340 | |
| Total equity/(deficit) | |
| 230,665 | | |
| 267,187 | | |
| 36,847 | |
| | |
| | | |
| | | |
| | |
| Total liabilities and equity/(deficit) | |
| 712,479 | | |
| 752,282 | | |
| 103,744 | |
First
High-School Education Group Co., Ltd.
Reconciliation
of GAAP to non-GAAP Measure
(All
amounts in thousands)
| | |
Six month ended June 30, | |
| | |
2022 | | |
2023 | | |
2023 | |
| | |
RMB | | |
RMB | | |
US$ | |
| | |
| | |
| | |
| |
| Reconciliation of net income to adjusted net income: | |
| | |
| | |
| |
| Net income | |
| 42,700 | | |
| 36,664 | | |
| 5,056 | |
| Add: | |
| | | |
| | | |
| | |
| Share-based compensation expenses | |
| - | | |
| - | | |
| - | |
| Donation expenses | |
| - | | |
| - | | |
| - | |
| Transaction costs in relation to previous financing activities | |
| - | | |
| - | | |
| - | |
| Tax effects of adjustments* | |
| - | | |
| - | | |
| - | |
| Adjusted net income | |
| 42,700 | | |
| 36,664 | | |
| 5,056 | |
| * | Tax
effects were determined based upon the nature, as well as the jurisdiction, of each reconciliation adjustment at the respective applicable
income tax rate. |
10
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