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FHSEY First HighSchool Education Group Company Ltd (QB)

0.09
0.00 (0.00%)
05 Dec 2024 - Closed
Delayed by 15 minutes
Name Symbol Market Type
First HighSchool Education Group Company Ltd (QB) USOTC:FHSEY OTCMarkets Depository Receipt
  Price Change % Change Price Bid Price Offer Price High Price Low Price Open Price Traded Last Trade
  0.00 0.00% 0.09 0.0801 0.09 0.00 13:00:01

Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16]

18/09/2024 1:00pm

Edgar (US Regulatory)


 

 

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 2024

 

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 18, 2024 By: /s/ Shaowei Zhang
  Name: Shaowei Zhang
  Title: Chairman of the Board of Directors and
Chief Executive Officer

 

1

 

 

EXHIBIT INDEX

 

Exhibit No.   Description
     
Exhibit 99.1   Press Release

 

 

2

 

Exhibit 99.1

 

First High-School Education Group Announces First Half 2024 Unaudited Financial Results

 

BEIJING, CHINA / ACCESSWIRE / September 18, 2024 / 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 of 2024 ended June 30, 2024.

 

First Half 2024 Financial and Operational Highlights – Continuing Operations

 

Total revenues were RMB151.1 million (US$20.8 million), a decrease of 6.7% from RMB161.9 million in the first half of 2023.

 

Gross profit was RMB52.3 million (US$7.2 million), a decrease of 17.3% from RMB63.2 million in the first half of 2023.

 

Income from operations was RMB3.0 million (US$0.4 million), a decrease of 92.4% from RMB39.6 million in the first half of 2023.

 

Net income was RMB11.2 million (US$1.5 million), a decrease of 69.5% from RMB36.7 million in the first half of 2023.

 

Adjusted net income1 (Non-GAAP) was RMB10.1 million (US$1.4 million), a decrease of 72.5% from RMB36.7 million in the first half of 2023.

 

The total number of students enrolled at our school programs and public schools that we provide management services as of September 1, 2024 was 35,151, an increase of 5.6% from 33,275 as of September 1, 2023.

 

The total number of school programs at our school programs and public schools that we provide management services as of September 1, 2024 was 23, a decrease of 8.0% from 25 as of September 1, 2023.

 

CFO Comments

 

Mr. Tommy Zhou, Chief Financial Officer of First High-School Education Group, commented:

 

Compared to the corresponding period of the previous year, we observed a decrease in both revenues and net income. These declines were primarily attributable to the ongoing impact of adverse macroeconomic factors. Specifically, we did not have any revenue generated from government cooperative agreements, and we incurred increased costs to actively cope with heightened competition. To address these challenges, the entire team concentrated on expanding our direct customer base and enhancing the quality of our educational offerings.

 

 

1Adjusted 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, 2024, we have successfully concluded the student admissions process for the 2024 fall semester. At that time, the combined enrollment in our school programs and the public schools we manage totaled 35,151 students, distributed across 23 school programs. We anticipate providing these students and schools with our proven operational expertise and generating value for all stakeholders.

 

First Half 2024 Financial Results – Continuing Operations

 

Total Revenues

 

Total revenues were RMB151.1 million (US$20.8 million), a decrease of 6.7% from RMB161.9 million in the first half of 2023. The decrease was primarily because we had no revenues generated from government cooperative agreements.

 

Revenues from customers were RMB151.1 million (US$20.8 million), an increase of 8.2% from RMB139.6 million in the first half of 2023. The increase was primarily driven by increased student enrollment in our existing schools.

 

Revenues from government cooperative agreements were nil compared to RMB22.3 million in the first half of 2023. The decrease was primarily due to the tightened fiscal budget of the relevant government entities and our on-going renegotiation of cooperative agreements.

 

Cost of revenues

 

Cost of revenues were RMB98.9 million (US$13.6 million), which remained relatively stable compared to RMB98.7 million in the first half of 2023.

 

Gross profit

 

Gross profit was RMB52.3 million (US$7.2 million), a decrease of 17.3% from RMB63.2 million in the first half of 2023.

 

Gross margin was 34.6%, compared with 39.0% in the first half of 2023. The decrease was primarily due to fluctuations in (1) the number of staff and their compensations; (2) school operating efficiency, such as utility usage limits, and budget control; and (3) revenues generated from government cooperative agreements.

 

2

 

 

Total operating expenses

 

Total operating expenses were RMB49.2 million (US$6.8 million), which increased significantly from RMB23.6 million in the first half of 2023.

 

Selling and marketing expenses were RMB1.6 million (US$0.2 million), an increase of 71.6% from RMB0.9 million in the first half of 2023. The increase was primarily due to the increased expenses in brand promotion and marketing activities in relation to the increased student enrollment.

 

General and administrative expenses were RMB47.7 million (US$6.6 million), which increased significantly from RMB22.7 million in the first half of 2023. The increase was primarily due to increased staffing, and professional services used in management duties, in connection with school management, teaching supervision, human resources, and information technology.

 

Income from operations

 

Income from operations was RMB3.0 million (US$0.4 million), a decrease of 92.4% from RMB39.6 million in the first half of 2023.

 

Net Income from continuing operations

 

Net income from continuing operations was RMB4.2 million (US$0.6 million), a decrease of 88.9% from RMB37.6 million in the first half of 2023.

 

Net Income from discontinued operations

 

Net income from discontinued operations was RMB7.0 million (US$1.0 million), compared with net loss of RMB0.9 million in the first half of 2023.

 

Net income

 

Net income was RMB11.2 million (US$1.5 million), a decrease of 69.4% from RMB36.7 million in the first half of 2023.

 

Adjusted net income2 (Non-GAAP)

 

Adjusted net income (Non-GAAP) was RMB10.1 million (US$1.4 million), a decrease of 72.5% from RMB36.7 million in the first half of 2023.

 

 

2Adjusted 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.

 

3

 

 

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 of 2024 ended June 30, 2024. Net income from discontinued operations was RMB7.0 million (US$1.0 million) for the first half of 2024 ended June 30, 2024.

 

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 Wednesday, September 18, 2024, at 8:00 AM U.S. Eastern Time (8:00 PM September 18, 2024, 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 792778

 

4

 

 

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 reversal of impairment loss in relation to accounts receivable. 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 RMB7.2672 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on June 28, 2024. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on June 28, 2024, or at any other rate.

 

5

 

 

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)

 

6

 

 

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 months ended June 30,  
    2023     2024     2024  
    RMB     RMB     US$  
Revenues                  
Revenue from customers     139,593       151,109       20,793  
Revenue from governments cooperative agreements     22,283       -       -  
Total revenues     161,877       151,109       20,793  
Cost of revenues     (98,680 )     (98,852 )     (13,602 )
Gross profit     63,197       52,257       7,191  
                         
Operating expenses and income                        
Selling and marketing expenses     (913 )     (1,567 )     (216 )
General and administrative expenses     (22,652 )     (47,682 )     (6,561 )
Total operating expenses     (23,565 )     (49,249 )     (6,777 )
Income from operations     39,632       3,008       414  
                         
Other income (expenses)                        
Interest income     452       156       22  
Interest expense     (2,503 )     (1,300 )     (179 )
Government grants     23       2,264       312  
Others, net     897       69       10  
Net loss on disposal of fixed asset     -       (1 )     -  
Reversal of impairment loss     -       1,106       152  
Income from continuing operations before income tax     38,501       5,303       730  
                         
Income tax expenses     (889 )     (1,115 )     (153 )
Income (loss) from continuing operations     37,612       4,188       576  
Income (loss) from discontinued operations     (947 )     7,021       966  
Net income (loss)     36,664       11,210       1,542  
Foreign currency translation adjustment     3,356       2,909       400  
Comprehensive income (loss) - continuing operations     48,229       7,097       977  
Comprehensive income (loss) - discontinued operations     (8,209 )     7,022       966  
Comprehensive income (loss)     40,020       14,119       1,943  
                         
Attributable to                        
Shareholder of the Company     37,985       7,163       986  
Non-controlling interests     2,035       6,956       957  
                         
Earnings per share:                        
Basic earnings per share from continuing operation     0.52       0.05       0.01  
Basic earnings per share from discontinued operation     (0.10 )     0.08       0.01  
                         
Diluted Earnings per share:                        
Diluted earnings per share from continuing operation     0.49       0.5       0.01  
Diluted earnings per share from discontinued operation     (0.09 )     0.08       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  

 

7

 

 

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, 
   2023   2024   2024 
   RMB   RMB   US$ 
Current assets            
Cash   189,243    58,206    8,009 
Accounts receivable, net of expected credit loss   82,202    79,162    10,893 
Amounts due from related parties –non-trade   215,908    219,528    30,208 
Prepaid expenses and other current assets   241,402    223,332    30,732 
Assets related to discontinued operation   42,746    33,395    4,595 
Total current assets   771,502    613,622    84,437 
                
Non-current Assets               
Property and equipment, net   119,808    112,720    15,511 
Intangible assets, net   7,247    7,103    977 
Goodwill   30,347    30,348    4,176 
Deferred tax assets   20,294    20,294    2,793 
Other non-current assets   33,350    34,905    4,803 
Assets related to discontinued operation   9,075    8,031    1,105 
Total non-current assets   220,122    213,401    29,365 
Total assets   991,624    827,024    113,802 

 

8

 

 

   As of
December 31,
   As of June 30, 
   2023   2024   2024 
   RMB   RMB   US$ 
Current liabilities               
Contract liabilities   140,501    42,585    5,860 
Bank loan   87,970    31,636    4,353 
Borrowings under financing arrangements   -    -    - 
Accounts payable   21,508    12,920    1,778 
Accrued expenses and other payables   263,078    262,685    36,147 
Income tax payables   29,678    30,247    4,162 
Amounts due to related parties   165,173    169,646    23,344 
Dividend payables   2,132    2,132    293 
Liability related to discontinued operation   119,930    102,514    14,106 
Total current liabilities   829,970    654,364    90,044 
                
Deferred revenue   -    (275)   (38)
Deferred tax liabilities   6,207    6,207    854 
Total non-current liabilities   6,207    5,932    816 
Total liabilities   836,177    660,297    90,860 
                
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, 2023, and 86,838,700 shares issued and outstanding as of June 30, 2024, respectively)   6    6    1 
Additional paid-in capital   356,622    357,155    49,146 
Statutory reserves   51,425    50,891    7,003 
Accumulated other comprehensive income   2,836    2,909    400 
Accumulated deficit   (257,421)   (253,167)   (34,837)
Non-controlling interests   1,977    8,933    1,229 
Total equity   155,445    166,727    22,942 
                
Total liabilities and equity   991,624    827,024    113,802 

 

9

 

 

First High-School Education Group Co., Ltd.

Reconciliation of GAAP to non-GAAP Measure

(All amounts in thousands)

 

   Six months ended June 30, 
   2023   2024   2024 
   RMB   RMB   US$ 
             
Reconciliation of net income to adjusted net income:               
Net income   36,664    11,210    1,542 
Subtract:               
Reversal of impairment loss   -    (1,106)   (152)
Adjusted net income   36,664    10,104    1,390 

 

 

10

 

 


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