Hailiang Education Reports Fiscal Year 2015 Financial Results

ZHUJI, China, Oct. 28, 2015 /PRNewswire/ -- Hailiang Education Group Inc. (Nasdaq: HLG) ("Hailiang Education" or the "Company"), a provider of private K-12 educational services in China, today announced its financial results for the fiscal year ended June 30, 2015.

Fiscal Year 2015 ("FY15") Financial Highlights

• Revenue was RMB514.8 million (US$83.0 million), an increase of 11.2% from RMB462.8 million in fiscal year 2014 ("FY14").
• Gross profit was RMB180.3 million (US$29.1 million), an increase of 10.5% from RMB163.1 million in FY14; gross margin was 35.0% in FY15.
• Net profit was RMB141.0 million (US$22.7 million), a slight increase from RMB140.7 million in FY14. Basic and diluted earnings per ADS were RMB6.24 (US$1.00)^[1].

Fiscal Year 2015 Operational Highlights

• The number of students enrolled in basic educational program was 16,135, an increase of 2.8% from 15,695 in FY14.
• The number of students enrolled in international program was 1,371, an increase of 16.2% from 1,180 in FY14.

"We are pleased to report strong earnings for the first time as a public company," commented Mr. Ming Wang, Chairman and Chief Executive Officer of Hailiang Education. "We closed out the fiscal year on a strong note with revenue and student enrollment both increasing. Enrollment in our more profitable international program increased significantly, accounting for 7.8% of the total enrollment in FY15 demonstrating the traction this high-quality program is getting among students and parents alike. Our listing on NASDAQ in July 2015 is a significant milestone for us, which not only strengthens our brand recognition, but also provides the support we need for our ongoing strategic expansion. We believe we are on the right track and are confident in our ability to increase shareholder value going forward."

Financial Results for Fiscal Year 2015

Revenue

Revenue in FY15 was RMB514.8 million (US$83.0 million), an increase of 11.2% from RMB462.8 million in FY14.

Revenue from basic educational program in FY15 was RMB433.1 million (US$69.9 million), an increase of 10.2% from RMB393.0 million in FY14, driven primarily by an increase in the average tuition charged per student during the period.

Revenue from international program in FY15 was RMB81.7 million (US$13.2 million), an increase of 17.0% from RMB69.8 million in FY14, primarily due to an increase in the number of students enrolled in the international program and, to a lesser extent, an increase in the average tuition charged per student in the international program.

Cost of Revenue

Cost of revenue in FY15 was RMB334.5 million (US$54.0 million), an increase of 11.6% from RMB299.7 million in FY14. The increase in cost of revenue was primarily due to increases in the number of senior and experienced teachers to enhance education quality, employee compensation and student-related costs primarily associated with the increases in the number of students enrolled and the cost of the Company's student canteen services.

Gross Profit and Gross Margin

Gross profit in FY15 was RMB180.3 million (US$29.1 million), an increase of 10.5% from RMB163.1 million in FY14. Gross margin in FY15 was 35.0%, compared with 35.2% in FY14.

Operating Expenses

Operating expenses in FY15 were RMB48.9 million (US$7.9 million), an increase of 10.4% from RMB44.3 million in FY14.

Selling expenses in FY15 were RMB15.5 million (US$2.5 million), which remained stable compared with RMB15.6 million in FY14.

Administrative expenses in FY15 were RMB33.3 million (US$5.4 million), an increase of 16.5% from RMB28.6 million in FY14. The increase in administrative expenses was primarily due to expenses associated with the Company's initial public offering which were partially offset by a decrease in maintenance costs.

Net Finance Income

Net finance income in FY15 was RMB7.1 million (US$1.2 million), a decrease of 64.4% from RMB20.1 million in FY14. The decrease in net finance income was primarily due to a decrease in the amount of funds the Company loaned to or deposited with certain related parties during FY2015.

Net Profit

Net profit in FY15 was RMB141.0 million (US$22.7 million), an increase of 0.2% from RMB140.7 million in FY14.

Basic and Diluted Earnings per ADS

Basic and diluted earnings per ADS were RMB6.24 (US$1.00), which remained constant compared with basic and diluted earnings per ADS of RMB6.24 for FY14.

Cash Flow

Net cash provided by operating activities in FY15 was RMB236.1 million (US$38.1 million), an increase of 58.1% from RMB149.4 million in FY14. Capital expenditures in FY15 were RMB115.6 million (US$18.6 million), an increase of 1213.6% from RMB8.8 million in FY14, primarily related to improvements made to the Company's school facilities and purchases of furniture and equipment.

Balance Sheet

As of June 30, 2015, the Company had cash and cash equivalents of RMB233.4 million (US$37.6 million), compared with RMB42.0 million as of June 30, 2014.

Conference Call Information

Hailiang Education's management will host an earnings conference call at 8:30 AM on October 28, 2015, U.S. Eastern Time (8:30 PM on October 28, 2015, Beijing/Hong Kong Time).

Dial-in details for the earnings conference call are as follows:

Please dial in 15 minutes before the call is scheduled to begin and provide the passcode to join the call.

A replay of the conference call may be accessed by phone at the following number until November 4, 2015:

Additionally, a live and archived webcast of the conference call will be available at http://ir.hailiangedu.com.

About Hailiang Education

Founded in 1995, Hailiang Education now operates three centrally managed schools through its PRC affiliated entities under the "Hailiang" brand in Zhuji city, Zhejiang province: Zhuji Hailiang Foreign Language School, Zhuji Private High School, and Tianma Experimental School. Its schools offer a basic educational program, an international program at the kindergarten, primary school, middle school, and high school levels, as well as courses designed for university-bound students studying for A-levels courses in the United Kingdom or the SAT courses in the United States.

For more information, please visit http://ir.hailiangedu.com.

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, the Company's business strategies and initiatives as well as the Company's business plans; the Company's future business development, results of operations and financial condition; expected changes in the Company's revenue and certain cost or expense items; trends and competition in the education industry in China; general economic and business conditions in China; and other risks detailed in the Company's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. 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.

Contact:

Mr. Bo Lyu
T: +86 575 8706-9788
ir@hailiangeducation.com

Mr. Christian Arnell
T: +86 10 5900-1548 in Beijing
carnell@ChristensenIR.com

Mrs. Linda Bergkamp
T: +1 480-614-3004
lbergkamp@christensenir.com

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SOURCE Hailiang Education Group Inc.