Ambow Education Announces Fourth Quarter and Full Year 2020 Financial Results

AMBOW EDUCATION HOLDING LTD.

AUDITED CONSOLIDATED BALANCE SHEETS

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

As of December 31,

As of December 31,

2020

2019

US$

RMB

RMB

ASSETS

Current assets:

Cash and cash equivalents

18,210

118,821

157,600

Restricted cash

126

824

–

Short term investments, available for sale

18,062

117,854

57,487

Short term investments, held to maturity

6,897

45,000

31,000

Accounts receivable, net

3,214

20,972

17,939

Amounts due from related parties

463

3,024

2,318

Prepaid and other current assets, net

18,028

117,634

133,296

Total current assets

65,000

424,129

399,640

Non-current assets:

Property and equipment, net

22,144

144,492

157,463

Land use rights, net

263

1,715

1,759

Intangible assets, net

8,400

54,808

56,607

Goodwill

3,940

25,710

60,353

Deferred tax assets, net

971

6,338

10,195

Operating lease right-of-use asset

37,948

247,608

257,361

Finance lease right-of-use asset

897

5,850

6,450

Other non-current assets, net

21,313

139,067

70,971

Total non-current assets

95,876

625,588

621,159

Total assets

160,876

1,049,717

1,020,799

LIABILITIES

Current liabilities:

Short-term borrowing  *

1,533

10,000

–

Deferred revenue  *

25,088

163,699

165,111

Accounts payable  *

2,976

19,423

14,718

Accrued and other liabilities  *

32,121

209,590

192,957

Income taxes payable, current  *

28,297

184,638

180,715

Amounts due to related parties  *

390

2,543

1,971

Operating lease liability, current  *

8,230

53,702

53,512

Total current liabilities

98,635

643,595

608,984

Non-current liabilities:

Long-term borrowing 

1,470

9,594

–

Other non-current liabilities  *

45

292

–

Income taxes payable, non-current  *

5,328

34,763

32,152

Operating lease liability, non-current  *

33,765

220,319

216,067

Total non-current liabilities

40,608

264,968

248,219

Total liabilities

139,243

908,563

857,203

EQUITY

Preferred shares

(US$ 0.003 par value;1,666,667 shares
    authorized, nil issued and outstanding as of
    December 31, 2019 and 2020) 

–

–

–

Class A O
rdinary shares

(US$0.003 par value; 66,666,667 and
    66,666,667 shares authorized, 38,858,199
    and  41,923,276 shares issued and
    outstanding as of December 31, 2019 and
    2020, respectively)

122

794

730

Class C O
rdinary shares

(US$0.003 par value; 8,333,333 and 8,333,333
    shares authorized, 4,708,415 and 4,708,415
    shares issued and outstanding as of
    December 31, 2019 and 2020, respectively)

14

90

90

Additional paid-in capital

543,306

3,545,073

3,508,745

Statutory reserve

645

4,210

20,185

Accumulated deficit

(524,007)

(3,419,146)

(3,371,815)

Accumulated other comprehensive income

1,855

12,101

6,341

Total Ambow Education Holding Ltd.’s equity

21,935

143,122

164,276

Non-controlling interests

(302)

(1,968)

(680)

Total equity

21,633

141,154

163,596

Total liabilities and equity

160,876

1,049,717

1,020,799

*  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.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

For the years ended December 31,

For the three months ended December 31,

2020

2020

2019

2020

2020

2019

US$

RMB

RMB

US$

RMB

RMB

Audited

Audited

Audited

Unaudited

Unaudited

Unaudited

NET REVENUES

 Educational program and
   services

80,571

525,727

582,706

25,690

167,629

173,339

Intelligent program and
   services

958

6,253

1,203

904

5,901

10

Total net revenues

81,529

531,980

583,909

26,594

173,530

173,349

COST OF REVENUES

 Educational program and
    services

(58,172)

(379,571)

(383,635)

(15,615)

(101,888)

(118,181)

Intelligent program and
    services

(1,214)

(7,919)

(5,259)

(855)

(5,579)

559

Total cost of revenues

(59,386)

(387,490)

(388,894)

(16,470)

(107,467)

(117,622)

GROSS PROFIT

22,143

144,490

195,015

10,124

66,063

55,727

Operating expenses:

Selling and marketing

(8,024)

(52,355)

(55,721)

(2,221)

(14,494)

(14,943)

General and administrative

(26,710)

(174,283)

(194,417)

(7,211)

(47,053)

(53,907)

Research and development

(874)

(5,703)

(3,793)

(191)

(1,247)

(2,238)

Impairment loss

(5,624)

(36,699)

(38,754)

–

–

–

Total operating expenses

(41,232)

(269,040)

(292,685)

(9,623)

(62,794)

(71,088)

OPERATING (LOSS)
INCOME

(19,089)

(124,550)

(97,670)

501

3,269

(15,361)

OTHER INCOME
   (EXPENSES)

Interest income, net

1,456

9,501

5,379

360

2,351

2,036

Foreign exchange gain (loss),
   net

150

980

23

145

949

(23)

Other (loss) income, net

(191)

(1,244)

396

(319)

(2,084)

203

Gain from derecognition of
   liabilities

602

3,926

–

602

3,926

–

Gain from deregistration of
   subsidiaries

608

3,967

1,841

–

–

–

Gain on disposal of
   subsidiaries

115

752

–

–

–

562

Gain on the bargain purchase

6,172

40,273

–

–

–

–

Gain from fair value change of
   contingent consideration
   payable

–

–

1,322

–

–

1,322

Gain on sale of investment
   available for sale

533

3,476

1,200

153

999

778

Total other income

9,445

61,631

10,161

941

6,141

4,878

(LOSS) INCOME BEFORE
   INCOME TAX AND NON-
   CONTROLLING
   INTEREST

(9,644)

(62,919)

(87,509)

1,442

9,410

(10,483)

Income tax (expense) benefit

(163)

(1,062)

(12,917)

205

1,337

(1,885)

NET (LOSS) INCOME

(9,807)

(63,981)

(100,426)

1,647

10,747

(12,368)

Less: Net loss attributable to
   non-controlling interest

(194)

(1,269)

(485)

(35)

(229)

(216)

NET (LOSS) INCOME
   ATTRIBUTABLE TO
   ORDINARY
   SHAREHOLDERS

(9,613)

(62,712)

(99,941)

1,682

10,976

(12,152)

NET (LOSS) INCOME

(9,807)

(63,981)

(100,426)

1,647

10,747

(12,368)

OTHER
   COMPREHENSIVE
   INCOME, NET OF TAX

Foreign currency translation
   adjustments

955

6,234

(2,924)

(689)

(4,497)

343

Unrealized gains on short term
   investments

  Unrealized holding gains 
   arising during period

377

2,458

2,046

144

940

808

  Less: reclassification 
   adjustment for gains
   included in net income

449

2,932

1,086

118

771

597

Other comprehensive income
   (loss)

883

5,760

(1,964)

(663)

(4,328)

554

TOTAL
   COMPREHENSIVE
   (LOSS) INCOME

(8,924)

(58,221)

(102,390)

984

6,419

(11,814)

Net (loss) income per share –
    basic and diluted

(0.22)

(1.41)

(2.30)

0.04

0.23

(0.28)

Weighted average shares used
   in calculating basic and
   diluted net (loss) income
   per share

44,372,326

44,372,326

43,505,175

46,721,812

46,721,812

43,529,884

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,
   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 stock award

12,500

0

–

–

(0)

–

–

–

–

–

Foreign currency translation
   adjustment

–

–

–

–

–

–

–

433

–

433

Unrealized gain on
   investment, net of income
   taxes

–

–

–

–

–

–

–

154

–

154

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 stock award

12,500

1

–

–

(1)

–

–

–

–

–

Foreign currency translation
   adjustment

–

–

–

–

–

–

–

7,895

–

7,895

Unrealized gain on
   investment, net of income
   taxes

–

–

–

–

–

–

–

118

–

118

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

Share-based compensation

–

–

–

–

239

–

–

–

–

239

Issuance of ordinary shares
   for restricted stock award

12,501

0

–

–

(0)

–

–

–

–

–

Foreign currency translation
   adjustment

–

–

–

–

–

–

–

2,403

–

2,403

Unrealized gain on
   investment, net of income
   taxes

–

–

–

–

–

–

–

(915)

–

(915)

Deregistration of subsidiary

–

–

–

–

–

–

–

–

(16)

(16)

Disposal of subsidiaries

–

–

–

–

(133)

(502)

502

–

–

(133)

Net loss

–

–

–

–

–

–

(84,534)

–

(332)

(84,866)

Balance as of
   September 30, 2020

38,895,700

731

4,708,415

90

3,509,330

4,210

(3,430,122)

16,429

(1,736)

98,932

Share-based compensation

–

–

–

–

228

–

–

–

–

228

Issuance of ordinary shares
   for restricted stock award

12,500

0

–

–

(0)

–

–

–

–

–

Issuance of ordinary shares
   in a registered direct
   offering

3,015,076

63

–

–

35,515

–

–

–

–

35,578

Foreign currency translation
   adjustment

–

–

–

–

–

–

–

(4,497)

–

(4,497)

Unrealized gain on
   investment, net of income
   taxes

–

–

–

–

–

–

–

169

–

169

Deregistration of subsidiary

–

–

–

–

–

–

–

–

(3)

(3)

Net income/(loss)

–

–

–

–

–

–

10,976

–

(229)

10,747

Balance as of
   December 31, 2020

41,923,276

794

4,708,415

90

3,545,073

4,210

(3,419,146)

12,101

(1,968)

141,154

Balance as of January 1,
   2019

38,756,289

794

4,708,415

90

3,507,123

20,149

(3,271,838)

8,305

(1,786)

262,771

Share-based compensation

–

–

–

–

872

–

–

–

–

872

Issuance of ordinary shares
   for restricted stock award

28,646

1

–

–

(1)

–

–

–

–

–

Foreign currency translation
   adjustment

–

–

–

–

–

–

–

(2,428)

–

(2,428)

Unrealized gain on
   investment, net of income
   taxes

–

–

–

–

–

–

–

75

–

75

Net loss

–

–

–

–

–

–

(23,756)

–

(93)

(23,849)

Balance as of March 31,
   2019

38,784,935

729

4,708,415

90

3,507,994

20,149

(3,295,594)

5,952

(1,879)

237,441

Share-based compensation

–

–

–

–

266

–

–

–

–

266

Issuance of ordinary shares
   for restricted stock award

19,097

0

–

–

(0)

–

–

–

–

–

Foreign currency translation
   adjustment

–

–

–

–

–

–

–

(746)

–

(746)

Unrealized gain on
   investment, net of income
   taxes

–

–

–

–

–

–

–

173

–

173

Addition of noncontrolling
   interests resulting from
   new subsidiaries

–

–

–

–

–

–

–

–

502

502

Net income (loss)

–

–

–

–

–

–

8,778

–

(180)

8,598

Balance as of June 30,
   2019

38,804,032

729

4,708,415

90

3,508,260

20,149

(3,286,816)

5,379

(1,557)

246,234

Share-based compensation

–

–

–

–

244

–

–

–

–

244

Foreign currency translation
   adjustment

–

–

–

–

–

–

–

(93)

–

(93)

Unrealized gain on
   investment, net of income
   taxes

–

–

–

–

–

–

–

501

–

501

Net (loss) / income

–

–

–

–

–

–

(72,811)

–

4

(72,807)

Balance as of
   September 30, 2019

38,804,032

729

4,708,415

90

3,508,504

20,149

(3,359,627)

5,787

(1,553)

174,079

Share-based compensation

–

–

–

–

242

–

–

–

–

242

Issuance of ordinary shares
   for restricted stock award

54,167

1

–

–

(1)

–

–

–

–

–

Foreign currency translation
   adjustment

–

–

–

–

–

–

–

343

–

343

Appropriation to statutory
   reserves

–

–

–

–

–

36

(36)

–

–

–

Unrealized gain on
   investment, net of income
    taxes

–

–

–

–

–

–

–

211

–

211

Deregistration of
   subsidiaries

–

–

–

–

–

–

–

–

306

306

Noncontrolling interests
   from new subsidiaries

–

–

–

–

–

–

–

–

783

783

Net loss

–

–

–

–

–

–

(12,152)

–

(216)

(12,368)

Balance as of
   December 31, 2019

38,858,199

730

4,708,415

90

3,508,745

20,185

(3,371,815)

6,341

(680)

163,596

Discussion of Segment Operations

(All amounts in thousands)

For the years ended December 31,

For the three months ended December 31,

2020

2020

2019

2020

2020

2019

US$

RMB

RMB

US$

RMB

RMB

NET REVENUES

K-12 Schools

44,680

291,539

313,747

16,210

105,773

110,533

CP&CE Programs 

36,849

240,441

270,162

10,384

67,757

62,816

Total net revenues

81,529

531,980

583,909

26,594

173,530

173,349

COST OF REVENUES

K-12 Schools

(28,909)

(188,628)

(197,064)

(10,522)

(68,656)

(68,177)

CP&CE Programs 

(30,477)

(198,862)

(191,830)

(5,948)

(38,811)

(49,445)

Total cost of revenues

(59,386)

(387,490)

(388,894)

(16,470)

(107,467)

(117,622)

GROSS PROFIT

K-12 Schools

15,771

102,911

116,683

5,688

37,117

42,356

CP&CE Programs 

6,372

41,579

78,332

4,436

28,946

13,371

Total gross profit

22,143

144,490

195,015

10,124

66,063

55,727