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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT
MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.
SUMMARY
This summary aims to give you an overview of the information contained in this
document. Since it is a summary, it does not contain all the information that may be
important to you. You should read the document in its entirety before you decide whether
to invest in the [REDACTED]. There are risks associated with any investment. Some of
the particular risks in investing in our [REDACTED] are set out in the section headed
“Risk Factors” in this document. You should read that section carefully before you decide
to invest in our [REDACTED].
OVERVIEW
Our University, namely, Guangzhou Vocational and Technical University of Science and
Technology* (廣州科技職業技術大學), is the second largest private undergraduate vocational
university in the PRC in terms of full-time student enrollment in the 2020/2021 school year,
accounting for approximately 9.0% of the market share, according to the Frost & Sullivan
Report. As of the Latest Practicable Date, our University occupied two campuses in Guangdong
Province, namely, Guangzhou Campus and Binhai Campus. For the 2020/2021 school year,
25,495 full-time students were enrolled at our University. Over the years, we have been able
to steadily enhance our reputation and increase our full-time student enrollment. For the
2017/2018, 2018/2019, 2019/2020 and 2020/2021 school year, our full-time student
enrollments were 11,201, 12,453, 18,611 and 25,495, respectively, representing a CAGR of
approximately 31.5% during the period.
Our University was approved by the MOE to provide undergraduate vocational education
(職業本科教育) in 2018, and became one of the first 15 universities that were approved by the
MOE to provide such education out of hundreds of eligible higher vocational education
institutions in the PRC in 2019. As of the Latest Practicable Date, only 27 universities were
approved by the MOE to provide undergraduate vocational education, including 22 private
universities, two of which, including our University, were located in Guangdong Province. Our
student enrollment in the 2020/2021 school year ranked second among the 22 private
universities approved by the MOE to provide undergraduate vocational education, and second
among all private higher vocational education institutions in Southern China, according to the
Frost & Sullivan Report.
We have a diverse setting of majors and courses, with a focus on engineering to track the
changing demand for professional and technical talents in various industries of the Greater Bay
Area. For the 2020/2021 school year, approximately 59.9% of the full-time students enrolled
at our University had majored in the engineering discipline. We adopted multiple measures to
promote the innovation and entrepreneurship of our students, including providing
entrepreneurship workplace, entrepreneurship guidance and financial support to our students.
–1–THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT
MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.
SUMMARY
We experienced steady growth in our revenue and profit during the Track Record Period.
Our revenue increased from RMB172.7 million for the year ended August 31, 2018 to
RMB207.4 million for the year ended August 31, 2019 and further to RMB348.4 million for
the year ended August 31, 2020, representing a CAGR of approximately 42.0% during this
period. Our net profit was RMB31.8 million, RMB30.7 million and RMB142.0 million for the
years ended August 31, 2018, 2019 and 2020, respectively. The increase of net profit from the
year ended August 31, 2019 to the year ended August 31, 2020 was mainly attributable to a
number of factors, including an increase of revenue and a decrease of finance cost. Please refer
to the section headed “Financial Information – Period to Period Comparison of Results of
Operations” in this document for details.
OUR BUSINESS MODEL
Our University mainly offers formal undergraduate program, 3+2 junior college-
undergraduate program and junior college program, in which our full-time students may obtain
the bachelor’s degree or junior college degree diploma, as the case may be, upon completing
the requisite courses and credits, passing relevant examinations and/or reaching other
graduation requirements. Please refer to the section headed “Business – Our University – Our
Formal Education Programs” in this document for details.
In addition to the above formal education programs, we offer continuing education
programs (繼續教育) on a part-time basis to the students who have already enrolled in our
formal education programs. Such programs primarily consist of (i) a two-year junior
college-undergraduate program, under which our junior college program students may apply
for such program and, after completing the junior college program studies, will be awarded a
junior college degree diploma by our University and upon successfully passing the Self-taught
Higher Education Examinations, a bachelor’s degree from the bachelor’s degree-granting
universities with which we partnered; and (ii) professional qualification certificate training,
which helps students who intend to obtain occupational skills appraisal or professional
qualification and certificates to prepare for the relevant examinations. Please refer to the
section headed “Business – Our University – Continuing Education Programs” in this
document for details.
OUR COMPETITIVE STRENGTHS
We seek to leverage our competitive strengths to solidify our market leading position and
expand our business operations. We believe the following strengths contribute to our past
success and differentiate us from our competitors: (i) a leading private undergraduate
vocational university (本科層次職業大學) in the PRC with solid reputation; (ii) advantageous
location with significant potential for development; (iii) diversified curriculums featuring the
engineering discipline to closely track the needs of industrial development and transformation
in the Greater Bay Area to cultivate high-quality, innovative, professional and technical talents;
(iv) in-depth integration of education and practical training and effective school-enterprise
collaboration that enhance the Initial Employment Rate of our graduates; (v) advanced
education and talent training model and a cradle for future entrepreneurs with innovation and
entrepreneurship; and (vi) seasoned management team and highly qualified teaching staff.
OUR BUSINESS STRATEGIES
We aim at expand our business operations, enhance our profitability, improve our
curriculums and training programs and solidify the leading position of our University in the
PRC. To achieve our goals, we plan to execute the following business strategies: (i) continue
to expand our business operation and maintain our market leading position; (ii) expand our
education network (辦學網絡) through acquisitions; (iii) optimize our pricing strategy and
enhance our profitability; and (iv) expand and upgrade our curriculums and majors to enhance
our brand recognition and reputation.
–2–THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT
MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.
SUMMARY
SUMMARY BUSINESS OPERATING DATA
We currently operate our Guangzhou Campus and Binhai Campus. The aggregate number
of full-time students enrolled at our University increased from 11,201 in the 2017/2018 school
year to 25,495 in the 2020/2021 school year. For the 2020/2021 school year, we employed an
aggregate of 1,412 teachers.
The following table sets forth the detailed full-time student enrollment information for
each educational program at each of our University Campuses for the school years indicated:
Guangzhou Campus Binhai Campus Total
School Year School Year School Year
2017/ 2018/ 2019/ 2020/ 2017/ 2018/ 2019/ 2020/ 2017/ 2018/ 2019/ 2020/
2018 2019 2020 2021 2018 2019 2020 2021 2018 2019 2020 2021
Undergraduate
program . . . – – 1,159 3,649 – – 620 579 – – 1,779 4,228
3+2 junior
college-
undergraduate
program . . – – – 2,259 – – – – – – – 2,259
Junior college
program . . . 11,201 11,139 15,184 18,112 – 1,314 1,648 896 11,201 12,453 16,832 19,008
Total . . . . . 11,201 11,139 16,343 24,020 – 1,314 2,268 1,475 11,201 12,453 18,611 25,495
The following table sets forth the information relating to the full-time student enrollment,
student capacity and school utilization rate for each of our University Campuses for the school
years indicated:
Student Enrollment Student Capacity(1)(2) School Utilization Rate(3)
School Year School Year School Year
2017/ 2018/ 2019/ 2020/ 2017/ 2018/ 2019/ 2020/ 2017/ 2018/ 2019/ 2020/
2018 2019 2020 2021(5) 2018 2019 2020 2021 2018 2019 2020 2021(4)
Guangzhou
Campus . . . 11,201 11,139 16,343 24,020 15,610 14,397 17,593 27,402 71.8% 77.4% 92.9% 87.7%(5)
Binhai
Campus . . . – 1,314 2,268 1,475 – 2,636 2,636 2,636 – 49.8% 86.0% 56.0%(5)
Total . . . . . 11,201 12,453 18,611 25,495 15,610 17,033 20,229 30,038 71.8% 73.1% 92.0% 84.9%
–3–THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT
MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.
SUMMARY
Notes:
(1) We generally require our students to reside at our student dormitories during their study, except for (i)
our students of the undergraduate program and junior college program in their last school year with us;
and (ii) our students of the 3+2 junior college-undergraduate program in their second semester of the
second school year with us. Our University is a boarding school and accordingly, we generally provide
beds for students enrolled in the undergraduate program, 3+2 junior college-undergraduate program and
junior college program on a full-time basis. The capacity of our University represents the approximate
number of students that our University’s student dormitories are designed to accommodate for the
relevant school year plus the number of students who do not reside at our University Campuses. It is
derived generally from the number of available beds in the standard rooms of the relevant student
dormitories according to our University’s internal records at the commencement of a school year in
September for the school years from 2017/2018 to 2019/2020, and in October for the 2020/2021 school
year due to the COVID-19 pandemic, and the number of students who chose not to live on campus.
(2) The student capacity of our Guangzhou Campus increased during the Track Record Period mainly
because the number of beds increased due to newly constructed student dormitories.
(3) School utilization rate of a particular school year is calculated by dividing the number of full-time
student enrollments by the student capacity in such school year.
(4) The number of full-time student enrollments of our University for the 2020/2021 school year was
determined as of October 18, 2020, which was the first day the first-year students for the 2020/2021
school year were required to report to our Guangzhou Campus as a result of a delay to the
commencement of the 2020/2021 school year in light of the COVID-19 pandemic.
(5) The school utilization rate of our Guangzhou Campus decreased in the 2020/2021 school year primarily
because we built new student dormitories in our Guangzhou Campus, which increased the student
capacity. The school utilization rate of our Binhai Campus also decreased in the 2020/2021 school year
primarily because the student enrollment at our Binhai Campus decreased in 2020/2021 school year as
most of the students were arranged to reside at our Guangzhou Campus after its student capacity
increased.
The following table sets forth the average tuition fee of our undergraduate and junior
college programs for the periods indicated:
Average Tuition Fee(1)(2)
Year ended August 31,
2018 2019 2020
RMB RMB RMB
Undergraduate program . . . . . . . . . . . . . . . . . – – 26,848
Junior college program . . . . . . . . . . . . . . . . 14,231 14,806 16,301
Notes:
(1) For illustration purposes, the average tuition fee for the years ended August 31, 2018, 2019 and 2020
are calculated by dividing the revenue generated from tuition fees for a given financial year by the
number of full-time students enrolled for the 2017/2018, 2018/2019 and 2019/2020 school years,
respectively. For the 2017/2018, 2018/2019 and 2019/2020 school years, the number of full-time
students enrolled at our University was 11,201, 12,453 and 18,611, respectively.
(2) As our University began to offer the 3+2 junior college-undergraduate program in the 2020/2021 school
year, there was no revenue generated from its tuition fees during the Track Record Period. Accordingly,
the average tuition fee in above table is not applicable to the 3+2 junior college-undergraduate program.
–4–THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT
MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.
SUMMARY
The average boarding fee of our University amounted to approximately RMB1,449,
RMB1,486 and RMB743 for the years ended August 31, 2018, 2019 and 2020, respectively.
The average boarding fee of our University decreased in 2020 mainly because we refunded the
boarding fees to our full-time students for the spring semester of the 2019/2020 school year due
to temporary closure of our University Campuses caused by the COVID-19 pandemic. Such
average tuition fee is calculated by dividing the revenue generated from boarding fees for a
given financial year by the number of full-time students enrolled, excluding the number of
full-time students who do not live on campus, for the 2017/2018, 2018/2019 and 2019/2020
school years, respectively. There were 4,792, 3,579 and 2,907 full-time students at our
University who did not live on campus for the 2017/2018, 2018/2019 and 2019/2020 school
years, respectively.
The following table sets forth a breakdown of our revenue for the periods indicated:
Year Ended August 31,
2018 2019 2020
RMB’000 % RMB’000 % RMB’000 %
Tuition fees
Undergraduate
program . . . . . . . . – – – – 47,762 13.8
Junior college
program . . . . . . . . 159,403 92.3 184,376 88.9 274,378 78.7
Subtotal . . . . . . . . . . . 159,403 92.3 184,376 88.9 322,140 92.5
Boarding fees. . . . . . . . 9,287 5.4 13,185 6.4 11,662 3.3
Other education service
fees (1) . . . . . . . . . . . 3,027 1.7 6,875 3.3 12,214 3.5
Revenue from
non-education
business (2) . . . . . . . . 1,021 0.6 3,003 1.4 2,407 0.7
Total . . . . . . . . . . . . . 172,738 100.0 207,439 100.0 348,423 100.0
Notes:
(1) Other education service fees primarily include the fees generated from continuing education programs
offered to students on a part-time basis, which consist of (i) the tuition fees generated from the two-year
junior college-undergraduate program; and (ii) fees generated from the provision of professional
qualification certificate training services.
(2) Revenue from non-education business mainly includes the revenue generated from Tongxin Printing and
Guangzhou Guangke Molding Company Limited* (廣州廣科模具有限公司), which we disposed to
Guangdong Jingxing in January 2021. See the section headed “History and Corporate Structure –
Corporate Reorganization – 4. Disposal to Guangdong Jingxing” in this document for details.
CUSTOMERS AND SUPPLIERS
Our customers primarily consist of students. For the years ended August 31, 2018, 2019
and 2020, we did not have any single customer who accounted for more than 5% of the revenue
of our Group. Our suppliers primarily consist of construction materials suppliers and
construction services providers. Purchases from our five largest suppliers amounted to
RMB88.1 million, RMB110.8 million and RMB135.5 million, respectively, for the years ended
August 31, 2018, 2019 and 2020, accounting for 64.3%, 75.0% and 52.4% of our total
purchases for the relevant periods. For the same years, purchases from our largest supplier
amounted to RMB51.1 million, RMB92.3 million, RMB54.3 million, respectively, accounting
for 37.3%, 62.4% and 21.0% of our total purchases for the relevant periods. All of our largest
suppliers during the Track Record Period were Independent Third Parties. None of our
–5–THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT
MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.
SUMMARY
Directors, their respective close associates, or any Shareholder who, to the knowledge of our
Directors, owns more than 5% of our issued capital, had any interest in any of our five largest
suppliers during the Track Record Period and up to the Latest Practicable Date.
STRUCTURED CONTRACTS
The following simplified diagram illustrates the flow of economic benefits from our
University and/or our School Sponsor to our Group stipulated under the Structured Contracts.
See the section headed “Structured Contracts – Operation of the Structured Contracts” in this
document for further details.
Our Company “ ” denotes direct legal and beneficial “- - -” denotes Structured Contracts
ownership in the equity interest
100%
(5) Entrustment of directors’ rights Directors of our
(3) Exclusive call option University
(6) Entrustment of shareholders’ rights
(7) Pledge of equity interests Registered
Shareholders
Keda WFOE 100%
(4) Entrustment of School Sponsor’s rights
(2) Provision of exclusive technical and management School Sponsor
consultancy services
100%
(1) Payment of service fees
Our University
CONTROLLING SHAREHOLDERS
Immediately after the completion of the [REDACTED] and the [REDACTED]
(assuming that the [REDACTED] is not exercised at all and without taking into account any
Shares which may be issued upon the exercise of any options which may be granted under the
Share Option Scheme), our Controlling Shareholders, namely, Mr. Feng, Ms. Lu, New Visual
and New Container, will together control the exercise of more than 30% of the voting power
at the general meetings of our Company. See the section headed “Relationship with our
Controlling Shareholders” in this document for further details.
FOREIGN INVESTMENT LAW
Conducting operations through structured contracts has been adopted by many PRC-based
companies, including us, to obtain and maintain necessary licenses and permits in the
industries that are currently subject to foreign investment restrictions or prohibitions in China.
On January 1, 2020, the Foreign Investment Law become effective and become the legal
foundation for foreign investment in the PRC. As advised by our PRC Legal Advisors, since
structured contracts are not specified as foreign investment under the Foreign Investment Law,
and if the future laws, regulations and rules do not incorporate structured contracts as a form
of foreign investment, our Structured Contracts as a whole and each of the agreements
comprising the Structured Contracts will not be affected and will continue to be legal, valid and
binding on the parties.
–6–THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT
MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.
SUMMARY
For the details of risks relating to the Foreign Investment Law, please see the section
headed “Risk Factors – Risks Relating to our Structured Contracts – Significant uncertainties
exist in relation to the interpretation and implementation of the Foreign Investment Law and
how it may impact the viability or sustainability of our current corporate structure, corporate
governance and business operations” in this document.
POTENTIAL IMPLICATIONS OF THE 2016 DECISION AND RELATED
IMPLEMENTATION RULES
The 2016 Decision was approved by the Standing Committee of the NPC on November
7, 2016, and became effective on September 1, 2017. Pursuant to the 2016 Decision, private
schools will no longer be classified as either schools, for which the school sponsor(s) require
reasonable returns or schools for which the school sponsor(s) do not require reasonable returns.
Instead, the school sponsor(s) of a private school may choose for the school to be a For-Profit
Private School or Non-Profit Private School, with the exception that the schools providing
compulsory education must be non-profit. The school sponsors of For-Profit Private Schools
are allowed to receive income from the operation of the school and the balance of running such
schools shall be handled in accordance with the provisions of the PRC Company Law and other
laws and regulations. By contrast, the school sponsors of Non-Profit Private Schools are
prohibited from receiving income from the operation of the school and the balance of running
such schools shall be only used for the operation of the schools. In addition, For-Profit Private
Schools are entitled to have discretion in determining the fees collected from the students in
accordance with the market conditions while the fee collection of Non-Profit Private Schools
shall be subject to provincial government regulation. Please refer to the sections headed
“Regulatory Overview – Regulations on Private Education in the PRC – The Law for
Promoting Private Education and the Implementation Rules for the Law for Promoting Private
Education” and “Business – Potential Implications of the 2016 Decision and Related
Implementation Rules” in this document for details.
THE MOJ DRAFT FOR COMMENTS
On April 20, 2018, the MOE issued the MOE Draft for Comments, to seek public
comments, and on August 10, 2018, the MOJ issued the MOJ Draft for Comments based on a
revised version of the MOE Draft for Comments, to seek public comments. According to
Clause 21 of the MOJ Draft for Comments, the minimum registered capital for a For-Profit
Private School providing higher education for academic qualification shall be RMB200
million. If we choose to register our University as a For-Profit Private School in the future and
if the MOJ Draft for Comments are adopted in its current form, we may need to increase the
registered capital of our University, to meet the requirements of registered capital under the
MOJ Draft for Comments. In the event that such increase in registered capital is required, we
may consider satisfying the requirements by utilizing our Group’s resources, which would be
a combination of the then available reserves of our University and/or capital injections by our
then school sponsor backed by cash available to our Group. We believe that the amount
required to increase the registered capital of our University would not materially and adversely
affect our financial position.
–7–THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT
MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.
SUMMARY
The implementation of the MOJ Draft for Comments may also have an impact on our
expansion strategy. As advised by our PRC Legal Advisors, if the MOJ Draft for Comments is
eventually adopted in the current form and our then school sponsor is considered as using
centralized school management model, we may no longer be able to acquire Non-Profit Private
Schools or control them by means of merger, franchising or through structured contracts, and
our acquisition scope may also be limited. Please refer to the section headed “Business – The
MOJ Drafts for Comments” for details.
The MOJ requested comments from the general public on the MOJ Draft for Comments,
if any, to be submitted prior to September 10, 2018. According to the Notice of the State
Council’s 2020 Legislative Work Plan published on June 26, 2020, the Implementation Rules
for the Law for Promoting Private Education of the PRC (《民辦教育促進法實施條例》) is
proposed to be amended. As of the Latest Practicable Date, we were not in a position to
accurately assess the potential impact of the election of registering our University as a
For-Profit Private School or Non-Profit Private School due to the absence of any other detailed
implementation rules that have yet to be promulgated by the relevant local governments under
the 2016 Decision for clarification on the substantial uncertainties in the interpretation and
implementation of the 2016 Decision with respect to various aspects of the operation of a
private school, in particular, regulations on the fees charged by Non-Profit Private Schools and
respective preferential tax treatments that may be enjoyed by a For-Profit Private Schools and
a non-profit school, and to provide an implementation timetable. We currently intend to register
our University as a For-Profit Private School. Please see the section headed “Risk Factors –
Risks Relating to Our Business and Our Industry – We are subject to uncertainties brought by
the 2016 Decision and the MOJ Draft for Comments, which if implemented in its current form,
may have an adverse impact on the development, operation and management of our University”
in this document.
SUMMARY COMBINED FINANCIAL INFORMATION OF OUR GROUP
The following table sets forth our summary combined financial information as of and for
the years ended August 31, 2018, 2019 and 2020. You should read this summary together with
the combined financial information set forth in the Accountants’ Report of our Group in
Appendix I to this document, including the related notes, as well as the information set forth
in the section headed “Financial Information” in this document.
–8–THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT
MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.
SUMMARY
Selected Combined Profit or Loss Data
Year ended August 31,
2018 2019 2020
RMB’000 RMB’000 RMB’000
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . 172,738 207,439 348,423
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . 53,939 72,059 189,286
Profit before tax . . . . . . . . . . . . . . . . . . . . . 33,427 32,650 145,322
Profit and total comprehensive
for the year . . . . . . . . . . . . . . . . . . . . . . 31,800 30,653 141,993
Attributable to: . . . . . . . . . . . . . . . . . . . . . .
Owners of our Company . . . . . . . . . . . . . . 31,800 30,653 141,993
Our revenue increased from RMB172.7 million for the year ended August 31, 2018 to
RMB207.4 million, primarily due to (i) an increase in the revenue generated from tuition fees
and boarding fees mainly as a result of increased student enrollments; and (ii) an increase in
other education service fees mainly due to an increase in the tuition fees generated from the
two-year junior college-undergraduate program in the 2018/2019 school year as a result of
increased student enrollment. Our revenue further increased to RMB348.4 million for the year
ended August 31, 2020, primarily due to the increase in the revenue generated by tuition fees
as a result of (i) an increase of student enrollment in the junior college program and the
enrollment of students for our new undergraduate program beginning in the 2019/2020 school
year; (ii) an increase of the tuition fee rates of our junior college program and the introduction
of undergraduate programs in the 2019/2020 school year, which commended higher tuition fee
rates compared to those of the junior college program; and (iii) an increase of RMB5.3 million
of other education service fees as the student enrollment under the two-year junior
college-undergraduate program increased in the 2019/2020 school year.
Selected Combined Statements of Financial Position Data
Year ended August 31,
2018 2019 2020
RMB’000 RMB’000 RMB’000
Total Current assets . . . . . . . . . . . . . . . . . . . 134,142 192,361 154,603
Current liabilities . . . . . . . . . . . . . . . . . . . . 382,134 513,803 448,173
Net current liabilities . . . . . . . . . . . . . . . . . . (247,992) (321,442) (293,570)
Total non-current assets . . . . . . . . . . . . . . . . 1,181,281 1,299,299 1,517,343
Net assets . . . . . . . . . . . . . . . . . . . . . . . . . 586,688 617,341 759,334
Equity attributable to owners of
our Company
Share capital . . . . . . . . . . . . . . . . . . . . . . . – – –
Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . 586,688 617,341 759,334
Total equity . . . . . . . . . . . . . . . . . . . . . . . . 586,688 617,341 759,334
–9–THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT
MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.
SUMMARY
We had net current liabilities of RMB248.0 million, RMB321.4 million and RMB293.6
million as of August 31, 2018, 2019, 2020, respectively. We had net current liabilities as of
each of these dates primarily because we used a large amount of cash to finance the expansion
of our school facilities at our University Campuses. The capital expenditures and prepayments,
which are recorded as non-current assets were, partially financed by non-current liabilities,
such as long-term interest bearing bank and other borrowings, and by current liabilities, such
as short-term interest-bearing bank and other borrowings and other payables and accruals. We
expect to improve our net current liabilities position with (i) the [REDACTED] from the
[REDACTED]; (ii) funds generated from our business operations as we expand our school
facilities to increase student enrollment; and (iii) additional long-term banking facilities to
finance our capital expenditure instead of short-term bank and other borrowings.
Selected Combined Statements of Cash Flows Data
Year Ended August 31,
2018 2019 2020
RMB’000 RMB’000 RMB’000
Profit before tax . . . . . . . . . . . . . . . . . . . . . 33,427 32,650 145,322
Operating cash flows before movement in
working capital . . . . . . . . . . . . . . . . . . . . 70,250 93,065 212,259
Changes in working capital . . . . . . . . . . . . . . (3,959) 98,293 (133,458)
Interest received and income tax paid . . . . . . . (683) (866) (1,205)
Net cash flows from operating activities . . . . . . 65,608 190,492 77,596
Net cash flows used in investing activities . . . . . (164,865) (182,225) (374,868)
Net cash flows from financing activities . . . . . . 61,854 43,755 181,696
Net increase/(decrease) in cash and
cash equivalents . . . . . . . . . . . . . . . . . . . . (37,403) 52,022 (115,576)
Cash and cash equivalents at
beginning of year . . . . . . . . . . . . . . . . . . . 159,246 121,843 173,865
Cash and cash equivalents . . . . . . . . . . . . . . . 121,843 173,865 58,289
Key Financial Ratios
The following table sets forth certain of our key financial ratios as of the dates and for
the periods indicated:
As of/Year ended August 31,
2018 2019 2020
Profitability ratios
Net profit margin . . . . . . . . . . . . . . . . . . . . 18.4% 14.8% 40.8%
Return on assets . . . . . . . . . . . . . . . . . . . . . 2.5% 2.2% 9.0%
Return on equity . . . . . . . . . . . . . . . . . . . . . 5.6% 5.1% 20.6%
– 10 –THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT
MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.
SUMMARY
As of/Year ended August 31,
2018 2019 2020
Liquidity ratio
Current ratio . . . . . . . . . . . . . . . . . . . . . . . 35.1% 37.4% 34.5%
Quick ratio . . . . . . . . . . . . . . . . . . . . . . . . 34.6% 37.1% 33.8%
Capital adequacy ratios
Gearing ratio . . . . . . . . . . . . . . . . . . . . . . . 68.5% 78.6% 91.6%
Debt to equity ratio . . . . . . . . . . . . . . . . . . . 47.8% 50.5% 84.0%
Interest coverage ratio . . . . . . . . . . . . . . . . . 8.4 2.6 9.5
Please refer to the section headed “Financial Information – Analysis of Key Financial
Ratios” in this document for further details of the key financial ratios of our Group.
[REDACTED]
We expect to incur a total of RMB[REDACTED] of [REDACTED] (assuming an
[REDACTED] of HK$[REDACTED] per [REDACTED], being the mid-point of the
indicative [REDACTED] range between HK$[REDACTED] per [REDACTED] and
HK$[REDACTED] per [REDACTED], and assuming that the [REDACTED] is not
exercised) until the completion of the [REDACTED], which accounts for approximately
[REDACTED]% of the gross [REDACTED] from the [REDACTED]. For the year ended
August 31, 2020, we incurred RMB[REDACTED] as [REDACTED], RMB[REDACTED] of
which will be capitalized upon the [REDACTED] and the remaining RMB[REDACTED] was
charged to our profit or loss for the year ended August 31, 2020. We expect to incur additional
[REDACTED] of RMB[REDACTED], of which RMB[REDACTED] is expected to be
charged to our profit or loss for the year ending August 31, 2021 and RMB[REDACTED] will
be capitalized upon the [REDACTED]. [REDACTED] represent professional fees and other
fees incurred in connection with the [REDACTED], including [REDACTED] commissions.
The [REDACTED] above are the best estimate as of the Latest Practicable Date and for
reference only and the actual amount may differ from this estimate. We expect these
[REDACTED] to have a material impact on our results of operations for the year ending
August 31, 2021.
[REDACTED] STATISTICS
Based on an [REDACTED] of Based on an [REDACTED] of
HK$[REDACTED] per HK$[REDACTED] per
[REDACTED] [REDACTED]
Market capitalization of our Shares . . . . . HK$[REDACTED] HK$[REDACTED]
[REDACTED] per Share . . . . . . . . . . . HK$[REDACTED] HK$[REDACTED]
Notes:
(1) All statistics in the table are based on the assumption that the [REDACTED] is not exercised.
– 11 –THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT
MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.
SUMMARY
(2) The calculation of market capitalization of our Shares is based on the [REDACTED] Shares expected to be
in issue immediately upon completion of the [REDACTED] assuming the [REDACTED] is not exercised.
(3) The [REDACTED] combined net tangible asset value per Share is calculated after making the adjustments set
forth in Appendix II to this document.
[REDACTED]
We estimate that we will receive [REDACTED] of approximately HK$[REDACTED]
from the [REDACTED], assuming that the [REDACTED] is not exercised, after deducting the
[REDACTED] commissions and other estimated [REDACTED] expenses payable by us and
assuming an [REDACTED] of HK$[REDACTED] per [REDACTED] (being the mid-point of
the indicative [REDACTED] range). If the [REDACTED] is exercised in full, we estimate
that our additional [REDACTED] from the [REDACTED] of these additional Shares will be
approximately HK$[REDACTED], after deducting the [REDACTED] commissions and our
estimated expenses, assuming an [REDACTED] of HK$[REDACTED] per [REDACTED].
We intend to use the [REDACTED] from the [REDACTED] for the purposes and in the
amounts as below: (i) approximately [REDACTED], or HK$[REDACTED], is expected to be
used primarily to expand our University Campuses by constructing additional teaching and
administrative facilities, recreational facilities and/or student dormitories in our University
Campuses; (ii) approximately [REDACTED], or HK$[REDACTED], is expected to be used
primarily to acquire qualified universities and/or junior colleges to expand our education
network; and (iii) approximately [REDACTED], or HK$[REDACTED], is expected to be
used to fund our working capital and general corporate purposes.
DIVIDEND POLICY
Historically we have not declared or paid any dividend to our Shareholders and there is
no assurance that dividends of any amount will be declared or be distributed in the future.
We are a holding company incorporated under the laws of the Cayman Islands. As a result,
the payment and amount of any future dividend will depend on the availability of dividends
received from our subsidiaries. The PRC laws require a foreign-invested enterprise to make up
for its accumulative losses out of its after-tax profits and allocate at least 10% of its remaining
after-tax profits, if any, to fund its statutory reserves until the aggregate amount of its statutory
reserves exceeds 50% of its registered capital. Any amount of dividend we pay will be at the
discretion of our Directors and will depend on our future operations and earnings, capital
requirements and surplus, general financial condition, contractual restrictions and other factors
that our Directors consider relevant. Any declaration and payment as well as the amount of
dividend will be subject to our constitutional documents and the Companies Act. Our
Shareholders in a general meeting may approve any declaration of dividends, which must not
exceed the amount recommended by our Board. No dividend shall be declared or payable
– 12 –THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT
MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.
SUMMARY
except out of our profits and reserves lawfully available for distribution. Our future
declarations of dividends may or may not reflect our historical declarations of dividends and
will be at the absolute discretion of the Board.
After the [REDACTED], our Board intends to recommend at the relevant shareholder
meetings an annual dividend of no less than 30.0% of our profits available for distribution
generated in each financial year. Going forward, we will re-evaluate our dividend policy in
light of our financial position and the prevailing economic climate.
RISK FACTORS
We believe that there are certain risks and uncertainties involved in our operations, some
of which are beyond our control. Major risks we face include, among others, the following: (i)
we currently own and operate a single school and virtually all of our revenue was generated
from such school during the Track Record Period; (ii) we are subject to uncertainties brought
by the 2016 Decision and the MOJ Draft for Comments, which if implemented in its current
form, may have an adverse impact on the development, operation and management of our
University; (iii) our business is heavily dependent on the market recognition of the brand and
reputation of our University and our Group; (iv) we may not be able to successfully increase
student enrollment at our University, which may hinder our ability to expand our business; (v)
our business and results of operations depend on the level of tuition fees and boarding fees we
are able to charge and our ability to maintain and raise tuition and boarding fees; and (vi) we
may not be able to successfully execute our growth strategies or effectively manage our
growth, which may hinder our ability to capitalize on new business opportunities.
PROPERTY VALUATION
According to the property valuation report prepared by Asia-Pacific Consulting and
Appraisal Limited, an independent valuer we engaged, as set forth in Appendix III to this
document, the total market value of the property interests included in such property valuation
report was approximately RMB407.4 million as of December 31, 2020. Please refer to the
section headed “Business – Properties” and Appendix III to this document for further details
on our properties. For risks associated with the assumptions made in the valuation of our
properties, please refer to the section headed “Risk Factors – Risk relating to Our Business and
Our Industry – The appraisal value of our properties may be different from their actual
realizable value and are subject to uncertainty or change” in this document.
LEGAL PROCEEDINGS AND COMPLIANCE
During the Track Record Period and up to the Latest Practicable Date, we had not been,
and were not, a party to any material legal, arbitral or administrative proceedings, and we were
not aware of any pending or threatened legal, arbitral or administrative proceedings against us
or any of our Directors, which, in the opinion of our Directors, could have a material adverse
effect on our business operations or financial condition. Our Directors also confirmed that our
Group is not engaged in any material litigation, arbitration or administrative proceeding
– 13 –THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT
MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.
SUMMARY
currently. During the Track Record Period and up to the Latest Practicable Date, we did not
commit any material non-compliance of the laws or regulations, which taken as a whole, in the
opinion of our Directors, are likely to have a material adverse effect on our business, financial
condition or results of operations. During the same periods, we also did not experience any
non-compliance of the laws or regulations, which taken as a whole, in the opinion of our
Directors, reflects negatively on the ability or tendency of our Company, our Directors or our
senior management, to operate our business in a compliant manner. According to our PRC
Legal Advisors, other than disclosed in the sections headed “Risk Factors” and “Business” in
this document, we have complied with all the relevant PRC laws and regulations in all material
respects during the Track Record Period and up to the Latest Practicable Date.
RECENT DEVELOPMENTS AND NO MATERIAL ADVERSE CHANGE
Subsequent to the Track Record Period and up to the Latest Practicable Date, our business
and operation has remained stable which was in line with our past trends and expectations. We
expect to incur [REDACTED] in connection with the [REDACTED] and the [REDACTED],
which will likely impact our net profit for the year ending August 31, 2021.
COVID-19 Pandemic
In response to the outbreak of COVID-19 pandemic, the PRC government enacted a
number of measures, including, among other things, extending the Chinese New Year holiday,
instituting mandatory quarantine, requiring residents in the PRC to remain at home and to
avoid gathering in public. To facilitate learning, our University began to offer online courses
for the 2019/2020 spring semester in March 2020 and we selected a number of suitable online
platforms to conduct teaching with reference to the characteristics of each major course offered
by our University. Since our students did not live on campus during the spring semester of the
2019/2020 school year, we were required by the local government authorities to refund a
portion of the boarding fees already collected from our students in the beginning of the
2019/2020 school year, which were initially recognized as contract liabilities. We may also
incur additional costs as we deal with the COVID-19 pandemic, such as the costs to maintain
sanitation and invest in online technology upgrade. Moreover, many of our courses have
practical training that is provided to our students in separate practical training bases or
laboratories, which cannot be duplicated online. All of the above may compromise the quality
of our education services and materially and adversely affect the outcome of teachers’
instructions. Please refer to the sections headed “Risk Factors – Risks Relating to our Business
and our Industry – Our business has been and is likely to continue to be severely interrupted
by the COVID-19 pandemic” and “Business – Our University – Impact of the COVID-19
Pandemic” in this document for details.
– 14 –THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT
MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.
SUMMARY
We resumed in-class teaching and practical training activities at our Guangzhou Campus
on June 15, 2020 for the remainder of the 2019/2020 school year. We commenced the fall
semester of the 2020/2021 school year on October 18, 2020 and October 19, 2020 at our
Guangzhou Campus and on October 10, 2020 at our Binhai Campus for the newly admitted
students to complete registration, and we commenced classes on September 14, 2020 for all
other students.
In light of the COVID-19 pandemic, the MOHRSS, MOF and SAT jointly issued the
Implementing Opinions on the Phased Reduction and Exemption of Enterprise Social Insurance
Premiums (《關於階段性減免企業社會保險費的實施意見》) on February 20, 2020, which
stipulates that, except for Hubei Province, small, medium and micro enterprises that meet the
exemption policy will be exempted from making certain social insurance premium payments
from February to June 2020, while large enterprises and other business units are entitled to the
benefit of 50% reduction in social insurance premiums they are required to contribute for their
employees from February to April 2020. In addition, on June 22, 2020, the MOHRSS, MOF and
SAT jointly issued the Notice on Issues Relating to Extending the Implementation Period of the
Phased Reduction and Exemption of Enterprise Social Insurance Premiums Policy (《關於延
長階段性減免企業社會保險費政策實施期限有關問題的通知》), which extended the
implementation period of the above-mentioned opinions to December 2020 for small, medium
and micro enterprises and June 2020 for large enterprises and other units except for Hubei
Province. Based on the foregoing, our University is entitled to the benefit of 50% reduction in
social insurance premium payments from February to June 2020. Accordingly, we have
experienced a reduction in social insurance contributions for our staff for the year ended
August 31, 2020. For details of the financial impact the COVID-19 pandemic had on of our
operations, please refer to the section headed “Financial Information – Results of Operations”
in this document.
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