Skillful Craftsman Education Technology Ltd. (“the Company”)
(NASDAQ: EDTK), an education technology company providing
interactive online learning services, today announced its financial
results for the first six months of fiscal year 2021
ended September 30, 2020.
First Six Months of Fiscal Year 2021
Financial and Operational Highlights
All financial figures are in US Dollars unless
otherwise noted.
-
Revenue was $15.3 million, compared with $13.4 million for the same
period of last year, representing a 14% increase.
-
Gross profit was $8.5 million, compared with $8.1
million for the same period of last year, representing a 5%
increase.
-
Gross profit margin was 55%, compared with 60% for the same
period of last year.
-
Net income was $4.39 million, compared with $5.13 million for
the same period of last year. The decrease was due in part to
one-time expense related to the Company’s initial public offering
(“IPO”).
-
Basic and diluted earnings per share were $0.44, compared
with $0.57 for the same period of last year.
-
Total fee-paying members1 reached 3.28 million, compared with 2.57
million during the same period of last year, representing a 28%
increase.
1Number of fee-paying members is defined as the
total number of members that are paying fees for accessing our
platforms as of the end of the applicable period.
Mr. Xiaofeng Gao, Chairman and CEO of Skillful
Craftsman Education Technology Ltd., commented, “We are excited to
announce our strong results for the first six months of fiscal year
2021 ended September 30, 2020. Our revenue increased by 14% to
$15.3 million, from $13.4 million for the same period of last year
and our total fee-paying members increased by 28% to 3.28 million,
compared with 2.57 million during the same period of last year. We
believe the results demonstrate the resilience of our business, the
experience of our senior management team, and our commitment to
quality service. As an education technology company, we strive to
optimize our service and diversify our offerings to meet the
evolving needs of the market. We believe that the current business
climate, which encourages remote learning, will enhance our
business growth more than ever. We have been pursuing our business
strategies to expand course offerings in tune with industry trends
and national policies, integrate online and offline resources for
virtual simulation experimental training, offer professional
development-related services and develop mobile app and WeChat
interfaces for our online learning platform. We believe we are
well-positioned in the turbulent market environment to optimize our
revenue structure and strategically explore opportunities to create
more value for all of our shareholders.”
First Six Months of Fiscal Year 2021
Financial Results
All figures refer to the first six months of
fiscal year 2021 ended September 30, 2020 unless otherwise
stated
Revenue
Revenue increased by 14% to $15.3 million,
from $13.4 million for the same period of last year.
Cost of Revenue
Cost of revenue increased by 28%
to $6.83 million, from $5.35 million for the same
period of last year. The increase was mainly caused by the increase
of resource usage fee by $0.35 million and website maintenance fee
by $0.48 million. In addition, the depreciation expenses of server
hardware also increased by $0.6 million.
Gross Profit and Gross
Margin
Gross profit increased by 5% to $8.5
million, from $8.1 million for the same period of last
year.
Gross margin decreased by 5 percentage points to
55%, from 60% for the same period of last year.
Operating Expenses
Operating expenses increased by 90%
to $2.38 million, from $1.25 million for the same
period of last year.
Sales and marketing expenses increased by 13%
to $0.88 million, from $0.78 million for the same
period of last year. This increase was mainly due to
Telecommunications service fees, which increased by $0.21 million
as the Company expanded their network and service systems.
General and administrative expenses increased by
217% to $1.50 million, from $0.47 million for
the same period of last year. This increase was primarily caused by
higher employee compensation and welfare expenses and particularly
an increase of $0.54 million in salary and fee expenses of
independent directors, senior executives and employees related to
the IPO. The service fee also increased by $0.27 million due to the
success of IPO. The Company also recorded research and development
expenses in general and administrative expenses of $0.24 million,
compared with $0.10 million for the same period of last year.
Income Before Tax
Income before tax expense decreased by 11% to
$6.14 million, from $6.86 million for the same period of last
year.
Net Income
Net income decreased by 14% to $4.39
million, from $5.13 million for the same period of last
year.
Basic and diluted earnings per share
were $0.44, compared with $0.57 for the same period
of last year.
Cash and Cash Equivalents
As of September 30, 2020, the Company had
cash and cash equivalents of $17.5 million, compared
with $11.9 million as of March 31, 2020.
Cash Flow
Net cash generated from operating activities
was $6.58 million, compared with $6.78 million for the
same period of last year.
Net cash used in investing activities
was $14.24 million, compared with $5.73 million for
the same period of last year.
Net cash generated from financing activities
was $13.24 million, compared with nil for the same
period of last year.
About Skillful Craftsman
Skillful Craftsman is an education technology
company that provides interactive online vocational training and
virtual simulation experimental training courses. The Company began
operations in Wuxi, China in 2013 and is a key supporter for China
education reform and development for labor employment. As of March
31, 2020, the Company had 68.5 million total registered members, of
which 3.1 million are fee-paying members. For more information,
please visit: ir.kingwayup.com
Safe Harbor Statement
This report contains “forward-looking
statements” for purposes of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 that represent our
beliefs, projections and predictions about future events. All
statements other than statements of historical fact are
“forward-looking statements,” including any projections of
earnings, revenue or other financial items, any statements of the
plans, strategies and objectives of management for future
operations, any statements concerning proposed new projects or
other developments, any statements regarding future economic
conditions or performance, any statements of management’s beliefs,
goals, strategies, intentions and objectives, and any statements of
assumptions underlying any of the foregoing. Words such as “may”,
“will”, “should”, “could”, “would”, “predicts”, “potential”,
“continue”, “expects”, “anticipates”, “future”, “intends”, “plans”,
“believes”, “estimates” and similar expressions, as well as
statements in the future tense, identify forward-looking
statements.
Forward-looking statements are based on
information available at the time those statements are made and
management’s belief as of that time with respect to future events.
These statements are necessarily subjective and involve known and
unknown risks, uncertainties and other important factors that could
cause our actual results, performance or achievements, or industry
results, to differ materially from any future results, performance
or achievements described in or implied by such statements. Such
risks, uncertainties, and other factors include, but are not
limited to, our ability to improve launch and leverage new
technologies and cooperative relationships or anticipate market
demand in a timely or cost-effective manner, and those factors
discussed under the headings “Risk Factors”, “Operating and
Financial Review and Prospects,” and elsewhere in our Annual
Report on Form 20-F. Forward-looking statements should not be read
as a guarantee of future performance or results, and will not
necessarily be accurate indications of whether, or the times by
which, our performance or results may be achieved. Actual results
may differ materially from expected results described in our
forward-looking statements, including with respect to correct
measurement and identification of factors affecting our business or
the extent of their likely impact, and the accuracy and
completeness of the publicly available information with respect to
the factors upon which our business strategy is based or the
success of our business. The Company disclaims any intention to,
and undertakes no obligation to, update or revise any
forward-looking statement.
For investor and media enquiries, please
contact:
Skillful CraftsmanInvestor
Relations
DepartmentEmail: iredtk@kingwayedu.cn
Ascent Investor Relations
LLCTina XiaoTel: +1
917-609-0333Email: tina.xiao@ascent-ir.com
SKILLFUL CRAFTSMAN EDUCATION TECHNOLOGY
LIMITEDCONSOLIDATED BALANCE SHEETS
|
|
|
As of |
|
|
|
September 30, 2020 |
|
|
March 31, 2020 |
|
|
|
(Unaudited) |
|
|
(Audited) |
ASSETS |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
17,450,639 |
|
|
$ |
11,931,714 |
|
Accounts receivable, net |
|
|
103,069 |
|
|
|
78,785 |
|
Prepayments and other current assets |
|
|
1,119,333 |
|
|
|
1,963,102 |
|
Other investments |
|
|
8,000,000 |
|
|
|
- |
|
Total current
assets |
|
|
26,673,041 |
|
|
|
13,973,601 |
|
Non-current
assets |
|
|
|
|
|
|
Property and equipment, net |
|
|
15,212,700 |
|
|
|
12,324,125 |
|
Intangible assets, net |
|
|
19,146,875 |
|
|
|
19,294,740 |
|
Long-term prepayments and other non-current assets |
|
|
68,526 |
|
|
|
97,035 |
|
Total non-current assets |
|
|
34,428,101 |
|
|
|
31,715,900 |
|
TOTAL
ASSETS |
|
$ |
61,101,142 |
|
|
$ |
45,689,501 |
|
|
Current
liabilities |
|
|
|
|
|
|
Accounts payable |
|
$ |
99,264 |
|
|
$ |
249,086 |
|
Taxes payable |
|
|
330,189 |
|
|
|
543,600 |
|
Amounts due to a related party |
|
|
509,012 |
|
|
|
- |
|
Other payables |
|
|
996,436 |
|
|
|
227,525 |
|
Deferred revenue-current |
|
|
12,250,372 |
|
|
|
16,736,365 |
|
Total current
liabilities |
|
|
14,185,273 |
|
|
|
17,756,576 |
|
Non-current
liabilities |
|
|
|
|
|
|
Deferred revenue-non-current |
|
|
1,597,510 |
|
|
|
50,877 |
|
Total non-current
liabilities |
|
|
1,597,510 |
|
|
|
50,877 |
|
TOTAL
LIABILITIES |
|
$ |
15,782,783 |
|
|
$ |
17,807,453 |
|
COMMITMENTS AND
CONTIGENCIES |
|
|
|
|
|
- |
|
SHAREHOLDERS’
EQUITY: |
|
|
|
|
|
|
Ordinary shares, 500,000,000 shares authorized; par value $0.0002
per share; 12,000,000 and 9,000,000 shares issued and outstanding
as of 30 September, 2020 and 31 March, 2020, respectively |
|
|
2,400 |
|
|
|
1,800 |
|
Additional paid-in capital |
|
|
13,415,987 |
|
|
|
1,619,774 |
|
Statutory reserve |
|
|
745,590 |
|
|
|
745,590 |
|
Retained earnings |
|
|
31,313,865 |
|
|
|
26,921,172 |
|
Accumulated other component of
equity: |
|
|
|
|
|
|
Foreign currency translation reserve |
|
|
(159,483 |
) |
|
|
(1,406,288 |
) |
TOTAL SHAREHOLDERS’
EQUITY |
|
|
45,318,359 |
|
|
|
27,882,048 |
|
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY |
|
$ |
61,101,142 |
|
|
$ |
45,689,501 |
|
SKILLFUL CRAFTSMAN EDUCATION TECHNOLOGY
LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME
|
|
|
For the six months
endedSeptember, |
|
|
|
2020 |
|
|
2019 |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
Revenue |
|
$ |
15,313,780 |
|
|
$ |
13,420,883 |
|
Cost of
revenue |
|
|
(6,826,879 |
) |
|
|
(5,350,363 |
) |
Gross
profit |
|
|
8,486,901 |
|
|
|
8,070,520 |
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
Selling and marketing expenses |
|
|
(879,812 |
) |
|
|
(776,903 |
) |
General and administrative expenses |
|
|
(1,499,774 |
) |
|
|
(473,802 |
) |
Total operating
expenses |
|
|
(2,379,586 |
) |
|
|
(1,250,705 |
) |
Income from
operations |
|
|
6,107,315 |
|
|
|
6,819,815 |
|
Interest income |
|
|
30,292 |
|
|
|
41,692 |
|
Others, net |
|
|
(909 |
) |
|
|
(3,345 |
) |
Income before income
taxes |
|
|
6,136,698 |
|
|
|
6,858,162 |
|
Income tax expense |
|
|
(1,744,005 |
) |
|
|
(1,724,099 |
) |
Net
income |
|
$ |
4,392,693 |
|
|
$ |
5,134,063 |
|
|
|
|
|
|
|
|
Other comprehensive
income/(loss): |
|
|
|
|
|
|
Foreign currency translation adjustment |
|
|
1,246,805 |
|
|
|
(1,020,318 |
) |
Total comprehensive
income |
|
|
5,639,498 |
|
|
|
4,113,745 |
|
Net earnings per ordinary share, basic and diluted |
|
|
0.44 |
|
|
0.57 |
Weighted average number of
ordinary shares, basic and diluted |
|
|
10,000,000 |
|
|
9,000,000 |
SKILLFUL CRAFTSMAN EDUCATION TECHNOLOGY
LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
For the six months ended September 30, |
|
2020 |
|
2019 |
Cash flows from
operating activities |
|
|
|
|
|
Net income |
$ |
4,392,693 |
|
|
$ |
5,134,063 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
|
|
Depreciation of property and equipment |
|
1,657,961 |
|
|
|
1,069,520 |
|
Amortization of intangible assets |
|
3,157,605 |
|
|
|
3,104,576 |
|
Loss on disposals of property and equipment |
|
- |
|
|
|
7,002 |
|
Changes in operating assets
and liabilities: |
|
|
|
|
|
Accounts receivables |
|
(24,284 |
) |
|
|
365,396 |
|
Prepayments and other current assets |
|
(602,972 |
) |
|
|
(388,049 |
) |
Long-term prepayments and other non-current assets |
|
28,509 |
|
|
|
(291,606 |
) |
Accounts payable |
|
(149,822 |
) |
|
|
18,224 |
|
Amounts due to a related party |
|
509,012 |
|
|
|
- |
|
Deferred revenue |
|
(2,939,360 |
) |
|
|
(1,732,645 |
) |
Other payables |
|
768,911 |
|
|
|
187,950 |
|
Taxes payable |
|
(213,411 |
) |
|
|
(692,252 |
) |
Net cash generated
from operating activities |
|
6,584,842 |
|
|
|
6,782,179 |
|
|
|
|
|
|
|
Cash flows from
investing activities |
|
|
|
|
|
Purchases of property and equipment |
|
(3,988,249 |
) |
|
|
(1,682,416 |
) |
Purchases of intangible assets |
|
(2,254,100 |
) |
|
|
(4,043,574 |
) |
Purchases of other investments |
|
(8,000,000 |
) |
|
|
- |
|
Net cash used in
investing activities |
$ |
(14,242,349 |
) |
|
$ |
(5,725,990 |
) |
|
|
|
|
|
|
Cash flows from
financing activities |
|
|
|
|
|
Proceeds from IPO net off IPO
expenses |
|
13,243,554 |
|
|
|
- |
|
Net cash flows
generated from financing activities |
|
13,243,554 |
|
|
|
- |
|
|
|
|
|
|
|
Effects of foreign currency
translation |
|
(67,122 |
) |
|
|
539,066 |
|
|
|
|
|
|
|
Net increase in cash and cash
equivalents |
|
5,518,925 |
|
|
|
1,595,255 |
|
Cash and cash equivalents at
beginning of period |
|
11,931,714 |
|
|
|
10,362,283 |
|
Cash and cash
equivalents at end of period |
$ |
17,450,639 |
|
|
$ |
11,957,538 |
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information: |
|
|
|
|
|
Cash paid for income
taxes |
$ |
1,974,038 |
|
|
|
2,327,558 |
|
|
|
|
|
|
|
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