China Liberal Education Holdings Limited Reports Financial Results for the First Six Months of Fiscal Year 2024
PR Newswire
BEIJING, Oct. 11, 2024
BEIJING, Oct. 11, 2024 /PRNewswire/ -- China Liberal Education Holdings Limited (Nasdaq: CLEU) ("China Liberal," the "Company," "we," "our," or "us"), a China-based company that provides technological consulting services for smart campus solutions and other educational services, today announced its unaudited financial results for the first six months of fiscal year 2024 ended June 30, 2024.
Ms. Ngai Ngai Lam, Chairwoman and CEO of China Liberal, commented, "Amidst the challenging economic and market conditions, our revenue experienced a decline in the first half of fiscal year 2024, primarily due to the conclusion of two technological consulting projects for smart campus solutions. Despite these challenges, we successfully maintained a relatively stable revenue stream from our core tailored job readiness training services, which remains the backbone of our income. We are also pleased to report a resurgence in revenue from the sales of textbooks and course materials. Additionally, we sustained a strong gross margin of 84.8%, a significant surge from 63.2% in the same period of last year, driven by our established business strategies and targeted restructuring efforts. Furthermore, our total cash position grew significantly to $84.15 million as of June 30, 2024, a notable increase from $20.34 million as of December 31, 2023. Those figures are a testament to the resilience of our business model and operations, and we expect to navigate short-term headwinds and resume our long-term growth trajectory. Looking forward, we remain confident in our business model and committed to translating our efforts into sustained growth and creating value for our shareholders."
First Six Months of Fiscal Year 2024 Financial Summary
For the Six Months Ended June 30,
-------------------------------- -------------------------------------
($ millions, except for
percentages or per share data) 2024 2023 %Change
-------------------------------- ---------- ---------- -------------
Revenue 0.89 1.36 (34.8 %)
--------------------------------- ---------- ---------- -------------
Gross profit 0.75 0.86 (12.6 %)
--------------------------------- ---------- ---------- -------------
Gross margin 84.8 % 63.2 % 21.5pp
--------------------------------- ---------- ---------- -------------
Loss from operations (4.56) (0.74) 515.7 %
--------------------------------- ---------- ---------- -------------
Net (loss) income (4.72) 0.38 NM
--------------------------------- ---------- ---------- -------------
Basic and diluted (loss) earnings
per share (2.04) 0.18 NM
--------------------------------- ---------- ---------- -------------
Note: pp represents percentage points; NM represents not meaningful.
-- Revenue was $0.89 million for the six months ended June 30, 2024,
compared to $1.36 million for the same period of last year.
-- Gross profit was $0.75 million for the six months ended June 30, 2024,
compared to $0.86 million for the same period of last year.
-- Gross margin was 84.8% for the six months ended June 30, 2024, increased
by 21.5% from 63.2% for the same period of last year.
-- Loss from operations was $4.56 million for the six months ended June 30,
2024, compared to income from operations of $0.74 million for the same
period of last year.
-- Net loss was $4.72 million for the six months ended June 30, 2024,
compared to net income of $0.38 million for the same period of last year.
-- Basic and diluted loss per share were $2.04 for the six months ended June
30, 2024, compared to basic and diluted earnings per share of $0.18 for
the same period of last year.
First Six Months of Fiscal Year 2024 Financial Results
Revenue
Revenue decreased by $0.5 million, or 34.8%, to $0.89 million for the six months ended June 30, 2024, from $1.36 million for the same period of last year. The decrease in revenue was mainly attributable to the decrease in revenue from technological consulting services for smart campus solutions in the first six months ended June 30, 2024.
Revenue from tailored job readiness training services decreased by $83,297, or 8.8% to $0.86 million for the six months ended June 30, 2024, from $0.94 million for the same period of last year, which was mainly attributed to the loss of certain customers, which reduced revenue contribution from tailored job readiness training services.
Revenue from providing smart campus related technological consulting service decreased by $0.4 million, or 97.4%, to $0.01 million for the six months ended June 30, 2024 from $0.41 million for the same period of last year. The decrease was primarily because two projects were completed for the six months ended June 30, 2024 as compared to six completed projects for the same period of last year. Also, the size and the scope of the projects carried out in the six months ended June 30, 2024 were smaller compared those completed in the six months ended June 30, 2023, and the service fees charged by the Company decreased accordingly.
In order to ensure the quality of course content delivered to students and to meet international standards, the Company developed, edited, and published 12 English textbooks and course materials with an emphasis on language training, and distributed these materials to students enrolled with Fuzhou Melbourne Polytechnic, a three-year college in China ("FMP") and Strait College of Minjiang University, a four-year university in China ("Strait College"). In 2021, the Company engaged a publisher to handle the printing of these textbooks and course materials. Under the Company arrangement with the publisher, the Company charge 8% royalties for each book and the Company do not receive royalties for the first 5,100 copies of each book. Revenue from textbooks and course material sales increased by $13,476, or 100.00%, to $13,476 for the six months ended June 30, 2024 from nil for the same period of last year. The increase was mainly attributed to the increased demand for textbooks and course materials. According to the Company's agreement with the publisher, the Company will be able to receive a fee only when the number of copies printed by the publisher exceed a pre-determined volume.
Cost of Revenues
Cost of revenue decreased by $0.36 million, or 73.00%, to $0.14 million for the six months ended June 30, 2024 from $0.50 million for the same period of last year, primarily due to reduced average size and scope of the technology consulting projects completed in the six months ended June 30, 2024. Accordingly, costs associated with hardware and components installation in Technology Consulting Services for Smart Campus related projects decreased significantly when comparing the six months ended June 30, 2024 to the six months ended June 30, 2023. Cost of revenue accounted for 15.2% and 36.8% of total revenue for the six months ended June 30, 2024 and 2023, respectively.
Gross Profit
Gross profit decreased by $0.1 million, or 12.6%, to $0.75 million for the six months ended June 30, 2024 from $0.86 million for the same period of last year, while gross profit margin increased by 21.5% to 84.8% for the six months ended June 30, 2024 from 63.2% for the same period of last year. The decrease in gross profit was primarily due to a decrease in gross profit contribution from smart campus related technological consulting services, which mainly resulted from the decrease in average project size and average gross profit per project for the six months ended June 30, 2024 compared to the same period of last year.
Allowance for Doubtful Accounts
The Company maintain allowance for doubtful accounts for estimated losses. The Company review accounts receivable on a periodic basis and make general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company consider various factors, including the age of the balance, customer's payment history, its current credit-worthiness and current economic trends. Accounts are written off after efforts at collection prove unsuccessful. Allowance for doubtful accounts was $2.56 million and $24,554, for the six months ended June 30, 2024 and 2023, respectively. The allowance for doubtful accounts for the six months ended June 30, 2024 was mainly related to working capital provided for the two colleges, FMP and Strait College, which were expected to have collectability issues and allowance for doubtful accounts were made for the estimated losses.
Operating Expenses
Selling expenses decreased by $0.07 million, or 59.8%, to $0.04 million for the six months ended June 30, 2024 from $0.11 million for the same period of last year. The decrease in selling expenses was primarily attributable to the decrease in salaries and related costs of marketing staff which caused by reduction of three staff in the marketing department.
General and administrative expenses increased by $1.2 million, or 84.5%, to $2.7 million for the six months ended June 30, 2024 from $1.5 million for the same period of last year, primarily due to share based compensation expense of $1.2 million incurred in the six months ended June 30, 2024.
Interest Expenses
Interest expenses increased by $0.04 million, or 36.3%, to $0.16 million for the six months ended June 30, 2024 from $0.12 million for the same period of last year, primarily due to interest expenses on short-term bank loans, loans from third parties and loans from a related party.
Government Subsidy Income
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