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Annual Report 2019Report Annual 年度報告 Contents 2019 Annual Report Hope Education Group Co., Ltd. 希望教育集團有限公司 2019 Annual Report 年度報告 Contents Page 2 Corporate Information 4 Our Schools 5 Chairman’s Statement 7 Financial and Business Summary 10 Management Discussion and Analysis 28 Directors and Senior Management 37 Report of Directors 72 Corporate Governance Report 88 ESG Report 118 Independent Auditor’s Report 132 Notes to Financial Statements 233 Definitions CORPORATE INFORMATION BOARD OF DIRECTORS AUTHORIZED REPRESENTATIVES Executive Directors Mr. Li Tao Ms. Leung Wing Han Sharon Mr. Xu Changjun (Chairman) Mr. Wang Huiwu (Chief Executive Officer) JOINT COMPANY SECRETARIES Mr. Li Tao Mr. Huang Zhongcai Non-executive Directors Ms. Leung Wing Han Sharon Mr. Wang Degen REGISTERED OFFICE Mr. Lu Zhichao Mr. Tang Jianyuan PO Box 309, Ugland House Grand Cayman, KY1-1104 Independent Non-executive Directors Cayman Islands Mr. Zhang Jin HEADQUARTERS AND PRINCIPAL PLACE Mr. Chen Yunhua OF BUSINESS IN CHINA Dr. Gao Hao 5/F, Administrative Building Audit Committee Sichuan TOP IT Vocational Institute 2000 Xi Qu Avenue, Pidu District Mr. Zhang Jin (Chairman) Chengdu Mr. Lu Zhichao PRC Mr. Tang Jianyuan Mr. Chen Yunhua PRINCIPAL PLACE OF BUSINESS Dr. Gao Hao IN HONG KONG Nomination and Remuneration Committee 40th Floor, Sunlight Tower No. 248 Queen’s Road East Mr. Chen Yunhua (Chairman) Wanchai, Hong Kong Mr. Wang Huiwu Dr. Gao Hao LEGAL ADVISOR AS TO HONG KONG LAW Strategy and Development Committee William Ji & Co. LLP (in association with Tian Yuan Law Firm Hong Kong Office) Mr. Wang Huiwu (Chairman) Suite 702, 7th Floor Mr. Xu Changjun Two Chinachem Central Mr. Wang Degen 26 Des Voeux Road Central Mr. Lu Zhichao Central Mr. Li Tao Hong Kong 2 HOPE EDUCATION GROUP CO., LTD. • 2019 ANNUAL REPORT CORPORATE INFORMATION AUDITOR PRINCIPAL BANKERS Ernst & Young Bank of China Certified Public Accountants China Minsheng Bank 22/F, CITIC Tower Chengdu Rural Commercial Bank 1 Tim Mei Avenue Central, Hong Kong COMPANY’S WEBSITE COMPLIANCE ADVISOR www.hopeedu.com Guotai Junan Capital Limited STOCK CODE 27/F, Low Block Grand Millennium Plaza 1765 181 Queen’s Road Central Hong Kong PRINCIPAL SHARE REGISTRAR Maples Fund Services (Cayman) Limited PO Box 1093, Boundary Hall Cricket Square Grand Cayman, KY1-1102 Cayman Islands HONG KONG SHARE REGISTRAR Computershare Hong Kong Investor Services Limited Shops 1712-1716, 17th Floor, Hopewell Centre 183 Queen’s Road East Wanchai, Hong Kong HOPE EDUCATION GROUP CO., LTD. • 2019 ANNUAL REPORT 3 OUR SCHOOLS OUR SCHOOLS We have 14 Schools in 6 provinces, consisting of 5 Colleges & Universities, 7 Junior Colleges and 2 Technician Colleges Tianyi College Southwest Jiaotong University Hope college Junior College College Acquired in 2011 Built in 2009 Sichuan Vocational college of Culture & Communication Sichuan Hope Automotive Vocational college Junior College Junior College Acquired in 2014 Built in 2013 Sichuan TOP IT vocational Institute Sichuan Hope Automotive Technician College Junior College Technician College Acquired in 2017 Built in 2016 Guizhou Vocational Institute of Technology Yinchuan University of Energy Junior College University Built in 2016 Acquired in 2019 Energy Guizhou Technician College of technology ShanXi Medical University Jinci College Technician College College Built in 2019 Acquired in 2014 College of Science and technology of Guizhou University Hebi Automotive Engineering College College Junior College Acquired in 2019 Acquired in 2019 Business College of Guizhou University of Finance and Economics Suzhou TOP Institute of information & technology College Junior College Acquired in 2014 Acquired in 2019 SCHOOLS UNDER CONSTRUCTION Chong Qing Digital and Technology College JiangXi Zhangshu Medical college Gansu Baiyin Minde vocational college 4 HOPE EDUCATION GROUP CO., LTD. • 2019 ANNUAL REPORT CHAIRMAN’S STATEMENT Dear Shareholders, On behalf of the Board, I am pleased to present to the Shareholders the annual report of the Group for the year ended 31 December 2019. RESULTS OF THE COMPANY ACCOMPLISHED RAPID GROWTH IN 2019 For 2019, we recorded revenue of RMB1.33 billion and adjusted net profit of RMB0.50 billion, representing year-on-year growth of 29.3% and 57.0%, respectively. As of the year end, our student enrollment exceeded 140,000, 63% higher than the previous year. Meanwhile, we made several acquisitions, namely The College of Science and Technology of Guizhou University, Hebi Automotive Engineering Vocational College, Suzhou Top Institute of Information Technology, Yinchuan University of Energy, and Guizhou Technical College of Technology, a newly built college, adding 5 more schools in our portfolio. Currently, the Group has a total of 14 schools which are comprised of 5 undergraduate colleges, 7 higher vocational colleges, and 2 technical colleges. Simultaneously, we commenced the construction for Chongqing Digital Industry Vocational College (重慶數字產業職業學院), Jiangxi Zhangshu Vocational College of Traditional Chinese Medicine (江西樟樹中醫藥職業學院) and Gansu Mingde Vocational Education College (甘肅明德職業教育學院), laying a solid foundation for our future development. Moreover, through collaboration with North Bangkok University, we eventually established our Chinese International School, our first school in overseas. After listing, we continued to further our precision management, and our gross profit was boosted to 52% in 2019, 6.2% higher than the previous year. We paid much more attention to picking out and promotion of talents and enhancement of teaching quality. As such, we won wider recognition for our teaching quality and enrollment figures of some of our schools made a record high in 2019-2020. We also introduced information-based means to improve efficiency in management. High quality courses of our various schools have been uploaded online to materialize sharing of excellent educational resources within the Group. A NEW DECADE: MORE FRUITFUL YEARS TO COME Subsequent to the founding of our first college, Southwest Jiaotong University Hope College, in 2009, in these over ten-year-time, our Group has emerged as a leader in the private higher education industry in the PRC. Our education services cover 6 provinces and have released a great number of high-quality professional technical talents to our society. Entering 2020, it marks a new chapter for the development of Hope Education. The State has enrolled a series of policies which give vigorous support to vocational education, unveiling a very bright future for this sector. Specifically, Hope Education Group takes vocational education as the core of our business and the encouragement given to private investment by the government has rendered a much larger room for our development. Looking forward to the next decade, we shall uphold our original idea of education and training of people. We will continue to build a strong teaching team and put more efforts in practical training and upgrade of our existing schools. While we shall also expand the scale of our existing schools, more schools will also be built, so as to create conditions for sustainable development. In order to provide all-round development for students in our schools and meet their diversified needs, the Group will carry out more training on practical skills, open up the employment service market, provide a variety of education promotion channels, and improve the capability of students to obtain employment and serve the society. In early 2020, we signed an agreement for acquisition of INTI International University & Colleges in Malaysia (馬拉西亞英迪大學). After the acquisition, Hope Education will have the ability to provide special, undergraduate, master and doctorate grade of education, and will achieve the new pattern of collaborative development of domestic and overseas colleges of the Group. HOPE EDUCATION GROUP CO., LTD. • 2019 ANNUAL REPORT 5 CHAIRMAN’S STATEMENT REALIZING OUR VISION BY PRAGMATISM, DEDICATION AND DILIGENCE In 2020, Chinese higher education will enter into the popularized stage from the affordable stage. At present, China is gradually introducing a series of higher education enrollment expansion plans. As the leader of China’s private higher education, Hope Education Group has the responsibility and ability to provide more and better higher education degrees for the society. We will uphold our spirit and style of pragmatism, dedication and diligence, and contribute to the development of China’s higher education and the high-quality development of China’s social economy. APPRECIATION On behalf of the Board, I would like to extend my heartfelt gratitude to all local governments, all sectors of society and our Shareholders for their continued support for the development of Hope Education Group Co., Ltd. I would also like to thank all students and their parents. Also, I would like to express my sincere appreciation to the Board members, senior management as well as the management and teaching staff within our schools for their contribution and dedication. Hope Education Group Co., Ltd. Chairman Xu Changjun Hong Kong, 27 March 2020 6 HOPE EDUCATION GROUP CO., LTD. • 2019 ANNUAL REPORT FINANCIAL AND BUSINESS SUMMARY For the For the year ended year ended 31 December 31 December 2019 2018 Change Change (in millions (in millions (in millions of RMB) of RMB) of RMB) (percentage) Revenue 1,331.38 1,029.52 301.86 29.3% Gross profit 674.50 467.24 207.26 44.4% Adjusted gross profit1 692.85 471.67 221.18 46.9% Adjusted gross profit margin 52.0% 45.8% – 6.2% Net profit 490.03 167.34 322.69 192.8% Adjusted net profit2
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