I.Key accounting information and financial indicators
II.Discussion and Analysis of Corporate Operating
1.The postponement of recruitment examinations result in the delay of income recognition, but the trend of enrollment expansion is again confirmed.
The civil servant provincial joint examination was postponed for nearly 4 months, and other recruitment examinations were also postponed to a certain extent in the first half of this year. In the case that the agreement class accounted for a relatively high proportion, the delay of the examination resulted in a significant discrepancy between the level of revenue recognition for the reporting period and that of actual operation.During the reporting period, the Company achieved a total income of RMB 2,807,980,480.60, down 22.80% from RMB3,637,419,515.48 in the same period of last year.
Contrary to the decrease in recognized revenue, the number of students increased by 37.08% year-on-year, from 1,788,952 to 2,452,252 during the reporting period; the contract liabilities (advanced payment after deducting the VAT ) was RMB 7,222,148,935.39, an increase of 31.50% over the same period of last year.
Normally, the first half of the year is an intensive period for civil service examinations. As a result of the pandemic, the focus of the civil service examinations was delayed by 3-4 months and moved back to the second half of the year. Nevertheless, not only did the examination resume successfully, but the number of recruits also achieved a more consistent or even higher growth rate than expected. Compared with civil servants recruitment, there is much more room for recruitment in public services such as teachers, doctors and police. Therefore, the reconfirmation of expansion trend in civil servants recruitment clearly indicates the expansion trend in the recruitment of public service categories.
The key operating resources and performance indicators are shown in the table below:
2. The outbreak of Covid-19 is preventable, controllable, and predictable, and the Company has established a comprehensive response system as a countermeasure, which greatly enhanced its leading force in education and training industry.
The outbreak of the pandemic has caused great distress to the whole education industry. With the advantages of the enterprise’s platform and its excellent execution, the Company quickly created an effective response system, which not only enabled itself to go through the special period smoothly, but also took the opportunity to expand its leading force and dominance.
In response to the problem that face-to-face teaching could not be carried out smoothly within a certain period of time, the Company made every effort to explore the digital resources in the enterprise platform. With the advantageous and standardized teaching and researching ability as a lever, digital penetration is carried out on the main course products, which again strengthens the leading advantage of online and offline integrated curriculum, so that more students can obtain the convenience of online learning and the effectiveness of face-to-face learning at the same time. As a result, the number of students in the reporting period increased significantly.
After the second quarter, with the pandemic gradually put into normalized prevention and control, people all over the country return to work and production. The second round of the epicemic in Beijing, Dalian and other places has been controlled rapidly and effectively, which once again reflects the relevant judgment that the pandemic is preventable, controllable and predictable.
3. Focusing on the future long-term growth, the Company significantly expands talent reserve and branches, though moving against general trend.
Based on a clearer med-term and long-term trends in recruitment expansion and the expectation that the pandemic can be prevented and controlled, the company did not reduce the number of staff or eliminate branches but considerably expanded talent reserve and the scale of branches.
At the end of this reporting period, the total number of employees of the company was 41911, an increase of 6,702 compared with 35,209 in 2019, an increase of 19.03%. Among them, there are 18,036 teaching professionals, 4,561 more than 13,475 in 2019, an increase of 33.85%. There are 2,702 full-time R&D personnels, 651 more than 2,051 in 2019, an increase of 31.74%.
There are 1,335 outlets, 231 more than 1,104 in 2019, an increase of 20.92%.
4. The “take-off action” of the new business sector has been fruitful, and the capacity of talent reserve has been gradually released.
During the reporting period, new businesses such as postgraduate entrance examinations and medical services still remained highly active, and new businesses seldom adopted the product model of agreement classes. The revenue recognition was not affected by examination delays,thus driving the comprehensive sequence in which they were located with revenue increased by 26.04% year-over-year increase.At the same time, as delays of recruitment examinations led to a decrease in revenue recognition of the relevant sequences,the revenue share of integrated sequence increased to 34.58 percent from 21.18 percent in the same period of last year .
Around 2019, the Company completed a round of intensive investments in resources of the active new businesses, especially in key categories such as postgraduate entrance examinations to achieve the leading scale of core teaching and research resources at one time.In addition, starting from the second half of 2019, the Company has taken "take-off action" for the new business segments, investing more management resources in the new businesses from the top level.
The outbreak of the pandemic strengthened the Company's determination to expand its operations across sectors, which also verified the rationality of strengthening the development of the marketing part for recruitment examinations. As a result, the special actions have been further strengthened and deepened.It has also boosted the current performance of related categories,and more importantly, further improved the overall layout advantages, which is conducive to realizing the medium and long-term sector’s rotating growth trend.
In terms of the external situation, the academic qualification improvement sector has directly benefited from the strengthening of the employment stabilization policy since the pandemic. The Ministry of Education has increased its enrollment for further studies this year. The three expanded enrollments for postgraduates, undergraduates and second bachelors will absorb more than 1.7 million people, including about 1.4 million fresh graduates. According to relevant departments, 189,000 more graduate students will be admitted this year. It is estimated that the enrollment expansion will exceed 20%. The enrollment expansion of ordinary junior college students is 322,000. The enrollment expansion will mainly favor college applicants who will apply for majors that are promoted by national strategy or urgently needed by the society; and the enrollment expansion will take place in colleges and universities which are in the central and western regions and northeast China.