China Distance Education Holdings Limited Reports Financial Results for the First Quarter of Fiscal 2013

 China Distance Education Holdings Limited Reports Financial Results for the
                         First Quarter of Fiscal 2013

1Q13 Net Revenue Up 31.3% to $13.0 Million

1Q13 Net Income Up to $1.5 Million

PR Newswire

BEIJING, Feb. 26, 2013



BEIJING, Feb. 26, 2013 /PRNewswire/ -- China Distance Education Holdings
Limited (NYSE: DL) ("CDEL", or the "Company"), a leading provider of online
education in China focusing on professional education, today announced
financial results for the first quarter of fiscal 2013 ended December 31,
2012.

First Quarter Fiscal 2013 Financial Highlights

  oTotal course enrollments reached 898,000, an increase of 8.4% from the
    first quarter of fiscal 2012.
  oNet Revenue increased by 31.3% to $13.0 million from $9.9 million in the
    prior year period, exceeding the top-end of the guidance range.
  oGross profit from continuing operations increased by 30.6% to $6.9 million
    from $5.3 million in the prior year period. Gross margin was stable at
    53.0%, compared to 53.3% in the prior year period.
  oOperating income from continuing operations increased 615.5% to $1.7
    million from $232 thousand in the prior year period.
  oNet income was $1.5 million, compared to $367 thousand in the prior year
    period, an increase of 302.2%.
  oBasic and diluted net income per American Depositary Share ("ADS") was
    $0.044, compared to $0.011 for the first quarter of fiscal 2012. Each ADS
    represents four ordinary shares.

"We are very pleased to report another strong quarter highlighted by
continuingly robust growth in net revenue, income and non-APQE course
enrollments," stated Mr. Zhengdong Zhu, Chairman and CEO of CDEL. "Our
high-quality course offerings and innovative learning systems keep attracting
new and returning students and generate continuing revenue growth. Such
performance reflects the enduring market response to our high quality courses
and services as well as the outstanding user experience offered by our online
learning platform, including our mobile learning system."

"Along with our strong revenue growth experienced in the first quarter, we
also expect delayed APQE exams this year to push a disproportional amount of
our revenue and income from second fiscal quarter to the third and fourth
fiscal quarters of fiscal 2013. Nevertheless, we expect to see robust
enrollments and revenue growth on a yearly basis as we stay focused on further
penetrating the market in our core segments that encompass accounting, health
care and construction engineering test-preparation, career development and
continuous education courses. We also plan to simultaneously expand into the
much larger general online education market through our open-platform
strategy."

Ms. Ping Wei, Chief Financial Officer of CDEL, added, "Growth very much
characterized the first quarter of fiscal 2013, with net revenue increasing by
31.3% to $13.0 million and net income surging three times to $1.5 million as
we continued leveraging on our highly scalable online learning platform. We
remain confident in the outlook for market demand and our ability to meet that
demand. Coupled with prudent cost and expense controls, we are very confident
that while we expect lower revenue growth for next fiscal quarter due to the
delayed timing of APQE enrollments, our top and bottom line for fiscal 2013 is
expected to maintain the growth momentum we have experienced since fiscal
2012."

First Quarter Fiscal 2013 Financial Results

Net Revenue. Total net revenue from continuing operations for the first
quarter of fiscal 2013 was $13.0 million, representing a year-over-year
increase of 31.3% from $9.9 million in the first quarter of fiscal 2012. Net
revenue from online education services, books and reference materials, and
other sources contributed to 82.9%, 5.9% and 11.2% of total net revenue,
respectively.

Net revenue from online education services was $10.8 million, an increase of
39.2% from $7.7 million in the prior year period. The increase mainly resulted
from higher revenue in the Company's accounting test preparation courses,
healthcare and construction engineering courses, and the recognition of
delayed APQE and CPA courses revenue relating to the delayed exams in 2012.
Such increase was partially offset by a decrease in revenue of the Company's
accounting continuing education courses due to the reduced pricing as the
Company aggressively expands the market.

Net revenue from books and reference materials for the first quarter of fiscal
2013 was $761 thousand, a decrease of 20.5% from $957 thousand in the first
quarter of fiscal 2012.

Net revenue from other sources for the first quarter of fiscal 2013 was $1.5
million, an increase of 21.4% from $1.2 million in the prior year period. The
increase was mainly a result of increased revenue in offline business start-up
training courses provided by Zhengbao Yucai and other offline supplementary
training courses.

Cost of Sales. Cost of sales from continuing operations for the first quarter
of fiscal 2013 was $6.1 million, representing an increase of 32.1% from $4.6
million for the first quarter of fiscal 2012. The increase in cost of sales
was mainly due to increased salaries and related expenses, lecturer fees, and
expenses incurred by the Company's offline business start-up training courses
and other supplementary training courses. Such increase was partially offset
by a decrease in cost of book and reference materials.

Gross Profit. Gross profit from continuing operations for the first quarter of
fiscal 2013 was $6.9 million, an increase of 30.6% from $5.3 million in the
prior year period. Gross margin was stable at 53.0%, compared to 53.3% in the
first quarter of fiscal 2012.

Operating expenses. Total operating expenses from continuing operations for
the first quarter of fiscal 2013 were $5.2 million, a 3.7% increase from $5.0
million in the prior year period.

Selling expenses from continuing operations amounted to $2.8 million for the
first quarter of fiscal 2013, a slight decrease of 3.1% from $2.9 million in
the prior year period, primarily as a result of decreases in advertising and
promotional activities, and commission to the Company's distributors. Such
decrease was partially offset by an increase in salaries and related expenses.

General and administrative expenses from continuing operations were $2.5
million in the first quarter of fiscal 2013, an increase of 12.7% from $2.2
million in the prior year period, primarily due to increases in salaries and
related expenses, professional fees, and share-based compensation expenses.

Income Tax Expense. Income tax expenses for the first quarter of fiscal 2013
were $416 thousand, compared to $86 thousand in the prior year period. The
increase in income tax expenses was primarily due to the increase of taxable
income.

Net Income from continuing operations. Net income from continuing operations
was $1.5 million for the first quarter of fiscal 2013, compared to $373
thousand in the prior year period.

Net Income. Net income was $1.5 million for the first quarter of fiscal 2013,
compared to $367 thousand in the prior year period. Net income margin was
11.4%, compared to 3.7% in the prior year period.

Operating Cash Flow. Net operating cash inflow was $5.3 million for the first
quarter of fiscal 2013, compared to $5.0 million in the prior year period. The
inflow was primarily the result of net income before non-cash items generated
in the quarter, increase in accrued expenses and other liabilities, and
deferred revenue. Such inflow was partially offset by the increase in
prepayment and other current assets, other non-current assets, and the
decrease in income tax payable and refundable fees.

Cash and Cash Equivalents, Term Deposits and Restricted Cash. Cash and cash
equivalents, term deposits and restricted cash as of December 31, 2012
amounted to $46.2 million as compared to $57.7 million as of September 30,
2012 primarily due to a dividend payment of $16.1 million and capital
expenditures of $1.1 million, partially offset by $5.3 million of cash flow
generated from operating activities in the quarter.

Outlook

For the 2013 fiscal year, the Company estimates total net revenue from
continuing operations in the range of $63.5-$66.5 million, representing
year-over-year growth of approximately 21.2%-27.6%.

For the second quarter of fiscal 2013, after taking into account the impact of
the delayed APQE exams this year, the Company estimates total net revenue from
continuing operations in the range of $12.9-$13.5 million, representing
year-over-year growth of approximately 5%-10%. Excluding APQE revenue
contributions of $3.4 million in 2Q12 and an estimated $1.9 million for 2Q13,
estimated revenue other than APQE is expected to grow 24%-30% for 2Q13.

These forecasts reflect the Company's current and preliminary view, which are
subject to change.

Conference Call

The Company will host a conference call at 8:00 a.m. Eastern Time on February
27, 2013 to discuss its first quarter fiscal 2013 financial results and recent
development. The conference call may be accessed by calling 1-866-519-4004
(US), 800-819-0121 (China Landline), 400-620-8038 (China Mobile), 800-930-346
(Hong Kong), or 0-808-234-6646 (UK). The pass code is CDEL or DL.

A telephone replay will be available shortly after the call until March 7,
2013 at 1-855-452-5696 (US), 800-870-0205 (China Landline), 400-120-0932
(China Mobile), 800-963-117 (Hong Kong), or 0-808-234-0072 (UK). The Pass code
is 97213474.

A live and archived webcast of the conference call will be available at
http://ir.cdeledu.com.

About China Distance Education Holdings Limited

China Distance Education Holdings Limited is a leading provider of online
education in China focusing on professional education. The online courses
offered by the Company are designed to help professionals and other course
participants obtain and maintain the skills, licenses and certifications
necessary to pursue careers in China in the areas of accounting, law,
healthcare, construction engineering, and other industries. The Company also
offers online test preparation courses to self-taught learners pursuing higher
education diplomas or degrees and to secondary school and college students
preparing for various academic and entrance exams. In addition, the Company
offers online foreign language courses and offline business start-up training
courses. For further information please visit http://ir.cdeledu.com.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are
made under the "safe harbor" provisions of the U.S. Private Securities
Litigation Reform Act of 1995. These forward-looking statements can be
identified by terminology such as "will," "may," "should," "potential,"
"continue," "expect," "anticipate," "future," "intend," "plan," "believe,"
"is/are likely to," "estimate" and similar statements. Among other things, the
outlook for the fiscal year 2013, the second quarter of the fiscal year 2013
and quotations from management in this announcement, as well as the Company's
strategic and operational plans (including the Company's open-platform
strategy), contain forward-looking statements. The Company may also make
written or oral forward-looking statements in its periodic reports to the SEC,
in its annual report to shareholders, in press releases and other written
materials and in oral statements made by its officers, directors or employees
to third parties. Statements that are not historical facts, including
statements about the Company's beliefs and expectations, are forward-looking
statements. Forward-looking statements involve inherent risks and
uncertainties. A number of factors could cause actual results to differ
materially from those contained in any forward-looking statement, including
but not limited to the following: our goals and growth strategies; our future
prospects and market acceptance of our online and offline courses and other
products and services; our future business development and results of
operations; projected revenues, profits, earnings and other estimated
financial information; projected enrollment numbers; our plans to expand and
enhance our online and offline courses and other products and services;
competition in the education and test preparation markets; and Chinese laws,
regulations and policies, including those applicable to the Internet and
Internet content providers, the education and telecommunications industries,
mergers and acquisitions, taxation and foreign exchange.

Further information regarding these and other risks is included in the
Company's annual report on Form 20-F and other documents filed with the SEC.
The Company does not undertake any obligation to update any forward-looking
statement, except as required under applicable law. All information provided
in this press release and in the attachments is as of the date of this press
release.

Statement Regarding Unaudited Financial Information

The unaudited financial information set forth above is preliminary and subject
to adjustments. Adjustments to the financial statements may be identified when
audit work is performed for the year-end audit, which could result in
significant differences from this preliminary unaudited financial information.

Contacts:

China Distance Education Holdings Limited Investor Relations:

Lingling Kong, IR manager                 Bill Zima

Tel: +86-10-8231-9999 ext1805             ICR Inc.

Email: IR@cdeledu.com                     Tel: +1 646-328-2550

                                         

China Distance Education Holdings Limited
Consolidated Balance Sheets
(in thousands of US Dollars, except number of shares and per share data)
                                        September 30, 2012  December31,2012
                                        (Audited)           (Unaudited)
Assets:
Current assets:
 Cash and cash equivalents              49,723              38,160
 Term deposit                           7,956               8,024
 Restricted cash                        6                   6
 Accounts receivable, net of allowance
 for doubtful accounts of US$2,092 and  4,081               3,925
 US$2,105 as of September 30, 2012 and
 December 31, 2012, respectively
 Inventories                            658                 499
 Prepayment and other current assets    3,573               4,708
 Deferred tax assets, current portion   1,856               1,895
 Deferred cost                          1,795               1,615
  Total current assets                 69,648              58,832
Non-current assets:
 Property, plant and equipment, net     9,676               10,346
 Goodwill                               7,511               7,575
 Other intangible assets, net           1,929               1,797
 Deposit for purchase of non-current    131                 301
 assets
 Other non-current assets               1,091               1,404
  Total non-current assets             20,338              21,423
  Total assets                         89,986              80,255
Liabilities and equity:
Current liabilities:
 Accrued expenses and other liabilities
 (including accrued expenses and other
 liabilities of the consolidated VIE
 without recourse to China Distance     9,636               10,565
 Education
 Holdings Limited of US$8,789 and
 US$9,738 as of September 30, 2012 and
 December 31, 2012, respectively)
 Income tax payable (including income
 tax payable of the consolidated VIE
 without
 recourse to China Distance Education   2,627               2,348
 Holdings Limited of US$2,319 and
 US$2,055 as of September 30, 2012 and
 December 31, 2012, respectively)
 Deferred revenue (including deferred
 revenue of the consolidated VIE
 without
 recourse to China Distance Education   9,450               12,993
 Holdings Limited of US$9,408 and
 US$12,925 as of September 30, 2012 and
 December 31, 2012, respectively)
 Refundable fees (including refundable
 fees of the consolidated VIE without
 recourse to China Distance Education   3,524               3,270
 Holdings Limited of US$3,524 and
 US$3,270 as of September 30, 2012 and
 December 31, 2012, respectively)
  Total current liabilities            25,237              29,176
Non-current liabilities:
 Deferred tax liabilities, non-current
 portion (including non-current portion
 of
 deferred tax liabilities of the
 consolidated VIE without recourse to   132                 252
 China Distance
 Education Holdings Limited of nil and
 nil as of September 30, 2012 and
 December
 31, 2012, respectively)
 Total non-current liabilities          132                 252
  Total liabilities                    25,369              29,428


Equity:
 Ordinary shares (par value of
 US$0.0001 per share at September 30,
 2012 and
 December 31 2012, respectively;
 Authorized – 480,000,000 shares at     13                  14
 September30, 2012 and December 31,
 2012; Issued and outstanding –
 134,386,849 and 135,432,521 shares at
 September30, 2012 and December 31
 2012, respectively)
 Additional paid-in capital             61,777              46,067
 Accumulated other comprehensive income 4,922               5,365
 Cumulative deficits                    (2,095)             (619)
  Total China Distance Education      64,617              50,827
 Holdings Limited shareholders' equity
  Total equity                        64,617              50,827
  Total liabilities and equity        89,986              80,255





China Distance Education Holdings Limited
Unaudited Consolidated Statements Of Operations
(in thousands of US dollars, except number of shares, per share and per ADS
data)
                                               Three Months Ended December 31,
                                               2011              2012
Sales, net of business tax, value-added tax
and related surcharges:
      Online education services                7,741             10,779
      Books and reference materials            957               761
      Others                                   1,205             1,463
       Total net revenues                    9,903             13,003
Cost of sales
      Cost of services                         (4,056)           (5,604)
      Cost of tangible goods sold              (571)             (509)
       Total cost of sales                   (4,627)           (6,113)
Gross profit                                   5,276             6,890
Operating expenses
      Selling expenses                         (2,869)           (2,779)
      General and administrative expenses      (2,177)           (2,454)
       Total operating expenses              (5,046)           (5,233)
Other operating income                         2                 3
Operating income                               232               1,660
Interest income                                244               253
Exchange loss                                  (17)              (21)
Income before income taxes                     459               1,892
Less: Income tax expense                       (86)              (416)
Net income from continuing operations
attributable to China Distance                 373               1,476
Education Holdings Limited
Net loss from discontinued operations
attributable to China Distance Education       (6)               -
Holdings Limited, net of tax
Net income attributable to China Distance      367               1,476
Education Holdings Limited


Net income per share:
Net income attributable to China Distance
Education Holdings Limited
shareholders
      Basic from continuing operations         0.003             0.011
      Basic from discontinued operations       0.000             0.000
      Basic                                    0.003             0.011
      Diluted from continuing operations       0.003             0.011
      Diluted from discontinued operations     0.000             0.000
      Diluted                                  0.003             0.011


Net income per ADS:
Net income attributable to China Distance
Education Holdings Limited
shareholders
      Basic from continuing operations         0.011             0.044
      Basic from discontinued operations       0.000             0.000
      Basic                                    0.011             0.044
      Diluted from continuing operations       0.011             0.044
      Diluted from discontinued operations     0.000             0.000
      Diluted                                  0.011             0.044
Weighted average shares used in calculating
net income per share:
      Basic                                    130,075,371       134,754,567
      Diluted                                  130,089,977       135,496,638





SOURCE China Distance Education Holdings Limited

Website: http://ir.cdeledu.com
 
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