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China Distance Education Holdings Limited Outlines Strategy Aimed at Driving Future Growth

2017-12-06 20:09

BEIJING, China, December 6, 2017 -- China Distance Education Holdings Limited (NYSE: DL) (“CDEL”, or the “Company”), a leading provider of online education and value-added services for professionals and corporate clients in China, today provided highlights of the Company’s strategies aimed at driving future growth, as well as further definition of the Company’s business structure.

Mr. Zhengdong Zhu, Chairman and CEO of CDEL, said, “Over the past few fiscal years, as previously reported, our business has experienced revenue growth headwinds primarily due to examination policy changes and lower demand for certain professional certification courses, including the Registered Tax Agent Exam, National Pharmacist Exam, and Accounting Certificate Exam. In addition, we experienced pressure on operating margins, amid ongoing investment in targeted growth initiatives to better position the Company as China’s premier lifelong learning partner for our students in different industries, with healthier revenue growth and profitability levels. As we embark on fiscal 2018, we would like to take this opportunity to amplify key efforts underway focused on enhancing the future growth of our business, and to provide further definition of our business structure.”

Strategic Initiatives Aimed at Driving Future Growth

Over the last several quarters, CDEL launched a number of strategic initiatives in an effort to better position the Company for future growth, including:

• Extending Accounting Ecosystem,

• Expanding legal education vertical,

• Entering China’s college market, and

• Other key strategic investments.

Mr. Zhu said, “These strategic initiatives are designed to complement our overall business, further diversify our business model to mitigate risk, and drive incremental growth.”

Extending Accounting Ecosystem - To further enhance CDEL’s footprint in the accounting area, the Company has extended its “Accounting Ecosystem” to include practical training and employment guidance services, in addition to professional certification exam preparation and continuing education services. Moreover, the Company has broadened its services to small-and medium-sized enterprises (SMEs) by introducing accounting and related advisory services to complement its existing tax education and tax advisory business.

Employment Guidance Services – In an effort to help students master critical accounting concepts and practical skills, and to guide them in their job search, the Company is providing employment guidance services for accounting professionals, which bundle accounting practical skills training courses and employment guidance services. In fiscal 2017, the Company’s employment guidance services for accounting professionals generated impressive cash receipts of approximately $6.1 million.

Investment in Leading Accounting Services Company – In October 2017, the Company entered into an agreement to acquire an 80% interest in Jiangsu Zhengbao Asset Financial Advisory Co., Ltd. (“Jiangsu Asset”), previously called Nanjing Asset Financial Consulting Co., Ltd., which provides accounting and related advisory services to SMEs. The investment in Jiangsu Asset bolsters the Company’s accounting services business by over 2,500 SME customers, while at the same time providing superb internship opportunities to students in its College Cooperation Program.

Expanding Legal Education Vertical – In September 2017, the Company completed its acquisition of a 40% equity stake in Beijing Ruida Chengtai Education Technology Co., Ltd. (“Beijing Ruida”), a leading provider of examination preparation services for participants in China’s national judicial examination, for RMB192 million ($28.8 million) as previously announced. As previously disclosed, the Company has an option to further increase its equity interest in Beijing Ruida up to 60% before April 2019, under certain pre-agreed conditions. The strategic investment in Beijing Ruida is a prime example of CDEL’s strategy to augment its current capabilities by building out existing education verticals, further mitigating business concentration risk, while also adding a well-regarded national judicial examination preparation provider to its portfolio of education services. The Company’s early integration efforts have been seamless with Beijing Ruida delivering strong revenue of over RMB190 million during the 2017 National Judicial Examination preparation season.

Expanding College-Focused Business – In May 2016, CDEL bolstered its college-focused business with the acquisition of an 80% equity interest in Xiamen NetinNet Software Co., Ltd. (“Xiamen NetinNet”), a leading provider of accounting learning simulation software tailored for China’s college market. In July 2017, CDEL completed the sale of its 80% equity interest in Xiamen NetinNet to CDEL’s controlled associate company Beijing Zhengbao Yucai Education Technology Co., Ltd. (“Zhengbao Yucai”), to enhance the Company’s operating efficiency and better position CDEL’s overall business for future growth, by enabling CDEL’s U.S. listed company to focus primarily on the professional education market, while Zhengbao Yucai focuses on the college education market. Also in 2017, Zhengbao Yucai further expanded its college-focused business in the engineering and construction area with Zhengbao Yucai’s investment in Hangzhou Wanting Technology Co., Ltd. (“Hangzhou Wanting”), a company listed on China’s New Third Board, which offers comprehensive simulation-based learning content to college students to master critical engineering and construction skills. As of September 30, 2017, through an increase in its shareholding, Zhengbao Yucai’s equity interest in Hangzhou Wanting was 20.72%.

Other Key Strategic Investments – CDEL has also made a number of other key strategic investments over the last several quarters to broaden the Company’s portfolio and complement CDEL’s overall business, including Beijing Niuke Technology Co., Ltd., an online information technology training and recruiting platform; and Nurselink International Limited, a company engaged in nurse recruiting and training services. A number of CDEL’s strategic investments posted healthy business growth over the past few quarters.

Business Structure

CDEL operates a U.S. listed company, China Distance Education Holdings Limited (NYSE: DL), and also has a controlled associate company, Beijing Zhengbao Yucai Education Technology Co., Ltd. (“Zhengbao Yucai,” NEEQ: 837730). Zhengbao Yucai has been listed on China’s New Third Board since June 2016.

CDEL’s U.S. listed company is primarily focused on the professional certification and professional development education markets by offering exam preparation courses and a series of complementary services for students across several industry verticals, such as accounting, healthcare, engineering and construction, and legal education, among others. The target customers are working professionals as well as college students. The aforementioned Accounting Ecosystem is primarily cultivated by CDEL’s U.S. listed company.

Zhengbao Yucai, on the other hand, is primarily focused on China’s college market, by offering business start-up training courses mainly to university students, and learning simulation software aimed at enriching the learning experience of college students and complementing traditional college teaching methods.

The Company does not currently intend to further inject any business operated by CDEL’s U.S. listed company into Zhengbao Yucai.

Fact Sheet

To access CDEL’s Company Fact Sheet, which provides further details regarding China Distance Education, including investment highlights, growth strategy, product and service offerings, and summary financials, please click on the following link http://ir.cdeledu.com/upload/html/2017/12/06/suecd687629d92439991456934426a94b8.pdf.

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. Among other things, our business structure, strategic and operational plans, in particular our strategic initiatives for accounting education extending Accounting Ecosystem, expanding legal education market and college-focused business, as well as the quotations from management and outlook of the Company’s development and strategic investments (in particular, the anticipated benefits of our acquisition and strategic investments such as the acquisition of 40% equity interest in Beijing Ruida, acquisition of an 80% equity interest in Xiamen NetinNet and its subsequent transaction with Zhengbao Yucai and Zhengbao Yucai’s investment in Hangzhou Wanting) contain forward-looking statements. Forward-looking statements are not historical facts, but instead are predictions about future events. Future events are inherently uncertain, and our forward-looking statements may turn out to be incorrect. The forward-looking statements in this press release speak only as of the date on which they are made, and we assume no obligation to update any forward-looking statements except as required by law.

About China Distance Education Holdings Limited

China Distance Education Holdings Limited is a leading provider of online education and value-added services for professionals and corporate clients in China. The courses offered by the Company through its websites are designed to help professionals seeking to obtain and maintain professional licenses and to enhance their job skills through our professional development courses in China in the areas of accounting, healthcare, engineering & construction, and other industries. The Company also offers professional education courses for participants in the national judicial examination, online test preparation courses for self-taught learners pursuing higher education diplomas or degrees, test preparation courses for university students intending to take the nationwide graduate school entrance exam, practical accounting training courses for college students and working professionals, as well as online language courses and third-party developed online courses. In addition, the Company provides business services to corporate clients, including but not limited to tax advisory and accounting outsourcing services. For further information, please visit http://ir.cdeledu.com.

Contacts:

China Distance Education Holdings Limited         The Piacente Group | Investor Relations
  Investor Relations Department               Brandi Piacente
  Tel: +86-10-8231-9999 ext1805               Tel: +1 212-481-2050
  Email: IR@cdeledu.com                  Email: dl@tpg-ir.com

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