Meten Holding Group Ltd. Announces Financial Results for Fiscal Year Ended December 31, 2021

SHENZHEN, China, May 16, 2022 /PRNewswire/ -- Meten Holding Group Ltd. ("Meten Holding Group" or the "Company") (NASDAQ: METX), an omnichannel training company headquartered in China providing language and workplace training services and actively developing metaverse, blockchain and cryptocurrency mining businesses, today announced its financial results for the fiscal year ended December 31, 2021.


FY2021


RMB
(million)

YoY (%)

Gross billings

551.3

(23.6%)

Revenues

729.0

(18.7%)

General adult English Language
Training ("ELT")

176.8

(47.0%)

Online ELT

290.4

0.2%

Overseas training services

151.1

15.7%

Junior ELT

98.0

(24.8%)

Gross Profit

245.3

(15.4%)

Gross Profit Margin

33.6%

1.3 ppts

Adjusted net loss1

(360.6)

(12.9%)

1Non-GAAP measure. For more information about non-GAAP financial measures, please see the section captioned "About Non-GAAP Financial Measures" at the end of this press release.

Highlights

  • FY2021 revenue decreased 18.7% year-on-year to RMB729.0 million (US$114.4 million), primarily as a result of the resurgence of COVID-19 and a reduction in the number of offline learning centers.
  • FY2021 gross profit decreased 15.4% year-on-year to RMB245.3 million (US$38.5 million). Gross profit margin increased 1.3 percentage points year-on-year to 33.6%.
  • As of December 31, 2021, Meten Holding Group had 34 learning centers in operation. To optimize the layout of offline centers, the Company closed another 84 offline learning centers by the end of 2021.
  • FY2021 adjusted net loss increased 12.9% year-on-year to RMB360.6 million (US$56.6 million).

Alan Peng, Chief Executive Officer of Meten Holding Group commented:

"In fiscal year 2021, we significantly reduced the number of offline learning centers to effectively reduce the impact of the resurgence of COVID-19 on our business, improve the utilization of our resources, and prepare for the strategic transformation of our business. Inevitably, our financial and operational performances have been affected by the initiation of business transformation in fiscal year 2021. However, we expect these measures to significantly reduce the Company's fixed costs, improve profit margins and reduce operating risks in the long term. With an effective resource reallocation, we believe that our offline learning centers' operation performance and profitability will be significantly improved once the COVID-19 pandemic is under control.

We launched a number of new businesses in fiscal year 2021, in addition to the optimization of the existing business. In fiscal year 2021, we actively kept exploring opportunities in the blockchain and cryptocurrency industry and established strategic partnerships with AGM Group Holdings lnc. Meanwhile, the Company is actively seeking opportunities in mine construction, mining, and the manufacturing and sales of mining machines. In addition, the Company has entered into an agreement with industry experts in the cryptocurrency and blockchain industry to establish a joint venture engaging in the research and development, production, and sales of cryptocurrency mining equipment. We believe that all of these partnerships have laid a solid foundation for the steady development of the Company's new approach in the field of Metaverse, blockchain and cryptocurrency.

We remain confident with our progress in our business transformation, and we believe we are well-positioned with multi-growth drivers. Looking forward, we will continue to execute our strategic plan and strive to generate additional revenue and create long-term shareholder value."

Operational developments



FY2021

Student enrollments


64,067

(8.9%)

Course withdrawal rate(1) (%)


16.4%

5.4 ppts

(1) Refers to the amount of refunds issued in a specific period of time as a percentage of the sum of the amount of gross billings and the amount of refunds for such period.


December 31, 2021

Number of self-operated learning centers

32

(69.5%)*

Number of franchised learning centers

2

(84.6%)*

(* Change compared to the previous year end)

Continued product innovation

The Company continued to invest in product development in fiscal year 2021, leveraging the several recently launched new products across both its offline and online platforms, which include three new language (Japanese, Spanish, Korean and German) products. For fiscal year 2021, the Company's revenue derived from Japanese, Spanish and Korean language training services was RMB8.0 million (US$1.3 million).

Financial results

Revenues

In fiscal year 2021, revenue amounted to RMB729.0 million (US$114.4 million), a decrease of 18.7% year-on-year from RMB897.0 million in fiscal year 2020, primarily as a result of the resurgence of COVID-19 and a reduction in the number of offline learning centers.

For general adult ELT, revenues decreased 47.0% year-on-year, to RMB176.8 million (US$27.7 million) in fiscal year 2021 from RMB333.5 million in fiscal year 2020. For overseas training services, revenues increased 15.7% year-on-year, to RMB151.1 million (US$23.7 million) in fiscal year 2021 from RMB130.6 million in fiscal year 2020.

For Junior ELT, revenues decreased to RMB98.0 million (US$15.4 million) in fiscal year 2021 from RMB130.3 million in fiscal year 2020. This decrease in revenues was largely driven by the resurgence of COVID-19 and the closure of offline learning centers.

For online ELT, revenues increased 0.2% year-on-year, to RMB290.4 million (US$45.6 million) in fiscal year 2021 from RMB289.7 million in fiscal year 2020.

Cost of revenues

The Company's cost of revenues consists primarily of staff costs, property expenses, depreciation and amortization, and teaching material costs.

In fiscal year 2021, cost of revenues decreased by 20.3% to RMB483.7 million (US$75.9 million), from RMB607.1 million in fiscal year 2020. This was predominantly due to efforts to optimize costs and a reduction in the number of offline learning centers.

Gross profit

In fiscal year 2021, gross profit decreased by 15.4% to RMB245.3 million (US$38.5 million), from RMB290.0 million in fiscal year 2020.

In fiscal year 2021, gross profit margin increased by 1.3 percentage points to 33.6% from 32.3% in fiscal year 2020.

Operating expenses

In fiscal year 2021, selling and marketing expenses amounted to RMB250.9 million (US$39.4 million), a decrease of 19.2% from RMB310.4 million in fiscal year 2020, primarily as a result of reduction in the number of offline sales points. 

In fiscal year 2021, research and development expenses decreased by 42.2% year-on-year to RMB18.4 million (US$2.9 million), from RMB31.9 million in fiscal year 2020.

In fiscal year 2021, general and administrative expenses decreased by 2.0% year-on-year to RMB341.5 million (US$53.6 million), from RMB348.4million in fiscal year 2020.

Loss from operations

In fiscal year 2021, loss from operations was RMB365.4 million (US$57.3 million), compared to loss from operations of RMB400.8 million in fiscal year 2020.

Net loss

In fiscal year 2021, net loss was RMB386.3 million (US$60.6 million), compared to a net loss of RMB412.8 million in fiscal year 2020.

Cash and cash equivalents

As of December 31, 2021, Meten Holding Group had RMB168.4 million (US$26.4 million) of cash and cash equivalents, compared to RMB90.1 million as of December 31, 2020.

Outlook

The launch of the new businesses marks a strategic transformation of the Company. Currently, the Company's cryptocurrency and Metaverse education businesses are in operation and are just beginning to generate revenue. The Company expects to develop and become a Metaverse technology company in the next one to two years with the deployment of its transformation strategies.

Exchange Rate

The Company's business is primarily conducted in China and all of the revenues are denominated in Renminbi ("RMB"). This announcement contains translations of certain RMB amounts into U.S. dollars ("USD" or "US$") at specified rates solely for the convenience of the readers. Unless otherwise noted, all translations from RMB to USD for fiscal year 2021 are made at the rate of RMB6.3726 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on December 31, 2021, respectively. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on December 31, 2021, as the case may be, or at any other rate.

About Non-GAAP Financial Measures

Meten Holding Group's consolidated financial results are presented in accordance with GAAP. However, to provide meaningful supplemental information regarding its performance, Meten Holding Group adopts the following measures which are defined as non-GAAP financial measures by the U.S. Securities and Exchange Commission:

  • EBITDA: calculated by subtracting net interest income/loss and adding back income tax expense and non-cash expense of depreciation and amortization to a firm's net income/(loss).
  • Adjusted EBITDA: calculated by removing certain one-off, irregular and/or non-recurring items from EBITDA such as offering expenses and share-based compensation expenses.
  • Adjusted net (loss)/income: calculated by adding back certain one-off, irregular and/or non-recurring items to net income/loss such as offering expenses and share-based compensation expenses.

The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

About Meten Holding Group Ltd.

Meten Holding Group Ltd., formerly known as Meten EdtechX Education Group Ltd., is an omnichannel training company headquartered in China providing language and workplace training services. In addition to its training services, Meten Holding Group actively develops metaverse, blockchain and cryptocurrency mining businesses to align with its future business development strategy. Meten Holding Group is committed to developing blockchain related businesses in North America, including cryptocurrency mining, mining farm construction, and mining pool and data center operation. Meten Holding Group actively explores metaverse business, such as Metaverse vocational education courses, with its competitive advantages and technology.

For more information, please visit: https://investor.metenedu-edtechx.com.

Safe Harbor Statement

This announcement contains forward-looking statements that involve risks and uncertainties. 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," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. 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: the future development of and the Company's ability to succeed in its new line of business in cryptocurrency and blockchain industry; the continuing impact of the COVID-19 pandemic and the emergence of new variants; our ability to attract students without a significant decrease in course fees; our ability to continue to hire, train and retain qualified teachers; our ability to maintain and enhance our brands; our ability to effectively and efficiently manage the expansion of our school network and successfully execute our growth strategy; the outcome of ongoing, or any future, litigation or arbitration, including those relating to copyright and other intellectual property rights; competition in the English language training sector in China; changes in our revenues and certain cost or expense items as a percentage of our revenues; the expected growth of the Chinese English language training and private education market; Chinese governmental policies relating to private educational services and providers of such services; health epidemics and other outbreaks in China; and general economic conditions in China. 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, and the Company undertakes no duty to update such information, except as required under applicable law.

For investor and media inquiries, please contact:

Ascent Investor Relations LLC
Tina Xiao
+1 917-609-0333
tina.xiao@ascent-ir.com

 

 

 

METEN HOLDING GROUP LTD

CONSOLIDATED BALANCE SHEETS

(In thousands of RMB, except share data and per share data, or otherwise noted)




As of December 31,



2020


2021



RMB'000


RMB'000


US$'000







Unaudited







(Note 3(c))

ASSETS







Current assets







Cash and cash equivalents


90,115


168,404


26,426

Contract assets


6,194


5,323


835

Accounts receivable, net


27,013


44,291


6,950

Other contract costs


47,125


32,241


5,059

Prepayments and other current assets


50,658


117,735


18,475

Amounts due from related parties


7,934


7,265


1,140

Prepaid income tax


14,460


14,479


2,272








Total current assets


243,499


389,738


61,157








Non-current assets







Restricted cash


10,358


8,840


1,387

Other contract costs


9,316


11,149


1,750

Equity method investments


24,552


24,403


3,829

Property and equipment, net


146,891


85,803


13,464

Operating lease right-of-use assets


322,559


105,551


16,563

Intangible assets, net


19,337


14,675


2,303

Deferred tax assets


6,997


25,991


4,079

Goodwill


274,567


192,962


30,280

Long-term prepayments and other
non-current assets


40,754


26,254


4,122








Total non-current assets


855,331


495,628


77,777








Total assets


1,098,830


885,366


138,934

 

 

 

 METEN HOLDING GROUP LTD 

CONSOLIDATED BALANCE SHEETS (Continued)

(In thousands of RMB, except share data and per share data, or otherwise noted)




As of December 31,



2020


2021



RMB'000


RMB'000


US$'000







Unaudited







(Note 3(c))

LIABILITIES AND STOCKHOLDERS'
EQUITY







Current liabilities







Accounts payable (including amounts of
   variable interest entities ("VIEs") without
   recourse to the Company of RMB 9,762 and
   RMB 15,881 as of December 31, 2020 and
   2021, respectively)


17,013


16,164


2,536

Bank loans (including amounts of VIEs without
   recourse to the Company of RMB 133,900
   and RMB 6,000 as of December 31, 2020 and
   2021
, respectively )


133,900


6,000


942

Deferred revenue  (including amounts of VIEs
   without recourse to the Company of RMB   
   341,934 and RMB 213,006 as of December
   31, 2020 and 2021, respectively)


341,934


213,006


33,425

Salary and welfare payable  (including amounts
   of VIEs without recourse to the Company of
   RMB 65,927 and RMB 26,075 as of
   December 31, 2020 and 2021, respectively)


67,609


27,404


4,300

Financial liabilities from contracts with
   customers  (including amounts of VIEs   
   without recourse to the Company of RMB 
   384,561 and RMB 337,932  as of December
   31, 2020 and 2021, respectively)


384,561


337,932


53,029

Accrued expenses and other payables (including
   amounts of VIEs without recourse to the
   Company of RMB 43,009 and RMB 7,733 as
   of December 31, 2020 and 2021, respectively)


46,030


36,575


5,739

Income taxes payable (including amounts of
  VIEs without recourse to the Company of
   RMB 267 and RMB 195 as of December 31,
   2020 and 2021, respectively)


267


195


31

Amounts due to related parties (including
   amounts of VIEs without recourse to the
   Company of RMB159,739 and RMB 685,287
   as of December 31, 2020 and 2021,
   respectively)


50,192


41,758


6,553

Current operating lease liabilities  (including

   amounts of VIEs without recourse to the
   Company of RMB 131,151 and RMB 35,817
   as of December 31, 2020 and 2021,
   respectively)


131,151


35,817


5,620

Total current liabilities


1,172,657


714,851


112,175

 

 

 

METEN HOLDING GROUP LTD 

CONSOLIDATED BALANCE SHEETS (Continued)

(In thousands of RMB, except share data and per share data, or otherwise noted)




As of December 31,



2020


2021



RMB'000


RMB'000


US$'000







Unaudited







(Note 3(c))

Non-current liabilities







Deferred revenue (including amounts of VIEs
   without recourse to the Company of RMB
   46,927 and RMB 35,546 as of December 31,
   2020 and 2021, respectively)


46,927


35,546


5,578

Deferred tax liabilities (including amounts of
   VIEs without recourse to the Company of
   RMB 7,661 and RMB 4,433 as of
   December 31, 2020 and 2021, respectively)


7,661


4,433


696

Operating lease liabilities (including amounts of

   VIEs without recourse to the Company of
   RMB
200,409 and RMB 59,824 as of
   December 31, 2020 and 2021, respectively)


200,409


59,824


9,388

Non-current tax payable (including amounts of
   VIEs without recourse to the Company of
   RMB 33,718 and RMB 34,137 as of
   December 31, 2020 and 2021, respectively)


33,718


34,137


5,357








Total non-current liabilities


288,715


133,940


21,019








Total liabilities


1,461,372


848,791


133,194








 

 

 

METEN HOLDING GROUP LTD 

CONSOLIDATED BALANCE SHEETS (Continued)

(In thousands of RMB, except share data and per share data, or otherwise noted)




As of December 31,




2020


2021



RMB'000


RMB'000


US$'000







Unaudited







(Note 3(c))

Shareholders' equity







Ordinary shares (US$0.003 par value;
   16,666,667 shares authorized; 1,895,819 and
   11,371,444 shares issued outstanding as of
   December 31, 2020 and 2021) *


37


217


34

Subscriptions receivable


-


-


-

Additional paid-in capital


557,535


1,342,769


210,710

Accumulated deficit


(936,247)


(1,320,546)


(207,222)








Total equity (deficit) attributable to
   shareholders of the Company


(378,675)


22,440


3,522

Non-controlling interests


16,133


14,135


2,218








Total equity (deficit)


(362,542)


36,575


5,740








Commitments and contingencies


-


-


-








Total liabilities and shareholders' deficit


1,098,830


885,366


138,934









 

 

 

METEN HOLDING GROUP LTD 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(In thousands of RMB, except share data and per share data, or otherwise noted) 





Years ended December 31,



2019


2020


2021



RMB'000


RMB'000


RMB'000


US$'000










Unaudited










(Note 3(c))


Revenues


1,447,899


897,035


728,996


114,395


Cost of revenues


(755,356)


(607,077)


(483,701)


(75,903)


Gross profit


692,543


289,958


245,295


38,492


Operating expenses:










Selling and marketing expenses


(437,986)


(310,433)


(250,850)


(39,364)


General and administrative expenses


(449,903)


(348,435)


(341,455)


(53,582)


Research and development expenses


(32,333)


(31,878)


(18,413)


(2,889)


Loss from operations


(227,679)


(400,788)


(365,423)


(57,343)


Other income (expenses):










Interest income


1,633


448


340


53


Interest expenses


(2,453)


(6,101)


(2,400)


(377)


Foreign currency exchange loss, net


(19)


(382)


(9,678)


(1,519)


Gains/(losses) on disposal and closure
   of subsidiaries and branches


583


(31,884)


(37,829)


(5,936)


Gains on Short-term investments


-


495


-


-


Government grants


5,773


28,124


7,969


1,251


Equity in income/(loss) on equity
method investments


2,658


(1,532)


(149)


(23)


Others, net


4,044


4,640


634


99


Loss before income tax


(215,460)


(406,980)


(406,536)


(63,795)


Income tax credit/(expense)


(9,608)


(5,803)


20,239


3,176


Net loss


(225,068)


(412,783)


(386,297)


(60,619)


Less: Net loss attributable to non-
   controlling interests


(5,664)


(1,798)


(1,998)


(314)


Net loss attributable to shareholders
   of the Company


(219,404)


(410,985)


(384,299)


(60,305)


Less: Accretion of Redeemable
   Owners' Investment


-


-


-


-


Net loss available to shareholders of
   the Company


(219,404)


(410,985)


(384,299)


(60,305)












Net loss


(225,068)


(412,783)


(386,297)


(60,619)












Comprehensive loss


(225,068)


(412,783)


(386,297)


(60,619)


Net loss per share










- Basic


(136.02)


(221.51)


(28.19)


(4.42)


- Diluted


(136.02)


(187.26)


(31.92)


(5.01)


Weighted average shares used in
   calculating net loss per share










- Basic


1,613,054


1,855,382


13,634,847


13,634,847


- Diluted


1,613,054


2,194,735


12,040,040


12,040,040


 

 

Adjusted net income represents net income/(loss) before share-based compensation and offering expenses. The table below sets forth a reconciliation of our adjusted net income for the periods indicated:

 



For the Year Ended
December 31,




2017



2018



2019



2020


2021




RMB



RMB



RMB



RMB



RMB


US$




(in thousands)




Net (loss)/income



40,342




53,445




(225,068)




(412,783)




(386,297)


(60,619)


Add:























Share-based compensation expenses



7,886




7,648




96,661




52,256




23,334


3,662


Offering expenses






14,766




28,123









Warrant financing















41,118




2,404


377


Adjusted net (loss)/income



48,228




75,859




(100,284)




(319,409)




(360,559)


(56,579)


 

 

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SOURCE Meten Holding Group Ltd.