South China Vocational Education Announces its 2022 Annual Results　Revenue Grows Steadily to RMB516.3 million

Actively Supports and Serves Country’s Development Strategies Upholds "Empowering Industry-education Interaction and Creating Value” Philosophy

HONG KONG SAR - Media OutReach - 3 April 2023 - South China Vocational Education Group Company Limited ("South China Vocational Education" or the "Group", Stock Code: 6913), a leading private formal vocational education service provider in the Guangdong-Hong Kong-Macao Greater Bay Area ("GBA"), has announced its annual results for the year ended 31 December 2022 ("FY2022" or the "Year").

During the Year, the Group maintained its position as the leading private formal vocational education service provider in the GBA by focusing on quality development and with active progress in establishing majors, school-enterprise cooperation and brand building. The Group's revenue increased by approximately 3.3% year-on-year to RMB516.3 million, primarily due to an increase in tuition fees as a result of the increase in total full-time student enrollment and the increase in the average tuition fees, as well as an increase in continuing education programs during the Year. The Group's gross profit amounted to approximately RMB196.8 million and profit for the year was approximately RMB142.9 million.

Continues to pursue stable development, improves operational efficiency

Mr. He Huishan, Chairman of the Board and Executive Director of South China Vocational Education Group, said, "In 2022, we formulated our overall development strategies that agree with the 14th Five-Year Plan, insisting on enriching the content and special characteristics of vocational education, driving development of the new innovative industry-education integrated engine and, instead of the single academic qualifications structure, changing to adopting the "three-wheeled" strategy that stresses academic qualification education, open education and industry-education integration. Despite the challenges from the pandemic during the year, we are pleased to see the Group made significant progress in all its work and achieved overall stable performance. We will continue to uphold our philosophy of 'empowering industry-education interaction and creating value', deepen organizational and management reform and improve operational efficiency, so as to inject new vigor to help the Group develop."

The Group operates two schools in the GBA, namely, Guangdong Lingnan Institute of Technology ("Lingnan Institute of Technology") and Guangdong Lingnan Modern Technician College ("Lingnan Modern Technician College"). As at 31 December 2022, Lingnan Institute of Technology had 13 secondary colleges and offered over 47 majors in a wide range of disciplines, including but not limited to, electronic information engineering technology, e-commerce, computer network technology, cloud computing technology application, webcasting and operation, online marketing and livestreaming e-commerce, industrial internet, financial services and management, etc. Lingnan Modern Technician College had 7 departments and offered over 27 majors, including but not limited to, mechatronics, drones, vehicle inspection and maintenance, fire engineering, traditional Chinese medicine, rehabilitation, nursing, big data applications, advertising design, computer network application, computer program design and digital media application, etc.

Favorable policies to support vocational education development

During the Year, a number of national policies favourable to the development of vocational education were rolled out, providing a strong impetus to the long-term development of the industry and opening up wide room for the Group's future growth. Among them, the newly revised "Vocational Education Law of the People's Republic of China" was passed in April 2022. It states that "vocational education is of equal importance as general education", promotes "the mutual integration of vocational education and general education", and emphasizes that "the State encourages the development of various levels and forms of vocational education, promotes diversified school-running, supports broad and equal participation of social forces in vocational education". Besides, in December 2022, the General Office of the Central Committee of CPC and the General Office of the State Council issued the Opinions on Deepening the Construction and Reform of Modern Vocational Education System (the "Deepening Opinions"). The Deepening Opinions have put forward that the promotion of the high-quality development of modern vocational education should be placed in a more prominent position. The policy also emphasizes that modern vocational education should insist on serving the overall development of students and economic and social development, based on enhancing the key competencies of vocational schools, cultivate more high-quality technical and skilled talents, and lay a solid foundation for accelerating the building of a strong country in education, science and technology and talent.

Notable increase in new enrollment in 2022/23 academic year, evidence of brand influence

During the year, with the Group actively building up course content and improving quality, new enrollments in the 2022/23 academic year achieved encouraging growth. As at 21 September 2022, new enrollments of Lingnan Institute of Technology increased by 15.4% year-on-year to 5,291, and that of Lingnan Modern Technician College climbed by a notable 66.5% to 5,638, reflective of the brand influence of the Group and that its strategies of driving high-quality and scalable development are bearing fruit. In aggregate, the full-time students enrolled at the Group's schools numbered at 26,743 for the 2022/2023 school year. As at 31 December 2022, the average tuition fee of Lingnan Institute of Technology and Lingnan Modern Technician College were RMB17,348 and RMB12,667, respectively, and the average boarding fee of the two schools were RMB1,792 and RMB1,804, respectively.

Adopts "three-wheeled" approach of academic education, open education and industry-education integration

With regard to business development strategy, the Group will drive growth through the directions of promoting the endogenous growth of formal vocational education, expanding school networks by mergers and acquisitions, expanding ancillary education business and developing international cooperation. Firstly, the expansion and upgrade of Lingnan Institute of Technology will continue. Supported by the policy encouraging the establishment of undergraduate level vocational education, the Group will first focus on the establishment of certain undergraduate programs and then gradually develop the entire school into an undergraduate level vocational and technical college. In addition, Lingnan Modern Technician College will proactively identify new venues in the GBA for its new branches or new independent colleges, expanding its network of secondary vocational schools.

In addition, the Group will strive to expand its school networks through mergers and acquisitions, with priority given to high-quality technical schools and institutions providing non-formal vocational training in the Greater Bay Area. Furthermore, the Group will continue to proactively expand its ancillary education business, including adult continuing education programs, vocational skills certificate examination training, and training tasks for government institutions and industry associations. The Group will also explore cooperation with overseas colleges and institutions for higher education (focusing on colleges and institutions in Hong Kong, Macau, Singapore, the European Union and other countries and regions) so as to create a new pathway for global high-quality education.

Mr. He Huishan concluded, "Looking forward, South China Vocational Education will actively integrate into the country's new development aspiration. It will push to tap investment and financing power, strengthen integration of internal and external resources, step up market-oriented development mechanism and bring in talent. On the foundation of pushing for steady development and raising the quality and standard of vocational education, the Group will actively explore mergers and acquisitions of training business and online education, build a provincial-level industry-education integration demonstration park, and improve the layout of the vocational education system and education-related industries. It will also gradually export its vocational education model to the Greater Bay Area and areas surrounding Guangdong, such as Jiangxi and Fujian, work hard on building an ecosystem that focuses on industry-education integration and development, so as to fortify its core competitiveness, improve employee well-being and its capability to serve the society. The Group will transform and upgrade in line with the country's strategy and regional development needs, while aiming for high-quality growth."

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