HQ Global Education Announces FY2011 First Nine Months and Third Quarter Financial Results

CHANGSHA, China, July 15, 2011 /PRNewswire-Asia/ -- HQ Global Education Inc. (OTCBB: HQGE) ("HQ" or the "Company"), which operates 10 vocational schools in China under the "HQ" brand and is one of China's leading providers of customized vocational education, today announced its financial results for the FY2011 first nine months and third quarter ended May 31, 2011.

Nine Months and Third Quarter of Fiscal 2011 Financial and Operating Highlights

• Revenue generated in this quarter was $16.9 million, which was a decrease of 2% as compared to $17.2 million for the three months ended May 31, 2010.  
• Net income for the quarter decreased 10% to $4.9 million, compared with $5.6 million for the same period of last year. $.15 per share basic and diluted earnings based on 33 million shares outstanding for the quarter.
• Total revenue for the first nine months of fiscal year 2011 achieved $46 million, representing an increase of $8.9 million, or 24% as compared to $37.1 million for the same period of 2010.
• For the nine months ended May 31, 2011, our net income increased $3.4 million or 29% to $15.1 million, as compared to $11.7 million for the same period of last year.
• Cash and total assets were $10.6 million and $69.0 million, respectively, as of May 31, 2011.

Mr. Guangwen He, Chairman and CEO of HQ Global Education stated, "Most of our businesses did quite well in the third quarter and past nine months, meeting or exceeding expectations. Despite the unclear international financial market, we believe that our business is solid and our operating strategy is sound in China, we intend to focus on operating our "Order-oriented Education" at our ten schools utilizing our existing and accessible resources and will continue to put great efforts into business development, service quality and brand recognition."

Third Quarter Fiscal Year 2011 Results of Operations

Revenue

For the three months ended May 31, 2011, we achieved total revenue of $16.9 million representing a decrease of 2%, as compared to $17.2 million for the same period in 2010. The decrease was mainly attributable to the second semester of fiscal 2011 began in February for four of our schools in Hunan province (Changsha HQ, Shaoshan HQ, Shaoshan and Shaoyang), as a result, the tuition and fees were proportionately recognized in five months from February to June. In fiscal 2010, the second semester began in March to June in all of our schools and tuition and fees were proportionately recognized in four months from March to June 2010. This also led to decrease of revenue from vocational education for the three months ended May 31, 2011 over the same period of the prior year.

During the quarter, approximately 59.3% of our revenue, or $10 million, was generated from vocational education services. Campus service fee improved to $6.9 million for the three months ended May 31, 2011, an increase of 32% compared to $5.2 million in the same period of 2010.

For the nine months ended May 31, 2011, we achieved total revenue of $46 million, representing an increase of $8.9 million, or 24% as compared to $37.1 million for the nine months ended May 31, 2010. Our revenue for the first nine months of fiscal year 2011 is very close to the revenue of $47.1 million that we achieved in the full fiscal year 2010.

Gross Profit

Gross profit for the third quarter of fiscal year 2011 ended May 31, 2011 was $6.0 million as compared to $6.4 million for the period ended May 31, 2010. The decrease of $0.4 million, or 6%, was primarily due to the decrease of revenue from vocational education and the increase of cost of campus services.

Net Income

Our net income for the three months ended May 31, 2011 was $4.9 million, representing a decrease of $0.6 million or 10% as compared to $5.5 million. For the nine months ended May 31, 2011, our net income increased $3.4 million or 29% to $15.1 million, as compared to $11.7 million for the same period of last year. Our net income for the past nine months has already exceeded the $13.6 million that we earned in the twelve months of fiscal year 2010. Basic and diluted earnings per share were $0.15 per share based on 33 million shares outstanding for the quarter, compared with basic and diluted earnings per share of $0.17 achieved in the same period a year ago.

Change in Liquidity and Capital Resources

As of May 31, 2011, we had approximately $10.6 million in cash, up $5.4 million from $5.2 million as of August 31, 2010. Total current assets and total assets were $28.1 million and $69.0 million as of May 31, 2011. Total current liabilities and total liabilities were $7.7 million and $10.9 million as of May 31, 2011. Total shareholders' equity was approximately $58.2 million, an increase of $17.5 million compared to $40.6 million as of August 31, 2010.

About HQ Global Education Inc. ("HQ")

HQ Global Education, Inc. provides customized vocational training and private education services to students through private and public vocational schools in China. The HQ Global brand has become increasingly synonymous throughout China with superior vocational training to meet employer needs and career fulfillment for students who aspire to become technical and skilled workers. As of the second semester of fiscal 2011, the enrollment totaled 36,926 students from 25 provinces throughout China. Through "Order-oriented" customized educational model, HQ Global has established contractual relationships with approximately 128 employers to provide training and internship arrangements for students and therefore has maintained 100% job placement for graduates. HQ Global generates revenue from tuition, campus service and order-oriented service.

For more information please visit: http://www.hq-education.com

Information Regarding Forward-Looking Statements

Except for historical information contained herein, the statements in this press release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, product demand, market competition, and risks inherent in our operations. These and other risks are described in our filings with the U.S. Securities and Exchange Commission.

SOURCE HQ Global Education Inc.