China YuHua Education : INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 28 FEBRUARY 2021

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CHINA YUHUA EDUCATION CORPORATION LIMITED

中国宇华教育集团有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 6169)

INTERIM RESULTS ANNOUNCEMENT

FOR THE SIX MONTHS ENDED 28 FEBRUARY 2021

HIGHLIGHTS

The board (the "Board") of directors (the "Directors") of China YuHua Education Corporation Limited (the "Company", together with its subsidiaries and consolidated affiliated entities, the "Group") is pleased to announce the unaudited consolidated interim results of the Group for the six months ended 28 February 2021. These interim results except for the non-IFRS measures have been reviewed by the Company's audit committee and the Company's auditors, PricewaterhouseCoopers.

	Six months ended
	28 February	29 February
	2021	2020	Change
(RMB'000)	(Unaudited)	(Unaudited)
Revenue	1,365,495	1,260,408	8.3%
Gross Profit	854,686	732,476	16.7%
Adjusted Gross Profit1	881,232	762,609	15.6%
Adjusted Net Profit attributable to owners of
the Company2	691,146	494,765	39.7%

Notes:

1. The Adjusted Gross Profit for the six months ended 28 February 2021 is calculated as gross profit for the period, excluding (i) the impact from share-based expense (in cost of revenue) and (ii) additional depreciation and amortisation due to the provisional fair value adjustments to the acquired identifiable assets of LEI Lie Ying Limited and its subsidiaries (including HIEU Schools), Kaifeng City Yubohui Education Information Consulting Co., Ltd. ("Yubohui Education") and its subsidiaries (including Kaifeng City Xiangfu District Bowang High School), Thai Education Holdings Co., Ltd. ("TEDCO") and its subsidiaries (including Stamford International University) and Jinan Shuangsheng Education Consulting Co., Ltd. and its subsidiaries (including Shandong Yingcai University). For the calculation of the Adjusted Gross Profit for the six months ended 29 February 2020, please refer to the Company's interim results announcement for the six months ended 29 February 2020.
2. The Adjusted Net Profit attributable to owners of the Company for the six months ended 28 February 2021 is calculated as the net profit attributable to the owners of the Company, excluding (i) the impact from share-based compensation expense; (ii) additional depreciation and amortisation due to the provisional fair value adjustments to the acquired identifiable assets mentioned above in (1); (iii) government grants recognised during the period; (iv) accrued, but not paid interest expenses associated with the convertible bonds issued; and (v) fair value losses on convertible bonds and convertible loan recognised during the period. For the calculation of the Adjusted Net Profit for the six months ended 29 February 2020, please refer to the Company's interim results announcement for the year ended six months ended 29 February 2020.

1

Non-IFRS Measures

To supplement the Group's consolidated financial statements which are presented in accordance with the International Financial Reporting Standards ("IFRS"), the Company also uses Adjusted Gross Profit, Adjusted Net Profit and other adjusted figures as additional financial measures, which are not required by, or presented in accordance with, IFRS. The Company believes that these non-IFRS measures facilitate comparisons of operating performance from period to period and company to company by eliminating potential impacts of items that the management do not consider to be indicative of the Group's operating performance. The Company believes that these measures provide useful information to shareholders and potential investors in understanding and evaluating the Group's consolidated results of operations in the same manner as they help the Group's management. However, the Company's presentation of such adjusted figures may not be comparable to a similarly titled measure presented by other companies. The use of these non- IFRS measures have limitations as an analytical tool, and you should not consider it in isolation from, or as substitute for analysis of, the Company's results of operations or financial condition as reported under IFRS.

Calculation of the Adjusted Gross Profit

	Six months ended
	28 February	29 February
	2021	2020
	(RMB'000)	(RMB'000)
Gross Profit	854,686	732,476
Share-based compensation expenses
(in cost of revenue)	6,203	6,203

Additional depreciation and amortisation

• due to the fair value adjustments to
• the acquired identifiable assets

	- HIEU	4,457	4,457
- Bowang High School	3,372	7,156
- Shandong Yingcai University	10,370	10,173
	- Stamford International University	2,144	2,144
Adjusted Gross Profit	881,232	762,609

2

Calculation of the Adjusted Net Profit attributable to owners of the Company

	Six months ended
	28 February	29 February
	2021	2020
	(RMB'000)	(RMB'000)
Net profit attributable to the owners of the Company	849,217	17,233
Share-based compensation expenses (in cost of revenue)	6,203	6,203
Share-based compensation expense (in administrative expenses)	5,845	8,293
Additional depreciation and amortisation due to the fair value
adjustments to the acquired identifiable assets
- HIEU	4,065	3,120
- Bowang High School	2,360	5,009
- Shandong Yingcai University	10,370	9,155
- Stamford International University	2,144	2,144
Change in fair value on convertible bonds and
Convertible LoanNote	(167,275)	453,534
Government Grants	(21,783)	(9,927)
Adjusted Net Profit attributable to the owners
of the Company	691,146	494,765

Note: Details are set out in Note 6: Other gains/losses - net.

3

FINANCIAL STATEMENTS AND NOTES TO THE FINANCIAL STATEMENTS

INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

		Six months ended
		28 February	29 February
	Note	2021			2020
		RMB'000	RMB'000
		(Unaudited)	(Unaudited)
Revenue	4	1,365,495			1,260,408
Cost of revenue	5	(510,809)	(527,932)
Gross profit		854,686			732,476
Selling expenses	5	(31,177)	(35,647)
Administrative expenses	5	(118,381)	(122,629)
Net impairment losses on financial assets		2,036			(3,444)
Other income		30,728			13,585
Other gains/(losses) - net	6	166,161			(453,949)
Operating profit		899,981			130,392
Finance income		13,817			18,947
Finance expenses		(44,357)	(68,775)
Finance expenses - net		(30,540)	(49,828)
Profit before income tax		869,441			80,564
Income tax credit	7	4,760			4,427
Profit for the period		874,201			84,991
Profit attributable to:
- Owners of the Company		849,217			17,233
- Non-controlling interests		24,984			67,758
		874,201			84,991
Earnings per share attributable to owner
of the Company (RMB)
Basic earnings per share	8	0.25			0.01
Diluted earnings per share	8	0.18			0.01

4

INTERIM CONDENSED CONSOLIDATED BALANCE SHEET

		As at		As at
		28 February		31 August
	Note	2021	2020
		RMB'000		RMB'000
		(Unaudited)		(Audited)
Assets
Non-current assets		3,862,515
Property, plant and equipment		3,792,348
Intangible assets		1,543,941	1,550,944
Right-of-use assets		1,896,567	1,927,981
Other non-current assets		110,423	11,109
Total non-current assets		7,413,446	7,282,382
Current assets
	94,427
Trade and other receivables	9	57,211
Financial assets at fair value through profit or loss		-	50,000
Cash and cash equivalents		1,780,455	2,175,197
Restricted cash		145,719	154,372
Total current assets		2,020,601	2,436,780
Total assets		9,434,047	9,719,162
Equity
Equity attributable to owners of the Company		28
Share capital		28
Share premium		1,336,870	1,546,308
Reserves		802,898	974,417
Retained earnings		1,956,406	1,109,469
Capital and reserves attributable to owners
of the Company		4,096,202	3,630,222
Non-controlling interests		21,991	459,190
Total equity		4,118,193	4,089,412
Liabilities
Non-current liabilities		690,000
Borrowings	11	633,326
Deferred income tax liabilities	13	506,075	510,835
Lease liabilities		27,979	31,101
Financial liabilities at fair value through profit or loss	12	2,000,063	2,301,148
Deferred income		96,096	97,739
Total non-current liabilities		3,320,213	3,574,149

5

		As at		As at
		28 February		31 August
	Note	2021	2020
		RMB'000		RMB'000
		(Unaudited)		(Audited)
Current liabilities		598,493
Accruals and other payables	10	616,168
Borrowings	11	160,463	509,093
Contract liabilities		1,231,744	924,507
Lease liabilities		4,941	5,833
Total current liabilities		1,995,641	2,055,601
Total liabilities		5,315,854	5,629,750
Total equity and liabilities		9,434,047	9,719,162

6

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

		Six months ended
		28 February	29 February
Note	2021			2020
		RMB'000	RMB'000
		(Unaudited)	(Unaudited)
Cash flows from operating activities
Cash generated from operations	1,140,818			556,611
Interest paid	(12,864)	(61,501)
Net cash generated from operating activities	1,127,954			495,110
Cash flows from investing activities
Purchases of property, plant and equipment	(157,649)	(125,828)
Payment of prepaid land lease payments	-	(117,508)
Prepayment for construction of a new campus
in Henan Province	-	(61,419)
Purchases of intangible assets	(1,858)	(3,159)
Proceeds from disposal of property, plant and equipment	936			1,569
Proceeds from disposal of intangible assets	7			3
Proceeds from disposal of subsidiary	533			-
Purchases of financial instruments at fair value
through profit or loss	-	(400,000)
Disposals of financial instruments at fair value
through profit or loss	50,406			400,217
Payment related to other non-current assets	(100,000)	-
Acquisition of subsidiaries of prior periods	-	(69,612)
Changes in term deposits with initial term
of over three months	-	329,395
Changes in restricted bank deposits	-	(40)
Interest received	474			7,111
Disposals of financial instruments at fair value
through other comprehensive income	720			-
Net cash used in investing activities	(206,431)	(39,271)

7

		Six months ended
		28 February	29 February
	Note	2021		2020
		RMB'000	RMB'000
		(Unaudited)	(Unaudited)
Cash flows from financing activities
Issuance of convertible bonds		-	1,876,402
Payment of convertible bonds issuance costs		-	(18,756)
Redemption of convertible bonds		-	(1,388,768)
Transactions with non-controlling interests	15	(721,200)	-
Dividends paid to owners of the Company		(277,333)	(219,042)
Principal elements of lease payments or finance
lease payments		(4,941)	(3,464)
Proceeds from borrowings	11	440,000		369,894
Repayments of borrowings	11	(731,956)	(1,608,739)
Net cash used in financing activities		(1,295,430)	(992,473)
Net decrease in cash and cash equivalents		(373,907)	(536,634)
Cash and cash equivalents at beginning of the period		2,175,197		2,125,719
Exchange losses on cash and cash equivalents		(20,835)	(11,452)
Cash and cash equivalents at end of the period		1,780,455		1,577,633

8

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Six months ended
	28 February		29 February
	2021	2020
	RMB'000		RMB'000
	(Unaudited)		(Unaudited)
Profit for the period	874,201	84,991
Other comprehensive income (loss)
Items that may be reclassified to profit or loss
Currency translation differences	91,887	(16,008)
Items that will not be reclassified to profit or loss
Changes in the fair value of equity investments at
fair value through other comprehensive income	720	97
Changes in the fair value related to the changes in
the liability's credit risk of convertible bonds	7,154	14,699
Other comprehensive loss for the period, net of tax	99,761	(1,212)
Total comprehensive income for the period	973,962	83,779
Total comprehensive income for the period attributable to:
- Owners of the Company	948,978	16,021
- Non-controlling interests	24,984	67,758
	973,962	83,779

9

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

1 General information

China YuHua Education Corporation Limited (the "Company") and its subsidiaries (collectively referred to as the "Group") provide private formal full-coverage education services in the People's Republic of China (the "PRC") and the Kingdom of Thailand ("Thailand") (the "Business").

The Company was incorporated in the Cayman Islands on 25 April 2016 as an exempted company with limited liability under the Companies Law, Cap 22 (Law 3 of 1961, as consolidated and revised), of the Cayman Islands. The address of the Company's registered office is at the offices of Maples Corporate Services Limited at PO Box 309, Ugland House, Grand Cayman, KY1-1104, the Cayman Islands. The ultimate holding company of the Company is GuangYu Investment Holdings Limited. The ultimate controlling party of the Group is Mr. Li Guangyu, who is also an executive director and Chairman of the Board of Directors of the Company (the "Controlling Shareholder").

The Company's shares have been listed on The Stock Exchange of Hong Kong Limited since 28 February 2017 (the "Listing").

This interim condensed consolidated financial information is presented in Renminbi (RMB) and rounded to nearest thousand yuan, unless otherwise stated.

Key events

1. Transactions with non-controlling interests
   On 22 September 2020 and 26 October 2020, the Group acquired the remaining 7.2% and 22.8% of the issued shares of Hunan Lie Ying Industry Co., Ltd. ("Hunan Lieying"), a previously 70% subsidiary held by the Group, from their respective non-controlling shareholders at purchase considerations of RMB143,200,000 and RMB578,000,000, respectively. Immediately prior to the above transactions, the carrying amount of the existing 7.2% and 22.8% non-controlling interests in Hunan Lieying were RMB108,700,000 and RMB353,483,000 respectively. The Group recognized a decrease in non-controlling interests of RMB462,183,000 and a decrease in equity attributable to owners of the Company of RMB259,017,000. Upon completion of the transactions with non-controlling interests, Hunan Lieying became a wholly owned subsidiary of the Group during the six months ended 28 February 2021.
   Details were set out in Note 15.
2. Grant of awards pursuant to a share award scheme
   On 25 January 2021, the Group awarded a total of 6,684,800 award shares to 103 selected participants who are unconnected grantees under a share award scheme (the "Share Award Scheme"). The closing price of the shares on this grant date was HK$7.39 per share. The award shares issued represent approximately 0.2002% of the total issued shares of the Company immediately prior to the issue of such shares and approximately 0.1998% of the total issued shares of the Company as enlarged by such issue. As at 28 February 2021, all the awarded shares were vested and exercised. The expenses charged to this interim condensed financial information was amounted to HK$49,401,000 (equivalent to RMB41,304,000).

2 Basis of preparation

This interim condensed consolidated financial information for the six months ended 28 February 2021 has been prepared in accordance with International Accounting Standard ("IAS") 34 "Interim Financial Reporting". The interim condensed consolidated financial information should be read in conjunction with the annual financial statements for the year ended 31 August 2020, which have been prepared in accordance with International Financial Reporting Standards ("IFRSs").

10

3 Accounting policies

The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 August 2020.

1. New and amended standards adopted by the Group
   The Group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 September 2020:
2. • Amendments to IAS 1 and IAS 8 - Definition of Material
   • Amendments to IFRS 3 - Definition of a Business
   • Conceptual Framework for Financial Reporting - Conceptual Framework for Financial Reporting
   • Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest rate benchmark reform
   • Amendments to IFRS 16 - COVID-19-related rent concessions

The above standards did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.

1. New standards and interpretations not yet adopted

		Effective for
New Standards, interpretations		accounting periods
and amendments		beginning on
IFRS 17	Insurance Contracts	1 January 2023
Amendments to IFRS 10 and	Sale or contribution of assets between an investor and	To be determined
IAS 28	its associate or joint venture
Amendments to IAS 1	Classification of liabilities as current or non-current	1 January 2023
Amendments to IAS 16	Property, plant and equipment: proceeds before	1 January 2022
	intended use
Amendments to IAS 3	Reference to the conceptual framework	1 January 2022
Amendments to IAS 37	Onerous contracts - cost of fulfilling a contract	1 January 2022
Annual Improvements to	The improvements of IFRS 9, IFRS 16, IFRS 1 and	1 January 2022
IFRS Standards 2018-2020	IAS 41
Amendments to IAS 1 and	Disclosure of Accounting Policies	1 January 2023
IFRS Practice Statement 2
Amendments to IAS 8	Definition of Accounting Estimates	1 January 2023

The Group has not early adopted the abovementioned new or amended standards and interpretations in this interim financial information and will apply these new or amended standards and interpretations in accordance with their respective effective dates. The Group has already commenced an assessment of the related impact to the Group of these abovementioned standards and interpretation.

4 Segment information

The Group is principally engaged in the provision of private formal education from kindergarten to university education service in the PRC and Thailand.

The executive directors are identified as the chief operating decision-maker (the "CODM") of the Group. Management has determined the operating segments based on the information reviewed by the CODM for the purposes of allocating resources and assessing performance.

11

The CODM considers the business from the service perspective. When the Group companies have similar economic characteristics, and the segments are similar in each of the following respects: (i) the nature of the services; (ii) the type or class of students for their services; (iii) the methods used to provide their services; and (iv) if applicable, the nature of the regulatory environment, the Group's operating segments are aggregated. In the view of CODM, the Group is principally engaged in three different segments which are subject to different business risks and different economic characteristics and the Group's operating and reportable segments for segment reporting purpose are Kindergartens, Grade 1-12 and University, respectively.

For the purposes of monitoring segment performance and allocating resources among segments, segment results represent profit for the period earned by each segment. This is the measure reported to the CODM for the purposes of resource allocation and assessment of segment performance.

Assets and liabilities dedicated to a particular segment's operations are included in that segment's total assets and liabilities.

The Group has a large number of customers, and no single customer accounted for more than 10% of the Group's total revenue for the six months ended 28 February 2021 and 29 February 2020.

The information of the reportable segments provided to the CODM for the six months ended 28 February 2021 and

29 February 2020 is as follows:

											Inter-segment
	Kindergartens	Grade 1-12	University	Unallocated		elimination	Total
			(RMB'000)	(RMB'000)	(RMB'000)	(RMB'000)		(RMB'000)	(RMB'000)
Unaudited
For the six months ended
28 February 2021
Revenue	26,795		328,116		1,010,584		1,113		(1,113)	1,365,495
Cost of revenue	(18,864)	(188,702)	(303,243)	-		-	(510,809)
Gross profit	7,931		139,414		707,341		1,113		(1,113)	854,686
Selling expenses	(61)	(5,091)	(26,025)	-		-	(31,177)
Administrative expenses	(1,970)	(21,657)	(77,978)	(17,889)	1,113	(118,381)
Net impairment losses on
financial assets			-	-	(2,036)	-		-	(2,036)
Other income	10	15,214	14,542	962		-	30,728
Other (losses)/gains - net	(38)	(222)	(2,487)	168,908		-	166,161
Operating profit	5,872		127,658		613,357		153,094			-	899,981
Finance income (expenses) - net	126		376		12,346		(43,388)		-	(30,540)
Profit before income tax	5,998		128,034		625,703		109,706			-	869,441
Income tax credit			-	843		3,917		-		-	4,760
Profit for the period	5,998		128,877		629,620		109,706			-	874,201
Unaudited
As at 28 February 2021
Total assets	183,584		2,858,751		9,072,766		3,402,648		(6,083,702)	9,434,047
Total liabilities	44,924		1,160,283		3,077,011		7,277,493		(6,243,857)	5,315,854
Other segment information
For the six months ended
28 February 2021
Additions to non-current assets	227		6,772		398,721		296			-	406,016
Depreciation and amortisation	(666)	(22,733)	(100,733)	(1,595)		-	(125,727)
Losses on disposal of property,
plant and equipment	38		192		5,121		53			-	5,404

12

											Inter-segment
	Kindergartens	Grade 1-12	University	Unallocated	elimination	Total
		(RMB'000)	(RMB'000)	(RMB'000)	(RMB'000)	(RMB'000)	(RMB'000)
Unaudited
For the six months ended
29 February 2020
Revenue	26,657		323,810		909,941		1,241			(1,241)	1,260,408
Cost of revenue	(14,345)	(165,572)	(348,015)	-	-	(527,932)
Gross profit
12,312		158,238	561,926	1,241	(1,241)	732,476
Selling expenses	(13)	(10,228)	(25,398)	(8)	-	(35,647)
Administrative expenses	(3,038)	(21,412)	(79,849)	(19,571)	1,241	(122,629)
Net impairment losses on
financial assets		-	-	(3,444)	-	-	(3,444)
Other income	12		4,766	8,790	17	-	13,585
Other (losses)/gains - net	(24)	(656)	386	(453,655)	-	(453,949)
Operating profit
9,249		130,708		462,411		(471,976)	-	130,392
Finance expenses - net	(66)	(943)	(16,256)	(32,563)	-	(49,828)
Profit before income tax
9,183		129,765		446,155		(504,539)	-	80,564
Income tax credit		-	1,789		2,638		-	-	4,427
Profit for the period
9,183		131,554		448,793		(504,539)	-	84,991
Unaudited
As at 29 February 2020
Total assets	185,108		2,924,955		8,197,794		3,974,259			(6,226,358)	9,055,758
Total liabilities	52,409		1,393,673		3,248,466		6,536,213			(6,373,800)	4,856,961
Other segment information
For the six months ended
29 February 2020
Additions to non-current assets	1,036		6,758		232,498		16			-	240,308
Depreciation and amortisation	(819)	(29,443)	(98,509)	(1,865)	-	(130,636)
Losses on disposal of property,
plant and equipment	24		606		551		21			-	1,202

13

5	Expenses by nature
		Six months ended
		28 February 2021	29 February 2020
		(RMB'000)	(RMB'000)
		(Unaudited)	(Unaudited)
	Employee benefit expenses	347,716		342,315
	- Wages, salaries, bonus and other welfare	294,364		327,819
	- Share-based compensation expenses	12,048		14,496
	- Share Award Scheme expenses	41,304		-
	Depreciation of property, plant and equipment	88,198		86,433
	Depreciation of right-of-use assets	28,714		28,300
	Amortisation of intangible assets	8,815		15,903
	Canteen expenditure	19,312		13,736
	Student training and scholarship expenses	29,272		40,140
	School consumables	20,269		21,015
	Utilities expenses	22,190		24,272
	Maintenance expenses	17,375		18,296
	Marketing expense	23,543		20,595
	Operating lease payments	2,482		2,444
	Office expenses	33,390		42,642
	Consultancy and professional fee	7,717		10,524
	Travel and entertainment expense	5,494		7,932
	Other expenses	5,880		11,661
		660,367		686,208
6	Other gains/(losses) - net
		Six months ended
		28 February 2021	29 February 2020
		(RMB'000)	(RMB'000)
		(Unaudited)	(Unaudited)
	Net gains or (losses) on financial liabilities at fair value through profit or
	loss as at period end	167,275		(163,014)
	Net losses on redemption of the Prior Convertible Bonds	-	(297,461)
	Net gains on conversion of the convertible loans under the IFC Loan	-	6,941
	Losses on disposal of property, plant and equipment	(5,404)	(1,202)
	Gain on disposal of financial assets at fair value through profit or loss	406		217
	Donation	(976)	570
	Write-off long aged payables	4,860		-
		166,161		(453,949)

14

7	Income tax credit
		Six months ended
		28 February 2021	29 February 2020
		(RMB'000)	(RMB'000)
		(Unaudited)	(Unaudited)
	Current tax
	Current tax on profits before income tax for the period	-	-
	Deferred tax
	Decrease in deferred tax assets (Note 13)	(310)	(500)
	Decrease in deferred tax liabilities (Note 13)	5,070		4,927
	Deferred tax expense for the period	4,760		4,427
	Income tax credit	4,760		4,427

1. Cayman Islands profits tax
   The Company was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law of the Cayman Islands and accordingly, is exempted from Cayman Islands income tax.
2. British Virgin Islands profit tax
   The Company's direct subsidiary in the British Virgin Islands was incorporated under the BVI Companies Act, 2004, and accordingly, is exempted from British Virgin Islands income tax.
3. Hong Kong profit tax
   No provision for Hong Kong profit tax was provided as the Company and the Group did not have assessable profits in Hong Kong during the six months ended 28 February 2021 and 29 February 2020.
4. PRC corporate income tax ("CIT")
   CIT is provided on assessable profits of entities incorporation in the PRC. Pursuant to the Corporate Income Tax Law of the PRC (the "CIT Law"), which was effective from 1 January 2008, the CIT was 25% during the six months ended 28 February 2021 and 29 February 2020.
   According to the Implementation Rules for the Law for Promoting Private Education, private schools for which the sponsors do not require reasonable returns are eligible to enjoy the same preferential tax treatment as public schools. As a result, private schools providing academic qualification education are eligible to enjoy income tax exemption treatment if the sponsors of such schools do not require reasonable returns. All schools of the Group have been granted corporate income tax exemption for the tuition income from relevant local tax authorities.
   The corporate income tax rate for Xizang Yuanpei Information Technology Management Company Limited ("Xizang Yuanpei"), a wholly-owned subsidiary of the Company, is 15% based on the relevant tax regulations of Tibet Autonomous Region.
5. Thailand corporate income tax
   The statutory corporate income tax rate applied on the net taxable profits for Thailand companies is 20%. According to the relevant Thailand regulations, entities which engages in higher education are not subject to Thailand income taxes.

15

8 Earnings per share

1. Basic
   Basic earnings per share is calculated by dividing the profit attributable to owners of the Company for the six months ended 28 February 2021 by the weighted average number of ordinary shares in issue during the six months ended 28 February 2021.

	Six months ended
	28 February 2021	29 February 2020
	(Unaudited)	(Unaudited)
Profit attributable to owners of the Company (RMB'000)	849,217		17,233
Weighted average number of ordinary shares in issue (thousand)	3,341,205		3,292,972
Basic earnings per share (RMB)	0.25		0.01

1. Diluted
   Diluted earnings per share is calculated based on the adjusted profit attributable to owners of the Company for the six months ended 28 February 2021 by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares.

	Six months ended
	28 February 2021	29 February 2020
	(Unaudited)	(Unaudited)
Profit attributable to owners of the Company (RMB'000)	849,217		17,233
Adjustments for:
- interest savings and fair value change on convertible Bonds	(159,196)	-
Adjusted profit attributable to owners of the Company (RMB'000)	690,021		17,233
Weighted average number of ordinary shares in issue (thousands)	3,341,205	3,292,972
Adjustments for:
- Pre-IPO share options (thousands)	95,927	89,526
- Convertible Bonds	306,158	-
Adjusted weighted average number of ordinary shares for diluted
earnings per share (thousands)	3,743,290		3,382,498
Diluted earnings per share (RMB)	0.18		0.01

16

9 Trade and other receivables

		As at	As at
		28 February 2021	31 August 2020
		RMB'000	RMB'000
		(Unaudited)	(Audited)
Trade receivables
	Due from students	20,231		14,858
	Provision for impairment	(4,726)	(2,891)
		15,505		11,967
Other receivables
Receivables from local government	56,673		21,953
	Deposits	3,700		3,451
Receivables for disposal of subsidiaries	-	533
	Staff advance	9,007		7,484
	Interest receivables	572		110
	Others	2,970		3,310
Provision for impairment	(239)	(38)
		72,683		36,803
Prepayment
	Prepaid expenses	6,239		8,441
		94,427		57,211

As at 28 February 2021 and 31 August 2020, the aging analysis of trade receivables based on the invoice date were as follows:

	As at	As at
	28 February 2021	31 August 2020
	(RMB'000)	(RMB'000)
	(Unaudited)	(Audited)
Less than 1 year	16,617		14,216
Over 1 year	3,614		642
	20,231		14,858

17

10 Accruals and other payables

	As at	As at
	28 February 2021	31 August 2020
	(RMB'000)	(RMB'000)
	(Unaudited)	(Audited)
Amounts due to related parties	9,925		9,567
Payables in relation to the acquisition of subsidiaries	134,185		134,712
Payables for purchases of property, plant and equipment	110,272		101,494
Salary and welfare payables	89,351		124,204
Defined pension benefits	9,989		9,579
Deposits received	29,005		30,385
Miscellaneous expenses received from students	93,592		75,519
Payables for teaching materials and other operating expenditure	37,913		38,591
Payables for contracting canteens	772		770
Government subsidies payable to students and teachers	22,147		32,937
Audit and consulting fees	5,219		7,677
Interest payables	3,444		3,591
Taxes payable	22,199		16,902
Legal claim payables	6,589		6,589
Others	23,891		23,651
	598,493		616,168

11 Borrowings

	As at	As at
	28 February 2021	31 August 2020
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Non-current
Secured
Bank loans	690,000		633,326
	690,000	633,326
Current
Secured
Bank loans	160,463		509,093
	160,463	509,093
Total borrowings	850,463		1,142,419

18

(a) Movements in borrowings is analysed as follows:
Unaudited	RMB'000
Six months ended 28 February 2021
Opening amount as at 1 September 2020	1,142,419
Restated opening net book amount
Proceeds of new borrowings (i)	440,000
Settlement of borrowings by repayment in cash	(731,956)
	Closing amount as at 28 February 2021	850,463
	Six months ended 29 February 2020
	Opening amount as at 1 September 2019	1,572,373
	Adjustments for change in accounting policy	(21,760)
	Restated opening net book amount	1,550,613
	Transfer from the IFC Loan	689
	Proceeds of new borrowings	369,894
	Settlement of borrowings by repayment in cash	(1,608,739)
	Settlement by offsetting deposits for the respective borrowings	(10,550)
	Closing amount as at 29 February 2020
	301,907
	Note:

1. 1. The bank loans carry interest rate is 4.200%.
2. As at 28 February 2021, there were no undrawn bank facility (31 August 2020: RMB240,000,000).
3. The carrying amounts of assets pledged as security for borrowings are:

	As at	As at
	28 February 2021	31 August 2020
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Bank borrowings
Guaranteed by related party	850,000		650,000
Pledged with land use rights and property, plant and equipment	-	41,733
Guaranteed and pledged by subsidiaries of the Group	463		686
Pledged with right over the tuition fee and accommodation fee	-	200,000
Guaranteed by related party and pledged with right over the
tuition fee and accommodation fee	-	250,000
	850,463		1,142,419

19

12 Financial liabilities at fair value through profit or loss

	As at	As at
	28 February 2021	31 August 2020
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Non-current
Convertible Bonds due 2024	2,000,063		2,301,148

Issuance of the Convertible Bonds due 2024

On 27 December 2019 (the "Issue Date"), the Company completed the issuance of the Convertible Bonds due 2024. The cash proceeds related to the issuance of RMB1,876,402,000 were received by the Group on 27 December 2019. The issuance cost related to the Convertible Bonds due 2024 of approximately RMB18,756,000 was charged to the finance expenses during prior period.

The Convertible	Bonds due 2024 were recognized and measured	as	financial	liabilities at fair value through profit
or loss pursuant	to the subscription agreement. The fair value as	of	31 August	2020 and 28 February 2021 were of

RMB2,301,148,000 and RMB2,000,063,000, respectively. The changes in the fair value that were attributable to the changes in the liability's credit risk of RMB7,154,000 during the period were charged to other comprehensive income. Other changes in fair value related to the financial liabilities of RMB162,275,000 were charged to other gains (Note 6).

The Convertible Bonds due 2024 bear interest on their outstanding principal amount from and including the Issue Date at the rate of 0.90 per cent per annum, payable semi-annually in arrears on 27 June and 27 December in each year, commencing on 27 June 2020. Pursuant to the subscription agreement, the convertible bonds can be converted into fully paid ordinary shares of the Company with a par value of HK$0.00001 each, at the option of the bondholders. Each convertible bond will, at the option of the holder, be convertible (unless previously redeemed, converted or purchased and cancelled) on or after the date which is 41 days after the Issue Date up to the close of business on the date falling seven days prior to the Maturity Date (the "Conversion Period") into fully paid ordinary shares with a par value of HK$0.00001 each of the Company at an initial conversion price of HK$7.0190 per share. The conversion price is subject to adjustment in the circumstances described under certain terms and conditions of the subscription agreement. The conversion price of the Convertible Bonds due 2024 as at 28 February 2021 is HK$6.8200 per share.

As at 28 February 2021, no conversion related to the Convertible Bonds due 2024 was exercised by the holders.

On giving notice in accordance with the respective terms and conditions of the subscription agreement, at any time after 1 March 2023 and prior to the Maturity Date, the Convertible Bonds due 2024 may be redeemed at the option of the Company.

The Convertible Bonds due 2024 may be redeemed at the option of the Company or the holders pursuant to the respective terms and conditions under the subscription agreement. The convertible bonds may be redeemed at the option of the Company in whole but not in part for taxation reasons as described in the subscription agreement. The convertible bonds may be redeemed at the option of the holder following the occurrence of a relevant event described in the subscription agreement or on 27 December 2022 as the optional put date for the holder to request the Company to redeem all or some of the convertible bonds upon giving notice in accordance with the subscription agreement.

20

13 Deferred tax assets and liabilities

The movement in deferred income tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

Deferred tax assets
	As at	As at
	28 February 2021	31 August 2020
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Opening amount	20,194			20,184
Charged to profit or loss (Note 7)	(310)	10
Closing amount	19,884		20,194
Deferred tax liabilities
	As at	As at
	28 February 2021	31 August 2020
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Opening amount	(531,029)	(541,249)
Charged to profit or loss (Note 7)	5,070			10,220
Closing amount	(525,959)	(531,029)
Deferred tax liabilities (net)
	As at	As at
	28 February 2021	31 August 2020
	RMB'000	RMB'000
	(Unaudited)	(Audited)
Opening amount	(510,835)	(521,065)
Charged to profit or loss (Note 7)	4,760			10,230
Closing amount	(506,075)	(510,835)

14 Dividends

On 27 April 2021, the Board of Directors has resolved to declare an interim dividend of HK$0.123 (2020: HK$0.082) per share to shareholders whose names appear on the register of members of the Company at the close of business on 15 June 2021. This interim dividend, amounting to HK$414,113,000 (2020: HK$273,850,000), has not been recognised as a liability in this interim financial information. The interim dividend will be distributed to shareholders of the Company on 24 June 2021.

A dividend in respect of the year ended 31 August 2020 of HK$0.092 per share amounting to a total dividend of HK$308,673,000 (equivalent to RMB277,333,000) was approved at the annual general meeting held on 1 February 2021 and paid on 22 February 2021.

21

15 Transactions with non-controlling interests

On 22 September 2020 and 26 October 2020, the Group acquired the remaining 7.2% and 22.8% of the issued shares of Hunan Lie Ying Industry Co., Ltd. ("Hunan Lieying"), a previously 70% subsidiary held by the Group at purchase considerations of RMB143,200,000 and RMB578,000,000, respectively. Immediately prior to the above transactions, the carrying amount of the existing 7.2% and 22.8% non-controlling interests in Hunan Lie Ying Industry Co., Ltd. were RMB108,700,000 and RMB353,483,000 respectively. The Group recognized a decrease in non-controlling interests of RMB462,183,000 and a decrease in equity attributable to owners of the parent of RMB259,017,000.

The transactions were achieved by the following steps: (i) Changsha Jiuzhao Education Technology Co., Ltd. ("Changsha Jiuzhao") was incorporated in the PRC by Mr. Li Guangyu and Ms. Li Hua at respective shareholding of 40% and 60% on 19 June 2020; (ii) on 30 September 2020, certain contractual arrangements were entered into among Xizang Yuanpei Information Technology Management Company Limited ("Xizang Yuanpei"), a wholly owned subsidiary of the Company, Changsha Jiuzhao and Mr. Li Guangyu and Ms. Li Hua. With effect of the contractual arrangement, the Directors of the Group concluded that the Group has control over Changsha Jiuzhao as a result of the contractual arrangement; (iii) on 22 September and 26 October 2020, 7.2% and 22.8% equity interests of Hunan Lieying was acquired by Changsha Jiuzhao.

Upon completion of the transactions above, Hunan Lieying became a wholly owned subsidiary of the Group.

The effect on the equity attributable to the owners of China YuHua Education Limited during the year is summarized as follows:

As at

28 February 2021

(RMB'000)

(Unaudited)

Carrying amount of non-controlling interests acquired	462,183
Consideration paid to non-controlling interests	(721,200)
Excess of consideration paid recognised in the transactions
with non-controlling interests reserve within equity	(259,017)

There were no other transactions with non-controlling interests during the six months ended 28 February 2021.

22

MANAGEMENT DISCUSSION AND ANALYSIS

Business Review

With over 20 years of operating private schools in China, the Group is one of the leading private school operators in China in terms of student enrolment.

The Group's fundamental educational objectives are to foster modern talent with leadership and

lifelong learning capabilities and nurture great minds to contribute to the future development of the Chinese nation ("培養具有領導才能和自主學習能力的現代化人才，為中華民族的偉大復

興貢獻力量"). As an educational service provider, the Group believes it is entrusted to nurture the future of society, and aims to provide educational services in a manner consistent with the values and attitudes of the Group. The curriculums for the Group's university and K-12 schools not only accommodate the students' eagerness to achieve academic excellence, but also emphasise well-rounded development.

For the six months ended 28 February 2021, notwithstanding the impact of COVID-19, the business of the Group remained relatively stable, and COVID-19 has not had a material adverse effect on the revenue and operating results of the Group. The Group intends to continue to expand its school network and ensure delivery of high-quality education to its students by making continuous improvements to the educational infrastructure available.

23

The Group's Schools

As at 28 February 2021, the Group had 26 schools in China and 1 school in Thailand.

The following table shows a summary of the Group's schools by category as at the end of February

2021 and 2020:

		As at		As at
		28 February		29 February
		2021		2020
The Group's schools in the PRC		(note 1)	3(note 1)
Universities	3
High schools	5		5
Middle schools	7		7
Primary schools	6		6
Kindergartens	5		7
The Group's school overseas		(note 2)	1(note 2)
University	1
Total	27		29

Notes:

1. As of the date of this announcement, the Group, through LEI Lie Ying Limited, owns 100% of the equity interests in Hunan Lie Ying Industry Co., Ltd. (湖南獵鷹實業有限公司) which in turn owns the entire sponsorship interests in Hunan International Economics University (湖南涉外經濟學院), Hunan Lie Ying Mechanic School (湖南獵鷹技工學校) and Hunan International Economics University Vocational Skills Training Centre (湖南涉外經濟學院職業技能培訓中心) (together the "HIEU Schools"), and the entire equity interests in Hunan Lie Ying Property Management Co., Ltd. (湖南獵 鷹物業管理有限公司). Details of the Group's acquisition of the remaining 30% equity interests in Hunan Lie Ying Industry Co., Ltd. (湖南獵鷹實業有限公司) on 25 September 2020 were disclosed in the Company's announcements published on 28 September 2020 and 30 September 2020.
2. This represents Stamford International University that the Group operates in Thailand.

Event after the Reporting Period

There has been no material event after the reporting period.

Future Development

The Group's future development focuses on potential acquisitions and their subsequent consolidation with the Group. The Group will continue to seek acquisitions in higher education sector with high growth potential and will focus on post-acquisition consolidation to maximize shareholder value.

24

Financial Review

1. Overview
   For the six months ended 28 February 2021, the Group recorded revenue of RMB1,365.5 million, an Adjusted Gross Profit of RMB881.2 million and a gross profit of RMB854.7 million. The Adjusted Gross Profit Margin1 of the Group was 64.5% for the six months ended 28 February 2021 as compared with 60.5% for the corresponding period in 2020. The gross profit margin was 62.6% for the six months ended 28 February 2021 as compared with 58.1% for the corresponding period in 2020.
   The Adjusted Net Profit attributable to owners of the Company for the six months ended 28 February 2021 was RMB691.1 million, representing an increase of RMB196.3 million or a 39.7% increase from the corresponding period in 2020. The Adjusted Net Profit Margin2 attributable to owners of the Company was 50.6% and 39.3% for the six months ended 28 February 2021 and 29 February 2020, respectively.
   The net profit attributable to owners of the Company amounted to RMB849.2 million and RMB17.2 million for the six months ended 28 February 2021 and 29 February 2020, respectively. The net profit margin attributable to owners of the Company amounted to 62.2% and 1.4% for the six months ended 28 February 2021 and 29 February 2020, respectively.
2. Revenue
   For the six months ended 28 February 2021, the revenue of the Group amounted to RMB1,365.5 million, representing an increase of RMB105.1 million or 8.3% as compared with RMB1,260.4 million for the corresponding period in 2020. The increase was primarily due to the result of an increase in student enrolment and tuition fees for several schools.
3. Cost of Revenue
   For the six months ended 28 February 2021, the Adjusted Cost of Revenue3 of the Group amounted to RMB484.3 million, representing a decrease of RMB13.5 million or 2.7% as compared with RMB497.8 million for the corresponding period in 2020. The cost of revenue of the Group amounted to RMB510.8 million and RMB527.9 million for the six months ended 28 February 2021 and 29 February 2020, respectively.

1

2

3

The Adjusted Gross Profit Margin is calculated based on the Adjusted Gross Profit.

The Adjusted Net Profit Margin attributable to owners of the Company is calculated based on the Adjusted Net Profit attributable to owners of the Company.

The Adjusted Cost of Revenue is calculated as cost of revenue for the period, excluding the impact from the non-cash expenses of share-based compensations and additional depreciation and amortisation due to the provisional fair value adjustments to the acquired identifiable assets of (i) LEI Lie Ying Limited; (ii) Yubohui Education and its subsidiaries;

1. TEDCO and its subsidiaries; and (iv) Jinan Shuangsheng Education Consulting Co., Ltd. and its subsidiaries (including Shandong Yingcai University).

25

1. Gross Profit and Gross Profit Margin
2. 1. 
      For the six months ended 28 February 2021, the Adjusted Gross Profit of the Group amounted to RMB881.2 million, representing an increase of RMB118.6 million or 15.6% as compared with RMB762.6 million for the corresponding period in 2020. The Adjusted Gross Profit Margin of the Group for the six months ended 28 February 2021 was 64.5%, compared with 60.5% for the corresponding period in 2020.
      The Group's gross profit amounted to RMB854.7 million and RMB732.5 million for the six months ended 28 February 2021 and 29 February 2020, respectively. The Group's gross margin amounted to 62.6% and 58.1% for the six months ended 28 February 2021 and 29 February 2020, respectively. The improvement in the gross profit margin was mainly due to
   2. implementation of cost control measures; and (ii) the increase in revenue as a result of the increase in student enrolment and tuition fees for several schools.
3. Selling Expenses
4. 
   For the six months ended 28 February 2021, the selling expenses of the Group amounted to RMB31.2 million, representing a decrease of RMB4.4 million or 12.4% from RMB35.6 million during the corresponding period in 2020. The decrease was primarily due to implementation of cost control measures.
5. Administrative Expenses
6. 
   For the six months ended 28 February 2021, the Adjusted Administrative Expenses4 of the Group amounted to RMB112.5 million, representing a decrease of RMB1.8 million as compared with RMB114.3 million for the corresponding period in 2020. The administrative expenses of the Group amounted to RMB118.4 million and RMB122.6 million for the six months ended 28 February 2021 and 29 February 2020, respectively.
7. Other Income
   For the six months ended 28 February 2021, the other income of the Group amounted to RMB30.7 million, representing an increase of RMB17.1 million or 125.7% as compared with RMB13.6 million for the corresponding period in 2020. This increase was primarily due to an increase in government grants and subsidies obtained.
8. Other Gains and Losses
   For the six months ended 28 February 2021, the other gains and losses of the Group amounted to a gain of RMB166.2 million as compared with a loss of RMB453.9 million for the corresponding period in 2020. The gain and loss was primarily due to fair value changes on convertible bonds.

4 Adjusted Administrative Expenses are calculated as administrative expense for the period, excluding the impact from share- based compensation.

26

1. Operating Profit
   The operating profit of the Group amounted to RMB900.0 million and RMB130.4 million for the six months ended 28 February 2021 and 29 February 2020, respectively. The increase was primarily due to increase in gross profit and fair value changes on convertible bonds.
2. Finance Income
   Finance income decreased by 27.0% from RMB18.9 million for the six months ended 29 February 2020 to RMB13.8 million for the corresponding period in 2021 due to a decrease in cash and cash equivalents and term deposits with initial term of over three months.
3. Finance Expenses
   Finance expenses decreased by 35.5% from RMB68.8 million for the six months ended 29 February 2020 to RMB44.4 million for the corresponding period in 2021 due to a decrease in interest expenses from borrowings.
4. Profit for the Reporting Period
   As a result of the above factors, the profit for the period for the six months ended 28 February 2021 and 29 February 2020 were RMB874.2 million and RMB85.0 million, respectively. In addition, the Adjusted Net Profit attributable to owners of the Company amounted to RMB691.1 million and RMB494.8 million for the six months ended 28 February 2021 and 29 February 2020, respectively.
   The increase in the Adjusted Net Profit attributable to owners of the Company was mainly due to (i) increase in student enrolment and tuition fees for several schools; and (ii) the acquisition of the remaining 30% of the issued shares of Hunan Lie Ying Industry Co., Ltd. in September and October 2020; and (iii) the acquisition of the remaining 10% of the issued shares of Jinan Shuangsheng Education Consulting Co., Ltd. in August 2020.
   The net profit attributable to owners of the Company for the six months ended 28 February 2021 and 29 February 2020 were RMB849.2 million and RMB17.2 million, respectively, representing an increase of RMB832.0 million. The increase in net profit was primarily due to
   (i) increase in revenue; (ii) the acquisition of minority interests in Hunan Lie Ying Industry Co., Ltd. and Jinan Shuangsheng Education Consulting Co., Ltd.; and (iii) changes in fair value on convertible bonds.

27

1. Liquidity and Source of Funding and Borrowing
   As at 28 February 2021, the Group's cash and cash equivalents decreased by 18.1% from RMB2,175.2 million as at 31 August 2020 to RMB1,780.5 million. Including restricted cash, the Group's total cash decreased from RMB2,329.6 million as at 31 August 2020 to RMB1,926.2 million as at 28 February 2021. The decrease primarily resulted from payments associated with the repurchase of the Company's 3.00% convertible bonds due January 2020.
   As at 28 February 2021, the current assets of the Group amounted to RMB2,020.6 million, including RMB1,926.2 million in cash and restricted cash and RMB94.4 million in other current assets. The current liabilities of the Group amounted to RMB1,995.6 million, of which RMB598.5 million was accruals and other payables, RMB160.5 million was borrowings, RMB1,231.7 million was contract liabilities and RMB4.9 million was other current liabilities. As at 28 February 2021, the current ratio of the Group, which is equivalent to the current assets divided by the current liabilities, was 1.01 (31 August 2020: 1.19).
2. Gearing Ratio
   As at 28 February 2021, the gearing ratio of the Group, which was calculated as total interest-bearing bank loans divided by total equity, was approximately 20.7% (31 August 2020: 27.9%).
3. Material Investments
   On 25 September 2020, the Group received a notification from the Changsha court that its bid
   in the court-sanctioned public action process to acquire Chen Zhengxian's 7.2% non-controlling interests in Hunan Lie Ying Industry Co., Ltd. (湖南獵鷹實業有限公司) ("Hunan Lie Ying"), a non-wholly owned subsidiary of the Company and the holding company of the Company's interests in HIEU Schools, was successful (the "First Acquisition"). On the same day, the
   Company entered into an agreement with Guangdong Nanbo Education Investment Pte Ltd. (廣東南博教育投資有限公司) ("Guangdong Nanbo") to acquire its 22.8% non-controlling interests in Hunan Lie Ying (the "Second Acquisition" and together with the First Acquisition, the "Acquisitions"). Upon completion of the Acquisitions, Hunan Lie Ying became a wholly- owned subsidiary of the Company. The total consideration paid for Chen Zhengxian's 7.2% and Guangdong Nanbo's 22.8% non-controlling interests in Hunan Lie Ying was approximately RMB721.2 million (equivalent to approximately HK$819.1 million). Details of the Group's acquisition of the remaining 30% equity interests in Hunan Lie Ying on 25 September 2020 were disclosed in the Company's announcements published on 28 September 2020 and 30 September 2020.
   Other than the above, the Group did not make any material investments during the six months ended 28 February 2021.

28

1. Material Acquisitions and Disposals
   The Group did not have any material acquisitions or disposals of subsidiaries, consolidated affiliated entities or associated companies during the six months ended 28 February 2021.
2. Pledge of Assets
   As at 28 February 2021, the bank borrowings of the Group amounting to RMB850.5 million were secured by related party and equity interests of certain subsidiaries of the Group.
3. Contingent Liabilities
   The Group had no contingent liabilities as at 28 February 2021.
4. Foreign Exchange Exposure
   During the six months ended 28 February 2021, the Group mainly operated in China and the majority of the transactions were settled in Renminbi ("RMB"), the Company's primary consolidated affiliated entities functional currency. As at 28 February 2021, except for the bank deposits denominated in foreign currencies, the Group did not have significant foreign currency exposure from its operations.
5. Employee and Remuneration Policy
   As at 28 February 2021 and 29 February 2020, we had 6,965 and 7,542 employees, respectively. The number of employees employed by the Group varies from time to time depending on need. Employees' remuneration is determined in accordance with prevailing industry practice and employees' educational backgrounds, experiences and performance. The remuneration policy and package of the Group's employees are periodically reviewed. As required by the PRC laws and regulations, the Company participates in various employee social security plans for its employees that are administered by local governments, including among others, housing provident funds, pensions, medical insurance, social insurance and unemployment insurance. Compensation of key executives of the Group is determined by the Company's remuneration committee which reviews and recommends to the Board the executives' compensation based on the Group's performance and the executives' respective contributions to the Group.
   The Company also has a Pre-IPO Share Option Scheme and a Share Award Scheme. Please refer to the section headed "Statutory and General Information - Pre-IPO Share Option Scheme and Share Award Scheme" in Appendix V to the prospectus of the Company dated 16 February 2017 (the "Prospectus") for further details.
   The total remuneration cost incurred by the Group for the six months ended 28 February 2021 was RMB347.7 million (for the six months ended 29 February 2020: RMB342.3 million).

29

The following table sets forth the total number of employees by function as at 28 February 2021:

	Number of
Function	employees	% of total
Teachers	4,833		69.4%
Administrative staff	311		4.5%
Other staff	1,821		26.1%
Total
6,965		100.0%

DECLARATION OF INTERIM DIVIDEND AND CLOSURE OF REGISTER OF MEMBERS

The Board has resolved to declare an interim dividend for the six months ended 28 February 2021 of HK$0.123 (2020: HK$0.082) per share to shareholders whose names appear on the register of members of the Company at the close of business on 15 June 2021. The interim dividend will be distributed to shareholders of the Company on 24 June 2021.

The register of members of the Company will be closed for the purpose of determining the identity of members who are entitled to the interim dividend from 10 June 2021 to 15 June 2021, both days inclusive, during which period no transfer of shares will be registered. In order to qualify for the interim dividend, all duly completed transfer forms accompanied by the relevant share certificates must be lodged with the Company's share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong, for registration, no later than 4:30 p.m. on 9 June 2021.

CORPORATE GOVERNANCE AND OTHER INFORMATION

The Board is committed to achieving high corporate governance standards. The Board believes that high corporate governance standards are essential in providing a framework for the Group to safeguard the interests of shareholders and to enhance corporate value and accountability.

1. Compliance with the Code on Corporate Governance Practices

During the six months ended 28 February 2021, the Company has complied with all applicable code provisions set out in the Corporate Governance Code (the "CG Code") and Corporate Governance Report contained in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules").

The Company will continue to regularly review and monitor its corporate governance practices to ensure compliance with the CG Code, and maintain a high standard of corporate governance practices of the Company.

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1. Compliance with the Model Code for Securities Transactions by Directors
   The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix 10 to the Listing Rules as its own securities dealing code to regulate all dealings by Directors and relevant employees of securities in the Company and other matters covered by the Model Code.
   Specific enquiry has been made of all the Directors and the relevant employees and they have confirmed that they have complied with the Model Code during the six months ended 28 February 2021.
2. Audit Committee
   The Company has established an audit committee with written terms of reference in accordance with the Listing Rules. The audit committee comprises three independent non-executive Directors, namely, Mr. Chen Lei, Mr. Xia Zuoquan and Mr. Zhang Zhixue. Mr. Chen Lei is the chairman of the audit committee.
   The audit committee has reviewed the unaudited interim condensed financial information of the Group for the six months ended 28 February 2021 and has met with the independent auditors, PricewaterhouseCoopers, who have reviewed the interim condensed financial information in accordance with International Standard on Review Engagements 2410. The audit committee has also discussed matters with respect to the accounting policies and practices adopted by the Company and internal control with senior management members of the Group.
3. Other Board Committees
   In addition to the audit committee, the Company has also established a nomination committee and a remuneration committee.
4. Purchase, Sale or Redemption of the Company's Listed Securities
   Neither the Company nor any of its subsidiaries or consolidated affiliated entities purchased, sold or redeemed any listed securities of the Company during the six months ended 28 February 2021.
5. Material Litigation
   The Company was not involved in any material litigation or arbitration during the six months ended 28 February 2021. The Directors are also not aware of any material litigation or claims that are pending or threatened against the Group during the six months ended 28 February 2021.

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1. Building Certificates and Permits
   As at 28 February 2021, in relation to owned buildings or groups of buildings other than those associated with the HIEU Schools (the "Non-HIEUSchools Owned Buildings"), the Group had not obtained proper building ownership certificates or other requisite certificates or permits for 11 of the 32 Non-HIEU Schools Owned Buildings, due in part to changes to the urban planning in the cities which the Group operates, administrative oversight by the Group's management and their unfamiliarity with the relevant regulatory requirements. The Group is in the process of applying to relevant government authorities for the relevant outstanding certificates and permits and are closely following up with the government authorities with respect to the applications. Please also refer to the section headed "Business - Properties - Owned Properties - Buildings or Groups of Buildings" in the Prospectus for further details. There have been no updates in this regard since the publication of the Prospectus.
   As at 28 February 2021, the Company was in the process of applying for, but had not yet obtained, the proper certificates in relation to 48 buildings currently occupied by the HIEU Schools. The Company understands that the lack of certificates in relation to these buildings will not prejudice the ability of the Company to operate the HIEU Schools and that the buildings are fit and safe for education purposes. For further details, please refer to the Company's circular dated 29 June 2018.
2. Use of Proceeds
3. 1. Use of Net Proceeds from Global Offering
      On 28 February 2017, the Shares were listed on the Main Board of the Stock Exchange. The net proceeds from the IPO were approximately HK$1,488.3 million, which have been utilised in the manner as set out in the Prospectus.
   2. Use of Proceeds from the International Finance Corporation Loan
      On 31 May 2018, the Company, China YuHua Education Investment Limited and China Hong Kong YuHua Education Limited entered into a loan agreement with International Finance Corporation, pursuant to which International Finance Corporation agreed to lend and the Company agreed to borrow up to the principal amount of US$75 million, comprised of an initial US$50 million tranche and a US$25 million tranche which shall, at the option of International Finance Corporation, be convertible into conversion shares at a conversion price of HK$5.75 per share. The conversion price was subsequently adjusted to HK5.53 per share. For further details, please refer to the Company's announcement dated 31 May 2018.
      As of 28 February 2021, the Company had drawn US$75 million from the loan facility; US$50.0 million of the total principal amount had been repaid to International Finance Corporation and US$0.1 million of the total principal amount was transferred to borrowings; and US$24.9 million of the total principal amount had been converted into ordinary shares of the Company and issued to International Finance Corporation in February 2020. For further details, please refer to the Company's announcements dated 4 February 2020 and 23 November 2020.

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1. Use of Proceeds from Issue of 2024 Convertible Bonds
   On 27 December 2019, the Company completed the issuance of the convertible bonds, being the 0.90% convertible bonds due 2024 in an aggregate principal amount of HK$2,088 million, of which the net proceeds amounted to approximately HK$2,062 million. As of 28 February 2021, the net proceeds of the issue of these convertible bonds had been utilised as set out in the announcement of the Company dated 23 November 2020.

PUBLICATION OF THE INTERIM RESULTS ANNOUNCEMENT AND INTERIM REPORT

This interim results announcement is published on the website of the Stock Exchange at www.hkexnews.hk and the website of the Company at www.yuhuachina.com. The interim report of the Group for the six months ended 28 February 2021 will be published on the aforesaid websites and will be dispatched to the Company's shareholders in due course.

By order of the Board

China YuHua Education Corporation Limited

Li Guangyu

Chairman and Executive Director

Hong Kong, 27 April 2021

As at the date of this announcement, the Board comprises Mr. Li Guangyu, Ms. Li Hua and Ms. Qiu Hongjun as executive Directors; and Mr. Zhang Zhixue, Mr. Chen Lei and Mr. Xia Zuoquan as independent non-executive Directors.

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