A private kindergarten company that made headlines in late 2017 for allegations of child abuse released its 2018 financial report Wednesday, showing steady enrollment growth but halved net income compared with the previous year.
According to the report by New York Stock Exchange-listed RYB Education Inc. — one of China’s leading early childhood education providers — the company had 23,627 total students at the end of 2018, a year-on-year increase of 9 percent. Its net revenues for the fourth quarter of 2018, meanwhile, had increased by 15 percent to $45 million. Wei Ping, the company’s chief financial officer, attributed this growth to stable enrollment, increased student fees, and expanded product sales.
However, after operating costs were deducted, RYB Education’s net income for 2018 was just $5.1 million — 54 percent lower than the year prior. Furthermore, the company’s cash and assets totaled $104.1 million at the end of last year, compared with $158.7 million at the end of 2017. This decrease was primarily due to acquisition-related payments, capital expenses, and fewer advance tuition payments from customers.
RYB Education was thrust into the international spotlight in November 2017 when Beijing authorities investigated parents’ claims that they had found strange marks on their kids’ bodies. Police determined that initial rumors of children being drugged and molested were unfounded, and a teacher surnamed Liu was sentenced to 18 months in prison for using sewing needles to punish children who had refused to sleep during naptime.
To regain parents’ trust and confidence, RYB Education began investing in improving the safety and security of its facilities, setting up comprehensive surveillance systems, scheduling safety inspections, and promoting transparency by inviting parents to participate in schools’ daily operations, Shi Yanlai, the company’s CEO and co-founder, said Wednesday. Shi also acknowledged that these initiatives had affected the company’s short-term margins.
A year after the scandal, the State Council — China’s Cabinet — issued a guideline restricting private kindergartens from going public and prohibiting already-listed companies from investing in domestic for-profit kindergartens. This announcement sent RYB Education’s stock price plummeting by over 50 percent.
But RYB Education coped by adjusting its business model: In February of this year, it purchased a 70-percent stake in a Singaporean early childhood education company for 125 million yuan ($18.6 million), according to its financial report, which also states that the company intends to change its name to GEH Education.
Founded in 1998, RYB Education provides early childhood education for ages 2 through 6. According to its official website, the company had 80 directly owned kindergartens and 175 franchised kindergartens in over 130 cities and towns across China as of June 2017.
Editor: David Paulk.
(Header image: A mother and child leave an RYB Education kindergarten in Beijing after several parents accused the school of abusing their children, Nov. 24, 2017. IC)