17.8% Increase in Revenue Year over Year

97.9% Increase in Operating Income Year over Year

SHENZHEN, China, Nov. 23 /PRNewswire-Asia-FirstCall/ -- Noah Education Holdings Ltd. (NYSE: NED) ("Noah" or "the Company"), a leading provider of interactive educational content and education services in China, today announced its unaudited financial results for fiscal quarter ended September 30, 2009.

    First Quarter Fiscal 2010 Financial Highlights
    -- Net revenue for the quarter increased by 17.8% to RMB238.2 million
       (US$34.9 million), compared with RMB202.2 million in the first quarter
       of fiscal 2009, exceeding the Company's previously stated guidance of
       RMB231 million to RMB237 million
    -- Gross profit increased by 16.1% to RMB117.5 million (US$17.2 million),
       representing a gross margin of 49.3%, compared with gross profit of
       RMB101.2 million, or a gross margin of 50.1%, in the first quarter of
       fiscal 2009
    -- Operating income increased by 97.9% to RMB32.5 million (US$4.8 million),
       compared with operating income of RMB16.4 million in the first quarter
       of fiscal 2009
    -- Net income increased by 5.5% to RMB37.8 million (US$5.5 million),
       compared with RMB35.8 million in the first quarter of fiscal 2009,
       which included RMB 10.9 million in derivative and foreign exchange
       gains
    -- Basic and diluted earnings per share were RMB0.99 (US$0.14) and RMB0.96
       (US$0.14), respectively, compared with RMB0.94 basic and RMB0.93
       diluted for the first quarter of fiscal 2009.  Non-GAAP earnings per
       share, excluding share-based compensation expenses were RMB1.06 basic
       (US$0.16) and RMB1.03 diluted (US$0.15), compared with RMB0.87 basic
       and RMB0.85 diluted, for the first quarter of fiscal 2009

Mr. Dong Xu, Noah's Chairman and Chief Executive Officer, said, "Noah Education is off to a very solid start in fiscal 2010. We are executing well on all fronts, driving top-line growth, maintaining stable margins and steadily improving our bottom line. In our flagship Electronic Learning Product or 'ELP' business, our product mix has shifted as we predicted, with Kids Learning Device or 'KLD' now representing the largest component of ELP revenue. As DLD and E-dictionaries settle into maturity, KLD will be our key top line growth driver among our ELP products. Market reception to these products has been excellent, with demand showing no signs of slowing down. We will continue to focus on R&D efforts to create new, innovative applications for children aged 3-19 years to stay ahead of the competition in this fast-growing and underserved market. Additionally, we have implemented more rigorous budget controls in support of our margin performance, and to enable us to better predict and control expenses.

"Last year, we took the first step in diversifying our education services offering through the acquisition of Little New Star or 'LNS', and I am pleased to report that integration is well underway. The majority of corporate and administrative functions are completely integrated as of the end of the first quarter. We have added new talent to the LNS management team that will focus on strengthening the brand, creating a customer-focused culture and exploring innovative ways to grow the business. I am pleased with our progress to date and confident that we have the tools to enable this business to thrive.

"By adhering to the fundamental principles of our strategy, we have now delivered five consecutive profitable quarters during the global recession. We are focused on growing the company organically and diversifying our offering through selective acquisitions of complementary businesses. Ultimately, we strive to become the leader in providing interactive educational content and education services to students in China," Xu concluded.

First Quarter Fiscal Year 2010 Unaudited Financial Results

Net Revenue. Net revenue for the first quarter of fiscal 2010 was RMB238.2 million (US$34.9 million), exceeding the Company's guidance of RMB231 million to RMB237 million. This represented an increase of 17.8% compared with net revenue of RMB202.2 million for the first quarter of fiscal 2009. Net revenue from Noah's legacy ELP business was RMB225.2 million (US$33.0 million), representing a year-over-year increase of 11.4%. Net revenue from LNS was RMB13.0 million (US$1.9 million).

The following tables provide a breakdown of sales volume and revenue for the first fiscal quarter 2010 for Noah's legacy ELP business segment.

                              Volume                  Net Revenue (RMB 'MM)
                   Q1 10      Q1 09   Inc/(Dec)    Q1 10     Q1 09   Inc/(Dec)
    DLD           122,920    176,327    -30.3%      84.3     135.4     -37.7%
    KLD           214,756     73,165   +193.5%     106.1      27.5    +285.8%
    E-dictionary  164,300    237,941    -30.9%      34.1      36.2      -5.9%
    Others             --         --       --        0.6       3.1     -80.6%
    Total         501,976    487,433     +3.0%     225.2     202.2     +11.4%

Cost of revenue. Cost of revenue for the first quarter of fiscal 2010 was RMB120.6 million (US$17.7 million), representing an increase of 19.5% from RMB101.0 million in the first quarter 2009. This was essentially in line with Noah's revenue growth, with a slight adjustment for the change in product mix.

Gross Profit and Gross Margin. Gross profit in the first quarter of fiscal 2010 was RMB117.5 million (US$17.2 million), representing a year-over-year increase of 16.1%. Gross margin for the first quarter was 49.3%, down slightly from 50.1% in the first quarter 2009. Gross margin decreased slightly in line with the change in the product mix, which is now more heavily weighted toward KLD products. Gross profit and margin for the ELP business for the first fiscal quarter 2010 were RMB110.1 million (US$16.1 million) and 48.9%, respectively. Gross profit and margin for LNS business for the first quarter 2010 were RMB7.4 million (US$1.1 million) and 56.5%, respectively.

Operating Expenses. Total operating expenses for the first quarter of fiscal 2010 were RMB98.2 million (US$14.4 million), a slight year-over-year increase compared to RMB 95.8 million in the first quarter of 2009.

Research and development expenses for the first quarter of fiscal 2010 were RMB12.4 million (US$1.8 million), representing a 28.1% decrease from RMB17.2 million in the first quarter of fiscal 2009. The year-over-year decrease was primarily due to a decrease in costs related to third-party software and content developers.

Sales and marketing expenses for the first quarter of fiscal 2010 were RMB69.3 million (US$10.2 million), up 7% year over year from RMB64.7 million, and in line with the expansion of Noah's business.

General and administrative expenses for the first quarter of fiscal 2010 were RMB16.4 million (US$2.4 million), up 18.6% from RMB13.8 million in the first quarter of fiscal 2009. The increase in general and administrative expenses was mainly attributable to the integration of LNS and depreciation related to the Company's new office space in Chengdu.

Other Operating Income. Other operating income for the first quarter of fiscal 2010 was RMB13.3 million (US$1.9 million), increased by 20% year-over-year, compared to RMB11.0 million in the first quart of fiscal 2009. Other operating income for first fiscal quarter of 2010 was primarily consist of RMB12.0 million (US$1.7 million) government subsidy income to high-tech software companies, and RMB1.3 million (US$0.2 million) from sales of miscellaneous accessories.

Total Operating Income. Total operating income for the first quarter of fiscal 2010 increased significantly to RMB32.5 million (US$4.8 million), representing an operating margin of 13.7%, compared to operating income of RMB16.4 million and an operating margin of 8.1% in the first quarter of fiscal 2009. This was a result of the Company's efforts to control operating expenses while increasing revenue.

Other Non-operating Income, net. Interest income was RMB2.9 million (US$0.4 million) in the first quarter of fiscal 2010, a significant increase compared to RMB0.6 million in first quarter of fiscal 2009, attributable mainly to the Company's higher balance of bank deposits. Investment income was RMB1.1 million (US$0.2 million) in the first quarter of fiscal 2010, compared with RMB7.8 million in the first quarter of 2009. Other non-operating income was RMB0.6 (US$0.098 million) in the first quarter of fiscal 2010, compared with RMB6.1 million in the first quarter of fiscal 2009. The difference is attributable to the absence of any foreign exchange gain or gain from the fair value of warrants in the 2010 period.

Net Income. The Company reported net income of RMB37.8 million (US$5.5 million) for the first quarter of fiscal 2010. Basic earnings per share and diluted earnings per share were RMB0.99 (US$0.14) and RMB0.96 (US$0.14), respectively, for the first quarter of fiscal 2010. This compares with net income of RMB35.8 million which included RMB 10.9 million in derivatives and foreign exchange gains, and basic earnings per share and diluted earnings per share of RMB0.94 and RMB0.93 respectively for the first quarter of fiscal 2009.

Net income excluding share-based compensation expenses (non-GAAP) for the first quarter ended September 30, 2009 was RMB40.5 million (US$5.9 million), or RMB1.06 (US$0.16) and RMB1.03 (US$0.15) per basic and diluted share, respectively.

Liquidity. As of September 30, 2009, Noah had cash and cash equivalents, short-term bank deposits and investments of RMB828.1 million (US$121.3 million). This compares with cash and cash equivalents, short-term bank deposit and investments of RMB776.1 million as of June 30, 2009.

Q1 Operational Highlights

ELP products. As predicted, the sales mix within Noah's ELP product category has shifted, with a heavier weighting toward KLD products as DLD and e-dictionary reach maturity. Noah remains focused on developing new and innovative content delivery methods to drive demand for these products.

    -- Kids Learning Device (KLD) products.  KLD products continue to generate
       substantial interest, and for the first time are the largest
       contributor to total ELP revenue at 47.1%.  The Company expects KLD
       revenue and sales volume to continue to grow at a fast rate.
    -- Digital Learning Device (DLD) products.  Noah remains China's industry
       leader in terms of both DLD sales and volume.  In Q1 fiscal 2010, Noah
       saw a decline in DLD revenue which was partially due to the difficult
       economy.  DLD sales declines are expected to be less pronounced in the
       coming quarters as the economy recovers.  Additionally, increases in
       KLD sales are expected to offset declines in DLD revenue.
    -- E-dictionaries.  In general, demand for Noah's e-dictionaries remains
       stable, with revenue down slightly from Q1 fiscal 2009.  The Company is
       looking into expansion opportunities in international markets for these
       products.

Education Services. LNS integration is on track. The LNS management team will focus on strengthening the brand, creating a customer-focused culture and capitalizing on the synergy between the education services and ELP businesses. Our newly developed Electronic Teaching Devices were introduced to LNS schools in September. We are also developing English training programs for younger kids, and seeking partnership opportunities with kindergarten classes. We continue to look for acquisition opportunities in education services segment.

Recent Business Highlights

Strategic Investment in Franklin Electronic Publishers. Noah recently announced that it would make a strategic investment with a total consideration of $3 million in Franklin Electronic Publishers via Saunders Acquisition Corporation, an entity formed to consummate a merger with and into Franklin. The deal is expected to be completed in the third quarter of fiscal 2010. Management expects this investment to facilitate a partnership that helps further Noah's strategic objectives. As a result:

    -- Franklin and Noah agree to carry out certain business cooperation
       initiatives, including Noah obtaining the exclusive sponsorship of
       Franklin's Global SpellEvent in China, gaining access to Franklin's
       distribution channel outside of China, and being granted a right of
       first offer as the preferred original design manufacturer in China for
       Franklin's handheld electronic reference products and handheld language
       learning devices. There will also be cost saving opportunities from
       joint R&D efforts.

Strengthened Management Team. In early November, Noah announced changes to its senior management team that enable each member of the team to focus on his/her strengths and will create stronger leadership in the long term. Changes include:

    -- Mr. Benguo Tang, one of Noah's founders, has been appointed to the
       position of President and Chief Operating Officer upon the departure of
       Mr. Xianquan Xiao.  Having been with Noah since its inception, Mr. Tang
       is well placed to drive the execution of the Company's strategic vision.
    -- Mr. Jerry He, the Company's Executive Vice President, has been
       appointed to the role of Chief Financial Officer.
    -- Ms. Dora Li will manage Noah's internal financial controls and
       accounting processes as Noah's Vice President of Finance, Controller.

Financial Outlook for Second Quarter and Full Year of Fiscal 2010

Based on current estimates and market conditions, Noah expects to generate net revenue in the range of RMB151 million (US$ 22.1 million) to RMB159 million (US$ 23.3 million) for the second quarter of fiscal 2010, which includes RMB146 million to RMB152 million from the legacy ELP business, and RMB5 million to RMB7 million from the LNS business. Basic net income per share in the second quarter of fiscal 2010 is expected to be in the range of RMB 0.39 to RMB0.45 (US$ 0.06 to US$ 0.07).

For the full year fiscal 2010, Noah expects the net revenue to be in the range of RMB824 million to RMB855 million (US$ 121 million to US$ 125 million), which includes RMB786 million to RMB812 million from the legacy ELP business and RMB38 million to RMB43 million from the LNS business. Basic net income per share is expected to be in the range of RMB3.00 to RMB3.20 (US$ 0.44 to US$ 0.47).

This forecast reflects Noah's current and preliminary view, which is subject to change.

Conference Call

    Noah has scheduled an investor conference call at 6:00 a.m. (Pacific) /
9:00 a.m. (Eastern) / 10:00 p.m. (Beijing/Hong Kong) on November 23, 2009 to
discuss its first quarter fiscal 2010 financial results and recent business
activities.  Individuals interested in participating in the call may do so by
dialing:

                            Toll Free                       Toll
    United States           1-800-510-0178                  1-617-614-3450
    China  - South          China Telecom 10-800-130-0399
                            China Netcom 10-800-852-1490
           - North          China Telecom 10-800-152-1490
    Hong Kong               800-96-3844
    United Kingdom          00-800-280-02002
    Passcode                Noah Education

    Please dial in 10 minutes before the call is scheduled to begin.

A telephone replay will be available shortly after the call until November 30, 2009 by dialing the following numbers:

                            Toll Free               Toll
    United States           1-888-286-8010          1-617-801-6888
    International Dial In                           1-617-801-6888
    Passcode                89520019

A live webcast of the conference call and replay will be available on the investor relations page of Noah's website at http://ir.noahedu.com.cn .

Annual General Meeting

Noah also today announced the details of its Annual General Meeting for shareholders (AGM). The AGM will take place at Building C2, Chengdu High-Tech Software Park, Tianfu Road South, Chengdu, Sichuan Province, People's Republic of China on Tuesday, December 22nd at 9 am local time. All NED shareholders are invited to attend the meeting in person, or vote via proxy before December 19, 2009.

Currency Convenience Translation

For the convenience of readers, certain RMB amounts have been translated into US dollars at the rate of RMB Noah expects to generate net revenue in the range of RMB6.8262 to US$1.00, the noon buying rate for US dollars in effect on September 30, 2009 for cable transfers of RMB per US dollar as certified for customs purposes by the Federal Reserve Bank of New York.

Use of Non-GAAP Financial Measures

In addition to consolidated financial results under GAAP, the Company also provides non-GAAP financial measures, including non-GAAP net income which excludes non-cash share-based compensation and change in fair value of warrants. The Company believes that the non-GAAP financial measures provide investors with another method for assessing the Company's operating results in a manner that is focused on the performance of its ongoing operations. Readers are cautioned not to view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the performance of the Company's liquidity and when planning and forecasting future periods.

About Noah

Noah Education Holdings Limited is a leading provider of interactive educational content and education services in China. Noah's core offering includes the development and marketing of interactive educational courseware content, electronic learning products (ELP), software, kids' English training and after-school education services. Noah combines standardized education content with innovative digital and multimedia technologies to create a dynamic learning experience and improve academic performance for the kids at the age of 3-19 in China. Noah has developed a nationwide sales network, powerful brand image, and accessible and diverse delivery platforms to bring its innovative content to the student population. Noah also provides kids' English training service under the brand Little New Star in its direct-owned schools and more than 600 franchise schools throughout China. Noah was founded in 2004 and is listed on the New York Stock Exchange under the ticker symbol NED.

Safe Harbor Statement

This press release contains forward-looking statements that reflect Noah's current expectations and views of future events that involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Noah has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. You should understand that our actual future results may be materially different from and worse than what Noah expects. Information regarding these risks, uncertainties and other factors is included in Noah's most recent Annual Report on Form 20-F and other filings with the SEC.

   For more information, please contact:

    Investor Contact:
     Jerry He, CFA
     CFO and Executive Vice President
     Noah Education Holdings Ltd
     Tel:   +86-755-8204-9263
     Email: jerry.he@noahedu.com

    Investor Relations (US):
     Jessica McCormick
     Taylor Rafferty
     Tel:   +1-212-889-4350
     Email: noahedu@taylor-rafferty.com

    Investor Relations (HK):
     Ruby Yim
     Taylor Rafferty
     Tel:   +852-3196-3712
     Email: noahedu@taylor-rafferty.com


                          - FINANCIAL TABLES FOLLOW -



                          Noah Education Holdings Ltd.
                      Consolidated Statements of Operations

                                                 Three months ended
                                                    September 30,
                                          2008                 2009
                                       (Unaudited)          (Unaudited)
                                           RMB            RMB         USD
    Net revenue                        202,179,495    238,165,223 34,889,869
    Cost of revenue                   (100,979,037)  (120,643,320) (17,673,569)
    Gross profit                       101,200,459    117,521,903   17,216,300
    Research & development expenses    (17,234,011)   (12,387,826)  (1,814,747)
    Sales & marketing expenses         (64,715,603)   (69,266,914) (10,147,214)
    General and administrative
     expenses                          (13,834,460)   (16,401,747)  (2,402,764)
    Other expenses                         (12,681)      (170,634)     (24,997)
    Total operating expenses           (95,796,755)   (98,227,121) (14,389,722)

    Other operating income              11,041,160     13,252,092    1,941,357
    Operating income                    16,444,864     32,546,874    4,767,935
    Derivative gain (loss)               5,161,005              0            0
    Interest income                        641,142      2,868,630      420,238
    Investment income                    7,790,226      1,122,175      164,392
    Other Non-Operating income           6,106,229        667,545       97,792
    Income before income taxes          36,143,465     37,205,224    5,450,357
    Income tax (expenses) credit          (315,509)       603,510       88,410
    Net income                          35,827,957     37,808,734    5,538,767

    Net income per share
      Basic                                   0.94           0.99         0.14
      Diluted                                 0.93           0.96         0.14

    Weighted average ordinary shares
     outstanding
      Basic                             37,932,586     38,243,246
      Diluted                           38,626,579     39,184,476



                          Noah Education Holdings Ltd.
                           Consolidated Balance Sheet


                                       June 30, 2009   September 30, 2009
                                          Audited          Unaudited
                                            RMB         RMB          USD
    Assets:
    Current assets
       Cash and cash equivalents       493,911,466   445,051,410   65,197,534
       Short-tem bank deposit          274,200,000   374,000,000   54,788,902
       Investments                       7,978,942     9,098,081    1,332,818
       Accounts receivables, net of
        allowance                      181,653,129   203,758,663   29,849,501
       Related party receivables           627,626       599,124       87,768
       Inventories                     151,872,803   142,209,361   20,832,873
       Prepaid expenses and other
        current assets                  69,039,625    65,180,318    9,548,551
       Deferred tax asset                   13,207       394,753       57,829
           Total current assets      1,179,296,798 1,240,291,710  181,695,776
       Deposit for investment           21,581,952             0            0
       Property, plant and
        equipment, net                 119,619,947   133,218,305   19,515,734
       Intangible assets, net            4,461,760    27,903,701    4,087,736
       Goodwill                                  0    56,597,146    8,291,164
       Deferred tax asset                2,058,180     2,058,180      301,512
           Total assets              1,327,018,637 1,460,069,042  213,891,922

    Liabilities and Shareholders'
     Equity
    Current liabilities
       Accounts payable                 82,560,888    89,350,344   13,089,324
       Other payables and accruals      45,809,825    78,168,232   11,451,207
       Advances from customers           3,308,173     2,249,516      329,541
       Income taxes payable                499,471       403,911       59,171
       Deferred revenues                 1,518,203     3,685,673      539,930
           Total current liabilities   133,696,560   173,857,676   25,469,173
       Consideration payable                     0    10,000,000    1,464,944
       Deferred revenues                 6,227,860     6,648,323      973,942
       Deferred tax liabilities                  0     2,693,704      394,613
           Total non-current
            liabilities                  6,227,860    19,342,027    2,833,499
       Total liabilities               139,924,420   193,199,703   28,302,672

    Shareholders' Equity
    Ordinary shares                         14,504        15,493        2,270
    Additional paid-in capital       1,029,778,033 1,072,046,283  157,048,765

    Accumulated other comprehensive
     loss                              (93,632,438)  (93,935,295) (13,760,994)
    Retained earnings                  250,934,118   288,742,858   42,299,209
    Total shareholders' equity       1,187,094,217 1,266,869,339  185,589,250

    Total liabilities and
     shareholders' equity            1,327,018,637 1,460,069,042  213,891,922

    Note 1: Information extracted from the audited financial statements
            included in the fiscal 2009 Form 20-F of the Company filed with
            the Securities and Exchange Commission on November 20, 2009.




                          Noah Education Holdings Ltd.
                       Reconciliation of Non-GAAP to GAAP

                                           Three months ended
                                              September 30,
                                     2008                     2009
                                  (Unaudited)             (Unaudited)
                                  RMB   % of Rev     RMB         USD  % of Rev

    GAAP net revenue         202,179,495  100.0% 238,165,223 34,889,869 100.0%

    GAAP gross profit        101,200,459   50.1% 117,521,903 17,216,300  49.3%
    Share-based compensation      61,404    0.0%      71,609     10,490   0.0%
    Non-GAAP gross profit    101,261,863   50.1% 117,593,512 17,226,790  49.4%

    GAAP operating income     16,444,864    8.1%  32,546,874  4,767,935  13.7%
    Share-based compensation   2,301,798    1.1%   2,660,903    389,807   1.1%
    Non-GAAP operating income 18,746,662    9.3%  35,207,777  5,157,742  14.8%

    GAAP net income           35,827,957   17.7%  37,808,734  5,538,767  15.9%
    Share-based compensation   2,301,798    1.1%   2,660,903    389,807   1.1%
    Change in the fair value
     of warrants              (5,161,005)  -2.6%           0          0   0.0%
    Non-GAAP net income       32,968,750   16.3%  40,469,637  5,928,574  17.0%

    GAAP net income per share
    Basic                           0.94                0.99       0.14
    Diluted                         0.93                0.96       0.14

    Non-GAAP net income per
     share
    Basic                           0.87                1.06       0.16
    Diluted                         0.85                1.03       0.15

SOURCE Noah Education Holdings Ltd.

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