Noah Education Announces Unaudited Fourth Quarter and Full Fiscal Year 2010 Financial Results

Aug 30, 2010, 20:15 ET from Noah Education Holdings Ltd.

SHENZHEN, China, Aug. 30 /PRNewswire-Asia-FirstCall/ -- Noah Education Holdings Ltd. (NYSE: NED) ("Noah" or "the Company"), a leading provider of supplemental education products and services in China, today announced its unaudited financial results for the fourth quarter and full fiscal year ended June 30, 2010.

    Fourth Quarter Fiscal 2010 Financial Highlights
    -- Net revenue for the quarter decreased by 71.9% to RMB33.5 million
       (US$4.9 million), compared with RMB119.1 million in the fourth quarter
       of fiscal 2009
    -- Gross loss was RMB3.8 million (US$0.5 million), compared with gross
       profit of RMB61.5 million in the fourth quarter of fiscal 2009
    -- Operating loss was RMB89.4 million (US$13.2 million), compared with
       operating income RMB9.8 million in the fourth quarter of fiscal 2009
    -- Net loss was RMB83.5 million (US$12.3 million), compared with net
       income of RMB17.9 million in the fourth quarter of fiscal 2009
    -- Basic and diluted loss per share were RMB2.19 (US$0.32) and RMB2.15
       (US$0.32) respectively, compared with basic and diluted earnings per
       share of RMB0.50 for the fourth quarter of fiscal 2009. Non-GAAP basic
       and diluted loss per share, excluding share-based compensation expense,
       were RMB2.13 (US$0.31) and RMB2.09 (US$0.31) respectively, compared
       with basic and diluted earnings per share of RMB0.57 for the fourth
       quarter of fiscal 2009

    Full Fiscal Year 2010 Financial Highlights
    -- Net revenue for fiscal year 2010 increased by 1.4% to RMB680.3 million
       (US$100.3 million), compared with RMB671.1 million in fiscal 2009
    -- Gross profit decreased by 9.6% to RMB311.5 million (US$45.9 million),
       representing a gross margin of 45.8%, compared with gross profit of
       RMB344.7 million, or a gross margin of 51.4%, in fiscal 2009
    -- Operating loss was RMB13.9 million (US$2.0 million), compared with
       operating income of RMB64.7 million in fiscal 2009
    -- Net income decreased by 94.2% to RMB5.7 million (US$0.8 million),
       compared with RMB97.0 million in fiscal 2009
    -- Basic and diluted earnings per share were RMB0.15 (US$0.02) and RMB0.14
       (US$0.02) respectively, compared with basic and diluted earnings per
       share of RMB2.66 and RMB2.62 respectively in fiscal 2009. Non-GAAP
       basic and diluted earnings per share, excluding share-based
       compensation expense and the change in the fair value of warrants, were
       RMB0.42 (US$0.06) and RMB0.41 (US$0.06), compared with RMB2.73 basic
       and RMB2.71 diluted share in fiscal 2009


    Key Strategic Development -- Completion of Acquisition of Wentai Education

The Transaction

On August 30, 2010, Noah completed its acquisition of a 70% interest in Shenzhen Wentai Education Industry Development Co., Ltd ("Wentai Education"), a company focused on early childhood, primary and secondary education services in China, pursuant to the terms of a definitive agreement entered into on March 15, 2010. The total consideration of RMB126 million is funded by the Company's current cash reserve. Of the RMB126 million, RMB90 million will be used to fuel expansion plans. Wentai Education's management team will retain 30% ownership of the business. Wentai Education recorded revenue of approximately RMB49 million in 2009, and Noah currently expects the newly acquired business to generate RMB53-56 million on a pro-forma basis in Noah's fiscal year 2011, excluding additional growth from potential new schools brought under Wentai management. Wentai Education will serve as an attractive platform for Noah to test its new content and devices. Additionally, the bilingual nature of the schools is an ideal complement to Noah's Little New Star (LNS) tutoring centers, and paves the way for international partnership opportunities. Wentai Education's experienced staff and management team will remain with the Company in order to help drive the expansion of the Wentai Education business.

About Wentai Education

Founded in 2002, Wentai Education specializes in operating and managing schools for students aged 3-18, with the goal of providing high-end, top-quality education. Wentai Education's management team implements a rigorous, well-structured curriculum at each of its schools to provide students with a profound and comprehensive understanding of the subject matter. Wentai Education currently manages six kindergartens and four primary schools in five cities in Guangdong Province: Guangzhou, Foshan, Shenzhen, Dongguan and Huizhou. All of its schools are bilingual, with Chinese and English as the teaching mediums. Recognized as top-tier in their respective cities for quality of education, Wentai Education has a total student enrollment of over 5,000, and faculty and staff numbering approximately 580. In addition, the schools are able to provide enrichment programs, summer camps and before- and after-school programs.

Commenting on the results, Mr. Xu Dong, Noah's Chairman and Chief Executive Officer, said, "During the final quarter of fiscal year 2010 we encountered significant disruptions to our distribution capability and capacity as we sought to realign our distributors. Although these challenges, as well as an increasingly tough competitive environment, adversely impacted the sales of our ELP products and overall financial results in the fiscal fourth quarter, we continue to believe that this strategic decision will ultimately help maximize revenue opportunities by increasing penetration in our target markets and enhancing our geographical reach. To strengthen our network we have recently commenced monthly meetings in which our distributors can voice their concerns and provide us with suggestions to help us improve our products, sales lines, and working relationships. As a result of these relationship building efforts, we are pleased to report that the majority of our legacy distributors continue to deploy our products. Although we do anticipate a latency period through the end of calendar year 2010 as new distributors evaluate the success of Noah's devices within their overall product lineup, we are confident that the relationship building steps we are exercising will allow us to effectively stabilize our network of distributors and restore our sales channels.

"For the first half of fiscal 2011, we will focus our efforts on reducing our accounts receivable and inventory to healthy levels so that in the following quarters we may then resume ELP growth through new product sales. As we work through this transitional period on the sales front, we will strive to reduce our cost base by appropriately aligning our sales and marketing, back office, administrative, production, and research spending and staff headcount with our current performance. We anticipate these initiatives will allow us to realize an approximate RMB20 million in cost savings over the course of fiscal 2011, which will help support our bottom line.

"As we actively work to address the disruptions in our core business, we are encouraged by the strong performance of our education services business and believe it will fuel much of our growth going forward. Little New Star exceeded our guidance for both the fourth quarter and full year of fiscal 2010 and continues to demonstrate attractive growth potential as it further expands its directly-owned and franchised school network, and as the Dudu Happy Reading Program gains traction. We are also very pleased to have finalized our acquisition of Wentai Education, which further extends our footprint within China's growing, yet fragmented education services industry. The acquisition not only underscores our ability to execute on one of our key growth initiatives, but its potential synergies with both our core Electronic Learning Products business and Little New Star (LNS) make it an important strategic move. We look forward to working in close collaboration with Wentai Education's experienced staff and management team whose industry knowledge and expertise will help drive the expansion of this business. We are confident this acquisition will provide us with a solid stream of recurring revenue, and that the high margin nature of this business will also help drive profit growth.

"As we head into our peak season, we anticipate the measures we have implemented to contribute to the stabilization of our ELP business and the restoration of our distribution network, with our expanding presence in the education services space to be a primary catalyst for our growth in the coming quarters."

Fourth Quarter and Fiscal Year 2010 Unaudited Financial Results

Net Revenue. Net revenue for the fourth quarter of fiscal 2010 was RMB33.5 million (US$4.9 million). This represented a decrease of 71.9% compared with net revenue of RMB119.1 million for the fourth quarter of fiscal 2009. The decline in net revenue from Noah's preliminary estimate of RMB55.6 million, which was provided on July 26, 2010, mostly stemmed from the return of ELP devices as new distributors gained a better understanding of customer demand and adjusted order levels accordingly. Net revenue from Noah's traditional ELP business was RMB23.2 million (US$3.4 million), compared to the Company's previously issued guidance of RMB121 million to RMB126 million, representing a decrease of 80.5% from the same period last fiscal year. Net revenue from the LNS business was RMB10.3 million (US$1.5 million), against the Company's guidance of RMB8 to RMB9 million.

For the fiscal year 2010, net revenue was RMB680.3 million (US$100.3 million), up 1.4% from RMB671.1 million in fiscal year 2009. For the full fiscal year, net revenue from the traditional ELP business was RMB640.4 million (US$94.4 million), representing a decrease of 4.6% from fiscal 2009. Net revenue from the LNS business was RMB39.9 million (US$5.9 million).

The following tables provide a breakdown of sales volume and net revenue for Noah's traditional ELP business in the fourth quarter and fiscal year 2010:


                                          Volume               Net Revenue
                                                                (RMB 'MM)
                                                  Inc/                  Inc/
    Noah                       Q4 10      Q4 09   (Dec)  Q4 10  Q4 09   (Dec)
    DLD                        4,279     72,965  -94.1%   0.08   53.6  -99.9%
    KLD                       10,681     69,968  -84.7%    4.0   33.0  -87.9%
    E-dictionary              95,269    159,092  -40.1%   18.9   31.6  -40.2%
    Others                        --         --      --    0.2    0.9  -77.7%
      Total                  110,229    302,025  -63.5%   23.2  119.1  -80.5%

                                          Volume               Net Revenue
                                                                (RMB 'MM)
                                                  Inc/                  Inc/
    Noah                       FY 10      FY 09   (Dec)  FY 10  FY 09   (Dec)
    DLD                      337,071    506,017  -33.4%  238.8  380.1  -37.2%
    KLD                      563,986    376,324   49.9%  278.7  156.4   78.2%
    E-dictionary             567,737    720,119  -21.2%  121.6  128.2   -5.1%
    Others                        --         --      --    1.3    6.4  -79.7%
      Total                1,468,794  1,602,460   -8.3%  640.4  671.1   -4.6%

Cost of revenue. Cost of revenue for the fourth quarter of fiscal 2010 was RMB37.3 million (US$5.5 million), representing a decrease of 35.5% from RMB57.6 million in the fourth quarter 2009. For fiscal year 2010, cost of revenue was RMB368.8 million (US$54.3 million), up 13.0% from RMB326.4 million in fiscal 2009. The decrease in cost of revenue for the fourth fiscal quarter 2010 was mainly due to decline in sales within the ELP business. For fiscal year 2010, excluding cost of revenue from LNS business of RMB18.5 million (US$2.7 million), which was not present in fiscal 2009, cost of revenue from the Company's ELP business increased by 7.3%, primarily due to an increase in raw material cost, a write-down charge for obsolete inventory, and an increase in copyright licensing fee.

Gross Profit/loss and Gross Margin. Gross loss in the fourth quarter of fiscal 2010 was RMB3.8 million (US$0.5 million), compared with gross profit of RMB61.5 million in the fourth quarter of fiscal 2009.

Gross profit for fiscal year 2010 decreased to RMB311.5 million (US$45.9 million), from RMB344.7 million in fiscal 2009. The gross margin for fiscal year 2010 was 45.8% as compared with 51.4% in 2009. The decrease in gross profit margin was primarily due to a shift in Noah's product mix towards KLD products during fiscal 2010.

Operating Expenses. Total operating expenses for the fourth quarter of fiscal 2010 were RMB87.8 million (US$13.0 million), representing an increase of 43.0% from RMB61.4 million in the fourth quarter 2009. Total operating expenses for fiscal 2010 were RMB367.0 million (US$54.1 million), representing an increase of 12.7% from RMB325.7 million in fiscal year 2009. These increases were mainly due to rises in general and administrative expenses, sales and marketing expenses, and other expenses.

Research and development (R&D) expenses for the fourth quarter of fiscal 2010 were RMB12.9 million (US$1.9 million), representing a 3.7% decrease from RMB13.4 million in the fourth quarter of fiscal 2009. Total R&D expenses includes RMB0.44 million (US$0.06 million) from LNS. Excluding expenses generated from LNS, R&D expenses from ELP business decreased RMB0.9 million (US$0.1 million). Total decrease was mainly attributable to a decrease in third party software development cost, new product modeling, and office rental.

For fiscal 2010, R&D expenses were RMB52.7 million (US$7.8 million), representing a slight decrease of 6.3% from RMB56.3 million in fiscal 2009. The decrease in R&D expenses for fiscal 2010 was mainly attributable to a decline in third party content and software development cost.

Sales and marketing (S&M) expenses for the fourth quarter of fiscal 2010 were RMB36.9 million (US$5.4 million), up 6.8% from RMB34.5 million of the fourth quarter of fiscal 2009. The increase in S&M expenses includes a RMB1.0 million (US$0.1 million) from LNS and a RMB1.4 million (US$0.2 million) increase from the ELP business, which was mainly due to increase in staff cost, shipping expense, travel expenses, rental expenses, which was offset by a decrease in promotional expenses.

For fiscal year 2010, S&M expenses were RMB219.5 million (US$32.4 million), up 4.2% from RMB210.7 million in the previous fiscal year. The increase in S&M expenses includes a RMB3.4 million (US$0.5 million) from LNS and a RMB5.4 million (US$0.8 million) increase from the ELP business, which was mainly due to an increase in expenses relating to products upgrading, promotional expense, and travel expenses which was offset by a decrease in staff cost and entertainment expenses.

General and administrative (G&A) expenses for the fourth quarter of fiscal 2010 were RMB35.6 million (US$5.2 million), up 163.7% from RMB13.5 million in the fourth quarter of fiscal 2009. The increase in G&A expenses in the fourth quarter mainly attributable to RMB1.8 million (US$0.3 million) from LNS and RMB20.2 million (US$3.0 million) from the ELP business, which was mainly due to an increase in bad debt provision of RMB17.2 million (US$2.5 million), an increase in staff cost of RMB1.1 million (US$0.2 million), and an increase in real estate tax of RMB0.9 million (US$0.1 million).

For fiscal year 2010, G&A expenses were RMB91.8 million (US$13.5 million), up 56.9% from RMB58.5 million in fiscal 2009. The increase in G&A expenses for fiscal 2010 includes RMB7.2 million (US$1.1 million) from LNS and an increase of RMB26.2 million (US$3.9 million)from the ELP business, which mainly includes an increase in bad debt provision of RMB13.4 million (US$2.0 million), an increase in staff cost of RMB4.7 million (US$0.7 million), depreciation cost of RMB3.6 million (US$0.5 million), and an increase in professional fees of RMB2.3 million (US$0.3 million) relating to the Company's merger and acquisition initiatives, an increase in real estate tax of RMB0.9 million (US$0.1 million) and other business tax of RMB0.7 million (US$0.1 million).

Income (Loss) from Operations. Operating loss for the fourth quarter of fiscal 2010 was RMB89.4 million (US$13.2 million), compared to an operating income of RMB9.8 million in the fourth quarter of fiscal 2009. For the fiscal year ended June 30, 2010, operating loss was RMB13.9 million (US$2.0 million), as compared to operating income of RMB64.7 million in the previous fiscal year.

Other Income, net. Interest income was RMB1.4 million (US$0.2 million) in the fourth quarter of fiscal 2010, compared to RMB2.5 million in fourth quarter of fiscal 2009. Investment income was RMB0.9 million (US$0.1 million) in the fourth quarter of fiscal 2010, compared with RMB3.5 million in the fourth quarter of fiscal 2009. Other non-operating income was RMB4.3 million (US$0.6 million) in the fourth quarter of fiscal 2010, compared with RMB1.9 million in the fourth quarter of fiscal 2009. Other non-operating income includes RMB3.9 million (US$0.6 million) foreign exchange gain in the fourth quarter of fiscal 2010, consisting primarily of realized exchange gains due to the impact of US dollar depreciation on intercompany loans.

For fiscal year 2010, interest income was RMB9.1 million (US$1.3 million), compared with RMB5.3 million in fiscal 2009. Investment income was RMB2.8 million (US$0.4 million) in fiscal 2010 compared with RMB15.3 million in fiscal 2009. Other non-operating income was RMB6.0 million (US$0.9 million) in fiscal 2010, compared with RMB6.2 million in fiscal 2009. In fiscal year 2009, the Company also had an RMB5.8 million derivative gain on warrant. The warrant expired in April 2009.

Net Income. The Company reported a net loss of RMB83.6 million (US$12.3 million), or RMB2.19 (US$0.32) and RMB2.15 (US$0.32) loss per basic and diluted share, respectively, for the fourth quarter of fiscal 2010. This compares with net income of RMB17.9 million, or RMB0.50 per basic and diluted share, for the fourth quarter of fiscal 2009.

Net loss excluding share-based compensation expenses (non-GAAP) for the fourth quarter ended June 30, 2010 was RMB81.0 million (US$11.9 million), or RMB2.13 (US$0.31) and RMB2.09 (US$0.31) loss per basic and diluted share, respectively.

Net income for the fiscal year ended June 30, 2010 was RMB5.7 million (US$0.8 million), a 94.2% decrease from RMB97.0 million in the fiscal year ended June 30, 2009.

For fiscal year 2010, basic and diluted earnings per share amounted to RMB0.15 (US$0.02) and RMB0.14 (US$0.02), respectively, compared to RMB2.66 and RMB2.62 per basic and diluted share, respectively for fiscal year 2009.

Basic and diluted earnings per share, excluding share-based compensation expenses and the change in the fair value of warrants (non-GAAP), were RMB0.42 (US$0.06) and RMB0.41 (US$0.06), respectively, compared to RMB2.73 and RMB2.71 per basic and diluted share, respectively, for fiscal 2009.

Liquidity. As of June 30, 2010, Noah had cash, cash equivalents, short-term bank deposits and short-term investments of RMB572.2 million (US$84.4 million). This compares with cash, cash equivalents and short-term investments of RMB714.0 million as of March 31, 2010.

Business and Operational Highlights

Electronic Learning Products (ELP) -- In the fourth quarter of fiscal 2010, ELP sales were adversely impacted by the disruptions to Noah's distribution network and intensified competition. The Company will release a new student notebook targeting the higher-end segment in the first quarter of fiscal 2011 in order to meet increased demand during the peak season. To help stabilize DLD revenue levels going forward, the Company will continue to employ a heavily customer-focused development approach in order to introduce products that are aligned with the preferences of its target customer base. Noah does not plan to introduce any new KLD models in the first half of fiscal 2011 given its flagship NE350 remains one of the most competitive products in the market. The Company's partnership with Franklin Electronic Publishers led to an increase in ODM contracts in the fourth quarter fiscal 2010, which helped mitigate overall decline from E-dictionaries in the quarter.

Distribution channel update -- During the fourth quarter of fiscal 2010, Noah encountered disruptions in the implementation of the Company's channel realignment initiative and, in particular, its efforts to introduce new distributors. The disruptions arose from the absence of sufficient measures to ensure adequate distribution capability and capacity during the process. The strategic realignment of its channel distribution network is intended to increase penetration in the Company's target markets, enhance geographical reach, and maximize revenue opportunities. Noah is now focusing on maintaining the effectiveness of its distribution network, while simultaneously working with selected new distributors to expand and optimize its network. To maintain relationships with both new and existing distributors, the Company will now offer monthly meetings, which serve as a platform for idea generation and allow Noah's management team to understand and address distributors' issues and concerns. Noah has successfully retained a working relationship with most of its legacy distributors and added new distributors to help penetrate its targeted market segments. As many of these new distributors evaluate the role and importance of Noah's devices within their product portfolio in the coming quarters, the Company will aim to achieve a high retention rate by fostering strong relationships with new distributors.

Education Services -- LNS. LNS added 39 franchise schools in the fourth fiscal quarter of 2010, bringing the total number of franchised schools added in fiscal 2010 to 118. Noah plans to continue to grow the LNS school network by further expanding the number of franchised schools. The Dudu Happy Reading (DHR) program is progressing well, with additional schools in China exhibiting interest in rolling out the program.

Franklin Electronic Publishers. In February 2010, Noah completed its strategic investment to acquire an approximately 21% interest on a diluted basis in Franklin Electronic Publishers. The partnership has thus far helped drive revenue growth in Noah's ODM business. The investment in Franklin will also afford Noah access to its extensive distribution channels, and Noah will gain exclusive sponsorship of Franklin's Global SpellEvent in China. Additionally, the relationship will serve as a platform for R&D collaboration.

Cost cutting. As Noah implements steps to aid in the recovery of its ELP business, it will also introduce initiatives to reduce operational spending and support its bottom line. The Company will institute tighter cost controls and select headcount reductions across various departments, including sales and marketing, back office administration, production, and research. Noah will also evaluate its current marketing campaigns to ensure that advertising spending is reaching the target end markets and effectively driving product sales. Noah expects to achieve RMB20 million in cost savings in fiscal year 2011 through these initiatives.

Share Repurchase Program

In May 2010, the Company's Board of Directors authorized a share repurchase program. Under the plan, Noah may purchase up to US$10 million of ADSs over the course of the next 12 months, as permitted under the open trading window. As of June 30, 2010, Noah had repurchased 737,900 ADSs on the open market, representing a consideration of US$3.0 million. This program reflects Noah's confidence in its long-term growth prospects and its belief that its ADSs are undervalued at current levels.

In February 2010, under the authorization from Board of Directors, the Company also bought back 656,400 ADSs through a block trade from Lehman Brothers Commercial Corporation Asia Limited, its affiliates, and its liquidators.

Financial Outlook for First Quarter of Fiscal Year 2011

Based on current estimates and market conditions, Noah expects to generate net revenue in the range of RMB123 million (US$18.1 million) to RMB129 million (US$19.0 million) for the first quarter of fiscal 2011, which includes RMB102.5 million to RMB106.5 million from the traditional ELP business, RMB12.5 million to RMB13.5 million from the LNS business and RMB 8 million to 9 million from Wentai Education (August 30 - September 30, 2010). Basic loss per share in the first quarter of fiscal 2011 is expected to be in the range of RMB0.32 (US$0.05) to RMB0.38 (US$0.06).

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

Conference Call

Noah's senior management will host a conference call at 8:00 a.m. (Eastern) / 5:00 a.m. (Pacific) / 8:00 p.m. (China) on Tuesday, August 31, 2010 to discuss its fourth quarter and fiscal year 2010 financial results and recent business activities. The conference call may be accessed by calling:

                      Toll Free                           Toll
    United States     1.866.825.1709                      1.617.213.8060
    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
    International                                         1.617.213.8060
    Passcode          "Noah Education" or "Noah" or "NED"

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

A telephone replay will be available shortly after the call until September 7, 2010 by dialing the following numbers:

                      Toll Free                           Toll
    United States     1-888-286-8010                      1-617-801-6888
    International                                         1-617-801-6888
    Dial In Passcode  49772260

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

Statement Regarding Unaudited Financial Information

The unaudited financial information set forth above is subject to adjustments that may be identified when audit work is performed on our year-end financial statements, which could result in significant differences from this unaudited financial information.

Currency Convenience Translation

For the convenience of readers, certain RMB amounts have been translated into US dollars at the rate of RMB6.7815 to US$1.00, the noon buying rate for US dollars in effect on June 30, 2010 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 (ELPs), software, English training services for children 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 children 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 English training service for children under the brand Little New Star in its directly-owned training centers and franchised training centers throughout China. Noah was founded in 2004 and is listed on the New York Stock Exchange under the ticker symbol NED. For more information about Noah, please visit http://www.noahedu.com.cn .

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.

                          - FINANCIAL TABLES FOLLOW-



    Noah Education Holdings Ltd.
    Consolidated Statements of Operations

                                                Three Months Ended
                                                      June 30
                                          2009                 2010
                                       (Unaudited)          (Unaudited)
                                           RMB            RMB           USD
    Net revenue                        119,130,742    33,522,273    4,943,194
    Cost of revenue                    (57,624,581)  (37,303,151)  (5,550,723)
    Gross profit (loss)                 61,506,160    (3,780,878)    (535,409)
    Research & development expenses    (13,375,829)  (12,917,556)  (1,904,823)
    Sales & marketing expenses         (34,504,340)  (36,854,178)  (5,434,517)
    General and administrative
     expenses                          (13,549,669)  (35,556,553)  (5,243,169)
    Other expenses                         (15,907)   (2,451,472)    (361,494)
    Total operating expenses           (61,445,746)  (87,779,759) (12,944,003)

    Other operating income               9,735,007     2,179,597      321,403
    Operating income (loss)              9,795,421   (89,381,039) (13,180,128)
    Derivative gain (loss)                       0             0            0
    Interest income                      2,502,650     1,419,771      209,359
    Investment income                    3,546,450       907,099      133,761
    Other Non-Operating income           1,925,187     4,253,625      627,240
    Income before income taxes          17,769,708   (82,800,545) (12,209,768)
    Income tax (expenses) credit           178,095      (753,926)    (111,174)
    Net income (loss)                   17,947,803   (83,554,471) (12,320,942)

    Net income (loss) per share
      Basic                                   0.50         (2.19)       (0.32)
      Diluted                                 0.50         (2.15)       (0.32)

    Weighted average ordinary shares
     outstanding
      Basic                             35,693,062    38,122,632   38,122,632
      Diluted                           35,947,165    38,855,771   38,855,771



                                                Twelve Months Ended
                                                      June 30
                                          2009               2010
                                       (Audited)          (Unaudited)
                                           RMB           RMB           USD
    Net revenue                        671,145,679   680,287,877  100,315,251
    Cost of revenue                   (326,400,700) (368,753,623) (54,376,410)
    Gross profit (loss)                344,744,979   311,534,254   45,938,842
    Research & development expenses    (56,301,924)  (52,731,069)  (7,775,724)
    Sales & marketing expenses        (210,692,882) (219,494,698) (32,366,689)
    General and administrative
     expenses                          (58,498,799)  (91,774,452) (13,533,061)
    Other expenses                        (158,466)   (3,028,248)    (446,546)
    Total operating expenses          (325,652,071) (367,028,468) (54,122,018)

    Other operating income              45,575,781    41,629,196    6,138,641
    Operating income (loss)             64,668,689   (13,865,018)  (2,044,536)
    Derivative gain (loss)               5,807,511             0            0
    Interest income                      5,307,899     9,134,152    1,346,922
    Investment income                   15,257,412     2,823,770      416,393
    Other Non-Operating income           6,203,615     5,962,348      879,208
    Income before income taxes          97,245,126     4,055,252      597,988
    Income tax (expenses) credit          (254,883)    1,604,572      236,610
    Net income (loss)                   96,990,243     5,659,824      834,598

    Net income (loss) per share
      Basic                                   2.66          0.15         0.02
      Diluted                                 2.62          0.14         0.02

    Weighted average ordinary shares
     outstanding
      Basic                             36,446,790    38,327,047   38,327,047
      Diluted                           37,069,492    39,201,389   39,201,389



    Noah Education Holdings Ltd.
    Consolidated Balance Sheet
                                       March 31             June 30
                                        2010                  2010
                                      Unaudited            Unaudited
                                         RMB            RMB           USD
    Assets:
    Current assets
      Cash and cash equivalents       688,254,341    506,727,524   74,722,042
      Short-tem deposit                20,000,000     60,000,000    8,847,600
      Investments                       5,780,288      5,493,179      810,024
      Accounts receivables, net of
       allowance                      374,271,537    318,776,507   47,006,784
      Related party receivables           506,326        437,203       64,470
      Inventories                     109,161,307    148,738,236   21,932,941
      Prepaid expenses, and other
       current assets                  54,194,572     69,754,383   10,285,981
      Deferred tax asset - current      1,037,683        131,362       19,371
        Total current assets        1,253,206,054  1,110,058,395  163,689,213
      Property, plant and
       equipment, net                 141,786,674    144,249,822   21,271,079
      Intangible assets, net           29,422,149     29,126,595    4,295,008
      Goodwill                         56,597,146     56,597,146    8,345,815
      Deferred tax asset                2,058,180      2,058,180      303,499
      Investments in available for
       sale securities                 30,310,572     29,875,955    4,405,508
      Deposit for investment                           4,200,000      619,332
        Total assets                1,513,380,775  1,376,166,093  202,929,454
    Liabilities and Shareholders'
     Equity
    Current liabilities
      Accounts payable                 88,266,756     79,128,081   11,668,227
      Other payables, accruals         79,252,952     55,019,736    8,113,210
      Advances from customers           7,969,776      9,804,405    1,445,758
      Income taxes payable                829,413        329,152       48,537
      Deferred revenues                 5,616,191      5,517,159      813,560
        Total current liabilities     181,935,088    149,798,533   22,089,292
      Consideration payable                     0              0            0
      Deferred revenues                 6,536,626      6,677,960      984,732
      Deferred tax liabilities          2,352,672      2,666,030      393,133
        Total non-current
         liabilities                    8,889,299      9,343,990    1,377,865
      Total liabilities               190,824,387    159,142,523   23,467,157
    Shareholders' Equity                                                    0
    Ordinary shares                        15,433         15,196        2,241
    Additional paid-in capital      1,066,821,907  1,049,366,056  154,739,520
    Accumulated other comprehensive
     loss                             (94,259,242)   (98,346,885) (14,502,232)
    Accumulated unrealized holding
     gains                              9,829,872      9,395,254    1,385,424
    Retained earnings                 340,148,421    256,593,949   37,837,344
    Total shareholders' equity      1,322,556,391  1,217,023,570  179,462,297
    Total liabilities and
     shareholders' equity           1,513,380,778  1,376,166,093  202,929,454



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

                                 Three Months Ended
                                       June 30
                                        2009
                                     (Unaudited)
                                RMB             % of Rev

    GAAP net revenue        119,130,742          100.0%

    GAAP gross profit        61,506,160           51.6%
    Share-based
     compensation                83,553            0.1%
    Non-GAAP gross
     profit                  61,589,713           51.7%

    GAAP operating
     income                   9,795,421            8.2%
    Share-based
     compensation             2,472,762            2.1%
    Non-GAAP operating
     income                  12,268,183           10.3%

    GAAP net income          17,947,803           15.1%
    Share-based
     compensation             2,472,762            2.1%
    Change in the fair
     value of warrants                0            0.0%
    Non-GAAP net income      20,420,565           17.1%

    GAAP net income per
     share
    Basic                          0.50
    Diluted                        0.50

    Non-GAAP net income
     per share
    Basic                          0.57
    Diluted                        0.57


                                                Three Months Ended
                                                     June 30
                                                       2010
                                                   (Unaudited)
                                 RMB              USD               % of Rev

    GAAP net revenue          33,522,273        4,943,194             100.0%

    GAAP gross profit         (3,780,878)        (557,528)            -11.3%
    Share-based
     compensation                 76,361           11,260               0.2%
    Non-GAAP gross
     profit                   (3,704,517)        (546,268)            -11.1%

    GAAP operating
     income                  (89,381,039)     (13,180,128)           -266.6%
    Share-based
     compensation              2,524,465          372,258               7.5%
    Non-GAAP operating
     income                  (86,856,575)     (12,807,870)           -259.1%

    GAAP net income          (83,554,471)     (12,320,942)            249.3%
    Share-based
     compensation              2,524,465          372,258               7.5%
    Change in the fair
     value of warrants                 0                0               0.0%
    Non-GAAP net income      (81,030,006)     (11,948,684)           -241.7%

    GAAP net income per
     share
    Basic                          (2.19)           (0.32)
    Diluted                        (2.15)           (0.32)

    Non-GAAP net income
     per share
    Basic                          (2.13)           (0.31)
    Diluted                        (2.09)           (0.31)


                                    Twelve Months Ended
                                         June 30
                                           2009
                                        (Unaudited)
                                  RMB              % of Rev

    GAAP net revenue          671,145,679            100.0%

    GAAP gross profit         344,744,979             51.4%
    Share-based
     compensation                 240,079              0.0%
    Non-GAAP gross
     profit                   344,985,058             51.4%

    GAAP operating
     income                    64,668,689              9.6%
    Share-based
     compensation               8,173,462              1.2%
    Non-GAAP operating
     income                    72,842,151             10.9%

    GAAP net income            96,990,243             14.5%
    Share-based
     compensation               8,173,462              1.2%
    Change in the fair
     value of warrants         (5,807,511)             0.9%
    Non-GAAP net income        99,356,194             14.8%

    GAAP net income per
     share
    Basic                            2.66
    Diluted                          2.62

    Non-GAAP net income
     per share
    Basic                            2.73
    Diluted                          2.71


                                            Twelve Months Ended
                                                 June 30
                                                   2010
                                                (Unaudited)
                                   RMB                USD            % of Rev

    GAAP net revenue           680,287,877        100,315,251          100.0%

    GAAP gross profit          311,534,254         45,938,842           45.8%
    Share-based
     compensation                  295,940             43,639            0.0%
    Non-GAAP gross
     profit                    311,830,194         45,982,481           45.8%

    GAAP operating
     income                    (13,865,018)        (2,044,536)          -2.0%
    Share-based
     compensation               10,395,821          1,532,968            1.5%
    Non-GAAP operating
     income                     (3,469,197)          (511,568)          -0.5%

    GAAP net income              5,659,824            834,598            0.8%
    Share-based
     compensation               10,395,821          1,532,968            1.5%
    Change in the fair
     value of warrants                   0                  0            0.0%
    Non-GAAP net income         16,055,645          2,367,566            2.4%

    GAAP net income per
     share
    Basic                             0.15               0.02
    Diluted                           0.14               0.02

    Non-GAAP net income
     per share
    Basic                             0.42               0.06
    Diluted                           0.41               0.06


    For further information, please contact:

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

    Investor Relations (US):
     Kelly Gawlik
     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

SOURCE Noah Education Holdings Ltd.



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