Ambow Education Announces Fourth Quarter and Full Year 2018 Financial Results

BEIJING,April 6,2019 -- Ambow Education Holding Ltd. ("Ambow" or the "Company") (NYSE American: AMBO),a leading national provider of educational and career enhancement services in China,today announced its audited financial and operating results for the fourth quarter ended December 31,2018 and fiscal year 2018.

Fourth Quarter 2018 Financial Highlights

Net revenues for the fourth quarter of 2018 increased by 10.8% to US$24.6 million from US$22.2 million in the same period of 2017. This increase was due primarily to higher student enrollment for the 2018-2019 academic year in the Company's K-12 schools and revenues from Boston-basedBay State College ("BSC",acquired in November 2017).

Gross profit for the fourth quarter of 2018 was US$8.3 million,compared with US$9.8 million for the same period of 2017. Gross profit margin was 33.7% for the fourth quarter of 2018,compared to 44.1% in the same period of 2017. The decrease in gross profit margin was primarily attributable to lower profit margin at BSC,as the Company is in the process of consolidating its business operations.

Operating expenses in the fourth quarter of 2018 decreased by 5.5% to US$6.9 million from US$7.3 million for the same period of 2017. Operating expenses as a percentage of net revenues for the quarter decreased to 28.0% from 33.0% in the same period of 2017,primarily due to a one-time bad debt expense recovery and reversal of US$2.9 million in the fourth quarter of 2018.

Net income attributable to ordinary shareholders for the fourth quarter of 2018was US$4.5 million,or US$0.10 per basic and diluted share,compared with a net income of US$3.3 million for the fourth quarter of 2017,or US$0.09 per basic share and US$0.08 per diluted share.

As of December 31,2018,Ambow maintained strong cash resources of US$52.2 million,comprising cash and cash equivalents of US$30.8 million,short-term investments of US$17.0 million,and restricted cash of US$4.4 million.

As of December 31,the Company's deferred revenue balance was US$18.1 million,representing a 2.8% increase from US$17.6 million as of December 31,2017,mainly attributable to the tuition and course fees collected in the K-12 business segment for the 2018-2019 academic year,and the tuition and fees collected at BSCfor the spring semester of 2019.

Fiscal Year 2018 Financial Highlights

Net revenues for fiscal year 2018 increased by 13.3% to US$77.3 million from US$68.2 million in 2017,due primarily to higher student enrollment for both 2017-2018 and 2018-2019 academic years in the Company's K-12 schools and revenues from BSC.

Gross profit for fiscal year 2018 decreased by 2.4% to US$28.1 million from US$28.8 million in 2017. Gross profit margin was 36.4%,compared to 44.2% in 2017. The decrease in gross profit margin was primarily attributable to lower profit margin at BSC,as the Company is in the process of consolidating its business operations.

Operating expenses for fiscal year 2018 were US$25.9 million,a 9.1% decrease from US$28.5 million in 2017. Operating expenses as a percentage of net revenues for the year decreased to 33.5% from 41.8% in 2017,primarily due to a one-time bad debt expense recovery and reversal of US$2.9 million in the fourth quarter of 2018.

Operating income for fiscal year 2018 was US$2.2 million,compared with an operating income of US$0.4 million for 2017.

Net income attributable to ordinary shareholders for fiscal year 2018was US$6.5 million,or US$0.16 per basic and diluted share,compared with a net income of US$7.1 million,or US$0.18 per basic and diluted share,in the prior year. A one-time gain of US$5.7 million from the sale of subsidiaries was recorded in 2017.

"We are pleased to report a solid fourth quarter; with year-over-year revenue growth across our two primary business segments,Better Schools and Better Jobs,up 12.8 percent and 38.3 percent,respectively," said Dr. Jin Huang,Ambow's President and Chief Executive Officer. "While tuition fees from Bay State College contributed significantly to Ambow's Better Jobs revenue throughout the fiscal year,transition expenses related to BSC's acquisition pressured margins and impacted the Company's financial results for the year. However,with higher enrollments to be expected across all business segments in 2019,we will remain focused on managing costs and improving margins to boost operational efficiency and generate greater overall profitability."

Dr. Huang further commented on the strategic value of Bay State College to Ambow's long-term success,"Through international expansion,Ambow is now uniquely positioned to address the pressing needs of smaller private U.S. colleges that are experiencing declining enrollments and tuition revenue. In launching Ambow's first Cross-Border College Program between China and U.S. colleges,we are optimizing BSC's course offerings while simultaneously providing talented and financially qualified students from China who are eager to earn a bachelor's degree in the United States."

"We are confident that the implementation of the Cross-Border Program at Bay State will serve as an excellent model that is scalable and can be adopted by many U.S. colleges facing enrollment and tuition challenges."

The Company's fourth quarter and fiscal year 2018 financial and operating results can also be found on its Form 6-K and Form 20-F filed with the U.S. Securities and Exchange Commission at www.sec.gov.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the convenience of the reader. Unless otherwise noted,all amounts translated from RMB to U.S. dollars for the fourth quarter and the twelve months of 2018 are based on the effective exchange rate of 6.8755 as of December 31,2018; all amounts translated from RMB to U.S. dollars for the fourth quarter and the twelve months of 2017 are based on the effective exchange rate of 6.5063 as of December 31,2017. The exchange rates were according to the middle rate as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.

About Ambow Education Holding Ltd.

Ambow Education Holding Ltd. is a leading national provider of educational and career enhancement services in China,offering high-quality,individualized services and products. With its extensive network of regional service hubs complemented by a dynamic proprietary learning platform and distributors,Ambow provides its services and products to students in 30 out of the 31 provinces and autonomous regions within China.

Follow us on Twitter: @Ambow_Education

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things,the outlook and quotations from management in this announcement,as well as Ambow's strategic and operational plans,contain forward-looking statements. Ambow may also make written or oral forward-looking statements in its reports filed or furnished to the U.S. Securities and Exchange Commission,in its annual reports to shareholders,in press releases and other written materials and in oral statements made by its officers,directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statements,including but not limited to the following: the Company's goals and strategies,expansion plans,the expected growth of the content and application delivery services market,the Company's expectations regarding keeping and strengthening its relationships with its customers,and the general economic and business conditions in the regions where the Company provides its solutions and services. Further information regarding these and other risks is included in the Company's filings with the U.S. Securities and Exchange Commission. All information provided in this press release is as of the date of this press release,and Ambow undertakes no duty to update such information,except as required under applicable law.

For investor and media inquiries please contact:

Ambow Education Holding Ltd.

Tel: +86 10-6206-8000

The Piacente Group | Investor Relations

Tel: +1 212-481-2050 or +86 10-5730-6200

Email: ambow@tpg-ir.com

AMBOW EDUCATION HOLDING LTD.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands,except for share and per share data)

As of December 31,

As of December 31,

2018

2017

US$

RMB

RMB

ASSETS

Current assets:

Cash and cash equivalents

30,752

211,436

195,303

Restricted cash

4,374

30,072

2,350

Short term investments,available for sale

6,866

47,208

128,042

Short term investments,held to maturity

10,181

70,000

93,000

Accounts receivable,net

2,637

18,132

24,511

Amounts due from related parties

161

1,105

-

Prepaid and other current assets,net

19,601

134,770

129,517

Loan receivable,current

6,207

42,677

-

Total current assets

80,779

555,400

572,723

Non-current assets:

Property and equipment,net

24,134

165,933

168,423

Land use rights,net

262

1,804

1,848

Intangible assets,net

13,441

92,412

96,769

Goodwill

10,642

73,166

73,166

Deferred tax assets,net

1,490

10,240

8,222

Long-term loan receivables

-

-

42,677

Other non-current assets,638

11,264

13,592

Total non-current assets

51,607

354,819

404,697

Total assets

132,386

910,219

977,420

LIABILITIES

Current liabilities:

Deferred revenue *

18,071

124,250

114,396

Accounts payable *

1,977

13,583

23,414

Accrued and other liabilities *

37,270

256,325

418,998

Borrow from third party,000

41,179

-

Income taxes payable *

30,123

207,114

202,314

Amounts due to related parties *

392

2,696

3,430

Total current liabilities

93,833

645,147

762,552

Non-current liabilities:

Long-term borrowings from third party

-

-

39,205

Consideration payable for acquisitions

192

1,322

6,766

Other non-current liabilities

142

979

2,938

Total non-current liabilities

334

2,301

48,909

Total liabilities

94,167

647,448

811,461

EQUITY

Preferred shares

(US$0.003 par value;1,666,667 shares authorized,nil issued and outstanding as of December31,2017 and 2018)

-

-

-

Class A Ordinary shares

(US$0.003 par value; 66,667 and 66,34,206,939 and 38,756,289 shares issued and outstanding as of December31,2017 and 2018,respectively)

106

728

640

Class C Ordinary shares

(US$0.003 par value; 8,333,333 and 8,333 shares authorized,4,708,415 and 4,415 shares issued and outstanding as of December31,2017 and September30,respectively)

13

90

90

Additional paid-in capital

510,090

3,507,123

3,456,307

Statutory reserve

2,931

20,149

20,036

Accumulated deficit

(475,869)

(3,271,838)

(3,316,715)

Accumulated other comprehensive income

1,208

8,305

6,876

Total Ambow Education Holding Ltd.'s equity

38,479

264,557

167,234

Non-controlling interests

(260)

(1,786)

(1,275)

Total equity

38,219

262,771

165,959

Total liabilities and equity

132,420

* All of the VIE's assets can be used to settle obligations of their primary beneficiary. Liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company's general assets.

AMBOW EDUCATION HOLDING LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(All amounts in thousands,except for share and per share data)

For the years ended December 31,

For the three months ended December 31,

2018

2018

2017

2018

2018

2017

US$

RMB

RMB

US$

RMB

RMB

NET REVENUES

Educational program and services

76,378

525,134

432,754

24,537

168,705

141,685

Intelligent program and services

927

6,374

11,170

49

340

2,514

Total net revenues

77,305

531,508

443,924

24,586

169,045

144,199

COST OF REVENUES

Educational program and services

(48,279)

(331,939)

(249,400)

(16,137)

(110,948)

(79,739)

Intelligent program and services

(902)

(6,204)

(6,995)

(148)

(1,016)

(936)

Total cost of revenues

(49,181)

(338,143)

(256,395)

(16,285)

(111,964)

(80,675)

GROSS PROFIT

28,124

193,365

187,529

8,301

57,081

63,524

Operating expenses:

Selling and marketing

(6,363)

(43,751)

(36,710)

(1,714)

(11,784)

(8,505)

General and administrative

(19,303)

(132,718)

(142,252)

(5,214)

(35,846)

(37,238)

Research and development

(220)

(1,513)

(6,262)

19

134

(1,609)

Total operating expenses

(25,886)

(177,982)

(185,224)

(6,909)

(47,496)

(47,352)

OPERATING INCOME

2,238

15,383

2,305

1,392

9,585

16,172

OTHER INCOME (EXPENSES)

Interest income

967

6,652

5,191

187

1,285

1,181

Foreign exchange gain (loss),net

54

372

(522)

32

218

(1,262)

Other income (loss),net

210

1,447

1,652

135

930

1,668

Gain from derecognition of liabilities

2,215

15,226

-

2,226

-

Gain on disposal of subsidiaries

-

-

38,145

-

-

-

Gain (loss) from deregistration of subsidiaries

416

2,858

-

(53)

(362)

-

Gain from fair value change of contingent consideration payable

792

5,444

-

792

5,444

-

Gain on sale of investment available for sale

154

1,056

8,768

43

297

4,048

Total other income

4,808

33,055

53,234

3,351

23,038

5,635

INCOME BEFORE INCOME TAX AND NON-CONTROLLING INTEREST

7,046

48,438

55,539

4,743

32,623

21,807

Income tax expense

(509)

(3,498)

(9,614)

(227)

(1,559)

(615)

NET INCOME

6,537

44,940

45,925

4,516

31,064

21,192

Less: Net loss attributable to non-controlling interest

(7)

(50)

(538)

(13)

(89)

(338)

NET INCOME ATTRIBUTABLE TO ORDINARY SHAREHOLDERS

6,544

44,990

46,463

4,529

31,153

21,530

NET INCOME

6,192

OTHER COMPREHENSIVE INCOME,NET OF TAX

Foreign currency translation adjustments

190

1,304

3,876

8

52

2,895

Unrealized gainson short term investments

Unrealized holding gains arising during period

113

776

2,901

48

330

1,395

Less: reclassification adjustment for gains included in net income

95

651

5,606

33

224

2,916

Other comprehensive income

208

1,429

1,171

23

158

1,374

TOTAL COMPREHENSIVE INCOME

6,745

46,369

47,096

4,539

31,222

22,566

Net income per share – basic

0.16

1.09

1.20

0.10

0.72

0.55

Net income per share - diluted

0.16

1.08

1.18

0.10

0.71

0.55

Weighted average shares used in calculating basic net income per share

41,342,597

41,597

38,826,800

43,255,473

43,473

38,895,416

Weighted average shares used in calculating diluted net income per share

41,671,763

41,763

39,303,760

43,589,336

43,336

39,282,462

Discussion of Segment Operations

For the year ended December 31,

2018

2018

2017

2018

2018

2017

US$

RMB

RMB

US$

RMB

RMB

(All amounts in thousands)

NET REVENUES

Better Schools

47,213

324,610

287,804

16,234

111,618

91,058

Better Jobs

29,165

200,524

144,950

8,303

57,087

50,627

Others

927

6,199

COST OF REVENUES

Better Schools

(30,022)

(206,415)

(178,935)

(10,911)

(75,018)

(54,243)

Better Jobs

(18,257)

(125,524)

(70,465)

(5,226)

(35,930)

(25,496)

Others

(902)

(6,675)

GROSS PROFIT

Better Schools

17,191

118,195

108,869

5,323

36,600

36,815

Better Jobs

10,908

75,000

74,485

3,077

21,157

25,131

Others

25

170

4,175

(99)

(676)

1,578

Total gross profit

28,524

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