Ambow Education Announces First Quarter 2019 Financial Results

BEIJING,June 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 unaudited financial and operating results for the three-month period ended March 31,2019.

First Quarter 2019 Financial Highlights

Net revenues for the first quarter of 2019 increased by 6.0% to US$17.7 million from US$16.7 million in the same period of 2018. This increase was due primarily to higher student enrollment for the 2018-2019 academic year.

Gross profit for the first quarter of 2019 slightly increased to US$5.8 million from US$5.6 million in the same period of 2018. Gross profit margin was 32.8%,compared with 33.5% for the first quarter of 2018.

Operating expenses for the first quarter of 2019 increased by 27.1% to US$8.9 million from US$7.0 million for the same period of 2018. The increase of operating expenses was primarily due to the additional investments to set up education-to-employment service centers.

Net loss attributable to ordinary shareholders was US$3.5 million,or US$0.08 per basic and diluted share,compared with a net loss of US$1.1 million,or US$0.03 per basic and diluted share,for the first quarter of 2018. The first quarter is always a traditionally soft quarter for the Company due to school closures for winter break.

As of March 31,2019,Ambow maintained strong cash resources of US$48.3 million,comprised of cash and cash equivalents of US$23.3 million,short-term investments of US$20.9 million,and restricted cash of US$4.1 million.

As of March 31,the Company's deferred revenue balance was US$22.1 million,representing a 22.1% increase from US$18.1 million as of December 31,2018,mainly attributable to the tuition and course fees collected in the K-12 business segment for the 2018-2019 academic year,the increase in deferred revenue collected from our service centers and the tuition fees collected at Bay State College for the spring semester of 2019.

"2019 will be a transformational year for Ambow,we're excited over our 2019 outlook and the opportunities afforded to us in the cross-border education market. Combining the momentum of the last 12 months; from going public to the launches of a college cross-border program and mutual credit recognition alliance between Chinese and U.S. colleges,we have the necessary infrastructure in place to further our mission,which is to address critical demands in the education market and bridge the gaps between higher education and career aspirations of students," noted Dr. Jin Huang,Ambow's President and Chief Executive Officer.

"We continue to strengthen capabilities in the education technology and service space,and expand our international reach through a series of agreements and program launches including: the signing of a collaborative agreement with ITU to jointly develop a cross-border U.S. master's degree curriculum and a partnership with GCQA to establish a credit recognition alliance between Chinese and U.S. colleges. We are pleased to have set a good foundation in order to build up progressive developments for the year ahead," concluded Dr. Huang.

The Company's firstquarter 2019 financial and operating results can also be found on its Form 6-K filed with the U.S. Securities and Exchange Commission atwww.sec.gov.

Adoption of ASC 842 Leases

On February 25,2016,the FASB issued ASU 2016-02,Leases. The new standard creates Topic 842,Leases,in the FASB Accounting Standard Codification and supersedes FASB ASC 840,Leases. It requires a lessee to recognize the assets and liabilities that arise from operating and finance leases. Accordingly a lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset ("ROU asset") representing its right to use the underlying asset for the lease term. We adopted this guidance in the first quarter of 2019 using the modified retrospective approach,and elected the optional transition method that permits adoption of the new standard prospectively,as of the effective date,without adjusting comparative periods presented. Adoption of the standard resulted in the recognition of US$5.7 million of operating lease ROU asset current,US$0.1 million of finance lease ROU asset current,US$15.0 million of operating lease ROU asset non-current,US$0.9 million of finance lease ROU asset non-current,US$5.0 million of operating lease liabilities current,and US$16.9 million of operating lease liabilities non-current on the consolidated balance sheet as of March 31,2019 at adoption related to classrooms,dormitories,service campus and centers,and other operational and office space.

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 first quarter of 2019 are based on the effective exchange rate of 6.7112as of March 29,2019; all amounts translated from RMB to U.S. dollars for the first quarter of 2018 are based on the effective exchange rate of 6.2726as of March 30,2018; all amounts translated from RMB to U.S. dollars as of December 31,2018 are based on the effective exchange rate of 6.8755as of December 31,2018. 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 10-6508-0677

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 March 31,

As of December 31,

2019

2018

US$

RMB

RMB

ASSETS

Current assets:

Cash and cash equivalents

23,311

156,447

211,436

Restricted cash

4,136

27,757

30,072

Short term investments,available for sale

7,496

50,308

47,208

Short term investments,held to maturity

13,410

90,000

70,000

Accounts receivable,net

2,523

16,932

18,132

Amounts due from related parties

235

1,577

1,105

Prepaid and other current assets,net

20,134

135,125

134,770

Loan receivable,current

6,359

42,677

42,677

Operating lease right-of-use asset,current

5,650

37,915

-

Finance lease right-of-use asset,current

89

600

-

Total current assets

83,343

559,338

555,400

Non-current assets:

Property and equipment,net

23,245

156,005

165,933

Land use rights,net

267

1,793

1,804

Intangible assets,net

8,813

59,145

92,412

Goodwill

10,902

73,166

73,166

Deferred tax assets,net

1,346

9,038

10,240

Operating lease right-of-use asset,non-current

15,016

100,778

-

Finance lease right-of-use asset,non-current

939

6,300

-

Other non-current assets,594

17,408

11,264

Total non-current assets

63,122

423,633

354,819

Total assets

146,465

982,971

910,219

LIABILITIES

Current liabilities:

Deferred revenue *

22,131

148,523

124,250

Accounts payable *

1,827

12,277

13,583

Accrued and other liabilities *

27,121

181,881

256,325

Borrow from third party,000

40,401

41,179

Income taxes payable *

31,423

210,883

207,114

Amounts due to related parties *

434

2,911

2,696

Operating lease liability,current *

5,046

33,865

-

Total current liabilities

93,982

630,741

645,147

Non-current liabilities:

Consideration payable for acquisitions

197

1,322

1,322

Other non-current liabilities

-

-

979

Operating lease liability,non-current *

16,907

113,467

-

Total non-current liabilities

17,104

114,789

2,301

Total liabilities

111,086

745,530

647,448

EQUITY

Preferred shares

(US$0.003 par value;1,666,667 shares authorized,

nil issued and outstanding as of December31,

2018 and March 31,2019)

-

-

-

Class A Ordinary shares

(US$0.003 par value; 66,667 and

66,38,756,289

and 38,784,935 shares issued and

outstanding as of December31,2018 and

March 31,respectively)

109

729

728

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

December31,2018 and March31,

respectively)

13

90

90

Additional paid-in capital

522,707

3,507,994

3,123

Statutory reserve

3,002

20,149

20,149

Accumulated deficit

(491,059)

(3,295,594)

(3,271,838)

Accumulated other comprehensive income

887

5,952

8,305

Total Ambow Education Holding Ltd.'s equity

35,659

239,320

264,557

Non-controlling interests

(280)

(1,879)

(1,786)

Total equity

35,379

237,441

262,771

Total liabilities and equity

146,219

* 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 CHANGES IN EQUITY

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

Attributable to Ambow Education Holding Ltd.'s Equity

Retained

Accumulated

Class A Ordinary

Class C Ordinary

Additional

Earnings

other

Non-

shares

shares

paid-in

Statutory

(Accumulated

comprehensive

controlling

Total

Shares

Amount

Shares

Amount

capital

reserves

deficit)

income

Interest

Equity

RMB

RMB

RMB

RMB

RMB

RMB

RMB

RMB

Balance as of January 1,2019

38,289

728

4,415

90

3,123

20,149

(3,838)

8,305

(1,786)

262,771

Share-based compensation

-

-

-

-

872

-

-

-

-

872

Issuance of ordinary shares

for restricted stock award

28,646

1

-

-

(1)

-

-

-

-

-

Foreign currency translation

adjustment

-

-

-

-

-

-

-

(2,428)

-

(2,428)

Unrealized gain on

investment,net of income

taxes

-

-

-

-

-

-

-

75

-

75

Net loss

-

-

-

-

-

-

(23,756)

-

(93)

(23,849)

Balance as of March31,

2019

38,935

729

4,994

20,594)

5,952

(1,879)

237,441

Balance as of January 1,

2018

34,206,939

640

4,456,307

20,036

(3,316,715)

6,876

(1,275)

165,959

Share-based compensation

-

-

-

-

616

-

-

-

-

616

Issuance of ordinary shares

for restricted stock award

30,187

1

-

-

(1)

-

-

-

-

-

Foreign currency translation

adjustment

-

-

-

-

-

-

-

3,276

-

3,276

Unrealized gain on

investment,net of income

taxes

-

-

-

-

-

-

-

64

-

64

Deregistration of

subsidiaries

-

-

-

-

-

-

-

-

(9)

(9)

Net (loss)/income

-

-

-

-

-

-

(7,062)

-

93

(6,969)

Balance as of March31,237,126

641

4,922

20,323,777)

10,126

(1,191)

162,937

AMBOW EDUCATION HOLDING LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

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

For the three months ended March 31,

2019

2019

2018

US$

RMB

RMB

NET REVENUES

Educational program and services

17,610

118,185

101,411

Intelligent program and services

69

461

3,368

Total net revenues

17,679

118,646

104,779

COST OF REVENUES

Educational program and services

(11,652)

(78,197)

(68,076)

Intelligent program and services

(277)

(1,858)

(1,426)

Total cost of revenues

(11,929)

(80,055)

(69,502)

GROSS PROFIT

5,750

38,591

35,277

Operating expenses:

Selling and marketing

(2,099)

(14,088)

(10,205)

General and administrative

(6,797)

(45,618)

(33,292)

Research and development

(25)

(168)

(443)

Total operating expenses

(8,921)

(59,874)

(43,940)

OPERATING LOSS

(3,171)

(21,283)

(8,663)

OTHER INCOME (EXPENSES)

Interest income

58

388

2,090

Foreign exchange gain (loss),net

(5)

(31)

14

Other income,net

98

660

214

Gain from deregistration of subsidiaries

191

1,279

2,797

Gain on sale of investment available for sale

42

279

298

Total other income

384

2,575

5,413

LOSS BEFORE INCOME TAX AND NON-

CONTROLLING INTEREST

(2,787)

(18,708)

(3,250)

Income tax expense

(766)

(5,141)

(3,719)

NET LOSS

(3,553)

(23,849)

(6,969)

Less: Net (loss)/ income attributable to non-

controlling interest

(14)

(93)

93

NET LOSS ATTRIBUTABLE TO

ORDINARY SHAREHOLDERS

(3,539)

(23,756)

(7,062)

NET LOSS

(3,969)

OTHER COMPREHENSIVE INCOME,NET

OF TAX

Foreign currency translation adjustments

(362)

(2,428)

3,276

Unrealized gains on short term investments

Unrealized holding gains arising during period

42

280

207

Less: reclassification adjustment for gains

included in net income

31

205

143

Other comprehensive (loss)/income

(351)

(2,353)

3,340

TOTAL COMPREHENSIVE LOSS

(3,904)

(26,202)

(3,629)

Net loss per share - basic and diluted

(0.08)

(0.55)

(0.18)

Weighted average shares used in calculating

basic and diluted net loss per share

43,474,571

43,571

38,925,752

Discussion of Segment Operations

For the three months ended March 31,

2019

2019

2018

US$

RMB

RMB

(All amounts in thousands)

NET REVENUES

K-12 Schools *

9,505

63,793

52,177

College Preparation & CE Programs *

8,174

54,853

52,602

Total net revenues

17,779

COST OF REVENUES

K-12 Schools *

(6,302)

(42,296)

(36,106)

College Preparation & CE Programs *

(5,627)

(37,759)

(33,396)

Total cost of revenues

(11,502)

GROSS PROFIT

K-12 Schools *

3,203

21,497

16,071

College Preparation & CE Programs *

2,547

17,094

19,206

Total gross profit

5,277

* Ambow previously had three reportable segments,including Better School,Better Job and Others for the years before 2019. In

2019,along with the shift of business development focus,Ambow changed its management approach in the way to organize

reportable segments to make operating decisions and assess performance. New reportable segments include K-12 schools and

College Preparation & CE Programs,which provide K-12 educational service and tutoring and vocational educational services

respectively.

View original content:/news-releases/ambow-education-announces-first-quarter-2019-financial-results-300862780.html