Ambow Education Announces Second Quarter 2021 Financial Results

BEIJING,Sept. 20,2021 --Ambow Education Holding Ltd. ("Ambow" or the "Company") (NYSE American: AMBO),a leading cross-border career educational and technology service provider,today announced its unaudited financial and operating results for the three-month and six-month periods ended June 30,2021.

"In the second quarter of 2021,we remained focused on technology-driven educational and career enhancement services,embracing the national strategy of improving collaborative and coordinated development across education,talents and industry and promoting high-quality economic growth," noted Dr. Jin Huang,Ambow's President and Chief Executive Officer. "We're pleased to report solid financial performance and further improved operating efficiency in the second quarter,highlighted by a 10.8% year-over-year growth in net revenues and an increase in gross margin of 530 basis points year-over-year to 44.1%."

"Additionally,during the quarter,we made a number of strides that helped to expand our role as a leading innovator in the Chinese career education market. Building on our 20-year proven track record in the vocational and technical education sector,in June we cooperated with Nanchang Vocational University,one of the 15 first batch of undergraduate vocational education pilot schools in China,to co-found the Smart Manufacturing Modern Industrial College,underscoring China's pilot program for the integration between industry and education. Meanwhile,we formed a strategic cooperation with the Talent Exchange Center of the Ministry of Industry and Information Technology to strengthen international communication in various information technology-related disciplines. More excitingly,in July we launched an open education platform,OOOK,which incorporates our in-house developed technologies,enabling teachers to provide high-quality,cross-device live and recorded courses with immersive and interactive learning experiences. Notably,with its groundbreaking technology and solutions,OOOK won the '2021 Best Product Technology Innovation' award at the 10th Annual China Finance Summit."

"Moving into the second half of 2021,we remain committed to delivering innovative educational products and services that will be at the forefront of the industry by continuingly capitalizing on technologytrends. We are confident that our strategic efforts will continue to drive the long-term growth of our overall business," concluded Dr. Huang.

Second Quarter 2021 Financial Highlights

Net revenues for the second quarter of 2021 increased by 10.8% to RMB 172.3 million (US$ 26.7 million) from RMB 155.5 million (US$ 22.0 million) in the same period of 2020. The increase was primarily due to the full business recovery from the impact of the COVID-19 pandemic.

Gross profit for the second quarter of 2021 increased by 25.7% to RMB 75.9 million (US$ 11.8 million) from RMB 60.4 million (US$ 8.5 million) in the same period of 2020. Gross profit margin was 44.1%,compared with 38.8% for the first second quarter of 2020. The increases in gross profit and margin were mainly attributable to faster growth of net revenues in the period.

Operating expenses for the second quarter of 2021 decreased by 7.8% to RMB 55.6 million (US$ 8.6 million) from RMB 60.3 million (US$ 8.5 million) in the same period of 2020. The decrease was primarily attributable to stringent expense controls to improve operating efficiency.

Operating income for the second quarter of 2021 was RMB 20.3 million (US$ 3.1 million),compared to operating income of RMB 0.1 million (US$ 0.02 million) in the same period of 2020.

Net income attributable to ordinary shareholders was RMB 22.4 million (US$ 3.5 million),or RMB 0.48 (US$ 0.07) per basic and diluted share,compared with a net income of RMB 4.8 million (US$ 0.7 million),or RMB 0.11 (US$ 0.02) per basic and diluted share,in the same period of 2020.

As of June 30,2021,Ambow maintained strong cash resources of RMB 257.7 million (US$ 39.9 million),comprised of cash and cash equivalents of RMB 168.4 million (US$ 26.1 million),short-term investments of RMB 87.6 million (US$ 13.5 million) and restricted cash of RMB 1.7 million (US$ 0.3 million).

First Six Months 2021 Financial Highlights

Net revenues for the first six months of 2021 increased by 22.9% to RMB 301.9 million (US$ 46.8 million) from RMB 245.7 million (US$ 34.8 million) in the same period of 2020. The increase was primarily due to the full business recovery from the impact of the COVID-19 pandemic and higher revenue contribution from our new U.S. business.

Gross profit for the first six months of 2021 increased by 67.5% to RMB 120.6 million (US$ 18.7 million) from RMB 72.0 million (US$ 10.2 million) in the same period of 2020. Gross profit margin was 39.9%,compared with 29.3% in the same period of 2020. The increases in gross profit and margin were mainly attributable to faster growth of net revenues in the period.

Operating expenses for the first six months of 2021 slightly increased by 3.9% to RMB 115.4 million (US$ 17.9 million) from RMB 111.1 million (US$ 15.7 million) in the same period of 2020.

Operating income for the six months of 2021 was RMB 5.2 million (US$ 0.8 million),compared to operating loss of RMB 39.2 million (US$ 5.5 million) in the same period of 2020.

Net income attributable to ordinary shareholders was RMB 8.1 million (US$ 1.3 million),or RMB 0.17 (US$ 0.03) per basic and diluted share,compared with a net income of RMB 10.8 million (US$ 1.5 million),or RMB 0.25 (US$ 0.04) per basic and diluted share,in the same period of 2020. Excluding the one-time gain from bargain purchase of NewSchool of Architecture and Design,LLC of RMB 40.3 million (US$ 5.7 million),net loss for the first six months of 2020 was RMB 29.5 million (US$ 4.2 million) or RMB 0.68 (US$ 0.10) per basic and diluted share.

The Company's financial and operating results for the secondquarter and first half of 2021 can also be found on its Current Report on Form 6-K to be furnished with the U.S. Securities and Exchange Commission atwww.sec.gov.

Regulatory Policy Update

The Standing Committee of the National People's Congress promulgated an amendment to the Implementation Rules of the Law for Promoting Private Education on April 7,which has been effective since September 1,2021 (the "Implementation Rules"). The Implementation Rules stipulated,among other provisions,that (1) sponsors of private schools may choose to establish schools as either non-profit or for-profit schools,but nine-year compulsory education schools cannot be operated as for-profit schools; (2) foreign-invested enterprises established in China and social organizations whose actual controllers are foreign parties shall not sponsor,participate in or actually control private schools that provide compulsory education; (3) group-based education organizations shall not control non-profit private schools through mergers and acquisitions,franchise agreements and contractual arrangements; and (4) related party transactions entered into by private schools shall be open,fair and just,and shall not harm national interests,school interests,or student or teacher interests. The Company is assessing the impact of the Implementation Rules and formulating different scenarios as compliance measures.

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 second quarter and first half of 2021 are based on the effective exchange rate of 6.4566as of June 30,2021; all amounts translated from RMB to U.S. dollars for the second quarter and first half of 2020 are based on the effective exchange rate of 7.0651as of June 30,2020; all amounts translated from RMB to U.S. dollars as of December 31,2020 are based on the effective exchange rate of 6.5250as of December 31,2020. 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. Fluctuations in financial highlights are based on RMB amounts.

About Ambow Education Holding Ltd.

Ambow Education Holding Ltd. is a leading cross-border career educational and technology service provider,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 China and United States of America.

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

E-mail: 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 June 30,

As of December 31,

2021

2020

US$

RMB

RMB

ASSETS

Current assets:

Cash and cash equivalents

26,086

168,424

118,821

Restricted cash

256

1,650

824

Short-term investments,available for sale

13,266

85,652

117,854

Short-term investments,held to maturity

310

2,000

45,000

Accounts receivable,net

3,289

21,234

20,972

Amounts due from related parties

501

3,235

3,024

Prepaid and other current assets,net

18,858

121,757

117,634

Total current assets

62,566

403,952

424,129

Non-current assets:

Property and equipment,net

21,989

141,972

144,492

Land use rights,net

262

1,693

1,715

Intangible assets,net

8,403

54,252

54,808

Goodwill

3,982

25,710

25,710

Deferred tax assets,net

883

5,704

6,338

Operating lease right-of-use asset

35,522

229,353

247,608

Finance lease right-of-use asset

860

5,550

5,850

Other non-current assets

21,805

140,786

139,067

Total non-current assets

93,706

605,020

625,588

Total assets

156,272

1,008,972

1,049,717

LIABILITIES

Current liabilities:

Short-term borrowings *

3,020

19,498

10,000

Deferred revenue *

21,106

136,274

163,699

Accounts payable *

3,320

21,425

19,423

Accrued and other liabilities *

31,473

203,207

209,590

Income taxes payable,current *

28,669

185,105

184,638

Amounts due to related parties *

429

2,771

2,543

Operating lease liability,current *

7,620

49,198

53,702

Total current liabilities

95,637

617,478

643,595

Non-current liabilities:

Long-term borrowing

-

-

9,594

Other non-current liabilities *

47

304

292

Income taxes payable,non-current *

5,316

34,322

34,763

Operating lease liability,non-current *

32,196

207,877

220,319

Total non-current liabilities

37,559

242,503

264,968

Total liabilities

133,196

859,981

908,563

EQUITY

Preferred shares

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

authorized,nil issued and outstanding as of

June 30,2021 and December 31,2020)

-

-

-

Class A Ordinary shares

(US$0.003 par value; 66,667 and

66,667 shares authorized,41,948,276

and 41,923,276 shares issued and

outstanding as of June 30,2021 and

December 31,2020,respectively)

123

794

794

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 June 30,

2021 and December 31,respectively)

14

90

90

Additional paid-in capital

549,130

3,545,512

3,073

Statutory reserve

652

4,210

4,210

Accumulated deficit

(528,302)

(3,411,035)

(3,419,146)

Accumulated other comprehensive income

1,844

11,907

12,101

Total Ambow Education Holding Ltd.'s equity

23,461

151,478

143,122

Non-controlling interests

(385)

(2,487)

(1,968)

Total equity

23,076

148,991

141,154

Total liabilities and equity

156,717

* 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 AND COMPREHENSIVE INCOME

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

For the six months ended June 30,

For the three months ended June 30,

2021

2021

2020

2021

2021

2020

US$

RMB

RMB

US$

RMB

RMB

NET REVENUES

Educational program and

services

46,635

301,104

245,659

26,576

171,590

155,392

Intelligent program and

services

116

752

83

102

661

71

Total net revenues

46,751

301,856

245,742

26,678

172,251

155,463

COST OF REVENUES

Educational program and

services

(27,782)

(179,375)

(172,324)

(14,797)

(95,536)

(94,891)

Intelligent program and

services

(299)

(1,930)

(1,458)

(122)

(786)

(160)

Total cost of revenues

(28,081)

(181,305)

(173,782)

(14,919)

(96,322)

(95,051)

GROSS PROFIT

18,670

120,551

71,960

11,759

75,929

60,412

Operating expenses:

Selling and marketing

(3,782)

(24,422)

(24,206)

(2,079)

(13,422)

(13,657)

General and

administrative

(13,220)

(85,357)

(84,243)

(5,949)

(38,412)

(45,042)

Research and development

(868)

(5,602)

(2,698)

(582)

(3,757)

(1,567)

Total operating expenses

(17,870)

(115,381)

(111,147)

(8,610)

(55,591)

(60,266)

OPERATING INCOME

(LOSS)

800

5,170

(39,187)

3,149

20,338

146

OTHER INCOME

(EXPENSES)

Interest income

621

4,008

4,135

302

1,948

2,145

Foreign exchange gain

(loss),net

31

203

35

(2)

(12)

9

Other (loss) income,net

(183)

(1,180)

1,552

(37)

(240)

146

Gain from deregistration

of subsidiaries

205

1,325

3,897

183

1,181

3,897

Gain on the bargain

purchase

-

-

40,273

-

-

-

Gain on sale of investment

available for sale

189

1,221

1,056

73

474

530

Total other income

863

5,577

50,948

519

3,351

6,727

INCOME BEFORE

INCOME TAX AND

NON-CONTROLLING

INTEREST

1,663

10,747

11,761

3,668

23,689

6,873

Income tax expense

(489)

(3,155)

(1,623)

(236)

(1,526)

(2,362)

NET INCOME

1,174

7,592

10,138

3,432

22,163

4,511

Less: Net loss attributable

to non-controlling

interest

(80)

(519)

(708)

(43)

(277)

(296)

NET INCOME

ATTRIBUTABLE TO

ORDINARY

SHAREHOLDERS

1,254

8,111

10,846

3,475

22,440

4,807

NET INCOME

1,511

OTHER

COMPREHENSIVE

INCOME,NET OF

TAX

Foreign currency

translation adjustments

(65)

(417)

8,328

(82)

(532)

7,895

Unrealized gainson short-

term investments

Unrealized holding gains

arising during period

166

1,075

940

76

493

499

Less: reclassification

adjustment for gains

included in net income

132

852

668

48

308

381

Other comprehensive

(loss) income

(31)

(194)

8,600

(54)

(347)

8,013

TOTAL

COMPREHENSIVE

INCOME

1,143

7,398

18,738

3,378

21,816

12,524

Net income per share –

basic and diluted

0.03

0.17

0.25

0.07

0.48

0.11

Weighted average shares

used in calculating

basic and diluted net

income per share

46,642,280

46,280

43,577,168

46,648,495

46,495

43,583,418

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

Accumulated

Class A Ordinary

Class C Ordinary

Additional

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 1,2021

41,276

794

4,415

90

3,073

4,210

(3,146)

12,101

(1,968)

141,154

Share-based compensation

-

-

-

-

219

-

-

-

-

219

Issuance of ordinary shares for restricted

stock award

12,500

-

-

(0)

-

-

-

-

-

Foreign currency translation adjustment

-

-

-

-

-

-

-

115

-

115

Unrealized gain on investment,net of

income taxes

-

-

-

-

-

-

-

38

-

38

Net loss

-

-

-

-

-

-

(14,329)

-

(242)

(14,571)

Balance as of March31,935,776

794

4,292

4,433,475)

12,254

(2,210)

126,955

Share-based compensation

-

-

-

-

220

-

-

-

-

220

Issuance of ordinary shares for restricted

stock award

12,500

-

-

(0)

-

-

-

-

-

Foreign currency translation adjustment

-

-

-

-

-

-

-

(532)

-

(532)

Unrealized gain on investment,net of

income taxes

-

-

-

-

-

-

-

185

-

185

Net income/(loss)

-

-

-

-

-

-

22,440

-

(277)

22,163

Balance as of June30,512

4,035)

11,907

(2,487)

148,991

Balance as of January 1,2020

38,858,199

730

4,508,745

20,185

(3,371,815)

6,341

(680)

163,596

Share-based compensation

-

-

-

-

238

-

-

-

-

238

Issuance of ordinary shares for restricted

stock award

12,500

-

-

(0)

-

-

-

-

-

Foreign currency translation adjustment

-

-

-

-

-

-

-

433

-

433

Unrealized gain on investment,net of

income taxes

-

-

-

-

-

-

-

154

-

154

Impact on adoption of ASC 326

-

-

-

-

-

-

(594)

-

-

(594)

Net income/(loss)

-

-

-

-

-

-

6,039

-

(412)

5,627

Balance as of March31,870,699

730

4,983

20,366,370)

6,928

(1,092)

169,454

Share-based compensation

-

-

-

-

242

-

-

-

-

242

Issuance of ordinary shares for restricted

stock award

12,500

1

-

-

(1)

-

-

-

-

-

Foreign currency translation adjustment

-

-

-

-

-

-

-

7,895

-

7,895

Unrealized gain on investment,net of

income taxes

-

-

-

-

-

-

-

118

-

118

Deregistration of subsidiaries

-

-

-

-

-

(15,473)

15,473

-

-

-

Net income/(loss)

-

-

-

-

-

-

4,807

-

(296)

4,511

Balance as of June30,883,199

731

4,509,224

4,712

(3,346,090)

14,941

(1,388)

182,220

Discussion of Segment Operations

(All amounts in thousands)

For the six months ended June 30,

2021

2021

2020

2021

2021

2020

US$

RMB

RMB

US$

RMB

RMB

NET REVENUES

K-12 Schools

27,205

175,650

126,800

16,223

104,748

85,389

CP&CE Programs

19,546

126,206

118,942

10,455

67,503

70,074

Total net revenues

46,463

COST OF REVENUES

K-12 Schools

(15,161)

(97,886)

(74,542)

(8,100)

(52,297)

(41,113)

CP&CE Programs

(12,920)

(83,419)

(99,240)

(6,819)

(44,025)

(53,938)

Total cost of revenues

(28,051)

GROSS PROFIT

K-12 Schools

12,044

77,764

52,258

8,123

52,451

44,276

CP&CE Programs

6,626

42,787

19,702

3,636

23,478

16,136

Total gross profit

18,412

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