##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 
 FORM 20-F
 
  o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES
EXCHANGE ACT OF 1934
 or
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended June 30, 2009.
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the transition period from  to
 or
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 Date of event requiring this shell company report
 Commission file number: 001-33728
 NOAH EDUCATION HOLDINGS LTD.
   (Translation
of Registrants Name Into English)
  (Jurisdiction
of Incorporation or Organization)
 Guangdong Province, Peoples Republic of China
  
 (Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
 Securities registered or to be registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredOrdinary shares, par value US$0.00005 per share
    
    The New York Stock Exchange*
 *
    
    Not for trading, but only in connection with the listing on The New York
Stock Exchange of American depositary shares, each representing one ordinary
share. 
 Securities registered or to be registered pursuant to Section 12(g) of the Act:
 None
 (Title of Class)
 Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
 None
 (Title of Class)
 37,758,963 ordinary shares, par
value US$ 0.00005 per share, as of June 30, 2009.
 Yes o No þ
 o þ
 Yes þ No o
 Yes o No o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer þ
  þ o o
 o o
 o þ
  Yes o No o




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##### 



TABLE OF CONTENTS
 INTRODUCTION
    
    
    1FORWARD-LOOKING STATEMENTS
    
    
    1PART I
    
    
    3Item 1. Identity of Directors, Senior Management and Advisers
    
    
    3Item 2. Offer Statistics and Expected Timetable
    
    
    3Item 3. Key Information
    
    
    3Item 4. Information on the Company
    
    
    24Item 4A. Unresolved Staff Comments
    
    
    41Item 5. Operating and Financial Review and Prospects
    
    
    41Item 6. Directors, Senior Management and Employees
    
    
    61Item 7. Major Shareholders and Related Party Translations
    
    
    70Item 8. Financial Information
    
    
    74Item 9. The Offer and Listing
    
    
    76Item 10. Additional Information
    
    
    76Item 11. Quantitative and Qualitative Disclosures About Market Risk
    
    
    89Item 12. Description of Securities Other than Equity Securities
    
    
    89PART II
    
    
    90Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    90Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    90Item 15T. Controls and Procedures
    
    
    90Item 16A. Audit Committee Financial Expert
    
    
    91Item 16B. Code of Ethics
    
    
    91Item 16C. Principal Accountant Fees and Services
    
    
    91Item 16D. Exemptions from the Listing Standards for Audit Committees
    
    
    92Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    92Item 16F. Change in Registrants Certifying Accountant
    
    
    93Item 16G. Corporate Governance
    
    
    93PART III
    
    
    93Item 17. Financial Statements
    
    
    93Item 18. Financial Statements
    
    
    93Item 19. Exhibits
    
    
    94Exhibit 1.1Exhibit 4.19Exhibit 4.20Exhibit 4.21Exhibit 4.22Exhibit 4.23Exhibit 4.24Exhibit 4.25Exhibit 8.1Exhibit 12.1Exhibit 12.2Exhibit 13.1Exhibit 13.2Exhibit 15.1




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INTRODUCTION
  
    
    Noah, we, us, our company, and our, refer to Noah Education Holdings Ltd.,
its predecessor and its subsidiaries and affiliated entities;
    
    China or PRC refers to the Peoples Republic of China, excluding, solely for the
purpose of this annual report, Taiwan, Hong Kong and Macau;
    
    shares or ordinary shares refers to our ordinary shares, par value US$ 0.00005
per share;
    
    ADSs refers to our American depositary shares, each of which represents one
ordinary share;
    
    U.S. GAAP refers to general accepted accounting principles in the United States;
    
    all references to RMB or Renminbi are to the legal currency of China and all
references to $, dollars, US$ and U.S. dollars are to the legal currency of the
United States; and
    
    all discrepancies in any table between the amounts identified as total amounts and
the sum of the amounts listed therein are due to rounding.
    
 FORWARD-LOOKING STATEMENTS
   
    
    our anticipated growth strategies;
    
    our future business development, results of operations and financial condition;
    
    expected changes in our revenues and certain cost or expense items;
    
    our ability to expand our content, attract customers and leverage our brands;
    
    our ability to manage growth;
    
    trends and competition in the interactive educational content industry; and
    
    fluctuations in general economic and business conditions in China.
  1




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2




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PART I
 
 Item 1. Identity of Directors, Senior Management and Advisers
  
 Item 2. Offer Statistics and Expected Timetable
  
 Item 3. Key Information
 Selected Financial Data
  Year Ended June 30,2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009RMB
    
    
    RMB
    
    
    RMB
    
    
    RMB
    
    
    RMB
    
    
    US$(in thousands, except share, per share and per ADS data)Consolidated Statement of
Operations Data:Net revenue
    
    
    208,950
    
    
    
    393,039
    
    
    
    555,225
    
    
    
    651,935
    
    
    
    671,146
    
    
    
    98,261Cost of
revenue(1)
    
    
    (115,519
    )
    
    
    (174,584
    )
    
    
    (266,566
    )
    
    
    (318,788
    )
    
    
    (326,401
    )
    
    
    (47,788
    )Gross profit
    
    
    93,431
    
    
    
    218,455
    
    
    
    288,659
    
    
    
    333,147
    
    
    
    344,745
    
    
    
    50,473Research and
development
expenses(1)
    
    
    (8,646
    )
    
    
    (20,345
    )
    
    
    (43,487
    )
    
    
    (52,667
    )
    
    
    (56,302
    )
    
    
    (8,243
    )Sales and
marketing
expenses(1)
    
    
    (37,375
    )
    
    
    (179,869
    )
    
    
    (172,540
    )
    
    
    (197,430
    )
    
    
    (210,693
    )
    
    
    (30,847
    )General and administrative expenses(1)
    
    
    (14,684
    )
    
    
    (16,508
    )
    
    
    (24,676
    )
    
    
    (44,260
    )
    
    
    (58,499
    )
    
    
    (8,565
    )Other operating expenses
    
    
    (13,793
    )
    
    
    (311
    )
    
    
    (20,910
    )
    
    
    (3,132
    )
    
    
    (158
    )
    
    
    (23
    )Total operating expenses
    
    
    (74,498
    )
    
    
    (217,034
    )
    
    
    (261,612
    )
    
    
    (297,489
    )
    
    
    (325,652
    )
    
    
    (47,678
    )Other operating income
    
    
    16,437
    
    
    
    24,725
    
    
    
    40,023
    
    
    
    44,101
    
    
    
    45,576
    
    
    
    6,673Operating income
    
    
    35,370
    
    
    
    26,147
    
    
    
    67,070
    
    
    
    79,759
    
    
    
    64,669
    
    
    
    9,468Derivative gain (loss)
    
    
    2,365
    
    
    
    2,667
    
    
    
    (55
    )
    
    
    (1,868
    )
    
    
    5,807
    
    
    
    850Interest income
    
    
    1,168
    
    
    
    952
    
    
    
    2,306
    
    
    
    13,644
    
    
    
    5,308
    
    
    
    777Investment income
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    11,057
    
    
    
    15,257
    
    
    
    2,234Interest expense
    
    
    
    
    
    
    (162
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other non-operating income
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    42,708
    
    
    
    6,204
    
    
    
    908Income before income taxes
    
    
    38,903
    
    
    
    29,604
    
    
    
    69,321
    
    
    
    145,300
    
    
    
    97,245
    
    
    
    14,237Provision for income taxes
    
    
    
    
    
    
    (2,969
    )
    
    
    (2,892
    )
    
    
    (1,101
    )
    
    
    (255
    )
    
    
    (37
    )Net income
    
    
    38,903
    
    
    
    26,635
    
    
    
    66,428
    
    
    
    144,199
    
    
    
    96,990
    
    
    
    14,200Preference share dividends
    
    
    (3,728
    )
    
    
    
    
    
    
    (17,705
    )
    
    
    
    
    
    
    
    
    
    
    Deemed dividend
    
    
    (1,516
    )
    
    
    (1,516
    )
    
    
    (2,653
    )
    
    
    (379
    )
    
    
    
    
    
    
    Net income attributable to ordinary
shareholders
    
    
    33,659
    
    
    
    25,119
    
    
    
    46,070
    
    
    
    143,820
    
    
    
    96,990
    
    
    
    14,200Net income per ordinary shareBasic
    
    
    1.34
    
    
    
    0.90
    
    
    
    2.32
    
    
    
    4.03
    
    
    
    2.66
    
    
    
    0.39Diluted
    
    
    1.32
    
    
    
    0.88
    
    
    
    2.15
    
    
    
    3.93
    
    
    
    2.62
    
    
    
    0.38Net income
per ADS(2)Basic
    
    
    1.34
    
    
    
    0.90
    
    
    
    2.32
    
    
    
    4.03
    
    
    
    2.66
    
    
    
    0.39Diluted
    
    
    1.32
    
    
    
    0.88
    
    
    
    2.15
    
    
    
    3.93
    
    
    
    2.62
    
    
    
    0.38Weighted average number of ordinary
shares used in per share
calculations:Basic
    
    
    21,473,442
    
    
    
    21,473,442
    
    
    
    21,473,442
    
    
    
    33,153,982
    
    
    
    36,446,790Diluted
    
    
    21,473,442
    
    
    
    21,473,442
    
    
    
    22,906,684
    
    
    
    34,056,315
    
    
    
    37,069,492Cash dividends per ordinary share
    
    
    0.5715
    
    
    
    
    
    
    
    2.7145
    
    
    
    
    
    
    
    3.8249
    
    
    
    0.56Cash dividends per preference share
    
    
    0.5715
    
    
    
    
    
    
    
    2.7145
    
    
    
    
    
    
    
    
    
    
    
    
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##### Table of Contents



As of June 30,2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009RMB
    
    
    RMB
    
    
    RMB
    
    
    RMB
    
    
    RMB
    
    
    US$(in thousands)Consolidated Balance Sheet Data:Cash and cash equivalents
    
    
    105,972
    
    
    
    59,958
    
    
    
    77,367
    
    
    
    260,223
    
    
    
    493,911
    
    
    
    72,313Total assets
    
    
    284,142
    
    
    
    313,090
    
    
    
    329,710
    
    
    
    1,362,871
    
    
    
    1,327,019
    
    
    
    194,287Total current liabilities
    
    
    70,200
    
    
    
    77,736
    
    
    
    90,723
    
    
    
    64,392
    
    
    
    133,697
    
    
    
    19,574Warrants
    
    
    2,735
    
    
    
    
    
    
    
    4,934
    
    
    
    5,830
    
    
    
    
    
    
    
    Ordinary Shares
    
    
    9
    
    
    
    9
    
    
    
    9
    
    
    
    15
    
    
    
    15
    
    
    
    2Additional paid-in capital
    
    
    32,572
    
    
    
    32,572
    
    
    
    48,738
    
    
    
    1,169,619
    
    
    
    1,029,778
    
    
    
    150,768Accumulated other comprehensive
income (loss)
    
    
    6
    
    
    
    (2,482
    )
    
    
    (5,498
    )
    
    
    (89,949
    )
    
    
    (93,632
    )
    
    
    (13,709
    )Retained earnings
    
    
    52,277
    
    
    
    77,396
    
    
    
    61,429
    
    
    
    205,248
    
    
    
    250,934
    
    
    
    36,739Total shareholders equity
    
    
    84,864
    
    
    
    107,495
    
    
    
    104,678
    
    
    
    1,284,933
    
    
    
    1,187,094
    
    
    
    173,801
 
 (1)
    
    Share-based compensation expenses are included in our cost of revenue and operating expenses
as follows: Year Ended June 30,2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009(RMB)
    
    
    (RMB)
    
    
    (RMB)
    
    
    (RMB)
    
    
    (RMB)
    
    
    (US$)(in thousands)Share-based compensation included in:Cost of revenue
    
    
    
    
    
    
    
    
    
    
    376
    
    
    
    228
    
    
    
    240
    
    
    
    35Research and development expenses
    
    
    
    
    
    
    
    
    
    
    9,444
    
    
    
    4,175
    
    
    
    3,198
    
    
    
    468Sales and marketing expenses
    
    
    
    
    
    
    
    
    
    
    4,386
    
    
    
    14,846
    
    
    
    2,453
    
    
    
    359General and administrative expenses
    
    
    
    
    
    
    
    
    
    
    624
    
    
    
    1,095
    
    
    
    2,282
    
    
    
    334
 
 (2)
    
    Each ADS represents one ordinary share. Exchange Rate Information
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Noon Buying Rate(RMB per US$ 1.00)PeriodPeriod
    
    End
    
    
    Average(1)
    
    
    Low
    
    
    High2004
    
    
    8.2765
    
    
    
    8.2768
    
    
    
    8.2774
    
    
    
    8.27642005
    
    
    8.0702
    
    
    
    8.1826
    
    
    
    8.2765
    
    
    
    8.07022006
    
    
    7.8041
    
    
    
    7.9579
    
    
    
    8.0702
    
    
    
    7.80412007
    
    
    7.2946
    
    
    
    7.5806
    
    
    
    7.8127
    
    
    
    7.29462008
    
    
    6.8225
    
    
    
    6.9193
    
    
    
    7.2946
    
    
    
    6.78002009May
    
    
    6.8278
    
    
    
    6.8235
    
    
    
    6.8326
    
    
    
    6.8176June
    
    
    6.8302
    
    
    
    6.8334
    
    
    
    6.8371
    
    
    
    6.8264July
    
    
    6.8319
    
    
    
    6.8317
    
    
    
    6.8342
    
    
    
    6.8300August
    
    
    6.8299
    
    
    
    6.8323
    
    
    
    6.8358
    
    
    
    6.8299September
    
    
    6.8262
    
    
    
    6.8277
    
    
    
    6.8303
    
    
    
    6.8247October
    
    
    6.8264
    
    
    
    6.8267
    
    
    
    6.8292
    
    
    
    6.8248November (through November 13)
    
    
    6.8260
    
    
    
    6.8265
    
    
    
    6.8278
    
    
    
    6.8255
 
 (1)
    
    Annual averages are calculated from month-end rates. Monthly averages are calculated using
the average of the daily rates during the relevant period. Capitalization and Indebtedness
  Reasons for the Offer and Use of Proceeds
  Risk Factors
 Risks Related to Our Business and Our Industry
 Our limited operating history makes it difficult to evaluate our business, future prospects and
results of operations.
  If we fail to accurately predict or adapt to changing consumer preferences and technological
advances in interactive education content and delivery platforms, our business could be adversely
affected.
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Our business depends on strong brands, and if we are not able to maintain and enhance our brand
awareness, our business, financial condition and results of operations may be harmed.
  We license a substantial portion of our content from third parties, and our licenses may expire or
not be renewed.
  If we cannot maintain good relationships with teachers in our Teachers Alliance, our content
development ability may diminish and our content sales may suffer.
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We are subject to securities class action lawsuits alleging that we misrepresented or failed to
disclose in our initial public offering registration statement that the increases in the costs of
raw materials were negatively impacting our gross margin. If the class action lawsuits are
successful, they may have an adverse effect on our financial condition and operating results.
 Seidel v. Noah Education
Holdings, Ltd. et al Schapiro v. Noah Education
Holdings, Ltd. et al. Sebik v. Noah Education Holdings, Ltd. et
al.
  Third parties have brought intellectual property infringement claims against us in the past, and
may bring similar claims in the future.
   Any error in the solutions to the practice questions in our searchable database and our courseware
titles could damage our reputation.
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Our intellectual property rights may not prevent our competitors from using our technologies or
similar technologies to develop competing products, which could weaken our competitive position and
harm our business and results of operations.
   Capacity constraints or system disruptions to, or security risks in, our computer systems or
websites could damage our reputation and limit our ability to increase content sales.
  Uncertainty and adverse changes in the economy could have a material adverse impact on our business
and operating results.
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We may not be able to successfully execute our strategy of expanding into new geographical markets
in China.
  Failure to execute our growth strategies of online content distribution, after-school tutoring and
English training services for children may have a material adverse affect on our business and
prospects.
  We may not be able to manage our growth and continue to integrate new expansion into our
operations, which could adversely affect our business and results of operations.
  Our success depends on the continuing efforts of our senior management team and other key personnel
and our business may be harmed if we lose their services.
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If we are unable to compete effectively with existing or new competitors, our sales and market
share could decline.
  We have no control over our third-party distributors.
  We rely on a limited number of manufacturers to produce our finished products, and our reputation
and results of operations could be harmed if they fail to produce quality products in a timely and
cost-effective manner and in sufficient quantities.
  Increases in our component or manufacturing costs could reduce our gross margins.
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If we do not correctly anticipate demand for particular products, we could incur additional costs,
experience manufacturing delays, damage relationships with distributors or lose new sales
opportunities.
   Any defects in our products, or our failure to comply with applicable safety standards, could
result in delayed shipments or rejection of our products and damage to our reputation, and could
expose us to regulatory or other legal action.
  If we are liable for a substantial amount of past due social welfare payments that we have not made
a provision for, our financial condition may be materially and adversely affected.
  If we fail to maintain an effective system of internal control over financial reporting, we may not
be able to accurately report our financial results or prevent fraud.
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Risks Related to Our Corporate Structure
 If the PRC government finds that the agreements that establish the structure for operating our
online business do not comply with applicable PRC laws and regulations, we could be subject to
severe penalties.
 www.noahedu.com
  
    
    revoking the business and operating licenses, including the Internet content
provider license, of Noah Zhi Yuan or our PRC subsidiaries and affiliated entities;
    
    discontinuing or restricting the operations of any related-party transactions among
our PRC subsidiaries and affiliated entities;
    
    imposing fines, confiscating the income of Noah Zhi Yuan or our income, or imposing
other requirements with which we or our PRC subsidiaries and affiliated entities may
not be able to comply;
    
    shutting down the servers of Noah Zhi Yuan or blocking our websites; or
    
    requiring us or our PRC subsidiaries and affiliated entities to restructure our
ownership structure or operations.
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We rely on contractual arrangements with Noah Zhi Yuan and its shareholders for our online China
operations, which may not be as effective in providing operational control as direct ownership.
   The beneficial owners of Noah Zhi Yuan may have potential conflicts of interest with us.
  Contractual arrangements we have entered into among our subsidiaries and Noah Zhi Yuan may be
subject to scrutiny by the PRC tax authorities, and a finding that we or Noah Zhi Yuan owe
additional taxes could substantially reduce our consolidated net income and the value of your
investment.
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The regulation of Internet website operators is relatively new and subject to interpretation, and
our operation of online education programs could be adversely affected if we are deemed to have
violated applicable laws and regulations.
  If the PRC authorities determine that we do not have the requisite licenses or permits to operate
tutoring centers, we may have to cease the operations of tutoring centers and English training
centers and suffer a setback to our growth strategy.
  Risks Related to Doing Business in China
 Adverse changes in economic and political policies of the PRC government could have a material
adverse effect on the overall economic growth of China, which could adversely affect our business.
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Regulation and censorship of information disseminated over the Internet in China may adversely
affect our business and reputation and subject us to liability for information displayed on our
websites.
  Uncertainties with respect to the PRC legal system could adversely affect us.
   You may experience difficulties in effecting service of legal process, enforcing foreign judgments
or bringing original actions in China based on United States or other foreign laws against us, our
management or the experts named in this annual report.
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Governmental control of currency conversion may affect the value of your investment.
  Recent regulations relating to offshore investment activities by PRC residents may limit our
ability to acquire PRC companies and could adversely affect our business, financial condition and
results of operations.
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We rely principally on dividends and other distributions on equity paid by our wholly owned
subsidiaries to fund any cash and financing requirements we may have, and any limitation on the
ability of our subsidiaries and affiliated entities to make payments to us could have a material
adverse effect on our ability to conduct our business.
   If we were deemed a resident enterprise by PRC tax authorities, we could be subject to tax on our
global income and our non-PRC shareholders could be subject to certain PRC taxes.
  PRC regulation of loans and direct investment by offshore holding companies to PRC entities may
delay or prevent us from using the proceeds of the offering to make loans or additional capital
contributions to our PRC operating subsidiaries and affiliated entities.
  
    
    loans by us to our wholly owned subsidiaries in China, each of which is a
foreign-invested enterprise, to finance their activities cannot exceed statutory limits
and must be registered with SAFE or its local counterpart; and
 
    
    loans by us to Noah Zhi Yuan, which is a domestic PRC entity, must be approved by
the relevant government authorities and must also be registered with SAFE or its local
counterpart.
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Expiration of, or changes to, tax benefits or incentives could materially and adversely affect our
operating results.
  Fluctuation in the value of the RMB may have a material adverse effect on your investment.
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The approval of the China Securities Regulatory Commission, or the CSRC, may have been required in
connection with our initial public offering in October 2007 under a recently adopted PRC
regulation. The regulation also establishes more complex procedures for acquisitions conducted by
foreign investors which could make it more difficult to pursue growth through acquisitions.
    If any of our PRC subsidiaries, affiliated entities and their subsidiaries becomes the subject of a
bankruptcy or liquidation proceeding, we may lose the ability to use and enjoy those assets, which
could reduce the size of our operations and materially and adversely affect our business, ability
to generate revenue and the market price of our ADSs.
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We face risks related to health epidemics and other outbreaks.
  Risks Related to Our ADSs
 We believe we were a passive foreign investment company for our taxable year ended June 30, 2009,
which could result in adverse U.S. federal income tax consequences to U.S. holders of our ADSs or
ordinary shares.
  The market price for our ADSs has been volatile and may continue to fluctuate significantly.
  We may need additional capital, and the sale of additional ADSs or other equity securities could
result in additional dilution to our shareholders.
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
    
    investors perception of, and demand for, securities of electronic learning product
providers;
    
    conditions of the U.S. and other capital markets in which we may seek to raise
funds;
    
    our future results of operations, financial condition and cash flows;
    
    PRC governmental regulation of foreign investment in education in China;
    
    economic, political and other conditions in China; and
    
    PRC governmental policies relating to foreign currency borrowings.
  
    
    further develop or enhance our services and products;
    
    acquire necessary technologies, products or businesses;
    
    expand operations in China;
    
    hire, train and retain employees;
    
    market our programs, services and products; or
    
    respond to competitive pressures or unanticipated capital requirements.
 Our corporate actions are substantially controlled by our officers, directors, principal
shareholders and their affiliated entities.
  Substantial future sales or the perception of sales of our ADSs in the public market could cause
the price of our ADSs to decline.
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Our business is subject to seasonal fluctuations, which may cause our results of operations to
fluctuate from quarter to quarter. This may result in volatility and adversely affect the price of
our ADSs.
  Our historical financial condition and results of operations are not necessarily indicative of
future performance and are difficult to forecast.
  
    
    general economic conditions in China and PRC regulations or actions pertaining to
the provision of our products and services;
    
    natural disasters or geopolitical events, such as avian influenza or other
epidemics, war or threat of war;
    
    changes in consumers spending patterns;
    
    our ability to control cost of revenues and operating expenses; and
    
    non-recurring charges incurred in connection with acquisitions or other
extraordinary transactions or unexpected circumstances.
  You may not have the same voting rights as the holders of our ordinary shares and may not receive
voting materials in time to be able to exercise your right to vote.
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You may not be able to participate in rights offerings and may experience dilution of your holdings
as a result.
  You may be subject to limitations on transfer of your ADSs.
  Certain judgments obtained against us by our shareholders may not be enforceable.
  We are a Cayman Islands company and, because judicial precedent regarding the rights of
shareholders is more limited under Cayman Islands law than under U.S. law, you may have less
protection of your shareholder rights than you would under U.S. law.
   Our articles of association contain anti-takeover provisions that could have a material adverse
effect on the rights of holders of our ordinary shares and ADSs.
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Item 4. Information on the Company
 History and Development of the Company
      Business Overview
 Overview
   24




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##### Table of Contents



www.noahedu.com
   i i i i
  Our ELPs
 Our Content and Services
   25




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
    
    Basic English Language Training Courseware Titles. As of June 30, 2009, we had
developed over 340 series of English language learning courseware, each based on a
different series of textbooks. These titles constitute approximately half of our basic
courseware titles. Of these, the titles developed for primary and secondary students
are organized by semester and correspond to the English language curriculum typically
taught in primary and secondary schools. The titles developed for college students and
professionals are designed as preparation courses for standardized English aptitude
tests. Test scores are used as measurements for English proficiency in a variety of
situations where English proficiency is considered a prerequisite, including college
graduation, entrance to masters degree programs, employment opportunities or job
promotions. For the year 2009, approximately 48% of our downloadable courseware titles
were English language courseware titles.
    
    Mathematics Courseware Titles. We have been increasingly focused on the development
of mathematic courseware titles in recent years as schools in China have historically
placed strong emphasis on mathematics education. In addition to the courseware titles
related to the regular mathematics curriculum, we have also developed DLDs focusing on
advanced level practice questions and solutions for the International Mathematics
Olympics to meet the demand of those students who want to be more competitive in their
mathematics skills.
    
    Chinese-As-A-Foreign Language Courseware.We have witnessed an increasing number of
non-native Chinese speakers in China and around the world who are interested in
learning Chinese as a foreign language. We plan to leverage our expertise in language
training courseware development and offer Chinese language study courseware to capture
growth opportunities in this area.
    
    Other Basic Education Courseware Titles. Our other basic courseware titles cover
standard subjects, other than English, that are typically taught in primary and
secondary schools in China. These include Chinese, physics, chemistry, biology,
geography, political science and history. These titles are organized by semester and by
subject. Under each subject, there may be several versions to reflect differences in
curriculum adopted by school systems in different cities and provinces.
    
    Practice Question Database. In July 2007, we brought to market what we believe to
be the first searchable practice question database on DLDs, with approximately 300,000
practice questions. These questions initially focus on the subjects of mathematics,
physics and chemistry. Each practice question contains 24 searchable fields and links
to solutions and related questions and courseware titles. Our latest products, the
NP1500 and NP2150 DLDs, cover nine academic subjects, include over 600,000 searchable
test questions in mathematics, physics and chemistry in practice question databases,
and host 5,000 sample compositions and nearly 24,000 e-books. They also feature
innovative functions, including our newly developed graphic calculator technology,
Pocket English and Riverdeep Fun Mathematics.
    
    Dictionaries. We have licensed and compiled over 250 dictionaries, including 26
dictionaries related to the English language, eight dictionaries related to Japanese
language, ten dictionaries related to other foreign languages and over 200 professional
dictionaries on subjects including medicine, law and engineering. Portions of these
dictionaries are presented with colorful interactive animations, dialogues and
explanatory graphics.
    
    Online Tutoring Sessions. Our users can log-on to our website and post questions
regarding their homework. We ensure that a teacher from our Teachers Alliance is
available to answer the posted questions and, historically, a majority of the questions
posted have been answered. Other students can participate in the exchange and post
their answers as well.
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
    
    Planning. Our planning team is responsible for the planning and coordination of the
courseware curricula with the assistance of our Teachers Alliance. Once the planning
for the entire courseware is completed, the task of designing the teaching plan for
each courseware title is assigned to individual teachers from our Teachers Alliance.
    
    Compiling. The writers on our compiling team write the script for the multimedia
presentations based on the completed teaching plan. Our artists and production crew,
led by our directors, create the sound effect, artwork, animation, video and other
multimedia elements required in the script.
    
    Programming. The programming team assembles the multimedia elements into a
completed courseware title according to the production script, using a simple
programming language supported by our proprietary NP-iTECH software.
  Our Content Delivery Platforms
 i i
   www.noahedu.com
  27




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Our Childrens Training Services
   Research and Development
 i
 i i i i
 i i
  28




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
    
    In May 2006, we brought to market what we believe to be the first color DLDs.
The open architecture allowed our color DLDs to be built on an interchangeable
platform with our black-and-white DLDs. It also allows easy integration with
web-based and wireless-based technologies and future add-ons.
    
    In July 2007, we introduced to the market what we believe to be the first
searchable practice question database on DLDs. Our searchable practice question
database is built on our proprietary and innovative vertical search technology. Our
vertical search technology allows faster and more precise searches in the handheld
environment through extensive indexing of the information in the database and high
integration with the operating system.
    
    In January 2008, we incorporated graphic calculators into our DLDs. We believe
we are the first in China to have developed the technology for incorporation into
hand-held devices. The calculator is capable of drawing graphs for functions,
geometry and other types of mathematics problems, as well as presenting the effects
graphically of input variations. Furthermore, it allows students to manipulate
algebra equations and program certain scientific calculations.
    
    In August 2008, we incorporated Simulated Laboratory of Physics and Chemistry,
or SLPC, into our DLDs. It is designed and developed for high school students to
learn physics and chemistry. Students can use SLPC to simulate experiments and
design new experiments based on their study needs and progress. It is a
user-friendly and interactive in-classroom study platform and is also an
exploratory tool for students to test new ideas. It puts a lab into students
handheld devices and is called pocket laboratory.
    
    In June 2009, we brought our new generation of KLD, NE260 and NE280 to the
market with Vertical Search Technology. Vertical Search Technology is a search
engine designed for a specific field. It integrates information in certain fields
from webpage database, extract data based on certain pieces of a phrase, then
process the data and revert the information back to users. The search results are
more relevant, accurate and in-depth than those from a general search engine. We
believe Vertical Search Technology is one of the best search engines in hand-held
digital learning devices. It can search across books, problem sets, encyclopedia,
subjects and other resources.
  
    
    Learning with fun: It aims to enable users to learn through entertainment. It
increases users study interest and motivation through scenario simulation, games and
interactive practice problem sets. Users can learn by online or off-line games, using
hand-held devices or internet. It provides users with a happy, easy and fun learning
environment.
    
    E-book: This technology will digitalize paper books, and hold thousands of books in
a hand-held device. Users can zoom in and out, click on pictures, text, titles and
other elements to read, talk, make notes and search.
    
    Semanteme-based processing: Semanteme-based processing can be the foundation of
knowledge database. It stores the information in a network structure. When applied in
teaching and learning and combined with database technology, semanteme-based processing
technology can help the users to search and learn through induction, and measure their
progress over time.
    
    Inter-connectivity: With the advance of wireless technology, such as WIFI, GRPS, SG,
it is believed that hand-held learning devices will be connected to Internet wirelessly
in the near future. In the next year or so, Noah will develop more learning devices and
contents for Internet users, wirelessly or through LAN. Our Internet portal will become
a center for our customers, providing learning subject search, book search, homework
tutoring, study groups or communities, content updates and upgrades, student
performance tracking and other services.
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Our Sales Network
     Marketing and Brand Promotion
   Advertisements
 Seminars and Workshops
  30




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Fan Club, Online Chat Room and Social Activities
 Charitable Events
 Access Noah.
 Raw Material Supplies and Manufacturing Arrangements
    Customer Support and Service
  Competition
   31




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Intellectual Property
 i www.noahedu.com www.littlestar.com.cn www.jmlittlestar.com.cn i i
   Regulation
 Internet-Related Regulations
   32




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
    
    Noah Zhi Yuan is required to obtain and has obtained approvals from competent
education administrative authorities under the PRC Interim Provisions on the
Administration of Education Website and Online School, for offering certain education
content online.
    
    Noah Zhi Yuan is required to obtain and has obtained a value-added
telecommunications business license issued by the Ministry of Industry and Information
Technology in accordance with the PRC Telecommunication Rules. This license is valid
from May 15, 2009 to May 15, 2014.
    
    Certain aspects of our online service offerings may be construed as an Internet
electronic bulletin board service, which require a license from the Department of
Information Industry of Guangdong Province under the PRC Provisions on the
Administration of Internet Electronic Bulletin Board Services. Noah Zhi Yuans
application for this license was rejected by Department of Information Industry of
Guangdong Province.
    
    Noah Zhi Yuan is required to obtain and has obtained an Internet culture license
from the Ministry of Culture in accordance with the PRC Interim Provisions on the
Administration of Internet Culture. This license is valid from January 2009 to January
2012.
    
    Under the PRC Provisional Regulation on Administration of Internet Publication, Noah
Zhi Yuan is required to obtain the approval from the General Administration of Press
and Publication for any Internet publication activities. Noah Zhi Yuans application
for this license was rejected in September 2008. Noah Zhi Yuan will re-submit the
application for this license with supplemental materials.
 Regulations on Private Schools
    33




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Regulations on Commercial Franchise Operations
         34




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Regulations on Foreign Currency Exchange
    Regulations on Dividend Distribution
  
    
    The Wholly Foreign Owned Enterprise Law (1986), as amended;
    
    The Wholly Foreign Owned Enterprise Law Implementing Rules (1990), as amended;
    
    the Sino-foreign Equity Joint Venture Enterprise Law (1979), as amended; and
    
    the Sino-foreign Equity Joint Venture Enterprise Law Implementing Rules (1983), as
amended.
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Regulation on Overseas Listing
   Regulations on Shareholder Loans
  Regulations on Copyright
  Regulations on Patents
   36




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Regulations on Trademarks
  Organizational Structure
   
    
    Global Ring Limited, or Global Ring;
    
    Well Profit Creation Limited;
    
    Bright Sound Limited;
    
    Win Bright Creation Limited;
    
    Noah Education Development (Chengdu) Co., Ltd.;
    
    Changsha Little Star Cartoon Digital Technology Ltd., or Cartoon Digital;
    
    Changsha High-Tech Industrial Development Zone Xingya Electronic Technology Co.,
Ltd.;
    
    Changsha Little New Star Stationery Development Co., Ltd.;
    
    Shanxi Datong Little New Star Foreign Languages School;
    
    Changsha Tianxin District Little New Star School;
    
    Changsha Tianxin District New Star English Training School;
    
    Xiangtan Yuetang District Little New Star English School;
    
    Innovative Noah Electronic (Shenzhen) Co., Ltd., or Innovative Noah;
    
    New Noah Technology (Shenzhen) Co., Ltd., or New Noah;
    
    Noah Education Technology (Shenzhen) Co., Ltd., or Noah Education;
    
    Bright Sound Electronic Technology (Shenzhen) Co., Ltd., or Bright Sound;
    
    Shenzhen New Noah Education Investment Development Co., Ltd.;
    
    Beijing Haidian New Noah School;
    
    Chengdu New Noah School, or Chengdu Noah;
    
    Chongqing New Noah School;
    
    Beijing Noah Zhi Yuan Education Consulting Co. Ltd.;
    
    Beijing Xicheng New Noah School;
    
    Chengdu Innovative Noah Electronic Co., Ltd.;
  37




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
    
    Chengdu Shidai Noah Education Software Co. Ltd.;
    
    Chengdu Zhiyuan Noah Education Technology Co. Ltd.; and
    
    Chengdu Shidai Noah Information Technology Co. Ltd.
  
  www.noahedu.com
 
    
    exercise effective control over Noah Zhi Yuan;
    
    receive a substantial portion of the economic benefits from Noah Zhi Yuan in
consideration for the services provided by our subsidiary, Noah Education; and
    
    have an exclusive option to purchase all or part of the equity interests in Noah Zhi
Yuan to the extent permitted by PRC law.
  38




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
    
    the ownership structures of Noah Zhi Yuan and our subsidiaries in China comply in
all material respects with all existing PRC laws and regulations;
    
    the contractual arrangements among our PRC subsidiaries, Noah Zhi Yuan and its
shareholders governed by PRC law are valid, binding and enforceable, and will not
result in any violation of PRC laws or regulations currently in effect; and
    
    the business operations of our subsidiaries in China and Noah Zhi Yuan comply in all
material respects with existing PRC laws and regulations.
   Contractual Arrangements with Noah Zhi Yuan and its Shareholders
  Agreements that Provide Effective Control over Our Affiliated Entity
 Equity Pledge Agreement
  39




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Option Agreement
 Loan Agreement
 Power of Attorney
 Agreements that Transfer Economic Benefits to Us
 Software Development and Maintenance Agreement www.noahedu.com
 Exclusive Technology Supporting and Consulting Service Agreement
 Content Providing Agreement www.noahedu.com
 Property, Plant and Equipment
    40




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Item 4A. Unresolved Staff Comments
  
 Item 5. Operating and Financial Review and Prospects
 The following discussion and analysis of our financial condition and results of operations
should be read in conjunction with our consolidated financial statements and the related notes
included elsewhere in this annual report on Form 20-F . This discussion and analysis may contain
forward-looking statements based upon current expectations that involve risks and uncertainties.
Our actual results may differ materially from those anticipated in these forward-looking statements
as a result of various factors, including those set forth under Item 3. Key InformationD. Risk
Factors or in other parts of this annual report on Form 20-F .
 Operating Results
 Overview
    Acquisition
    41




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Factors Affecting Our Results of Operations
 Market Demand
  Product Mix and Content Offering
      42




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Branding
  Seasonality
  Economic Environment
  Our Results of Operations
 Net Revenue, Cost of Revenue and Gross Profit
  Year Ended June 30,2007 to
    
    
    
    
    
    
    2008 to2008
    
    
    
    
    
    
    2009Percentage
    
    
    
    
    
    
    Percentage2007
    
    
    Change
    
    
    2008
    
    
    change
    
    
    2009(RMB)
    
    
    %
    
    
    (RMB)
    
    
    %
    
    
    (RMB)
    
    
    (US$)(in thousands, except percentages)Net revenue
    
    
    555,225
    
    
    
    17.4
    
    
    
    651,935
    
    
    
    2.9
    
    
    
    671,146
    
    
    
    98,261Cost of revenue
    
    
    (266,566
    )
    
    
    19.6
    
    
    
    (318,788
    )
    
    
    2.4
    
    
    
    (326,401
    )
    
    
    (47,788
    )Gross profit
    
    
    288,659
    
    
    
    15.4
    
    
    
    333,147
    
    
    
    3.5
    
    
    
    344,745
    
    
    
    50,473
  Year Ended June 30,2007
    
    
    2008
    
    
    2009(%)
    
    
    (%)
    
    
    (%)Net revenue
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Cost of revenue
    
    
    48.0
    
    
    
    48.9
    
    
    
    48.6Gross profit
    
    
    52.0
    
    
    
    51.1
    
    
    
    51.4
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Year Ended June 30,2007
    
    
    2008
    
    
    2009(RMB)
    
    
    (RMB)
    
    
    (RMB)
    
    
    (US$)(in thousands)Electronic learning products
    
    
    548,164
    
    
    
    644,957
    
    
    
    664,746
    
    
    
    97,324Prepaid premium cards
    
    
    5,544
    
    
    
    1,252
    
    
    
    175
    
    
    
    26Software
    
    
    1,517
    
    
    
    3,864
    
    
    
    1,517
    
    
    
    222School
    
    
    
    
    
    
    1,862
    
    
    
    4,708
    
    
    
    689Total Revenue
    
    
    555,225
    
    
    
    651,935
    
    
    
    671,146
    
    
    
    98,261
  Year Ended June 30,2007
    
    
    2008
    
    
    2009(RMB)
    
    
    (RMB)
    
    
    (RMB)
    
    
    (US$)(in thousands)DLDs
    
    
    414,729
    
    
    
    515,314
    
    
    
    380,139
    
    
    
    55,655KLDs
    
    
    
    
    
    
    
    
    
    
    156,422
    
    
    
    22,902E-dictionaries
    
    
    133,435
    
    
    
    129,643
    
    
    
    128,185
    
    
    
    18,767
  Year Ended June 30,2007
    
    
    2008
    
    
    2009DLDs
    
    
    557,093
    
    
    
    589,016
    
    
    
    506,017KLDs
    
    
    
    
    
    
    
    
    
    
    376,324E-dictionaries
    
    
    775,659
    
    
    
    630,241
    
    
    
    720,119
 Net Revenue
 Year Ended June 30,2007
    
    
    2008
    
    
    2009(RMB)
    
    
    (%)
    
    
    (RMB)
    
    
    (%)
    
    
    (RMB)
    
    
    (%)(in thousands, except for percentages)Sales discounts
    
    
    72,326
    
    
    
    13.0
    
    
    
    39,384
    
    
    
    6.0
    
    
    
    58,387
    
    
    
    8.7Sales returns
    
    
    5,612
    
    
    
    1.0
    
    
    
    1,450
    
    
    
    0.2
    
    
    
    3,702
    
    
    
    0.6Net revenue
    
    
    555,225
    
    
    
    100.0
    
    
    
    651,935
    
    
    
    100.0
    
    
    
    671,146
    
    
    
    100.0
   44




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Cost of Revenue.
 Operating Expenses
  Year Ended June 30,2007 to
    
    
    
    
    
    
    2008 to2008
    
    
    
    
    
    
    2009Percentage
    
    
    
    
    
    
    Percentage2007
    
    
    Change
    
    
    2008
    
    
    change
    
    
    2009(RMB)
    
    
    %
    
    
    (RMB)
    
    
    %
    
    
    (RMB)
    
    
    (US$)(in thousands, except percentages)Research and
development expenses
    
    
    43,487
    
    
    
    21.1
    
    
    
    52,667
    
    
    
    6.9
    
    
    
    56,302
    
    
    
    8,243Sales and marketing
expenses
    
    
    172,540
    
    
    
    14.4
    
    
    
    197,430
    
    
    
    6.7
    
    
    
    210,693
    
    
    
    30,847General and
administrative expenses
    
    
    24,676
    
    
    
    79.4
    
    
    
    44,260
    
    
    
    32.2
    
    
    
    58,499
    
    
    
    8,565Other operating expenses
    
    
    20,910
    
    
    
    (85.0
    )
    
    
    3,132
    
    
    
    (94.9
    )
    
    
    158
    
    
    
    23Total operating expenses
    
    
    261,612
    
    
    
    13.7
    
    
    
    297,489
    
    
    
    9.5
    
    
    
    325,652
    
    
    
    47,678
 Research
and Development Expenses
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Sales and Marketing Expenses.
 General and Administrative Expenses.
 Other Operating Expenses.
   46




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Other Income Statement Items and Net Income
  Year Ended June 30,2007 to
    
    
    
    
    
    
    2008 to2008
    
    
    
    
    
    
    2009Percentage
    
    
    
    
    
    
    Percentage2007
    
    
    Change
    
    
    2008
    
    
    change
    
    
    2009(RMB)
    
    
    %
    
    
    (RMB)
    
    
    %
    
    
    (RMB)
    
    
    (US$)(in thousands, except percentages)Net revenue
    
    
    555,225
    
    
    
    17.4
    
    
    
    651,935
    
    
    
    2.9
    
    
    
    671,146
    
    
    
    98,261Gross profit
    
    
    288,659
    
    
    
    15.4
    
    
    
    333,147
    
    
    
    3.5
    
    
    
    344,745
    
    
    
    50,473Total operating
expenses
    
    
    (261,612
    )
    
    
    13.7
    
    
    
    (297,489
    )
    
    
    9.5
    
    
    
    (325,652
    )
    
    
    (47,678
    )Other operating
income
    
    
    40,023
    
    
    
    10.2
    
    
    
    44,101
    
    
    
    3.3
    
    
    
    45,576
    
    
    
    6,673Operating income
    
    
    67,070
    
    
    
    18.9
    
    
    
    79,759
    
    
    
    (18.9
    )
    
    
    64,669
    
    
    
    9,468Derivative (loss)
gain
    
    
    (55
    )
    
    
    3,296.4
    
    
    
    (1,868
    )
    
    
    410.9
    
    
    
    5,807
    
    
    
    850Interest income
    
    
    2,306
    
    
    
    491.6
    
    
    
    13,644
    
    
    
    (61.1
    )
    
    
    5,308
    
    
    
    777Investment income
    
    
    
    
    
    
    *
    
    
    
    11,057
    
    
    
    38.0
    
    
    
    15,257
    
    
    
    2,234Interest expense
    
    
    
    
    
    
    *
    
    
    
    
    
    
    
    *
    
    
    
    
    
    
    
    Other non-operating
income
    
    
    
    
    
    
    *
    
    
    
    42,708
    
    
    
    (85.5
    )
    
    
    6,204
    
    
    
    908Income before
income taxes
    
    
    69,321
    
    
    
    109.6
    
    
    
    145,300
    
    
    
    (33.1
    )
    
    
    97,245
    
    
    
    14,237Provision for
income taxes
    
    
    (2,892
    )
    
    
    (61.9
    )
    
    
    (1,101
    )
    
    
    (76.9
    )
    
    
    (255
    )
    
    
    (37
    )Net income
    
    
    66,428
    
    
    
    117.1
    
    
    
    144,199
    
    
    
    (32.7
    )
    
    
    96,990
    
    
    
    14,200
 
 *
    
    Not meaningful  Year Ended June 30,2007
    
    
    2008
    
    
    2009(%)
    
    
    (%)
    
    
    (%)Net revenue
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Gross profit
    
    
    52.0
    
    
    
    51.1
    
    
    
    51.4Total operating expenses
    
    
    47.1
    
    
    
    45.6
    
    
    
    48.5Other operating income
    
    
    7.2
    
    
    
    6.7
    
    
    
    6.8Operating income
    
    
    12.1
    
    
    
    12.2
    
    
    
    9.6Derivative gain (loss)
    
    
    *
    
    
    
    (0.3
    )
    
    
    0.9Interest income
    
    
    0.4
    
    
    
    2.1
    
    
    
    0.8Investment income
    
    
    
    
    
    
    1.7
    
    
    
    2.3Other non-operating income
    
    
    
    
    
    
    6.6
    
    
    
    0.9Income before income taxes
    
    
    12.5
    
    
    
    22.3
    
    
    
    14.5Provision for income taxes
    
    
    0.5
    
    
    
    0.2
    
    
    
    *Net income
    
    
    12.0
    
    
    
    22.1
    
    
    
    14.5
 
 *
    
    Less than 0.1% Other Operating Income
  47




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##### Table of Contents



Derivative Gain (Loss).
 Interest Income.
 Investment Income.
 Other Non-Operating Income.
 Provision for Income Taxes.
    48




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Critical Accounting Policies
   Revenue Recognition
     49




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Inventory Obsolescence
   50




---



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Allowance for Doubtful Accounts
  Share-Based Compensation
     51




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##### Table of Contents



Number ofOrdinaryShares
    
    
    Option
    
    
    
    
    
    
    Fair valueUnderlying
    
    
    Exercise
    
    
    Fair Value of
    
    
    ofOptions
    
    
    Price Per
    
    
    Options at
    
    
    ordinaryGrant Date
    
    Granted
    
    
    Share
    
    
    Date of Grant
    
    
    shares
    
    
    Type of ValuationOctober 2006
(terminated on June
30, 2007)
    
    
    1,011,874
    
    
    US$
    1.4720
    
    
    US$
    3.375
    
    
    US$
    4.755
    
    
    RetrospectiveJune 2007 (as
replacement
options)
    
    
    888,324
    
    
    US$
    1.4720
    
    
    US$
    3.375
    
    
    US$
    4.755
    
    
    RetrospectiveJune 2007 (as
replacement
options)
    
    
    76,438
    
    
    
    
    
    
    US$
    4.74
    
    
    US$
    5.885
    
    
    ContemporaneousJune 2007
    
    
    339,536
    
    
    US$
    1.4720
    
    
    US$
    4.535
    
    
    US$
    5.885
    
    
    ContemporaneousJune 2007
    
    
    38,732
    
    
    US$
    1.4720
    
    
    US$
    4.375
    
    
    US$
    5.885
    
    
    ContemporaneousJune 2007
    
    
    126,412
    
    
    US$
    3.8719
    
    
    US$
    2.995
    
    
    US$
    5.885
    
    
    ContemporaneousJune 2007
    
    
    2,000
    
    
    US$
    6.1420
    
    
    US$
    1.990
    
    
    US$
    5.885
    
    
    ContemporaneousJune 2007
    
    
    2,000
    
    
    US$
    6.1420
    
    
    US$
    1.990
    
    
    US$
    5.885
    
    
    ContemporaneousJanuary 2008
    
    
    667,177
    
    
    US$
    5.56
    
    
    US$
    2.11
    
    
    US$
    5.56
    
    
    ContemporaneousMarch 2009
    
    
    1,259,500
    
    
    US$
    2.60
    
    
    US$
    1.39
    
    
    US$
    2.95
    
    
    ContemporaneousMay 5, 2009
    
    
    3,000
    
    
    US$
    2.60
    
    
    US$
    1.61
    
    
    US$
    3.19
    
    
    ContemporaneousMay 13, 2009
    
    
    10,000
    
    
    US$
    2.60
    
    
    US$
    1.62
    
    
    US$
    3.20
    
    
    ContemporaneousMay 18, 2009
    
    
    1,500
    
    
    US$
    2.60
    
    
    US$
    1.89
    
    
    US$
    3.54
    
    
    ContemporaneousJune 15, 2009
    
    
    3,000
    
    
    US$
    2.60
    
    
    US$
    2.14
    
    
    US$
    3.84
    
    
    ContemporaneousJune 29, 2009
    
    
    2,000
    
    
    US$
    2.60
    
    
    US$
    2.16
    
    
    US$
    3.87
    
    
    ContemporaneousJuly 1, 2009
    
    
    80,000
    
    
    US$
    3.88
    
    
    US$
    1.73
    
    
    US$
    3.88
    
    
    ContemporaneousJuly 21, 2009
    
    
    30,000
    
    
    US$
    2.60
    
    
    US$
    1.41
    
    
    US$
    3.90
    
    
    Contemporaneous
     52




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Holding Company Structure
  Recent Accounting Pronouncements
   53




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\

54




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55




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Liquidity and Capital Resources
 Cash Flows and Working Capital
   Year Ended June 30,2007
    
    
    2008
    
    
    2009(RMB)
    
    
    (RMB)
    
    
    (RMB)
    
    
    (US$)(in thousands)Net cash provided by (used in) operating activities
    
    
    41,528
    
    
    
    (29,370
    )
    
    
    82,441
    
    
    
    12,070Net cash provided by (used in) investing activities
    
    
    52,352
    
    
    
    (756,863
    )
    
    
    350,652
    
    
    
    51,338Net cash provided by (used in) financing activities
    
    
    (76,000
    )
    
    
    970,787
    
    
    
    (199,320
    )
    
    
    (29,182
    )Effect of exchange rate changes on cash and cash
equivalents
    
    
    (471
    )
    
    
    (1,698
    )
    
    
    (85
    )
    
    
    (12
    )Net increase (decrease) in cash and cash equivalents
    
    
    17,880
    
    
    
    184,554
    
    
    
    233,775
    
    
    
    34,226Cash and cash equivalents at beginning of period
    
    
    59,958
    
    
    
    77,367
    
    
    
    260,223
    
    
    
    38,099Cash and cash equivalents at end of period
    
    
    77,367
    
    
    
    260,223
    
    
    
    493,911
    
    
    
    72,313
 Operating Activities
    56




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##### Table of Contents



Investing Activities
   Financing Activities
   Restrictions on Cash Dividends
  Borrowings
  Capital Expenditures
    57




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##### Table of Contents



Research and Development, Patents and Licenses, Etc.
 i
 i i i i
 i
    58




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##### Table of Contents




    
    Learning with fun: It aims to enable users to learn through entertainment. It
increases users study interest and motivation through scenario simulation, games and
interactive practice problem sets. Users can learn by online or off-line games, using
hand-held devices or internet. It provides users with a happy, easy and fun learning
environment.
 
    
    E-book: This technology will digitalize paper books, and hold thousands of books in
a hand-held device. Users can zoom in and out, click on pictures, text, titles and
other elements to read, talk, make notes and search.
 
    
    Semanteme-based processing: Semanteme-based processing can be the foundation of
knowledge database. It stores the information in a network structure. When applied in
teaching and learning and combined with database technology, semanteme-based processing
technology can help the users to search and learn through induction, and measure their
progress over time.
 
    
    Inter-connectivity: With the advance of wireless technology, such as WIFI, GRPS, SG,
it is believed that hand-held learning devices will be connected to Internet wirelessly
in the near future. In the next year or so, Noah will develop more learning devices and
contents for Internet users, wirelessly or through LAN. Our Internet portal will become
a center for our customers, providing learning subject search, book search, homework
tutoring, study groups or communities, content updates and upgrades, student
performance tracking and other services.
  Trend Information
  Off-Balance Sheet Arrangements
   59




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##### Table of Contents



Tabular Disclosure of Contractual Obligations
  Payment Due by June 30,Total
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    Thereafter(RMB)
    
    
    (RMB)
    
    
    (RMB)
    
    
    (RMB)
    
    
    (RMB)
    
    
    (RMB)
    
    
    (RMB)(In thousands)Operating lease
obligations
    
    
    10,297
    
    
    
    4,203
    
    
    
    1,800
    
    
    
    1,422
    
    
    
    1,317
    
    
    
    1,287
    
    
    
    268Purchase obligations
    
    
    82,560
    
    
    
    82,560
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Marketing expenses
    
    
    2,932
    
    
    
    2,932
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    95,789
    
    
    
    89,695
    
    
    
    1,800
    
    
    
    1,422
    
    
    
    1,317
    
    
    
    1,287
    
    
    
    268
  Safe Harbor
   
    
    our anticipated growth strategies;
 
    
    our future business development, results of operations and financial condition;
 
    
    expected changes in our revenues and certain cost and expense items;
 
    
    our ability to expand our content, attract customers and leverage our brands;
 
    
    our ability to manage growth;
 
    
    trends and competition in the interactive educational content industry; and
 
    
    fluctuations in general economic and business conditions in China.
    60




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##### Table of Contents



Item 6. Directors, Senior Management and Employees
 Directors and Senior Management
  Name
    
    Age
    
    
    Position/TitleDong Xu
    
    
    43
    
    
    Chairman and Chief Executive OfficerJerry He
    
    
    35
    
    
    Chief Financial OfficerBenguo Tang
    
    
    44
    
    
    Director, President and Chief Operating OfficerXiaotong Wang
    
    
    47
    
    
    Director and Chief Technology OfficerXianquan Xiao
    
    
    43
    
    
    DirectorXiao Chen
    
    
    46
    
    
    Independent DirectorGuangnan Ni
    
    
    70
    
    
    Independent DirectorConrad Kwong Yue Tsang
    
    
    37
    
    
    Independent DirectorBenzhong Wang
    
    
    70
    
    
    Independent DirectorShengli Zheng
    
    
    66
    
    
    Independent DirectorTianming Du
    
    
    59
    
    
    Vice PresidentDora Li
    
    
    41
    
    
    Vice President, Finance and Financial ControllerYi Liu
    
    
    42
    
    
    Vice President, SalesMing Ouyang
    
    
    33
    
    
    Vice President, Content DevelopmentWei Zheng
    
    
    49
    
    
    Vice President, Research and Development
 Mr. Dong Xu
 Mr. Jerry He
 Mr. Benguo Tang
 Mr. Xiaotong Wang
  61




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##### Table of Contents



Mr. Xianquan Xiao
 Dr. Xiao Chen
 Mr. Guangnan Ni
 Mr. Conrad Kwong Yue Tsang
 Mr. Benzhong Wang
 Mr. Shengli Zheng
 Mr. Tianming Du
  62




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##### Table of Contents



Ms. Dora Li
 Mr. Yi Liu
 Mr. Ming Ouyang
 Mr. Wei Zheng i
 Employment Agreements
    63




---



##### Table of Contents



Compensation
  Share Incentives
 2006 Equity Compensation Plan
  2007 Share Incentive Plan and 2008 Share Incentive Plan
 Types of Awards
 
    
    options to purchase our ordinary shares;
 
    
    restricted shares, which represent non-transferable ordinary shares, that may be
subject to repurchase, restrictions on transferability and other restrictions; and
 
    
    restricted share units, which represent the right to receive our ordinary shares at
a specified date in the future, which may be subject to repurchase.
  Eligibility
 Plan Administration
 Award Agreement
  64




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##### Table of Contents



Acceleration of Awards upon Corporate Transactions
 Exercise Price and Term of Awards
  Amendment and Termination
  65




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##### Table of Contents



Ordinary SharesUnderlying
    
    
    Exercise Price
    
    
    
    
    
    
    Date of Expiration ofName
    
    Options Granted
    
    
    (US$/Share)
    
    
    Date of Grant
    
    Vesting PeriodDong Xu
    
    
    180,000
    
    
    
    2.60
    
    
    March 2, 2009
    
    December 31, 2011Jerry He
    
    
    80,000
    
    
    
    3.88
    
    
    July 2, 2009
    
    December 31, 2011Xianquan Xiao
    
    
    203,832
    
    
    
    1.472
    
    
    June 30, 2007
    
    December 31, 2008339,536
    
    
    
    1.472
    
    
    June 30, 2007
    
    October 24, 200738,000
    
    
    
    5.56
    
    
    January 18, 2008
    
    December 31, 2010150,000
    
    
    
    2.60
    
    
    March 2, 2009
    
    December 31, 2011Xiao Chen
    
    
    2,000
    
    
    
    6.142
    
    
    June 30, 2007
    
    June 30, 2010Guangnan Ni
    
    
    2,000
    
    
    
    6.142
    
    
    July 6, 2007
    
    June 30, 2010Dora Li
    
    
    8,000
    
    
    
    5.56
    
    
    January 18, 2008
    
    December 31, 201055,000
    
    
    
    2.60
    
    
    March 2, 2009
    
    December 31, 2011Yi Liu
    
    
    50,000
    
    
    
    2.60
    
    
    March 2, 2009
    
    December 31, 2011Ming Ouyang
    
    
    20,184
    
    
    
    1.472
    
    
    June 30, 2007
    
    December 31, 200815,000
    
    
    
    5.56
    
    
    January 18, 2008
    
    December 31, 201035,000
    
    
    
    2.60
    
    
    March 2, 2009
    
    December 31, 2011Wei Zheng
    
    
    173,256
    
    
    
    1.472
    
    
    June 30, 2007
    
    December 31, 200860,650
    
    
    
    
    
    
    June 30, 2007
    
    October 24, 200738,000
    
    
    
    5.56
    
    
    January 18, 2008
    
    December 31, 2010100,000
    
    
    
    2.60
    
    
    March 2, 2009
    
    December 31, 2011Rick Chen1
    
    
    117,840
    
    
    
    3.8719
    
    
    June 30, 2007
    
    June 30, 2010115,000
    
    
    
    5.56
    
    
    January 18, 2008
    
    December 31, 201050,000
    
    
    
    2.60
    
    
    March 2, 2009
    
    December 31, 200930,000
    
    
    
    2.60
    
    
    July 21, 2009
    
    December 31, 2009Other individuals as a group
    
    
    447,620
    
    
    
    1.472
    
    
    June 30, 2007
    
    December 31, 2008445,177
    
    
    
    5.56
    
    
    January 18, 2008
    
    December 31, 2010769,000
    
    
    
    2.60
    
    
    March 2, 2009
    
    December 31, 2011
 Board Practices
 Board of Directors
   Committees of the Board of Directors
  
 1
    
    Rick Chen resigned as our executive vice president in August 2009.  66




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##### Table of Contents



Audit Committee
 
    
    appointing the independent auditors and pre-approving all audit and non-audit
services permitted to be performed by the independent auditors;
 
    
    reviewing with the independent auditors any audit problems or difficulties and
managements response;
 
    
    reviewing and approving all proposed related party transactions, as defined in Item
404 of Regulation S-K under the Securities Act;
 
    
    discussing the annual audited financial statements with management and the
independent auditors;
 
    
    reviewing major issues as to the adequacy of our internal controls and any special
audit steps adopted in light of material control deficiencies; and
 
    
    meeting separately and periodically with management and the independent auditors.
  Compensation Committee
 
    
    reviewing and evaluating at least annually and, if necessary, revising the
compensation policies adopted by our management;
 
    
    reviewing and evaluating at least annually the performance, and determining the
compensation, of our chief executive officer;
 
    
    reviewing and approving our chief executive officers employment agreement and
amendments thereto, and severance arrangement, if any;
 
    
    reviewing all annual bonus, long-term incentive compensation, share option, employee
pension and welfare benefit plans; and
 
    
    reviewing and approving director and executive officer indemnification and insurance
matters, and any employee loans in an amount equal to or greater than US$ 120,000.
   67




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##### Table of Contents



Corporate Governance and Nominating Committee
 
    
    recommending to our board of directors for nomination or appointment by the board
such candidates as the committee has found to be well qualified and willing and ready
to be elected or reelected to serve as our members of our board or its committees or to
fill any vacancies on our board or its committees, respectively;
 
    
    reviewing annually the composition of our board of directors and its committees in
light of the characteristics of independence, qualification, experience and
availability of the board members;
 
    
    developing and recommending to our board of directors a set of corporate governance
guidelines and principles applicable to the company; and
 
    
    monitoring of compliance with the companys code of business conduct and ethics,
including reviewing the adequacy and effectiveness of our internal rules and procedures
to ensure compliance with applicable laws and regulations.
  Duties of Directors
   Terms of Directors and Officers
  Employees
     68




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##### Table of Contents



Share Ownership
  
    
    each of our directors and executive officers; and
 
    
    each person known to us to own beneficially more than 5% of our ordinary shares.
  Shares Beneficially OwnedNumber
    
    
    %Directors and Executive Officers(1):Dong Xu(2)
    
    
    8,126,711
    
    
    
    20.2Jerry He(3)
    
    
    *
    
    
    
    *Benguo Tang(4)
    
    
    5,268,268
    
    
    
    13.1Xiaotong Wang(5)
    
    
    4,487,890
    
    
    
    11.1Xianquan Xiao(6)
    
    
    1,707,760
    
    
    
    4.2Xiao Chen(7)
    
    
    *
    
    
    
    *Guangnan Ni(8)
    
    
    *
    
    
    
    *Conrad Kwong Yue Tsang(9)
    
    
    3,364,669
    
    
    
    8.4Dora Li(10)
    
    
    *
    
    
    
    *Yi Liu(11)
    
    
    *
    
    
    
    *Ming Ouyang(12)
    
    
    *
    
    
    
    *Wei Zheng(13)
    
    
    *
    
    
    
    *All Directors and Executive Officers as a Group
    
    
    23,271,520
    
    
    
    57.7Principal Shareholders:Jointly Gold Technologies Ltd.(14)
    
    
    8,078,200
    
    
    
    21.0First Win Technologies Ltd.(15)
    
    
    5,268,268
    
    
    
    13.1Global Wise Technologies Ltd.(16)
    
    
    4,487,890
    
    
    
    11.7Baring Asia II Holdings (22) Limited(17)
    
    
    3,364,669
    
    
    
    8.4Lehman Brothers Bankhaus AG (i. Ins.)(18)
    
    
    2,860,500
    
    
    
    7.1Sunshine Nation Limited(19)
    
    
    2,647,743
    
    
    
    6.6Dynamic View Investments Limited(20)
    
    
    1,252,116
    
    
    
    3.1
 
 *
    
    Less than 1%(1)
    
    The business address of our directors and executive officers, except for Mr. Conrad Tsang, is
c/o Noah Education Holdings Ltd., 10th Floor, B Building, Futian Tianan Hi-Tech Venture Park,
Futian District, Shenzhen, Guangdong Province, Peoples Republic of China.(2)
    
    Includes 7,416,810 ordinary shares and 661,390 ADSs, representing 661,390 ordinary shares,
held by Jointly Gold Technologies Ltd., a British Virgin Islands limited liability company
affiliated with Mr. Xu. These shares also include 48,511 ordinary shares issuable upon
exercise of options held by Mr. Xu that will be vested as of November 30, 2009.(3)
    
    Represents ordinary shares issuable upon exercise of options held by Mr. He that will be
vested as of November 30, 2009.(4)
    
    Includes 4,711,208 ordinary shares and 557,060 ADSs, representing 557,060 ordinary shares,
held by First Win Technologies Ltd., a British Virgin Islands limited liability company
affiliated with Mr. Tang.  69




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##### Table of Contents



(5)
    
    Includes 3,809,340 ordinary shares and 678,550 ADSs, representing 678,550 ordinary shares,
held by Global Wise Technologies Ltd., a British Virgin Islands limited liability company
affiliated with Mr. Wang.(6)
    
    Includes 691,416 ordinary shares and 560,700 ADSs, representing 560,700 ordinary shares, held
by Dynamic View Investments Limited, a British Virgin Islands limited liability company, of
which Mr. Xiao is the sole director. The shareholders of Dynamic View are Mr. Xiao and seven
of our other employees, namely Ruchun Zhang, Baolin Xu, Longxi Liu, Xiaodong Ji, Yong Liu, Fei
Zhao and Shunan Guo. Mr. Xiao disclaims beneficial ownership in the shares held by Dynamic
View except to the extent of his pecuniary interest therein. These shares also include 455,644
ordinary shares issuable upon exercise of options held by Mr. Xiao that will be vested as of
November 30, 2009.(7)
    
    Represents ordinary shares issuable upon exercise of options held by Mr. Chen that will be
vested as of November 30, 2009.(8)
    
    Represents ordinary shares issuable upon exercise of options held by Mr. Ni that will be
vested as of November 30, 2009.(9)
    
    Includes 3,364,669 ordinary shares held by Baring Asia II Holdings (22) Limited, a company
incorporated in the British Virgin Islands. Mr. Tsang is a board representative of Baring Asia
II Holdings (22) Limited. Mr. Tsang disclaims beneficial ownership of all of our shares held
by the investment entities affiliated with Baring Asia II Holdings (22) Limited except to the
extent of his pecuniary interest therein. The business address of Mr. Tsang is 39th Floor, One
International Finance Centre, 1 Harbour View Street, Central, Hong Kong.(10)
    
    Represents ordinary shares issuable upon exercise of options held by Ms. Li that will be
vested as of November 30, 2009.(11)
    
    Represents ordinary shares issuable upon exercise of options held by Mr. Liu that will be
vested as of November 30, 2009.(12)
    
    Represents ordinary shares issuable upon exercise of options held by Mr. Ouyang that will be
vested as of November 30, 2009.(13)
    
    Represents ordinary shares issuable upon exercise of options held by Mr. Zheng that will be
vested as of November 30, 2009.(14)
    
    Jointly Gold Technologies Ltd., a company incorporated in the British Virgin Islands, is
affiliated with Dong Xu. The registered address of Jointly Gold Technologies Ltd. is Akara
Bldg., 24 Decastro Street, Wickhams Cay I, Road Town, Tortola, British Virgin Islands.(15)
    
    First Win Technologies Ltd., a company incorporated in the British Virgin Islands, is
affiliated with Benguo Tang. The registered address of First Win Technologies Ltd. is Akara
Bldg., 24 Decastro Street, Wickhams Cay I, Road Town, Tortola, British Virgin Islands.(16)
    
    Global Wise Technologies Ltd., a company incorporated in the British Virgin Islands, is
affiliated with Xiaotong Wang. The registered address of Global Wise Technologies Ltd. is
Akara Bldg., 24 Decastro Street, Wickhams Cay I, Road Town, Tortola, British Virgin Islands.(17)
    
    Includes 3,364,669 ordinary shares held by Baring Asia II Holdings (22) Limited, which is
incorporated solely for the purpose of holding shares in our company for the benefit of the
entities that comprise The Baring Asia Private Equity Fund II (Fund II). The voting and
investment power over the shares owned by Baring Asia II Holdings (22) Limited is exercised by
the investment committee of Baring Asia Fund II (GP) LP, the sole general partner of Fund II.
This investment committee is comprised of Jean Eric Salata, Gordon Shaw Sun Kan and
Christopher Brotchie, each of whom disclaims beneficial ownership of all of our shares held by
Baring Asia II Holdings (22) Limited, except to the extent of their pecuniary interest
therein. The address of Baring Asia II Holdings (22) Limited is P.O. Box 431, 13-15 Victoria
Road, St. Peter Port, Guernsey, Channel Islands, GY1 3XD, United Kingdom.(18)
    
    According to a Schedule 13G filed on October 23, 2009, Lehman Brothers Bankhaus AG (i. Ins.)
had shared voting and investment power over 2,860,500 ordinary shares as of December 31, 2008.
The address of Lehman Brothers Bankhaus AG (i. Ins.) is Rathenauplatz 1, 60313 Frankfurt am
Main, Germany.(19)
    
    Sunshine Nation Limited is a company incorporated in the British Virgin Islands. The
registered address of Sunshine Nation Limited is Akara Building, 24 De Castro Street,
Wickhams Cay I, Road Town, Tortola, British Virgin Islands. Ms. Siyuan Du is the sole owner
and director of Sunshine Nation Limited.(20)
    
    The sole director of Dynamic View Investments Limited, a company incorporated in the British
Virgin Islands, is Xianquan Xiao. The shareholders of Dynamic View are Mr. Xiao and seven of
our other employees, namely Ruchun Zhang, Baolin Xu, Longxi Liu, Xiaodong Ji, Yong Liu, Fei
Zhao and Shunan Guo. The registered address of Dynamic View Investments Limited is Akara
Bldg., 24 Decastro Street, Wickhams Cay I, Road Town, Tortola, British Virgin Islands.   
 Item 7. Major Shareholders and Related Party Translations
 Major Shareholders
   70




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##### Table of Contents



Related Party Transactions
  Contractual Arrangements with Noah Zhi Yuan and Its Shareholders
  Private Placements
   Shareholders Agreement
   71




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##### Table of Contents



Legal Reorganization
        
    
    provide any similar services to any third party, or engage in any other business,
 
    
    purchase equipment, materials or stationary of more than RMB 300,000,
 
    
    employ any person unless it is necessary to carry out the business as appointed by
New Noah and Industrial Noah,
 
    
    enter into any loan or financing arrangement beyond US$ 100,000, or
 
    
    gift, lease, sell or license software products not developed for New Noah and
Innovative Noah.
  72




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##### Table of Contents



Transactions with Noah Zhi Yuan
   Equity Compensation Plan
  Advances to Related Parties
  Distributorships
   Year ended June 30,Name of related party
    
    2007
    
    
    2008
    
    
    2009(RMB)
    
    
    (RMB)
    
    
    (RMB)
    
    
    (US$)Chengdu Nuo Ya Wei Ye
    
    
    18,440
    
    
    
    
    
    
    
    
    
    
    
    
 Employment Agreements
   73




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##### Table of Contents



Related Party Transaction Policy
  Interests of Experts and Counsel
  
 Item 8. Financial Information
 Consolidated Statements and Other Financial Information
  Legal Proceedings
 Seidel v. Noah Education
Holdings, Ltd. et al Schapiro v. Noah Education
Holdings, Ltd. et al. Sebik v. Noah Education Holdings, Ltd. et
al.
     74




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##### Table of Contents



Dividend Policy
     Significant Changes
   75




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##### Table of Contents



Item 9. The Offer and Listing
 Offer and Listing Details
  Sales PriceHigh
    
    
    LowYearly High and LowFiscal year ended June 30, 2008 (from October 19, 2007)
    
    
    23.70
    
    
    
    4.76Fiscal year ended June 30, 2009
    
    
    5.91
    
    
    
    1.85Quarterly High and LowFiscal quarter ended December 31, 2007
    
    
    23.70
    
    
    
    6.45Fiscal quarter ended March 31, 2008
    
    
    8.40
    
    
    
    4.76Fiscal quarter ended June 30, 2008
    
    
    8.49
    
    
    
    5.13Fiscal quarter ended September 30, 2008
    
    
    5.91
    
    
    
    3.45Fiscal quarter ended December 31, 2008
    
    
    4.27
    
    
    
    1.85Fiscal quarter ended March 31, 2009
    
    
    3.55
    
    
    
    2.30Fiscal quarter ended June 30, 2009
    
    
    4.78
    
    
    
    2.88Fiscal quarter ended September 30, 2009
    
    
    5.42
    
    
    
    3.50Monthly Highs and LowsMay 2009
    
    
    4.47
    
    
    
    3.02June 2009
    
    
    4.78
    
    
    
    3.70July 2009
    
    
    4.96
    
    
    
    3.50August 2009
    
    
    5.42
    
    
    
    4.35September 2009
    
    
    5.15
    
    
    
    4.31October 2009
    
    
    5.90
    
    
    
    4.31November 2009 (through November 19)
    
    
    6.16
    
    
    
    4.72
 Plan of Distribution
  Markets
  Selling Shareholders
  Dilution
  Expenses of the Issue
  
 Item 10. Additional Information
 Share Capital
  Memorandum and Articles of Association
   76




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##### Table of Contents



Ordinary Shares
 General
 Dividends
 Voting Rights
   Transfer of Shares
  Liquidation
 Calls on Shares and Forfeiture of Shares
 Redemption of Shares
  77




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##### Table of Contents



Variations of Rights of Shares
 Inspection of Books and Records 3⁄4
 Limitations
on the Rights to Own Shares
 Disclosure
of Shareholder Ownership
 Differences in Corporate Law
  Mergers and Similar Arrangements
  
    
    a merger means the merging of two or more constituent companies and the vesting of
their undertaking, property and liabilities in one of such companies as the surviving
company; and
 
    
    a consolidation means the combination of two or more constituent companies into a
consolidated company and the vesting of the undertaking, property and liabilities of
such companies to the consolidated company.
  
    
    a special resolution of the shareholders of each constituent company voting together
as one class, if the shares to be issued to each shareholder in the consolidated or
surviving company will have the same rights and economic value as the shares held in
the relevant constituent company; or
 
    
    a shareholder resolution of each constituent company passed by a majority in number
representing 75% in value of the shareholders voting together as one class.
   78




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##### Table of Contents




    
    the statutory provisions as to majority vote have been met;
 
    
    the shareholders have been fairly represented at the meeting in question;
 
    
    the arrangement is such that a businessman would reasonably approve; and
 
    
    the arrangement is not one that would more properly be sanctioned under some other
provision of the Companies Law.
   Shareholders Suits.
   
    
    a company is acting or proposing to act illegally or ultra vires;
 
    
    the act complained of, although not ultra vires, could be effected duly if
authorized by more than a simple majority vote which has not been obtained; and
 
    
    those who control the company are perpetrating a fraud on the minority.
 Directors Fiduciary Duties.
  79




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##### Table of Contents



Shareholder Action by Written Resolution
 Shareholder Proposals
 Cumulative Voting
 Removal of Directors
 Transactions with Interested Shareholders
   80




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##### Table of Contents



Dissolution; Winding Up
 Variation of Rights of Shares
 Amendment of Governing Documents
 Inspection of Books and Records
 Anti-Takeover Provisions in Our Memorandum and Articles of Association
  Rights of Non-Resident or Foreign Shareholders
 Indemnification
    81




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##### Table of Contents



Registration Rights
  Demand Registration Rights th th
 Piggyback Registration Rights
 Form F-3 Registration Rights
 Expenses of Registration
 Material Contracts
   82




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##### Table of Contents



Exchange Controls
  Taxation
  Cayman Islands Taxation
  Peoples Republic of China Taxation
    83




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##### Table of Contents



United States Federal Income Taxation
   
    
    banks;
 
    
    financial institutions;
 
    
    insurance companies;
 
    
    broker dealers;
 
    
    traders that elect to mark to market;
 
    
    tax-exempt entities;
 
    
    persons liable for alternative minimum tax;
 
    
    persons holding an ADS or ordinary share as part of a straddle, hedging, conversion
or integrated transaction;
 
    
    persons that actually or constructively own 10% or more of our voting stock;
 
    
    U.S. expatriates;
 
    
    persons holding ADSs or ordinary shares through partnerships or other pass-through
entities; or
 
    
    persons who acquired ADSs or ordinary shares pursuant to the exercise of any
employee share option or otherwise as compensation.
 U.S. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS ABOUT THE APPLICATION OF THE U.S. FEDERAL TAX
RULES TO THEIR PARTICULAR CIRCUMSTANCES AS WELL AS THE STATE AND LOCAL AND FOREIGN TAX CONSEQUENCES
TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF ADSs OR ORDINARY SHARES.
  84




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##### Table of Contents




    
    an individual who is a citizen or resident of the United States;
 
    
    a corporation (or other entity taxable as a corporation for U.S. federal income tax
purposes) organized under the laws of the United States, any State or the District of
Columbia;
 
    
    an estate whose income is subject to U.S. federal income taxation regardless of its
source; or
 
    
    a trust that (1) is subject to the supervision of a court within the United States
and the control of one or more U.S. persons or (2) has a valid election in effect under
applicable U.S. Treasury regulations to be treated as a U.S. person.
    Passive Foreign Investment Company
  
    
    at least 75% of its gross income is passive income, or
 
    
    at least 50% of the value of its assets (based on an average of the quarterly values
of the assets during a taxable year) is attributable to assets that produce or are held
for the production of passive income (the asset test).
   The rules dealing with deemed sale elections are very
complex. You are strongly encouraged to consult your tax advisor as to the possibility and
consequences of making a deemed sale election if we cease to become a PFIC and such election
becomes available to you.
  85




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##### Table of Contents




    
    the excess distribution or gain will be allocated ratably over your holding period
for the ADSs or ordinary shares,
 
    
    the amount allocated to the current taxable year, and any taxable year prior to the
first taxable year in which we were a PFIC, will be treated as ordinary income, and
 
    
    the amount allocated to each other year will be subject to the highest tax rate in
effect for that year and the interest charge generally applicable to underpayments of
tax will be imposed on the resulting tax attributable to each such year.
     86




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##### Table of Contents



de minimis
   YOU ARE STRONGLY URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE IMPACT OF OUR BEING A PFIC
FOR OUR TAXABLE YEAR ENDED JUNE 30, 2009 ON YOUR INVESTMENT IN OUR ADSs AND ORDINARY SHARES AS WELL
AS APPLICATION OF THE PFIC RULES TO YOUR INVESTMENT IN ADSs OR ORDINARY SHARES.
 Taxation of Dividends and Other Distributions on the ADSs or Ordinary Shares
      87




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##### Table of Contents



Taxation of Disposition of ADSs or Ordinary Shares
   Information Reporting and Backup Withholding
   Dividends and Paying Agents
  Statement by Experts
  Documents on Display
  http:// www.sec.gov
  88




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##### Table of Contents



http://www.noahedu.com.cn
 Subsidiary Information
  
 Item 11. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
  Foreign Exchange Risk
    
 Item 12. Description of Securities Other than Equity Securities
   89




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##### Table of Contents



PART II
 
 Item 13. Defaults, Dividend Arrearages and Delinquencies
  
 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
 Material Modifications to the Rights of Security Holders
  Use of Proceeds
  
    
    approximately US$ 7.7 million to fund our expansion into complementary
business such as acquiring childrens English language training business;
    
    approximately US$ 7.7 million to fund research and development efforts; and
    
    approximately US$ 12.6 million to pay the dividends in the fiscal year ended
June 30, 2009.
  
 Item 15T. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Managements Annual Report on Internal Control over Financial Reporting
   90




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##### Table of Contents



Changes in Internal Control over Financial Reporting
  
 Item 16A. Audit Committee Financial Expert
  
 Item 16B. Code of Ethics
 www.noahtech.com.cn
 
 Item 16C. Principal Accountant Fees and Services
  For the Year Ended June 30,2008
    
    
    2009(in thousands of US$)Audit fees (1)
    
    
    325
    
    
    
    325Audit-related fees(2)
    
    
    50
    
    
    
    50Tax fees (3)
    
    
    3⁄4
    
    
    
    29All other fees (4)
    
    
    3⁄4
    
    
    
    3⁄4
 
 (1)
    
    Audit fees means the aggregate fees billed in each of the fiscal years listed for
professional services rendered by our independent registered public accounting firm for the
audit of our annual financial statements that are normally provided in connection with
statutory and regulatory filings or engagements for those fiscal years.  91




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##### Table of Contents



(2)
    
    Audit-related fees means the aggregate fees billed in each of the fiscal years listed for
assurance and related services by our independent registered public accounting firm that are
reasonably related to the performance of the audit or review of our financial statements and
are not reported under Audit fees.(3)
    
    Tax fees means the aggregate fees billed in each of the fiscal years listed for
professional services rendered by our independent registered public accounting firm for tax
compliance, tax advice, and tax planning.(4)
    
    All other fees means the aggregate fees billed in each of the fiscal years listed for
products and services provided by our independent registered public accounting firm, other
than the services reported in the other categories. de minimus
 
 Item 16D. Exemptions from the Listing Standards for Audit Committees
  
 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  ApproximateTotal Number of
    
    
    Dollar Value ofADSs Purchased
    
    
    ADSs that MayTotal Number of
    
    
    Average Price
    
    
    as Part of Publicly
    
    
    Yet Be PurchasedPeriod
    
    ADSs Purchased
    
    
    Paid Per ADS(1)
    
    
    Announced Plan(2)
    
    
    Under the Plan(1)June 18, 2008  June
25, 2008
    
    
    143,484
    
    
    US$
    5.93
    
    
    
    143,484
    
    
    US$
    9,149,450.83August 26, 2008 
August 29, 2008
    
    
    74,500
    
    
    US$
    4.80
    
    
    
    74,500
    
    
    US$
    8,792,190.53September 2, 2008 
September 30, 2008
    
    
    886,066
    
    
    US$
    4.45
    
    
    
    866,066
    
    
    US$
    4,846,440.11October 8, 2008 
October 31, 2008
    
    
    536,134
    
    
    US$
    3.18
    
    
    
    536,134
    
    
    US$
    3,141,116.02November 3, 2008 
November 28, 2008
    
    
    523,484
    
    
    US$
    2.51
    
    
    
    523,484
    
    
    US$
    1,826,247.90December 1, 2008 
November 31, 2008
    
    
    259,471
    
    
    US$
    2.89
    
    
    
    259,471
    
    
    US$
    1,077,412.43February 19, 2009 
February 27, 2009
    
    
    68,900
    
    
    US$
    3.09
    
    
    
    68,900
    
    
    US$
    864,615.50March 2, 2009 
March 31, 2009
    
    
    94,032
    
    
    US$
    3.06
    
    
    
    94,032
    
    
    US$
    576,601.97June 10, 2009  June
19, 2009
    
    
    142,551
    
    
    US$
    4.04
    
    
    
    142,551
    
    
    US$
    157.75Total
    
    
    2,728,622
 
 (1)
    
    Each of our ADSs represents one ordinary share.(2)
    
    The repurchase plan was publicly announced on March 27, 2008 and provides for the repurchase
of up to US$ 10 million of our ordinary shares.  92




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##### Table of Contents



Item 16F. Change in Registrants Certifying Accountant
  
 Item 16G. Corporate Governance
  
 PART III
 
 Item 17. Financial Statements
  
 Item 18. Financial Statements
   93




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##### Table of Contents



Item 19. Exhibits
 ExhibitNumber
    
    Description of Document1.1
    *
    
    Amended and Restated Memorandum and Articles of Association of the Registrant2.1
    
    
    Registrants Specimen American Depositary Receipt (incorporated by reference
to Exhibit 4.1 from our F-1 registration statement (File No. 333-146267), as
amended, initially filed with the Commission on September 24, 2007)2.2
    
    
    Registrants Specimen Certificate for Ordinary Shares (incorporated by
reference to Exhibit 4.2 from our F-1 registration statement (File
No. 333-146267), as amended, initially filed with the Commission on
September 24, 2007)2.3
    
    
    Form of Deposit Agreement among the Registrant, the depositary and holders
of the American Depositary Receipts (incorporated by reference to Exhibit
4.3 from our F-1 registration statement (File No. 333-146267), as amended,
initially filed with the Commission on September 24, 2007)4.1
    
    
    Share Subscription Agreement, dated June 30, 2004, as amended, relating to
the subscription of Series A preference shares in the Registrant
(incorporated by reference to Exhibit 4.4 from our F-1 registration
statement (File No. 333-146267), as amended, initially filed with the
Commission on September 24, 2007)4.2
    
    
    Share Purchase Agreement, dated March 7, 2007, in respect of the purchase by
Lehman Brothers Commercial Corporation Asia Limited of ordinary shares and
Series A preference shares in the Registrant from existing holders
(incorporated by reference to Exhibit 4.5 from our F-1 registration
statement (File No. 333-146267), as amended, initially filed with the
Commission on September 24, 2007)4.3
    
    
    Share Purchase Agreement, dated April 10, 2007, in respect of the purchase
by Great Joy Group Limited of ordinary shares in the Registrant from
existing holders (incorporated by reference to Exhibit 4.6 from our F-1
registration statement (File No. 333-146267), as amended, initially filed
with the Commission on September 24, 2007)4.4
    
    
    Amended and Restated Shareholders Agreement, dated as of March 16, 2007
(incorporated by reference to Exhibit 4.7 from our F-1 registration
statement (File No. 333-146267), as amended, initially filed with the
Commission on September 24, 2007)4.5
    
    
    English translation of Agreement For Trust and Other Relevant Arrangement
Relating to 2006 Equity Compensation Plan dated October 26, 2006, together
with the English translation of the termination agreement dated June 29,
2006 (incorporated by reference to Exhibit 10.1 from our F-1 registration
statement (File No. 333-146267), as amended, initially filed with the
Commission on September 24, 2007)4.6
    
    
    2007 Share Incentive Plan (incorporated by reference to Exhibit 3 of Form
6-K furnished with the Commission on December 19, 2008)4.7
    
    
    2008 Share Incentive Plan (incorporated by reference to Exhibit 4 of Form
6-K furnished with the Commission on December 19, 2008)4.8
    
    
    Form of Indemnification Agreement with the Registrants directors
(incorporated by reference to Exhibit 10.3 from our F-1 registration
statement (File No. 333-146267), as amended, initially filed with the
Commission on September 24, 2007)4.9
    
    
    Form of Employment Agreement with Executive Officers (incorporated by
reference to Exhibit 10.4 from our F-1 registration statement (File
No. 333-146267), as amended, initially filed with the Commission on
September 24, 2007)4.10
    
    
    English Translation of Software Development and Maintenance Agreement, dated
June 8, 2007, between Noah Education and Noah Zhi Yuan (incorporated by
reference to Exhibit 10.5 from our F-1 registration statement (File
No. 333-146267), as amended, initially filed with the Commission on
September 24, 2007)4.11
    
    
    English Translation of Exclusive Technology Supporting and Consulting
Service Agreement, dated June 8, 2007, between Noah Education and Noah Zhi
Yuan (incorporated by reference to Exhibit 10.6 from our F-1 registration
statement (File No. 333-146267), as amended, initially filed with the
Commission on September 24, 2007)
  94




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##### Table of Contents



ExhibitNumber
    
    Description of Document4.12
    
    
    English Translation of Content Services Agreement, dated June 8, 2007,
between Noah Education and Noah Zhi Yuan (incorporated by reference to
Exhibit 10.7 from our F-1 registration statement (File No. 333-146267), as
amended, initially filed with the Commission on September 24, 2007)4.13
    
    
    English Translation of Equity Pledge Agreement, dated June 8, 2007, between
Noah Education, Dong Xu and Benguo Tang (incorporated by reference to
Exhibit 10.8 from our F-1 registration statement (File No. 333-146267), as
amended, initially filed with the Commission on September 24, 2007)4.14
    
    
    English Translation of Option Agreement, dated June 8, 2007, between Noah
Education, Dong Xu and Benguo Tang (incorporated by reference to Exhibit
10.9 from our F-1 registration statement (File No. 333-146267), as amended,
initially filed with the Commission on September 24, 2007)4.15
    
    
    English Translation of Loan Agreement, dated June 8, 2007, between Noah
Education, Dong Xu and Benguo Tang (incorporated by reference to Exhibit
10.10 from our F-1 registration statement (File No. 333-146267), as amended,
initially filed with the Commission on September 24, 2007)4.16
    
    
    English Translation of Power of Attorney, dated June 8, 2007, by Xu Dong in
favor of Noah Education in respect of Noah Zhi Yuan (incorporated by
reference to Exhibit 10.11 from our F-1 registration statement (File
No. 333-146267), as amended, initially filed with the Commission on
September 24, 2007)4.17
    
    
    English Translation of Power of Attorney, dated June 8, 2007, by Benguo Tang
in favor of Noah Education in respect of Noah Zhi Yuan (incorporated by
reference to Exhibit 10.12 from our F-1 registration statement (File
No. 333-146267), as amended, initially filed with the Commission on
September 24, 2007)4.18
    
    
    English Translation of Asset Purchase Agreement, dated June 30, 2004,
between Noah Industrial and the Registrant (incorporated by reference to
Exhibit 10.13 from our F-1 registration statement (File No. 333-146267), as
amended, initially filed with the Commission on September 24, 2007)4.19
    *
    
    English Translation of Purchase & Sale Contract for Commercial House dated
February 20, 2009 between Chengdu Hi-tech Real Estate Co., Ltd. and Chengdu
Shidai Noah Information Technology Co., Ltd.4.20
    *
    
    English Translation of Purchase & Sale Contract for Commercial House dated
February 20, 2009 between Chengdu Hi-tech Real Estate Co., Ltd. and Chengdu
Shidai Noah Information Technology Co., Ltd.4.21
    *
    
    English Translation of Purchase & Sale Contract for Commercial House dated
February 20, 2009 between Chengdu Hi-tech Real Estate Co., Ltd. and Chengdu
Shidai Noah Education Software Co. Ltd.4.22
    *
    
    English Translation of Purchase & Sale Contract for Commercial House dated
February 20, 2009 between Chengdu Hi-tech Real Estate Co., Ltd. and Chengdu
Shidai Noah Education Software Co. Ltd.4.23
    *
    
    Share Purchase Agreement dated May 22, 2009 between Sunshine Nation Limited,
Tianming Du, Liangdong Du, Siyuan Du and the Registrant4.24
    *
    
    English Translation of Equity Acquisition Agreement dated May 22, 2009
between Tianmin Du, Liangdong Du, Changsha Xingchen Enterprise Management &
Consultation Co., Ltd and Global Ring Limited4.25
    *
    
    English Translation of Equity Transfer Agreement dated May 22, 2009 between
Tianmin Du, Liangdong Du, Changsha Xingchen Enterprise Management &
Consultation Co., Ltd. and Shenzhen Zhi Yuan Noah Internet Co., Ltd.8.1
    *
    
    Subsidiaries of the Registrant11.1
    
    
    Code of Business Conduct and Ethics of the Registrant (incorporated by
reference to Exhibit 99.1 from our F-1 registration statement (File
No. 333-146267), as amended, initially filed with the Commission on
September 24, 2007)12.1
    *
    
    CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 200212.2
    *
    
    CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 200213.1
    *
    
    CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 200213.2
    *
    
    CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 200215.1
    *
    
    Consent of Deloitte Touche Tohmatsu
 *
    
    Filed with this annual report on Form 20-F  95




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##### Table of Contents



SIGNATURES
  Noah Education Holdings Ltd.By:
    /s/ Dong XuName:
    Dong XuTitle:
    Chairman and Chief Executive Officer   96




---



##### 



NOAH EDUCATION HOLDINGS LTD.
 FOR THE YEARS ENDED JUNE 30, 2007, 2008 AND 2009
 Page(s)Report of Independent Registered Public Accounting Firm
    
    
    F-1Consolidated Balance Sheets as of June 30, 2008 and 2009
    
    
    F-2Consolidated Statements of Operations for the years ended June 30, 2007,
2008 and 2009
    
    
    F-3Consolidated Statements of Shareholders Equity and Comprehensive Income
for the years ended June 30, 2007, 2008 and 2009
    
    
    F-4Consolidated Statements of Cash Flows for the years ended June 30, 2007,
2008 and 2009
    
    
    F-5Notes to the Consolidated Financial Statements
    
    
    F-6  F-42Schedule 1  Noah Education Holdings Ltd.  condensed financial statements
as of June 30, 2008 and 2009 and for the years ended June 30, 2007, 2008
and 2009
    
    
    F-43  F-47




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      /s/ Deloitte Touche TohmatsuDeloitte Touche TohmatsuHong KongNovember 20, 2009
  F-1




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 
 CONSOLIDATED BALANCE SHEETS
 As of June 30,2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    US$AssetsCurrent assetsCash and cash equivalents
    
    
    260,222,860
    
    
    
    493,911,466
    
    
    
    72,312,885Short-term bank deposits
    
    
    
    
    
    
    274,200,000
    
    
    
    40,145,237Investments
    
    
    759,875,217
    
    
    
    7,978,942
    
    
    
    1,168,186Accounts receivable, net of allowance
    
    
    171,727,724
    
    
    
    181,653,129
    
    
    
    26,595,580Related party receivables
    
    
    706,088
    
    
    
    627,626
    
    
    
    91,890Inventories
    
    
    84,893,471
    
    
    
    151,872,803
    
    
    
    22,235,484Prepaid expenses and other current assets
    
    
    58,005,597
    
    
    
    69,039,625
    
    
    
    10,107,994Deferred tax asset
    
    
    2,154,472
    
    
    
    13,207
    
    
    
    1,934Total current assets
    
    
    1,337,585,429
    
    
    
    1,179,296,798
    
    
    
    172,659,190Property, plant and equipment, net
    
    
    17,871,691
    
    
    
    119,619,947
    
    
    
    17,513,389Intangible assets, net
    
    
    6,504,214
    
    
    
    4,461,760
    
    
    
    653,240Deposits for investment
    
    
    910,000
    
    
    
    21,581,952
    
    
    
    3,159,783Deferred tax asset
    
    
    
    
    
    
    2,058,180
    
    
    
    301,335Total assets
    
    
    1,362,871,334
    
    
    
    1,327,018,637
    
    
    
    194,286,937Liabilities and Shareholders EquityCurrent liabilitiesAccounts payables
    
    
    34,827,252
    
    
    
    82,560,888
    
    
    
    12,087,624Other payables and accruals
    
    
    22,444,789
    
    
    
    45,809,825
    
    
    
    6,706,952Advances from customers
    
    
    2,825,530
    
    
    
    3,308,173
    
    
    
    484,345Income tax payable
    
    
    815,911
    
    
    
    499,471
    
    
    
    73,127Deferred revenue
    
    
    3,478,153
    
    
    
    1,518,203
    
    
    
    222,278Total current liabilities
    
    
    64,391,635
    
    
    
    133,696,560
    
    
    
    19,574,326Non-current liabilitiesWarrants
    
    
    5,830,023
    
    
    
    
    
    
    
    Deferred revenue
    
    
    7,716,488
    
    
    
    6,227,860
    
    
    
    911,812Total non-current liabilities
    
    
    13,546,511
    
    
    
    6,227,860
    
    
    
    911,812Total liabilities
    
    
    77,938,146
    
    
    
    139,924,420
    
    
    
    20,486,138Commitments and contingencies (note 19)Shareholders EquityOrdinary Shares, US$0.00005 par value;
600,000,000 shares authorized as
of June 30, 2008 and 2009; 38,063,201 and
35,589,120 shares issued and outstanding as
of June 30, 2008 and 2009 respectively
    
    
    15,349
    
    
    
    14,504
    
    
    
    2,124Additional paid-in capital
    
    
    1,169,618,982
    
    
    
    1,029,778,033
    
    
    
    150,768,357Accumulated other comprehensive loss
    
    
    (89,949,455
    )
    
    
    (93,632,438
    )
    
    
    (13,708,594
    )Retained earnings
    
    
    205,248,312
    
    
    
    250,934,118
    
    
    
    36,738,912Total shareholders equity
    
    
    1,284,933,188
    
    
    
    1,187,094,217
    
    
    
    173,800,799Total liabilities and shareholders equity
    
    
    1,362,871,334
    
    
    
    1,327,018,637
    
    
    
    194,286,937
   F-2




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 2007
    
    
    2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    RMB
    
    
    US$Net revenue  third parties
    
    
    536,785,034
    
    
    
    651,934,602
    
    
    
    671,145,679
    
    
    
    98,261,497Net revenue  related parties
    
    
    18,439,980
    
    
    
    
    
    
    
    
    
    
    
    Total net revenue
    
    
    555,225,014
    
    
    
    651,934,602
    
    
    
    671,145,679
    
    
    
    98,261,497Cost of revenue  third parties
    
    
    (260,105,773
    )
    
    
    (318,787,904
    )
    
    
    (326,400,700
    )
    
    
    (47,787,869
    )Cost of revenue  related parties
    
    
    (6,460,612
    )
    
    
    
    
    
    
    
    
    
    
    Total cost of revenue (a)
    
    
    (266,566,385
    )
    
    
    (318,787,904
    )
    
    
    (326,400,700
    )
    
    
    (47,787,869
    )Gross profit
    
    
    288,658,629
    
    
    
    333,146,698
    
    
    
    344,744,979
    
    
    
    50,473,628Research and development expenses (a)
    
    
    (43,486,658
    )
    
    
    (52,666,685
    )
    
    
    (56,301,924
    )
    
    
    (8,243,086
    )Sales and marketing expenses (a)
    
    
    (172,539,509
    )
    
    
    (197,430,136
    )
    
    
    (210,692,882
    )
    
    
    (30,847,249
    )General and administrative expenses (a)
    
    
    (24,676,281
    )
    
    
    (44,259,888
    )
    
    
    (58,498,799
    )
    
    
    (8,564,727
    )Other operating expenses
    
    
    (20,909,758
    )
    
    
    (3,131,763
    )
    
    
    (158,466
    )
    
    
    (23,201
    )Total operating expenses
    
    
    (261,612,206
    )
    
    
    (297,488,472
    )
    
    
    (325,652,071
    )
    
    
    (47,678,263
    )Other operating income
    
    
    40,023,377
    
    
    
    44,100,827
    
    
    
    45,575,781
    
    
    
    6,672,686Operating income
    
    
    67,069,800
    
    
    
    79,759,053
    
    
    
    64,668,689
    
    
    
    9,468,051Derivative (loss) gain
    
    
    (55,207
    )
    
    
    (1,868,238
    )
    
    
    5,807,511
    
    
    
    850,270Interest income
    
    
    2,306,073
    
    
    
    13,643,761
    
    
    
    5,307,899
    
    
    
    777,122Investment income
    
    
    
    
    
    
    11,057,176
    
    
    
    15,257,412
    
    
    
    2,233,816Other non-operating income
    
    
    
    
    
    
    42,708,114
    
    
    
    6,203,615
    
    
    
    908,263Income before income taxes
    
    
    69,320,666
    
    
    
    145,299,866
    
    
    
    97,245,126
    
    
    
    14,237,522Provision for income taxes
    
    
    (2,892,367
    )
    
    
    (1,101,395
    )
    
    
    (254,883
    )
    
    
    (37,317
    )Net income
    
    
    66,428,299
    
    
    
    144,198,471
    
    
    
    96,990,243
    
    
    
    14,200,205Preference stock dividends
    
    
    (17,705,374
    )
    
    
    
    
    
    
    
    
    
    
    Deemed dividend
    
    
    (2,653,072
    )
    
    
    (379,092
    )
    
    
    
    
    
    
    Net income attributable to ordinary shareholders
    
    
    46,069,853
    
    
    
    143,819,379
    
    
    
    96,990,243
    
    
    
    14,200,205Net income per shareBasic
    
    
    2.32
    
    
    
    4.03
    
    
    
    2.66
    
    
    
    0.39Diluted
    
    
    2.15
    
    
    
    3.93
    
    
    
    2.62
    
    
    
    0.38Weighted average ordinary shares outstandingBasic
    
    
    21,473,442
    
    
    
    33,153,982
    
    
    
    36,446,790
    
    
    
    36,446,790Diluted
    
    
    22,906,684
    
    
    
    34,056,315
    
    
    
    37,069,492
    
    
    
    37,069,492
  Year ended June 30,2007
    
    
    2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    RMB
    
    
    US$Share-based compensation expenses
during the related period related:Cost of revenue
    
    
    375,825
    
    
    
    228,400
    
    
    
    240,079
    
    
    
    35,150Research and development expenses
    
    
    9,444,159
    
    
    
    4,174,846
    
    
    
    3,198,310
    
    
    
    468,260Sales and marketing expenses
    
    
    4,386,283
    
    
    
    14,846,359
    
    
    
    2,452,724
    
    
    
    359,100General and administrative expenses
    
    
    624,446
    
    
    
    1,095,032
    
    
    
    2,282,348
    
    
    
    334,155
   F-3




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME
 AccumulatedAdditional
    
    
    other
    
    
    
    
    
    
    TotalOrdinary shares
    
    
    paid-in
    
    
    comprehensive
    
    
    Retained
    
    
    shareholders
    
    
    ComprehensiveShare
    
    
    Amount
    
    
    capital
    
    
    income (loss)
    
    
    earnings
    
    
    equity
    
    
    incomeRMB
    
    
    RMB
    
    
    RMB
    
    
    RMB
    
    
    RMB
    
    
    RMBAs of July 1, 2006
    
    
    21,473,442
    
    
    
    8,888
    
    
    
    32,572,269
    
    
    
    (2,481,967
    )
    
    
    77,396,303
    
    
    
    107,495,493Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,428,299
    
    
    
    66,428,299
    
    
    
    66,428,299Share-based compensation
    
    
    
    
    
    
    
    
    
    
    14,830,713
    
    
    
    
    
    
    
    
    
    
    
    14,830,713
    
    
    
    Cumulative translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,015,859
    )
    
    
    
    
    
    
    (3,015,859
    )
    
    
    (3,015,859
    )Deemed distribution to shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,516,362
    )
    
    
    (1,516,362
    )
    
    
    Deemed dividend on issuance of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,879,307
    )
    
    
    (4,879,307
    )
    
    
    Deemed contribution from shareholders
on disposal of a subsidiary
    
    
    
    
    
    
    
    
    
    
    1,334,957
    
    
    
    
    
    
    
    
    
    
    
    1,334,957
    
    
    
    Dividend to ordinary shareholders
and preference shareholders
(RMB2.715 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (76,000,000
    )
    
    
    (76,000,000
    )
    
    
    As of June 30, 2007
    
    
    21,473,442
    
    
    
    8,888
    
    
    
    48,737,939
    
    
    
    (5,497,826
    )
    
    
    61,428,933
    
    
    
    104,677,934
    
    
    
    63,412,440Issue of ordinary shares pursuant
to initial public offering
    
    
    10,202,641
    
    
    
    3,809
    
    
    
    1,067,015,352
    
    
    
    
    
    
    
    
    
    
    
    1,067,019,161
    
    
    
    Direct offering expenses
    
    
    
    
    
    
    
    
    
    
    (90,480,425
    )
    
    
    
    
    
    
    
    
    
    
    (90,480,425
    )
    
    
    Conversion of preference shares
to ordinary shares
    
    
    6,521,962
    
    
    
    2,698
    
    
    
    129,753,248
    
    
    
    
    
    
    
    
    
    
    
    129,755,946
    
    
    
    Share repurchase
    
    
    (143,484
    )
    
    
    (49
    )
    
    
    (5,833,952
    )
    
    
    
    
    
    
    
    
    
    
    (5,834,001
    )
    
    
    Exercise of share options
    
    
    8,640
    
    
    
    3
    
    
    
    82,183
    
    
    
    
    
    
    
    
    
    
    
    82,186
    
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    144,198,471
    
    
    
    144,198,471
    
    
    
    144,198,471Share-based compensation
    
    
    
    
    
    
    
    
    
    
    20,344,637
    
    
    
    
    
    
    
    
    
    
    
    20,344,637
    
    
    
    Cumulative translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (84,451,629
    )
    
    
    
    
    
    
    (84,451,629
    )
    
    
    (84,451,629
    )Deemed distribution to shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (379,092
    )
    
    
    (379,092
    )
    
    
    As of June 30, 2008
    
    
    38,063,201
    
    
    
    15,349
    
    
    
    1,169,618,982
    
    
    
    (89,949,455
    )
    
    
    205,248,312
    
    
    
    1,284,933,188
    
    
    
    59,746,842Share repurchase
    
    
    (2,585,138
    )
    
    
    (883
    )
    
    
    (62,461,110
    )
    
    
    
    
    
    
    
    
    
    
    (62,461,993
    )
    
    
    Exercise of share options
    
    
    111,057
    
    
    
    38
    
    
    
    661,926
    
    
    
    
    
    
    
    
    
    
    
    661,964
    
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    96,990,243
    
    
    
    96,990,243
    
    
    
    96,990,243Share-based compensation
    
    
    
    
    
    
    
    
    
    
    8,173,461
    
    
    
    
    
    
    
    
    
    
    
    8,173,461
    
    
    
    Cumulative translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,682,983
    )
    
    
    
    
    
    
    (3,682,983
    )
    
    
    (3,682,983
    )Dividend to ordinary shareholders
(US$0.56 per share)
    
    
    
    
    
    
    
    
    
    
    (86,215,226
    )
    
    
    
    
    
    
    (51,304,437
    )
    
    
    (137,519,663
    )
    
    
    As of June 30, 2009
    
    
    35,589,120
    
    
    
    14,504
    
    
    
    1,029,778,033
    
    
    
    (93,632,438
    )
    
    
    250,934,118
    
    
    
    1,187,094,217
    
    
    
    93,307,260As of June 30, 2009 (US$)
    
    
    
    
    
    
    2,124
    
    
    
    150,768,357
    
    
    
    (13,708,594
    )
    
    
    36,738,912
    
    
    
    173,800,799
    
    
    
    13,660,985
   F-4




---



##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years ended June 30,2007
    
    
    2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    RMB
    
    
    US$Cash flows from operating activities:Net income
    
    
    66,428,299
    
    
    
    144,198,471
    
    
    
    96,990,243
    
    
    
    14,200,205Adjustments to reconcile net income to net
cash provided by (used in) operating activities:Amortization of intangible assets
    
    
    5,317,993
    
    
    
    5,115,148
    
    
    
    5,779,198
    
    
    
    846,124Depreciation of property, plant and equipment
    
    
    2,335,854
    
    
    
    3,021,971
    
    
    
    4,901,623
    
    
    
    717,640Allowance for doubtful accounts
    
    
    761,215
    
    
    
    11,184,045
    
    
    
    1,459,142
    
    
    
    213,631Write-down of excess and obsolete inventories
    
    
    3,089,906
    
    
    
    9,764,368
    
    
    
    2,131,102
    
    
    
    312,012Write-off of property, plant and equipment
    
    
    13,426
    
    
    
    3,009
    
    
    
    13,187
    
    
    
    1,931Share-based compensation
    
    
    14,830,713
    
    
    
    20,344,637
    
    
    
    8,173,461
    
    
    
    1,196,665Derivative loss (gain)
    
    
    55,207
    
    
    
    1,868,238
    
    
    
    (5,807,511
    )
    
    
    (850,270
    )Loss on trading investments, net
    
    
    
    
    
    
    852,373
    
    
    
    1,428,850
    
    
    
    209,196Unrealized exchange difference
    
    
    (2,545,007
    )
    
    
    (83,724,258
    )
    
    
    (3,620,484
    )
    
    
    (530,070
    )Changes in current assets and liabilities:Trading investments
    
    
    
    
    
    
    (13,727,590
    )
    
    
    3,467,425
    
    
    
    507,661Accounts receivable
    
    
    (51,131,306
    )
    
    
    (77,684,005
    )
    
    
    (11,384,547
    )
    
    
    (1,666,796
    )Related party receivables
    
    
    8,791,253
    
    
    
    (56,849
    )
    
    
    78,462
    
    
    
    11,488Inventories
    
    
    (33,755,086
    )
    
    
    (5,540,415
    )
    
    
    (69,110,434
    )
    
    
    (10,118,362
    )Prepaid expenses and other current assets
    
    
    435,769
    
    
    
    (27,458,039
    )
    
    
    (11,034,028
    )
    
    
    (1,615,477
    )Deferred tax asset
    
    
    (3,238,258
    )
    
    
    1,083,786
    
    
    
    83,085
    
    
    
    12,164Accounts payable
    
    
    16,191,045
    
    
    
    (13,134,766
    )
    
    
    47,733,636
    
    
    
    6,988,615Other payables and accruals
    
    
    11,117,312
    
    
    
    2,439,154
    
    
    
    14,441,414
    
    
    
    2,114,347Advances from customers
    
    
    2,380,184
    
    
    
    (13,174,167
    )
    
    
    482,643
    
    
    
    70,663Deferred revenue
    
    
    2,619,248
    
    
    
    5,237,786
    
    
    
    (3,448,578
    )
    
    
    (504,901
    )Income tax payable
    
    
    (2,170,243
    )
    
    
    17,607
    
    
    
    (316,440
    )
    
    
    (46,330
    )Net cash provided by (used in) operating activities
    
    
    41,527,524
    
    
    
    (29,369,496
    )
    
    
    82,441,449
    
    
    
    12,070,136Cash flows from investing activities:Acquisition of property, plant and equipment
    
    
    (5,774,589
    )
    
    
    (3,925,188
    )
    
    
    (96,829,444
    )
    
    
    (14,176,663
    )Acquisition of intangible assets
    
    
    (8,142,446
    )
    
    
    (5,028,528
    )
    
    
    (3,736,744
    )
    
    
    (547,091
    )Deposits for investment
    
    
    
    
    
    
    (910,000
    )
    
    
    (21,581,952
    )
    
    
    (3,159,783
    )Repayment from a former subsidiary
    
    
    24,550,935
    
    
    
    
    
    
    
    
    
    
    
    Disposal of property, plant and equipment
    
    
    6,000
    
    
    
    557
    
    
    
    
    
    
    
    Disposal of other assets
    
    
    1,790,000
    
    
    
    
    
    
    
    
    
    
    
    (Increase) decrease in held-to-maturity investments
    
    
    
    
    
    
    (747,000,000
    )
    
    
    747,000,000
    
    
    
    109,367,222Decrease in restricted bank deposit
    
    
    39,922,508
    
    
    
    
    
    
    
    
    
    
    
    Increase in short-term bank deposits
    
    
    
    
    
    
    
    
    
    
    (274,200,000
    )
    
    
    (40,145,237
    )Net cash provided by (used in) investing activities
    
    
    52,352,408
    
    
    
    (756,863,159
    )
    
    
    350,651,860
    
    
    
    51,338,448Cash flows from financing activities:Proceeds from issuance of ordinary shares,
net of issuance costs
    
    
    
    
    
    
    976,538,736
    
    
    
    
    
    
    
    Proceeds from exercise of shares options
    
    
    
    
    
    
    82,186
    
    
    
    661,964
    
    
    
    96,917Shares repurchase
    
    
    
    
    
    
    (5,834,001
    )
    
    
    (62,461,993
    )
    
    
    (9,144,973
    )Dividend paid to ordinary and preference shareholders
    
    
    (76,000,000
    )
    
    
    
    
    
    
    (137,519,663
    )
    
    
    (20,134,061
    )Net cash (used in) provided by financing activities
    
    
    (76,000,000
    )
    
    
    970,786,921
    
    
    
    (199,319,692
    )
    
    
    (29,182,117
    )Effect of exchange rate changes on cash and
cash equivalents
    
    
    (470,852
    )
    
    
    (1,698,532
    )
    
    
    (85,011
    )
    
    
    (12,446
    )Net increase in cash and cash equivalents
    
    
    17,879,932
    
    
    
    184,554,266
    
    
    
    233,773,617
    
    
    
    34,226,467Cash and cash equivalents at beginning of year
    
    
    59,958,046
    
    
    
    77,367,126
    
    
    
    260,222,860
    
    
    
    38,098,864Cash and cash equivalents at end of year
    
    
    77,367,126
    
    
    
    260,222,860
    
    
    
    493,911,466
    
    
    
    72,312,885Supplemental disclosure of cash flow information:Income taxes paid
    
    
    
    
    
    
    
    
    
    
    488,238
    
    
    
    71,482Interest paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-cash investing and financing activities:Deemed distribution to shareholders
    
    
    6,395,669
    
    
    
    (379,092
    )
    
    
    
    
    
    
    Derivative (loss) gain
    
    
    (55,207
    )
    
    
    (1,868,238
    )
    
    
    5,807,511
    
    
    
    850,270Acquisition of property, plant and equipment
funded through other payables and accruals
    
    
    
    
    
    
    
    
    
    
    9,833,622
    
    
    
    1,439,727
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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 1.
    
    Company information
 Noah Education Holdings Ltd. (the Company) and its subsidiaries and variable interest
entity (VIE) (hereinafter collectively referred to as the Group) is a leading provider
of interactive electronic educational materials, developing and providing content targeting
primarily Chinese elementary, middle and high school students in the Peoples Republic of
China (the PRC). The Groups content focuses on interactive, multimedia learning
materials that complement the Chinese national and local school curricula, covering subjects
such as English, Chinese, physics, chemistry, geography and history. The Groups content is
primarily distributed through the sale of specialty, handheld digital learning devices, into
which contents are embedded, and through the Groups website.
 As of June 30, 2009, details of the Groups subsidiaries and variable interest entity subsidiary are as follows:
 Place ofestablishment
    
    OwnershipName of subsidiary
    
    and operation
    
    interest
    
    Principal activitiesBeijing Haidian New Noah School (BJS)
    
    PRC
    
    
    100
    %
    
    After-class tutoring servicesBeijing Noah Zhi Yuan Education Consulting
Co. Ltd. (BJNZY)
    
    PRC
    
    
    100
    %
    
    After-class tutoring servicesBeijing Xicheng New Noah School (BXNNS)
    
    PRC
    
    
    100
    %
    
    After-class tutoring servicesBright Sound Electronic Technology
(Shenzhen) Co., Ltd. (BSTS)
    
    PRC
    
    
    100
    %
    
    Research and development, and
distribution of software for
electronic learning productsBright Sound Limited
    
    British Virgin 
Islands
(BVI)
    
    
    100
    %
    
    Investment holdingChengdu Innovative Noah Electronic
Co., Ltd. (CINE)
    
    PRC
    
    
    100
    %
    
    Distribution of electronic
learning productsChengdu New Noah School (CDS)
    
    PRC
    
    
    100
    %
    
    After-class tutoring servicesChengdu Shidai Noah Education Software
Co., Ltd. (CDSD)
    
    PRC
    
    
    100
    %
    
    Research and development, and
distribution of software for
electronic learning productsChengdu Shidai Noah Information
Technology Co., Ltd. (CDSDT)
    
    PRC
    
    
    100
    %
    
    Research and development, and
distribution of software for
electronic learning productsChengdu Zhiyuan Noah Education
Technology Co., Ltd. (CDZY)
    
    PRC
    
    
    100
    %
    
    Research and development, and
distribution of software contentsChongqing New Noah School (CQS)
    
    PRC
    
    
    100
    %
    
    After-class tutoring servicesInnovative Noah Electronic (Shenzhen)
Co., Ltd. (INES)
    
    PRC
    
    
    100
    %
    
    Manufacture and distribution
of electronic learning productsNew Noah Technology (Shenzhen) Co., Ltd.
(NNTS)
    
    PRC
    
    
    100
    %
    
    Research and development, and
distribution of software for
electronic learning productsNoah Education Development
(Chengdu) Co., Ltd. (NEDCD)
    
    PRC
    
    
    100
    %
    
    Provision of educational services,
research and development and
distribution of software
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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 1.
    
    Company information continued
 Place ofestablishment
    
    OwnershipName of subsidiary
    
    and operation
    
    interest
    
    Principal activitiesNoah Education Technology (Shenzhen)
Co., Ltd. (NETS)
    
    PRC
    
    
    100
    %
    
    Research and development, and
distribution of software contentsShenzhen New Noah Education Investment
Development Co., Ltd. (SNNEI)
    
    PRC
    
    
    100
    %
    
    Provision of educational services,
research and development, and
distribution of softwareShenzhen Zhi Yuan Noah Internet Co., Ltd.
(Zhi Yuan)
    
    PRC
    
    No direct ownership;
VIE
    
    Provision of online services for
downloading software and
coursewareWell Profit Creation Limited (WPC)
    
    Hong Kong
(HK)
    
    
    100
    %
    
    Investment holdingWin Bright Creation Limited (WBC)
    
    HK
    
    
    100
    %
    
    Investment holding
 To comply with PRC laws and regulations that restrict foreign ownership of companies
that operate internet content, advertising services, value-added telecom services and other
restricted business, the Group operates its websites and provides such restricted services
in the PRC through Zhi Yuan, whose equity interests are owned by the Companys two
directors. The paid-in capital of Zhi Yuan was funded by NETS through loans extended to the
equity shareholders. The Company has entered into certain exclusive agreements with Zhi
Yuan, which makes it obligatory for the Company to absorb a majority of the risk of losses
from Zhi Yuans activities and entitles it to receive a majority of its residual returns.
In addition, the Company has entered into certain agreements with those management members
and employees including loan agreements for the paid-in capital of Zhi Yuan, option
agreements to acquire the shareholding in Zhi Yuan when permitted by the PRC laws, voting
proxies for the equity shareholders to irrevocably assign its voting rights to NETS, and
share pledge agreements for the equity interest held by those management members and
employees.
 Based on these contractual agreements, the Company believes that Zhi Yuan should be
considered as a variable interest entity as the equity investors do not have the
characteristics of a controlling financial interest and the Company is the primary
beneficiary of Zhi Yuan. Accordingly, the Company believes that financial results and
financial position of Zhi Yuan should be, and continue to be consolidated under FIN 46R.
 The creditors of Zhi Yuan have no recourse to the general credit of the Company. The
carrying amount of the total assets and total liabilities of Zhi Yuan as of June 30, 2009
was approximately RMB6,812,000 (US$997,000) and RMB3,165,000 (US$463,000), respectively and
there was no pledge or collateral of its assets.
 The Company, through its wholly owned subsidiaries, provided funding during the years ended
June 30, 2008 and 2009 to Zhi Yuan, for the sole purpose of funding daily operations. As of
June 30, 2009, Zhi Yuan owed RMB3,065,000 (US$449,000) to the Companys wholly owned
subsidiaries. The amount was interest-free and repayable on demand.
  F-7




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 2.
    
    Summary of significant accounting policies
 (a)
    
    Basis of presentationThe accompanying consolidated financial statements of the Group have been prepared in
accordance with generally accepted accounting principles in the United States of
America (U.S. GAAP).(b)
    
    Basis of consolidationThe consolidated financial statements include the financial statements of the
Company, its subsidiaries and VIE for which the Company is the primary beneficiary.
All significant transactions and balances among the Company, its subsidiaries and VIE
subsidiary have been eliminated upon consolidation. The results of subsidiaries and
VIE subsidiary acquired or disposed of during the year are included in the
consolidated statements of operations from the effective date of acquisition or up to
the effective date of disposal, as appropriate.(c)
    
    Use of estimatesThe preparation of consolidated financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ from those
estimates.On an ongoing basis, the Group evaluates its estimates, including those related
useful lives of intangible assets and property, plant and equipment, fair value of
investments, share-based compensation expenses and income taxes, among others. The
Company bases its estimates on historical experience and on various other assumptions
that are believed to be reasonable, the results of which form the basis for making
judgments about the carrying values of assets and liabilities.(d)
    
    Foreign currency translationThe functional currency of the Company is the United States dollar (US$). Assets
and liabilities are translated at the exchange rates prevailing on the balance sheet
date. Equity accounts are translated at historical exchange rates and revenues,
expenses gains and losses are translated using the average rate for the year.
Translation adjustments are reported as cumulative translation adjustments and are
shown as a separate component of other comprehensive income or loss in the
consolidated statement of shareholders equity and comprehensive income. The Group
has chosen the Renminbi (RMB) as its reporting currency.The functional currency of the Companys subsidiaries and VIE is the RMB.
Transactions in other currencies are recorded in RMB at the rates of exchange
prevailing on the dates of the transactions. Monetary assets and liabilities
denominated in other currencies are translated into RMB at rates of exchange in
effect at the balance sheet dates. Exchange gains and losses are recorded in the
consolidated statements of operations.The translations of RMB amounts as of and for the year ended June 30, 2009 into US$
are included solely for the convenience of the reader and were calculated at the rate
of US$1.00 = RMB6.8302, representing the noon buying rate in the City of New York for
cable transfers of RMB, as certified for customs purposes by the Federal Reserve Bank
of New York, on June 30, 2009. This convenience translation is not intended to imply
that the RMB amounts could have been, or could be, converted, realized or settled
into US$ at that rate or at any other rate.
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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 2.
    
    Summary of significant accounting policies continued
 (e)
    
    Cash and cash equivalentsCash and cash equivalents consist of cash on hand and highly liquid short-term
deposits which are unrestricted as to withdrawal and use, and which have maturities
of three months or less from the date of deposit.(f)
    
    Short-term bank depositsShort-term bank deposits are cash in bank which have maturities of more than three
months but less than one year from the date of deposit.(g)
    
    InvestmentsInvestments represent the Groups investments in debt securities or equity
securities, and are classified as trading investments or held-to-maturity
investments. Investments in debt securities are classified as held-to-maturity and
measured at amortized cost only if the Group has the positive intent and ability to
hold those securities to maturity. Investments in debt securities or equity
securities that are not classified as held-to-maturity and are bought and held
principally for the purpose of selling them in the near term are classified as
trading securities. Investments classified as trading investments are recorded at
fair value with unrealized holding gains and losses recorded in the net income. The
fair value of the Groups investments classified as trading is based on the quoted
market price on the last business day of the fiscal year.For individual securities classified as held-to-maturity, the Group needs to
determine whether a decline in fair value below the amortized cost basis is other
than temporary. If the decline in fair value is judged to be other than temporary,
the cost basis of the individual security shall be written down to fair value as a
new cost basis and the amount of the write-down shall be included in earnings.(h)
    
    InventoriesInventories are stated at the lower of cost and market value. Cost is calculated
using the weighted average method. The Group estimates the write-down of excessive,
slow moving and obsolete inventories as well as inventory whose carrying value is in
excess of net realizable value.(i)
    
    Property, plant and equipment, netProperty, plant and equipment are stated at cost less accumulated depreciation and
amortization and any identified impairment loss.Depreciation and amortization is calculated on a straight line basis over the
following estimated useful lives after taking into account the residual values.
Estimated useful lives are:
 Buildings
    
    20 yearsLeasehold improvements
    
    Shorter of term of the lease or 5 yearsMachinery
    
    3-5 yearsOffice equipment
    
    5 yearsComputer equipment
    
    3-5 yearsMotor vehicles
    
    5 years
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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 2.
    
    Summary of significant accounting policies continued
 (i)
    
    Property, plant and equipment, net  continuedThe assets residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date.The Group reassesses annually the residual values and the useful life of the
property, plant and equipment and if the expectation differs from the original
estimate, such difference will impact the depreciation in the year in which such
estimate has been changed.(j)
    
    Intangible assetsAcquired intangible assets includes patents, trademarks and licenses are measured
initially at cost and amortized on as straight line basis over their estimated useful
lives.(k)
    
    Impairment of long-lived assetsThe Group reviews property, plant, and equipment and certain identifiable
intangibles, excluding goodwill, for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of these assets is measured by comparison of its carrying amount to
future undiscounted cash flows the assets are expected to generate. If property,
plant, and equipment and certain identifiable intangibles are considered to be
impaired, the impairment to be recognized equals the amount by which the carrying
value of the assets exceeds its fair market value.The Company is currently amortizing its acquired intangible assets with definite
lives over periods ranging from 1 to 10 years.No impairment of property, plant and equipment, and intangible assets was recognized
in the years ended June 30, 2007, 2008 and 2009.(l)
    
    Fair value of financial instrumentsThe Groups financial instruments consist primarily of cash and cash equivalents,
short-term bank deposits, trading investments, held-to-maturity investments, accounts
receivable, related party receivables, other current assets, accounts payable, other
payables and warrants. The fair values of these financial instruments approximate
their carrying amounts reported in the consolidated balance sheets due to the
short-term nature of these instruments.The warrants issued to Lehman Brothers Commercial Corporation Asia Limited were
initially recorded as a liability at their fair value, and charged to retained
earnings as deemed dividend to ordinary shareholders and convertible preference
shareholders of the Company. Subsequently, they were measured at fair value with
changes recorded in the consolidated statement of operations. The warrants expired
on April 18, 2009.
  F-10




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 2.
    
    Summary of significant accounting policies continued
 (l)
    
    Fair value of financial instruments  continuedFair Value HierarchyThe Company follows a fair value hierarchy that requires an entity to maximize the
use of observable inputs and minimize the use of unobservable inputs when measuring
fair value. A financial instruments categorization within the fair value hierarchy
is based on the lowest level of input that is significant to the fair value
measurement. There are three levels of inputs that may be used to measure fair
value:Level 1 applies to assets or liabilities for which there are quoted prices in active
markets for identical assets or liabilities.Level 2 applies to assets or liabilities for which there are inputs other than quoted
prices included within Level 1 that are observable for asset or liability such as
quoted prices for similar assets or liabilities in active markets; quoted prices for
identical assets or liabilities in markets with insufficient volume or infrequent
transactions (less active markets); or model-derived valuations in which significant
inputs are observable or can be derived principally from, or corroborated by,
observable market data.Level 3 applies to assets or liabilities for which there are unobservable inputs to
the valuation methodology that are significant to the measurement of the fair value
of the assets or liabilities.(m)
    
    Accounting for DerivativesAll derivative transactions are recognized as either assets or liabilities on the
balance sheet and measured at fair value with changes recorded in the consolidated
income statement. Warrants were the only derivatives held by the Group during the
reported periods.(n)
    
    Revenue recognitionRevenue is only recognized when persuasive evidence of an arrangement exists,
delivery has occurred provided that there are no significant post delivery
obligations to the customers, the sale price is fixed or determinable, and collection
is reasonably assured. If the arrangement is subject to customer acceptance, the
revenue is deferred and recognized until acceptance occurs.
  F-11




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 2.
    
    Summary of significant accounting policies continued
 (n)
    
    Revenue recognition  continued
 The Group generates its revenues from the following:
 (i)
    
    Electronic learning devices
 The Groups handheld electronic learning devices include digital learning
devices and e-dictionaries. The devices sold include both hardware and
software related elements and the software elements are more than incidental
to the devices functionality. The sale of electronic learning devices also
includes elements of content and general telephone support. Upon physical
delivery of the electronic learning devices, the software, hardware, and most
of the content elements have been delivered because software and content are
built-in with the hardware. The general telephone customer support available
to customers are considered post-contract customer support (PCS) as this
support is received by the customers after the physical delivery of the
devices. The revenue related to telephone support is recognized together with
the revenue from sales of the devices, as no separate fee is charged for the
telephone customer support, the telephone customer support is substantially
provided within one year after the sales of devices, and the cost related to
offering these telephone support services are insignificant. The Group also
considers delivery of its content to have occurred upon the physical delivery
of the devices as the customers have the ability to commence the downloading
of the general content from the Groups websites. The Group does not have
further obligations to update or modify the content. Accordingly, revenue
from electronic learning devices is generally recognized when goods are
delivered and title has passed to the distributors and collectibility is
reasonably assured.
 The Group considers its customers to be the distributors and does not sell
directly to end-users. There is no right of returns held by the distributors
or end-users except for defective products under warranty. The Company may
accept return on a negotiated basis depending on facts and circumstances. As
these returns are not significant and occur on a negotiated basis, they are
accounted for as incurred.
 The Group generally provides a one-year warranty. As the Groups cost to
fulfill such warranty provisions have historically been insignificant, it is
expensed as incurred.
 The Group provides certain rebates to their distributors. Cash consideration
given to the distributors, such as marketing allowances, for which the Group
receives a separately identifiable benefit and can reasonably estimate fair
value are accounted as an expense rather than a reduction of the revenue.
Other cash consideration, including price allowances based on volume
purchasing levels, is recognized as a reduction of revenue.
 The Group may receive deposits from customers in advance prior to receiving
any committed sales order for its electronic learning devices. Such amounts
received will be recorded as advances from customers on the consolidated
balance sheet, and offset against accounts receivable when sales orders are
received and the electronic learning devices are delivered.
  F-12




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 2.
    
    Summary of significant accounting policies continued
 (n)
    
    Revenue recognition  continued
 (ii)
    
    Prepaid premium cardsThe Group sold prepaid cards primarily to distributors. Prepaid premium cards
represent prepaid service fees and users were entitled to particular content
available on the Groups website. The prepaid service fee was recorded as
deferred revenue upon receiving the upfront cash payment. Revenue was
recognized upon actual use of the card by the customers or upon the expiration
of the card. The Group ceased the sale of prepaid cards in fiscal year 2009.(iii)
    
    SoftwareRevenue from stand-alone contracts to sell proprietary software, content and
related after sales and maintenance services is not recognized upon delivery,
due to the presence of undelivered elements, including technical support and
rights to receive unspecified enhancements of software on a when-and-if
available basis (collectively referred as post-contract customer support or
PCS), bug fixes and providing access to a website to enable users to
download Groups searchable database, receive broadcasts of courseware and
access other services on the Groups website. As the Group does not have
vendor-specific objective evidence to allocate a portion of the fee to the
undelivered service element, and PCS, the Group accounts for the entire
contract as a single unit of accounting. The Group applies the revenue
recognition model of the final deliverable (the website access) included in
the arrangement to the entire contract. No provision was made for warranty
and bug fixes as the cost of fulfilling such obligation is insignificant.
Accordingly, the Group recognizes the total contract amount ratably over the
service period in which the Company has committed to provide access to its
website, that is, to commence revenue recognition only after the software and
related content was delivered and accepted, and after the content has been
made available to the mobile phone users to download in February 2007.The unrecognized portion would be recorded as deferred revenue, a liability on
the consolidated balance sheet.(iv)
    
    Tuition fee incomeThe Group provides after-class tuition programs to primary and secondary
school students. The prepaid tuition fees are recorded as deferred revenue
upon receiving the upfront cash payments, and recognized as revenue ratably
over the course of the tuition programs.
 The Companys subsidiaries and its VIE are subject to value added tax (VAT) of 17%
or business tax (BT) of 5% on the revenue earned for goods and services sold in the
PRC. The Group presents revenues net of such VAT and BT which amounted to
RMB93,536,526, RMB130,246,687, RMB159,403,581 (US$23,338,055) for the years ended
June 30, 2007, 2008 and 2009 respectively.
  F-13




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 2.
    
    Summary of significant accounting policies continued
 (o)
    
    Software development costsCosts related to research and development are generally charged to expense as
incurred. Capitalization of development costs for software to be sold or marketed
begins when a products technological feasibility has been established. In most
instances, the Groups products are released soon after technological feasibility has
been established. Therefore, costs incurred subsequent to achievement of
technological feasibility are usually not significant, and generally all software
development costs have been immediately expensed.The Group expenses all internal software and website development costs that are
incurred in connection with the planning and implementation phases of development and
costs that are associated with repair or maintenance of the existing websites or the
development of software and websites content. Costs incurred during the application
development stage are capitalized if material. All website and software development
costs have been expensed as incurred as there were no significant costs incurred for
development of internal software and website during the application development
stage.(p)
    
    Advertising costsThe Group expenses advertising costs as incurred. Total advertising costs were
RMB101,173,133, RMB103,416,139, RMB84,316,491 (US$12,344,659) for the years ended
June 30, 2007, 2008 and 2009 respectively, and have been included as part of sales
and marketing expenses.(q)
    
    Cost of revenueCost of sale of electronic learning devices consist primarily of cost of raw
materials, sub-contracting fees, depreciation and maintenance costs for servers and
related equipment, amortization of intangible assets and other related incidental
expenses which are directly attributable to the rendering of the Groups principal
operations. The cost related to the revenue from prepaid cards and software
represent the costs related to the provision of content, the maintenance of the
Groups website and the development of the proprietary software.(r)
    
    Operating leasesLeases where substantially all the rewards and risks of ownership of assets remain
with the leasing company are accounted for as operating leases. Rentals payable
under operating leases are charged to the income statement on a straight-line basis
over the term of the relevant lease.
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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 2.
    
    Summary of significant accounting policies continued
 (s)
    
    Retirement benefit costsThe employees of the Group are members of state-managed retirement benefit schemes
operated by the local governments. The Group is required to contribute a specified
percentage of their payroll costs to the retirement benefit scheme to fund the
benefits. The only obligation of the Group with respect to the retirement benefit
scheme is to make the specified contributions. The total costs charged to the
consolidated income statement were RMB4,404,346, RMB5,789,085, RMB6,479,228
(US$948,615) for the years ended June 30, 2007 , 2008 and 2009 respectively,
represents contributions payable to this scheme for that period.(t)
    
    Government subsidiesThe Group receives government subsidies in relation to refund of value added tax to
encourage development in the software industry, which amounted to RMB37,204,620,
RMB39,913,661, RMB43,360,888 (US$6,348,407) for the years ended June 30, 2007, 2008
and 2009 respectively. The Company recorded the government subsidies as other
operating income as all conditions to qualify for the receipt of the government
subsidies have been met.(u)
    
    Income taxesDeferred income taxes are recognized for temporary differences between the tax basis
of assets and liabilities and their reported amounts in the financial statements, net
of operating loss carry forwards and credits, by applying enacted statutory tax rates
applicable to future years. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some portion or
all of the deferred tax assets will not be realized. Current income taxes are
provided for in accordance with the laws of the relevant taxing authorities.The Group recognizes the effect of income tax positions only if those positions are
more likely than not of being sustained. Recognized income tax positions are measured
at the largest amount that is greater than 50% likely of being realized. Changes in
recognition or measurement are reflected in the period in which the change in
judgment occurs. The Group records interest related to unrecognized tax benefits and
penalties, if any, in income tax expenses.(v)
    
    Share-based compensationThe Company measures the cost of employee services received in exchange for
share-based compensation at the grant date fair value of the award. The fair value
of stock options is determined using the Black-Scholes valuation model.The Company recognizes the compensation costs, net of a forfeiture rate, on a
straight-line basis over the requisite service period for each separately vesting
portion of the award.
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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 2.
    
    Summary of significant accounting policies continued
 (w)
    
    Comprehensive incomeComprehensive income is defined to include all changes in equity except those
resulting from investments by owners and distributions to owners. During the periods
presented, comprehensive income is reported in the consolidated statement of
shareholders equity and comprehensive income.(x)
    
    Segment InformationThe Company reports segment information based on the management approach. The
management approach designates the internal reporting used by management for making
decisions and assessing performance as the source of the Companys reportable
segments.(y)
    
    Net income per shareBasic earnings per share is computed by dividing net income attributable to ordinary
shareholders by the weighted average number of unrestricted ordinary shares
outstanding during the year using the two-class method. The Group has determined
that its convertible preference shares participate in undistributed earnings on the
same basis as the ordinary shares. Accordingly, the Group has used the two-class
method of computing earnings (loss) per share prior to the conversion of its
convertible preference shares in October 2007. Under this method, net income
applicable to holders of ordinary shares is allocated on a pro rata basis to the
ordinary and convertible preference shares to the extent that each class may share in
income for the period had it been distributed. Losses are not allocated to the
participating securities. Diluted earnings per share is computed using the more
dilutive of (a) the two-class method or (b) the if-converted method. Subsequent to
the conversion of its convertible preference shares, the if-converted method is used
to calculate diluted earnings per share.(z)
    
    DividendDividends are recognized when declared.(aa)
    
    Concentration of credit riskThe Group places its cash and cash equivalents with financial institutions with
high-credit ratings and quality. The Group has invested in financial products with a
small number of financial institutions and these financial institutions also have
high-credit ratings and quality.The Group conducts credit evaluations of customers. The Group establishes an
allowance for doubtful accounts based upon estimates, factors surrounding the credit
risk of specific customers and other information. As a result of the Groups credit
evaluation, allowance for doubtful accounts was RMB13,150,656 and RMB8,487,165
(US$1,242,594) as of June 30, 2008, and 2009 respectively.
  F-16




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 3.
    
    Recently issued accounting pronouncements
 In December 2007, the FASB issued SFAS No. 141R, Business Combination (SFAS 141R), to
improve reporting, creating greater consistency in the accounting and financial reporting of
business combinations. The standard requires the acquiring entity in a business combination
to recognize all, as of that date, the assets acquired and liabilities assumed and any
noncontrolling interest in the acquiree at the acquisition-date, measured at their fair
values; and requires the acquirer to disclose to investors and other users all of the
information they need to evaluate and understand the nature and financial effect of the
business combination. SFAS 141R applies prospectively to business combinations for which
the acquisition date is on or after the beginning of the first annual reporting period
beginning on or after December 15, 2008. Early adoption is prohibited. The Company is
currently evaluating whether the adoption of SFAS 141R will have a significant effect on its
financial position, results of operations or cash flows.
 In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated
Financial Statements (FASB 160), to improve the relevance, comparability and transparency
of financial information. SFAS 160 establishes the accounting and reporting standards for
the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It
clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the
consolidated entity that should be reported as equity in the consolidated financial
statements. SFAS 160 establishes a single method of accounting for changes in a parents
ownership interest in a subsidiary that do not result in deconsolidation, all such
transactions are equity transactions if the parent retains its controlling financial
interest in the subsidiary. SFAS 160 is effective for fiscal years and interim periods
within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is
prohibited. The Company is currently evaluating whether the adoption of SFAS 160 will have
a significant effect on its financial position, results of operations or cash flows. It is
not expected to have a material impact on the Companys financial position, results of
operations and cash flows.
 In March 2008, the FASB issued SFAS No. 161, Disclosures About Derivative Instruments and
Hedging Activities (SFAS 161), an amendment of SFAS No. 133. This new standard requires
enhanced disclosures to help investors better understand the effect of an entitys
derivative instruments and related hedging activities on its financial position, financial
performance, and cash flows. SFAS 161 is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008, with early application
allowed. The Company will adopt SFAS 161 on July 1, 2009.
 In April 2008, the FASB issued FSP SFAS 142-3, Determination of the Useful Life of
Intangible Assets. This FSP amends the factors that should be considered in developing
renewal or extension assumptions used to determine the useful life of a recognized
intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets. This FSP is
effective for fiscal years beginning after December 15, 2008, and interim periods within
those fiscal years. The guidance for determining the useful life of a recognized intangible
asset in this FSP shall be applied prospectively to intangible assets acquired after the
effective date. The Company is currently evaluating the impact, if any, of the adoption of
FSP SFAS 142-3 on its financial position, results of operations and cash flows.
  F-17




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 3.
    
    Recently issued accounting pronouncements continued
 In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R)
(SFAS 167). SFAS 167 eliminates FIN46Rs exceptions to consolidating qualifying
special-purpose entities, contains new criteria for determining the primary beneficiary, and
increases the frequency of required reassessments to determine whether a company is the
primary beneficiary of a variable interest entity. SFAS 167 also contains a new requirement
that any term, transaction, or arrangement that does not have a substantive effect on an
entitys status as a variable interest entity, a companys power over a variable interest
entity, or a companys obligation to absorb losses or its right to receive benefits of an
entity must be disregarded in applying FIN46Rs provisions. SFAS 167 will be effective for
the Groups fiscal year beginning July 1, 2010. The Company is currently assessing the
potential impacts, if any, on its consolidated financial statements.
 In August 2009, the FASB issued Accounting Standards Update No. 2009-05 Fair Value
Measurements and Disclosures (Topic 820) Measuring Liabilities at Fair Value. This update
provides amendments for fair value measurement of liabilities. It provides clarification
that in circumstances in which a quoted price in an active market for the identical
liability is not available, a reporting entity is required to measure fair value using one
or more techniques as specified by this update. This update is effective for the first
reporting period (including interim periods) beginning after August 2009. The Company is
currently assessing the potential impacts, if any, on its consolidated financial statements.
 In September 2009, the FASB issued Accounting Standards Update No. 2009-06, Income Taxes
(Topic 740) Implementation Guidance on Accounting for Uncertainty in Income Taxes and
Disclosure Amendments for Nonpublic Entities. The guidance answers the following
questions: is the income tax paid by the entity attributable to the entity or its owners;
what constitutes a tax position for a pass-through entity or a tax-exempt not-for-profit
entity; and how should accounting for uncertainty in income taxes be applied when a group of
related entities comprise both taxable and nontaxable entities. The guidance is effective
for the Company for interim and fiscal year beginning July 1, 2010. The Company is
currently assessing the potential impacts, if any, on its consolidated financial statements.
 In October 2009, the FASB issued Accounting Standard Update No. 2009-13, Revenue
Recognition (Topic 605): Multiple-Deliverable Revenue Arrangementsa consensus of the FASB
Emerging Issues Task Force. This update provides amendments to the criteria in Subtopic
605-25 for separating consideration in multiple-deliverable arrangements. As a result,
multiple-deliverable arrangements will be separated in more circumstances than under
existing U.S. GAAP. The amendments establish a selling price hierarchy for determining the
selling price of a deliverable. The selling price used for each deliverable will be based
on vendor-specific objective evidence (VSOE) if available, third-party evidence (TPE) if
VSOE is not available, or estimated selling price is neither VSOE or TPE is available. The
amendments also will replace the term fair value in the revenue allocation guidance with
selling price to clarify that the allocation of revenue is based on entity-specific
assumptions rather than assumptions of a marketplace participant. This update is effective
for the Company prospectively for revenue arrangements entered into or materially modified
in fiscal year beginning on July 1, 2010. The Company is currently assessing the potential
impacts, if any, on its consolidated financial statements.
  F-18




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 3.
    
    Recently issued accounting pronouncements continued
  4.
    
    Inventories
  As of June 30,2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    US$Raw materials
    
    
    19,583,940
    
    
    
    34,589,373
    
    
    
    5,064,181Work-in-progress
    
    
    24,612,928
    
    
    
    35,812,049
    
    
    
    5,243,192Finished goods
    
    
    40,696,603
    
    
    
    81,471,381
    
    
    
    11,928,111Inventories, net
    
    
    84,893,471
    
    
    
    151,872,803
    
    
    
    22,235,484
  5.
    
    Accounts receivable
 As of June 30,2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    US$Accounts receivable
    
    
    183,048,378
    
    
    
    189,890,294
    
    
    
    27,801,572Notes receivable
    
    
    1,830,002
    
    
    
    250,000
    
    
    
    36,602Less: allowance for doubtful debts
    
    
    (13,150,656
    )
    
    
    (8,487,165
    )
    
    
    (1,242,594
    )171,727,724
    
    
    
    181,653,129
    
    
    
    26,595,580
  F-19




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 5.
    
    Accounts receivable continued
  As of June 30,2007
    
    
    2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    RMB
    
    
    US$Balance as beginning of year
    
    
    1,205,396
    
    
    
    1,966,611
    
    
    
    13,150,656
    
    
    
    1,925,369Add: Current year additions
    
    
    761,215
    
    
    
    11,184,045
    
    
    
    1,459,142
    
    
    
    213,631Less: Current year write-offs
    
    
    
    
    
    
    
    
    
    
    (5,517,524
    )
    
    
    (807,813
    )Less: Amounts recovered during the year
    
    
    
    
    
    
    
    
    
    
    (605,109
    )
    
    
    (88,593
    )Balance at end of year
    
    
    1,966,611
    
    
    
    13,150,656
    
    
    
    8,487,165
    
    
    
    1,242,594
  6.
    
    Prepaid expenses and other current assets
 Prepaid expenses and other current assets consist of the following:
 As of June 30,2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    US$Subsidy receivables
    
    
    19,479,295
    
    
    
    43,476,111
    
    
    
    6,365,276VAT recoverable
    
    
    6,394,738
    
    
    
    9,092,696
    
    
    
    1,331,249Advances to suppliers
    
    
    3,363,057
    
    
    
    6,931,395
    
    
    
    1,014,816Prepaid advertising expenses
    
    
    7,571,442
    
    
    
    3,025,019
    
    
    
    442,889Staff advances
    
    
    3,380,043
    
    
    
    1,249,410
    
    
    
    182,924Interest receivable
    
    
    
    
    
    
    1,018,776
    
    
    
    149,157Rental deposits
    
    
    1,081,047
    
    
    
    972,782
    
    
    
    142,424Advances to the Board Secretary of
the Company
    
    
    2,777,778
    
    
    
    152,713
    
    
    
    22,358Investment income receivables from
held-to-maturity investments
    
    
    6,606,364
    
    
    
    
    
    
    
    Others
    
    
    7,351,833
    
    
    
    3,120,723
    
    
    
    456,901Balance at end of year
    
    
    58,005,597
    
    
    
    69,039,625
    
    
    
    10,107,994
  F-20




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 7.
    
    Investments
  As of June 30,2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    US$Trading (at fair value)
    
    
    12,875,217
    
    
    
    7,978,942
    
    
    
    1,168,186Held-to-maturity (at amortized cost)
    
    
    747,000,000
    
    
    
    
    
    
    
    759,875,217
    
    
    
    7,978,942
    
    
    
    1,168,186
  Years ended June 30,2007
    
    
    2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    RMB
    
    
    US$Realized gain
    
    
    
    
    
    
    
    
    
    
    399,408
    
    
    
    58,477Unrealized loss
    
    
    
    
    
    
    (852,373
    )
    
    
    (1,828,258
    )
    
    
    (267,673
    )Total
    
    
    
    
    
    
    (852,373
    )
    
    
    (1,428,850
    )
    
    
    (209,196
    )
     F-21




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 8.
    
    Property, plant and equipment
  As of June 30,2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    US$Buildings
    
    
    10,033,354
    
    
    
    111,304,359
    
    
    
    16,295,915Leasehold improvements
    
    
    685,019
    
    
    
    1,483,194
    
    
    
    217,152Machinery
    
    
    1,603,241
    
    
    
    875,814
    
    
    
    128,227Office equipment
    
    
    2,783,950
    
    
    
    8,270,308
    
    
    
    1,210,844Computer equipment
    
    
    7,281,675
    
    
    
    4,764,883
    
    
    
    697,620Motor vehicles
    
    
    3,073,520
    
    
    
    4,939,542
    
    
    
    723,19225,460,759
    
    
    
    131,638,100
    
    
    
    19,272,950Less: accumulated depreciation
    
    
    (7,589,068
    )
    
    
    (12,018,153
    )
    
    
    (1,759,561
    )Property, plant and equipment, net
    
    
    17,871,691
    
    
    
    119,619,947
    
    
    
    17,513,389
   9.
    
    Intangible assets
 As of June 30,2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    US$Patents, Trademarks and Licenses
    
    
    18,889,009
    
    
    
    8,376,548
    
    
    
    1,226,399Less: accumulative amortization
    
    
    (12,384,795
    )
    
    
    (3,914,788
    )
    
    
    (573,159
    )Intangible assets, net
    
    
    6,504,214
    
    
    
    4,461,760
    
    
    
    653,240
   F-22




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 9.
    
    Intangible assets continued
  RMB
    
    
    US$Year ending June 30,- 2010
    
    
    1,952,415
    
    
    
    285,850- 2011
    
    
    775,460
    
    
    
    113,534- 2012
    
    
    595,460
    
    
    
    87,180- 2013
    
    
    467,925
    
    
    
    68,508- 2014
    
    
    283,000
    
    
    
    41,434
 10.
    
    Other payables and accruals
  As of June 30,2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    US$Payable for acquisitions of property,
plant and equipment
    
    
    
    
    
    
    9,833,622
    
    
    
    1,439,727Accrued advertising expenses
    
    
    
    
    
    
    7,933,728
    
    
    
    1,161,566Accrued social welfare payments
    
    
    6,647,580
    
    
    
    7,202,858
    
    
    
    1,054,560VAT payable
    
    
    4,017,573
    
    
    
    4,474,115
    
    
    
    655,049Accrued bonus
    
    
    
    
    
    
    4,383,685
    
    
    
    641,809Accrued salaries
    
    
    2,548,613
    
    
    
    3,027,189
    
    
    
    443,206Accrued audit fee
    
    
    2,229,208
    
    
    
    2,459,398
    
    
    
    360,077Accrued consultation fee
    
    
    
    
    
    
    1,337,799
    
    
    
    195,865Accrued expenses
    
    
    2,187,671
    
    
    
    1,794,626
    
    
    
    262,749Others
    
    
    4,814,144
    
    
    
    3,362,805
    
    
    
    492,34422,444,789
    
    
    
    45,809,825
    
    
    
    6,706,952
  F-23




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 11.
    
    Capital structure
           F-24




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 12.
    
    Share-based compensation
   Exercise price
    
    Number of optionsUS$
    
    Outstanding
    
    Vesting periodGranted in 20070.0000
    
    30,750
    
    Vest upon a successful initial public offering1.4720
    
    572,346
    
    30% will vest from the date of grant to December 31, 2007; 40% will vest from January 1, 2008 to December 31, 2008; the remaining 30% will vest upon a successful initial public offering1.4720
    
    203,832
    
    37.5% will vest from the date of grant to December 31, 2007; 10% will vest from January 1, 2008 to December 31, 2008; the remaining 52.5% will vest upon a successful initial public offering
  F-25




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 12.
    
    Share-based compensation continued
 Exercise price
    
    Number of optionsUS$
    
    Outstanding
    
    Vesting periodGranted in 2007  continued1.4720
    
    339,536
    
    Vest upon a successful initial public offering1.4720
    
    30,802
    
    30% will vest from the date of grant to December 31, 2007; 30% will vest from January 1, 2008 to December 31, 2008; the remaining 40% will vest from January 1, 2009 to December 31, 20093.8719
    
    117,840
    
    30% will vest from the date of grant to June 30, 2008; 30% will vest from July 1, 2008 to June 30, 2009; the remaining 40% will vest from July 1, 2009 to June 30, 20103.8719
    
    6,858
    
    30% will vest from the date of grant to December 31, 2007; 30% will vest from January 1, 2008 to December 31, 2008; the remaining 40% will vest from January 1, 2009 to December 31, 20096.1420
    
    2,000
    
    30% will vest from the date of grant to June 30, 2008; 30% will vest from July 1, 2008 to June 30, 2009; the remaining 40% will vest from July 1, 2009 to June 30, 2010Granted in 20086.1420
    
    2,000
    
    30% will vest from the date of grant to June 30, 2008; 30% will vest from July 1, 2008 to June 30, 2009; the remaining 40% will vest from July 1, 2009 to June 30, 20105.56
    
    587,504
    
    30% will vest from the date of grant to December 31, 2008; 30% will vest from January 1, 2009 to December 31, 2009; the remaining 40% will vest from January 1, 2010 to December 31, 2010
  F-26




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 12.
    
    Share-based compensation continued
  Exercise price
    
    Number of optionsUS$
    
    Outstanding
    
    Vesting period2.6
    
    1,279,000
    
    30% will vest from the date of grant to December 31, 2009; 30% will vest from January 1, 2010 to December 31, 2010; the remaining 40% will vest from January 1, 2011 to December 31, 2011.
      F-27




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 12.
    
    Share-based compensation continued
 Share options activity
  Weighted
    
    
    Weighted
    
    
    
    
    
    
    Weightedaverage
    
    
    averaged
    
    
    
    
    
    
    average
    
    
    Weightedexercise
    
    
    remaining
    
    
    Aggregate
    
    
    intrinsic
    
    
    averageOptions
    
    
    price
    
    
    contractual
    
    
    intrinsic
    
    
    value per
    
    
    grant dateoutstanding
    
    
    per share
    
    
    life
    
    
    value
    
    
    share
    
    
    fair valueUS$
    
    
    
    
    
    US$
    
    
    US$
    
    
    US$At July 1, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted pursuant to the Equity
Compensation Plan
    
    
    1,011,874
    
    
    
    1.4720
    
    
    
    5
    
    
    
    3,324,006
    
    
    
    3.28
    
    
    
    3.38Termination of the Equity
Compensation Plan
    
    
    (1,001,874
    )
    
    
    1.4720
    
    
    
    
    
    
    
    3,324,006
    
    
    
    3.38
    
    
    
    3.38Granted pursuant to the 2007
Share Incentive Plan
    
    
    1,471,442
    
    
    
    1.6080
    
    
    
    5
    
    
    
    6,293,851
    
    
    
    4.28
    
    
    
    3.71Outstanding at June 30, 2007
    
    
    1,471,442
    
    
    
    1.6080
    
    
    
    5
    
    
    
    6,293,851
    
    
    
    4.28
    
    
    
    Granted pursuant to the
2007 Share Incentive Plan
    
    
    669,177
    
    
    
    5.5617
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    2.11Forfeited during the year
    
    
    (37,866
    )
    
    
    1.9334
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.23Exercised
    
    
    (8,640
    )
    
    
    1.4720
    
    
    
    
    
    
    
    28,365
    
    
    
    
    
    
    
    3.38Outstanding at June 30, 2008
    
    
    2,094,113Granted pursuant to the
2008 Share Incentive Plan
    
    
    1,279,000
    
    
    
    2.6000
    
    
    
    4
    
    
    
    456,265
    
    
    
    0.36
    
    
    
    1.39Forfeited during the year
    
    
    (89,588
    )
    
    
    4.9125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.31Exercised
    
    
    (111,057
    )
    
    
    1.4720
    
    
    
    
    
    
    
    266,254
    
    
    
    2.40
    
    
    
    3.38Outstanding at June 30, 2009
    
    
    3,172,468Vested and expected to vestAs of June 30, 2009
    
    
    1,673,309
    
    
    
    3.5334As of June 30, 2008
    
    
    1,271,850
    
    
    
    1.7802ExercisableAs of June 30, 2009
    
    
    1,429,200
    
    
    
    3.5083As of June 30, 2008
    
    
    851,742
    
    
    
    1.4533
   F-28




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 12.
    
    Share-based compensation continued
  June 30, 2007
    
    June 30, 2008
    
    June 30, 2009Risk-free interest rate
    
    4.74% to 4.89%
    
    2.39% to 4.89%
    
    1.31% to 1.60%Expected option life
    
    2.5 years to 3.5 years
    
    3.5 years to 3.98 years
    
    3.75 years to 3.92 yearsExpected volatility
    
    39.96%
    
    39.95% to 46.31%
    
    58.45%Expected dividend
    
    0%
    
    0%
    
    0%
  13.
    
    Other operating expenses
 Years ended June 30,2007
    
    
    2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    RMB
    
    
    US$Aborted Alternative Investment Market
(AIM) initial public offering expenses
(Note)
    
    
    20,220,890
    
    
    
    
    
    
    
    
    
    
    
    Donation
    
    
    
    
    
    
    3,000,000
    
    
    
    
    
    
    
    Others
    
    
    688,868
    
    
    
    131,763
    
    
    
    158,466
    
    
    
    23,201Total other operating expenses
    
    
    20,909,758
    
    
    
    3,131,763
    
    
    
    158,466
    
    
    
    23,201
 Note:
    
    Aborted AIM initial public offering expenses are professional fees and other
expenses incurred in 2006 related to the Companys planned initial public offering on
the AIM exchange. The offering was aborted in December 2006 and such costs were
recognized as other operating expense. 14.
    
    Other operating income
 Years ended June 30,2007
    
    
    2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    RMB
    
    
    US$Subsidy income
    
    
    37,204,620
    
    
    
    39,913,661
    
    
    
    43,360,888
    
    
    
    6,348,407Other operating income (Note)
    
    
    2,818,757
    
    
    
    4,187,166
    
    
    
    2,214,893
    
    
    
    324,27940,023,377
    
    
    
    44,100,827
    
    
    
    45,575,781
    
    
    
    6,672,686
 Note:
    
    Other operating income mainly comprised of sales of miscellaneous accessories and
the write-off of old advances from customers.  F-29




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NOAH EDUCATION HOLDINGS LTD.
 15.
    
    Other non-operating income
 Years ended June 30,2007
    
    
    2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    RMB
    
    
    US$Unrealized exchange gain
    
    
    
    
    
    
    41,574,303
    
    
    
    3,042,036
    
    
    
    445,380Others
    
    
    
    
    
    
    1,133,811
    
    
    
    3,161,579
    
    
    
    462,883
    
    
    
    42,708,114
    
    
    
    6,203,615
    
    
    
    908,263
 16.
    
    Income tax expenses
  Cayman Islands and British Virgin Islands
  PRC
      F-30




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NOAH EDUCATION HOLDINGS LTD.
 16.
    
    Income tax expenses continued
        F-31




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NOAH EDUCATION HOLDINGS LTD.
 16.
    
    Income tax expenses continued
  Years ended June 30,2007
    
    
    2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    RMB
    
    
    US$Current tax
    
    
    6,130,625
    
    
    
    17,608
    
    
    
    171,798
    
    
    
    25,153Deferred tax
    
    
    (3,238,258
    )
    
    
    1,083,787
    
    
    
    83,085
    
    
    
    12,1642,892,367
    
    
    
    1,101,395
    
    
    
    254,883
    
    
    
    37,317
  Years ended June 30,2007
    
    
    2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    RMB
    
    
    US$Income before income taxes
    
    
    69,320,666
    
    
    
    145,299,866
    
    
    
    97,245,126
    
    
    
    14,237,522Tax at the domestic income tax rate of 33%
or 25%
    
    
    22,875,820
    
    
    
    40,748,688
    
    
    
    24,311,282
    
    
    
    3,559,381Tax effect of income that are not taxable:Allowance for research and development
    
    
    (777,299
    )
    
    
    (2,970,336
    )
    
    
    (3,076,898
    )
    
    
    (450,484
    )Derivative gain
    
    
    
    
    
    
    
    
    
    
    (1,451,878
    )
    
    
    (212,567
    )Other non-taxable income
    
    
    
    
    
    
    
    
    
    
    (816,130
    )
    
    
    (119,488
    )Tax effect of expenses that are not deductible:Share-based compensation expenses
    
    
    2,232,888
    
    
    
    1,943,731
    
    
    
    1,148,507
    
    
    
    168,151Certain employees benefits
    
    
    393,531
    
    
    
    612,491
    
    
    
    
    
    
    
    Other non-deductible expenses
    
    
    250,671
    
    
    
    721,968
    
    
    
    188,236
    
    
    
    27,559Tax effect of intercompany transactions
that are not (taxable) deductible
    
    
    (1,096,832
    )
    
    
    (9,628,803
    )
    
    
    11,604,484
    
    
    
    1,698,996Effect of tax holidays and tax concessions:Preferential tax treatment
    
    
    (12,477,719
    )
    
    
    (10,130,397
    )
    
    
    (12,182,410
    )
    
    
    (1,783,610
    )2-plus-3 Income Tax Holiday
    
    
    (14,621,847
    )
    
    
    (15,335,879
    )
    
    
    (18,003,975
    )
    
    
    (2,635,937
    )Change in valuation allowance
    
    
    10,346,032
    
    
    
    12,174,535
    
    
    
    6,804,482
    
    
    
    996,234Non-taxable VAT refund
    
    
    (5,446,398
    )
    
    
    (5,592,637
    )
    
    
    (6,524,172
    )
    
    
    (955,195
    )Effect of changes in enacted tax law
and rates
    
    
    (3,895,292
    )
    
    
    (11,884,938
    )
    
    
    (5,798,705
    )
    
    
    (848,980
    )Effect of loss of the Company and
subsidiaries not subject to tax in other
jurisdictions
    
    
    5,108,812
    
    
    
    442,972
    
    
    
    4,037,471
    
    
    
    591,120Others
    
    
    
    
    
    
    
    
    
    
    14,589
    
    
    
    2,1372,892,367
    
    
    
    1,101,395
    
    
    
    254,883
    
    
    
    37,317
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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 16.
    
    Income tax expenses continuedThe aggregate amount and per share effect of the tax holidays and tax concessions are as
follows:
 Years ended June 30,2007
    
    
    2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    RMB
    
    
    US$The aggregate effect
    
    
    27,099,566
    
    
    
    25,466,276
    
    
    
    30,186,385
    
    
    
    4,419,547Per share effect  basic
    
    
    1.26
    
    
    
    0.77
    
    
    
    0.83
    
    
    
    0.12Per share effect  diluted
    
    
    0.92
    
    
    
    0.74
    
    
    
    0.81
    
    
    
    0.12
 The Group has made its assessment of the level of tax authority for each tax position
(including the potential application of interest and penalties) based on the technical
merits, and has measured the unrecognized tax benefits associated with the tax positions.
Based on the evaluation by the Group, it is concluded that there are no significant
uncertain tax positions or unrecognized tax benefit which would favorably affect the
effective income tax rate in future periods. The Group does not anticipate any significant
increases or decrease to its liabilities for unrecognized tax benefit within the next twelve
months. The Group classifies interest and/or penalties related to income tax matters in
income tax expense. As of June 30, 2009, there is no interest and penalties related to
uncertain tax positions. The tax positions for the years 2006 to 2009 may be subject to
examination by the PRC tax authorities.Significant components of deferred tax assets:
 Years ended June 30,2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    US$Tax loss carried forwards
    
    
    24,126,667
    
    
    
    31,699,575
    
    
    
    4,641,090Allowance for excess and obsolete inventories
    
    
    6,254,037
    
    
    
    6,786,813
    
    
    
    993,648Allowance for doubtful debts
    
    
    3,287,663
    
    
    
    2,121,791
    
    
    
    310,648Deferred revenue
    
    
    231,622
    
    
    
    13,207
    
    
    
    1,934Total deferred tax assets
    
    
    33,899,989
    
    
    
    40,621,386
    
    
    
    5,947,320Less: valuation allowance
    
    
    (31,745,517
    )
    
    
    (38,549,999
    )
    
    
    (5,644,051
    )Total net deferred tax assets
    
    
    2,154,472
    
    
    
    2,071,387
    
    
    
    303,269
 Movement of valuation allowances:
 As of June 30,2007
    
    
    2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    RMB
    
    
    US$At the beginning of year
    
    
    5,697,050
    
    
    
    19,570,982
    
    
    
    31,745,517
    
    
    
    4,647,817Effect of change in tax rate
    
    
    3,527,900
    
    
    
    
    
    
    
    
    
    
    
    Current year addition
    
    
    10,346,032
    
    
    
    12,174,535
    
    
    
    6,804,482
    
    
    
    996,234At the end of year
    
    
    19,570,982
    
    
    
    31,745,517
    
    
    
    38,549,999
    
    
    
    5,644,051
 Valuation allowances have been provided on the deferred tax assets because the Company believes that it is not more likely than not that the assets will be
utilized. As of June 30, 2008 and 2009, valuation allowances were provided for the deferred tax assets relating to the future benefit of net operating loss
carry forward as the management determines that the utilization of those net operating loss carry forward not more likely than not. If events occur in the
future that allow the Group to realize more of its deferred tax assets than the presently recorded amount, an adjustment to the valuation allowances will
increase income when those events occur. Tax losses carry forward in the amount of approximately RMB76,613,849, RMB29,843,732 and RMB52,005,652
(US$7,614,075), incurred in the years ended June 30, 2007, 2008 and 2009, respectively, will expire in the years ending June 30, 2012, 2013 and 2014,
respectively.
  F-33




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 17.
    
    Net income per shareThe following table sets forth the computation of basic and diluted income per share for the years indicated:
 As of June 30,2007
    
    
    2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    RMB
    
    
    US$Net income
    
    
    66,428,299
    
    
    
    144,198,471
    
    
    
    96,990,243
    
    
    
    14,200,205Deemed dividend on issuance of preference shares
    
    
    (1,516,362
    )
    
    
    (379,092
    )
    
    
    
    
    
    
    Deemed dividend on issuance of warrants
    
    
    (1,136,710
    )
    
    
    
    
    
    
    
    
    
    
    Dividends on preference share
    
    
    (17,705,374
    )
    
    
    
    
    
    
    
    
    
    
    Amounts allocated to preference shares for
participating rights to dividends
    
    
    3,719,846
    
    
    
    (10,278,093
    )
    
    
    
    
    
    
    Income attributable to holders of ordinary shares
 basic
    
    
    49,789,699
    
    
    
    133,541,286
    
    
    
    96,990,243
    
    
    
    14,200,205Amount allocated to preference shares for
participating rights to dividends
    
    
    (3,719,846
    )
    
    
    10,278,093
    
    
    
    
    
    
    
    Derivative loss
    
    
    55,207
    
    
    
    
    
    
    
    
    
    
    
    Amount reallocated to preference shares for
participating rights to dividends
    
    
    3,190,390
    
    
    
    (10,042,717
    )
    
    
    
    
    
    
    Income attributable to holders of ordinary shares
 diluted
    
    
    49,315,450
    
    
    
    133,776,662
    
    
    
    96,990,243
    
    
    
    14,200,205Weighted average ordinary shares outstanding used
in computing basic income per share
    
    
    21,473,442
    
    
    
    33,153,982
    
    
    
    36,446,790
    
    
    
    36,446,790Plus incremental weighted average ordinary shares
from assumed exercise of share options using the
treasury stock method
    
    
    1,433,242
    
    
    
    902,333
    
    
    
    622,702
    
    
    
    622,702Shares used in calculating diluted income per share
    
    
    22,906,684
    
    
    
    34,056,315
    
    
    
    37,069,492
    
    
    
    37,069,492Basic earnings per share
    
    
    2.32
    
    
    
    4.03
    
    
    
    2.66
    
    
    
    0.39Diluted earnings per share
    
    
    2.15
    
    
    
    3.93
    
    
    
    2.62
    
    
    
    0.38
 The Company had securities which could potentially dilute basic income per share in the future, but which were
excluded from the computation of diluted net income per share in the periods presented, as their effects would
have been anti-dilutive. Such outstanding securities consist of the following:
 As of June 30,2007
    
    
    2008
    
    
    2009Warrants
    
    
    
    
    
    
    218,064
    
    
    
    Share options
    
    
    
    
    
    
    
    
    
    
    1,903,107
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NOAH EDUCATION HOLDINGS LTD.
 18.
    
    Related party transactionsThe Company has entered into a number of transactions with related parties. The balances
and transactions with these related parties for the years ended June 30, 2007, 2008 and 2009
are as follows:
 Name of related party
    
    Relationship with the GroupXu Dong
    
    Chairman, director and shareholderWang Xiao Tong
    
    Director and shareholderChengdu Nuo Ya Wei Ye Trading Co., Ltd.
(Chengdu Nuo Ya Wei Ye)
    
    Distributor with common shareholder in prior yearTang Ben Guo
    
    Director and shareholderRick Chen (note 1)
    
    Executive Vice PresidentLiu Ding Jian (note 2)
    
    Vice President, MarketingOuyang Ming
    
    Vice President, Content DevelopmentXiao Xian Quan (note 4)
    
    Director, Chief Operating Officer and
Vice Presidents, SalesDora Li (note 3)
    
    Chief Financial OfficerLiu Yi
    
    Vice President, Sales and Marketing
     (1)
    
    Balances with its related parties
 As of June 30,Name of related party
    
    2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    US$Related party receivables
    
    Tang Ben Guo
    
    
    149,161
    
    
    
    9,233
    
    
    
    1,352Wang Xiao Tong
    
    
    5,914
    
    
    
    
    
    
    
    Xu Dong
    
    
    92,511
    
    
    
    55,000
    
    
    
    8,052Xiao Xian Quan
    
    
    390,623
    
    
    
    324,345
    
    
    
    47,487Dora Li
    
    
    
    
    
    
    462
    
    
    
    68Rick Chen
    
    
    5,482
    
    
    
    21,098
    
    
    
    3,089Ouyang Ming
    
    
    11,817
    
    
    
    203,488
    
    
    
    29,792Liu Ding Jian
    
    
    50,580
    
    
    
    
    
    
    
    Liu Yi
    
    
    
    
    
    
    14,000
    
    
    
    2,050706,088
    
    
    
    627,626
    
    
    
    91,890
 The amounts are unsecured, interest free and are repayable on demand.(2)
    
    Transactions with related parties
 (i)
    
    Sales between the Group and its related parties are as follows:
 Year ended June 30,Account
    
    
    Name of related party
    
    2007
    
    
    2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    RMB
    
    
    US$Sales
    
    Chengdu Nuo Ya Wei Ye
    
    
    18,439,980
    
    
    
    
    
    
    
    
    
    
    
    
  F-35




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NOAH EDUCATION HOLDINGS LTD.
 19.
    
    Commitments and contingenciesCommitmentsAs of June 30, 2009, the Company had commitments under non-cancelable operating
leases for office facilities and contracts for marketing expenses. Future
minimum lease payments at June 30, 2009, by year end are as follows:
 Operatingleasesfor office
    
    
    Marketingfacilities
    
    
    expenses
    
    
    Total
    
    
    TotalRMB
    
    
    RMB
    
    
    RMB
    
    
    US$2010
    
    
    4,203,052
    
    
    
    2,932,137
    
    
    
    7,135,189
    
    
    
    1,044,6532011
    
    
    1,800,177
    
    
    
    
    
    
    
    1,800,177
    
    
    
    263,5612012
    
    
    1,422,216
    
    
    
    
    
    
    
    1,422,216
    
    
    
    208,2252013
    
    
    1,316,710
    
    
    
    
    
    
    
    1,316,710
    
    
    
    192,7782014
    
    
    1,287,048
    
    
    
    
    
    
    
    1,287,048
    
    
    
    188,435Thereafter
    
    
    268,135
    
    
    
    
    
    
    
    268,135
    
    
    
    39,25710,297,338
    
    
    
    2,932,137
    
    
    
    13,229,475
    
    
    
    1,936,909
 The Group incurred rental expenses under operating leases of RMB3,419,880, RMB5,793,608 and
RMB7,427,482 (US$1,087,447) for the years ended June 30, 2007, 2008 and 2009, respectively.Significant legal proceedingsIn October 2008, a securities class action lawsuit, entitled Seidel v. Noah Education
Holdings Ltd. et al. was filed in the United States District Court for the Southern District
of New York against the Company in connection with the Companys October 2007 initial public
offering. The plaintiffs in this case allege that the registration statement of the
Companys October 2007 initial public offering purported to warn about the potential impact
of increases in component costs, but failed to disclose that the Group was then experiencing
increased raw material costs. The plaintiffs allege federal securities law violations and
seek unspecified damage. In November 2008, two additional securities class action lawsuits,
entitled Schapiro v. Noah Education Holdings Ltd. et al. and Sebik v. Noah Education
Holdings Ltd. et al. were filed in the United States District Court for the Southern
District of New York against the Company with substantially the same allegation. The court
has consolidated these complaints into a single action and the consolidated complaint added
a new allegation, claiming the registration statement of the Companys October 2007 initial
public offering failed to disclose that one model of the DLD devices did not include a
recycling warning sticker required under the PRC laws. The Company has vigorously defended
against the lawsuit and believes that the plaintiffs allegation has no merit.
  F-36




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 19.
    
    Commitments and contingencies continuedSignificant legal proceedings continuedIn October 2005 and December 2006, Beijing Renai Education Institution (Beijing Renai)
commenced two separate proceedings at the Beijing First Intermediate Peoples Court against
INES for alleged infringement of Beijing Renais copyright in its textbooks and recorded
pronunciations of English words used by INES on its website. Beijing Renai withdrew its
first claim in December 2006 and its second claim in February 2007. In July 2007, Beijing
Renai commenced two new legal proceedings at the Beijing Haidian District Peoples Court
and the Anhui Province Hefei City Intermediate Peoples Court against INES on substantially
the same grounds and claimed RMB500,000 as compensation. The judgments of the legal
proceedings were delivered in May 2008 and July 2008, and INES was ordered to settle
compensation of approximately RMB165,000 and RMB63,000 to Beijing Renai. In September
2008, INES appealed the judgment of Anhui Province Hefei City Intermediate Peoples Court to
Anhui Province Higher Peoples Court. In June 2009, the appellate court issued the final
judgment ordering INES to pay settlement compensation of approximately RMB62,000 to Beijing
Renai. Accruals of RMB62,000 has been made as of June 30, 2009. In January 2009, INES
appealed the judgment of Beijing Haidian District Peoples Court to the appellate court,
Beijing First intermediate Peoples Court and the case remains pending as of the date of
this report. In August 2009, Beijing Renai filed a new proceeding at Beijing Haidian
District Peoples Court against INES for the same cause of action. INES objected on
jurisdiction grounds to the court and the case remains pending as of the date of this
report.In August 2008, Beijing Chinese Online Cultural Development Co., Ltd., (Beijing Chinese
Online) filed a proceeding at Shenzhen Futian District Peoples Court against INES and Zhi
Yuan for alleged infringement of Beijing Chinese Onlines copyrights. The case was settled
during fiscal year 2009 by compensation of approximately RMB324,266 to the plaintiff.In November 2008 and January 2009, Shenzhen Wanhong Technology Development Co., Ltd.,
(Shenzhen Wanhong) commenced two separate legal proceedings at the Shenzhen Intermediate
Peoples Court and Jinan Intermediate Peoples Court against INES and NNTS for alleged
infringement of Shenzhen Wanhongs patent right. In March 2009, judgment from the Shenzhen
Intermediate Peoples Court was delivered. INES and NNTS was order to settle compensation
of approximately RMB514,000. INES and NNTS appealed to Guangdong Province Higher Peoples
Court and final judgment was issued in September 2009 dismissing all the claims of Shenzhen
Wanhong. In relation to the case filed at Jinan Intermediate Peoples Court, INES and NNTS
requested the Patent Reexamination Board of the State Intellectual Property Office to
reexamine Shenzhen Wanhongs patent and declare it invalid. As a result of the
reexamination, the Patent Reexamination Board invalidated Shenzhen Wanhongs patent.
Shenzhen Wanghong consequently filed an administrative action against the Patent
Reexamination Board at Beijing First Intermediate Peoples Court. As of the date of this
report, the validity of Shenzhen Wanhongs patent right has not been determined and the case
filed at Jinan Intermediate Peoples Court remains pending.Other contingencyThe Company has not made adequate social welfare payments as required under applicable PRC
labor laws. Accrual for the amounts under-paid has been made in the reported periods and
amounted to RMB6,647,580 and RMB7,202,858 (US$1,054,560) as of June 30, 2008 and 2009,
respectively. However, accrual for the penalties that may be imposed by the relevant PRC
government authorities has not been made in the financial statements as management
considered that it is not probable the relevant PRC government authorities will impose any
penalty at all. Should the PRC government decide to assess penalty, the amount is estimated
to be approximately RMB5,047,000 (US$739,000) as of June 30, 2009 (RMB4,457,000 as of June
30, 2008).
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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 20.
    
    Statutory reservesThe Groups subsidiaries incorporated in the PRC are required to make appropriations of
retained earnings set at certain percentage of after-tax profit determined in accordance
with PRC accounting standards and regulations (PRC GAAP) to statutory surplus reserve and
statutory public welfare fund whenever dividends are declared by these PRC subsidiaries.The statutory surplus reserve can be used to increase the registered capital and eliminate
future losses of the companies. It cannot be distributed to shareholders except in the
event of a solvent liquidation of the companies. The Groups subsidiaries are required to
appropriate 10% of their profit after income tax calculated in accordance with the PRC
accounting standard and system to the statutory surplus reserve until the balance reaches
50% of their respective registered capital, where further appropriation, will be at their
directors recommendation. During the year ended June 30, 2005, the Group made total
appropriations to these statutory reserves of approximately RMB5,000,000. The statutory
surplus reserve balance at June 30, 2008 and 2009, were RMB5,000,000 and RMB5,000,000
(US$732,043), respectively.The statutory welfare public reserve can only be used for the collective benefits and
facilities of the employees. The Groups subsidiaries are required to appropriate certain
of their profit after income tax calculated in accordance with the PRC accounting standard
and system to the statutory welfare public reserve. The percentage of appropriation will be
at their directors recommendation. No appropriation was made during the report periods.These reserves represents appropriations of retained earnings determined according to PRC
law and may not be distributable.In addition to these reserves, the registered capital of the Companys PRC subsidiaries are
also restricted. The total amount of the restricted capital and reserves at June 30, 2008
and 2009 amounted to RMB781,017,056 and RMB921,999,899 (US$134,988,712), respectively.
 21.
    
    Segment informationOperating segments are defined as components of an enterprise that engage in business
activities for which separate information is available and evaluated by the chief operating
decision maker. During the years ended June 30, 2007, the Group operates in one operating
segment, and this includes primarily the development, manufacture and sale of specialty
handheld digital learning devices and content. During the year ended June 30, 2008 and
2009, the Group also provides after-class tuition programs to primary and secondary school
students. The net revenue, net income and assets relating to the after-class tuition
segment accounted for less than 10% of the Companys consolidated net revenue, net income
and assets.Geographical disclosures:the Company mainly operates in the PRC and in 2007, 2008 and 2009,
no single country other than mainland China accounted for 10% or more of the Companys
consolidated net revenue. In addition, all the identifiable assets of the Company are
located in the PRC.Major customers:There are no single customers who contributed for 10% or more of the
Companys net revenue for the years ended June 30, 2007, 2008 and 2009.
  F-38




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 21.
    
    Segment information continuedProduct groups:the Company sells specialty handheld electronic learning devices, which include digital
learning devices and e-dictionaries, that are similar in nature, have similar production process, have
similar type of customers and utilize the same distribution method, as discrete financial information is
not available for the Companys operations of prepaid cards and software; they are considered to be
service lines instead of segment. Revenue from these product groups are as follows:
 For the years ended June 30,2007
    
    
    2008
    
    
    2009
    
    
    2009RMB
    
    
    RMB
    
    
    RMB
    
    
    US$Electronic learning devices
    
    
    548,164,024
    
    
    
    644,957,464
    
    
    
    664,745,790
    
    
    
    97,324,499Prepaid premium cards
    
    
    5,543,896
    
    
    
    1,251,406
    
    
    
    175,284
    
    
    
    25,663Software
    
    
    1,517,094
    
    
    
    3,864,279
    
    
    
    1,517,094
    
    
    
    222,116555,225,014
    
    
    
    650,073,149
    
    
    
    666,438,168
    
    
    
    97,572,278Tuition fee income
    
    
    
    
    
    
    1,861,453
    
    
    
    4,707,511
    
    
    
    689,219555,225,014
    
    
    
    651,934,602
    
    
    
    671,145,679
    
    
    
    98,261,497
 22.
    
    Subsequent eventThe Company has evaluated subsequent events, through the date that the consolidated
financial statements were issued on November 20, 2009.On May 22, 2009, the Company signed a Share Purchase Agreement (SPA) with Sunshine Nation
Limited, a company with limited liability organized under the laws of the British Virgin
Islands, (the Seller), and the other parties, including Mr. Du, Tianming, Mr. Du,
Liangdong and Mr. Du, Siyuan, to acquire all the issued and outstanding shares of Global
Ring Limited. Mr. Du, Siyuan is the sole owner of the Seller. Mr. Du, Tianming and Mr. Du,
Liangdong are the key management of Changsha Little New Star Cartoon Digital Technology
Ltd., (Little New Star), a company organized under the laws of the PRC, which is a
wholly-owned subsidiary of Global Ring Limited. Little New Star, a Changsha based private
education service provider, is a leading provider in kids English language training in
China.The total consideration is RMB53,000,000 of cash and 2,647,743 of the Companys ordinary shares, issuable to the seller on the closing day.As of June 30, 2009, RMB21,581,952 (US$3,159,783) was prepaid and disclosed as deposits for
investment in the consolidated financial statements.The transaction was closed on July 2, 2009.
  F-39




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 22.
    
    Subsequent event continuedOn September 30, 2009, the Company signed Share Subscription Agreement with Saunders
Acquisition Corporation (Saunders), a Delaware Corporation to subscribe 400,000 shares of
Series B Preferred stock of Saunders for a subscription price of US$1 million. Saunders was
formed for the purpose of consummating a merger (the Merger) with and into Franklin
Electronic Publishers, Incorporated, a Pennsylvania corporation (Franklin). The Companys
acquisition of the Series B Preferred stock of Saunders is conditional on the completion of
the Merger. Saunders is currently owned by the senior management of Franklin. On the
effective date of the Merger, shares of the Series B Preferred stock of Saunders will be
converted into shares of Series B Preferred stock of Franklin as the surviving corporation.
The Merger is expected to be completed in the first calendar quarter of 2010.On September 30, 2009, the Company also signed a Share Purchase Agreement with Shining See
Limited (Shining Sea), an exempted company organized under the laws of the Island of
Bermuda and a current shareholder of Franklin to purchase 800,000 shares of Series A
Preferred stock of Franklin from Shining Sea for a purchase price of US$2 million. Shining
Sea is an investment vehicle principally owned by a trust created for the benefit of Dr.
James Simons, the founder of Renaissance Technologies LLC and a current director of
Franklin, and his family. In addition, Shining Sea has separately agreed to purchase 365,630
ordinary shares of the Company, approximately 1.0% of the Companys outstanding ordinary shares, from Global Wise Technologies Ltd. and Dynamic View Investments Limited, two
existing shareholders of the Company, at a per share price of US$5.47 per share. The
Companys acquisition of the Series A Preferred stock of Franklin is conditional on the
completion of the Merger.
 23.
    
    Convertible preference sharesIn April 2004, the Company entered into a series A preference share purchase agreement with
Baring and Alpha, pursuant to which, the Company issued 6,521,962 series A preference shares
(Convertible Preference Shares). The issuance price of the Convertible Preference Shares
was US$2.4533 per share and total consideration paid by the investors for the Convertible
Preference Shares was US$16,000,000. Upon completion of the initial public offering in
October 2007, all convertible preference shares were automatically converted into 6,521,962
ordinary shares based on the carrying value of the convertible preference shares at date of
conversion.The holders of Convertible Preference Shares have various rights and preferences as follows:ConversionThe Convertible Preference Shares are convertible to ordinary shares at US$2.4533 per share
at the discretion of the holders anytime and shall be automatically converted to ordinary shares upon a fully underwritten initial public offering with gross proceeds to the Company
of not less than US$50,000,000 (Qualified IPO).
  F-40




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 23.
    
    Convertible preference shares continuedRedemptionAt any time commencing on July 1, 2009, each Convertible Preference Shares would have been
redeemable at the option of the holders at a redemption price equal to the original issuance
price plus all declared but unpaid dividends thereon up to the date of redemption.Liquidation and reorganizationIn the event of any trade sale, merger, acquisition, reorganization or other transaction
involving the Group in which the original shareholders do not retain a majority of the
voting power in the surviving entity, or any change in the control, or a sale of all or
substantially all of the assets or business of the Group (Sale Event), the holders of
Convertible Preference Shares shall be entitled either a portion of the proceeds of such
Sale Event, in proportion to the shareholding of holders of Convertible Preference Shares in
the Company (on an as-if-converted basis); or if within 3 years after July 1, 2004, the
selling price of the Company is less than US$100,000,000 in a Sale Event, the holders of the
Convertible Preference Shares shall be entitled to cash amount of 150% of the original
issuance price, plus all declared but unpaid dividends.Subject to above, in the event of any liquidation, winding up or dissolution of any Group
company, or any other Sale Event, or any initial public offering which is not a Qualified
IPO, all the assets and funds of the Company available for distribution to members shall be
distributed pro rata among all the holders of Convertible Preference Shares (on an
as-if-converted basis) and ordinary shares.Voting rightsEach holder of Convertible Preference Shares shall have the right to one vote for each
ordinary share into which such Convertible Preference Shares could then be converted, with
full voting rights and powers equal to the voting rights and powers of the holders of
ordinary shares.Dividends rightsAny dividends or distributions shall be distributed among all holders of ordinary shares and
Convertible Preference Shares in proportion to the number of ordinary shares that would be
held by each such holder as if all Convertible Preference Shares were converted to ordinary shares at the effective conversion date. No dividends shall be declared or distributed to
ordinary shareholders unless until a dividend in like amount and kind has first been
declared and paid in full to the Series A Preference Shareholders on an as-if-converted
basis.The Company has determined that there was no embedded beneficial conversion feature
attributable to the Convertible Preference Shares as the initial conversion price was higher
than the estimated fair value of the Companys ordinary shares on the commitment date.
  F-41




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##### Table of Contents



NOAH EDUCATION HOLDINGS LTD.
 23.
    
    Convertible preference shares continuedAntidution provisionsIn the event the number of ordinary shares shall be increased by a stock dividends payable
in ordinary shares, stock split, subdivision or other similar transactions, the conversion
price for the Convertible Preference Shares (Conversion Price) shall be decreased in
proportion to the percentage increase in the outstanding number of ordinary shares. In the
event the number of ordinary shares shall be decreased by a reverse stock split, combination
consolidation, or other similar transaction, the Conversion Price shall be increased in
proportion to the percentage decrease in the outstanding number of ordinary shares.If the Company shall issue any ordinary shares, rights, options or warrants or any
securities convertible or exchangeable into ordinary shares, with the exception to shares
issued in connection with the Companys equity incentive plan, for a consideration per share
less than the Conversion Price, the Convertible Preference Shareholders shall be entitled to
receive additional Convertible Preference Shares.
  F-42




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##### Table of Contents



SCHEDULE 1
 NOAH EDUCATION HOLDINGS LIMITED
BALANCE SHEET
 As of June 30,2008
    
    
    2009RMB
    
    
    RMBAssetsCurrent assetsCash and cash equivalents
    
    
    21,437,399
    
    
    
    70,594,995Amounts due from subsidiaries
    
    
    871,865,481
    
    
    
    788,271,786Trading investments
    
    
    12,875,217
    
    
    
    7,978,942Prepaid expenses and other current assets
    
    
    3,012,709
    
    
    
    424,086Total current assets
    
    
    909,190,806
    
    
    
    867,269,809Investments in subsidiaries
    
    
    394,067,207
    
    
    
    312,732,885Deposit for investment
    
    
    
    
    
    
    18,581,952Total assets
    
    
    1,303,258,013
    
    
    
    1,198,584,646Liabilities and Shareholders EquityCurrent LiabilitiesOther payables and accruals
    
    
    3,308,508
    
    
    
    3,797,194Deferred revenue
    
    
    1,469,806
    
    
    
    1,465,375Total current liabilities
    
    
    4,778,314
    
    
    
    5,262,569Non-current LiabilitiesWarrants
    
    
    5,830,023
    
    
    
    Deferred revenue
    
    
    7,716,488
    
    
    
    6,227,860Total non-current liabilities
    
    
    13,546,511
    
    
    
    6,227,860Total liabilities
    
    
    18,324,825
    
    
    
    11,490,429Shareholders Equity
Ordinary shares, US$0.00005 par value; 600,000,000 shares
authorized as of June 30, 2008 and 2009; 38,063,201
and 35,589,120 shares issued and outstanding as of
June 30, 2008 and 2009 respectively
    
    
    15,349
    
    
    
    14,504Additional paid-in capital
    
    
    1,169,618,982
    
    
    
    1,029,778,033Accumulated other comprehensive loss
    
    
    (89,949,455
    )
    
    
    (93,632,438
    )Retained earnings
    
    
    205,248,312
    
    
    
    250,934,118Total shareholders equity
    
    
    1,284,933,188
    
    
    
    1,187,094,217Total liabilities and shareholders equity
    
    
    1,303,258,013
    
    
    
    1,198,584,646
  F-43




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##### Table of Contents



SCHEDULE 1
 NOAH EDUCATION HOLDINGS LIMITED
STATEMENT OF OPERATIONS
 Years ended June 30,2007
    
    
    2008
    
    
    2009RMB
    
    
    RMB
    
    
    RMBGeneral and administrative expenses
    
    
    (14,239,240
    )
    
    
    (7,445,427
    )
    
    
    (14,638,999
    )Other operating expenses
    
    
    (20,220,890
    )
    
    
    
    
    
    
    (14,596
    )Other operating income (loss)
    
    
    
    
    
    
    49,872,230
    
    
    
    (3,883,766
    )Operating (loss) income
    
    
    (34,460,130
    )
    
    
    42,426,803
    
    
    
    (18,537,361
    )Derivative (loss) gain
    
    
    (55,207
    )
    
    
    (1,868,238
    )
    
    
    5,807,511Other non-operating income
    
    
    
    
    
    
    1,133,811
    
    
    
    3,161,579Investment loss
    
    
    
    
    
    
    (810,067
    )
    
    
    (934,649
    )Interest income
    
    
    408,025
    
    
    
    11,062,762
    
    
    
    324,807Income (loss) before income taxes
    
    
    (34,107,312
    )
    
    
    51,945,071
    
    
    
    (10,178,113
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    Income (loss) after tax
    
    
    (34,107,312
    )
    
    
    51,945,071
    
    
    
    (10,178,113
    )Share of net profits of subsidiaries, net of taxes
    
    
    100,535,611
    
    
    
    92,253,400
    
    
    
    107,168,356Net income
    
    
    66,428,299
    
    
    
    144,198,471
    
    
    
    96,990,243Preference stock dividend
    
    
    (17,705,374
    )
    
    
    
    
    
    
    Deemed dividend
    
    
    (2,653,072
    )
    
    
    (379,092
    )
    
    
    Net income attributable to ordinary shareholders
    
    
    46,069,853
    
    
    
    143,819,379
    
    
    
    96,990,243
  F-44




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##### Table of Contents



SCHEDULE 1
 NOAH EDUCATION HOLDINGS LIMITED
STATEMENT OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME
 AccumulatedAdditional
    
    
    other
    
    
    
    
    
    
    TotalOrdinary shares
    
    
    paid-in
    
    
    comprehensive
    
    
    Retained
    
    
    shareholders
    
    
    ComprehensiveShare
    
    
    Amount
    
    
    capital
    
    
    (Loss) Income
    
    
    earnings
    
    
    equity
    
    
    incomeRMB
    
    
    RMB
    
    
    RMB
    
    
    RMB
    
    
    RMB
    
    
    RMBAs at July 1, 2006
    
    
    21,473,442
    
    
    
    8,888
    
    
    
    32,572,269
    
    
    
    (2,481,967
    )
    
    
    77,396,303
    
    
    
    107,495,493
    
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,428,299
    
    
    
    66,428,299
    
    
    
    66,428,299Share-based compensation
    
    
    
    
    
    
    
    
    
    
    14,830,713
    
    
    
    
    
    
    
    
    
    
    
    14,830,713
    
    
    
    Cumulative Translation Adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,015,859
    )
    
    
    
    
    
    
    (3,015,859
    )
    
    
    (3,015,859
    )Deemed distribution to shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,516,362
    )
    
    
    (1,516,362
    )
    
    
    Deemed dividend on issuance of
warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,879,307
    )
    
    
    (4,879,307
    )
    
    
    Deemed capital contribution from
shareholders on disposal of
a subsidiary
    
    
    
    
    
    
    
    
    
    
    1,334,957
    
    
    
    
    
    
    
    
    
    
    
    1,334,957
    
    
    
    Dividend to ordinary shareholders
and preference shareholders
(RMB2.715 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (76,000,000
    )
    
    
    (76,000,000
    )
    
    
    As at June 30, 2007
    
    
    21,473,442
    
    
    
    8,888
    
    
    
    48,737,939
    
    
    
    (5,497,826
    )
    
    
    61,428,933
    
    
    
    104,677,934
    
    
    
    63,412,440Issue of ordinary shares pursuant
to initial public offering
    
    
    10,202,641
    
    
    
    3,809
    
    
    
    1,067,015,352
    
    
    
    
    
    
    
    
    
    
    
    1,067,019,161
    
    
    
    Direct offering expenses
    
    
    
    
    
    
    
    
    
    
    (90,480,425
    )
    
    
    
    
    
    
    
    
    
    
    (90,480,425
    )
    
    
    Conversion of preference shares
to ordinary shares
    
    
    6,521,962
    
    
    
    2,698
    
    
    
    129,753,248
    
    
    
    
    
    
    
    
    
    
    
    129,755,946
    
    
    
    Share repurchase
    
    
    (143,484
    )
    
    
    (49
    )
    
    
    (5,833,952
    )
    
    
    
    
    
    
    
    
    
    
    (5,834,001
    )
    
    
    Exercise of share options
    
    
    8,640
    
    
    
    3
    
    
    
    82,183
    
    
    
    
    
    
    
    
    
    
    
    82,186
    
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    144,198,471
    
    
    
    144,198,471
    
    
    
    144,198,471Share-based compensation
    
    
    
    
    
    
    
    
    
    
    20,344,637
    
    
    
    
    
    
    
    
    
    
    
    20,344,637
    
    
    
    Cumulative translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (84,451,629
    )
    
    
    
    
    
    
    (84,451,629
    )
    
    
    (84,451,629
    )Deemed distribution to shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (379,092
    )
    
    
    (379,092
    )
    
    
    As at June 30, 2008
    
    
    38,063,201
    
    
    
    15,349
    
    
    
    1,169,618,982
    
    
    
    (89,949,455
    )
    
    
    205,248,312
    
    
    
    1,284,933,188
    
    
    
    59,746,842Share repurchase
    
    
    (2,585,138
    )
    
    
    (883
    )
    
    
    (62,461,110
    )
    
    
    
    
    
    
    
    
    
    
    (62,461,993
    )
    
    
    Exercise of share options
    
    
    111,057
    
    
    
    38
    
    
    
    661,926
    
    
    
    
    
    
    
    
    
    
    
    661,964
    
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    96,990,243
    
    
    
    96,990,243
    
    
    
    96,990,243Share-based compensation
    
    
    
    
    
    
    
    
    
    
    8,173,461
    
    
    
    
    
    
    
    
    
    
    
    8,173,461
    
    
    
    Cumulative translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,682,983
    )
    
    
    
    
    
    
    (3,682,983
    )
    
    
    (3,682,983
    )Dividend to ordinary shareholders
    
    
    
    
    
    
    
    
    
    
    (86,215,226
    )
    
    
    
    
    
    
    (51,304,437
    )
    
    
    (137,519,663
    )
    
    
    As at June 30, 2009
    
    
    35,589,120
    
    
    
    14,504
    
    
    
    1,029,778,033
    
    
    
    (93,632,438
    )
    
    
    250,934,118
    
    
    
    1,187,094,217
    
    
    
    93,307,260
  F-45




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##### Table of Contents



SCHEDULE 1
 NOAH EDUCATION HOLDINGS LIMITED
STATEMENT OF CASH FLOWS
 Years ended June 30,2007
    
    
    2008
    
    
    2009RMB
    
    
    RMB
    
    
    RMBCash flows from operating activities:Net income
    
    
    66,428,299
    
    
    
    144,198,471
    
    
    
    96,990,243Adjustments to reconcile net income to net cash
provide by (used in) operating activities:Share of net profits of subsidiaries
    
    
    (100,535,611
    )
    
    
    (92,253,400
    )
    
    
    (107,168,356
    )Derivative loss (gain)
    
    
    55,207
    
    
    
    1,868,238
    
    
    
    (5,807,511
    )Loss on trading investments, net
    
    
    
    
    
    
    852,373
    
    
    
    1,428,850Share based compensation
    
    
    
    
    
    
    825,865
    
    
    
    1,384,373Dividend received from a subsidiary
    
    
    76,000,000
    
    
    
    
    
    
    
    Unrealized exchange difference
    
    
    (2,544,842
    )
    
    
    (137,927,681
    )
    
    
    263,282Changes in current assets and liabilities:Trading investments
    
    
    
    
    
    
    (13,727,590
    )
    
    
    3,467,425Prepaid expenses and other current assets
    
    
    (79,963
    )
    
    
    (2,932,746
    )
    
    
    2,588,623Other payables and accruals
    
    
    7,085,011
    
    
    
    (4,006,766
    )
    
    
    488,686Deferred revenue
    
    
    
    
    
    
    9,186,294
    
    
    
    (1,493,059
    )Net cash provided by (used in) operating activities
    
    
    46,408,101
    
    
    
    (93,916,942
    )
    
    
    (7,857,444
    )Cash flows from investing activities:Deposit for investment
    
    
    
    
    
    
    
    
    
    
    (18,581,952
    )Capital injections in subsidiaries
    
    
    
    
    
    
    (22,649,638
    )
    
    
    (Advances to) repayment from subsidiaries
    
    
    (6,757,740
    )
    
    
    (848,185,373
    )
    
    
    275,001,695Repayment from a subsidiary
    
    
    44,163,431
    
    
    
    
    
    
    
    Net cash provided by (used in) investing activities
    
    
    37,405,691
    
    
    
    (870,835,011
    )
    
    
    256,419,743Cash flows from financing activities:Proceeds from issuance of ordinary shares,
net of issuance costs
    
    
    
    
    
    
    976,538,736
    
    
    
    Proceeds from exercise of share options
    
    
    
    
    
    
    82,186
    
    
    
    661,964Shares repurchase
    
    
    
    
    
    
    (5,834,001
    )
    
    
    (62,461,993
    )Dividend paid to ordinary and preference
shareholders
    
    
    (76,000,000
    )
    
    
    
    
    
    
    (137,519,663
    )Net cash (used in) provided by financing activities
    
    
    (76,000,000
    )
    
    
    970,786,921
    
    
    
    (199,319,692
    )Effect of exchange rate changes on cash and
cash equivalents
    
    
    (470,852
    )
    
    
    (1,698,532
    )
    
    
    (85,011
    )Net increase in cash and cash equivalents
    
    
    7,813,792
    
    
    
    6,034,968
    
    
    
    49,242,607Cash and cash equivalents at beginning of year
    
    
    9,758,023
    
    
    
    17,100,963
    
    
    
    21,437,399Cash and cash equivalents at end of year
    
    
    17,100,963
    
    
    
    21,437,399
    
    
    
    70,594,995
  F-46




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##### Table of Contents



SCHEDULE 1
 NOAH EDUCATION HOLDINGS LIMITED   NOTE TO SCHEDULE 1
    F-47