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Noah CEO Discusses F4Q10 Results - Earnings Call Transcript

The LNS and Wentai businesses put us in a good position in China’s education services space, and we are committed to further solidifying this position through the acquisition of additional complimentary business going forward.

Although, we have encountered various challenges in recent months, I believe we have a sound strategy in place, as well as management team committed to stabilizing our business and restoring growth. We are focused on the stabilization of our ELP business and believe the measures we have taken thus far will lead to a recovery.

At the same time, we understand the dynamics of the increasingly competitive and maturing ELP industry, and as such, we are actively working to extract and drive growth from our education services business, which continues to show robust growth prospect as a highly resilient and visibility industry and offers attractive margin profile.

With that, I will now turn the call over to Dora Li to walk you through our financial performance for the quarter.

Dora Li

Thank you, Chairman. As you’ve seen from our release, net revenue in the fourth quarter declined 71.9% year-over-year to RMB33.5 million, as we experienced disruptions from our distribution channel realignment in each area, and we saw increase competitive pressure in the ELP space.

Our actual revenue for the fourth quarter was also below our estimated revenue figure reported on July 26th due to returns recorded from discontinued distributors.

DLD sales were hardest hit by these disruptions and by the increasing competition in student’s notebook. And as a result, net revenue in this segment declined to RMB0.08 million.

KLD sales fell 87.9% to RMB4 million and E-dictionary revenue declined 40.2% to RMB18.9 million. E-dictionary sales held up comparatively well due to revenue we received from ODM contracts from our partnership with Franklin Electronic Publishers.

For the full 2010 fiscal year, net revenue was up 1.4% to RMB680.3 million, although, DLD and E-dictionary revenue were down 37.2% and 5.1%, respectively. KLD revenue did rise 78.2% over fiscal year 2009 to RMB278.7 million, which reflect the ongoing popularity of KLD product in marketplace, despite the challenge we had this quarter with our distribution channel.

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