China Bilingual Announces Financial Results for Fiscal Year End and Transition Period Ended August 31, 2011

TAIYUAN CITY, China, Nov. 30, 2011 /PRNewswire-Asia-FirstCall/ -- China Bilingual Technology & Education Group Inc. (OTCBB: CBLY) ("China Bilingual" or the "Company"), an education company that owns and operates high-quality, K-12 private boarding schools in China, today announced its financial results for the eight-month transition period ended August 31, 2011. The Company changed its fiscal year end from December 31 to August 31 to better reflect the school year, which typically runs from September 1 through August 31.

Financial Highlights: (Eight-Month Fiscal Year Transition Period Ended August 31, 2011)

• Revenues increased to $17.3 million, or 6.6% compared to $16.2 million for the eight-month period ended August 31, 2010. The eight-month revenues only accounted for the Company's two schools, which were operating near full capacity.
• Gross profit increased to $10.7 million, or 3.2% compared to $10.4 million for the eight-month period ended August 31, 2010. The Company's gross margin for the current period was 62.1%.
• Net Income increased to $9.4 million (54.6% net profit margin), or 0.4% year-over-year compared to $9.4 million for the eight-month period ended August 31, 2010. The slower net income growth was primarily due to no significant change in enrollment between the periods, expenses related to teachers and staff salaries, and public company expenses.
• The schools owned by the Company are exempt from paying corporate income taxes in China because of their classification in China's primary education sector.
• Basic and Diluted EPS were $0.31 per share for the eight months ended August 31, 2011.
• Total Assets increased 209.6% to $152.5 million as of August 31, 2011, compared to $49.2 million as of December 31, 2010, based on the acquisition of a third school campus.
• Stockholders' Equity increased 34.4% to $42.6 million as of August 31, 2011 compared to $31.7 million as of December 31, 2010.

"We are pleased with our performance for the reported transition period, including the closing of the acquisition of our third school campus," stated Dr. Ren Zhiqing, Chairman and CEO of China Bilingual. "For fiscal 2012, we will focus on increasing enrollment at our schools while we continue to seek suitable opportunities to expand our business model into additional schools. The acquisition of our newest private K-12 boarding school could double our enrollment capacity to approximately 20,000 students over time. Education is China's third largest consumer spending category, and our strong academic reputation provides us with a major competitive advantage in the fast-growing private education sector. We remain dedicated to becoming an education leader in China and increasing long-term value for our shareholders."

Earnings Webcast

Management will host an earnings webcast to discuss these financial results Thursday, December 1, 2011 at 2:30 p.m. Eastern time (11:30 a.m. Pacific).

To participate in the webcast, please register at http://www.redchip.com/virtualconference.

About China Bilingual Technology & Education Group Inc.

China Bilingual Technology & Education Group Inc. is an education company that owns and operates high-quality, K-12 private boarding schools in China. Founded in 1998, the Company currently operates three schools encompassing the kindergarten, elementary, middle and high school levels with approximately 13,220 students and 1,876 faculty and staff.

The Company's schools are located in Shanxi and Sichuan Provinces and provide students with an innovative and high-quality education with a focus on fluency and cultural skills in both Chinese and English. The schools regularly rank among the top schools in their respective regions for college entrance rates and national college entrance exam scores. The Company's schools have earned excellent teaching reputations and are recognized for the success of their students and strong faculty.

As China experiences rapid industrialization and economic growth, the government is focused on education as a means to increase worker productivity and raise the standard of living. Parents in China's new middle and upper classes are sending their children to receive private school education to give them an advantage in China's increasingly competitive workforce. The Company's sector in education is not subject to corporate income tax, and the Company anticipates its growth will come from both organic growth through increased enrollment and expansion of its business model and teaching methods into new schools to be acquired by the Company. For more information, visit http://www.chinabilingualedu.com.

Financial Statement Summary

Below is a summary of historical financial information on the Company. This information should be read in conjunction with the Company's historical consolidated financial statements for the eight months ended August 31, 2011 and 2010 and accompanying notes included in the Company's Form 10-K filed with the Securities and Exchange Commission (the "SEC") on November 29, 2011 and the historical consolidated financial statements for the years ended December 31, 2010 and 2009 and accompanying notes included in the Company's Form 10-K filed with the SEC on March 31, 2011. The Company also filed historical consolidated financial statements for the company it acquired on August 31, 2011, Shanxi Rising Education Investment Company, Limited, for the years ended August 31, 2011 and 2010 and accompanying notes included in the Company's Form 8-K filed with the SEC on November 17, 2011.

BUSINESS COMBINATION - EQUITY TRANSFER AGREEMENT

(From Note 19, Financial Statements filed in Form 10-K filed with the SEC on November 29, 2011)

On August 31, 2011, the Company completed the acqusition of the equity interests in Shanxi Rising Education Investment Company, Limited (the "Investment Company") from its equity holders (the "Sellers") for a total purchase consideration of RMB 690,000,000 (approximately $108,226,806) under the terms of the Equity Transfer Agreement, (the "Acquisition"). The Acquisition has been accounted for as a business combination under Accounting Standards Codification Topic 805, Business Combinations ("ASC 805"). The total purchase consideration of RMB 690,000,000 has been discounted to its net present value and allocated to the net tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of August 31, 2011. As of the balance sheet date, August 31, 2011, the exchange rate to the US Dollar was RMB 6.3755.

Description of Acqusition

On August 31, 2011, the Company's entered into an Equity Transfer Agreement and purchased all of the outstanding equity of the Investment Company from the Sellers for a total purchase consideration of RMB 690,000,000. The net present value of the total fair value consideration transferred equals RMB 616,023,000 (approximately $96,623,480), of which RMB 336,563,000 (approximately $52,790,055) has been paid. Under the terms of the Equity Transfer Agreement the balance of the purchase price is to be paid over three years in three scheduled payments as follows:

1. RMB 153,437,000 (or RMB 135,016,000, approximately $21,177,319, net of discount) to be paid by August 31, 2012,
2. RMB 100,000,000 (or RMB 76,947,000, approximately $12,069,171, net of discount) by August 31, 2013, and
3. RMB 100,000,000 (or RMB 67,497,000, approximately $10,586,935, net of discount) by August 31, 2014.

The net present value of the payments is discounted at the Company's current financing interest rate of 14%.

The Investment Company is an education company that owns and operates a K-12 private boarding school in the PRC, encompassing kindergarten, primary and secondary education. The Investment Company was established in 2001 and it has share capital of RMB 70,000,000. It is the parent company of Shanxi Rising School (the "Rising School"), founded 2002, which currently serves over 5,400 students from its location in Shanxi Province, PRC. The Rising School is now known by the Company as the "Shanxi South Campus."

Prior to closing the Equity Transfer Agreement, the Company became involved in the operations of the Shanxi South Campus in the spring of 2011. With the consent of the Investment Company, the Company assisted in the operations, accounting and promotion of the school to attract more and better students for the 2011-2012 school year. Some of these responsibilities included collecting prepaid School Fees in advance of the school year, which combined with better operations, higher tuition rates and an increase in enrollment led to an increase in deferred revenue at August 31, 2011. Company's involvement was under the direction of Investment Company management until it assumed control of the Shanxi South Campus on August 31, 2011, in accordance with the Equity Transfer Agreement.

Fair value of consideration transferred and recording of assets acquired and liabilities assumed

The following table summarizes the recognized amounts of identifiable assets acquired and liabilities assumed:

For the purpose of preparing the audited consolidated balance sheet as of August 31, 2011, the present value of the purchase price is allocated to the Company's net tangible assets acquired and liabilities assumed as of August 31, 2011. The assets of the Investment Company have an appraised value in excess of the discounted present fair value of the assets acquired, but are marked to the fair value of total consideration transferred. The Company contracted an independent, third-party appraisal firm for a detailed appraisal of the assets included in the Equity Transfer Agreement.

Unaudited Pro Forma Results

Unaudited pro forma results of operations after giving effect to certain adjustments resulting from the acquisitions of the Investment Company, as described above, were as follows for the eight months ended August 31, 2011 and 2010 as if the business combinations had occurred at the beginning of each period presented.

The pro forma data is provided for informational purposes only and does not purport to be indicative of the results which would have actually been obtained if the combinations had been effectuated at the beginning of each period presented, or of those results which may be obtained in the future.

Forward-Looking Statements

Certain statements contained herein constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates and projections about the Company's industry, management's beliefs and certain assumptions made by management. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Because such statements involve risks and uncertainties, the actual results and performance of the Company may differ materially from the results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, product demand, market competition, and risks inherent in our operations. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by law, the Company also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made here. For additional information, readers should carefully review reports or documents the Company files periodically with the Securities and Exchange Commission.

Contact:

At the Company:
Michael Toups, Chief Financial Officer
U.S. Office +1 727-641-1357
Email: [email protected]

Investor Relations:
Mike Bowdoin
RedChip Companies, Inc.
Tel: +1-800-733-2447, Ext. 110
Email: [email protected]
Web: http://www.RedChip.com

SOURCE China Bilingual Technology & Education Group Inc.

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