SHANGHAI, China, Nov. 10 /Xinhua-PRNewswire/ -- 51job, Inc. (Nasdaq:
JOBS), a leading provider of integrated human resource services in China,
announced today unaudited financial results for the third quarter of 2006
ended September 30, 2006.
(Logo: http://www.prnasia.com/sa/200611091940.jpg )
Third Quarter 2006 Financial Highlights:
-- Total revenues increased 12.5% over Q3 2005 to RMB180.8 million
(US$22.9 million), in line with the Company’s guidance range of
RMB173 to RMB183 million
-- Gross margin improved to 56.2% compared with 54.7% in Q3 2005
-- Net income increased 59.0% over Q3 2005 to RMB27.1 million (US$3.4
million)
-- Fully diluted earnings per common share were RMB0.48 (US$0.12 per ADS)
-- Excluding share-based compensation expense and foreign currency
translation loss, non-GAAP adjusted fully diluted earnings per
common share were RMB0.67 (US$0.17 per ADS), exceeding the Company’s
guidance range of RMB0.50 to RMB0.60
Commenting on the results, Rick Yan, President and Chief Executive
Officer of 51job, Inc., said, “In the third quarter, we continued to execute
our strategic plan of profitable growth. Driven by our ongoing efforts to
increase efficiency and capitalize on economies of scale, we again achieved
higher gross margin, which has improved approximately 750 basis points since
the end of 2004. In addition, we are pleased that third quarter
profitability exceeded our expectations despite increased spending related to
sales and promotion activities and our new office facilities.”
“We pride ourselves on leading the Chinese HR services industry not only
in terms of financial scale and geographic reach, but also in product breadth
and service quality. We believe that the successful development of the
industry will be driven by product improvement. We are pleased that feedback
from corporate customers and job seekers continue to indicate that our
services are generating superior results amongst the competition. We are
focused on further differentiating and strengthening the value proposition of
our services, which we believe will benefit our customers and shareholders
over the longer term,” said Mr. Yan.
Third Quarter 2006 Unaudited Financial Results
Total revenues for the third quarter ended September 30, 2006 were
RMB180.8 million (US$22.9 million), an increase of 12.5% from RMB160.8
million for the same quarter in 2005.
Print advertising revenues for the third quarter of 2006 increased 5.7%
to RMB98.4 million (US$12.4 million) compared with RMB93.1 million for the
same quarter in 2005. The increase was primarily due to a greater volume of
advertisements in 51job Weekly and higher average revenue per page. The
estimated number of print advertising pages generated in the third quarter of
2006 was 3,217 compared with 3,115 pages in the same quarter in 2005.
Average revenue per page in the third quarter of 2006 increased 2.3% over the
third quarter of 2005.
Online recruitment services revenues for the third quarter of 2006 were
RMB57.6 million (US$7.3 million), representing a 29.6% growth from RMB44.4
million for the same quarter last year. The increase was principally
attributable to growth in the number of employers using the Company’s online
services. Unique employers using the Company’s online recruitment services
increased to 44,969 in the third quarter of 2006 compared with 34,407 in the
same period last year.
Executive search revenues for the third quarter of 2006 decreased 22.7%
to RMB4.9 million (US$0.6 million) from RMB6.3 million for the same quarter
last year due to fewer candidate assignments and fewer completed cases. For
the third quarter of 2006, other human resource related revenues grew 18.2%
to RMB20.0 million (US$2.5 million) from RMB16.9 million in the third quarter
last year due to increased demand for corporate training and business process
outsourcing services.
Gross profit for the third quarter of 2006 was RMB96.0 million (US$12.1
million), representing an increase of 15.9% from RMB82.9 million for the same
quarter last year. Gross margin, which is equal to gross profit divided by
net revenues, was 56.2% in the third quarter of 2006 compared with 54.7% in
the same quarter in 2005. The increase in gross margin was mainly due to
greater economies of scale and increased revenue contribution from the online
services business, which were partially offset by higher share-based
compensation expenses.
Operating expenses for the third quarter of 2006 were RMB65.2 million
(US$8.2 million) compared with RMB53.0 million for the same period last
year. Operating expenses as a percentage of net revenues was 38.2% for the
third quarter of 2006 compared with 35.0% for the third quarter of 2005.
Excluding share-based compensation expenses, operating expenses as a
percentage of net revenues was 34.5% for the third quarter of 2006 compared
with 32.8% for the third quarter of 2005.
Sales and marketing expenses for the third quarter of 2006 were RMB35.5
million (US$4.5 million) compared with RMB27.9 million for the same quarter
in 2005 mainly due to an increase in employee salaries and benefits, higher
advertising and promotion expenses, and greater share-based compensation
expenses.
General and administrative expenses for the third quarter of 2006
increased to RMB29.6 million (US$3.7 million) from RMB25.1 million in the
third quarter last year primarily as a result of increased share-based
compensation expense, additional depreciation and moving expenses related to
the Company’s new Zhangjiang corporate offices and recently purchased
Shanghai sales office, and higher professional services fees.
Income from operations for the third quarter of 2006 was RMB30.8 million
(US$3.9 million) compared with RMB29.8 million for the same period last
year. The Company’s effective tax rate for the third quarter of 2006
decreased to 20.4% from 31.7% in the third quarter of 2005 due to tax
exemptions obtained for certain Company entities in China.
Net income for the third quarter of 2006 increased 59.0% to RMB27.1
million (US$3.4 million) from RMB17.0 million for the same period in 2005.
Fully diluted earnings per common share for the third quarter of 2006 were
RMB0.48 (US$0.06) compared with RMB0.30 for the same quarter in 2005. Fully
diluted earnings per ADS for the third quarter of 2006 were RMB0.96 (US$0.12)
compared with RMB0.59 in the third quarter of 2005.
On January 1, 2006, the Company adopted SFAS No. 123R, which requires
companies to measure compensation expense for all share-based payments,
including employee stock options, at fair value. The Company recognized
total share-based compensation of RMB7.5 million (US$0.9 million) in the
third quarter of 2006 compared with RMB3.6 million in the third quarter of
2005 under the previous accounting treatment. Effective from January 1,
2006, the Company has changed its presentation of share-based compensation
expense in its statements of operations and has reclassified the expense to
cost of services, sales and marketing expenses, and general and
administrative expenses.
In the third quarter of 2006, the Company recognized a foreign currency
translation loss of RMB3.1 million (US$0.4 million) compared with a
translation loss of RMB10.6 million in the third quarter of 2005 resulting
from an appreciation of the Renminbi against the U.S. dollar.
Excluding share-based compensation and foreign currency translation loss
which had no impact on the Company’s cash earnings, non-GAAP adjusted net
income for the third quarter of 2006 was RMB37.6 million (US$4.8 million), a
21.0% increase from RMB31.1 million for the third quarter of 2005. Non-GAAP
adjusted fully diluted earnings per common share were RMB0.67 (US$0.08) in
the third quarter of 2006 compared with RMB0.54 in the third quarter of
2005. Non-GAAP adjusted fully diluted earnings per ADS in the third quarter
of 2006 were RMB1.33 (US$0.17) compared with RMB1.09 in the third quarter of
2005.
Nine Months 2006 Unaudited Financial Results
Total revenues for the nine months ended September 30, 2006 were RMB526.7
million (US$66.6 million), an increase of 16.8% from RMB450.9 million in the
comparable period in 2005. Income from operations for the nine months ended
September 30, 2006 increased 67.4% to RMB94.2 million (US$11.9 million) from
RMB56.3 million for the same period last year.
Net income for the nine months of 2006 increased 89.0% to RMB79.5 million
(US$10.1 million) compared with RMB42.1 million for the same period in 2005.
Fully diluted earnings per common share for the nine months of 2006 increased
to RMB1.41 (US$0.18) from RMB0.73 in the comparable period in 2005. Fully
diluted earnings per ADS for the nine months of 2006 were RMB2.82 (US$0.36)
compared with RMB1.47 in the same period in 2005.
Excluding share-based compensation and foreign currency translation loss,
non-GAAP adjusted net income for the nine months ended September 30, 2006
increased 68.0% to RMB106.8 million (US$13.5 million) from RMB63.6 million
for the nine months ended September 30, 2005. Non-GAAP adjusted fully
diluted earnings per common share were RMB1.89 (US$0.24) for the nine months
ended September 30, 2006 compared with RMB1.11 in the same period in 2005.
Non-GAAP adjusted fully diluted earnings per ADS in the first nine months of
2006 were RMB3.79 (US$0.48) compared with RMB2.22 in the same period in 2005.
As of September 30, 2006, the Company’s cash balance was RMB825.9
million (US$104.5 million) compared with RMB830.6 million at December 31,
2005 and RMB812.5 million at June 30, 2006.
Business Outlook
For the fourth quarter of 2006, based on current operating conditions and
seasonal patterns, the Company’s revenue target is in the range of RMB165 to
RMB175 million (US$20.9 to US$22.1 million). Excluding share-based
compensation expense and any foreign currency translation losses or gains,
the Company’s non-GAAP fully diluted earnings target for the fourth quarter
of 2006 is in the range of RMB0.40 to RMB0.50 per common share (US$0.10 to
US$0.13 per ADS). The Company expects aggregate share-based compensation
expense in the fourth quarter of 2006 to be approximately RMB8 million.
Other Company News
In mid-September, the Company completed the move of its principal
executive offices to a new office complex located in Shanghai’s New Pudong
Area of Zhangjiang. The Company’s new corporate address is Building 3, No.
1387, Zhang Dong Road, Shanghai 201203, People’s Republic of China.
In September, the Company changed its newspaper contractor to Human
Resource News in the city of Changsha. There was no interruption in the
printing and distribution of 51job Weekly in Changsha during the transition.
Currency Convenience Translation
For the convenience of readers, certain Renminbi amounts have been
translated into U.S. dollars at the rate of RMB7.9040 to US$1.00, the noon
buying rate in the City of New York for cable transfers of Renminbi per U.S.
dollar as certified for customs purposes by the Federal Reserve Bank of New
York, as of September 29, 2006.
Conference Call Information
Management of 51job will host a conference call at 8:00 p.m. Eastern Time
on November 9, 2006 (9:00 a.m. Shanghai / Hong Kong time zone on November 10,
2006) to discuss third quarter 2006 results. The call will be available live
and on replay through 51job’s investor relations website,
http://ir.51job.com . Please go to the website at least fifteen minutes
early to register and download and install any necessary audio software.
Participants may also dial into the teleconference at +1-800-263-8506 (+1-719-
457-2681 for international callers) and provide the passcode 2421126. An
audio replay of the conference call will be available three hours after
completion through November 16, 2006, by dialing +1-888-203-1112 (+1-719-457-
0820 for international callers) and entering the passcode 2421126.
About 51job
51job, Inc. (Nasdaq: JOBS) is a leading provider of integrated human
resource services in China with a strong focus on recruitment related
services. Offering a broad array of products and services, 51job connects
millions of job seekers with employment opportunities and streamlines the
recruitment process and human resource administration for tens of thousands
of companies in China. Through print advertisements in 51job Weekly and
online recruitment services at http://www.51job.com , both domestic Chinese
employers and multinational companies alike are able to attract, identify and
recruit new employees. 51job also provides executive search services and a
number of other value-added human resource services, including training,
business process outsourcing and salary surveys. 51job’s nationwide office
network in China spans 25 cities operating 23 local editions of 51job Weekly
and Hong Kong.
Use of Non-GAAP Financial Measures
To supplement the consolidated financial statements presented in
accordance with United States Generally Accepted Accounting Principles
(GAAP), 51job uses non-GAAP measures of adjusted net income, adjusted
earnings per common share and adjusted earnings per ADS, which are adjusted
from results based on GAAP to exclude the impact of share-based compensation
expense and foreign currency translation gain or loss. The Company believes
excluding stock-based compensation from its non-GAAP financial measures is
useful for its management and investors to assess and analyze the Company’s
core operating results as such expense is not directly attributable to the
underlying performance of the Company’s business operations and do not
impact its cash earnings. The Company believes excluding foreign currency
translation gain or loss from its non-GAAP financial measures is useful for
its management and investors as such translation gain or loss is unrelated to
the Company’s core business operations and will not result in cash
settlement nor impact the Company’s cash earnings. 51job also believes
these non-GAAP measures excluding share-based compensation expense and
foreign currency translation gain or loss are important in helping investors
to understand the Company’s current financial performance and future
prospects and to compare business trends among different reporting periods on
a consistent basis. The presentation of these additional measures should not
be considered a substitute for or superior to GAAP results or as being
comparable to results reported or forecasted by other companies. The non-
GAAP measures have been reconciled to GAAP measures in the attached financial
statements.
Safe Harbor Statement
Statements in this release regarding targets for the fourth quarter of
2006, future business and operating results constitute “forward-looking”
statements within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, and as defined in the Private Securities Litigation Reform Act of
1995. These statements are based upon management’s current expectations,
and actual results could differ materially. Among the factors that could
cause actual results to differ are the number of recruitment advertisements
placed, sales orders received and customer contracts executed during the
remaining weeks of the fourth quarter of 2006; any accounting adjustments
that may occur during the quarterly close; fluctuations in the value of the
Renminbi against the U.S. dollar and other currencies; behavioural and
operational changes of customers in meeting their human resource needs as
they respond to evolving social, economic and political changes in China;
introduction by its competitors of new or enhanced products or services;
price competition in the market for the various human resource services that
the Company provides in China; acceptance of new products and services
developed or introduced by the Company outside of the human resources
industry and fluctuations in general economic conditions. For additional
information on these and other factors that may affect the Company’s
financial results, please refer to the Company’s filings with the Securities
and Exchange Commission. 51job undertakes no obligation to update these
targets prior to announcing final results for the fourth quarter of 2006 or
as a result of new information, future events or otherwise.
-- Financial tables to follow --
51job, Inc.
Consolidated Statements of Operations
For the Three Months Ended
September 30, September 30, September 30,
2005 2006 2006
(unaudited) (unaudited) (unaudited)
RMB RMB USD (Note 1)
Revenues:
Print advertising 93,099,031 98,399,311 12,449,306
Online recruitment
services 44,443,053 57,591,608 7,286,388
Executive search 6,326,391 4,887,422 618,348
Other human resource
related revenues 16,883,951 19,959,081 2,525,187
Total revenues 160,752,426 180,837,422 22,879,229
Less: Business and related tax (9,162,446) (9,988,023) (1,263,667)
Net revenues 151,589,980 170,849,399 21,615,562
Cost of services (Note 2) (68,736,494) (74,847,284) (9,469,545)
Gross profit 82,853,486 96,002,115 12,146,017
Operating expenses:
Sales and marketing
(Note 3) (27,933,160) (35,539,657) (4,496,414)
General and administrative
(Note 4) (25,072,943) (29,639,979) (3,749,997)
Total operating expenses (53,006,103) (65,179,636) (8,246,411)
Income from operations 29,847,383 30,822,479 3,899,606
Loss from foreign currency
translation (10,596,968) (3,108,767) (393,316)
Interest and investment income 5,562,566 5,491,693 694,799
Other income 127,921 821,111 103,886
Income before provision for
income tax 24,940,902 34,026,516 4,304,975
Income tax expense (7,910,392) (6,945,105) (878,682)
Net income 17,030,510 27,081,411 3,426,293
Earnings per share:
Basic 0.31 0.49 0.06
Diluted 0.30 0.48 0.06
Earnings per ADS (Note 5):
Basic 0.61 0.98 0.12
Diluted 0.59 0.96 0.12
Weighted average number of
common shares
outstanding:
Basic 55,715,513 55,545,311 55,545,311
Diluted 57,281,182 56,424,919 56,424,919
Notes:
(1) The conversion of RMB amounts into USD amounts is based on the noon
buying rate of USD1.00=RMB7.9040 on September 29, 2006 in The City
of New York for cable transfers of RMB as certified for customs
purposes by the Federal Reserve Bank of New York.
(2) Includes share-based compensation expense of RMB360,531 and
RMB1,193,812 (US$151,039) for the three months ended September 30,
2005 and 2006, respectively.
(3) Includes share-based compensation expense of RMB363,072 and
RMB1,026,250 (US$129,839) for the three months ended September 30,
2005 and 2006, respectively.
(4) Includes share-based compensation expense of RMB2,874,373 and
RMB5,231,229 (US$661,846) for the three months ended September 30,
2005 and 2006, respectively.
(5) Each ADS represents two common shares.
51job, Inc.
Consolidated Statements of Operations
For the Nine Months Ended
September 30, September 30, September 30,
2005 2006 2006
(unaudited) (unaudited) (unaudited)
RMB RMB USD (Note 1)
Revenues:
Print advertising 277,291,885 302,115,742 38,223,145
Online recruitment
services 115,112,686 161,177,836 20,391,933
Executive search 20,319,387 14,487,405 1,832,921
Other human resource
related revenues 38,138,096 48,960,995 6,194,458
Total revenues 450,862,054 526,741,978 66,642,457
Less: Business and related tax (25,670,058) (29,087,644) (3,680,117)
Net revenues 425,191,996 497,654,334 62,962,340
Cost of services (Note 2) (206,990,934) (219,759,115) (27,803,532)
Gross profit 218,201,062 277,895,219 35,158,808
Operating expenses:
Sales and marketing
(Note 3) (87,354,189) (95,549,878) (12,088,800)
General and administrative
(Note 4) (74,541,108) (88,103,540) (11,146,703)
Total operating expenses (161,895,297) (183,653,418) (23,235,503)
Income from operations 56,305,765 94,241,801 11,923,305
Loss from foreign currency
translation (10,631,086) (5,980,205) (756,605)
Interest and investment income 15,233,614 15,041,269 1,902,994
Other income 581,394 854,818 108,150
Income before provision for
income tax 61,489,687 104,157,683 13,177,844
Income tax expense (19,392,203) (24,610,476) (3,113,674)
Net income 42,097,484 79,547,207 10,064,170
Earnings per share:
Basic 0.76 1.44 0.18
Diluted 0.73 1.41 0.18
Earnings per ADS (Note 5):
Basic 1.51 2.88 0.36
Diluted 1.47 2.82 0.36
Weighted average number of
common shares
outstanding:
Basic 55,710,597 55,204,867 55,204,867
Diluted 57,434,151 56,395,157 56,395,157
Notes:
(1) The conversion of RMB amounts into USD amounts is based on the noon
buying rate of USD1.00=RMB7.9040 on September 29, 2006 in The City
of New York for cable transfers of RMB as certified for customs
purposes by the Federal Reserve Bank of New York.
(2) Includes share-based compensation expense of RMB1,150,713 and
RMB3,420,165 (US$432,713) for the nine months ended September 30,
2005 and 2006, respectively.
(3) Includes share-based compensation expense of RMB1,101,650 and
RMB2,940,111 (US$371,978) for the nine months ended September 30,
2005 and 2006, respectively.
(4) Includes share-based compensation expense of RMB8,776,552 and
RMB14,987,012 (US$1,896,130) for the nine months ended September 30,
2005 and 2006, respectively.
(5) Each ADS represents two common shares.
51job, Inc.
Reconciliation of GAAP and Non-GAAP Results
For the Three Months Ended
September 30, September 30, September 30,
2005 2006 2006
(unaudited) (unaudited) (unaudited)
RMB RMB USD (Note 1)
GAAP income before provision
for income tax 24,940,902 34,026,516 4,304,974
Add back: Share-based
compensation expense 3,597,976 7,451,291 942,724
Add back: Loss from foreign
currency translation 10,596,968 3,108,767 393,316
Non-GAAP income before
provision for income
tax 39,135,846 44,586,574 5,641,014
Non-GAAP income tax expense (8,046,624) (6,971,407) (882,010)
Non-GAAP adjusted net income 31,089,222 37,615,167 4,759,004
Non-GAAP adjusted earnings per
share:
Basic 0.56 0.68 0.09
Diluted 0.54 0.67 0.08
Non-GAAP adjusted earnings per
ADS
(Note):
Basic 1.12 1.35 0.17
Diluted 1.09 1.33 0.17
Weighted average number of
common shares outstanding:
Basic 55,715,513 55,545,311 55,545,311
Diluted 57,281,182 56,424,919 56,424,919
For the Nine Months Ended
September 30, September 30, September 30,
2005 2006 2006
(unaudited) (unaudited) (unaudited)
RMB RMB USD (Note 1)
GAAP income before provision
for income tax 61,489,687 104,157,683 13,177,845
Add back: Share-based
compensation expense 11,028,915 21,347,288 2,700,821
Add back: Loss from foreign
Currency translation 10,631,086 5,980,205 756,605
Non-GAAP income before
provision for income tax 83,149,688 131,485,176 16,635,271
Non-GAAP income tax expense (19,538,670) (24,637,117) (3,117,045)
Non-GAAP adjusted net income 63,611,018 106,848,059 13,518,226
Non-GAAP adjusted earnings per
share:
Basic 1.14 1.94 0.25
Diluted 1.11 1.89 0.24
Non-GAAP adjusted earnings per
ADS (Note 2):
Basic 2.28 3.87 0.49
Diluted 2.22 3.79 0.48
Weighted average number of
common shares outstanding:
Basic 55,710,597 55,204,867 55,204,867
Diluted 57,434,151 56,395,157 56,395,157
Notes:
(1) The conversion of RMB amounts into USD amounts is based on the noon
buying rate of USD1.00=RMB7.9040 on September 29, 2006 in The City of
New York for cable transfers of RMB as certified for customs purposes
by the Federal Reserve Bank of New York.
(2) Each ADS represents two common shares.
51job, Inc.
Consolidated Balance Sheets
December September September
31, 30, 30,
2005 2006 2006
(audited) (unaudited) (unaudited)
RMB RMB USD (Note 1)
ASSETS
Current assets:
Cash 830,633,550 825,883,936 104,489,364
Short-term investments 10,554,529 -- --
Accounts receivable (net of
allowance of RMB2,860,275
and RMB3,042,077 as of December
31, 2005 and September 30,
2006, respectively) 22,222,865 37,568,123 4,753,052
Prepayments and other current
assets 23,265,437 19,333,550 2,446,046
Deferred tax assets, current 5,867,820 5,743,677 726,680
Total current assets 892,544,201 888,529,286 112,415,142
Property and equipment 32,357,875 195,012,827 24,672,675
Intangible assets 11,380,835 9,922,427 1,255,368
Other long-term assets 26,724,335 3,304,370 418,064
Deferred tax assets, non-current 412,314 404,696 51,201
Total assets
963,419,560 1,097,173,606 138,812,450
LIABILITIES
Current liabilities:
Accounts payable 7,358,046 13,570,160 1,716,872
Due to related parties 1,505,515 599,187 75,808
Salary and employee related
accrual 19,339,789 19,750,222 2,498,763
Taxes payable 23,201,967 24,694,952 3,124,361
Advance from customers 40,619,516 57,950,278 7,331,766
Other payables and accruals 17,515,264 19,338,572 2,446,682
Total current liabilities 109,540,097 135,903,371 17,194,252
Deferred tax liability, non-current -- 84,667 10,712
Total liabilities 109,540,097 135,988,038 17,204,964
Commitments and contingencies -- -- --
Shareholders’ equity:
Common shares (US$0.0001 par
value; 500,000,000 shares
authorized, 54,876,079 and
56,022,624 shares issued and
outstanding as of December
31, 2005 and September 30,
2006, respectively) 45,451 46,359 5,865
Additional paid-in capital 848,423,068 852,514,797 107,858,654
Deferred share-based
compensation (23,141,471) -- --
Statutory reserves 3,680,707 3,680,707 465,676
Other comprehensive gain (loss) (318,174) 206,617 26,141
Retained earnings 25,189,882 104,737,088 13,251,150
Total shareholders’ equity 853,879,463 961,185,568 121,607,486
Total liabilities and shareholders’
equity 963,419,560 1,097,173,606 138,812,450
Note 1: The conversion of RMB amounts into USD amounts is based on the
noon buying rate of USD1.00=RMB7.9040 on September 29, 2006 in
The City of New York for cable transfers of RMB as certified for
customs purposes by the Federal Reserve Bank of New York.
