EX-99.2 3 exhibit2.htm EX-99.2 Exhibit  EX-99.2

FOR IMMEDIATE RELEASE

Contact:

Linda Chien
Investor Relations
51job, Inc.
+(86-21) 6879-6250
investor.relations@51job.com

51job, Inc. Reports Second Quarter 2007 Financial Results

SHANGHAI, China, August 9, 2007 51job, Inc. (Nasdaq: JOBS), a leading provider of integrated human resource services in China, announced today unaudited financial results for the second quarter of 2007 ended June 30, 2007.

     
Second Quarter 2007 Financial Highlights:
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  Total revenues increased 21.1% over Q2 2006 to RMB209.9 million (US$27.6 million), at the top end of
the Company’s guidance range of RMB200 to RMB210 million
Gross margin improved to 57.8% compared with 56.0% in Q2 2006
Operating income grew 46.4% over Q2 2006 to RMB43.1 million (US$5.7 million)
Net income increased 19.5% over Q2 2006 to RMB31.0 million (US$4.1 million)
Fully diluted earnings per common share were RMB0.55 (US$0.14 per ADS)
Excluding share-based compensation expense and foreign currency translation loss, non-GAAP adjusted
fully diluted earnings per common share were RMB0.74 (US$0.20 per ADS), in line with the Company’s guidance
range of RMB0.67 to RMB0.77

Commenting on the results, Rick Yan, President and Chief Executive Officer of 51job, Inc., said, “Our solid second quarter performance was highlighted by continued traction in new customer acquisitions and strong growth in advertisement volumes. We also saw meaningful margin improvement during the quarter, achieving a record gross margin level and higher operating margin despite increased spending on sales and marketing activities.”

“We are pleased with our progress this year and will continue to invest in new product development and to execute an aggressive sales and marketing strategy. We believe these initiatives will strengthen our competitive position, drive revenue growth and enable us to generate greater returns to shareholders in the longer term,” said Mr. Yan.

Second Quarter 2007 Unaudited Financial Results

Total revenues for the second quarter ended June 30, 2007 were RMB209.9 million (US$27.6 million), an increase of 21.1% from RMB173.4 million for the same quarter in 2006.

Print advertising revenues for the second quarter of 2007 increased 10.8% to RMB107.6 million (US$14.1 million) compared with RMB97.1 million for the same quarter in 2006. The increase was primarily the result of a greater volume of advertisements in 51job Weekly which was partially offset by lower average revenue per page. The estimated number of print advertising pages generated in the second quarter of 2007 grew 37.3% to 4,213 compared with 3,068 pages in the same quarter in 2006. Average revenue per page in the second quarter of 2007 decreased 19.3% over the same quarter in 2006 due to growing revenue contribution from lower priced cities.

Online recruitment services revenues for the second quarter of 2007 were RMB71.2 million (US$9.4 million), representing a 29.3% growth from RMB55.1 million for the same quarter last year. The increase was mainly attributable to growth in the number of employers using the Company’s online services. Unique employers using the Company’s online recruitment services increased 32.1% to 57,975 in the second quarter of 2007 compared with 43,891 in the same quarter last year.

Executive search revenues for the second quarter of 2007 increased 2.8% to RMB4.7 million (US$0.6 million) from RMB4.6 million for the same quarter last year. For the second quarter of 2007, other human resource related revenues grew 58.7% to RMB26.5 million (US$3.5 million) from RMB16.7 million in the second quarter last year principally due to greater customer demand for corporate training and business process outsourcing services.

Gross profit for the second quarter of 2007 was RMB115.1 million (US$15.1 million), representing an increase of 25.4% from RMB91.8 million for the same quarter last year. Gross margin, which is equal to gross profit divided by net revenues, was 57.8% in the second quarter of 2007 compared with 56.0% in the same quarter in 2006.

Operating expenses for the second quarter of 2007 were RMB72.0 million (US$9.5 million) compared with RMB62.4 million for the same quarter last year. Operating expenses as a percentage of net revenues decreased to 36.2% for the second quarter of 2007 from 38.1% for the second quarter of 2006. Excluding share-based compensation expense, operating expenses as a percentage of net revenues decreased to 33.3% in the second quarter of 2007 compared with 34.0% in the second quarter of 2006.

Sales and marketing expenses for the second quarter of 2007 increased 34.5% to RMB42.2 million (US$5.5 million) from RMB31.4 million for the same quarter in 2006 primarily due to higher employee salary and benefit expenses due to the hiring of additional salespersons, greater advertising expenses, and increased spending on marketing and promotional activities.

General and administrative expenses for the second quarter of 2007 decreased to RMB29.8 million (US$3.9 million) from RMB31.0 million in the second quarter last year primarily due to lower office rental and share-based compensation expenses, which were partially offset by increased costs relating to new staff additions and higher employee salaries.

Income from operations for the second quarter of 2007 increased 46.4% to RMB43.1 million (US$5.7 million) from RMB29.4 million for the same quarter last year. The Company’s effective tax rate increased to 31.2% in the second quarter of 2007 compared with 21.9% in the second quarter of 2006 due to the expiration of certain tax exemptions.

Net income for the second quarter of 2007 increased 19.5% to RMB31.0 million (US$4.1 million) from RMB26.0 million for the same quarter in 2006. Fully diluted earnings per common share for the second quarter of 2007 were RMB0.55 (US$0.07) compared with RMB0.46 for the same quarter in 2006. Fully diluted earnings per ADS for the second quarter of 2007 were RMB1.10 (US$0.14) compared with RMB0.92 in the second quarter of 2006.

In the second quarter of 2007, the Company recognized total share-based compensation expense of RMB6.8 million (US$0.9 million) compared with RMB8.0 million in the second quarter of 2006. The Company also recognized a foreign currency translation loss of RMB4.3 million (US$0.6 million) in the second quarter of 2007 compared with a translation loss of RMB1.3 million in the second quarter of 2006 resulting from an appreciation of the Renminbi against the U.S. dollar.

Excluding share-based compensation expense and foreign currency translation loss which had no impact on the Company’s cash earnings, non-GAAP adjusted income for the second quarter of 2007 was RMB42.1 million (US$5.5 million), a 19.6% increase from RMB35.2 million for the second quarter of 2006. Non-GAAP adjusted fully diluted earnings per common share were RMB0.74 (US$0.10) in the second quarter of 2007 compared with RMB0.62 in the second quarter of 2006. Non-GAAP adjusted fully diluted earnings per ADS in the second quarter of 2007 were RMB1.49 (US$0.20) compared with RMB1.25 in the second quarter of 2006.

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Six Months 2007 Unaudited Financial Results

Total revenues for the six months ended June 30, 2007 were RMB410.4 million (US$53.9 million), an increase of 18.7% from RMB345.9 million in the comparable period in 2006. Income from operations for the six months ended June 30, 2007 increased 33.9% to RMB84.9 million (US$11.2 million) from RMB63.4 million for the same period last year.

Net income for the first half of 2007 increased 20.4% to RMB63.2 million (US$8.3 million) compared with RMB52.5 million for the same period in 2006. Fully diluted earnings per common share for the first half of 2007 increased to RMB1.12 (US$0.15) from RMB0.93 in the comparable period in 2006. Fully diluted earnings per ADS for the first half of 2006 were RMB2.23 (US$0.29) compared with RMB1.86 in the same period in 2006.

Excluding share-based compensation and foreign currency translation loss, non-GAAP adjusted net income for the six months ended June 30, 2007 increased 21.9% to RMB84.4 million (US$11.1 million) from RMB69.2 million for the six months ended June 30, 2006. Non-GAAP adjusted fully diluted earnings per common share were RMB1.49 (US$0.20) in first half of 2007 compared with RMB1.23 in the same period in 2006. Non-GAAP adjusted fully diluted earnings per ADS in the first half of 2007 were RMB2.98 (US$0.39) compared with RMB2.46 in the same period in 2006.

As of June 30, 2007, the Company’s cash balance was RMB959.2 million (US$126.0 million) compared with RMB868.7 million at December 31, 2006 and RMB919.2 million at March 31, 2007.

Business Outlook

For the third quarter of 2007, based on current market and operating conditions, the Company’s revenue target is in the estimated range of RMB205 to RMB215 million (US$26.9 to US$28.2 million). Excluding share-based compensation expense and any foreign currency translation losses or gains that may arise from further Renminbi revaluations, the Company’s non-GAAP fully diluted earnings target for the third quarter of 2007 is in the estimated range of RMB0.55 to RMB0.65 per common share (US$0.14 to US$0.17 per ADS). The Company expects aggregate share-based compensation expense in the third quarter of 2007 to be approximately RMB8 million.

Currency Convenience Translation

For the convenience of readers, certain Renminbi amounts have been translated into U.S. dollars at the rate of RMB7.6120 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 June 29, 2007.

Conference Call Information

Management of 51job will host a conference call at 9:00 p.m. Eastern Time on August 9, 2007 (9:00 a.m. Shanghai / Hong Kong time zone on August 10, 2007) to discuss second quarter 2007 results. The call will be available live and on replay through 51job’s investor relations website, 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 +1-800-475-3716 (+1-719-457-2728 for international callers) and provide the passcode 5607475. An audio replay of the conference call will be available three hours after completion through August 16, 2007, by dialing +1-888-203-1112 (+1-719-457-0820 for international callers) and entering the passcode 5607475.

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 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 26 cities operating 23 local editions of 51job Weekly.

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 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 expense 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 third quarter of 2007, 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 third quarter of 2007; 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; behavioral and operational changes of customers in meeting their human resource needs as they respond to evolving social, economic and political changes in China as well as stock market volatilities; 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 third quarter of 2007 or as a result of new information, future events or otherwise.

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- Financial tables to follow -
51job, Inc.
Consolidated Statements of Operations

                         
    For the Three Months Ended
    June 30, 2006   June 30, 2007   June 30, 2007
(In thousands, except share data)   (unaudited)   (unaudited)   (unaudited)
 
  RMB   RMB   USD (Note 1)
Revenues:
                       
Print advertising
    97,061       107,569       14,132  
Online recruitment services
    55,059       71,203       9,354  
Executive search
    4,550       4,676       614  
Other human resource related revenues
    16,693       26,497       3,481  
Total revenues
    173,363       209,945       27,581  
Less: Business and related tax
    (9,375 )     (10,775 )     (1,416 )
Net revenues
    163,988       199,170       26,165  
Cost of services (Note 2)
    (72,184 )     (84,076 )     (11,045 )
Gross profit
    91,804       115,094       15,120  
Operating expenses:
                       
Sales and marketing (Note 3)
    (31,401 )     (42,232 )     (5,548 )
General and administrative (Note 4)
    (30,998 )     (29,804 )     (3,915 )
Total operating expenses
    (62,399 )     (72,036 )     (9,463 )
Income from operations
    29,405       43,058       5,657  
Loss from foreign currency translation
    (1,258 )     (4,270 )     (561 )
Interest and investment income
    5,000       5,946       781  
Other income
    98       392       51  
Income before provision for income tax
    33,245       45,126       5,928  
Income tax expense
    (7,280 )     (14,095 )     (1,852 )
Net income
    25,965       31,031       4,076  
Earnings per share:
                       
Basic
    0.47       0.55       0.07  
Diluted
    0.46       0.55       0.07  
Earnings per ADS (Note 5):
                       
Basic
    0.94       1.10       0.14  
Diluted
    0.92       1.10       0.14  
Weighted average number of common shares outstanding:
                       
Basic
    55,138,410       56,206,580       56,206,580  
Diluted
    56,450,619       56,613,893       56,613,893  

     

    Notes:

1.   The conversion of RMB amounts into USD amounts is based on the noon buying rate of USD1.00=RMB7.6120 on June 29, 2007 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 RMB1,279 and RMB1,168 (US$153) for the three months ended June 30, 2006 and 2007, respectively.

3.   Includes share-based compensation expense of RMB1,100 and RMB1,005 (US$132) for the three months ended June 30, 2006 and 2007, respectively.

4.   Includes share-based compensation expense of RMB5,606 and RMB4,648 (US$611) for the three months ended June 30, 2006 and 2007, respectively.

5.   Each ADS represents two common shares.

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51job, Inc.
Consolidated Statements of Operations

                         
    For the Six Months Ended
    June 30, 2006   June 30, 2007   June 30, 2007
(In thousands, except share data)   (unaudited)   (unaudited)   (unaudited)
 
  RMB   RMB   USD (Note 1)
Revenues:
                       
Print advertising
    203,716       221,126       29,050  
Online recruitment services
    103,586       132,788       17,445  
Executive search
    9,600       8,528       1,120  
Other human resource related revenues
    29,002       47,988       6,304  
Total revenues
    345,904       410,430       53,919  
Less: Business and related tax
    (19,099 )     (21,878 )     (2,874 )
Net revenues
    326,805       388,552       51,045  
Cost of services (Note 2)
    (144,912 )     (168,926 )     (22,192 )
Gross profit
    181,893       219,626       28,853  
Operating expenses:
                       
Sales and marketing (Note 3)
    (60,010 )     (76,008 )     (9,985 )
General and administrative (Note 4)
    (58,464 )     (58,719 )     (7,714 )
Total operating expenses
    (118,474 )     (134,727 )     (17,699 )
Income from operations
    63,419       84,899       11,154  
Loss from foreign currency translation
    (2,871 )     (7,037 )     (924 )
Interest and investment income
    9,549       11,396       1,497  
Other income
    34       370       49  
Income before provision for income tax
    70,131       89,628       11,776  
Income tax expense
    (17,665 )     (26,442 )     (3,474 )
Net income
    52,466       63,186       8,302  
Earnings per share:
                       
Basic
    0.95       1.12       0.15  
Diluted
    0.93       1.12       0.15  
Earnings per ADS (Note 5):
                       
Basic
    1.91       2.25       0.30  
Diluted
    1.86       2.23       0.29  
Weighted average number of common shares outstanding:
                       
Basic
    55,031,824       56,175,178       56,175,178  
Diluted
    56,366,314       56,583,148       56,583,148  

     

    Notes:

1.   The conversion of RMB amounts into USD amounts is based on the noon buying rate of USD1.00=RMB7.6120 on June 29, 2007 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 RMB2,226 and RMB2,352 (US$309) for the six months ended June 30, 2006 and 2007, respectively.

3.   Includes share-based compensation expense of RMB1,914 and RMB2,022 (US$266) for the six months ended June 30, 2006 and 2007, respectively.

4.   Includes share-based compensation expense of RMB9,756 and RMB9,835 (US$1,292) for the six months ended June 30, 2006 and 2007, respectively.

5.   Each ADS represents two common shares.

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51job, Inc.
Reconciliation of GAAP and Non-GAAP Results

                         
    For the Three Months Ended
    June 30, 2006   June 30, 2007   June 30, 2007
(In thousands, except share data)   (unaudited)   (unaudited)   (unaudited)
 
  RMB   RMB   USD (Note 1)
GAAP income before provision for income tax
    33,245       45,126       5,928  
Add back: Share-based compensation expense
    7,985       6,821       896  
Add back: Loss from foreign currency translation
    1,258       4,270       561  
Non-GAAP income before provision for income tax
    42,488       56,217       7,385  
Non-GAAP income tax expense
    (7,274 )     (14,100 )     (1,852 )
Non-GAAP adjusted income
    35,214       42,117       5,533  
Non-GAAP adjusted earnings per share:
                       
Basic
    0.64       0.75       0.10  
Diluted
    0.62       0.74       0.10  
Non-GAAP adjusted earnings per ADS (Note 2):
                       
Basic
    1.28       1.50       0.20  
Diluted
    1.25       1.49       0.20  
Weighted average number of common shares outstanding:
                       
Basic
    55,138,410       56,206,580       56,206,580  
Diluted
    56,450,619       56,613,893       56,613,893  
                         
    For the Six Months Ended
    June 30, 2006   June 30, 2007   June 30, 2007
(In thousands, except share data)   (unaudited)   (unaudited)   (unaudited)
 
  RMB   RMB   USD (Note 1)
GAAP income before provision for income tax
    70,131       89,628       11,775  
Add back: Share-based compensation expense
    13,896       14,209       1,867  
Add back: Loss from foreign currency translation
    2,872       7,037       924  
Non-GAAP income before provision for income tax
    86,899       110,874       14,566  
Non-GAAP income tax expense
    (17,666 )     (26,449 )     (3,475 )
Non-GAAP adjusted net income
    69,233       84,425       11,091  
Non-GAAP adjusted earnings per share:
                       
Basic
    1.26       1.50       0.20  
Diluted
    1.23       1.49       0.20  
Non-GAAP adjusted earnings per ADS (Note 2):
                       
Basic
    2.52       3.01       0.40  
Diluted
    2.46       2.98       0.39  
Weighted average number of common shares outstanding:
                       
Basic
    55,031,824       56,175,178       56,175,178  
Diluted
    56,366,314       56,583,148       56,583,148  

     

    Notes:

1.   The conversion of RMB amounts into USD amounts is based on the noon buying rate of USD1.00=RMB7.6120 on June 29, 2007 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.

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51job, Inc.
Consolidated Balance Sheets

                         
    December 31,   June 30,   June 30,
    2006   2007   2007
(In thousands, except share data)   (audited)   (unaudited)   (unaudited)
 
  RMB   RMB   USD (Note 1)
ASSETS
                       
Current assets:
                       
Cash
    868,698       959,152       126,005  
Accounts receivable (net of allowance of RMB2,612 and RMB4,121 as of December 31, 2006 and June 30, 2007, respectively)
    28,431       42,271       5,553  
Prepayments and other current assets
    18,064       16,862       2,215  
Deferred tax assets, current
    4,383       4,121       541  
Total current assets
    919,576       1,022,406       134,314  
Property and equipment
    194,315       195,177       25,641  
Intangible assets
    9,363       8,025       1,054  
Other long-term assets
    3,857       3,820       502  
Deferred tax assets, non-current
    504       1,146       151  
Total assets
    1,127,615       1,230,574       161,662  
LIABILITIES
                       
Current liabilities:
                       
Accounts payable
    9,692       15,689       2,061  
Due to related parties
    464       219       29  
Salary and employee related accrual
    26,677       20,377       2,677  
Taxes payable
    23,751       28,285       3,716  
Advance from customers
    57,930       76,887       10,101  
Other payables and accruals
    20,561       21,135       2,777  
Total current liabilities
    139,075       162,592       21,361  
Deferred tax liabilities, non-current
    122       246       31  
Total liabilities
    139,197       162,838       21,392  
Commitments and contingencies
                     
Shareholders’ equity:
                       
Common shares (US$0.0001 par value; 500,000,000 shares authorized, 56,119,761 and 56,282,125 shares issued and outstanding as of December 31, 2006 and June 30, 2007, respectively)
    46       47       6  
Additional paid-in capital
    859,899       875,857       115,063  
Statutory reserves
    4,849       4,849       637  
Other comprehensive gain
    261       434       57  
Retained earnings
    123,363       186,549       24,507  
Total shareholders’ equity
    988,418       1,067,736       140,270  
Total liabilities and shareholders’ equity
    1,127,615       1,230,574       161,662  
     
__________
Note 1:
  The conversion of RMB amounts into USD amounts is based on the noon
buying rate of USD1.00=RMB7.6120 on June 29, 2007 in The City of New
York for cable transfers of RMB as certified for customs purposes by
the Federal Reserve Bank of New York.

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