51job, Inc. Reports Second Quarter 2007 Financial Results

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51job, Inc. JOBS, a 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:

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.

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, 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 1-800-475-3716 ( 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.

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