Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2018shares | |
Document and Entity Information | |
Entity Registrant Name | 51JOB, INC. |
Entity Central Index Key | 0001295484 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2018 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | Yes |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Trading Symbol | JOBS |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 61,874,716 |
Document Fiscal Year Focus | 2018 |
Document Fiscal Period Focus | FY |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2018CNY (¥)¥ / sharesshares | Dec. 31, 2017CNY (¥)¥ / sharesshares | Dec. 31, 2016CNY (¥)¥ / sharesshares | |
Revenues: | ||||
Total revenues | $ 550,061 | ¥ 3,781,946 | ¥ 2,881,215 | ¥ 2,372,695 |
Less: Business tax and surcharges | (6,144) | (42,245) | (32,623) | (34,361) |
Net revenues | 543,917 | 3,739,701 | 2,848,592 | 2,338,334 |
Cost of services | (151,082) | (1,038,766) | (763,440) | (663,001) |
Gross profit | 392,835 | 2,700,935 | 2,085,152 | 1,675,333 |
Operating expenses | ||||
Sales and marketing | (174,122) | (1,197,178) | (917,784) | (783,492) |
General and administrative | (51,423) | (353,557) | (296,608) | (280,002) |
Total operating expenses | (225,545) | (1,550,735) | (1,214,392) | (1,063,494) |
Income from operations | 167,290 | 1,150,200 | 870,760 | 611,839 |
Gain (Loss) from foreign currency translation | (16,341) | (112,353) | 3,630 | 238 |
Interest and investment income, net | 16,533 | 113,673 | 77,009 | 58,933 |
Change in fair value of convertible senior notes | 14,410 | 99,079 | (496,175) | (69,439) |
Gain from sale of long-term investments | 8,882 | 61,070 | ||
Other income, net | 25,483 | 175,206 | 87,032 | 98,315 |
Income before income tax expense | 216,257 | 1,486,875 | 542,256 | 699,886 |
Income tax expense | (35,261) | (242,434) | (169,493) | (134,699) |
Net income | 180,996 | 1,244,441 | 372,763 | 565,187 |
Net loss (income) attributable to non-controlling interests | 1,146 | 7,878 | (874) | 791 |
Net income attributable to 51job, Inc. | 182,142 | 1,252,319 | 371,889 | 565,978 |
Other comprehensive income: | ||||
Foreign currency translation adjustments | 102 | 698 | (6,037) | 984 |
Unrealized gain on available-for-sale debt securities, net of tax effect of RMB9,625, RMB36,900 and RMB38,847 in 2016, 2017 and 2018, respectively | 16,950 | 116,540 | 110,702 | 28,876 |
Total comprehensive income | 198,048 | 1,361,679 | 477,428 | 595,047 |
Comprehensive loss (income) attributable to non-controlling interests | 1,146 | 7,878 | (874) | 791 |
Comprehensive income attributable to 51job, Inc | $ 199,194 | ¥ 1,369,557 | ¥ 476,554 | ¥ 595,838 |
Earnings per share: | ||||
- Basic (in CNY and dollars per share) | (per share) | $ 2.97 | ¥ 20.42 | ¥ 6.19 | ¥ 9.74 |
- Diluted (in CNY and dollars per share) | (per share) | $ 2.88 | ¥ 19.82 | ¥ 6.08 | ¥ 9.68 |
Weighted average number of common shares outstanding: | ||||
- Basic (in shares) | 61,318,292 | 61,318,292 | 60,087,306 | 58,132,976 |
- Diluted (in shares) | 63,175,483 | 63,175,483 | 61,150,413 | 58,474,068 |
Online recruitment services | ||||
Revenues: | ||||
Total revenues | $ 353,705 | ¥ 2,431,898 | ¥ 1,871,700 | ¥ 1,547,143 |
Other human resource related revenues | ||||
Revenues: | ||||
Total revenues | $ 196,356 | ¥ 1,350,048 | ¥ 1,009,515 | ¥ 825,552 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Parenthetical) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | |
Unrealized gain on available-for-sale securities, tax effect | ¥ 38,847 | ¥ 36,900 | ¥ 9,625 | |
Share-based compensation | $ (14,571) | (100,183) | (85,968) | (86,070) |
Included in cost of services | ||||
Share-based compensation | (2,373) | (16,316) | (14,029) | (14,080) |
Included in operating expenses - Sales and marketing | ||||
Share-based compensation | (2,040) | (14,026) | (12,060) | (12,104) |
Included in operating expenses - General and administrative | ||||
Share-based compensation | $ (10,854) | ¥ (74,623) | ¥ (59,879) | ¥ (59,886) |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS ¥ in Thousands, $ in Thousands | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) |
Current assets: | |||
Cash | $ 286,285 | ¥ 1,968,351 | ¥ 2,292,476 |
Restricted cash | 839 | 5,770 | 249 |
Short-term investments | 998,602 | 6,865,886 | 4,839,550 |
Accounts receivable (net of allowance for doubtful accounts of RMB5,384 and RMB11,014 as of December 31, 2017 and 2018, respectively) | 33,462 | 230,065 | 186,861 |
Prepayments and other current assets | 88,273 | 606,918 | 559,105 |
Total current assets | 1,407,461 | 9,676,990 | 7,878,241 |
Non-current assets: | |||
Long-term investments | 106,042 | 729,095 | 433,886 |
Property and equipment, net | 76,652 | 527,020 | 497,845 |
Goodwill | 150,698 | 1,036,124 | 1,021,454 |
Intangible assets, net | 35,553 | 244,446 | 162,024 |
Other long-term assets | 1,416 | 9,736 | 17,370 |
Deferred tax assets | 2,182 | 15,005 | 12,912 |
Total non-current assets | 372,543 | 2,561,426 | 2,145,491 |
Total assets | 1,780,004 | 12,238,416 | 10,023,732 |
Current liabilities (including amounts of the consolidated VIEs and VIEs' subsidiaries without recourse to the primary beneficiaries of RMB62,795 and RMB99,691 as of December 31, 2017 and 2018, respectively): | |||
Accounts payable | 7,255 | 49,881 | 35,532 |
Salary and employee related accrual | 23,872 | 164,134 | 134,966 |
Taxes payable | 27,895 | 191,793 | 230,734 |
Advance from customers | 163,814 | 1,126,300 | 937,981 |
Convertible senior notes, current | 250,917 | 1,725,182 | |
Other payables and accruals | 138,489 | 952,178 | 703,441 |
Total current liabilities | 612,242 | 4,209,468 | 2,042,654 |
Non-current liabilities (including amounts of the consolidated VIEs and VIEs' subsidiaries without recourse to the primary beneficiaries of RMB49,860 and RMB114,897 as of December 31, 2017 and 2018, respectively): | |||
Deferred tax liabilities | 30,653 | 210,752 | 121,348 |
Convertible senior notes, non-current | 1,667,967 | ||
Total non-current liabilities | 30,653 | 210,752 | 1,789,315 |
Total liabilities | 642,895 | 4,420,220 | 3,831,969 |
Commitments and contingencies | |||
Mezzanine equity: | |||
Redeemable non-controlling interests | 32,818 | 225,645 | 228,230 |
Shareholders' equity: | |||
Common shares (US$0.0001 par value per share; 500,000,000 shares authorized, 61,853,004 and 61,874,716 shares issued and outstanding as of December 31, 2017 and 2018, respectively) | 7 | 50 | 50 |
Additional paid-in capital | 298,893 | 2,055,036 | 1,809,732 |
Statutory reserves | 2,513 | 17,279 | 13,874 |
Accumulated other comprehensive income | 36,970 | 254,185 | 136,947 |
Retained earnings | 762,518 | 5,242,691 | 3,993,777 |
Total 51job, Inc. shareholders' equity | 1,100,901 | 7,569,241 | 5,954,380 |
Non-controlling interests | 3,390 | 23,310 | 9,153 |
Total equity | 1,104,291 | 7,592,551 | 5,963,533 |
Total liabilities, mezzanine equity and equity | $ 1,780,004 | ¥ 12,238,416 | ¥ 10,023,732 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) ¥ in Thousands | Dec. 31, 2018$ / shares | Dec. 31, 2018CNY (¥)shares | Dec. 31, 2017$ / shares | Dec. 31, 2017CNY (¥)shares |
CONSOLIDATED BALANCE SHEETS | ||||
Allowance for doubtful accounts receivable | ¥ | ¥ 11,014 | ¥ 5,384 | ||
Amounts of the current liabilities of the consolidated VIEs and VIEs' subsidiaries without recourse to the primary beneficiaries | ¥ | 99,691 | 62,795 | ||
Amounts of the non-current liabilities of the consolidated VIEs and VIEs' subsidiaries without recourse to the primary beneficiaries | ¥ | ¥ 114,897 | ¥ 49,860 | ||
Par value per common share (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||
Common shares, shares authorized | shares | 500,000,000 | 500,000,000 | ||
Common shares, shares issued | shares | 61,874,716 | 61,853,004 | ||
Common shares, shares outstanding | shares | 61,874,716 | 61,853,004 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY ¥ in Thousands, $ in Thousands | Total 51job, Inc. shareholders' equityUSD ($) | Total 51job, Inc. shareholders' equityCNY (¥) | Common sharesUSD ($)shares | Common sharesCNY (¥)shares | Additional paid-in capitalUSD ($) | Additional paid-in capitalCNY (¥) | Statutory reservesUSD ($) | Statutory reservesCNY (¥) | Accumulated other comprehensive incomeUSD ($) | Accumulated other comprehensive incomeCNY (¥) | Retained earningsUSD ($) | Retained earningsCNY (¥) | Non-controlling interestsUSD ($) | Non-controlling interestsCNY (¥) | USD ($)shares | CNY (¥)shares |
Balance at Dec. 31, 2015 | ¥ 4,125,042 | ¥ 48 | ¥ 1,052,788 | ¥ 13,232 | ¥ 2,422 | ¥ 3,056,552 | ¥ 9,070 | ¥ 4,134,112 | ||||||||
Balance (in shares) at Dec. 31, 2015 | shares | 58,944,631 | 58,944,631 | ||||||||||||||
Exercise of share options | 160,493 | ¥ 1 | 160,492 | ¥ 160,493 | ||||||||||||
Exercise of share options (in shares) | shares | 1,117,754 | 1,117,754 | 1,117,754 | 1,117,754 | ||||||||||||
Share-based compensation | 86,070 | 86,070 | ¥ 86,070 | |||||||||||||
Appropriation of statutory reserves | 128 | (128) | ||||||||||||||
Foreign currency translation adjustments | 984 | 984 | 984 | |||||||||||||
Unrealized gain on available-for-sale debt securities, net of tax effect of RMB9,625, RMB36,900 and RMB38,847 in 2016, 2017 and 2018, respectively | 28,876 | 28,876 | 28,876 | |||||||||||||
Net income (loss) | 565,978 | 565,978 | (791) | 565,187 | ||||||||||||
Balance at Dec. 31, 2016 | 4,967,443 | ¥ 49 | 1,299,350 | 13,360 | 32,282 | 3,622,402 | 8,279 | 4,975,722 | ||||||||
Balance (in shares) at Dec. 31, 2016 | shares | 60,062,385 | 60,062,385 | ||||||||||||||
Exercise of share options | 424,450 | ¥ 1 | 424,449 | ¥ 424,450 | ||||||||||||
Exercise of share options (in shares) | shares | 2,147,819 | 2,147,819 | 2,147,819 | 2,147,819 | ||||||||||||
Share-based compensation | 85,968 | 85,968 | ¥ 85,968 | |||||||||||||
Settlement of zero-strike call options and retirement of common shares | (35) | ¥ 0 | (35) | (35) | ||||||||||||
Settlement of zero-strike call options and retirement of common shares (in shares) | shares | (357,200) | (357,200) | ||||||||||||||
Appropriation of statutory reserves | 514 | (514) | ||||||||||||||
Foreign currency translation adjustments | (6,037) | (6,037) | (6,037) | |||||||||||||
Unrealized gain on available-for-sale debt securities, net of tax effect of RMB9,625, RMB36,900 and RMB38,847 in 2016, 2017 and 2018, respectively | 110,702 | 110,702 | 110,702 | |||||||||||||
Net income (loss) | 371,889 | 371,889 | 874 | 372,763 | ||||||||||||
Balance at Dec. 31, 2017 | 5,954,380 | ¥ 50 | 1,809,732 | 13,874 | 136,947 | 3,993,777 | 9,153 | ¥ 5,963,533 | ||||||||
Balance (in shares) at Dec. 31, 2017 | shares | 61,853,004 | 61,853,004 | 61,853,004 | 61,853,004 | ||||||||||||
Exercise of share options | 145,196 | ¥ 0 | 145,196 | ¥ 145,196 | ||||||||||||
Exercise of share options (in shares) | shares | 752,814 | 752,814 | 752,814 | 752,814 | ||||||||||||
Share-based compensation | 100,183 | 100,183 | 11,539 | ¥ 111,722 | ||||||||||||
Settlement of zero-strike call options and retirement of common shares | (75) | ¥ 0 | (75) | (75) | ||||||||||||
Settlement of zero-strike call options and retirement of common shares (in shares) | shares | (731,102) | (731,102) | ||||||||||||||
Appropriation of statutory reserves | 3,405 | (3,405) | ||||||||||||||
Foreign currency translation adjustments | 698 | 698 | $ 102 | 698 | ||||||||||||
Unrealized gain on available-for-sale debt securities, net of tax effect of RMB9,625, RMB36,900 and RMB38,847 in 2016, 2017 and 2018, respectively | 116,540 | 116,540 | 16,950 | 116,540 | ||||||||||||
Net income (loss) | 1,252,319 | 1,252,319 | 2,618 | 180,996 | 1,244,441 | |||||||||||
Net income | 1,254,937 | |||||||||||||||
Balance at Dec. 31, 2018 | $ 1,100,901 | ¥ 7,569,241 | $ 7 | ¥ 50 | $ 298,893 | ¥ 2,055,036 | $ 2,513 | ¥ 17,279 | $ 36,970 | ¥ 254,185 | $ 762,518 | ¥ 5,242,691 | $ 3,390 | ¥ 23,310 | $ 1,104,291 | ¥ 7,592,551 |
Balance (in shares) at Dec. 31, 2018 | shares | 61,874,716 | 61,874,716 | 61,874,716 | 61,874,716 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | |||
Unrealized gain on available-for-sale securities, tax effect | ¥ 38,847 | ¥ 36,900 | ¥ 9,625 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | |
Cash flows from operating activities: | ||||
Net income for the year | $ 180,996 | ¥ 1,244,441 | ¥ 372,763 | ¥ 565,187 |
Adjustments for: | ||||
Share-based compensation | 15,267 | 104,965 | 85,968 | 86,070 |
Depreciation | 8,297 | 57,044 | 53,422 | 53,754 |
Amortization of intangible assets | 5,603 | 38,525 | 10,245 | 9,022 |
Allowance for doubtful accounts | 1,543 | 10,607 | 15,394 | 7,548 |
Loss due to disposal of fixed assets | 33 | 225 | 690 | 122 |
Loss (Gain) from foreign currency translation | 16,341 | 112,351 | (2,248) | 14,749 |
Change in fair value of convertible senior notes | (14,410) | (99,079) | 496,175 | 69,439 |
Gain from sale of long-term investments | (8,882) | (61,070) | ||
Income from equity method investments | (352) | (2,417) | ||
Deferred tax expense | 2,695 | 18,531 | 12,787 | 14,419 |
Changes in operating assets and liabilities, net of effects of acquisition: | ||||
Increase in accounts receivable | (7,986) | (54,905) | (74,356) | (20,071) |
Increase in prepayments and other current assets | (6,795) | (46,719) | (35,128) | (31,686) |
Increase in accounts payable | 2,176 | 14,958 | 2,565 | 7,474 |
Increase in salary and employee related accrual | 4,242 | 29,168 | 18,087 | 19,374 |
Increase (Decrease) in taxes payable | (6,620) | (45,519) | 74,423 | 41,624 |
Increase in advance from customers | 27,390 | 188,319 | 234,523 | 91,795 |
Increase in other payables and accruals | 40,125 | 275,883 | 183,530 | 148,062 |
Decrease (Increase) in other long-term assets | 1,110 | 7,634 | (7,277) | (2,675) |
Net cash provided by operating activities | 260,773 | 1,792,942 | 1,441,563 | 1,074,207 |
Cash flows from investing activities: | ||||
Purchase of short-term investments | (291,648) | (2,005,226) | (576,452) | (305,823) |
Cash paid for long-term investments other than available-for-sale debt securities | (22,811) | (156,835) | (97,267) | (1,000) |
Cash paid for acquisitions, net of cash acquired | (4,061) | (27,923) | (734,895) | (8,450) |
Cash paid for available-for-sale debt securities | (126,716) | |||
Cash received from sale of available-for-sale debt securities | 11,708 | 80,500 | ||
Purchase of property and equipment | (12,661) | (87,053) | (23,655) | (20,328) |
Purchase of intangible assets | (12,168) | (83,660) | (1,987) | (26,276) |
Purchase of other long-term assets | (735) | |||
Net cash used in investing activities | (331,641) | (2,280,197) | (1,434,256) | (489,328) |
Cash flows from financing activities: | ||||
Settlement of zero-strike call options and retirement of common shares | (11) | (75) | (35) | |
Proceeds from the exercise of share options | 21,118 | 145,196 | 424,450 | 160,493 |
Net cash provided by financing activities | 21,107 | 145,121 | 424,415 | 160,493 |
Effect of foreign exchange rate changes on cash and restricted cash | 3,422 | 23,530 | (60,460) | 37,680 |
Net increase (decrease) in cash and restricted cash | (46,339) | (318,604) | 371,262 | 783,052 |
Cash and restricted cash, beginning of year | 333,463 | 2,292,725 | 1,921,463 | 1,138,411 |
Cash and restricted cash, end of year | 287,124 | 1,974,121 | 2,292,725 | 1,921,463 |
Supplemental disclosure of cash flow information: | ||||
Cash paid during the years for income taxes | 33,184 | 228,158 | 121,929 | 107,239 |
Cash paid for interest, net of amounts capitalized | 5,353 | 36,807 | 38,377 | 36,773 |
Supplemental disclosure of non-cash investing activities: | ||||
Accrual related to purchase of property, equipment and software | (1,133) | (7,789) | (1,043) | (2,405) |
Unpaid cash consideration for business combinations | (27,923) | (8,450) | ||
Supplemental disclosure of non-cash financing activities: | ||||
Restricted cash and payables related to the exercise of share options, end of year | $ 839 | ¥ 5,770 | ¥ 249 | ¥ 389 |
ORGANIZATION AND NATURE OF OPER
ORGANIZATION AND NATURE OF OPERATIONS | 12 Months Ended |
Dec. 31, 2018 | |
ORGANIZATION AND NATURE OF OPERATIONS | |
ORGANIZATION AND NATURE OF OPERATIONS | 1. ORGANIZATION AND NATURE OF OPERATIONS The accompanying consolidated financial statements include the financial statements of 51job, Inc. (the “Company”), which was incorporated in the Cayman Islands in March 2000, its subsidiaries and certain variable interest entities (“VIEs”). The Company, its subsidiaries and VIEs are hereinafter collectively referred to as the “Group.” The Group is an integrated human resource services provider in the People’s Republic of China (the “PRC” or “China”) and is principally engaged in Internet-based recruitment services. The Group also provides other human resource related services, such as business process outsourcing, campus recruitment, training, assessment and placement services. |
PRINCIPAL ACCOUNTING POLICIES
PRINCIPAL ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2018 | |
PRINCIPAL ACCOUNTING POLICIES | |
PRINCIPAL ACCOUNTING POLICIES | 2. PRINCIPAL ACCOUNTING POLICIES (a) Basis of Presentation and Use of Estimates The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenues and expenses during the reported years. Management’s significant estimates include those related to allowances for accounts receivable, allowances for prepayments and other current assets, estimated useful lives of property and equipment and intangible assets, fair values of options to purchase the Company’s common shares, fair values of financial instruments, impairment of long-lived assets, long-term investments and goodwill, the purchase price allocation and fair value of non-controlling interests with respect to business combinations, and deferred tax valuation allowance. Management bases the estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may materially differ from those estimates. (b) Basis of Consolidation The consolidated financial statements include the financial statements of the Company, its subsidiaries and the VIEs of which the Company is the primary beneficiary. All significant transactions and balances between the Company, its subsidiaries and the VIEs have been eliminated upon consolidation. A subsidiary is an entity in which the Company, directly or indirectly, controls more than one half of the voting power; has the power to appoint or remove the majority of the members of the board of directors; to cast majority of votes at the meeting of the board of directors; or to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. The Company has adopted Accounting Standards Codification (“ASC”) 810 “Consolidation” for all periods presented. It requires a VIE to be consolidated by the reporting entity that has a controlling financial interest in the VIE, and thus is the VIE's primary beneficiary. An entity is considered to be a VIE if certain conditions are present, such as if the equity investors in the entity do not have the characteristics of a controlling financial interest or the entity does not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. In determining whether the Company or its subsidiary has a controlling financial interest in a VIE, the Company considered whether the Company or its subsidiaries have the power to direct activities that most significantly impact the VIE’s economic performance, including the power to appoint senior management, right to direct company strategy, power to approve capital expenditure budgets, power to establish and manage ordinary business operation procedures and internal regulations and systems, and the right to receive benefits from the VIE that could potentially be significant to the VIE or the obligation to absorb losses of the VIE that could potentially be significant to the VIE. The Company’s subsidiaries include the following: · 51net.com Inc. (“51net”), incorporated in the British Virgin Islands in August 1999, which is wholly owned by the Company; · 51net Beijing, incorporated in the Cayman Islands in April 2000, which wholly owns Qian Cheng Wu You Network Information Technology (Beijing) Co., Ltd. (“WFOE”), incorporated in the PRC in July 2000, which is wholly owned by the Company; · 51net HR, incorporated in the Cayman Islands in April 2000, which owns 70% of Shanghai Wang Ju Human Resource Consulting Co., Ltd. (“Wang Ju”), incorporated in the PRC in October 2006, which is wholly owned by the Company; and · Lagou Information Limited ("Lagou"), incorporated in the Cayman Islands in December 2013, which was acquired and became 66% owned by the Company in December 2017. 51net’s principal subsidiaries include the following: · Qianjin Network Information Technology (Shanghai) Co., Ltd. (“Tech JV”), incorporated in the PRC in January 2000, which is 50% owned by 51net; · Wang Jin Information Technology (Shanghai) Co., Ltd. (“Wang Jin”), incorporated in the PRC in June 2004, which is wholly owned by 51net; · Shanghai Wang Ju Advertising Co., Ltd., incorporated in the PRC in June 2007, which is wholly owned by 51net; and · Wuhan Wang Cai Information Technology Co., Ltd., incorporated in the PRC in December 2009, which is wholly owned by Wang Jin. Tech JV’s principal subsidiaries include the following: · Shanghai Qianjin Advertising Co., Ltd. (“AdCo”), incorporated in the PRC in June 2001, which is 80% owned by Tech JV; · Shanghai Wang Cai Advertising Co., Ltd., incorporated in the PRC in April 2005, which is jointly owned by Tech JV and AdCo; · Shanghai Qianjin Zhong Cheng Human Resources Co., Ltd., incorporated in the PRC in December 2010; which is wholly owned by Tech JV; · Shanghai Yishu Information Technology Co., Ltd., incorporated in the PRC in May 2007; which was acquired and became wholly owned by Tech JV in April 2015; and · Beijing Zhiding Youyuan Management Consulting Co., Ltd., incorporated in the PRC in September 2010, which was acquired and became 60% owned by Tech JV in June 2015. The Group’s VIEs and the VIEs’ principal subsidiaries include the following: · Beijing Run An Information Consultancy Co., Ltd. (“Run An”), incorporated in the PRC in January 1997, which wholly owns Beijing Qian Cheng Si Jin Advertising Co., Ltd. (“Qian Cheng”), owns 30% of Wang Ju, and owns 60% of Beijing Lagou Network Information Technology Co, Ltd., incorporated in the PRC in March 2013 and acquired by Run An in December 2017; and · Qian Cheng, incorporated in the PRC in February 1999, which owns 20% of AdCo and effectively owns 50% of Tech JV by direct and indirect ownership through Qian Cheng’s wholly owned subsidiary Wuhan Mei Hao Qian Cheng Advertising Co., Ltd. (“Wuhan AdCo”), incorporated in the PRC in August 2001. As of December 31, 2018 and for all years presented, the Company is the primary beneficiary of two VIEs, Run An and Qian Cheng, which were in existence prior to the establishment of the Company and are considered predecessors of the Group. The Company does not have any direct equity ownership in the VIEs and the VIEs’ subsidiaries, but through certain arrangements as described below, the Company receives all of the economic benefits, absorbs all of the expected losses and has the power to direct activities that are significant to the VIEs. In addition, through a call option agreement between 51net and Qian Cheng, 51net is able to purchase the equity interests in Tech JV that are held by Qian Cheng and Wuhan AdCo as well as the equity interests in AdCo and its subsidiaries that are held by Qian Cheng. As a result, Run An, Qian Cheng and all of Tech JV and AdCo are included in the consolidated financial statements, and the Company effectively holds all of the equity interests in its subsidiaries including the VIEs. Run An holds a human resource service permit issued by the Beijing human resources and social security bureau which allows it to provide recruitment, training and human resource consulting services. Run An is jointly owned by two long-time members of the Company’s senior management team, Jingwu Chen and Tao Wang. As of December 31, 2018, the registered capital of Run An was RMB6,000 and its retained earnings were RMB20,047. Qian Cheng holds a business license to provide advertising services. Qian Cheng is wholly owned by Run An. As of December 31, 2018, the registered capital of Qian Cheng was RMB1,500 and its retained earnings were RMB4,731. As the consolidated VIEs are incorporated as limited liability companies under the PRC Company Law, creditors of the VIEs do not have recourse to the general credit of the Company. Currently, there is no contractual arrangement that could require the Company to provide additional financial support to the consolidated VIEs, but the Company may provide such support on a discretionary basis in the future, which could expose the Company to loss. The Group has entered into various agreements as related to its VIEs. The key provisions of the agreements with the Company or its subsidiaries and the VIEs or its shareholders are as follows: Technical and Consulting Service Agreements. WFOE has entered into technical and consulting service agreements with Run An and Qian Cheng, respectively, under which WFOE has the exclusive right, subject to certain exceptions, to provide technical services to Run An and Qian Cheng for service fees. WFOE did not issue any invoices to either Run An or Qian Cheng, and neither Run An nor Qian Cheng paid any fees to WFOE for the years ended December 31, 2016, 2017 and 2018. The technical and consulting service agreements with WFOE are valid to September 11, 2027 under the Run An agreement and valid to May 2, 2034 under the Qian Cheng agreement, and can only be terminated by WFOE during the term. Such term is renewable upon written consent of the parties. Although the renewal is upon mutual consent, WFOE may, through its power of attorney, direct Run An and, through Run An, cause Qian Cheng to renew the technical and consulting service agreements upon expiration. Equity Pledge Agreement. As security for the obligations of Run An under the technical and consulting service agreement and the obligations of Run An and its shareholders under the exclusive purchase option agreement described below, the shareholders of Run An have pledged all of their equity interest in Run An to WFOE. According to the pledge agreement, WFOE has the right to dispose of the pledged equity pursuant to PRC law in the event of default by Run An or its shareholders as provided in the pledge agreement. Additionally, the shareholders of Run An have agreed that they will not dispose of the pledged equity or take any actions that will prejudice WFOE’s interest under the equity pledge agreement. The equity pledge agreement among WFOE, Run An and its shareholders was entered into on September 4, 2017 and shall expire two years after the fulfillment of all obligations under the Run An technical and consulting service agreement and the exclusive purchase option agreement. This pledge agreement, in combination with the exclusive purchase option agreement, contains content that is substantially the same as the pledge agreements entered into between WFOE and Run An’s shareholders in September 2007 and January 2014, and between WFOE and Qian Cheng’s shareholders in May 2004. The pledge of the equity interest by the shareholders of Run An to WFOE has been registered with the relevant bureau of the State Administration for Industry and Commerce (currently known as the PRC State Administration for Market Regulation). Exclusive Purchase Option Agreement. WFOE has entered into an exclusive purchase option agreement with the shareholders of Run An, dated as of January 27, 2014, and supplemented and amended as of September 4, 2017, under which WFOE or its designee is granted an irrevocable option to purchase all or a portion of the equity interests in Run An at any time by issuing a written notice to the shareholders, subject to compliance with applicable PRC laws and regulations. The purchase price shall be equal to the contribution actually made by the shareholder for his equity interest in Run An. If the lowest price permitted under PRC law is above the contribution actually made by the shareholder, the premium shall be paid to Tech JV in accordance with the terms of the loan agreements described below. The exclusive purchase option agreement has the same term as the Run An technical and consulting service agreement. WFOE also has the exclusive right to terminate the agreement at any time by delivering a written notice to the shareholders of Run An. Powers of Attorney. In conjunction with the signing of the equity pledge agreement and the exclusive purchase option agreement, each of the shareholders of Run An has signed an irrevocable power of attorney to appoint WFOE, as attorney‑in‑fact to vote, by itself or any other person to be designated at its discretion, on all matters of Run An that need to be decided by its shareholders. Because Qian Cheng is a wholly owned subsidiary of Run An and Wuhan AdCo is a wholly owned subsidiary of Qian Cheng, through controlling all material matters of Run An (including but not limited to all material operational matters and the appointment and removal of directors and senior management), WFOE also has indirect control on all material matters of Qian Cheng and Wuhan AdCo. Each power of attorney was entered into on January 27, 2014, and supplemented and amended as of September 4, 2017, and will remain effective for as long as Run An exists. The shareholders of Run An are not entitled to terminate or amend the terms of the power of attorney without prior written consent from WFOE. Loan Agreements. Tech JV has entered into loan agreements dated as of September 11, 2007, and supplemented and amended as of September 4, 2017, for an aggregate amount of RMB6,000 with the shareholders of Run An, with the sole and exclusive purpose to fund the capitalization of Run An. The loans can be repaid only with the proceeds received from the transfer of the shareholders’ equity interest in Run An to Tech JV or its designee. The interest‑free loan agreements are valid to September 11, 2027, and the term may be extended upon written consent of the parties. Call Option Agreement. 51net has entered into a call option agreement with Qian Cheng dated as of August 1, 2002, and supplemented and amended as of May 3, 2004 and August 1, 2012, under which 51net or its designee is granted an irrevocable option to purchase all of Qian Cheng’s equity interest in Tech JV and AdCo for RMB1,200 or, if such purchase price is not permissible under applicable PRC laws, the lowest price permitted under then applicable PRC laws. In addition, Qian Cheng granted 51net an irrevocable option to purchase any and all of its equity interests in the subsidiaries of AdCo at the lowest price permitted under PRC laws. The call option agreement is valid to July 31, 2022, and the term may be extended upon written consent of the parties. Management monitors the regulatory risk associated with these contractual arrangements. The Company’s PRC legal counsel has advised management that these contractual arrangements are not in violation of existing PRC laws, rules and regulations in all material aspects. Based on such advice and management’s knowledge and experience, the Company believes that its contractual arrangements with its consolidated VIEs and their shareholders are valid, legally binding and in compliance with current PRC laws. However, there are substantial uncertainties regarding the interpretation and application of current or future PRC laws, rules and regulations that could limit the Company’s ability to enforce these contractual arrangements. See Note 18 for further discussion. Summary financial information of the Group’s VIEs and the VIEs’ subsidiaries included in the consolidated financial statements is as follows: As of December 31, 2017 2018 RMB RMB Total assets 268,484 521,044 Total liabilities 112,655 214,588 For the year ended December 31, 2016 2017 2018 RMB RMB RMB Total revenues — — 161,816 Net income (loss) (2,300) (4,088) 18,406 For the year ended December 31, 2016 2017 2018 RMB RMB RMB Net cash provided by (used in) operating activities 1,257 (7,131) 5,855 Net cash provided by (used in) investing activities (126,716) 4,152 (83,936) Net cash provided by financing activities 126,745 3,334 157,500 Net increase in cash 1,286 355 78,919 Cash, beginning of year 6,241 7,527 7,882 Cash, end of year 7,527 7,882 86,801 (c) Foreign Currencies The Group’s functional and reporting currency is the Renminbi (“RMB”). Transactions denominated in currencies other than RMB are translated into RMB at the exchange rates quoted by the People’s Bank of China prevailing at the dates of the transactions. Gains and losses resulting from foreign currency transactions are included in the consolidated statements of operations and comprehensive income. Monetary assets and liabilities denominated in foreign currencies are translated into RMB using the applicable exchange rates quoted by the People’s Bank of China at the balance sheet dates. All such exchange gains and losses are included in the consolidated statements of operations and comprehensive income. The exchange differences for translation of group companies’ balances where RMB is not their functional currency are included in cumulative translation adjustments, which is a separate component of shareholders’ equity in the consolidated financial statements. The unaudited United States dollar (“US$”) amounts disclosed in the accompanying financial statements are presented solely for the convenience of the readers. Translations of amounts from RMB into US$ for the convenience of the reader were calculated at the rate of US$1.00 = RMB6.8755 on December 31, 2018, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on December 31, 2018, or at any other rate. (d) Cash and Restricted Cash Cash represents cash on hand and demand deposits placed with banks or other financial institutions. Restricted cash represents cash proceeds from the exercise of share options by the Company’s employees, executives and directors held in a bank account which have yet to be transmitted to them. The following table reconciles cash and restricted cash as reported on the consolidated balance sheets as of December 31, 2017 and 2018, to the amounts presented in the consolidated statements of cash flows: 2017 2018 RMB RMB Cash 2,292,476 1,968,351 Restricted cash 249 5,770 Total cash and restricted cash 2,292,725 1,974,121 Included in the cash and restricted cash balances as of December 31, 2017 and 2018 are amounts denominated in United States dollars totaling US$125,450 and US$135,668, respectively (equivalent to approximately RMB819,715 and RMB931,120, based on the RMB to US$ exchange rate quoted by the People’s Bank of China on December 29, 2017 and December 28, 2018, respectively). The Group receives substantially all of its revenues in RMB, which currently is neither a freely convertible currency nor can it be freely remitted out of China. (e) Accounts Receivable Accounts receivable is presented net of allowance for doubtful accounts. The Company provides general and specific provisions for bad debts when facts and circumstances indicate that the receivable is unlikely to be collected. If the financial condition of its customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. (f) Investments The Group’s short‑term investments consist of time deposits with original maturities between three months and one year with banks in the PRC and Hong Kong, and investment products issued by financial institutions in the PRC with a variable interest rate indexed to the performance of underlying assets. The Group’s long-term investments consist of equity securities without readily determinable fair values, equity method investments and available-for-sale debt securities. Equity Securities without Readily Determinable Fair Values Equity securities without readily determinable fair values are measured and recorded using a measurement alternative that measures the securities at cost less impairment, if any, plus or minus changes resulting from qualifying observable price changes. Prior to January 1, 2018, these securities were accounted for using the cost method of accounting, measured at cost less other-than-temporary impairment. No other-than-temporary impairment charge was incurred in the years ended December 31, 2016 and 2017. No qualifying observable price changes were noted in the year ended December 31, 2018. The Group’s investments in equity securities without readily determinable fair values primarily consist of a number of small, non-controlling equity investments in companies that provide services related to the Group’s operations or the overall human resources industry. In the year ended December 31, 2017, the Group made long-term investments including RMB96,967 for a 9.5% equity interest in a mobile-based platform focused on short-term, on-demand work opportunities in the United States and a total of RMB300 for a 5.0% equity interest in each of three companies that provide business process outsourcing services in China. In the year ended December 31, 2018, the Group made long-term investments including RMB31,535 for a 14.3% equity interest in a technology talent assessment services provider in the United States, RMB25,000 for a 18.0% equity interest in a human resource consulting and executive search services company in China, and a total of RMB300 for a 5.0% equity interest in each of three companies that provide business process outsourcing services in China. Equity Method Investments For investees over which the Group does have the ability to exercise significant influence, but does not have a controlling interest, the Group accounts for these investments under the equity method. Under the equity method, the Group initially records investments at cost and subsequently recognizes proportionate share of each equity investee’s change in fair value in the consolidated statements of operations and comprehensive income and accordingly adjusts the carrying amount of the investment. An impairment charge is recorded if the carrying amount of the investment exceeds its fair value and this condition is determined to be other-than-temporary. In the year ended December 31, 2018, the Group made an equity method investment of RMB75,000 for a 5.0% equity interest in an investment fund partnership as a limited partner. The Group also entered into an agreement in the amount of RMB50,000 for a 25.0% equity interest in another investment fund partnership as a limited partner, of which RMB25,000 was paid in the year ended December 31, 2018 and a remaining balance of RMB25,000 will be paid in 2019. Both funds are focused on exploring opportunities and making investments in companies that primarily provide services in the education and training market in China. No other-than-temporary impairment charge was incurred in the year ended December 31, 2018. Available-for-Sale Debt Securities Debt securities that the Group has the intent to hold for an indefinite period are classified as available-for-sale and reported at fair value. Unrealized gains and losses (other than impairment losses) are reported, net of the related tax effect, in other comprehensive income. Upon sale, realized gains and losses are reported in net income. The Group monitors these investments for other-than-temporary impairment by considering factors including, but not limited to, current economic and market conditions, the operating performance of the companies including current earnings trends and other company-specific information. In September 2016, the Group completed an investment of RMB126,716 for a 15.0% equity interest in Shanghai Gaodun Education & Training Co., Ltd. (“Golden Finance”), a provider of online and offline accounting and finance training courses in China. The Group’s shares in Golden Finance have liquidation preference, and the Group has a right to demand redemption of its investment. Accordingly, due to the redemption option available to the Group, the Golden Finance investment was determined to be a debt, which was classified as available-for-sale debt security measured at fair value. Unrealized gain net of tax of RMB110,702 and RMB116,540 associated with the Golden Finance investment was included in accumulated other comprehensive income in the years ended December 31, 2017 and 2018, respectively. In 2018, the Company realized a gain of RMB61,070 from the sale of some shares of Golden Finance, and as of December 31, 2018, the Group's equity interest in Golden Finance was 11.7%. (g) Property and Equipment Property and equipment are stated at cost less accumulated depreciation and impairment if applicable. Repairs and maintenance costs are charged to operating expenses as incurred, whereas the costs of renewals and betterment that extends the useful lives of property and equipment are capitalized as additions to the related assets. Depreciation is calculated on a straight‑line basis to allocate the cost of the assets to their estimated residual value over the following estimated useful lives: Estimated useful lives Land use rights 32.42 to 50 years Building 20 years Leasehold improvements Lesser of the lease period or the estimated useful life Electronic equipment 3 to 5 years Furniture and fixtures 5 years Motor vehicles 5 years Other assets 5 years (h) Business Combinations U.S. GAAP requires that all business combinations not involving entities or businesses under common control be accounted for under the purchase method. The Group has adopted ASC 805 “Business Combinations,” and the cost of an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred and equity instruments issued. The transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of the (i) the total of cost of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the consolidated statements of operations and comprehensive income. The determination and allocation of fair values to the identifiable assets acquired and liabilities assumed is based on various assumptions and valuation methodologies requiring considerable management judgment. The most significant variables in these valuations are discount rates, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to forecast the future cash inflows and outflows. Management determines discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons. Although management believes that the assumptions applied in the determination are reasonable based on information available at the date of acquisition, actual results may differ from the forecasted amounts and the difference could be material. A non-controlling interest is recognized to reflect the portion of a subsidiary's equity which is not attributable, directly or indirectly, to the Company. When the non-controlling interest is contingently redeemable upon the occurrence of a conditional event, which is not solely within the control of the Company, the non-controlling interest is classified as mezzanine equity. Consolidated net income on the consolidated statements of operations and comprehensive income includes the net income (loss) attributable to non-controlling interests and mezzanine equity holders when applicable. Net income (loss) attributable to mezzanine equity holders is included in net income (loss) attributable to non-controlling interests on the consolidated statements of operations and comprehensive income, while it is excluded from the consolidated statements of changes in shareholders' equity. For the year ended December 31, 2018, net loss attributable to mezzanine equity holders amounted to RMB10,496. The cumulative results of operations attributable to non-controlling interests are also recorded as non-controlling interests in the Company's consolidated balance sheets. Cash flows related to transactions with non-controlling interests are presented under financing activities in the consolidated statements of cash flows when applicable. (i) Goodwill and Intangible Assets Goodwill Goodwill represents the excess of the total cost of the acquisition, the fair value of any non-controlling interests and the acquisition date fair value of any previously held equity interest in the acquiree over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed of the acquired entity as a result of the Company’s acquisitions of interests in its subsidiaries and VIEs. Goodwill is not amortized but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that it might be impaired. The Company first assesses qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. In the qualitative assessment, the Company considers primary factors such as industry and market considerations, overall financial performance of the reporting unit and other specific information related to the operations. Based on the qualitative assessment, if it is more likely than not that the fair value of each reporting unit is less than the carrying amount, the quantitative impairment test is performed. In performing the two-step quantitative impairment test, the first step compares the fair values of each reporting unit to its carrying amount, including goodwill. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. This allocation process is only performed for the purposes of evaluating goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities. Application of a goodwill impairment test requires significant management judgment, including the identification of reporting units, assigning assets, liabilities and goodwill to reporting units, and determining the fair value of each reporting unit. The Company estimates the fair value of the reporting unit using a discounted cash flow model. This valuation approach considers various assumptions including projections of future cash flows, perpetual growth rates and discount rates. The assumptions about future cash flows and growth rates are based on management’s assessment of a number of factors, including the reporting unit’s recent performance against budget, performance in the market that the reporting unit serves, as well as industry and general economic data from third party sources. Discount rate assumptions reflect an assessment of the risk inherent in those future cash flows. Changes to the underlying businesses could affect the future cash flows, which in turn could affect the fair value of the reporting unit. Management performs its annual goodwill impairment test on December 31. No impairment of goodwill was recognized in the years ended December 31, 2016, 2017 and 2018. Intangible Assets Intangible assets purchased and intangible assets arising from acquisitions of subsidiaries are recognized and measured at fair value upon acquisition. The Company’s purchased intangible assets include computer software, acquired technology and licenses, which are amortized on a straight-line basis over their estimated useful lives, ranging from 3 to 10 years. Separately identifiable intangible assets arising from acquisitions cons |
ACQUISITION
ACQUISITION | 12 Months Ended |
Dec. 31, 2018 | |
ACQUISITION | |
ACQUISITION | 3. ACQUISITION Lagou Information Limited In December 2017, to expand its online operations, the Company completed an acquisition of a 66% equity interest in Lagou Information Limited, an entity incorporated in the Cayman Islands. Lagou is the holding company of Beijing Lagou Network Technology Co., Ltd., which owns and operates a recruitment website focused on technology and engineering talent in China. The total purchase price was RMB782,594 and was funded from the Company's existing cash resources. Beginning December 26, 2017, the date of acquisition, Lagou has been fully consolidated into the Group's financial statements. As the acquisition date was just prior to the end of 2017, there was no material contribution from Lagou to the Company's consolidated statement of operations and comprehensive income for the year ended December 31, 2017. The allocation of the purchase price is summarized as follows: RMB Net assets 125,026 Identifiable intangible assets: Trade names 60,183 Technology 35,979 Goodwill 818,730 Deferred tax liabilities (14,424) Redeemable non-controlling interests (242,900) Total 782,594 Neither the results of operations since the acquisition date nor the pro forma results of operations of Lagou have been presented because they were not material to the Company’s consolidated statements of operations and comprehensive income. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2018 | |
ACCOUNTS RECEIVABLE | |
ACCOUNTS RECEIVABLE | 4. ACCOUNTS RECEIVABLE As of December 31, 2017 2018 RMB RMB Accounts receivable 192,245 241,079 Less: Allowance for doubtful accounts (5,384) (11,014) 186,861 230,065 The movement of allowance for doubtful accounts is analyzed as follows: 2016 2017 2018 RMB RMB RMB Balance at beginning of year 3,290 6,144 5,384 Additions 6,705 5,738 11,701 Write-offs (3,851) (6,498) (6,071) Balance at end of year 6,144 5,384 11,014 |
PREPAYMENTS AND OTHER CURRENT A
PREPAYMENTS AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2018 | |
PREPAYMENTS AND OTHER CURRENT ASSETS | |
PREPAYMENTS AND OTHER CURRENT ASSETS | 5. PREPAYMENTS AND OTHER CURRENT ASSETS Components of prepayments and other currents assets as of December 31, 2017 and 2018 are as follows: 2017 2018 RMB RMB Rental and other deposits 3,116 2,766 Prepayments for rental and others 29,799 23,689 Employee advances 9,268 27,136 Payments made on behalf of customers, net of allowance 458,199 472,502 Prepaid insurance premium 1,035 1,158 Interest income receivable 51,374 74,231 Others 6,314 5,436 Total 559,105 606,918 Payments made on behalf of customers are associated with the operations of the Company’s business process outsourcing services. The Company has remitted funds in advance on behalf of its customers for purposes such as monthly customers’ employee benefits, social insurance and payroll payments, which will be reimbursed to the Company in the near term. The Company provides an allowance for payments made on behalf of customers when facts and circumstances indicate that the receivable is unlikely to be collected. The movement of allowance for payments made on behalf of customers is analyzed as follows: 2016 2017 2018 RMB RMB RMB Balance at beginning of year 856 459 3,047 Additions 843 9,656 — Reversals — — (1,094) Write-offs (1,240) (7,068) (562) Balance at end of year 459 3,047 1,391 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2018 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | 6. PROPERTY AND EQUIPMENT Property and equipment and its related accumulated depreciation as of December 31, 2017 and 2018 are as follows: 2017 2018 RMB RMB Land use rights and building 575,443 632,844 Leasehold improvements 35,709 37,994 Electronic equipment 141,787 152,058 Furniture and fixtures 7,194 7,312 Motor vehicles 7,210 8,135 Other assets 49,095 53,747 Less: Accumulated depreciation (318,593) (365,070) Net book value 497,845 527,020 Depreciation expense was RMB53,754, RMB53,422 and RMB57,044 for the years ended December 31, 2016, 2017 and 2018, respectively. Loss due to disposal of fixed assets was RMB122, RMB690 and RMB225 for the years ended December 31, 2016, 2017 and 2018, respectively. |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2018 | |
GOODWILL | |
GOODWILL | 7. GOODWILL The changes in the carrying amount of goodwill for the years ended December 31, 2017 and 2018 are as follows: 2017 2018 RMB RMB Balance at beginning of year 217,394 1,021,454 Acquisition of Lagou 804,060 14,670 Balance at end of year 1,021,454 1,036,124 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2018 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | 8. INTANGIBLE ASSETS Intangible assets and its related accumulated amortization as of December 31, 2017 and 2018 are as follows: 2017 2018 RMB RMB Computer software 31,958 29,156 Acquired technology 60,251 60,251 Trade names 95,783 95,783 Customer relationships 12,270 12,270 Acquired program transmission license — 119,728 Acquired training and other licenses 4,151 4,151 Less: Accumulated amortization (42,389) (76,893) Net book value 162,024 244,446 In 2018, the Company entered into an agreement to acquire the assets of an online training services company, including an online audio/video program transmission license. The transaction was accounted for as an asset acquisition rather than a business combination as the acquiree company did not meet the criteria of a business and substantially all of the fair value of the gross assets acquired would be concentrated in a single asset, which met the criteria to be an asset acquisition under the adopted ASU 2017-01. The total purchase price was RMB89,796 and was funded from the Company’s existing cash resources. A deferred tax liability of RMB29,932 was determined by using a simultaneous equation, and this increased the carrying amount of the program transmission license. As of December 31, 2018, total unpaid consideration amounted to RMB7,355, which will be paid in 2019. Amortization expense was RMB9,022, RMB10,245 and RMB38,525 for the years ended December 31, 2016, 2017 and 2018, respectively. The Company will record estimated amortization expenses of RMB42,342, RMB39,724, RMB38,570, RMB38,124 and RMB30,574 for the years ending December 31, 2019, 2020, 2021, 2022 and 2023, respectively. |
OTHER PAYABLES AND ACCRUALS
OTHER PAYABLES AND ACCRUALS | 12 Months Ended |
Dec. 31, 2018 | |
OTHER PAYABLES AND ACCRUALS | |
OTHER PAYABLES AND ACCRUALS | 9. OTHER PAYABLES AND ACCRUALS Components of other payables and accruals as of December 31, 2017 and 2018 are as follows: 2017 2018 RMB RMB Receipts from customers 580,794 808,799 Payables to customers related to government policy compliance incentives 71,638 114,909 Professional service fees 3,274 3,727 Office expenses 8,636 7,338 Payables to employees related to net proceeds from share options exercised 137 3,217 Accrued interest expense related to convertible senior notes 7,632 8,016 Payable for acquisition 27,923 — Others 3,407 6,172 Total 703,441 952,178 Receipts from customers are associated with the operations of the Company’s business process outsourcing services. The Company has received funds in advance from its customers for purposes such as monthly customers’ employee benefits, social insurance and payroll payments, which will be disbursed by the Company to other parties on behalf of its customers in the near term. |
TAXATION
TAXATION | 12 Months Ended |
Dec. 31, 2018 | |
TAXATION | |
TAXATION | 10. TAXATION Cayman Islands Under the current laws of the Cayman Islands, the Company and its subsidiaries that are incorporated in the Cayman Islands are not subject to tax on income or capital gain. In addition, upon payments of dividends by those companies to their shareholders, no Cayman Islands withholding tax will be imposed. British Virgin Islands Under the current laws of the British Virgin Islands, the Company’s subsidiary that is incorporated in the British Virgin Islands is not subject to tax on income or capital gain. In addition, upon payments of dividends by that company to its shareholders, no British Virgin Islands withholding tax will be imposed. Hong Kong 51net is registered in Hong Kong as a non‑Hong Kong company and is subject to Hong Kong profits tax at a rate of 16.5% on its assessable profit. China The PRC Enterprise Income Tax Law (“EIT Law”), which became effective January 1, 2008, applies a uniform enterprise income tax (“EIT”) rate of 25% to both foreign‑invested enterprises (“FIEs”) and domestic enterprises. In December 2009, Tech JV was designated by relevant local authorities in Shanghai as a “High and New Technology Enterprise” ("HNTE") under the EIT Law. Tech JV became subject to a preferential tax rate of 15%. Tech JV is entitled to this preferential 15% tax rate as long as it maintains the required qualifications, which is subject to review every three years. In 2018, the renewal of Tech JV's preferential tax status valid from 2018 through 2020 was processed without objection. In addition, two PRC subsidiaries of the Group, Beijing Lagou Network Technology Co., Ltd. and Beijing Zhiding Youyuan Management Consulting Co., Ltd., have been designated as HNTEs under the EIT Law, and each of their preferential tax status of 15% is also valid through 2020. The Group's other PRC subsidiaries, VIEs and VIEs' subsidiaries are subject to the statutory EIT rate of 25%. The EIT Law also imposes a 10% withholding income tax (“WHT”) for dividends declared out of the profits earned after January 1, 2008 by a FIE to its immediate holding company outside China. For certain treaty jurisdictions such as Hong Kong which has signed tax treaties with the PRC, the WHT rate is 5%. Since the Company intends to permanently reinvest earnings to further expand its businesses in mainland China, its FIEs do not intend to declare dividends to its immediate foreign holding entities in the foreseeable future. Accordingly, as of December 31, 2018, the Company has not recorded any withholding tax on the retained earnings of its FIEs in China. Cumulative undistributed earnings of the Company’s PRC subsidiaries intended to be permanently reinvested totaled RMB5,324,204 and RMB6,913,897, and the amount of the unrecognized deferred tax liability on the permanently reinvested earnings was RMB532,420 and RMB691,390 as of December 31, 2017 and 2018, respectively. Composition of Income Tax Expense Income (loss) before income tax expense for the years ended December 31, 2016, 2017 and 2018 were taxed within the following jurisdictions: 2016 2017 2018 RMB RMB RMB PRC entities 875,175 1,139,978 1,617,091 Non-PRC entities (175,289) (597,722) (130,216) Total 699,886 542,256 1,486,875 The current and deferred portion of income tax expense included in the consolidated statements of operations and comprehensive income for the years ended December 31, 2016, 2017 and 2018 are as follows: 2016 2017 2018 RMB RMB RMB Current income tax expense PRC entities 120,280 156,706 223,903 Non-PRC entities — — — Total 120,280 156,706 223,903 Deferred income tax expense PRC entities 14,419 12,787 18,531 Non-PRC entities — — — Total 14,419 12,787 18,531 Income tax expense PRC entities 134,699 169,493 242,434 Non-PRC entities — — — Total 169,493 242,434 Reconciliation of the Differences Between Statutory Tax Rate and the Effective Tax Rate Reconciliation between the statutory EIT rate in the PRC and the Group’s effective tax rate for the years ended December 31, 2016, 2017 and 2018 are as follows: 2016 2017 2018 EIT statutory rate 25 % 25 % 25 % Difference in EIT rates of certain subsidiaries (11) % (20) % (11) % Non-deductibility of expenses incurred outside the PRC 6 % 28 % 3 % Other permanent differences (1) % (2) % (1) % Effective EIT rate of the Group 19 % 31 % 16 % Income tax expense differs from the amounts computed by applying the EIT rate primarily due to the preferential tax rate enjoyed by Tech JV in the PRC. The aggregate amount and per share effect of the preferential tax rate for the years ended December 31, 2016, 2017 and 2018 are as follows: 2016 2017 2018 RMB RMB RMB (in thousands, except per share data) Aggregate effect 81,300 107,547 154,182 Basic net income per share effect 1.40 1.79 2.51 Diluted net income per share effect 1.39 1.76 2.44 Significant components of deferred tax assets and liabilities as of December 31, 2017 and 2018 are as follows: 2017 2018 RMB RMB Deductible temporary differences related to other payables and accruals 1,053 1,073 Deductible temporary differences related to provision for doubtful accounts 1,265 1,648 Deductible temporary differences related to advertising expenses 12,076 13,422 Tax loss carryforwards 50,900 49,408 Amount offset by non-current deferred tax liabilities (12,806) (6,633) 52,488 58,918 Less: Valuation allowance (39,576) (43,913) Total deferred tax assets 12,912 15,005 Taxable temporary differences related to depreciation period (6,153) (10,141) Taxable temporary differences related to available-for-sale debt securities (46,526) (85,373) Taxable temporary differences related to government subsidy income (57,995) (75,240) Taxable temporary differences related to trade names, technology and customer relationships (23,480) (20,440) Taxable temporary differences related to acquired program transmission license — (26,191) Amount offset by non-current deferred tax assets 12,806 6,633 Total deferred tax liabilities (121,348) (210,752) All deferred tax assets and liabilities within a single tax jurisdiction are offset and presented as a single amount in accordance with ASC 740-10-45-6 “Income Taxes – Overall – Other Presentation Matters.” The Group has classified all deferred tax assets and liabilities as non-current items on its consolidated balance sheet as of December 31, 2017 and 2018. As of December 31, 2017 and 2018, valuation allowances were provided on the deferred tax assets to the extent that management believed it was more likely than not that such deferred tax assets would not be realized in the foreseeable future. Valuation allowances were also provided because it was more likely than not that the Group will not be able to utilize certain tax loss carryforwards generated by certain subsidiaries or VIEs. As those entities continue to generate tax losses and tax planning strategies are not available to utilize those tax losses in other group companies, management believes it is more likely than not that such losses will not be utilized before they expire. However, certain valuation allowance was reversed in 2016, 2017 and 2018 when certain entities generated sufficient taxable income to utilize the deferred tax assets. If events occur in the future that prevent these entities from realizing some or all of its deferred tax assets, an adjustment to the valuation allowances will be recognized when such events occur. As of December 31, 2018, the Group had net operating loss carryforwards in PRC entities of RMB186,703, which can be carried forward to offset taxable income. The carryforward period for net operating losses under the EIT Law is five years. The net operating loss carryforwards of the Group will expire in varying amounts from 2019 to 2023. Other than the expiration, there are no other limitations or restrictions upon the Group’s ability to use these operating loss carryforwards. The following represents a roll‑forward of the valuation allowance for each of the years: 2016 2017 2018 RMB RMB RMB Balance at beginning of year 1,851 2,443 39,576 Additions 1,019 37,902 6,305 Reversals (427) (769) (1,968) Balance at end of year 2,443 39,576 43,913 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2018 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | 11. SHARE‑BASED COMPENSATION In April 2009, the Company adopted a share option plan (“2009 Option Plan”), which provided for the issuance of up to 5,000,000 common shares. The total number of common shares reserved under the 2009 Option Plan was increased to 10,000,000 in December 2011. Issuances from this plan ceased in 2015. In November 2015, the Company adopted a share incentive plan (“2015 Plan”). Under the 2015 Plan, share-based awards such as share options, restricted shares, restricted share units, dividend equivalent rights, share appreciation rights and share payments may be granted. The 2015 Plan has a term of ten years. The maximum aggregate number of common shares which may be issued pursuant to all share-based awards under the 2015 Plan is (i) 10,000,000, and (ii) an automatic increase on January 1, 2019, January 1, 2022 and January 1, 2025 by that number of common shares representing 5% of the then total issued and outstanding common shares of the Company on an as-converted fully diluted basis as of December 31 of the respective preceding year. Under the share option and incentive plans, the directors may, at their discretion, grant share-based awards to any senior executives, directors, employees or consultants of the Group. As of December 31, 2018, the only share-based awards that have been granted under the plans are share options to purchase the Company’s common shares. The share options are granted at the fair market value of the common shares at the date of grant, vest over a period of four years and expire six years from the date of grant. The following table summarizes the Company’s share option activity for the years ended December 31, 2016, 2017 and 2018: Weighted Weighted average average remaining Aggregate Number exercise contractual intrinsic value of shares price life (years) (thousands) Outstanding at December 31, 2015 6,089,905 US$ 28.19 3.38 US$ 12,942 Granted 1,157,400 US$ 34.27 Exercised (1,117,754) US$ 21.54 Forfeited (334,720) US$ 29.86 Outstanding at December 31, 2016 5,794,831 US$ 30.58 3.36 US$ 19,272 Granted 1,279,872 US$ 56.68 Exercised (2,147,819) US$ 29.04 Forfeited (119,902) US$ 32.64 Outstanding at December 31, 2017 4,806,982 US$ 38.17 3.83 US$ 109,017 Granted 1,320,672 US$ 73.46 Exercised (752,814) US$ 29.71 Forfeited (55,850) US$ 35.72 Outstanding at December 31, 2018 5,318,990 US$ 48.16 3.76 US$ 90,526 Vested and expected to vest at December 31, 2018 5,064,646 US$ 47.56 3.70 US$ 88,532 Exercisable at December 31, 2018 2,615,921 US$ 35.93 2.61 US$ 69,418 The aggregate intrinsic value in the table above represents the difference between the Company’s closing stock price on the last trading day and the exercise price for in‑the‑money options of the respective year. The total intrinsic value of options exercised for the years ended December 31, 2016, 2017 and 2018 was RMB83,976, RMB184,932 and RMB280,679 (US$40,823), respectively. As of December 31, 2018, there was RMB321,368 (US$46,741) of unrecognized share‑based compensation cost related to non‑vested share options. That deferred cost is expected to be recognized over a weighted average vesting period of 3.09 years. To the extent the actual forfeiture rate is different from the original estimate, actual share‑based compensation related to these awards may be different from the expectation. For the year ended December 31, 2018, total cash received from the exercise of share options amounted to RMB145,196 (US$21,118). A summary of non-vested share option activity for the years ended December 31, 2016, 2017 and 2018 is presented below: Weighted average grant-date Number fair value of shares (per share) Non-vested at December 31, 2015 2,708,243 US$ 11.02 Granted 1,157,400 US$ 9.63 Vested (1,035,577) US$ 11.01 Forfeited (334,720) US$ 11.09 Non-vested at December 31, 2016 2,495,346 US$ 10.37 Granted 1,279,872 US$ 15.62 Vested (1,085,019) US$ 10.50 Forfeited (119,902) US$ 10.55 Non-vested at December 31, 2017 2,570,297 US$ 12.86 Granted 1,320,672 US$ 21.53 Vested (1,132,050) US$ 12.51 Forfeited (55,850) US$ 10.83 Non-vested at December 31, 2018 2,703,069 US$ 17.29 Expected to vest at December 31, 2018 2,448,725 US$ 17.29 There were no capitalized share‑based compensation costs for the years ended December 31, 2016, 2017 and 2018. Share‑based compensation expense with respect to the share option plans recognized during the years ended December 31, 2016, 2017 and 2018, totaled RMB86,070, RMB85,968 and RMB100,183 (US$14,571), respectively. The total fair value of share options vested during the years ended December 31, 2016, 2017 and 2018 was RMB79,139, RMB74,100 and RMB97,364 (US$14,161), respectively. Share-Based Compensation of Subsidiary Lagou has adopted a 2014 Stock Option Plan, a 2016 Stock Option Plan and a 2018 Stock Option Plan (collectively, the "Lagou Stock Option Plans"), which permit the granting of stock options and/or stock purchase rights of Lagou to employees, directors and consultants. Share-based compensation expense with respect to the Lagou Stock Option Plans recognized during the year ended December 31, 2018 amounted to RMB4,782 (US$696). As of December 31, 2018, the unrecognized share-based compensation expenses related to the Lagou Stock Option Plans were RMB2,228 (US$324). The expenses are expected to be recognized over a weighted average period of 3.25 years. |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 12 Months Ended |
Dec. 31, 2018 | |
EMPLOYEE BENEFITS | |
EMPLOYEE BENEFITS | 12. EMPLOYEE BENEFITS The full‑time employees of the Group’s subsidiaries and VIEs that are incorporated in the PRC are entitled to staff welfare benefits including medical care, welfare subsidies, unemployment insurance, pension benefits and housing fund. These companies are required to contribute to these benefits based on certain percentages of the employees’ salaries in accordance with the relevant regulations and charge the amount contributed to these benefits to the consolidated statements of operations and comprehensive income. The total amounts charged to the consolidated statements of operations and comprehensive income for such employee benefits amounted to RMB198,272, RMB230,263 and RMB293,452 for the years ended December 31, 2016, 2017 and 2018, respectively. The PRC government is responsible for the welfare and medical benefits and ultimate pension liability to these employees. |
CONVERTIBLE SENIOR NOTES
CONVERTIBLE SENIOR NOTES | 12 Months Ended |
Dec. 31, 2018 | |
CONVERTIBLE SENIOR NOTES | |
CONVERTIBLE SENIOR NOTES | 13. CONVERTIBLE SENIOR NOTES On April 3, 2014, the Company issued US$172,500 of convertible senior notes due April 15, 2019 (the “Notes”). The Notes bear interest at a rate of 3.25% per year, payable semiannually in arrears. The interest expense incurred associated with the Notes was RMB37,298, RMB37,799 and RMB37,191 for the years ended December 31, 2016, 2017 and 2018, respectively. The Notes may be converted to the Company’s ADSs based on an initial conversion rate of 11.6976 ADSs per US$1,000 principal amount of the Notes (which represents an initial conversion price of US$85.49 per ADS). The conversion rate is subject to certain anti-dilutive adjustments. Following the change in the ratio of the Company’s common shares to ADSs from 2:1 to 1:1 effective August 8, 2014, the initial conversion rate was adjusted to 23.3952 ADSs per US$1,000 principal amount of the Notes (which represents an adjusted initial conversion price of approximately US$42.74 per ADS). Holders may convert their Notes on or after October 15, 2018 until the close of business on the second scheduled trading day immediately preceding the maturity date, or at their option prior to the close of business on the business day immediately preceding October 15, 2018 only under the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on June 30, 2014 (and only during such calendar quarter), if the last reported sale price of ADSs for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (ii) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price (as defined in the indenture agreement) per US$1,000 principal amount of the Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the ADSs and the conversion rate on each such trading day; (iii) if the Company call the Notes for redemption; or (iv) upon the occurrence of specified corporate events (as defined in the indenture agreement). Upon conversion, the Company will pay or deliver, as the case may be, cash, ADSs, or a combination of cash and ADSs, at its election. Holders had the right to require the Company to repurchase for cash all or part of the Notes on April 15, 2017 at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but not including, the repurchase date. The Company did not receive any repurchase requests from holders on April 15, 2017. If the Company undergoes a fundamental change (as defined in the indenture agreement), holders may require the Company to repurchase for cash all or part of the Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest to, but not including, the fundamental change repurchase date. The Company does not have the option to redeem the Notes prior to their maturity, except in the event of tax redemption. The Notes are senior unsecured obligations. The Notes (i) rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Notes; (ii) rank equally in right of payment with any unsecured indebtedness that is not so subordinated; (iii) be effectively junior in right of payment to any secured indebtedness to the extent of the value of the assets securing such indebtedness; and (iv) be structurally subordinated to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries and consolidated VIEs. The Group’s functional currency is the RMB, and the Notes are denominated in US$. As a result, the conversion feature of the Notes is indexed to the Company’s stock as well as the RMB and US$ exchange rate. Therefore, it is considered an embedded derivative which is required to be bifurcated from the host instrument in accordance with ASC 815 “Derivatives and Hedging.” Under ASC 815-15-25, if an entity has a hybrid financial instrument that would require bifurcation of embedded derivatives, the entity may irrevocably elect to initially and subsequently measure a hybrid financial instrument in its entirety at fair value with changes in fair value recognized in earnings. The Company has elected to measure the Notes in their entirety at fair value with changes in fair value recognized as non-operating income or loss at each balance sheet date in accordance with ASC 815-15-25. Furthermore, the fair value of the Notes is translated into RMB, the Group’s functional currency, at each balance sheet date with the difference being reported as foreign currency translation gain or loss. In addition, issuance costs of RMB33,093 associated with the Notes offering were fully expensed as incurred in the year ended December 31, 2014 in accordance with ASC 825-10-25-3, which states that upfront costs and fees related to items for which the fair value option is elected shall be recognized in the consolidated statements of operations and comprehensive as incurred and not deferred. As of December 31, 2018, the estimated fair value of the Notes amounted to RMB1,725,182. The Company recorded a foreign currency translation loss of RMB79,393, a gain of RMB85,917 and a loss of RMB156,293 for the years ended December 31, 2016, 2017 and 2018, respectively, associated with the Notes. The change in fair value of the Notes was a loss of RMB69,439, a loss of RMB496,175 and a gain of RMB99,079 for the years ended December 31, 2016, 2017 and 2018, respectively. See Note 2(t). The Company evaluated the changes in fair value of the Notes due to its specific credit risk in accordance with ASU 2016-01, based on which, the Company considers its credit risk being kept at a relatively low level and assessed that there has been no significant fluctuation in its specific credit risk since the Notes issuance date. As of December 31, 2018, the Company has received a request to convert US$100 in principal amount of the Notes, which will be settled with the delivery of ADSs in April 2019. Zero-Strike Call Options On April 3, 2014 and in connection with the issuance of the Notes, the Company used approximately US$50,000 of the net proceeds from the offering to enter into zero-strike call option transactions (“Call Options”), covering 1,462,204 ADSs, with affiliates of the initial purchasers of the Notes (“Dealers”). The Call Options are intended to facilitate privately negotiated transactions by which investors in the Notes are able to hedge their investment. The Call Options expire soon after the maturity date of the Notes or when the Dealers request early settlement. The Company will receive the fixed number of ADSs determined at the commencement date of the transaction, which is based on the market price per ADS at the commencement date. 357,200 ADSs and 731,102 ADSs were early settled in 2017 and 2018, respectively. All of the ADSs received from early settlement were retired. See Note 2(v). The economic substance of the Call Options is the same as a traditional forward repurchase contract. Because the Call Options permitted net cash settlement prior to shareholder approval of an increase in the Company’s share repurchase program, they were classified as a derivative instrument measured initially and subsequently at fair value with changes in fair value recorded in earnings. The Company accounted for the Call Options as a free-standing derivative asset on its consolidated balance sheet when the Call Options were entered into in April 2014. The derivative asset was initially recorded at its fair value of US$50,000 on the commencement date which represented the amount of cash transferred to the Dealers. The derivative asset was subsequently recorded at fair value with the change in fair value through June 20, 2014, the date on which shareholder approval was received, recorded in the consolidated statements of operations and comprehensive income in the amount of RMB24,874. Upon shareholder approval of an increase to the Company’s share repurchase program in June 2014, the asset was reclassified and recorded as a reduction to equity to reflect the Company’s repurchase of its own shares. A prepaid forward contract is considered a form of a stock borrowing facility, and economically, the contract is construed as a share lending arrangement between the Company and the Dealers. Therefore, the accounting for a share lending arrangement was applied by analogy in accordance with ASC 470-20-25-20A. In the year ended December 31, 2014, the Company recorded a debt issuance cost of RMB14,429 with the offset to additional paid-in capital for the fair value of the arrangement. Given that the Company has elected to fair value the Notes entirely, the debt issuance costs in connection with the Notes were recognized in earnings as incurred in the consolidated statements of operations and comprehensive income in accordance with ASC 825-10-25-3. See Note 2(t). |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2018 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 14. EARNINGS PER SHARE Basic earnings per share and diluted earnings per share have been calculated for the years ended December 31, 2016, 2017 and 2018 as follows: 2016 2017 2018 RMB RMB RMB (in thousands, except share and per share data) Numerator: Net income attributable to 51job, Inc. 565,978 371,889 1,252,319 Denominator: Denominator for basic earnings per share — weighted average common shares outstanding 58,132,976 60,087,306 61,318,292 Dilutive effect of share options 341,092 1,063,107 1,857,191 Denominator for diluted earnings per share 58,474,068 61,150,413 63,175,483 Basic earnings per share 9.74 6.19 20.42 Diluted earnings per share 9.68 6.08 19.82 The convertible senior notes were not included in the calculation of diluted earnings per share in 2016, 2017 and 2018 because their inclusion would have been anti-dilutive. The Company excluded outstanding share options of 3,881,628 in 2016, 1,176,660 in 2017 and 888,548 in 2018 from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. The Company excluded common shares underlying the zero-strike call option contracts from both the basic and diluted earnings per share calculation as they are considered as deemed repurchased for the purpose of calculating both basic and diluted earnings per share. |
FAIR VALUE CHANGES OF INVESTMEN
FAIR VALUE CHANGES OF INVESTMENT | 12 Months Ended |
Dec. 31, 2018 | |
FAIR VALUE CHANGES OF INVESTMENT | |
FAIR VALUE CHANGES OF INVESTMENT | 15. FAIR VALUE CHANGES OF INVESTMENT The following table provides information about the reconciliation of the Level 3 fair value measurements of available-for-sale debt securities using significant unobservable inputs for the periods indicated: RMB Balance at January 1, 2016 — Initial recognition 126,716 Unrealized gain 38,501 Balance at December 31, 2016 165,217 Unrealized gain 147,602 Balance at December 31, 2017 312,819 Unrealized gain 155,387 Sale of debt securities (19,430) Balance at December 31, 2018 448,776 The unrealized gain on available-for-sale debt securities of RMB28,876, RMB110,702 and RMB116,540, representing the unrealized fair value gain netting relevant income tax of RMB9,625, RMB36,900 and RMB38,847, was recognized in other comprehensive income for the years ended December 31, 2016, 2017 and 2018, respectively. In determining the fair value, the Group utilizes an income approach of a discounted cash flow model with unobservable inputs including future cash flows, a terminal growth rate of 3%, a discount rate of 18% and a risk-free rate of 2.84%. The determination of the fair value was assisted by an independent appraisal, based on estimates, judgments and information of other comparable companies. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 16. COMMITMENTS AND CONTINGENCIES Operating Lease Commitments The Group has entered into non‑cancelable agreements with initial or remaining terms in excess of one year for the rental and property management of office premises and for the lease of office equipment. Future minimum payments with respect to these agreements for the twelve months ending December 31 of the coming years are as follows: Office Office premises equipment Total RMB RMB RMB 2019 53,547 13,995 67,542 2020 39,156 227 39,383 2021 24,709 59 24,768 2022 19,768 29 19,797 2023 and thereafter 14,432 — 14,432 151,612 14,310 165,922 Rental expenses for the years ended December 31, 2016, 2017 and 2018 were RMB50,946, RMB53,433 and RMB67,960, respectively. Contractual Purchase Obligations The Group’s contractual purchase obligations consist of agreements to purchase advertising services from media companies and to purchase office furnishings. Future minimum payments with respect to these agreements for the twelve months ending December 31 of the coming year are as follows: Advertising Office services furnishings Total RMB RMB RMB 2019 6,793 329 7,122 2020 591 9 600 Contingencies As of the filing date of this annual report on Form 20‑F, the Group is not currently a party to, nor is aware of, any legal proceeding, investigation or claim which is likely to have a material adverse effect on the Group’s business, financial condition, results of operations and cash flows. Tech JV obtained an advertising license in May 2000, when Tech JV was a 98% foreign owned entity, and a license to conduct human resource services in September 2002, when Tech JV was a 99% foreign owned entity. During the period from the date Tech JV acquired these licenses to the Group’s restructuring in May 2004, Tech JV and its licensed PRC subsidiaries conducted all of the advertising and human resource related services. Following the acquisition of these licenses and commencing these operations, the PRC government enacted laws limiting foreign ownership in entities conducting advertising and human resource related services. The PRC government has permitted 100% foreign ownership of advertising businesses since December 2005. For the foreign ownership of human resource services companies, the limitation was 70% for Hong Kong service providers and Macau service providers since June 2005 and for human resource services companies registered in several locations in the PRC, such as Pudong New District, Shanghai since June 2006. Starting from January 2008, the PRC government no longer implemented any foreign ownership percentage limitation for Hong Kong service providers and Macau service providers. Since November 2018, the PRC government has issued some notices and regulations to pilot the establishment of wholly foreign owned human resource service agencies in certain locations, such as the China (Shanghai) Pilot Free Trade Zone, in the PRC. Prior to the restructuring in May 2004, the ownership percentage of Tech JV was above the maximum foreign ownership permitted for an entity conducting advertising and human resource operations. The PRC government has not published an official ruling with respect to the status of foreign ownership arrangements that were established prior to the enactment of these limitations and the Group has not received any waiver from the PRC government with respect to this past non‑compliance. The PRC government may determine that the Group’s ownership structure was inconsistent with or insufficient for the proper operation of the Group’s businesses, or that the Group’s business licenses or other approvals were not properly issued or not sufficient. In the opinion of management, the likelihood of loss with respect to the Group’s past ownership structure is remote. |
REDEEMABLE NON-CONTROLLING INTE
REDEEMABLE NON-CONTROLLING INTERESTS | 12 Months Ended |
Dec. 31, 2018 | |
REDEEMABLE NON-CONTROLLING INTERESTS | |
REDEEMABLE NON-CONTROLLING INTERESTS | 17. REDEEMABLE NON-CONTROLLING INTERESTS In December 2017, the Company acquired an approximately 66% equity interest in Lagou on a fully diluted basis. Lagou has been consolidated into the Group’s financial statements as of December 31, 2017. As Lagou has shares that could be redeemed by minority shareholders upon the occurrence of certain events that are not solely within the control of the Company, these preferred shares are accounted for as redeemable non-controlling interests in mezzanine equity. The changes in the amount of redeemable non-controlling interests for the years ended December 31, 2017 and 2018 are as follows: 2017 2018 RMB RMB Balance at beginning of year — 228,230 Addition 228,230 — Share-based compensation — 7,911 Net loss attributable to mezzanine equity holders — (10,496) Balance at end of year 228,230 225,645 |
CERTAIN RISKS AND CONCENTRATION
CERTAIN RISKS AND CONCENTRATION | 12 Months Ended |
Dec. 31, 2018 | |
CERTAIN RISKS AND CONCENTRATION | |
CERTAIN RISKS AND CONCENTRATION | 18. CERTAIN RISKS AND CONCENTRATION Concentration of Credit Risk Financial instruments that potentially subject the Group to significant concentrations of credit risk consist primarily of cash, restricted cash, short‑term investments and receivables. As of December 31, 2017 and 2018, the Group’s cash, restricted cash and short‑term investments were held in major financial institutions located in the PRC, Hong Kong and the United States which management believes are of high credit quality. As of December 31, 2018, the Company had approximately RMB7,912,854 (US$1,150,877) in cash, time deposits and investment products, which constitute about 90% of total cash, restricted cash and short-term investments, held at reputable financial institutions in the PRC. The Company believes that it is not exposed to unusual risks as these PRC financial institutions have high credit quality. However, in the event of bankruptcy of a financial institution in which the Company has deposits or investments, it may be unlikely to claim its deposits or investments back in full. Receivables are typically unsecured and denominated in RMB, and are derived from revenues earned from operations or from payments made on behalf of certain customers arising in the PRC. Management believes credit risk on receivables is moderate due to the diversity of its services and customers. No individual customer accounted for more than 10% of net revenues during the years ended December 31, 2016, 2017 and 2018. No individual customer accounted for more than 10% of accounts receivable as of December 31, 2017 and 2018. Currency Risk The Group’s sales and purchase and expense transactions are generally denominated in RMB and a significant portion of the Group’s liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China. In addition, the Group’s cash and convertible senior notes denominated in US$ subject the Group to risks associated with changes in the exchange rate of RMB against US$ and may affect the Group’s results of operations going forward. PRC Regulatory Risk The Group is subject to regulatory risks, which include the interpretation of current laws, the legality of its corporate structure and the scope of its operations in the PRC, which may result in limitations on the Group’s ability to conduct business in the PRC. The Group conducts some of its operations in the PRC through VIEs and consolidates them pursuant to a series of contractual arrangements. If the contractual arrangements establishing the VIE structure are found to be in violation of any existing or future PRC laws, rules or regulations, the Group may be subject to penalties, which may include but not be limited to, the cancellation or revocation of the Group’s business and operating licenses, being required to restructure the Group’s operations or discontinue the Group’s operating activities. The imposition of any of these or other penalties may result in a material and adverse effect on the Group’s ability to conduct its operations. In such case, the Group may lose its rights to direct the activities of and receive economic benefits from its VIEs, which may result in deconsolidation of the VIEs. In addition, any change in interpretation of current laws or any future laws affecting the determination of whether a VIE is a domestic or foreign-invested company may materially impact the viability of the Group’s current corporate structure, corporate governance and business operations in many aspects. For example, the first draft of the PRC Foreign Investment Law published by the PRC Ministry of Commerce on January 19, 2015 (“First Draft FIL”) tended to deem VIEs as entities with foreign investment, and as a result, the Group’s VIEs and subsidiaries in which these VIEs have direct or indirect equity ownership could be subject to the restrictions on foreign investment. On January 29, 2019, the National People’s Congress published the second draft of the PRC Foreign Investment Law (“FIL”), which was voted and passed on March 15, 2019 and will come into effect on January 1, 2020. Compared with the First Draft FIL in 2015, the scope of foreign investment in the FIL is significantly narrower and limited to the establishment of foreign-invested enterprises by foreign investors in China by means of new set-up or merger/acquisitions. The FIL no longer includes “control or own interests of domestic enterprises by contract, trust or other means” within the scope of foreign investment, while still providing the “catch-all clause” to include any investments made by foreign investors in China through other means as provided by laws, administrative regulations or State Council provisions. Therefore, although the FIL does not clearly deem VIEs as foreign-invested enterprises, it is possible that future regulations or interpretations may provide otherwise, as a result of which, the Group’s business, operating results and financial condition may be adversely affected. |
RELATED PARTY TRANSACTION AND B
RELATED PARTY TRANSACTION AND BALANCES | 12 Months Ended |
Dec. 31, 2018 | |
RELATED PARTY TRANSACTION AND BALANCES | |
RELATED PARTY TRANSACTION AND BALANCES | 19. RELATED PARTY TRANSACTION AND BALANCES The Company has entered into royalty agreements with Recruit Management Solutions Co., Ltd. (“RMS”) and Recruit Career Co., Ltd. (“RCC”), which are wholly owned subsidiaries of Recruit Holdings Co., Ltd. (“Recruit”), for the use of training and online assessment materials. Recruit is a shareholder of the Company. The royalty fees charged by RMS were RMB152, RMB270 and RMB285 during the years ended December 31, 2016, 2017 and 2018, respectively. The royalty fees charged by RCC were RMB60, RMB20 and RMB14 during the years ended December 31, 2016, 2017 and 2018, respectively. As of December 31, 2017 and 2018, the royalty payables due to RMS were RMB68 and RMB81, respectively. As of December 31, 2017 and 2018, the royalty payables due to RCC were RMB0.5 and RMB2, respectively. |
PRINCIPAL ACCOUNTING POLICIES (
PRINCIPAL ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
PRINCIPAL ACCOUNTING POLICIES | |
Basis of Presentation and Use of Estimates | (a) Basis of Presentation and Use of Estimates The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenues and expenses during the reported years. Management’s significant estimates include those related to allowances for accounts receivable, allowances for prepayments and other current assets, estimated useful lives of property and equipment and intangible assets, fair values of options to purchase the Company’s common shares, fair values of financial instruments, impairment of long-lived assets, long-term investments and goodwill, the purchase price allocation and fair value of non-controlling interests with respect to business combinations, and deferred tax valuation allowance. Management bases the estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may materially differ from those estimates. |
Basis of Consolidation | (b) Basis of Consolidation The consolidated financial statements include the financial statements of the Company, its subsidiaries and the VIEs of which the Company is the primary beneficiary. All significant transactions and balances between the Company, its subsidiaries and the VIEs have been eliminated upon consolidation. A subsidiary is an entity in which the Company, directly or indirectly, controls more than one half of the voting power; has the power to appoint or remove the majority of the members of the board of directors; to cast majority of votes at the meeting of the board of directors; or to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. The Company has adopted Accounting Standards Codification (“ASC”) 810 “Consolidation” for all periods presented. It requires a VIE to be consolidated by the reporting entity that has a controlling financial interest in the VIE, and thus is the VIE's primary beneficiary. An entity is considered to be a VIE if certain conditions are present, such as if the equity investors in the entity do not have the characteristics of a controlling financial interest or the entity does not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. In determining whether the Company or its subsidiary has a controlling financial interest in a VIE, the Company considered whether the Company or its subsidiaries have the power to direct activities that most significantly impact the VIE’s economic performance, including the power to appoint senior management, right to direct company strategy, power to approve capital expenditure budgets, power to establish and manage ordinary business operation procedures and internal regulations and systems, and the right to receive benefits from the VIE that could potentially be significant to the VIE or the obligation to absorb losses of the VIE that could potentially be significant to the VIE. The Company’s subsidiaries include the following: · 51net.com Inc. (“51net”), incorporated in the British Virgin Islands in August 1999, which is wholly owned by the Company; · 51net Beijing, incorporated in the Cayman Islands in April 2000, which wholly owns Qian Cheng Wu You Network Information Technology (Beijing) Co., Ltd. (“WFOE”), incorporated in the PRC in July 2000, which is wholly owned by the Company; · 51net HR, incorporated in the Cayman Islands in April 2000, which owns 70% of Shanghai Wang Ju Human Resource Consulting Co., Ltd. (“Wang Ju”), incorporated in the PRC in October 2006, which is wholly owned by the Company; and · Lagou Information Limited ("Lagou"), incorporated in the Cayman Islands in December 2013, which was acquired and became 66% owned by the Company in December 2017. 51net’s principal subsidiaries include the following: · Qianjin Network Information Technology (Shanghai) Co., Ltd. (“Tech JV”), incorporated in the PRC in January 2000, which is 50% owned by 51net; · Wang Jin Information Technology (Shanghai) Co., Ltd. (“Wang Jin”), incorporated in the PRC in June 2004, which is wholly owned by 51net; · Shanghai Wang Ju Advertising Co., Ltd., incorporated in the PRC in June 2007, which is wholly owned by 51net; and · Wuhan Wang Cai Information Technology Co., Ltd., incorporated in the PRC in December 2009, which is wholly owned by Wang Jin. Tech JV’s principal subsidiaries include the following: · Shanghai Qianjin Advertising Co., Ltd. (“AdCo”), incorporated in the PRC in June 2001, which is 80% owned by Tech JV; · Shanghai Wang Cai Advertising Co., Ltd., incorporated in the PRC in April 2005, which is jointly owned by Tech JV and AdCo; · Shanghai Qianjin Zhong Cheng Human Resources Co., Ltd., incorporated in the PRC in December 2010; which is wholly owned by Tech JV; · Shanghai Yishu Information Technology Co., Ltd., incorporated in the PRC in May 2007; which was acquired and became wholly owned by Tech JV in April 2015; and · Beijing Zhiding Youyuan Management Consulting Co., Ltd., incorporated in the PRC in September 2010, which was acquired and became 60% owned by Tech JV in June 2015. The Group’s VIEs and the VIEs’ principal subsidiaries include the following: · Beijing Run An Information Consultancy Co., Ltd. (“Run An”), incorporated in the PRC in January 1997, which wholly owns Beijing Qian Cheng Si Jin Advertising Co., Ltd. (“Qian Cheng”), owns 30% of Wang Ju, and owns 60% of Beijing Lagou Network Information Technology Co, Ltd., incorporated in the PRC in March 2013 and acquired by Run An in December 2017; and · Qian Cheng, incorporated in the PRC in February 1999, which owns 20% of AdCo and effectively owns 50% of Tech JV by direct and indirect ownership through Qian Cheng’s wholly owned subsidiary Wuhan Mei Hao Qian Cheng Advertising Co., Ltd. (“Wuhan AdCo”), incorporated in the PRC in August 2001. As of December 31, 2018 and for all years presented, the Company is the primary beneficiary of two VIEs, Run An and Qian Cheng, which were in existence prior to the establishment of the Company and are considered predecessors of the Group. The Company does not have any direct equity ownership in the VIEs and the VIEs’ subsidiaries, but through certain arrangements as described below, the Company receives all of the economic benefits, absorbs all of the expected losses and has the power to direct activities that are significant to the VIEs. In addition, through a call option agreement between 51net and Qian Cheng, 51net is able to purchase the equity interests in Tech JV that are held by Qian Cheng and Wuhan AdCo as well as the equity interests in AdCo and its subsidiaries that are held by Qian Cheng. As a result, Run An, Qian Cheng and all of Tech JV and AdCo are included in the consolidated financial statements, and the Company effectively holds all of the equity interests in its subsidiaries including the VIEs. Run An holds a human resource service permit issued by the Beijing human resources and social security bureau which allows it to provide recruitment, training and human resource consulting services. Run An is jointly owned by two long-time members of the Company’s senior management team, Jingwu Chen and Tao Wang. As of December 31, 2018, the registered capital of Run An was RMB6,000 and its retained earnings were RMB20,047. Qian Cheng holds a business license to provide advertising services. Qian Cheng is wholly owned by Run An. As of December 31, 2018, the registered capital of Qian Cheng was RMB1,500 and its retained earnings were RMB4,731. As the consolidated VIEs are incorporated as limited liability companies under the PRC Company Law, creditors of the VIEs do not have recourse to the general credit of the Company. Currently, there is no contractual arrangement that could require the Company to provide additional financial support to the consolidated VIEs, but the Company may provide such support on a discretionary basis in the future, which could expose the Company to loss. The Group has entered into various agreements as related to its VIEs. The key provisions of the agreements with the Company or its subsidiaries and the VIEs or its shareholders are as follows: Technical and Consulting Service Agreements. WFOE has entered into technical and consulting service agreements with Run An and Qian Cheng, respectively, under which WFOE has the exclusive right, subject to certain exceptions, to provide technical services to Run An and Qian Cheng for service fees. WFOE did not issue any invoices to either Run An or Qian Cheng, and neither Run An nor Qian Cheng paid any fees to WFOE for the years ended December 31, 2016, 2017 and 2018. The technical and consulting service agreements with WFOE are valid to September 11, 2027 under the Run An agreement and valid to May 2, 2034 under the Qian Cheng agreement, and can only be terminated by WFOE during the term. Such term is renewable upon written consent of the parties. Although the renewal is upon mutual consent, WFOE may, through its power of attorney, direct Run An and, through Run An, cause Qian Cheng to renew the technical and consulting service agreements upon expiration. Equity Pledge Agreement. As security for the obligations of Run An under the technical and consulting service agreement and the obligations of Run An and its shareholders under the exclusive purchase option agreement described below, the shareholders of Run An have pledged all of their equity interest in Run An to WFOE. According to the pledge agreement, WFOE has the right to dispose of the pledged equity pursuant to PRC law in the event of default by Run An or its shareholders as provided in the pledge agreement. Additionally, the shareholders of Run An have agreed that they will not dispose of the pledged equity or take any actions that will prejudice WFOE’s interest under the equity pledge agreement. The equity pledge agreement among WFOE, Run An and its shareholders was entered into on September 4, 2017 and shall expire two years after the fulfillment of all obligations under the Run An technical and consulting service agreement and the exclusive purchase option agreement. This pledge agreement, in combination with the exclusive purchase option agreement, contains content that is substantially the same as the pledge agreements entered into between WFOE and Run An’s shareholders in September 2007 and January 2014, and between WFOE and Qian Cheng’s shareholders in May 2004. The pledge of the equity interest by the shareholders of Run An to WFOE has been registered with the relevant bureau of the State Administration for Industry and Commerce (currently known as the PRC State Administration for Market Regulation). Exclusive Purchase Option Agreement. WFOE has entered into an exclusive purchase option agreement with the shareholders of Run An, dated as of January 27, 2014, and supplemented and amended as of September 4, 2017, under which WFOE or its designee is granted an irrevocable option to purchase all or a portion of the equity interests in Run An at any time by issuing a written notice to the shareholders, subject to compliance with applicable PRC laws and regulations. The purchase price shall be equal to the contribution actually made by the shareholder for his equity interest in Run An. If the lowest price permitted under PRC law is above the contribution actually made by the shareholder, the premium shall be paid to Tech JV in accordance with the terms of the loan agreements described below. The exclusive purchase option agreement has the same term as the Run An technical and consulting service agreement. WFOE also has the exclusive right to terminate the agreement at any time by delivering a written notice to the shareholders of Run An. Powers of Attorney. In conjunction with the signing of the equity pledge agreement and the exclusive purchase option agreement, each of the shareholders of Run An has signed an irrevocable power of attorney to appoint WFOE, as attorney‑in‑fact to vote, by itself or any other person to be designated at its discretion, on all matters of Run An that need to be decided by its shareholders. Because Qian Cheng is a wholly owned subsidiary of Run An and Wuhan AdCo is a wholly owned subsidiary of Qian Cheng, through controlling all material matters of Run An (including but not limited to all material operational matters and the appointment and removal of directors and senior management), WFOE also has indirect control on all material matters of Qian Cheng and Wuhan AdCo. Each power of attorney was entered into on January 27, 2014, and supplemented and amended as of September 4, 2017, and will remain effective for as long as Run An exists. The shareholders of Run An are not entitled to terminate or amend the terms of the power of attorney without prior written consent from WFOE. Loan Agreements. Tech JV has entered into loan agreements dated as of September 11, 2007, and supplemented and amended as of September 4, 2017, for an aggregate amount of RMB6,000 with the shareholders of Run An, with the sole and exclusive purpose to fund the capitalization of Run An. The loans can be repaid only with the proceeds received from the transfer of the shareholders’ equity interest in Run An to Tech JV or its designee. The interest‑free loan agreements are valid to September 11, 2027, and the term may be extended upon written consent of the parties. Call Option Agreement. 51net has entered into a call option agreement with Qian Cheng dated as of August 1, 2002, and supplemented and amended as of May 3, 2004 and August 1, 2012, under which 51net or its designee is granted an irrevocable option to purchase all of Qian Cheng’s equity interest in Tech JV and AdCo for RMB1,200 or, if such purchase price is not permissible under applicable PRC laws, the lowest price permitted under then applicable PRC laws. In addition, Qian Cheng granted 51net an irrevocable option to purchase any and all of its equity interests in the subsidiaries of AdCo at the lowest price permitted under PRC laws. The call option agreement is valid to July 31, 2022, and the term may be extended upon written consent of the parties. Management monitors the regulatory risk associated with these contractual arrangements. The Company’s PRC legal counsel has advised management that these contractual arrangements are not in violation of existing PRC laws, rules and regulations in all material aspects. Based on such advice and management’s knowledge and experience, the Company believes that its contractual arrangements with its consolidated VIEs and their shareholders are valid, legally binding and in compliance with current PRC laws. However, there are substantial uncertainties regarding the interpretation and application of current or future PRC laws, rules and regulations that could limit the Company’s ability to enforce these contractual arrangements. See Note 18 for further discussion. Summary financial information of the Group’s VIEs and the VIEs’ subsidiaries included in the consolidated financial statements is as follows: As of December 31, 2017 2018 RMB RMB Total assets 268,484 521,044 Total liabilities 112,655 214,588 For the year ended December 31, 2016 2017 2018 RMB RMB RMB Total revenues — — 161,816 Net income (loss) (2,300) (4,088) 18,406 For the year ended December 31, 2016 2017 2018 RMB RMB RMB Net cash provided by (used in) operating activities 1,257 (7,131) 5,855 Net cash provided by (used in) investing activities (126,716) 4,152 (83,936) Net cash provided by financing activities 126,745 3,334 157,500 Net increase in cash 1,286 355 78,919 Cash, beginning of year 6,241 7,527 7,882 Cash, end of year 7,527 7,882 86,801 |
Foreign Currencies | (c) Foreign Currencies The Group’s functional and reporting currency is the Renminbi (“RMB”). Transactions denominated in currencies other than RMB are translated into RMB at the exchange rates quoted by the People’s Bank of China prevailing at the dates of the transactions. Gains and losses resulting from foreign currency transactions are included in the consolidated statements of operations and comprehensive income. Monetary assets and liabilities denominated in foreign currencies are translated into RMB using the applicable exchange rates quoted by the People’s Bank of China at the balance sheet dates. All such exchange gains and losses are included in the consolidated statements of operations and comprehensive income. The exchange differences for translation of group companies’ balances where RMB is not their functional currency are included in cumulative translation adjustments, which is a separate component of shareholders’ equity in the consolidated financial statements. The unaudited United States dollar (“US$”) amounts disclosed in the accompanying financial statements are presented solely for the convenience of the readers. Translations of amounts from RMB into US$ for the convenience of the reader were calculated at the rate of US$1.00 = RMB6.8755 on December 31, 2018, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on December 31, 2018, or at any other rate. |
Cash and Restricted Cash | (d) Cash and Restricted Cash Cash represents cash on hand and demand deposits placed with banks or other financial institutions. Restricted cash represents cash proceeds from the exercise of share options by the Company’s employees, executives and directors held in a bank account which have yet to be transmitted to them. The following table reconciles cash and restricted cash as reported on the consolidated balance sheets as of December 31, 2017 and 2018, to the amounts presented in the consolidated statements of cash flows: 2017 2018 RMB RMB Cash 2,292,476 1,968,351 Restricted cash 249 5,770 Total cash and restricted cash 2,292,725 1,974,121 Included in the cash and restricted cash balances as of December 31, 2017 and 2018 are amounts denominated in United States dollars totaling US$125,450 and US$135,668, respectively (equivalent to approximately RMB819,715 and RMB931,120, based on the RMB to US$ exchange rate quoted by the People’s Bank of China on December 29, 2017 and December 28, 2018, respectively). The Group receives substantially all of its revenues in RMB, which currently is neither a freely convertible currency nor can it be freely remitted out of China. |
Accounts Receivable | (e) Accounts Receivable Accounts receivable is presented net of allowance for doubtful accounts. The Company provides general and specific provisions for bad debts when facts and circumstances indicate that the receivable is unlikely to be collected. If the financial condition of its customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. |
Investments | (f) Investments The Group’s short‑term investments consist of time deposits with original maturities between three months and one year with banks in the PRC and Hong Kong, and investment products issued by financial institutions in the PRC with a variable interest rate indexed to the performance of underlying assets. The Group’s long-term investments consist of equity securities without readily determinable fair values, equity method investments and available-for-sale debt securities. Equity Securities without Readily Determinable Fair Values Equity securities without readily determinable fair values are measured and recorded using a measurement alternative that measures the securities at cost less impairment, if any, plus or minus changes resulting from qualifying observable price changes. Prior to January 1, 2018, these securities were accounted for using the cost method of accounting, measured at cost less other-than-temporary impairment. No other-than-temporary impairment charge was incurred in the years ended December 31, 2016 and 2017. No qualifying observable price changes were noted in the year ended December 31, 2018. The Group’s investments in equity securities without readily determinable fair values primarily consist of a number of small, non-controlling equity investments in companies that provide services related to the Group’s operations or the overall human resources industry. In the year ended December 31, 2017, the Group made long-term investments including RMB96,967 for a 9.5% equity interest in a mobile-based platform focused on short-term, on-demand work opportunities in the United States and a total of RMB300 for a 5.0% equity interest in each of three companies that provide business process outsourcing services in China. In the year ended December 31, 2018, the Group made long-term investments including RMB31,535 for a 14.3% equity interest in a technology talent assessment services provider in the United States, RMB25,000 for a 18.0% equity interest in a human resource consulting and executive search services company in China, and a total of RMB300 for a 5.0% equity interest in each of three companies that provide business process outsourcing services in China. Equity Method Investments For investees over which the Group does have the ability to exercise significant influence, but does not have a controlling interest, the Group accounts for these investments under the equity method. Under the equity method, the Group initially records investments at cost and subsequently recognizes proportionate share of each equity investee’s change in fair value in the consolidated statements of operations and comprehensive income and accordingly adjusts the carrying amount of the investment. An impairment charge is recorded if the carrying amount of the investment exceeds its fair value and this condition is determined to be other-than-temporary. In the year ended December 31, 2018, the Group made an equity method investment of RMB75,000 for a 5.0% equity interest in an investment fund partnership as a limited partner. The Group also entered into an agreement in the amount of RMB50,000 for a 25.0% equity interest in another investment fund partnership as a limited partner, of which RMB25,000 was paid in the year ended December 31, 2018 and a remaining balance of RMB25,000 will be paid in 2019. Both funds are focused on exploring opportunities and making investments in companies that primarily provide services in the education and training market in China. No other-than-temporary impairment charge was incurred in the year ended December 31, 2018. Available-for-Sale Debt Securities Debt securities that the Group has the intent to hold for an indefinite period are classified as available-for-sale and reported at fair value. Unrealized gains and losses (other than impairment losses) are reported, net of the related tax effect, in other comprehensive income. Upon sale, realized gains and losses are reported in net income. The Group monitors these investments for other-than-temporary impairment by considering factors including, but not limited to, current economic and market conditions, the operating performance of the companies including current earnings trends and other company-specific information. In September 2016, the Group completed an investment of RMB126,716 for a 15.0% equity interest in Shanghai Gaodun Education & Training Co., Ltd. (“Golden Finance”), a provider of online and offline accounting and finance training courses in China. The Group’s shares in Golden Finance have liquidation preference, and the Group has a right to demand redemption of its investment. Accordingly, due to the redemption option available to the Group, the Golden Finance investment was determined to be a debt, which was classified as available-for-sale debt security measured at fair value. Unrealized gain net of tax of RMB110,702 and RMB116,540 associated with the Golden Finance investment was included in accumulated other comprehensive income in the years ended December 31, 2017 and 2018, respectively. In 2018, the Company realized a gain of RMB61,070 from the sale of some shares of Golden Finance, and as of December 31, 2018, the Group's equity interest in Golden Finance was 11.7%. |
Property and Equipment | (g) Property and Equipment Property and equipment are stated at cost less accumulated depreciation and impairment if applicable. Repairs and maintenance costs are charged to operating expenses as incurred, whereas the costs of renewals and betterment that extends the useful lives of property and equipment are capitalized as additions to the related assets. Depreciation is calculated on a straight‑line basis to allocate the cost of the assets to their estimated residual value over the following estimated useful lives: Estimated useful lives Land use rights 32.42 to 50 years Building 20 years Leasehold improvements Lesser of the lease period or the estimated useful life Electronic equipment 3 to 5 years Furniture and fixtures 5 years Motor vehicles 5 years Other assets 5 years |
Business Combinations | (h) Business Combinations U.S. GAAP requires that all business combinations not involving entities or businesses under common control be accounted for under the purchase method. The Group has adopted ASC 805 “Business Combinations,” and the cost of an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred and equity instruments issued. The transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of the (i) the total of cost of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the consolidated statements of operations and comprehensive income. The determination and allocation of fair values to the identifiable assets acquired and liabilities assumed is based on various assumptions and valuation methodologies requiring considerable management judgment. The most significant variables in these valuations are discount rates, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to forecast the future cash inflows and outflows. Management determines discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons. Although management believes that the assumptions applied in the determination are reasonable based on information available at the date of acquisition, actual results may differ from the forecasted amounts and the difference could be material. A non-controlling interest is recognized to reflect the portion of a subsidiary's equity which is not attributable, directly or indirectly, to the Company. When the non-controlling interest is contingently redeemable upon the occurrence of a conditional event, which is not solely within the control of the Company, the non-controlling interest is classified as mezzanine equity. Consolidated net income on the consolidated statements of operations and comprehensive income includes the net income (loss) attributable to non-controlling interests and mezzanine equity holders when applicable. Net income (loss) attributable to mezzanine equity holders is included in net income (loss) attributable to non-controlling interests on the consolidated statements of operations and comprehensive income, while it is excluded from the consolidated statements of changes in shareholders' equity. For the year ended December 31, 2018, net loss attributable to mezzanine equity holders amounted to RMB10,496. The cumulative results of operations attributable to non-controlling interests are also recorded as non-controlling interests in the Company's consolidated balance sheets. Cash flows related to transactions with non-controlling interests are presented under financing activities in the consolidated statements of cash flows when applicable. |
Goodwill and Intangible Assets | (i) Goodwill and Intangible Assets Goodwill Goodwill represents the excess of the total cost of the acquisition, the fair value of any non-controlling interests and the acquisition date fair value of any previously held equity interest in the acquiree over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed of the acquired entity as a result of the Company’s acquisitions of interests in its subsidiaries and VIEs. Goodwill is not amortized but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that it might be impaired. The Company first assesses qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. In the qualitative assessment, the Company considers primary factors such as industry and market considerations, overall financial performance of the reporting unit and other specific information related to the operations. Based on the qualitative assessment, if it is more likely than not that the fair value of each reporting unit is less than the carrying amount, the quantitative impairment test is performed. In performing the two-step quantitative impairment test, the first step compares the fair values of each reporting unit to its carrying amount, including goodwill. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. This allocation process is only performed for the purposes of evaluating goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities. Application of a goodwill impairment test requires significant management judgment, including the identification of reporting units, assigning assets, liabilities and goodwill to reporting units, and determining the fair value of each reporting unit. The Company estimates the fair value of the reporting unit using a discounted cash flow model. This valuation approach considers various assumptions including projections of future cash flows, perpetual growth rates and discount rates. The assumptions about future cash flows and growth rates are based on management’s assessment of a number of factors, including the reporting unit’s recent performance against budget, performance in the market that the reporting unit serves, as well as industry and general economic data from third party sources. Discount rate assumptions reflect an assessment of the risk inherent in those future cash flows. Changes to the underlying businesses could affect the future cash flows, which in turn could affect the fair value of the reporting unit. Management performs its annual goodwill impairment test on December 31. No impairment of goodwill was recognized in the years ended December 31, 2016, 2017 and 2018. Intangible Assets Intangible assets purchased and intangible assets arising from acquisitions of subsidiaries are recognized and measured at fair value upon acquisition. The Company’s purchased intangible assets include computer software, acquired technology and licenses, which are amortized on a straight-line basis over their estimated useful lives, ranging from 3 to 10 years. Separately identifiable intangible assets arising from acquisitions consist of online program transmission license, trade names, technology and customer relationships, which are amortized on a straight-line basis over their estimated useful lives of 5 to 20 years. The estimated life of intangible assets subject to amortization is reassessed if circumstances occur that indicate the life has changed. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. No impairment of intangible assets was recognized in the years ended December 31, 2016, 2017 and 2018. |
Impairment of Long-Lived Assets Other Than Goodwill | (j) Impairment of Long-Lived Assets Other Than Goodwill Long‑lived assets are reviewed for impairment whenever events or changes in circumstances indicate that carrying amount of an asset group may not be recoverable. The recoverability of an asset group is based on the undiscounted future cash flows the asset group is expected to generate and recognize an impairment loss when the estimated undiscounted future cash flows expected to result from the use of the asset group plus net proceeds expected from the disposition of the asset group, if any, are less than the carrying value of the asset group. If the Group identifies an impairment, the Group reduces the carrying amount of the asset group to its estimated fair value based on a discounted cash flow approach or, when available and appropriate, to comparable market values. No impairment of long‑lived assets was recognized in the years ended December 31, 2016, 2017 and 2018. |
Revenue Recognition | (k) Revenue Recognition On January 1, 2018, the Company adopted ASC 606 “Revenue from Contracts with Customers” (“ASC 606”) and applied the modified retrospective method to all contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts were not adjusted and reported under the accounting standards in effect for the periods presented. According to ASC 606, revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Group expects to be entitled to in exchange for those goods or services. The Group determines revenue recognition through the following steps: · Identification of the contract, or contracts, with a customer; · Identification of the performance obligation in the contract; · Determination of the transaction price, including the constraint on variable consideration; · Allocation of the transaction price to the performance obligation in the contracts; and · Recognition of revenue when (or as) the Group satisfies a performance obligation. The following is a description of the accounting policy for the principal revenue streams of the Group. Online Recruitment Services Revenues The Group provides online recruitment services through several websites, including www.51job.com , www.yingjiesheng.com, www.51jingying.com and www.lagou.com , and their respective mobile applications. The Group sells recruitment packages that provide a single service or combination of services, such as job postings, access to a searchable resumé database, advertising and online management tools, which assist employers with their hiring process. The Other Human Resource Related Revenues The Group provides other value-added human resource services, such as business process outsourcing, campus recruitment, training, assessment, placement and other services. The Group assists employers with human resource administrative functions on an outsourced basis, which mainly consist of social insurance, benefits and payroll processing as well as regulatory compliance services. Employers can choose to utilize a single service or combination of services. The fees collected for providing these services are mainly based on a fixed fee per employee or transaction processed. The Group provides campus recruitment services to employers. These services include planning, promoting and managing recruitment events on or near college campuses as well as a host of selection and screening services that enable employers to successfully recruit college students and graduates. The Group satisfies its performance obligation and revenue is recognized when these events and the tasks in conjunction to these events as outlined in the contract with customers have been completed. The Group conducts training programs, workshops and physical activities related to a variety of business and management topics, such as leadership, communication skills and team building. The Group satisfies its performance obligation and revenue is recognized when participants attend training events organized by the Group. For professional assessment tests, the Group satisfies its performance obligation and revenue is recognized when tests are administered to job candidates and employees. For placement services, the Group satisfies its performance obligation and revenue is recognized as the identification of prospective candidates to fill job positions as designated in the contract is completed and accepted by customers. For other services such as compensation benchmarking reports, the Group satisfies its performance obligation and revenue is recognized when services are performed and items are delivered. Arrangements with Multiple Performance Obligations The Group’s contracts with customers may include multiple services and therefore, multiple performance obligations. For such arrangements, the Group allocates revenues to each performance obligation based on its value on a standalone basis which is determined utilizing regular selling prices charged in unbundled arrangements. Contract Balances The Group’s contract balances include accounts receivable and advance from customers. The contract balances have increased along with the growth of the Group’s business. The Group’s advance from customers consists of cash received from customers in advance of revenue recognition, which is a contract liability. The increase in the advance from customers balance for the year ended December 31, 2018 was primarily driven by payments from employers received prior to the Group satisfying its performance obligation, which was offset by RMB914,312 of revenues recognized that were included in the advance from customers balance as of December 31, 2017. Practical Expedients and Exemptions The Group generally expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses in the consolidated statements of operations and comprehensive income. The Group has applied the optional exemption provided by ASC 606 to not disclose the value of remaining performance obligations not yet satisfied as of period end for contracts with original expected duration of one year or less. Value-Added Tax, Business Tax and Surcharges Effective January 1, 2012, the PRC State Council instituted a business tax to value-added tax (“VAT”) transformational pilot program in Shanghai. Under this program, industries subject to business tax were transitioned to VAT payers. As of May 1, 2016, the VAT program was expanded to cover all industries in the PRC, the VAT chain for all industries was completed, and the Company ceased paying business tax in the PRC. Generally, the main businesses of the Group’s PRC subsidiaries and VIEs are subject to VAT rates of 5% or 6%, and are permitted to offset input VAT supported by valid VAT invoices received from vendors against their VAT liability. VAT on the invoiced amount collected by the PRC subsidiaries and VIEs on behalf of tax authorities in respect of services provided, net of VAT paid for purchases, is recorded as taxes payable until it is paid to the tax authorities. The Group’s PRC subsidiaries and VIEs are also subject to certain government surcharges on the VAT payable in the PRC. In the consolidated statements of operations and comprehensive income, these surcharges are included under the account of “business tax and surcharges,” which is deducted from gross revenues to arrive at net revenues. |
Cost of Services | (l) Cost of Services Cost of services consist primarily of payroll compensation and related employee costs, subcontracting fees and other expenses incurred by the Group which are directly attributable to the rendering of the Group’s online recruitment and other human resource services. |
Sales and Marketing Expenses | (m) Sales and Marketing Expenses Sales and marketing expenses consist primarily of the Group’s sales and marketing personnel payroll compensation and related employee costs and advertising and promotion expenses. Advertising and promotion expenses generally represent the cost of promotions to create or stimulate a positive image of the Group or a desire for the Group’s services. Advertising and promotion expenses are charged to the consolidated statements of operations and comprehensive income when incurred and totaled RMB126,205, RMB130,355 and RMB205,279 for the years ended December 31, 2016, 2017 and 2018, respectively. |
Share-Based Compensation | (n) Share‑Based Compensation The Company accounts for share‑based compensation arrangements with employees in accordance with ASC 718 “Compensation – Stock Compensation.” It requires the Company to measure at the grant date the fair value of the stock‑based award and recognize compensation costs, net of estimated forfeitures, on a straight‑line basis, over the requisite service period. The Company uses the Black‑Scholes option pricing model to determine the fair value of stock options. Risk‑free interest rates are based on U.S. Treasury yield for the terms consistent with the expected life of award at the time of grant. Expected life takes into account vesting and contractual terms, employee demographics and historical exercise behavior, which the Company believes are useful reference points. The assumption for expected dividend yield is consistent with the Company’s current policy of no dividend payout. The Company estimates expected volatility at the date of grant based on historical volatilities of the market price of its American depositary shares (“ADSs”). Forfeiture rate is estimated based on historical forfeiture patterns and adjusted to reflect future change in circumstances and facts, if any. If actual forfeitures differ from those estimates, the Company may need to revise those estimates used in subsequent periods. The weighted average fair value per stock option on grant date is RMB66.87, RMB101.63 and RMB148.05 for the years ended December 31, 2016, 2017 and 2018, respectively. For the years ended December 31, 2016, 2017 and 2018, the fair value of options granted was estimated with the following assumptions: 2016 2017 2018 Risk-free interest rate 1.00%-1.70% 1.61% 2.41%-2.75% Expected life (years) 4 4 4 Expected dividend yield 0% 0% 0% Volatility 33%-34% 32% 32% Weighted average fair value per common share on date of option grant US$34.27 US$56.68 US$73.46 |
Operating Leases | (o) Operating Leases Leases where substantially all the rewards and risks of ownership of assets remain with the leasing company are accounted for as operating leases. Payments made under operating leases, net of any incentives received by the Group from the leasing company, are charged to the consolidated statements of operations and comprehensive income on a straight‑line basis over the lease periods. |
Taxation | (p) Taxation The Company accounts for income taxes using the liability method. Under this method, deferred income taxes are recognized for the differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities by applying enacted statutory rates applicable to future years in which the differences are expected to reverse. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all of, the deferred tax assets will not be realized. The Company accounts for uncertainties in accordance with ASC 740‑10‑25 “Income Taxes – Overall – Recognition.” The Company recognizes a tax benefit associated with an uncertain tax position when, in management’s judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. The Company has elected to classify interest and penalties related to an uncertain tax position, if any and when required, as general and administrative expenses. In the years ended December 31, 2016, 2017 and 2018, the Company did not record any interest and penalties associated with uncertain tax positions as there were no uncertain tax positions. |
Statutory Reserves | (q) Statutory Reserves With the exception of Tech JV which is 50% owned by 51net, a British Virgin Islands company, and Wang Ju which is majority owned by 51net HR, a Cayman Islands company, the Group’s subsidiaries and VIEs incorporated in the PRC are required on an annual basis to allocate at least 10% of their after‑tax profit, after the recovery of accumulated deficit to the statutory common reserve. The amount of allocation is calculated based on an entity’s after‑tax profit shown in its statutory financial statements which are prepared in accordance with PRC accounting standards and regulations until the reserve has reached 50% of the registered capital of each company. Once the total statutory common reserve fund reaches 50% of the registered capital of the respective companies, further appropriations are discretionary. The statutory common reserve fund is not distributable to shareholders except in the event of liquidation. Since 2008, the statutory common reserve fund for more than half of the Group’s subsidiaries and VIEs incorporated in the PRC had reached 50% of the registered capital of the respective companies. As a result, no appropriations were made by these entities to their respective statutory reserve funds in the years ended December 31, 2016, 2017 and 2018. With the exception of a few entities, all remaining subsidiaries whose total statutory common reserve fund had not reached 50% of its respective registered capital had accumulative losses as of December 31, 2016, 2017 and 2018. As a result, these entities did not make appropriations to their statutory reserve funds in the years ended December 31, 2016, 2017 and 2018. During the years ended December 31, 2016, 2017 and 2018, the Group’s subsidiaries made total appropriations to their statutory common reserve fund in the amount of RMB128, RMB514 and RMB3,405, respectively. In addition, the Group’s subsidiaries and VIEs incorporated in the PRC may, at the discretion of its board of directors, on an annual basis set aside the statutory common welfare fund, which can be used for staff welfare of the Group. No appropriations to the statutory common welfare fund were made for the years ended December 31, 2016, 2017 and 2018. Appropriations to the statutory common reserve fund and the statutory common welfare fund are accounted for as a transfer from retained earnings to the statutory reserves. There are no legal requirements in the PRC to fund these reserves by transfer of cash to any restricted accounts, and the Group does not do so. These reserves are not distributable as cash dividends. |
Dividend and Restricted Net Assets | (r) Dividend and Restricted Net Assets Dividends are recognized when declared. PRC regulations currently permit payment of dividends only out of accumulated profits as determined in accordance with PRC accounting standards and regulations. Additionally, the Group’s PRC subsidiaries and VIEs can only distribute dividends after they have met the PRC requirements for appropriation to statutory reserves. See Note 2(q). In addition, the net assets of the Group’s subsidiaries and VIEs associated with their paid-in capital are not distributable in the form of dividends. Aggregate net assets of the Group’s PRC subsidiaries and VIEs not distributable in the form of dividends to the parent as a result of the aforesaid PRC regulations and related to the paid-in capital and statutory reserves were approximately RMB522,592 and RMB525,997, or 8.4% and 6.7% of total consolidated net assets as of December 31, 2017 and 2018, respectively. However, the PRC subsidiaries may transfer such net assets to the Company by other means, including through royalty and trademark license agreements or certain other contractual agreements, at the discretion of the Company without third party consent. |
Earnings Per Share | (s) Earnings Per Share In accordance with ASC 260 “Earnings Per Share,” basic earnings per share is computed by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding during the year. Diluted earnings per share is calculated by dividing net income attributable to common shareholders, as adjusted for the change in income resulting from the assumed conversion of securities or other contracts (i.e., zero-strike call option contracts) to common shares, by the weighted average number of common and dilutive common equivalent shares outstanding during the period. Common equivalent shares consist of the common shares issuable upon the conversion of the convertible senior notes (using the if-converted method) and common shares issuable upon the exercise of outstanding share options (using the treasury stock method). The common shares underlying the zero-strike call option contracts are excluded from both the basic and diluted earnings per share calculation as they are considered as deemed repurchased for the purpose of calculating both basic and diluted earnings per share. See Note 13. |
Fair Value Measurement of Financial Instruments | (t) Fair Value Measurement of Financial Instruments Fair value reflects the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in accordance with ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”). When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value and expands disclosures about fair value measurements. ASC 820 establishes a three‑tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1 – Observable inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities Level 2 – Include other inputs that are directly or indirectly observable in the marketplace Level 3 – Unobservable inputs which are supported by little or no market activity ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (i) market approach; (ii) income approach; and (iii) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. Financial instruments of the Group are primarily comprised of cash, restricted cash, short-term investments, available-for-sale debt securities, receivables, payables, convertible senior notes and zero-strike call options. As of December 31, 2017 and 2018, the carrying values of cash, restricted cash, accounts receivable and payables approximated their estimated fair values due to the short-term maturities of these instruments. Short-term investments in time deposits are categorized as Level 1 under the fair value hierarchy and the carrying values approximated their estimated fair values because such deposits bear market interest rates. Short-term investments in investment products are categorized as Level 2 under the fair value hierarchy and their fair values are based on quoted prices or other observable inputs in active markets. The Group reports available-for-sale debt securities at fair value at each balance sheet date and changes in fair value are reflected in the consolidated statements of operations and comprehensive income. Fair value of the available-for-sale debt securities is measured using Level 3 inputs within the fair value hierarchy. In determining the fair value, the Group utilizes an income approach of a discounted cash flow model, which includes unobservable inputs such as future cash flows, growth rates and discount rates. These assumptions are inherently uncertain and subjective, and changes in any unobservable inputs may have a significant impact on the fair value. See Note 15 for the change in fair value of available-for-sale debt securities. In accordance with ASC 820, the Company measures the convertible senior notes at fair value on a recurring basis. The Company reports the convertible senior notes at fair value at each balance sheet date and changes in fair value are reflected in the consolidated statements of operations and comprehensive income. Fair value of the convertible senior notes is measured using Level 1 inputs within the fair value hierarchy as they are based on quoted market prices that are currently available on a dealer market. See Note 13. Fair value of the zero-strike call options is measured using Level 2 inputs within the fair value hierarchy as they are based on market prices of the Company’s publicly traded ADSs underlying the options. In determining the debt issuance costs related to the convertible senior notes and zero-strike call options, the Company applied the accounting for the fair value of a share lending arrangement using Level 3 inputs. The fair value of a share lending arrangement represents the economic loss from the share lending arrangement over the expected term of the underlying zero-strike call option contract. The inputs used in calculating fair value of the share lending arrangement include the contract value of the zero-strike call options, the estimated long-term share lending commission rate and the expected term of the zero-strike call option contract. See Note 13. |
Segment Reporting | (u) Segment Reporting Based on the criteria established by ASC 280 “Segment Reporting,” the Group currently operates and manages its business as a single operating and single reportable segment. The Group’s chief operating decision‑maker (“CODM”) is the chief executive officer. The CODM reviews operating results to make decisions about allocating resources and assessing performance for the entire Group. The Group primarily generates its revenues from customers in the PRC, and assets of the Group are also located in PRC. Accordingly, no geographical segments are presented. |
Stock Repurchase | (v) Stock Repurchase When the Company’s common shares are repurchased for retirement, the excess of cost over par value is charged entirely to additional paid‑in capital, limited to additional paid‑in capital of the same issue being retired. |
Comprehensive Income | (w) Comprehensive Income In accordance with ASC 220 “Comprehensive Income,” other comprehensive income/loss is defined as the change in equity of a company during the period from transactions and other events and circumstances excluding transactions resulting from investments from owners and distributions to owners. Accumulated other comprehensive income mainly consists of cumulative foreign currency translation adjustments and unrealized gains on available-for-sale debt securities. |
Government Subsidies | (x) Government Subsidies Government subsidies represent discretionary cash subsidies granted by the local government to encourage the development of certain enterprises that are established in the local special economic region. Cash subsidies have no defined rules and regulations to govern the criteria necessary for companies to enjoy the benefits and are recognized as other income when received and when all conditions for their receipt have been satisfied. The Group recognized government subsidies of RMB97,092, RMB86,287 and RMB173,760 which was included in other income for the years ended December 31, 2016, 2017 and 2018, respectively. |
Reclassifications | (y) Certain prior period amounts have been reclassified to conform to current period presentation as a result of the adoption of ASU No. 2016-18, “Statement of Cash Flows: Restricted Cash.” |
Recent Accounting Pronouncements | (z) Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” a new standard on revenue which will supersede the revenue recognition requirements in ASC 605 “Revenue Recognition.” In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” which delayed the effective date of ASU 2014-09 by one year. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” which clarified the implementation guidance on principal versus agent considerations. Further, in 2016, the FASB issued five amendments to the new standard. The new standard, as amended, sets forth a single comprehensive model for recognizing and reporting revenues. The new guidance requires the Company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenues and cash flows relating to customer contracts. The standard is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2018. Early adoption is permitted but not before periods beginning on or after January 1, 2017. The standard allows for two methods of adoption: the full retrospective adoption, which requires the standard to be applied to each prior period presented, or the modified retrospective adoption, which requires the cumulative effect of adoption to be recognized as an adjustment to opening retained earnings in the period of adoption. The Company adopted ASC 606 beginning January 1, 2018 using the modified retrospective method and assessed its contracts with customers under the new standard. Results for reporting periods prior to January 1, 2018 were not adjusted and are presented in accordance with the accounting standards in effect for those periods. The adoption of ASC 606 had no material impact on the Company’s consolidated financial statements, and there was no adjustment to beginning retained earnings on January 1, 2018. The Company’s revenue recognition for its major revenue streams has remained substantially consistent with the historical revenue recognition practices. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). The main objective of this update is to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. ASU 2016-01 changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. The guidance also changes certain disclosure requirements and other aspects of current U.S. GAAP. Further, in March 2018, the FASB issued “Technical Corrections and Improvements to Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities,” which provides further guidance on adjustments for observable transaction for equity securities without a readily determinable fair value and clarification on fair value option for liabilities instruments. ASU 2016-01 is effective for annual reporting periods, and interim periods within those years beginning after December 15, 2017. Early adoption by public entities is permitted only for certain provisions. The Company has adopted ASU 2016-01 from January 1, 2018 and the adoption had no material impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases” (“ASU 2016-02”). This update requires lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases of greater than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company has identified its existing lease contracts and has entered data within the contracts needed for the calculation of the right-of-use assets and lease liabilities into a worksheet to build the repository of lease contracts and to assist the Company with the accounting entries. This guidance is effective for the Company as of January 1, 2019. The FASB has issued further ASUs related to the standard, providing an optional transition method allowing entities to not recast comparative periods. The Company intends to use the optional transition method and, as such, recognize the effects of applying the new standard as a cumulative-effect adjustment to retained earnings as of January 1, 2019. The Company plans to elect the practical expedients upon transition that will retain the lease classification and initial direct costs for any leases that exist prior to adoption of the standard. The Company will not reassess whether any contracts entered into prior to adoption are leases. On adoption, the Company currently expects to record right-of-use assets (after adjustments for prepayments in the amount of approximately RMB4,700) and lease liabilities of approximately RMB108,400 and RMB103,700, respectively, based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses” (“ASU 2016-13”), which introduces new guidance for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments, including, but not limited to, trade and other receivables, held-to-maturity debt securities, loans and net investments in leases. The new guidance also modifies the impairment model for available-for-sale debt securities and requires the entities to determine whether all or a portion of the unrealized loss on an available-for-sale debt security is a credit loss. The standard also indicates that entities may not use the length of time a security has been in an unrealized loss position as a factor in concluding whether a credit loss exists. The ASU is effective for public companies for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for all entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is in the process of evaluating the impact of ASU 2016-13 on its consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). The new guidance is intended to reduce the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The ASU is effective for public companies for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including interim periods within those fiscal years. An entity that elects early adoption must adopt all of the amendments in the same period. The guidance requires application using a retrospective transition method. The Company has adopted ASU 2016-15 and the adoption had no material impact on the Company’s consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows: Restricted Cash” (“ASU 2016-18”). This ASU affects all entities that have restricted cash or restricted cash equivalents and are required to present a statement of cash flows under Topic 230. ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This update will become effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, and early adoption is permitted in any interim or annual period. The Company adopted ASU 2016-18 retrospectively on January 1, 2018, and as a result, the consolidated statements of cash flows now present restricted cash in the beginning and ending balances of cash. The inclusion of restricted cash to changes in cash and restricted cash was not material for all periods presented. In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business” (“ASU 2017-01”), which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The standard introduces a screen for determining when assets acquired are not a business and clarifies that a business must include, at a minimum, an input and a substantive process that contribute to an output to be considered a business. The ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company has adopted ASU 2017-01 and the adoption had no material impact on the Company’s consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”), which removes the requirement to compare the implied fair value of goodwill with its carrying amount as part of the second step of the goodwill impairment test. As a result, under the ASU, “an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.” The ASU is effective prospectively for fiscal years beginning after December 15, 2019. The Company is in the process of evaluating the impact of ASU 2017-04 on its consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, "Compensation – Stock Compensation (Topic 718): Scope of modification accounting" ("ASU 2017-09"), which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. ASU 2017-09 is effective prospectively for all companies for annual periods beginning on or after December 15, 2017, and early adoption is permitted. The Company has adopted ASU 2017-05 in the current year and the adoption had no material impact on the Company's consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting” (“ASU 2018-07”), to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. Under the guidance, the measurement of equity-classified nonemployee awards will be fixed at the grant date, which may lower their cost and reduce volatility in the income statement. The guidance is effective for public business entities in annual periods beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted, including in an interim period. The Company is in the process of evaluating the impact of ASU 2018-07 on its consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”), which eliminates, adds and modifies certain disclosure requirements for fair value measurements. Under the guidance, public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The guidance is effective for all entities for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years, but entities are permitted to early adopt either the entire standard or only the provisions that eliminate or modify the requirements. The Company is in the process of evaluating the impact of ASU 2018-13 on its consolidated financial statements. |
PRINCIPAL ACCOUNTING POLICIES_2
PRINCIPAL ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
PRINCIPAL ACCOUNTING POLICIES | |
Summary of financial information of Group's VIEs | As of December 31, 2017 2018 RMB RMB Total assets 268,484 521,044 Total liabilities 112,655 214,588 For the year ended December 31, 2016 2017 2018 RMB RMB RMB Total revenues — — 161,816 Net income (loss) (2,300) (4,088) 18,406 For the year ended December 31, 2016 2017 2018 RMB RMB RMB Net cash provided by (used in) operating activities 1,257 (7,131) 5,855 Net cash provided by (used in) investing activities (126,716) 4,152 (83,936) Net cash provided by financing activities 126,745 3,334 157,500 Net increase in cash 1,286 355 78,919 Cash, beginning of year 6,241 7,527 7,882 Cash, end of year 7,527 7,882 86,801 |
Schedule of cash and restricted cash | 2017 2018 RMB RMB Cash 2,292,476 1,968,351 Restricted cash 249 5,770 Total cash and restricted cash 2,292,725 1,974,121 |
Schedule of estimated useful lives of property and equipment | Estimated useful lives Land use rights 32.42 to 50 years Building 20 years Leasehold improvements Lesser of the lease period or the estimated useful life Electronic equipment 3 to 5 years Furniture and fixtures 5 years Motor vehicles 5 years Other assets 5 years |
Schedule of assumptions used to estimate the fair value of stock options | 2016 2017 2018 Risk-free interest rate 1.00%-1.70% 1.61% 2.41%-2.75% Expected life (years) 4 4 4 Expected dividend yield 0% 0% 0% Volatility 33%-34% 32% 32% Weighted average fair value per common share on date of option grant US$34.27 US$56.68 US$73.46 |
ACQUISITION (Tables)
ACQUISITION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Lagou Information Limited | |
ACQUISITION | |
Schedule of allocation of the purchase price at the date of acquisition | RMB Net assets 125,026 Identifiable intangible assets: Trade names 60,183 Technology 35,979 Goodwill 818,730 Deferred tax liabilities (14,424) Redeemable non-controlling interests (242,900) Total 782,594 |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
ACCOUNTS RECEIVABLE | |
Schedule of accounts receivable | As of December 31, 2017 2018 RMB RMB Accounts receivable 192,245 241,079 Less: Allowance for doubtful accounts (5,384) (11,014) 186,861 230,065 |
Schedule of movement of allowance for doubtful accounts | 2016 2017 2018 RMB RMB RMB Balance at beginning of year 3,290 6,144 5,384 Additions 6,705 5,738 11,701 Write-offs (3,851) (6,498) (6,071) Balance at end of year 6,144 5,384 11,014 |
PREPAYMENTS AND OTHER CURRENT_2
PREPAYMENTS AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
PREPAYMENTS AND OTHER CURRENT ASSETS | |
Schedule of components of prepayments and other current assets | 2017 2018 RMB RMB Rental and other deposits 3,116 2,766 Prepayments for rental and others 29,799 23,689 Employee advances 9,268 27,136 Payments made on behalf of customers, net of allowance 458,199 472,502 Prepaid insurance premium 1,035 1,158 Interest income receivable 51,374 74,231 Others 6,314 5,436 Total 559,105 606,918 |
Schedule of movement of allowance for payments made on behalf of customers | 2016 2017 2018 RMB RMB RMB Balance at beginning of year 856 459 3,047 Additions 843 9,656 — Reversals — — (1,094) Write-offs (1,240) (7,068) (562) Balance at end of year 459 3,047 1,391 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
PROPERTY AND EQUIPMENT | |
Schedule of property and equipment and related accumulated depreciation | 2017 2018 RMB RMB Land use rights and building 575,443 632,844 Leasehold improvements 35,709 37,994 Electronic equipment 141,787 152,058 Furniture and fixtures 7,194 7,312 Motor vehicles 7,210 8,135 Other assets 49,095 53,747 Less: Accumulated depreciation (318,593) (365,070) Net book value 497,845 527,020 |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
GOODWILL | |
Schedule of changes in the carrying amount of goodwill | 2017 2018 RMB RMB Balance at beginning of year 217,394 1,021,454 Acquisition of Lagou 804,060 14,670 Balance at end of year 1,021,454 1,036,124 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
INTANGIBLE ASSETS | |
Schedule of intangible assets and related accumulated amortization | 2017 2018 RMB RMB Computer software 31,958 29,156 Acquired technology 60,251 60,251 Trade names 95,783 95,783 Customer relationships 12,270 12,270 Acquired program transmission license — 119,728 Acquired training and other licenses 4,151 4,151 Less: Accumulated amortization (42,389) (76,893) Net book value 162,024 244,446 |
OTHER PAYABLES AND ACCRUALS (Ta
OTHER PAYABLES AND ACCRUALS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
OTHER PAYABLES AND ACCRUALS | |
Schedule of components of other payables and accruals | 2017 2018 RMB RMB Receipts from customers 580,794 808,799 Payables to customers related to government policy compliance incentives 71,638 114,909 Professional service fees 3,274 3,727 Office expenses 8,636 7,338 Payables to employees related to net proceeds from share options exercised 137 3,217 Accrued interest expense related to convertible senior notes 7,632 8,016 Payable for acquisition 27,923 — Others 3,407 6,172 Total 703,441 952,178 |
TAXATION (Tables)
TAXATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
TAXATION | |
Schedule of income (loss) before income tax expense taxed between jurisdictions | 2016 2017 2018 RMB RMB RMB PRC entities 875,175 1,139,978 1,617,091 Non-PRC entities (175,289) (597,722) (130,216) Total 699,886 542,256 1,486,875 |
Schedule of current and deferred portion of income tax expense included in the consolidated statements of operations and comprehensive income | 2016 2017 2018 RMB RMB RMB Current income tax expense PRC entities 120,280 156,706 223,903 Non-PRC entities — — — Total 120,280 156,706 223,903 Deferred income tax expense PRC entities 14,419 12,787 18,531 Non-PRC entities — — — Total 14,419 12,787 18,531 Income tax expense PRC entities 134,699 169,493 242,434 Non-PRC entities — — — Total 169,493 242,434 |
Schedule of reconciliation between the statutory EIT rate in the PRC and the Group's effective tax rate | 2016 2017 2018 EIT statutory rate 25 % 25 % 25 % Difference in EIT rates of certain subsidiaries (11) % (20) % (11) % Non-deductibility of expenses incurred outside the PRC 6 % 28 % 3 % Other permanent differences (1) % (2) % (1) % Effective EIT rate of the Group 19 % 31 % 16 % |
Schedule of aggregate amount and per share effect of the preferential tax rate | 2016 2017 2018 RMB RMB RMB (in thousands, except per share data) Aggregate effect 81,300 107,547 154,182 Basic net income per share effect 1.40 1.79 2.51 Diluted net income per share effect 1.39 1.76 2.44 |
Schedule of significant components of deferred tax assets and liabilities | 2017 2018 RMB RMB Deductible temporary differences related to other payables and accruals 1,053 1,073 Deductible temporary differences related to provision for doubtful accounts 1,265 1,648 Deductible temporary differences related to advertising expenses 12,076 13,422 Tax loss carryforwards 50,900 49,408 Amount offset by non-current deferred tax liabilities (12,806) (6,633) 52,488 58,918 Less: Valuation allowance (39,576) (43,913) Total deferred tax assets 12,912 15,005 Taxable temporary differences related to depreciation period (6,153) (10,141) Taxable temporary differences related to available-for-sale debt securities (46,526) (85,373) Taxable temporary differences related to government subsidy income (57,995) (75,240) Taxable temporary differences related to trade names, technology and customer relationships (23,480) (20,440) Taxable temporary differences related to acquired program transmission license — (26,191) Amount offset by non-current deferred tax assets 12,806 6,633 Total deferred tax liabilities (121,348) (210,752) |
Schedule of roll-forward of the valuation allowance | 2016 2017 2018 RMB RMB RMB Balance at beginning of year 1,851 2,443 39,576 Additions 1,019 37,902 6,305 Reversals (427) (769) (1,968) Balance at end of year 2,443 39,576 43,913 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
SHARE-BASED COMPENSATION | |
Summary of share option activity | Weighted Weighted average average remaining Aggregate Number exercise contractual intrinsic value of shares price life (years) (thousands) Outstanding at December 31, 2015 6,089,905 US$ 28.19 3.38 US$ 12,942 Granted 1,157,400 US$ 34.27 Exercised (1,117,754) US$ 21.54 Forfeited (334,720) US$ 29.86 Outstanding at December 31, 2016 5,794,831 US$ 30.58 3.36 US$ 19,272 Granted 1,279,872 US$ 56.68 Exercised (2,147,819) US$ 29.04 Forfeited (119,902) US$ 32.64 Outstanding at December 31, 2017 4,806,982 US$ 38.17 3.83 US$ 109,017 Granted 1,320,672 US$ 73.46 Exercised (752,814) US$ 29.71 Forfeited (55,850) US$ 35.72 Outstanding at December 31, 2018 5,318,990 US$ 48.16 3.76 US$ 90,526 Vested and expected to vest at December 31, 2018 5,064,646 US$ 47.56 3.70 US$ 88,532 Exercisable at December 31, 2018 2,615,921 US$ 35.93 2.61 US$ 69,418 |
Summary of non-vested share option activity | Weighted average grant-date Number fair value of shares (per share) Non-vested at December 31, 2015 2,708,243 US$ 11.02 Granted 1,157,400 US$ 9.63 Vested (1,035,577) US$ 11.01 Forfeited (334,720) US$ 11.09 Non-vested at December 31, 2016 2,495,346 US$ 10.37 Granted 1,279,872 US$ 15.62 Vested (1,085,019) US$ 10.50 Forfeited (119,902) US$ 10.55 Non-vested at December 31, 2017 2,570,297 US$ 12.86 Granted 1,320,672 US$ 21.53 Vested (1,132,050) US$ 12.51 Forfeited (55,850) US$ 10.83 Non-vested at December 31, 2018 2,703,069 US$ 17.29 Expected to vest at December 31, 2018 2,448,725 US$ 17.29 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
EARNINGS PER SHARE | |
Schedule of basic earnings per share and diluted earnings per share | 2016 2017 2018 RMB RMB RMB (in thousands, except share and per share data) Numerator: Net income attributable to 51job, Inc. 565,978 371,889 1,252,319 Denominator: Denominator for basic earnings per share — weighted average common shares outstanding 58,132,976 60,087,306 61,318,292 Dilutive effect of share options 341,092 1,063,107 1,857,191 Denominator for diluted earnings per share 58,474,068 61,150,413 63,175,483 Basic earnings per share 9.74 6.19 20.42 Diluted earnings per share 9.68 6.08 19.82 |
FAIR VALUE CHANGES OF INVESTM_2
FAIR VALUE CHANGES OF INVESTMENT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
FAIR VALUE CHANGES OF INVESTMENT | |
Schedule of information about the reconciliation of the Level 3 fair value measurements of available-for-sale debt securities | RMB Balance at January 1, 2016 — Initial recognition 126,716 Unrealized gain 38,501 Balance at December 31, 2016 165,217 Unrealized gain 147,602 Balance at December 31, 2017 312,819 Unrealized gain 155,387 Sale of debt securities (19,430) Balance at December 31, 2018 448,776 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of future minimum payments relating to operating lease commitments | Future minimum payments with respect to these agreements for the twelve months ending December 31 of the coming years are as follows: Office Office premises equipment Total RMB RMB RMB 2019 53,547 13,995 67,542 2020 39,156 227 39,383 2021 24,709 59 24,768 2022 19,768 29 19,797 2023 and thereafter 14,432 — 14,432 151,612 14,310 165,922 |
Schedule of future minimum payments with respect to contractual purchase obligations | Future minimum payments with respect to these agreements for the twelve months ending December 31 of the coming year are as follows: Advertising Office services furnishings Total RMB RMB RMB 2019 6,793 329 7,122 2020 591 9 600 |
REDEEMABLE NON-CONTROLLING IN_2
REDEEMABLE NON-CONTROLLING INTERESTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
REDEEMABLE NON-CONTROLLING INTERESTS | |
Schedule of redeemable non-controlling interest | 2017 2018 RMB RMB Balance at beginning of year — 228,230 Addition 228,230 — Share-based compensation — 7,911 Net loss attributable to mezzanine equity holders — (10,496) Balance at end of year 228,230 225,645 |
PRINCIPAL ACCOUNTING POLICIES -
PRINCIPAL ACCOUNTING POLICIES - Basis of Consolidation (Details) ¥ in Thousands | Jan. 27, 2014 | Dec. 31, 2018CNY (¥)entity | Dec. 31, 2017entity | Dec. 31, 2016entity | Jun. 30, 2015 | Sep. 11, 2007CNY (¥) |
Basis of consolidation | ||||||
Number of consolidated VIEs | entity | 2 | 2 | 2 | |||
Expiration term of equity pledge agreement | 2 years | |||||
Lagou Information Limited | ||||||
Basis of consolidation | ||||||
Percentage of equity interest acquired | 66.00% | |||||
51net HR | Wang Ju | ||||||
Basis of consolidation | ||||||
Ownership interest in subsidiary (as a percent) | 70.00% | |||||
51net | Tech JV | ||||||
Basis of consolidation | ||||||
Ownership interest in subsidiary (as a percent) | 50.00% | |||||
Tech JV | AdCo | ||||||
Basis of consolidation | ||||||
Ownership interest in subsidiary (as a percent) | 80.00% | |||||
Tech JV | Zhiding Youyuan | ||||||
Basis of consolidation | ||||||
Ownership interest in subsidiary (as a percent) | 60.00% | |||||
Run An | ||||||
Basis of consolidation | ||||||
Registered capital | ¥ 6,000 | |||||
Retained earnings | ¥ 20,047 | |||||
Interest-free loans to shareholders of VIEs | ¥ 6,000 | |||||
Run An | Wang Ju | ||||||
Basis of consolidation | ||||||
Ownership interest (as a percent) | 30.00% | |||||
Run An | Beijing Lagou Network Information Technology Co, Ltd | ||||||
Basis of consolidation | ||||||
Ownership interest (as a percent) | 60.00% | |||||
Qian Cheng | ||||||
Basis of consolidation | ||||||
Registered capital | ¥ 1,500 | |||||
Retained earnings | 4,731 | |||||
Purchase price for Qian Cheng's equity interest in Tech JV and AdCo under the call option agreement | ¥ 1,200 | |||||
Qian Cheng | Tech JV | ||||||
Basis of consolidation | ||||||
Ownership interest (as a percent) | 50.00% | |||||
Qian Cheng | AdCo | ||||||
Basis of consolidation | ||||||
Ownership interest (as a percent) | 20.00% |
PRINCIPAL ACCOUNTING POLICIES_3
PRINCIPAL ACCOUNTING POLICIES - Financial Information of the Group's VIEs (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | |
Financial information of the Group's VIEs | ||||
Total revenues | $ 550,061 | ¥ 3,781,946 | ¥ 2,881,215 | ¥ 2,372,695 |
Net income (loss) | 180,996 | 1,244,441 | 372,763 | 565,187 |
Net cash provided by (used in) operating activities | 260,773 | 1,792,942 | 1,441,563 | 1,074,207 |
Net cash provided by (used in) investing activities | (331,641) | (2,280,197) | (1,434,256) | (489,328) |
Net cash provided by financing activities | 21,107 | 145,121 | 424,415 | 160,493 |
Net increase in cash | (46,339) | (318,604) | 371,262 | 783,052 |
Cash and restricted cash, beginning of year | 333,463 | 2,292,725 | 1,921,463 | 1,138,411 |
Cash and restricted cash, end of year | $ 287,124 | 1,974,121 | 2,292,725 | 1,921,463 |
The Group's VIEs | ||||
Financial information of the Group's VIEs | ||||
Total assets | 521,044 | 268,484 | ||
Total liabilities | 214,588 | 112,655 | ||
Total revenues | 161,816 | |||
Net income (loss) | 18,406 | (4,088) | (2,300) | |
Net cash provided by (used in) operating activities | 5,855 | (7,131) | 1,257 | |
Net cash provided by (used in) investing activities | (83,936) | 4,152 | (126,716) | |
Net cash provided by financing activities | 157,500 | 3,334 | 126,745 | |
Net increase in cash | 78,919 | 355 | 1,286 | |
Cash and restricted cash, beginning of year | 7,882 | 7,527 | 6,241 | |
Cash and restricted cash, end of year | ¥ 86,801 | ¥ 7,882 | ¥ 7,527 |
PRINCIPAL ACCOUNTING POLICIES_4
PRINCIPAL ACCOUNTING POLICIES - Foreign Currencies, Cash and Restricted Cash, Investments (Details) ¥ in Thousands, $ in Thousands | 1 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2016CNY (¥) | Dec. 31, 2018USD ($)company¥ / $ | Dec. 31, 2018CNY (¥)company | Dec. 31, 2017CNY (¥)company | Dec. 31, 2016CNY (¥) | Dec. 31, 2018CNY (¥)¥ / $ | Dec. 28, 2018CNY (¥) | Dec. 31, 2017USD ($) | Dec. 31, 2017CNY (¥) | Dec. 29, 2017CNY (¥) | Dec. 31, 2015CNY (¥) | |
Foreign Currencies | |||||||||||
Exchange rate used for conversion of RMB into U.S. dollars in the financial statements | ¥ / $ | 6.8755 | 6.8755 | |||||||||
Cash and Restricted Cash | |||||||||||
Cash | $ 286,285 | ¥ 1,968,351 | ¥ 2,292,476 | ||||||||
Restricted cash | 839 | 5,770 | 249 | ||||||||
Total cash and restricted cash | 287,124 | ¥ 1,921,463 | 1,974,121 | $ 333,463 | 2,292,725 | ¥ 1,138,411 | |||||
Investments | |||||||||||
Other-than-temporary impairment charge | ¥ 0 | 0 | |||||||||
Qualifying observable price changes | ¥ 0 | ||||||||||
Available-for-sale debt securities | 126,716 | ||||||||||
Unrealized gain on available-for-sale securities, net of tax effect | 16,950 | 116,540 | ¥ 110,702 | ¥ 28,876 | |||||||
USD | |||||||||||
Cash and Restricted Cash | |||||||||||
Amount of cash and restricted cash held in U.S. dollars | $ 135,668 | ¥ 931,120 | $ 125,450 | ¥ 819,715 | |||||||
Equity Method Investments | |||||||||||
Investments | |||||||||||
Amount paid for investments | 25,000 | ||||||||||
Remaining unpaid amount of investments | 25,000 | ||||||||||
Other-than-temporary impairment charge on equity method investment | ¥ 0 | ||||||||||
Mobile-based platform focused on short-term, on-demand work opportunities in the United States | |||||||||||
Investments | |||||||||||
Equity interest | ¥ 96,967 | ||||||||||
Percentage of equity interest owned | 9.50% | 9.50% | |||||||||
Technology talent assessment services provider in the United States | |||||||||||
Investments | |||||||||||
Equity interest | ¥ 31,535 | ||||||||||
Percentage of equity interest owned | 14.30% | 14.30% | |||||||||
Human resource consulting and executive search services company in China | |||||||||||
Investments | |||||||||||
Equity interest | ¥ 25,000 | ||||||||||
Percentage of equity interest owned | 18.00% | 18.00% | |||||||||
Companies That Provide Business Process Outsourcing Services in China | |||||||||||
Investments | |||||||||||
Equity interest | ¥ 300 | ¥ 300 | |||||||||
Percentage of equity interest owned | 5.00% | 5.00% | 5.00% | 5.00% | |||||||
Number of companies | company | 3 | 3 | 3 | ||||||||
Golden Finance | |||||||||||
Investments | |||||||||||
Available-for-sale debt securities | ¥ 126,716 | ||||||||||
Available-for-sale debt securities, percentage acquired | 15.00% | 11.70% | 11.70% | ||||||||
Unrealized gain on available-for-sale securities, net of tax effect | ¥ 116,540 | ¥ 110,702 | |||||||||
Realized gain on sale of debt securities | 61,070 | ||||||||||
Investment fund | Equity Method Investments | |||||||||||
Investments | |||||||||||
Ownership interest (as a percent) | 5.00% | 5.00% | |||||||||
Amount paid for investments | 75,000 | ||||||||||
Another Investment Fund | Equity Method Investments | |||||||||||
Investments | |||||||||||
Ownership interest (as a percent) | 25.00% | 25.00% | |||||||||
Amount paid for other investment | ¥ 50,000 |
PRINCIPAL ACCOUNTING POLICIES_5
PRINCIPAL ACCOUNTING POLICIES - Property and Equipment, Business Combinations (Details) ¥ in Thousands | 12 Months Ended |
Dec. 31, 2018CNY (¥) | |
Business Combinations | |
Net loss attributable to mezzanine equity holders | ¥ 10,496 |
Land use rights | Minimum | |
Property and equipment | |
Estimated useful lives | 32 years 5 months 1 day |
Land use rights | Maximum | |
Property and equipment | |
Estimated useful lives | 50 years |
Building | |
Property and equipment | |
Estimated useful lives | 20 years |
Leasehold improvements | |
Property and equipment | |
Estimated useful lives | Lesser of the lease period or the estimated useful life |
Electronic equipment. | Minimum | |
Property and equipment | |
Estimated useful lives | 3 years |
Electronic equipment. | Maximum | |
Property and equipment | |
Estimated useful lives | 5 years |
Furniture and fixtures | |
Property and equipment | |
Estimated useful lives | 5 years |
Motor vehicles | |
Property and equipment | |
Estimated useful lives | 5 years |
Other assets | |
Property and equipment | |
Estimated useful lives | 5 years |
PRINCIPAL ACCOUNTING POLICIES_6
PRINCIPAL ACCOUNTING POLICIES - Goodwill and Intangible Assets, Impairment of Long-Lived Assets Other Than Goodwill (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Principal accounting policies | |||
Impairment of goodwill | ¥ 0 | ¥ 0 | ¥ 0 |
Impairment of intangible assets | 0 | 0 | 0 |
Impairment of long-lived assets recognized | ¥ 0 | ¥ 0 | ¥ 0 |
Minimum | |||
Principal accounting policies | |||
Useful life of purchased intangible assets | 3 years | ||
Estimated useful lives of intangible assets arising from acquisitions | 5 years | ||
Maximum | |||
Principal accounting policies | |||
Useful life of purchased intangible assets | 10 years | ||
Estimated useful lives of intangible assets arising from acquisitions | 20 years |
PRINCIPAL ACCOUNTING POLICIES_7
PRINCIPAL ACCOUNTING POLICIES - Revenue Recognition, Advance from Customers, Sales and Marketing Expenses (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Principal accounting policies | |||
Advance from customers | ¥ 914,312 | ||
Advertising and promotion expenses | ¥ 205,279 | ¥ 130,355 | ¥ 126,205 |
Minimum | |||
Principal accounting policies | |||
Average subscription period of recruitment packages | 1 month | ||
Average display period of advertisement | 7 days | ||
Contract term for business process outsourcing services | 1 year | ||
Value-added tax rate (as a percent) | 5.00% | ||
Maximum | |||
Principal accounting policies | |||
Average subscription period of recruitment packages | 1 year | ||
Average display period of advertisement | 1 year | ||
Contract term for business process outsourcing services | 3 years | ||
Value-added tax rate (as a percent) | 6.00% |
PRINCIPAL ACCOUNTING POLICIES_8
PRINCIPAL ACCOUNTING POLICIES - Share-Based Compensation, Taxation (Details) ¥ / shares in Units, ¥ in Thousands | 12 Months Ended | |||||
Dec. 31, 2018CNY (¥)$ / shares | Dec. 31, 2018CNY (¥)¥ / shares | Dec. 31, 2017CNY (¥)$ / shares | Dec. 31, 2017CNY (¥)¥ / shares | Dec. 31, 2016CNY (¥)$ / shares | Dec. 31, 2016CNY (¥)¥ / shares | |
Share based compensation | ||||||
Weighted average fair value per stock option on grant date (in dollars or CNY per share) | (per share) | $ 21.53 | ¥ 148.05 | $ 15.62 | ¥ 101.63 | $ 9.63 | ¥ 66.87 |
Risk-free interest rate (as a percent) | 1.61% | 1.61% | ||||
Expected life (years) | 4 years | 4 years | 4 years | 4 years | 4 years | 4 years |
Expected dividend yield (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
Volatility (as a percent) | 32.00% | 32.00% | 32.00% | 32.00% | ||
Weighted average fair value of the common share on date of option grant | $ / shares | $ 73.46 | $ 56.68 | $ 34.27 | |||
Taxation | ||||||
Uncertain tax positions | ¥ | $ 0 | ¥ 0 | $ 0 | ¥ 0 | $ 0 | ¥ 0 |
Minimum | ||||||
Share based compensation | ||||||
Risk-free interest rate (as a percent) | 2.41% | 2.41% | 1.00% | 1.00% | ||
Volatility (as a percent) | 33.00% | 33.00% | ||||
Maximum | ||||||
Share based compensation | ||||||
Risk-free interest rate (as a percent) | 2.75% | 2.75% | 1.70% | 1.70% | ||
Volatility (as a percent) | 34.00% | 34.00% |
PRINCIPAL ACCOUNTING POLICIES_9
PRINCIPAL ACCOUNTING POLICIES - Statutory Reserves, Dividend and Restricted Net Assets, Segment Reporting, Government Subsidies (Details) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018CNY (¥)segment | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | |
Principal accounting policies | |||
Percentage allocation of annual after-tax profit to statutory common reserve | 10.00% | ||
Statutory common reserve as a percentage of registered capital reached | 50.00% | ||
Appropriations to the statutory reserve fund by subsidiaries and VIEs | ¥ 0 | ¥ 0 | ¥ 0 |
Total appropriations to the statutory common reserve fund | 3,405 | 514 | 128 |
Appropriations to the statutory common welfare fund | 0 | 0 | 0 |
Net assets not distributable | ¥ 525,997 | ¥ 522,592 | |
Aggregate net assets not distributable as percentage of total consolidated net assets | 6.70% | 8.40% | |
Number of operating segments | segment | 1 | ||
Number of reportable segments | segment | 1 | ||
Government subsidies recognized | ¥ 173,760 | ¥ 86,287 | ¥ 97,092 |
51net | Tech JV | |||
Principal accounting policies | |||
Ownership interest in subsidiary (as a percent) | 50.00% |
PRINCIPAL ACCOUNTING POLICIE_10
PRINCIPAL ACCOUNTING POLICIES - Reclassifications and Recent Accounting Pronouncements (Details) - Accounting Standards Update 2016-02 - Restatement Adjustment ¥ in Thousands | Jan. 01, 2019CNY (¥) |
Recently issued accounting pronouncements | |
Adjustment for prepayments | ¥ 4,700 |
Right-to-use assets | 108,400 |
Lease liabilities | ¥ 103,700 |
ACQUISITION (Details)
ACQUISITION (Details) ¥ in Thousands, $ in Thousands | 1 Months Ended | |||
Dec. 31, 2017CNY (¥) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2016CNY (¥) | |
ACQUISITION | ||||
Goodwill | ¥ 1,021,454 | $ 150,698 | ¥ 1,036,124 | ¥ 217,394 |
Lagou Information Limited | ||||
ACQUISITION | ||||
Percentage of equity interest acquired | 66.00% | |||
Total purchase price | ¥ 782,594 | |||
Net assets | 125,026 | |||
Goodwill | 818,730 | |||
Deferred tax liabilities | (14,424) | |||
Non-controlling interests | (242,900) | |||
Total | 782,594 | |||
Lagou Information Limited | Trade names | ||||
ACQUISITION | ||||
Identifiable intangible assets: | 60,183 | |||
Lagou Information Limited | Technology | ||||
ACQUISITION | ||||
Identifiable intangible assets: | ¥ 35,979 |
ACCOUNTS RECEIVABLE (Details)
ACCOUNTS RECEIVABLE (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) |
ACCOUNTS RECEIVABLE | |||||
Accounts receivable | ¥ 241,079 | ¥ 192,245 | |||
Less: Allowance for doubtful accounts | (11,014) | (5,384) | ¥ (6,144) | ¥ (3,290) | |
Accounts receivable, net | $ 33,462 | ¥ 230,065 | ¥ 186,861 |
ACCOUNTS RECEIVABLE - Allowance
ACCOUNTS RECEIVABLE - Allowance for Doubtful Accounts (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Allowance for doubtful accounts | |||
Balance at beginning of year | ¥ 5,384 | ¥ 6,144 | ¥ 3,290 |
Additions | 11,701 | 5,738 | 6,705 |
Write-offs | (6,071) | (6,498) | (3,851) |
Balance at end of year | ¥ 11,014 | ¥ 5,384 | ¥ 6,144 |
PREPAYMENTS AND OTHER CURRENT_3
PREPAYMENTS AND OTHER CURRENT ASSETS - Summary (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) |
PREPAYMENTS AND OTHER CURRENT ASSETS | |||
Rental and other deposits | ¥ 2,766 | ¥ 3,116 | |
Prepayments for rental and others | 23,689 | 29,799 | |
Employee advances | 27,136 | 9,268 | |
Payments made on behalf of customers, net of allowance | 472,502 | 458,199 | |
Prepaid insurance premium | 1,158 | 1,035 | |
Interest income receivable | 74,231 | 51,374 | |
Others | 5,436 | 6,314 | |
Total | $ 88,273 | ¥ 606,918 | ¥ 559,105 |
PREPAYMENTS AND OTHER CURRENT_4
PREPAYMENTS AND OTHER CURRENT ASSETS - Allowance for payments made on behalf of customers (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
PREPAYMENTS AND OTHER CURRENT ASSETS | |||
Balance at beginning of year | ¥ 3,047 | ¥ 459 | ¥ 856 |
Additions | 9,656 | 843 | |
Reversals | (1,094) | ||
Write-offs | (562) | (7,068) | (1,240) |
Balance at end of year | ¥ 1,391 | ¥ 3,047 | ¥ 459 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | Dec. 31, 2018CNY (¥) | |
Property and equipment | |||||
Less: Accumulated depreciation | ¥ (318,593) | ¥ (365,070) | |||
Net book value | $ 76,652 | 497,845 | 527,020 | ||
Depreciation expense | 8,297 | ¥ 57,044 | 53,422 | ¥ 53,754 | |
Loss due to disposal of fixed assets | $ 33 | ¥ 225 | 690 | ¥ 122 | |
Land use rights and building | |||||
Property and equipment | |||||
Gross book value | 575,443 | 632,844 | |||
Leasehold improvements | |||||
Property and equipment | |||||
Gross book value | 35,709 | 37,994 | |||
Electronic equipment. | |||||
Property and equipment | |||||
Gross book value | 141,787 | 152,058 | |||
Furniture and fixtures | |||||
Property and equipment | |||||
Gross book value | 7,194 | 7,312 | |||
Motor vehicles | |||||
Property and equipment | |||||
Gross book value | 7,210 | 8,135 | |||
Other assets | |||||
Property and equipment | |||||
Gross book value | ¥ 49,095 | ¥ 53,747 |
GOODWILL (Details)
GOODWILL (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Changes in the carrying amount of goodwill | |||
Balance at beginning of year | ¥ 1,021,454 | ¥ 217,394 | |
Acquisition of Lagou | 14,670 | 804,060 | |
Balance at end of year | $ 150,698 | ¥ 1,036,124 | ¥ 1,021,454 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018CNY (¥) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Intangible assets | ||||
Less: Accumulated amortization | ¥ (76,893) | ¥ (42,389) | ||
Net book value | $ 35,553 | 244,446 | 162,024 | |
Deferred tax liability | 20,440 | 23,480 | ||
Computer software | ||||
Intangible assets | ||||
Gross book value | 29,156 | 31,958 | ||
Technology | ||||
Intangible assets | ||||
Gross book value | 60,251 | 60,251 | ||
Trade names | ||||
Intangible assets | ||||
Gross book value | 95,783 | 95,783 | ||
Customer relationships | ||||
Intangible assets | ||||
Gross book value | 12,270 | 12,270 | ||
Acquired program transmission license | ||||
Intangible assets | ||||
Gross book value | 119,728 | |||
Acquired training licenses | ||||
Intangible assets | ||||
Gross book value | 4,151 | ¥ 4,151 | ||
Online audio/video program transmission license | ||||
Intangible assets | ||||
Total purchase price of intangible assets acquired | ¥ 89,796 | |||
Deferred tax liability | 29,932 | |||
Unpaid consideration | ¥ 7,355 |
INTANGIBLE ASSETS - Amortizatio
INTANGIBLE ASSETS - Amortization Expense (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | |
INTANGIBLE ASSETS | ||||
Amortization expense | $ 5,603 | ¥ 38,525 | ¥ 10,245 | ¥ 9,022 |
Estimated amortization expenses | ||||
2019 | 42,342 | |||
2020 | 39,724 | |||
2021 | 38,570 | |||
2022 | 38,124 | |||
2023 | ¥ 30,574 |
OTHER PAYABLES AND ACCRUALS (De
OTHER PAYABLES AND ACCRUALS (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) |
OTHER PAYABLES AND ACCRUALS | |||
Receipts from customers | ¥ 808,799 | ¥ 580,794 | |
Payables to customers related to government policy compliance incentives | 114,909 | 71,638 | |
Professional service fees | 3,727 | 3,274 | |
Office expenses | 7,338 | 8,636 | |
Payables to employees related to net proceeds from share options exercised | 3,217 | 137 | |
Accrued interest expense related to convertible senior notes | 8,016 | 7,632 | |
Payable for acquisition | 27,923 | ||
Others | 6,172 | 3,407 | |
Total | $ 138,489 | ¥ 952,178 | ¥ 703,441 |
TAXATION - Summary (Details)
TAXATION - Summary (Details) - CNY (¥) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
TAXATION | |||
Income tax rate (as a percent) | 25.00% | 25.00% | 25.00% |
Withholding income tax rate (as a percent) | 10.00% | ||
Cumulative undistributed earnings of the Company's PRC subsidiaries | ¥ 6,913,897,000 | ¥ 5,324,204,000 | |
Unrecognized deferred tax liability of the Company's PRC subsidiaries | ¥ 691,390,000 | ¥ 532,420,000 | |
Hong Kong | |||
TAXATION | |||
Withholding income tax rate for Hong Kong (as a percent) | 5.00% | ||
PRC | |||
TAXATION | |||
Income tax rate (as a percent) | 25.00% | ||
Cayman Islands | |||
TAXATION | |||
Withholding tax amount | ¥ 0 | ||
British Virgin Islands | |||
TAXATION | |||
Withholding tax amount | ¥ 0 | ||
51net | Hong Kong | |||
TAXATION | |||
Income tax rate (as a percent) | 16.50% | ||
Tech JV | PRC | |||
TAXATION | |||
Preferential income tax rate for High and New Technology Enterprise (as a percent) | 15.00% | ||
Review frequency of the qualifications for High and New Technology Enterprise | 3 years | ||
Beijing Lagou Network Technology Co., Ltd and Beijing Zhiding Youyuan Management Consulting Co., Ltd | |||
TAXATION | |||
Preferential income tax rate for High and New Technology Enterprise (as a percent) | 15.00% |
TAXATION - Composition of Incom
TAXATION - Composition of Income Tax Expense (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | |
Composition of Income Tax Expense | ||||
Income (loss) before income tax expense - PRC entities | ¥ 1,617,091 | ¥ 1,139,978 | ¥ 875,175 | |
Income (loss) before income tax expense - Non-PRC entities | (130,216) | (597,722) | (175,289) | |
Income before income tax expense | $ 216,257 | ¥ 1,486,875 | ¥ 542,256 | ¥ 699,886 |
TAXATION - Current and Deferred
TAXATION - Current and Deferred Income Tax Expense (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | |
Current income tax expense | ||||
PRC entities | ¥ 223,903 | ¥ 156,706 | ¥ 120,280 | |
Total | 223,903 | 156,706 | 120,280 | |
Deferred income tax expense | ||||
PRC entities | 18,531 | 12,787 | 14,419 | |
Total | $ 2,695 | 18,531 | 12,787 | 14,419 |
Income tax expense | ||||
PRC entities | 242,434 | 169,493 | 134,699 | |
Total | $ 35,261 | ¥ 242,434 | ¥ 169,493 | ¥ 134,699 |
TAXATION - Reconciliation Betwe
TAXATION - Reconciliation Between the Statutory Tax Rate and the Effective Tax Rate (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of the Differences Between Statutory Tax Rate and the Effective Tax Rate | |||
EIT statutory rate (as a percent) | 25.00% | 25.00% | 25.00% |
Difference in EIT rates of certain subsidiaries (as a percent) | (11.00%) | (20.00%) | (11.00%) |
Non-deductibility of expenses incurred outside the PRC (as a percent) | 3.00% | 28.00% | 6.00% |
Other permanent differences (as a percent) | (1.00%) | (2.00%) | (1.00%) |
Effective EIT rate of the Group (as a percent) | 16.00% | 31.00% | 19.00% |
TAXATION - Aggregate Amount and
TAXATION - Aggregate Amount and Per Share Effect of the Preferential Tax Rate (Details) - CNY (¥) ¥ / shares in Units, ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
TAXATION | |||
Aggregate effect | ¥ 154,182 | ¥ 107,547 | ¥ 81,300 |
Basic net income per share effect (in CNY per share) | ¥ 2.51 | ¥ 1.79 | ¥ 1.40 |
Diluted net income per share effect (in CNY per share) | ¥ 2.44 | ¥ 1.76 | ¥ 1.39 |
TAXATION - Deferred Tax Assets
TAXATION - Deferred Tax Assets and Liabilities (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | |
Components of deferred tax assets and liabilities | |||||
Deductible temporary differences related to other payables and accruals | ¥ 1,073 | ¥ 1,053 | |||
Deductible temporary differences related to provision for doubtful accounts | 1,648 | 1,265 | |||
Deductible temporary differences related to advertising expenses | 13,422 | 12,076 | |||
Tax loss carryforwards | 49,408 | 50,900 | |||
Amount offset by non-current deferred tax liabilities | (6,633) | (12,806) | |||
Total non-current deferred tax assets | 58,918 | 52,488 | |||
Less: Valuation allowance | (43,913) | (39,576) | ¥ (2,443) | ¥ (1,851) | |
Total deferred tax assets | $ 2,182 | 15,005 | 12,912 | ||
Taxable temporary differences related to depreciation period | (10,141) | (6,153) | |||
Taxable temporary differences related to available-for-sale debt securities | (85,373) | (46,526) | |||
Taxable temporary differences related to government subsidy income | (75,240) | (57,995) | |||
Taxable temporary differences related to trade names, technology and customer relationships | (20,440) | (23,480) | |||
Taxable temporary differences related to acquired program transmission license | (26,191) | ||||
Amount offset by non-current deferred tax assets | 6,633 | 12,806 | |||
Total deferred tax liabilities | $ (30,653) | (210,752) | ¥ (121,348) | ||
Net operating loss carryforwards | ¥ 186,703 | ||||
Tax loss carryforwards, expiration year | 5 years |
TAXATION - Valuation Allowance
TAXATION - Valuation Allowance (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
TAXATION | |||
Balance at beginning of year | ¥ 39,576 | ¥ 2,443 | ¥ 1,851 |
Additions | 6,305 | 37,902 | 1,019 |
Reversals | (1,968) | (769) | (427) |
Balance at end of year | ¥ 43,913 | ¥ 39,576 | ¥ 2,443 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - shares | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2015 | Dec. 31, 2018 | Dec. 31, 2011 | Apr. 30, 2009 | |
SHARE-BASED COMPENSATION | ||||
Expiration period | 6 years | |||
Vesting period | 4 years | |||
2009 Option Plan | ||||
SHARE-BASED COMPENSATION | ||||
Common shares reserved for issuance under share plan | 10,000,000 | 5,000,000 | ||
2015 Plan | ||||
SHARE-BASED COMPENSATION | ||||
Common shares reserved for issuance under share plan | 10,000,000 | |||
Expiration period | 10 years | |||
Automatic increase allowed (as a percentage) | 5.00% |
SHARE-BASED COMPENSATION - Shar
SHARE-BASED COMPENSATION - Share Option Activity (Details) $ / shares in Units, ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||||
Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2018CNY (¥)shares | Dec. 31, 2017USD ($)$ / shares | Dec. 31, 2017CNY (¥)shares | Dec. 31, 2016USD ($)$ / shares | Dec. 31, 2016CNY (¥)shares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2018CNY (¥)shares | |
Number of shares | ||||||||
Outstanding at the beginning of the period (in shares) | shares | 4,806,982 | 4,806,982 | 5,794,831 | 6,089,905 | ||||
Granted (in shares) | shares | 1,320,672 | 1,320,672 | 1,279,872 | 1,157,400 | ||||
Exercised (in shares) | shares | (752,814) | (752,814) | (2,147,819) | (1,117,754) | ||||
Forfeited (in shares) | shares | (55,850) | (55,850) | (119,902) | (334,720) | ||||
Outstanding at the end of the period (in shares) | shares | 5,318,990 | 5,318,990 | 4,806,982 | 5,794,831 | 6,089,905 | |||
Vested and expected to vest at the end of the period (in shares) | shares | 5,064,646 | 5,064,646 | ||||||
Exercisable at the end of the period (in shares) | shares | 2,615,921 | 2,615,921 | ||||||
Weighted average exercise price | ||||||||
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 38.17 | $ 30.58 | $ 28.19 | |||||
Granted (in dollars per share) | $ / shares | 73.46 | 56.68 | 34.27 | |||||
Exercised (in dollars per share) | $ / shares | 29.71 | 29.04 | 21.54 | |||||
Forfeited (in dollars per share) | $ / shares | 35.72 | 32.64 | 29.86 | |||||
Outstanding at the end of the period (in dollars per share) | $ / shares | 48.16 | $ 38.17 | $ 30.58 | $ 28.19 | ||||
Vested and expected to vest at the end of the period (in dollars per share) | $ / shares | 47.56 | |||||||
Exercisable at the end of the period (in dollars per share) | $ / shares | $ 35.93 | |||||||
Weighted average remaining contractual life | ||||||||
Outstanding at the end of the period | 3 years 9 months 4 days | 3 years 9 months 4 days | 3 years 9 months 29 days | 3 years 4 months 10 days | 3 years 4 months 17 days | |||
Vested and expected to vest at the end of the period | 3 years 8 months 12 days | 3 years 8 months 12 days | ||||||
Exercisable at the end of the period | 2 years 7 months 10 days | 2 years 7 months 10 days | ||||||
Aggregate intrinsic value | ||||||||
Outstanding at the end of the period | $ | $ 90,526 | $ 109,017 | $ 19,272 | $ 12,942 | ||||
Vested and expected to vest at the end of the period | $ | 88,532 | |||||||
Exercisable at the end of the period | $ | 69,418 | |||||||
Total intrinsic value of options exercised | 40,823 | ¥ 280,679 | ¥ 184,932 | ¥ 83,976 | ||||
Unrecognized share-based compensation cost related to non-vested share options | $ 46,741 | ¥ 321,368 | ||||||
Weighted average vesting period | 3 years 1 month 2 days | 3 years 1 month 2 days | ||||||
Proceeds from the exercise of share options | $ 21,118 | ¥ 145,196 | ¥ 424,450 | ¥ 160,493 |
SHARE-BASED COMPENSATION - Non-
SHARE-BASED COMPENSATION - Non-vested Share Option Activity (Details) ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Thousands | 12 Months Ended | |||||||
Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2018CNY (¥)¥ / sharesshares | Dec. 31, 2017$ / shares | Dec. 31, 2017CNY (¥)¥ / sharesshares | Dec. 31, 2016$ / shares | Dec. 31, 2016CNY (¥)¥ / sharesshares | Dec. 31, 2015CNY (¥)shares | Dec. 31, 2018CNY (¥)shares | |
Share-Based Compensation | ||||||||
Non-vested at the beginning of the period (in shares) | 2,570,297 | 2,570,297 | 2,495,346 | 2,708,243 | ||||
Granted (in shares) | 1,320,672 | 1,320,672 | 1,279,872 | 1,157,400 | ||||
Vested (in shares) | (1,132,050) | (1,132,050) | (1,085,019) | (1,035,577) | ||||
Forfeited (in shares) | (55,850) | (55,850) | (119,902) | (334,720) | ||||
Non-vested at the end of the period (in shares) | 2,703,069 | 2,703,069 | 2,570,297 | 2,495,346 | 2,708,243 | |||
Expected to vest at the end of the period (in shares) | 2,448,725 | 2,448,725 | ||||||
Weighted average grant-date fair value | ||||||||
Non-vested at the beginning of the period (in dollars per share) | $ / shares | $ 12.86 | $ 10.37 | $ 11.02 | |||||
Granted (in dollars or CNY per share) | (per share) | 21.53 | ¥ 148.05 | 15.62 | ¥ 101.63 | 9.63 | ¥ 66.87 | ||
Vested (in dollars per share) | $ / shares | 12.51 | 10.50 | 11.01 | |||||
Forfeited (in dollars per share) | $ / shares | 10.83 | 10.55 | 11.09 | |||||
Non-vested at the end of the period (in dollars per share) | $ / shares | 17.29 | $ 12.86 | $ 10.37 | |||||
Expected to vest at the end of the period (in dollars per share) | $ / shares | $ 17.29 | |||||||
Capitalized share-based compensation costs | ¥ | ¥ 0 | ¥ 0 | ¥ 0 | |||||
Share-based compensation | $ 14,571 | ¥ 100,183 | 85,968 | 86,070 | ||||
Fair value of share options vested | 14,161 | ¥ 97,364 | ¥ 74,100 | ¥ 79,139 | ||||
Unrecognized share-based compensation cost related to non-vested share options | $ 46,741 | ¥ 321,368 | ||||||
Weighted average vesting period | 3 years 1 month 2 days | 3 years 1 month 2 days | ||||||
Lagou Stock Option Plans | ||||||||
Weighted average grant-date fair value | ||||||||
Share-based compensation | $ 696 | ¥ 4,782 | ||||||
Unrecognized share-based compensation cost related to non-vested share options | $ 324 | ¥ 2,228 | ||||||
Weighted average vesting period | 3 years 3 months | 3 years 3 months |
EMPLOYEE BENEFITS (Details)
EMPLOYEE BENEFITS (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
EMPLOYEE BENEFITS | |||
Employee benefits expenses | ¥ 293,452 | ¥ 230,263 | ¥ 198,272 |
CONVERTIBLE SENIOR NOTES (Detai
CONVERTIBLE SENIOR NOTES (Details) $ / shares in Units, ¥ in Thousands | Aug. 08, 2014$ / shares | Jun. 20, 2014CNY (¥) | Apr. 03, 2014USD ($)$ / sharesshares | Dec. 31, 2018USD ($)itemshares | Dec. 31, 2018CNY (¥)itemshares | Dec. 31, 2017CNY (¥)shares | Dec. 31, 2016CNY (¥) | Dec. 31, 2014CNY (¥) | Dec. 31, 2018CNY (¥) | Aug. 07, 2014 |
CONVERTIBLE SENIOR NOTES | ||||||||||
Ratio of common shares to ADSs | 1 | 2 | ||||||||
Gain (Loss) from foreign currency translation | $ (16,341,000) | ¥ (112,353) | ¥ 3,630 | ¥ 238 | ||||||
Gain (Loss) from change in fair value | $ 14,410,000 | 99,079 | (496,175) | (69,439) | ||||||
Convertible senior notes due April 15, 2019 | ||||||||||
CONVERTIBLE SENIOR NOTES | ||||||||||
Amount issued | $ | $ 172,500,000 | |||||||||
Interest rate | 3.25% | |||||||||
Interest expense incurred | ¥ 37,191 | ¥ 37,799 | 37,298 | |||||||
Number of trading days in consideration of conversion of the Notes | item | 20 | 20 | ||||||||
Number of consecutive trading days in consideration of conversion of the Notes | item | 30 | 30 | ||||||||
Threshold percentage of stock price trigger | 130.00% | 130.00% | ||||||||
Number of business days in consideration of conversion of the Notes | 5 days | 5 days | ||||||||
Number of consecutive trading day period (measurement period) in consideration of conversion of the Notes | 10 days | 10 days | ||||||||
Denomination of the principal amount of debt in consideration conversion of the Notes | $ | $ 1,000 | |||||||||
Threshold percentage of stock price trigger in measurement period | 98.00% | 98.00% | ||||||||
Redemption price, if repurchase on April 15, 2017 | 100.00% | |||||||||
Redemption price, if undergoing a fundamental change | 100.00% | 100.00% | ||||||||
Issuance costs | ¥ 33,093 | |||||||||
Gain (Loss) from foreign currency translation | ¥ 156,293 | ¥ 85,917 | (79,393) | |||||||
Gain (Loss) from change in fair value | ¥ 99,079 | ¥ (496,175) | ¥ (69,439) | |||||||
Conversion of debt, principal amount | $ | $ 100 | |||||||||
Convertible senior notes due April 15, 2019 | Zero-Strike Call Options | ||||||||||
CONVERTIBLE SENIOR NOTES | ||||||||||
Issuance costs | ¥ 14,429 | |||||||||
Option strike price | $ / shares | $ 0 | |||||||||
Payment for call options | $ | $ 50,000,000 | |||||||||
Fair value recorded | $ | $ 50,000,000 | |||||||||
Amount of change in fair value | ¥ 24,874 | |||||||||
Convertible senior notes due April 15, 2019 | Estimated fair value | ||||||||||
CONVERTIBLE SENIOR NOTES | ||||||||||
Fair value of the Notes | ¥ 1,725,182 | |||||||||
ADSs | Zero-Strike Call Options | ||||||||||
CONVERTIBLE SENIOR NOTES | ||||||||||
Number of shares received and retired from settlement of zero-strike call options | shares | 731,102 | 731,102 | 357,200 | |||||||
ADSs | Convertible senior notes due April 15, 2019 | ||||||||||
CONVERTIBLE SENIOR NOTES | ||||||||||
Conversion rate | 0.0233952 | 0.0116976 | ||||||||
Conversion price (USD per share) | $ / shares | $ 42.74 | $ 85.49 | ||||||||
ADSs | Convertible senior notes due April 15, 2019 | Zero-Strike Call Options | ||||||||||
CONVERTIBLE SENIOR NOTES | ||||||||||
Number of ADSs covered | shares | 1,462,204 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2018CNY (¥)¥ / sharesshares | Dec. 31, 2017CNY (¥)¥ / sharesshares | Dec. 31, 2016CNY (¥)¥ / sharesshares | |
Numerator: | ||||
Net income attributable to 51job, Inc. | $ 182,142 | ¥ 1,252,319 | ¥ 371,889 | ¥ 565,978 |
Denominator: | ||||
Denominator for basic earnings per share - weighted average common shares outstanding (in shares) | 61,318,292 | 61,318,292 | 60,087,306 | 58,132,976 |
Dilutive effect of share options (in shares) | 1,857,191 | 1,857,191 | 1,063,107 | 341,092 |
Denominator for diluted earnings per share (in shares) | 63,175,483 | 63,175,483 | 61,150,413 | 58,474,068 |
Basic earnings per share (in CNY per share) | (per share) | $ 2.97 | ¥ 20.42 | ¥ 6.19 | ¥ 9.74 |
Diluted earnings per share (in CNY per share) | (per share) | $ 2.88 | ¥ 19.82 | ¥ 6.08 | ¥ 9.68 |
Share options | ||||
Denominator: | ||||
Excluded outstanding share options (in shares) | 888,548 | 888,548 | 1,176,660 | 3,881,628 |
FAIR VALUE CHANGES OF INVESTM_3
FAIR VALUE CHANGES OF INVESTMENT (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018USD ($)item | Dec. 31, 2018CNY (¥)item | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | |
Reconciliation of the Level 3 fair value measurements | ||||
Unrealized gain on available-for-sale securities, net of tax effect | $ 16,950 | ¥ 116,540 | ¥ 110,702 | ¥ 28,876 |
Unrealized gain on available-for-sale debt securities, tax | ¥ 38,847 | 36,900 | 9,625 | |
Income approach - discounted cash flow | Terminal growth rate | ||||
Fair value inputs | ||||
Available-for-sale debt securities, measurement input | item | 0.03 | 0.03 | ||
Income approach - discounted cash flow | Discount rate | ||||
Fair value inputs | ||||
Available-for-sale debt securities, measurement input | item | 0.18 | 0.18 | ||
Income approach - discounted cash flow | Risk-free rate | ||||
Fair value inputs | ||||
Available-for-sale debt securities, measurement input | item | 0.0284 | 0.0284 | ||
Available-for-sale debt securities | ||||
Reconciliation of the Level 3 fair value measurements | ||||
Balance at the beginning of the period | ¥ 312,819 | 165,217 | 0 | |
Initial recognition | 126,716 | |||
Unrealized gain | 155,387 | 147,602 | 38,501 | |
Sale of debt securities | (19,430) | |||
Balance at the end of the period | ¥ 448,776 | ¥ 312,819 | ¥ 165,217 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Operating Lease Commitments (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating lease commitments | |||
2019 | ¥ 67,542 | ||
2020 | 39,383 | ||
2021 | 24,768 | ||
2022 | 19,797 | ||
2023 and thereafter | 14,432 | ||
Total | 165,922 | ||
Rental expenses | 67,960 | ¥ 53,433 | ¥ 50,946 |
Office premises | |||
Operating lease commitments | |||
2019 | 53,547 | ||
2020 | 39,156 | ||
2021 | 24,709 | ||
2022 | 19,768 | ||
2023 and thereafter | 14,432 | ||
Total | 151,612 | ||
Office equipment | |||
Operating lease commitments | |||
2019 | 13,995 | ||
2020 | 227 | ||
2021 | 59 | ||
2022 | 29 | ||
Total | ¥ 14,310 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Contractual Purchase Obligations (Details) ¥ in Thousands | Dec. 31, 2018CNY (¥) |
Contractual purchase obligations | |
2019 | ¥ 7,122 |
2020 | 600 |
Advertising services | |
Contractual purchase obligations | |
2019 | 6,793 |
2020 | 591 |
Office furnishings | |
Contractual purchase obligations | |
2019 | 329 |
2020 | ¥ 9 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES - Percentage of Foreign Ownership (Details) | Dec. 31, 2018 | Sep. 30, 2002 | May 31, 2000 |
Commitments and Contingencies Disclosure | |||
Maximum foreign ownership percentage of advertising companies in the PRC | 100.00% | ||
Maximum foreign ownership percentage of human resource services companies permitted in the PRC | 70.00% | ||
Tech JV | |||
Commitments and Contingencies Disclosure | |||
Percentage of foreign ownership in Tech JV | 99.00% | 98.00% |
REDEEMABLE NON-CONTROLLING IN_3
REDEEMABLE NON-CONTROLLING INTERESTS (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
REDEEMABLE NON-CONTROLLING INTERESTS | ||
Balance at beginning of year | ¥ 228,230 | ¥ 0 |
Addition | 228,230 | |
Stock-based compensation | 7,911 | |
Net loss attributable to mezzanine equity holders | (10,496) | |
Balance at end of year | ¥ 225,645 | ¥ 228,230 |
Lagou Information Limited | ||
REDEEMABLE NON-CONTROLLING INTERESTS | ||
Percentage of equity interest acquired | 66.00% |
CERTAIN RISKS AND CONCENTRATI_2
CERTAIN RISKS AND CONCENTRATION (Details) - 12 months ended Dec. 31, 2018 - Total cash, restricted cash and short-term investments - Credit concentration risk - PRC ¥ in Thousands, $ in Thousands | USD ($) | CNY (¥) |
Unusual Risk or Uncertainty | ||
Cash and certificates of deposit | $ 1,150,877 | ¥ 7,912,854 |
Percentage of cash, restricted cash and short-term investments held in the PRC | 90.00% |
RELATED PARTY TRANSACTION AND_2
RELATED PARTY TRANSACTION AND BALANCES (Details) - Royalty agreements - CNY (¥) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
RMS | |||
RELATED PARTY TRANSACTION AND BALANCES | |||
Royalty fees charged by related parties | ¥ 285,000 | ¥ 270,000 | ¥ 152,000 |
Royalty payables due to related parties | 81,000 | 68,000 | |
RCC | |||
RELATED PARTY TRANSACTION AND BALANCES | |||
Royalty fees charged by related parties | 14,000 | 20,000 | ¥ 60,000 |
Royalty payables due to related parties | ¥ 2,000 | ¥ 500 |