Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2019shares | |
Document and Entity Information | |
Document Type | 20-F |
Document Registration Statement | false |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Entity File Number | 000-50841 |
Entity Registrant Name | 51job, Inc. |
Entity Incorporation, State or Country Code | KY |
Entity Address, Address Line One | Building 3 |
Entity Address, Address Line Two | No. 1387 Zhang Dong Road |
Entity Address, City or Town | Shanghai |
Entity Address, Postal Zip Code | 201203 |
Entity Address, Country | CN |
Entity Central Index Key | 0001295484 |
Document Period End Date | Dec. 31, 2019 |
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 Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Document Accounting Standard | U.S. GAAP |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 66,784,688 |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | FY |
Business Contact | |
Document and Entity Information | |
Entity Address, Address Line One | Building 3 |
Entity Address, Address Line Two | No. 1387 Zhang Dong Road |
Entity Address, City or Town | Shanghai |
Entity Address, Postal Zip Code | 201203 |
Entity Address, Country | CN |
Contact Personnel Name | Rick Yan |
City Area Code | 86-21 |
Local Phone Number | 6160-1888 |
Contact Personnel Fax Number | 6879-6233 |
ADSs | |
Document and Entity Information | |
Title of 12(b) Security | American depositary shares, each representing onecommon share, par value US$0.0001 per share |
Security Exchange Name | NASDAQ |
Trading Symbol | JOBS |
Common shares | |
Document and Entity Information | |
Title of 12(b) Security | Common shares, par value US$0.0001 per share |
No Trading Symbol Flag | true |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2019CNY (¥)¥ / sharesshares | Dec. 31, 2018CNY (¥)¥ / sharesshares | Dec. 31, 2017CNY (¥)¥ / sharesshares | |
Revenues: | ||||
Net revenues | $ 574,568 | ¥ 4,000,025 | ¥ 3,781,946 | ¥ 2,881,215 |
Cost of services | (175,520) | (1,221,935) | (1,081,011) | (796,063) |
Gross profit | 399,048 | 2,778,090 | 2,700,935 | 2,085,152 |
Operating expenses | ||||
Sales and marketing | (170,679) | (1,188,233) | (1,197,178) | (917,784) |
General and administrative | (55,168) | (384,072) | (353,557) | (296,608) |
Total operating expenses | (225,847) | (1,572,305) | (1,550,735) | (1,214,392) |
Income from operations | 173,201 | 1,205,785 | 1,150,200 | 870,760 |
Gain (Loss) from foreign currency translation | 9,750 | 67,881 | (112,353) | 3,630 |
Interest and investment income, net | 25,221 | 175,584 | 113,673 | 77,009 |
Change in fair value of equity securities investment | (6,092) | (42,410) | ||
Change in fair value of convertible senior notes | (108,029) | (752,073) | 99,079 | (496,175) |
Impairment of long-term investments | (14,117) | (98,277) | ||
Gain from sale of long-term investments | 0 | 0 | 61,070 | |
Other income, net | 29,533 | 205,602 | 175,206 | 87,032 |
Income before income tax expense | 109,467 | 762,092 | 1,486,875 | 542,256 |
Income tax expense | (33,883) | (235,890) | (242,434) | (169,493) |
Net income | 75,584 | 526,202 | 1,244,441 | 372,763 |
Net loss (income) attributable to non-controlling interests | 879 | 6,116 | 7,878 | (874) |
Net income attributable to 51job, Inc. | 76,463 | 532,318 | 1,252,319 | 371,889 |
Other comprehensive income: | ||||
Foreign currency translation adjustments | 49 | 339 | 698 | (6,037) |
Unrealized gain on available-for-sale debt securities, net of tax effect of RMB36,900, RMB38,847 and nil in 2017, 2018 and 2019, respectively | 0 | 0 | 116,540 | 110,702 |
Total comprehensive income | 75,633 | 526,541 | 1,361,679 | 477,428 |
Comprehensive loss (income) attributable to non-controlling interests | 879 | 6,116 | 7,878 | (874) |
Comprehensive income attributable to 51job, Inc | $ 76,512 | ¥ 532,657 | ¥ 1,369,557 | ¥ 476,554 |
Earnings per share: | ||||
- Basic (in CNY and dollars per share) | (per share) | $ 1.17 | ¥ 8.18 | ¥ 20.42 | ¥ 6.19 |
- Diluted (in CNY and dollars per share) | (per share) | $ 1.15 | ¥ 7.98 | ¥ 19.82 | ¥ 6.08 |
Weighted average number of common shares outstanding: | ||||
- Basic (in shares) | 65,049,597 | 65,049,597 | 61,318,292 | 60,087,306 |
- Diluted (in shares) | 66,683,457 | 66,683,457 | 63,175,483 | 61,150,413 |
Online recruitment services | ||||
Revenues: | ||||
Net revenues | $ 354,963 | ¥ 2,471,179 | ¥ 2,431,898 | ¥ 1,871,700 |
Other human resource related revenues | ||||
Revenues: | ||||
Net revenues | $ 219,605 | ¥ 1,528,846 | ¥ 1,350,048 | ¥ 1,009,515 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Parenthetical) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Unrealized gain on available-for-sale securities, tax effect | ¥ 0 | ¥ 38,847 | ¥ 36,900 | |
Share-based compensation | $ (18,078) | (125,854) | (100,183) | (85,968) |
Included in cost of services | ||||
Share-based compensation | (2,900) | (20,189) | (16,316) | (14,029) |
Included in operating expenses - Sales and marketing | ||||
Share-based compensation | (2,493) | (17,356) | (14,026) | (12,060) |
Included in operating expenses - General and administrative | ||||
Share-based compensation | $ (12,727) | ¥ (88,604) | ¥ (74,623) | ¥ (59,879) |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) |
Current assets: | |||
Cash | $ 329,642 | ¥ 2,294,904 | ¥ 1,968,351 |
Restricted cash | 9,505 | 66,169 | 5,770 |
Short-term investments | 1,098,234 | 7,645,686 | 6,865,886 |
Accounts receivable (net of allowance for doubtful accounts of RMB11,014 and RMB21,952 as of December 31, 2018 and 2019, respectively) | 38,271 | 266,437 | 230,065 |
Prepayments and other current assets | 96,126 | 669,208 | 606,918 |
Total current assets | 1,571,778 | 10,942,404 | 9,676,990 |
Non-current assets: | |||
Long-term investments | 212,954 | 1,482,544 | 729,095 |
Property and equipment, net | 39,061 | 271,932 | 527,020 |
Goodwill | 148,830 | 1,036,124 | 1,036,124 |
Intangible assets, net | 29,182 | 203,162 | 244,446 |
Right-of-use assets | 46,081 | 320,809 | |
Other long-term assets | 1,497 | 10,420 | 9,736 |
Deferred tax assets | 3,181 | 22,147 | 15,005 |
Total non-current assets | 480,786 | 3,347,138 | 2,561,426 |
Total assets | 2,052,564 | 14,289,542 | 12,238,416 |
Current liabilities (including amounts of the consolidated VIEs and VIEs' subsidiaries without recourse to the primary beneficiaries of RMB99,691 and RMB95,671 as of December 31, 2018 and 2019, respectively): | |||
Accounts payable | 6,911 | 48,114 | 49,881 |
Salary and employee related accrual | 23,381 | 162,775 | 164,134 |
Taxes payable | 38,438 | 267,596 | 191,793 |
Advance from customers | 159,229 | 1,108,518 | 1,126,300 |
Convertible senior notes | 1,725,182 | ||
Lease liabilities, current | 5,001 | 34,817 | |
Other payables and accruals | 174,041 | 1,211,642 | 952,178 |
Total current liabilities | 407,001 | 2,833,462 | 4,209,468 |
Non-current liabilities (including amounts of the consolidated VIEs and VIEs' subsidiaries without recourse to the primary beneficiaries of RMB114,897 and RMB109,909 as of December 31, 2018 and 2019, respectively): | |||
Lease liabilities, non-current | 7,292 | 50,763 | |
Deferred tax liabilities | 30,783 | 214,307 | 210,752 |
Total non-current liabilities | 38,075 | 265,070 | 210,752 |
Total liabilities | 445,076 | 3,098,532 | 4,420,220 |
Commitments and contingencies | |||
Mezzanine equity: | |||
Redeemable non-controlling interests | 31,166 | 216,974 | 225,645 |
Shareholders' equity: | |||
Common shares (US$0.0001 par value per share; 500,000,000 shares authorized, 61,874,716 and 66,784,688 shares issued and outstanding as of December 31, 2018 and 2019, respectively) | 8 | 53 | 50 |
Additional paid-in capital | 704,052 | 4,901,466 | 2,055,036 |
Statutory reserves | 2,575 | 17,930 | 17,279 |
Accumulated other comprehensive income | 36,560 | 254,524 | 254,185 |
Retained earnings | 829,435 | 5,774,358 | 5,242,691 |
Total 51job, Inc. shareholders' equity | 1,572,630 | 10,948,331 | 7,569,241 |
Non-controlling interests | 3,692 | 25,705 | 23,310 |
Total equity | 1,576,322 | 10,974,036 | 7,592,551 |
Total liabilities, mezzanine equity and equity | $ 2,052,564 | ¥ 14,289,542 | ¥ 12,238,416 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) ¥ in Thousands | Dec. 31, 2019$ / shares | Dec. 31, 2019CNY (¥)shares | Dec. 31, 2018$ / shares | Dec. 31, 2018CNY (¥)shares |
CONSOLIDATED BALANCE SHEETS | ||||
Allowance for doubtful accounts receivable | ¥ | ¥ 21,952 | ¥ 11,014 | ||
Amounts of the current liabilities of the consolidated VIEs and VIEs' subsidiaries without recourse to the primary beneficiaries | ¥ | 95,671 | 99,691 | ||
Amounts of the non-current liabilities of the consolidated VIEs and VIEs' subsidiaries without recourse to the primary beneficiaries | ¥ | ¥ 109,909 | ¥ 114,897 | ||
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 | 66,784,688 | 61,874,716 | ||
Common shares, shares outstanding | shares | 66,784,688 | 61,874,716 |
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, 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 RMB36,900, RMB38,847 and nil in 2017, 2018 and 2019, respectively | 110,702 | 110,702 | 110,702 | |||||||||||||
Net income | 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 | ||||||||||||||
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 | 698 | |||||||||||||
Unrealized gain on available-for-sale debt securities, net of tax effect of RMB36,900, RMB38,847 and nil in 2017, 2018 and 2019, respectively | 116,540 | 116,540 | 116,540 | |||||||||||||
Net income | 1,252,319 | 1,252,319 | 2,618 | 1,254,937 | ||||||||||||
Balance at Dec. 31, 2018 | 7,569,241 | ¥ 50 | 2,055,036 | 17,279 | 254,185 | 5,242,691 | 23,310 | ¥ 7,592,551 | ||||||||
Balance (in shares) at Dec. 31, 2018 | shares | 61,874,716 | 61,874,716 | 61,874,716 | 61,874,716 | ||||||||||||
Exercise of share options | 281,412 | ¥ 1 | 281,411 | ¥ 281,412 | ||||||||||||
Exercise of share options (in shares) | shares | 1,172,210 | 1,172,210 | 1,172,210 | 1,172,210 | ||||||||||||
Share-based compensation | 125,854 | 125,854 | 295 | ¥ 126,149 | ||||||||||||
Settlement of zero-strike call options and retirement of common shares | (31) | ¥ 0 | (31) | (31) | ||||||||||||
Settlement of zero-strike call options and retirement of common shares (in shares) | shares | (297,902) | (297,902) | ||||||||||||||
Conversion of convertible senior notes to common shares | 2,439,198 | ¥ 2 | 2,439,196 | 2,439,198 | ||||||||||||
Conversion of convertible senior notes to common shares (in shares) | shares | 4,035,664 | 4,035,664 | ||||||||||||||
Appropriation of statutory reserves | 651 | (651) | ||||||||||||||
Foreign currency translation adjustments | 339 | 339 | $ 49 | 339 | ||||||||||||
Unrealized gain on available-for-sale debt securities, net of tax effect of RMB36,900, RMB38,847 and nil in 2017, 2018 and 2019, respectively | 0 | 0 | ||||||||||||||
Net income | 532,318 | 532,318 | 2,100 | 534,418 | ||||||||||||
Balance at Dec. 31, 2019 | $ 1,572,630 | ¥ 10,948,331 | $ 8 | ¥ 53 | $ 704,052 | ¥ 4,901,466 | $ 2,575 | ¥ 17,930 | $ 36,560 | ¥ 254,524 | $ 829,435 | ¥ 5,774,358 | $ 3,692 | ¥ 25,705 | $ 1,576,322 | ¥ 10,974,036 |
Balance (in shares) at Dec. 31, 2019 | shares | 66,784,688 | 66,784,688 | 66,784,688 | 66,784,688 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | |||
Unrealized gain on available-for-sale securities, tax effect | ¥ 0 | ¥ 38,847 | ¥ 36,900 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Cash flows from operating activities: | ||||
Net income for the year | $ 75,584 | ¥ 526,202 | ¥ 1,244,441 | ¥ 372,763 |
Adjustments for: | ||||
Share-based compensation | 18,120 | 126,149 | 104,965 | 85,968 |
Depreciation | 6,293 | 43,811 | 57,044 | 53,422 |
Amortization of intangible assets | 6,100 | 42,467 | 38,525 | 10,245 |
Amortization of right-of-use assets | 7,038 | 48,995 | ||
Allowance for doubtful accounts | 4,008 | 27,903 | 10,607 | 15,394 |
Loss due to disposal of fixed assets | 33 | 231 | 225 | 690 |
Loss (Gain) from foreign currency translation | (9,750) | (67,881) | 112,351 | (2,248) |
Change in fair value of equity securities investment | 6,092 | 42,410 | ||
Change in fair value of convertible senior notes | 108,029 | 752,073 | (99,079) | 496,175 |
Gain from sale of long-term investments | 0 | 0 | (61,070) | |
Income from equity method investments | (1,225) | (8,531) | (2,417) | |
Impairment of long-term investments | 14,117 | 98,277 | ||
Deferred tax expense (benefit) | (515) | (3,587) | 18,531 | 12,787 |
Changes in operating assets and liabilities, net of effects of acquisitions and disposals: | ||||
Increase in accounts receivable | (8,499) | (59,171) | (54,905) | (74,356) |
Increase in prepayments and other current assets | (10,361) | (72,131) | (46,719) | (35,128) |
Increase (Decrease) in accounts payable | (216) | (1,502) | 14,958 | 2,565 |
Increase (Decrease) in salary and employee related accrual | (195) | (1,359) | 29,168 | 18,087 |
Increase (Decrease) in taxes payable | 11,833 | 82,381 | (45,519) | 74,423 |
Increase (Decrease) in advance from customers | (2,554) | (17,782) | 188,319 | 234,523 |
Increase in other payables and accruals | 35,377 | 246,289 | 275,883 | 183,530 |
Decrease (Increase) in other long-term assets | (98) | (684) | 7,634 | (7,277) |
Decrease in lease liabilities | (6,146) | (42,787) | ||
Net cash provided by operating activities | 253,065 | 1,761,773 | 1,792,942 | 1,441,563 |
Cash flows from investing activities: | ||||
Cash paid for short-term investments | (111,074) | (773,277) | (2,005,226) | (576,452) |
Cash paid for long-term investments | (125,920) | (876,628) | (156,835) | (97,267) |
Cash paid for acquisitions, net of cash acquired | (27,923) | (734,895) | ||
Cash paid for dividend distribution | (65) | (455) | ||
Cash received from investment income | 903 | 6,285 | ||
Cash received from sale of available-for-sale debt securities | 80,500 | |||
Purchase of property and equipment | (3,723) | (25,919) | (87,053) | (23,655) |
Purchase of intangible assets | (1,226) | (8,538) | (83,660) | (1,987) |
Net cash used in investing activities | (241,105) | (1,678,532) | (2,280,197) | (1,434,256) |
Cash flows from financing activities: | ||||
Settlement of convertible senior notes | (1) | (5) | ||
Settlement of zero-strike call options and retirement of common shares | (4) | (31) | (75) | (35) |
Proceeds from the exercise of share options | 40,422 | 281,412 | 145,196 | 424,450 |
Net cash provided by financing activities | 40,417 | 281,376 | 145,121 | 424,415 |
Effect of foreign exchange rate changes on cash and restricted cash | 3,205 | 22,335 | 23,530 | (60,460) |
Net increase (decrease) in cash and restricted cash | 55,582 | 386,952 | (318,604) | 371,262 |
Cash and restricted cash, beginning of year | 283,565 | 1,974,121 | 2,292,725 | 1,921,463 |
Cash and restricted cash, end of year | 339,147 | 2,361,073 | 1,974,121 | 2,292,725 |
Supplemental disclosure of cash flow information: | ||||
Cash paid during the years for income taxes | 27,110 | 188,735 | 228,158 | 121,929 |
Cash paid for interest, net of amounts capitalized | 2,727 | 18,982 | 36,807 | 38,377 |
Supplemental disclosure of non-cash operating activities: | ||||
Recognition of right-of-use assets and lease liabilities | 19,118 | 133,094 | ||
Supplemental disclosure of non-cash investing activities: | ||||
Accrual related to purchase of property, equipment and software | (921) | (6,409) | (7,789) | (1,043) |
Unpaid cash consideration for business combinations | (27,923) | |||
Accrual related to purchase of long-term investment | (2,004) | (13,952) | ||
Supplemental disclosure of non-cash financing activities: | ||||
Restricted cash and payables related to the exercise of share options, end of year | 9,505 | 66,169 | ¥ 5,770 | ¥ 249 |
Settlement of convertible senior notes by common shares | $ (350,369) | ¥ (2,439,198) |
ORGANIZATION AND PRINCIPAL ACTI
ORGANIZATION AND PRINCIPAL ACTIVITIES | 12 Months Ended |
Dec. 31, 2019 | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | 1. ORGANIZATION AND PRINCIPAL ACTIVITIES The accompanying consolidated financial statements include the financial statements of 51job, Inc., which was incorporated in the Cayman Islands in March 2000, its subsidiaries and certain variable interest entities (“VIEs”). 51job, Inc., its subsidiaries and the VIEs are hereinafter collectively referred to as the “Group” or the “Company.” 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, 2019 | |
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. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) 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. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) 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, 2019 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, 2019, the registered capital of Run An was RMB6,000 and its accumulated loss was RMB13,229. Qian Cheng holds a business license to provide advertising services. Qian Cheng is wholly owned by Run An. As of December 31, 2019, the registered capital of Qian Cheng was RMB1,500 and its retained earnings were RMB4,444. 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. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) 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. 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 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. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) 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. 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 RMB 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 19 for further discussion. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) 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, 2018 2019 RMB RMB Total assets 521,044 478,635 Total liabilities 214,588 205,580 For the year ended December 31, 2017 2018 2019 RMB RMB RMB Total revenues — 161,816 180,749 Net income (loss) (4,088) 18,406 (33,419) For the year ended December 31, 2017 2018 2019 RMB RMB RMB Net cash provided by (used in) operating activities (7,131) 5,855 (24,841) Net cash provided by (used in) investing activities 4,152 (83,936) (22,232) Net cash provided by financing activities 3,334 157,000 25,000 Net increase (decrease) in cash 355 78,919 (22,073) Cash, beginning of year 7,527 7,882 86,801 Cash, end of year 7,882 86,801 64,728 (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$1.00 = RMB6.9618 on December 31, 2019, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on December 31, 2019, or at any other rate. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) (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, 2018 and 2019, to the amounts presented in the consolidated statements of cash flows: 2018 2019 RMB RMB Cash 1,968,351 2,294,904 Restricted cash 5,770 66,169 Total cash and restricted cash 1,974,121 2,361,073 Included in the cash and restricted cash balances as of December 31, 2018 and 2019 are amounts denominated in United States dollars totaling US$135,668 and US$76,726, respectively (equivalent to approximately RMB931,120 and RMB535,254, based on the RMB to US$ exchange rate quoted by the People’s Bank of China on December 28, 2018 and December 31, 2019, 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 with readily determinable fair values, equity securities without readily determinable fair values, equity method investments and available-for-sale debt securities. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) Equity Securities with Readily Determinable Fair Values Equity securities with readily determinable fair values are measured at fair value with unrealized gains and losses recorded in the consolidated statements of operations and comprehensive income. For the year ended December 31, 2019, the Company acquired a 5.7% equity interest in Huali University Group Limited, a large-scale private higher education and vocational education group in South China that is listed on the Hong Kong Stock Exchange. The investment cost was RMB201,558 and the fair value as of December 31, 2019 was RMB159,148, which was measured using the stock price at the end of the year. The change in fair value for the year ended December 31, 2019 was RMB42,410. Equity Securities without Readily Determinable Fair Values Equity securities without readily determinable fair values, and for which the Company does not control or exercise significant influence, 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 and no qualifying observable price changes were noted in the years ended December 31, 2017, 2018 and 2019. For the year ended December 31, 2019, the Company recognized an impairment loss of RMB98,277 associated with an investment in a provider of on-demand work opportunities in the United States, primarily due to changes in its business prospects and financial condition. 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, 2018, the Group made the following long-term investments: (i) RMB31,535 for a 14.3% equity interest in a technology talent assessment services provider in the United States; (ii) RMB25,000 for a 18.0% equity interest in a human resource consulting and executive search services company in China; and (iii) 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, 2019, the Group made the following long-term investments: (i) RMB565,664 for a 17.5% equity interest in CDP Holdings, Ltd., a provider of human capital management services delivered through a cloud-based technology platform in China; (ii) RMB78,000 for a 19.5% equity interest in a provider of tools and solutions powered by artificial intelligence that assist HR departments with talent recruitment, training and retention in China; (iii) RMB20,157 for a 3.0% equity interest in a recruiting platform that focuses on gig and hourly services workers within the on-demand labor market in the United States; and (iv) a total of RMB200 for a 5.0% equity interest in each of two 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. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) 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 RMB 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 a 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 on a recurring basis. See note 16. In 2018, the Company realized a gain of RMB61,070 from the sale of some shares of Golden Finance. As of December 31, 2019, the Group's redeemable 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 2. PRINCIPAL ACCOUNTING POLICIES (Continued) Upon the adoption of ASC 842 "Leases" ("ASC 842") on January 1, 2019, land use rights were presented as right-of-use assets. See Notes 2(o) and 9. (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 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 years ended December 31, 2018 and 2019, net loss attributable to mezzanine equity holders amounted to RMB10,496 and RMB8,671, respectively. 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. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) (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 the 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, 2017, 2018 and 2019. 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. Separately identifiable intangible assets arising from acquisitions consist of online program transmission license, trade names, technology and customer relationships. 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, 2017, 2018 and 2019. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) Amortization is calculated on a straight-line basis over the following estimated useful lives: Estimated useful lives Computer software 2 to 10 years Acquired technology 5 to 10 years Trade names 10 to 20 years Customer relationships 5 years Acquired program transmission license 6 years Acquired training and other licenses 5 to 10 years (j) Impairment of Long-Lived Assets Ot |
ACQUISITION
ACQUISITION | 12 Months Ended |
Dec. 31, 2019 | |
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, 2019 | |
ACCOUNTS RECEIVABLE | |
ACCOUNTS RECEIVABLE | 4. ACCOUNTS RECEIVABLE As of December 31, 2018 2019 RMB RMB Accounts receivable 241,079 288,389 Less: Allowance for doubtful accounts (11,014) (21,952) 230,065 266,437 4. ACCOUNTS RECEIVABLE (Continued) The movement of allowance for doubtful accounts is analyzed as follows: 2017 2018 2019 RMB RMB RMB Balance at beginning of year 6,144 5,384 11,014 Additions 5,738 11,701 22,799 Write-offs (6,498) (6,071) (11,861) Balance at end of year 5,384 11,014 21,952 |
PREPAYMENTS AND OTHER CURRENT A
PREPAYMENTS AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
PREPAYMENTS AND OTHER CURRENT ASSETS | |
PREPAYMENTS AND OTHER CURRENT ASSETS | 5. PREPAYMENTS AND OTHER CURRENT ASSETS Components of prepayments and other current assets as of December 31, 2018 and 2019 are as follows: 2018 2019 RMB RMB Rental and other deposits 2,766 4,691 Prepayments for rental and others 23,689 16,208 Employee advances 27,136 23,295 Payments made on behalf of customers, net of allowance 472,502 475,901 Prepaid insurance premium 1,158 1,493 Interest income receivable 74,231 88,990 Receivables related to net proceeds from share options exercised — 50,765 Others 5,436 7,865 Total 606,918 669,208 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: 2017 2018 2019 RMB RMB RMB Balance at beginning of year 459 3,047 1,391 Additions 9,656 — 5,104 Reversals — (1,094) — Write-offs (7,068) (562) (950) Balance at end of year 3,047 1,391 5,545 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | 6. PROPERTY AND EQUIPMENT Property and equipment and its related accumulated depreciation as of December 31, 2018 and 2019 are as follows: 2018 2019 RMB RMB Land use rights 276,759 — Building 356,085 356,085 Leasehold improvements 37,994 39,902 Electronic equipment 152,058 165,015 Furniture and fixtures 7,312 7,763 Motor vehicles 8,135 6,583 Other assets 53,747 56,412 Less: Accumulated depreciation (365,070) (359,828) Net book value 527,020 271,932 Depreciation expense was RMB53,422, RMB57,044 and RMB43,811 for the years ended December 31, 2017, 2018 and 2019, respectively. Loss due to disposal of fixed assets was RMB690, RMB225 and RMB231 for the years ended December 31, 2017, 2018 and 2019, respectively. Upon the adoption of ASC 842 on January 1, 2019, land use rights were reclassified from property and equipment and presented as right-of-use assets. Such amount was included in the opening balance of right-of-use assets as of January 1, 2019 with no adjustments made to prior periods. See Notes 2(o) and 9. |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2019 | |
GOODWILL | |
GOODWILL | 7. GOODWILL The changes in the carrying amount of goodwill for the years ended December 31, 2018 and 2019 are as follows: 2018 2019 RMB RMB Balance at beginning of year 1,021,454 1,036,124 Acquisition of Lagou 14,670 — Balance at end of year 1,036,124 1,036,124 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2019 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | 8. INTANGIBLE ASSETS Intangible assets and its related accumulated amortization as of December 31, 2018 and 2019 are as follows: 2018 2019 RMB RMB Computer software 29,156 30,321 Acquired technology 60,251 60,251 Trade names 95,783 95,783 Customer relationships 12,270 12,270 Acquired program transmission license 119,728 119,728 Acquired training and other licenses 4,151 4,151 Less: Accumulated amortization (76,893) (119,342) Net book value 244,446 203,162 8. INTANGIBLE ASSETS (Continued) 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. 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. Amortization expense was RMB10,245, RMB38,525 and RMB42,467 for the years ended December 31, 2017, 2018 and 2019, respectively. The Company will record estimated amortization expenses of RMB39,982, RMB38,796, RMB38,341, RMB30,790 and RMB55,253 for the years ending December 31, 2020, 2021, 2022, 2023, and 2024 and thereafter, respectively. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2019 | |
LEASES | |
LEASES | 9. LEASES The Company has entered into non-cancelable agreements with initial or remaining terms in the range of one The components of lease expense for the year ended December 31, 2019 are as follows: RMB Amortization of right-of-use assets 48,995 Interest on lease liabilities 4,462 Expenses for short-term lease within 12 months 4,239 Total lease expense 57,696 Supplemental balance sheet information related to leases as of December 31, 2019 is as follows: RMB Operating lease right-of-use assets 320,809 Operating lease liabilities, current 34,817 Operating lease liabilities, non-current 50,763 Total lease liabilities 85,580 Weighted average remaining lease term (in years) 1.28 Weighted average discount rate 4.76 % The weighted average remaining lease term excludes land use rights that are recorded within right-of-use assets. If included, the weighted average remaining lease term would be 26.71 years. 9. LEASES (Continued) Supplemental cash flow information related to leases for the year ended December 31, 2019 is as follows: RMB Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows for operating leases 46,495 Maturities of lease liabilities as of December 31, 2019 were as follows: RMB 2020 36,728 2021 26,535 2022 19,351 2023 11,089 2024 700 Total undiscounted lease payments 94,403 Less: Imputed interest (8,823) Total lease liabilities 85,580 Disclosures Related to Periods Prior to Adoption of New Lease Standard Rental expenses for the years ended December 31, 2017 and 2018 were RMB53,433 and RMB67,960, respectively. |
OTHER PAYABLES AND ACCRUALS
OTHER PAYABLES AND ACCRUALS | 12 Months Ended |
Dec. 31, 2019 | |
OTHER PAYABLES AND ACCRUALS | |
OTHER PAYABLES AND ACCRUALS | 10. OTHER PAYABLES AND ACCRUALS Components of other payables and accruals as of December 31, 2018 and 2019 are as follows: 2018 2019 RMB RMB Receipts from customers 808,799 958,347 Payables to customers related to government subsidies 114,909 164,572 Professional service fees 3,727 4,281 Office expenses 7,338 8,769 Payables to employees related to net proceeds from share options exercised 3,217 56,594 Accrued interest expense related to convertible senior notes 8,016 — Others 6,172 19,079 Total 952,178 1,211,642 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. The payables to customers are related to government subsidies received on behalf of the Company’s business process outsourcing customers for maintaining a certain level of employment rate, which the Company is then obligated to remit these subsidies to its customers. |
TAXATION
TAXATION | 12 Months Ended |
Dec. 31, 2019 | |
TAXATION | |
TAXATION | 11. 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, 2019, 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 RMB6,913,897 and RMB8,425,647, and the amount of the unrecognized deferred tax liability on the permanently reinvested earnings was RMB691,390 and RMB842,565 as of December 31, 2018 and 2019, respectively. 11. TAXATION (Continued) Composition of Income Tax Expense Income (loss) before income tax expense for the years ended December 31, 2017, 2018 and 2019 were taxed within the following jurisdictions: 2017 2018 2019 RMB RMB RMB PRC entities 1,139,978 1,617,091 1,711,678 Non-PRC entities (597,722) (130,216) (949,586) Total 542,256 1,486,875 762,092 The current and deferred portion of income tax expense (benefit) included in the consolidated statements of operations and comprehensive income for the years ended December 31, 2017, 2018 and 2019 are as follows: 2017 2018 2019 RMB RMB RMB Current income tax expense: PRC entities 156,706 223,903 239,477 Non-PRC entities — — — Total 156,706 223,903 239,477 Deferred income tax expense (benefit): PRC entities 12,787 18,531 (3,587) Non-PRC entities — — — Total 12,787 18,531 (3,587) Income tax expense: PRC entities 169,493 242,434 235,890 Non-PRC entities — — — Total 169,493 242,434 235,890 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, 2017, 2018 and 2019 are as follows: 2017 2018 2019 EIT statutory rate 25 % 25 % 25 % Difference in EIT rates of certain subsidiaries (20) % (11) % (22) % Change in fair value of convertible senior notes 23 % (2) % 25 % Expenses incurred outside the PRC 5 % 5 % 7 % Other permanent differences (2) % (1) % (4) % Effective EIT rate of the Group 31 % 16 % 31 % 11. TAXATION (Continued) Income tax expense differs from the amounts computed by applying the EIT rate primarily due to (i) the change in fair value of convertible senior notes, (ii) the expenses incurred outside the PRC which cannot be utilized to offset PRC taxable income, and (iii) 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, 2017, 2018 and 2019 are as follows: 2017 2018 2019 RMB RMB RMB (in thousands, except per share data) Aggregate effect 107,547 154,182 163,146 Basic net income per share effect 1.79 2.51 2.51 Diluted net income per share effect 1.76 2.44 2.45 Significant components of deferred tax assets and liabilities as of December 31, 2018 and 2019 are as follows: 2018 2019 RMB RMB Deductible temporary differences related to other payables and accruals 1,073 1,297 Deductible temporary differences related to provision for doubtful accounts 1,648 4,108 Deductible temporary differences related to advertising expenses 13,422 14,358 Tax loss carryforwards 49,408 57,580 Amount offset by non-current deferred tax liabilities (6,633) (5,385) 58,918 71,958 Less: Valuation allowance (43,913) (49,811) Total deferred tax assets 15,005 22,147 Taxable temporary differences related to depreciation period (10,141) (11,096) Taxable temporary differences related to available-for-sale debt securities (85,373) (85,373) Taxable temporary differences related to government subsidy income (75,240) (84,623) Taxable temporary differences related to trade names, technology and customer relationships (20,440) (17,399) Taxable temporary differences related to acquired program transmission license (26,191) (21,201) Amount offset by non-current deferred tax assets 6,633 5,385 Total deferred tax liabilities (210,752) (214,307) 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, 2018 and 2019. As of December 31, 2018 and 2019, 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 2017, 2018 and 2019 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, 2019, the Group had net operating loss carryforwards in PRC entities of RMB249,874, 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 2020 to 2024. Other than the expiration, there are no other limitations or restrictions upon the Group’s ability to use these operating loss carryforwards. 11. TAXATION (Continued) The following represents a roll-forward of the valuation allowance for each of the years: 2017 2018 2019 RMB RMB RMB Balance at beginning of year 2,443 39,576 43,913 Additions 37,902 6,305 6,088 Reversals (769) (1,968) (190) Balance at end of year 39,576 43,913 49,811 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2019 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | 12. 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, 2019, 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. 12. SHARE-BASED COMPENSATION (Continued) The following table summarizes the Company’s share option activity for the years ended December 31, 2017, 2018 and 2019: Weighted Weighted average average remaining Aggregate Number exercise contractual intrinsic value of shares price life (years) (thousands) 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 Granted 1,169,728 US$ 69.46 Exercised (1,172,210) US$ 35.03 Forfeited (53,557) US$ 62.65 Outstanding at December 31, 2019 5,262,951 US$ 55.67 3.76 US$ 153,857 Vested and expected to vest at December 31, 2019 5,008,721 US$ 55.12 3.71 US$ 149,166 Exercisable at December 31, 2019 2,626,300 US$ 45.01 2.71 US$ 104,764 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, 2017, 2018 and 2019 was RMB184,932, RMB280,679 and RMB333,261 (US$47,870), respectively. As of December 31, 2019, there was RMB367,082 (US$52,728) 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 2.96 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, 2019, total cash received from the exercise of share options amounted to RMB281,412 (US$40,422). 12. SHARE-BASED COMPENSATION (Continued) A summary of non-vested share option activity for the years ended December 31, 2017, 2018 and 2019 is presented below: Weighted average grant-date Number fair value of shares (per share) Non-vested at December 31, 2016 2,495,346 US$ 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 Granted 1,169,728 US$ 22.12 Vested (1,182,589) US$ 15.99 Forfeited (53,557) US$ 18.16 Non-vested at December 31, 2019 2,636,651 US$ 20.00 Expected to vest at December 31, 2019 2,382,421 US$ 19.99 There were no capitalized share-based compensation costs for the years ended December 31, 2017, 2018 and 2019. Share-based compensation expense with respect to the share option plans recognized during the years ended December 31, 2017, 2018 and 2019, totaled RMB85,968, RMB100,183 and RMB125,854 (US$18,078), respectively. The total fair value of share options vested during the years ended December 31, 2017, 2018 and 2019 was RMB74,100, RMB97,364 and RMB131,641 (US$18,909), 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 years ended December 31, 2018 and 2019 amounted to RMB4,782 and RMB295 (US$42), respectively. As of December 31, 2019, the unrecognized share-based compensation expenses related to the Lagou Stock Option Plans were RMB2,263 (US$325). The expenses are expected to be recognized over a weighted average period of 3.06 years. |
EMPLOYEE BENEFITS
EMPLOYEE BENEFITS | 12 Months Ended |
Dec. 31, 2019 | |
EMPLOYEE BENEFITS | |
EMPLOYEE BENEFITS | 13. 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 RMB230,263, RMB293,452 and RMB322,522 for the years ended December 31, 2017, 2018 and 2019, 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, 2019 | |
CONVERTIBLE SENIOR NOTES | |
CONVERTIBLE SENIOR NOTES | 14. CONVERTIBLE SENIOR NOTES On April 3, 2014, the Company issued US$172,500 of 3.25% Convertible Senior Notes due 2019 (the “Notes”). The interest expense incurred associated with the Notes was RMB37,799, RMB37,191 and RMB10,966 for the years ended December 31, 2017, 2018 and 2019, respectively. The Notes matured on April 15, 2019. All holders of the Notes requested the conversion of the Notes into the Company’s ADSs at a rate of 23.3952 The Group’s functional currency is the RMB, and the Notes were denominated in US$. As a result, the conversion feature of the Notes was indexed to the Company’s stock as well as the RMB and US$ exchange rate. Therefore, it was considered an embedded derivative which is required to be bifurcated from the host instrument in accordance with ASC 815 “Derivatives and Hedging.” As permitted under ASC 815-15-25, the Company 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. The change in fair value of the Notes was a loss of RMB496,175, a gain of RMB99,079 and a loss of RMB752,073 for the years ended December 31, 2017, 2018 and 2019, respectively. See Note 16. Furthermore, the fair value of the Notes was translated into RMB at each balance sheet date with the difference being reported as foreign currency translation gain or loss. The Company recorded a foreign currency translation gain of RMB85,917, a loss of RMB156,293 and a gain of RMB38,052 for the years ended December 31, 2017, 2018 and 2019, respectively, associated with the Notes. 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. The Company evaluated the changes in fair value of the Notes based on its specific credit risk. The Company considered its credit risk was at a relatively low level and assessed that there had been no significant fluctuation in its specific credit risk from the Notes issuance date to maturity date. 14. CONVERTIBLE SENIOR NOTES (Continued) 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 were intended to facilitate privately negotiated transactions by which investors in the Notes were able to hedge their investment. All of the Call Options were early settled by the Dealers priority to the maturity of the Notes. The Company received 76,000 ADSs in 2014, nil in 2015, nil in 2016, 357,200 ADSs in 2017, 731,102 ADSs in 2018 and 297,902 ADSs in 2019. The ADSs received from settlement were retired. See Note 2(u). The economic substance of the Call Options was 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 was 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. As the Company had 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 16. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2019 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 15. EARNINGS PER SHARE Basic earnings per share and diluted earnings per share have been calculated for the years ended December 31, 2017, 2018 and 2019 as follows: 2017 2018 2019 RMB RMB RMB (in thousands, except share and per share data) Numerator: Net income attributable to 51job, Inc. 371,889 1,252,319 532,318 Denominator: Denominator for basic earnings per share — weighted average common shares outstanding 60,087,306 61,318,292 65,049,597 Dilutive effect of share options 1,063,107 1,857,191 1,633,860 Denominator for diluted earnings per share 61,150,413 63,175,483 66,683,457 Basic earnings per share 6.19 20.42 8.18 Diluted earnings per share 6.08 19.82 7.98 15. EARNINGS PER SHARE (Continued) The convertible senior notes were not included in the calculation of diluted earnings per share in 2017 and 2018 because their inclusion would have been anti-dilutive. The Company excluded outstanding share options of 1,176,660 in 2017, 888,548 in 2018 and 1,730,427 in 2019 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 were considered as deemed repurchased for the purpose of calculating both basic and diluted earnings per share. |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 12 Months Ended |
Dec. 31, 2019 | |
FAIR VALUE MEASUREMENT | |
FAIR VALUE MEASUREMENT | 16. FAIR VALUE MEASUREMENT 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 Level 2 Level 3 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. Measured on Recurring Basis That Group’s financial instruments measured at fair value on a recurring basis are cash, restricted cash, short-term investments, equity securities with readily determinable fair value, available-for-sale debt securities, receivables and payables, convertible senior notes and zero-strike call options. As of December 31, 2018 and 2019, 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. 16. FAIR VALUE MEASUREMENT (Continued) Equity securities with readily determinable fair value are classified within Level 1 and include listed equity securities valued using quoted market prices that are currently available on the Hong Kong Stock Exchange. The fair value is measured at each balance sheet date and changes in fair value are reflected in the consolidated statements of operations and comprehensive income. 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. The Company measured the convertible senior notes at fair value on a recurring basis until their maturity on April 15, 2019. The Company reported the convertible senior notes at fair value at each balance sheet date and changes in fair value were reflected in the consolidated statements of operations and comprehensive income. Fair value of the convertible senior notes was measured using Level 1 inputs within the fair value hierarchy as they were based on quoted market prices that were available on a dealer market. See Note 14. Fair value of the zero-strike call options was measured using Level 2 inputs within the fair value hierarchy as they were based on market prices of the Company’s publicly traded ADSs underlying the options. See Note 14. 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 14. The following tables summarize the Group’s assets that are measured at fair value on a recurring basis and are categorized under the fair value hierarchy for the periods indicated: As of December 31, 2019 Level 1 Level 2 Level 3 Total RMB RMB RMB RMB Short-term investments in time deposits 7,095,686 — — 7,095,686 Short-term investments in investment products — 550,000 — 550,000 Listed equity securities 159,148 — — 159,148 Available-for-sale debt securities — — 448,776 448,776 As of December 31, 2018 Level 1 Level 2 Level 3 Total RMB RMB RMB RMB Short-term investments in time deposits 6,855,886 — — 6,855,886 Short-term investments in investment products — 10,000 — 10,000 Available-for-sale debt securities — — 448,776 448,776 Convertible senior notes 1,725,182 — — 1,725,182 16. FAIR VALUE MEASUREMENT (Continued) The following table provides information about Level 1 fair value measurement of listed equity securities for the period indicated: RMB Balance at December 31, 2018 — Initial recognition 201,558 Unrealized loss (42,410) Balance at December 31, 2019 159,148 The unrealized loss on listed equity securities of RMB42,410 was recognized in the consolidated statements of operations and comprehensive income for the year ended December 31, 2019. The following table provides information about the reconciliation of the Level 3 fair value measurement of available-for-sale debt securities using significant unobservable inputs for the periods indicated: RMB 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 Balance at December 31, 2019 448,776 In determining the fair value of the available-for-sale debt securities, the Group utilizes an income approach of a discounted cash flow model The unrealized gain on available-for-sale debt securities of RMB110,702 and RMB116,540, representing the unrealized fair value gain netting relevant income tax of RMB36,900 and RMB38,847, was recognized in other comprehensive income for the years ended December 31, 2017 and 2018, respectively. The fair value of the available-for-sale securities was unchanged for the year ended December 31, 2019 as the Company determined that the business prospects of the investee were unchanged, its financial results were consistent with historical expectations, and there were no significant changes in the valuation assumptions used to determine the fair value of the investment. Measured on Non-Recurring Basis The Group’s financial assets that are measured at fair value on a non-recurring basis include certain long-term investments, intangible assets and goodwill when they were determined to be impaired. Investments in privately held companies for which the Group elected to record using the measurement alternative were re-measured on a non-recurring basis, and are categorized within Level 3 under the fair value hierarchy. The values were estimated based on valuation methods using the observable transaction price at the transaction date and other unobservable inputs. 16. FAIR VALUE MEASUREMENT (Continued) The inputs used to measure the estimated fair value of intangible assets and goodwill are classified as Level 3 due to the significance of unobservable inputs used, such as historical financial information and assumptions about future growth rates and discount rates, which require significant judgment. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 17. COMMITMENTS AND CONTINGENCIES Contractual Purchase Obligations The Group’s contractual purchase obligations consist of agreements for property management services for its office premises, for advertising services from media companies, for hosting and network services for its online operations 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: Property Hosting and management Advertising network Office services services services furnishings Total RMB RMB RMB RMB RMB 2020 9,845 8,725 3,922 3,248 25,740 2021 5,957 — 231 75 6,263 2022 4,542 — 86 10 4,638 2023 3,155 — 25 — 3,180 2024 1,994 — — — 1,994 Future minimum payments under non-cancelable agreements for storage and housing rental with lease terms of 12 months or less was RMB7,984 as of December 31, 2019. 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. Starting from December 31, 2019, the PRC government no longer implements any limitation on foreign ownership of human resource services companies. 17. COMMITMENTS AND CONTINGENCIES (Continued) 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, 2019 | |
REDEEMABLE NON-CONTROLLING INTERESTS | |
REDEEMABLE NON-CONTROLLING INTERESTS | 18. 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, 2018 and 2019 are as follows: 2018 2019 RMB RMB Balance at beginning of year 228,230 225,645 Share-based compensation 7,911 — Net loss attributable to mezzanine equity holders (10,496) (8,671) Balance at end of year 225,645 216,974 |
CERTAIN RISKS AND CONCENTRATION
CERTAIN RISKS AND CONCENTRATION | 12 Months Ended |
Dec. 31, 2019 | |
CERTAIN RISKS AND CONCENTRATION | |
CERTAIN RISKS AND CONCENTRATION | 19. 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, 2018 and 2019, 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, 2019, the Company had approximately RMB9,509,906 (US$1,366,013) in cash, time deposits and investment products, which constitute about 95% of total cash, restricted cash and short-term investments, held at reputable financial institutions in the PRC. The Company believes that it is not exposed to unusual risks as these PRC financial institutions have high credit quality. However, in the event of bankruptcy of a financial institution in which the Company has deposits or investments, it may be unlikely to claim its deposits or investments back in full. Receivables are typically unsecured and denominated in RMB, and are derived from revenues earned from operations or from payments made on behalf of certain customers arising in the PRC. Management believes credit risk on receivables is moderate due to the diversity of its services and customers. The Company maintains reserves for estimated credit losses and these losses have generally been within its expectations. No individual customer accounted for more than 10% of net revenues during the years ended December 31, 2017, 2018 and 2019. No individual customer accounted for more than 10% of accounts receivable as of December 31, 2018 and 2019. 19. CERTAIN RISKS AND CONCENTRATION (Continued) Currency Risk The Group’s sales and purchase and expense transactions are generally denominated in RMB and substantially all of the Group’s liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China. In addition, the Group’s cash denominated in US$ 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. On January 1, 2020, the PRC Foreign Investment Law (“FIL”) and the Regulations for Implementation of the PRC Foreign Investment Law (“Implementation Regulations”) came into effect and replaced the trio of prior laws regulating foreign investment in China, namely, the Sino-Foreign Equity Joint Venture Enterprise Law, the Sino-Foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-Invested Enterprise Law, together with their implementation rules and ancillary regulations. The FIL and the Implementation Regulations embody an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. However, since they are relatively new, uncertainties still exist in relation to their interpretation and implementation. For instance, under the FIL, “foreign investment” refers to investment activities directly or indirectly conducted by foreign individuals, enterprises or other entities in China. Though it does not explicitly classify contractual arrangements as a form of foreign investment, there is no assurance that foreign investment conducted via contractual arrangement would not be interpreted as a type of indirect foreign investment activity under the definition in the future. In addition, the definition contains a catch-all provision which includes investments made by foreign investors through means stipulated in laws or administrative regulations or other methods prescribed by the State Council. Therefore, it still leaves leeway for future laws, administrative regulations or provisions promulgated by the State Council to provide for contractual arrangements as a form of foreign investment. In any of these cases, it will be uncertain whether contractual arrangements will be deemed to be in violation of the market access requirements for foreign investment under the PRC laws and regulations. Furthermore, if future laws, administrative regulations or provisions prescribed by the State Council mandate further actions to be taken by companies with respect to existing contractual arrangements, the Group may face substantial uncertainties as to whether it can complete such actions in a timely manner, or at all. Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance challenges could materially and adversely affect the Group’s current corporate structure, corporate governance and business operations. |
RELATED PARTY TRANSACTION AND B
RELATED PARTY TRANSACTION AND BALANCES | 12 Months Ended |
Dec. 31, 2019 | |
RELATED PARTY TRANSACTION AND BALANCES | |
RELATED PARTY TRANSACTION AND BALANCES | 20. 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. RMS took over the human resource assessment solutions business, by means of absorption-type split, from RCC on April 1, 2018 due to business reorganization. The royalty fees charged by RMS were RMB270, RMB285 and RMB345 during the years ended December 31, 2017, 2018 and 2019, respectively. The royalty fees charged by RCC were RMB20, RMB14 and nil during the years ended December 31, 2017, 2018 and 2019, respectively. As of December 31, 2018 and 2019, the royalty payables due to RMS were RMB83 and RMB78, respectively. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2019 | |
SUBSEQUENT EVENT | |
SUBSEQUENT EVENT | 21. SUBSEQUENT EVENT There has been an outbreak of a novel strain of coronavirus (“COVID-19”) in China, which has resulted in quarantines, travel restrictions, and the temporary closure of businesses and facilities in China starting in early 2020. The outbreak has spread rapidly to many parts of the world, and the World Health Organization declared COVID-19 to be a pandemic in March 2020. Substantially all of the Group’s operations and employees are based in China. Consequently, the Group’s business and results of operations may be materially and adversely affected due to the potential harmful impact of COVID-19 on the Chinese and global economy in general. Such potential impact in 2020 may include, but is not limited to, a material negative decline to revenues due to weak market demand or reduced customer budgets, slower collection of accounts receivable and additional allowances for doubtful accounts if customers do not have strong cash flows, and significant downward adjustments or impairments to the fair values of the Group’s long-term investments due to significant volatility in global financial markets. Because of the significant uncertainties surrounding the COVID-19 outbreak, the extent and the magnitude of the business disruption and the related financial impact cannot be reasonably estimated at this time. However, the Company expects its net revenues and net income in the first quarter of 2020 to decrease year over year. |
PRINCIPAL ACCOUNTING POLICIES (
PRINCIPAL ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
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. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) 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. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) 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, 2019 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, 2019, the registered capital of Run An was RMB6,000 and its accumulated loss was RMB13,229. Qian Cheng holds a business license to provide advertising services. Qian Cheng is wholly owned by Run An. As of December 31, 2019, the registered capital of Qian Cheng was RMB1,500 and its retained earnings were RMB4,444. 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. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) 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. 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 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. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) 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. 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 RMB 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 19 for further discussion. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) 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, 2018 2019 RMB RMB Total assets 521,044 478,635 Total liabilities 214,588 205,580 For the year ended December 31, 2017 2018 2019 RMB RMB RMB Total revenues — 161,816 180,749 Net income (loss) (4,088) 18,406 (33,419) For the year ended December 31, 2017 2018 2019 RMB RMB RMB Net cash provided by (used in) operating activities (7,131) 5,855 (24,841) Net cash provided by (used in) investing activities 4,152 (83,936) (22,232) Net cash provided by financing activities 3,334 157,000 25,000 Net increase (decrease) in cash 355 78,919 (22,073) Cash, beginning of year 7,527 7,882 86,801 Cash, end of year 7,882 86,801 64,728 |
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$1.00 = RMB6.9618 on December 31, 2019, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that rate on December 31, 2019, 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, 2018 and 2019, to the amounts presented in the consolidated statements of cash flows: 2018 2019 RMB RMB Cash 1,968,351 2,294,904 Restricted cash 5,770 66,169 Total cash and restricted cash 1,974,121 2,361,073 Included in the cash and restricted cash balances as of December 31, 2018 and 2019 are amounts denominated in United States dollars totaling US$135,668 and US$76,726, respectively (equivalent to approximately RMB931,120 and RMB535,254, based on the RMB to US$ exchange rate quoted by the People’s Bank of China on December 28, 2018 and December 31, 2019, 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 with readily determinable fair values, equity securities without readily determinable fair values, equity method investments and available-for-sale debt securities. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) Equity Securities with Readily Determinable Fair Values Equity securities with readily determinable fair values are measured at fair value with unrealized gains and losses recorded in the consolidated statements of operations and comprehensive income. For the year ended December 31, 2019, the Company acquired a 5.7% equity interest in Huali University Group Limited, a large-scale private higher education and vocational education group in South China that is listed on the Hong Kong Stock Exchange. The investment cost was RMB201,558 and the fair value as of December 31, 2019 was RMB159,148, which was measured using the stock price at the end of the year. The change in fair value for the year ended December 31, 2019 was RMB42,410. Equity Securities without Readily Determinable Fair Values Equity securities without readily determinable fair values, and for which the Company does not control or exercise significant influence, 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 and no qualifying observable price changes were noted in the years ended December 31, 2017, 2018 and 2019. For the year ended December 31, 2019, the Company recognized an impairment loss of RMB98,277 associated with an investment in a provider of on-demand work opportunities in the United States, primarily due to changes in its business prospects and financial condition. 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, 2018, the Group made the following long-term investments: (i) RMB31,535 for a 14.3% equity interest in a technology talent assessment services provider in the United States; (ii) RMB25,000 for a 18.0% equity interest in a human resource consulting and executive search services company in China; and (iii) 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, 2019, the Group made the following long-term investments: (i) RMB565,664 for a 17.5% equity interest in CDP Holdings, Ltd., a provider of human capital management services delivered through a cloud-based technology platform in China; (ii) RMB78,000 for a 19.5% equity interest in a provider of tools and solutions powered by artificial intelligence that assist HR departments with talent recruitment, training and retention in China; (iii) RMB20,157 for a 3.0% equity interest in a recruiting platform that focuses on gig and hourly services workers within the on-demand labor market in the United States; and (iv) a total of RMB200 for a 5.0% equity interest in each of two 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. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) 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 RMB 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 a 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 on a recurring basis. See note 16. In 2018, the Company realized a gain of RMB61,070 from the sale of some shares of Golden Finance. As of December 31, 2019, the Group's redeemable 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 2. PRINCIPAL ACCOUNTING POLICIES (Continued) Upon the adoption of ASC 842 "Leases" ("ASC 842") on January 1, 2019, land use rights were presented as right-of-use assets. See Notes 2(o) and 9. |
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 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 years ended December 31, 2018 and 2019, net loss attributable to mezzanine equity holders amounted to RMB10,496 and RMB8,671, respectively. 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 | 2. PRINCIPAL ACCOUNTING POLICIES (Continued) (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 the 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, 2017, 2018 and 2019. 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. Separately identifiable intangible assets arising from acquisitions consist of online program transmission license, trade names, technology and customer relationships. 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, 2017, 2018 and 2019. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) Amortization is calculated on a straight-line basis over the following estimated useful lives: Estimated useful lives Computer software 2 to 10 years Acquired technology 5 to 10 years Trade names 10 to 20 years Customer relationships 5 years Acquired program transmission license 6 years Acquired training and other licenses 5 to 10 years |
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, 2017, 2018 and 2019. |
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. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) Online Recruitment Services Revenues The Group provides online recruitment services through several websites, including www.51job.com www.yingjiesheng.com www.51jingying.com www.lagou.com www.51mdd.com 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 subscription period of recruitment packages ranges from one month to one year, and the display period for online advertising ranges from one 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 contract term for business process outsourcing services ranges from one 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. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) 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 advance from customers balance was RMB1,126,300 and RMB1,108,518 for the years ended December 31, 2018 and 2019, respectively, which was primarily driven by payments from employers received prior to the Group satisfying its performance obligation. This was offset by RMB914,312 and RMB1,098,970 of revenues recognized that were included in the advance from customers balance as of December 31, 2017 and 2018, respectively. 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 and Related Government Surcharges Generally, the main businesses of the Group’s PRC subsidiaries and VIEs are subject to value-added tax (“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 subject to certain government surcharges on the VAT payable in the PRC. Beginning January 1, 2019, the Company's presentation of surcharges has been included in cost of services. |
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. The amount of government surcharges included in cost of services was RMB32,623, RMB42,245 and RMB49,966 for the years ended December 31, 2017, 2018 and 2019, respectively. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) |
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 RMB130,355, RMB205,279 and RMB201,988 for the years ended December 31, 2017, 2018 and 2019, 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 RMB101.63, RMB148.05 and RMB153.95 for the years ended December 31, 2017, 2018 and 2019, respectively. For the years ended December 31, 2017, 2018 and 2019, the fair value of options granted was estimated with the following assumptions: 2017 2018 2019 Risk-free interest rate 1.61% 2.41%-2.75% 1.61%-2.47% Expected life (years) 4 4 4 Expected dividend yield 0% 0% 0% Volatility 32% 32% 35%-38% Weighted average fair value per common share on date of option grant US$56.68 US$73.46 US$69.46 |
Leases | (o) Leases Prior to the adoption of ASC 842 on January 1, 2019, leases where substantially all the rewards and risks of ownership of assets remain with the leasing company were accounted for as operating leases. Payments made under operating leases were charged to the consolidated statements of operations and comprehensive income on a straight-line basis over the lease periods. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) On January 1, 2019, the Company adopted ASC 842 using the modified retrospective method. The Company elected practical expedients upon transition that retained the lease classification and initial direct costs for any leases that existed prior to adoption of the standard. The Company did not reassess whether any contracts entered into prior to adoption were leases. Prior periods have not been restated and there was no cumulative-effect adjustment to retained earnings as of January 1, 2019. The adoption of ASC 842 resulted in the recording of right-of-use assets (after adjustments for prepayments in the amount of RMB4,700) and lease liabilities of approximately RMB108,400 and RMB103,700, respectively, based on the present value of remaining lease payments over the lease term. Total right-of-use assets included net book value of RMB236,700 in land use rights that were previously presented in property and equipment on the consolidated balance sheet as of December 31, 2018.The adoption of ASC 842 did not have a material impact on the Company's consolidated statements of operations and comprehensive income. The Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use assets and lease liabilities on the Company's consolidated balance sheets. Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease right-of-use assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option, if any. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate, which it calculates based on the credit quality of the Company and by comparing interest rates available in the market for similar borrowings, and adjusting this amount based on the impact of collateral over the term of each lease. The Company has elected to adopt the following lease policies in conjunction with the adoption of ASC 842: (i) elect for each lease not to separate non-lease components from lease components and instead to account for each separate lease component and the non-lease components associated with that lease component as a single lease component; and (ii) for leases that have lease terms of 12 months or less and does not include a purchase option that is reasonably certain to exercise, the Company elected not to apply ASC 842 recognition requirements. |
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, 2017, 2018 and 2019, the Company did not record any interest and penalties associated with uncertain tax positions as there were no uncertain tax positions. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) |
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, 2017, 2018 and 2019. 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, 2017, 2018 and 2019. As a result, these entities did not make appropriations to their statutory reserve funds in the years ended December 31, 2017, 2018 and 2019. During the years ended December 31, 2017, 2018 and 2019, the Group’s subsidiaries that did not have accumulative losses made total appropriations to their statutory common reserve fund in the amount of RMB514, RMB3,405 and RMB651, 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, 2017, 2018 and 2019. 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 RMB525,997 and RMB493,962, or 6.7% and 4.4% of total consolidated net assets as of December 31, 2018 and 2019, 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 14. |
Segment Reporting | (t) Segment Reporting Based on the criteria established by ASC 280 “Segment Reporting,” the Group currently operates and manages its business as a single single |
Stock Repurchase | (u) 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 | (v) 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 | (w) 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 RMB86,287, RMB173,760 and RMB202,354 which was included in other income for the years ended December 31, 2017, 2018 and 2019, respectively. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) |
Reclassifications | (x) Reclassifications Beginning January 1, 2019, the Company's presentation of government surcharges has been included in cost of services. The prior years' amounts of government surcharges, which were RMB32,623 and RMB42,245 for the years ended December 31, 2017 and 2018, respectively, have been reclassified to conform with the current year's presentation. This reclassification had no effect on the reported results in the Company's consolidated statements of operations and comprehensive income. |
Recent Accounting Pronouncements | (y) Recent Accounting Pronouncements New and Amended Standards Adopted by the Group In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-02, “Leases.” This ASU required lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases of greater than twelve months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The Company adopted this ASU beginning January 1, 2019, and for its impact on the Company's financial statements, please see Notes 2(o) and 9. 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 has adopted ASU 2018-07 and the adoption had no material impact on the Company's consolidated financial statements. New and Amended Standards Not Yet Adopted by the Group In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses”, 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 adoption of this standard is not expected to have a material impact on the Company’s financial statements and disclosures. In January 2017, the FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment”, 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 adoption of this standard is not expected to have a material impact on the Company’s financial statements and disclosures. 2. PRINCIPAL ACCOUNTING POLICIES (Continued) 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 does not expect the effect, on adoption on January 1, 2020, to have any impact on the Company’s financial position, results of operations or cash flows. The Company is in the process of evaluating the modified disclosures that will be required upon adoption of ASU 2018-13. |
PRINCIPAL ACCOUNTING POLICIES_2
PRINCIPAL ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
PRINCIPAL ACCOUNTING POLICIES | |
Summary of financial information of Group's VIEs | As of December 31, 2018 2019 RMB RMB Total assets 521,044 478,635 Total liabilities 214,588 205,580 For the year ended December 31, 2017 2018 2019 RMB RMB RMB Total revenues — 161,816 180,749 Net income (loss) (4,088) 18,406 (33,419) For the year ended December 31, 2017 2018 2019 RMB RMB RMB Net cash provided by (used in) operating activities (7,131) 5,855 (24,841) Net cash provided by (used in) investing activities 4,152 (83,936) (22,232) Net cash provided by financing activities 3,334 157,000 25,000 Net increase (decrease) in cash 355 78,919 (22,073) Cash, beginning of year 7,527 7,882 86,801 Cash, end of year 7,882 86,801 64,728 |
Schedule of cash and restricted cash | 2018 2019 RMB RMB Cash 1,968,351 2,294,904 Restricted cash 5,770 66,169 Total cash and restricted cash 1,974,121 2,361,073 |
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 estimated useful lives of intangible assets | Estimated useful lives Computer software 2 to 10 years Acquired technology 5 to 10 years Trade names 10 to 20 years Customer relationships 5 years Acquired program transmission license 6 years Acquired training and other licenses 5 to 10 years |
Schedule of assumptions used to estimate the fair value of stock options | 2017 2018 2019 Risk-free interest rate 1.61% 2.41%-2.75% 1.61%-2.47% Expected life (years) 4 4 4 Expected dividend yield 0% 0% 0% Volatility 32% 32% 35%-38% Weighted average fair value per common share on date of option grant US$56.68 US$73.46 US$69.46 |
ACQUISITION (Tables)
ACQUISITION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Lagou Information Limited | |
Business Acquisition [Line Items] | |
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, 2019 | |
ACCOUNTS RECEIVABLE | |
Schedule of accounts receivable | As of December 31, 2018 2019 RMB RMB Accounts receivable 241,079 288,389 Less: Allowance for doubtful accounts (11,014) (21,952) 230,065 266,437 4. ACCOUNTS RECEIVABLE (Continued) |
Schedule of movement of allowance for doubtful accounts | 2017 2018 2019 RMB RMB RMB Balance at beginning of year 6,144 5,384 11,014 Additions 5,738 11,701 22,799 Write-offs (6,498) (6,071) (11,861) Balance at end of year 5,384 11,014 21,952 |
PREPAYMENTS AND OTHER CURRENT_2
PREPAYMENTS AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
PREPAYMENTS AND OTHER CURRENT ASSETS | |
Schedule of components of prepayments and other current assets | 2018 2019 RMB RMB Rental and other deposits 2,766 4,691 Prepayments for rental and others 23,689 16,208 Employee advances 27,136 23,295 Payments made on behalf of customers, net of allowance 472,502 475,901 Prepaid insurance premium 1,158 1,493 Interest income receivable 74,231 88,990 Receivables related to net proceeds from share options exercised — 50,765 Others 5,436 7,865 Total 606,918 669,208 |
Schedule of movement of allowance for payments made on behalf of customers | 2017 2018 2019 RMB RMB RMB Balance at beginning of year 459 3,047 1,391 Additions 9,656 — 5,104 Reversals — (1,094) — Write-offs (7,068) (562) (950) Balance at end of year 3,047 1,391 5,545 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
PROPERTY AND EQUIPMENT | |
Schedule of property and equipment and related accumulated depreciation | 2018 2019 RMB RMB Land use rights 276,759 — Building 356,085 356,085 Leasehold improvements 37,994 39,902 Electronic equipment 152,058 165,015 Furniture and fixtures 7,312 7,763 Motor vehicles 8,135 6,583 Other assets 53,747 56,412 Less: Accumulated depreciation (365,070) (359,828) Net book value 527,020 271,932 |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
GOODWILL | |
Schedule of changes in the carrying amount of goodwill | 2018 2019 RMB RMB Balance at beginning of year 1,021,454 1,036,124 Acquisition of Lagou 14,670 — Balance at end of year 1,036,124 1,036,124 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
INTANGIBLE ASSETS | |
Schedule of intangible assets and related accumulated amortization | 2018 2019 RMB RMB Computer software 29,156 30,321 Acquired technology 60,251 60,251 Trade names 95,783 95,783 Customer relationships 12,270 12,270 Acquired program transmission license 119,728 119,728 Acquired training and other licenses 4,151 4,151 Less: Accumulated amortization (76,893) (119,342) Net book value 244,446 203,162 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
LEASES | |
Summary of components of lease expense | The components of lease expense for the year ended December 31, 2019 are as follows: RMB Amortization of right-of-use assets 48,995 Interest on lease liabilities 4,462 Expenses for short-term lease within 12 months 4,239 Total lease expense 57,696 |
Summary of supplemental balance sheet information related to leases | Supplemental balance sheet information related to leases as of December 31, 2019 is as follows: RMB Operating lease right-of-use assets 320,809 Operating lease liabilities, current 34,817 Operating lease liabilities, non-current 50,763 Total lease liabilities 85,580 Weighted average remaining lease term (in years) 1.28 Weighted average discount rate 4.76 % |
Summary of supplemental cash flow information related to leases | Supplemental cash flow information related to leases for the year ended December 31, 2019 is as follows: RMB Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows for operating leases 46,495 |
Summary of maturities of lease liabilities | Maturities of lease liabilities as of December 31, 2019 were as follows: RMB 2020 36,728 2021 26,535 2022 19,351 2023 11,089 2024 700 Total undiscounted lease payments 94,403 Less: Imputed interest (8,823) Total lease liabilities 85,580 |
OTHER PAYABLES AND ACCRUALS (Ta
OTHER PAYABLES AND ACCRUALS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
OTHER PAYABLES AND ACCRUALS | |
Schedule of components of other payables and accruals | 2018 2019 RMB RMB Receipts from customers 808,799 958,347 Payables to customers related to government subsidies 114,909 164,572 Professional service fees 3,727 4,281 Office expenses 7,338 8,769 Payables to employees related to net proceeds from share options exercised 3,217 56,594 Accrued interest expense related to convertible senior notes 8,016 — Others 6,172 19,079 Total 952,178 1,211,642 |
TAXATION (Tables)
TAXATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
TAXATION | |
Schedule of income (loss) before income tax expense taxed between jurisdictions | 2017 2018 2019 RMB RMB RMB PRC entities 1,139,978 1,617,091 1,711,678 Non-PRC entities (597,722) (130,216) (949,586) Total 542,256 1,486,875 762,092 |
Schedule of current and deferred portion of income tax expense (benefit) included in the consolidated statements of operations and comprehensive income | 2017 2018 2019 RMB RMB RMB Current income tax expense: PRC entities 156,706 223,903 239,477 Non-PRC entities — — — Total 156,706 223,903 239,477 Deferred income tax expense (benefit): PRC entities 12,787 18,531 (3,587) Non-PRC entities — — — Total 12,787 18,531 (3,587) Income tax expense: PRC entities 169,493 242,434 235,890 Non-PRC entities — — — Total 169,493 242,434 235,890 |
Schedule of reconciliation between the statutory EIT rate in the PRC and the Group's effective tax rate | 2017 2018 2019 EIT statutory rate 25 % 25 % 25 % Difference in EIT rates of certain subsidiaries (20) % (11) % (22) % Change in fair value of convertible senior notes 23 % (2) % 25 % Expenses incurred outside the PRC 5 % 5 % 7 % Other permanent differences (2) % (1) % (4) % Effective EIT rate of the Group 31 % 16 % 31 % |
Schedule of aggregate amount and per share effect of the preferential tax rate | 2017 2018 2019 RMB RMB RMB (in thousands, except per share data) Aggregate effect 107,547 154,182 163,146 Basic net income per share effect 1.79 2.51 2.51 Diluted net income per share effect 1.76 2.44 2.45 |
Schedule of significant components of deferred tax assets and liabilities | 2018 2019 RMB RMB Deductible temporary differences related to other payables and accruals 1,073 1,297 Deductible temporary differences related to provision for doubtful accounts 1,648 4,108 Deductible temporary differences related to advertising expenses 13,422 14,358 Tax loss carryforwards 49,408 57,580 Amount offset by non-current deferred tax liabilities (6,633) (5,385) 58,918 71,958 Less: Valuation allowance (43,913) (49,811) Total deferred tax assets 15,005 22,147 Taxable temporary differences related to depreciation period (10,141) (11,096) Taxable temporary differences related to available-for-sale debt securities (85,373) (85,373) Taxable temporary differences related to government subsidy income (75,240) (84,623) Taxable temporary differences related to trade names, technology and customer relationships (20,440) (17,399) Taxable temporary differences related to acquired program transmission license (26,191) (21,201) Amount offset by non-current deferred tax assets 6,633 5,385 Total deferred tax liabilities (210,752) (214,307) |
Schedule of roll-forward of the valuation allowance | 2017 2018 2019 RMB RMB RMB Balance at beginning of year 2,443 39,576 43,913 Additions 37,902 6,305 6,088 Reversals (769) (1,968) (190) Balance at end of year 39,576 43,913 49,811 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
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, 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 Granted 1,169,728 US$ 69.46 Exercised (1,172,210) US$ 35.03 Forfeited (53,557) US$ 62.65 Outstanding at December 31, 2019 5,262,951 US$ 55.67 3.76 US$ 153,857 Vested and expected to vest at December 31, 2019 5,008,721 US$ 55.12 3.71 US$ 149,166 Exercisable at December 31, 2019 2,626,300 US$ 45.01 2.71 US$ 104,764 |
Summary of non-vested share option activity | Weighted average grant-date Number fair value of shares (per share) 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 Granted 1,169,728 US$ 22.12 Vested (1,182,589) US$ 15.99 Forfeited (53,557) US$ 18.16 Non-vested at December 31, 2019 2,636,651 US$ 20.00 Expected to vest at December 31, 2019 2,382,421 US$ 19.99 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
EARNINGS PER SHARE | |
Schedule of basic earnings per share and diluted earnings per share | 2017 2018 2019 RMB RMB RMB (in thousands, except share and per share data) Numerator: Net income attributable to 51job, Inc. 371,889 1,252,319 532,318 Denominator: Denominator for basic earnings per share — weighted average common shares outstanding 60,087,306 61,318,292 65,049,597 Dilutive effect of share options 1,063,107 1,857,191 1,633,860 Denominator for diluted earnings per share 61,150,413 63,175,483 66,683,457 Basic earnings per share 6.19 20.42 8.18 Diluted earnings per share 6.08 19.82 7.98 |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
FAIR VALUE MEASUREMENT | |
Summary of assets that are measured at fair value on a recurring basis | As of December 31, 2019 Level 1 Level 2 Level 3 Total RMB RMB RMB RMB Short-term investments in time deposits 7,095,686 — — 7,095,686 Short-term investments in investment products — 550,000 — 550,000 Listed equity securities 159,148 — — 159,148 Available-for-sale debt securities — — 448,776 448,776 As of December 31, 2018 Level 1 Level 2 Level 3 Total RMB RMB RMB RMB Short-term investments in time deposits 6,855,886 — — 6,855,886 Short-term investments in investment products — 10,000 — 10,000 Available-for-sale debt securities — — 448,776 448,776 Convertible senior notes 1,725,182 — — 1,725,182 |
Summary of reconciliation of Level 1 fair value measurement of listed equity securities | RMB Balance at December 31, 2018 — Initial recognition 201,558 Unrealized loss (42,410) Balance at December 31, 2019 159,148 |
Summary of reconciliation of Level 3 fair value measurement of available-for-sale debt securities | RMB 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 Balance at December 31, 2019 448,776 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of future minimum payments with respect to contractual purchase obligations | Property Hosting and management Advertising network Office services services services furnishings Total RMB RMB RMB RMB RMB 2020 9,845 8,725 3,922 3,248 25,740 2021 5,957 — 231 75 6,263 2022 4,542 — 86 10 4,638 2023 3,155 — 25 — 3,180 2024 1,994 — — — 1,994 |
REDEEMABLE NON-CONTROLLING IN_2
REDEEMABLE NON-CONTROLLING INTERESTS (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
REDEEMABLE NON-CONTROLLING INTERESTS | |
Schedule of redeemable non-controlling interest | 2018 2019 RMB RMB Balance at beginning of year 228,230 225,645 Share-based compensation 7,911 — Net loss attributable to mezzanine equity holders (10,496) (8,671) Balance at end of year 225,645 216,974 |
PRINCIPAL ACCOUNTING POLICIES -
PRINCIPAL ACCOUNTING POLICIES - Basis of Consolidation (Details) ¥ in Thousands | Jan. 27, 2014 | Dec. 31, 2019CNY (¥)entity | Dec. 31, 2017 | Jun. 30, 2015 | Sep. 11, 2007CNY (¥) |
Basis of consolidation | |||||
Number of consolidated VIEs | entity | 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/(accumulated loss) | ¥ (13,229) | ||||
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/(accumulated loss) | 4,444 | ||||
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, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2019CNY (¥) | |
Financial information of the Group's VIEs | |||||
Total assets | $ 2,052,564 | ¥ 12,238,416 | ¥ 14,289,542 | ||
Total liabilities | 445,076 | 4,420,220 | 3,098,532 | ||
Net income (loss) | 75,584 | ¥ 526,202 | 1,244,441 | ¥ 372,763 | |
Net cash provided by (used in) operating activities | 253,065 | 1,761,773 | 1,792,942 | 1,441,563 | |
Net cash provided by (used in) investing activities | (241,105) | (1,678,532) | (2,280,197) | (1,434,256) | |
Net cash provided by financing activities | 40,417 | 281,376 | 145,121 | 424,415 | |
Net increase (decrease) in cash | 55,582 | 386,952 | (318,604) | 371,262 | |
Cash and restricted cash, beginning of year | 283,565 | 1,974,121 | 2,292,725 | 1,921,463 | |
Cash and restricted cash, end of year | $ 339,147 | 2,361,073 | 1,974,121 | 2,292,725 | |
VIE's | |||||
Financial information of the Group's VIEs | |||||
Total assets | 521,044 | 478,635 | |||
Total liabilities | 214,588 | ¥ 205,580 | |||
Total revenues | 180,749 | 161,816 | |||
Net income (loss) | (33,419) | 18,406 | (4,088) | ||
Net cash provided by (used in) operating activities | (24,841) | 5,855 | (7,131) | ||
Net cash provided by (used in) investing activities | (22,232) | (83,936) | 4,152 | ||
Net cash provided by financing activities | 25,000 | 157,000 | 3,334 | ||
Net increase (decrease) in cash | (22,073) | 78,919 | 355 | ||
Cash and restricted cash, beginning of year | 86,801 | 7,882 | 7,527 | ||
Cash and restricted cash, end of year | ¥ 64,728 | ¥ 86,801 | ¥ 7,882 |
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 | 24 Months Ended | |||||||
Sep. 30, 2016CNY (¥) | Dec. 31, 2019USD ($)$ / ¥ | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥)company | Dec. 31, 2017CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2019CNY (¥)$ / ¥ | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2016CNY (¥) | |
Foreign Currencies | ||||||||||
Exchange rate used for conversion of RMB into U.S. dollars in the financial statements | $ / ¥ | 6.9618 | 6.9618 | ||||||||
Cash and Restricted Cash | ||||||||||
Cash | $ 329,642 | ¥ 2,294,904 | ¥ 1,968,351 | |||||||
Restricted cash | 9,505 | 66,169 | 5,770 | |||||||
Total cash and restricted cash | 339,147 | ¥ 2,292,725 | 2,361,073 | $ 283,565 | 1,974,121 | ¥ 1,921,463 | ||||
Investments | ||||||||||
Change in fair value of equity securities with readily determinable fair values | 6,092 | ¥ 42,410 | ||||||||
Other-than-temporary impairment charge | 0 | ¥ 0 | 0 | |||||||
Qualifying observable price changes | 0 | 0 | ¥ 0 | |||||||
USD | ||||||||||
Cash and Restricted Cash | ||||||||||
Amount of cash and restricted cash held in U.S. dollars | $ 76,726 | ¥ 535,254 | $ 135,668 | 931,120 | ||||||
Equity Method Investments | ||||||||||
Investments | ||||||||||
Amount paid for investments | 25,000 | 25,000 | ||||||||
Other-than-temporary impairment charge on equity method investment | 0 | ¥ 0 | ||||||||
Huali University Group Limited | ||||||||||
Investments | ||||||||||
Equity interest acquired (as a percent) | 5.70% | 5.70% | ||||||||
Cost of equity securities with readily determinable fair values | ¥ 201,558 | |||||||||
Fair value of equity securities with readily determinable fair values | 159,148 | |||||||||
Change in fair value of equity securities with readily determinable fair values | 42,410 | |||||||||
Investment in a provider of on-demand work opportunities in the United States | ||||||||||
Investments | ||||||||||
Other-than-temporary impairment charge | ¥ 98,277 | |||||||||
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 | ¥ 200 | ¥ 300 | ||||||||
Percentage of equity interest owned | 5.00% | 5.00% | 5.00% | 5.00% | ||||||
Number of companies | company | 3 | |||||||||
CDP Holdings, Ltd. | ||||||||||
Investments | ||||||||||
Equity interest | ¥ 565,664 | |||||||||
Percentage of equity interest owned | 17.50% | 17.50% | ||||||||
Provider of tools and solutions powered by artificial intelligence | ||||||||||
Investments | ||||||||||
Equity interest | ¥ 78,000 | |||||||||
Percentage of equity interest owned | 19.50% | 19.50% | ||||||||
Recruiting platform that focuses on gig and hourly services workers within the on-demand labor market in the United States | ||||||||||
Investments | ||||||||||
Equity interest | ¥ 20,157 | |||||||||
Percentage of equity interest owned | 3.00% | 3.00% | ||||||||
Investment fund | Equity Method Investments | ||||||||||
Investments | ||||||||||
Amount paid for investments | ¥ 75,000 | |||||||||
Ownership interest (as a percent) | 5.00% | 5.00% | ||||||||
Another Investment Fund | Equity Method Investments | ||||||||||
Investments | ||||||||||
Amount paid for investments | ¥ 50,000 | |||||||||
Ownership interest (as a percent) | 25.00% | 25.00% | ||||||||
Golden Finance | ||||||||||
Investments | ||||||||||
Available-for-sale debt securities | ¥ 126,716 | |||||||||
Available-for-sale debt securities, percentage of equity interest | 15.00% | 11.70% | 11.70% | |||||||
Realized gain on sale of debt securities | ¥ 61,070 |
PRINCIPAL ACCOUNTING POLICIES_5
PRINCIPAL ACCOUNTING POLICIES - Property and Equipment, Business Combinations (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Business Combinations | ||
Net loss attributable to mezzanine equity holders | ¥ 8,671 | ¥ 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, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
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 |
Customer relationships | |||
Principal accounting policies | |||
Estimated useful lives | 5 years | ||
Acquired training licenses | |||
Principal accounting policies | |||
Estimated useful lives | 6 years | ||
Minimum | Computer software | |||
Principal accounting policies | |||
Estimated useful lives | 2 years | ||
Minimum | Technology | |||
Principal accounting policies | |||
Estimated useful lives | 5 years | ||
Minimum | Trade names | |||
Principal accounting policies | |||
Estimated useful lives | 10 years | ||
Minimum | Acquired training and other licenses | |||
Principal accounting policies | |||
Estimated useful lives | 5 years | ||
Maximum | Computer software | |||
Principal accounting policies | |||
Estimated useful lives | 10 years | ||
Maximum | Technology | |||
Principal accounting policies | |||
Estimated useful lives | 10 years | ||
Maximum | Trade names | |||
Principal accounting policies | |||
Estimated useful lives | 20 years | ||
Maximum | Acquired training and other licenses | |||
Principal accounting policies | |||
Estimated useful lives | 10 years |
PRINCIPAL ACCOUNTING POLICIES_7
PRINCIPAL ACCOUNTING POLICIES - Revenue Recognition, Cost of Services and Sales Marketing Expenses (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Principal accounting policies | ||||
Advance from customers | ¥ 1,108,518 | ¥ 1,126,300 | ||
Revenues recognized included in advances from customer balance | 1,098,970 | ¥ 914,312 | ||
Revenue, Practical Expedient, Incremental Cost of Obtaining Contract [true false] | true | |||
Government surcharges included in cost of services | ¥ 49,966 | 42,245 | 32,623 | |
Advertising and promotion expenses | ¥ 201,988 | ¥ 205,279 | ¥ 130,355 | ¥ 130,355 |
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 (Details) | 12 Months Ended | ||||||
Dec. 31, 2019$ / shares | Dec. 31, 2019¥ / shares | Dec. 31, 2018$ / shares | Dec. 31, 2018¥ / shares | Dec. 31, 2017$ / shares | Dec. 31, 2017¥ / shares | Dec. 31, 2016¥ / shares | |
Share based compensation | |||||||
Weighted average fair value per stock option on grant date (in dollars or CNY per share) | (per share) | $ 22.12 | ¥ 153.95 | $ 21.53 | ¥ 148.05 | $ 15.62 | ¥ 101.63 | ¥ 101.63 |
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 | $ 69.46 | $ 73.46 | $ 56.68 | ||||
Minimum | |||||||
Share based compensation | |||||||
Risk-free interest rate (as a percent) | 1.61% | 1.61% | 2.41% | 2.41% | |||
Volatility (as a percent) | 35.00% | 35.00% | |||||
Maximum | |||||||
Share based compensation | |||||||
Risk-free interest rate (as a percent) | 2.47% | 2.47% | 2.75% | 2.75% | |||
Volatility (as a percent) | 38.00% | 38.00% |
PRINCIPAL ACCOUNTING POLICIES_9
PRINCIPAL ACCOUNTING POLICIES - Leases (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Jan. 01, 2019CNY (¥) | Dec. 31, 2018CNY (¥) |
Principal accounting policies | ||||
Prepayments | $ 96,126 | ¥ 669,208 | ¥ 606,918 | |
Right-of-use assets | 46,081 | 320,809 | ||
Lease liabilities | 85,580 | |||
Property and equipment, net | $ 39,061 | ¥ 271,932 | ¥ 527,020 | |
ASU 2016-02 | Land use rights | ||||
Principal accounting policies | ||||
Right-of-use assets | ¥ 108,400 | |||
Lease liabilities | 103,700 | |||
ASU 2016-02 | Restatement Adjustment | ||||
Principal accounting policies | ||||
Retained earnings | 0 | |||
Prepayments | (4,700) | |||
ASU 2016-02 | Restatement Adjustment | Land use rights | ||||
Principal accounting policies | ||||
Property and equipment, net | ¥ (236,700) |
PRINCIPAL ACCOUNTING POLICIE_10
PRINCIPAL ACCOUNTING POLICIES - Taxation, Statutory Reserves, Dividend and Restricted Net Assets, Segment Reporting, Government Subsidies and Reclassifications (Details) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019CNY (¥)segment | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Principal accounting policies | |||
Uncertain tax positions | ¥ 0 | ¥ 0 | ¥ 0 |
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% | 50.00% | 50.00% |
Appropriations to the statutory reserve fund by subsidiaries and VIEs | ¥ 0 | ¥ 0 | ¥ 0 |
Total appropriations to the statutory common reserve fund | 651 | 3,405 | 514 |
Appropriations to the statutory common welfare fund | 0 | 0 | 0 |
Net assets not distributable | ¥ 493,962 | ¥ 525,997 | |
Aggregate net assets not distributable as percentage of total consolidated net assets | 4.40% | 6.70% | |
Number of operating segments | segment | 1 | ||
Number of reportable segments | segment | 1 | ||
Government subsidies recognized | ¥ 202,354 | ¥ 173,760 | 86,287 |
Government surcharges included in cost of services | ¥ 49,966 | ¥ 42,245 | ¥ 32,623 |
51net | Tech JV | |||
Principal accounting policies | |||
Ownership interest in subsidiary (as a percent) | 50.00% |
ACQUISITION (Details)
ACQUISITION (Details) ¥ in Thousands, $ in Thousands | 1 Months Ended | |||
Dec. 31, 2017CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | |
ACQUISITION | ||||
Goodwill | ¥ 1,021,454 | $ 148,830 | ¥ 1,036,124 | ¥ 1,036,124 |
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, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) |
ACCOUNTS RECEIVABLE | |||||
Accounts receivable | ¥ 288,389 | ¥ 241,079 | |||
Less: Allowance for doubtful accounts | (21,952) | (11,014) | ¥ (5,384) | ¥ (6,144) | |
Accounts receivable, net | $ 38,271 | ¥ 266,437 | ¥ 230,065 |
ACCOUNTS RECEIVABLE - Allowance
ACCOUNTS RECEIVABLE - Allowance for Doubtful Accounts (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Allowance for doubtful accounts | |||
Balance at beginning of year | ¥ 11,014 | ¥ 5,384 | ¥ 6,144 |
Additions | 22,799 | 11,701 | 5,738 |
Write-offs | (11,861) | (6,071) | (6,498) |
Balance at end of year | ¥ 21,952 | ¥ 11,014 | ¥ 5,384 |
PREPAYMENTS AND OTHER CURRENT_3
PREPAYMENTS AND OTHER CURRENT ASSETS (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) |
PREPAYMENTS AND OTHER CURRENT ASSETS | |||
Rental and other deposits | ¥ 4,691 | ¥ 2,766 | |
Prepayments for rental and others | 16,208 | 23,689 | |
Employee advances | 23,295 | 27,136 | |
Payments made on behalf of customers, net of allowance | 475,901 | 472,502 | |
Prepaid insurance premium | 1,493 | 1,158 | |
Interest income receivable | 88,990 | 74,231 | |
Receivables related to net proceeds from share options exercised | 50,765 | ||
Others | 7,865 | 5,436 | |
Total | $ 96,126 | ¥ 669,208 | ¥ 606,918 |
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, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
PREPAYMENTS AND OTHER CURRENT ASSETS | |||
Balance at beginning of year | ¥ 1,391 | ¥ 3,047 | ¥ 459 |
Additions | 5,104 | 9,656 | |
Reversals | (1,094) | ||
Write-offs | (950) | (562) | (7,068) |
Balance at end of year | ¥ 5,545 | ¥ 1,391 | ¥ 3,047 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2019CNY (¥) | |
Property and equipment | |||||
Less: Accumulated depreciation | ¥ (365,070) | ¥ (359,828) | |||
Net book value | $ 39,061 | 527,020 | 271,932 | ||
Depreciation expense | 6,293 | ¥ 43,811 | 57,044 | ¥ 53,422 | |
Loss due to disposal of fixed assets | $ 33 | ¥ 231 | 225 | ¥ 690 | |
Land use rights | |||||
Property and equipment | |||||
Gross book value | 276,759 | ||||
Building | |||||
Property and equipment | |||||
Gross book value | 356,085 | 356,085 | |||
Leasehold improvements | |||||
Property and equipment | |||||
Gross book value | 37,994 | 39,902 | |||
Electronic equipment | |||||
Property and equipment | |||||
Gross book value | 152,058 | 165,015 | |||
Furniture and fixtures | |||||
Property and equipment | |||||
Gross book value | 7,312 | 7,763 | |||
Motor vehicles | |||||
Property and equipment | |||||
Gross book value | 8,135 | 6,583 | |||
Other assets | |||||
Property and equipment | |||||
Gross book value | ¥ 53,747 | ¥ 56,412 |
GOODWILL (Details)
GOODWILL (Details) ¥ in Thousands | 12 Months Ended |
Dec. 31, 2018CNY (¥) | |
Changes in the carrying amount of goodwill | |
Balance at beginning of year | ¥ 1,021,454 |
Acquisition of Lagou | 14,670 |
Balance at end of year | ¥ 1,036,124 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | |
Intangible assets | |||
Less: Accumulated amortization | ¥ (76,893) | ¥ (119,342) | |
Net book value | 244,446 | $ 29,182 | 203,162 |
Deferred tax liability | 20,440 | 17,399 | |
Computer software | |||
Intangible assets | |||
Gross book value | 29,156 | 30,321 | |
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 | 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 |
INTANGIBLE ASSETS - Amortizatio
INTANGIBLE ASSETS - Amortization Expense (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
INTANGIBLE ASSETS | ||||
Amortization expense | $ 6,100 | ¥ 42,467 | ¥ 38,525 | ¥ 10,245 |
Estimated amortization expenses | ||||
2020 | 39,982 | |||
2021 | 38,796 | |||
2022 | 38,341 | |||
2023 | 30,790 | |||
2024 and thereafter | ¥ 55,253 |
LEASES (Details)
LEASES (Details) | Dec. 31, 2019 |
Minimum | |
Leases | |
Initial or remaining terms | 1 year |
Incremental borrowing rate | 4.75% |
Maximum | |
Leases | |
Initial or remaining terms | 6 years |
Incremental borrowing rate | 4.90% |
LEASES - Components of lease ex
LEASES - Components of lease expenses (Details) - 12 months ended Dec. 31, 2019 ¥ in Thousands, $ in Thousands | USD ($) | CNY (¥) |
Components of lease expense | ||
Amortization of right-of-use assets | $ 7,038 | ¥ 48,995 |
Interest on lease liabilities | 4,462 | |
Expenses for short-term lease within 12 months | 4,239 | |
Total lease cost | ¥ 57,696 |
LEASES - Supplemental Balance s
LEASES - Supplemental Balance sheet information related to lease (Details) - 12 months ended Dec. 31, 2019 ¥ in Thousands, $ in Thousands | USD ($) | CNY (¥) |
Supplemental balance sheet information related to leases | ||
Operating lease right-of-use assets | $ 46,081 | ¥ 320,809 |
Operating lease liabilities, current | 5,001 | 34,817 |
Operating lease liabilities, non-current | $ 7,292 | 50,763 |
Total lease liabilities | ¥ 85,580 | |
Weighted average remaining lease term (in years) | 1 year 3 months 10 days | 1 year 3 months 10 days |
Weighted average discount rate | 4.76% | 4.76% |
Weighted average remaining lease term, including land use rights (in years) | 26 years 8 months 15 days |
LEASES - Supplemental cash flow
LEASES - Supplemental cash flow information related to leases (Details) ¥ in Thousands | 12 Months Ended |
Dec. 31, 2019CNY (¥) | |
LEASES | |
Operating cash outflows for operating leases | ¥ 46,495 |
LEASES - Maturities of lease li
LEASES - Maturities of lease liabilities (Details) ¥ in Thousands | Dec. 31, 2019CNY (¥) |
Maturities of lease liabilities | |
2020 | ¥ 36,728 |
2021 | 26,535 |
2022 | 19,351 |
2023 | 11,089 |
2024 | 700 |
Total undiscounted lease payments | 94,403 |
Less: Imputed interest | (8,823) |
Total lease liabilities | ¥ 85,580 |
LEASES - Future minimum payment
LEASES - Future minimum payments with respect to the company's operating leases (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
LEASES | ||
Rental expenses | ¥ 67,960 | ¥ 53,433 |
OTHER PAYABLES AND ACCRUALS (De
OTHER PAYABLES AND ACCRUALS (Details) ¥ in Thousands, $ in Thousands | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) |
OTHER PAYABLES AND ACCRUALS | |||
Receipts from customers | ¥ 958,347 | ¥ 808,799 | |
Payables to customers related to government subsidies | 164,572 | 114,909 | |
Professional service fees | 4,281 | 3,727 | |
Office expenses | 8,769 | 7,338 | |
Payables to employees related to net proceeds from share options exercised | 56,594 | 3,217 | |
Accrued interest expense related to convertible senior notes | 8,016 | ||
Others | 19,079 | 6,172 | |
Total | $ 174,041 | ¥ 1,211,642 | ¥ 952,178 |
TAXATION (Details)
TAXATION (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
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 | ¥ 8,425,647 | ¥ 6,913,897 | |
Unrecognized deferred tax liability of the Company's PRC subsidiaries | ¥ 842,565 | ¥ 691,390 | |
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 | |||
TAXATION | |||
Preferential income tax rate for High and New Technology Enterprise (as a percent) | 15.00% | ||
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, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Composition of Income Tax Expense | ||||
PRC entities | ¥ 1,711,678 | ¥ 1,617,091 | ¥ 1,139,978 | |
Non-PRC entities | (949,586) | (130,216) | (597,722) | |
Income before income tax expense | $ 109,467 | ¥ 762,092 | ¥ 1,486,875 | ¥ 542,256 |
TAXATION - Current and Deferred
TAXATION - Current and Deferred Income Tax Expense (Income) (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Current income tax expense: | ||||
PRC entities | ¥ 239,477 | ¥ 223,903 | ¥ 156,706 | |
Total | 239,477 | 223,903 | 156,706 | |
Deferred income tax expense (benefit): | ||||
PRC entities | (3,587) | 18,531 | 12,787 | |
Total | $ (515) | (3,587) | 18,531 | 12,787 |
Income tax expense: | ||||
PRC entities | 235,890 | 242,434 | 169,493 | |
Total | $ 33,883 | ¥ 235,890 | ¥ 242,434 | ¥ 169,493 |
TAXATION - Reconciliation Betwe
TAXATION - Reconciliation Between the Statutory Tax Rate and the Effective Tax Rate (Details) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of the Differences Between Statutory Tax Rate and the Effective Tax Rate | |||
EIT statutory rate | 25.00% | 25.00% | 25.00% |
Difference in EIT rates of certain subsidiaries | (22.00%) | (11.00%) | (20.00%) |
Change in fair value of convertible senior notes | 25.00% | (2.00%) | 23.00% |
Expenses incurred outside the PRC | 7.00% | 5.00% | 5.00% |
Other permanent differences | (4.00%) | (1.00%) | (2.00%) |
Effective EIT rate of the Group | 31.00% | 16.00% | 31.00% |
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, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
TAXATION | |||
Aggregate effect | ¥ 163,146 | ¥ 154,182 | ¥ 107,547 |
Basic net income per share effect (in CNY per share) | ¥ 2.51 | ¥ 2.51 | ¥ 1.79 |
Diluted net income per share effect (in CNY per share) | ¥ 2.45 | ¥ 2.44 | ¥ 1.76 |
TAXATION - Deferred Tax Assets
TAXATION - Deferred Tax Assets and Liabilities (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | |
Components of deferred tax assets and liabilities | |||||
Deductible temporary differences related to other payables and accruals | ¥ 1,297 | ¥ 1,073 | |||
Deductible temporary differences related to provision for doubtful accounts | 4,108 | 1,648 | |||
Deductible temporary differences related to advertising expenses | 14,358 | 13,422 | |||
Tax loss carryforwards | 57,580 | 49,408 | |||
Amount offset by non-current deferred tax liabilities | (5,385) | (6,633) | |||
Total non-current deferred tax assets | 71,958 | 58,918 | |||
Less: Valuation allowance | (49,811) | (43,913) | ¥ (39,576) | ¥ (2,443) | |
Total deferred tax assets | $ 3,181 | 22,147 | 15,005 | ||
Taxable temporary differences related to depreciation period | (11,096) | (10,141) | |||
Taxable temporary differences related to available-for-sale debt securities | (85,373) | (85,373) | |||
Taxable temporary differences related to government subsidy income | (84,623) | (75,240) | |||
Taxable temporary differences related to trade names, technology and customer relationships | (17,399) | (20,440) | |||
Taxable temporary differences related to acquired program transmission license | (21,201) | (26,191) | |||
Amount offset by non-current deferred tax assets | 5,385 | 6,633 | |||
Total deferred tax liabilities | $ (30,783) | (214,307) | ¥ (210,752) | ||
Net operating loss carryforwards | ¥ 249,874 | ||||
Tax loss carryforwards, expiration year | 5 years |
TAXATION - Valuation Allowance
TAXATION - Valuation Allowance (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
TAXATION | |||
Balance at beginning of year | ¥ 43,913 | ¥ 39,576 | ¥ 2,443 |
Additions | 6,088 | 6,305 | 37,902 |
Reversals | (190) | (1,968) | (769) |
Balance at end of year | ¥ 49,811 | ¥ 43,913 | ¥ 39,576 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - shares | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2015 | Dec. 31, 2019 | 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, 2019USD ($)$ / sharesshares | Dec. 31, 2019CNY (¥)shares | Dec. 31, 2018USD ($)$ / shares | Dec. 31, 2018CNY (¥)shares | Dec. 31, 2017USD ($)$ / shares | Dec. 31, 2017CNY (¥)shares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2019CNY (¥)shares | |
Number of shares | ||||||||
Outstanding at the beginning of the period (in shares) | shares | 5,318,990 | 5,318,990 | 4,806,982 | 5,794,831 | ||||
Granted (in shares) | shares | 1,169,728 | 1,169,728 | 1,320,672 | 1,279,872 | ||||
Exercised (in shares) | shares | (1,172,210) | (1,172,210) | (752,814) | (2,147,819) | ||||
Forfeited (in shares) | shares | (53,557) | (53,557) | (55,850) | (119,902) | ||||
Outstanding at the end of the period (in shares) | shares | 5,262,951 | 5,262,951 | 5,318,990 | 4,806,982 | 5,794,831 | |||
Vested and expected to vest at the end of the period (in shares) | shares | 5,008,721 | 5,008,721 | ||||||
Exercisable at the end of the period (in shares) | shares | 2,626,300 | 2,626,300 | ||||||
Weighted average exercise price | ||||||||
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 48.16 | $ 38.17 | $ 30.58 | |||||
Granted (in dollars per share) | $ / shares | 69.46 | 73.46 | 56.68 | |||||
Exercised (in dollars per share) | $ / shares | 35.03 | 29.71 | 29.04 | |||||
Forfeited (in dollars per share) | $ / shares | 62.65 | 35.72 | 32.64 | |||||
Outstanding at the end of the period (in dollars per share) | $ / shares | 55.67 | $ 48.16 | $ 38.17 | $ 30.58 | ||||
Vested and expected to vest at the end of the period (in dollars per share) | $ / shares | 55.12 | |||||||
Exercisable at the end of the period (in dollars per share) | $ / shares | $ 45.01 | |||||||
Weighted average remaining contractual life | ||||||||
Outstanding at the end of the period | 3 years 9 months 3 days | 3 years 9 months 3 days | 3 years 9 months 3 days | 3 years 9 months 29 days | 3 years 4 months 9 days | |||
Vested and expected to vest at the end of the period | 3 years 8 months 15 days | 3 years 8 months 15 days | ||||||
Exercisable at the end of the period | 2 years 8 months 15 days | 2 years 8 months 15 days | ||||||
Aggregate intrinsic value | ||||||||
Outstanding at the end of the period | $ | $ 153,857 | $ 90,526 | $ 109,017 | $ 19,272 | ||||
Vested and expected to vest at the end of the period | $ | 149,166 | |||||||
Exercisable at the end of the period | $ | 104,764 | |||||||
Total intrinsic value of options exercised | 47,870 | ¥ 333,261 | ¥ 280,679 | ¥ 184,932 | ||||
Unrecognized share-based compensation cost related to non-vested share options | $ 52,728 | ¥ 367,082 | ||||||
Weighted average vesting period | 2 years 11 months 15 days | 2 years 11 months 15 days | ||||||
Proceeds from the exercise of share options | $ 40,422 | ¥ 281,412 | ¥ 145,196 | ¥ 424,450 |
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, 2019USD ($)$ / sharesshares | Dec. 31, 2019CNY (¥)¥ / sharesshares | Dec. 31, 2018$ / shares | Dec. 31, 2018CNY (¥)¥ / sharesshares | Dec. 31, 2017$ / shares | Dec. 31, 2017CNY (¥)¥ / sharesshares | Dec. 31, 2016¥ / sharesshares | Dec. 31, 2016$ / sharesshares | Dec. 31, 2019CNY (¥)shares | |
Share-Based Compensation | |||||||||
Non-vested at the beginning of the period (in shares) | 2,703,069 | 2,703,069 | 2,570,297 | 2,495,346 | |||||
Granted (in shares) | 1,169,728 | 1,169,728 | 1,320,672 | 1,279,872 | |||||
Vested (in shares) | (1,182,589) | (1,182,589) | (1,132,050) | (1,085,019) | |||||
Forfeited (in shares) | (53,557) | (53,557) | (55,850) | (119,902) | |||||
Non-vested at the end of the period (in shares) | 2,636,651 | 2,636,651 | 2,703,069 | 2,570,297 | 2,495,346 | 2,495,346 | |||
Expected to vest at the end of the period (in shares) | 2,382,421 | 2,382,421 | |||||||
Weighted average grant-date fair value | |||||||||
Non-vested at the beginning of the period (in dollars per share) | $ / shares | $ 17.29 | $ 12.86 | $ 10.37 | ||||||
Granted (in dollars or CNY per share) | (per share) | 22.12 | ¥ 153.95 | 21.53 | ¥ 148.05 | 15.62 | ¥ 101.63 | ¥ 101.63 | ||
Vested (in dollars per share) | $ / shares | 15.99 | 12.51 | 10.50 | ||||||
Forfeited (in dollars per share) | $ / shares | 18.16 | 10.83 | 10.55 | ||||||
Non-vested at the end of the period (in dollars per share) | $ / shares | 20 | $ 17.29 | $ 12.86 | $ 10.37 | |||||
Expected to vest at the end of the period (in dollars per share) | $ / shares | $ 19.99 | ||||||||
Capitalized share-based compensation costs | ¥ | ¥ 0 | ¥ 0 | ¥ 0 | ||||||
Share-based compensation | $ 18,078 | 125,854 | 100,183 | 85,968 | |||||
Fair value of share options vested | 18,909 | ¥ 131,641 | 97,364 | ¥ 74,100 | |||||
Unrecognized share-based compensation cost related to non-vested share options | $ 52,728 | ¥ 367,082 | |||||||
Weighted average vesting period | 2 years 11 months 15 days | 2 years 11 months 15 days | |||||||
Lagou Stock Option Plans | |||||||||
Weighted average grant-date fair value | |||||||||
Share-based compensation | $ 42 | ¥ 295 | ¥ 4,782 | ||||||
Unrecognized share-based compensation cost related to non-vested share options | $ 325 | ¥ 2,263 | |||||||
Weighted average vesting period | 3 years 21 days | 3 years 21 days |
EMPLOYEE BENEFITS (Details)
EMPLOYEE BENEFITS (Details) - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
EMPLOYEE BENEFITS | |||
Employee benefits expenses | ¥ 322,522 | ¥ 293,452 | ¥ 230,263 |
CONVERTIBLE SENIOR NOTES (Detai
CONVERTIBLE SENIOR NOTES (Details) $ / shares in Units, ¥ in Thousands | Apr. 15, 2019USD ($)$ / sharesshares | Jun. 20, 2014CNY (¥) | Apr. 03, 2014USD ($)$ / sharesshares | Dec. 31, 2019USD ($)shares | Dec. 31, 2019CNY (¥)shares | Dec. 31, 2018CNY (¥)shares | Dec. 31, 2017CNY (¥)shares | Dec. 31, 2016shares | Dec. 31, 2015shares | Dec. 31, 2014CNY (¥)shares |
CONVERTIBLE SENIOR NOTES | ||||||||||
Change in fair value of convertible senior notes | $ (108,029,000) | ¥ (752,073) | ¥ 99,079 | ¥ (496,175) | ||||||
Settlement of convertible senior notes by common shares | $ 350,369,000 | 2,439,198 | ||||||||
Convertible senior notes due April 15, 2019 | ||||||||||
CONVERTIBLE SENIOR NOTES | ||||||||||
Amount issued | $ | $ 172,500,000 | |||||||||
Interest rate | 3.25% | |||||||||
Interest expense incurred | 10,966 | 37,191 | 37,799 | |||||||
Change in fair value of convertible senior notes | (752,073) | 99,079 | (496,175) | |||||||
Foreign currency translation gain (loss) | ¥ 38,052 | ¥ (156,293) | ¥ 85,917 | |||||||
Issuance costs | ¥ 33,093 | |||||||||
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 | |||||||||
ADSs | Zero-Strike Call Options | ||||||||||
CONVERTIBLE SENIOR NOTES | ||||||||||
Number of shares received and retired from settlement of zero-strike call options | shares | 297,902 | 297,902 | 731,102 | 357,200 | 0 | 0 | 76,000 | |||
ADSs | Convertible senior notes due April 15, 2019 | ||||||||||
CONVERTIBLE SENIOR NOTES | ||||||||||
Conversion rate | 0.0233952 | |||||||||
Denomination of the principal amount of debt in consideration conversion of the Notes | $ | $ 1,000 | |||||||||
Shares issued | shares | 4,035,664 | |||||||||
Cash payment for fractional shares (in dollars per share) | $ / shares | $ 0.704 | |||||||||
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, 2019USD ($)$ / sharesshares | Dec. 31, 2019CNY (¥)¥ / sharesshares | Dec. 31, 2018CNY (¥)¥ / sharesshares | Dec. 31, 2017CNY (¥)¥ / sharesshares | |
Numerator: | ||||
Net income attributable to 51job, Inc. | $ 76,463 | ¥ 532,318 | ¥ 1,252,319 | ¥ 371,889 |
Denominator: | ||||
Denominator for basic earnings per share - weighted average common shares outstanding (in shares) | 65,049,597 | 65,049,597 | 61,318,292 | 60,087,306 |
Dilutive effect of share options (in shares) | 1,633,860 | 1,633,860 | 1,857,191 | 1,063,107 |
Denominator for diluted earnings per share (in shares) | 66,683,457 | 66,683,457 | 63,175,483 | 61,150,413 |
Basic earnings per share (in CNY per share) | (per share) | $ 1.17 | ¥ 8.18 | ¥ 20.42 | ¥ 6.19 |
Diluted earnings per share (in CNY per share) | (per share) | $ 1.15 | ¥ 7.98 | ¥ 19.82 | ¥ 6.08 |
Share options | ||||
Denominator: | ||||
Excluded outstanding share options (in shares) | 1,730,427 | 1,730,427 | 888,548 | 1,176,660 |
FAIR VALUE MEASUREMENT - Fair v
FAIR VALUE MEASUREMENT - Fair value measured on a recurring basis (Details) - CNY (¥) ¥ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Level 1 | Listed equity securities | ||
FAIR VALUE MEASUREMENT | ||
Assets measured at fair value | ¥ 159,148 | |
Fair Value, Recurring | Short-term investments in time deposits | ||
FAIR VALUE MEASUREMENT | ||
Assets measured at fair value | 7,095,686 | ¥ 6,855,886 |
Fair Value, Recurring | Short-term investments in investment products | ||
FAIR VALUE MEASUREMENT | ||
Assets measured at fair value | 550,000 | 10,000 |
Fair Value, Recurring | Listed equity securities | ||
FAIR VALUE MEASUREMENT | ||
Assets measured at fair value | 159,148 | |
Fair Value, Recurring | Available-for-sale debt securities | ||
FAIR VALUE MEASUREMENT | ||
Assets measured at fair value | 448,776 | 448,776 |
Fair Value, Recurring | Convertible senior notes | ||
FAIR VALUE MEASUREMENT | ||
Assets measured at fair value | 1,725,182 | |
Fair Value, Recurring | Level 1 | Short-term investments in time deposits | ||
FAIR VALUE MEASUREMENT | ||
Assets measured at fair value | 7,095,686 | 6,855,886 |
Fair Value, Recurring | Level 1 | Listed equity securities | ||
FAIR VALUE MEASUREMENT | ||
Assets measured at fair value | 159,148 | |
Fair Value, Recurring | Level 1 | Convertible senior notes | ||
FAIR VALUE MEASUREMENT | ||
Assets measured at fair value | 1,725,182 | |
Fair Value, Recurring | Level 2 | Short-term investments in investment products | ||
FAIR VALUE MEASUREMENT | ||
Assets measured at fair value | 550,000 | 10,000 |
Fair Value, Recurring | Level 3 | Available-for-sale debt securities | ||
FAIR VALUE MEASUREMENT | ||
Assets measured at fair value | ¥ 448,776 | ¥ 448,776 |
FAIR VALUE MEASUREMENT - Equity
FAIR VALUE MEASUREMENT - Equity Securities (Details) - 12 months ended Dec. 31, 2019 ¥ in Thousands, $ in Thousands | USD ($) | CNY (¥) |
FAIR VALUE MEASUREMENT | ||
Unrealized loss | $ (6,092) | ¥ (42,410) |
Level 1 | Listed equity securities | ||
FAIR VALUE MEASUREMENT | ||
Initial recognition | 201,558 | |
Unrealized loss | (42,410) | |
Balance at end of year | ¥ 159,148 |
FAIR VALUE MEASUREMENT - Reconc
FAIR VALUE MEASUREMENT - Reconciliation of the Level 3 fair value measurement of available-for-sale debt securities (Details) - Level 3 - Available-for-sale debt securities - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of the Level 3 fair value measurements | |||
Balance at beginning of year | ¥ 448,776 | ¥ 312,819 | ¥ 165,217 |
Unrealized gain | 0 | 155,387 | 147,602 |
Sale of debt securities | (19,430) | ||
Balance at end of year | ¥ 448,776 | ¥ 448,776 | ¥ 312,819 |
FAIR VALUE MEASUREMENT - Fair_2
FAIR VALUE MEASUREMENT - Fair value of the available-for-sale debt securities (Details) ¥ in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($)item | Dec. 31, 2019CNY (¥)item | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
FAIR VALUE MEASUREMENT | ||||
Unrealized gain on available-for-sale securities, net of tax effect | $ 0 | ¥ 0 | ¥ 116,540 | ¥ 110,702 |
Unrealized fair value gain netting relevant income tax recognized in other comprehensive income | ¥ | ¥ 0 | ¥ 38,847 | ¥ 36,900 | |
Level 3 | ||||
FAIR VALUE MEASUREMENT | ||||
Fair value valuation technique of the available-for-sale debt securities | us-gaap:ValuationTechniqueDiscountedCashFlowMember | us-gaap:ValuationTechniqueDiscountedCashFlowMember | ||
Level 3 | Terminal growth rate | ||||
FAIR VALUE MEASUREMENT | ||||
Fair value input of the available-for-sale debt securities | 0.03 | 0.03 | ||
Level 3 | Discount rate | ||||
FAIR VALUE MEASUREMENT | ||||
Fair value input of the available-for-sale debt securities | 0.18 | 0.18 | ||
Level 3 | Risk-free rate | ||||
FAIR VALUE MEASUREMENT | ||||
Fair value input of the available-for-sale debt securities | 0.0284 | 0.0284 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Contractual Purchase Obligations (Details) ¥ in Thousands | 12 Months Ended |
Dec. 31, 2019CNY (¥) | |
Contractual purchase obligations | |
2020 | ¥ 25,740 |
2021 | 6,263 |
2022 | 4,638 |
2023 | 3,180 |
2024 | 1,994 |
Rental expenses of storage and housing | 7,984 |
Property management services | |
Contractual purchase obligations | |
2020 | 9,845 |
2021 | 5,957 |
2022 | 4,542 |
2023 | 3,155 |
2024 | 1,994 |
Advertising services | |
Contractual purchase obligations | |
2020 | 8,725 |
Hosting and network services | |
Contractual purchase obligations | |
2020 | 3,922 |
2021 | 231 |
2022 | 86 |
2023 | 25 |
Office furnishings | |
Contractual purchase obligations | |
2020 | 3,248 |
2021 | 75 |
2022 | ¥ 10 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Percentage of Foreign Ownership (Details) | Dec. 31, 2019 | Dec. 30, 2019 | 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, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
REDEEMABLE NON-CONTROLLING INTERESTS | |||
Balance at beginning of year | ¥ 225,645 | ¥ 228,230 | |
Stock-based compensation | 7,911 | ||
Net loss attributable to mezzanine equity holders | (8,671) | (10,496) | |
Balance at end of year | ¥ 216,974 | ¥ 225,645 | |
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, 2019 - 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 | $ 1,366,013 | ¥ 9,509,906 |
Percentage of cash, restricted cash and short-term investments held in the PRC | 95.00% |
RELATED PARTY TRANSACTION AND_2
RELATED PARTY TRANSACTION AND BALANCES (Details) - Royalty agreements - CNY (¥) ¥ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
RMS | |||
RELATED PARTY TRANSACTION AND BALANCES | |||
Royalty fees charged by related parties | ¥ 345 | ¥ 285 | ¥ 270 |
Royalty payables due to related parties | 78 | 83 | |
RCC | |||
RELATED PARTY TRANSACTION AND BALANCES | |||
Royalty fees charged by related parties | ¥ 0 | ¥ 14 | ¥ 20 |