51job, Inc. Reports Third Quarter 2014 Financial Results

SHANGHAI, November 7, 2014 /PRNewswire/ — 51job, Inc. (Nasdaq: JOBS) (“51job” or the “Company”), a leading provider of integrated human resource services in China, announced today its unaudited financial results for the third quarter of 2014 ended September 30, 2014.

Third Quarter 2014 Financial Highlights:

  • Total revenues increased 13.0% over Q3 2013 to RMB474.0 million (US$77.2 million), exceeding the Company’s guidance range
  • Online recruitment services revenues increased 13.6% over Q3 2013 to RMB315.5 million (US$51.4 million), which reflected the impact of a 6% value-added tax (“VAT”) policy change effective June 1, 2014
  • Gross margin of 72.9% compared with 72.4% in Q3 2013
  • Income from operations increased 11.8% over Q3 2013 to RMB127.8 million (US$20.8 million)
  • Fully diluted earnings per share were RMB2.17 (US$0.35). Effective August 8, 2014, the Company changed the ratio of its American Depositary Share (“ADS”) for common share to one for one. See “Other Company News” below
  • Excluding share-based compensation expense, loss from foreign currency translation and change in fair value of convertible notes, as well as the related tax effect of these items, non-GAAP adjusted fully diluted earnings per share were RMB2.52 (US$0.41), exceeding the Company’s guidance range
  • Cash and short-term investments increased to RMB4,345.5 million (US$708.0 million) as of September 30, 2014

Commenting on the results, Rick Yan, President and Chief Executive Officer of 51job, said, “Our online business maintained a solid growth trajectory in the third quarter. Hiring demand remained positive and we continued to focus on our customer acquisition efforts. Despite operational adjustments we are making to our business process outsourcing services which have affected new client engagements in 2014, the performance of our other HR services area remained solid as we improved cross-selling of other value-added services, primarily our training services. We remain confident that the progress we have made in this year of investment and transition positions us to extend our market leadership, to capture greater opportunities in the HR space in China and to deliver sustainable and profitable returns to our shareholders over the long term.”

Third Quarter 2014 Unaudited Financial Results

Total revenues for the third quarter ended September 30, 2014 were RMB474.0 million (US$77.2 million), an increase of 13.0% from RMB419.6 million for the same quarter in 2013.

Online recruitment services revenues for the third quarter of 2014 were RMB315.5 million (US$51.4 million), representing a 13.6% increase from RMB277.6 million for the same quarter of the prior year. The growth was principally due to an increase in the number of unique employers using online recruitment services, which was partially offset by a decrease in average revenue per unique employer and the implementation of a 6% VAT policy change effective June 1, 2014. Unique employers increased 19.4% to 283,651 in the third quarter of 2014 compared with 237,526 in the same quarter of the prior year driven by strengthened customer acquisition efforts and increased usage of online recruitment services by employers. However, average revenue per unique employer decreased 4.9% in the third quarter of 2014 as compared with the same quarter in 2013 primarily due to the effect of the VAT policy change on online recruitment services revenues and the addition of new customers who generally purchase introductory, lower priced services.

Print advertising revenues for the third quarter of 2014 decreased 78.5% to RMB2.0 million (US$0.3 million) compared with RMB9.4 million for the same quarter in 2013 primarily due to the ongoing business transition away from print advertising services. The estimated number of print advertising pages generated in the third quarter of 2014 was 19 pages compared with 298 pages in the same quarter in 2013. The Company operates a print publication in the city of Xian as of September 30, 2014 compared with four cities as of September 30, 2013.

Other human resource related revenues for the third quarter of 2014 increased 18.0% to RMB156.5 million (US$25.5 million) from RMB132.6 million in the same quarter of 2013 primarily due to growth and usage of business process outsourcing and training services.

Gross profit for the third quarter of 2014 increased 14.6% to RMB334.0 million (US$54.4 million) from RMB291.5 million for the same quarter of the prior year. Gross margin, which is gross profit as a percentage of net revenues, increased to 72.9% in the third quarter of 2014 compared with 72.4% in the same quarter in 2013.

Operating expenses for the third quarter of 2014 increased 16.4% to RMB206.2 million (US$33.6 million) from RMB177.2 million for the same quarter of 2013. Sales and marketing expenses for the third quarter of 2014 increased 20.1% to RMB143.8 million (US$23.4 million) from RMB119.7 million for the same quarter of the prior year primarily due to additional sales headcount, higher employee compensation expenses and greater advertising expenditures. General and administrative expenses for the third quarter of 2014 increased 8.7% to RMB62.4 million (US$10.2 million) from RMB57.4 million in the third quarter of 2013 primarily due to higher employee compensation expenses, including share-based compensation, as well as greater office and depreciation expenses.

Income from operations for the third quarter of 2014 increased 11.8% to RMB127.8 million (US$20.8 million) from RMB114.4 million for the same quarter of the prior year. Operating margin, which is income from operations as a percentage of net revenues, was 27.9% in the third quarter of 2014 compared with 28.4% in the same quarter of 2013. Excluding share-based compensation expense, operating margin would be 32.6% in the third quarter of 2014 compared with 32.9% in the same quarter of 2013.

In April 2014, the Company completed an offering of US$172.5 million in convertible senior notes. In the third quarter of 2014, the Company recognized a mark-to-market gain of RMB58.5 million (US$9.5 million) associated with a change in the fair value of convertible notes.

The effective tax rate in the third quarter of 2014 decreased to 12.3% compared with 17.7% in the third quarter of 2013 as a result of non-taxable items, primarily the change in fair value of convertible notes, which comprised a large portion of the income before income tax base. The effective tax rate on non-GAAP results in the third quarter of 2014 was 14.8% compared with 15.5% in the third quarter of 2013.

Net income for the third quarter of 2014 was RMB187.2 million (US$30.5 million) compared with RMB117.4 million for the same quarter in 2013. Fully diluted earnings per share for the third quarter of 2014 were RMB2.17 (US$0.35) compared with RMB1.95 for the same quarter in 2013.

In the third quarter of 2014, total share-based compensation expense was RMB21.3 million (US$3.5 million) compared with RMB18.3 million in the third quarter of 2013. The Company also recognized a loss from foreign currency translation of RMB0.4 million (US$0.1 million) in the third quarter of 2014 compared with RMB1.4 million in the third quarter of 2013.

Excluding share-based compensation expense, loss from foreign currency translation and change in fair value of convertible notes, as well as the related tax effect of these items, non-GAAP adjusted net income for the third quarter of 2014 increased 9.7% to RMB150.4 million (US$24.5 million) compared with RMB137.0 million for the third quarter of 2013. Non-GAAP adjusted fully diluted earnings per share were RMB2.52 (US$0.41) in the third quarter of 2014 compared with RMB2.28 in the third quarter of 2013.

Nine Months 2014 Unaudited Financial Results

Total revenues for the nine months ended September 30, 2014 were RMB1,368.7 million (US$223.0 million), an increase of 13.6% from RMB1,204.3 million for the same period in 2013. Income from operations for the nine months ended September 30, 2014 increased 4.1% to RMB370.0 million (US$60.3 million) from RMB355.3 million for the same period in 2013.

Net income for the nine months ended September 30, 2014 increased 3.6% to RMB357.7 million (US$58.3 million) from RMB345.4 million for the same period in 2013. Fully diluted earnings per share for the nine months ended September 30, 2014 was RMB5.95 (US$0.97) compared with RMB5.76 for the same period in 2013.

Excluding share-based compensation expense, gain/loss from foreign currency translation, convertible senior notes issuance costs, change in fair value of convertible notes and change in fair value of zero-strike call options, as well as the related tax effect of these items, non-GAAP adjusted net income for the nine months ended September 30, 2014 increased 14.3% to RMB453.8 million (US$73.9 million) from RMB397.1 million for the nine months ended September 30, 2013. Non-GAAP adjusted fully diluted earnings per share were RMB7.49 (US$1.22) for the nine months ended September 30, 2014 compared with RMB6.63 in the same period in 2013.

As of September 30, 2014, cash and short-term investments totaled RMB4,345.5 million (US$708.0 million) compared with RMB3,147.5 million as of December 31, 2013. Short-term investments consist of certificates of deposit with original maturities from three months to one year.

Business Outlook

Based on current market conditions and factoring in the VAT policy change, the Company’s total revenues target for the fourth quarter of 2014 is in the estimated range of RMB515 million to RMB530 million (US$83.9 million to US$86.3 million). Excluding share-based compensation expense, any gain or loss from foreign currency translation, and any mark-to-market gain or loss associated with a change in fair value of convertible notes, as well as the related tax effect of these items, the Company’s non-GAAP fully diluted earnings target for the fourth quarter of 2014 is in the estimated range of RMB2.60 to RMB2.80 (US$0.42 to US$0.46) per share. The Company expects total share-based compensation expense in the fourth quarter of 2014 to be in the estimated range of RMB21 million to RMB22 million (US$3.4 million to US$3.6 million).

Other Company News

Effective August 8, 2014, the Company changed the ratio of its ADS to common share from one (1) ADS to two (2) common shares to one (1) ADS to one (1) common share.

In June 2014, the Company’s shareholders approved an increase to a share repurchase program originally authorized in September 2008 from US$25 million to US$75 million. In the third quarter of 2014, the Company repurchased 450,500 ADSs in the open market for an aggregate consideration of US$14.5 million, including transaction fees.

Currency Convenience Translation

For the convenience of readers, certain Renminbi amounts have been translated into U.S. dollars at the rate of RMB6.1380 to US$1.00, the noon buying rate on September 30, 2014 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board.

Conference Call Information

Management will hold a conference call at 8:00 p.m. Eastern Time on November 6, 2014 (9:00 a.m. Shanghai / Hong Kong time zone on November 7, 2014) to discuss its third quarter 2014 financial results, operating performance and business outlook. To dial in to the call, please use conference ID 9129268 and the following telephone numbers:

US: +1-866-839-8029

Hong Kong: +852-2598-7556

International: +1-914-449-1588

The call will also be available live and on replay through 51job’s investor relations website, http://ir.51job.com. Please go to the website at least fifteen minutes early to register or install any necessary audio software.

Use of Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles (“GAAP”), 51job uses non-GAAP financial measures of income before income tax expense, income tax expense, adjusted net income and adjusted earnings per share, which are adjusted from results based on GAAP to exclude share-based compensation expense, gain/loss from foreign currency translation, convertible senior notes issuance costs, change in fair value of convertible notes and change in fair value of zero-strike call options, as well as the related tax effect of these items. The Company believes excluding share-based compensation expense and its related tax effect from its non-GAAP financial measures is useful for its management and investors to assess and analyze the Company’s core operating results as such expense is not directly attributable to the underlying performance of the Company’s business operations and do not impact its cash earnings. The Company believes excluding gain/loss from foreign currency translation and its related tax effect from its non-GAAP financial measures is useful for its management and investors as such translation loss is not indicative of the Company’s core business operations and will not result in cash settlement nor impact the Company’s cash earnings. The Company believes excluding convertible senior notes issuance costs and its related tax effect from its non-GAAP financial measures is useful for its management and investors as such costs are one-time, non-recurring and not attributable to the underlying performance of the Company’s business. The Company believes excluding change in fair value of convertible notes and its related tax effect from its non-GAAP financial measures is useful for its management and investors as such change is not indicative of the Company’s core business operations and will not result in cash settlement nor impact the Company’s cash earnings. The Company believes excluding change in fair value of zero-strike call options and its related tax effect from its non-GAAP financial measures is useful for its management and investors as such change is not indicative of the Company’s core business operations and will not result in cash settlement nor impact the Company’s cash earnings. 51job also believes these non-GAAP financial measures excluding share-based compensation expense, gain/loss from foreign currency translation, convertible senior notes issuance costs, change in fair value of convertible notes and change in fair value of zero-strike call options, as well as the related tax effect of these items, are important in helping investors to understand the Company’s current financial performance and future prospects and to compare business trends among different reporting periods on a consistent basis. The presentation of these additional measures should not be considered a substitute for or superior to GAAP results or as being comparable to results reported or forecasted by other companies. The non-GAAP measures have been reconciled to GAAP measures in the attached financial statements.

About 51job

51job is a leading provider of integrated human resource services in China with a strong focus on recruitment related services. Through online recruitment services at http://www.51job.com and mobile applications, 51job enables enterprises to attract, identify and recruit employees and connects millions of job seekers with employment opportunities. 51job also provides a number of other value-added human resource services, including business process outsourcing, training, executive search and compensation and benefits analysis. 51job has a call center in Wuhan and a nationwide sales office network spanning 25 cities across China.

Safe Harbor Statement

Statements in this release regarding targets for the fourth quarter of 2014, future business and operating results constitute “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. These statements are based upon management’s current expectations, and actual results could differ materially. Among the factors that could cause actual results to differ are the number of recruitment advertisements placed, sales orders received and customer contracts executed during the remaining weeks of the fourth quarter of 2014; any accounting adjustments that may occur during the quarterly close; fluctuations in the value of the Renminbi against the U.S. dollar and other currencies; behavioral and operational changes of customers in meeting their human resource needs as they respond to evolving social, economic, regulatory and political changes in China as well as stock market volatilities; introduction by its competitors of new or enhanced products or services; price competition in the market for the various human resource services that the Company provides in China; acceptance of new products and services developed or introduced by the Company outside of the human resources industry; and fluctuations in general economic conditions. For additional information on these and other factors that may affect the Company’s financial results, please refer to the Company’s filings with the Securities and Exchange Commission. 51job undertakes no obligation to update these targets prior to announcing final results for the fourth quarter of 2014 or as a result of new information, future events or otherwise.

FOR IMMEDIATE RELEASE

Contact:

Rebecca Liu
Investor Relations
51job, Inc.
+(86-21) 6879-6250
ir@51job.com

51job, Inc.

Consolidated Statements of Operations and Comprehensive Income

For the Three Months Ended

(In thousands, except share and per share data)

September 30, 2013

(unaudited)

September 30, 2014

(unaudited)

September 30, 2014

(unaudited)

RMB

RMB

US$ (Note 1)

Revenues:

Online recruitment services

277,645

315,450

51,393

Print advertising

9,357

2,012

328

Other human resource related revenues

132,597

156,513

25,499

Total revenues

419,599

473,975

77,220

Less: Business and related tax

(16,784)

(16,017)

(2,610)

Net revenues

402,815

457,958

74,610

Cost of services (Note 2)

(111,289)

(123,953)

(20,194)

Gross profit

291,526

334,005

54,416

Operating expenses:

Sales and marketing (Note 3)

(119,742)

(143,788)

(23,426)

General and administrative (Note 4)

(57,432)

(62,420)

(10,170)

Total operating expenses

(177,174)

(206,208)

(33,596)

Income from operations

114,352

127,797

20,820

Loss from foreign currency translation

(1,387)

(362)

(59)

Interest and investment income, net

19,214

22,296

3,633

Change in fair value of convertible notes

————

58,501

9,531

Other income, net

10,371

5,125

835

Income before income tax expense

142,550

213,357

34,760

Income tax expense

(25,198)

(26,139)

(4,259)

Net income

117,352

187,218

30,501

Other comprehensive income:

Foreign currency translation adjustments

(22)

(27)

(4)

Comprehensive income

117,330

187,191

30,497

Earnings per share:

Basic

1.99

3.23

0.53

Diluted (Note 5)

1.95

2.17

0.35

Weighted average number of common shares outstanding:

Basic

58,845,116

57,984,142

57,984,142

Diluted

60,129,379

63,177,289

63,177,289

Notes:

1. The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.1380 to US$1.00 on September 30, 2014 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board.

2. Includes share-based compensation expense of RMB2,931 and RMB3,411 (US$556) for the three months ended September 30, 2013 and 2014, respectively.

3. Includes share-based compensation expense of RMB2,520 and RMB2,932 (US$478) for the three months ended September 30, 2013 and 2014, respectively.

4. Includes share-based compensation expense of RMB12,845 and RMB14,947 (US$2,435) for the three months ended September 30, 2013 and 2014, respectively.

5. Diluted earnings per share is calculated in accordance with the “if converted” method. This includes the add-back of interest expense of RMB8,636, change in fair value of convertible notes of RMB58,501 and foreign currency translation loss of RMB33 related to the convertible senior notes to the numerator of net income and the addition of the maximum number of 4,035,672 potentially converted shares related to the convertible senior notes to the denominator of common shares for the three months ended September 30, 2014.

51job, Inc.

Consolidated Statements of Operations and Comprehensive Income

For the Nine Months Ended

(In thousands, except share and per share data)

September 30, 2013

(unaudited)

September 30, 2014

(unaudited)

September 30, 2014

(unaudited)

RMB

RMB

US$ (Note 1)

Revenues:

Online recruitment services

795,209

929,014

151,355

Print advertising

45,179

12,788

2,084

Other human resource related revenues

363,947

426,898

69,549

Total revenues

1,204,335

1,368,700

222,988

Less: Business and related tax

(48,821)

(50,166)

(8,173)

Net revenues

1,155,514

1,318,534

214,815

Cost of services (Note 2)

(312,601)

(346,002)

(56,370)

Gross profit

842,913

972,532

158,445

Operating expenses:

Sales and marketing (Note 3)

(332,292)

(418,309)

(68,151)

General and administrative (Note 4)

(155,290)

(184,216)

(30,012)

Total operating expenses

(487,582)

(602,525)

(98,163)

Income from operations

355,331

370,007

60,282

(Loss) Gain from foreign currency translation

(5,178)

5,514

898

Interest and investment income, net

55,063

65,996

10,751

Convertible senior notes issuance costs

————

(47,210)

(7,691)

Change in fair value of convertible notes

————

29,622

4,826

Change in fair value of zero-strike call options

————

(24,874)

(4,052)

Other income, net

13,390

37,503

6,110

Income before income tax expense

418,606

436,558

71,124

Income tax expense

(73,226)

(78,904)

(12,855)

Net income

345,380

357,654

58,269

Other comprehensive income:

Foreign currency translation adjustments

(22)

57

9

Comprehensive income

345,358

357,711

58,278

Earnings per share:

Basic

5.92

6.08

0.99

Diluted (Note 5)

5.76

5.95

0.97

Weighted average number of common shares outstanding:

Basic

58,386,284

58,830,180

58,830,180

Diluted

59,914,169

60,076,413

60,076,413

Notes:

1. The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.1380 to US$1.00 on September 30, 2014 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board.

2. Includes share-based compensation expense of RMB7,462 and RMB9,501 (US$1,548) for the nine months ended September 30, 2013 and 2014, respectively.

3. Includes share-based compensation expense of RMB6,415 and RMB8,167 (US$1,331) for the nine months ended September 30, 2013 and 2014, respectively.

4. Includes share-based compensation expense of RMB32,698 and RMB41,634 (US$6,783) for the nine months ended September 30, 2013 and 2014, respectively.

5. Diluted earnings per share is calculated in accordance with the “if converted” method. The potential conversion of the convertible senior notes was excluded in the computation of diluted earnings per share for the nine months ended September 30, 2014 because the effect would be anti-dilutive.

51job, Inc.

Reconciliation of GAAP and Non-GAAP Results

For the Three Months Ended

(In thousands, except share and per share)

September 30, 2013
(unaudited)

September 30, 2014
(unaudited)

September 30, 2014
(unaudited)

RMB

RMB

USD (Note 1)

GAAP income before income tax expense

142,550

213,357

34,760

Add back: Share-based compensation expense

18,296

21,290

3,469

Add back: Loss from foreign currency translation

1,387

362

59

Add back: Change in fair value of convertible notes

————

(58,501)

(9,531)

Non-GAAP income before income tax expense

162,233

176,508

28,757

GAAP income tax expense

(25,198)

(26,139)

(4,259)

Tax effect of share-based compensation expense, loss from foreign currency translation and change in fair value of convertible notes

(5)

————

————

Non-GAAP income tax expense

(25,203)

(26,139)

(4,259)

Non-GAAP adjusted net income

137,030

150,369

24,498

Non-GAAP adjusted earnings per share:

Basic

2.33

2.59

0.42

Diluted (Note 2)

2.28

2.52

0.41

Weighted average number of common shares outstanding:

Basic

58,845,116

57,984,142

57,984,142

Diluted

60,129,379

63,177,289

63,177,289

For the Nine Months Ended

(In thousands, except share and per share data)

September 30, 2013
(unaudited)

September 30, 2014
(unaudited)

September 30, 2014
(unaudited)

RMB

RMB

US$ (Note 1)

GAAP income before income tax expense

418,606

436,558

71,124

Add back: Share-based compensation expense

46,575

59,302

9,662

Add back: Loss (Gain) from foreign currency translation

5,178

(5,514)

(898)

Add back: Convertible senior notes issuance costs

————

47,210

7,691

Add back: Change in fair value of convertible notes

————

(29,622)

(4,826)

Add back: Change in fair value of zero-strike call options

————

24,874

4,052

Non-GAAP income before income tax expense

470,359

532,808

86,805

GAAP income tax expense

(73,226)

(78,904)

(12,855)

Tax effect of share-based compensation expense, loss (gain) from foreign currency translation, convertible senior notes issuance costs, change in fair value of convertible notes and change in fair value of zero-strike call options

(5)

(124)

(20)

Non-GAAP income tax expense

(73,231)

(79,028)

(12,875)

Non-GAAP adjusted net income

397,128

453,780

73,930

Non-GAAP adjusted earnings per share:

Basic

6.80

7.71

1.26

Diluted (Note 3)

6.63

7.49

1.22

Weighted average number of common shares outstanding:

Basic

58,386,284

58,830,180

58,830,180

Diluted

59,914,169

62,766,861

62,766,861

Notes:

1. The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.1380 to US$1.00 on September 30, 2014 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board.

2. Diluted earnings per share is calculated in accordance with the “if converted” method. This includes the add-back of interest expense of RMB8,636 related to the convertible senior notes to the numerator of Non-GAAP adjusted net income and the addition of the maximum number of 4,035,672 potentially converted shares related to the convertible senior notes to the denominator of common shares for the three months ended September 30, 2014.

3. Diluted earnings per share is calculated in accordance with the “if converted” method. This includes the add-back of interest expense of RMB16,502 related to the convertible senior notes to the numerator of Non-GAAP adjusted net income and the addition of the weighted average maximum number of 2,690,448 potentially converted shares related to the convertible senior notes to the denominator of common shares for the nine months ended September 30, 2014.

51job, Inc.

Consolidated Balance Sheets

As of

(In thousands, except share and per share data)

December 31,

2013

(unaudited)

September 30,

2014

(unaudited)

September 30,

2014

(unaudited)

RMB

RMB

US$ (Note 1)

ASSETS

Current assets:

Cash

1,065,543

1,315,212

214,274

Restricted cash

15,489

6,366

1,037

Short-term investments

2,081,964

3,030,274

493,691

Accounts receivable (net of allowance of RMB3,347 and
RMB1,220 as of December 31, 2013 and September
30, 2014, respectively)

62,808

58,308

9,499

Prepayments and other current assets

345,061

402,063

65,504

Deferred tax assets, current

9,757

8,500

1,385

Total current assets

3,580,622

4,820,723

785,390

Non-current assets:

Property and equipment, net

519,277

525,596

85,630

Intangible assets, net

3,652

7,814

1,273

Other long-term assets

18,808

9,404

1,532

Deferred tax assets, non-current

632

86

14

Total non-current assets

542,369

542,900

88,449

Total assets

4,122,991

5,363,623

873,839

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable

22,858

26,049

4,244

Salary and employee related accrual

60,076

58,021

9,453

Taxes payable

78,100

59,869

9,754

Advance from customers

411,877

515,698

84,017

Other payables and accruals

212,978

232,672

37,907

Total current liabilities

785,889

892,309

145,375

Non-current liabilities:

Deferred tax liabilities, non-current

5,983

11,729

1,911

Convertible senior notes

————

1,032,046

168,140

Total non-current liabilities

5,983

1,043,775

170,051

Total liabilities

791,872

1,936,084

315,426

Shareholders’ equity:

Common shares (US$0.0001 par value; 500,000,000 shares authorized, 59,144,055 and 59,043,271 shares issued and outstanding as of December 31, 2013 and September 30, 2014, respectively)

48

48

8

Additional paid-in capital

1,316,713

1,055,422

171,949

Statutory reserves

8,456

8,456

1,378

Accumulated other comprehensive income

1,541

1,598

260

Retained earnings

2,004,361

2,362,015

384,818

Total shareholders’ equity

3,331,119

3,427,539

558,413

Total liabilities and shareholders’ equity

4,122,991

5,363,623

873,839

Note 1: The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB6.1380 to US$1.00 on September 30, 2014 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board.