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51job Reports Revenue Growth, Coupon Deal

Chinese online job recruitment website 51job.com (JOBS) has announced its unaudited financial results for the second quarter ending June 30, 2007.

Total revenues increased 21.1% over year-on-year to CNY209.9 million and gross margin improved to 57.8%, compared with 56% a year ago. Print advertising revenues for the second quarter of 2007 increased 10.8% to CNY107.6 million compared with CNY97.1 million for the same quarter in 2006.

Operating expenses for the second quarter of 2007 were CNY72.0 million compared with CNY62.4 million for the same quarter last year. Net income increased 19.5% to CNY31.0 million from CNY26.0 million for the same quarter in 2006. Fully diluted earnings per common share for the second quarter of 2007 were CNY0.55.

The company has also just signed an agreement with Japan's Recruit Company to establish a new business focused on providing coupon advertising services in China.

Independently incorporated, this new coupon advertising company will reportedly benefit from 51job's distribution and leverage Recruit's product knowledge to help local businesses to tap into the rapidly growing consumer market in China. 51job operates 23 editions of 51job Weekly and distributes several million copies each week throughout China. A recognized market leader in the printing and distribution of free coupon magazines, Recruit publishes Hot Pepper, which was launched in 2001 and has expanded to 49 area-specific editions in Japan today.

The new company is expected to have a total capitalization of up to US$10.8 million provided through multiple funding stages spanning several years. Recruit is expected to provide 60% of the funding in cash, , and the remaining 40% will be financed through convertible bonds to 51job. The zero coupon convertible bonds to be issued by the new coupon company to 51job will include conversion rights for 40% of the share capital of the new company.

In April 2006, 51job and Recruit entered into a business alliance under which a corporate planning group was formed to assess further opportunities in the human resources industry as well as potentially new businesses in other sectors in China.

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