Table of Contents
As filed with the Securities and Exchange Commission on November 29, 2007
Registration No. 333-147620
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ChinaEdu Corporation
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant¡¯s name into English)
| Cayman Islands | 8200 | Not Applicable | ||
|
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
ChinaEdu Corporation
12/F Capital Times Square
No. 88 Xichangan Street
Beijing, 100031 People¡¯s Republic of China
Tel: 8610 8391-5888
(Address, including zip code, and telephone number, including area code, of Registrant¡¯s principal executive offices)
CT Corporation System
111 Eighth Avenue
13 th Floor
New York, New York 10011
Tel: (212) 590-9009
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
|
Steven N. Robinson, Esq. Peter E. Kohl, Esq. Man Chiu Lee, Esq. Hogan & Hartson LLP 10/F Kerry Center 1 Guanghua Road Beijing, People¡¯s Republic of China 100020 Tel: 8610 6598-8600 |
W. Clayton Johnson, Esq. Robert K. Williams, Esq. Cleary Gottlieb Steen & Hamilton LLP Bank of China Tower One Garden Road Central, Hong Kong Tel: 852 2521-4122 |
Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¡§
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¡§
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¡§
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¡§
CALCULATION OF REGISTRATION FEE
| Title of Each Class of Securities To Be Registered | Proposed Maximum Aggregate Offering Price (1) |
Amount of Registration Fee | ||||
|
Ordinary shares, par value $0.01 per share (2)(3) |
$ | 94,116,000 | $ | 2,890 | ||
| (1) | Estimated solely for the purpose of computing the amount of the registration fee, in accordance with Rule 457(o) promulgated under the Securities Act of 1933, as amended. |
| (2) | Includes ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of the distribution or within 40 days after the later of the effective date of this registration statement and the date the securities are first bona fide offered to the public, and also includes ordinary shares that may be purchased by the underwriters pursuant to an over-allotment option. These ordinary shares are not being registered for purposes of sales outside the United States. |
| (3) | American depositary shares evidenced by American depositary receipts issuable upon deposit of the ordinary shares registered hereby are being registered pursuant to a separate registration statement on Form F-6 (Registration No. 333-147630). Each American depositary share represents three ordinary shares. |
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
Table of Contents
The information in this preliminary prospectus is not complete and may be changed. Neither we nor the selling shareholders may sell these securities until the registration statement filed with the U.S. Securities and Exchange commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject to completion
Preliminary prospectus dated , 2007
PROSPECTUS
6,820,000 American Depositary Shares
ChinaEdu Corporation
(Incorporated in the Cayman Islands with limited liability)
Representing 20,460,000 Ordinary Shares
This is our initial public offering of American depositary shares, or ADSs, each representing three of our ordinary shares, par value $0.01 per share. No public market currently exists for our ordinary shares or our ADSs. We are selling 5,456,000 ADSs, and the selling shareholders identified in this prospectus are selling 1,364,000 ADSs. We will not receive any proceeds from the ADSs sold by the selling shareholders.
We currently anticipate the initial public offering price of our ADSs to be between $10.00 and $12.00 per ADS. We have applied to list our ADSs on the Nasdaq Global Market under the symbol ¡°CEDU.¡±
Investing in our ADSs involves risks. See ¡° Risk Factors ¡± beginning on page 10.
| Per ADS | Total | |||||
|
Public Offering Price |
$ | $ | ||||
|
Underwriting Discount |
$ | $ | ||||
|
Proceeds, Before Expenses, to Us |
$ | $ | ||||
|
Proceeds, Before Expenses, to the Selling Shareholders |
$ | $ | ||||
We and certain of the selling shareholders have granted the underwriters a 30-day option to purchase up to 1,023,000 additional ADSs from us and certain of the selling shareholders to cover any over-allotments at the initial public offering price less the underwriting discount and commission.
Delivery of our ADSs will be made on or about , 2007.
Neither the Securities and Exchange Commission nor any state securities regulators has approved or disapproved these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
Bear, Stearns & Co. Inc.
| Piper Jaffray | CIBC World Markets |
The date of this prospectus is , 2007
Table of Contents
Table of Contents
| Page | ||
| 1 | ||
| 10 | ||
| 40 | ||
| 42 | ||
| 43 | ||
| 44 | ||
| 45 | ||
| 47 | ||
| 49 | ||
| 54 | ||
| 57 | ||
|
Management¡¯s Discussion and Analysis of Financial Condition and Results of Operations |
59 | |
| 99 | ||
| 117 | ||
| 128 | ||
| 136 | ||
| 138 | ||
| 142 | ||
| 154 | ||
| 161 | ||
| 164 | ||
| 168 | ||
| 169 | ||
| 178 | ||
| 179 | ||
| 180 | ||
| 181 | ||
| F-1 |
You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. We are offering to sell ADSs and seeking offers to buy ADSs only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the ADSs.
We have not taken any action to permit a public offering of the ADSs outside the United States or to permit the possession or distribution of this prospectus outside the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to the offering of the ADSs and the distribution of the prospectus outside of the United States.
Until , 2007 (25 days after the date of this prospectus), all dealers that buy, sell, or trade the ADSs, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers¡¯ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
i
Table of Contents
Conventions That Apply to This Prospectus
Unless otherwise indicated, the following terms have the following meanings in this prospectus:
| Ÿ |
¡°ADRs¡± refers to the American depositary receipts that evidence our ADSs; |
| Ÿ |
¡°ADSs¡± refers to our American depositary shares, each representing three ordinary shares; |
| Ÿ |
¡°China¡± or the ¡°PRC¡± refers to the People¡¯s Republic of China, excluding for the purpose of this prospectus Hong Kong, Macau and Taiwan; |
| Ÿ |
¡°Chinese affiliated entity¡± or ¡°Chinese affiliated entities¡± refers to the variable interest entity or variable interest entities through which we operate certain lines of our business and, which, pursuant to contractual arrangements, are effectively controlled by us and have transferred to us essentially all of the economic benefits of their businesses; |
| Ÿ |
¡°collaborative alliance¡± or ¡°collaborative alliances¡± refers to the subsidiary or subsidiaries that we form with certain university partners to provide services to their online degree programs and which are majority owned by us; |
| Ÿ |
¡°Nasdaq¡± refers to the Nasdaq Global Market; |
| Ÿ |
¡°provinces¡± of China refers to provinces or municipalities under the direct administration of the Chinese central government, and provincial-level autonomous regions of China; |
| Ÿ |
¡°registered students,¡± when used to refer to students of university online degree programs, are students who either in the current period or in previous periods have paid tuition and are still registered in an academic degree program; |
| Ÿ |
¡°revenue students,¡± when used to refer to students of university online degree programs, are students who have paid tuition in the applicable period; |
| Ÿ |
¡°RMB¡± refers to Renminbi, the legal currency of the PRC; |
| Ÿ |
¡°shares¡± or ¡°ordinary shares¡± refers to our ordinary shares, with par value $0.01 per share; |
| Ÿ |
¡°U.S. GAAP¡± refers to the accounting principles generally accepted in the United States of America; and |
| Ÿ |
¡°$¡± refers to U.S. dollars, the legal currency of the United States of America. |
Unless the context indicates otherwise, ¡°we,¡± ¡°us,¡± ¡°our company,¡± ¡°our¡± and ¡°ChinaEdu¡± refer to ChinaEdu Corporation, a Cayman Islands company, its predecessor entities and subsidiaries, and, in the context of describing our business operations, also include our Chinese affiliated entities. See ¡°Corporate Structure.¡±
Unless otherwise indicated, our financial information presented in this prospectus has been prepared in accordance with U.S. GAAP.
Solely for your convenience, this prospectus contains translations of certain Renminbi amounts into U.S. dollar amounts at specified rates. All translations from Renminbi to U.S. dollars were made at the noon buying rate in The City of New York for cable transfers of Renminbi as certified for customs purposes by the Federal Reserve Bank of New York. Unless otherwise stated, the translations of Renminbi amounts into U.S. dollar amounts have been made at the noon buying rate in effect on June 30, 2007, which was RMB7.61 to $1.00. We make no representation that the Renminbi or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. See ¡°Risk Factors¡ªRisks related to the People¡¯s Republic of China¡ªGovernmental restrictions of currency conversion may limit our ability to receive and use our revenue or financing effectively¡± and ¡°¡ªThe fluctuation of the Renminbi may materially and adversely affect your investment¡± for discussions of the effects of currency control and fluctuating exchange rates on the value of our ADSs.
ii
Table of Contents
You should read the following summary together with the more detailed information regarding our company, the ordinary shares and ADSs being sold in this offering, and our consolidated financial statements and notes to these consolidated financial statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our ADSs discussed under ¡°Risk Factors,¡± before deciding whether to buy our ADSs.
Our Business
We are a leading educational services provider in China. Our primary business is to provide comprehensive services to the online degree programs of leading Chinese universities. Our services for online degree programs include academic program development, technology services, enrollment marketing, student support services and finance operations. We also operate private primary and secondary schools, market and support international post-secondary and English language curriculum programs to established learning institutions, and offer online interactive tutoring services to primary and secondary school students. We believe we are the largest service provider to online degree programs in China in terms of the number of higher education institutions that we serve and the number of student enrollments that we support. In 2007, the largest online degree program that we service, Renmin University of China, was named the largest online degree program in China in terms of student enrollment numbers by Xuexigang.com and Chinaonlineedu.com, two online education and distance learning websites. In addition, in 2006, we were ranked among the top ten education brands in China by an independent survey conducted by Sina.com (a leading Chinese Internet portal) and 40 other media organizations, or the Sina.com Survey, based on online voting and evaluations by industry experts and media professionals. This survey also ranked the online degree programs of three of our university partners among the top ten online degree programs in China, based on online voting and evaluations by industry experts and media professionals.
We currently have strategic relationships with eleven universities, nine of which are under long-term, exclusive contracts that vary from 15 to 50 years in length. Nine of these universities currently operate online degree programs and the tenth and eleventh are awaiting regulatory approval to start their programs. As of June 30, 2007, approximately 165,000 students were registered in the online degree programs that we service through these relationships. These online degree programs are marketed under the brand names of leading Chinese universities, which allows us to benefit from the significant brand equity that these higher education institutions have established.
Our business has experienced significant growth since its inception in 1999. This growth has been driven by the increased number of universities that we serve, the increased enrollment of the online degree programs of our university partners, and our expansion into other education-related lines of business. We generate our revenue from service fees and tuition payments derived from students who are enrolled in, or served by, our businesses. As of June 30, 2007, we were providing services to online degree programs that in aggregate had approximately 165,000 registered students and we were serving approximately 42,000 students in our other businesses. Our net revenue increased from RMB100.9 million in 2004 to RMB126.4 million in 2005 and RMB213.5 million ($28.1 million) in 2006, representing a compound annual growth rate, or CAGR, of 45.2%. Our net revenue increased from RMB98.9 million in the six months ended June 30, 2006 to RMB120.0 million ($15.8 million) for the same period in 2007, representing an increase of 21.3%. Our income from operations declined from RMB22.3 million in 2004 to RMB11.2 million in 2005, but increased to RMB57.2 million ($7.5 million) in 2006. Our income from operations increased from RMB27.8 million in the six months ended June 30, 2006 to RMB33.3 million ($4.4 million) for the same period in 2007. Our net income attributable to ordinary shareholders improved from a net loss of RMB4.0 million in 2004 and a net loss of RMB2.9 million in 2005 to a net income of RMB25.5 million ($3.4 million) in 2006. Our net income attributable to ordinary shareholders declined from RMB17.1 million for the six months ended June 30, 2006 to RMB12.5 million ($1.6 million) for the same period in 2007. This decline
1
Table of Contents
was primarily due to the increase in our income tax provision for the six months ended June 30, 2007 as compared with the same period in 2006, as a result of uncertainties regarding the future status of our Chinese subsidiaries and Chinese affiliated entities under the new tax law, which will become effective on January 1, 2008. See ¡°Management¡¯s Discussion and Analysis of Financial Condition and Results of Operations¡ªTaxation¡± in this prospectus. Net revenue from our online degree programs contributed 100.0%, 78.0%, 73.5% and 74.0%, respectively, of our net revenue in 2004, 2005, 2006 and the six months ended June 30, 2007.
For a discussion of recent financial and other developments affecting us and our business, see ¡°Recent Developments.¡±
Our Market Opportunity
Reflecting the magnitude of the overall population, the size of the education and training market in China is the largest in the world and growing rapidly. According to Enhancing China¡¯s Competitiveness through Lifelong Learning , a study published by the World Bank in 2007, or the World Bank Study, of China¡¯s approximately 1.3 billion people, around 260 million are students enrolled in basic, secondary and higher education programs. Education spending in China is expected to grow rapidly as demand for more skilled labor grows, and as a result the participation rates in the educational system increases. According to China¡¯s Eleventh Five-Year Plan for China¡¯s Educational Reform and Development , or the Eleventh Five-Year Plan, the government has targeted a significant increase in the overall level of spending on education, which includes both public and private spending, to 4.0% of its gross domestic product, or GDP, by 2010, compared with 2.8% of GDP in 2005. Assuming China¡¯s GDP increases to $2.3 trillion by 2010, as projected by China¡¯s State Council Development Research Center, achieving the government¡¯s target for the education sector would result in overall education spending increasing from $75.0 billion in 2003 to $242.0 billion by 2010. The growth in educational spending will likely be driven by several factors, including favorable demographic trends, growth in per capita and disposable income, the limited supply and growing demand for post-secondary education, government initiatives, and an increasing emphasis on higher education as well as English proficiency as a means to increase China¡¯s international competitiveness.
Our Strengths and Strategy
We believe that the following strengths will enable us to capture the rapid growth opportunities in the education service market in China:
| Ÿ |
market leadership and proven track record; |
| Ÿ |
substantial knowledge of our customers and the Chinese education market; |
| Ÿ |
premier services for online degree programs; and |
| Ÿ |
experienced management team with proven track record. |
Our goal is to strengthen our position as a market leader in China¡¯s rapidly growing educational services industry. Our strategy consists of the following key elements:
| Ÿ |
expand the penetration of our online degree program services; |
| Ÿ |
establish a network of learning centers for online degree programs; |
| Ÿ |
continue to strengthen our brand name and our reputation; |
| Ÿ |
develop new services and products to further enhance the learning experience of existing students and attract new students; and |
| Ÿ |
pursue strategic acquisitions. |
2
Table of Contents
Our Challenges
The successful execution of our strategies is subject to certain risks and uncertainties, including those relating to:
| Ÿ |
the regulatory environment in China affecting the education sector, including price controls over tuition that can be charged; |
| Ÿ |
our dependence on our online degree program services for a substantial majority of our revenue; |
| Ÿ |
our dependence on a limited number of university customers and our ability to attract new university customers; |
| Ÿ |
our ability to maintain an effective system of internal control over financial reporting; |
| Ÿ |
our limited operating history; |
| Ÿ |
our dependence on third parties, particularly learning centers, to perform functions that are critical to our business success; |
| Ÿ |
our ability to effectively control and receive the economic benefits of our Chinese affiliated entities, which own some of our businesses, through contractual arrangements instead of direct equity ownership; |
| Ÿ |
our ability to respond to competitive pressures; |
| Ÿ |
our ability to continue to provide a high level of service quality to maintain and enhance our reputation; |
| Ÿ |
our ability to retain our experienced senior management team; and |
| Ÿ |
our ability to successfully execute future acquisitions and efficiently manage the businesses that we have acquired or will acquire in the future. |
Please see ¡°Risk Factors¡± and other information included in this prospectus for a detailed discussion of these and other risks and uncertainties.
Our History and Corporate Structure
We were incorporated as an exempted company in the Cayman Islands with limited liability in 1999 and began our online degree services business in the same year, providing services to Renmin University of China. Since our inception, we have rapidly grown our online degree program services business and have added three new business lines through acquisitions in 2005 (online tutoring, private primary and secondary schools and curriculum services) and 2006 (vocational post-secondary education programs).
Chinese laws and regulations limit the ability of foreign-owned entities to participate in the education and telecommunication sectors in China. Our corporate structure is designed to comply with these restrictions. The restrictions on the foreign ownership and operation of each of our four lines of business are as follows:
| Ÿ |
Online Degree Programs ¡ªOur primary business is to provide comprehensive services to the online degree programs of leading Chinese universities. While Chinese laws and regulations prohibit or restrict foreign companies and foreign-invested enterprises from owning, operating and managing online degree programs, they do not prohibit foreign companies or foreign-invested enterprises from providing services to online degree programs. We do not own, operate or manage online degree programs, but instead provide online degree services to our university customers through majority-owned subsidiaries formed between our three Chinese subsidiaries, CMR Web, Hongcheng Liye and Hongcheng Technology, and our university partners, except for two online degree programs that are serviced through Hongcheng Education, one of our Chinese affiliated entities. |
| Ÿ |
International Curriculum Programs ¡ªChinese laws and regulations do not prohibit or restrict foreign companies or foreign-invested enterprises from engaging in the marketing and distribution of international |
3
Table of Contents
|
curriculum programs. This business is operated by Hongcheng Liye, one of our wholly-owned subsidiaries in China. |
| Ÿ |
Online Tutoring Programs¡ª Chinese laws and regulations prohibit or restrict foreign companies and foreign-invested enterprises from owning the ICP licenses for, or operating, educational websites such as our 101 Online School¡¯s website. As a result of this restriction, this business is operated by Xiandai Technology, one of our Chinese affiliated entities. |
| Ÿ |
Private Primary and Secondary Schools ¡ªChinese laws and regulations prohibit foreign companies and foreign-invested enterprises from owning and operating private primary and secondary schools in China. As a result of this restriction, this business is operated by Hongcheng Education, one of our Chinese affiliated entities. |
We do not have a direct ownership interest in, and are not obligated to absorb the expected losses of, our Chinese affiliated entities, but we direct these companies¡¯ business affairs and receive substantially all of the economic benefits of their businesses through contractual arrangements. In 2006 and the six months ended June 30, 2007, 89.7% and 86.8%, respectively, of our net revenue was derived from businesses conducted by our three principal Chinese subsidiaries. The following diagram illustrates our corporate structure as of June 30, 2007.
Corporate Information
We are an exempted company incorporated in the Cayman Islands with limited liability on September 6, 1999. Our principal executive offices are located at 12/F Capital Times Square, No.88 Xichangan Street, Beijing 100031, People¡¯s Republic of China. Our telephone number at this address is 86 (10) 8391-5888. Our registered office in the Cayman Islands is located at the offices of Walkers SPV Limited, Walker House, 87 Mary Street, George Town, Grand Cayman KY1-9002, Cayman Islands.
Investor inquiries should be directed to us at the address and telephone number of our principal executive offices set forth above. Our website is www.chinaedu.net . The information contained on this website and our other websites is not a part of this prospectus. Our agent for service of process in the United States is CT Corporation System located at 111 Eighth Avenue, 13/F, New York, New York 10011.
4
Table of Contents
The Offering
|
American Depositary Shares offered |
6,820,000 ADSs, representing 20,460,000 ordinary shares |
|
by us |
5,456,000 ADSs |
|
by the selling shareholders |
1,364,000 ADSs |
|
Price per ADS |
We currently estimate that the initial public offering price will be between $10.00 and $12.00 per ADS. |
|
The ADSs |
Each ADS represents three ordinary shares, par value $0.01 per share. The ADSs will be evidenced by American Depositary Receipts, or ADRs. A nominee of the depositary will be the registered holder of the ordinary shares underlying your ADSs. |
|
You will have the rights of an ADR holder as provided in a deposit agreement among us, the depositary and holders and beneficial owners of ADSs. |
|
To better understand the terms of the ADSs, you should carefully read the section in this prospectus entitled ¡°Description of American Depositary Shares.¡± We also encourage you to read the deposit agreement, which is an exhibit to the registration statement that includes this prospectus. We may amend or terminate the deposit agreement for any reason without your consent. If an amendment to the deposit agreement becomes effective, you will be considered, by continuing to hold your ADSs, to have agreed to be bound by the deposit agreement as amended. |
|
Over-allotment option |
We and certain of the selling shareholders have granted the underwriters a 30-day option to purchase up to 1,023,000 additional ADSs from us and certain of the selling shareholders to cover any over-allotments at the initial public offering price less the underwriting discount and commissions. |
|
ADSs outstanding immediately after this offering |
6,820,000 ADSs (or 7,843,000 ADSs if the underwriters exercise the over-allotment option in full). |
|
Ordinary shares outstanding immediately after this offering |
58,434,407 ordinary shares. |
5
Table of Contents
|
We intend to use the proceeds from this offering for the following purposes: |
| Ÿ |
approximately $10 million to expand our existing lines of business, including the funding of potential new collaborative alliances with university partners as those opportunities may arise from time to time; |
| Ÿ |
approximately $10 million to develop our own initial network of learning centers; |
| Ÿ |
approximately $15 million to complete the construction of the new campuses at our Jingzhou School (Southern Campus) and Anqing Foreign Language School; and |
| Ÿ |
the balance for general corporate purposes, which may include funding potential acquisitions of complementary businesses as such opportunities may arise from time to time, expanding our sales efforts, opening new offices and developing new or enhanced technologies, products and services. |
|
Risk factors |
See ¡°Risk Factors¡± in this prospectus beginning on page 10 for a discussion of factors and uncertainties that you should carefully consider before deciding to invest in our ADSs. |
|
Listing |
We have applied for approval to have our ADSs listed on the Nasdaq Global Market. Our ordinary shares will not be listed on any exchange or quoted for trading on any over the counter trading system. |
|
Proposed Nasdaq Global Market symbol |
¡°CEDU¡± |
|
Depositary |
The Bank of New York Company, Inc. |
|
Payment and settlement |
We expect the ADSs to be delivered against payment on or about , 2007. |
6
Table of Contents
Summary Consolidated Financial and Operating Data
The following summary consolidated statement of operations data for the years ended December 31, 2004, 2005 and 2006 and the summary consolidated balance sheet data as of December 31, 2005 and 2006 have been derived from our audited consolidated financial statements included in this prospectus beginning on page F-1. The summary consolidated balance sheet data as of December 31, 2004 have been derived from our audited consolidated financial statements, which are not included in this prospectus. The summary consolidated statement of operations data for the six months ended June 30, 2006 and 2007 and the summary consolidated balance sheet data as of June 30, 2007 have been derived from our unaudited condensed consolidated financial information included in this prospectus. Our audited consolidated financial statements are prepared and presented in accordance with U.S. GAAP. We have prepared the unaudited condensed consolidated financial information on the same basis as our audited consolidated financial statements. The unaudited condensed consolidated financial information includes all adjustments, consisting only of normal and recurring adjustments, that we consider necessary for a fair presentation of our financial position and operating results for the periods presented. Our historical results for any period are not necessarily indicative of results to be expected in any future period. In addition, our unaudited results for the six months ended June 30, 2007 may not be indicative of our results for the full year ending December 31, 2007. You should read the following information in conjunction with our consolidated financial statements and related notes, ¡°Selected Condensed Consolidated Financial Data¡± and ¡°Management¡¯s Discussion and Analysis of Financial Condition and Results of Operations¡± included elsewhere in this prospectus.
| Years ended December 31, | Six months ended June 30, | ||||||||||||||||||||
| 2004 | 2005 | 2006 | 2006 | 2006 | 2007 | 2007 | |||||||||||||||
| RMB | RMB | RMB | $ | RMB | RMB | $ | |||||||||||||||
| (in thousands except share, per share and per ADS data) | |||||||||||||||||||||
|
Condensed Consolidated Statement of Operations Data: |
|||||||||||||||||||||
|
Net revenue |
100,896 | 126,362 | 213,531 | 28,052 | 98,898 | 119,963 | 15,760 | ||||||||||||||
|
Cost of revenue (1) (2) |
(38,014 | ) | (53,138 | ) | (80,308 | ) | (10,550 | ) | (36,533 | ) | (42,058 | ) | (5,525 | ) | |||||||
|
Operating expenses (1) (2) |
(40,580 | ) | (62,047 | ) | (76,002 | ) | (9,985 | ) | (34,588 | ) | (44,625 | ) | (5,863 | ) | |||||||
|
Income from operations |
22,302 | 11,177 | 57,221 | 7,517 | 27,777 | 33,280 | 4,372 | ||||||||||||||
|
Net income (loss) |
11,949 | (2,850 | ) | 25,539 | 3,355 | 17,100 | 12,474 | 1,639 | |||||||||||||