Annual and transition report of foreign private issuers pursuant to Section 13 or 15(d)

DESCRIPTION OF BUSINESS, ORGANIZATION AND SIGNIFICANT CONCENTRATIONS AND RISKS

v3.2.0.727
DESCRIPTION OF BUSINESS, ORGANIZATION AND SIGNIFICANT CONCENTRATIONS AND RISKS
12 Months Ended
Mar. 31, 2015
DESCRIPTION OF BUSINESS, ORGANIZATION AND SIGNIFICANT CONCENTRATIONS AND RISKS  
DESCRIPTION OF BUSINESS, ORGANIZATION AND SIGNIFICANT CONCENTRATIONS AND RISKS

(1)DESCRIPTION OF BUSINESS, ORGANIZATION AND SIGNIFICANT CONCENTRATIONS AND RISKS

 

Description of Business and Organization

 

ATA Inc. (the “Company”), through its wholly-owned subsidiaries, ATA Testing Authority (Holdings) Limited (“ATA BVI”), Xing  Wei Institute (Hong  Kong) Limited (“Xing Wei”), ATA Testing Authority (Beijing) Limited (“ATA Testing”), Beijing JinDiXin Software Technology Limited (“Beijing JDX”), ATA Learning (Beijing) Inc. (“ATA Learning”), Zhong Xiao Zhi Xing Education Technology Company Limited (“Zhi Xing”), and its consolidated variable interest entity (“VIE”), ATA Online (Beijing) Education Technology Limited (“ATA Online”) (collectively, referred to as the “Group”), provides computer-based testing services, test-based educational services, test preparation and training solutions and other related services in the People’s Republic of China (the “PRC”).

 

Significant Concentrations and Risks

 

The Group is subject to the following significant concentration and risks:

 

Country risk

 

The Group is subject to special risks associated with the PRC. These include risks associated with, among others, the political, economic, legal and social environment in the PRC, including the relative difficulty of protecting and enforcing intellectual property rights in the PRC. The interpretation and application of current or proposed requirements and regulations may have an adverse effect on the Group’s business, financial condition and results of operations. In addition, the ability to negotiate and implement specific business development projects in a timely and favorable manner may be impacted by political considerations unrelated to or beyond the control of the Group. Although the PRC government has been pursuing economic reform policies for over three decades, no assurance can be given that the PRC government will continue to pursue such policies or that such policies may not be significantly altered. Any change in PRC government policies and regulations affecting the education and testing service industry may have a negative impact on the Group’s operating results and financial condition.

 

Revenue concentration

 

For the years ended March 31, 2013, 2014 and 2015, RMB246.9 million, RMB250.3 million and RMB246.2 million, representing 67.3%, 65.1% and 70.3% of the Group’s net revenues, respectively, were generated from service fees from Chinese government controlled entities including governmental agencies, educational institutions and industry associations controlled by the PRC government. The demand for the Group’s products and services by these agencies, institutions and associations is affected by government budgetary cycles, funding availability and government policies. Funding reductions, reallocations or delays could adversely impact demand for the Group’s products and services or reduce the fees these customers are willing to pay for the Group’s products and services.

 

Net revenues from customers that individually exceeded 10% of the Group’s net revenues are as follows:

 

 

 

Year Ended March 31,

 

 

 

2013

 

2014

 

2015

 

 

 

RMB

 

%

 

RMB

 

%

 

RMB

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities Association of China

 

84,244,267 

 

23.0% 

 

64,057,268 

 

16.7% 

 

66,847,350 

 

19.1% 

 

The Chinese Institute of Certified Public Accountants

 

54,255,662 

 

14.8% 

 

61,654,948 

 

16.0% 

 

64,944,327 

 

18.5% 

 

China Banking Association

 

60,573,979 

 

16.5% 

 

67,516,046 

 

17.6% 

 

64,169,577 

 

18.3% 

 

Ministry of Human Resources and Social Security

 

22,747,389 

 

6.2% 

 

29,333,419 

 

7.6% 

 

35,132,028 

 

10.0% 

 

 

Accounts receivable, net from customers, that individually exceeded 10% of the Group’s accounts receivable, net are as follows:

 

 

 

March 31,

 

 

 

2014

 

2015

 

 

 

RMB

 

%

 

RMB

 

%

 

Securities Association of China

 

17,481,156 

 

25.6% 

 

21,601,986 

 

44.9% 

 

 

Concentration of cash and cash equivalent balances held at financial institutions

 

Cash and cash equivalents balances include deposits in:

 

 

 

March 31,

 

 

 

2014

 

2015

 

 

 

RMB

 

RMB

 

Financial institutions in the mainland of the PRC

 

 

 

 

 

— Denominated in Renminbi (“RMB”)

 

291,498,542 

 

190,964,354 

 

— Denominated in United Stated Dollars (“USD”)

 

6,517,884 

 

721 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total cash and cash equivalents balances held at mainland PRC financial institutions

 

298,016,426 

 

190,965,075 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial institutions in Hong Kong Special Administrative Region (“HKSAR”) of the PRC

 

 

 

 

 

— Denominated in RMB

 

12,052,519 

 

43,214,291 

 

— Denominated in Hong Kong Dollar

 

307,363 

 

33,442 

 

— Denominated in USD

 

1,570,790 

 

5,973,846 

 

— Denominated in GBP

 

 

108,717 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total cash balances held at HKSAR financial institutions

 

13,930,672 

 

49,330,296 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total cash and cash equivalents balances held at financial institutions

 

311,947,098 

 

240,295,371 

 

 

 

 

 

 

 

 

Management believes these financial institutions have high credit ratings. Cash and cash equivalents denominated in currencies other than functional currency are subject to foreign currency risk due to the appreciation or depreciation of the RMB under the current exchange rate regime in the PRC and HKSAR.