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

DESCRIPTION OF BUSINESS, ORGANIZATION AND SIGNIFICANT CONCENTRATIONS AND RISKS

v2.4.0.6
DESCRIPTION OF BUSINESS, ORGANIZATION AND SIGNIFICANT CONCENTRATIONS AND RISKS
12 Months Ended
Mar. 31, 2013
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”), ATA Testing Authority (Beijing) Limited (“ATA Testing”), Beijing JinDiXin Software Technology Limited (“Beijing JDX”), ATA Learning (Beijing) Inc. (“ATA Learning”), 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 almost 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, 2011, 2012 and 2013, RMB209.3 million, RMB240.7 million and RMB246.9 million, representing 68.9%, 68.4% and 67.3% 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 are 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,

 

 

 

2011

 

2012

 

2013

 

 

 

RMB

 

%

 

RMB

 

%

 

RMB

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities Association of China

 

115,742,065

 

38.1

%

 

131,404,013

 

37.3

%

 

84,244,267

 

23.0

%

 

China Banking Association

 

51,681,348

 

17.0

%

 

36,971,719

 

10.5

%

 

60,573,979

 

16.5

%

 

The Chinese Institute of Certified Public Accountants

 

 

 

 

 

 

 

54,255,662

 

14.8

%

 

 

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

 

 

 

March 31,

 

 

 

2012

 

2013

 

 

 

RMB

 

%

 

RMB

 

%

 

Securities Association of China

 

25,579,897

 

31.3

%

 

19,643,518

 

38.4

%

 

China Customs Education and Training Center

 

9,863,856

 

12.1

%

 

7,927,308

 

15.5

%

 

 

Concentration of cash balances held at financial institutions

 

Cash balances include deposits in:

 

 

 

March 31,

 

 

 

2012

 

2013

 

 

 

RMB

 

RMB

 

Financial institutions in the mainland of the PRC

 

 

 

 

 

— Denominated in Renminbi (“RMB”)

 

208,631,163

 

248,284,360

 

— Denominated in United Stated Dollars (“USD”)

 

719

 

719

 

 

 

 

 

 

 

Total cash balances held at mainland PRC financial institutions

 

208,631,882

 

248,285,079

 

 

 

 

 

 

 

Financial institutions in HKSAR of the PRC

 

 

 

 

 

— Denominated in RMB

 

45,917,908

 

16,662,994

 

— Denominated in Hong Kong Dollar

 

437,435

 

3,172,392

 

— Denominated in USD

 

2,177,482

 

21,909,250

 

 

 

 

 

 

 

Total cash balances held at HKSAR financial institutions

 

48,532,825

 

41,744,636

 

 

 

 

 

 

 

Total cash balances held at financial institutions

 

257,164,707

 

290,029,715

 

 

Management believes these financial institutions have high credit ratings. Cash denominated in currencies other than functional currency is subject to foreign currency risk due to the appreciation or depreciation of the RMB under the current exchange rate regime in the PRC and Hong Kong Special Administrative Region (“HKSAR”).