HONG KONG, Mar. 22, 2017 /PRNewswire/ -- Tencent Holdings Limited ("Tencent" or the "Company", SEHK 00700), a leading provider of Internet value added services in China, today announced the unaudited consolidated results for the fourth quarter of 2016 ("4Q2016") and audited consolidated results for the year ended December 31, 2016 ("FY2016").
FY2016 Key Highlights:
[1] Figures stated in USD are based on USD1 to RMB6.9370. |
4Q2016 Key Highlights:
Mr. Ma Huateng, Chairman and CEO of Tencent, said, "During 2016, Tencent achieved significant progress in a number of strategic initiatives to further strengthen our leadership, enrich our ecosystem and enhance our competitiveness. QQ and Weixin reinforced their positions as ubiquitous platforms for users in China to communicate and socialise, as well as to enjoy content and services efficiently. We launched a number of successful self-developed and licensed games and solidified our position as the leading game company globally. We expanded the popularity of our media platforms and grew rapidly the number of paying users for our digital content platforms. We also substantially increased the market share and daily transactions of our mobile payment services, and achieved rapid growth in commercial payment transactions. Looking ahead, we will seek to deliver superior experiences to our users and to create business opportunities for our ecosystem partners through the further implementation of our "Connection" strategy. We will also invest heavily in cutting edge technologies such as security, cloud, big data and AI so as to position us for the next wave of growth."
4Q2016 Financial Review
Value Added Services ("VAS"). Revenues from our VAS business increased by 27% to RMB29,191 million for 4Q2016 on a YoY basis. Online games revenues grew by 16% YoY to RMB18,469 million. The increase was primarily driven by contributions from our major PvP and RPG genre smart phone games. Social networks revenues increased by 51% YoY to RMB10,722 million. The increase mainly reflected revenue growth from digital content services, including our expanded digital music business, and virtual item sales.
Online advertising. Revenues from our online advertising business increased by 45% to RMB8,288 million for 4Q2016 on a YoY basis. Performance-based advertising revenues grew by 77% YoY to RMB5,168 million, mainly driven by higher contributions from advertising revenues derived from Weixin Moments, our mobile news apps, and Weixin Official Accounts. Brand display advertising revenues increased by 11% YoY to RMB3,120 million, primarily driven by growth in revenues from our mobile media platforms such as Tencent News and Tencent Video, partly offset by performance inventory replacing some brand inventory.
Others. Revenues from our other businesses increased by 289% to RMB6,385 million for 4Q2016 on a YoY basis. The increase was mainly due to revenue growth from our payment related and cloud services.
Other Key Financial Information for 4Q2016
Share-based compensation was RMB1,754 million, up 117% YoY.
EBITDA was RMB16,775 million, up 39% YoY. Adjusted EBITDA was RMB18,495 million, up 44% YoY.
Capital expenditure was RMB2,839 million, up 51% YoY.
Free cash flow was RMB17,156 million, up 6% YoY.
As at 31 December 2016, the Group had net cash of RMB18,140 million. Fair value of our stakes in listed investee companies (both associates and available-for-sale financial assets) totalled RMB89 billion as at December 31, 2016.
Company Strategic Highlights
In 2016, we strengthened our "Connection" strategy by making our social platforms more interactive for users to share and communicate, and by connecting our social platforms to a broader range of online and offline services. We increasingly sought to differentiate user experience between our QQ and Weixin platforms.
We also sought to deepen "Connection" between our users and our core business engines:
Smart phone games: Our strategy is to engage a large pool of casual gamers and gradually advance them to mid-core and hard-core categories. During the year, we strengthened our leading position in player-versus-player games and expanded our presence in role playing games with a series of successful in-house and licensed titles.
PC client games: We strived to serve hard-core gamers better via attractive new content for existing titles and via user behavioural insights gained from data mining. As a result, our paying user ratio increased YoY. We broadened user engagement with our major PC game titles via eSports, game video streaming, and game interest groups. Our integrated PC game community, Tencent Game Platform, plays an important role in introducing new titles to gamers.
Social and performance advertising: Our social advertising inventory remained as a key attraction to advertisers, leveraging our platform's superior targeting capability, unparalleled consumer reach, and premium brand image. We innovated around advertisement formats to enable more native and immersive experience for users, hence enhancing performance for marketers. We enabled advertisers and Weixin Official Accounts to select each other, better matching relevant advertisements with appropriate content. By improving click-through and sell-through rates of our existing inventory, we achieved satisfactory revenue growth without dramatically increasing advertisement loading rates.
Brand advertising: For video, we prioritised sponsorship advertising to better capitalise on our premium inventory. For our news applications, we further upgraded our targeting capabilities.
In addition, we are investing in forefront technologies such as artificial intelligence and machine learning to position our "Connection" strategy for the future. We intend to use machine learning to personalise recommendations within our digital content services, sharpen our advertising targeting capability, enrich social interactions via features such as animated face masks, and save costs by optimising our customer service needs.
Business Review and Outlook
Company Product Highlights
Operating Information
Social and Communication Platforms
Online Game Platforms
[2] Including smart phone games revenue attributable to our social networks business. |
Media and Digital Content Platforms
Utility Platforms
Company Outlook and Strategies for 2017
During 2017, we intend to further our "Connection" strategy by expanding our ecosystem around our core social and communication platforms via initiatives including:
For other detailed disclosure, please refer to our website www.tencent.com/ir, or follow us via Weixin Official Account (Weixin ID: Tencent_IR).
About Tencent
Tencent uses technology to enrich the lives of Internet users. Every day, hundreds of millions of people communicate, share experiences, consume information and seek entertainment through our integrated platforms. Tencent's diversified services include QQ, Weixin/ WeChat for communications; Qzone for social networking; QQ Game Platform for online games; QQ.com and Tencent News for information and Tencent Video for video content.
Tencent was founded in Shenzhen in 1998 and went public on the Main Board of the Hong Kong Stock Exchange in 2004. The Company is one of the constituent stocks of the Hang Seng Index. Tencent seeks to evolve with the Internet by investing in innovation, providing a mutually beneficial environment for partners, and staying close to users.
For enquiries, please contact:
Investor: |
|
Stella Lui |
Tel: (86) 755 86013388 ext 68870/ (852) 3148 5100 Email: stellalui@tencent.com |
Kennis Lau |
Tel: (86) 755 86013388 ext 68958/ (852) 3148 5100 Email: kennislau@tencent.com |
Media: |
|
Canny Lo |
Tel: (86) 755 86013388 ext 66630/ (852) 3148 5100 Email: cannylo@tencent.com |
Limin Chen |
Tel: (86) 755 86013388 ext 56011 Email: liminchen@tencent.com |
Non-GAAP Financial Measures
To supplement the consolidated results of the Group prepared in accordance with IFRS, certain non-GAAP financial measures, including non-GAAP operating profit, non-GAAP operating margin, non-GAAP profit for the period, non-GAAP net margin, non-GAAP profit attributable to equity holders of the Company, non-GAAP basic EPS and non-GAAP diluted EPS, have been presented in this announcement. These unaudited non-GAAP financial measures should be considered in addition to, not as a substitute for, measures of the Company's financial performance prepared in accordance with IFRS. In addition, these non-GAAP financial measures may be defined differently from similar terms used by other companies.
The Company's management believes that the non-GAAP financial measures provide investors with useful supplementary information to assess the performance of the Group's core operations by excluding certain non-cash items and certain impact of M&A transactions. In addition, non-GAAP adjustments include relevant non-GAAP adjustments for the Group's material associates based on available published financials of the relevant material associates, or estimates made by the Company's management based on available information, certain expectations, assumptions and premises.
Forward-Looking Statements
This press release contains forward-looking statements relating to the business outlook, forecast business plans and growth strategies of the Company. These forward-looking statements are based on information currently available to the Company and are stated herein on the basis of the outlook at the time of this press release. They are based on certain expectations, assumptions and premises, some of which are subjective or beyond our control. These forward-looking statements may prove to be incorrect and may not be realized in future. Underlying the forward-looking statements is a large number of risks and uncertainties. Further information regarding these risks and uncertainties is included in our other public disclosure documents on our corporate website.
CONSOLIDATED INCOME STATEMENT |
|||||
RMB in million, unless specified |
|||||
Unaudited |
Audited |
||||
4Q2016 |
4Q2015 |
2016 |
2015 |
||
Revenues |
43,864 |
30,441 |
151,938 |
102,863 |
|
VAS |
29,191 |
23,068 |
107,810 |
80,669 |
|
Online advertising |
8,288 |
5,733 |
26,970 |
17,468 |
|
Others |
6,385 |
1,640 |
17,158 |
4,726 |
|
Cost of revenues |
(20,238) |
(12,661) |
(67,439) |
(41,631) |
|
Gross profit |
23,626 |
17,780 |
84,499 |
61,232 |
|
Gross margin |
54% |
58% |
56% |
60% |
|
Interest income |
653 |
649 |
2,619 |
2,327 |
|
Other gains, net |
1,022 |
249 |
3,594 |
1,886 |
|
Selling and marketing expenses |
(4,462) |
(3,024) |
(12,136) |
(7,993) |
|
General and administrative expenses |
(6,909) |
(4,766) |
(22,459) |
(16,825) |
|
Operating profit |
13,930 |
10,888 |
56,117 |
40,627 |
|
Operating margin |
32% |
36% |
37% |
39% |
|
Finance costs, net |
(483) |
(363) |
(1,955) |
(1,618) |
|
Share of losses of associates and joint |
(522) |
(1,329) |
(2,522) |
(2,793) |
|
Profit before income tax |
12,925 |
9,196 |
51,640 |
36,216 |
|
Income tax expense |
(2,402) |
(1,998) |
(10,193) |
(7,108) |
|
Profit for the year |
10,523 |
7,198 |
41,447 |
29,108 |
|
Net margin |
24% |
24% |
27% |
28% |
|
Attributable to: |
|||||
Equity holders of the Company |
10,529 |
7,164 |
41,095 |
28,806 |
|
Non-controlling interests |
(6) |
34 |
352 |
302 |
|
Non-GAAP profit attributable to equity holders of the Company |
12,332 |
8,953 |
45,420 |
32,410 |
|
Earnings per share for profit attributable to equity holders of the Company (in RMB per share) |
|||||
- basic |
1.121 |
0.769 |
4,383 |
3.097 |
|
- diluted |
1.108 |
0.759 |
4,329 |
3.055 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
|||
RMB in million, unless specified |
|||
Audited |
|||
2016 |
2015 |
||
Profit for the year |
41,447 |
29,108 |
|
Other comprehensive income, net of tax: |
|||
Items that may be subsequently reclassified to profit or loss |
|||
Share of other comprehensive income of associates |
863 |
329 |
|
Net gains from changes in fair value of |
2,929 |
12,586 |
|
Transfer to profit or loss upon disposal |
(1,176) |
(11) |
|
Currency translation differences |
4,198 |
1,975 |
|
Other fair value gains |
600 |
- |
|
Items that may not be subsequently |
|||
Other fair value (losses)/gains |
(244) |
736 |
|
Total comprehensive income for the year |
48,617 |
44,723 |
|
Attributable to: |
|||
Equity holders of the Company |
48,194 |
44,416 |
|
Non-controlling interests |
423 |
307 |
OTHER FINANCIAL INFORMATION |
|||||
RMB in million, unless specified |
|||||
Unaudited |
Audited |
||||
4Q2016 |
4Q2015 |
2016 |
2015 |
||
EBITDA (a) |
16,775 |
12,040 |
62,550 |
43,049 |
|
Adjusted EBITDA (a) |
18,495 |
12,831 |
66,863 |
45,805 |
|
Adjusted EBITDA margin (b) |
42% |
42% |
44% |
45% |
|
Interest expense |
611 |
409 |
2,167 |
1,510 |
|
Net cash (c) |
18,140 |
19,114 |
18,140 |
19,114 |
|
Capital expenditures (d) |
2,839 |
1,883 |
12,100 |
7,709 |
|
Note: |
|||||
(a) EBITDA consists of operating profit less interest income and other gains/losses, net, and plus depreciation of property, plant and equipment as well as investment properties, and amortisation of intangible assets. Adjusted EBITDA consists of EBITDA plus equity-settled share-based compensation expenses. |
|||||
(b) Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenues. |
|||||
(c) Net cash represents period end balance and is calculated as cash and cash equivalents, term deposits, minus borrowings and notes payable. |
|||||
(d) Capital expenditures consist of additions (excluding business combinations) to property, plant and equipment, construction in progress, land use rights and intangible assets (excluding online game and other content licenses). |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION |
|||
RMB in million, unless specified |
Audited |
||
As at December 31 |
|||
2016 |
2015 |
||
ASSETS |
|||
Non-current assets |
|||
Property, plant and equipment |
13,900 |
9,973 |
|
Construction in progress |
4,674 |
4,248 |
|
Investment properties |
854 |
292 |
|
Land use rights |
5,174 |
2,293 |
|
Intangible assets |
36,467 |
13,439 |
|
Investments in associates |
70,042 |
60,171 |
|
Investments in redeemable instruments of associates |
9,627 |
6,230 |
|
Investments in joint ventures |
630 |
544 |
|
Available-for-sale financial assets |
83,806 |
44,339 |
|
Prepayments, deposits and other assets |
7,363 |
5,480 |
|
Other financial assets |
1,760 |
- |
|
Deferred income tax assets |
7,033 |
757 |
|
Term deposits |
5,415 |
3,674 |
|
246,745 |
151,440 |
||
Current assets |
|||
Inventories |
263 |
222 |
|
Accounts receivable |
10,152 |
7,061 |
|
Prepayments, deposits and other assets |
14,118 |
11,397 |
|
Other financial assets |
1,649 |
1,198 |
|
Term deposits |
50,320 |
37,331 |
|
Restricted cash |
750 |
54,731 |
|
Cash and cash equivalents |
71,902 |
43,438 |
|
149,154 |
155,378 |
||
Total assets |
395,899 |
306,818 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued) |
|||
RMB in million, unless specified |
Audited |
||
As at December 31 |
|||
2016 |
2015 |
||
EQUITY |
|||
Equity attributable to equity holders of the Company |
|||
Share capital |
- |
- |
|
Share premium |
17,324 |
12,167 |
|
Shares held for share award schemes |
(3,136) |
(1,817) |
|
Other reserves |
23,693 |
9,673 |
|
Retained earnings |
136,743 |
100,012 |
|
174,624 |
120,035 |
||
Non-controlling interests |
11,623 |
2,065 |
|
Total equity |
186,247 |
122,100 |
|
LIABILITIES |
|||
Non-current liabilities |
|||
Borrowings |
57,549 |
12,922 |
|
Notes payable |
36,204 |
37,092 |
|
Long-term payables |
4,935 |
3,626 |
|
Other financial liabilities |
2,576 |
- |
|
Deferred income tax liabilities |
5,153 |
3,668 |
|
Deferred revenue |
2,038 |
3,004 |
|
108,455 |
60,312 |
||
Current liabilities |
|||
Accounts payable |
27,413 |
15,700 |
|
Other payables and accruals |
20,873 |
70,199 |
|
Borrowings |
12,278 |
11,429 |
|
Notes payable |
3,466 |
3,886 |
|
Current income tax liabilities |
5,219 |
1,608 |
|
Other tax liabilities |
745 |
462 |
|
Deferred revenue |
31,203 |
21,122 |
|
101,197 |
124,406 |
||
Total liabilities |
209,652 |
184,718 |
|
Total equity and liabilities |
395,899 |
306,818 |
|
RECONCILIATIONS OF IFRS TO NON-GAAP RESULTS |
|||||||
Adjustments |
|||||||
RMB in million, unless specified |
As
|
Equity-settled |
Cash-settled |
Net |
Amortisation of |
Impairment |
Non-GAAP
|
Year ended December 31, 2016 |
|||||||
Operating profit |
56,117 |
4,313 |
142 |
(7,624) |
397 |
4,809 |
58,154 |
Profit for the year |
41,447 |
5,085 |
142 |
(7,786) |
1,651 |
5,452 |
45,991 |
Profit attributable |
41,095 |
4,982 |
141 |
(7,770) |
1,547 |
5,425 |
45,420 |
Operating margin |
37% |
38% |
|||||
Net margin |
27% |
30% |
|||||
Year ended December 31, 2015 |
|||||||
Operating profit |
40,627 |
2,756 |
85 |
(4,275) |
198 |
2,373 |
41,764 |
Profit for the year |
29,108 |
3,304 |
85 |
(4,016) |
1,186 |
3,185 |
32,852 |
Profit attributable |
28,806 |
3,221 |
81 |
(4,016) |
1,149 |
3,169 |
32,410 |
Operating margin |
39% |
41% |
|||||
Net margin |
28% |
32% |
|||||
RECONCILIATIONS OF IFRS TO NON-GAAP RESULTS (continued) |
|||||||
Adjustments |
|||||||
RMB in million, unless specified |
As |
Equity-settled |
Cash-settled |
Net |
Amortisation of |
Impairment |
Non-GAAP |
Unaudited three months ended December 31, 2016 |
|||||||
Operating profit |
13,930 |
1,720 |
34 |
(1,502) |
162 |
602 |
14,946 |
Profit for the period |
10,523 |
1,946 |
34 |
(1,440) |
541 |
828 |
12,432 |
Profit attributable |
10,529 |
1,906 |
34 |
(1,440) |
493 |
810 |
12,332 |
Operating margin |
32% |
34% |
|||||
Net margin |
24% |
28% |
|||||
Unaudited three months ended September 30, 2016 |
|||||||
Operating profit |
14,460 |
1,098 |
34 |
(2,404) |
139 |
1,710 |
15,037 |
Profit for the period |
10,776 |
1,259 |
34 |
(2,309) |
426 |
1,743 |
11,929 |
Profit attributable |
10,646 |
1,224 |
33 |
(2,297) |
389 |
1,742 |
11,737 |
Operating margin |
36% |
37% |
|||||
Net margin |
27% |
30% |
|||||
Unaudited three months ended December 31, 2015 |
|||||||
Operating profit |
10,888 |
791 |
18 |
(929) |
46 |
719 |
11,533 |
Profit for the period |
7,198 |
959 |
17 |
(995) |
313 |
1,525 |
9,017 |
Profit attributable |
7,164 |
939 |
16 |
(995) |
304 |
1,525 |
8,953 |
Operating margin |
36% |
38% |
|||||
Net margin |
24% |
30% |
|||||
Note: |
|||||||
(a) Including put options granted to employees of investee companies on their shares and shares to be issued under investee companies' share-based incentive plans which can be acquired by the Group, and other incentives |
|||||||
(b) Including net (gains)/losses on deemed disposals, disposals of investee companies and businesses, and fair value changes on options we own in investee companies |
|||||||
(c) Amortisation of intangible assets resulting from acquisitions, net of related deferred tax |
|||||||
(d) Impairment provision for associates, available-for-sale financial assets, and intangible assets arising from acquisitions |
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