BEIJING, Feb. 25 /Xinhua-PRNewswire/ -- Perfect World Co., Ltd.
(Nasdaq: PWRD) ("Perfect World" or the "Company"), a leading online game developer and operator in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2007
Fourth Quarter 2007 Highlights*
-- Total revenues were RMB258.4 million (USD35.4 million), an
increase of 20.8% from 3Q07 and 325.2% from 4Q06
-- Gross profit was RMB219.8 million (USD30.1 million), an increase of
23.2% from 3Q07 and 364.0% from 4Q06
-- Operating profit was RMB137.4 million (USD18.8 million), an increase
of 18.0% from 3Q07 and a significant turnaround from an operating loss
of RMB10.5 million in 4Q06
-- Net income was RMB146.2 million (USD20.0 million), an increase of
18.6% from 3Q07 and a significant turnaround from a net loss of
RMB11.1 million in 4Q06
-- Basic and diluted earnings per ADS were RMB2.62(USD0.36) and RMB2.48
(USD0.34), respectively, as compared to basic and diluted earnings per
ADS of RMB2.51 and RMB2.18, respectively, in 3Q07, and a net loss per
ADS of RMB0.43 in 4Q06
-- Aggregate average concurrent users (ACU) for games under operation
were approximately 624,000, an increase of 21.6% from 3Q07 and 153.5%
from 4Q06
-- Active paying customers (APC) for games under item-based revenue
model were approximately 1,565,000, an increase of 12.8% from 3Q07 and
159.9% from 4Q06
-- Average revenue per active paying customer (ARPU) for games under
item-based revenue model was RMB141, an increase of 3.8% from 3Q07 and
85.2% from 4Q06
-- Expansion packs for "Perfect World II," "Zhu Xian," and
"Legend of Martial Arts" were successfully launched
-- "Perfect World II" was successfully launched in Korea by CJ Internet
Corporation on October 23, 2007
-- "Legend of Martial Arts" was successfully launched in Taiwan by
Soft-World International Corp. on November 28, 2007
-- Closed beta testing for "Chi Bi" was launched on December 18, 2007
-- Small-scale closed beta testing for "Hot Dance Party" was launched
on December 28, 2007
NOTE*: The U.S. dollar (USD) amounts disclosed in this press release are
presented solely for the convenience of the reader. The conversion
of Renminbi (RMB) into USD in this release is based on the noon
buying rate in The City of New York for cable transfers in RMB per
USD as certified for customs purposes by the Federal Reserve Bank
of New York as of December 31, 2007, which was RMB7.2946 to
USD1.00. The percentages stated are calculated based on RMB.
Fiscal Year 2007 Financial Highlights
-- Total revenues were RMB689.1 million (USD94.5 million), an increase
of 593.2% from fiscal year 2006
-- Gross profit was RMB570.1 million (USD78.2 million), an increase of
662.2% from fiscal year 2006
-- Operating profit was RMB350.2 million (USD48.0 million), a
significant turnaround from an operating loss of RMB27.5 million in
fiscal year 2006
-- Net income was RMB361.9 million (USD49.6 million), a significant
turnaround from a net loss of RMB27.9 million in fiscal year 2006
-- Basic and diluted earnings per ADS were RMB8.63 (USD1.18) and
RMB6.77 (USD0.93), respectively, as compared to a net loss per ADS of
RMB1.02 in fiscal year 2006
"2007 was a great year for us and our fourth quarter results came in well ahead of our expectations," commented Mr. Michael Chi, Chairman and Chief Executive Officer of Perfect World. "I believe our achievements were driven by our ability to successfully develop and operate new games while maintaining user interest in our portfolio of existing games. This demonstrates our commitment to deliver solid results and maximize shareholder value. Our management team has always been one of our key competitive strengths, and I am happy to have Mr. Alan Chen join our management team. Alan was appointed as our Senior Vice President and General Manager of our Shanghai office which is being established. He will lead our initiatives to expand our game development capacity in Shanghai and help our business grow in potential overseas markets. In the past year, we successfully executed a number of major strategic developments, such as the launch of ‘Zhu Xian,’ the successful completion of our initial public offering, and an expansion in the number of overseas licensing agreements, all of which have helped strengthen our position as a leading online game developer and operator in China. I am also very pleased that we launched small-scale closed beta testing for ‘Hot Dance Party’ in 4Q07 and open beta testing for ‘Chi Bi’ in 1Q08. We currently have four new games under development, including a 3D MMORPG based on ‘Journey to the West,’ one of the four great classical novels of Chinese literature. Our proven track record and ability to diversify our game portfolio are expected to further demonstrate our determination to develop and operate new games. I believe our strong commitment to effectively executing our core strategies and continuous efforts to achieve sustainable growth will serve as a solid foundation and help us become one of the leading online game companies in the world."
Fourth Quarter 2007 Financial Results
Total Revenues
Total revenues were RMB258.4 million (USD35.4 million) in 4Q07, an increase of 20.8%, or RMB44.5 million from RMB213.9 million in 3Q07 and an increase of 325.2%, or RMB197.6 million from RMB60.8 million in 4Q06.
Online game operation revenues were RMB230.2 million (USD31.6 million) in 4Q07, an increase of 16.6%, or RMB32.7 million, from RMB197.4 million in 3Q07 and an increase of 285.2%, or RMB170.4 million, from RMB59.8 million in 4Q06. The sequential increase in online game operation revenues primarily resulted from the successful launch of expansion packs for each of the Company’s three existing item-based games, which also helped extend the average period that players typically play its games.
The ACU was approximately 624,000 in 4Q07, an increase of 21.6%, or 111,000, from 513,000 in 3Q07 and an increase of 153.5%, or 378,000, from 246,000 in 4Q06. The ARPU for games under item-based revenue model was RMB141 in 4Q07, an increase of 3.8%, or RMB5, from RMB136 in 3Q07 and an increase of 85.2%, or RMB65, from RMB76 in 4Q06. The APC for games under item-based revenue model was approximately 1,565,000 in 4Q07, an increase of 12.8%, or 177,000, from 1,390,000 in 3Q07 and an increase of 159.9%, or 963,000, from 602,000 in 4Q06.
Overseas licensing revenues were RMB28.2 million (USD3.9 million) in 4Q07, an increase of 71.7%, or RMB11.8 million, from RMB16.4 million in 3Q07 and an increase of 2,682.3%, or RMB27.2 million, from RMB1.0 million in 4Q06. The sequential increase in overseas licensing revenues was mainly due to an increase in usage-based royalty fees from the Taiwan market of approximately RMB3.8 million, and additional usage-based royalty fees from the Korean market of approximately RMB3.4 million in 4Q07. Moreover, initial license fees of approximately RMB3.4 million in relation to licensing agreement with Soft-World International Corp. for Legend of Martial Arts was recognized in 4Q07.
Cost of Revenues
The cost of revenues was RMB38.6 million (USD5.3 million) in 4Q07, an increase of 9.1%, or RMB3.2 million, from RMB35.4 million in 3Q07 and an increase of 188.1%, or RMB 25.2 million, from RMB13.4 million in 4Q06. The rise from 3Q07 was mainly due to an increase in staff costs, a special year-end bonus, and an increase in VAT and other related taxes.
Gross Profit and Gross Margin
Gross profit was RMB219.8 million (USD30.1 million) in 4Q07, an increase of 23.2%, or RMB41.3 million, from RMB178.5 million in 3Q07, and an increase of 364.0%, or RMB172.4 million, from RMB47.4 million in 4Q06. Gross margin was 85.1% in 4Q07, which increased from 83.4% in 3Q07 and 77.9% in 4Q06. The sequential improvement in gross margin was mainly due to a higher level of economies of scale generated from rapid revenue growth, cost savings from using a greater number of company-owned servers and fewer leased servers, better utilization of servers and Internet Data Center, or IDC, resources, and an increase in overseas licensing revenues.
Operating Expenses
Operating expenses were RMB82.4 million (USD11.3 million) in 4Q07, an increase of 32.8%, or RMB20.3 million, from RMB62.0 million in 3Q07, and an increase of 42.5%, or RMB24.6 million, from RMB57.8 million in 4Q06. The sequential increase in operating expenses was mainly attributed to higher R&D expenses, sales and marketing expenses, and general and administrative expenses.
R&D expenses increased by 67.2%, or RMB9.1 million, from RMB13.6 million in 3Q07 to RMB22.7 million (USD3.1 million) in 4Q07. This was primarily due to an increase in R&D headcount and a special year-end bonus. The R&D headcount was 388 as of December 31, 2007, as compared to 323 as of September 30, 2007.
Sales and marketing expenses increased by 17.2%, or RMB6.5 million, from RMB37.9 million in 3Q07 to RMB44.4 million (USD6.1 million) in 4Q07. This was largely due to an increase in advertising and promotional expenses and a special year-end bonus.
General and administrative expenses increased by 44.4%, or RMB4.7 million, from RMB10.5 million in 3Q07 to RMB15.2 million (USD2.1 million) in 4Q07. This was primarily due to an increase in share-based compensation expenses, a special year-end bonus, and an increase in professional fees, including Sarbanes Oxley compliance consulting fees and legal fees.
Operating Profit
Operating profit was RMB137.4 million (USD18.8 million) in 4Q07, an increase of 18.0%, or RMB21.0 million, from RMB116.4 million in 3Q07, and a significant turnaround from an operating loss of RMB10.5 million in 4Q06.
Income Tax Expense
Income tax expense was RMB4.3 million (USD0.6 million) in 4Q07, an increase of 79.1%, or RMB 1.9 million, from RMB2.4 million in 3Q07 and a significant increase from RMB0.2 million in 4Q06. The sequential increase was mainly due to the increase in overseas licensing revenues in 4Q07.
Net Income
Net income was RMB146.2 million (USD20.0 million) in 4Q07, an increase of 18.6%, or RMB22.9 million from RMB123.3 million in 3Q07, and a significant turnaround from a net loss of RMB11.1 million in 4Q06. Basic and diluted earnings per ADS were RMB2.62 (USD0.36) and RMB2.48 (USD0.34), respectively, in 4Q07, as compared to basic and diluted earnings per ADS of RMB2.51 and RMB2.18, respectively, in 3Q07, and a loss per ADS of RMB0.43 in 4Q06.
Cash and Cash Equivalents
As of December 31, 2007, the Company had RMB1.5 billion (USD205.1 million) of cash and cash equivalents, an increase of 5.8%, or RMB 82.5 million, from RMB1.4 billion as of September 30, 2007. The sequential increase was mainly due to net cash inflow generated from the Company’s online game operations and overseas licensing.
Fiscal Year 2007 Financial Results
Total Revenues
Total revenues were RMB689.1 million (USD94.5 million) in fiscal year 2007, an increase of 593.2%, or RMB589.7 million from RMB99.4 million in fiscal year 2006. The year-over-year increase was primarily due to the expansion of the Company’s game portfolio in the domestic market and a significant increase in overseas licensing revenues. Online game operation revenues were RMB615.7 million (USD84.4 million) in fiscal year 2007, an increase of 525.8%, or RMB517.3 million, from RMB98.4 million in fiscal year 2006. Overseas licensing revenues were RMB73.4 million (USD10.1 million) in fiscal year 2007, an increase of 7,139.9%, or RMB72.4 million, from RMB1.0 million in fiscal year 2006.
Gross Profit and Gross Margin
Gross profit was RMB570.1 million (USD78.2 million) in fiscal year 2007, an increase of 662.2%, or RMB495.3 million, from RMB74.8 million in fiscal year 2006. Gross margin was 82.7% in fiscal year 2007, which increased from 75.2% in fiscal year 2006. The year-over-year increase in gross margin was primarily due to a higher level of economies of scale generated from significant revenue growth.
Operating Expenses
Operating expenses were RMB219.9 million (USD30.1 million) in fiscal year 2007, an increase of 115.0%, or RMB117.6 million, from RMB102.3 million in fiscal year 2006. The year-over-year increase in operating expenses was mainly attributed to a significant increase in R&D expenses, sales and marketing expenses, and general and administrative expenses excluding one-time share-based compensation in fiscal year 2006, primarily due to the Company’s business expansion.
Operating Profit
Operating profit was RMB350.2 million (USD48.0 million) in fiscal year 2007, a significant turnaround from an operating loss of RMB27.5 million in fiscal year 2006.
Net Income
Net income was RMB361.9 million (USD49.6 million) in fiscal year 2007, a significant turnaround from a net loss of RMB27.9 million in fiscal year 2006. Basic and diluted earnings per ADS were RMB8.63 (USD1.18) and RMB6.77 (USD0.93), respectively, in fiscal year 2007, as compared to a net loss per ADS of RMB1.02 in fiscal year 2006.
Cash and Cash Equivalents
As of December 31, 2007, the Company had RMB1.5 billion (USD205.1 million) of cash and cash equivalents, a significant increase from RMB101.4 million as of December 31, 2006. The year-over-year increase was mainly due to the net proceeds collected from the IPO and net cash inflow generated from the Company’s operations.
Recent Business Developments
U.S. Subsidiary
The Company is in the process of establishing a U.S. subsidiary to capture potential business opportunity in North America. The U.S. subsidiary is expected to primarily focus on solidifying the Company’s international expansion strategy.
Appointed Alan Chen as the Company’s Senior Vice President and General Manager of the Shanghai office
The Company has appointed Alan Chen as Senior Vice President and General Manager of the Shanghai office which is being established. Mr. Chen will lead the initiatives to expand the Company’s game development capacity in Shanghai and help the Company expand in additional overseas markets.
Launched Open Beta Testing for "Chi Bi"
The Company successfully launched open beta testing on January 25, 2008 for "Chi Bi," its first MMORPG based on Chinese history, the famous Three Kingdoms period. The Company will co-promote "Chi Bi" alongside the movie "Red Cliff," which has the same Chinese name as "Chi Bi," in mainland China, according to an agreement signed with China Film Group Corporation, which owns the copyright to the movie in mainland China.
Entered into New Overseas Licensing Agreements with Cubinet Interactive
On February 19, 2008, the Company announced that it had entered into new overseas licensing agreements with Cubinet Interactive Sdn. Bhd. to license the Company’s "Legend of Martial Arts" in Vietnam and "Zhu Xian" in Vietnam, Thailand, Malaysia and Singapore.
Incorporated Perfect Online Holding Limited
The Company incorporated Perfect Online Holding Limited, a wholly-owned subsidiary, in Hong Kong in the fourth quarter of 2007, and transferred the Company’s 100% direct shareholding in Beijing Perfect World Software Co., Ltd., the Company’s wholly-owned subsidiary in China, to the new Hong Kong subsidiary in the first quarter of 2008.
Purchased New Office Space
The Company purchased office premises with an area of approximately 4,500 square meters during the past quarter, and additional office premises with an area of approximately 2,700 square meters in 1Q08 to meet the demand arising from the Company’s recent business and staff expansion. Both premises are located in Beijing, China, and the total cost is approximately RMB72.1 million.
Business Outlook
Based on the Company’s current operations, total revenues for the first quarter of 2008 are expected to be between RMB276 million and RMB284 million. This represents an increase of 7% - 10% on a sequential basis and reflects expected growth from launch of new games and incremental revenues from existing games.
The Company expects to launch open beta testing for its new game, "Hot Dance Party," by the end of 1Q08. "Hot Dance Party" is the Company’s first 3D casual game, and the Company is currently working on strengthening the game’s innovative features given the feedback received during small-scale closed beta testing.
Conference Call
Perfect World will host a conference call and live webcast at 8:00am Eastern Time (EST) (9:00pm, Beijing time) on Monday, February 25, 2008.
The dial-in details for the live conference call are as follows:
-- U.S. toll free number +1-877-847-0047
-- International dial-in number +852-3006-8101
-- China toll free number 800-876-5011
Passcode: PWRD
A live and archived webcast of the conference call will be available on the Investor Relations section of Perfect World’s website at http://www.pwrd.com .
A telephone replay of the call will be available after the conclusion of the conference call through 9:00 a.m. Eastern Time, March 3, 2008.
The dial-in details for the replay are as follows:
-- U.S. toll free number +1-877-847-0047
-- International dial-in number +852-3006-8101
-- China toll free number 800-876-5011
Passcode: 090995
About Perfect World Co., Ltd. ( http://www.pwrd.com )
Perfect World Co., Ltd. (Nasdaq: PWRD) is a leading online game developer and operator in China. Perfect World primarily develops three-dimensional ("3D") online games based on the proprietary Angelica 3D game engine and game development platform. The Company’s strong technology and creative game design capabilities, combined with extensive local knowledge and experience, enable it to frequently and rapidly introduce popular games designed to cater to changing customer preferences and market trends in China. The Company’s current portfolio of self-developed 3D massively multiplayer online role playing games ("MMORPGs") includes "Perfect World," "Legend of Martial Arts," "Perfect World II," "Zhu Xian" and "Chi Bi." The Company uses a time-based revenue model for "Perfect World," and an item-based revenue model for "Legend of Martial Arts," "Perfect World II," "Zhu Xian" and "Chi Bi." While most revenues are generated in China, the Company’s games have been licensed to leading game operators in more than ten countries and regions. The Company plans to continue to explore new and innovative business models and remains deeply committed to maximizing shareholder value over time.
Safe Harbor Statements
This press release contains forward-looking statements. These statements constitute forward-looking statements under the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the management’s quotations and "Business Outlook" contain forward-looking statements. Such statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Potential risks and uncertainties include, but are not limited to, our limited operating history, our dependence on five games for substantially all of our revenues, our ability to develop and operate new games that are commercially successful, the growth of the online game market and the continuing market acceptance of our games and in-game items in China and elsewhere, our ability to protect our intellectual property rights, our ability to respond to competitive pressure, our ability to maintain an effective system of internal control over financial reporting, and changes of the regulatory environment in China. Further information regarding these and other risks is included in Perfect World’s filings with the U.S. Securities and Exchange Commission, including its registration statement on Form F-1. All information provided in this press release and in the attachments is as of February 25, 2008, and Perfect World does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.
Perfect World Co., Ltd.
Consolidated Balance Sheets
Audited Unaudited Unaudited
` December 31, December 31, December 31,
2006 2007 2007
RMB RMB USD
Assets
Current assets
Cash and cash equivalents 101,356,892 1,496,032,993 205,087,735
Accounts receivable 5,570,756 16,796,527 2,302,597
Prepayment and other assets 6,700,732 40,806,249 5,594,035
Deferred tax assets 237,639 731,142 100,231
Total current assets 113,866,019 1,554,366,911 213,084,598
Non current assets
Property and equipment, net 10,578,722 107,331,206 14,713,787
Intangible assets, net 2,740,165 1,723,048 236,209
Prepaid expenses 344,955 1,590,002 217,970
Deferred tax assets -- 730,180 100,099
Total assets 127,529,861 1,665,741,347 228,352,663
Liabilities and Shareholders’
Equity
Current liabilities
Accounts payable 6,746,791 23,464,378 3,216,678
Advance from customers 20,449,444 49,672,384 6,809,473
Salary and welfare payable 10,175,358 30,901,115 4,236,163
Taxes payable 5,330,698 13,374,892 1,833,533
Accrued expenses and other
liabilities 7,224,240 14,175,638 1,943,306
Due to related parties 126,900 -- --
Deferred revenue 32,976,470 134,729,776 18,469,796
Deferred government grants 1,000,000 1,100,000 150,796
Total current liabilities 84,029,901 267,418,183 36,659,745
Deferred revenue -- 7,946,946 1,089,429
Total liabilities 84,029,901 275,365,129 37,749,174
Commitments
Shareholders’ Equity
Series A convertible preferred
shares (US$0.0001 par value,
80,000,000 shares authorized,
issued and outstanding as of
December 31, 2006; none
authorized, issued and
outstanding as of December 31,
2007) 61,796,533 -- --
Ordinary shares (US$0.0001 par
value, 9,920,000,000 shares
authorized, 154,285,720 Class A
ordinary shares issued and
outstanding as of December 31,
2006; 10,000,000,000 shares
authorized, 91,309,730 Class A
ordinary shares and 187,975,990
Class B ordinary shares issued
and outstanding as of December
31, 2007) 123,400 221,081 30,307
Additional paid-in capital 45,898,257 1,124,169,036 154,109,757
Receivables from shareholders (126,808) -- --
Statutory reserves 160,698 29,919,175 4,101,551
(Accumulated deficit)/retained
earnings (64,352,120) 267,837,988 36,717,296
Accumulated other comprehensive
loss -- (31,771,062) (4,355,422)
Total Shareholders’ Equity 43,499,960 1,390,376,218 190,603,489
Total Liabilities and
Shareholders’ Equity 127,529,861 1,665,741,347 228,352,663
Perfect World Co., Ltd.
Consolidated Statements of Operations
Three months ended
December 31, September 30, December 31, December 31,
2006 2007 2007 2007
RMB RMB RMB USD
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues
Online game
operation
revenues 59,754,962 197,444,414 230,194,222 31,556,798
Overseas licensing
revenues 1,013,592 16,422,947 28,200,883 3,865,994
Total Revenues 60,768,554 213,867,361 258,395,105 35,422,792
Cost of revenues (13,405,538) (35,405,618) (38,618,961) (5,294,185)
Gross profit 47,363,016 178,461,743 219,776,144 30,128,607
Operating expenses
Research and
development
expenses (5,824,205) (13,590,762) (22,725,718) (3,115,417)
Sales and
marketing
expenses (19,262,600) (37,904,624) (44,438,673) (6,091,996)
General and
administrative
expenses (32,732,708) (10,539,458) (15,215,509) (2,085,859)
Total operating
expenses (57,819,513) (62,034,844) (82,379,900) (11,293,272)
Operating(loss)/
profit (10,456,497) 116,426,899 137,396,244 18,835,335
Other
income/(expenses)
Interest income 122,015 9,594,555 14,156,626 1,940,699
Others, net (514,046) (298,604) (1,053,932) (144,481)
(Loss)/profit
before tax (10,848,528) 125,722,850 150,498,938 20,631,553
Income tax expense (202,718) (2,381,058) (4,265,466) (584,741)
Net(loss)/profit (11,051,246) 123,341,792 146,233,472 20,046,812
Series A
convertible
preferred shares
accretion (1,324,828) -- -- --
Cumulative
unearned
dividends of
Series A
Preferred Shares (792,330) (207,878) -- --
Net (loss)/profit
attributable to
ordinary
shareholders (13,168,404) 123,133,914 146,233,472 20,046,812
Net(loss)/
earnings per
share, basic (0.09) 0.50 0.52 0.07
Net(loss)/
earnings per
share, diluted (0.09) 0.44 0.50 0.07
Net(loss)/
earnings per ADS,
basic (0.43) 2.51 2.62 0.36
Net(loss)/
earnings per ADS,
diluted (0.43) 2.18 2.48 0.34
Shares used in
calculating basic
net earnings per
share 154,285,720 245,318,329 279,285,720 279,285,720
Shares used in
calculating
diluted net
earnings per
share 154,285,720 282,331,579 294,945,237 294,945,237
Total share-based
compensation cost
included in:
Cost of revenues (8,706) (31,815) (38,209) (5,238)
Research and
development
expenses (267,657) (377,776) (679,745) (93,185)
Sales and
marketing
expenses (26,106) (282,867) (324,124) (44,433)
General and
administrative
expenses (29,623,620) (1,920,586) (2,995,652) (410,667)
(cont.)
Year ended
December 31, December 31, December 31,
2006 2007 2007
RMB RMB USD
(Audited) (Unaudited) (Unaudited)
Revenues
Online game operation revenues 98,391,877 615,740,988 84,410,521
Overseas licensing revenues 1,013,592 73,382,626 10,059,856
Total Revenues 99,405,469 689,123,614 94,470,377
Cost of revenues (24,603,593) (118,982,981) (16,311,104)
Gross profit 74,801,876 570,140,633 78,159,273
Operating expenses
Research and development
expenses (18,889,338) (54,167,063) (7,425,639)
Sales and marketing expenses (37,496,069) (129,940,811) (17,813,288)
General and administrative
expenses (45,867,344) (35,783,802) (4,905,519)
Total operating expenses (102,252,751) (219,891,676) (30,144,446)
Operating (loss)/profit (27,450,875) 350,248,957 48,014,827
Other income/(expenses)
Interest income 320,525 24,968,787 3,422,914
Others, net (611,945) (1,681,718) (230,543)
(Loss)/profit before tax (27,742,295) 373,536,026 51,207,198
Income tax expense (202,718) (11,587,441) (1,588,496)
Net(loss)/profit (27,945,013) 361,948,585 49,618,702
Series A convertible preferred
shares accretion (1,834,377) -- --
Cumulative unearned dividends of
Series A Preferred Shares (1,019,049) (1,739,759) (238,500)
Net(loss)/profit attributable
to ordinary shareholders (30,798,439) 360,208,826 49,380,202
Net(loss)/earnings per share,
basic (0.21) 1.73 0.24
Net(loss)/earnings per share,
diluted (0.21) 1.35 0.19
Net(loss)/earnings per ADS, basic (1.02) 8.63 1.18
Net (loss) / earnings per ADS,
diluted (1.02) 6.77 0.93
Shares used in calculating basic
net earnings per share 150,403,134 208,737,775 208,737,775
Shares used in calculating
diluted net earnings per share 150,403,134 267,224,171 267,224,171
Total share-based compensation
cost included in:
Cost of revenues (9,080) (127,929) (17,537)
Research and development
expenses (312,370) (1,702,600) (233,406)
Sales and marketing expenses (31,217) (875,711) (120,049)
General and administrative
expenses (37,827,986) (5,637,887) (772,885)
Perfect World Co., Ltd.
Consolidated Statements of Cash Flows
Three months ended
December 31, September 30, December 31, December 31,
2006 2007 2007 2007
RMB RMB RMB USD
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flows from
operating
activities:
Net (loss)/profit (11,051,246) 123,341,792 146,233,472 20,046,812
Adjustments for:
Share-based
compensation cost 29,926,089 2,613,044 4,037,730 553,523
Depreciation and
amortization
expense 628,125 2,015,326 2,875,270 394,164
Exchange loss 513,101 302,708 5,812,374 796,805
Changes in assets
and liabilities:
Accounts
receivable (4,548,014) (9,076,518) 2,036,676 279,203
Prepayments and
other assets (3,874,488) (8,160,418) (2,592,287) (355,371)
Deferred tax
assets 1,050 (312,045) (11,235) (1,540)
Due from/to
related parties (1,417,375) -- -- --
Prepaid expenses (344,955) (1,273,788) 11,439 1,568
Accounts payable 4,458,559 (1,438,383) 3,936,603 539,660
Advance from
customers 14,442,420 26,499,279 (10,869,452) (1,490,068)
Salary and welfare
payable 2,079,812 3,414,273 15,480,337 2,122,164
Taxes payable 4,657,190 3,011,637 (688,092) (94,329)
Accrued
liabilities (998,825) 4,194,478 4,231,479 580,084
Deferred revenue 22,605,866 28,155,289 34,112,590 4,676,417
Deferred
government grants 1,000,000 -- (1,400,000) (191,923)
Net cash provided
by operating
activities 58,077,309 173,286,674 203,206,904 27,857,169
Cash flows from
investing
activities:
Purchase of
property,
equipment, and
software (7,151,818) (5,428,898) (83,979,972) (11,512,622)
Purchase of
copyrights (1,831,351) -- -- --
Net cash used in
investing
activities (8,983,169) (5,428,898) (83,979,972) (11,512,622)
Cash flows from
financing
activities:
Proceeds from
issuance of
Series A
convertible
preferred shares,
net of issuance
costs -- -- -- --
Receipt of
shareholder loan -- -- -- --
Repayment of
shareholder loan (8,000,000) -- -- --
Payment of
Receivable from
shareholders -- -- -- --
Proceeds from IPO,
net of issuance
costs -- 1,018,570,591 (8,105,195) (1,111,123)
Net cash (used
in)/provided by
financing
activities (8,000,000) 1,018,570,591 (8,105,195) (1,111,123)
Net increase in
cash 41,094,140 1,186,428,367 111,121,737 15,233,424
Foreign exchange
translation -- (8,723,559) (22,845,297) (3,131,809)
Effect of exchange
rate changes (513,101) (302,708) (5,812,374) (796,805)
Cash and cash
equivalents,
beginning of the
period 60,775,853 236,166,827 1,413,568,927 193,782,925
Cash and cash
equivalents, end
of the period 101,356,892 1,413,568,927 1,496,032,993 205,087,735
Supplemental
schedule of non-
cash financing
activities:
Issuance of
5,714,290
ordinary shares
to SAIF -- -- -- --
Issuance of
5,000,000 Series
A convertible
preferred shares
to existing
shareholders -- -- -- --
Conversion of
Series A
convertible
preferred shares
into common
shares -- 61,796,533 -- --
Supplemental
disclosures of
cash flow
information:
Cash paid during
the period for
income taxes (201,669) (2,005,418) (4,290,112) (588,122)
(cont.)
Year ended
December 31, December 31, December 31,
2006 2007 2007
RMB RMB USD
(Audited) (Unaudited) (Unaudited)
Cash flows from operating
activities:
Net (loss)/profit (27,945,013) 361,948,585 49,618,702
Adjustments for:
Share(based compensation cost 38,180,653 8,344,127 1,143,877
Depreciation and amortization
expense 1,300,144 7,162,045 981,828
Exchange loss 798,611 6,834,819 936,970
Changes in assets and
liabilities:
Accounts receivable (5,570,756) (11,225,771) (1,538,915)
Prepayments and other assets (5,327,230) (15,412,217) (2,112,826)
Deferred tax assets (237,639) (1,223,683) (167,752)
Due from/to related parties (2,215,700) (126,900) (17,396)
Prepaid expenses (344,955) (1,245,047) (170,681)
Accounts payable 4,992,695 7,133,260 977,882
Advance from customers 14,745,455 29,222,940 4,006,106
Salary and welfare payable 6,031,165 20,725,757 2,841,247
Taxes payable 5,320,037 8,044,194 1,102,760
Accrued liabilities 3,245,583 6,951,398 952,951
Deferred revenue 32,976,470 109,700,252 15,038,556
Deferred government grants 1,000,000 100,000 13,709
Net cash provided by operating
activities 66,949,520 536,933,759 73,607,018
Cash flows from investing
activities:
Purchase of property, equipment,
and software (8,525,422) (112,006,385) (15,354,699)
Purchase of copyrights (3,051,351) -- --
Net cash used in investing
activities (11,576,773) (112,006,385) (15,354,699)
Cash flows from financing
activities:
Proceeds from issuance of Series
A convertible preferred shares,
net of issuance costs 54,510,729 -- --
Receipt of shareholder loan 1,000,000 -- --
Repayment of shareholder loan (13,000,000) -- --
Payment of Receivable from
shareholders -- 126,808 17,384
Proceeds from IPO, net of
issuance costs -- 1,008,227,800 138,215,640
Net cash (used in)/provided by
financing activities 42,510,729 1,008,354,608 138,233,024
Net increase in cash 97,883,476 1,433,281,982 196,485,343
Foreign exchange translation -- (31,771,062) (4,355,422)
Effect of exchange rate changes (798,611) (6,834,819) (936,970)
Cash and cash equivalents,
beginning of the period 4,272,027 101,356,892 13,894,784
Cash and cash equivalents, end
of the period 101,356,892 1,496,032,993 205,087,735
Supplemental schedule of non-
cash financing activities:
Issuance of 5,714,290 ordinary
shares to SAIF 2,498,573 -- --
Issuance of 5,000,000 Series A
convertible preferred shares to
existing shareholders 3,971,025 -- --
Conversion of Series A
convertible preferred shares
into common shares -- 61,796,533 8,471,545
Supplemental disclosures of cash
flow information:
Cash paid during the period for
income taxes (440,358) (10,439,931) (1,431,186)
For further information, please contact:
Perfect World Co., Ltd.
Vivien Wang
Investor Relations Officer
Tel: +86-10-5885-1813
Fax: +86-10-5885-6899
Email: ir@pwrd.com
http://www.pwrd.com
Christensen Investor Relations
Peter Homstad
Tel: +1-480-614-3026
Fax: +1-480-614-3033
Email: phomstad@christensenir.com
Jung Chang
Tel: +852-2117-0861
Fax: +852-2117-0869
Email: jchang@christensenir.com
