HONG KONG, Nov. 12 /Xinhua-PRNewswire/ -- Tencent Holdings Limited ("Tencent" or the "Company", SEHK: 00700), a leading provider of Internet and mobile & telecommunications value-added services in China, today announced the unaudited consolidated results for the third quarter of 2008 ended September 30, 2008.
Highlights for the Third Quarter of 2008:
-- Total revenues were RMB2,024.5 million (USD296.9 million(1)), an
increase of 26.5% over the second quarter of 2008 ("QoQ") or an
increase of 91.4% over the third quarter of 2007 ("YoY")
-- Revenues from Internet value-added services (IVAS) were RMB1,400.6
million (USD205.4 million), an increase of 35.1% QoQ or an increase
of 95.1% YoY
-- Revenues from Mobile and telecommunications value-added services
(MVAS) were RMB372.5 million (USD54.6 million), an increase of 10.1%
QoQ or an increase of 92.5% YoY
-- Revenues from Online advertising were RMB249.1 million (USD36.5
million), an increase of 11.8% QoQ or an increase of 72.2% YoY
-- Gross profit was RMB1,378.7 million (USD202.2 million), an increase
of 20.2% QoQ or an increase of 80.8% YoY. Gross margin decreased to
68.1% from 71.7% last quarter
-- Operating profit was RMB810.5 million (USD118.9 million), an increase
of 5.9% QoQ or an increase of 72.3% YoY. Operating margin decreased
to 40.0% from 47.8% last quarter
-- Profit for the period was RMB745.3 million (USD109.3 million), an
increase of 14.3% QoQ or an increase of 74.8% YoY. Net margin
decreased to 36.8% from 40.8% last quarter
-- Profit attributable to equity holders of the Company for the period
was RMB737.1 million (USD108.1 million), an increase of 14.5% QoQ or
an increase of 72.9% YoY
-- Key platform statistics:
-- Total registered Instant Messaging ("IM") user accounts increased
to 856.2 million, representing a 4.1% growth QoQ
-- Active IM user accounts increased 3.9% QoQ to 355.1 million
-- Peak simultaneous online user accounts for IM services recorded
45.3 million, a growth of 7.9% QoQ
-- Peak simultaneous online user accounts of QQ Game portal (for mini
casual games only) was 4.4 million, representing a 11.2% growth
QoQ
-- IVAS paying subscriptions were 30.3 million, an increase of 16.1%
QoQ
-- MVAS paying subscriptions were 14.8 million, an increase of 10.4%
QoQ
(1) Figures stated in USD are based on USD1 to RMB6.8183
Mr. Ma Huateng, Chairman and CEO of Tencent, said, "We have achieved another quarter of record revenue and profit, thanks to favorable summer seasonality, successful operation of our newly launched games and growth of our Internet platforms. The global financial crisis and economic downturn in the U.S. are putting pressure on the Chinese economy. While we are concerned about uncertainties in the macro-economic environment, we believe the value of the Internet as an enabling technology that increased efficiency and saved costs for people and its long-term prospect would nevertheless remain intact.
"In case of an economic downturn, our online advertising business will inevitably be affected. On the other hand, our value-added services are relatively more resilient, as they comprise small ticket consumption items for the consumers. During this period of uncertainty, we would be monitoring expenses and managing risks rigorously. At the same time, we would still be making necessary investments in our businesses and take advantage of this opportunity to further enhance our market position." he added.
Business Highlights
IVAS revenues increased 35.1% QoQ to RMB1,400.6 million and represented 69.2% of the total revenues in the third quarter of 2008. The increase mainly reflected the seasonal effects of the summer school holidays, which had a positive impact on the demand for the Company's Internet value-added services. Besides a steady overall growth in revenues from online games, revenues from non-game Internet value-added services also increased. Specifically, revenues from QQ Membership and online identity and community business, including Qzone, QQ Pet and QQ Show, all increased during the quarter.
Game-related IVAS revenues increased 50.3% QoQ to RMB679.9 million in the third quarter of 2008. The full quarter effect of newly launched games, such as Dungeon and Fighter, QQ Dancer and Cross Fire, as well as organic growth in mini games contributed to the growth in revenues. The increase was partially offset by a decrease in revenues from more established games, such as QQ Fantasy.
MVAS revenues increased 10.1% QoQ to RMB372.5 million and represented 18.4% of the total revenues in the third quarter of 2008. This increase reflected higher revenues from bundled SMS subscriptions as well as growth in mobile gaming services. The increase was mainly attributable to enhancements to the user experience, increased promotional efforts and growing popularity of mobile gaming services.
Online Advertising revenues increased 11.8% QoQ to RMB249.1 million and represented 12.3% of total revenues in the third quarter of 2008. The increase mainly reflected positive seasonal effects.
Other Key Financial Information
Share-based compensation was RMB44.6 million for the third quarter of 2008 as compared with RMB32.1 million for the previous quarter. Foreign exchange loss, as a result of Renminbi appreciation, was RMB7.9 million as compared with RMB40.9 million for the previous quarter. Capital expenditure was RMB590.9 million for the third quarter of 2008 as compared with RMB255.5 million for the previous quarter.
Basic earnings per share for the quarter were RMB0.410, and diluted earnings per share were RMB0.400.
As at the end of September 2008, cash position stood at RMB4,263.5 million. The total number of shares in issue was 1.799 billion.
Outlook
Compared to the third quarter, the fourth quarter will generally present a weaker seasonality for Internet value-added services and online advertising business. Given the global financial crisis and worsening economic outlook in the U.S., the Company believes the macroeconomic environment in which it operates is facing increasing uncertainties and growing chances of downturn over the near term. While the Company believes the long-term secular growth trend of online advertising is still intact, the drag of the overall advertising market when advertisers spend less as a whole may negatively affect the Company's online advertising business. On the other hand, the Company believes its Internet and wireless value-added services, which are characterized by low average spending per user and per transaction, are relatively more resilient than online advertising during a downturn.
About Tencent
Tencent aims to enrich the interactive online experience of Internet users in China by providing a comprehensive range of Internet and wireless value-added services. Through its various online platforms, including Instant Messaging QQ, web portal QQ.com, QQ Game portal, multi-media blog service Qzone and wireless portal, Tencent services the largest online community in China and fulfills the user's needs for communication, information, entertainment and e-Commerce on the Internet.
Tencent has three main streams of revenues: Internet value-added services, mobile and telecommunications value-added services and online advertising.
Shares of Tencent Holdings Limited are traded on the Main Board of the Stock Exchange of Hong Kong Limited, under stock code 00700. The Company became one of the 43 constituents of the Hang Seng Index (HSI) on June 10, 2008. For more information, please visit http://www.tencent.com/ir .
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 Group and are stated herein on the basis of the outlook at the time of this announcement. 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.
CONDENSED CONSOLIDATED INCOME STATEMENT
In RMB '000 (unless otherwise stated)
Unaudited Unaudited
3Q2008 2Q2008 3Q2008 3Q2007
Revenues 2,024,474 1,599,778 2,024,474 1,057,626
Internet VAS 1,400,598 1,037,042 1,400,598 717,718
Mobile & Telecom
VAS 372,498 338,311 372,498 193,481
Online Advertising 249,068 222,790 249,068 144,643
Others 2,310 1,635 2,310 1,784
Cost of revenues (645,748) (453,069) (645,748) (295,112)
Gross profit 1,378,726 1,146,709 1,378,726 762,514
Gross margin 68.1% 71.7% 68.1% 72.1%
Other (losses)/gains,
net (6,902) 25,855 (6,902) 5,033
S&M expenses (184,730) (100,212) (184,730) (78,039)
G&A expenses (376,585) (307,059) (376,585) (219,235)
Operating profit 810,509 765,293 810,509 470,273
Operating margin 40.0% 47.8% 40.0% 44.5%
Finance costs (7,944) (40,918) (7,944) (12,137)
Share of loss of
associates/a
jointly controlled
entity (176) (1,558) (176) (14)
Profit before income
tax 802,389 722,817 802,389 458,122
Income tax expense (57,099) (70,618) (57,099) (31,813)
Profit for the period 745,290 652,199 745,290 426,309
Net margin 36.8% 40.8% 36.8% 40.3%
Attributable to:
Equity holders of the
Company 737,123 643,979 737,123 426,401
Minority interests 8,167 8,220 8,167 (92)
Earnings per share
- basic (RMB) 0.410 0.359 0.410 0.239
- diluted (RMB) 0.400 0.349 0.400 0.232
CONDENSED CONSOLIDATED BALANCE SHEETS
In RMB '000 (unless otherwise stated) Unaudited Unaudited
30 September 30 June
2008 2008
ASSETS
Non-current assets
Fixed assets 1,100,564 1,010,180
Construction in progress 605,548 200,452
Investment property 65,339 65,698
Leasehold land and land use rights 36,234 36,421
Intangible assets 439,785 452,008
Investment in a jointly controlled entity -- 2,500
Investment in associates 332,240 332,416
Deferred income tax assets 351,408 352,133
Available-for-sale financial assets 47,782 66,455
Other long-term assets 115,135 92,648
Prepayments, deposits and other
receivables 73,094 201,167
3,167,129 2,812,078
Current assets
Inventories 585 1,261
Accounts receivable 1,052,022 899,007
Prepayments, deposits and other
receivables 523,720 279,366
Financial assets held for trading 326,187 409,443
Held-to-maturity investments 68,183 68,591
Derivative financial instruments 29,640 44,133
Term deposits with initial term of over
three months 1,567,359 1,127,551
Restricted cash 300,000 300,000
Cash and cash equivalents 2,301,727 2,263,418
6,169,423 5,392,770
Total Assets 9,336,552 8,204,848
EQUITY
Equity attributable to the Company's
equity holders
Share capital 195 195
Share premium 1,305,417 1,402,286
Shares held for share award scheme (10,218) (10,218)
Share-based compensation reserve 332,786 287,971
Other reserves (281,288) 93,712
Retained earnings 5,071,500 4,334,377
6,418,392 6,108,323
Minority interests in equity 118,323 107,656
Total Equity 6,536,715 6,215,979
LIABILITIES
Non-current liabilities
Deferred income tax liabilities 49,131 50,864
Long term payables 416,524 --
465,655 50,864
Current liabilities
Accounts payable 252,956 255,446
Other payables and accruals 870,260 603,737
Short-term bank borrowing 292,184 292,184
Derivative financial instruments 11,941 26,434
Current income tax liabilities 122,961 170,833
Other tax liabilities 232,955 179,924
Deferred revenue 550,925 409,447
2,334,182 1,938,005
Total Liabilities 2,799,837 1,988,869
Total Equity and Liabilities 9,336,552 8,204,848
For enquiries, please contact:
Catherine Chan
Tel: +86-755-8601-3388 x8369 or +852-2179-5122
Email: cchan@tencent.com
