3Q Revenue up 65.7 % YoY; Net Profit up 49.6 % YoY
HONG KONG, Nov. 28, 2013 /PRNewswire/ -- NetDragon Websoft Inc.("NetDragon", Stock code:777.HK), a leading developer and operator of online games and mobile Internet platforms in China, today announced its unaudited financial results for the third quarter ended 30 September, 2013 and is scheduled to hold a conference call and live webcast on 28 November, 2013 at 7:00pm Hong Kong Time (6:00am Eastern Daylight Time) to review the Company's performance and recent business developments.
Third Quarter 2013 Financial and Operational Highlights
1. During the period, the mobile Internet segment has been classified as discontinued operations as a result of the disposal of the entire equity interest of 91 Wireless Websoft Limited and its subsidiaries. |
2. See "Non-GAAP Financial Measures" section for more details on the reasons for presenting these measures |
Mr. Liu Dejian, Chairman and Executive Director of NetDragon, commented, "In the third quarter of 2013, NetDragon maintained growth momentum in total revenues, which increased to RMB 480.9 million, representing 12.8% quarter-over-quarter and 65.7% year on year. The management is confident in the growth prospect of the Company as we enter our next stage of development following the sale of 91 Wireless.
"During the quarter, our core online game business continued to generate stable revenue and strong profitability for the Company. Several of our games including "Conquer Online" and "Way of Five" launched new expansion packs during the quarter. In respect of Web Game, "Caliber of Spirit", a 3D MOBA webgame based on NetDragon's in-house developed S3 game engine, conducted the official open beta testing in July. The latest expansion pack "Gods Recovery[3]'' of "Eudemons Online" is currently in official open beta testing. The timely development and release of expansion packs of our core games continues to represent our efforts to increase the interest of our existing players and stimulate new players to play our games.
"As for the mobile Internet business, we will shift our strategic focus to research & development and operation of original mobile games, a field where we have gained core competitiveness from our long history of game development expertise. In addition to the mobile games that were previously launched, we have successively launched a series of high quality mobile games, including "Age of Egmont", "War of Gods", "Crazy Horde" and "The Celestial Saga", further enriching our mobile game portfolio. We believe that, by leveraging our experiences accumulated in research & development and operation of games, as well as our open minding seeking win-win cooperation with operators, our mobile Internet business will move into a new stage of growth and become an increasing revenue contributor to NetDragon.
"During the period under review, the disposal of our subsidiary, 91 Wireless, to Baidu has become a major milestone in the history of the Internet and mobile industry and in the wake of completion of this disposal; we believe NetDragon will enter another exciting phase of development. After the payout of the special dividend of HK$7.77 per share to reward the shareholders for their long-term support, the remaining proceeds from disposal of 91 Wireless will provide strong financial support to NetDragon to continue to incubate our game business and new strategic emerging businesses, as well as lay solid foundation for us to develop new Blue Ocean projects. We have noted that, with the rapid social and economic development in China as well as the popularization of mobile Internet and other information technology, China' market for online education is expanding rapidly. After over two years of development, we have completed the initial stage of business model exploration and resources accumulation in online education and going forward, the Company will focus on ramping up our business volume in this space. Recently, we have announced the establishment of a joint venture company with Hon Hai and Vision Knight Capital to specialize in the research & development and promotion of related products."
Business Highlights for the Third Quarter of 2013
Game Business
- MMO Series
- Mobile Games
Others
3. Working title |
Recent Developments and Business Outlook
Game Business
- MMO Series
- Mobile Games
Others
Appointment of Chief Financial Officer
Since October, Mr. Ben Yam joined NetDragon as Chief Financial Officer to be responsible for financial management, corporate finance and investor relations. Mr. Yam has over 15 years of professional experience in financial services spanning private equity, corporate finance and auditing, and has served as an active board member of several venture-capital backed portfolio companies. He holds a Bachelor of Commerce Degree from the University of British Columbia with majoring in accounting. He is also a Chartered Accountant, a member of the Hong Kong Institute of Certified Public Accountants and CFA charter holder.
Financial Highlights:
RMB('000) |
3Q 2013 |
2Q 2013 |
3Q 2012 |
QoQ(%) |
YoY(%) |
Revenue |
480,864 |
426,116 |
290,144 |
12.8% |
65.7% |
- Continuing Operations |
219,364 |
224,159 |
204,067 |
-2.1% |
7.5% |
- Discontinued Operations* |
261,500 |
201,957 |
86,077 |
29.5% |
203.8% |
Gross Profit from continuing and |
431,588 |
385,483 |
252,786 |
12.0% |
70.7% |
GPM from continuing and discontinued |
89.8% |
90.5% |
87.1% |
-0.7% |
2.7% |
Operating Profit from continuing and |
199,299 |
204,293 |
126,958 |
-2.4% |
57.0% |
Non-GAAP Operating Profit from |
247,898 |
236,468 |
132,231 |
4.8% |
87.5% |
Profit attributable to the owners of the |
97,230 |
124,614 |
95,399 |
-22.0% |
1.9% |
Non-GAAP profit attributable to the |
147,702 |
156,732 |
114,133 |
-5.8% |
29.4% |
Profit for the period from continuing and |
142,547 |
154,288 |
95,285 |
-7.6% |
49.6% |
Non-GAAP Profit for the period from |
193,019 |
186,406 |
114,019 |
3.5% |
69.3% |
NPM from continuing and discontinued |
29.6% |
36.2% |
32.8% |
-6.6% |
-3.2% |
Basic EPS from continuing and (RMB cents) |
19.14 |
24.65 |
18.95 |
-22.4% |
1.0% |
Diluted EPS from continuing and (RMB cents) |
19.02 |
24.48 |
18.87 |
-22.3% |
0.8% |
Basic EPS from continuing operations (RMB cents) |
7.27 |
15.49 |
17.60 |
-53.1% |
-58.7% |
Diluted EPS from continuing operations (RMB cents) |
7.22 |
15.38 |
17.53 |
-53.1% |
-58.8% |
*Note: During the period, the mobile Internet segment has been classified as discontinued operations as a result of the disposal of the entire equity interest of 91 Wireless Websoft Limited and its subsidiaries. |
Metrics
Online Games
3Q 2013 |
2Q 2013 |
1Q 2013 |
4Q 2012 |
3Q 2012 |
2Q 2012 |
|
PCU |
510,000 |
468,000 |
445,000 |
521,000 |
525,000 |
582,000 |
ACU |
270,000 |
255,000 |
237,000 |
287,000 |
281,000 |
307,000 |
Non-GAAP Financial Measures
To supplement the consolidated results of the Group prepared in accordance with HKFRSs, the use of certain non-GAAP measures is provided solely to enhance the overall understanding of the Group's current financial performance. These non-GAAP measures are not expressly permitted measures under HKFRSs and may not be comparable to similarly titled measures for other companies. The non-GAAP financial measures of the Group exclude share-based payment expense, interest income on pledged bank deposit, exchange gain/loss on pledged bank deposit, secured bank borrowing and redeemable convertible preferred shares, net gain/loss on derivative financial instruments and finance costs.
Management Conference Call
NetDragon will host a management conference call and webcast to review its 2013 third quarter financial results for three months ended September 30, 2013 on Thursday, November 28, 2013 Hong Kong time.
Details of the live conference call are as follows:
Time: |
7:00 PM Beijing / Hong Kong Time / 6:00 AM Eastern Standard Time, November 28, 2013 |
International Toll |
65-6723-9381 |
US Toll Free |
1-866-519-4004 |
Hong Kong Toll Free |
800-930-346 |
China Toll Free (for fixed line users) |
800-8190-121 |
China Toll Free (for mobile users) |
400-6208-038 |
Passcode |
NetDragon |
A live and archived webcast of the conference call will be available on the Investor Relations section of NetDragon's website at http://ir.netdragon.com/investor/ir_events.shtml. Participants in the live webcast should visit the aforementioned website 10 minutes prior to the call, then click on the icon for "3Q 2013 Results Conference Call" and follow the registration instructions.
About NetDragon
NetDragon Websoft Inc. (777.HK) is a leading innovator and creative force in China's online gaming and mobile Internet industries. Established in 1999, we are a vertically integrated developer & operator of MMORPGs and a cutting-edge R&D powerhouse. Established in 1999, NetDragon has always been devoted to research and development and committed to promoting the development of online gaming industry. We launched our first self-developed online game Monster & Me in 2002, followed by multiple titles including Eudemons Online, Conquer Online and Zero Online. We are also China's pioneer in overseas expansion, directly operating titles in overseas markets since 2003 in English, Spanish, Arabic and other languages. NetDragon has a proven track record in incubating online gaming and mobile Internet projects over the years, including the No. 1 Chinese online game portal - 17173.com, and various well-known mobile Internet platforms, such as 91 Assistant and HiMarket, the largest third party application distribution platform.
For investor enquiries, please contact: |
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NetDragon Websoft Inc. |
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Ms. Maggie Zhou |
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Investor Relations Director |
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Tel.: |
+86 591 8754 3120 |
Email: |
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Website: |
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (FOR THE THREE MONTHS ENDED 30 SEPTEMBER 2013) |
|||||
Three Months Ended |
|||||
30/9/2013 |
30/6/2013 |
30/9/2012 |
|||
(Unaudited) |
(Unaudited and restated) |
(Unaudited and restated) |
|||
RMB '000 |
RMB '000 |
RMB '000 |
|||
Continuing operations |
|||||
Revenue |
219,364 |
224,159 |
204,067 |
||
Cost of revenue |
(19,837) |
(18,853) |
(12,505) |
||
Gross profit |
199,527 |
205,306 |
191,562 |
||
Other income and gains |
12,476 |
4,640 |
16,575 |
||
Selling and marketing expenses |
(27,935) |
(23,106) |
(29,199) |
||
Administrative expenses |
(87,611) |
(54,300) |
(45,157) |
||
Development costs |
(45,349) |
(37,550) |
(33,797) |
||
Other expenses |
(1,259) |
(1,577) |
(5,473) |
||
Share of profit of associates |
(41) |
20 |
(173) |
||
Operating Profit |
49,808 |
93,433 |
94,338 |
||
Interest income on pledged bank deposit |
222 |
1,896 |
2,600 |
||
Exchange (loss)gain on pledged bank deposit and secured bank loan |
(1,769) |
7,683 |
6,827 |
||
Net loss on derivative financial instrument |
- |
(8,015) |
(3,085) |
||
Finance costs |
(326) |
(1,507) |
(2,310) |
||
Profit before taxation |
47,935 |
93,490 |
98,370 |
||
Taxation |
(10,974) |
(15,168) |
(9,892) |
||
Profit for the period from continuing operations |
36,961 |
78,322 |
88,478 |
||
Discontinued operations |
|||||
Profit for the period from discontinued operations |
105,586 |
75,966 |
6,807 |
||
Profit for the period |
142,547 |
154,288 |
95,285 |
||
Other comprehensive (expense)income: |
|||||
Item that may be reclassified subsequently to profit or loss: |
|||||
Exchange differences arising on |
(167) |
(513) |
59 |
||
Total comprehensive income for the period |
142,380 |
153,775 |
95,344 |
||
Profit for the period attributable to: |
|||||
- Owners of the Company |
97,230 |
124,614 |
95,399 |
||
- Non-controlling interests |
45,317 |
29,674 |
(114) |
||
142,547 |
154,288 |
95,285 |
|||
Total comprehensive income attributable to: |
|||||
- Owners of the Company |
97,063 |
124,101 |
95,458 |
||
- Non-controlling interests |
45,317 |
29,674 |
(114) |
||
Other comprehensive (expense)income: |
142,380 |
153,775 |
95,344 |
||
RMB cents |
RMB cents |
RMB cents |
|||
Earnings per share |
|||||
From continuing and discontinued operations |
|||||
- Basic |
19.14 |
24.65 |
18.95 |
||
- Diluted |
19.02 |
24.48 |
18.87 |
||
From continuing operations |
|||||
- Basic |
7.27 |
15.49 |
17.60 |
||
- Diluted |
7.22 |
15.38 |
17.53 |
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (AS AT 30 SEPTEMBER 2013) |
|||
30 September 2013 (Unaudited) RMB '000 |
31 December 2012 (Audited) RMB '000 |
||
Non-current assets |
|||
Property, plant and equipment |
447,077 |
345,415 |
|
Prepaid lease payments |
187,311 |
139,678 |
|
Investment property |
15,857 |
16,217 |
|
Intangible assets |
1,311 |
2,626 |
|
Interests in associates |
1,366 |
11,793 |
|
Interest in a joint venture |
- |
18,015 |
|
Available-for-sale investments |
5,000 |
5,000 |
|
Loan receivables |
16,404 |
9,969 |
|
Deposits made for property, plant and equipment |
26,898 |
- |
|
Goodwill |
12,534 |
12,534 |
|
Deferred tax assets |
54 |
1,586 |
|
713,812 |
562,833 |
||
Current assets |
|||
Prepaid lease payments |
2,583 |
2,902 |
|
Loan receivables |
1,308 |
3,143 |
|
Trade receivables |
22,260 |
61,427 |
|
Other receivables, prepayments and deposits |
58,876 |
72,101 |
|
Held for trading investment |
- |
4,939 |
|
Amount due from related companies |
4,069 |
3,637 |
|
Amount due from a joint venture |
3 |
3,060 |
|
Pledged bank deposit |
108,268 |
194,405 |
|
Bank deposits |
415,000 |
394,081 |
|
Bank balances and cash |
800,739 |
1,142,825 |
|
1,413,106 |
1,882,520 |
||
Assets classified as held for sale |
1,186,586 |
- |
|
2,599,692 |
1,882,520 |
||
Current liabilities |
|||
Trade and other payables |
443,347 |
222,137 |
|
Deferred income |
25,740 |
24,778 |
|
Amount due to a related company |
- |
121 |
|
Amount due to an associate |
- |
5,600 |
|
Secured bank borrowing |
110,036 |
183,595 |
|
Other financial liability |
- |
10,679 |
|
Income tax payable |
25,422 |
66,355 |
|
604,545 |
513,265 |
||
Liabilities associated with assets classified as held for sale |
368,486 |
- |
|
973,031 |
513,265 |
||
Net current assets |
1,626,661 |
1,369,255 |
|
Total assets less current liabilities |
2,340,473 |
1,932,088 |
|
Non-current liabilities |
|||
Redeemable convertible preferred shares |
- |
195,115 |
|
Conversion option derivative liability |
- |
314,829 |
|
Deferred tax liabilities |
- |
6,141 |
|
- |
516,085 |
||
Net assets |
2,340,473 |
1,416,003 |
|
Capital and reserves |
|||
Share capital |
37,609 |
37,532 |
|
Share premium and reserves |
1,893,480 |
1,356,317 |
|
Equity attributable to owners of the Company |
1,931,089 |
1,393,849 |
|
Non-controlling interests |
409,384 |
22,154 |
|
Total equity |
2,340,473 |
1,416,003 |