BEIJING, May 17 /PRNewswire-Asia/ -- Perfect World Co., Ltd. (Nasdaq: PWRD) ("Perfect World" or the "Company"), a leading online game developer and operator based in China, today announced its unaudited financial results for the first quarter ended March 31, 2010.
(Logo: http://www.prnasia.com/sa/2009/04/16/200904161852.jpg )
First Quarter 2010 Highlights(1)
-- Total revenues were RMB625.0 million (USD91.6 million), an increase of
2.8% from 4Q09 and 47.0% from 1Q09
-- Gross profit was RMB537.9 million (USD78.8 million), an increase of
2.2% from 4Q09 and 45.9% from 1Q09
-- Operating profit was RMB323.2 million (USD47.3 million), an increase of
16.9% from 4Q09 and 40.3% from 1Q09. Non-GAAP operating profit(2) was
RMB344.9 million (USD50.5 million), an increase of 15.6% from 4Q09 and
40.3% from 1Q09
-- Net income attributable to the Company's shareholders was RMB305.2
million (USD44.7 million), an increase of 12.7% from 4Q09 and 41.6%
from 1Q09. Non-GAAP net income attributable to the Company's
shareholders(2) was RMB327.0 million (USD47.9 million), an increase of
11.7% from 4Q09 and 41.6% from 1Q09
-- Basic and diluted earnings per ADS(3) were RMB6.12 (USD0.90) and
RMB5.75 (USD0.84), respectively, as compared to RMB5.44 and RMB5.09,
respectively, in 4Q09, and RMB4.14 and RMB3.96, respectively, in 1Q09.
Non-GAAP basic and diluted earnings per ADS(2) were RMB6.56 (USD0.96)
and RMB6.16 (USD0.90), respectively, as compared to RMB5.88 and RMB5.50,
respectively, in 4Q09, and RMB4.43 and RMB4.25, respectively, in 1Q09
-- Established a wholly-owned subsidiary in Europe to expand the Company's
overseas operating capabilities
(1) The U.S. dollar (USD) amounts disclosed in this press release,
except for those transaction amounts that were actually settled in
U.S. dollars, 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 March 31, 2010, which was
RMB6.8258 to USD1.00. The percentages stated in this press release
are calculated based on the RMB amounts.
(2) As used in this press release, non-GAAP operating profit, non-GAAP
net income attributable to the Company's shareholders and non-GAAP
earnings per ADS are defined to exclude share-based compensation
charge from operating profit, net income attributable to the
Company's shareholders and earnings per ADS, respectively. See
"Non-GAAP Financial Measures" and "Reconciliation of GAAP and Non-
GAAP Results" at the end of this press release.
(3) Each ADS represents five ordinary shares.
"We are pleased to announce our first quarter 2010 results," commented Mr. Michael Chi, Chairman and Chief Executive Officer of Perfect World. "Our first quarter results came in line with our previous expectations as our games continued to perform well. Although we experienced some technical complications during some major updates on a recently launched new game, we have solved the problems and are working on a soon-to-be launched major expansion pack with a lot of enhanced content to further drive the user base. This was a valuable experience for us, and we will try our best to avoid similar issues in future developments for both new and existing games. Despite this occurrence and the adverse seasonality factors, we continued to grow the popularity of some of our existing games to deliver sequential growth."
"We continue to focus on investing in our R&D team to further strengthen our game development capabilities. By doing so, we are able to deliver a strong and sustainable pipeline of notably differentiated games that span the 3D, 2.5D and 2D market segments. Our specialized game engines and production studios allow us to remain highly competitive in the industry as we build franchises that include flagship titles in each of these market segments."
"Our overseas expansion continues to progress and we are quite satisfied with the development so far. We continued to sign new licensing agreements with various overseas game operators and are strengthening our penetration worldwide. Our U.S. operations are also progressing well. We recently launched 'Battle of the Immortals' in North America through our wholly-owned subsidiary in the U.S. The initial feedback has been very positive. Furthermore, in April, we acquired C&C Media Co., Ltd. ("C&C Media"), our long-term Japanese operation partner, to capture the growth opportunities in Japan and further expand our overseas operating capabilities."
"As a part of our growth strategy, we continuously monitor the market for acquisition opportunities that will generate synergies with our core business. I am excited to announce some recent developments on this front. We recently made a strategic investment to acquire a majority stake in Runic Games, Inc. ("Runic Games"), a top-tier game development studio based in the U.S., to further strengthen our R&D capabilities. By collaborating more closely with Runic's professional team, we seek to combine their creativity and expertise in game development with our deep understanding of the online game market to create global titles. We also exercised an option to increase our stake in Chengdu Ye Net Science and Technology Development Co., Ltd. ("Ye Net"), a web game developer and operator. Through enhanced control, we believe we will have greater flexibility to generate valuable synergies between the web game business and our core business."
"We are excited about the prospects that our industry presents and believe we are well-positioned to capture future opportunities. We will continue to dedicate our strong resources to longer-term projects to effectively lengthen the life cycle of both new and existing games that meet the expectations from game players around the world. Our long-term oriented management team is committed to driving the sustainable growth of our Company while increasing value for our shareholders."
First Quarter 2010 Financial Results
Total Revenues
Total revenues were RMB625.0 million (USD91.6 million) in 1Q10, an increase of 2.8%, or RMB17.1 million, from RMB607.9 million in 4Q09, and an increase of 47.0%, or RMB199.9 million, from RMB425.1 million in 1Q09.
Online game operation revenues were RMB569.7 million (USD83.5 million) in 1Q10, an increase of 5.2%, or RMB27.9 million, from RMB541.8 million in 4Q09, and an increase of 51.0%, or RMB192.5 million, from RMB377.2 million in 1Q09. The sequential growth in online game operation revenues was primarily attributable to the continued popularity of some of the Company's existing games and a series of successful in-game promotions and marketing activities.
The aggregate average concurrent users (ACU) for games under operation in mainland China was approximately 993,000 in 1Q10, as compared to 1,157,000 in 4Q09 and 615,000 in 1Q09. The active paying customers (APC) for games operated in mainland China under the item-based revenue model was approximately 1,670,000 in 1Q10, as compared to 2,188,000 in 4Q09 and 1,464,000 in 1Q09. The average revenue per active paying customer (ARPU) for games operated in mainland China under the item-based revenue model was RMB306 in 1Q10, as compared to RMB223 in 4Q09 and RMB244 in 1Q09. ACU and APC decreased by 14.2% and 23.7%, respectively, from 4Q09. This was mainly due to some technical complications that occurred during some major updates on a recently launched new game, as well as the adverse seasonality factors and more aggressive anti-cheating efforts adopted by the Company. However, the Company still managed to increase ARPU by 37.2% from 4Q09 through a series of successful promotions.
Overseas licensing revenues were RMB53.4 million (USD7.8 million) in 1Q10, as compared to RMB61.7 million in 4Q09 and RMB48.0 million in 1Q09. The decrease from 4Q09 was mainly attributed to a decline in usage-based royalty fees due to adverse seasonality in certain overseas markets, and a decrease in initial license fees as the Company did not commercially launch any game in overseas market in 1Q10.
Film, television and other revenues were RMB2.0 million (USD0.3 million) in 1Q10, as compared to RMB4.5 million in 4Q09 and Nil in 1Q09.
Cost of Revenues
The cost of revenues was RMB87.1 million (USD12.8 million) in 1Q10, as compared to RMB81.5 million in 4Q09 and RMB56.4 million in 1Q09.
The online game related cost was RMB87.1 million (USD12.8 million) in 1Q10, as compared to RMB79.8 million in 4Q09 and RMB56.4 million in 1Q09. The increase from 4Q09 was mainly due to an increase in staff related cost and depreciation expense.
The film, television and other cost was RMB24.9 thousand (USD3.6 thousand) in 1Q10, as compared to RMB1.7 million in 4Q09 and Nil in 1Q09.
Gross Profit and Gross Margin
Gross profit was RMB537.9 million (USD78.8 million) in 1Q10, an increase of 2.2%, or RMB11.5 million, from RMB526.4 million in 4Q09, and an increase of 45.9%, or RMB169.2 million, from RMB368.7 million in 1Q09. Gross margin was 86.1% in 1Q10, as compared to 86.6% in 4Q09 and 86.7% in 1Q09.
Operating Expenses
Operating expenses were RMB214.8 million (USD31.5 million) in 1Q10, as compared to RMB249.8 million in 4Q09 and RMB138.3 million in 1Q09. The decrease in operating expenses from 4Q09 was mainly attributed to lower sales and marketing expenses, and was partially offset by higher general and administrative expenses and R&D expenses.
Sales and marketing expenses decreased by 34.1%, or RMB42.5 million, from RMB124.7 million in 4Q09 to RMB82.2 million (USD12.0 million) in 1Q10. This was largely due to lower advertising and promotional expenses as the Company did not launch new game in 1Q10. In addition, the decrease from 4Q09 was also attributable to the special charge of approximately RMB17.5 million in 4Q09 associated with a change in the estimated useful lives of certain intangible assets acquired from InterServ which are related to outsourcing services.
R&D expenses increased by 1.2%, or RMB0.9 million, from RMB76.9 million in 4Q09 to RMB77.8 million (USD11.4 million) in 1Q10. The increase from 4Q09 was primarily due to an increase in staff cost as the Company continued to expand its R&D talent pool.
General and administrative expenses increased by 13.5%, or RMB6.5 million, from RMB48.3 million in 4Q09 to RMB54.8 million (USD8.0 million) in 1Q10. The increase from 4Q09 was mainly due to an increase in professional service expenses.
Operating Profit
Operating profit was RMB323.2 million (USD47.3 million) in 1Q10, an increase of 16.9%, or RMB46.6 million, from RMB276.5 million in 4Q09, and an increase of 40.3%, or RMB92.8 million, from RMB230.4 million in 1Q09. Non-GAAP operating profit was RMB344.9 million (USD50.5 million) in 1Q10, an increase of 15.6%, or RMB46.5 million, from RMB298.5 million in 4Q09, and an increase of 40.3%, or RMB99.1 million, from RMB245.8 million in 1Q09.
Total Other Income
Total other income was RMB10.5 million (USD1.5 million) in 1Q10, as compared to RMB11.8 million in 4Q09 and RMB5.0 million in 1Q09.
Income Tax Expense
Income tax expense was RMB28.7 million (USD4.2 million) in 1Q10, as compared to RMB17.5 million in 4Q09 and RMB19.9 million in 1Q09. Beijing Perfect World Software Co., Ltd. ("PW Software"), the Company's wholly-owned subsidiary, is qualified as a high and new technology enterprise and was entitled to a tax exemption in 2007, 2008 and 2009 and enjoys a 50% reduction of its applicable corporate income tax rate in 2010. The corporate income tax applied to PW Software in 1Q10 caused the increase in income tax expense from 4Q09. If PW Software will continue to be qualified as high and new technology enterprise from 2011 to 2012, it will continue to be entitled to a 50% reduction of its applicable corporate income tax rate from 2011 to 2012.
Net Income Attributable to the Company's Shareholders
Net income attributable to the Company's shareholders was RMB305.2 million (USD44.7 million) in 1Q10, an increase of 12.7%, or RMB34.3 million, from RMB270.8 million in 4Q09, and an increase of 41.6%, or RMB89.7 million, from RMB215.4 million in 1Q09. Non-GAAP net income attributable to the Company's shareholders was RMB327.0 million (USD47.9 million) in 1Q10, an increase of 11.7%, or RMB34.2 million, from RMB292.8 million in 4Q09, and an increase of 41.6%, or RMB96.1 million, from RMB230.9 million in 1Q09.
Basic and diluted earnings per ADS were RMB6.12 (USD0.90) and RMB5.75 (USD0.84), respectively, in 1Q10, as compared to RMB5.44 and RMB5.09, respectively, in 4Q09, and RMB4.14 and RMB3.96, respectively, in 1Q09. Non-GAAP basic and diluted earnings per ADS were RMB6.56 (USD0.96) and RMB6.16 (USD0.90), respectively, in 1Q10, as compared to RMB5.88 and RMB5.50, respectively, in 4Q09, and RMB4.43 and RMB4.25, respectively, in 1Q09.
Cash and Cash Equivalents
As of March 31, 2010, the Company had RMB1,876.9 million (USD275.0 million) of cash and cash equivalents, as compared to RMB1,567.2 million as of December 31, 2009. The increase was mainly due to net cash inflow generated from the Company's online game operations.
Recent Developments
Acquisition of C&C Media Co., Ltd.
In April 2010, the Company acquired C&C Media, a Japanese online game operator, to capture the growth opportunities in Japan and expand the Company's overseas operating capabilities. C&C Media is currently operating six games in Japan, including four games developed by Perfect World.
Investment in Runic Games, Inc.
In May 2010, the Company acquired a majority stake in Runic Games, a specialized developer of PC-based entertainment software in the U.S., at the consideration of approximately US$8.4 million. Runic Games has a team of experienced developers, including leads on "Diablo," "Diablo II," "Diablo II: Lord of Destruction," "Fate," "Hellgate: London" and "Mythos." Runic Games has developed and released a single-player action-RPG "Torchlight," and is currently developing the MMORPG version of "Torchlight." This strategic investment will allow the Company to further enhance its strong R&D capabilities, and leverage Runic Games' creative and professional development team to create global titles through enhanced control and a closer collaboration.
Investment in Chengdu Ye Net Science and Technology Development Co., Ltd.
In April 2010, Chengdu Perfect World Network Technology Co., Ltd. ("Chengdu PW Network"), an entity controlled by the Company, exercised an option to acquire an additional stake in Ye Net, a web game developer and operator. Following the completion of the transaction, the Company's effective equity stake in Ye Net will be increased to 80%. This investment provides the Company with enhanced control and greater flexibility in generating synergies between the web game business and the Company's core business.
Business Outlook
Based on the Company's current operations, total revenues for the second quarter of 2010 are expected to be between RMB594 million and RMB625 million, representing an increase of 14% to 20% on a year-over-year basis, and a flat to mild decline on a sequential basis. In order to lengthen the life cycle of the Company's existing games to maintain sustainable growth, the Company decided to decelerate some of the in-game promotions and monetization activities in the second quarter to further nurture the games and grow user base. In addition, this also reflects the impact of suspending game services in response to the one-day national mourning on April 21, 2010 for earthquake victims in Yushu, Qinghai Province.
Non-GAAP Financial Measures
To supplement the financial measures prepared in accordance with generally accepted accounting principals in the United States, or GAAP, this press release presents non-GAAP operating profit, non-GAAP net income attributable to the Company's shareholders and non-GAAP earnings per ADS by excluding share-based compensation charge from operating profit, net income attributable to the Company's shareholders and earnings per ADS, respectively. The Company believes these non-GAAP financial measures are important to help investors understand the Company's operating and financial performance, compare business trends among different reporting periods on a consistent basis and assess the Company's core operating results, as they exclude certain expenses that are not expected to result in cash payments. The use of the above non-GAAP financial measures has certain limitations. Share-based compensation charge has been and will continue to be incurred and is not reflected in the presentation of the non-GAAP financial measures. It should be considered in the overall evaluation of our results. None of the non-GAAP measures is a measure of net income attributable to the Company's shareholders, operating profit, operating performance or liquidity presented in accordance with GAAP. We compensate for these limitations by providing the relevant disclosure of our share-based compensation charge in our reconciliations to the most directly comparable GAAP financial measures, which should be considered when evaluating our performance. These non-GAAP financial measures should be considered in addition to financial measures prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, financial measures prepared in accordance with GAAP. Reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measure are set forth at the end of this release.
Conference Call
Perfect World will host a conference call and live webcast at 8:00 am Eastern Daylight Time (8:00 pm, Beijing time) on Monday, May 17, 2010.
The dial-in details for the live conference call are as follows:
-- U.S. Toll Free Number: 1-866-519-4004
-- International Dial-in Number: +65-6723-9381
-- Mainland China Toll Free Number: 10-800-819-0121
-- Hong Kong Toll Free Number: 80-093-0346
-- U.K. Toll Free Number: 080-8234-6646
Conference ID: 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 10:00 am Eastern Daylight Time, May 24, 2010.
The dial-in details for the replay are as follows:
-- U.S. Toll Free Number: 1-866-214-5335
-- International Dial-in Number: +61-2-8235-5000
Conference ID: 7973 (PWRD)
About Perfect World Co., Ltd. ( http://www.pwrd.com )
Perfect World Co., Ltd. (NASDAQ: PWRD) is a leading online game developer and operator based in China. Perfect World primarily develops online games based on proprietary game engines and game development platforms. The Company's strong technology and creative game design capabilities, combined with extensive knowledge and experiences in the online game market, enable it to frequently introduce popular games that are designed to cater to changing customer preferences and market trends promptly. The Company's current portfolio of self-developed online games includes massively multiplayer online role playing games ("MMORPGs"): "Perfect World," "Legend of Martial Arts," "Perfect World II," "Zhu Xian," "Chi Bi," "Pocketpet Journey West," "Battle of the Immortals" and "Fantasy Zhu Xian;" and an online casual game: "Hot Dance Party." While a substantial portion of the revenues are generated in China, the Company's games have been licensed to leading game operators in a number of countries and regions in Asia, Europe and South America. The Company also generates revenues from game operations in North America and Japan. 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 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, changes of the regulatory environment in China, and economic slowdown in China and/or elsewhere. Further information regarding these and other risks is included in Perfect World's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F. All information provided in this press release and in the attachments is as of May 17, 2010, 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.
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
Kathy Li
Tel: +1-480-614-3036
Fax: +1-480-614-3033
Email: kli@christensenir.com
Roger Hu
Tel: +86-10-5971-2001
Fax: +86-10-5971-2001
Email: rhu@christensenir.com
Perfect World Co., Ltd.
Unaudited Consolidated Balance Sheets
December 31, March 31, March 31,
2009 2010 2010
RMB RMB USD
Assets
Current assets
Cash and cash equivalents 1,567,165,156 1,876,900,991 274,971,577
Restricted cash 5,033,996 5,047,708 739,504
Short-term investments 30,000,000 -- --
Accounts receivable, net 90,435,732 63,408,486 9,289,532
Due from related parties 159,100 159,100 23,309
Prepayment and other
assets 54,262,066 72,924,572 10,683,666
Deferred tax assets 3,048,654 3,464,697 507,588
Total current assets 1,750,104,704 2,021,905,554 296,215,176
Non current assets
Equity investments 30,471,237 28,964,386 4,243,369
Film and television
cost 14,508,195 16,625,800 2,435,729
Property, equipment, and
software, net 244,069,532 249,285,971 36,521,136
Construction in progress 771,265,335 784,651,843 114,953,829
Intangible assets, net 36,930,233 54,796,424 8,027,839
Goodwill 116,256,000 116,256,000 17,031,850
Prepayments and other
assets 42,516,514 56,700,243 8,306,754
Deferred tax assets 2,895,739 2,857,116 418,576
Total assets 3,009,017,489 3,332,043,337 488,154,258
Liabilities and Shareholders'
Equity
Current liabilities
Accounts payable 92,131,878 69,967,910 10,250,507
Advances from customers 88,944,437 104,008,285 15,237,523
Salary and welfare payable 99,629,630 45,207,092 6,622,973
Taxes payable 35,503,484 45,865,801 6,719,476
Accrued expenses and other
liabilities 40,055,495 83,923,838 12,295,092
Due to related party 5,650,616 5,657,757 828,878
Deferred revenues 280,584,152 280,307,267 41,065,848
Deferred tax liabilities 22,488,342 23,921,819 3,504,618
Total current liabilities 664,988,034 658,859,769 96,524,915
Deferred revenues 28,479,618 25,967,324 3,804,290
Total liabilities 693,467,652 684,827,093 100,329,205
Shareholders' Equity
Ordinary shares (US$0.0001
par value, 10,000,000,000
shares authorized, 49,171,190
Class A ordinary shares issued
and outstanding, 199,957,195
Class B ordinary shares issued
outstanding as of December 31,
2009; 10,000,000,000 shares
authorized, 44,171,190 Class A
ordinary shares issued and
outstanding, 206,132,945 Class
B ordinary shares issued and
outstanding as of March 31,
2010) 198,506 199,309 29,199
Additional paid-in capital 381,099,428 407,572,908 59,710,643
Statutory reserves 181,563,507 181,563,507 26,599,594
Accumulated other
comprehensive loss (65,453,442) (65,238,302) (9,557,605)
Retained earnings 1,799,851,169 2,105,015,331 308,391,007
Total Perfect World
Shareholders' Equity 2,297,259,168 2,629,112,753 385,172,838
Non-controlling interests 18,290,669 18,103,491 2,652,215
Total Shareholders' Equity 2,315,549,837 2,647,216,244 387,825,053
Total Liabilities and
Shareholders' Equity 3,009,017,489 3,332,043,337 488,154,258
Perfect World Co., Ltd.
Unaudited Consolidated Statements of Operations
Three months ended
March 31, December 31, March 31, March 31,
2009 2009 2010 2010
RMB RMB RMB USD
Revenues
Online game
operation
revenues 377,173,678 541,773,555 569,713,235 83,464,683
Overseas
licensing
revenues 47,968,592 61,651,444 53,377,895 7,820,020
Film, television
and other
revenues -- 4,474,322 1,952,484 286,045
Total Revenues 425,142,270 607,899,321 625,043,614 91,570,748
Cost of revenues
Online game
related cost (56,442,843) (79,781,617) (87,105,440) (12,761,206)
Film, television
and other cost -- (1,735,088) (24,887) (3,646)
Total cost of
revenues (56,442,843) (81,516,705) (87,130,327) (12,764,852)
Gross profit 368,699,427 526,382,616 537,913,287 78,805,896
Operating expenses
Research and
development
expenses (56,958,268) (76,912,046) (77,808,074) (11,399,114)
Sales and
marketing
expenses (50,924,583)(124,655,400) (82,159,508) (12,036,612)
General and
administrative
expenses (30,438,140) (48,280,933) (54,795,477) (8,027,700)
Total operating
expenses (138,320,991)(249,848,379) (214,763,059) (31,463,426)
Operating profit 230,378,436 276,534,237 323,150,228 47,342,470
Other income/
(expenses)
Investment loss (625,045) (1,279,762) (1,506,851) (220,758)
Interest income 3,274,619 5,169,231 5,258,399 770,371
Others, net 2,359,971 7,874,430 6,766,026 991,243
Total other income 5,009,545 11,763,899 10,517,574 1,540,856
Profit before tax 235,387,981 288,298,136 333,667,802 48,883,326
Income tax
expense (19,942,929) (17,534,886) (28,690,818) (4,203,290)
Net income 215,445,052 270,763,250 304,976,984 44,680,036
Add: Net loss
attributable to
non-controlling
interests -- 86,162 187,178 27,422
Net income
attributable to
the Company's
shareholders 215,445,052 270,849,412 305,164,162 44,707,458
Net earnings per
share, basic 0.83 1.09 1.22 0.18
Net earnings per
share, diluted 0.79 1.02 1.15 0.17
Net earnings per
ADS, basic 4.14 5.44 6.12 0.90
Net earnings per
ADS, diluted 3.96 5.09 5.75 0.84
Shares used in
calculating basic
net earnings per
share 260,412,419 248,945,580 249,384,104 249,384,104
Shares used in
calculating
diluted net
earnings
per share 271,768,450 265,982,221 265,565,857 265,565,857
Total share-based
compensation cost
included in:
Cost of revenues (1,079,899) (1,149,174) (1,693,246) (248,066)
Research and
development
expenses (6,976,521) (11,363,609) (9,404,410) (1,377,774)
Sales and
marketing
expenses (1,595,196) (1,602,599) (2,271,910) (332,842)
General and
administrative
expenses (5,766,248) (7,839,431) (8,423,397) (1,234,053)
Perfect World Co., Ltd.
Unaudited Consolidated Statements of Cash Flows
Three months ended
March 31, December 31, March 31, March 31,
2009 2009 2010 2010
RMB RMB RMB USD
Cash flows from
operating
activities:
Net income 215,445,052 270,763,250 304,976,984 44,680,036
Adjustments for:
Share-based
compensation
cost 15,417,864 21,954,813 21,792,963 3,192,735
Depreciation and
amortization
expense 9,370,560 32,447,920 17,836,399 2,613,085
Exchange loss 49,792 113,749 261,907 38,370
Investment loss 625,045 1,279,762 1,506,851 220,758
Loss from disposal
of property,
equipment, and
software 67,569 399,425 116,071 17,005
Changes in assets
and liabilities:
Accounts
receivable (19,038,659) 48,265,298 26,856,675 3,934,581
Current
prepayments
and other
assets (6,622,458) 9,939,338 (16,375,737) (2,399,094)
Deferred tax
assets (75,319) (3,573,707) (395,925) (58,004)
Film and
television
cost -- (14,508,195) (2,117,605) (310,235)
Due from/to
related
parties -- (565,138) 7,141 1,046
Non-current
prepayments
and other
assets 1,050,366 747,629 (14,499,468) (2,124,215)
Accounts
payable 11,651,065 1,582,299 (20,794,672) (3,046,481)
Advances from
customers (2,690,605) (26,140,988) 15,065,334 2,207,116
Salary and
welfare
payable (25,700,751) 21,649,640 (54,413,418) (7,971,728)
Taxes payable 35,855,955 8,812,168 10,371,267 1,519,421
Accrued
expenses
and other
liabilities 5,868,313 (1,137,447) 43,930,792 6,435,992
Deferred
revenues 26,784,532 3,303,923 (2,592,055) (379,744)
Deferred tax
liabilities (18,139,092) 2,741,097 1,433,477 210,009
Deferred
government
grants -- (1,450,000) -- --
Net cash provided
by operating
activities 249,919,229 376,624,836 332,966,981 48,780,653
Cash flows from
investing
activities:
Purchase of
property,
equipment,
and software (14,221,383) (48,302,540) (35,135,276) (5,147,422)
Purchase of
intangible
assets -- (1,313,235) (20,492,670) (3,002,237)
Decrease of
restricted
cash 135,361,200 -- -- --
Cash paid for
business
acquisitions,
net of cash
acquired (154,554,000) -- -- --
Purchase of
short-term
investments (40,000,000) -- -- --
Maturities
of short-term
investments -- 40,000,000 30,000,000 4,395,089
Decrease in loan
receivable -- 3,780,000 -- --
Net cash used
in investing
activities (73,414,183) (5,835,775) (25,627,946) (3,754,570)
Cash flows from
financing
activities:
Exercise of
share options 334,433 2,304,395 2,306,091 337,849
Repurchase of
Company
shares (523,583,215) -- -- --
Net cash (used
in) / provided
by financing
activities (523,248,782) 2,304,395 2,306,091 337,849
Effect of
exchange rate
changes on
cash and cash
equivalents 110,412 87,971 90,709 13,289
Net (decrease) /
increase in
cash (346,633,324) 373,181,427 309,735,835 45,377,221
Cash and cash
equivalents,
beginning
of the period 1,333,075,731 1,193,983,729 1,567,165,156 229,594,356
Cash and cash
equivalents,
end of the
period 986,442,407 1,567,165,156 1,876,900,991 274,971,577
Supplemental
disclosures
of cash flow
information:
Cash paid during
the period for
income taxes (2,575,784) (16,849,182) (14,420,198) (2,112,602)
Perfect World Co., Ltd.
Reconciliation of GAAP and Non-GAAP Results
Three months ended
March 31, December 31, March 31, March 31,
2009 2009 2010 2010
RMB RMB RMB USD
GAAP operating profit 230,378,436 276,534,237 323,150,228 47,342,470
Share based compensation
charge 15,417,864 21,954,813 21,792,963 3,192,735
Non-GAAP operating
profit 245,796,300 298,489,050 344,943,191 50,535,205
GAAP net income
attributable to the
Company's shareholders 215,445,052 270,849,412 305,164,162 44,707,458
Share based compensation
charge 15,417,864 21,954,813 21,792,963 3,192,735
Non-GAAP net income
attributable to the
Company's shareholders 230,862,916 292,804,225 326,957,125 47,900,193
GAAP net earnings per
ADS
- Basic 4.14 5.44 6.12 0.90
- Diluted 3.96 5.09 5.75 0.84
Non-GAAP net earnings
per ADS
- Basic 4.43 5.88 6.56 0.96
- Diluted 4.25 5.50 6.16 0.90
ADSs used in calculating
net earnings per ADS
- Basic 52,082,484 49,789,116 49,876,821 49,876,821
- Diluted 54,353,690 53,196,444 53,113,171 53,113,171
