NetDragon Websoft Inc. Announces First Quarter 2012 Financial Results Record Quarterly Revenue of RMB 237 million; Net Profit Increased 621.2% Quarter-over-quarter

Mobile Internet Revenue Increased 84.1% Quarter-over-quarter

HONG KONG, May 25, 2012 /PRNewswire-Asia/ -- NetDragon Websoft Inc. ("NetDragon", Stock code: 777), a leading developer and operator of online games and mobile internet platforms in China, today announced its financial results for the first quarter of 2012 ended 31 March 2012. Additionally, a conference call and live webcast is scheduled at 7:00 PM, May 25, 2012 Hong Kong time (7:00 AM Eastern Daylight Time, May 25) to review the company's performance and recent business developments.

First Quarter 2012 Financial and Operational Highlights

  • Revenue was RMB 237.0 million, an increase of 9.1% over the fourth quarter of 2011 ("QoQ") and an increase of 51.2% over the first quarter of 2011("YoY").
  • Revenue from Online Games was RMB 191.6 million, a decrease of 0.5% QoQ and an increase of 27.2% YoY.
  • Revenue from Mobile Internet was RMB 45.4 million, an increase of 84.1% QoQ and an increase of 644.3% YoY.
  • Gross profit was RMB 208.7 million, an increase of 10.5% QoQ and an increase of 46.8% YoY.
  • Operating profit was RMB 64.1 million, an increase of 138.3% QoQ and an increase of 69.8% YoY.
  • Profit attributable to owners of the company was RMB 55.8 million, an increase of 609.5% QoQ and an increase of 61.1% YoY.
  • Basic earnings per share were RMB 10.88 cents, diluted EPS were RMB 10.87 cents.
  • Peak concurrent users ("PCU") for online games were 600,000, a decrease of 2.0% QoQ and an increase of 9.9% YoY.   
  • Average concurrent users ("ACU") for online gameswere 297,000, a decrease of 4.2% QoQ and an increase of 20.7% YoY.

Mr. Liu Dejian, NetDragon's Chairman and Executive Director commented: "During the first quarter, we are delighted with the overall growth of the company, driven by the well-established and smoothly operating online games business as well as the fast-growing mobile internet business. Quarterly revenue hit a historic high of RMB 237.0 million; net profit also increased 621.2% QoQ, laying a solid foundation for the company to achieve 2012 strategic goals.

"Regarding our online games business, after the success of two expansion packs in 2011, Eudemons Online's new Chinese version expansion pack 'Legacy of Asgard' entered its beta testing this March and set a record high in monthly revenue, demonstrating that this classic game is still maintaining its powerful vitality and market appeal. Going forward, we plan to explore further opportunities in the branding and serializing of Eudemons Online. In addition, we've launched the expansion pack 'Invasion of Pirates' for Conquer Online in several foreign languages this quarter, in a move to maintain the appeal of this game in overseas markets."

"In terms of our mobile internet business, we are steadily advancing our strategy of providing a superior yet simple end-user experience as well as offering differentiated content and services, all with the aim of maintaining our leadership position in the mobile marketplace space. So far, we have achieved good results. First quarter revenue increased 84.1% QoQ to RMB45.4 million, and now represented 19.2% of total revenue compared with 11.4% in the previous quarter. By leveraging over a dozen years of R&D experience in various IT fields, we will continue to rapidly roll out mobile games and develop more e-commerce and content-focused verticals. Not only will this support direct monetization of our user base, but it will also spur the growth of mobile advertising and platform distribution revenues. In addition, we recently announced our '91 Win Matrix' cooperative plan, in a move to provide technical, operational, financial and brand cooperation to small and medium-sized developers in a joint effort to build a healthy mobile internet value chain. Going forward, we have full confidence in achieving NetDragon's 2012 overall strategic goals."    

First Quarter 2012 Business Highlights

Online Games

  • NetDragon launched the EP "Invasion of Pirates" for the martial arts MMORPG, Conquer Online, in French, Spanish, Arabic and Traditional Chinese.
  • NetDragon launched new Malaysian version EP "Demon Rising" for its 2.5D Fantasy MMORPG, Eudemons Online.
  • NetDragon was honored with "2011 Annual Most Popular Online Gaming Company in China" by 17173 "2011 China Online Games List"; Eudemons Online received three awards alone: "China's Annual Most Popular Online Game", "Most Popular 2.5D Online Games" and "Most Popular China-Made Original Online Games".

Mobile Internet

  • 91 PC Suite, NetDragon's applications distribution platform for all mainstream operating systems, exceeded 75 million total users. And total users for HiMarket, NetDragon's Android applications distribution platform, exceeded 21 million. As of March 2012, total aggregate downloads over both marketplaces surpassed 5 billion.
  • NetDragon's in-house developed mobile games, Dragon Royal Online and HengHa Warring States, as well as jointly-operated mobile games, such as 91 Immortal and 91 Richistan, were officially launched in the first quarter. 

Recent Developments and Business Outlook

Online Games

  • Eudemons Online's new Chinese EP "Legacy of Asgard" was officially launched in April 2012. The EP hit a record high in monthly revenue during the beta in March 2012.
  • NetDragon's first 3D MMORPG Dungeon Keeper Online entered open beta testing in April 2012.  
  • NetDragon's 2.5D Sci-Fi MMORPG Zero Online launched its new Chinese EP in May. This revolutionary new EP introduced an entirely new copy task, enabling players to readily have a more sophisticated playing experience as well as enjoy the fun of a single-player game.
  • iPad based Conquer Online will release additional language versions in a move to further expand its presence on tablets. 

Mobile Internet

  • NetDragon announced the launch of its nationwide developer program "91 Win Matrix", inviting developers to join the 91 Open Mobile Platform for mobile innovative applications development. NetDragon will provide developers with comprehensive support, including technical, operational, financial and brand cooperation.  
  • "91 Kid Applications", a platform within 91 PC Suite, which focuses on recommending mobile applications for children and for mothers as a tool for interacting with their toddlers, was officially rolled out. This is NetDragon's first formal foray into the market segment for childcare products.  
  • NetDragon, together with DeNA Co., Ltd., Japan's leading social gaming platform operator, signed an agreement with Jiangyin National High-tech District Administration Committee in Hong Kong. This joint venture company will localize non-Chinese social games, including a roster of DeNA Group's popular in-house developed and third party titles, for the growing smartphone market in China.
  • NetDragon will keep enriching games, applications, themes, ringtones, wallpapers, and other contents on our mobile internet platforms. With more efforts on analyzing data, distributing more customized and personalized contents, NetDragon will provide smartphone users with more valuable services.

Financial Highlights:

RMB('000)

1Q 2012

4Q 2011

1Q 2011

QoQ(%)

YoY(%)

Revenue

236,975

217,176

156,755

9.1%

51.2%

-Online Games

191,581

192,513

150,656

(0.5%)

27.2%

-Mobile Internet Business

45,394

24,663

6,099

84.1%

644.3%

Gross Profit

208,700

188,839

142,212

10.5%

46.8%

GPM

88.1%

87.0%

90.7%

1.1%

(2.6%)

Profit for the period

55,873

7,747

34,672

621.2%

61.1%

NPM

23.6%

3.6%

22.1%

20.0%

1.5%

EPS-Basic (RMB cents)

10.88

1.53

6.57

611.1%

65.6%

EPS-Diluted (RMB cents)

10.87

1.53

6.57

610.5%

65.4%

Metrics

Online Games


1Q 2012

4Q 2011

3Q 2011

2Q 2011

1Q 2011

4Q 2010

PCU

600,000

612,000

569,000

643,000

546,000

542,000

ACU

297,000

310,000

300,000

311,000

246,000

232,000

Management Conference Call

NetDragon will host a management conference call and webcast to review its financial results for the first quarter ended March 31, 2012 on Friday, May 25, 2012 Hong Kong time.  

Details of the live conference call are as follows:

Time: 7:00 PM Beijing / Hong Kong Time / 7:00 AM Eastern Daylight Time, May 25, 2012

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)

800-819-0121

China Toll Free (for mobile users)

400-620-8038

Passcode

NetDragon

Replay service is available from 10:00 PM May 25 to 11:59 PM, June 1, 2012 HKT. Below are the replay numbers for different regions. International Toll: 61-2-8235-5000; US Toll Free: 1-866-214-5335; Replay passcode: 80265474. 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 "1Q 2012 Results Conference Call" and follow the registration instructions.

About NetDragon

NetDragon Websoft Inc. (HKSE: 0777) 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. We launched our first self-made online game Monster & Me in 2002, followed by multiple titles including Eudemons Online, Conquer Online and Heroes of Might & Magic 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. In the mobile Internet industry, we provide China's leading marketplace for smartphone users, offering applications and content for the most popular mobile operating systems. NetDragon offers many well-known mobile Internet products and services, including 91 Panda Reader, 91 PC Suite, 91 Panda Space, sj.91.com and hiapk.com.

For investor inquiries, please contact:



NetDragon Websoft Inc.

Ms. Maggie Zhou

Investor Relations Director

Tel.:

+86 591 8754 3120

+86 591 8390 2825

Email:

maggie@nd.com.cn


ndir@nd.com.cn

Website:

www.nd.com.cn/ir

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED 31 MARCH 2012

 


Three Months Ended

 


31/3/2012

31/12/2011


31/3/2011

(Unaudited)

 

(Unaudited)

(Unaudited)/
(Restated)

RMB '000

 

RMB '000

 

RMB '000

 

Revenue

236,975


217,176


156,755

Cost of revenue

(28,275)


(28,337)


(14,543)







Gross profit

208,700


188,839


142,212

Other income and gains

3,989


17,369


9,912

Selling and marketing expenses

(33,487)


(46,277)


(25,318)

Administrative expenses

(58,911)


(59,529)


(46,591)

Development costs

(45,786)


(47,387)


(40,577)

Other expenses

(1,721)


(5,047)


(1,885)

Net loss on derivative financial instruments

(3,961)


(17,582)


-

Finance costs

(4,729)


(3,490)


-

Share of losses of associates

(373)


(439)


-







Profit before taxation

63,721


26,457


37,753

Taxation

(7,848)


(18,710)


(3,081)

Profit for the period

55,873


7,747


34,672







Other comprehensive expense:






Exchange differences arising on
translation of foreign operations

 

(17)


 

(171)


 

(172)







Total comprehensive income for the period

55,856


7,576


34,500







Profit for the period attributable to:






  -Owners of the Company

55,771


7,861


34,612

-Non-controlling interests

102


(114)


60


55,873


7,747


34,672

Total comprehensive income attributable to:






- Owners of the Company

55,754


7,690


34,440

- Non-controlling interests

102


(114)


60


55,856


7,576


34,500







Earnings per share

RMB cents


RMB cents


RMB cents

- Basic

10.88


1.53


6.57

- Diluted

10.87


1.53


6.57

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(AS AT 31 MARCH 2012)


31 March 2012


31 December 2011


(Unaudited)


(Audited)


RMB '000


RMB '000

Non-current assets




Property, plant and equipment

195,851


192,119

Prepaid lease payments

140,682


86,298

Investment property  

15,807


15,809

Deposit paid for acquisition of property, plant and equipment

36


19,050

Intangible assets

6,398


4,520

Interests in associates

12,296


12,669

Available-for-sale investments

4,000


4,000

Loan receivables

6,125


6,314

Deferred tax assets

54


54


381,249


340,833

Current assets




Prepaid lease payments

2,902


1,784

Loan receivables

966


1,091

Trade receivables

33,259


41,555

Other receivables, prepayments and deposits

49,064


41,429

Amounts due from related companies

1,598


1,200

Bank deposits

110,000


40,000

Bank balances and cash

1,387,418


1,428,928


1,585,207


1,555,987





Current liabilities




Trade payables

7,040


5,001

Other payables and accruals          

122,025


121,353

Deferred income

27,286


25,528

Amounts due to related companies

243


965

Promissory notes

-


30,623

Income tax payable

38,521


42,849


195,115


226,319

Net current assets

1,390,092


1,329,668





Total assets less current liabilities

1,771,341


1,670,501

Non-current liabilities




Redeemable convertible preferred shares

164,916


131,675

Conversion option derivative liability

46,080


39,932


210,996


171,607

Net assets

1,560,345


1,498,894





Capital and reserves




Share capital

38,226


38,226

Share premium and reserves

1,522,474


1,461,126

Equity attributable to owners of the Company

1,560,700


1,499,352

Non-controlling interests

(355)


(458)


1,560,345


1,498,894

SOURCE NetDragon Websoft Inc.



RELATED LINKS
http://ir.netdragon.com/investor/ir_events.shtml
http://www.nd.com.cn/ir
http://www.netdragon.com

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