NetDragon Websoft Inc. Announces First Quarter 2013 Financial Results Total Revenues up 50.5% YoY; Net Profit up 108.3% YoY

Mobile Business Experienced Rapid Growth

HONG KONG, June 3, 2013 /PRNewswire/ -- 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 ended March 31, 2013 and is scheduled to hold a conference call and live webcast on June 3, 2013 at 7:00pm Hong Kong Time / 7:00am Eastern Daylight Time to review the company's performance and recent business developments.

First Quarter 2013 Financial and Operational Highlights

  • Total revenues were RMB 356.7 million, an increase of 7.8% over the fourth quarter of 2012 ("QoQ") and an increase of 50.5% over the first quarter of 2012("YoY");
  • Revenue from Online Games was RMB 212.0 million, a decrease of 7.5% QoQ and an increase of 10.7% YoY;
  • Revenue from Mobile Internet was RMB 144.7 million, an increase of 42.0% QoQ and an increase of 218.8% YoY;
  • Gross profit was RMB 310.1 million, an increase of 4.5% QoQ and an increase of 48.6% YoY;
  • Operating profit was RMB 128.1 million, an increase of 6.3% QoQ and an increase of 77.4% YoY;
  • Non-GAAP operating profit1 was RMB175.5 million, an increase of 26.6% QoQ and an increase of 114.1% YoY;
  • Profit attributable to the owners of the Company was RMB 111.8 million, an increase of 100.4% YoY;
  • Non-GAAP profit attributable to owners of the Company was RMB 136.2 million, an increase of 26.4% QoQ and an increase of 84.1% YoY;
  • Profit for the period was RMB116.4 million, an increase of 108.3% YoY;
  • Non-GAAP profit for the period was RMB 140.8 million, an increase of 30.8% QoQ and an increase of 90.1% YoY;
  • Basic earnings per share were RMB 22.19 cents, diluted EPS were RMB 16.91 cents;
  • Peak concurrent users ("PCU") for online games were 445,000, a decrease of 14.6% QoQ and a decrease of 25.8% YoY;
  • Average concurrent users ("ACU") for online games were 237,000, a decrease of 17.4% QoQ and a decrease of 20.2% YoY.

1 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: "The first quarter of 2013 witnessed NetDragon's continued growth in total revenues and net profit. Total revenues grew 7.8% quarter over quarter to RMB 356.7 million, and net profit up 108.3% year over year. We are pleased to see our duel-engine strategy on online games and mobile Internet businesses has been paid off as evidenced by our strong results. The stable structure as a result of the two businesses mutually supporting each other is expected to strongly enhance our company's long-term development."

"As for our online games business, our company further optimized the resource allocation for projects, and focused more on depth development of core titles while maintaining a steady flow of new products in the development pipeline, with the aim of consolidating the existing gamer base through the company's core games, and laying the groundwork for new player acquisition. In addition, NetDragon has launched EPs in different languages to strengthen our key titles' revenue in overseas markets. In this quarter, overseas sales from game markets saw a 9.4% rise quarter-over-quarter."

"2013 is essential to the establishment of mobile internet footprint. Although Internet companies have accelerated the pace of their engagement in mobile segment, our mobile business maintained the leading position across the industry through our pioneering efforts and ongoing innovation. Mobile delivered revenue up to RMB 144.7 million in this quarter, an increase of 42.0% quarter-over-quarter. Notably, 91 Wireless' platforms exceeded over 10 billion accumulated app downloads, evidencing its user stickiness and superiority over competitive offerings. The company continues to focus on strengthening the advantages of 91 Assistant and HiMarket platforms while steadily driving proprietary research and development of mobile games and software products and providing more vertical apps to stay in tune with users' increasingly diversified needs. For all this, we are continuing to broaden cooperation with the industry's leading vendors. The management believes that with the continuous increasing user base and user loyalty, our mobile business is anticipated to delivering more revenue and further pleasant surprises."

First Quarter 2013 Business Highlights

Mobile Internet

  • 91 Wireless' platforms had surpassed over 10 billion accumulated app downloads.
  • On March 27, 2013, 91 Wireless Websoft Limited converted each issued and outstanding preferred shares into fully-paid non-assessable ordinary shares at the conversion rate for each preferred share.
  • 91 Wireless' HiMarket launched "Android Weekly" cooperation model, through which HiMarket collaborated with industry-leading e-reader vendors by providing content, in a move to enrich 91 content and enlarge our community base.

Online Games

  • As of the first quarter, NetDragon had 10 self-developed mobile games, by leveraging our existing superior resources and years of game R&D experience. More other self-developed mobile games are on track to be launched.
  • The iOS version of "Crazy Horde", featuring a fresh, lovely and artistic style based on  primitive society, entered beta testing in March 2013. Its Android version is expected to conduct testing in the second half of 2013, in an aim to roll out this game in the global market.
  • The iOS paid version of NetDragon's self-developed strategic game "War of Gods"  launched in January 2013. Inspired by Chinese myths, "War of Gods" integrates casual games and real-time combat interaction.
  • NetDragon launched multilingual versions of Conquer Online EP "The Oriental Assassin", including versions in English, French, Spanish and Arabic.

Recent Developments and Business Outlook

Mobile Internet

  • iPhone 5.0 version of 91 Panda Reader was launched in May 2013. The version's ease of use and speedy responsiveness contribute significantly to a highly improved overall user experience. 

Online Games

  • Zero Online's new Chinese EP "Doom Savior*" was launched on 31 May.
  • Eudemons Online's new EP "Dawn of Romance" entered its open beta testing on 28 April. The new EP featured with a focus on love and marriage is meant to resonate with each player's emotional side. The new EP received a warm response, evidencing the classic title's ongoing popularity. Eudemons Online's new Portuguese EP "Edge of Night" will also be launched in June.
  • The mobile version of "Age of Egmont", "Age of Egmont: Pocket Version" entered the closed beta testing on 28 March. Versions with different game experiences will be offered through several platforms including PC, iOS and Android.
  • "Caliber of Spirit", the world's first next generation 3D MOBA online game based on NetDragon's in-house developed S3 game engine, supports PC, web and mobile platforms and features seven industry-leading innovative technologies, has been available on Tencent's game platform since May.
  • "Sky Battle*", a 2.5D role-play mobile game based on NetDragon's in-house developed C3 game engine, entered a non-data-deleted testing for its iOS version in May.

* Working titles

Financial Highlights:

RMB('000)

1Q 2013

4Q 2012

1Q 2012

QoQ(%)

YoY(%)

Revenue

356,725

331,046

236,975

7.8%

50.5%

-Online Games

211,994

229,104

191,581

(7.5%)

10.7%

-Mobile Internet

144,731

101,942

45,394

42.0%

218.8%

Gross Profit

310,066

296,829

208,700

4.5%

48.6%

GPM

86.9%

89.7%

88.1%

(2.8%)

(1.2%)

Operating Profit

128,091

120,542

72,192

6.3%

77.4%

Non-GAAP Operating Profit 

175,456

138,555

81,953

26.6%

114.1%

Profit (Loss) attributable to the
owner of the Company

111,787

(157,025)

55,771

N/A

100.4%

Non-GAAP profit attributable to the
owners of the Company

136,245

107,800

74,003

26.4%

84.1%

Profit (Loss)

116,382

(157,182)

55,873

N/A

108.3%

Non-GAAP Profit 

140,840

107,643

74,105

30.8%

90.1%

NPM

32.6%

N/A

23.6%

N/A

9.0%

EPS-Basic (RMB cents)

22.19

(31.19)

10.88

N/A

104.0%

EPS-Diluted (RMB cents)

16.91

(30.99)

10.87

N/A

55.6%

Metrics

Online Games


1Q 2013

4Q 2012

3Q 2012

2Q 2012

1Q 2012

4Q 2011

PCU

445,000

521,000

525,000

582,000

600,000

612,000

ACU

237,000

287,000

281,000

307,000

297,000

310,000

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 on pledged bank deposit, secured bank loan and redeemable convertible preferred shares, net loss on derivative financial instruments and finance costs.

Management Conference Call

NetDragon will host a management conference call and webcast to review its financial results for the first quarter ended March 31, 2013 on Monday, June 3, 2013 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, June 3, 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)

800-819-0121

China Toll Free (for mobile users)

400-620-8038

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 "1Q 2013 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, including91 Assistant, HiMarket, 91 Launcher, 91 Panda Reader, sj.91.com and www.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 PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED 31 MARCH 2013


 Three Months Ended


31/3/2013

31/12/2012


31/3/2012

(Unaudited)

(Unaudited)

(Unaudited)

RMB '000

RMB '000

RMB '000

Revenue

356,725


331,046


236,975

Cost of revenue

(46,659)


(34,217)


(28,275)







Gross profit

310,066


296,829


208,700

Other income and gains

15,217


17,536


3,770

Selling and marketing expenses

(35,510)


(44,220)


(33,487)

Administrative expenses

(102,822)


(82,883)


(58,911)

Development costs

(54,660)


(61,992)


(45,786)

Other expenses

(4,820)


(2,902)


(1,721)

Share of losses of associates

(393)


(435)


(373)

Share of profit of a jointly controlled entity

1,013


(1,391)


-

Operating Profit

128,091


120,542


72,192







Interest income on pledged bank deposit

1,925


2,249


-

Exchange (loss) gain on pledged bank

deposit, secured bank loan and redeemable

convertible preferred shares

(4,653)


7,098


219

Net gain (loss) on derivative financial instruments

38,360


(243,611)


(3,961)

Finance Costs

(12,725)


(12,548)


(4,729)

Profit (loss) before taxation

150,998


(126,270)


63,721

Taxation                                                

(34,616)


(30,912)


(7,848)

Profit (loss) for the period

116,382


(157,182)


55,873

Other comprehensive expenses:






Items that may be reclassified subsequently

  to profit or loss:






Exchange differences arising on
translation of foreign operations

 

(112)


 

(195)


 

(17)

Total comprehensive income for the period

116,270


(157,377)


55,856







Profit (loss) for the period attributable to:






-Owners of the Company

111,787


(157,025)


55,771

-Non-controlling interests

4,595


(157)


102


116,382


(157,182)


55,873

Total comprehensive income attributable to:






- Owners of the Company

111,675


(157,220)


55,754

- Non-controlling interests

4,595


(157)


102


116,270


(157,377)


55,856







Earnings per share

RMB cents


RMB cents


RMB cents

- Basic

22.19


(31.19)


10.88

- Diluted

16.91


(30.99)


10.87

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(AS AT 31 MARCH 2013)


31 March 2013


31 December 2012


(Unaudited)


(Audited)


RMB '000


RMB '000

Non-current assets




Property, plant and equipment

380,602


345,415

Prepaid lease payments

198,114


139,678

Investment property

16,151


16,217

Intangible assets

2,205


2,626

Interests in associates

5,800


11,793

Interests in a jointly controlled entity

19,028


18,015

Available-for-sale investments

5,000


5,000

Loan receivables

9,812


9,969

Goodwill

12,534


12,534

Deferred tax assets

3,986


1,586


653,232


562,833

Current assets




Prepaid lease payments

2,902


2,902

Loan receivables

2,720


3,143

Trade receivables

77,568


61,427

Other receivables, prepayments and deposits

73,007


72,101

Held for trading investments

-


4,939

Amount due from related companies

3,452


3,637

Amount due from a jointly controlled entity

4,700


3,060

Pledged bank deposit

187,877


194,405

Bank deposits

428,233


394,081

Bank balances and cash

1,292,782


1,142,825


2,073,241


1,882,520





Current liabilities

 




Trade and other payables

252,914


222,137

Deferred income

25,612


24,778

Amounts due to related companies

291


121

Amount due to an associate

-


5,600

Secured bank loan

182,853


183,595

Other financial liability

5,022


10,679

Income tax payable

71,613


66,355


538,305


513,265

Net current assets

1,534,936


1,369,255

Total assets less current liabilities

2,188,168


1,932,088





Non-current liabilities

 




Redeemable convertible preferred shares

-


195,115

Conversion option derivative liability

-


314,829

Deferred tax liability

11,001


6,141


11,001


516,085

Net assets

2,177,167


1,416,003





Capital and reserves




Share capital

37,542


37,532

Share premium and reserves

1,678,235


1,356,317

Equity attributable to owners of the Company

1,715,777


1,393,849

Non-controlling interests

461,390


22,154


2,177,167


1,416,003

 

SOURCE NetDragon Websoft Inc.



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

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