NetDragon Websoft Inc. Reports Fourth Quarter and Fiscal Year 2012 Financial Results Full-year Revenue First Topped RMB1.1 Billion; Mobile Internet Maintains Top-line Growth

HONG KONG, March 27, 2013 /PRNewswire/ -- NetDragon Websoft Inc. ("NetDragon"; Stock Code: 777), a leading developer and operator of online games and mobile internet platforms in China, announced its financial results for the fourth quarter and fiscal year ended December 31, 2012 and is scheduled to hold a conference call and webcast on March 27, 2013 at 7:00pm Hong Kong Time / 7:00am Eastern Daylight Time to review the company's performance and recent business developments.

Fourth Quarter 2012 Financial and Operational Highlights

  • Total revenues were RMB331.0 million, an increase of 14.1% over the third quarter of 2012 ("QoQ"), and an increase of 52.4% over the fourth quarter of 2011 ("YoY");
  • Revenue from Online Games was RMB229.1 million, an increase of 12.3% QoQ and an increase of 19.0% YoY;
  • Revenue from Mobile Internet was RMB101.9 million, an increase of 18.4% QoQ and an increase of 313.3% YoY;
  • Gross profit was RMB296.8 million, an increase of 17.4% QoQ and an increase of 57.2% YoY;
  • Operating profit was RMB120.5 million, a decrease of 5.1% QoQ and an increase of 153.6% YoY;
  • Non-GAAP operating profit1 was RMB138.6 million, an increase of 4.8% QoQ and an increase of 141.8% YoY;
  • Non-GAAP profit attributable to owners of the company1 was RMB107.8 million, a decrease of 5.5% and an increase of 400.2%;
  • Non-GAAP net profit for the period1 was RMB107.6 million, a decrease of 5.6% and an increase of 402.1%;
  • Basic loss per share were RMB31.19 cents, diluted loss per share were RMB30.99 cents ;
  • Peak concurrent users ("PCU") for online games were 521,000, a decrease of 0.8% QoQ and a decrease of 14.9% YoY;
  • Average concurrent users ("ACU") for online games were 287,000, an increase of 2.1% QoQ and a decrease of 7.4% YoY;
  • The Board of Directors has recommended a final dividend of 0.2 Hong Kong dollar per share, subject to final approval by the shareholders at the Annual General Meeting.

Fiscal Year 2012 Financial Highlights

  • Total revenue for 2012 jumped to RMB1,108.3 million, an increase of 45.6% compared to 2011;
  • Total revenue from Online Games was RMB825.7 million, an increase of 17.7% compared to 2011;
  • Total revenue from Mobile Internet was RMB282.6 million, an increase of 375.7% compared to 2011;
  • Gross profit was RMB992.0 million, an increase of 44.6% compared to 2011;
  • Operating profit was RMB408.0 million, an increase of 102.6% compared to 2011;
  • Non-GAAP operating profit1 was RMB442.7 million, an increase of 109.4% compared to 2011;
  • Profit attributable to owners of the company was RMB39.2 million, a decrease of 71% over 2011;
  • Non-GAAP profit attributable to owners of the company1 was RMB368.0 million, an increase of 120.6% over 2011;
  • Net profit for the year was RMB39.0 million, a decrease of 71.2% over 2011;
  • Non-GAAP net profit for the year1 was RMB367.8 million, an increase of 120.3% over 2011;
  • Basic earnings per share were RMB7.71 cents, diluted EPS were RMB7.60 cents;
  • During the year ended 31 December 2012, the company repurchased a total of 9,635,500 shares on the Stock Exchange at an aggregate consideration of HKD 56,147,000 before expenses.

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, "2012 marked a significant milestone in NetDragon's history, with full-year revenue hitting a historic high of RMB1.1 billion. Total revenue for the fourth quarter of 2012 reached RMB331 million, representing the eleventh consecutive quarter of top-line growth. Notably and as originally anticipated, while NetDragon maintained stability in online game business, our mobile internet business revenue reached RMB102 million in the fourth quarter, while full-year revenue stood at RMB283 million. According to iResearch, as of December 2012, 91 platform is the No. 1 third party apps distributor in China based on active users, for Android system. It also has the greatest number of Android apps displayed in the platform, close to 900,000 Android apps, and it has 93,000 app developers, the greatest number of app developers in China."

Mr. Liu concluded: "All the staff and management at NetDragon now are more confident than ever about the development of and prospects for NetDragon. Not long ago, NetDragon has got the green light by Hong Kong Stock Exchange to proceed with the Proposed Spin-off of 91 Wireless Websoft Limited. And on Feb 8, we've submitted the listing application form to the Stock Exchange for the listing of, and permission to deal in, 91 Wireless Websoft Limited shares on the Growth Enterprise Market. With the advantages that the proposed spin-off will receive upon obtaining the listing status combined with our years of experience, 91 Wireless Websoft Limited is expected to continue to develop the mobile internet business, with an aim to maintain and enhance its position in China's mobile internet market, while its parent, NetDragon, will continue to focus on the research, development and operation of a variety of high-end original online games for global players. In addition, NetDragon plans to incubate additional commercially viable projects in an aim to cultivate the new drivers for NetDragon's sustainability going forward."

Fourth Quarter 2012 Business Highlights

Mobile Internet

  • As of December 2012, HiMarket and 91 Assistant have around 93,000 app developers on the platforms, having the greatest number of app developers among the independent third-party app distributors in China.
  • NetDragon launched a test version of "91 Mobile Game Center", a cross-platform mobile games and social network platform. The platform integrates evaluation, download and management of mobile games, interaction community and comments sharing into one version, perfectly supporting data exchange between Android and iOS to provide a new level of experience for smartphone users.

Online Games

  • NetDragon launched the new English EP "Cult of the Shadowed Sun" for Eudemons Online on December 28, following its September release of the Chinese version for this EP, which hit a record high in October.
  • NetDragon launched the new EP "Supreme Lady*" for Tou Ming Zhuang Online. Combining today's hot topics including the popular television series "Qing Palace Drama" which is currently popular among target players, the new EP engages players with a series of unique features.
  • NetDragon released new EP "Mystery of the Wanderer*" for Heroes of Might and Magic Online. Updates of weaponry and outfits bring the thrill associated with the classical game up several notches.
  • NetDragon's first imaginative style ARPG "Age of Egmont" (previously named "Age of Emblem") entered its first closed beta testing in December 2012.

Recent Developments and Business Outlook

Mobile Internet

  • "91 Assistant's Gold Version", launched in February 2013, introduced its mobile life column, an online community and other functions to further enhance user experience and engagement.
  • 91 Wireless Websoft Limited formally submitted the application to the Hong Kong Stock Exchange on February 8, 2013 for a GEM Listing of the shares of 91 Wireless Websoft Limited, by way of introduction.

Online Games

  • Eudemons Online's new Chinese EP "Love in a Fallen City*", is scheduled to enter closed beta in March 2013, and is on track to launch open beta in April. 
  • NetDragon's first self-developed 3D webpage game "Calibur of Spirit" is currently in a data-deletion beta testing, and is scheduled to move to open paid beta testing in March 2013.
  • NetDragon's 2.5D MMORPG mobile game "Crazy Tribes" using the primitive social as background with fresh, lovely and artistic style is expected for a non-data-deletion paid testing at the beginning of 2013.
  • "Age of Egmont" (previously named "Age of Emblem") is scheduled to launch its mobile version in March 2013.

Others

  • "91 Cloud Mall" plans to, by continuing to deploy the "scenario shopping engine", match selected purchase data from participating e-commerce firms based on usage behaviors when purchases take place through a mobile device to intelligently promote further sales, and share the data with retailers as well as mobile application and web developers, and to use this information to further strengthen cooperation in the future, completing the building of a marketing platform "Money Tree" to help partners develop more profitable marketing campaigns.

* Working titles

Financial Highlights:

RMB('000)

4Q 2012

3Q 2012

4Q 2011

QoQ (%)

YoY (%)

2012

2011

YoY (%)

Revenue

331,046

290,144

217,176

14.1%

52.4%

1,108,349

760,974

45.6%

-Online Games

229,104

204,067

192,513

12.3%

19.0%

825,744

701,565

17.7%

-Mobile Internet

101,942

86,077

24,663

18.4%

313.3%

282,605

59.409

375.7%

Gross Profit

296,829

252,786

188,839

17.4%

57.2%

991,990

685,942

44.6%

GPM

89.7%

87.1%

87.0%

2.6%

2.7%

89.5%

90.1%

(0.6%)

Operating Profit

120,542

126,958

47,529

(5.1%)

153.6%

407,980

201,373

102.6%

Non-GAAP Operating Profit 

138,555

132,231

57,290

4.8%

141.8%

442,713

211,458

109.4%

(Loss)/Profit attributable to equity holders

(157,025)

95,399

7,861

N/A

N/A

39,176

135,161

(71.0%)

Non-GAAP profit attributable to equity holders

107,800

114,133

21,551

(5.5%)

400.2%

367,992

166,844

120.6%

Net (Loss)/Profit

(157,182)

95,285

7,747

N/A

N/A

38,961

135,243

(71.2%)

Non-GAAP Net Profit 

107,643

114,019

21,437

(5.6%)

402.1%

367,777

166,926

120.3%

EPS-Basic (RMB cents)

(31.19)

18.95

1.53

N/A

N/A

7.71

25.85

(70.2%)

EPS-Diluted (RMB cents)

(30.99)

18.87

1.53

N/A

N/A

7.60

25.85

(70.6%)

Metrics

Online Games


4Q 2012

3Q 2012

2Q 2012

1Q 2012

4Q 2011

3Q 2011

PCU

521,000

525,000

582,000

600,000

612,000

569,000

ACU

287,000

281,000

307,000

297,000

310,000

300,000

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 equity-settled share-based compensation, 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 conference call and webcast to review its financial results for the fourth quarter and fiscal year 2012 ended December 31, 2012 and present an overview of its financial performance and business operations on Wednesday, March 27, 2013 Hong Kong time.

Details of the investor conference call are as follows:

Time: 7:00 PM Beijing / Hong Kong Time / 7:00 AM Eastern Daylight Time, March 27, 2013

Dial in numbers: 

International Toll 

65-6723-9381

US Toll Free

1-86-6519-4004

Hong Kong Toll Free

800-93-0346

Mainland China Toll Free (for fixed line users)

800-819-0121

Mainland China Toll Free (for mobile users)

400-620-8038

Passcode

NetDragon

Replay service is available from 22:00 March 27 to 20:59 April 3, 2013 HKT. Below are the replay numbers for different regions. Inte rnational Toll: 61-2-8199-0299; US Toll Free: 1-855-4525-696; Replay passcode: 18876511. 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/content/2013-03-13/20130313191323868.shtml. Participants in the live webcast should visit the aforementioned website 10 minutes prior to the call, then click on the icon for "4Q and Fiscal Year 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 Assistant, HiMarket, 91 Open Mobile Platform, 91 Panda Reader, sj.91.com and www.hiapk.com.

For further information 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 FOURTH QUARTER AND FISCAL YEAR ENDED 31 DECEMBER 2012


4Q 2012


 

3Q 2012


2012


2011

RMB '000


RMB '000

RMB '000

RMB '000

(Unaudited)


 (Unaudited)   

(Audited)

(Audited)

Revenue

331,046


290,144


1,108,349


760,974

Cost of revenue

(34,217)


(37,358)


(116,359)


(75,032)









Gross profit

296,829


252,786


991,990


685,942

Other income and gains

17,536


17,322


50,025


38,156

Selling and marketing expenses

(44,220)


(37,388)


(152,173)


(140,340)

Administrative expenses

(82,883)


(51,564)


(247,628)


(210,941)

Development costs

(61,992)


(46,231)


(204,173)


(159,269)

Other expenses

(2,902)


(7,604)


(27,214)


(11,594)

Share of losses of associates

(435)


(363)


(1,456)


(581)

Share of loss of a jointly controlled entity

(1,391)


-


(1,391)


-









Operating profit

120,542


126,958


407,980


201,373

Interest income on pledged bank deposit

2,249


2,600


4,849


-

Exchange gain on pledged bank deposit, secured loan and redeemable convertible preferred shares

 

7,098


 

6,234


 

11,909


 

-

Net loss on derivative financial instruments

(243,611)


(15,474)


(282,424)


(17,792)

Finance costs

(12,548)


(6,821)


(28,417)


(3,806)









(Loss)/Profit before taxation

(126,270)


113,497


113,897


179,775

Taxation

(30,912)


(18,212)


(74,936)


(44,532)

(Loss)/Profit for the period / year

(157,182)


95,285


38,961


135,243









Other comprehensive (expenses) income:








Exchange differences arising on

translation of foreign operations

 

(195)


 

59


 

(64)


 

(1,452)









Total comprehensive income for

the period / year

 

(157,377)


 

95,344


 

(38,897)


 

133,791









(Loss)/Profit for the period attributable to:








    -Owners of the Company

(157,025)


95,399


39,176


135,161

-Non-controlling interests

(157)


(114)


(215)


82


(157,182)


95,285


38,961


135,243

Total comprehensive income attributable to:








- Owners of the Company

(157,220)


95,458


39,112


133,709

- Non-controlling interests

(157)


(114)


(215)


82


(157,377)


95,344


38,897


133,791









Earnings per share

RMB cents


RMB cents


RMB cents


RMB cents

  - Basic

(31.19)


18.95


7.71


25.85

- Diluted

(30.99)


18.87


7.60


25.85

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (AS AT 31 DECEMBER 2012)



2012


2011


RMB '000


RMB '000

Non-current assets




Property, plant and equipment

345,415


192,119

Prepaid lease payments

 

139,678


86,298

Investment property

16,217


15,809

Deposit paid for acquisition of land use rights

-


19,050

Intangible assets

2,626


4,520

Interests in associates

11,793


12,669

Interest in a jointly controlled entity

18,015


-

Available-for-sale investments

5,000


4,000

Loan receivables

9,969


6,314

Goodwill

12,534


-

Deferred tax assets

1,586


54


562,833


340,833

Current assets

 




Prepaid lease payments

2,902


1,784

Loan receivables

3,143


1,091

Trade receivables

61,427


41,555

Other receivables, prepayments and deposits

72,101


41,429

Held for trading investments

4,939


-

Amounts due from related companies

3,637


1,200

Amount due from a jointly controlled entity

3,060


-

Pledged bank deposit

194,405


-

Bank deposits

394,081


40,000

Bank balances and cash

1,142,825


1,428,928


1,882,520


1,555,987

Current liabilities

 




Trade and other payables

222,137


126,354

Deferred income

24,778


25,528

Amounts due to related companies

121


965

Amount due to an associate

5,600


-

Secured bank loan

183,595


-

Other financial liability

10,679


-

Promissory notes

-


30,623

Income tax payable

66,355


42,849


513,265


226,319





Net current assets

 

1,369,255


1,329,668





Total assets less current liabilities

1,932,088


1,670,501





Non-current liabilities

 




Redeemable convertible preferred shares

195,115


131,675

Conversion option derivative liability

314,829


39,932

Deferred tax liabilities

6,141


-


516,085


171,607

Net assets

 

1,416,003


1,498,894





Capital and reserves

 




Share capital

37,532


38,226

Share premium and reserves

1,356,317


1,461,126

Equity attributable to owners of the Company

1,393,849


1,499,352

Non-controlling interests

22,154


(458)


1,416,003


1,498,894

SOURCE NetDragon Websoft Inc.



RELATED LINKS
http://www.netdragon.com/
http://ir.netdragon.com/content/2013-03-13/20130313191323868.shtml

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