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Pacific Online Limited Announces Interim 2010 Unaudited Financial Results


News provided by

Pacific Online Ltd.

Aug 23, 2010, 10:16 ET

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HONG KONG, Aug. 23 /PRNewswire-FirstCall/ -- Pacific Online Ltd. (HKSe: 543) ("Pacific Online" or the "Company"), a leading internet content provider in China, today announced its unaudited financial results for the first half ended June 30, 2010.

First Half 2010 Highlights

  • Total revenues were RMB202.6 million, an increase of 43% from RMB141.8 million for the six months ended 30 June 2009
  • Gross profit was RMB141.0 million, an increase of 43% from RMB98.7 million for the six months ended 30 June 2009
  • Operating profit before Share-Based Compensation Expenses (non-GAAP) was RMB74.1 million, representing a 54% increase from RMB48.2 million over the same period in 2009.  
  • Net income attributable to the Company's shareholders was RMB72.9 million, an increase of 64% from RMB44.4 million for the six months ended 30 June 2009
  • Basic and diluted earnings per share were RMB7.50 cents and RMB7.41 cents, respectively for six months ended 30 June 2010, as compared to RMB4.57 cents and RMB4.57 cents, respectively for the six months ended 30 June 2009  

"We are pleased to announce our first half results," commented Mr. Lam Wai Yan, Chairman and CEO.  "Our first half growth was driven primarily by higher spending from both new and existing clients."

"Our outlook for the second half of 2010 continues to be promising.  As the global economy continues to recover from the depths of the crisis, manufacturers of electronics and other related IT companies are steadily increasing their online marketing spending to support new applications and products. This, in particular, is helping drive growth of our core PConline portal."

"Car sales in China will have grown by 10 percent in volume this year, down from the 48 percent recorded in the first six months of the year and the 45 percent recorded for 2009, according to DongYang, the secretary general of the China Association of Automobile Manufacturers. However, this benefitted our industry leading automotive portal, PCauto, as greater competition among major auto brands and an increase in inventory pressures caused advertisers to increase spending to reach consumers. Our leading position in the automotive vertical will allow us to capture the strong demand from auto advertisers."

"With continued strong demand expected from the IT, auto, and gaming industries, we expect to increase advertising rates on our leading portals.  Looking forward, we intend to continue to enhance our research and development capabilities, invest in new technology and expand the content offering. Growth in the internet advertising industry remains robust, and our management team is fully committed to driving sustainable growth by effectively executing on our growth strategies."

First Half 2010 Financial Results

Total Revenues

Total revenues were RMB202.6 million for the six months ended 30 June 2010, an increase of 43% from RMB141.8 million for the six months ended 30 June 2009.

Revenue for PConline, the Group's information technology ("IT") and consumer electronics portal, was RMB90.0 million for the six months ended 30 June 2010, an increase of 20% from the same period one year ago. The increase in revenues from PConline was due to higher advertising spending from IT manufacturers.

Revenue for PCauto, the Group's automobile portal, was RMB93.1 million for the six months ended 30 June 2010, an increase of 63% from the same period one year ago. The increase in revenues from PCauto was due to the strong growth of the automobile industry in China.

Revenue for the Group's other operations, such as games, lady, baby portals and others, was RMB19.5 million for the six months ended 30 June 2010, an increase of 108% from the same period one year ago. Revenues from this segment are increasing significantly as consumer goods companies start to experiment with and direct a greater share of their advertising budgets to internet advertising.

PConline and PCauto accounted for about 90% of the Group's total revenue; however the Pacific Online's diversification strategy is proving beneficial as new revenue sources start to supplement and offset risk of the Group's main verticals.

Cost of Revenues

Cost of Revenue was RMB61.6 million for the six months ended 30 June 2010, an increase of 43% from the six months ended 30 June 2009. The increase in Cost of Revenues was proportional to the revenue growth.

Gross Profit and Gross Margin

Gross profit was RMB141.0 million for the six months ended 30 June 2010, an increase of 43% from the six months ended 30 June 2009. The gross profit margin was 70% for the first half of 2010 and was stable compared to the first half of 2009.  

Operating Expenses

Operating expenses were RMB62.5 million for the six months ended 30 June 2010, an increase of 32% from the six months ended 30 June 2009. The increase in operating expenses was primarily due to the following factors:

A 50% increase in selling and marketing costs from the same period last year.  The increase was primarily due to an increase of marketing expenses to strengthen brand awareness of the Group's portals.

A 15% increase in administrative expenses from the same period last year. The increase was mainly due to an increase in professional fees and share-based compensation expenses.

A 22% increase in product development expenses from the same period last year. The increase was primarily due to an increase in staff costs as the Group expanded its research and development team.

Operating Profit before Share-Based Compensation Expenses (non-GAAP)

Operating profit before Share-Based Compensation Expenses (non-GAAP) was RMB74.1million in the first half of 2010, representing a 54% increase from RMB48.2 million over the same period in 2009.

Net Finance Income

The Group realized a net finance income of RMB1.3 million for the six months ended 30 June 2010, a decrease of 66% from the six months ended 30 June 2009. The net finance income was primarily attributed to interest income on short-term bank deposits.

Income Tax Expense

Income Tax Expense was RMB6.9 million for the six months ended 30 June 2010, a decrease of 35% from the six months ended 30 June 2009. The decrease was mainly due to a reversal of the over-provided withholding tax resulted from different tax rates.

Net Income Attributable to the Company's Shareholders

Net Profit was RMB72.9 million for the six months ended 30 June 2010, an increase of 64% from RMB44.4 million for the six months ended 30 June 2009.

Basic and diluted earnings per share were RMB7.50 cents and RMB7.41 cents, respectively for six months ended 30 June 2010, as compared to RMB4.57 cents and RMB4.57 cents, respectively for the six months ended 30 June 2009.  

Liquidity and Financial Resources

As at 30 June 2010, the Group had financial resources in the form of short-term bank deposits and cash totaling RMB372.1 million, compared to RMB444.0 million in short-term bank deposits and cash as at 31 December 2009.

Employee and Remuneration Information

As of 30 June 2010, the Group had 860 employees (31 December 2009: 754). The Group determines staff's remuneration based on factors such as qualifications and years of experience.

Recent Developments

Acquisition of Property

In light of the development plan of the Group, the Board decided to establish its headquarters, research and development center, e-business platform operation center, as well as software and services contracting center in Guangzhou. In order to meet such development needs of the Group, on 25 January 2010, GZP Computer (a subsidiary of the Company) acquired a property located at No. 115, Gaopu Road, Gaotang Software Station, Tianhe District, Guangzhou, the PRC at a total consideration of RMB148,650,000. Further details of the said acquisition are disclosed in the Company's announcement dated 28 January 2010.

Conference Call

Pacific Online Ltd. will host a conference call and live webcast from 09:00 am - 10:00 am Hong Kong time on August 24, 2010.

The dial-in details for the live conference call are as follows:

- U.S. Toll Free Number:


1 866 549 1292

- International Dial-in Number:


+852 3005 2050

- Mainland China Toll Free Number:


400 681 6949

- Hong Kong Toll Free Number:


+852 3005 2050

Conference ID: 928856#


A live and archived webcast of the conference call will be available on the Investor Relations section of Pacific Online's website at corp.pconline.com.cn.

A telephone replay of the call will be available after the conclusion of the conference call for 30 days.

The dial-in details for the replay are as follows:

- U.S. Toll Free Number

1 866 753 0743

- Hong Kong Number

+852 3005 2020

Conference ID: 149653#


About Pacific Online Ltd. (corp.pconline.com.cn)

Pacific Online is one of the leading Internet content providers in the PRC in terms of total advertising revenue. The Group operates five vertically-integrated portals, including PConline, which is the largest portal in the PRC specializing in IT product-related content, in terms of advertising revenue, and PCauto, which is the largest portal in the PRC specializing in automobile-related content, in terms of advertising revenue. According to industry practice, vertically-integrated portals are portals that focus on specific content.

Safe Harbor Statement

This press release contains forward-looking statements which are subject to risks and uncertainties. Actual results may differ from those discussed in the press release.  In addition, any projections about the company's future performance represent management's estimates as of today August 23, 2010. The Company assumes no obligation to update these projections in the future as business and market conditions change.

For further information, please contact


Pacific Online Ltd.

Jeff Wang

Chief Financial Officer

Tel: +86-10-5885-1813  

Email: [email protected]


Christensen Investor Relations

Roger Hu

Tel: +852-2117-0861

Fax: +852-2117-0869

Email: [email protected]

PACIFIC ONLINE LIMITED
Unaudited Consolidated Balance Sheets

PACIFIC ONLINE LIMITED
CONDENSED CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2010



Unaudited


Audited


30-Jun


31-Dec


2010

 

2009


RMB'000  


RMB'000

ASSETS




Non-current assets




Property, plant and equipment

12,659


12,534

Intangible assets

9,262


9,321

Deferred income tax assets

6,258


4,843


28,179


26,698

Current assets




Trade and other receivables

170,913


135,772

Short-term bank deposits with original terms of over three months

143,850


34,680

Cash and cash equivalents

228,282


409,330


543,045


579,782





Total assets

571,224


606,480





EQUITY




Capital and reserves attributable to equity holders of the Company




Ordinary shares

9,186


8,737

Reserves

462,881


474,561

Total equity

472,067


483,298





Liabilities




Non-current  liabilities




Deferred income tax liabilities

4,149


-





Current liabilities




Accruals and other payables

61,573


61,445

Prepaid advertising subscriptions from customers

22,925


21,271

Current income tax liabilities

10,510


40,466


95,008


123,182

Total liabilities

99,157


123,182

Total equity and liabilities

571,224


606,480

Net current assets

448,037


456,600

Total assets less current liabilities

476,216


483,298


PACIFIC ONLINE LIMITED
Unaudited Consolidated Statements of Operations

PACIFIC ONLINE LIMITED
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2010



Unaudited


Six months ended 30 June


2010


2009


RMB'000


RMB'000





Revenue

202,598


141,834

Cost of revenue

(61,591)


(43,158)





Gross profit

141,007


98,676

Selling and marketing costs

(30,969)


(20,614)

Administrative expenses

(21,297)


(18,450)

Product development expenses

(10,201)


(8,353)

Operating profit

78,540


51,259





Finance income

1,981


4,386

Finance costs

(641)


(585)

Finance income – net

1,340


3,801





Profit before income tax

79,880


55,060

Income tax expense

(6,942)


(10,689)





Profit for the period

72,938


44,371





Attributable to:




Equity holders of the Company

72,938


44,371





Earnings per share for profit attributable to equity holders of the Company




- basic (RMB)

7.50 cents


4.57 cents





- diluted (RMB)

7.41 cents


4.57 cents





Dividends

-


-


PACIFIC ONLINE LIMITED
Unaudited Consolidated Statements of Cash Flows

PACIFIC ONLINE LIMITED
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2010


Unaudited


Six months ended 30 June


2010


2009


RMB'000


RMB'000





Cash flows from operating activities




Cash generated from operations

51,816


47,424

Income tax paid

(34,164)


(19,146)

Net cash generated from operating activities

17,652


28,278





Cash flows from investing activities




Purchase of property, plant and equipment

(2,144)


(1,190)

Purchase of intangible assets

(197)


(296)

Increase  in short-term bank deposits with original terms of over three months

(109,170)


(53,992)

Interest received

1,981


1,567

Net cash used in investing activities

(109,530)


(53,911)





Cash flows from financing activities




Cash dividends paid

(94,993)


(314,062)

Proceeds from issuance of ordinary shares

6,366


-

Net cash used in financing activities

(88,627)


(314,062)





Net decrease in cash and cash equivalents

(180,505)


(339,695)

Cash and cash equivalents at beginning of period

409,330


582,854

Exchange losses on cash and cash equivalents

(543)


(47)

Cash and cash equivalents

228,282


243,112


SOURCE Pacific Online Ltd.

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