Published: March 07, 2011
Perfect World Announces Fourth Quarter and Fiscal Year 2010 Unaudited Financial Results
BEIJING, March 7, 2011 /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 fourth quarter and fiscal year ended December 31, 2010.
(Logo: http://photos.prnewswire.com/prnh/20090416/CNTH023LOGO )
Fourth Quarter 2010 Highlights(1)
-- Total revenues were RMB593.0 million (USD89.8 million), as compared to
RMB658.2 million in 3Q10 and RMB607.9 million in 4Q09
-- Gross profit was RMB482.3 million (USD73.1 million), as compared to
RMB508.9 million in 3Q10 and RMB526.4 million in 4Q09
-- Operating profit was RMB122.8 million (USD18.6 million), as compared to
RMB211.9 million in 3Q10 and RMB276.5 million in 4Q09. Non-GAAP
operating profit(2) was RMB147.3 million (USD22.3 million), as compared
to RMB237.4 million in 3Q10 and RMB298.5 million in 4Q09
-- Net income attributable to the Company's shareholders was RMB125.2
million (USD19.0 million), as compared to RMB213.7 million in 3Q10 and
RMB270.8 million in 4Q09. Non-GAAP net income attributable to the
Company's shareholders(2) was RMB149.7 million (USD22.7 million), as
compared to RMB239.2 million in 3Q10 and RMB292.8 million in 4Q09
-- Basic and diluted earnings per ADS(3) were RMB2.50 (USD0.38) and RMB2.36
(USD0.36), respectively, as compared to RMB4.27 and RMB4.05,
respectively, in 3Q10, and RMB5.44 and RMB5.09, respectively, in 4Q09.
Non-GAAP basic and diluted earnings per ADS(2) were RMB2.98 (USD0.45)
and RMB2.82 (USD0.43), respectively, as compared to RMB4.77 and RMB4.53
respectively, in 3Q10, and RMB5.88 and RMB5.50, respectively, in 4Q09
-- The Company launched:
-- Open beta testing for "Forsaken World" on October 21, 2010
-- Open beta testing for "Dragon Excalibur" on October 28, 2010
-- Unlimited closed beta testing for "Empire of the Immortals" on
December 28, 2010
Fiscal Year 2010 Financial Highlights
-- Total revenues were RMB2,470.4 million (USD374.3 million), as compared
to RMB2,144.4 million in fiscal year 2009
-- Gross profit was RMB2,025.7 million (USD306.9 million), as compared to
RMB1,844.6 million in fiscal year 2009
-- Operating profit was RMB879.3 million (USD133.2 million), as compared to
RMB1,084.2 million in fiscal year 2009. Non-GAAP operating profit was
RMB976.1 million (USD147.9 million), as compared to RMB1,162.1 million
in fiscal year 2009
-- Net income attributable to the Company's shareholders was RMB840.7
million (USD127.4 million), as compared to RMB1,037.2 million in fiscal
year 2009. Non-GAAP net income attributable to the Company's
shareholders was RMB937.5 million (USD142.0 million), as compared to
RMB1,115.1 million in fiscal year 2009
-- Basic and diluted earnings per ADS were RMB16.80 (USD2.55) and RMB15.87
(USD2.41), respectively, as compared to RMB20.57 and RMB19.28,
respectively, in fiscal year 2009. Non-GAAP basic and diluted earnings
per ADS were RMB18.73 (USD2.84) and RMB17.70 (USD2.68), respectively, as
compared to RMB22.11 and RMB20.73, respectively, in fiscal year 2009
(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 December 30, 2010, which was
RMB6.6 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.
Mr. Michael Chi, Chairman and Chief Executive Officer of Perfect World, commented, "The past year was a challenging year of transition as we chose to lengthen the development cycle of our games and devote more resources to larger and longer-term projects in order to give them the best chance for success. While these moves were made to support the sustainable growth of our company over the long term, the slowdown in new releases during the past year did slow our revenue growth from prior years. This, coupled with sizable investments in R&D and expansion through acquisitions, placed added pressure on our margins in the short term and caused temporary fluctuations in our results. However, we are confident that this most recent quarter and the past year mark the trough in our financial performance as the mismatch between internal investments and output of new content start to realign in 2011."
"In the fourth quarter, our hard work during the year began to take shape as we launched three new games as well as a number of expansion packs for our existing games. These new titles, including 'Forsaken World' and 'Empire of the Immortals,' have already generated excitement among gamers and built a strong user base. We are expecting to see much stronger revenue growth in the first quarter of 2011 as these new contents start to take effect on the revenue side."
"One of our greatest strengths remains our deep and diversified pipeline, which has grown to include several new games in the development phase and a few highly-anticipated titles coming soon, including, 'Heaven Sword and Dragon Saber' and 'Swordsman Online,' both based on novels that are household names in China. We continue to develop new games across a wide range of genres to suit the varied tastes of different gamers, enabling us to capture a broader audience of users. We expect exciting titles in our pipeline and a number of recently-launched games to provide multiple growth drivers for us in both 2011 and the years to come."
"Our specialized production studios and proprietary gaming engines have allowed us to build solid franchises in the 2D, 2.5D and 3D market segments, and our brand remains popular in China while it continues to grow abroad. We remain a leader in the Chinese online game export market in terms of revenues and geographic coverage. During the year, we continued to sign new licensing agreements and launch our games in various markets through overseas game operators. We also strengthened our overseas operating platform through our operating subsidiaries in the U.S. and Europe, and C&C Media Co., Ltd. ('C&C Media'), our acquired subsidiary in Japan, all of which continue to serve as growing sources of revenues. Our strategic acquisition of a majority stake in Runic Games, Inc., the Seattle-based studio, also enhanced our global R&D capabilities and provided us strong pipeline of global titles."
"While 2010 was clearly a challenging year, we believe our decisions were necessary for the healthy growth of our company in the long run. And we are confident that we have now emerged as a much stronger business. Having confidence in our outlook, the board has also authorized Perfect World to repurchase up to USD100 million of the Company's own American Depositary Shares ('ADSs') between March 2011 and March 2012."
"Looking forward to 2011 and beyond, we are optimistic that we will deliver solid growth at both the top and bottom line given our multiple growth drivers from a diversified pipeline, as well as support from our core existing games that continue to serve as steady sources of revenue. We also expect our margin to gradually improve throughout the year, starting from Q1. Our strength in innovation, combined with enhanced R&D capabilities and strengthened operating platform from our continued investments, will position us well in the near term and ensure the long-term sustainable growth of our business."
Fourth Quarter 2010 Financial Results
Total Revenues
Total revenues were RMB593.0 million (USD89.8 million) in 4Q10, as compared to RMB658.2 million in 3Q10 and RMB607.9 million in 4Q09. The decrease in total revenues from 3Q10 was primarily because there was no major movie or TV series release in 4Q10, whereas the popular TV series "Fighting for My Marriage" contributed to the Company's results in 3Q10.
Online game operation revenues were RMB526.2 million (USD79.7 million) in 4Q10, as compared to RMB527.1 million in 3Q10 and RMB541.8 million in 4Q09. Despite launches of new games and large expansion packs of core existing games during the quarter, online game operation revenues in 4Q10 were relatively flat compared with 3Q10. This was primarily due to the deliberate decision to slow monetization activities to foster user interest and further nurture these games at the initial stages following the releases of new content.
The aggregate average concurrent users (ACU) for games under operation in mainland China was approximately 999,000 in 4Q10, as compared to 733,000 in 3Q10 and 1,157,000 in 4Q09. The active paying customers (APC) for games operated in mainland China under the item-based revenue model was approximately 1,402,000 in 4Q10, as compared to 1,274,000 in 3Q10 and 2,188,000 in 4Q09. The average revenue per active paying customer (ARPU) for games operated in mainland China under the item-based revenue model was RMB275 in 4Q10, as compared to RMB323 in 3Q10 and RMB223 in 4Q09. The increase in traffic from 3Q10 was mainly due to the strong performance of several of the Company's newly launched games, as well as the continued popularity of a number of the Company's existing games. The decrease in ARPU from 3Q10 was mainly due to the dilution effect arising from the launches of the new games during 4Q10.
Overseas licensing revenues were RMB57.8 million (USD8.8 million) in 4Q10, as compared to RMB48.6 million in 3Q10 and RMB61.7 million in 4Q09. The increase from 3Q10 was primarily attributable to an increase in initial license fees arising from a number of new commercial launches overseas, as well as a sequential growth in usage-based royalties.
Film, television and other revenues were RMB9.0 million (USD1.4 million) in 4Q10, as compared to RMB82.5 million in 3Q10 and RMB4.5 million in 4Q09. Most of the film, television and other revenues recognized in 3Q10 were related to the release of the TV series "Fighting for My Marriage," whereas there was no similar major release during 4Q10.
Cost of Revenues
The cost of revenues was RMB110.7 million (USD16.8 million) in 4Q10, as compared to RMB149.3 million in 3Q10 and RMB81.5 million in 4Q09.
The online game related cost was RMB102.3 million (USD15.5 million) in 4Q10, as compared to RMB92.4 million in 3Q10 and RMB79.8 million in 4Q09. The increase from 3Q10 was mainly due to an increase in staff cost, including a special year-end bonus.
The film, television and other cost was RMB8.3 million (USD1.3 million) in 4Q10, as compared to RMB56.9 million in 3Q10 and RMB1.7 million in 4Q09. Most of the film, television and other cost recognized in 3Q10 was related to the TV series "Fighting for My Marriage." There was no major release in 4Q10.
Gross Profit and Gross Margin
Gross profit was RMB482.3 million (USD73.1 million) in 4Q10, as compared to RMB508.9 million in 3Q10 and RMB526.4 million in 4Q09. Gross margin was 81.3% in 4Q10, as compared to 77.3% in 3Q10 and 86.6% in 4Q09. The decrease in gross profit from 3Q10 was primarily due to the absence of a major movie or TV release in 4Q10, whereas the popular TV series "Fighting for My Marriage" contributed to the Company's results in 3Q10.
Operating Expenses
Operating expenses were RMB359.5 million (USD54.5 million) in 4Q10, as compared to RMB297.0 million in 3Q10 and RMB249.8 million in 4Q09. The increase in operating expenses from 3Q10 was mainly attributed to higher sales and marketing expenses, R&D expenses and general and administrative expenses.
R&D expenses were RMB136.8 million (USD20.7 million) in 4Q10, as compared to RMB113.8 million in 3Q10 and RMB76.9 million in 4Q09. The increase from 3Q10 was primarily due to an increase in staff cost, including a special year-end bonus, as well as lower capitalization of development cost. During 4Q10, the Company ceased capitalization of development cost for "Forsaken World" and "Dragon Excalibur" following their official launches.
Sales and marketing expenses were RMB155.2 million (USD23.5 million), as compared to RMB123.8 million in 3Q10 and RMB124.7 million in 4Q09. The increase from 3Q10 was largely due to an increase in advertising and promotional expenses associated with the launches of the new games "Forsaken World," "Dragon Excalibur" and "Empire of the Immortals;" as well as the releases of some large-scale expansion packs, such as "Breach of Heaven" for "Zhu Xian" and "Perfect World II 2012" for "Perfect World II," during 4Q10. In addition, the Company also incurred a special year-end bonus in 4Q10.
General and administrative expenses were RMB67.5 million (USD10.2 million) in 4Q10, as compared to RMB59.4 million in 3Q10 and RMB48.3 million in 4Q09. The increase from 3Q10 was mainly due to a provision of receivables related to the Company's film and television business. The Company's film and television business continues to expand. As the credit term, collection cycle, as well as characteristic of receivables of the film and television business are significantly different from those of the online gaming business, the Company adopted a conservative and prudent approach and provided certain allowance for its accounts receivables related to its film and television business in 4Q10.
Operating Profit
Operating profit was RMB122.8 million (USD18.6 million) in 4Q10, as compared to RMB211.9 million in 3Q10 and RMB276.5 million in 4Q09. Non-GAAP operating profit was RMB147.3 million (USD22.3 million) in 4Q10, as compared to RMB237.4 million in 3Q10 and RMB298.5 million in 4Q09. The decrease from 3Q10 was mainly due to an increase in staff cost, including a special year-end bonus, as well as a ramp-up in advertising and marketing spending to support the launches of a number of the Company's new games and large expansion packs. As the Company adopted prudent monetization strategies with the new content at the initial stages of release during 4Q10, higher sales and marketing expenses prior to the releases of new content and greater R&D spending outgrew revenues temporarily in 4Q10.
Total Other Income
Total other income was RMB12.7 million (USD1.9 million) in 4Q10, as compared to RMB6.8 million in 3Q10 and RMB11.8 million in 4Q09. The increase from 3Q10 was largely due to an increase in government grant subsidy income.
Income Tax Expense
Income tax expense was RMB12.1 million (USD1.8 million) in 4Q10, as compared to RMB17.1 million in 3Q10 and RMB17.5 million in 4Q09.
Net Income Attributable to the Company's Shareholders
Net income attributable to the Company's shareholders was RMB125.2 million (USD19.0 million) in 4Q10, as compared to RMB213.7 million in 3Q10 and RMB270.8 million in 4Q09. Non-GAAP net income attributable to the Company's shareholders was RMB149.7 million (USD22.7 million) in 4Q10, as compared to RMB239.2 million in 3Q10 and RMB292.8 million in 4Q09.
Basic and diluted earnings per ADS were RMB2.50 (USD0.38) and RMB2.36 (USD0.36), respectively, in 4Q10, as compared to RMB4.27 and RMB4.05, respectively, in 3Q10, and RMB5.44 and RMB5.09, respectively, in 4Q09. Non-GAAP basic and diluted earnings per ADS were RMB2.98 (USD0.45) and RMB2.82 (USD0.43), respectively, in 4Q10, as compared to RMB4.77 and RMB4.53, respectively, in 3Q10, and RMB5.88 and RMB5.50, respectively, in 4Q09.
Cash and Cash Equivalents
As of December 31, 2010, the Company had RMB1,387.6 million (USD210.2 million) of cash and cash equivalents, as compared to RMB1,424.9 million as of September 30, 2010. The Company continued to generate cash inflow through its online game operations, however, the cash outflow for investments in principal-protected financial products during 4Q10 resulted in a decrease in the cash and cash equivalents balance.
Fiscal Year 2010 Financial Results
Total Revenues
Total revenues were RMB2,470.4 million (USD374.3 million) in fiscal year 2010, as compared to RMB2,144.4 million in fiscal year 2009.
Online game operation revenues were RMB2,156.3 million (USD326.7 million) in fiscal year 2010, as compared to RMB1,879.9 million in fiscal year 2009. The year-over-year increase was primarily attributable to the Company's successful expansion of its overseas operations in North America and Japan, as well as the continued popularity of some of the Company's core existing games.
Overseas licensing revenues were RMB215.0 million (USD32.6 million) in fiscal year 2010, as compared to RMB214.6 million in fiscal year 2009. In previous years the Company generated considerable licensing revenues from Japan through C&C Media, its Japanese operation partner. In 2Q10, the Company fully acquired C&C Media and began classifying its revenues as online game operation revenues. As such, although the Company grew its licensing revenues in various markets as it continued to strengthen its global penetration during fiscal year 2010, the overseas licensing revenues were relatively flat compared with fiscal year 2009.
Film, television and other revenues were RMB99.2 million (USD15.0 million) in fiscal year 2010, as compared to RMB49.8 million in fiscal year 2009. Most of the film, television and other revenues recognized in fiscal year 2010 were related to the popular TV series "Fighting for My Marriage," which was released in 3Q10.
Cost of Revenues
Cost of revenues were RMB444.7 million (USD67.4 million) in fiscal year 2010, as compared to RMB299.8 million in fiscal year 2009. The year-over-year increase was primarily due to increases in staff cost, sales-related taxes and server depreciation expenses associated with the Company's overseas acquisitions and expansion of its domestic game operations, as well as an increase in film, television and other cost associated with the release of the successful TV series "Fighting for My Marriage."
Gross Profit and Gross Margin
Gross profit was RMB2,025.7 million (USD306.9 million) in fiscal year 2010, as compared to RMB1,844.6 million in fiscal year 2009. Gross margin was 82.0% in fiscal year 2010, as compared to 86.0% in fiscal year 2009.
Operating Expenses
Operating expenses were RMB1,146.4 million (USD173.7 million) in fiscal year 2010, as compared to RMB760.4 million in fiscal year 2009. The year-over-year increase in operating expenses was mainly due to the expansion of the Company's overall business operations and talent pool, as well as its overseas acquisitions.
Operating Profit
Operating profit was RMB879.3 million (USD133.2 million) in fiscal year 2010, as compared to RMB1,084.2 million in fiscal year 2009. Non-GAAP operating profit was RMB976.1 million (USD147.9 million) in fiscal year 2010, as compared to RMB1,162.1 million in fiscal year 2009. In order to deliver higher-quality products in the longer run in response to the demands of the fast-changing industry, the Company has been lengthening the development cycle of its games and devoting more resources to longer-term projects, while at the same time investing heavily in R&D and expanding its talent pool. As a result, the Company did not launch any new games until the last quarter of the year, which impacted the revenue growth in fiscal year 2010, yet still incurred higher sales and marketing expenses prior to the launches of these new games as well as greater R&D spending for future titles in the pipeline. As such, expenses temporarily outgrew revenues during this transitional year.
Net Income Attributable to the Company's Shareholders
Net income attributable to the Company's shareholders was RMB840.7 million (USD127.4 million) in fiscal year 2010, as compared to RMB1,037.2 million in fiscal year 2009. Non-GAAP net income attributable to the Company's shareholders was RMB937.5 million (USD142.0 million) in fiscal year 2010, as compared to RMB1,115.1 million in fiscal year 2009.
Basic and diluted earnings per ADS were RMB16.80 (USD2.55) and RMB15.87 (USD2.41), respectively, in fiscal year 2010, as compared to RMB20.57 and RMB19.28, respectively, in fiscal year 2009. Non-GAAP basic and diluted earnings per ADS were RMB18.73 (USD2.84) and RMB17.70 (USD2.68), respectively, in fiscal year 2010, as compared to RMB22.11 and RMB20.73, respectively, in fiscal year 2009.
Business Outlook
Based on the Company's current operations, total revenues for the first quarter of 2011 are expected to be between RMB640 million and RMB664 million, representing an increase of 8% to 12% on a sequential basis. This reflects expected growth from the Company's existing games and the anticipated contribution from the recent launches of "Forsaken World," "Dragon Excalibur" and "Empire of the Immortals."
Share Repurchase Program
The board has duly authorized Perfect World to repurchase up to USD100 million of its own ADSs during the period from March 2011 to March 2012.
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 8:00pm Eastern Standard Time on Monday, March 7, 2011 (9:00am Beijing time on Tuesday, March 8, 2011).
Dial-in numbers 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 beginning two hours after the conclusion of the conference call through 11:59pm Eastern Time, March 14, 2011.
Dial-in numbers 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 and promptly introduce popular games designed to cater changing customer preferences and market trends. 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," "Fantasy Zhu Xian," "Forsaken World," "Dragon Excalibur," and "Empire of the Immortals;" 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, South America and the Russian Federation and other Russian speaking territories. The Company also generates revenues from game operations in North America, Europe 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 March 7, 2011, 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
Vice President, Investor Relations & Corporate Communications
Tel: +86-10-5780-5700
Fax: +86-10-5780-5713
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
Teal Willingham
Tel: +86-10-5826-4727
Fax: +86-10-5826-4838
Email: twillingham@christensenir.com
Perfect World Co., Ltd.
Unaudited Consolidated Balance Sheets
December 31, December 31,
2009 2010
---- ----
RMB RMB
Assets
Current assets
Cash and cash equivalents 1,567,165,156 1,387,621,178
Restricted cash 5,033,996 4,849,614
Short-term investments 30,000,000 390,000,000
Accounts receivable, net 90,435,732 157,617,474
Due from related parties 159,100 2,127,500
Prepayment and other assets 54,262,066 83,369,296
Deferred tax assets 3,048,654 9,399,978
Total current assets 1,750,104,704 2,034,985,040
------------- -------------
Non current assets
Equity investments 30,471,237 49,378,909
Time deposit - 280,000,000
Restricted cash - 120,000,000
Film and television cost 14,508,195 24,240,561
Property, equipment, and
software, net 244,069,532 306,248,969
Construction in progress 771,265,335 911,395,229
Intangible assets, net 36,930,233 138,464,771
Goodwill 116,256,000 483,624,832
Prepayments and other assets 42,516,514 54,300,649
Deferred tax assets 2,895,739 2,690,344
--------- ---------
Total assets 3,009,017,489 4,405,329,304
============= =============
Liabilities and
Shareholders' Equity
Current liabilities
Accounts payable 92,131,878 121,600,949
Advances from customers 88,944,437 146,203,059
Salary and welfare payable 99,629,630 154,136,724
Taxes payable 35,503,484 27,455,310
Accrued expenses and other
liabilities 40,055,495 131,580,683
Due to related party 5,650,616 4,832,000
Deferred revenues 280,584,152 386,274,965
Deferred tax liabilities 22,488,342 47,037,398
Deferred government grants - 300,000
--- -------
Total current liabilities 664,988,034 1,019,421,088
Deferred revenues 28,479,618 26,320,224
Total liabilities 693,467,652 1,045,741,312
----------- -------------
Shareholders' Equity
Ordinary shares (US$0.0001
par value, 10,000,000,000 198,506 199,791
shares authorized,
49,171,190 Class A ordinary
shares
issued and outstanding,
199,957,195 Class B
ordinary
shares issued and
outstanding as of December
31, 2009;
10,000,000,000 shares
authorized, 39,171,195
Class A
ordinary shares issued and
outstanding, 211,839,885
Class
B ordinary shares issued and
outstanding as of December
31, 2010)
Additional paid-in capital 381,099,428 493,089,324
Statutory reserves 181,563,507 239,264,390
Accumulated other
comprehensive loss (65,453,442) (65,956,622)
Retained earnings 1,799,851,169 2,582,851,059
Total Perfect World
Shareholders' Equity 2,297,259,168 3,249,447,942
Non-controlling interests 18,290,669 110,140,050
---------- -----------
Total Shareholders' Equity 2,315,549,837 3,359,587,992
------------- -------------
Total Liabilities and
Shareholders' Equity 3,009,017,489 4,405,329,304
============= =============
December 31,
2010
----
USD
Assets
Current assets
Cash and cash equivalents 210,245,633
Restricted cash 734,790
Short-term investments 59,090,909
Accounts receivable, net 23,881,435
Due from related parties 322,348
Prepayment and other assets 12,631,712
Deferred tax assets 1,424,239
Total current assets 308,331,066
-----------
Non current assets
Equity investments 7,481,653
Time deposit 42,424,242
Restricted cash 18,181,818
Film and television cost 3,672,812
Property, equipment, and software, net 46,401,359
Construction in progress 138,090,186
Intangible assets, net 20,979,511
Goodwill 73,276,490
Prepayments and other assets 8,227,371
Deferred tax assets 407,628
-------
Total assets 667,474,136
===========
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable 18,424,386
Advances from customers 22,151,979
Salary and welfare payable 23,354,049
Taxes payable 4,159,895
Accrued expenses and other liabilities 19,936,467
Due to related party 732,121
Deferred revenues 58,526,510
Deferred tax liabilities 7,126,878
Deferred government grants 45,455
------
Total current liabilities 154,457,740
Deferred revenues 3,987,913
Total liabilities 158,445,653
-----------
Shareholders' Equity
Ordinary shares (US$0.0001 par value,
10,000,000,000 30,271
shares authorized, 49,171,190 Class A
ordinary shares
issued and outstanding, 199,957,195 Class
B ordinary
shares issued and outstanding as of
December 31, 2009;
10,000,000,000 shares authorized,
39,171,195 Class A
ordinary shares issued and outstanding,
211,839,885 Class
B ordinary shares issued and outstanding
as of December
31, 2010)
Additional paid-in capital 74,710,504
Statutory reserves 36,252,180
Accumulated other comprehensive loss (9,993,428)
Retained earnings 391,341,070
Total Perfect World Shareholders' Equity 492,340,597
Non-controlling interests 16,687,886
----------
Total Shareholders' Equity 509,028,483
-----------
Total Liabilities and Shareholders'
Equity 667,474,136
===========
Perfect World Co., Ltd.
Unaudited Consolidated Statements of Operations
Three months ended
------------------
December September
31, 30,
2009 2010
---- ----
RMB RMB
Revenues
Online game operation revenues 541,773,555 527,058,956
Overseas licensing revenues 61,651,444 48,631,218
Film, television and other
revenues 4,474,322 82,533,378
--------- ----------
Total Revenues 607,899,321 658,223,552
Cost of revenues
Online game related cost (79,781,617) (92,367,125)
Film, television and other
cost (1,735,088) (56,943,511)
---------- -----------
Total cost of revenues (81,516,705) (149,310,636)
----------- ------------
Gross profit 526,382,616 508,912,916
Operating expenses
Research and development
expenses (76,912,046) (113,816,013)
Sales and marketing expenses (124,655,400) (123,795,571)
General and administrative
expenses (48,280,933) (59,409,274)
----------- -----------
Total operating expenses (249,848,379) (297,020,858)
------------ ------------
Operating profit 276,534,237 211,892,058
----------- -----------
Other income/(expenses)
Share of loss from equity
investments (1,279,762) (2,405,028)
Interest income 5,169,231 8,205,577
Others, net 7,874,430 1,022,167
--------- ---------
Total other income 11,763,899 6,822,716
---------- ---------
Profit before tax 288,298,136 218,714,774
Income tax expense (17,534,886) (17,112,123)
----------- -----------
Net income 270,763,250 201,602,651
----------- -----------
Less: Net (loss) /income
attributable to (86,162) (12,090,414)
non-controlling interests ------- -----------
Net income attributable to the
Company's 270,849,412 213,693,065
shareholders =========== ===========
Net earnings per share, basic 1.09 0.85
Net earnings per share,
diluted 1.02 0.81
Net earnings per ADS, basic 5.44 4.27
Net earnings per ADS, diluted 5.09 4.05
Shares used in calculating
basic net earnings 248,945,580 250,476,431
per share
Shares used in calculating
diluted net earnings 265,982,221 264,025,135
per share
Total share-based
compensation cost
included in:
Cost of revenues (1,149,174) (1,877,096)
Research and development
expenses (11,363,609) (9,215,409)
Sales and marketing expenses (1,602,599) (3,651,450)
General and administrative
expenses (7,839,431) (10,757,280)
Three months ended
------------------
December December
31, 31,
2010 2010
---- ----
RMB USD
Revenues
Online game operation revenues 526,194,312 79,726,411
Overseas licensing revenues 57,824,612 8,761,305
Film, television and other
revenues 8,975,757 1,359,963
--------- ---------
Total Revenues 592,994,681 89,847,679
Cost of revenues
Online game related cost (102,339,541) (15,505,991)
Film, television and other
cost (8,330,860) (1,262,252)
---------- ----------
Total cost of revenues (110,670,401) (16,768,243)
------------ -----------
Gross profit 482,324,280 73,079,436
Operating expenses
Research and development
expenses (136,790,553) (20,725,841)
Sales and marketing expenses (155,249,007) (23,522,577)
General and administrative
expenses (67,470,317) (10,222,775)
----------- -----------
Total operating expenses (359,509,877) (54,471,193)
------------ -----------
Operating profit 122,814,403 18,608,243
----------- ----------
Other income/(expenses)
Share of loss from equity
investments (2,107,573) (319,329)
Interest income 7,637,954 1,157,266
Others, net 7,187,667 1,089,040
--------- ---------
Total other income 12,718,048 1,926,977
---------- ---------
Profit before tax 135,532,451 20,535,220
Income tax expense (12,140,994) (1,839,545)
----------- ----------
Net income 123,391,457 18,695,675
----------- ----------
Less: Net (loss) /income
attributable to (1,817,047) (275,310)
non-controlling interests ---------- --------
Net income attributable to the
Company's 125,208,504 18,970,985
shareholders =========== ==========
Net earnings per share, basic 0.50 0.08
Net earnings per share,
diluted 0.47 0.07
Net earnings per ADS, basic 2.50 0.38
Net earnings per ADS, diluted 2.36 0.36
Shares used in calculating
basic net earnings 250,754,716 250,754,716
per share
Shares used in calculating
diluted net earnings 264,919,670 264,919,670
per share
Total share-based
compensation cost
included in:
Cost of revenues (1,732,264) (262,464)
Research and development
expenses (9,371,368) (1,419,904)
Sales and marketing expenses (3,437,163) (520,782)
General and administrative
expenses (9,903,017) (1,500,457)
Year ended
----------
December December December
31, 31, 31,
2009 2010 2010
---- ---- ----
RMB RMB USD
Revenues
Online game
operation
revenues 1,879,932,736 2,156,258,192 326,705,787
Overseas
licensing
revenues 214,625,630 214,980,802 32,572,849
Film, television
and other
revenues 49,804,306 99,194,565 15,029,480
---------- ---------- ----------
Total Revenues 2,144,362,672 2,470,433,559 374,308,116
Cost of revenues
Online game
related cost (271,043,328) (378,678,901) (57,375,591)
Film, television
and other cost (28,717,551) (66,018,204) (10,002,758)
----------- ----------- -----------
Total cost of
revenues (299,760,879) (444,697,105) (67,378,349)
------------ ------------ -----------
Gross profit 1,844,601,793 2,025,736,454 306,929,767
Operating
expenses
Research and
development
expenses (270,355,072) (419,076,642) (63,496,461)
Sales and
marketing
expenses (336,316,211) (482,162,083) (73,054,861)
General and
administrative
expenses (153,684,631) (245,150,994) (37,144,090)
------------ ------------ -----------
Total operating
expenses (760,355,914) (1,146,389,719) (173,695,412)
------------ -------------- ------------
Operating
profit 1,084,245,879 879,346,735 133,234,355
------------- ----------- -----------
Other income/
(expenses)
Share of loss
from equity
investments (4,088,738) (8,092,328) (1,226,110)
Interest income 15,404,786 27,000,890 4,091,044
Others, net 10,422,381 15,846,865 2,401,040
---------- ---------- ---------
Total other
income 21,738,429 34,755,427 5,265,974
---------- ---------- ---------
Profit before
tax 1,105,984,308 914,102,162 138,500,329
Income tax
expense (68,283,268) (87,539,495) (13,263,560)
----------- ----------- -----------
Net income 1,037,701,040 826,562,667 125,236,769
------------- ----------- -----------
Less: Net (loss)
/income
attributable to 499,641 (14,138,106) (2,142,137)
non-controlling
interests ------- ----------- ----------
Net income
attributable to
the Company's 1,037,201,399 840,700,773 127,378,906
shareholders ============= =========== ===========
Net earnings per
share, basic 4.11 3.36 0.51
Net earnings per
share, diluted 3.86 3.17 0.48
Net earnings per
ADS, basic 20.57 16.80 2.55
Net earnings per
ADS, diluted 19.28 15.87 2.41
Shares used in
calculating
basic net
earnings 252,138,828 250,232,543 250,232,543
per share
Shares used in
calculating
diluted net
earnings 269,004,366 264,818,376 264,818,376
per share
Total share-
based
compensation
cost
included in:
Cost of revenues (4,983,795) (6,938,253) (1,051,250)
Research and
development
expenses (36,730,329) (37,480,733) (5,678,899)
Sales and
marketing
expenses (7,290,958) (13,079,432) (1,981,732)
General and
administrative
expenses (28,883,711) (39,286,985) (5,952,573)
Perfect World Co., Ltd.
Reconciliation of GAAP and Non-GAAP Results
Three months ended
------------------
December September
31, 30,
2009 2010
---- ----
RMB RMB
GAAP operating profit 276,534,237 211,892,058
Share based compensation 21,954,813 25,501,235
charge
Non-GAAP operating 298,489,050 237,393,293
profit
GAAP net income
attributable to the
Company's shareholders 270,849,412 213,693,065
Share based compensation 21,954,813 25,501,235
charge
Non-GAAP net income
attributable to the
Company's shareholders 292,804,225 239,194,300
GAAP net earnings per
ADS
- Basic 5.44 4.27
- Diluted 5.09 4.05
Non-GAAP net earnings
per ADS
- Basic 5.88 4.77
- Diluted 5.50 4.53
ADSs used in calculating
net earnings per ADS
- Basic 49,789,116 50,095,286
- Diluted 53,196,444 52,805,027
Three months ended
------------------
December December
31, 31,
2010 2010
---- ----
RMB USD
GAAP operating profit 122,814,403 18,608,243
Share based compensation 24,443,812 3,703,607
charge
Non-GAAP operating 147,258,215 22,311,850
profit
GAAP net income
attributable to the
Company's shareholders 125,208,504 18,970,985
Share based compensation 24,443,812 3,703,607
charge
Non-GAAP net income
attributable to the
Company's shareholders 149,652,316 22,674,592
GAAP net earnings per
ADS
- Basic 2.50 0.38
- Diluted 2.36 0.36
Non-GAAP net earnings
per ADS
- Basic 2.98 0.45
- Diluted 2.82 0.43
ADSs used in calculating
net earnings per ADS
- Basic 50,150,943 50,150,943
- Diluted 52,983,934 52,983,934
Year ended
----------
December December December
31, 31, 31,
2009 2010 2010
---- ---- ----
RMB RMB USD
GAAP operating profit 1,084,245,879 879,346,735 133,234,355
Share based compensation 77,888,793 96,785,403 14,664,454
charge
Non-GAAP operating 1,162,134,672 976,132,138 147,898,809
profit
GAAP net income
attributable to the
Company's shareholders 1,037,201,399 840,700,773 127,378,906
Share based compensation 77,888,793 96,785,403 14,664,454
charge
Non-GAAP net income
attributable to the
Company's shareholders 1,115,090,192 937,486,176 142,043,360
GAAP net earnings per
ADS
- Basic 20.57 16.80 2.55
- Diluted 19.28 15.87 2.41
Non-GAAP net earnings
per ADS
- Basic 22.11 18.73 2.84
- Diluted 20.73 17.70 2.68
ADSs used in calculating
net earnings per ADS
- Basic 50,427,766 50,046,509 50,046,509
- Diluted 53,800,873 52,963,675 52,963,675
SOURCE Perfect World Co., Ltd.
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