6-K 1 a13-7303_16k.htm 6-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 


 

FORM 6-K

 


 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE

SECURITIES EXCHANGE ACT OF 1934

 

For the month of March 2013

 

Commission File Number: 001-33587

 


 

PERFECT WORLD CO., LTD.

 


 

Perfect World Plaza, Building 306, 86 Beiyuan Road

Chaoyang District, Beijing 100101

People’s Republic of China

(86 10) 5780-5700

(Address of principal executive offices)

 


 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F x                 Form 40-F o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

 

 

 



 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

Perfect World Co., Ltd.

 

 

 

 

 

 

 

By:

/s/ Kelvin Wing Kee Lau

 

Name:

Kelvin Wing Kee Lau

 

Title:

Chief Financial Officer

 

Date: March 12, 2013

 

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EXHIBIT INDEX

 

 

Page

 

 

Exhibit 99.1 — Press release

4

 

3



Exhibit 99.1

 

GRAPHIC

 

PERFECT WORLD ANNOUNCES FOURTH QUARTER AND FISCAL YEAR 2012 UNAUDITED FINANCIAL RESULTS

 

(Beijing, China March 11, 2013) — 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, 2012.

 

Fourth Quarter 2012 Highlights1

 

·                  Total revenues were RMB679.9 million (USD109.1 million), as compared to RMB695.8 million in 3Q12 and RMB776.4 million in 4Q11.

 

·                  Gross profit was RMB522.6 million (USD83.9 million), as compared to RMB566.9 million in 3Q12 and RMB639.3 million in 4Q11.

 

·                  Operating profit was RMB12.4 million (USD2.0 million), as compared to RMB109.4 million in 3Q12 and RMB220.2 million in 4Q11.  Excluding the share-based compensation charge and the goodwill impairment, non-GAAP operating profit2 was RMB67.1 million (USD10.8 million), as compared to RMB127.5 million in 3Q12 and RMB244.0 million in 4Q11.

 

·                  Net income attributable to the Company’s shareholders was RMB86.4 million (USD13.9 million), as compared to RMB86.2 million in 3Q12 and RMB260.0 million in 4Q11.  Excluding the share-based compensation charge and the goodwill impairment, non-GAAP net income attributable to the Company’s shareholders2 was RMB141.1 million (USD22.7 million), as compared to RMB104.3 million in 3Q12 and RMB283.9 million in 4Q11.

 

·                  Basic and diluted earnings per ADS3 were RMB1.79 (USD0.29) and RMB1.78 (USD0.29), respectively, as compared to RMB1.78 and RMB1.77, respectively, in 3Q12, and RMB5.65 and RMB5.45, respectively, in 4Q11.  Excluding the share-based compensation charge and the goodwill impairment, non-GAAP basic and diluted earnings per ADS2 were RMB2.92 (USD0.47) and RMB2.90 (USD0.47), respectively, as compared to RMB2.16 and RMB2.14 respectively, in 3Q12, and RMB6.17 and RMB5.94, respectively, in 4Q11.

 

·                  In October 2012, obtained exclusive rights to operate “Dota 2,” a popular online game with the unique mix of action, RTS and RPG gameplay, in mainland China.

 

·                  Released German, Polish, and Russian versions of “Torchlight 2.”

 


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 31, 2012, which was RMB6.2301 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 and the goodwill impairment 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.

 

4



 

Fiscal Year 2012 Financial Highlights

 

·                  Total revenues were RMB2,770.6 million (USD444.7 million), as compared to RMB2,983.4  million in fiscal year 2011.

 

·                  Gross profit was RMB2,230.7 million (USD358.0 million), as compared to RMB2,503.5 million in fiscal year 2011.

 

·                  Operating profit was RMB511.8 million (USD82.1 million), as compared to RMB1,023.3 million in fiscal year 2011.  Excluding the share-based compensation charge and the goodwill impairment, non-GAAP operating profit was RMB623.7 million (USD100.1 million), as compared to RMB1,128.0 million in fiscal year 2011.

 

·                  Net income attributable to the Company’s shareholders was RMB540.7 million (USD86.8 million), as compared to RMB984.0 million in fiscal year 2011.  Excluding the share-based compensation charge and the goodwill impairment, non-GAAP net income attributable to the Company’s shareholders was RMB652.6 million (USD104.7 million), as compared to RMB1,088.7 million in fiscal year 2011.

 

·                  Basic and diluted earnings per ADS were RMB11.31 (USD1.81) and RMB11.15 (USD1.79), respectively, as compared to RMB20.18 and RMB19.27, respectively, in fiscal year 2011.  Excluding the share-based compensation charge and the goodwill impairment, non-GAAP basic and diluted earnings per ADS were RMB13.65 (USD2.19) and RMB13.46 (USD2.16), respectively, as compared to RMB22.33 and RMB21.32, respectively, in fiscal year 2011.

 

Mr. Michael Chi, Chairman of Perfect World commented, “We ended 2012 with the fourth quarter top-line results in line with our expectations.  During the past year of 2012, we decelerated in-game promotional activities and primarily focused on longer-term projects in our pipeline and content enhancements for our existing titles in order to maintain a healthy life cycle of our portfolio and sustainable growth of our business.  As such, our 2012 results came in softer than our previous year’s results.  However, we believe this was a necessary step for the long-term benefit of our business and are confident that our efforts over the past year will translate into more high-quality entertainment and services for our players worldwide in 2013 and beyond.”

 

“Every single well-received product we ever delivered over the past few years is the fruit of the close collaboration of all of our talented staff and our dedicated management team, to all of whom I would like to extend my deep appreciation.  Especially, I would like to express my sincere gratitude to Robert, our Co-CEO, for his persistent efforts to push forward the development and implementation of our corporate strategy together with me.  Through his years’ of contribution to the Company, the board of directors and I have grown great confidence in his outstanding leadership and execution capabilities.  As such, while remaining Chairman of the Board of Directors to oversee the Company’s strategic directions, I have decided to step down from the Co-CEO position and the board has decided to appoint Robert as the Company’s CEO.  The board and I will continue to support Robert in his role as the Company’s CEO, and are confident in his future leadership of the Company to overcome challenges and create a better Perfect World.”

 

5



 

Mr. Robert Xiao, CEO of Perfect World continued, “I would like to thank Michael and the board for their trust and support.  As Michael just mentioned, the past year was a quiet year for us in terms of our new game launches.  However, we believe it was necessary for us to focus on working on areas that would pay off in the future for the long run.  During the fourth quarter, besides enhancing our recently-launched new game, ‘Return of the Condor Heroes,’ we also continued to work on expanding our deep and diverse game pipeline.  A number of attractive titles are currently under development, including a variety of MMORPGs, web games and mobile games. Out of them, our highly-anticipated MMORPGs, ‘Swordsman Online’ and ‘Saint Seiya Online,’ are now in the final stages of development and fine-tuning.  We look forward to bringing these two titles to our Chinese players later this year.  We also plan to introduce more of our web games and mobile games to different markets this year and further strengthen our pipeline.  In addition to these attractive titles that are under development by our Chinese studios, our pipeline also includes a number of world-class titles.  For example, we have obtained exclusive rights to operate ‘Dota 2’ in mainland China.  This world-famous title with a unique mix of action, RTS and RPG gameplay has attracted wide attention from gamers worldwide.  Another world-class title in our pipeline is ‘Neverwinter,’ a highly-anticipated MMORPG being developed by our subsidiary Cryptic Studios in the U.S., which we look forward to initially launching in North America soon.”

 

“We also continue to strengthen our operational capabilities in both China and overseas.  In addition to operating a variety of MMORPGs and web games in China, we have also established an overseas network through our subsidiaries and licensing activities with overseas partners, covering over a hundred countries and regions with over one-fourth of our total revenues generated from various overseas markets.  Continued focus on our global operational capabilities is an important part of our strategies.  As such, I am pleased to announce that the Company has appointed Mr. Qi Zhu, our senior vice president, as Chief Publishing Officer, Asia, responsible for our game operations and publishing in Asia, and Mr. Alan Chen, our senior vice president, as Chief Publishing Officer, U.S. & Europe, responsible for our game operations and publishing in the U.S. and Europe.”

 

“In summary, moving forward, in addition to our unchanged dedication to delivering more AAA-quality client-based games and further strengthening our global presence, we will also put more resources and efforts on developing lighter games, including web games and mobile games, to further diversify our portfolio and pipeline.  We are hopeful that our efforts will turn into new growth drivers for our business and create long-term value for our shareholders.”

 

6



 

“I am also pleased to announce that as we continue to generate a healthy cash flow from our strong operations and remain confident in our long term outlook, the Company would like to return value to our shareholders to express our gratitude for their enduring trust and support.  On March 10, 2013, the board of directors declared annual cash dividends in the aggregate amount of approximately USD22 million to our shareholders of record as of the close of business on April 8, 2013 (Eastern Time), at USD0.09 per Class A or Class B ordinary share, or USD0.45 per ADS, each representing five Class B ordinary shares of the Company.  The cash dividends are expected to be distributed in or around April 2013. We intend to distribute dividends annually in the future.  However, the distribution of any future dividends will be at the full discretion of the Board and will be dependent upon our financial position, results of operations, available cash, capital requirements and other factors.  Bringing value to our shareholders is an important part of our commitment, and we will continue to do what is necessary for the long-term health of our business and the best interest of our shareholders.”

 

Fourth Quarter 2012 Financial Results

 

Total Revenues

 

Total revenues were RMB679.9 million (USD109.1 million) in 4Q12, as compared to RMB695.8 million in 3Q12 and RMB776.4 million in 4Q11.

 

Online game operation revenues, which include both domestic and overseas online game operations, were RMB599.7 million (USD96.3 million) in 4Q12, as compared to RMB608.2 million in 3Q12 and RMB706.9 million in 4Q11.

 

The aggregate average concurrent users (ACU) for games under operation in mainland China was approximately 620,000 in 4Q12, as compared to 601,000 in 3Q12 and 873,000 in 4Q11.  The increase in ACU from 3Q12 was mainly attributable to a rebound in user traffic for some of the Company’s existing games such as “Zhu Xian.”

 

Licensing revenues were RMB36.5 million (USD5.9 million) in 4Q12, as compared to RMB39.0 million in 3Q12 and RMB65.6 million in 4Q11.  The decrease from 3Q12 was primarily due to lower initial license fees in certain overseas markets in 4Q12.

 

Other revenues were RMB43.7 million (USD7.0 million) in 4Q12, as compared to RMB48.6 million in 3Q12 and RMB3.9 million in 4Q11.  Most of the other revenues for 4Q12 were associated with “Torchlight 2,” a popular pay-per-install game developed by Runic Games, the Company’s majority-owned subsidiary based in the U.S.

 

Cost of Revenues

 

The cost of revenues was RMB157.3 million (USD25.3 million) in 4Q12, as compared to RMB128.9 million in 3Q12 and RMB137.1 million in 4Q11.  The increase from 3Q12 was mainly due to an impairment associated with certain of the Company’s smaller games in 4Q12.

 

Gross Profit and Gross Margin

 

Gross profit was RMB522.6 million (USD83.9 million) in 4Q12, as compared to RMB566.9 million in 3Q12 and RMB639.3 million in 4Q11.  Gross margin was 76.9% in 4Q12, as compared to 81.5% in 3Q12 and 82.3% in 4Q11.

 

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Operating Expenses

 

Operating expenses were RMB510.2 million (USD81.9 million) in 4Q12, as compared to RMB457.5 million in 3Q12 and RMB419.1 million in 4Q11.  The increase in operating expenses from 3Q12 was mainly due to the goodwill impairment associated with the Company’s Japanese subsidiary and higher R&D expenses, partially offset by decreases in sales and marketing expenses and general administrative expenses in 4Q12.

 

R&D expenses were RMB230.9 million (USD37.1 million) in 4Q12, as compared to RMB197.1 million in 3Q12 and RMB186.5 million in 4Q11.  The increase from 3Q12 was primarily due to an increase in staff cost, including a special year-end bonus.

 

Sales and marketing expenses were RMB159.7 million (USD25.6 million) in 4Q12, as compared to RMB177.1 million in 3Q12 and RMB142.0 million in 4Q11.  The decrease from 3Q12 was primarily due to a decrease in advertising and promotional expenses in 4Q12.  In 4Q12, the Company did not launch any major new game or release as many major expansion packs as in 3Q12.

 

General and administrative expenses were RMB78.8 million (USD12.6 million) in 4Q12, as compared to RMB83.3 million in 3Q12 and RMB90.6 million in 4Q11.  The decrease from 3Q12 was mainly due to a decrease in staff cost.

 

Goodwill impairment was RMB40.8 million (USD6.5 million) in 4Q12, as compared to Nil in 3Q12 and Nil in 4Q11.  The increase was primarily due to the goodwill impairment associated with the Company’s Japanese subsidiary.

 

Operating Profit

 

Operating profit was RMB12.4 million (USD2.0 million) in 4Q12, as compared to RMB109.4 million in 3Q12 and RMB220.2 million in 4Q11.  Excluding the share-based compensation charge and the goodwill impairment, non-GAAP operating profit was RMB67.1 million (USD10.8 million) in 4Q12, as compared to RMB127.5 million in 3Q12 and RMB244.0 million in 4Q11.

 

Total Other Income

 

Total other income was RMB75.6 million (USD12.1 million) in 4Q12, as compared to RMB16.1 million in 3Q12 and RMB49.0 million in 4Q11.  The increase from 3Q12 was largely due to a foreign exchange gain and an equity investment gain recognized in 4Q12, while respective losses were recognized in 3Q12.  In addition, the sequential increase was also attributable to an increase in government grant subsidy income.

 

Income Tax Expense

 

Income tax expense was RMB1.1 million (USD0.2 million) in 4Q12, as compared to RMB29.1 million in 3Q12 and RMB10.7 million in 4Q11.  The decrease from 3Q12 was mainly due to the R&D super deduction recognized during the annual tax filing for some of the Company’s PRC entities.

 

8



 

Net Income Attributable to the Company’s Shareholders

 

Net income attributable to the Company’s shareholders was RMB86.4 million (USD13.9 million) in 4Q12, as compared to RMB86.2 million in 3Q12 and RMB260.0 million in 4Q11.  Excluding the share-based compensation charge and the goodwill impairment, non-GAAP net income attributable to the Company’s shareholders was RMB141.1 million (USD22.7 million) in 4Q12, as compared to RMB104.3 million in 3Q12 and RMB283.9 million in 4Q11.

 

Basic and diluted earnings per ADS were RMB1.79 (USD0.29) and RMB1.78 (USD0.29), respectively, in 4Q12, as compared to RMB1.78 and RMB1.77, respectively, in 3Q12, and RMB5.65 and RMB5.45, respectively, in 4Q11.  Excluding the share-based compensation charge and the goodwill impairment, non-GAAP basic and diluted earnings per ADS were RMB2.92 (USD0.47) and RMB2.90 (USD0.47), respectively, in 4Q12, as compared to RMB2.16 and RMB2.14, respectively, in 3Q12, and RMB6.17 and RMB5.94, respectively, in 4Q11.

 

Cash and Cash Equivalents

 

As of December 31, 2012, the Company had RMB799.6 million (USD128.3 million) of cash and cash equivalents, as compared to RMB745.8 million as of September 30, 2012.  The increase was primarily due to net cash inflow generated from the Company’s online game operations, partially offset by a cash outflow for the investments in certain short-term structured deposits.

 

Fiscal Year 2012 Financial Results

 

Total Revenues

 

Total revenues were RMB2,770.6 million (USD444.7 million) in fiscal year 2012, as compared to RMB2,983.4 million in fiscal year 2011.

 

Online game operation revenues, which include both domestic and overseas online game operations, were RMB2,499.4 million (USD401.2 million) in fiscal year 2012, as compared to RMB2,708.5 million in fiscal year 2011.  The year-over-year decrease was primarily due to lower monetization of some of the existing games for the Company’s domestic operations, and was partially offset by the continued strength of the Company’s U.S. and European subsidiaries, as well as additional contribution from its recently-launched new game “Return of the Condor Heroes” in the domestic market.

 

Licensing revenues were RMB171.6 million (USD27.5 million) in fiscal year 2012, as compared to RMB246.8 million in fiscal year 2011.  The year-over-year decrease was primarily because the Company did not launch any new game in the domestic market until the end of 3Q12, which led to less availability of new games for export to overseas markets in fiscal year 2012.

 

Other revenues were RMB99.6 million (USD16.0 million) in fiscal year 2012, as compared to RMB28.1 million in fiscal year 2011.  The year-over-year increase was primarily associated with the revenue contribution from “Torchlight 2,” the Company’s popular pay-per-install game released in fiscal year 2012.

 

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Cost of Revenues

 

Cost of revenues was RMB539.9 million (USD86.7 million) in fiscal year 2012, as compared to RMB479.9 million in fiscal year 2011.  The year-over-year increase was primarily due to an impairment associated with certain of the Company’s smaller games and an increase in staff cost in fiscal year 2012.

 

Gross Profit and Gross Margin

 

Gross profit was RMB2,230.7 million (USD358.0 million) in fiscal year 2012, as compared to RMB2,503.5 million in fiscal year 2011.  Gross margin was 80.5% in fiscal year 2012, as compared to 83.9% in fiscal year 2011.

 

Operating Expenses

 

Operating expenses were RMB1,718.9 million (USD275.9 million) in fiscal year 2012, as compared to RMB1,480.2 million in fiscal year 2011.  The year-over-year increase in operating expenses was mainly due to an increase in staff cost and the goodwill impairment associated with the Company’s Japanese subsidiary.

 

Operating Profit

 

Operating profit was RMB511.8 million (USD82.1 million) in fiscal year 2012, as compared to RMB1,023.3 million in fiscal year 2011.  Excluding the share-based compensation charge and the goodwill impairment, non-GAAP operating profit was RMB623.7 million (USD100.1 million) in fiscal year 2012, as compared to RMB1,128.0 million in fiscal year 2011.

 

Net Income Attributable to the Company’s Shareholders

 

Net income attributable to the Company’s shareholders was RMB540.7 million (USD86.8 million) in fiscal year 2012, as compared to RMB984.0 million in fiscal year 2011.  Excluding the share-based compensation charge and the goodwill impairment, non-GAAP net income attributable to the Company’s shareholders was RMB652.6 million (USD104.7 million) in fiscal year 2012, as compared to RMB1,088.7 million in fiscal year 2011.

 

Basic and diluted earnings per ADS were RMB11.31 (USD1.81) and RMB11.15 (USD1.79), respectively, in fiscal year 2012, as compared to RMB20.18 and RMB19.27, respectively, in fiscal year 2011.  Excluding the share-based compensation charge and the goodwill impairment, non-GAAP basic and diluted earnings per ADS were RMB13.65 (USD2.19) and RMB13.46 (USD2.16), respectively, in fiscal year 2012, as compared to RMB22.33 and RMB21.32, respectively, in fiscal year 2011.

 

Declaration of Annual Cash Dividends

 

On March 10, 2013, the Company’s board of directors declared annual cash dividends in the aggregate amount of approximately USD22 million to the Company’s shareholders of record as of the close of business on April 8, 2013 (Eastern Time), at USD0.09 per Class A or Class B ordinary share, or USD0.45 per ADS, each representing five Class B ordinary shares of the Company.  The cash dividends are expected to be distributed in or around April 2013.

 

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The Company intends to distribute dividends annually in the future.  However, the distribution of any future dividends will be at the full discretion of the Board and will be dependent upon the Company’s financial position, results of operations, available cash, capital requirements and other factors.

 

Business Outlook

 

Based on the Company’s current operations, total revenues for the first quarter of 2013 are expected to be between RMB592 million and RMB619 million.  “Torchlight 2,” the Company’s popular pay-per-install game, contributed better-than expected revenues in the fourth quarter.  The Company does not expect the revenue contribution from this game to be as significant in the first quarter of 2013.  Additionally, the Company does not launch any major new game in the first quarter of 2013 and decided to slow down some of the in-game monetization in order to maintain a healthy life cycle of its existing games in the long term.

 

Non-GAAP Financial Measures

 

To supplement the financial measures prepared in accordance with generally accepted accounting principles 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 and the goodwill impairment 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 goodwill impairment may recur in the future.  They are not reflected in the presentation of the non-GAAP financial measures, but 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 and the goodwill impairment 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.

 

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Conference Call

 

Perfect World will host a conference call and live webcast at 9:00pm Eastern Daylight Time on Monday, March 11, 2013 (9:00am Beijing time on Tuesday, March 12, 2013).

 

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

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 19, 2013.

 

Dial-in numbers for the replay are as follows:

· U.S. Toll Free Number

1-855-452-5696

· International Dial-in Number

+61-2-8199-0299

Conference ID: 14047724

 

 

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.  Perfect World’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.  Perfect World’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,” “Empire of the Immortals” and “Return of the Condor Heroes;” an online casual game: “Hot Dance Party;” and a number of web games and social networking games.  While a substantial portion of the revenues are generated in China, Perfect World operates its games in North America, Europe and Japan through its own subsidiaries.  Perfect World’s games have also been licensed to leading game operators in a number of countries and regions in Asia, Latin America, Australia, New Zealand, and the Russian Federation and other Russian speaking territories.  Perfect World intends to continue to explore new and innovative business models and is committed to maximizing shareholder value over time.

 

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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, Perfect World’s limited operating history, its ability to develop and operate new games that are commercially successful, the growth of the online game market and the continuing market acceptance of its games and in-game items in China and elsewhere, its ability to protect intellectual property rights, its ability to respond to competitive pressure, its 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 11, 2013, 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

Joanne Deng — Investor Relations Manager

Tel: +86-10-5780-5700

Fax: +86-10-5780-5713

Email: ir@pwrd.com

http://www.pwrd.com

 

Christensen Investor Relations

Patty Bruner

Tel: +1-480-614-3036

Fax: +1-480-614-3033

Email: pbruner@christensenir.com

 

Victor Kuo

Tel: +86-10-5826-4939

Fax: +86-10-5826-4838

Email: vkuo@christensenir.com

 

13



 

Perfect World Co., Ltd.

Unaudited Consolidated Balance Sheets

 

 

 

December 31,

 

December  31,

 

December  31,

 

 

 

2011

 

2012

 

2012

 

 

 

RMB

 

RMB

 

USD

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

2,150,213,495

 

799,632,647

 

128,349,890

 

Restricted cash

 

535,500,431

 

891,462,180

 

143,089,546

 

Short-term investments

 

139,517,875

 

1,508,884,886

 

242,192,723

 

Accounts receivable, net

 

142,543,972

 

110,286,428

 

17,702,192

 

Due from related parties

 

40,000

 

7,542,600

 

1,210,671

 

Prepayment and other assets

 

94,628,466

 

156,083,903

 

25,053,194

 

Deferred tax assets

 

27,130,068

 

41,585,847

 

6,674,989

 

Total current assets

 

3,089,574,307

 

3,515,478,491

 

564,273,205

 

Non current assets

 

 

 

 

 

 

 

Equity investments

 

33,384,729

 

227,832,057

 

36,569,567

 

Time deposits

 

293,892,575

 

51,465,395

 

8,260,765

 

Restricted time deposits

 

125,717,425

 

7,814,450

 

1,254,306

 

Property, equipment, and software, net

 

1,259,850,498

 

1,206,485,419

 

193,654,262

 

Construction in progress

 

4,793,214

 

20,326,428

 

3,262,617

 

Intangible assets, net

 

273,193,489

 

229,013,555

 

36,759,210

 

Goodwill

 

466,328,513

 

408,829,417

 

65,621,646

 

Due from related parties

 

7,561,080

 

 

 

Prepayments and other assets

 

62,457,484

 

87,332,624

 

14,017,853

 

Deferred tax assets

 

35,235,313

 

42,427,797

 

6,810,131

 

Total assets

 

5,651,988,627

 

5,797,005,633

 

930,483,562

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable

 

89,123,596

 

70,696,803

 

11,347,618

 

Short-term bank loans

 

560,780,100

 

747,974,500

 

120,058,185

 

Advances from customers

 

95,921,079

 

133,949,512

 

21,500,379

 

Salary and welfare payable

 

204,976,567

 

232,137,936

 

37,260,708

 

Taxes payable

 

43,236,335

 

49,898,625

 

8,009,282

 

Accrued expenses and other liabilities

 

68,663,124

 

58,016,741

 

9,312,329

 

Due to related parties

 

155,000

 

150,000

 

24,077

 

Deferred revenues

 

461,921,174

 

365,705,044

 

58,699,707

 

Deferred tax liabilities

 

106,933,061

 

61,219,290

 

9,826,374

 

Deferred government grants

 

579,526

 

458,287

 

73,560

 

Total current liabilities

 

1,632,289,562

 

1,720,206,738

 

276,112,219

 

Deferred revenues

 

17,481,338

 

56,503,584

 

9,069,451

 

Deferred tax liabilities

 

8,005,954

 

6,875,864

 

1,103,652

 

Other long-term liabilities

 

8,803,103

 

1,619,438

 

259,938

 

Total liabilities

 

1,666,579,957

 

1,785,205,624

 

286,545,260

 

 

 

 

 

 

 

 

 

Shareholders’ Equity

 

 

 

 

 

 

 

Ordinary shares (US$0.0001 par value, 10,000,000,000 shares authorized, 29,671,195 Class A ordinary shares issued and outstanding, 201,238,020 Class B ordinary shares issued and outstanding as of December 31, 2011; 10,000,000,000 shares authorized, 29,671,195 Class A ordinary shares issued and outstanding, 212,376,660 Class B ordinary shares issued and outstanding as of December 31, 2012)

 

186,948

 

193,960

 

31,133

 

Additional paid-in capital

 

212,421,037

 

329,804,508

 

52,937,274

 

Statutory reserves

 

268,014,793

 

272,938,726

 

43,809,686

 

Accumulated other comprehensive loss

 

(60,430,695

)

(80,543,186

)

(12,928,073

)

Retained earnings

 

3,538,087,071

 

3,466,189,747

 

556,361,816

 

Total Perfect World Shareholders’ Equity

 

3,958,279,154

 

3,988,583,755

 

640,211,836

 

Non-controlling interests

 

27,129,516

 

23,216,254

 

3,726,466

 

Total Shareholders’ Equity

 

3,985,408,670

 

4,011,800,009

 

643,938,302

 

Total Liabilities and Shareholders’ Equity

 

5,651,988,627

 

5,797,005,633

 

930,483,562

 

 



 

Perfect World Co., Ltd.

Unaudited Consolidated Statements of Operations

 

 

 

Three months ended

 

Year ended

 

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

 

December 31,

 

December 31,

 

 

 

2011

 

2012

 

2012

 

2012

 

2011

 

2012

 

2012

 

 

 

RMB

 

RMB

 

RMB

 

USD

 

RMB

 

RMB

 

USD

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Online game operation revenues

 

706,928,792

 

608,210,956

 

599,656,127

 

96,251,445

 

2,708,506,602

 

2,499,418,794

 

401,184,378

 

Licensing revenues

 

65,602,278

 

38,967,837

 

36,495,793

 

5,857,979

 

246,823,270

 

171,563,574

 

27,537,852

 

Other revenues

 

3,856,156

 

48,630,435

 

43,745,046

 

7,021,564

 

28,106,785

 

99,603,687

 

15,987,494

 

Total Revenues

 

776,387,226

 

695,809,228

 

679,896,966

 

109,130,988

 

2,983,436,657

 

2,770,586,055

 

444,709,724

 

Cost of revenues

 

(137,087,329

)

(128,875,426

)

(157,316,603

)

(25,251,056

)

(479,929,333

)

(539,935,810

)

(86,665,673

)

Gross profit

 

639,299,897

 

566,933,802

 

522,580,363

 

83,879,932

 

2,503,507,324

 

2,230,650,245

 

358,044,051

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

(186,483,272

)

(197,110,698

)

(230,930,699

)

(37,066,933

)

(664,354,758

)

(797,067,359

)

(127,938,132

)

Sales and marketing expenses

 

(142,022,371

)

(177,135,483

)

(159,699,131

)

(25,633,478

)

(513,914,847

)

(559,973,706

)

(89,881,977

)

General and administrative expenses

 

(90,617,974

)

(83,270,255

)

(78,805,501

)

(12,649,155

)

(301,951,176

)

(321,059,742

)

(51,533,642

)

Goodwill impairment

 

 

 

(40,769,946

)

(6,544,028

)

 

(40,769,946

)

(6,544,028

)

Total operating expenses

 

(419,123,617

)

(457,516,436

)

(510,205,277

)

(81,893,594

)

(1,480,220,781

)

(1,718,870,753

)

(275,897,779

)

Operating profit

 

220,176,280

 

109,417,366

 

12,375,086

 

1,986,338

 

1,023,286,543

 

511,779,492

 

82,146,272

 

Other income / (expenses)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share of (loss) / income from equity investments

 

(341,956

)

(4,430,549

)

6,396,692

 

1,026,740

 

(1,574,506

)

(5,334,495

)

(856,245

)

Interest income

 

23,418,520

 

19,169,167

 

22,355,315

 

3,588,275

 

72,527,888

 

94,572,292

 

15,179,900

 

Interest expense

 

(4,329,191

)

(5,345,876

)

(4,368,201

)

(701,145

)

(6,606,336

)

(21,866,732

)

(3,509,852

)

Others, net

 

30,228,833

 

6,695,488

 

51,213,562

 

8,220,343

 

54,171,038

 

84,212,576

 

13,517,050

 

Total other income

 

48,976,206

 

16,088,230

 

75,597,368

 

12,134,213

 

118,518,084

 

151,583,641

 

24,330,853

 

Profit before tax

 

269,152,486

 

125,505,596

 

87,972,454

 

14,120,551

 

1,141,804,627

 

663,363,133

 

106,477,125

 

Income tax expense

 

(10,657,559

)

(29,077,514

)

(1,134,281

)

(182,065

)

(161,704,455

)

(116,119,365

)

(18,638,443

)

Income from continuing operations, net of tax

 

258,494,927

 

96,428,082

 

86,838,173

 

13,938,486

 

980,100,172

 

547,243,768

 

87,838,682

 

Loss from discontinued operations, net of tax

 

 

 

 

 

(37,492

)

 

 

Net Income

 

258,494,927

 

96,428,082

 

86,838,173

 

13,938,486

 

980,062,680

 

547,243,768

 

87,838,682

 

Net loss / (income) attributable to the non-controlling interests

 

1,526,359

 

(10,269,331

)

(391,178

)

(62,788

)

3,923,735

 

(6,593,580

)

(1,058,343

)

Net income attributable to the Company’s shareholders

 

260,021,286

 

86,158,751

 

86,446,995

 

13,875,698

 

983,986,415

 

540,650,188

 

86,780,339

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per share, basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

1.13

 

0.36

 

0.36

 

0.06

 

4.04

 

2.26

 

0.36

 

Discontinued operations

 

0.00

 

0.00

 

0.00

 

0.00

 

0.00

 

0.00

 

0.00

 

Total earnings per share, basic

 

1.13

 

0.36

 

0.36

 

0.06

 

4.04

 

2.26

 

0.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per share, diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

1.09

 

0.35

 

0.36

 

0.06

 

3.85

 

2.23

 

0.36

 

Discontinued operations

 

0.00

 

0.00

 

0.00

 

0.00

 

0.00

 

0.00

 

0.00

 

Total earnings per share, diluted

 

1.09

 

0.35

 

0.36

 

0.06

 

3.85

 

2.23

 

0.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per ADS, basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

5.65

 

1.78

 

1.79

 

0.29

 

20.17

 

11.31

 

1.81

 

Discontinued operations

 

0.00

 

0.00

 

0.00

 

0.00

 

0.01

 

0.00

 

0.00

 

Total earnings per ADS, basic

 

5.65

 

1.78

 

1.79

 

0.29

 

20.18

 

11.31

 

1.81

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per ADS, diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

5.45

 

1.77

 

1.78

 

0.29

 

19.26

 

11.15

 

1.79

 

Discontinued operations

 

0.00

 

0.00

 

0.00

 

0.00

 

0.01

 

0.00

 

0.00

 

Total earnings per ADS, diluted

 

5.45

 

1.77

 

1.78

 

0.29

 

19.27

 

11.15

 

1.79

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares used in calculating basic net earnings per share

 

230,210,827

 

241,622,487

 

241,754,091

 

241,754,091

 

243,765,093

 

239,119,233

 

239,119,233

 

Shares used in calculating diluted net earnings per share

 

238,748,799

 

243,269,476

 

243,416,502

 

243,416,502

 

255,380,327

 

242,495,660

 

242,495,660

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount attributable to the Company’s shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, net of tax

 

260,021,286

 

86,158,751

 

86,446,995

 

13,875,698

 

983,672,251

 

540,650,188

 

86,780,339

 

Income from discontinued operations, net of tax

 

 

 

 

 

314,164

 

 

 

Net income

 

260,021,286

 

86,158,751

 

86,446,995

 

13,875,698

 

983,986,415

 

540,650,188

 

86,780,339

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total share-based compensation cost included in:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

(1,508,310

)

(1,130,569

)

(799,479

)

(128,325

)

(6,362,169

)

(4,570,357

)

(733,593

)

Research and development expenses

 

(11,607,745

)

(8,598,468

)

(6,631,180

)

(1,064,378

)

(47,533,344

)

(34,818,684

)

(5,588,784

)

Sales and marketing expenses

 

(3,628,054

)

(2,730,279

)

(2,390,115

)

(383,640

)

(15,228,350

)

(10,111,863

)

(1,623,066

)

General and administrative expenses

 

(7,101,620

)

(5,652,702

)

(4,105,931

)

(659,047

)

(35,612,664

)

(21,643,688

)

(3,474,051

)

 



 

Perfect World Co., Ltd.

Reconciliation of GAAP and Non-GAAP Results

 

 

 

Three months ended

 

Year ended

 

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

 

December 31,

 

December 31,

 

 

 

2011

 

2012

 

2012

 

2012

 

2011

 

2012

 

2012

 

 

 

RMB

 

RMB

 

RMB

 

USD

 

RMB

 

RMB

 

USD

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating profit

 

220,176,280

 

109,417,366

 

12,375,086

 

1,986,338

 

1,023,286,543

 

511,779,492

 

82,146,272

 

Share based compensation charge

 

23,845,729

 

18,112,018

 

13,926,705

 

2,235,390

 

104,736,527

 

71,144,592

 

11,419,494

 

Goodwill impairment

 

 

 

40,769,946

 

6,544,028

 

 

40,769,946

 

6,544,028

 

Non-GAAP operating profit

 

244,022,009

 

127,529,384

 

67,071,737

 

10,765,756

 

1,128,023,070

 

623,694,030

 

100,109,794

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income attributable to the Company’s shareholders

 

260,021,286

 

86,158,751

 

86,446,995

 

13,875,698

 

983,986,415

 

540,650,188

 

86,780,339

 

Share based compensation charge

 

23,845,729

 

18,112,018

 

13,926,705

 

2,235,390

 

104,736,527

 

71,144,592

 

11,419,494

 

Goodwill impairment

 

 

 

40,769,946

 

6,544,028

 

 

40,769,946

 

6,544,028

 

Non-GAAP net income attributable to the Company’s shareholders

 

283,867,015

 

104,270,769

 

141,143,646

 

22,655,116

 

1,088,722,942

 

652,564,726

 

104,743,861

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net earnings per ADS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic

 

5.65

 

1.78

 

1.79

 

0.29

 

20.18

 

11.31

 

1.81

 

- Diluted

 

5.45

 

1.77

 

1.78

 

0.29

 

19.27

 

11.15

 

1.79

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net earnings per ADS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic

 

6.17

 

2.16

 

2.92

 

0.47

 

22.33

 

13.65

 

2.19

 

- Diluted

 

5.94

 

2.14

 

2.90

 

0.47

 

21.32

 

13.46

 

2.16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADSs used in calculating net earnings per ADS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic

 

46,042,165

 

48,324,497

 

48,350,818

 

48,350,818

 

48,753,019

 

47,823,847

 

47,823,847

 

- Diluted

 

47,749,760

 

48,653,895

 

48,683,300

 

48,683,300

 

51,076,065

 

48,499,132

 

48,499,132