NetDragon Websoft Inc. Announces 2012 Third Quarter Results

         NetDragon Websoft Inc. Announces 2012 Third Quarter Results

3Q Total Revenues Recorded New High

Net Profit Doubled QoQ

Mobile Internet Revenue Up 46.2% QoQ

PR Newswire

HONG KONG, Nov. 23, 2012

HONG KONG, Nov. 23, 2012 /PRNewswire/ --NetDragon Websoft Inc. ("NetDragon";
Stock Code: 777), a leading developer and operator of online games and mobile
internet platforms in China, today announced its unaudited financial results
for the third quarter ended September 30, 2012. A conference call and webcast
is scheduled for November 23, 2012 at 7:00 pm Hong Kong time (6:00 am ET,
November 23) to review the company's financial results and recent business
developments.

Third Quarter 2012 Financial and Operational Highlights

  oTotal Revenues* were RMB290.1 million, an increase of 11.7% over the
    second quarter of 2012 ("QoQ") and an increase of 43.8% over the third
    quarter of 2011 ("YoY");
  oRevenue from Online Games was RMB204.0 million, an increase of 1.5% QoQ
    and an increase of 11.2% YoY;
  oRevenue from Mobile Internet* was RMB86.1 million, an increase of 46.2%
    QoQ and an increase of 370.9% YoY;
  oGross profit was RMB252.8 million, an increase of 8.2% QoQ and an increase
    of 36.9% YoY;
  oOperating profit was RMB127.0 million, an increase of 43.8% QoQ and an
    increase of 114.9% YoY;
  oProfit attributable to Owners of the Company was RMB95.4 million, an
    increase of 111.8% QoQ and an increase of 91.7% YoY;
  oPro Forma Net Profit was RMB117.6 million, an increase of 71.2% QoQ and an
    increase of 133.4% YoY;
  oBasic earnings per share ("EPS") were RMB18.95 cents, while diluted
    earnings per share were RMB18.87 cents;
  oPeak concurrent users ("PCU") for online games were 525,000, a decrease of
    9.8% QoQ and a decrease of 7.7% YoY;
  oAverage concurrent users ("ACU") for online games were 281,000, a decrease
    of 8.5% QoQ and a decrease of 6.3% YoY;
  oTotal users of 91 Assistant were 127 million, an increase of 27.2% QoQ and
    an increase of 253.4% YoY;
  oTotal users of HiMarket exceeded 48 million, an increase of 57.5% QoQ and
    an increase of 599.7% YoY.

* The company has revisited the accounting policies of its mobile Internet
business, and determined to present 91 mobile platform revenues derived from
third party apps and content with cooperation partners on a net basis instead
of gross basis. Management believes this will result in more relevant
information about the core financial and operational performance of the mobile
internet segment. Restated revenue figures net of cooperation fee for prior
reporting periods are provided below

Mr. Liu Dejian, Chairman and Executive Director of NetDragon, commented "In
the third quarter of 2012, NetDragon maintained stability in online games and
robust growth in mobile internet business. Total revenues hit a new high,
growing 11.7% quarter-over-quarter to RMB290.1 million; net profit grew 111.8%
quarter-over-quarter.

"Our revenue from online games increased approximately 1.5%
quarter-over-quarter,aided by release of an expansion pack for Eudemons Online
in September. As the traditional online games market matures, we will continue
to support our flagship titles but shift our emphasis towards mobile and web
games production. We believe that the increasingly enriched product portfolio
will help our company maintain solid growth in online games going forward.

"Our mobile internet business maintained its industry-leading position,
increasing its revenue by 46.2% quarter-over-quarter. After focusing primarily
on user acquisition since our mobile platform's inception in 2008, we now see
our business entering a period of fast-growing monetization. Moreover, we are
excited about our leadership role in the mobile internet world, and
wholeheartedly accept the challenges and opportunities that lie ahead in
fashioning a healthy and dynamic win-win mobile internet ecosystem in China
and beyond."

Third Quarter 2012 Business Highlights

Mobile Internet

  o"91 Assistant", NetDragon's applications distribution platform for all
    mainstream operating systems, reached 127 million total users. Total users
    for "HiMarket", NetDragon's Android applications distribution platform,
    exceeded 48 million.
  oTotal apps and content exceeded 700,000 and aggregate downloads surpassed
    9.5 billion, which ranks NetDragon as China's largest mobile applications
    distribution platform.
  o91 Open Mobile Platform launched more than 300 mobile games, with total
    registered users exceeding 9 million.
  o91 DeNA, the joint venture between 91 Mobile and Japan's largest mobile
    social gaming platform operator DeNA Co., Ltd., launched its first
    self-developed game "Legend of Cavalry" and localized titles including
    "Fantasica", "Emblem of the Gods" and "Rites of Delta".

Online Games

  oEudemons Online's new Chinese EP was officially launched.
  oDisney Fantasy Online's new EPs were launched in August and September
    2012, respectively.
  oThe Arabic version of "DDTank" for which NetDragon serves as an agent,
    officially launched its open beta testing on September 20.

Recent Developments and Business Outlook

Mobile Internet

  o91 Limited and China's leading TMT social media DoNews jointly held
    "Symposium on Trend of Mobile applications on Android Platform & 2012
    First China Android Business Summit", aiming to build an Android ecosystem
    in China.
  oNetDragon launched its quarterly report titled "Trend of Mobile
    Applications on 91 Mobile Internet" in a move to provide macro data that
    assists mobile developers and advertisers.

Online Games

  oNew expansion packs for "Heroes of Might and Magic Online" and "Tou Ming
    Zhuang Online" are scheduled for the fourth quarter of 2012.
  oNetDragon's 2.5D MMORPG "Crazy Tribes" set in an ancient era underwent its
    closed beta testing in September 2012 and is scheduled for its first open
    beta testing in November 2012.

Others

  oAs of September 30, 2012, "91 Application Center for Children" exceeded 35
    million totaled aggregate downloads, on which over 4000 applications are
    available for kids created by developers both in and outside of
    China.Android version of the Center will be introduced this year.

Financial Highlights:

RMB('000)                   3Q 2012 2Q 2012 3Q 2011 QoQ(%) YoY(%)
Revenue (Restated)          290,144 259,849 201,812 11.7%  43.8%
-Online Games               204,067 200,992 183,533 1.5%   11.2%
-Mobile Internet (Restated) 86,077  58,857  18,279  46.2%  370.9%
Gross Profit                252,786 233,675 184,696 8.2%   36.9%
GPM                         87.1%   89.9%   91.5%   -2.8%  -4.4%
Operating Profit            126,958 88,289  59,077  43.8%  114.9%
Net Profit                  95,285  44,986  49,854  111.8% 91.1%
Pro Forma Net Profit        117,580 68,683  50,380  71.2%  133.4%
NPM                         32.8%   17.3%   24.7%   15.5%  8.1%
EPS-Basic (RMB cents)       18.95   8.75    9.48    116.6% 99.9%
EPS-Diluted (RMB cents)     18.87   8.73    9.48    116.2% 99.1%

* Restated Revenue Figures

RMB ('000)                     2Q 2012 1Q 2012 4Q 2011 3Q 2011 2Q 2011 1Q 2011
Total Revenues (Unrestated)    276,133 236,975 217,176 202,739 184,304 156,755
Total Revenues (Restated)      259,849 227,310 212,171 201,812 184,642 156,904
Mobile Internet Revenue        75,141  45,394  24,663  19,206  9,441   6,099
(Unrestated)
Mobile Internet Revenue        58,857  35,729  19,658  18,279  9,779   6,248
(Restated)

Metrics

Online Games

    3Q 2012 2Q 2012 1Q 2012 4Q 2011 3Q 2011 2Q 2011
PCU 525,000 582,000 600,000 612,000 569,000 643,000
ACU 281,000 307,000 297,000 310,000 300,000 311,000

Pro Forma Financial Measures

To supplement the consolidated results prepared in accordance with Hong Kong
Financial Reporting Standards, certain pro forma financial measures, namely
Pro Forma Net Profit, have been presented in this press release. These
unaudited pro forma financial measures should be considered in addition to,
not as a substitute for, measures of the Group's financial performance
prepared in accordance with HKFRS. In addition, these pro forma financial
measures may be defined differently from similar terms used by other
companies.

Management believes that the pro forma financial measures provide investors
with useful supplementary information to assess the performance of the Group's
core operations by excluding certain non-cash items, namely valuation loss on
derivative financial instruments and finance costs, on a non-tax adjusted
basis, both items associated with convertible preferred shares and promissory
notes issued by a subsidiary.

Management Conference Call

NetDragon will host a management conference call and webcast to review its
financial results for the third quarter ended September 30, 2012 on Friday,
November 23, 2012 Hong Kong time.

Details of the live conference call are as follows:

Time: 7:00 PM Beijing / Hong Kong Time / 6:00 AM Eastern Standard Time,
November 23, 2012

International Toll                    65-6723-9381
US Toll Free                           1-866-519-4004
Hong Kong Toll Free                    800-930-346
China Toll Free (for fixed line users) 800-8190-121
China Toll Free (for mobile users)     400-6208-038
Passcode                               NetDragon

Replay service is available from 10:00 PM November 23 to 08:59 PM December 1,
2012 HKT. Below are the replay numbers for different regions. International
Toll: 61-2-8199-0299; US Toll Free: 1-855-4525-696; Replay passcode: 68454378.
A live and archived webcast of the conference call will be available on the
Investor Relations section of NetDragon's website at
http://ir.netdragon.com/investor/ir_events.shtml. Participants in the live
webcast should visit the aforementioned website 10 minutes prior to the call,
then click on the icon for "3Q 2012 Results Conference Call" and follow the
registration instructions.

About NetDragon

NetDragon Websoft Inc. (HKSE: 0777) is a leading innovator and creative force
in China's online gaming and mobile internet industries. Established in 1999,
we are a vertically integrated developer & operator of MMORPGs and a
cutting-edge R&D powerhouse. We launched our first self-made online game
Monster & Me in 2002, followed by multiple titles including Eudemons Online,
Conquer Online and Heroes of Might & Magic Online. We are also China's pioneer
in overseas expansion, directly operating titles in overseas markets since
2003 in English, Spanish, Arabic and other languages. In the mobile Internet
industry, we provide China's leading marketplace for smartphone users,
offering applications and content for the most popular mobile operating
systems. NetDragon offers many well-known mobile Internet products and
services, including sj.91.com, www.hiapk.com, 91 Assistant, HiMarket, 91 Panda
Reader and 91 Panda Home.

For investor inquiries, please contact:

NetDragon Websoft Inc.

Ms. Maggie Zhou
Investor Relations Director
Tel.:| +86 591 8754 3120
+86 591 8390 2825
Email:| ndir@nd.com.cn
Website:| www.nd.com.cn/ir



CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED 30 SEPTEMBER 2012
                                          Three Months Ended
                                          30/9/2012   30/6/2012   30/9/2011
                                          (Unaudited) (Unaudited  (Unaudited
                                                      /Restated)  /Unrestated)
                                          RMB '000    RMB '000    RMB '000
Revenue                                   290,144      259,849    202,739
Cost of revenue                           (37,358)     (26,174)   (18,043)
Gross profit                              252,786      233,675    184,696
Other income and gains                    17,322       11,397     5,303
Selling and marketing expenses            (37,388)     (37,078)   (34,310)
Administrative expenses                   (51,564)     (54,270)   (56,373)
Development costs                         (46,231)     (50,164)   (36,280)
Other expenses                            (7,604)      (14,986)   (3,894)
Share of losses of associates             (363)        (285)      (65)
                                                               

Operating Profit                          126,958      88,289     59,077
Interest income on pledged bank deposit   2,600        -          -
Exchange gain (loss) on pledged bank
deposit, secured bank loan and redeemable 6,234        (1,642)    427
convertible preference shares
Net loss on derivative financial          (15,474)     (19,378)   (210)
instruments
Finance costs                             (6,821)      (4,319)    (316)
Profit before taxation                    113,497      62,950     58,978
Taxation                                  (18,212)     (17,964)   (9,124)
Profit for the period                     95,285       44,986     49,854
Other comprehensive income (expense):
Exchange differences arising on                                 
translation of foreign operations
                                          59           89         (734)
Total comprehensive income for the period 95,344       45,075     49,120
Profit for the period attributable to:
-Owners of the Company                    95,399       45,032     49,771
-Non-controlling interests                (114)        (46)       83
                                          95,285       44,986     49,854
Total comprehensive income attributable
to:
- Owners of the Company                   95,458       45,121     49,037
- Non-controlling interests               (114)        (46)       83
                                          95,344       45,075     49,120
                                          RMB cents   RMBcents  RMB cents
Earnings per share
- Basic                                   18.95        8.75       9.48
- Diluted                                 18.87        8.73       9.48



CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(AS AT 30 SEPTEMBER 2012)
                                           30 September 2012  31 December 2011
                                           (Unaudited)        (Audited)
                                           RMB '000           RMB '000
Non-current assets
Property, plant and equipment              261,116            192,119
Prepaid lease payments                     140,042            86,298
Investment property                       16,111             15,809
Deposit paid for acquisition of property,  -                  19,050
plant and equipment
Intangible assets                          4,000              4,520
Interests in associates                    12,148             12,669
Long-term deposit                          3,600              -
Available-for-sale investments             5,000              4,000
Loan receivables                           8,893              6,314
Deferred tax assets                        54                 54
                                           450,964            340,833
Current assets
Prepaid lease payments                     2,902              1,784
Loan receivables                           3,894              1,091
Trade receivables                          81,469             41,555
Other receivables, prepayments and         46,484             41,429
deposits
Held for trading investment                5,000              -
Amount due from related companies          2,499              1,200
Pledged bank deposit                       191,387            -
Bank deposits                              173,358            40,000
Bank balances and cash                     1,271,289          1,428,928
                                           1,778,282          1,555,987
Current liabilities
Trade payables                             31,154             5,001
Other payables and accruals     108,955            121,353
Deferred income                            32,881             25,528
Amount due to a related company            -                  965
Secured bank loan                          185,174            -
Other financial liability                  6,183              -
Promissory notes                           -                  30,623
Income tax payable                         42,724             42,849
                                           407,071            226,319
Net current assets                         1,371,211          1,329,668
Total assets less current liabilities      1,822,175          1,670,501
Non-current liabilities
Redeemable convertible preferred shares    174,979            131,675
Conversion option derivative liability     75,135             39,932
                                           250,114            171,607
Net assets                                 1,572,061          1,498,894
Capital and reserves
Share capital                              37,511             38,226
Share premium and reserves                 1,508,763          1,461,126
Equity attributable to owners of the       1,546,274          1,499,352
Company
Non-controlling interests                  25,787             (458)
                                           1,572,061          1,498,894

SOURCE NetDragon Websoft Inc.

Website: http://www.netdragon.com/
Website: http://ir.netdragon.com/investor/ir_events.shtml
 
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