CMGE Reports Third Quarter 2012 Unaudited Financial Results
CMGE Reports Third Quarter 2012 Unaudited Financial Results
HONG KONG, Nov. 28, 2012 (GLOBE NEWSWIRE) -- China Mobile Games and
Entertainment Group Limited ("CMGE" or the "Company") (Nasdaq:CMGE), a leading
mobile game company in China, today reported its unaudited financial results
for the third quarter ended September 30, 2012.
Third Quarter Financial Highlights
* Revenues were RMB43.6 million (US$6.9 million ^(1)), compared with RMB63.1
million in the third quarter of 2011 and RMB60.7 million in the second
quarter of 2012.
* Net income was RMB1.6 million (US$0.3 million), which includes one-time
listing expense of RMB18.1 million (US$2.9 million), compared with RMB24.2
million in the third quarter of 2011 and RMB23.4 million in the second
quarter of 2012.
* Diluted earnings per American Depositary Share ^(2) ("ADS") were RMB0.04
(US$0.01).
* Cash and cash equivalents were RMB156.3 million (US$24.8 million) as of
September 30, 2012.
Third Quarter Operating Metrics
* Total paying user accounts ^(3) for feature phone single player games were
9.8 million, compared with 11.7 million in the third quarter of 2011 and
12.6 million in the second quarter of 2012, and average revenue per paying
user account ("ARPU") was RMB2.92, compared with RMB2.94 in the third
quarter of 2011 and RMB3.03 in the second quarter of 2012.
* Total paying user accounts for feature phone social games were 37,638,
compared with 16,593 in the third quarter of 2011 and 32,494 in the second
quarter of 2012, and ARPU was RMB57.14, compared with RMB64.82 in the
third quarter of 2011 and RMB57.76 in the second quarter of 2012.
* Total subscriptions ^(4) for smartphone single player games were 1.2
million in the third quarter of 2012, compared with 2.3 million in the
third quarter of 2011 and 1.7 million in the second quarter of 2012, and
average revenue per subscription was RMB4.06, compared with RMB4.73 in the
third quarter of 2011 and RMB4.79 in the second quarter of 2012.
* Total paying user accounts for smartphone social games were 30,357,
compared with 216,423 in the third quarter of 2011 and 126,301 in the
second quarter of 2012, and ARPU was RMB199.89, compared with RMB24.80 in
the third quarter of 2011 and RMB80.12 in the second quarter of 2012.
Ken Jian Xiao, CMGE's chief executive officer, commented, "While our results
for the third quarter were somewhat lackluster, we are optimistic about our
prospects for 2013 as we believe we have been effectively positioning
ourselves for the anticipated strong growth in the smartphone game segment."
"Our performance during the third quarter largely reflects the reality of the
feature phone market environment and the transition in our business. The
feature phone market has been shrinking as users continue to transition from
feature phones to smartphones and a certain mobile operator continues to
enforce a strict policy to reduce the volume of promotional advertisements for
smartphone single-player games to which it exposes its users. In response to
these challenges and in order to ensure the sustainable growth of our business
over the long term, we have recently focused our efforts on developing new
high quality smartphone social games for Android and iOS, the expansion of
distribution channels and the development of third-party game operating and
publishing capabilities.
"On the game development side, we have been directing considerable resources
to the development of at least seven proprietary social games for Android and
iOS-based smartphones, and we are excited about their potential. Our social
games not only include traditional heavy online role-playing games, but also
lighter social games, such as card games. Currently, more than 80% of our team
is working on smartphone-related projects, up from 50% a year ago, and by the
end of 2013, we believe that smartphone games will likely account for more
than 80% of our total mobile game revenues.
"We plan to expand the distribution channels for our Android phone games
through several means, including further exploring pre-installation
opportunities with both mobile chipset manufacturers and more than 400 handset
manufacturers that are increasingly focused on smartphones, building strategic
relationships with leading app store promotion platforms in China, and
maintaining strong partnerships with mobile operators. We also intend to
expand cooperation with open platforms, strengthen cooperation and promotional
opportunities with third party app stores, and significantly build out our
Douwan social game platform.
"CMGE has also built a strong game operating and publishing team for
third-party games. We are recruiting game studios and other third party
developers to introduce their games to our platform, which we are doing on
both exclusive and non-exclusive bases. The Company has also set aside funds,
which it intends to use for investing in early stage companies that focus on
mobile game research and development, user traffic development and game
promotion. We have already invested in several projects and will continue to
seek out top teams and companies to help provide CMGE with high quality game
products and increased user traffic. Through initiatives such as these, we
believe we will be able to effectively navigate the current market conditions
and deliver value to our shareholders over the long term."
Ken Chang, CMGE's chief financial officer, added, "Operationally, we were
pleased to see ARPU for smartphone social games continue to increase in the
third quarter of 2012, compared to the second quarter of 2012. A one-off
expense of RMB18.1 million (US$2.9 million), related to CMGE's successful
listing on the Nasdaq Global Market on September 25, 2012, was expensed during
the third quarter, and we continue to operate our business without any bank
borrowings or other debt. Over the past year, we have invested heavily in
human resources and research and development for smartphone social games,
enhancements to our social game platform, as well as our mobile handset design
business. We believe we will start to see some initial returns from these
investments next year."
Third Quarter 2012 Results
Revenues
Total net revenues were RMB43.6 million (US$6.9 million), compared with
RMB63.1 million in the third quarter of 2011 and RMB60.7 million in the prior
quarter.
* Feature phone game revenues were RMB30.7 million (US$4.9 million), a
decrease of 13.6% from RMB35.5 million in the same period last year and a
decrease of 23.8% from RMB40.3 million in the prior quarter. The decline
was primarily because consumers in China continue to migrate from feature
phones to smartphones.
* Smartphone game revenues were RMB10.9 million (US$1.7 million), a decrease
of 32.3% from RMB16.2 million in the same period last year and a decrease
of 39.3% from RMB18.0 million in the prior quarter. China Mobile, the
Company's service provider for all of its smartphone single-player game
bundles, has continued to tighten its policy on the number of pop-up
advertisements broadcast to its users. This has limited the promotion of
the Company's game bundles on China Mobile's platform and has resulted in
a decline in total subscriptions for CMGE's smartphone single-player
games, despite that our smartphone game bundles ranked first on China
Mobile's platform in terms of revenue from January to August 2012. In
addition, the number of paying users in smartphone social games, largely
for Paopao Xiyou and Dian Feng, has decreased because the Company decided
not to update or further enhance these existing games. Instead, CMGE has
been focusing research and development efforts on developing at least
seven new smartphone social games, more cater for the growing interest of
state-of-the-art quality social games, especially MMORPG games. The
Company anticipates that two new light smartphone social games will launch
in the fourth quarter of 2012 and another two new online smartphone social
games will debut in the first quarter of 2013.
* Handset design revenues were RMB2.0 million (US$0.3 million), which were
mainly derived from feature phone design. This represented a 82.6%
decrease from the corresponding period in 2011 and a 18.4% decrease from
the prior quarter as market demand continues to shift strongly from
feature phones to smartphones. The Company completed and delivered its
first order from smartphone manufacturers in September 2012, which
represented 22% of the revenue of the Company's mobile handset design
business in the third quarter of 2012.
Cost of Revenues
Cost of revenues was RMB22.5 million (US$3.6 million) during the third quarter
of 2012, a decrease of 22.6% from RMB29.0 million in the third quarter of 2011
and a decrease of 6.4% from RMB24.0 million in the second quarter of 2012.
These declines were primarily due to a decrease in the amount paid to agents
who pre-install CMGE's feature phone games and a drop in handset design sales
volume, which resulted in lower component costs. The Company's overall gross
margin was 48.4% during the third quarter of 2012, compared with 54.0% in the
third quarter of 2011 and 60.4% in the second quarter of 2012.
Operating Expenses
Operating expenses were RMB40.6 million (US$6.4 million) during the third
quarter of 2012, compared with RMB13.0 million in the third quarter of 2011
and RMB19.3 million in the second quarter of 2012. Operating expenses
excluding share-based compensation (non-GAAP ^ (5)) were RMB35.5 million
(US$5.6 million), compared with RMB14.1 million in the third quarter of 2011
and RMB16.1 million in the second quarter of 2012. The increase in non-GAAP
operating expenses was primarily driven by one-off costs related to the
Company's listing on Nasdaq, which were RMB18.1 million during the third
quarter of 2012, and higher research and development expenses, which as a
percentage of net revenue increased to 21.3% in the third quarter of 2012,
from 11.0% in the third quarter of 2011 and 12.1% in the second quarter of
2012 as the Company recruited more software engineers for new game
development.
Share-based compensation expenses totaled RMB5.1 million (US$0.8 million)
during the third quarter of 2012, compared with a gain of RMB1.0 million in
the third quarter of 2011 and expenses of RMB3.2 million in the second quarter
of 2012.
Operating Loss
Operating loss was RMB19.5 million (US$3.1 million) during the third quarter
of 2012, compared with operating income of RMB21.0 million in the third
quarter of 2011 and operating income of RMB17.4 million in the second quarter
of 2012. The third quarter operating loss was primarily due to the decrease in
total net revenues, the increase in overall research and development expenses
and the one-time expenses related to the Company's Nasdaq listing.
Operating loss excluding share-based compensation (non-GAAP) was RMB14.4
million (US$2.3 million) during the third quarter of 2012, compared with
income of RMB20.0 million in the third quarter of 2011 and income of RMB20.6
million in the second quarter of 2012.
Contingently Returnable Consideration Assets
Changes in fair value of contingently returnable consideration assets resulted
in a gain of RMB20.6 million (US$3.3 million) during the third quarter of
2012, compared with a gain of RMB11.2 million in the third quarter of 2011 and
a loss of RMB3.2 million in the second quarter of 2012. The gain in the
current quarter was primarily due to an increase in the fair value of the
consideration shares to be returned to VODone pursuant to the contingent
conditions related to the acquisitions of the 3GUU Group and the OWX Holding
Group.
Income Tax
The Company had an income tax benefit of RMB0.2 million (US$28,000) during the
third quarter of 2012, compared with an income tax expense of RMB8.4 million
in the third quarter of 2011 and an income tax benefit of RMB8.8 million in
second quarter of 2012. The decline in income tax benefit in the third quarter
of 2012 compared to the second quarter of 2012 was primarily because certain
subsidiaries were granted tax exemptions for being new software development
enterprises which made retroactively effective to the beginning of 2011 and
recognized during the second quarter of 2012.
Net Income
Net income during the third quarter of 2012 was RMB1.6 million (US$0.3
million), compared with RMB24.2 million in the third quarter of 2011 and
RMB23.4 million in the second quarter of 2012.
Net income excluding share-based compensation (non-GAAP) was RMB6.7 million
(US$1.1 million) during the third quarter of 2012, compared with RMB23.1
million in the third quarter of 2011 and RMB26.6 million in the second quarter
of 2012.
Basic and Diluted Earnings per ADS
Basic and diluted earnings per ADS both were RMB0.04 (US$0.01). Basic and
diluted earnings per ADS excluding share-based compensation (non-GAAP) were
RMB0.26 (US$0.04) and RMB0.25 (US$0.04), respectively, during the third
quarter of 2012. The number of ADSs used in calculating both GAAP and non-GAAP
weighted average basic and diluted earnings per ADS was 21.6 million and 22.6
million, respectively. For the third quarter of 2012, the basic and diluted
earnings per ordinary share were calculated using the two-class method because
the contingently redeemable ordinary shares were participating securities.
Since each contingently redeemable ordinary share has the same participating
right as each ordinary share, the allocation of undistributed earnings was
based on the proportionate number of ordinary shares and contingently
redeemable ordinary shares outstanding. The Company has allocated to
undistributed earnings to ordinary shares RMB1.0 million (US$0.2 million) for
calculating basic earnings per share and RMB5.6 million (US$0.9 million) for
calculating basic earnings per share excluding the impact of share-based
compensation (non-GAAP).
The effects of share options granted and restricted shares issued by the
Company were included in the calculation of diluted earnings per share for the
three months ended September 30, 2012.
Cash and Cash Equivalents
As of September 30, 2012, the Company had cash and cash equivalents of
RMB156.3 million (US$24.8 million). Operating cash flow for the third quarter
of 2012 was a net outflow of RMB12.4 million (US$2.0 million).
Common Shares
CMGE had 331,074,551 common shares outstanding as of September 30, 2012.
Recent Business Developments
As of September 30, 2012, the Company's game portfolio included 490 mobile
games, of which 327 were smartphone games and 163 were feature phone games.
Conference Call
CMGE's management will host a conference call to discuss the results at 8:00
a.m. Eastern Standard Time on November 28, 2012 (9:00 p.m. Beijing time on the
same day).
The dial-in details for the live conference call are:
U.S. Toll Free Dial-In +1 855-500-8701
Hong Kong Dial-In +852 3051-2745
China Dial-In 4001-200-654
International Dial-In +65 6723-9385
Conference ID CMGE
A telephone replay of the call will be available after the conclusion of the
conference call at 11:00 a.m. Eastern Standard Time on November 28, 2012
through 11:59 p.m. Eastern Standard Time on December 4, 2012. The dial-in
details for the replay are:
U.S. Toll Free Dial-In +1 855-452-5696
International Dial In: +61 2-8199-0299
Conference ID 54142228
A live webcast of the conference call will be available on the investor
relations section of CMGE's website at: http://www.cmge.com/
About CMGE
CMGE is a leading mobile game company in China with the largest market share
among mobile game developers in terms of revenues in 2010 and 2011, according
to a report prepared in March 2012 by Analysys International, an independent
market research firm. CMGE has integrated capabilities in the development,
operation, sale and distribution of mobile games in China. Its mobile handset
design business complements its game development business as it pre-installs
CMGE's mobile games and game platforms in the handsets it designs, and
enhances CMGE's knowledge of user habits and preferences and industry trends.
CMGE has a large and diversified portfolio of games for feature phones and
smartphones, and has strong development capabilities, evidenced by the fact
that it develops single-player games and mobile social games for both types of
handsets.
Forward-looking Statements
This press release contains forward-looking statements. These statements are
made under the "safe harbor" provisions of 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," "confident" and similar
statements. CMGE may also make written or oral forward-looking statements in
its periodic reports to the U.S. Securities and Exchange Commission, in its
annual report to shareholders, in press releases and other written materials
and in oral statements made by its officers, directors or employees to third
parties. Statements that are not historical facts, including statements about
CMGE's beliefs and expectations, are forward-looking statements.
Forward-looking statements involve inherent risks and uncertainties. A number
of factors could cause actual results to differ materially from those
contained in any forward-looking statement, including but not limited to the
following: The Company's growth strategies as well as business plans; future
development, results of operations and financial condition; ability to
continue to develop new and attractive products and services; ability to
continue to develop new technologies or upgrade existing technologies; ability
to attract and retain users and customers and further enhance brand
recognition; the expected growth of and trends in the mobile game industry in
China; PRC governmental policies and regulations relating to the mobile game
industry in China; competition in the mobile game industry; and general
economic and business conditions in China. Further information regarding these
and other risks is included in the Company's registration statement on Form
F-1 and other documents filed with the Securities and Exchange Commission.
CMGE does not undertake any obligation to update any forward-looking
statement, except as required under applicable law. All information provided
in this press release and in the attachments is as of the date of the press
release, and CMGE undertakes no duty to update such information, except as
required under applicable law.
About Non-GAAP Financial Measures
To supplement CMGE's financial results presented in accordance with U.S. GAAP,
the Company uses non-GAAP financial measures, which are adjusted from results
based on U.S. GAAP to exclude share-based compensation expenses.
Reconciliations of non-GAAP financial measures to U.S. GAAP financial measures
are set forth in tables at the end of this earnings release, which provide
more details on the non-GAAP financial measures.
Non-GAAP financial information is provided as additional information to help
investors compare business trends among different reporting periods on a
consistent basis and to enhance investors' overall understanding of the
historical and current financial performance of the Company's continuing
operations and prospects for the future. Non-GAAP financial information should
not be considered a substitute for or superior to U.S. GAAP results. In
addition, calculations of this non-GAAP financial information may be different
from calculations used by other companies, and therefore comparability may be
limited.
^1 This announcement contains translations of certain Renminbi (RMB) amounts
into U.S. dollars (US$) at specified rates solely for the convenience of the
reader. Unless otherwise noted, all translations from RMB to U.S. dollars are
made at a rate of RMB6.285 to US$1.00, the effective noon buying rate as of
September 28, 2012 in The City of New York for cable transfers of RMB as set
forth in H.10 weekly statistical release of the Federal Reserve Board.
^2 One ADS represents 14 Class A ordinary shares of the Company.
^3 Total paying user accounts represents the number of user accounts that have
purchased in-game items for the relevant period, adjusted to eliminate
double-counting of the same user accounts.
^4 Represents the total number of monthly subscriptions to game bundles
offered through mobile network operators and the number of games downloaded
through application stores. A user who pays two subscription fees during one
month to subscribe to different game bundles, pays both a subscription fee and
a fee to download a game through an application store, or who pays to download
two games through an application store, would be counted as two subscriptions.
^5 Non-GAAP measures and related reconciliations to GAAP measures are
described in the accompanying sections titled "About Non-GAAP Financial
Measures" and "Reconciliations of Non-GAAP Financial Measures to Comparable
GAAP Measures" at the end of this press release.
CHINA MOBILE GAMES AND ENTERTAINMENT GROUP LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET
(Amounts in thousands of Renminbi ("RMB") and U.S. Dollars ("US$"),
except for number of shares and share data )
As of
December 31, As of September 30,
2011* 2012 2012
RMB RMB US$
ASSETS
Current assets:
Cash and cash equivalents 187,237 156,327 24,874
Short-term investments -- 45,000 7,160
Accounts receivable 56,121 47,259 7,520
Inventories 2,103 2,764 440
Prepayments and other current assets 24,966 82,036 13,053
Amounts due from related parties 1,349 6 1
Deferred tax assets 1,491 212 34
Total current assets 273,267 333,604 53,082
Non-current assets:
Property and equipment, net 5,435 4,884 777
Goodwill 598,358 598,358 95,207
Intangible assets, net 70,101 58,342 9,283
Deferred initial public offering costs 2,010 -- --
Deferred tax assets 916 106 17
Other non-current assets 343 343 55
Total non-current assets 677,163 662,033 105,339
TOTAL ASSETS 950,430 995,637 158,421
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 9,150 1,606 256
Accrued expenses and other current 17,577 29,724 4,730
liabilities
Deferred revenue 3,894 2,663 424
Income tax payable 11,115 532 85
Dividends payable 63,000 -- --
Amounts due to related parties 6,542 3,195 508
Total current liabilities 111,278 37,720 6,003
Non-current liabilities:
Unrecognized tax benefits 27,844 20,729 3,298
Deferred tax liabilities 12,580 10,378 1,651
Other non-current liabilities 2,550 2,150 342
Total non-current liabilities 42,974 33,257 5,291
Total liabilities 154,252 70,977 11,294
Commitments and contingencies
Contingently redeemable ordinary shares
Contingently redeemable ordinary shares
(US$0.001 par value, 26,485,961 shares
authorized; nil and 26,485,961 shares
issued and outstanding as of December 31,
2011 and September 30, 2012, respectively. -- 76,961 12,246
As of September 30, 2012, aggregate
liquidation preference and redemption
amount were RMB75,899 and RMB76,961,
respectively)
Shareholders' equity:
Ordinary shares (US$0.001 par value,
1,000,000,000 shares authorized;
302,729,550 shares issued and outstanding 1,937 1,937 308
as of December 31, 2011 and September 30,
2012)
Additional paid-in capital 709,815 722,265 114,923
Retained earnings 84,853 123,881 19,711
Accumulated other comprehensive loss (427) (384) (61)
Total shareholders' equity 796,178 847,699 134,881
TOTAL LIABILITIES, CONTINGENTLY REDEEMABLE 950,430 995,637 158,421
ORDINARY SHARES AND SHAREHOLDERS' EQUITY
* Amounts for the year ended December 31, 2011 were derived from December 31,
2011 audited consolidated financial statements.
CHINA MOBILE GAMES AND ENTERTAINMENT GROUP LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
(Amounts in thousands of Renminbi ("RMB") and U.S. Dollars ("US$"),
except for number of shares and per share data)
For the three months ended For the nine months ended
September 30, June 30, September 30, September 30, September 30, September 30, September 30,
2011 2012 2012 2012 2011 2012 2012
RMB RMB RMB USD RMB RMB USD
Net revenues
(a)
Feature phone 35,510 40,272 30,682 4,882 110,020 106,391 16,928
games
Smartphone 16,174 18,029 10,948 1,742 43,971 45,072 7,172
games
Handset design 11,409 2,430 1,983 316 29,524 7,214 1,148
Total net 63,093 60,731 43,613 6,940 183,515 158,677 25,248
revenues
Cost of
revenues (b)
Feature phone (15,091) (17,688) (16,308) (2,595) (44,226) (52,352) (8,330)
games
Smartphone (4,640) (3,903) (3,598) (573) (12,626) (10,696) (1,702)
games
Handset design (9,301) (2,444) (2,579) (410) (20,790) (7,803) (1,242)
Total cost of (29,032) (24,035) (22,485) (3,578) (77,642) (70,851) (11,274)
revenues
Gross profit 34,061 36,696 21,128 3,362 105,873 87,826 13,974
Operating
expenses:
Selling (2,405) (4,894) (3,992) (636) (5,141) (11,046) (1,758)
expenses
General and
administrative (3,651) (7,068) (9,273) (1,475) (13,616) (22,248) (3,540)
expenses
Research and
development (6,970) (7,364) (9,270) (1,475) (15,077) (25,231) (4,014)
expenses
Listing -- -- (18,053) (2,872) -- (18,053) (2,872)
expenses
Total
operating (13,026) (19,326) (40,588) (6,458) (33,834) (76,578) (12,184)
expenses
Operating 21,035 17,370 (19,460) (3,096) 72,039 11,248 1,790
income
Interest 275 273 235 37 624 800 127
income
Other income 98 112 113 18 203 338 54
Changes in
fair value of
contingently 11,163 (3,161) 20,550 3,270 7,533 24,520 3,901
returnable
consideration
assets
Income before
income taxes
and 32,571 14,594 1,438 229 80,399 36,906 5,872
noncontrolling
interests
Income tax
(expenses) (8,411) 8,828 176 28 (25,446) 6,951 1,106
benefits
Net income 24,160 23,422 1,614 257 54,953 43,857 6,978
Accretion of
contingently
redeemable -- (1,887) (576) (92) -- (2,463) (392)
ordinary
shares
CHINA MOBILE GAMES AND ENTERTAINMENT GROUP LIMITED
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (CONTINUED)
(Amounts in thousands of Renminbi ("RMB") and U.S. Dollars ("US$"),
except for number of shares and per share data)
For the three months ended For the nine months ended
September 30, June 30, September 30, September 30, September 30, September 30, September 30,
2011 2012 2012 2012 2011 2012 2012
RMB RMB RMB USD RMB RMB USD
Net income
attributable 24,160 21,535 1,038 165 54,953 41,394 6,586
to
shareholders
Net income
attributable
to 2,599 -- -- -- 11,837 -- --
noncontrolling
interests
Net income
attributable
to China
Mobile Games
and 21,561 21,535 1,038 165 43,116 41,394 6,586
Entertainment
Group
Limited's
ordinary
shareholders
Other
comprehensive
(loss) income:
Foreign
currency (346) 27 23 4 (615) 43 7
translation
adjustment
Total other
comprehensive (346) 27 23 4 (615) 43 7
(loss) income
Comprehensive 23,814 21,562 1,061 169 54,338 41,437 6,593
income
Comprehensive
income
attributable 2,555 -- -- -- 11,759 -- --
to
noncontrolling
interests
Comprehensive
income
attributable
to China
Mobile Games
and 21,259 21,562 1,061 169 42,579 41,437 6,593
Entertainment
Group
Limited's
ordinary
shareholders
Earnings per
share:
Basic earnings 0.0862 0.0654 0.0032 0.0005 0.1916 0.1257 0.0200
per share
Diluted
earnings per 0.0861 0.0654 0.0030 0.0005 0.1915 0.1239 0.0197
share
Weighted
average number
of ordinary
shares
outstanding in
computing:
Basic earnings 250,082,418 302,729,550 302,729,550 302,729,550 225,027,473 302,729,550 302,729,550
per share
Diluted
earnings per 250,082,418 302,729,550 316,228,294 316,228,294 225,027,473 307,229,131 307,229,131
share
(a) Net
revenues from
related
parties
Feature phone 430 -- -- -- 12,012 -- --
games
(b) Cost of
revenues to
related
parties
Handset design (5) -- -- -- (550) -- --
CHINA MOBILE GAMES AND ENTERTAINMENT GROUP LIMITED
UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of Renminbi ("RMB") and U.S. Dollars ("US$"))
For the three months ended For the nine months ended
September 30, June 30, September 30, September 30, September 30, September 30, September 30,
2011 2012 2012 2012 2011 2012 2012
RMB RMB RMB US$ RMB RMB US$
Net cash
provided by
(used in) 7,817 22,255 (12,405) (1,974) 60,337 22,243 3,539
operating
activities
Net cash
provided by
(used in) (1,579) (29,461) (28,880) (4,595) (6,065) (61,039) (9,712)
investing
activities
Net cash
provided by
(used in) -- 72,881 (2,038) (324) -- 7,843 1,248
financing
activities
Exchange
rate effect
on cash and (417) 27 23 4 (693) 43 7
cash
equivalents
Net increase
(decrease)
in cash and 5,821 65,702 (43,300) (6,889) 53,579 (30,910) (4,918)
cash
equivalents
Cash and
cash
equivalents, 151,796 133,925 199,627 31,763 104,038 187,237 29,792
beginning of
the period
Cash and
cash
equivalents, 157,617 199,627 156,327 24,874 157,617 156,327 24,874
end of the
period
Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Measures
(Amounts in thousands of Renminbi ("RMB") except for per ADS data)
For the three months ended For the three months ended For the three months ended
September 30, 2011 June 30, 2012 September 30, 2012
Non- Non-
GAAP Adjustment (a) GAAP GAAP Adjustment(a) GAAP GAAP Adjustment(a) Non-GAAP
RMB RMB RMB RMB RMB RMB RMB RMB RMB
Operating 13,026 1,034 14,060 19,326 (3,199) 16,127 40,588 (5,054) 35,534
expenses
Income/(loss)
from 21,035 (1,034) 20,001 17,370 3,199 20,569 (19,460) 5,054 (14,406)
operations
Operating 33.3% 31.7% 28.6% 33.9% NM (c) NM (c)
margin
Net income 24,160 (1,034) 23,126 23,422 3,199 26,621 1,614 5,054 6,668
Net margin 38.3% 36.7% 38.6% 43.8% 3.7% 15.3%
Net income
attributable 21,561 (1,034) 20,527 21,535 3,199 24,734 1,038 5,054 6,092
to CMGE
Net margin
attributable 34.2% 32.5% 35.5% 40.7% 2.4% 14.0%
to CMGE
Diluted
earnings per 1.21 1.15 0.92 1.05 0.04 0.25
ADS(b)
For the nine months ended September 30, 2011 For the nine months ended September 30, 2012
GAAP Adjustment (a) Non-GAAP GAAP Adjustment (a) Non-GAAP
RMB RMB RMB RMB RMB RMB
Operating 33,834 (937) 32,897 76,578 (10,144) 66,434
expenses
Income from 72,039 937 72,976 11,248 10,144 21,392
operations
Operating 39.3% 39.8% 7.1% 13.5%
margin
Net income 54,953 937 55,890 43,857 10,144 54,001
Net margin 29.9% 30.5% 27.6% 34.0%
Net income
attributable 43,116 937 44,053 41,394 10,144 51,538
to CMGE
Net margin
attributable 23.5% 24.0% 26.1% 32.5%
to CMGE
Diluted
earnings per 2.68 2.74 1.73 2.16
ADS(b)
(a) Adjustment to exclude the share-based compensation expense of each period.
(b) 1 ADS = 14 Ordinary Shares.
(C) Not Meaningful.
CONTACT: For investor and media inquiries, please contact:
China Mobile Games and Entertainment Group Limited
In China:
Tel: +86 20-8561-3455
E-mail: ir@cmge.com
Christensen
Christian Arnell
Tel: +86-10-5826-4939 (China)
E-mail: carnell@ChristensenlR.com
In the U.S.:
Christensen
Linda Bergkamp
Tel: +1 480 614 3000
E-mail: lbergkamp@ChristensenIR.com
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