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Perfect World Announces Fourth Quarter and Fiscal Year 2012 Unaudited Financial Results



    Perfect World Announces Fourth Quarter and Fiscal Year 2012 Unaudited
                              Financial Results

PR Newswire

BEIJING, March 11, 2013

BEIJING, March 11, 2013 /PRNewswire/ -- 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.

(Logo: http://photos.prnewswire.com/prnh/20090416/CNTH023LOGO)

Fourth Quarter 2012 Highlights (1)

  o Total revenues were RMB679.9 million (USD109.1 million), as compared to
    RMB695.8 million in 3Q12 and RMB776.4 million in 4Q11.
  o Gross profit was RMB522.6 million (USD83.9 million), as compared to
    RMB566.9 million in 3Q12 and RMB639.3 million in 4Q11.
  o 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 profit (2) was RMB67.1 million (USD10.8 million), as compared to
    RMB127.5 million in 3Q12 and RMB244.0 million in 4Q11.
  o 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
    shareholders (2) was RMB141.1 million (USD22.7 million), as compared to
    RMB104.3 million in 3Q12 and RMB283.9 million in 4Q11. 
  o Basic and diluted earnings per ADS (3) 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 ADS (2) 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.
  o 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.
  o 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.

Fiscal Year 2012 Financial Highlights

  o Total revenues were RMB2,770.6 million (USD444.7 million), as compared to
    RMB2,983.4  million in fiscal year 2011.
  o Gross profit was RMB2,230.7 million (USD358.0 million), as compared to
    RMB2,503.5 million in fiscal year 2011.
  o 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. 
  o 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. 
  o 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."

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."

"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.  

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.

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.

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.

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.

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.

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

 

 

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, 1,259,850,498  1,206,485,419  193,654,262
net
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         68,663,124     58,016,741     9,312,329
liabilities
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;             186,948        193,960        31,133

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)
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    (60,430,695)   (80,543,186)   (12,928,073)
loss
Retained earnings                  3,538,087,071  3,466,189,747  556,361,816
Total Perfect World Shareholders'  3,958,279,154  3,988,583,755  640,211,836
Equity
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              5,651,988,627  5,797,005,633  930,483,562
Shareholders' Equity

 

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       706,928,792    608,210,956    599,656,127    96,251,445    2,708,506,602    2,499,418,794    401,184,378
revenues
Licensing       65,602,278     38,967,837     36,495,793     5,857,979     246,823,270      171,563,574      27,537,852
revenues
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         (137,087,329)  (128,875,426)  (157,316,603)  (25,251,056)  (479,929,333)    (539,935,810)    (86,665,673)
revenues
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     (186,483,272)  (197,110,698)  (230,930,699)  (37,066,933)  (664,354,758)    (797,067,359)    (127,938,132)
expenses
Sales and
marketing       (142,022,371)  (177,135,483)  (159,699,131)  (25,633,478)  (513,914,847)    (559,973,706)    (89,881,977)
expenses
General and
administrative  (90,617,974)   (83,270,255)   (78,805,501)   (12,649,155)  (301,951,176)    (321,059,742)    (51,533,642)
expenses
Goodwill        -              -              (40,769,946)   (6,544,028)   -                (40,769,946)     (6,544,028)
impairment
Total operating (419,123,617)  (457,516,436)  (510,205,277)  (81,893,594)  (1,480,220,781)  (1,718,870,753)  (275,897,779)
expenses
Operating       220,176,280    109,417,366    12,375,086     1,986,338     1,023,286,543    511,779,492      82,146,272
profit
Other income /
(expenses)
Share of (loss)
/ income from   (341,956)      (4,430,549)    6,396,692      1,026,740     (1,574,506)      (5,334,495)      (856,245)
equity
investments
Interest income 23,418,520     19,169,167     22,355,315     3,588,275     72,527,888       94,572,292       15,179,900
Interest        (4,329,191)    (5,345,876)    (4,368,201)    (701,145)     (6,606,336)      (21,866,732)     (3,509,852)
expense
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     48,976,206     16,088,230     75,597,368     12,134,213    118,518,084      151,583,641      24,330,853
income
Profit before   269,152,486    125,505,596    87,972,454     14,120,551    1,141,804,627    663,363,133      106,477,125
tax
Income tax      (10,657,559)   (29,077,514)   (1,134,281)    (182,065)     (161,704,455)    (116,119,365)    (18,638,443)
expense
Income from
continuing      258,494,927    96,428,082     86,838,173     13,938,486    980,100,172      547,243,768      87,838,682
operations, net
of tax
Loss from
discontinued    -              -              -              -             (37,492)         -                -
operations, net
of tax
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 1,526,359      (10,269,331)   (391,178)      (62,788)      3,923,735        (6,593,580)      (1,058,343)
the
non-controlling
interests
Net income
attributable to 260,021,286    86,158,751     86,446,995     13,875,698    983,986,415      540,650,188      86,780,339
the Company's
shareholders
Net earnings
per share,
basic
Continuing      1.13           0.36           0.36           0.06          4.04             2.26             0.36
operations
Discontinued    0.00           0.00           0.00           0.00          0.00             0.00             0.00
operations
Total earnings
per share,      1.13           0.36           0.36           0.06          4.04             2.26             0.36
basic
Net earnings
per share,
diluted
Continuing      1.09           0.35           0.36           0.06          3.85             2.23             0.36
operations
Discontinued    0.00           0.00           0.00           0.00          0.00             0.00             0.00
operations
Total earnings
per share,      1.09           0.35           0.36           0.06          3.85             2.23             0.36
diluted
Net earnings
per ADS, basic
Continuing      5.65           1.78           1.79           0.29          20.17            11.31            1.81
operations
Discontinued    0.00           0.00           0.00           0.00          0.01             0.00             0.00
operations
Total earnings  5.65           1.78           1.79           0.29          20.18            11.31            1.81
per ADS, basic
Net earnings
per ADS,
diluted
Continuing      5.45           1.77           1.78           0.29          19.26            11.15            1.79
operations
Discontinued    0.00           0.00           0.00           0.00          0.01             0.00             0.00
operations
Total earnings
per ADS,        5.45           1.77           1.78           0.29          19.27            11.15            1.79
diluted
Shares used in
calculating
basic net       230,210,827    241,622,487    241,754,091    241,754,091   243,765,093      239,119,233      239,119,233
earnings
    per share
Shares used in
calculating
diluted net     238,748,799    243,269,476    243,416,502    243,416,502   255,380,327      242,495,660      242,495,660
earnings
    per share
Amount
attributable to
the Company's
shareholders:
Income from
continuing      260,021,286    86,158,751     86,446,995     13,875,698    983,672,251      540,650,188      86,780,339
operations, net
of tax
Income from
discontinued    -              -              -              -             314,164          -                -
operations, net
of tax
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         (1,508,310)    (1,130,569)    (799,479)      (128,325)     (6,362,169)      (4,570,357)      (733,593)
revenues
Research and
development     (11,607,745)   (8,598,468)    (6,631,180)    (1,064,378)   (47,533,344)     (34,818,684)     (5,588,784)
expenses
Sales and
marketing       (3,628,054)    (2,730,279)    (2,390,115)    (383,640)     (15,228,350)     (10,111,863)     (1,623,066)
expenses
General and
administrative  (7,101,620)    (5,652,702)    (4,105,931)    (659,047)     (35,612,664)     (21,643,688)     (3,474,051)
expenses

 

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 220,176,280   109,417,366    12,375,086    1,986,338     1,023,286,543  511,779,492   82,146,272
profit
Share based
compensation   23,845,729    18,112,018     13,926,705    2,235,390     104,736,527    71,144,592    11,419,494
     charge
Goodwill       -             -              40,769,946    6,544,028     -              40,769,946    6,544,028
impairment
Non-GAAP
operating      244,022,009   127,529,384    67,071,737    10,765,756    1,128,023,070  623,694,030   100,109,794
profit
GAAP net
income
attributable
to the         260,021,286   86,158,751     86,446,995    13,875,698    983,986,415    540,650,188   86,780,339

     Company's
shareholders
Share based
compensation   23,845,729    18,112,018     13,926,705    2,235,390     104,736,527    71,144,592    11,419,494
     charge
Goodwill       -             -              40,769,946    6,544,028     -              40,769,946    6,544,028
impairment
Non-GAAP net
income
attributable   283,867,015   104,270,769    141,143,646   22,655,116    1,088,722,942  652,564,726   104,743,861
to the  
     Company's
shareholders
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

SOURCE Perfect World Co., Ltd.

Website: http://www.pwrd.com
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