NetDragon Websoft Inc. ("NetDragon", with its subsidiaries collectively the "Group"; Stock Code: 777), a leading online game developer and operator in China, today announced its unaudited consolidated financial results for the three months and nine months ended September 30, 2009.
Third Quarter 2009 Business Highlights
-- Launched "Gold Edition: Heroes of Might and Magic Online".
-- Licensed "Eudemons Online" and "Tou Ming Zhuang Online" in Vietnam.
-- Concluded the final round of closed beta testing for "Tian Yuan" and
initiated open beta testing of "Disney Fantasy Online".
-- Released the Expansion Pack (EP) of "Conquer Online" named "Raiding
Clans" in Chinese, English, French and Spanish.
-- "Panda Home", a self-developed mobile phone application, won the "Best
Home Replacement App" award at the first Android Network Awards.
-- Launched the 5th Chinese EP for "Eudemons Online", titled "Demon
Rising".
-- Launched open beta testing for the Arabic version of "Conquer Online"
in the MENA markets, marking the first-ever large-scale Chinese online
game successfully introduced in said area.
-- Licensed "Zero Online" in Japan and "Way of the Five" in Taiwan, Hong
Kong and Macau.
-- Recognized as the "Most Valuable Enterprise in China's Online Game
Industry over the Past Ten Years" at the Ten-Year China Online Game
Industry Award Ceremony.
-- The Group celebrated its 10th anniversary on 1 September 2009.
Recent Developments
-- Received the "Best Q-version Online Game" award for "Way of the Five"
won at the 2009 ChinaJoy Golden Plume Awards Grand Ceremony in October
2009.
-- Conducted the first close beta testing of "Dungeon Keeper Online" in
October 2009.
-- Licensed its flagship game "Eudemons Online" to Nival Group, for Russia
and the CIS region in October 2009.
-- Recognized by Fortune Magazine as one of the "2009 Outstanding
Employers - the Best Companies to Work for in China".
Chairman's Statement
Mr. Liu Dejian, Chairman and Executive Director of NetDragon, commented: "As one of the leading innovators in the rapidly evolving interactive media industry, we continue to execute upon our strategy of strengthening core game development and operating capabilities in order to tap market opportunities both in the PRC and abroad. With an R&D force of nearly 2,000, we have built our "engine" for future growth in online gaming, mobile applications, digital platforms and multimedia initiatives."
Mr. Liu continued: "With increasing output of proprietary products from our R&D engine, we have been able to bolster our pioneering approach of direct game operations in multiple geographies while also expanding our network of publishing partners around the world through outbound licensing. We are quite happy with our progress in attracting gamers in both emerging and developed markets, and we shall redouble our efforts to provide players worldwide with excellent interactive entertainment experiences for years to come."
Mr. Liu concluded: "While our capacity expansion in the past 2 years has elevated our fixed cost structure, we remain a firm believer in the innovative practices and the productivity of our human resources. We expect to reap the rewards from our prudent investment in the future, and as our Group headcount remains flat sequentially, we believe that margins will recover in due course."
Business Outlook
-- Launch of "Tian Yuan" and "Disney Fantasy Online" expected by year-end
2009.
-- Launch of English version of "Eudemons Online" EP "Demon Rising"
expected in December, 2009.
-- Games in the pipeline include "CJ7 Online" and "Dungeon Keeper Online"
in 2010, and a new version of "Ultima Online" in 2011.
-- Enhance our proprietary technological platform and produce a greater
proportion of high-quality 3D games to further enrich our game
portfolio.
-- Upgrade our game and product development capability in a prudent and
selective manner.
-- Maintain our focus on the in-game user experience and the timely launch
of EPs, to extend the lifecycle of our existing games.
-- Continue to explore opportunities in mobile software applications, as
many of the Group's mobile apps rank among the most popular mobile
products in China. This business endeavor is an integral part of the
Groups' multimedia strategy.
Management Conference Call
NetDragon will host a management conference call and webcast to review its results and recent developments, at 8:00 pm Hong Kong Time 25 November 2009, which corresponds to 7:00 am on 25 November Eastern Standard Time.
Dial-in details for the live conference call are as follows:
Dial in numbers:
International Toll +1 617 786 2963
US Toll Free +1 800 901 5241
Hong Kong Toll Free +800 96 3844
South China Toll Free 10 800 130 0399
North China Toll Free 10 800 152 1490
Passcode: 63545413
Replay service is available from November 25 to December 2, 2009. Below are the replay numbers for different regions. International Toll: +1 617 801 6888; US Toll Free: +1 888 286 8010; Replay passcode: 54422741. 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.us/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 2009 Results Investor Conference Call" and follow the registration instructions.
About NetDragon
NetDragon Websoft Inc. is a leading innovator and creative force in China's online gaming industry. Established in 1999, NetDragon has been operating and developing a broad range of MMORPGs since launching its first self-made title Monster & Me in 2002. In addition, NetDragon is China's pioneer in overseas expansion, having directly operated its titles in overseas markets since 2004 in English, French, Spanish and other foreign languages.
The Group's game portfolio comprises a range of massively multiplayer online games that cater to various types of players and gaming preferences. Current offerings include the games Way of the Five, Eudemons Online, Conquer Online, Zero Online, and Heroes of Might & Magic Online. The Group also has several games currently in development, including Tian Yuan, Disney Fantasy Online, CJ7 Online, Dungeon Keeper Online and a new version of Ultima Online.
Financial Highlights (unaudited)
(RMB Millions) 3Q 2009 2Q 2009 QoQ 3Q 2009 3Q 2008 YoY
Revenue 150.9 162.9 (7.4%) 150.9 136.6 10.4%
Gross Profit 129.0 140.9 (8.4%) 129.0 119.3 8.2%
GPM 85.5% 86.5% -- 85.5% 87.3% --
Profit for the
period 19.0 17.6 7.9% 19.0 50.9 (62.7%)
NPM 12.6% 10.8% -- 12.6% 37.2% --
Basic EPS
(RMB cents) 3.67 3.32 10.5% 3.67 9.45 (61.2%)
Dividend per
share (HKD) -- 0.082 -- -- -- --
Metrics
3Q2009 2Q2009 1Q2009 4Q2008 3Q2008 2Q2008 1Q2008
PCU 519,000 632,000 695,000 591,000 544,000 697,000 669,000
ACU 273,000 310,000 333,000 317,000 311,000 355,000 313,000
Note: Online games include Conquer Online, Eudemons Online, Zero Online,
Tou Ming Zhuang Online, Heroes of Might and Magic Online, Way of
the Five and other games.
Condensed Consolidated Statement of Comprehensive Income
For the nine months ended 30 September 2009
Three months ended Nine months ended
30 September 30 September
2009 2008 2009 2008
(Unaudited) (Unaudited)(Unaudited) (Unaudited)
RMB'000 RMB'000 RMB'000 RMB'000
Revenue 150,877 136,618 487,646 459,515
Cost of revenue (21,833) (17,341) (62,639) (49,742)
Gross profit 129,044 119,277 425,007 409,773
Other revenue and gains 28,539 13,973 39,926 28,707
Selling and marketing
expenses (31,551) (26,446) (98,746) (70,686)
Administrative expenses (48,151) (27,824) (129,468) (90,137)
Development costs (55,484) (22,713) (143,253) (58,343)
Other expenses (161) (3,870) (538) (23,165)
Changes in fair value of
derivative financial
instruments -- 20,355 (15,214) 20,793
Changes in fair value of
financial assets at
fair value through profit
or loss -- (22,318) 18,431 (21,709)
Share of losses of
associates -- -- (724) --
Profit before taxation 22,236 50,434 95,421 195,233
Taxation (3,250) 450 (10,043) (29,156)
Profit for the period 18,986 50,884 85,378 166,077
Other comprehensive loss:
Exchange differences
arising on translation (522) (1,627) (720) (47,428)
of foreign operations
Total comprehensive income
for the period 18,464 49,257 84,658 118,649
Profit for the period
attributable to
-Owners of the Company 19,290 50,884 85,682 166,189
-Minority interests (304) -- (304) (112)
18,986 50,884 85,378 166,077
Total comprehensive income
attributable to:
-Owners of the Company 18,768 49,257 84,962 118,761
-Minority interests (304) -- (304) (112)
18,464 49,257 84,658 118,649
Earnings per share
- Basic 3.67cents 9.45 cents 16.30cents 30.67cents
- Diluted 3.67cents N/A N/A N/A
Condensed Consolidated Statement of Financial Position
As at 30 September 2009
At 30 At 31
September December
2009 2008
(Unaudited) (Audited)
RMB'000 RMB'000
Non-current assets
Property, plant and equipment 106,829 96,160
Prepaid lease payments 12,916 7,224
Deposit paid for acquisition of property,
plant and equipment -- 7,357
Intangible assets 10,017 10,754
Interests in associates -- 224
Available-for-sale investments 4,000 4,000
Loan receivables 6,180 6,835
Deferred tax assets 54 54
139,996 132,608
Current assets
Prepaid lease payments 228 138
Trade and other receivables, prepayments
and deposits 79,648 81,990
Loan receivables 416 440
Held for trading investments 282 --
Financial assets at fair value through
profit or loss -- 311,806
Derivative financial instruments -- 31,857
Amounts due from associates 26,000 --
Tax recoverable 74 108
Bank deposits 397,309 629,454
Bank balances and cash 904,140 332,009
1,408,097 1,387,802
Current liabilities
Trade and other payables, accruals and
deferred income 84,514 53,677
Income tax payable 12,721 12,922
97,235 66,599
Net current assets 1,310,862 1,321,203
1,450,858 1,453,811
Capital and reserves
Share capital 39,264 39,264
Share premium and reserves 1,411,898 1,414,547
Equity attributable to owners of the
Company 1,451,162 1,453,811
Minority interests (304) --
1,450,858 1,453,811
Source: NetDragon Websoft Inc.
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