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Tencent Announces 2012 Third Quarter Results

November 14, 2012

HONG KONG, Nov 14, 2012 /PRNewswire/ — Tencent Holdings Limited (“Tencent” or the “Company”, SEHK 00700), a leading provider of comprehensive Internet services in China, today announced the unaudited consolidated results for the third quarter of 2012 ended September 30, 2012.

Highlights of the Third Quarter of 2012:

  • Total revenues were RMB11,565.6 million (USD1,823.9 million[1]), an increase of 9.9% over the second quarter of 2012 (“QoQ”) or an increase of 54.3% over the third quarter of 2011 (“YoY”).
  • Revenues from Internet value-added services (“IVAS”) were RMB8,371.0 million (USD1,320.1 million), an increase of 7.5% QoQ or an increase of 39.4% YoY.
  • Revenues from mobile & telecommunications value-added services (“MVAS”) were RMB946.2 million (USD149.2 million), an increase of 1.9% QoQ or an increase of 12.0% YoY.
  • Revenues from online advertising were RMB1,015.3 million (USD160.1 million), an increase of 15.4% QoQ or an increase of 69.0% YoY.
  • Revenues from e-Commerce transactions were RMB1,133.9 million (USD178.8 million), an increase of 32.2% QoQ.
  • Gross profit was RMB6,778.5 million (USD1,069.0 million), an increase of 9.1% QoQ or an increase of 40.2% YoY. Gross margin decreased to 58.6% from 59.0% last quarter.
  • Operating profit was RMB4,124.4 million (USD650.4 million), an increase of 4.7% QoQ or an increase of 37.9% YoY. Operating margin decreased to 35.7% from 37.4% last quarter. Non-GAAP operating profit[2] was RMB4,442.8 million (USD700.6 million), an increase of 5.2% QoQ or an increase of 31.5% YoY. Non-GAAP operating margin decreased to 38.4% from 40.1% last quarter.
  • Profit for the quarter was RMB3,241.1 million (USD511.1 million), an increase of 4.2% QoQ or an increase of 32.5% YoY. Net margin decreased to 28.0% from 29.5% last quarter.
    Non-GAAP profit for the quarter2 was RMB3,587.1 million (USD565.7 million), an increase of 5.2% QoQ or an increase of 29.0% YoY. Non-GAAP net margin decreased to 31.0% from 32.4% last quarter.
  • Profit attributable to equity holders of the Company for the quarter was RMB3,218.7 million (USD507.6 million), an increase of 3.8% QoQ or an increase of 31.6% YoY. Non-GAAP profit attributable to equity holders of the Company for the quarter2 was RMB3,551.3 million (USD560.1 million), an increase of 4.9% QoQ or an increase of 28.2% YoY.
  • Basic earnings per share were RMB1.759. Diluted earnings per share were RMB1.727.
  • Key platform statistics:
    • Monthly active Instant Messaging (“IM”) user accounts were 783.9 million, flat QoQ or an increase of 10.1% YoY.
    • Peak simultaneous online IM user accounts were 167.3 million, an increase of 0.4% QoQ or an increase of 15.1% YoY.
    • Monthly active Qzone user accounts were 592.8 million, a decrease of 0.8% QoQ or an increase of 8.2% YoY; monthly active Pengyou user accounts were 258.9 million, an increase of 4.5% QoQ or an increase of 26.8% YoY.
    • Peak simultaneous online QQ Game Platform user accounts were 9.4 million, an increase of 6.8% QoQ or an increase of 17.5% YoY.
    • Fee-based IVAS registered subscriptions were 73.8 million, a decrease of 1.2% QoQ or a decrease of 4.8% YoY.
    • Fee-based MVAS registered subscriptions were 33.7 million, a decrease of 2.6% QoQ or an increase of 8.0% YoY.

Mr. Ma Huateng, Chairman and CEO of Tencent, said, “Our platform strength enabled us to achieve solid year-on-year growth in operating and financial metrics during the third quarter 2012. Several of our investment initiatives, such as open platform, Weixin and online video, made progress in driving user engagement or monetisation. Looking forward, we will extend our open platform from desktop to mobile Internet, and we will enrich the platform by encouraging a greater diversity of applications. Our focus remains on building our user base and enhancing our user experience, particularly during this period of rapid mobile Internet growth.”

Financial Review for the Third Quarter of 2012

Revenues from our IVAS business increased 7.5% QoQ to RMB8,371.0 million and represented 72.4% of our total revenues for the third quarter of 2012. Online game revenues increased 7.3% QoQ to RMB5,972.9 million. This primarily reflected growth in games revenues from China which benefited from the positive impact of summer holidays on titles such as Cross Fire, QQ Dancer and QQ Speed, as well as contributions from new titles, such as Legend of Yulong. We also experienced growth in game revenues from international markets such as the US, Europe, and Korea. Revenues from our community and open platforms increased 7.9% QoQ to RMB2,398.1 million, mainly driven by growth in item-based sales within applications on our open platforms.

Revenues from our MVAS business increased 1.9% QoQ to RMB946.2 million and represented 8.2% of our total revenues for the third quarter of 2012. This primarily reflected an increase in revenues from our mobile games and mobile books.

Revenues from our online advertising business increased 15.4% QoQ to RMB1,015.3 million and represented 8.8% of our total revenues for the third quarter of 2012. Brand display advertising revenues increased, reflecting the positive impact of the London Olympic Games, and performance display advertising grew, as advertisers spent more on our social networks’ inventory.

Revenues from our e-Commerce transactions business increased 32.2% QoQ to RMB1,133.9 million and represented 9.8% of our total revenues for the third quarter of 2012. This was mainly driven by increased volume of e-Commerce transactions in which we act as principal. Fees generated from transactions on our marketplace also contributed to the growth rate.

Other Key Financial Information for the Third Quarter of 2012

Share-based compensation was RMB217.3 million for the third quarter of 2012 as compared with RMB255.7 million for the previous quarter.

Capital expenditure was RMB1,132.3 million for the third quarter of 2012 as compared with RMB915.2 million for the previous quarter.

The Company didn’t repurchase any shares on the Stock Exchange during the third quarter of 2012 as compared with 26,000 shares repurchased for an aggregate consideration of approximately RMB4.3 million in the previous quarter.

As at September 30, 2012, net cash position totaled RMB23,492.4 million which excluded short-term borrowings of RMB3,012.0 million, long-term borrowings of RMB2,219.4 million and long-term notes payable of RMB7,591.2 million.

As at September 30, 2012, the total number of shares of the Company in issue was 1.846 billion.

Business Review and Outlook

Overall Financial Performance

In the third quarter of 2012, we achieved solid year-on-year growth in revenues and earnings.

  • Our IVAS business benefited from the popularity of our online game titles in China and overseas, and from increased item-based sales within applications on our open platforms.
  • Our MVAS business continued to achieve year-on-year revenue growth. However, our primary focus for this business is maximising long-term user base and user engagement, rather than near-term financial performance.
  • Our online advertising business registered a significant year-on-year revenue increase, thanks to new platform contributions and continued expansion in traditional brand display advertising.
  • Our e-Commerce transactions business experienced a sequential revenue increase during the quarter, due to growth in transaction volume.

Strategic Highlights

In September 2012, we announced the completion of a USD 600 million senior unsecured notes offering. This is our second international bond issue, following our first such transaction in December 2011. We are grateful that our investors continue to display confidence in our business model and financial performance, and we remain firmly committed to maintaining our strong credit profile and investment grade credit ratings.

Divisional and Product Highlights

Communications Platforms

For QQ IM, MAU registered 10% year-on-year growth and reached 784 million at the end of the third quarter of 2012. It’s PCU for the quarter was 167 million, representing 15% growth as compared to the same period last year. The growth rate of PCU decelerated as the increased number of mobile users resulted in greater dispersion of time spent on QQ IM through different day parts. During the quarter, Weixin reinforced its position as the leading mobile community in China, exceeding 200 million registered use accounts in September 2012.

Media Platforms

QQ.com extended its lead among portals in China in terms of page views and unique visitors, and Tencent Microblog maintained a leading social media position in China with 507 million registered user accounts and 94 million DAU at the end of the quarter. Tencent Video gained popularity among Internet users due to content enrichment and user experience improvement. During the quarter, we leveraged our in-depth coverage of the London Olympic Games and our cross-platform sharing tools to enhance our media influence and brand recognition, especially in the sports category.

IVAS

Our social networks registered solid growth in the third quarter of 2012, with increased traffic and photos uploads from mobile users. MAU of Qzone increased by 8% year-on-year to 593 million at the end of the quarter. MAU of Pengyou increased by 27% year-on-year to 259 million at the end of the quarter.

Our IVAS registered subscriptions count declined compared to the same period last year due to policies we launched in the second quarter of 2012 for cleaning up certain user accounts acquired through telecommunications operators, for whom fee collection was unlikely. We believe these measures should ultimately improve our subscriber base quality. The increasing adoption of mobile Internet activities is also impacting our IVAS registered subscriptions count, because at this stage the pace of our mobile user growth is faster than that of our mobile privilege development. Consequently, some of our IVAS subscription services are less appealing to mobile-oriented users as we have not yet extended all IVAS privileges from desktop to mobile devices. In future, we intend to enrich the mobile-related features and privileges of our IVAS subscription services to cater to this emerging user demand trend.

On our open platforms, item-based sales within applications continued to grow due to more usage of such applications and increased social sharing traffic. We have generated material revenues for third-party developers, who can publish their applications across our multiple platforms to tap into our base of social and game-oriented users. Looking ahead, we are extending the reach of our open platforms from desktop to mobile with the implementation of open QQ account login on third-party mobile applications, in order to position for the emerging opportunities in the mobile Internet. To maximise user engagement, and thus the long-term development of our open platforms, we are incentivising developers of applications with large user bases but moderate or low per user revenue generation. This initiative is particularly focused on non-game applications as we aim to broaden the range of services that our users can enjoy.

Our online game business achieved healthy year-on-year growth in users and revenues in the third quarter of 2012, with increased contribution from self-developed titles. Growth in revenues from China was driven by our established ACG and MMOG, as well as new titles, such as Legend of Yulong and Legend of Xuanyuan, which are both developed in-house. Revenue contribution from international markets, such as the US, Europe, and Korea, increased along with an expanded user base. QQ Game Platform’s PCU increased to 9.4 million during the quarter, representing growth of 18% compared to the same period last year. As the Chinese game industry matures and hit titles within the industry face the law of large numbers, our game business revenue growth rate will depend in part on the popularity and monetisation of our new and future titles, and in part on the health of our existing titles.

MVAS

In the third quarter of 2012, our MVAS business delivered stable revenue growth compared to the same period last year, driven by our bundled SMS packages and mobile games. We continued to progress in building our long-term user base with different types of mobile applications. For example, our mobile security product achieved over 100 million activated users during the period.

Our MVAS business is primarily focused on extending our desktop services to mobile, and on developing new applications for smartphones. As we are currently less focused on optimising monetisation, the near-term financial trajectory of this business may be uneven. Longer term, we believe growth in smartphone users, and in time spent online on mobile devices, should enable new business models to emerge which tap into the unique features of such devices.

Online Advertising

In the third quarter of 2012, our online advertising business achieved robust revenue growth on a year-on-year basis, supported by performance advertising on our social networks, video advertising, traditional brand display advertising, and search advertising. During the quarter, we utilised the London Olympic Games opportunity to better penetrate selected up-scale brand advertisers. Performance advertising on our social networks increased as we delivered greater impression volume, improved our click-through rates, and enabled new advertiser categories, such as education service providers, to participate in performance advertising. Looking forward, the absence of the Olympic Games event and decelerating economic growth in China may slow revenue growth rates for the online advertising industry as a whole, including our own online advertising business.

e-Commerce Transactions

The volume of our principal e-Commerce transactions increased sequentially in the third quarter of 2012 due to our own promotional activities, as well as increased public awareness of our long-established price leadership in the consumer electronics sector as a result of a widely publicised “price war” among other industry players. Our agency revenues also grew on a quarter-on-quarter basis, albeit from a low base, due to an increased number of transactions on our marketplace.

About Tencent

Tencent aims to enrich the interactive online experience of Internet users by providing a comprehensive range of Internet and wireless value-added services. Through its various online platforms, including Instant Messaging QQ, web portal QQ.com, the QQ Game Platform under Tencent Games, multi-media social networking service Qzone and wireless portal, Tencent services the largest online community in China and fulfills the user’s needs for communication, information, entertainment and e-Commerce on the Internet.

Tencent has four main streams of revenues: Internet value-added services, mobile and telecommunications value-added services, online advertising and e-Commerce.

Shares of Tencent Holdings Limited are traded on the Main Board of the Stock Exchange of Hong Kong Limited, under stock code 00700. The Company became a constituent of the Hong Kong’s Hang Seng Index (HSI) on June 10, 2008. For more information, please visit www.tencent.com/ir.

For enquiries, please contact:

Catherine Chan Tel: (86) 755 86013388 ext 88369 or (852) 31485100 Email: cchan#tencent.com
Jane Yip Tel: (86) 755 86013388 ext 81374 or (852) 31485100 Email: janeyip#tencent.com

Non-GAAP Financial Measures

To supplement the consolidated results of the Company prepared in accordance with IFRS, certain non-GAAP financial measures, including non-GAAP operating profit, non-GAAP operating margin, non-GAAP profit for the period, non-GAAP net margin and non-GAAP profit attributable to equity holders of the Company, have been presented in this press release. These unaudited non-GAAP financial measures should be considered in addition to, not as a substitute for, measures of the Company’s financial performance prepared in accordance with IFRS. In addition, these non-GAAP financial measures may be defined differently from similar terms used by other companies.

The Company’s management believes that the non-GAAP financial measures provide investors with useful supplementary information to assess the performance of the Company’s core operations by excluding certain non-cash items and certain impact of acquisitions.

Forward-Looking Statements

This press release contains forward-looking statements relating to the business outlook, forecast business plans and growth strategies of the Company. These forward-looking statements are based on information currently available to the Company and are stated herein on the basis of the outlook at the time of this press release. They are based on certain expectations, assumptions and premises, some of which are subjective or beyond our control. These forward-looking statements may prove to be incorrect and may not be realized in future. Underlying the forward-looking statements is a large number of risks and uncertainties. Further information regarding these risks and uncertainties is included in our other public disclosure documents on our corporate website.

    CONSOLIDATED INCOME STATEMENT
    In RMB '000 (unless otherwise stated)

                                            Unaudited                                Unaudited
                                            ---------                                ---------
                                             3Q2012               2Q2012                       3Q2012             3Q2011
                                             ------               ------                       ------             ------
    Revenues                                          11,565,556         10,527,244                   11,565,556          7,496,157
        Internet VAS                                   8,371,026          7,786,625                    8,371,026          6,003,135
        Mobile & Telecom VAS                             946,218            929,007                      946,218            844,900
    Online advertising                                 1,015,266            879,691                    1,015,266            600,572
             e-Commerce transactions                   1,133,901            857,526                    1,133,901                  -
                                                       ---------            -------                    ---------                ---
        Others                                            99,145             74,395                       99,145             47,550
                                                          ------             ------                       ------             ------
    Cost of revenues                                  (4,787,093)        (4,311,379)                  (4,787,093)        (2,661,407)
                                                      ----------         ----------                   ----------         ----------
    Gross profit                                       6,778,463          6,215,865                    6,778,463          4,834,750
                                                       ---------          ---------                    ---------          ---------
                               Gross margin                 58.6%              59.0%                        58.6%              64.5%
    Interest income                                      205,781            196,806                      205,781            124,159
    Other (losses)/gains,
     net                                                 (14,791)            (3,219)                     (14,791)             9,200
    S&M expenses                                        (819,790)          (609,672)                    (819,790)          (507,252)
    G&A expenses                                      (2,025,298)        (1,862,165)                  (2,025,298)        (1,469,278)
    Operating profit                                   4,124,365          3,937,615                    4,124,365          2,991,579
                           Operating margin                 35.7%              37.4%                        35.7%              39.9%
                                                            ----               ----                         ----               ----
    Finance (costs)/income,
     net                                                 (99,478)          (115,256)                     (99,478)            43,097
    Share of (losses)/profit
     of associates                                       (21,188)             5,411                      (21,188)           (21,842)
    Share of losses of
     jointly controlled
     entities                                             (6,089)            (9,375)                      (6,089)           (59,926)
    Profit before income tax                           3,997,610          3,818,395                    3,997,610          2,952,908
    Income tax expense                                  (756,465)          (707,824)                    (756,465)          (506,760)
                                                        --------           --------                     --------           --------
    Profit for the period                              3,241,145          3,110,571                    3,241,145          2,446,148
                                                       ---------          ---------                    ---------          ---------
                                 Net margin                 28.0%              29.5%                        28.0%              32.6%
                                                            ----               ----                         ----               ----
    Attributable to:
        Equity holders of the
         Company                                       3,218,693          3,100,075                    3,218,693          2,446,437
        Non-controlling
         interests                                        22,452             10,496                       22,452               (289)
                                                          ------             ------                       ------               ----

    Non-GAAP profit
     attributable to equity
     holders of the Company                           3,551, 337          3,386,266                   3,551, 337          2,769,143
                                                      ----------          ---------                   ----------          ---------

    Earnings per share
     (GAAP)
    - basic (RMB)                                          1.759              1.698                        1.759              1.340
    - diluted (RMB)                                        1.727              1.665                        1.727              1.314
                                                           -----              -----                        -----              -----

    CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
    In RMB '000 (unless otherwise stated)

                                                   Unaudited                             Unaudited
                                                   ---------                             ---------
                                                     3Q2012            2Q2012                      3Q2012            3Q2011
                                                     ------            ------                      ------            ------
    Profit for the period                                   3,241,145         3,110,571                   3,241,145         2,446,148
                                                            ---------         ---------                   ---------         ---------
    Other comprehensive income;
     net of tax:
    Net losses from changes in
     fair value of                                            (37,923)         (530,203)                    (37,923)         (491,093)
            available-for-sale
             financial assets
    Currency translation
     differences                                                  125             7,743                         125           (13,322)
                                                                  ---             -----                         ---           -------
    Total comprehensive income
     for the period                                         3,203,347         2,588,111                   3,203,347         1,941,733
                                                            ---------         ---------                   ---------         ---------
    Attributable to:
        Equity holders of the
         Company                                            3,180,882         2,576,886                   3,180,882         1,942,022
        Non-controlling interests                              22,465            11,225                      22,465              (289)
                                                               ------            ------                      ------              ----

    OTHER FINANCIAL INFORMATION
    In RMB '000 (unless otherwise stated)

                                          Unaudited
                                          ---------
                                           3Q2012               2Q2012             3Q2011
                                           ------               ------             ------
    EBITDA
     (a)                                             4,591,603          4,331,322          3,403,665
    Adjusted
     EBITDA
     (a)                                             4,784,020          4,558,963          3,581,786
                                                     ---------          ---------          ---------
    Adjusted
     EBITDA
     margin
     (b)                                                  41.4%              43.3%              47.8%
                                                          ----               ----               ----
    Interest
     expense                                            86,104             69,344             14,759
                                                        ------             ------             ------
    Net cash
     (c)                                            23,492,375         19,631,631         15,654,534
                                                    ----------         ----------         ----------
    Capital
     expenditures
     (d)                                             1,132,314            915,156          1,133,342
                                                     ---------            -------          ---------

Note:

    a)      EBITDA consists of
     operating profit less interest
     income, and plus other losses/
     (gains), net, depreciation of
     fixed assets and investment
     properties and amortisation of
     intangible assets.  Adjusted
     EBITDA consists of EBITDA plus
     equity-settled share-based
     compensation expenses.
    b)      Adjusted EBITDA margin is
     calculated by dividing Adjusted
     EBITDA by revenues.
    c)      Net cash is calculated as
     cash and cash equivalents, term
     deposits with initial term of
     over three months, and restricted
     cash pledged for secured bank
     borrowings, minus total
     borrowings and long-term notes
     payable.
    d)      Capital expenditures
     consist of additions (excluding
     business combination) to fixed
     assets, construction in progress,
     land use rights and intangible
     assets (excluding game and other
     content licences).

    CONSOLIDATED STATEMENT OF FINANCIAL POSITION

      In RMB '000 (unless otherwise stated)                                                                                                      Unaudited      Unaudited
                                                                                                                                                 ---------      ---------
                                                                                                                                                 30 September                       30 June
                                                                                                                                                       2012           2012

    ASSETS
    Non-current assets
    Fixed assets                                                                                                                                  6,707,460      6,201,179
    Construction in progress                                                                                                                        450,764        323,786
    Investment properties                                                                                                                            21,789         21,643
    Land use rights                                                                                                                                 346,697        348,509
    Intangible assets                                                                                                                             4,739,476      4,194,417
    Interests in associates                                                                                                                       7,070,127      5,292,559
    Investment in jointly controlled
     entities                                                                                                                                        47,819         53,908
    Deferred income tax assets                                                                                                                      172,590        184,608
    Available-for-sale financial assets                                                                                                           5,504,415      5,320,869
    Prepayments, deposits and other
     assets                                                                                                                                       1,991,043      3,877,451
    Long-term deposits                                                                                                                            8,591,724              -
                                                                                                                                                  ---------            ---
                                                                                                                                                 35,643,904     25,818,929
                                                                                                                                                 ----------     ----------
    Current assets

    Inventories                                                                                                                                     424,273        202,106
    Accounts receivable                                                                                                                           2,683,965      2,500,207
    Prepayments, deposits and other
     assets                                                                                                                                       3,332,155      3,275,968
    Short-term deposits                                                                                                                          14,281,401     17,014,730
    Restricted cash                                                                                                                               2,192,256      2,317,431
    Cash and cash equivalents                                                                                                                    13,441,768     10,602,451
                                                                                                                                                 ----------     ----------
                                                                                                                                                 36,355,818     35,912,893
                                                                                                                                                 ----------     ----------
    Total assets                                                                                                                                 71,999,722     61,731,822
                                                                                                                                                 ==========     ==========
    EQUITY
    Equity attributable to the Company's
     equity holders
    Share capital                                                                                                                                       198            198
    Share premium                                                                                                                                 2,651,800      2,488,779
    Shares held for share award scheme                                                                                                             (625,960)      (609,657)

    Other reserves                                                                                                                                  518,860        532,264
    Retained earnings                                                                                                                            34,870,783     31,652,090
                                                                                                                                                 ----------     ----------
                                                                                                                                                 37,415,681     34,063,674
    Non-controlling interests                                                                                                                       876,950        650,698
                                                                                                                                                    -------        -------
    Total equity                                                                                                                                 38,292,631     34,714,372
                                                                                                                                                 ----------     ----------

    LIABILITIES
    Non-current liabilities

    Borrowings                                                                                                                                    2,219,350        948,735
    Long-term notes payable                                                                                                                       7,591,193      3,751,839
    Deferred income tax liabilities                                                                                                               1,016,454        893,822
    Long-term payables                                                                                                                            1,530,080      1,441,920
                                                                                                                                                  ---------      ---------
                                                                                                                                                 12,357,077      7,036,316
                                                                                                                                                 ----------      ---------
    Current liabilities
    Accounts payable                                                                                                                              3,960,242      3,368,438
    Other payables and accruals                                                                                                                   5,403,161      4,872,613
    Derivative financial instruments                                                                                                                      -         14,680
    Borrowings                                                                                                                                    3,011,975      3,609,323
    Current income tax liabilities                                                                                                                1,029,070        998,523
    Other tax liabilities                                                                                                                           468,738        256,781
    Deferred revenue                                                                                                                              7,476,828      6,860,776
                                                                                                                                                  ---------      ---------
                                                                                                                                                 21,350,014     19,981,134
                                                                                                                                                 ----------     ----------
    Total liabilities                                                                                                                            33,707,091     27,017,450
                                                                                                                                                 ----------     ----------
    Total equity and liabilities                                                                                                                 71,999,722     61,731,822
                                                                                                                                                 ==========     ==========

    RECONCILIATIONS OF IFRS TO NON-GAAP RESULTS
    -------------------------------------------
                                                                                                                                                                                                                                                                                                                                            As                                                                       Adjustments                                                        Non-GAAP
                                                                                                                                                                                                                                                                                                                                         reported
                                                                                                                                                                                                                                                                                                                                         --------
    In RMB '000                                                                                                                                                                                                                                                                                                                       Equity-settled                 Cash-settled          Losses on        Amortisation        Impairment provision (d)   Special
                                                                                                                                                                                                                                                                                                                                                                                                                                                           dividend
                                                                                                                                                                                                                                                                                                                                                                                                                                                           income (e)
    except percentages                                                                                                                                                                                                                                                                                                           share-based compensation    share-based compensation (a)    deemed   of intangible assets (c)
                                                                                                                                                                                                                                                                                                                                                                     disposal (b)
    ---                                                                                                                                                                                                                                                                                                                                                               -----------
                                                                                                                                          Unaudited three months ended 30September 2012
                                                                                                                                          ---------------------------------------------
    Operating profit                                                                                                                                                                                                                                                                                                                              4,124,365                       192,417     24,860                     5,150                    38,494       448,000  (390,472)  4,442,814
              Operating margin                                                                                                                                                                                                                                                                                                                         35.7%                                                                                                                            38.4%
    Profit for theperiod                                                                                                                                                                                                                                                                                                                          3,241,145                       192,417     24,860                     5,150                    66,013       448,000  (390,472)  3,587,113
                          Net margin                                                                                                                                                                                                                                                                                                                   28.0%                                                                                                                            31.0%
    Profit attributable to equity holders of the Company                                                                                                                                                                                                                                                                                          3,218,693                       189,660     21,921                     5,150                    58,385       448,000  (390,472)  3,551,337
    ----------------------------------------------------                                                                                                                                                                                                                                                                                          ---------                       -------     ------                     -----                    ------       -------   --------  ---------
                                                                                                                                            Unaudited three months ended 30June 2012
                                                                                                                                            ----------------------------------------
    Operating profit                                                                                                                                                                                                                                                                                                                              3,937,615                       227,641     28,081                         -                    28,137             -          -  4,221,474
              Operating margin                                                                                                                                                                                                                                                                                                                         37.4%                                                                                                                            40.1%
    Profit for the period                                                                                                                                                                                                                                                                                                                         3,110,571                       227,641     28,081                         -                    44,060             -          -  3,410,353
                          Net margin                                                                                                                                                                                                                                                                                                                   29.5%                                                                                                                            32.4%
    Profit attributable to equity holders of the
     Company                                                                                                                                                                                                                                                                                                                                      3,100,075                       221,817     24,643                         -                    39,731             -          -  3,386,266
    --------------------------------------------                                                                                                                                                                                                                                                                                                  ---------                       -------     ------                       ---                    ------           ---        ---  ---------
                                                                                                                                          Unaudited three months ended 30September 2011
                                                                                                                                          ---------------------------------------------
    Operating profit                                                                                                                                                                                                                                                                                                                              2,991,579                       178,121     24,294                         -                   184,212             -          -  3,378,206
             Operating margin                                                                                                                                                                                                                                                                                                                          39.9%                                                                                                                            45.1%
    Profit for theperiod                                                                                                                                                                                                                                                                                                                          2,446,148                       178,121     24,294                         -                   131,211             -          -  2,779,774
                         Net margin                                                                                                                                                                                                                                                                                                                    32.6%                                                                                                                            37.1%
    Profit attributable to equity holders of the Company                                                                                                                                                                                                                                                                                          2,446,437                       176,934     22,397                         -                   123,375             -          -  2,769,143
    ----------------------------------------------------                                                                                                                                                                                                                                                                                          ---------                       -------     ------                       ---                   -------           ---        ---  ---------
    (a) Including put options
     granted to employees of
     investees on their shares and
     shares to be issued under
     investees' share-based
     incentive plans which can be
     acquired by the Company, and
     other incentives
    (b) Losseson deemed disposal of
     previously held interests in
     associates
    (c)  Amortisation of intangible
     assets resulting from
     acquisitions, net of related
     deferred tax
    (d) Impairment provision for
     interests in associates and
     available-for-sale financial
     assets
    (e) Special dividend income
     from Mail.ru

[1] Figures stated in USD are based on USD1 to RMB6.3410

[2] See “Non-GAAP Financial Measures” section for more details on the reasons for presenting these measures

SOURCE Tencent Holdings Limited


Source: PR Newswire