HONG KONG, Mar 23, 2011 - (ACN Newswire) - Kingsoft Corporation Limited ("Kingsoft" or the "Company"; HKEx: 03888), a leading developer, distributor and service provider of application and entertainment software in China, announced its audited annual results for the year ended 31 December 2010.
In the year under review, revenue from the entertainment and application software businesses have slightly decreased, resulting in a decline of total revenue by 5% to RMB971 million. Profit attributable to owners of the parent decreased by 3.8% year-over-year to RMB372 million. Basic earnings per share for the year were RMB34.16 cents (2009: RMB36.38 cents). The Board of directors has recommended a final dividend of HK15 cents per share for year 2010 (2009: HK15 cents) and a special dividend of HK25 cents per share.
Revenue from entertainment and application software business segments were RMB640 million and RMB321 million respectively, represented approximately 66% and 33% of total revenue in 2010.
Selling and distribution expenses decreased by 25% year-over-year. This decline was primarily due to no new games launched in 2010 and more cost-effective campaigns for marketing and promotional activities for existing games. R&D costs increased by 36% year-over-year as the result of the increase in staff salaries and benefits. Cash and cash equivalents increased by 31% from RMB1.27 billion in 2009 to RMB1.66 billion in 2010, reflecting a strong cash position of the Company.
Mr Pak Kwan KAU, Chairman and Chief Executive Officer of Kingsoft, said, "It has been a revolutionary year for Kingsoft in 2010. In response to market demand, we have transformed from traditional business model into the free model by launching free versions of Kingsoft's Internet Security products. WPS Office has successfully transformed into the Internet market, extending to provide more value added services, such as office automation, cloud-based storage and web-office service, etc. Kingsoft PowerWord has transformed from a software package to a learning community. Meanwhile, the Company is undergoing active business reorganisation and has introduced top talents of the Internet industry. Recently, we have completed the restructing of Kingsoft Internet Security, while the restructuring of our online game R&D studios is in good progress. All of these initiatives are aimed at improving the operational efficiency and the integrated competitiveness of the Company in preparation for sustainable long-term development."
FINANCIAL HIGHLIGHTS
(RMB'000)
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For the year ended December 31 2010 2009 Change
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Revenue 971,397 1,022,412 -5.0%
- Entertainment software 640,917 684,242 -6.3%
- Applications software 321,003 329,196 -2.5%
- Others 9,477 8,974 +5.6%
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Gross profit 840,399 893,945 -6.0%
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Profit Attributable to
owners of the parent 372,480 387,224 -3.8%
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Basic EPS (RMB cent) 34.16 36.38 -6.1%
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Final Dividend per share (HK cent) 15 15 -
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OPERATIONAL HIGHLIGHTS
2010, for the 3 months ended 3/31 6/31 9/30 12/31
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Online Games
- Daily Average Peak
Concurrent Users ("DAPCU") 915,212 817,835 773,349 771,352
- Monthly Average Paying
Users 1,457,101 1,276,351 1,325,056 1,347,806
- Monthly Average Revenue
per Paying User (RMB) 36 41 39 41
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Online Services of Internet Securities
- Daily Average Paying
Users 8,416,136 7,648,623 6,598,690 3,671,877
- Monthly Average Revenue
per Paying User (RMB) 2.0 2.2 2.2 3.0
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BUSINESS REVIEW
Application Software Business
During the year under review, subscriptions for Kingsoft Internet Security services declined due to the launch of free version in November, 2010, which was partially offset by the increase of sales from Kingsoft WPS Office both in China and Japan. Revenue from the application software business decreased by 2% year-over-year to RMB321.0 million. Revenue from Kingsoft Internet Security decreased by 8% year-over-year to RMB239.2 million, representing 75% of total revenue from application software business.
In October 2010, Kingsoft Internet Security Software Holdings Limited, a wholly-owned subsidiary of the Company, joined Conew, a top-tier Internet security software developer in China to establish Kingsoft Network Technology Limited and announced the launch of Kingsoft Internet Security free version in November 2010, resulting in a decrease in the number of paid users in the fourth quarter of 2010. The number of subscribers for online services of Kingsoft Internet Security decreased by 44% quarter-over-quarter and decreased by 58% year-over-year to 3.7 miliion in the fourth quarter. From the fourth quarter of 2010, monthly average paying users ("monthly ARPU") were fee-based VIP security service subscribers, and thus, monthly average revenue per paid user increased by 36% quarter-on-quarter and 43% year-over-year to RMB3.0.
In China, Kingsoft WPS Office has been widely adopted by various Chinese government departments, state-owned enterprises and renowned corporations. By the end of 2010, Kingsoft WPS Office was deployed by over 50 central ministries, and more than 300 provincial government institutions and municipalities, as well as numerous large and medium-sized enterprises, which demonstrates Kingsoft's leading position in the software market within China. WPS Office has extended its services to the Internet industry, providing the Internet users with services including office automation, cloud-based storage (Kingsoft Kuaipan), web-office service (Kingsoft Kuaixie) and mobile tablet office products, etc.
Entertainment Software Business
During the year under review, revenue from the entertainment software decreased by 6% year-over-year to RMB640.9 million. The decrease was mainly due to no new release of games in 2010 and the termination of the licensed online game Shui Hu Q Zhuan in November 2009. Irrespective of the unsatisfactory year-over-year revenue performance, revenue from the entertainment software business increased by 6% quarter-over-quarter to RMB165.0 million as the result of the recovery of revenue from JX Online World both in Mainland China and Vietnam during the fourth quarter of 2010.
Daily average peak concurrent users in the fourth quarter of 2010 were 0.8 million, which held flat compared with the previous quarter and decreased by 32% year-over-year. Monthly ARPU increased by 2% quarter-over-quarter and decreased by 24% year-over-year to 1.3 million. Monthly ARPU for the Company's online game increased by 5% quarter-over-quarter and by 8% year-over-year to RMB41.
Marching into 2011, Kingsoft is actively implementing business reorganisation. In January, 2011, the Company established Westhouse Holdings Limited ("Westhouse"), and acquired the businesses under Chengdu Xishanju Interactive Entertainment Technology Co., Ltd. and Zhuhai Kingsoft Online Game Technology Co., Ltd through the new entity. The founding employees were offered share-options as an incentive for them to contribute to the long-term development of Westhouse. Looking ahead in 2011, Kingsoft is launching five new games, including Legend of Moon, Rush Team, CangQiongZhinu and two other titles. The launch of new games will boost the revenue of the entertainment software business. In addition, the company will also develop advanced casual games and casual games on mobile tablet devices.
Looking ahead, Mr Kau concluded, "The Government has shown solid support to the software industy by defining it as a strategic new industry within the 'Twelfth Five-Year' Plan, creating considerable growth potential for Kingsoft in the future. With respect to online games business, the operatonal efficency will be improved through restructuring the online game R&D studios and implementing incentive policies for employees. We are confident in the upcoming launches of the new titles. In view of of the ever-changing Internet industry, we are commited to the product and service innovation, minimising management costs and enhancing operational efficency through steamlining our organisational structure as well as introducing management talent to strive for a better business performance, and maximise shareholders' returns through a win-win relationship."
Contact:
Kingsoft Corporation Limited
Ms. Michelle Feng Harnett
Tel: +86 10 82325515
Email: ir@kingsoft.com
Ms. Claire Lee
Tel: +86 10 82334488 - 5850
Email: limiao@kingsoft.com
Topic: Earnings
Source: Kingsoft Corporation Limited
Sectors: IT Individual, eSports, Gaming
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