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Pacific Online Limited Reports Higher Results for the Year 2011
Mar 23, 2012 (03:03 PM EDT)


Conference call to be held on March 26th at 9:00AM Hong Kong time

GUANGZHOU, China, March 23, 2012 /PRNewswire/ -- Pacific Online Ltd. (HKSe: 543) ("Pacific Online," the "Company" or the "Group"), a leading internet content provider in China, today reported higher revenues, net profit, and earnings per share for the year ended 31 December 2011. Management will host a conference call to discuss the results at 9:00 AM Hong Kong time on Monday, March 26, 2012 (which is also 9:00 PM EDT in New York on Sunday, March 25, 2012). Dial-in details are provided at the end of this release.

Year Ended December 31, 2011 Financial Highlights

  • Total revenues increased 25.9% year-over-year to RMB640.1 million
  • Gross profit increased 19.6% year-over-year to RMB442.2 million
  • Operating profit increased 19.8% year-over-year to RMB282.1 million
  • Net profit increased 14.1% year-over-year to RMB228.9 million
  • Basic and diluted earnings per share were RMB21.27 cents and RMB20.65 cents, respectively, as compared with RMB18.73 cents and RMB18.40 cents year-over-year, respectively
  • Net cash flow from operations increased 10.6% to RMB218.2 million

Mr. Waiyan Lam, Chairman and CEO of Pacific Online Limited, commented, "Our entire lineup of portals continued to show strong growth in 2011, led by PClady, which more than doubled its revenue from the prior year. The female-focused content and high-quality quality fashion and beauty advice are quickly increasing its popularity and generating a strong following. With disposable income in China steadily rising, we believe our PClady portal is poised to take advantage of growing advertising opportunities resulting from increasing demand for luxury and brand name products.

"PCauto showed another strong year of revenue growth despite the slowing growth rate of China's automobile industry. This clearly reflects the strength of our brand and the visibility we offer to online advertisers. While the growth rate of China's auto industry is expected to remain in the single digit pace, we believe we will still be able to generate further growth as advertisers allocate a greater share of their advertising dollars from print and television to newer digital media. Our established market position and increasing presence give us a great opportunity to capitalize on this trend.

"PConline, the Group's IT portal, continued to expand steadily. This reflects an overall increase in advertising spending from IT companies and we will continue to grow with the increasing demand of the consumer electronics market in China.

"In 2011, we further increased our focus on expanding our reach to the mobile web. We launched new applications on both Apple and Android operating systems to give users greater mobile access to PCauto, PConline, and PClady, our top three vertically integrated portals.

"We also launched free online magazines on the Apple iPad featuring premium content that mirrors and expands on certain content that is available on our portals.  The engaging and easy-to-read content is helping to generate deeper interest and greater user 'stickiness'. Our PCauto magazine has just completed its first full year in publication and has gained significant popularity. Starting from March this year, we also launched a PChouse magazine, our second online publication for the iPad, and are expecting it to pick up traction in the coming year.

"The number of internet users accessing the web through mobile devices is quickly rising and we are carefully adding new features and content to stay on top of all the above mentioned trends and capture greater market share over both the traditional and mobile web market moving forward.

"The Group moved into its new Guangzhou headquarters in the fourth quarter of the year. Photos of the Group's new headquarters are shown on the cover of our annual report. We believe the upgraded working environment will enhance team morale and productivity, and provide us with stability in the foreseeable future."

Proposed Final Dividend

The Board has recommended the payment of a final cash dividend of RMB14.78 cents per ordinary share for the year ended 31 December 2011 (the "Proposed Final Dividend") (2010: RMB14.38 cents), subject to the shareholders' approval at the Company's forthcoming annual general meeting to be held on Friday, 18 May 2012 (the "2012 AGM"). The Proposed Final Dividend will be paid in cash on 6 June 2012 to shareholders whose names appear on the register of members of the Company at the close of business on 29 May 2012.

Full Year 2011 Financial Results

Revenue

Revenue increased 25.9% from RMB508.6 million for the year ended 31 December 2010 to RMB640.1 million for the year ended 31 December 2011.

Revenue for PCauto, the Group's automobile portal, increased 24.9% from RMB235.3 million in 2010 to RMB293.9 million in 2011. According to statistics from the China Association of Automobile Manufacturers, passenger car sales in China grew only 5.2 percent to 14.5 million in 2011, the lowest growth rate over the past decade. However, PCauto was able to outperform the modest growth in the number of car sales as automobile advertisers continued allocating more of their marketing budgets to digital media.

Revenue  for PConline,  the Group's IT and  consumer  electronics portal,  increased  13.5% from RMB226.9 million in 2010 to RMB257.5 million in 2011. The increase in revenue from PConline was mainly due to the overall increase in advertising of consumer electronics such as smart phones, tablets, Blu-ray disc players and digital book readers.

Revenue for PClady, the Group's lady and fashion portal, increased 105.6% from RMB25.2 million in 2010 to RMB51.8 million in 2011. The increase reflected the tremendous demand in the women's segment, especially for luxury and fashion goods.

Revenue for other operations, including the PCgames, PCbaby and PChouse portals, increased by 74.5% from RMB21.2 million in 2010 to RMB37.0 million in 2011. Revenue from these segments increased significantly as advertisers increasingly accept the internet as an effective platform to promote and market their products and images.

As a percentage of total revenue, PCauto accounted for 46.3% in 2010 and 45.9% in 2011, whereas PConline accounted for 44.6% in 2010 and 40.2% in 2011, PClady accounted for 5.0% in 2010 and 8.1% in 2011 and other operations accounted for 4.1% in 2010 and 5.8% in 2011. The Group continued to diversify its revenue base across the different industry segments.

Cost of Revenue

Cost of revenue increased 42.6% from RMB138.8 million in 2010 to RMB197.9 million in 2011. The gross profit margin was 72.7% in 2010 and 69.1% in 2011. The increase in cost of revenue was primarily due to increases in the number of employees, higher sales commission and increases in technology service charges.

Operating Expenses

Selling and Marketing Costs

Selling and marketing costs increased 38.7% from RMB62.2 million in 2010 to RMB86.3 million in 2011. The increase was mainly due to increases in staff cost and marketing expenses.

Administrative Expenses

Administrative expenses decreased by 6.3% from RMB52.0 million in 2010 to RMB48.7 million in 2011, due to lower provisions for the impairment of trade receivables during the year under review.

Product Development Expenses

Product development expenses increased by 37.3% from RMB20.9 million in 2010 to RMB28.7 million in 2011. The increase was mainly due to the increase in the number of employees in the teams of mobile internet, online magazines, research and development to support the Group's expansion plans.

Operating Profit before Share-based Compensation Expenses (non-GAAP)

Operating profit before share-based compensation expenses (non-GAAP) was RMB289.2 million in 2011, representing 18.5% increase from RMB244.1 million in 2010.

Finance Income and Cost

Net finance income was RMB3.5 million in 2010 and RMB5.3 million in 2011. The rise in net finance income was mainly due to higher interest income on short-term deposits.

Profit Before Income Tax

Profit before income tax increased 20.3% from RMB239.0 million in 2010 to RMB287.4 million in 2011.

Income Tax Expense

Income tax expense increased by 52.7% from RMB38.3 million in 2010 to RMB58.5 million in 2011. This increase was due to an over provision of dividend withholding tax of RMB13 million in 2009 and its subsequent reversal in 2010, thus leading to a lower tax expense in 2010. Our statutory rate of 15% corporate income tax rate as a high and new technology enterprise and 5% dividend withholding tax rate remain the same in 2011 from 2010.

Net Profit

Net profit increased 14.1% from RMB200.7 million in 2010 to RMB228.9 million in 2011.

Liquidity and Financial Resources

As of 31 December 2011, the Group had short-term deposits and cash totaling RMB432.2 million, compared to RMB444.5 million as of 31 December 2010.

In 2011, net cash flow from operating activities was RMB218.2 million, net cash flow from investing activities was RMB84.7 million, net cash outflow used in financing activities was RMB134.5 million, with a net increase in cash and cash equivalents of RMB168.4 million for the year 2011.

In 2010, net cash flow from operating  activities was RMB197.3 million, net cash outflow used in investing activities was RMB257.4 million, net cash outflow used in financing activities was RMB86.2 million, with a net decrease in cash and cash equivalents of RMB146.3 million for the year 2010.

The Group had no external debt as of 31 December 2011 and 2010.

Business Outlook

As we look ahead to 2012, we plan to continue investing in the growth of our business and our brand. Given the positive outlook for the online advertising market in China, we are confident that our platform, strategy, and market position will continue to produce strong results. We will continue to expand the reach and stickiness of our existing portals and at the same time focus on the mobile web market as this segment will form an important part of our business in the future. We are always evaluating new opportunities to expand into new markets and launch new content as we seek to grow shareholder value over the long term.

Conference Call

Management will host a conference call to discuss the results at 9:00 AM Hong Kong time on Monday, March 26, 2012 (9:00 PM EDT on Sunday, March 25, 2012). Mr. Lam Wai Yan, Chairman and CEO, and Mr. Jeff Wang, Chief Financial Officer, will discuss the results and take questions following the prepared remarks.

The dial-in details for the live conference call are as follows:


- Hong Kong Toll Free Number:

3005 2050


- Mainland China Toll Free Number:

800 876 8626


- U.S. Toll Free Number:  

1 866 549 1292


- International dial-in number:  

+852 3005 2050



Passcode: 928856#



A live and archived webcast of the conference call will be available on the investor relations section of the Company's website at: http://corp.pconline.com.cn.

A telephone replay of the call will be available for 7 days after the conclusion of the conference call. The dial-in details for the replay are as follows:


- Hong Kong Number

3005 2020


- U.S. Toll Free Number:

1 866 753 0743


- International dial-in number:

+852 3005 2020



Passcode: 149653#



About Pacific Online Ltd. (corp.pconline.com.cn)

Pacific Online is one of the leading Internet content providers in the PRC in terms of total advertising revenue. The Company operates six vertically-integrated portals, which, according to industry practice, are portals that focus on specific content. Among the Company's portals are PConline, the largest portal in the PRC specializing in IT product-related content, in terms of advertising revenue, and PCauto, the largest portal in the PRC specializing in automobile-related content, in terms of advertising revenue.

Safe Harbor Statement

This press release contains forward-looking statements which are subject to risks and uncertainties. Actual results may differ from those discussed in the press release. In addition, any projections about the Company's future performance represent management's estimates as of today March 23, 2012. The Company assumes no obligation to update these projections in the future as business and market conditions change.

For further information, please contact:


Pacific Online Ltd.


Hudson Wong

Company Secretary

Tel: +852 2121 0634

Email: hudson.wong@pconline.com.cn



Christensen Investor Relations


Tip Fleming

Tel: +852-2117-0861

Fax: +852-2117-0869

Email: tfleming@christensenir.com


Teal Willingham

Tel: +86 10 5826 4988

Email: twillingham@christensenir.com



PACIFIC ONLINE LIMITED

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2011



Year ended 31 December



2011


2010



RMB'000


RMB'000

Revenue


640,095

508,608

Cost of revenue


(197,915)


(138,836)


Gross profit


442,180


369,772

Selling and marketing costs


(86,288)


(62,200)

Administrative expenses


(48,747)


(51,970)

Product development expenses


(28,718)


(20,940)

Other income


3,660


871


Operating profit


282,087


235,533


Finance income


6,229


4,941

Finance cost


(930)


(1,488)


Finance income — net


5,299


3,453


Profit before income tax


287,386


238,986

Income tax expense


(58,457)


(38,310)


Profit for the year


228,929


200,676




Year ended 31 December







2011

2010



RMB’000

RMB’000





Attributable to:




  Equity holders of the Company


228,929

200,676









Earnings per share for profit attributable to equity holders of




  the Company during the year



Restated





 - basic (RMB)


21.27 cents

18.73 cents





 - diluted (RMB)


20.65 cents

18.40 cents





Dividends per share




- Final dividend proposed (RMB)


14.78 cents

14.38 cents



PACIFIC ONLINE LIMITED

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2011



Year ended 31 December


2011

2010


RMB'000

RMB'000




Profit for the year

228,929


200,676

Other comprehensive income for the year, net of tax

-


-









Total comprehensive income for the year

228,929


200,676









Attributable to:




   Equity holders of the Company

228,929


200,676



PACIFIC ONLINE LIMITED

CONSOLIDATED BALANCE SHEET

AS AT 31 DECEMBER 2011



As at 31 December



2011


2010



RMB'000


RMB'000






ASSETS





Non-current assets





     Lease prepayment


17,964


18,390

     Property and equipment


207,299


148,741

     Intangible assets


9,034


9,345

     Deferred income tax assets


7,460


8,978



241,757


185,454


Current assets





Trade and other receivables and prepayments


197,300


149,711

Short-term bank deposits with original terms of over three months


2,500

182,200

Cash and cash equivalents


429,658


262,283



629,458


594,194


Total assets


871,215


779,648


EQUITY





Capital and reserves attributable to equity holders of the




    Company




    Ordinary shares


10,093

9,201

    Reserves


697,786


597,146


Total equity


707,879


606,347


Current liabilities





    Accruals and other payables


106,633

125,761

    Prepaid advertising subscriptions from customers


26,762


21,539

    Current income tax liabilities


29,941


26,001


Total current liabilities


163,336


173,301


Total equity and liabilities


871,215


779,648


Net current assets


466,122


420,893


Total assets less current liabilities


707,879


606,347



PACIFIC ONLINE LIMITED

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2011



Year ended 31 December



2011

2010


Cash flows from operating activities

RMB'000

RMB'000

Cash generated from operations

271,215

254,175

Income tax paid

(52,999)

(56,910)


Net cash generated from operating activities

218,216

197,265


Cash flows from investing activities



Purchase of property and equipment

(100,960)

(114,254)

Purchase of intangible assets

(122)

(564)

Decrease/(increase) in short-term bank deposits



with original terms of over three months

179,700

(147,520)

Interest received

6,070

4,941


Net cash generated from/(used in) investing activities

84,688

(257,397)


Cash flows from financing activities



Purchase of shares held for Share Award Scheme

(8,605)

-

Cash dividends paid

(140,753)

(94,996)

Proceeds from issuance of ordinary shares

14,825

8,850


Net cash used in financing activities

(134,533)

(86,146)


Net increase/(decrease) in cash and cash equivalents

168,371

(146,278)

Cash and cash equivalents at beginning of year

262,283

409,330

Exchange losses on cash and cash equivalents

(996)

(769)


Cash and cash equivalents at end of year

429,658

262,283





SOURCE Pacific Online Ltd.