|By PR Newswire||
|August 27, 2013 08:15 AM EDT||
HONG KONG, Aug. 27, 2013 /PRNewswire/ -- Pacific Online Limited (HKSE: 543) ("Pacific Online," the "Company," or the "Group"), a leading internet content provider in China, today announced its 2013 interim results for the six months ended June 30, 2013. The Group will host a conference call to discuss these results at 9:00AM Hong Kong time on Wednesday, August 28, 2013. Dial-in details are provided at the bottom of this release.
2013 Interim Financial Highlights
- Total revenues increased 14.4% year-over-year to RMB341.0 million
- Net profit increased 5.1% year-over-year to RMB89.4 million
"For the first half of 2013, we are pleased to report a 14.4% increase in revenues, despite the uncertain economic environment and growing competition online," stated Mr. Lam Wai Yan, Chairman and Chief Executive Officer of Pacific Online Limited. "Our performance demonstrates the progress we are making in content development and the strength of our diversified platform. We saw particularly strong growth in our Auto, Lady and Baby portals, and we continue to improve our content offering across all of our major portals as we work to draw and maintain viewers. Also, consumers can now access our portals and various online magazines on a range of mobile operating systems, and this gives our advertising partners even more solutions through which they can reach our users."
"PCauto, our largest portal in terms of revenue, saw revenue growth rise to just above the 20% level. Competition in the car market in China remains intense as car manufacturers and dealers try to attract consumer attention and build their brands. As a result, we benefitted from both higher advertising budgets, and a greater portion of those budgets being directed to digital outlets."
"Revenue from our IT-focused PConline portal declined 1.8%. The performance largely reflects changes that are being seen in the IT market in China. Advertising budgets among major IT-related brands are staying fairly stagnant. We intend to continue to devote more resources to the mobile market in an effort to increase our page views and attract a bigger share of IT manufactures' ad spend."
"Revenue from our female-focused PClady portal increased 35.5%. During the period under review, we devoted considerable resources to this vertical. We updated our site interface and design to improve the user experience. We also expanded our editorial team and bolstered the site by adding new subcategories, especially in luxury goods, and engaging new content that is positioned to appeal to slightly more mature consumer audiences."
"Our other vertical portals, including PCgames, PCbaby, and PChouse, continued to perform well, with revenues rising a collective 38.3%. PCbaby saw particularly strong growth as advertisers took to our portal to build awareness for their baby formula and diaper brands. We continue to work on all of these smaller portals to build stronger user bases with new features and content."
"In the face of rising competition in the domestic online environment, we find ourselves having to increase our own marketing spending in order to attract traffic. While this did bring added pressure on our margins during the first half of the year, we are pleased with the steps we have taken to bolster our online offering and build our brand as we seek to increase user stickiness and ensure the success of our business over the long-term."
2013 Interim Financial Results
Revenue increased 14.4% from RMB298.2 million for the six months ended June 30, 2012 to RMB341.0 million for the six months ended June 30, 2013.
In 2012, the Ministry of Finance in China launched a pilot program to gradually transition the taxation system from a business tax to a value-added tax. For the purpose of comparison, the Group's reported revenue growth for the six months ended June 30, 2013 would have been 19.0% had the business tax remained applicable during the six months ended June 30, 2013.
Revenue for PCauto, the Group's automobile portal, increased 20.8% from RMB145.5 million during the six months ended June 30, 2012 to RMB175.8 million for the six months ended June 30, 2013. The rise was primarily because demand for new cars in China remains robust and automobile manufacturers, dealers and other auto-related players continued to allocate more of their marketing budgets to digital media.
Revenue for PConline, the Group's IT and consumer electronics portal, decreased 1.8% from RMB112.9 million during the six months ended June 30, 2012 to RMB110.9 million during the same period in 2013. The slight decline was primarily due to ongoing changes in the IT industry in China. While the Company saw a strong increase in demand for advertisements among smartphone and tablet manufacturers, laptop and desktop computer manufacturers reduced their advertising budgets due to declining production and sales.
Revenue for PClady, the Group's lady and fashion portal, increased 35.5% from RMB24.3 million during the June 30, 2012 to RMB33.0 million during the six months ended June 30, 2013. The increase was primarily due to the Company's success at attracting more advertisers, especially in the up-market and luxury segments, following improvements to the site's design and interface, and the addition of new content and subcategories, which attracted new users, especially from more mature audiences.
Revenue for other operations, including the PCgames, PCbaby and PChouse portals, increased by 38.3% from RMB15.5 million during the six months ended June 30, 2012 to RMB21.4 million during the same period in 2013. The Company saw strong demand from advertisers for baby formula and diapers in the PCbaby portal, as it worked to upgrade the content and platforms of all of its up-and-coming portals.
As a percentage of total revenue, during the six months ended June 30, 2012 compared with the same period in 2013, PCauto accounted for 48.8% versus 51.5%, respectively; PConline accounted for 37.8% versus 32.5%, respectively; PClady accounted for 8.12% versus 9.7%, respectively; and other operations accounted for 5.2% versus 6.3%, respectively. The Group continued to diversify its revenue base across the different industry segments.
Cost of Revenue
Cost of revenue increased by 4.8% from RMB97.7 million during the six months ended June 30, 2012 to RMB102.3 million during the same period in 2013. Gross profit margin increased from 67.2% during the six months ended June 30, 2012 to 70.0% during the same period in 2013. The increase in cost of revenue was due to an increase in staff costs and sales related expenses. This was partially offset by lower business tax following the implementation of the business tax/value-added tax reform policy.
Selling and Marketing Costs
Selling and marketing costs increased 66.0% from RMB45.1 million during the six months ended June 30, 2012 to RMB74.8 million during the six months ended June 30, 2013. The increase was primarily due to increases in staff costs, as well as marketing expenses for brand development.
Administrative expenses decreased by 4.7% from RMB35.3 million during the six months ended June 30, 2012 to RMB33.6 million during the same period in 2013. The decrease was mainly due to a lower provision for impairment of receivables.
Product Development Expenses
Product development expenses increased by 31.1% from RMB17.2 million during the period ended June 30, 2012 to RMB22.5 during the same period in 2013. The increase was primarily due to an increase in staff costs as the Group expanded its research and development team.
Operating Profit before Share-based Compensation Expenses (non-GAAP)
Operating profit before share-based compensation expenses (non-GAAP) was RMB109.5 million during the six months ended June 30, 2013, representing a 1.3% increase from RMB108.2 million during the same period in 2012.
Finance Income and Cost
Net finance income was RMB6.3 million for the six months ended June 30, 2013 compared with RMB2.7 million during the six months ended June 30, 2012. Net finance income was mainly the result of interest income on short-term bank deposits.
Income Tax Expense
Income tax expenses increased 9.0% from RMB22.5 million during the six months ended June 30, 2012 to RMB24.5 million during the same period in 2013.
Net profit increased 5.1% from RMB85.0 million for the six months ended June 30, 2012 to RMB89.4 million for the six months ended June 30, 2013.
Liquidity and Financial Resources
As of June 30, 2013 the Group had short-term deposits and cash totaling RMB274.6 million, compared with RMB439.9 million as of December 31, 2012. The decline in cash was primarily due to the payment of a cash dividend totaling RMB165.9 million during the six months ended June 30, 2013.
Looking ahead, while it is expected that consumer spending in China will continue to grow and online advertising will keep becoming an ever more important outlet for brand promotion, the Group will continue to adjust to intensifying competition in order to stay relevant and useful to online consumers in China. The Group will continue to add both content and functionality to its portals to ensure that consumers find the information they need while keeping them engaged for longer. The Group will also continue to invest in the development of mobile technology in order to capture the rapid growth of mobile users in China. However, with rising labor costs and increased promotional expenses that are needed to draw users to the Group's portals, margins are expected to compress in the near term. None-the-less, with a debt-free balance sheet and strong ability to both grow revenues and generate cash, the Group will continue to enhance value for its shareholders over time.
Management will host a conference call to discuss the results at 9:00 AM Hong Kong time on August 28, 2013 (9:00 PM Eastern Daylight Time on Tuesday, August 27, 2013). Mr. Steve Ma, 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:
+852 3027 5500
- Mainland China Toll Free Number:
8008 0361 03
- U.S. Toll Free Number:
+1 866 978 9970
- International dial-in number:
+852 3027 5500
A live and archived webcast of the conference call will be available on the investor relations section of the Group's website at: http://corp.pconline.com.cn.
A telephone replay of the call will be available for thirty days after the conclusion of the conference call. The dial-in details for the replay are as follows:
- Hong Kong Number
+852 3027 5520
- U.S. Toll Free Number:
+1 866 753 0743
- International dial-in number:
+852 3027 5520
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, one of the largest portals in the PRC specializing in IT product-related content, and PCauto, one of the largest portals in the PRC specializing in automobile-related content.
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 August 28, 2013. 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.
Tel: +852 2121 0634
For the full financial statements, please visit the Group's website at www.corp.pconline.com.cn
SOURCE Pacific Online Limited