Financial

2014 Interim Report

Published by Tencent

Summary

Tencent’s financial performance for the first half of 2014 reflects a period of robust growth and strategic structural transformation. Total revenues for the second quarter reached RMB 19.7 billion, a 37% year-on-year increase, underpinned by strong momentum in Value Added Services and a 75% surge in online advertising revenue. Profit attributable to equity holders for the first six months of the year climbed to RMB 12.29 billion, compared to RMB 7.72 billion during the same period in 2013. This financial expansion was supported by a solid cash position and the successful execution of a five-for-one share subdivision in May 2014, which increased the total number of issued ordinary shares to over 9.3 billion. The company’s strategic direction during this period was defined by a pivot toward ecosystem-building through high-profile partnerships and divestments. A notable 40% decline in eCommerce revenue resulted from the strategic decision to transition marketplaces to JD.com, a move that facilitated a broader shift in capital allocation. Consequently, the value of interests in associates grew significantly, rising from RMB 10.87 billion at the start of the year to RMB 41.67 billion by June 30, 2014. These investments, which include stakes in JD.com, 58.com, and the Korean developer CJ Games, underscore a commitment to long-term platform development over short-term revenue maximization. Operational stability remained a priority, evidenced by a gearing ratio of 53% and the establishment of a $5 billion medium-term note program to support corporate objectives. Despite significant capital outflows for strategic acquisitions and a substantial increase in research and development spending to RMB 3.39 billion, the company maintained strong liquidity. With a workforce of nearly 25,000 employees and a high retention rate for share-based incentive schemes, the organization focused on balancing aggressive ecosystem expansion with disciplined capital management and governance throughout the first half of 2014.

From the report

Contents Contents 2 Corporate Information 2 Corporate Information 3 Financial Performance Highlights 3 Financial Performance Highlights 5 Chairman's Statement 5 Chairman’s Statement 10 Management Discussion and Analysis 10 Management Discussion and Analysis 24 Report on Review of Interim Financial Information 25 Consolidated Statement of Financial Position 28 Consolidated Income Statement 29 Consolidated Statement of Comprehensive Income 30 Consolidated Statement of Changes In Equity 32 Consolidated Statement of Cash Flows 34 Notes to the Interim Financial Information 34 Notes to the Interim Financial Information 75 Other Information 75 Other Information 88 Definition 88Definition

Corporate Information Corporate Information DIRECTORS NOMINATION COMMITTEE PRINCIPAL PLACE OF BUSINESS DIRECTORS NOMINATION COMMITTEE IN HONG KONG PRINCIPAL PLACE OF BUSINESS Executive Directors Ma Huateng( C h a i r m a n ) IN HONG KONG Ma Huateng( C h a i r m a n ) Li Dong Sheng 29/F., Three’Pacific Place Lau Chi Ping Martin Iain Ferguson Bruce No. 1 Queen s Road East Non-Executive Directors Ian Charles Stone Wanchai Non-Executive Directors Charles St Leger Searle Hong Kong Jacobus Petrus (Koos) Bekker REMUNERATION COMMITTEE CAYMAN ISLANDS PRINCIPAL Jacobus Petrus (Koos) Bekker REMUNERATION COMMITTEE CAYMAN ISLANDS PRINCIPAL Charles St Leger Searle lan Charles Stone (Chairman) SHARE REGISTRAR AND Independent Non-Executive Directors Independent Non-Executive Directors Li Dong Sheng Li Dong Sheng lain Ferguson Bruce Iain Ferguson Bruce lan Charles Stone Ian Charles Stone Ian Charles Stone( C h a i r m a n ) TRANSFER OFFICE Li Dong Sheng Royal Bank of Canada Trust Company Jacobus Petrus (Koos) Bekker Jacobus Petrus (Koos) Bekker Royal Bank of Canada Trust Company (Cayman) Limited AUDITOR (Cayman) Limited AUDITOR 4th Floor, Royal Bank House 4th Floor, Royal Bank House PricewaterhouseCoopers 24 Shedden Road, George Town

i Dong Sheng Royal Bank of Canada Trust Company Jacobus Petrus (Koos) Bekker Jacobus Petrus (Koos) Bekker Royal Bank of Canada Trust Company (Cayman) Limited AUDITOR (Cayman) Limited AUDITOR 4th Floor, Royal Bank House 4th Floor, Royal Bank House PricewaterhouseCoopers 24 Shedden Road, George Town AUDIT COMMITTEE Certified Public Accountants Grand Cayman KY1-1110 Cayman Islands Iain Ferguson Bruce( C h a i r m a n ) Ian Charles Stone PRINCIPAL BANKER HONG KONG BRANCH SHARE Charles St Leger Searle The Hongkong and Shanghai Banking REGISTRAR AND TRANSFER Corporation Limited OFFICE CORPORATE GOVERNANCE Computershare Hong Kong Investor COMMITTEE REGISTERED OFFICE Services Limited Services Limited Charles St Leger Searle Cricket Square Shops 1712-1716, 17th Floor ( C h a i r m a n ) Shops 1712-1716, 17th Floor Charles St Leger Searle (Chairman) Cricket Square Hopewell Centre Iain Ferguson Bruce Hutchins Drive, P.O. Box 2681 lain Ferguson Bruce Hutchins Drive, P.O. Box 2681 Hopewell Centre Ian Charles Stone Grand Cayman KY1-1111 183 Queen’s Road East lan Charles Stone Grand Cayman KY1-1111 183 Queen's Road East Cayman Islands Wan Chai, Hong Kong INVESTMENT COMMITTEE Cayman Islands Wan Chai, Hong Kong INVESTMENT COMMITTEE TENCENT GROUP HEAD OFFICE COMPANY WEBSITE Lau Chi Ping Martin TENCENT GROUP HEAD OFFICE COMPANY WEBSITE ( C h a i r m a n ) Ma Huateng Tencent Building www.tencent.com Charles St Leger Searle Kejizhongyi Avenue www.tencent.com Charles St Leger Searle Hi-tech Park STOCK CODE Nanshan District 700 Shenzhen, 518057 The PRC 700 Shenzhen, 518057 The PRC

ing Martin TENCENT GROUP HEAD OFFICE COMPANY WEBSITE ( C h a i r m a n ) Ma Huateng Tencent Building www.tencent.com Charles St Leger Searle Kejizhongyi Avenue www.tencent.com Charles St Leger Searle Hi-tech Park STOCK CODE Nanshan District 700 Shenzhen, 518057 The PRC 700 Shenzhen, 518057 The PRC Tencent Holdings Limited

> **[Chart page]** This page contains visual data — view in PDF for the best experience. Financial Performance Highlights Financial Performance Highlights FIRST HALF OF 2014 FIRST HALF OF 2014 Unaudited Six months ended Six Unaudited Year- 30 June months ended 30 June Year- 30 June 30 June on-year 2014 2013 change (RMB in millions, unless specified) Revenues 38,146 27,932 37% Revenues 38,146 27,932 37% Gross profit 22,772 15,388 48% Gross profit 22,772 15,388 48% Operating profit 15,633 9,628 62% Operating profit 15,633 9,628 62% Profit for the period 12,258 7,755 58% Profit for the period 12,258 7,755 58% Profit attributable to equity holders of the Company 12,293 Profit attributable to equity holders of the Company 7,724 59% Non-GAAP profit attributable to equity holders of the Company(1) 11,068 8,164 36% EPS(2) (RMB per share) – basic 1.332 0.843 58% – diluted 1.313 0.828 59% Non-GAAP EPS(1)(2) (RMB per share) – basic 1.199 0.891 35% – diluted 1.182 0.875 35% Interim Report 2014

> **[Chart page]** This page contains visual data — view in PDF for the best experience. Financial Performance Highlights Financial Performance Highlights SECOND QUARTER OF 2014 SECOND QUARTER OF 2014 Unaudited Three months ended Thre Unaudited Quarter- 30 June e months ended 31 March Year- Quarter- 30 June 30 June on-year 31 March on-quarter 2014 2013 change 2014 change (RMB in millions, unless specified) Revenues 19,746 14,384 37% 18,400 7% Revenues 19,746 14,384 37% 18,400 7% Gross profit 12,172 7,794 56% 10,600 15% Gross profit 12,172 7,794 56% 10,600 15% Operating profit 7,843 4,565 72% 7,790 1% Operating profit 7,843 4,565 72% 7,790 1% Profit for the period 5,826 3,684 58% 6,432 -9% Profit for the period 5,826 3,684 58% 6,432 -9% Profit attributable to equity holders Profit attributable to equity holders of the Company 5,836 3,680 59% 6,457 -10% Non-GAAP profit attributable to equity holders of the Company(1) 5,874 4,126 42% 5,194 13% EPS(2) (RMB per share) – basic 0.632 0.402 57% 0.700 -10% – diluted 0.623 0.395 58% 0.690 -10%

Pages: 94
Words: 34,270
Type: Financial

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