2014 Interim Report

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.