Financial

Annual Report 2017: Tencent

Published by Tencent

Summary

Tencent’s 2017 annual performance was defined by substantial financial expansion and strategic diversification across its core internet and value-added service segments. The company reported a 56% year-over-year revenue increase to RMB 237.76 billion, while profit attributable to equity holders rose by 74% to RMB 71.51 billion. This growth was primarily fueled by the mass adoption of flagship titles like *Honour of Kings*, the scaling of Weixin and WeChat to over 1 billion monthly active accounts, and robust gains in digital content, payment services, and cloud infrastructure. The company’s operational success was supported by a disciplined approach to capital management and corporate governance. Despite rising costs associated with traffic acquisition, content licensing, and employee remuneration—which grew to RMB 34.87 billion—Tencent maintained a strong liquidity position with RMB 105.7 billion in cash and cash equivalents by year-end. To navigate regulatory restrictions on foreign investment in the Chinese telecommunications and gaming sectors, the company continued its reliance on "Structure Contracts," allowing it to maintain control over domestic operating companies while consolidating their financial results. Tencent’s strategic focus during this period extended beyond its core platforms into an aggressive investment strategy, with the carrying value of its associates and available-for-sale financial assets rising significantly. The company prioritized investments in AI, smart retail, and global technology sectors, supported by a robust internal control framework based on the COSO model. Furthermore, the company integrated Environmental, Social, and Governance (ESG) principles into its operations, emphasizing human capital development, energy-efficient data center technology, and philanthropic initiatives. By the end of 2017, Tencent solidified its market position through a combination of high-growth digital services, a diversified investment portfolio, and a rigorous governance structure designed to manage the complexities of a rapidly evolving global technology landscape.

From the report

CONTENTS CONTENTS 2 CORPORATE INFORMATION 2 CORPORATE INFORMATION 3 FINANCIAL SUMMARY 3 FINANCIAL SUMMARY 4 CHAIRMAN'S STATEMENT 4 CHAIRMAN’S STATEMENT 12 MANAGEMENT DISCUSSION AND ANALYSIS 12 MANAGEMENT DISCUSSION AND ANALYSIS 29 DIRECTORS' REPORT’ 29 DIRECTORS REPORT 72 CORPORATE GOVERNANCE REPORT 93 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 112 INDEPENDENT AUDITOR’S REPORT 121 CONSOLIDATED INCOME STATEMENT 122 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 123 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 126 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 126 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 128 CONSOLIDATED STATEMENT OF CASH FLOWS 128 CONSOLIDATED STATEMENT OF CASH FLOWS 130 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 130 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 239 DEFINITION 239 DEFINITION

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 ) Lau Chi Ping Martin Non-Executive Directors Non-Executive Directors Jacobus Petrus (Koos) Bekker Jacobus Petrus (Koos) Bekker Charles St Leger Searle Independent Non-Executive Directors Independent Non-Executive Directors Li Dong Sheng Li Dong Sheng lain Ferguson Bruce Iain Ferguson Bruce Ian Charles Stone Yang Siu Shun AUDIT COMMITTEE Li Dong Sheng 29/F., Three’Pacific Place Iain Ferguson Bruce No. 1 Queen s Road East Ian Charles Stone Wanchai Charles St Leger Searle Hong Kong REMUNERATION COMMITTEE CAYMAN ISLANDS PRINCIPAL REMUNERATION COMMITTEE CAYMAN ISLANDS PRINCIPAL Ian Charles Stone (Chairman) SHARE REGISTRAR AND Ian Charles Stone( C h a i r m a n ) TRANSFER OFFICE Li Dong Sheng Li Dong Sheng Jacobus Petrus (Koos) Bekker SMP Partners (Cayman) Limited Jacobus Petrus (Koos) Bekker SMP Partners (Cayman) Limited Royal Bank House - 3rd Floor Royal Bank House – 3rd Floor AUDITOR 24 Shedden Road 24 Shedden Road PricewaterhouseCoopers P.O. Box 1586 Certified Public Accountants Grand Cayman, KY1-1110 Cayman Islands

Bekker SMP Partners (Cayman) Limited Jacobus Petrus (Koos) Bekker SMP Partners (Cayman) Limited Royal Bank House - 3rd Floor Royal Bank House – 3rd Floor AUDITOR 24 Shedden Road 24 Shedden Road PricewaterhouseCoopers P.O. Box 1586 Certified Public Accountants Grand Cayman, KY1-1110 Cayman Islands Iain Ferguson Bruce PRINCIPAL BANKERS HONG KONG BRANCH SHARE Ian Charles Stone ( C h a i r m a n ) REGISTRAR AND TRANSFER Bank of China Limited Charles St Leger Searle The Hongkong and Shanghai Banking OFFICE Yang Siu Shun Corporation Limited Computershare Hong Kong Investor Computershare Hong Kong Investor CORPORATE GOVERNANCE REGISTERED OFFICE Services Limited REGISTERED OFFICE Services Limited COMMITTEE Shops 1712-1716, 17th Floor Shops 1712-1716, 17th Floor COMMITTEE Cricket Square Hopewell Centre Charles St Leger Searle Hutchins Drive, P.O. Box 2681 183 Queen’s Road East ( C h a i r m a n ) Iain Ferguson Bruce Grand Cayman KY1-1111 Wan Chai, Hong Kong Ian Charles Stone Cayman Islands Wan Chai, Hong Kong Yang Siu Shun Cayman Islands COMPANY WEBSITE Yang Siu Shun TENCENT GROUP HEAD OFFICE COMPANY WEBSITE INVESTMENT COMMITTEE TENCENT GROUP HEAD OFFICE www.tencent.com INVESTMENT COMMITTEE Tencent Building www.tencent.com Lau Chi Ping Martin Kejizhongyi Avenue STOCK CODE ( C h a i r m a n ) Ma Huateng Hi-tech Park 700 Charles St Leger Searle Nanshan District Hi-tech Park 700 Charles St Leger Searle Shenzhen, 518057 Nanshan District The PRC Shenzhen, 518057 The PRC

VESTMENT COMMITTEE Tencent Building www.tencent.com Lau Chi Ping Martin Kejizhongyi Avenue STOCK CODE ( C h a i r m a n ) Ma Huateng Hi-tech Park 700 Charles St Leger Searle Nanshan District Hi-tech Park 700 Charles St Leger Searle Shenzhen, 518057 Nanshan District The PRC Shenzhen, 518057 The PRC 2 Tencent Holdings Limited

> **[Chart page]** This page contains visual data — view in PDF for the best experience. Financial Summary CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 2013 2014 2015 2016 2017 Year ended 31 December RMB'Million RMB'Million RMB'Million RMB'Million RMB'Million 2013 2014 2015 2016 2017 Revenues RMB’Million RMB’Million RMB’Million RMB’Million RMB’Million Revenues 60,437 78,932 102,863 151,938 237,760 Gross profit 32,659 48,059 61,232 84,499 116,925 Gross profit 32,659 48,059 61,232 84,499 116,925 Profit before income tax 19,281 29,013 36,216 51,640 88,215 Profit before income tax 19,281 29,013 36,216 51,640 88,215 Profit for the year 15,563 23,888 29,108 41,447 72,471 Profit for the year 15,563 23,888 29,108 41,447 72,471 Profit attributable to equity holders of the Company 15,502 23,810 28,806 41,095 71,510 Profit attributable to equity holders of the Company 15,502 23,810 28,806 41,095 71,510 Total comprehensive income for the year 18,376 21,975 44,723 48,617 79,061 Total comprehensive income for the year 18,376 21,975 44,723 48,617 79,061 Total comprehensive income attributable Total comprehensive income attributable to equity holders of the Company 18,327 21,891 44,416 48,194 78,218 Non-GAAP profit attributable to equity holders of the Company* 17,008 24,737 32,410 45,420 65,126

ome for the year 18,376 21,975 44,723 48,617 79,061 Total comprehensive income attributable Total comprehensive income attributable to equity holders of the Company 18,327 21,891 44,416 48,194 78,218 Non-GAAP profit attributable to equity holders of the Company* 17,008 24,737 32,410 45,420 65,126 CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As at 31 December 2013 2014 2015 2016 2017 RMB’Million RMB’Million RMB’Million RMB’Million RMB’Million Assets Non-current assets 53,549 95,845 151,440 246,745 376,226 Current assets 53,686 75,321 155,378 149,154 178,446 Current assets 53,686 75,321 155,378 149,154 178,446 Total assets 107,235 171,166 306,818 395,899 554,672 Total assets 107,235 171,166 306,818 395,899 554,672 Equity and liabilities Equity attributable to equity holders of the Company 57,945 80,013 120,035 174,624 256,074 Non-controlling interests 518 2,111 2,065 11,623 21,019 Non-controlling interests 518 2,111 2,065 11,623 21,019 Total equity 58,463 82,124 122,100 186,247 277,093 Non-current liabilities 15,505 39,007 60,312 108,455 125,839 Current liabilities 33,267 50,035 124,406 101,197 151,740 Non-current liabilities 108,455 Total liabilities 48,772 89,042 184,718 209,652 277,579 Total equity and liabilities 107,235 171,166 306,818 395,899 554,672

Pages: 246
Words: 109,591
Type: Financial

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