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Perfect World Company Limited (PWRD)

Q4 2012 Earnings Call

March 11, 2013 9:00 PM ET


Joanne Deng – IR Manager

Michael Chi – Founder, Chairman and Co-CEO

Robert Xiao – Co-CEO

Vivien Wang – VP, IR and Corporate Communications

Kelvin Lau – CFO


Eddie Leung – Merrill Lynch

Timothy Chan – Morgan Stanley

Muzhi Li – Citigroup

Mark Marostica – Piper Jaffray

Andy Yeung – Oppenheimer

George Meng – Macquarie

William Huang – Barclays

Martin Bao – CICC

Jia Long Shi – CLSA

Nick Ning – 86 Research



Hello, ladies and gentlemen. This is Tara. I’ll be the operator for this conference call. I’d like to welcome everyone to the Perfect World Co., Limited Fourth Quarter and Fiscal Year 2012 Earnings Conference Call. All lines have been placed on mute to prevent background noise. After the presentation, there will be a question-and-answer session. Please follow the instructions given at that time if you’d like to ask a question. In fairness to other callers, please keep your questions limited to one and then you are free to return to the queue.

Now, I would like to turn the call over to Ms. Joanne Deng, Investor Relations Manager at Perfect World. Ms. Deng, please proceed.

Joanne Deng

Thank you, operator and thank you, everyone for joining us today for Perfect World’s fourth quarter and fiscal year 2012 earnings release conference call. We distributed our unaudited earnings release earlier today. You may find a copy of the press release on our official website or through the newswires.

Today, you will hear from Mr. Michael Chi, our Chairman who would first give us a brief overview of the quarter and fiscal year 2012 and then make an important announcement of the company. Mr. Robert Xiao, our co-CEO, will then give us a brief overview of our business and cover strategy, and then provide an update on our dividend distribution plan.

After that, Ms. Vivien Wang, our Vice President of Investor Relations and Corporate Communications, would take us through some of our latest operational development. And then she will pass the call to Mr. Kelvin Lau, our CFO, who will talk through our financial performance in the fourth quarter and fiscal year 2012. Following the prepared remarks, Mr. Chi, Mr. Xiao, Mr. Lau and Ms. Wang would be available to answer your questions.

Before we continue, please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigations Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include but not limited to those outlined in our public filings with the SEC, including our annual report on Form 20-F.

For more information about these risks and uncertainties, please refer to our filings with the SEC. Perfect World does not undertake any obligations to update any forward-looking statement as a result of new information, future events, or otherwise except as required under applicable law. Our earnings release and this call include discussions of certain non-GAAP financial measures. Our earnings release contains a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures and is available on our website at under the Investor Relations section.

I would now like to turn the call over to Michael.

Michael Chi

Thank you, Joanne and thank you all for joining our call today. Our top line result in the fourth quarter was in line with our expectation. During 2012, we launched in in-game promotional activities and mainly focused on long-term project in our pipeline as content enhancement for our investing games in order to maintain a healthy life cycle for our portfolio and sustainable growth of our business.

As such, our results for 2012 came in softer than our previous year’s results. However, we believe this was a necessary step for the long-term growth of our business and are confident that our efforts over the past year will translate into more high-quality entertainment and services for our players worldwide in 2013 and beyond.

The success of the games we have delivered over the past few years has been a result of our close collaboration of all of our talented staff and our dedicated management team. I would like to extend my deep appreciation to all of them.

Especially, I would like to thank Robert, our Co-CEO, for his persistent efforts to push forward the development and the implementation of our corporate strategy together with me. Through his years of contribution to the company, the Board of Directors and I have grown great confidence in his outstanding leadership and execution capabilities.

As such, while remaining Chairman of the Board of Directors to oversee the company’s strategic direction, I have decided to step down from the Co-CEO position, and the board has decided to appoint

Robert as the company’s CEO. The board and I will continue to support Robert in his role as the company’s CEO.

We are confident in his future leadership on that company to overcome challenges and create a better Perfect World.

Now I’m pleased to pass the call over to our CEO, Mr. Robert Xiao.

Robert Xiao

Thank you, Michael. I would also like to thank the board and our shareholders for all your trust and support. 2012 was quiet for us in terms of new game launches. However, we believe it was necessary for us to focus on working on areas that we will pay off in the future for the long run. During the quarter, aside from furthering enhancing our recently-launched new MMORPG, Return of the Condor Heroes, we also continued to work on expanding our future portfolio, a number of attractive titles in our pipeline are currently under development, including our highly anticipated MMORPGs, Swordsman Online and Saint Seiya Online. These two titles are now in the final stages of development and we look forward to bringing them to Chinese players later this year.

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