2019-04-01 09:46Financial Performance - The company's audited profit attributable to equity holders for the year ended December 31, 2018, was RMB 78.719 billion, an increase of 10% compared to the previous year[7]. - The non-GAAP profit attributable to equity holders for the same period was RMB 77.469 billion, representing a 19% increase year-over-year[7]. - Total revenue for 2018 was RMB 312.694 billion, up from RMB 237.760 billion in 2017, reflecting a significant growth trajectory[4]. - Tencent's revenue for the fiscal year 2018 increased by 32%, driven by fintech services, social and video advertising, and digital content subscriptions and sales[18]. - Operating profit grew by 8% year-on-year, while non-GAAP operating profit increased by 13%[18]. - Revenue for Q4 2018 increased by 28% year-on-year to RMB 84.896 billion, compared to RMB 66.392 billion in Q4 2017[40]. - Revenue for the year ended December 31, 2018, increased by 32% year-on-year to RMB 312.69 billion[34]. - Gross profit for the same period was RMB 142.12 billion, up from RMB 116.93 billion in 2017, reflecting a gross margin of 45%[34]. User Engagement and Growth - The combined monthly active accounts for WeChat and QQ reached approximately 1.098 billion by the end of 2018, with increased penetration in lower-tier cities[10]. - The average daily reading of Moments posts on WeChat exceeded 750 million users, indicating strong user engagement[10]. - Daily active accounts for mini-programs have increased significantly, with a 54% year-over-year growth in average daily visits per user[11]. - As of the end of 2018, QQ's total monthly active accounts reached 807 million, supported by innovative AI-assisted features[11]. - The total number of digital content subscriptions exceeded 100 million by the end of 2018, representing a 50% year-over-year increase[12]. - The number of monthly active accounts for QQ reached 807.1 million, a 3.0% year-on-year increase[19]. - The combined monthly active accounts for WeChat and Weixin reached 1.0976 billion, reflecting an 11.0% year-on-year growth[19]. Revenue Streams - Revenue from mobile games amounted to RMB 77.8 billion, representing a 24% year-on-year increase[23]. - The online advertising business generated revenue of RMB 58.1 billion, a year-on-year increase of 44%, with social and other advertising revenue growing by 55% to RMB 39.8 billion[27]. - Value-added services revenue grew by 15% to RMB 176.65 billion, accounting for 56% of total revenue[34]. - Other businesses' revenue rose by 80% to RMB 77.97 billion, primarily due to growth in fintech and cloud services[35]. - The company's cloud revenue grew over 100% to RMB 9.1 billion, with paid customers more than doubling year-on-year[28]. Strategic Initiatives - The company initiated a strategic upgrade in October 2018 to enhance its competitive edge in the consumer internet and capitalize on opportunities in the industrial internet[8]. - The company emphasized investment in innovation and technology to maintain competitiveness in the rapidly changing internet industry[8]. - The company plans to invest in core infrastructure and cutting-edge technologies to embrace the development trend of the industrial internet and continue driving the transformation of the consumer internet[29]. - The company aims to enhance user connections with digital content and online functions through social platforms, including WeChat and mini-programs[29]. - The company will explore new game types and enhance overseas publishing capabilities to further expand its international business in the gaming sector[29]. Expenses and Costs - Total cost of revenue increased by 41% to RMB 170.57 billion, with the cost as a percentage of revenue rising from 51% in 2017 to 55% in 2018[36]. - Selling and marketing expenses grew by 37% to RMB 24.23 billion, representing 8% of total revenue[38]. - General and administrative expenses increased by 26% to RMB 41.52 billion, decreasing as a percentage of revenue from 14% to 13%[38]. - Net financial costs rose by 61% to RMB 4.67 billion, attributed to increased debt levels[38]. Shareholder Returns - The board proposed a final dividend of HKD 1.00 per share for the year ended December 31, 2018, up from HKD 0.88 per share in 2017, subject to shareholder approval[30]. - The group proposed a final dividend of HKD 1.00 per share for the year ended December 31, 2018, with a total dividend amounting to HKD 1.00 per share[67]. Investments and Acquisitions - Tencent invested in over 700 companies, with more than 100 companies each valued at over $1 billion, including over 60 publicly listed companies[15]. - The group recorded a return from the investment portfolio of RMB 17.285 billion for the year, a decrease of 2% year-on-year[61]. - The fair value of investments in listed companies (excluding subsidiaries) was RMB 238.040 billion as of December 31, 2018, compared to RMB 210.848 billion as of December 31, 2017[61]. Corporate Governance - The company has established five committees to assist the board, including the audit committee, corporate governance committee, investment committee, nomination committee, and remuneration committee[178]. - The company emphasizes maintaining high standards of corporate governance and ethical business practices as core values[175]. - The board consists of eight directors, including two executive directors, two non-executive directors, and four independent non-executive directors, with no changes in composition as of December 31, 2018[187]. - The company has received annual independence confirmations from each independent non-executive director, ensuring compliance with independence guidelines[187]. Employee and Executive Management - The total employee count was 54,309, an increase from 44,796 in 2017[168]. - The total compensation cost for the year ended December 31, 2018, was RMB 42.153 billion, up from RMB 34.866 billion in 2017, representing a growth of approximately 21%[168]. - The management team includes a Chief Information Officer and a Chief Operating Officer, both of whom have been with the company for over 20 years, focusing on strategic planning and operational management[126]. Legal and Regulatory Compliance - The company has established a structure contract to operate value-added telecommunications services in China, as foreign investment is restricted in this sector[143]. - The company’s legal advisors believe that the structure contract does not violate existing Chinese laws and regulations, although there are significant ambiguities in the interpretation and application of these laws[145]. - The company is subject to regulations that restrict foreign investors from directly participating in the operation of online gaming businesses in China[145].