Tencent : 2018 Annual Report

2018

Annual Report

CONTENTS

2CORPORATE INFORMATION

3FINANCIAL SUMMARY

4CHAIRMAN'S STATEMENT

14MANAGEMENT DISCUSSION AND ANALYSIS

31DIRECTORS' REPORT

76CORPORATE GOVERNANCE REPORT

100ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT

123INDEPENDENT AUDITOR'S REPORT

132CONSOLIDATED INCOME STATEMENT

133CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

134CONSOLIDATED STATEMENT OF FINANCIAL POSITION

137CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

140CONSOLIDATED STATEMENT OF CASH FLOWS

143NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

265DEFINITION

Corporate Information

DIRECTORS	NOMINATION COMMITTEE
Executive Directors	Ma Huateng (Chairman)
Ma Huateng (Chairman)	Li Dong Sheng
	Iain Ferguson Bruce
Lau Chi Ping Martin
	Ian Charles Stone
Non-Executive Directors	Charles St Leger Searle
Jacobus Petrus (Koos) Bekker	REMUNERATION COMMITTEE
Charles St Leger Searle
	Ian Charles Stone (Chairman)
Independent Non-Executive Directors	Li Dong Sheng
Li Dong Sheng	Jacobus Petrus (Koos) Bekker
Iain Ferguson Bruce	AUDITOR
Ian Charles Stone
Yang Siu Shun	PricewaterhouseCoopers
	Certified Public Accountants
AUDIT COMMITTEE
Yang Siu Shun (Chairman)	PRINCIPAL BANKERS
Iain Ferguson Bruce	Bank of China Limited
Ian Charles Stone	The Hongkong and Shanghai Banking
Charles St Leger Searle	Corporation Limited
CORPORATE GOVERNANCE	REGISTERED OFFICE
COMMITTEE	Cricket Square
Charles St Leger Searle (Chairman)	Hutchins Drive, P.O. Box 2681
Iain Ferguson Bruce	Grand Cayman KY1-1111
Ian Charles Stone	Cayman Islands
Yang Siu Shun
	TENCENT GROUP HEAD OFFICE
INVESTMENT COMMITTEE	Tencent Binhai Towers
Lau Chi Ping Martin (Chairman)	No. 33 Haitian 2nd Road
Ma Huateng	Nanshan District
Charles St Leger Searle	Shenzhen, 518054
	The PRC

PRINCIPAL PLACE OF BUSINESS IN HONG KONG

29/F., Three Pacific Place

No. 1 Queen's Road East

Wanchai

Hong Kong

CAYMAN ISLANDS PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE

SMP Partners (Cayman) Limited Royal Bank House - 3rd Floor 24 Shedden Road

P.O. Box 1586

Grand Cayman, KY1-1110 Cayman Islands

HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE

Computershare Hong Kong Investor

Services Limited

Shops 1712-1716, 17th Floor

Hopewell Centre

183 Queen's Road East

Wan Chai, Hong Kong

COMPANY WEBSITE

www.tencent.com

STOCK CODE

700

2Tencent Holdings Limited

Financial Summary

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

				Year ended 31 December
	2014		2015			2016			2017			2018
	RMB'Million		RMB'Million			RMB'Million			RMB'Million				RMB'Million
Revenues		78,932		102,863			151,938		237,760			312,694
Gross profit		48,059		61,232			84,499		116,925			142,120
Profit before income tax		29,013		36,216			51,640		88,215			94,466
Profit for the year		23,888		29,108			41,447		72,471			79,984
Profit attributable to equity holders of the Company		23,810		28,806			41,095		71,510			78,719
Total comprehensive income for the year	21,975		44,723			48,617			79,061			67,760
Total comprehensive income attributable
to equity holders of the Company	21,891		44,416			48,194			78,218			66,339
Non-GAAP profit attributable to
equity holders of the Company*	24,737		32,410			45,420			65,126			77,469

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

				As at 31 December
	2014		2015			2016			2017			2018
	RMB'Million		RMB'Million			RMB'Million			RMB'Million				RMB'Million
Assets
Non-current assets	95,845		151,440			246,745			376,226			506,441
Current assets		75,321		155,378			149,154		178,446			217,080
Total assets		171,166		306,818			395,899		554,672			723,521
Equity and liabilities
Equity attributable to equity holders of the Company	80,013		120,035			174,624			256,074			323,510
Non-controlling interests		2,111		2,065		11,623			21,019			32,697
Total equity		82,124		122,100		186,247			277,093			356,207
Non-current liabilities	39,007		60,312			108,455			125,839			164,879
Current liabilities	50,035		124,406			101,197			151,740			202,435
Total liabilities	89,042		184,718			209,652			277,579			367,314
Total equity and liabilities	171,166		306,818			395,899			554,672			723,521

*Comparative figures have been restated retrospectively to conform with the presentation adopted in 2015, whereas, among others, we have extended the definition ofnon-GAAP adjustments to cover that of our material associates. We adopted the new presentation in order to more clearly illustrate our non-GAAP financial measures, and to be more consistent with what we believe to be industry practice.

Annual Report 2018

3

Chairman's Statement

I am pleased to present our annual report for the year ended 31 December 2018 to the shareholders.

RESULTS

The Group's audited profit attributable to equity holders of the Company for the year ended 31 December 2018 was RMB78,719 million, an increase of 10% compared with the results for the previous year. Basic and diluted EPS for the year ended 31 December 2018 were RMB8.336 and RMB8.228, respectively.

The Group's non-GAAP profit attributable to equity holders of the Company for the year ended 31 December 2018 was RMB77,469 million, an increase of 19% compared with the results for the previous year. Non-GAAP basic and diluted EPS for the year ended 31 December 2018 were RMB8.203 and RMB8.097, respectively.

BUSINESS REVIEW AND OUTLOOK

1.Company Strategic Highlights

2018 marked the 20th anniversary of the founding of the Group. Throughout our history, we have constantly been embracing changes in users' needs, technologies and market conditions to stay at the forefront of our industry. In October, we initiated a strategic organisational upgrade to extend our strengths in the Consumer Internet and to capture the opportunities of the Industrial Internet. This strategic upgrade is intended to enable us to drive the convergence of social, content and technology trends, and to better serve enterprises, as well as consumers.

During the year, we stepped up our investment in innovation and technologies to stay competitive in the evolving Internet industry. We enriched our social platforms with a broader portfolio of digital content, as well as online and offline services, thus deepening our connection with our users, advertisers, merchants and enterprise partners. Through these initiatives, we strengthened our market leadership in social, games, digital content, and payment, contributing to continuing growth across our core business segments.

4Tencent Holdings Limited