SHENZHEN, China, March 21, 2022 /PRNewswire/ --Tencent Music
Entertainment Group ("TME," or the "Company") (NYSE: TME), the
leading online music and audio entertainment platform in
China, today announced its
unaudited financial results for the fourth quarter and full year
ended December 31, 2021.
Financial and Operational Highlights
In the three months ended December 31,
2021:
- Total revenues were RMB7.61
billion (US$1.19 billion),
representing a decrease of 8.7% year-over-year.
- Online music service revenues grew by 4.3%
year-over-year. Revenues from music subscriptions were RMB1.95 billion (US$306
million), representing 23.5% year-over-year growth.
- Online music paying users reached 76.2
million, increasing by 36.1% year-over-year. On a sequential basis,
the number of online music paying users grew by 5.0 million. Paying
ratio was 12.4%, up from 11.2% in the third quarter of this year
and 9.0% in the fourth quarter of last year.
- Net profit of the Company was RMB577 million (US$91
million) and net profit attributable to equity
holders of the Company was RMB536
million (US$84 million).
- Non-IFRS net profit of the Company[1] was
RMB873 million (US$137 million) and Non-IFRS net profit
attributable to equity holders of the
Company[1] was RMB832 million
(US$131 million).
In the full year ended December 31,
2021:
- Total revenues increased by 7.2% year-over-year to
RMB31.24 billion (US$4.90 billion).
- Online music service revenues grew by 22.7%
year-over-year. Revenues from music subscriptions were RMB7.33 billion (US$1.15
billion), representing 31.9% year-over-year
growth.
- Net profit of the Company was RMB3.22 billion (US$505
million) and net profit attributable to equity
holders of the Company was RMB3.03
billion (US$475 million).
- Non-IFRS net profit of the Company[1] was
RMB4.33 billion (US$680 million) and Non-IFRS net profit
attributable to equity holders of the
Company[1] was RMB4.15
billion (US$651 million).
"In 2021, we registered 7% year-over-year growth in total
revenues and sustained profitability, boosted by robust growth of
online music paying users reaching a record high of 76.2 million,
reflecting the vitality and resilience of our business through
resolute execution of the dual engine content-and-platform
strategy. While fourth quarter social entertainment revenues
moderated amid increasing competition and changing macro
environment, our subscription revenues sustained strong growth. We
added 5.0 million net paying users by continuing to provide
high-quality music content, an exceptional streaming experience,
and diverse, industry-leading platform features. In the future, we
will focus on optimizing our cost structure and improving operating
efficiency across our businesses while continuing to drive
innovation, better user experiences and healthy industry
development," said Mr. Cussion Pang, Executive Chairman of TME.
"Leveraging our proprietary tools and technologies, we are pleased
to see our investment in original music production starting to pay
off, as well as an increasing number of indie musicians finding a
home on our Tencent Musician
Platform. With broad capabilities across the content value chain,
we will continuously expand content production, licensing,
operation, promotion, and monetization efforts to augment the scale
and fortify the quality and competitiveness of our music catalog.
Based on the confidence we have in the future of our dual engine
content-and-platform strategy, we have completed over 50% of the
$1 billion share repurchase program
announced last year, and plan to complete the rest of the program
throughout this year. In addition, to provide our shareholders with
greater liquidity and protection amid an evolving regulatory
environment, we are pursuing a secondary listing on the Main Board
of the Hong Kong Stock Exchange through a listing by way of
introduction (which is a direct listing without any offering of new
shares), subject to regulatory approvals[2]," Mr. Pang
concluded.
"We are encouraged by the progress we've made with key
advancements in our innovative platform strategy, built on our
four pillars of music entertainment: listen, watch, sing and play.
For example, QQ Music, Kugou Music and Kuwo Music recently released
major version upgrades incorporating refreshed product concepts, as
well as optimized operations, UI design and other technological
innovations," said Mr. Ross Liang,
CEO of TME. "Long-form audio has also proven to be an excellent
complement to our powerful music portfolio, contributing to
expanding user scale with long-form audio MAUs reaching over 150
million, representing a 65% growth year-over-year. Moreover, we
have tightened our connection with the broader Tencent ecosystem and gained multi-dimensional
benefits including differentiated promotion channels and more
content and tools available to our platform, which also invigorate
our musician ecosystem. Moving forward, we will tirelessly drive
product innovations that will ultimately make our users more
engaged in our platform's immersive pan-entertainment experience,"
concluded Mr. Liang.
Recent Operational Highlights
- TME's online music and social entertainment services key
operating metrics[3]
|
4Q21
|
|
4Q20
|
|
YoY %
|
|
Mobile MAU - online
music (million)
|
615
|
|
622
|
|
(1.1%)
|
|
Mobile MAU - social
entertainment (million)
|
175
|
|
223
|
|
(21.5%)
|
|
Paying users - online
music (million)
|
76.2
|
|
56.0
|
|
36.1%
|
|
Paying users - social
entertainment (million)
|
9.0
|
|
10.8
|
|
(16.7%)
|
|
Monthly ARPPU -
online music (RMB)
|
8.5
|
|
9.4
|
|
(9.6%)
|
|
Monthly ARPPU -
social entertainment (RMB)
|
175.1
|
|
172.1
|
|
1.7%
|
|
- The 1% year-over-year decline in online music mobile MAUs was
primarily due to churn of our casual users served by other
pan-entertainment platforms. However, online music paying users
continued to deliver robust year-over-year and quarter-over-quarter
growth, reaching a record-high 76.2 million as we benefitted from
expanded sales channels and paying user loyalty due to the range of
high-quality content and services we provide.
- Amid increasing competition and changing macro environment,
social entertainment services MAUs and paying users were lower
year-over-year and quarter-over-quarter. We are working to increase
our competitiveness through ongoing product innovations and by
building additional verticals in social entertainment such as audio
live streaming, international expansion and virtual interactive
product offerings.
- We have established a comprehensive set of original
content production capabilities that leverages our deep
understanding of music as well as internal and external resources
to systematically create, evaluate and promote music.
-
- Developed and implemented a host of tools and technologies,
leading to notable hits such as "Lonely City," which shot to the
No. 1 spot in the charts within the Chinese Ancient Style category
upon release and inspired nearly 1 billion streams in the fourth
quarter.
- Deeply interacted with IPs in the broader Tencent ecosystem, collaborating with 46 IPs
across gaming, animation, literature, variety shows, film &
television and more to produce and release 117 original songs in
2021. In the fourth quarter, we teamed up with League of Legends:
Wild Rift to launch the industry's first e-sports music production
boot camp, ushering in the beginning of our long-term original
content production cooperation with TJ Sports.
- Tencent Musician
Platform continued to inspire musicians to create original
works, empowering them with all-in-one services, including domestic
and overseas promotion, artist and repertoire development,
incentive plans, performance resources, copyright protection and
career training. Some of our achievements include:
-
- As of the end of the fourth quarter, the number of indie
musicians on our Tencent Musician Platform reached 300,000.
- Served as a hotbed for hit songs by leveraging internal and
external promotion capabilities both on- and offline. Standouts
included "Time Never Forgets" by Fu Yi, which set a streaming
debut record within the indie musician category, as well as
"Flowers All the Way" by Wen Yixin, which was performed on multiple
offline New Year's Eve events hosted by influential TV
channels.
- TME Live has become an increasingly comprehensive
performance platform, reinforcing our overall online-merge-offline
content ecosystem.
-
- Throughout 2021, TME Live held 56 live performances with
captivating interactive and virtual experiences. In the fourth
quarter, our performances featured a rich lineup of domestic and
global megastars such as Joey Yung, Adele and Chen Linong.
- TME Live also extended downstream to support the diverse
development of our musicians, helping indie musicians expand their
influence and fan base with endeavors such as the Tencent Music
Entertainment Awards, Tencent Musician Platform Original Music Gala
and Force Stage.
- We have created trendsetting award ceremonies such as Tencent
Music Entertainment Awards (TMEA) to present and reward the
industry's best and brightest artists as well as their era-defining
works. Held in December 2021, the third star-studded TMEA featured
46 groups of artists, including Jay Chou, Mayday, Rene Liu, KUN,
Teens in Times and Joker Xue and set an audience record with
over 10 million views, far more than the previous two TMEAs.
- Our platform strategy embodies our commitment to
continuous product innovation. We are creating a more immersive
user experience with enhancements to our four pillars of music
entertainment: listen, watch, sing and play.
-
- Listen: In addition to the latest version of Weixin
which allows users to send songs from the TME music library
directly to friends on Weixin, in the fourth quarter we also
implemented innovative features to facilitate
socialization, such as the Leap of Heart function and
interactive playlists, and refined users' customized listening
experience with our multi-track function and upgraded smart
recommendations.
- Watch: we satisfy the natural extension of our music
users' visual needs with video content. In the fourth quarter, QQ
Music's video content sustained its year-over-year growth of more
than 100% in both unique visitors and video views. We will
continually enrich our music video content from musicians as we
benefit from deepening cooperation with Weixin Video Accounts.
- Sing: we advanced our ongoing enhancements to
WeSing's user experience with multiple innovations including
the launch of an online service model featuring on-demand vocal
accompaniment, which has mobilized karaoke KOLs on the
platform.
- Play: to unlock an entirely new class of virtual
interactions on our platform, we launched China's first virtual
music playground, TMELAND, and hosted its first online music
festival on New Year's Eve; participants flocked to the event to
party virtually with their friends and world-renowned DJs in the
form of brand-new 3D avatars. We also recently released QQ Music's
M-PETS and Kugou Music's Music Elf to provide companionship to our
music users, which have already been adopted by millions of
users.
- Long-form Audio: we increased our efforts to
cultivate a vibrant podcast ecosystem and expand production to
enrich our differentiated long-form audio content offerings. In the
fourth quarter, we achieved long-form audio MAUs of over 150
million, representing a 65% year-over-year growth.
- By leveraging our ongoing interconnections with Tencent's
ecosystem and our resulting broadened promotional capabilities,
we attracted a wide group of users to enjoy our music and video
content through efforts including but not limited to 1) our live
stream of Mayday's New Year's Eve concert in cooperation with
Weixin Video Accounts, which captivated a total of 14 million
viewers in the Tencent ecosystem, 2) the debut of Eason Chan's
"Lonely Warrior," the Chinese theme song for the animation Arcane:
League of Legends, on which we collaborated with Tencent Games and
3) jointly promoting the hit drama "Sword, Snow, Stride" with
Tencent Video through our long-form audio offering.
- We committed to fulfilling our social
responsibilities by implementing multiple charity
initiatives, such as the charity album "Hearing the 'Inaudible'
Music" for people with mid- and high-frequency hearing impairment
and the "2021 Little Red Flower Music Season" campaign, in which
hundreds of musicians composed songs for charity.
- In March 2022, we entered into a definitive agreement to
acquire a controlling stake in M&E Mobile Limited, which
currently operates Japan's leading karaoke app, Pokekara, to enrich
our karaoke experiences as well as deepen our reach in
international markets.
[1] Non-IFRS net profit and Non-IFRS
net profit attributable to equity holders of the Company was
arrived at after excluding the combined effect of amortization of
intangible assets and other assets arising from acquisitions,
share-based compensation expenses, net losses/gains from
investments, fair value change on puttable shares and income tax
effects.
[2] This disclosure does not, and is not intended to, constitute an
offer to sell or a solicitation of an offer to purchase any of our
securities in the United States, Hong Kong or elsewhere, and it
does not, and is not intended to, constitute an offer, solicitation
or sale of any securities in any jurisdiction in which such an
offer, solicitation or sale would be unlawful.
[3] For the definitions of the
cited key operating metrics, please refer to the introduction
section in the Company's 2020 20-F filed on April 9, 2021. The monthly ARPPU of social
entertainment services is calculated based on revenues from social
entertainment and others, including advertising services provided
on our social entertainment platforms.
Fourth Quarter 2021 Financial Results
Revenues
Total revenues for the fourth quarter of 2021 decreased by
RMB728 million, or 8.7%, to
RMB7.61 billion (US$1.19 billion) from RMB8.34 billion in the same period of 2020.
- Revenues from online music services for the fourth quarter of
2021 increased by 4.3% to RMB2.88
billion (US$452 million) from
RMB2.76 billion in the same period of
2020. The increase was driven by strong growth in music
subscription revenues and long-form audio, despite a decrease in
revenues from sublicensing, sales of digital albums and
advertising. Revenues from music subscriptions were
RMB1.95 billion (US$306 million), representing 23.5%
growth compared to RMB1.58
billion in the fourth quarter of 2020, primarily due to the
increase in the number of paying users by 36.1%, partially offset
by a decrease in ARPPU from RMB9.4 in
the fourth quarter of 2020 to RMB8.5
this quarter. The decrease in ARPPU was mainly due to additional
promotions this quarter.
- Revenues from social entertainment services and others for the
fourth quarter of 2021 decreased by 15.2% to RMB4.73 billion (US$742
million) from RMB5.58 billion
in the same period of 2020. The decrease was mainly due to the
impact from increased competition from other pan-entertainment
platforms as well as changing macro environment, despite a strong
revenue growth in audio live streaming. On a year-over-year basis,
ARPPU increased by 1.7% in the fourth quarter of 2021 while paying
users of social entertainment services decreased by 16.7%.
Cost of Revenues
Cost of revenues for the fourth quarter of 2021 decreased by
4.0% to RMB5.42 billion (US$850 million) from RMB5.64 billion in the same period of 2020,
primarily due to decreased total amounts of revenue sharing fees
resulting from lower revenues from social entertainment
services.
Gross Profit and Gross Margin
Gross profit for the fourth quarter of 2021 decreased by 18.7%
to RMB2.19 billion (US$344 million) from RMB2.70 billion in the same period of 2020. Gross
margin for the fourth quarter of 2021 decreased by 3.6% to 28.8%
from 32.4% in the same period of 2020. This decrease in gross
margin was primarily due to the increase in revenue sharing
ratio for social entertainment services and a shift in the revenues
mix, with revenue from online music, which typically has a lower
gross margin, accounting for a higher percentage of revenue.
Operating Expenses for the Period
Total operating expenses for the fourth quarter of 2021
increased by 8.2% to RMB1.82 billion
(US$285 million) from RMB1.68 billion in the same period of 2020.
Operating expenses as a percentage of total revenues increased to
23.9% in the fourth quarter of 2021 from 20.1% in the same period
of 2020.
- Selling and marketing expenses were RMB750 million (US$118
million), representing a decrease of 3.0% year-over-year
from RMB773 million in the same
period of 2020. This decrease was primarily due to improved
operating efficiency as we progressed with effectively reducing
user acquisition expenses through leveraging our internal organic
user traffic to attract more users.
- General and administrative expenses were RMB1.07 billion (US$167
million), representing an increase of 17.8% year-over-year
from RMB906 million in the same
period of 2020. The increase was mainly due to increased investment
in research and development to expand our competitive advantages in
product and technology innovations, as well as post-acquisition
awards, share-based compensation expenses and amortization of
intangible assets arising from the acquisition of Lazy Audio.
Operating Profit for the Period
Operating profit was RMB682
million (US$107 million) in
the fourth quarter of 2021, compared to an operating profit of
RMB1.30 billion in the same period of
2020.
Income Tax Expenses
Effective tax rate in the fourth quarter of 2021 was 11.5%,
compared to 5.5% in the same period of 2020. The lower effective
tax rate in the fourth quarter 2020 was because some of our
operating entities in China became
qualified for certain tax benefits in that quarter and the
cumulative impact was recorded accordingly. The effective tax rate
represents certain estimates by the Company as to the
tax obligations and benefits applicable to it in each
quarter.
Net Profit and Non-IFRS Net Profit for the Period
Net profit attributable to equity holders of the Company for the
fourth quarter of 2021 was RMB536
million (US$84 million),
compared to net profit of RMB1.20
billion in the same period of 2020. Non-IFRS net profit
attributable to equity holders of the Company was RMB832 million (US$131
million) for the fourth quarter of 2021, compared to
RMB1.35 billion in the same period of
2020. Please refer to the section in this press release titled
"Non-IFRS Financial Measure" for details.
Earnings per ADS
Basic and diluted earnings per American Depositary Shares
("ADS") were RMB0.33 (US$0.05) and RMB0.32(US$0.05),
respectively, for the fourth quarter of 2021. Non-IFRS basic and
diluted earnings per ADS were RMB0.51
(US$0.08) and RMB0.50 (US$0.08),
respectively, for the fourth quarter of 2021. During the fourth
quarter of 2021, the Company had weighted averages of 1.64 billion
basic and 1.65 billion diluted ADSs outstanding, respectively. Each
ADS represents two of the Company's Class A ordinary shares.
Cash Flows
Net cash provided by operating activities for the fourth quarter
of 2021 was RMB822 million
(US$129 million), compared to
RMB1.86 billion in cash provided by
operating activities during the same period of 2020. The decrease
was mainly due to the increase in accounts receivable, the majority
of which were settled in January 2022.Net cash provided by
investing activities in the fourth quarter of 2021 was RMB996 million (US$156 million), compared to net cash used in
investing activities of RMB143
million during the same period of 2020. The fluctuation
of cash flows from investing activities was impacted by higher
purchase and maturity of term deposits and short-term investments
in this quarter. Net cash used in financing activities in the
fourth quarter of 2021 was RMB286
million (US$45 million),
compared to RMB19 million of cash
provided by financing activities during the same period of
2020. Cash used in financing activities in the fourth quarter
of 2021 was primarily due to cash paid for the repurchase of
ordinary shares.
In March 2022, we won the bid to
acquire certain land use right in Shenzhen at RMB1.05
billion, and the first half of the consideration was paid in
the first quarter of 2022.
Cash, Cash Equivalents, Term Deposits and Short-term
Investments
As of December 31, 2021, the
combined balance of the Company's cash, cash equivalents, term
deposits and short-term investments amounted to RMB24.69 billion (US$3.87
billion), compared to RMB24.46
billion as of September 30,
2021. The increase in cash, cash equivalents, term deposits
and short-term investments was primarily due to cash flows
generated from operations of RMB822
million (US$129 million),
partially offset by cash used in purchase of intangible assets and
financing activities. Such combined balance was also affected
by the change in the exchange rate of RMB to USD at different
balance sheet dates. The exchange rate was 6.3726 to 1 on
December 31, 2021.
Share Repurchase Program
Pursuant to the 2021 Share Repurchase Program announced on
March 28, 2021, as of December 31, 2021, we have repurchased
approximately 49.0 million ADSs from the open market with cash for
a total consideration of approximately US$553 million.
Full Year 2021 Financial Results
Revenues
Total revenues for the full year of 2021 increased by
RMB2.09 billion, or 7.2%, to
RMB31.24 billion (US$4.90 billion) from RMB29.15 billion in the same period of 2020.
- Revenues from online music services for the full year of 2021
increased by 22.7% to RMB11.47
billion (US$1.80 billion) from
RMB9.35 billion in the same period of
2020. The increase was driven by strong growth in music
subscription revenues, supplemented by growth in advertising
revenues and revenues from long form audio, despite a decrease in
sales of digital albums and sublicensing revenues. Revenues
from music subscriptions were RMB7.33
billion (US$1.15 billion),
representing 31.9% growth compared to RMB5.56 billion for the full year of 2020,
primarily due to the increase in the number of paying users by
38.9%, partially offset by a decrease in ARPPU from RMB9.4 in year 2020 to RMB8.9 this year. The decrease in ARPPU was
mainly due to additional promotions in the second half of
2021.
- Revenues from social entertainment services and others for the
full year of 2021 slightly decreased by 0.1% to RMB19.78 billion (US$3.10
billion) from RMB19.80 billion
in the same period of 2020. The decrease was mainly due to the
impact from increased competition from other pan-entertainment
platforms as well as changing macro environment, which was
mitigated by strong revenue growth in audio live streaming. On a
year-over-year basis, ARPPU increased by 13.4% in year 2021 while
paying users of social entertainment services decreased by
12.0%.
Cost of Revenues
Cost of revenues for the full year of 2021 increased by 10.0% to
RMB21.84 billion (US$3.43 billion) from RMB19.85 billion in the same period of 2020. The
increase was primarily due to our increased investments in new
products, original content production and content costs, such as
Tencent Musician Platform and
long-form audio, to strengthen our platform's competitiveness,
partially offset by the decrease in revenue sharing fees related to
live streaming services.
Gross Profit and Gross Margin
Gross profit for the full year of 2021 increased by 1.1%
year-over-year to RMB9.40 billion
(US$1.48 billion) from RMB9.30 billion in the same period of 2020. Gross
margin for the full year of 2021 decreased by 1.8% to 30.1% from
31.9% in the same period of 2020. This decrease in gross
margin was primarily due to a shift in the revenues mix, with
revenue from online music, which typically has a lower gross
margin, accounting for a higher percentage of revenue. Such
decrease was also attributable to the increase of investments in
new products and content costs.
Operating Expenses for the Year
Total operating expenses for the full year of 2021 increased by
19.9% to RMB6.69 billion
(US$1.05 billion) from RMB5.58 billion in the same period of 2020.
Operating expenses as a percentage of total revenues increased to
21.4% for the full year of 2021 from 19.1% in the same period of
2020.
- Selling and marketing expenses were RMB2.68 billion (US$420
million), representing an increase of 8.2% year-over-year
from RMB2.48 billion in the same
period of 2020. The increase was primarily due to increased
spending to promote our brands and existing products in order to
strengthen our competitiveness.
- General and administrative expenses were RMB4.01 billion (US$629
million), representing an increase of 29.3% year-over-year
from RMB3.10 billion in the same
period of 2020. The increase was mainly due to increased investment
in research and development to expand our competitive advantages in
product and technology innovations, as well as post-acquisition
awards, share-based compensation expenses and amortization of
intangible assets arising from the acquisition of Lazy Audio.
Operating Profit for the Year
Operating profit was RMB3.80
billion (US$596 million) for
the full year of 2021, compared to operating profit of RMB4.71 billion in the same period of 2020.
Income Tax Expenses
Effective tax rate for the full year 2021 was 11.5%, compared to
9.8% in the same period 2020.
Net Profit and Non-IFRS Net Profit for the Year
Net profit attributable to equity holders of the Company for the
full year of 2021 was RMB3.03 billion
(US$475 million), compared to net
profit of RMB4.16 billion in the same
period of 2020. Non-IFRS net profit attributable to equity holders
of the Company was RMB4.15 billion
(US$651 million) for the full year of
2021, compared to RMB4.95 billion in
the same period of 2020. Please refer to the section in this press
release titled "Non-IFRS Financial Measure" for details.
Earnings per ADS
Basic and diluted earnings per ADS were RMB1.82 (US$0.29)
and RMB1.80 (US$0.28), respectively, for the full year of
2021. Non-IFRS basic and diluted earnings per ADS were RMB2.50 (US$0.39)
and RMB2.47 (US$0.39), respectively, for the full year of
2021. During the full year of 2021, the Company had weighted
averages of 1.66 billion basic and 1.68 billion diluted ADSs
outstanding, respectively.
Conference Call Information
TME's management will hold a conference call on Monday,
March 21, 2022, at 8:00 P.M. Eastern
Time or 8:00 A.M. Beijing Time on Tuesday,
March 22, 2022, to discuss its financial results. Listeners may
access the call by dialing the following numbers:
United States Toll
Free:
|
+1-888-317-6003
|
International:
|
+1-412-317-6061
|
Mainland China Toll
Free:
|
400-120-6115
|
Hong Kong, China Toll
Free:
|
800-963-976
|
Access
Code:
|
5337947
|
The replay will be accessible through March 28, 2022,
by dialing the following numbers:
United States Toll
Free:
|
+1-877-344-7529
|
International:
|
+1-412-317-0088
|
Access
Code:
|
5421564
|
A live and archived webcast of the conference call will also be
available on the Company's investor relations website at
https://ir.tencentmusic.com/.
Exchange Rate
This announcement contains translations of certain RMB amounts
into U.S. dollars ("USD") at specified rates solely for the
convenience of the reader. Unless otherwise stated, all
translations from RMB to USD were made at the rate of RMB6.3726 to US$1.00, the noon buying rate in effect on
December 31, 2021, in the H.10
statistical release of the Federal Reserve Board. The Company makes
no representation that the RMB or USD amounts referred could be
converted into USD or RMB, as the case may be, at any particular
rate or at all. For analytical presentation, all percentages are
calculated using the numbers presented in the financial statements
contained in this earnings release.
Non-IFRS Financial Measure
The Company uses non-IFRS net profit for the period, which is a
non-IFRS financial measure, in evaluating its operating results and
for financial and operational decision-making purposes. TME
believes that non-IFRS net profit helps identify underlying trends
in the Company's business that could otherwise be distorted by the
effect of certain expenses that the Company includes in its profit
for the period. TME believes that non-IFRS net profit for the
period provides useful information about its results of operations,
enhances the overall understanding of its past performance and
future prospects and allows for greater visibility with respect to
key metrics used by its management in its financial and operational
decision-making.
Non-IFRS net profit for the period should not be considered in
isolation or construed as an alternative to operating profit, net
profit for the period or any other measure of performance or as an
indicator of its operating performance. Investors are encouraged to
review non-IFRS net profit for the period and the reconciliation to
its most directly comparable IFRS measure. Non-IFRS net profit for
the period presented here may not be comparable to similarly titled
measures presented by other companies. Other companies may
calculate similarly titled measures differently, limiting their
usefulness as comparative measures to the Company's data. TME
encourages investors and others to review its financial information
in its entirety and not rely on a single financial measure.
Non-IFRS net profit for the period represents profit for the
period excluding amortization of intangible and other assets
arising from acquisitions, share-based compensation expenses, net
losses/gains from investments, fair value change on puttable shares
and income tax effects.
Please see the "Unaudited Non-IFRS Financial Measure" included
in this press release for a full reconciliation of Non-IFRS net
profit for the period to its net profit for the period.
About Tencent Music
Entertainment
Tencent Music Entertainment Group
(NYSE: TME) is the leading online music and audio entertainment
platform in China, operating the
country's highly popular and innovative music apps: QQ Music, Kugou
Music, Kuwo Music and WeSing. TME's mission is to use technology to
elevate the role of music in people's lives by enabling them to
create, enjoy, share and interact with music. TME's platform
comprises online music, online audio, online karaoke, music-centric
live streaming and online concert services, enabling music fans to
discover, listen, sing, watch, perform and socialize around music.
For more information, please visit ir.tencentmusic.com.
Safe Harbor Statement
This press release contains forward-looking statements. These
statements are made under the "safe harbor" provisions of the U.S.
Private Securities Litigation Reform Act of 1995. Statements that
are not historical facts, including statements about the Company's
beliefs and expectations, are forward-looking statements.
Forward-looking statements involve inherent risks and
uncertainties, and a number of factors could cause actual results
to differ materially from those contained in any forward-looking
statement. In some cases, forward-looking statements can be
identified by words or phrases such as "may," "will," "expect,"
"anticipate," "target," "aim," "estimate," "intend," "plan,"
"believe," "potential," "continue," "is/are likely to" or other
similar expressions. Further information regarding these and other
risks, uncertainties or factors is included in the Company's
filings with the SEC. All information provided in this press
release is as of the date of this press release, and the Company
does not undertake any duty to update such information, except as
required under applicable law.
Investor Relations Contact
Tencent Music Entertainment Group
ir@tencentmusic.com
+86 (755) 8601-3388 ext. 818415
TENCENT MUSIC
ENTERTAINMENT GROUP
|
CONSOLIDATED
INCOME STATEMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31
|
|
Year ended
December 31
|
|
2020
|
|
2021
|
|
2020
|
|
2021
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Audited
|
|
Unaudited
|
|
Unaudited
|
|
(in millions,
except per share data)
|
|
(in millions,
except per share data)
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Online music
services
|
2,760
|
|
2,880
|
|
452
|
|
9,349
|
|
11,467
|
|
1,799
|
Social entertainment
services and others
|
5,575
|
|
4,727
|
|
742
|
|
19,804
|
|
19,777
|
|
3,103
|
|
8,335
|
|
7,607
|
|
1,194
|
|
29,153
|
|
31,244
|
|
4,903
|
Cost of
revenues
|
(5,638)
|
|
(5,415)
|
|
(850)
|
|
(19,851)
|
|
(21,840)
|
|
(3,427)
|
Gross
profit
|
2,697
|
|
2,192
|
|
344
|
|
9,302
|
|
9,404
|
|
1,476
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing
expenses
|
(773)
|
|
(750)
|
|
(118)
|
|
(2,475)
|
|
(2,678)
|
|
(420)
|
General and
administrative expenses
|
(906)
|
|
(1,067)
|
|
(167)
|
|
(3,101)
|
|
(4,009)
|
|
(629)
|
Total operating
expenses
|
(1,679)
|
|
(1,817)
|
|
(285)
|
|
(5,576)
|
|
(6,687)
|
|
(1,049)
|
Interest
income
|
156
|
|
122
|
|
19
|
|
622
|
|
530
|
|
83
|
Other gains,
net
|
122
|
|
185
|
|
29
|
|
362
|
|
553
|
|
87
|
Operating
profit
|
1,296
|
|
682
|
|
107
|
|
4,710
|
|
3,800
|
|
596
|
|
|
|
|
|
|
|
|
|
|
|
|
Share of net
profit/(loss) of investments accounted for using
equity method
|
5
|
|
1
|
|
0
|
|
19
|
|
(47)
|
|
(7)
|
Finance
cost
|
(18)
|
|
(31)
|
|
(5)
|
|
(97)
|
|
(121)
|
|
(19)
|
Profit before
income tax
|
1,283
|
|
652
|
|
102
|
|
4,632
|
|
3,632
|
|
570
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
(71)
|
|
(75)
|
|
(12)
|
|
(456)
|
|
(417)
|
|
(65)
|
Profit for the
period
|
1,212
|
|
577
|
|
91
|
|
4,176
|
|
3,215
|
|
505
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
|
|
|
|
|
|
|
Equity holders of the
Company
|
1,197
|
|
536
|
|
84
|
|
4,155
|
|
3,029
|
|
475
|
Non-controlling
interests
|
15
|
|
41
|
|
6
|
|
21
|
|
186
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
for Class A and Class B ordinary
shares
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
0.36
|
|
0.16
|
|
0.03
|
|
1.25
|
|
0.91
|
|
0.14
|
Diluted
|
0.36
|
|
0.16
|
|
0.03
|
|
1.24
|
|
0.90
|
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per ADS
(2 Class A shares equal to 1 ADS)
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
0.72
|
|
0.33
|
|
0.05
|
|
2.51
|
|
1.82
|
|
0.29
|
Diluted
|
0.71
|
|
0.32
|
|
0.05
|
|
2.47
|
|
1.80
|
|
0.28
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
earnings per Class A and Class B
ordinary share computation:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
3,320,795,974
|
|
3,284,580,063
|
|
3,284,580,063
|
|
3,313,527,847
|
|
3,321,067,177
|
|
3,321,067,177
|
Diluted
|
3,364,932,615
|
|
3,308,612,118
|
|
3,308,612,118
|
|
3,360,460,759
|
|
3,363,045,757
|
|
3,363,045,757
|
|
|
|
|
|
|
|
|
|
|
|
|
ADS used in
earnings per ADS computation
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
1,660,397,987
|
|
1,642,290,032
|
|
1,642,290,032
|
|
1,656,763,924
|
|
1,660,533,589
|
|
1,660,533,589
|
Diluted
|
1,682,466,307
|
|
1,654,306,059
|
|
1,654,306,059
|
|
1,680,230,380
|
|
1,681,522,878
|
|
1,681,522,878
|
|
|
|
|
|
|
|
|
|
|
|
|
TENCENT MUSIC
ENTERTAINMENT GROUP
|
UNAUDITED NON-IFRS
FINANCIAL MEASURE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31
|
|
Year ended
December 31
|
|
2020
|
|
2021
|
|
2020
|
|
2021
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
|
(in millions,
except per share data)
|
|
(in millions,
except per share data)
|
Profit for
the period
|
1,212
|
|
577
|
|
91
|
|
4,176
|
|
3,215
|
|
505
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible and other assets arising from
acquisitions*
|
103
|
|
127
|
|
20
|
|
392
|
|
484
|
|
76
|
Share-based
compensation
|
141
|
|
202
|
|
32
|
|
570
|
|
753
|
|
118
|
(Gains)/Losses from
investments**
|
(39)
|
|
35
|
|
5
|
|
(101)
|
|
51
|
|
8
|
Fair value change on
puttable shares ***
|
9
|
|
-
|
|
-
|
|
37
|
|
-
|
|
-
|
Income tax
effects****
|
(62)
|
|
(68)
|
|
(11)
|
|
(103)
|
|
(171)
|
|
(27)
|
Non-IFRS Net
Profit
|
1,364
|
|
873
|
|
137
|
|
4,971
|
|
4,332
|
|
680
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
|
|
|
|
|
|
|
Equity holders of the
Company
|
1,349
|
|
832
|
|
131
|
|
4,950
|
|
4,146
|
|
651
|
Non-controlling
interests
|
15
|
|
41
|
|
6
|
|
21
|
|
186
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
for Class A and Class B
ordinary shares
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
0.41
|
|
0.25
|
|
0.04
|
|
1.49
|
|
1.25
|
|
0.20
|
Diluted
|
0.40
|
|
0.25
|
|
0.04
|
|
1.47
|
|
1.23
|
|
0.19
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per ADS
(2 Class A shares equal to 1 ADS)
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
0.81
|
|
0.51
|
|
0.08
|
|
2.99
|
|
2.50
|
|
0.39
|
Diluted
|
0.80
|
|
0.50
|
|
0.08
|
|
2.95
|
|
2.47
|
|
0.39
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
earnings per Class A and Class B
ordinary share computation:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
3,320,795,974
|
|
3,284,580,063
|
|
3,284,580,063
|
|
3,313,527,847
|
|
3,321,067,177
|
|
3,321,067,177
|
Diluted
|
3,364,932,615
|
|
3,308,612,118
|
|
3,308,612,118
|
|
3,360,460,759
|
|
3,363,045,757
|
|
3,363,045,757
|
|
|
|
|
|
|
|
|
|
|
|
|
ADS used in
earnings per ADS computation
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
1,660,397,987
|
|
1,642,290,032
|
|
1,642,290,032
|
|
1,656,763,924
|
|
1,660,533,589
|
|
1,660,533,589
|
Diluted
|
1,682,466,307
|
|
1,654,306,059
|
|
1,654,306,059
|
|
1,680,230,380
|
|
1,681,522,878
|
|
1,681,522,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Represents the
amortization of identifiable assets, including intangible assets
and prepayments for music content, resulting from
acquisitions
|
|
|
** Including the net
gains on deemed disposals/disposals of investments, fair value
changes arising from investments,
impairment provision of investments and other expenses in relation
to equity transactions of investments
|
*** Represents the
fair value changes on the put liability of certain shares issued in
2018
|
|
|
**** Represents the
income tax effects of Non-IFRS adjustments
|
|
|
TENCENT MUSIC
ENTERTAINMENT GROUP
|
CONSOLIDATED
BALANCE SHEET
|
|
|
|
|
|
|
|
|
|
As at December 31,
2020
|
|
As at December 31,
2021
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
Audited
|
|
Unaudited
|
|
Unaudited
|
|
|
(in
millions)
|
ASSETS
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
176
|
|
243
|
|
38
|
Land use
rights
|
|
-
|
|
1,495
|
|
235
|
Right-of-use
assets
|
|
311
|
|
283
|
|
44
|
Intangible
assets
|
|
2,020
|
|
2,829
|
|
444
|
Goodwill
|
|
17,492
|
|
19,121
|
|
3,001
|
Investments accounted
for using equity method
|
|
2,255
|
|
3,599
|
|
565
|
Financial assets at
fair value through other comprehensive income
|
9,771
|
|
7,302
|
|
1,146
|
Other
investments
|
|
349
|
|
199
|
|
31
|
Prepayments, deposits
and other assets
|
|
956
|
|
743
|
|
117
|
Deferred tax
assets
|
|
303
|
|
346
|
|
54
|
Term
deposits
|
|
2,953
|
|
4,303
|
|
675
|
|
|
36,586
|
|
40,463
|
|
6,350
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Inventories
|
|
18
|
|
24
|
|
4
|
Accounts
receivable
|
|
2,800
|
|
3,610
|
|
566
|
Prepayments, deposits
and other assets
|
|
2,846
|
|
2,731
|
|
429
|
Other
investments
|
|
37
|
|
37
|
|
6
|
Short-term
investments
|
|
-
|
|
1,029
|
|
162
|
Term
deposits
|
|
14,858
|
|
12,769
|
|
2,004
|
Cash and cash
equivalents
|
|
11,128
|
|
6,591
|
|
1,034
|
|
|
31,687
|
|
26,791
|
|
4,204
|
|
|
|
|
|
|
|
Total
assets
|
|
68,273
|
|
67,254
|
|
10,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
Equity
attributable to equity holders of the Company
|
|
|
|
|
|
|
Share
capital
|
|
2
|
|
2
|
|
0
|
Additional paid-in
capital
|
|
35,044
|
|
36,238
|
|
5,687
|
Shares held for share
award schemes
|
|
(78)
|
|
(183)
|
|
(29)
|
Treasury
shares
|
|
(134)
|
|
(3,660)
|
|
(574)
|
Other
reserves
|
|
6,300
|
|
3,726
|
|
585
|
Retained
earnings
|
|
11,111
|
|
14,194
|
|
2,227
|
|
|
52,245
|
|
50,317
|
|
7,896
|
Non-controlling
interests
|
|
486
|
|
738
|
|
116
|
|
|
|
|
|
|
|
Total
equity
|
|
52,731
|
|
51,055
|
|
8,012
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
Notes
payable
|
|
5,175
|
|
5,062
|
|
794
|
Accounts
payable
|
|
136
|
|
93
|
|
15
|
Other payables and
other liabilities
|
|
68
|
|
32
|
|
5
|
Deferred tax
liabilities
|
|
265
|
|
271
|
|
43
|
Lease
liabilities
|
|
218
|
|
205
|
|
32
|
Deferred
revenue
|
|
78
|
|
86
|
|
13
|
|
|
5,940
|
|
5,749
|
|
902
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Accounts
payable
|
|
3,565
|
|
4,329
|
|
679
|
Other payables and
other liabilities
|
|
3,881
|
|
3,832
|
|
601
|
Current tax
liabilities
|
|
445
|
|
363
|
|
57
|
Lease
liabilities
|
|
103
|
|
92
|
|
14
|
Deferred
revenue
|
|
1,608
|
|
1,834
|
|
288
|
|
|
9,602
|
|
10,450
|
|
1,640
|
|
|
|
|
|
|
|
Total
liabilities
|
|
15,542
|
|
16,199
|
|
2,542
|
|
|
|
|
|
|
|
Total equity and
liabilities
|
|
68,273
|
|
67,254
|
|
10,554
|
TENCENT MUSIC
ENTERTAINMENT GROUP
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31
|
|
Year ended
December 31
|
|
|
2020
|
|
2021
|
|
2020
|
|
2021
|
|
|
RMB
|
|
RMB
|
|
US$
|
|
RMB
|
|
RMB
|
|
US$
|
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Audited
|
|
Unaudited
|
|
Unaudited
|
|
|
(in
millions)
|
|
(in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
1,864
|
|
822
|
|
129
|
|
4,885
|
|
5,239
|
|
822
|
Net cash (used
in)/provided by investing activities
|
|
(143)
|
|
996
|
|
156
|
|
(14,206)
|
|
(5,999)
|
|
(941)
|
Net cash provided
by/(used in) financing activities
|
|
19
|
|
(286)
|
|
(45)
|
|
5,292
|
|
(3,710)
|
|
(582)
|
Net
increase/(decrease) in cash and cash equivalents
|
|
1,740
|
|
1,532
|
|
240
|
|
(4,029)
|
|
(4,470)
|
|
(701)
|
Cash and cash
equivalents at beginning of the period
|
|
9,641
|
|
5,078
|
|
797
|
|
15,426
|
|
11,128
|
|
1,746
|
Exchange differences
on cash and cash equivalents
|
|
(253)
|
|
(19)
|
|
(3)
|
|
(269)
|
|
(67)
|
|
(11)
|
Cash and cash
equivalents at end of the period
|
|
11,128
|
|
6,591
|
|
1,034
|
|
11,128
|
|
6,591
|
|
1,034
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View original
content:https://www.prnewswire.com/news-releases/tencent-music-entertainment-group-announces-fourth-quarter-and-full-year-2021-unaudited-financial-results-301506489.html
SOURCE Tencent Music Entertainment
Group