TENCENT ANNOUNCES 2022 SECOND QUARTER AND INTERIM RESULTS

HONG KONG,Aug. 17,2022 -- Tencent Holdings Limited ("Tencent" or the "Company",00700.HK),a leading provider of Internet value-added services in China,today announced the unaudited consolidated results for the second quarter ("2Q2022") and first half year of 2022 ("1H2022") ended June 30,2022.

2Q2022 Key Highlights

Revenues: -3% YoY,non-IFRS[1] profit attributable to equity holders of the Company: -17% YoY

Total revenues were RMB134.0 billion (USD20.0 billion[2]),a decrease of 3% over the second quarter of 2021 ("YoY").

On a non-IFRS basis,which is intended to reflect core earnings by excluding certain one-time and/or non-cash items:

- Operating profit was RMB36.7 billion (USD5.5 billion),a decrease of 14% YoY. Operating margin decreased to 27% from 31% last year.

- Profit for the period was RMB29.0 billion (USD4.3 billion),a decrease of 18% YoY. Net margin decreased to 22% from 25% last year.

- Profit attributable to equity holders of the Company for the quarter was RMB28.1 billion (USD4.2 billion),a decrease of 17% YoY.

- Basic earnings per share were RMB2.949. Diluted earnings per share were RMB2.896.

On an IFRS basis:

- Operating profit was RMB30.1 billion (USD4.5 billion),a decrease of 43% YoY. Operating margin decreased to 22% from 38% last year.

- Profit for the period was RMB19.2 billion (USD2.9 billion),a decrease of 55% YoY. Net margin decreased to 14% from 31% last year.

- Profit attributable to equity holders of the Company for the quarter was RMB18.6 billion (USD2.8 billion),a decrease of 56% YoY.

- Basic earnings per share were RMB1.951. Diluted earnings per share were RMB1.915.

1H2022 Key Highlights

Revenues: -1% YoY,non-IFRS profit attributable to equity holders of the Company: -20% YoY

Total revenues were RMB269.5 billion (USD40.2 billion),a decrease of 1% over the first half year of 2021 ("YoY").

On a non-IFRS basis,which is intended to reflect core earnings by excluding certain one-time and/or non-cash items:

- Operating profit was RMB73.2 billion (USD10.9 billion),a decrease of 14% YoY. Operating margin decreased to 27% from 31% last year.

- Profit for the period was RMB55.3 billion (USD8.2 billion),a decrease of 21% YoY. Net margin decreased to 21% from 25% last year.

- Profit attributable to equity holders of the Company for the period was RMB53.7 billion (USD8.0 billion),a decrease of 20% YoY.

- Basic earnings per share were RMB5.628. Diluted earnings per share were RMB5.516.

On an IFRS basis:

- Operating profit was RMB67.3 billion (USD10.0 billion),a decrease of 38% YoY. Operating margin decreased to 25% from 40% last year.

- Profit for the period was RMB43.0 billion (USD6.4 billion),a decrease of 53% YoY. Net margin decreased to 16% from 34% last year.

- Profit attributable to equity holders of the Company for the period was RMB42.0 billion (USD6.3 billion),a decrease of 53% YoY.

- Basic earnings per share were RMB4.407. Diluted earnings per share were RMB4.320.

Total cash were RMB315.9 billion (USD47.1 billion) at the end of the period.

Mr. Ma Huateng,Chairman and CEO of Tencent,said,"During the second quarter,we actively exited non-core businesses,tightened our marketing spending,and trimmed operating expenses,enabling us to sequentially increase our non-IFRS earnings,despite difficult revenue conditions. Looking forward,we will focus on enhancing the efficiency of our businesses and launching new revenue initiatives,including in-feed advertisements in our popular Video Accounts,while continuing to drive innovation through R&D. We generate approximately half of our revenues from FinTech and Business Services as well as Online Advertising that directly contribute to,and benefit from,overall economic activity,which should position us for revenue growth as China's economy expands."

[1] Non-IFRS adjustments excludes share-based compensation,M&A related impact such asnet (gains)/losses from investee companies,amortisation of intangible assets and impairment provision/(reversals),SSV & CPP,income tax effects and others

[2]Figures stated in USD are based on USD1 to RMB6.7114

2Q2022 Financial Review

Revenues from VAS[3]were RMB71.7 billion for the second quarter of 2022,broadly stable compared to the second quarter of 2021. International Games revenues decreased by 1% to RMB10.7 billion,or broadly stable in constant currency terms,as the international game industry experienced a post-pandemic digestion period. By title,we saw decreased revenues from PUBG Mobile and Brawl Stars,a robust performance from VALORANT,and incremental revenues from newly launched V Rising. Domestic Games revenues decreased by 1% to RMB31.8 billion,as the domestic game industry experienced a similar digestion period due to transitional issues including relatively fewer big game releases,lower user spending,and the implementation of minor protection measures.By title,we saw decreased revenues from Honour of Kings,Moonlight Blade Mobile and League of Legends,and incremental revenues from recently launched games,such as League of Legends: Wild Rift,Return to Empire and Fight of The Golden Spatula. Social Networks revenues grew by 1% to RMB29.2 billion,reflecting increased revenues from our Video Accounts live streaming service and digital content subscription services,and decreased revenues from music- and games-related live streaming services.

Revenues from Online Advertising decreased by 18% to RMB18.6 billion for the second quarter of 2022 on a year-on-year basis,reflecting notable weakness in the Internet services,education and finance sectors,especially in April and May,partly offset by our consolidation of Sogou's advertising revenue. Social and Others Advertising revenues decreased by 17% to RMB16.1 billion as weak ad demand led to subdued bidding density and consequently lower eCPMs. Media Advertising revenues decreased by 25% to RMB2.5 billion,attributable to lower advertising revenues from Tencent Video and Tencent News.

Revenues from FinTech and Business Services grew by 1% to RMB42.2 billion for the second quarter of 2022 on a year-on-year basis. FinTech Services revenue growth was slower relative to prior quarters as COVID-19 resurgence temporarily impacted commercial payment activities in April and May. Business Services revenues decreased slightly year-on-year reflecting our proactive efforts to scale back loss-making activities.

[3]From the third quarter of 2021,we disclose revenues from Domestic Games and International Games as new sub-segments under VAS,reflecting the increasing scale of our International Games business. Mobile games VAS revenues (including mobile games revenues attributable to our Social Networks business) decreased by 2% year-on-year to RMB40.0 billion,while PC client games revenues grew by 5% year-on-year to RMB11.6 billion for the second quarter of 2022

Other Key Financial Information for 2Q2022

EBITDA was RMB38.6 billion,down 13% YoY. Adjusted EBITDA was RMB44.7 billion,down 11% YoY.

Capital expenditures were RMB3.0 billion,down 57% YoY.

Free cash flow was RMB22.5 billion,up 30% YoY.

As at June 30,2022,net debt position totalled RMB20.4 billion. Fair value of our shareholdings[4] in listed investee companies (excluding subsidiaries) totalled RMB601.9 billion (USD89.7 billion).During the second quarter,the Company repurchased approximately 9.7 million shares on the Hong Kong Stock Exchange for an aggregate consideration of approximately RMB3.1 billion.

[4]Including those held via special purpose vehicles,on an attributable basis

Operating Metrics

As at

30 June

2022

As at

30 June

2021

Year-

on-year

change

As at

31 March

2022

Quarter-on-

quarter

change

(in millions,unless specified)

Combined MAU of Weixin and

WeChat

1,299.1

1,251.4

3.8%

1,288.3

0.8%

Mobile device MAU of QQ

568.7

590.9

-3.8%

563.8

0.9%

Fee-based VAS registered

subscriptions

234.7

229.4

2.3%

239.1

-1.8%

Business Review and Outlook

Communication and Social

For Weixin,Video Accounts established substantial user engagement,with their total user time spent exceeding 80% of Moments'. Video Accounts' total video views grew over 200% year-on-year,video views based on AI recommendation increased by over 400% year-on-year,and daily active creators and daily video uploads in Video Accounts rose by over 100% year-on-year. During the second quarter of 2022,we hosted a series of popular live concerts that each attracted tens of millions of viewers.

For QQ,we enriched the interactive experience by introducing shared virtual spaces,where users can make friends and engage in community activities,as well as live audio chat using Super QQ Show avatars.

Digital Content

Our fee-based VAS subscriptions increased by 2% year-on-year to 235 million. For Tencent Video,subscriptions amounted to 122 million. Our self-commissioned drama series,A Dream of Splendor,ranked first by video views industry-wide[5]in June 2022. According to QuestMobile,Tencent Video's mobile DAU was more than 20% higher than that of its closest peer in June 2022. For music,our subscriptions increased year-on-year to 83 million. In July 2022,TME sold over 6 million units of Jay Chou's digital album.

[5]According to Enlightent,A Dream of Splendor ranked number one by video views across all online platforms in China in June 2022

Domestic Games

The domestic game industry is facing transitional challenges including fewer big game releases,lower user spending and measures to protect minors. During this period,we prioritised developing technical capabilities and reinforcing our leadership in terms of player engagement. Honour of Kings and Peacekeeper Elite were the top two highest-ranked games by total time spent across the industry[6],and each increased their total time spent by adult users year-on-year. In recent months,we released several new games which have achieved notable popularity,such as Fight of The Golden Spatula (ranked fourth by total time spent across all games[6] in the second quarter of 2022) and Arena Breakout (ranked eighth by total time spent across all games in July 2022[6]).

[6]Source: QuestMobile,second quarter of 2022 (unless otherwise specified)

International Games

The international games market is experiencing a post-pandemic digestion period as players resume offline activities. However,we believe we are making progress against our strategic initiatives. For example,in terms of game operations,Riot Games' VALORANT achieved record-high MAU and quarterly grossing receipts in the crowded tactical shooter category. In terms of investments,in July 2022,our European developer Miniclip acquired SYBO,the developer of the endless runner game Subway Surfers,which ranked first in the mobile game industry by cumulative downloads globally over the past decade[7],increasing Miniclip's DAU by 30 million to 70 million. In terms of new games,V Rising,a Survival-Open World-Crafting game developed by our Swedish studio Stunlock,sold 2 million copies in its first month of Early Access.

[7]Source: data.ai,January 2012 to June 2022

Online Advertising

For Weixin Moments,we introduced a frame-breaking advertisement format,which is popular among brand advertisers. In July 2022,we began rolling out Video Accounts in-feed advertisements,which we believe represent a significant opportunity for expanding our market share and enhancing our profitability.

FinTech

COVID-19 resurgence temporarily dampened commercial payment activities during the second quarter of 2022. Commercial payment volume slowed to low-single-digit year-on-year growth in April 2022,but resumed to high-teens year-on-year growth in June 2022.

Cloud and Other Business Services

We focused on quality revenue growth,prioritising internally-developed products while reducing loss-making activities. Business Services' gross margin expanded quarter-on-quarter as we improved revenue mix and reduced costs. For PaaS,TDSQL database revenue grew over 30% year-on-year and represented over 5% of our cloud revenue in the second quarter of 2022. Frost & Sullivan named TDSQL the leading distributed database product in China[8],citing its scalability and support for industry solution services. For SaaS,Tencent Meeting launched a marketplace with plug-ins to enrich meeting experiences.

[8]Source: "2021 China Distributed Database Market Report" jointly released by Frost & Sullivan and LeadLeo Research Institution

Appointment of Independent Non-Executive Director

We appointed Professor Zhang Xiulan as an independent Non-Executive Director (INED) and a member of the Corporate Governance Committee. She is currently a consultant at the University of California,San Francisco,and was previously the Dean at the School of Social Development and Public Policy,Beijing Normal University. Following Professor Zhang's appointment,the number of INEDs on our board will increase to 5 while the number of female directors will increase to 2,out of a total of 9 board members. The appointment will broaden our board's independence,gender diversity and areas of expertise.

For other detailed disclosure,please refer to our website https://www.tencent.com/en-us/investors.htmlhttp://www.tencent.com/ir,or follow us via Weixin Official Account (Weixin ID: Tencent_IR).

About Tencent

Tencent uses technology to enrich the lives of Internet users.

Our communication and social services,Weixin and QQ,connect users with each other and with digital content and services,both online and offline,making their lives more convenient. Our targeted advertising service helps advertisers reach out to hundreds of millions of consumers in China. Our FinTech and business services support our partners' business growth and assist their digital upgrade.

Tencent invests heavily in talent and technological innovation,actively promoting the development of the Internet industry. Tencent was founded in Shenzhen,China,in 1998. Shares of Tencent (00700.HK) are listed on the Main Board of the Stock Exchange of Hong Kong.

Investor contact: IR@tencent.com

Media contact: GC@tencent.com

Non-IFRS Financial Measures

To supplement the consolidated results of the Group prepared in accordance with IFRS,certain additional non-IFRS financial measures (in terms of operating profit,operating margin,profit for the period,net margin,profit attributable to equity holders of the Company,basic EPS and diluted EPS),have been presented in this press release. These unaudited non-IFRS financial measures should be considered in addition to,not as a substitute for,measures of the Group's financial performance prepared in accordance with IFRS. In addition,these non-IFRS financial measures may be defined differently from similar terms used by other companies.

The Company's management believes that the non-IFRS financial measures provide investors with useful supplementary information to assess the performance of the Group's core operations by excluding certain non-cash items and certain impact of M&A transactions. In addition,non-IFRS adjustments include relevant non-IFRS adjustments for the Group's major associates based on available published financials of the relevant major associates,or estimates made by the Company's management based on available information,certain expectations,assumptions and premises.

Forward-Looking Statements

This press release contains forward-looking statements relating to the business outlook,estimates of financial performance,forecast business plans and growth strategies of the Company. These forward-looking statements are based on information currently available to the Company and are stated herein on the basis of the outlook at the time of this press release. They are based on certain expectations,assumptions and premises,some of which are subjective or beyond our control. These forward-looking statements may prove to be incorrect and may not be realised in the future. Underlying these forward-looking statements are a lot of risks and uncertainties. In light of the risks and uncertainties,the inclusion of forward-looking statements in this press release should not be regarded as representations by the Board or the Company that the plans and objectives will be achieved,and investors should not place undue reliance on such statements.

CONSOLIDATED INCOME STATEMENT

RMBin millions,unless specified

Unaudited

Unaudited

2Q2022

2Q2021

2Q2022

1Q2022

Revenues

134,034

138,259

134,034

135,471

VAS

71,683

72,013

71,738

Online Advertising

18,638

22,833

18,638

17,988

FinTech and Business Services

42,208

41,892

42,208

42,768

Others

1,505

1,521

1,977

Cost of revenues

(76,167)

(75,514)

(76,167)

(78,397)

Gross profit

57,867

62,745

57,867

57,074

Gross margin

43%

45%

43%

42%

Interest income

1,945

1,630

1,737

Other gains,net

4,420

20,763

4,420

13,133

Selling and marketing expenses

(7,932)

(10,013)

(7,932)

(8,058)

General and administrative expenses

(26,233)

(22,638)

(26,233)

(26,669)

Operating profit

30,067

52,487

30,067

37,217

Operating margin

22%

38%

22%

27%

Finance costs,net

(1,809)

(1,942)

(1,935)

Share of profit/(loss) of associates and

joint ventures,net

(4,460)

(3,857)

(4,460)

(6,280)

Profit before income tax

23,798

46,688

23,798

29,002

Income tax expense

(4,568)

(3,666)

(4,568)

(5,269)

Profit for the period

19,230

43,022

19,230

23,733

Net margin

14%

31%

14%

18%

Attributable to:

Equity holders of the Company

18,619

42,587

18,619

23,413

Non-controlling interests

611

435

611

320

Non-IFRS profit attributable to equity

holders of the Company

28,139

34,039

28,139

25,545

Earnings per share for profit

attributable to equity holders of

the Company

(in RMB per share)

- basic

1.951

4.472

1.951

2.455

- diluted

1.915

4.387

1.915

2.404

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

RMBin millions,unless specified

Unaudited

2Q2022

2Q2021

Profit for the period

19,022

Other comprehensive income,net of tax:

Items that may be subsequently reclassified to profit or loss

Share of other comprehensive income of associates and joint ventures

292

(11)

Transfer of share of other comprehensive income to profit or loss upon

disposal and deemed disposal of associates and joint ventures

(14)

5

Transfer to profit or loss upon disposal of financial assets at fair value

through other comprehensive income

2

-

Net losses from changes in fair value of financial assets at fair value

through other comprehensive income

(8)

-

Currency translation differences

6,989

(1,428)

Other fair value gains

865

92

Items that will not be subsequently reclassified to profit or loss

Share of other comprehensive income of associates and joint ventures

(379)

53

Net (losses)/gains from changes in fair value of financial assets at fair

value through other comprehensive income

(61,581)

46,522

Currency translation differences

2,219

(305)

(51,615)

44,928

Total comprehensive income for the period

(32,385)

87,950

Attributable to:

Equity holders of the Company

(32,083)

87,511

Non-controlling interests

(302)

439

OTHER FINANCIAL INFORMATION

RMBin millions,unless specified

Unaudited

2Q2022

1Q2022

2Q2021

EBITDA (a)

38,628

38,283

44,567

Adjusted EBITDA (a)

44,668

46,102

50,347

Adjusted EBITDA margin (b)

33%

34%

36%

Interest and related expenses

2,327

2,103

1,912

Net (debt)/cash (c)

(20,429)

(11,035)

(20,972)

Capital expenditures (d)

3,015

6,971

6,936

Note:

(a) EBITDA is calculated as operating profit minus interest income and other gains/losses,net,and adding back depreciation of property,plant and equipment,

investment properties as well as right-of-use assets,and amortisationof intangible assets and land use rights. Adjusted EBITDA is calculated as EBITDA

plus equity-settled share-based compensation expenses.

(b) Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by revenues.

(c) Net (debt)/cash represents period end balance and is calculated as cash and cash equivalents,plus term deposits and others,minus borrowings and

notes payable.

(d) Capital expenditures consist of additions (excluding business combinations) to property,construction in progress,investment

properties,land use rights and intangible assets (excluding video and music content,game licencesand other content).

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

RMB in millions,unless specified

Unaudited

Audited

As at

June 30,2022

As at

December 31,2021

ASSETS

Non-current assets

Property,plant and equipment

59,073

61,914

Land use rights

18,321

17,728

Right-of-use assets

22,622

20,468

Construction in progress

6,691

5,923

Investment properties

569

517

Intangible assets

177,718

171,376

Investments in associates

310,209

316,574

Investments in joint ventures

6,676

6,614

Financial assets at fair value through profit or loss

204,398

192,184

Financial assets at fair value through other

comprehensive income

143,563

250,257

Prepayments,deposits and other assets

37,335

37,177

Other financial assets

5,366

1,261

Deferred income tax assets

28,864

26,068

Term deposits

24,945

19,491

1,046,350

1,127,552

Current assets

Inventories

2,939

1,063

Accounts receivable

49,446

49,331

Prepayments,deposits and other assets

66,155

65,390

Other financial assets

1,095

1,749

Financial assets at fair value through profit or loss

14,762

10,573

Term deposits

91,670

83,813

Restricted cash

2,594

2,476

Cash and cash equivalents

184,658

167,966

Assets held for distribution

-

102,451

413,319

484,812

Total assets

1,459,669

1,612,364

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)

RMB in millions,2021

EQUITY

Equity attributable to equity holders of the Company

Share capital

-

-

Share premium

73,700

67,330

Treasury shares

(776)

-

Shares held for share award schemes

(4,745)

(4,843)

Other reserves

(40,210)

73,901

Retained earnings

708,525

669,911

736,494

806,299

Non-controlling interests

67,387

70,394

Total equity

803,881

876,693

LIABILITIES

Non-current liabilities

Borrowings

162,577

136,936

Notes payable

143,232

145,590

Long-term payables

9,971

9,966

Other financial liabilities

5,470

5,912

Deferred income tax liabilities

11,401

13,142

Lease liabilities

18,372

16,501

Deferred revenue

4,558

4,526

355,581

332,573

Current liabilities

Accounts payable

105,119

109,470

Other payables and accruals

53,326

60,582

Borrowings

20,473

19,003

Notes payable

10,062

-

Current income tax liabilities

9,656

12,506

Other tax liabilities

2,353

2,240

Other financial liabilities

3,909

3,554

Lease liabilities

6,086

5,446

Deferred revenue

89,223

87,846

Dividends payable for distribution in specie

-

102,451

300,207

403,098

Total liabilities

655,788

735,671

Total equity and liabilities

1,364

RECONCILIATIONSOFIFRSTONON-IFRSRESULTS

As

reported

Adjustments

Non-IFRS

RMB in millions,

unless specified

Share-based

compensation

(a)

Net (gains)/losses

from investee

companies (b)

Amortisation of

intangible assets

(c)

Impairment

provisions/

(reversals) (d)

SSV &

CPP (e)

Others (f)

Income

tax effects

(g)

Unaudited three months ended Jun 30,2022

Operating profit

30,067

6,507

(5,539)

1,255

2,831

1,370

176

–

36,667

Profit for the period

19,230

8,439

(6,085)

2,989

3,189

1,370

176

(321)

28,987

Profit attributable to

equity holders

18,619

8,257

(5,968)

2,767

3,370

176

(271)

28,139

Operating margin

22%

27%

Net margin

14%

22%

Unaudited three months ended March 31,2022

Operating profit

37,217

8,136

(18,559)

1,388

7,003

1,348

5

–

36,538

Profit for the period

23,733

9,635

(18,552)

3,163

7,832

1,348

5

(868)

26,296

Profit attributable to

equity holders

23,413

9,452

(18,542)

2,857

7,827

1,348

5

(815)

25,545

Operating margin

27%

27%

Net margin

18%

19%

Unaudited three months ended June 30,2021

Operating profit

52,487

6,202

(20,383)

1,124

3,372

–

–

–

42,802

Profit for the period

43,022

7,658

(20,413)

3,140

3,338

–

–

(1,605)

35,140

Profit attributable to

equity holders

42,587

7,376

(20,537)

2,767

3,331

–

–

(1,485)

34,039

Operating margin

38%

31%

Net margin

31%

25%

Note:

(a)Including put options granted to employees ofinvesteecompanies on their shares and shares to be issued underinvesteecompanies' share-based incentive plans which can be acquired by the Group,and other incentives

(b)Including net (gains)/losses on deemed disposals/disposals ofinvesteecompanies,fair value changes arising frominvesteecompanies,and other expenses in relation to equity transactions ofinvesteecompanies

(c)Amortisationof intangible assets resulting from acquisitions

(d)Impairment provisions/(reversals) for associates,joint ventures,goodwill and other intangible assets arising from acquisitions

(e)Mainly including donations and expenses incurred for the Group's Sustainable Social Value and Common Prosperity Programme ("SSV&CPP") initiatives (excluding share-based compensation expenses)

(f)Mainly including expenses incurred for regulatory fines in the Mainland of China and certain litigation settlements

(g)Income tax effects ofnon-IFRSadjustments