Financial Performance - The company's revenue for the first half of 2021 reached RMB 4.342 billion, representing a year-on-year increase of 33.2% compared to RMB 3.260 billion in the same period of 2020[7]. - Gross profit for the same period was RMB 2.288 billion, up 32.2% from RMB 1.731 billion in the previous year[7]. - Operating profit turned positive at RMB 1.284 billion, a significant recovery from an operating loss of RMB 3.556 billion in the first half of 2020[7]. - The company reported a net profit attributable to equity holders of RMB 1.083 billion, a substantial rebound from a loss of RMB 3.296 billion in the same period last year[7]. - Revenue for the six months ended June 30, 2021, reached RMB 4,342,146 thousand, a 33% increase from RMB 3,260,206 thousand in the same period of 2020[15]. - Gross profit for the same period was RMB 2,288,065 thousand, up from RMB 1,731,312 thousand, reflecting a gross margin improvement[15]. - The company reported a net profit of RMB 1,080,950 thousand for the first half of 2021, compared to a net loss of RMB 3,310,525 thousand in the prior year[15]. - The company reported a significant increase in other income, amounting to RMB 901,146 thousand, compared to a loss of RMB 3,529,736 thousand in the previous year[78]. - The company reported a net profit attributable to equity holders of RMB 1,082,742,000 for the six months ended June 30, 2021, compared to a net loss of RMB 3,295,874,000 for the same period in 2020[131]. User Engagement - The number of active users for the online business reached 232.7 million, showing a quarter-on-quarter growth of 4%[8]. - Daily active users for the free reading service reached 13 million in June 2021, a 30% increase from 10 million in December 2020[8]. - The number of new authors on the platform increased significantly, with 86% of new authors being born in the 1990s, and they accounted for 57% of the top 100 new book sales[11]. - Average monthly active users for proprietary platform products and Tencent's self-operated channels slightly decreased by 0.3% year-on-year to 232.7 million[20]. - Average monthly paying users decreased by 12.3% year-on-year to 9.3 million[20]. Revenue Segmentation - The copyright operations and other segments saw revenue growth of 125% to RMB 1.8 billion, accounting for 42% of total revenue[8]. - Online business revenue grew by 3.4% year-on-year to RMB 2,540.0 million, accounting for 58.5% of total revenue[18]. - Revenue from proprietary platform products in the online business decreased by 5.5% year-on-year to RMB 1,880.7 million[18]. - Revenue from third-party platforms in the online business surged by 91.9% year-on-year to RMB 305.8 million[18]. - The revenue from the online business segment was RMB 2,539,956 thousand for the first half of 2021, compared to RMB 2,457,276 thousand in the same period of 2020, indicating a growth of approximately 3.4%[112][113]. Cost and Expenses - Cost of revenue increased by 34.4% year-on-year to RMB 2,054.1 million, primarily due to expansion in copyright licensing and free reading business[21]. - Sales and marketing expenses increased by 6.1% to RMB 1,348.2 million, while the percentage of sales and marketing expenses to revenue decreased from 39.0% to 31.0%[23]. - General and administrative expenses rose by 81.1% to RMB 635.1 million, mainly due to increased employee compensation and related costs[24]. - The total costs of revenue for the first half of 2021 were RMB 2,054,081 thousand, up from RMB 1,528,894 thousand in the same period of 2020, reflecting an increase of approximately 34.3%[112][113]. Investments and Acquisitions - The company has launched over 70 comic adaptations of its IPs on Tencent Comics, with plans for 300 adaptations over three years[9]. - The company aims to expand its international market presence, with approximately 1,700 translated Chinese works and 280,000 local original works available on its overseas platform WebNovel[14]. - The company completed the acquisition of New Classics Media Holdings Limited on October 31, 2018, expanding its copyright operation business in film and television production[90]. - The company completed an investment of approximately RMB 299,282,000 for a 5% stake in a mobile reading and copyright operation company on July 30, 2021[196]. Shareholder Information - The total number of issued shares as of June 30, 2021, was 1,018,805,679 shares[49]. - Tencent Holdings Limited holds a total of 587,128,824 shares, representing approximately 57.63% of the company's equity[54]. - The company has adopted a Restricted Share Unit Plan, which was approved on December 23, 2014, and is effective for a period of ten years[56]. - The company has adopted a share incentive plan allowing for a total of 40,409,091 new ordinary shares to attract and retain talent[172]. Financial Position - Total assets increased from RMB 21,315.8 million as of December 31, 2020, to RMB 22,609.4 million as of June 30, 2021, while total liabilities rose slightly from RMB 6,217.3 million to RMB 6,227.7 million[35]. - The company's debt-to-equity ratio improved from 29.2% to 27.5% during the same period[35]. - The company's cash net amount increased from RMB 5,011.0 million to RMB 5,691.9 million, primarily due to cash generated from operating activities and the sale of equity[37]. - The company maintained a current ratio of 276.1% as of June 30, 2021, up from 272.7% at the end of 2020[35]. Risk Management - The company’s risk management and internal control systems have been deemed effective and adequate by the audit committee[43]. - The group faces various financial risks, including market risk, credit risk, and liquidity risk[98]. - The financial risk management policies remained unchanged during the six months ended June 30, 2021[98]. Future Outlook - The company plans to continue developing quality IP series and expand into new areas such as online movies and short dramas[9]. - The company plans to continue expanding its market presence and investing in new technologies to drive future growth[83]. - The company has set a performance guidance of 15% revenue growth for the next quarter[200]. - The implementation of a new user engagement strategy is projected to improve retention rates by 10%[200].

Financial Performance - The company's revenue for 2020 was RMB 8,525,701 thousand, representing an increase from RMB 8,347,767 thousand in 2019, which is approximately a 2.1% growth[9]. - Gross profit for 2020 was RMB 4,234,076 thousand, up from RMB 3,692,023 thousand in 2019, indicating a growth of about 14.7%[9]. - The operating loss for 2020 was RMB (4,474,668) thousand, compared to an operating profit of RMB 1,193,907 thousand in 2019, reflecting a significant decline[9]. - The net loss attributable to equity holders for the year was RMB (4,483,869) thousand, a stark contrast to the profit of RMB 1,095,953 thousand in 2019[9]. - The company reported a total comprehensive loss of RMB (4,532,508) thousand for the year, compared to a comprehensive income of RMB 1,167,355 thousand in 2019[9]. - The company reported a net loss of RMB 4,500.2 million for the year, compared to a profit of RMB 1,112.1 million in the previous year[16]. - Non-IFRS net profit for the year was RMB 900.8 million, down from RMB 1,210.8 million in the previous year[16]. - The company's gross profit increased by 14.7% to RMB 4,234.1 million for the year ended December 31, 2020, with a gross margin of 49.7%, up from 44.2% in 2019[26]. - The operating profit margin for 2020 was -52.5%, compared to 14.3% in 2019, indicating a significant decline in profitability[36]. - The company's basic loss per share for 2020 was RMB -4.48, compared to a profit of RMB 1.10 per share in 2019[36]. Assets and Liabilities - Total assets as of December 31, 2020, were RMB 21,315,760 thousand, down from RMB 26,250,004 thousand in 2019, marking a decrease of approximately 18.5%[9]. - The total equity attributable to equity holders was RMB 15,093,507 thousand, a decrease from RMB 19,396,567 thousand in 2019, which is a decline of about 22.1%[9]. - Current assets amounted to RMB 11,500,331 thousand, compared to RMB 12,190,525 thousand in 2019, indicating a decrease of approximately 5.7%[9]. - Non-current liabilities were RMB 2,000,091 thousand, an increase from RMB 925,546 thousand in 2019, reflecting a rise of approximately 116.5%[9]. - The company’s total liabilities were RMB 6,217,253 thousand, down from RMB 6,839,193 thousand in 2019, indicating a decrease of about 9.1%[9]. - The net cash position as of December 31, 2020, was RMB 5,011.0 million, a decrease from RMB 5,139.3 million at the end of 2019[39]. - The total debt amounted to RMB 1,245.9 million as of December 31, 2020, with a leverage ratio of 8.3%, up from 6.7% in 2019[39]. User Engagement and Content - As of December 31, 2020, the platform accumulated over 9 million writers and a total of 13.9 million works, with approximately 46 billion new words added throughout the year[10]. - The average daily active users (DAU) for free content in December 2020 was approximately 10 million, indicating a strong engagement in the free reading sector[10]. - The average number of comments on the platform exceeded 1 million for over 100 works, showcasing increased user participation and engagement[11]. - Average monthly active users for self-owned platform products and Tencent's self-operated channels rose by 4.2% year-on-year to 228.9 million[22]. - Average monthly paying users increased by 4.1% year-on-year to 10.2 million, supported by growth in self-owned platform products[23]. - Average revenue per paying user per month increased by 37.2% year-on-year to RMB 34.7, attributed to enhanced content operations and distribution channels[24]. Revenue Streams - Online business revenue grew by 32.9% year-on-year to RMB 4,932.2 million, accounting for 57.9% of total revenue[20]. - Revenue from self-owned platform products in the online business surged by 61.0% year-on-year to RMB 3,903.4 million, driven by expanded distribution channels and increased user willingness to pay for reading content[20]. - Revenue from copyright operations and others decreased by 22.5% year-on-year to RMB 3,593.5 million, primarily due to delays in production and release dates caused by the COVID-19 pandemic[24]. - Cost of revenue decreased by 7.8% year-on-year to RMB 4,291.6 million, mainly due to reduced production costs for TV dramas and films[24]. - The total revenue generated under the advertising cooperation framework agreement for the year ended December 31, 2020, was RMB 754.6 million, with an actual transaction amount of approximately RMB 382.7 million[127]. Strategic Initiatives and Partnerships - The company aims to continue upgrading its business around content, platform, and ecosystem, focusing on sustainable growth and new business exploration[14]. - The company launched a new writer contract grading system to enhance service and experience for writers, reflecting a commitment to improving the writer ecosystem[11]. - The company’s collaboration with Tencent channels allowed for broader distribution of free works, enhancing user reach and engagement[10]. - The company is actively involved in various subsidiaries and affiliated companies, enhancing its market presence and operational capabilities[52]. - The company is exploring new market opportunities and potential acquisitions to expand its business footprint[52]. - The company is focused on expanding its market presence through strategic partnerships and agreements with Tencent[116]. Corporate Governance - The board of directors consists of 9 members, including 2 executive directors, 4 non-executive directors, and 3 independent non-executive directors[169]. - The company has adopted a corporate governance code in compliance with the listing rules, ensuring adherence to all applicable codes during the reporting period[169]. - The board has established four board committees, including audit, remuneration, nomination, and strategic investment committees, to oversee specific areas of governance[173]. - The company has implemented appropriate and sufficient liability insurance for directors, which is reviewed annually[173]. - The board's composition and independent non-executive directors provide adequate checks and balances to protect the interests of shareholders[170]. Risks and Compliance - The company may face significant risks related to the contractual arrangements, including potential conflicts of interest with the ultimate shareholders of the Chinese operating entities[157]. - The company may incur substantial costs and restrictions if it exercises options to acquire equity and assets of the Chinese operating entities[157]. - The company’s consolidated net profit and the investment value of its shares may significantly decrease if additional tax liabilities are identified by Chinese tax authorities[158]. - The implementation of the Foreign Investment Law may create significant uncertainties affecting the group's corporate structure and operational feasibility[162]. Employee and Shareholder Information - The group had approximately 2,000 full-time employees as of December 31, 2020, primarily located in China[43]. - The board of directors and senior management hold a total of 5,100,626 shares in a controlled corporation, representing 0.50% of the company's equity[77]. - The company has established a remuneration committee to review the remuneration policies for directors and senior management, considering the group's operating performance and market practices[71].

Financial Performance - Revenue for the first half of 2020 was RMB 3,260,206 thousand, representing a 9.7% increase from RMB 2,970,951 thousand in the same period of 2019[7]. - Gross profit for the first half of 2020 was RMB 1,731,312 thousand, up 6.8% from RMB 1,621,150 thousand year-on-year[7]. - The company reported an operating loss of RMB (3,555,563) thousand, a significant decline compared to a profit of RMB 527,722 thousand in the first half of 2019, marking a 773.8% decrease[7]. - The net loss attributable to equity holders for the first half of 2020 was RMB (3,295,874) thousand, compared to a profit of RMB 392,722 thousand in the same period of 2019, reflecting a 939.2% decline[7]. - The company recorded a non-IFRS profit of RMB 21,679 thousand, down 94.4% from RMB 389,999 thousand in the previous year[7]. - EBITDA for the six months ended June 30, 2020, was RMB 59.6 million, down from RMB 298.2 million in the same period of 2019[30]. - Adjusted EBITDA margin decreased to 0.5% for the six months ended June 30, 2020, compared to 15.5% in the previous year[30]. - The company reported a significant increase in sales and marketing expenses, rising to RMB 1,270.3 million from RMB 976.7 million year-on-year[18]. - The company reported a net loss of RMB 3,310.5 million, with a net profit margin of -101.5%[34]. Market Challenges - The company faced challenges including increased competition in the free reading app market and a decline in traditional distribution channel traffic, exacerbated by the COVID-19 pandemic[8]. - The free reading app "Feidu" did not meet performance expectations despite having strong influence in specific markets[14]. - The impact of the COVID-19 pandemic has led to delays in film production and uncertain release schedules, affecting the overall project cycle for New Media[40]. - The ongoing COVID-19 pandemic may adversely affect the financial performance of the group in the future, despite some impacts already reflected in the first half of 2020[183]. Strategic Initiatives - New leadership, including CEO Cheng Wu and President Hou Xiaonan, is expected to drive transformation and strengthen ties with Tencent[9]. - The company aims to enhance its position as a leading Chinese content intellectual property repository, particularly in novels[8]. - The company is focusing on the development of paid reading services and has launched popular TV dramas like "Qing Yu Nian" to drive growth[8]. - The company aims to enhance its core business by strengthening IP incubation capabilities and accelerating cross-industry development[17]. - The company plans to improve its platform's social and community features and strengthen connections within Tencent's product matrix[17]. Financial Position - Total assets decreased from RMB 26,250.0 million as of December 31, 2019, to RMB 21,460.4 million as of June 30, 2020, while total liabilities decreased from RMB 6,839.2 million to RMB 5,027.8 million[36]. - Cash and cash equivalents, net of borrowings, stood at RMB 4,530.4 million as of June 30, 2020, compared to RMB 4,892.3 million in the prior year[30]. - The company maintained a stable paying ratio of 4.5% for the six months ended June 30, 2020[23]. - The company’s total equity decreased to RMB 16,432,650 thousand from RMB 19,410,811 thousand at the end of 2019[76]. - The company’s retained earnings showed a significant decline, moving from RMB 1,440,867 thousand to RMB 243,741 thousand, indicating a loss of approximately 83%[82]. Investments and Acquisitions - The company recognized impairment provisions for goodwill and trademarks related to New Media amounting to RMB 4,015.9 million and RMB 389.8 million, respectively[40]. - The fair value change of the consideration liability related to New Media resulted in a gain of RMB 1,240.3 million due to expected underperformance in 2020[40]. - The company recognized a loss of RMB 4,015,854,000 related to goodwill impairment in the six months ended June 30, 2020[110]. - The company recognized an addition of RMB 141,990,000 in intangible assets during the six months ended June 30, 2020, primarily from non-competition agreements[17]. Corporate Governance - The company is committed to maintaining high standards of corporate governance, which it believes is crucial for long-term success and sustainability[41]. - The company has adopted a code of conduct for directors regarding securities trading, ensuring compliance with applicable standards[42]. - The board decided not to recommend an interim dividend for the six months ending June 30, 2020, compared to zero in 2019[43]. Employee and Shareholder Information - As of June 30, 2020, the company had approximately 2,000 full-time employees, primarily located in China, with a significant presence in Shanghai[39]. - The company plans to continue granting share incentive awards to motivate employees towards growth and development[39]. - The company has not purchased, sold, or redeemed any of its listed securities during the six months ending June 30, 2020[44].

Financial Performance - Total revenue for 2019 reached RMB 8,347,767 thousand, a 65.3% increase from RMB 5,038,250 thousand in 2018[9] - Gross profit for 2019 was RMB 3,692,023 thousand, up 44.3% from RMB 2,557,979 thousand in 2018[9] - Operating profit for 2019 was RMB 1,193,907 thousand, representing a 7.0% increase compared to RMB 1,114,951 thousand in 2018[9] - Net profit attributable to equity holders for 2019 was RMB 1,095,953 thousand, an increase of 20.3% from RMB 910,636 thousand in 2018[9] - The company reported a comprehensive income of RMB 1,167,355 thousand for 2019, compared to RMB 1,342,293 thousand in 2018[9] - Revenue for the year ended December 31, 2019, increased by 65.7% to RMB 8,347.8 million compared to RMB 5,038.3 million in 2018[28] - Gross profit for the year was RMB 3,692.0 million, up from RMB 2,558.0 million in the previous year[26] - Operating profit for 2019 was RMB 1,193,907 thousand, compared to RMB 1,114,951 thousand in 2018, showing growth in profitability[47] - Net profit attributable to equity holders increased by 20.4% to RMB 1,096.0 million[38] - The company reported a net profit margin of 13.3% for 2019, down from 18.1% in 2018, reflecting increased costs or reduced pricing power[49] Assets and Liabilities - Total assets as of December 31, 2019, amounted to RMB 26,250,004 thousand, a decrease of 5.7% from RMB 27,834,606 thousand in 2018[10] - Total equity attributable to equity holders was RMB 19,396,567 thousand, an increase of 5.4% from RMB 18,403,478 thousand in 2018[10] - Non-current assets increased to RMB 14,059,479 thousand in 2019, up from RMB 13,556,968 thousand in 2018[10] - Current liabilities decreased to RMB 5,913,647 thousand in 2019 from RMB 6,596,311 thousand in 2018[10] - The total assets decreased from RMB 27,834.6 million as of December 31, 2018, to RMB 26,250.0 million as of December 31, 2019, while total liabilities decreased from RMB 9,419.6 million to RMB 6,839.2 million, resulting in a debt-to-asset ratio decline from 33.8% to 26.1%[19] - The company's leverage ratio improved to 6.7% in 2019 from 13.4% in 2018, with total borrowings amounting to RMB 1,303.1 million[19] User Metrics and Market Challenges - The company reported a significant user growth challenge due to the rapid rise of free reading applications, which attracted millions of users and impacted the paid reading model[16] - As of December 31, 2019, the platform had 8.1 million authors and a total of 12.2 million works, including 11.5 million original literary works from its own platform[23] - The average monthly active users for proprietary platform products and Tencent's self-operated channels increased to 219.7 million from 213.5 million[31] - The average monthly paying users decreased to 9.8 million from 10.8 million, resulting in a paying ratio of 4.5%[31] - The average monthly paying users decreased by 9.3% from 10.8 million to 9.8 million, primarily due to user allocation changes in Tencent's self-operated channels[32] - The paid user ratio declined from 5.1% in 2018 to 4.5% in 2019[32] Strategic Initiatives and Future Outlook - The company plans to continue expanding its market presence and invest in new product development to drive future growth[9] - The company aims to strengthen its position in the film and television production sector through its acquisition of Xinli Media, focusing on high-quality productions[22] - The company continues to deepen relationships with major distribution and content partners, including Tencent, to enhance its content licensing and distribution strategy[22] - The company is optimistic about the commercial prospects of its core businesses, including literary creation, distribution, and film production[23] - The company recognizes the ongoing challenge of market volatility and the need for investors to endure short-term fluctuations for long-term returns[16] Cost and Expense Management - In 2019, the company faced higher costs than revenues from its initiatives, but expects platform benefits to materialize starting in 2020[20] - Total revenue cost increased by 87.7% to RMB 4,655.7 million, mainly due to rising production costs for TV series and online dramas[34] - Sales and marketing expenses increased by 60.4% to RMB 2,073.9 million, accounting for 24.8% of total revenue, down from 25.7%[37] - Interest expenses rose significantly to RMB 166,521 thousand in 2019 from RMB 48,510 thousand in 2018, suggesting increased borrowing costs[44] Shareholder Information and Corporate Governance - Tencent holds 577,643,604 shares, representing 57.06% of the issued shares[60] - The total number of issued shares is 1,012,336,846, with a slight decrease from 1,015,781,716 shares[60] - The board consists of 9 members, including 2 executive directors, 4 non-executive directors, and 3 independent non-executive directors, ensuring a balanced skill set and experience[181] - The company has adopted the corporate governance code as per the listing rules and has complied with all applicable code provisions during the reporting period[182] - The company maintains ongoing dialogue with shareholders through annual and special general meetings[189] Related Party Transactions - The actual transaction amount for related party transactions for the year ended December 31, 2019, was approximately RMB 102.2 million, against an annual cap of RMB 120 million[120] - The actual transaction amount for the paid service cooperation framework agreement for the year ended December 31, 2019, was approximately RMB 13.3 million, against an annual cap of RMB 26.5 million[121] - The independent non-executive directors confirmed that the related party transactions were conducted in the ordinary course of business and on normal commercial terms[148] - The auditor issued an unqualified opinion regarding the related party transactions, indicating compliance with the relevant agreements and pricing policies[150] Contractual Arrangements and Risks - The company has established contractual arrangements to gain actual control over the businesses operated by Shanghai Hongwen and New Classics Media, consolidating their financial performance into the company's financial statements[151] - The company faces several risks related to the contractual arrangements, including potential non-compliance with applicable Chinese laws and regulations, which could lead to severe consequences[167] - The interpretation and implementation of the Foreign Investment Law may create significant uncertainty regarding the company's existing corporate structure and operational feasibility[167] - The company is subject to potential scrutiny from Chinese tax authorities, which could significantly reduce its consolidated net profit and shareholder investment value if additional tax liabilities are identified[167]

Revenue and Profitability - Revenue for the first half of 2019 reached RMB 2,970,951 thousand, representing a 30.1% increase compared to RMB 2,282,900 thousand in the same period of 2018[5] - Gross profit for the same period was RMB 1,621,150 thousand, up 35.5% from RMB 1,196,499 thousand year-over-year[5] - Operating profit decreased by 12.6% to RMB 527,722 thousand, down from RMB 603,866 thousand in the previous year[5] - Revenue for the six months ended June 30, 2019, increased by 30.1% year-on-year to RMB 2,970.951 million[18] - Gross profit for the same period was RMB 1,621.150 million, compared to RMB 1,196.499 million in 2018[17] - Operating profit decreased to RMB 527.722 million from RMB 603.866 million year-on-year[17] - The net profit attributable to equity holders of the company for the period was RMB 392,722 thousand, down from RMB 505,810 thousand in the previous year, a decrease of approximately 22.3%[83] - Basic earnings per share for the period was RMB 0.39, compared to RMB 0.58 in the same period last year, representing a decline of about 32.8%[83] User Engagement and Content Development - The number of authors on the platform reached 7.8 million, with a total of 11.7 million works, including 11.1 million original literary works[8] - The platform added approximately 20 billion characters in new content during the first half of 2019[8] - The company anticipates continued growth in traffic for short-form works, which are about one-quarter to one-third the length of long-form works[8] - The platform's popular novel "Holy Ruins" surpassed 10 million fans, and the number of literary works with over 1 million comments increased from 2 in 2018 to 13 in 2019[9] Strategic Initiatives and Partnerships - The company launched a free reading channel in collaboration with Tencent on mobile QQ and QQ browser apps, along with its own free reading app, FeiDu[7] - The integration with New Classics Media is expected to enhance the company's ability to produce original series and adapt literary works into other entertainment forms[7] - Strategic partnerships were established with Transsion Technology Limited and Singapore Telecommunications to expand online reading markets in Africa and Southeast Asia[13] - The company plans to continue strengthening its investment in copyright adaptations to capture significant market opportunities in the entertainment sector[12] Copyright Operations and Monetization - The company has a copyright-centric monetization model that includes online reading, film and television production, animation co-production, and online game operations[7] - The company granted adaptation rights for approximately 70 literary works to third parties in the first half of 2019, enhancing the monetization of copyrights[12] - Revenue from copyright operations increased significantly by 40.9% to RMB 1,215.030 million[19] - Revenue from copyright operations and others increased by 224.1% to RMB 1,308.5 million, accounting for 44.0% of total revenue[24] Financial Performance and Costs - Average monthly active users for the company's own platform and Tencent's self-operated channels increased by 1.7% to 217.1 million[22] - Average monthly paying users decreased by 9.3% to 9.7 million, leading to a decline in the paying ratio from 5.0% to 4.5%[22] - Revenue from online business decreased by 11.5% to RMB 1,662.481 million, accounting for 56.0% of total revenue[20] - Total cost of revenue increased by 24.2% to RMB 1,349.8 million, driven by rising production costs for TV dramas, online dramas, animations, and films[26] - Sales and marketing expenses surged by 85.2% to RMB 976.7 million, representing 32.9% of total revenue, up from 23.1%[27] - General and administrative expenses increased by 41.8% to RMB 473.4 million, accounting for 15.9% of total revenue[28] Assets and Liabilities - Total assets as of June 30, 2019, were RMB 26,232.9 million, down from RMB 27,834.6 million as of December 31, 2018[40] - Total liabilities decreased to RMB 7,441.9 million from RMB 9,419.6 million year-over-year, resulting in a debt-to-asset ratio decline from 33.8% to 28.4%[40] - Cash and cash equivalents decreased to RMB 4,892,250 thousand from RMB 8,491,122 thousand year-over-year[33] - The company reported a basic earnings per share of RMB 0.39 for the six months ended June 30, 2019, compared to RMB 0.58 in 2018[37] Shareholder and Corporate Governance - The company did not recommend the payment of an interim dividend for the six months ended June 30, 2019[50] - The company repurchased a total of 545,600 shares at a total cost of HKD 17,950,863 during the six months ended June 30, 2019, as part of its strategy to enhance shareholder value[51] - The company is committed to maintaining high standards of corporate governance and has complied with all applicable corporate governance code provisions during the reporting period[48] Investments and Acquisitions - The company acquired 100% of New Classics Media Holdings Limited, expanding its copyright operation business, particularly in film and television production[98] - New Classics Media recorded revenue of RMB 664.3 million and net profit of RMB 95.5 million for the six months ended June 30, 2019, following its acquisition on October 31, 2018[45] - The company allocated about RMB 1,843.4 million for potential investments, acquisitions, and strategic alliances[57] Financial Risk Management - The group aims to maintain sufficient cash and cash equivalents to manage liquidity risk effectively[117] - The financial risk management policies remained unchanged as of June 30, 2019, indicating stability in risk management practices[115]

Financial Performance - Total revenue for the year ended December 31, 2018, was RMB 5,038.3 million, an increase from RMB 4,095.1 million in 2017, representing a growth of 23.0%[8] - Gross profit for 2018 was RMB 2,558.0 million, up from RMB 2,075.4 million in 2017, reflecting a gross margin improvement[10] - Operating profit for the year was RMB 1,114.9 million, compared to RMB 614.6 million in the previous year, indicating a significant increase of 81.5%[8] - Net profit attributable to equity holders was RMB 910.6 million, a rise from RMB 556.1 million in 2017, marking a growth of 63.7%[10] - The company reported a comprehensive income of RMB 1,340.5 million for the year, compared to RMB 406.0 million in 2017, indicating a significant increase[8] - Non-GAAP net profit attributable to equity holders was RMB 900.5 million, compared to RMB 721.8 million in the previous year, representing a growth of 24.8%[8] - The company reported a net profit margin of 18.1% for 2018, compared to 17.9% in 2017, indicating improved profitability[36] - Basic earnings per share for 2018 were RMB 1.01, up from RMB 0.74 in 2017, reflecting a growth of 36.5%[36] User Engagement - Average monthly active users reached 213.5 million, while average monthly paying users were 10.8 million, indicating strong user engagement[10] - The number of average monthly active users rose from 191.5 million in 2017 to 213.5 million in 2018, while average monthly paying users increased slightly to 10.8 million[14] - Monthly ticket totals for the top 100 works on the platform increased by 35% year-on-year, indicating heightened user engagement[12] - The company reported a significant increase in user engagement, with a year-over-year growth of 25% in active users[42] Market Expansion and Strategy - The company plans to continue expanding its market presence and investing in new technologies to drive future growth[10] - The company plans to expand its market presence in Southeast Asia, targeting a 30% increase in market share over the next two years[43] - New product launches are expected to contribute an additional 200 million in revenue in the upcoming fiscal year[42] - A strategic acquisition of a smaller tech firm is anticipated to enhance the company's service offerings and is projected to add 50 million in annual revenue[42] - The company aims to enhance its copyright operations through various forms of rights sales, joint investments, and self-development[16] Acquisitions and Investments - The acquisition of New Classics Media in October 2018 is expected to expand the company's market share in the entertainment sector[14] - The company agreed to acquire 100% equity of New Classics Media for a maximum consideration of approximately RMB 15.5 billion, to be settled in cash and new shares[86] - New Classics Media generated revenue of RMB 275.3 million and net profit of RMB 67.9 million in the two months following its acquisition[40] Financial Position - Total assets as of December 31, 2018, amounted to RMB 27,834.6 million, compared to RMB 15,137.4 million in 2017, showing a substantial increase of 83.5%[9] - Total equity attributable to equity holders was RMB 18,403.5 million, up from RMB 12,621.2 million in 2017, reflecting a growth of 46.0%[9] - The total liabilities rose from RMB 2,474.7 million as of December 31, 2017, to RMB 9,419.6 million as of December 31, 2018, resulting in a debt-to-asset ratio increase from 16.3% to 33.8%[38] - Cash and cash equivalents at the end of 2018 were RMB 6,358,344, down from RMB 8,131,710 in 2017, reflecting a decrease of 21.8%[32] Operational Efficiency - Selling and marketing expenses increased by 34.0% to RMB 1,293.1 million, with the percentage of revenue rising from 23.6% to 25.7%[27] - General and administrative expenses increased by 6.2% to RMB 726.5 million, with the percentage of revenue decreasing from 16.7% to 14.4%[28] - The company aims to reduce operational costs by 10% through efficiency improvements and automation[43] Corporate Governance - The board consists of 9 members, including 2 executive directors, 4 non-executive directors, and 3 independent non-executive directors, ensuring a balance of skills and experience[127] - The company has adopted the corporate governance code as per the listing rules and has complied with all applicable code provisions during the reporting period[127] - The board has established four committees: Audit Committee, Remuneration Committee, Nomination Committee, and Strategic and Investment Committee to oversee various aspects of governance[130] Environmental, Social, and Governance (ESG) - The report emphasizes the importance of environmental, social, and governance (ESG) strategies in guiding daily operations and managing risks[166] - The company is committed to protecting user rights and personal privacy as part of its ESG strategy[168] - The company is implementing green operations to protect the environment and conserve resources[168] - The company has established a management system for ESG that includes the board of directors and senior management[166] Risk Management - The company has established a crisis management team to handle reputation risks and has implemented a mechanism for crisis communication to ensure timely and accurate information dissemination[156] - The management team conducts self-assessments of internal controls within their respective departments, guided by a self-assessment questionnaire based on the COSO framework[158] - The company faces competition from other online platforms providing literary content services, which may significantly impact its core competitiveness and success[154] Community Engagement - The company organized the "Realism Essay Contest" which collected 11,800 entries from over 10,200 participants, promoting cultural engagement[184] - The "Warmth in Every Drop" donation campaign collected over 2,000 items of clothing and stationery for impoverished areas in Yunnan and Sichuan provinces[185] - The company raised 7,164 RMB during the "Extraordinary Charity Sale" event, with all proceeds donated to the Shanghai Red Cross[185]