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].

lオl CHINA LITERATURE China Literature Limited (於開曼群島註冊成立的有限公司) 股份代號 : 772 1 | --- | --- | --- | --- | --- | --- | --- | --- | --- | |-------|-------|-------|-------|-------|-------|-----------|-------|-------| | | | | | | | | | | | | | | | | | | | | | 年 | | 報 | 告 | | | | | | | | | | | | | | | | | | | | | | | de 4 1948 | | | | | | | | | | | O | > | 傳 播 文 化 讓 創 意 實 現 價 值 集团 l 完 CHINA LITERATURE 目 錄 2 公司資料 4 財務概要及經營亮點 6 主席報告 10 管理層討論及分析 22 董事及高級管理層 27 董事會報告 60 企業管治報告 81 環境、社會及管治報告 97 獨立核數師報告 107 綜合全面收益表 108 綜合 ...

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]