Core Viewpoint - The rapid development of AI continues to disrupt the market, with NetDragon (00777) emphasizing its dual-driven strategy in gaming and education, particularly focusing on its education business following the successful spin-off and listing of its overseas education segment as "Mynd.ai" [1][4] Company Strategy - NetDragon's education business accounts for over 50% of its revenue, with the recent spin-off allowing for a focused approach on AI in education, aiming to establish Mynd.ai as a global SaaS company [1][4] - The management highlighted three reasons for the spin-off: better understanding of the company's value by local investors, potential for stock price and market value enhancement, and the release of company potential to pursue its vision [1][3] Market Position - NetDragon's education segment has shown a compound annual growth rate (CAGR) of 14.01% from 2018 to 2022, with its interactive flat panel (IFPD) products leading the global market with over 20% market share [1][2] - The company has established a competitive advantage through an integrated hardware-software-content model, targeting schools with its products [2][3] Financial Impact - The spin-off of Mynd.ai is expected to improve cash flow significantly, allowing for independent financing and reducing reliance on the parent company for funding [3][4] - The education business is projected to accelerate growth through AI+education SaaS services, enhancing profitability and optimizing the company's overall financial performance [4][5] Industry Outlook - The global education information technology market is expanding, with a market size exceeding 2.5 trillion yuan in 2020, and AI is anticipated to further upgrade educational products [2][3] - NetDragon's early investment in AI technology positions it well to capitalize on the evolving educational landscape, with plans to integrate AI into its existing product offerings [2][3] Valuation Insights - The dual strategy of gaming and education remains unchanged, with the gaming segment continuing to contribute significantly to profits and cash flow [4][5] - Analysts express optimism regarding the spin-off, suggesting it will enhance the company's focus on AI+education and improve overall valuation, with target prices indicating substantial upside potential [4][5]

Revenue Performance - Revenue for the first half of 2023 was RMB 3.7 billion, a decrease of 13% year-on-year[7]. - Game business revenue reached RMB 1.9 billion, accounting for 52% of total revenue, with an 8% year-on-year increase[7]. - Education business revenue was RMB 1.7 billion, representing 47% of total revenue, down 29% year-on-year[7]. - Revenue for the six months ended June 30, 2023, was RMB 3,681 million, a decrease of 13.2% compared to RMB 4,240 million for the same period in 2022[73]. - Revenue from online and mobile games was RMB 1,920 million, an increase of 8.1% compared to RMB 1,776 million in the previous year[91]. - Education revenue, including sales of educational equipment and related services, was RMB 1,720 million, down 28.7% from RMB 2,410 million in the same period last year[91]. - Revenue from mobile solutions, products, and marketing was RMB 41 million, slightly up from RMB 38 million in the previous year[91]. - Revenue from the Chinese market was RMB 1,790 million, while revenue from the United States was RMB 1,463 million, indicating a significant contribution from both regions[96]. Profitability Metrics - Gross profit amounted to RMB 2.3 billion, a decrease of 2% year-on-year[7]. - Operating profit was RMB 699 million, a decrease of 6% year-on-year[7]. - Non-GAAP operating profit was RMB 692 million, down 19% year-on-year[7]. - Net profit for the period was RMB 453 million, a decrease of 16.5% compared to RMB 542 million in the prior year[74]. - Basic earnings per share for the period was RMB 92.61, down from RMB 104.42 in the same period last year[74]. - The company reported a profit before tax of RMB 579 million for the six months ended June 30, 2023, compared to RMB 713 million in the same period of 2022, reflecting a decrease of approximately 18.8%[99]. - The company reported a profit of RMB 500 million for the six months ended June 30, 2023, a decrease of 11.5% compared to RMB 565 million for the same period in 2022[109]. Dividends and Shareholder Returns - The company announced an interim special dividend of HKD 1.0 per share and an interim dividend of HKD 0.4 per share[7]. - The interim special dividend and interim dividend declared for the six months ending June 30, 2023, are HKD 1.0 and HKD 0.4 per ordinary share, respectively, totaling HKD 1.4 per share[38]. - The total dividend amount for the six months ending June 30, 2023, is expected to be distributed on or around November 30, 2023[38]. - The board declared an interim special dividend of HKD 1.0 per share and an interim dividend of HKD 0.4 per share, compared to HKD 0.5 and HKD 0.4 per share in 2022[62]. Cash Flow and Financial Position - As of June 30, 2023, the group's cash and cash equivalents amounted to approximately RMB 4,173 million, an increase from RMB 3,909 million as of December 31, 2022[19]. - The group's net current assets as of June 30, 2023, were approximately RMB 3,878 million, compared to RMB 3,723 million as of December 31, 2022[19]. - The total assets as of June 30, 2023, amounted to RMB 7,031 million, an increase from RMB 6,687 million at the end of 2022[75]. - Cash and cash equivalents were RMB 3,645 million, slightly down from RMB 3,701 million at the end of 2022[75]. - The company reported a significant increase in interest expenses on convertible and exchangeable bonds, rising to RMB 108 million from RMB 90 million, an increase of 20%[79]. - The company’s total liabilities increased to RMB 1,583 million, up from RMB 1,468 million, indicating a rise of 7.8%[76]. - The company's equity attributable to owners increased to RMB 7,132 million, a rise of 3.4% from RMB 6,899 million[76]. Employee and Talent Management - As of June 30, 2023, the total number of employees in the group reached 5,207, an increase from 5,135 at the end of 2022 and 4,784 a year earlier[27]. - The company attracted 501 new talents in the first half of 2023, including 62 senior elite talents, and conducted campus recruitment activities that attracted 9,233 graduates[28]. - Total employee costs increased to RMB 1,170 million in the first half of 2023, up from RMB 1,043 million in the same period of 2022, reflecting a rise of 12.2%[107]. - The remuneration for directors and other key management personnel for the six months ended June 30, 2023, was RMB 94 million, up from RMB 66 million in the same period of 2022, representing a 42.4% increase[146]. Market and Product Development - The company aims to enhance revenue growth in its education business by strengthening product segmentation and integrating AI tools into its products[17]. - The launch of the new interactive panel ActivPanel LX aims to capture a larger market share in the cost-effective segment[10]. - The company is developing a flagship mobile game version 2.0 for "Honor of Kings" aimed at the overseas market[13]. - Multiple AIGC projects have been initiated to enhance player experience, focusing on NPCs and AI companions[12]. - The company has plans for market expansion and new product development, focusing on mobile solutions and educational products[98]. Corporate Governance and Shareholder Structure - Liu Dejian holds a beneficial interest of 40.75% in the company through DJM Holding Ltd., which owns 35.99% of the voting shares[41]. - DJM Holding Ltd. holds 35.99% of the company's shares, making it the largest shareholder[46]. - International Data Group owns approximately 10.08% of the company's shares, alongside Ho Chi Sing, who also holds 10.08%[46][47]. - The company maintains transparency regarding the interests and holdings of its directors and key executives in the company's shares[40]. Financial Instruments and Investments - The company issued convertible and exchangeable bonds totaling $150 million, equivalent to approximately HK$1,174.5 million, which can be converted into 279,510,479 ordinary shares of Best, representing 11.16% of the total issued share capital[57]. - The total amount of convertible and exchangeable bonds was RMB 1,469 million as of June 30, 2023, up from RMB 1,333 million as of December 31, 2022[125]. - The group holds a 40% stake in Yunqi Smart Technology Co., Ltd., a joint venture[143]. - The group holds a 60% stake in Fujian Guoteng Information Technology Co., Ltd., a joint venture[143]. Sustainability and Corporate Responsibility - The company improved its S&P Global Sustainability score to 40, ranking in the top 7% of the interactive media, services, and home entertainment industry[10]. - The company has received multiple awards, including recognition for outstanding corporate social responsibility and competitiveness in the gaming industry[18].

Financial Performance - Game revenue for the first half of 2023 reached RMB 1.9 billion, an 8% year-on-year increase and a 16% quarter-on-quarter increase[3] - In the first half of 2023, total revenue was RMB 3.7 billion, a year-over-year decrease of 13%[8] - Revenue from the gaming business was RMB 1.9 billion, accounting for 52% of total revenue, with an 8% year-over-year increase[8] - Revenue from the education business was RMB 1.7 billion, accounting for 47% of total revenue, reflecting a 29% year-over-year decrease[8] - The operating profit for the first half of 2023 was RMB 699 million, a year-over-year decrease of 6%[8] - Net profit for the period was RMB 453 million, a decrease of 16.5% from RMB 542 million in the prior year[12] - Basic earnings per share decreased to RMB 92.61 from RMB 104.42, representing a decline of 11.3%[14] - The group reported a total profit before tax of RMB 579 million, compared to RMB 580 million in the same period last year, indicating a stable performance despite revenue decline[30] Market Performance - Domestic game business revenue grew by 9% year-on-year, significantly outperforming the market growth rate of 2%[3] - The flagship game "Magic Domain" saw a 10% year-on-year revenue increase, with a 22% quarter-on-quarter increase[3] - The company maintained its leading position in the global market outside of China, with the highest market share in key markets such as the US, Germany, and the UK[5] Education Business - Education business revenue declined by 29% year-on-year to RMB 1.7 billion, reflecting the overall market trend post-pandemic[5] - The cumulative registered users of the national primary and secondary school smart education platform exceeded 84 million, with over 25 billion page views as of June 30, 2023[6] - The company signed a merger agreement to spin off its overseas education business with a valuation of $750 million, which is expected to enhance financing options and governance structure[7] Dividends and Shareholder Returns - A special dividend of HKD 1.0 per share and an interim dividend of HKD 0.40 per share were announced for the first half of 2023[2] - The company declared an interim special dividend of HKD 1.0 per share, amounting to RMB 490 million, and an interim dividend of HKD 0.4 per share, amounting to RMB 196 million[38] - The board declared an interim special dividend of HKD 1.0 per share and an interim dividend of HKD 0.4 per share for the six months ending June 30, 2023[74] Cash Flow and Assets - Cash and cash equivalents were RMB 3,645 million, slightly down from RMB 3,701 million[15] - The company reported a net cash inflow from operating activities of RMB 457 million, down from RMB 480 million in the previous year[20] - Total assets as of June 30, 2023, increased to RMB 7,031 million from RMB 6,687 million at the end of 2022, marking a growth of 5.1%[15] Research and Development - The company plans to launch multiple new games, including MMORPGs and a new casual game, in the second half of 2023[4] - The integration of generative AI (AIGC) into game operations is expected to enhance content production efficiency and improve player experience[4] - The number of research and development employees increased to 3,068 as of June 30, 2023, from 2,960 as of December 31, 2022[50] Corporate Governance - The company has adopted a code of conduct for securities transactions that meets or exceeds the standards set by the listing rules[73] - The Audit Committee reviewed the interim financial performance for the six months ending June 30, 2023, ensuring compliance with applicable accounting standards[77] - The company has adhered to the corporate governance code throughout the review period[77] Share Repurchase - The company repurchased a total of 9,844,500 shares at a total cost of HKD 146.7 million during the period ending June 30, 2023[78] - The repurchased shares were subsequently canceled in June 2023[78] - In April 2023, the company repurchased 3,633,500 shares at a price range of HKD 14.46 to HKD 15.44, totaling HKD 54.4 million[79]

Financial Performance - The company achieved a revenue growth of 11.8% year-on-year, surpassing RMB 7.9 billion in 2022[12]. - The gross profit for 2022 was RMB 4.315 billion, with a gross margin of approximately 54.8%[9]. - Operating profit for 2022 was RMB 1.15 billion, reflecting a decrease of 17% compared to the previous year[9]. - The net profit attributable to the company's owners for 2022 was RMB 834 million, down from RMB 1.062 billion in 2021[10]. - The company reported a basic earnings per share of RMB 154.15 for 2022, compared to RMB 191.67 in 2021[10]. - Total revenue for the year was RMB 7.9 billion, representing an 11.8% year-on-year increase[16]. - Operating profit decreased by 17.0% year-on-year to RMB 1.2 billion, with a significant drop in profit from the gaming segment by 14.1% to RMB 1.8 billion[16]. - Cash flow from operating activities increased by 4.2% year-on-year to RMB 1.1 billion, indicating a stable cash generation capability[16]. Revenue Breakdown - Game revenue decreased by 5.8% year-on-year to RMB 3.4 billion, while mobile game revenue slightly declined by 0.2%, outperforming the domestic mobile game market's decline of 14.4%[13]. - The flagship mobile game "Magic Domain Pocket Edition" achieved a revenue growth of 6.2% year-on-year, supported by a ROI-focused user acquisition strategy and continuous content updates[13]. - Overseas business revenue grew by 6.5% year-on-year to RMB 540 million, accounting for 15.7% of total game revenue, with significant contributions from the "Conquest" IP[13]. - Education business revenue increased by 34.2% year-on-year to RMB 4.3 billion, marking a historical high and reflecting a growing market share despite increased competition[14]. - Total revenue for the education business reached RMB 4.3 billion, a year-on-year increase of 34.2%, accounting for 55.1% of total revenue[19]. Strategic Initiatives - The company emphasized strengthening strategic partnerships and enhancing market strategies as key growth drivers[12]. - The company is positioned for long-term sustainable development through its efforts in 2022[12]. - The company plans to expand its market presence through strategic partnerships and acquisitions, including the acquisition of Explain Everything, a leading digital whiteboard platform[20]. - The company announced a strategic partnership with AI education technology leader Merlyn Mind to develop an AI-supported interactive panel, expected to launch with the next product update[19]. Research and Development - Research and development expenses increased to RMB 1.224 billion in 2022, representing a 5.5% increase from the previous year[9]. - The company added over 300 R&D personnel during the year to enhance its game development capabilities[19]. - Research and development expenses for gaming increased by 16.7% year-on-year to RMB 768 million, accounting for 22.4% of gaming revenue[25]. Corporate Governance - The company is committed to maintaining high standards of corporate governance and compliance through its audit and remuneration committees[47]. - The company’s board of directors includes both executive and independent non-executive members, ensuring governance and oversight[62]. - The company has established an audit committee responsible for reviewing financial reporting procedures and risk management[105]. - The company has adopted a new share option scheme effective from May 24, 2018, replacing the previous scheme[114]. Shareholder Information - The company announced a final dividend of HKD 0.40 per ordinary share, maintaining the same level as the previous year, with total dividends accounting for 73.0% of the annual profit attributable to owners[15]. - The company proposed a final dividend of HKD 0.4 per share, with an expected payout of approximately RMB 193 million, scheduled for July 7, 2023[58]. - The top five customers accounted for approximately 22.7% of total revenue, while the largest customer contributed about 12.0%[61]. Employee Engagement and Development - The total number of employees as of December 31, 2022, is 5,135, reflecting the company's commitment to talent acquisition and development[37]. - The company has received multiple employer brand awards in 2022, including the "2022 Most Loved Employer Award" and "2023 Outstanding Employer Award" for its innovative employment practices[37]. - The company is actively promoting a "metaverse organization" model, focusing on open communication and innovation to enhance employee engagement and value creation[38]. Risk Management - The company has taken measures to mitigate risks associated with its structural contracts, including annual reviews and disclosures in reports[99]. - The company is committed to hiring external legal advisors to ensure compliance with existing contracts and regulations[99]. - The company has established a comprehensive cybersecurity management framework to ensure robust governance and operational continuity[181]. Compliance and Ethics - The company emphasizes strict compliance with data protection laws and regulations to safeguard employee and customer privacy[57]. - The company provides multiple reporting channels for employees to report unethical behavior, including an internal OA system[172]. - The company has updated its business ethics rules and code of conduct 15 times over the past 20 years, currently at version 7.3[171]. Market Challenges - The company operates in the competitive online and mobile gaming industry, facing challenges from major players like Electronic Arts and Tencent[55]. - The company relies on consumer spending for revenue, which may be affected by economic uncertainties and inflation[56]. - The company faces risks related to new technologies that could render its game designs outdated[56].

[69 -> 85] Dear friends and investors, good morning. Thank you for joining us for NetDragon Websoft Holdings Limited 2022 Annual Results Presentation. [86 -> 109] Our presentation PPT will be broadcast on the live streaming platform and the PPT is also available for download on our company website at www.nd.com.cn under the investor relations tag in IR webcast section. 我们的业绩PPT会在直播平台同步播放,同时各位也可以在公司网站下载。 [110 -> 138] Before the start of our presentation, please allow me to introduce the management who are ho ...

Financial Performance - NetDragon Websoft Holdings Limited reported a revenue growth of 11.8% year-on-year, reaching RMB 77.9 billion for the fiscal year ending December 31, 2022[1]. - The education business achieved a record revenue of RMB 43.0 billion, representing a year-on-year increase of 34.2%, accounting for 55.1% of total revenue[3]. - Game business revenue decreased by 5.8% year-on-year to RMB 34.0 billion, with mobile game revenue slightly declining by 0.2% to RMB 577 million, outperforming the domestic mobile game market decline of 14.4%[6]. - The company announced a net profit attributable to shareholders of RMB 834 million for 2022, a decrease of 21.5% year-on-year[9]. - Operating profit for 2022 was RMB 1.2 billion, down 17.0% year-on-year[9]. - Revenue for 2022 was RMB 7,866 million, an increase of 11.8% from RMB 7,036 million in 2021[13]. - Gross profit decreased to RMB 4,315 million in 2022 from RMB 4,523 million in 2021, representing a decline of 4.6%[13]. - Net profit for the year was RMB 764 million, a decrease of 22.2% compared to RMB 983 million in 2021[13]. - The group reported a profit before tax of RMB 840 million for the year, compared to RMB 1,236 million in the previous year, indicating a decrease of about 32.1%[30]. Revenue Breakdown - Game revenue for 2022 was RMB 3.43 billion, a decrease of 5.8% year-on-year, while education revenue rose by 34.2% to RMB 4.3 billion[9]. - Revenue from online and mobile games was RMB 3,430 million, a decrease from RMB 3,642 million in the previous year, reflecting a decline of about 5.8%[27]. - Education revenue, including sales of educational equipment and related services, increased significantly to RMB 4,336 million from RMB 3,231 million, marking a growth of approximately 34.3%[27]. Strategic Initiatives - The company announced a strategic partnership with AI education technology leader Merlyn Mind to develop an AI-supported interactive panel, expected to launch with the next product update[5]. - The company acquired Explain Everything, a leading digital whiteboard platform, to enhance its product offerings and revenue-generating applications[3]. - The company aims to explore acquisition opportunities to expand market coverage and core competitiveness[8]. - The company plans to launch five new games based on the "Magic Domain" IP in 2023 and 2024, with the first game already released in March 2023[8]. Shareholder Returns - The company declared a final dividend of HKD 0.40 per share, with total dividends for the year amounting to HKD 1.30 per share, representing 73.0% of the total profit attributable to owners[2]. - The board proposed a final dividend of HKD 0.40 per share for the year ended December 31, 2022, totaling approximately RMB 193 million[67]. Cash Flow and Assets - Cash flow from operating activities increased by 4.2% year-on-year to RMB 1.1 billion[9]. - Total assets decreased to RMB 6,687 million in 2022 from RMB 6,941 million in 2021, a reduction of 3.7%[16]. - Cash and cash equivalents at year-end were RMB 3,701 million, slightly down from RMB 3,717 million in 2021[19]. - The company reported a net cash inflow from operating activities of RMB 1,070 million, an increase from RMB 1,027 million in 2021[18]. Employee and R&D Investments - The total number of employees increased to 5,135 as of December 31, 2022, from 4,834 in the previous year, with R&D staff rising to 2,960[47]. - R&D expenses grew by 16.7% year-on-year to RMB 768 million, representing 22.4% of game revenue[8]. Debt and Liabilities - New bank loans added in 2022 amounted to RMB 878 million, significantly higher than RMB 411 million in 2021[19]. - The debt-to-equity ratio increased to 0.11 as of December 31, 2022, compared to 0.06 in the previous year[46]. - Total bank loans amounted to approximately RMB 739 million as of December 31, 2022, up from RMB 403 million in 2021, with floating-rate loans at RMB 376 million and fixed-rate loans at RMB 363 million[46]. Corporate Governance - The company has complied with the corporate governance code throughout the review year[72]. - The audit committee reviewed the financial statements for the year ended December 31, 2022, ensuring compliance with applicable accounting standards[73].

Financial Performance - Total revenue for the year 2021 reached RMB 7,035,496 thousand, representing a year-over-year increase of 14.7% from RMB 6,137,640 thousand in 2020[9] - Gross profit for 2021 was RMB 4,522,566 thousand, with a gross margin of approximately 64.2%, compared to RMB 4,171,264 thousand in 2020[9] - The company reported a net profit of RMB 983,358 thousand for 2021, up 14.9% from RMB 855,820 thousand in 2020[10] - Basic earnings per share for 2021 was RMB 191.67, an increase from RMB 171.19 in 2020[10] - Total revenue for 2021 reached RMB 7,035,500,000, representing a year-on-year growth of 14.6%[16] - The education business revenue surged by 32.2% to RMB 3.2 billion, with operating losses narrowing by 28.4%[22] - The gaming business revenue increased by 6.1% year-on-year, reaching RMB 3.6 billion, with operating profit rising by 7.8% to RMB 2.1 billion[20] Assets and Liabilities - Non-current assets as of December 31, 2021, totaled RMB 3,944,043 thousand, reflecting a growth from RMB 3,869,904 thousand in 2020[10] - Current assets increased to RMB 6,940,793 thousand in 2021, compared to RMB 6,123,311 thousand in 2020[10] - The company’s total liabilities increased to RMB 3,810,227 thousand in 2021, up from RMB 3,343,684 thousand in 2020[10] - As of December 31, 2021, the group's cash and cash equivalents, including restricted bank balances and pledged deposits, amounted to approximately RMB 4,356,100,000, compared to RMB 4,309,100,000 as of December 31, 2020[26] - The net current assets of the group as of December 31, 2021, were approximately RMB 4,386,700,000, an increase from RMB 4,162,600,000 as of December 31, 2020[26] Market Strategy and Growth - The company plans to expand its market presence and invest in new product development to drive future growth[9] - The company aims to enhance its operational efficiency and explore potential mergers and acquisitions to strengthen its market position[9] - The company plans to enhance efforts in blockchain gaming and explore new growth opportunities in 2022[13] - The company plans to provide 94,000 Promethean interactive panels to K-12 schools across Egypt, marking a significant milestone in its collaboration with the Egyptian Ministry of Education[19] - The company is focused on expanding its overseas online education business, leveraging the expertise of its leadership team in the education sector[42] Research and Development - Research and development expenses for 2021 were RMB 1,159,308 thousand, slightly down from RMB 1,175,928 thousand in 2020[9] - Research and development expenses for the gaming segment were RMB (657,547) with a year-on-year increase of 3.7%[17] - The company is developing its first blockchain metaverse game based on its well-known overseas IP, aiming for a closed beta release in the second half of 2022[20] Shareholder Returns - The company announced a three-year share repurchase plan with a maximum buyback amount of USD 300,000,000[15] - The total dividend payout for the year, including a special interim dividend, amounted to HKD 2.23 per share, representing approximately 93.8% of the profit attributable to shareholders[16] - The group has repurchased 16,200,000 shares for a total amount of USD 38,000,000 as part of a three-year buyback plan of up to USD 300,000,000[19] Employee and Talent Management - The total number of employees as of December 31, 2021, was 4,834, with 597 new hires during the year, including 91 senior talents primarily in the gaming and education sectors[37] - The company received the "2021 Best Talent Employer Award" from BOSS Zhipin, highlighting its successful recruitment efforts[37] - The organization is exploring flexible employment models to optimize talent structure and enhance internal management efficiency[37] - The company is implementing a performance management system focused on task-oriented and self-management principles to improve efficiency and effectiveness[38] Corporate Governance - The company has adopted the corporate governance code as per the listing rules and has complied with it for the year ending December 31, 2021[106] - The board of directors consists of five executive directors and four non-executive directors, with a focus on strategic oversight and performance monitoring[132] - The company has established a robust governance structure, ensuring that all directors have timely access to relevant information and independent professional advice when necessary[135] Environmental, Social, and Governance (ESG) - The company is committed to sustainable development and high standards of corporate governance[160] - The company's greenhouse gas emissions for the year 2021 amounted to 9,610 tons of CO2 equivalent, with Scope 1 emissions at 1 ton (<1%), Scope 2 emissions at 288 tons (3%), and Scope 3 emissions at 9,321 tons (97%)[168] - The company aims to reduce energy consumption in offices by 5% compared to previous years through the use of more LED lights and further installation of motion sensors[169] Community Engagement - The company actively participates in community contribution activities, including the adoption of its smart classroom solutions by the Sarawak Education Department in Malaysia[194] - Fujian Huayu donated VR innovative smart laboratory hardware to impoverished counties, enhancing educational resources and receiving recognition from local governments[197] - The 2020 Global Future Education Design Competition was successfully held, aiming to promote inclusive education and sustainable development goals[198]

Revenue Performance - Total revenue for the first half of 2021 reached RMB 3,356,200,000, representing an 18.9% year-on-year growth[7] - Revenue from the gaming business was RMB 1,847,500,000, accounting for 55.0% of total revenue, with a year-on-year increase of 12.2%[7] - Revenue from the education business was RMB 1,407,600,000, representing 41.9% of total revenue, with a year-on-year growth of 23.7%[7] - The flagship IP "Magic Domain" saw a revenue increase of 14.1% year-on-year, driven by new gameplay and effective localization in overseas markets[12] - Revenue for the six months ended June 30, 2021, was RMB 3,356,174 thousand, representing a 19% increase from RMB 2,822,858 thousand in 2020[78] - Revenue from online and mobile games reached RMB 1,847,548 thousand, up from RMB 1,647,334 thousand, reflecting a growth of approximately 12% year-over-year[97] - Education revenue, including sales of educational equipment and related services, amounted to RMB 1,407,641 thousand, compared to RMB 1,137,941 thousand, representing a growth of about 23%[97] - The total revenue from the gaming segment was RMB 1,407,641,000, which reflects a strong performance in this area compared to RMB 1,137,941,000 in the same period last year, marking an increase of about 23.7%[102] Profitability - Operating profit from the gaming business was RMB 1,069,200,000, reflecting a year-on-year increase of 13.3%[7] - Non-IFRS operating profit was RMB 753,900,000, showing a year-on-year growth of 48.1%[7] - The net profit for the period was RMB 383,628 thousand, reflecting a 38% increase from RMB 277,794 thousand in 2020[79] - Basic earnings per share rose to RMB 77.45, compared to RMB 60.93 in the previous year, marking a 27% increase[79] - The operating profit increased to RMB 691,635 thousand, a 59% rise compared to RMB 434,429 thousand in 2020[78] - The company reported a profit before tax of RMB 599,670,000 for the six months ended June 30, 2021, compared to RMB 370,522,000 for the same period in 2020, indicating a significant increase of approximately 62%[107] Dividends and Shareholder Returns - The company announced an interim dividend of HKD 0.40 per share, a 60.0% increase compared to the previous year[7] - The interim dividend was increased by 60% to HKD 0.40 per ordinary share, reflecting confidence in long-term business prospects and cash flow generation capabilities[11] - The board declared an interim dividend of HKD 0.40 per share for the six months ending June 30, 2021, compared to HKD 0.25 per share in 2020[40] - The company declared an interim dividend of HKD 0.40 per share, totaling RMB 185,232,000, compared to a total of RMB 126,290,000 for the previous year's final dividend[9] Strategic Initiatives - The education business is planning for a potential public listing, with significant revenue opportunities anticipated in Egypt and Thailand[10] - The company continues to explore growth opportunities in various countries while expanding its product line in the gaming sector[10] - The company plans to replicate its successful model in Egypt to other countries, including the Philippines, the USA, Canada, and Saudi Arabia[12] - The company signed a strategic cooperation agreement with the Central Institute for Educational Technology to develop more products based on AI and online learning[15] Financial Position - As of June 30, 2021, the group's net cash balance was approximately RMB 4,100,000,000, enabling the company to seize future acquisition and investment opportunities[16] - The group's total bank loans amounted to approximately RMB 291,800,000 as of June 30, 2021, down from RMB 345,700,000 as of December 31, 2020, indicating a reduction in leverage[20] - The total equity of the group was approximately RMB 6,852,600,000 as of June 30, 2021, an increase from RMB 6,651,900,000 as of December 31, 2020[21] - The group had no significant contingent liabilities as of June 30, 2021, maintaining a strong financial position[22] - The liquidity risk is considered minimal, with the company maintaining sufficient cash reserves to meet operational needs[25] - The group’s asset-liability ratio was 0.04 as of June 30, 2021, down from 0.05 as of December 31, 2020, showing improved financial stability[20] Employee and Talent Management - The number of employees decreased to 5,964 as of June 30, 2021, from 6,442 as of December 31, 2020, reflecting a strategic adjustment in workforce[26] - The company is focusing on optimizing its talent management system and enhancing the performance evaluation process[28] - The company is exploring flexible employment models to attract global talent and improve organizational efficiency[28] - The company has been recognized as one of the "Best Employers with Innovative Spirit" in China for 2020[27] Shareholder Structure - Liu Dejian holds 45.07% of the company's issued voting shares, with 250,822,457 shares directly owned[43] - International Data Group owns approximately 11.78% of the company, holding 65,533,320 shares[49] - DJM Holding Ltd. is a major shareholder with a 34.33% stake, representing 191,078,100 shares[49] - The company has a significant concentration of ownership, with Liu Dejian, Liu Luoyuan, and Zheng Hui collectively controlling 45.07% of the issued share capital[45] Investments and Acquisitions - The acquisition of Chengdu Zhangwo Technology Co., Ltd. was completed on May 8, 2020, for a total consideration of RMB 25,800,000[169] - The identifiable net assets acquired from Chengdu Zhangwo included non-current assets valued at RMB 27,598,000 and current assets totaling RMB 7,797,000[171] - The acquisition of Beijing Wangzhong Software Technology Co., Ltd. involved a cash payment of RMB 50,000,000 for 90% equity, completed on January 8, 2020[177] Financial Instruments and Valuation - The company’s financial assets and liabilities are measured at fair value, categorized into three levels based on the observability of input data[184] - The fair value of financial assets measured at fair value through profit or loss was RMB 2,920,000, a decrease of 21.6% from RMB 3,723,000 as of January 1, 2021[189] - The fair value of non-listed equity warrants increased to RMB 61,717,000 as of June 30, 2021, up from RMB 40,894,000 on January 1, 2021, reflecting a fair value change of RMB 21,319,000[191]

Revenue Performance - Revenue for the first half of 2020 was RMB 2,822,900,000, representing a year-on-year growth of 5.6%[6] - Revenue from the gaming business was RMB 1,647,300,000, accounting for 58.4% of total revenue, with a year-on-year increase of 4.5%[6] - Revenue from the education business was RMB 1,137,900,000, accounting for 40.3% of total revenue, with a year-on-year growth of 8.5%[6] - The gaming business revenue for the first half of 2020 increased by 4.5% year-on-year, reaching RMB 1,647,300,000[11] - The education business revenue for the first half of 2020 was RMB 1,137,900,000, reflecting an 8.5% year-on-year growth[12] - Revenue for the six months ended June 30, 2020, was RMB 2,822,858 thousand, an increase from RMB 2,672,547 thousand in the same period of 2019, representing a growth of approximately 5.6%[65] User Engagement - Average monthly active users for the flagship platform 101 Education PPT exceeded 1,000,000, while the online teaching platform saw a peak of approximately 5,000,000 monthly active users, a growth of over 10 times compared to the second half of 2019[9] - The gaming business's daily active users for the flagship game "Magic Domain" increased by 41.4% year-on-year, indicating strong user engagement[10] - Monthly active users for the Edmodo platform reached a historical high of over 17,000,000, driven by the launch of the Edmodo Enterprise platform[13] - The flagship software platform 101 Education PPT had over 1,000,000 monthly active users, with significant user growth due to increased remote learning demand[13] Financial Performance - Operating cash inflow was RMB 528,400,000, reflecting a year-on-year increase of 25.7%[6] - Non-GAAP operating profit was RMB 509,200,000, a decrease of 6.2% year-on-year[6] - Non-GAAP profit attributable to owners of the company was RMB 449,500,000, down 5.5% year-on-year[6] - Operating profit decreased to RMB 434,429 thousand from RMB 480,363 thousand, reflecting a decline of about 9.6% year-over-year[65] - Net profit for the period was RMB 277,794 thousand, down from RMB 375,486 thousand, representing a decrease of approximately 26%[66] - Basic earnings per share for the period was 60.93 cents, compared to 79.66 cents in the previous year, a decline of about 23.6%[66] - The total comprehensive income for the period was RMB 288,329 thousand, down from RMB 375,071 thousand, indicating a decrease of about 23.1%[66] Strategic Initiatives - The group launched Edmodo Enterprise, a comprehensive hybrid learning platform, which rapidly expanded its market presence across multiple countries[9] - The group signed a memorandum of understanding with the Egyptian Ministry of Education to provide customized hybrid learning solutions, expected to generate significant revenue streams over the years[9] - The group plans to launch multiple new games by the end of 2020, including "Magic Domain Legend" and "Magic Domain Mobile II," all of which have obtained approval numbers[11] Employee and HR Management - As of June 30, 2020, the total number of employees in the group was 6,425, with a focus on recruiting 430 new talents primarily in the gaming and education sectors[22] - The R&D department employed 3,726 individuals as of June 30, 2020, reflecting a slight decrease from 3,751 in December 2019, but an increase from 3,479 in June 2019[22] - The company has established a human resources shared service platform to enhance service quality and employee experience, aiming to streamline HR processes and improve organizational efficiency[24] - The company has focused on AI-driven performance management to enhance efficiency and employee engagement, ensuring fair assessments based on output and quality[24] - The group has implemented a differentiated compensation strategy to attract and retain core talents, focusing on high-value positions and enhancing its benefits system[24] Shareholder Structure - The company has a significant shareholder structure, with DJM Holding Ltd. owning 33.88% of the issued voting shares[41] - Liu Dejian holds 44.48% of the company's shares, indicating a strong control over the company[35] - The company has a total of 250,822,457 shares held by Liu Dejian, Liu Luoyuan, and Zheng Hui collectively[35] - The company has a minority shareholder, International Data Group, holding 13.84% of the shares[41] - The ownership structure indicates potential for coordinated actions among major shareholders, particularly Liu Dejian, Liu Luoyuan, and Zheng Hui[37] Financial Position - As of June 30, 2020, total assets amounted to RMB 6,079,117 thousand, an increase from RMB 4,089,088 thousand as of December 31, 2019, representing a growth of approximately 49%[67] - Current liabilities increased to RMB 2,294,628 thousand from RMB 1,903,106 thousand, reflecting a rise of about 21%[68] - The net value of current assets reached RMB 3,784,489 thousand, up from RMB 2,185,982 thousand, indicating a significant increase of approximately 73%[68] - The company’s cash and cash equivalents reached RMB 3,910,220 thousand, significantly up from RMB 2,125,637 thousand, indicating an increase of around 84%[67] Stock Options and Incentives - The company has a significant number of stock options and reward shares that are part of its employee incentive programs, indicating a focus on employee retention and motivation[45] - The company adopted a new stock option plan in May 2018, replacing the previous plan that expired on June 12, 2018[45] - A total of 6,300,000 stock options were granted on January 24, 2020, with no options exercised or canceled during the period[47] - The company has a stock reward plan that allows for the issuance of shares up to 10% of the issued share capital, with 776,640 shares granted but not yet vested as of June 30, 2020[48] Compliance and Governance - The audit committee reviewed the interim financial results, confirming compliance with applicable accounting standards and regulations[60] - The company maintained compliance with the corporate governance code throughout the review period[60] - The company has adopted a code of conduct for securities transactions that meets or exceeds the standards set out in the Listing Rules[55]