Financial Performance - Revenue for the first half of 2024 was RMB 272,284 thousand, a decrease of 39.6% compared to RMB 450,609 thousand in 2023[7] - Gross profit for the same period was RMB 125,490 thousand, down 25.8% from RMB 169,229 thousand in 2023[7] - Operating loss narrowed to RMB 25,675 thousand from RMB 38,905 thousand, a reduction of 34.0% year-over-year[7] - Adjusted net loss increased to RMB 9,770 thousand, a significant rise of 209.9% compared to RMB 3,153 thousand in 2023[7] - Total revenue for the six months ended June 30, 2024, was RMB 272,284,000, a decrease of 39.6% from RMB 450,609,000 in the same period last year[52] - Online entertainment business revenue was RMB 272.1 million, also down 39.6% from RMB 450.5 million year-on-year, primarily due to the natural decline in older games and no new game launches during the reporting period[52] - Gross profit for the six months ended June 30, 2024, was RMB 125.5 million, down from RMB 169.2 million for the same period in 2023, with a gross margin increase to 46.1% from 37.6%[54] - Adjusted net loss for the period was RMB 9.8 million, compared to a loss of RMB 3.2 million in the previous year[51] - The total comprehensive loss for the period was RMB (14,908) thousand, compared to RMB (19,988) thousand in the previous period, indicating an improvement in financial performance[93] Assets and Liabilities - Total assets as of June 30, 2024, were RMB 1,886,560 thousand, a slight decrease from RMB 1,920,099 thousand at the end of 2023[9] - Total liabilities as of June 30, 2024, were RMB 275.1 million, with a debt-to-asset ratio of 15%, compared to 14% as of December 31, 2023[67] - Cash and cash equivalents totaled RMB 821.2 million as of June 30, 2024, down from RMB 966.0 million as of December 31, 2023[68] - The company had no bank loans or other borrowings as of June 30, 2024[70] - The company reported a decrease in cash and cash equivalents to RMB 821,188 thousand as of June 30, 2024, down from RMB 1,244,088 thousand at the beginning of the year, representing a decline of approximately 34%[94] - The company’s total liabilities increased, impacting the overall financial leverage and risk profile, although specific figures were not disclosed in the provided data[93] Research and Development - The company has significantly increased its investment in R&D, focusing on cutting-edge technologies such as AI, automation programming, and 3D modeling, which has improved project efficiency and quality[14] - Research and development expenses decreased by 21.2% to RMB 99.6 million for the six months ended June 30, 2024, compared to RMB 126.4 million for the same period in 2023[56] - The company plans to enhance its core IP competitive advantages and continue exploring AI technology to empower product development in the second half of 2024[47] Market Strategy and Development - The company continues to focus on high-quality game content development, particularly in female-oriented and pet collection game segments[11] - Future strategies include leveraging unique IP strategies to create innovative products aimed at young users[6] - For the second half of 2024, the company plans to deepen its focus on its core gaming segments and expand both domestically and internationally, enhancing game content and cultural integration[15] - The company aims to continuously invest in R&D to strengthen its technical and operational capabilities, thereby solidifying its market position in niche segments[15] - The gaming industry is experiencing a moderate recovery, with improved confidence due to the normalization of game license issuance, leading to new growth opportunities for companies with strong R&D capabilities[46] Employee and Management - The company had 699 full-time employees as of June 30, 2024, with 54.6% in R&D roles[76] - Employee costs for the six months ended June 30, 2024, were approximately RMB 151.6 million, representing 55.7% of the revenue, compared to RMB 206.4 million and 45.8% in the same period of 2023[76] - The total remuneration for key management personnel was HKD 3,785 million, a decrease from HKD 4,647 million in the previous period, representing a decline of approximately 18.5%[154] Shareholder Information - A special dividend of HKD 0.012 per share was approved for the year ended December 31, 2023, equivalent to approximately RMB 0.011[79] - The company declared a special dividend of HKD 0.012 per ordinary share for the six months ended June 30, 2024, totaling RMB 31,453,000, down from RMB 39,038,000 in 2023, a decrease of 19.4%[127][128] - As of June 30, 2024, the total number of issued ordinary shares remained at 2,872,844,000, with 153,239,936 shares held under the restricted share unit plan[165] Corporate Governance and Compliance - The audit committee has reviewed the interim financial information and confirmed compliance with International Accounting Standard 34[157] - The company has adopted the corporate governance code as per the listing rules, ensuring high standards of ethics and transparency[159] Risk Management - The group faces multiple financial risks, including market risk, credit risk, and liquidity risk, which are detailed in the annual financial statements[104] - The management has made significant judgments and estimates regarding the application of accounting policies, which may differ from actual results[102] Other Information - The company has no significant contingent liabilities as of June 30, 2024, and December 31, 2023[155] - The company has not reported any significant new product launches or technological advancements during the reporting period, focusing instead on operational adjustments[93] - The company continues to seek new business development opportunities[75]

Financial Performance - Revenue for the six months ended June 30, 2024, was RMB 272,284 thousand, a decrease of 39.6% compared to RMB 450,609 thousand in the same period last year[1]. - Gross profit for the same period was RMB 125,490 thousand, down 25.8% from RMB 169,229 thousand year-on-year[1]. - Adjusted net loss increased by 209.9% to RMB 9,770 thousand from RMB 3,153 thousand in the previous year[1]. - The net loss for the six months ended June 30, 2024, was RMB 14.9 million, compared to a net loss of RMB 19.9 million in the same period last year[10]. - The company reported a net loss of RMB 14.9 million for the first half of 2024, compared to a net loss of RMB 19.9 million in the same period of 2023[41]. - Adjusted net loss for the six months ended June 30, 2024, was RMB 9.8 million, an increase of 206.3% from RMB 3.2 million for the same period in 2023[25]. - Basic loss per share improved to RMB (0.0055) in 2024 from RMB (0.0075) in 2023, indicating a 26.7% reduction in loss per share[70]. - The company reported a loss attributable to shareholders of RMB 14,908,000 for the six months ended June 30, 2024, compared to a loss of RMB 19,988,000 for the same period in 2023, representing a 25.8% improvement[70]. User Engagement and Product Development - The company maintained a focus on user-centric R&D and continued to enhance its product matrix, particularly in female-oriented and pet collection games[3]. - The core self-developed IP "Aoki Legend" showed continuous revenue growth, demonstrating strong vitality with new content updates receiving positive player feedback[3]. - The company launched the "AI Smart Assistant" in the game "Aobi Island: Dream Kingdom," enhancing user experience and reducing labor costs in customer service[4]. - The company aims to integrate traditional Chinese cultural elements into its games, enhancing user engagement and market reputation[4]. - Future strategies include a continued focus on AI technology to enhance product development and operational capabilities[6]. Market and Industry Trends - The gaming industry is experiencing a gradual recovery, supported by improved policies and a stable market environment, creating new growth opportunities for companies with strong R&D capabilities[5]. - The company plans to accelerate its international market expansion, with multiple products currently in active development and testing[6]. Operational Metrics - The average quarterly active accounts as of June 30, 2024, were approximately 5.7 million, a decrease of 24.0% compared to 7.5 million in the same period last year[8]. - The average quarterly paying accounts as of June 30, 2024, were approximately 0.8 million, down 33.3% from 1.2 million year-over-year[8]. - The average revenue per paying account for the six months ended June 30, 2024, was approximately RMB 164.6, down 12.8% from RMB 188.7 year-over-year[8]. Expenses and Cost Management - Research and development expenses for the six months ended June 30, 2024, were RMB 99.6 million, a decrease of 21.2% from RMB 126.4 million year-over-year[17]. - Selling and marketing expenses for the six months ended June 30, 2024, were RMB 20.2 million, down 50.1% from RMB 40.5 million in the previous year[15]. - Administrative expenses for the six months ended June 30, 2024, were RMB 32.0 million, a decrease of 23.6% from RMB 41.9 million year-over-year[16]. - Employee costs for the first half of 2024 amounted to approximately RMB 151.6 million, representing 55.7% of the company's revenue, compared to RMB 206.4 million and 45.8% in the same period of 2023[35]. - Distribution costs and payment processing fees dropped to RMB 97,219,000 in 2024 from RMB 210,369,000 in 2023, reflecting a decrease of 53.8%[60]. Assets and Liabilities - Total liabilities as of June 30, 2024, were RMB 275.1 million, with a debt-to-asset ratio of 15%, up from 14% as of December 31, 2023[27]. - Cash and cash equivalents as of June 30, 2024, totaled RMB 821.2 million, down from RMB 966.0 million as of December 31, 2023[28]. - Non-current assets increased to RMB 628.5 million as of June 30, 2024, from RMB 585.2 million as of December 31, 2023[42]. - Current assets decreased to RMB 1,258.1 million as of June 30, 2024, from RMB 1,334.9 million as of December 31, 2023[42]. - Total liabilities decreased to RMB 254.8 million as of June 30, 2024, from RMB 275.1 million as of December 31, 2023[43]. Dividends and Shareholder Returns - The company approved a special dividend of HKD 0.012 per share for the year ending December 31, 2023, equivalent to approximately RMB 0.011[37]. - The company declared a special dividend of HKD 0.012 per ordinary share for the six months ended June 30, 2024, down from HKD 0.015 in 2023, resulting in total dividends of approximately RMB 31,453,000 compared to RMB 39,038,000 in the previous year, a decrease of 19.4%[72][73]. - The company did not declare any interim dividend for the six months ended June 30, 2024, consistent with the previous year[81]. Compliance and Financial Reporting - The audit committee reviewed the interim financial statements and confirmed compliance with International Accounting Standard 34 for the six months ended June 30, 2024[77]. - The group will adopt revised International Financial Reporting Standards starting January 1, 2024, with no significant impact expected on the group's financial statements[46]. - The group anticipates that the new standards effective from January 1, 2025, and January 1, 2026, will not have a significant impact on its interim consolidated financial information[47].

Financial Performance - For the fiscal year ending December 31, 2023, the company's revenue was RMB 782.8 million, a decrease of 16.6% compared to RMB 937.8 million for the fiscal year ending December 31, 2022[28]. - The gross profit for the fiscal year 2023 was RMB 318.1 million, down from RMB 360.6 million in 2022, reflecting a decline in profitability[3]. - The operating loss for 2023 was RMB 55.1 million, compared to a loss of RMB 37.1 million in 2022, indicating a worsening financial performance[3]. - The adjusted net loss for the year was RMB 10.1 million, a significant decrease from a profit of RMB 61.7 million in the previous year[3]. - The income tax expense for the year ended December 31, 2023, was RMB 8.0 million, compared to an income tax benefit of RMB 7.7 million for the year ended December 31, 2022[35]. - The adjusted net loss for the year ended December 31, 2023, was RMB 10.1 million, compared to an adjusted net profit of RMB 61.7 million for the year ended December 31, 2022[37]. - The net financial income for the year ended December 31, 2023, was RMB 33.0 million, compared to RMB 39.7 million for the year ended December 31, 2022[59]. - The online entertainment business costs for the year ended December 31, 2023, were RMB 464.6 million, a decrease of 19.6% from RMB 578.0 million for the year ended December 31, 2022[55]. - The average quarterly paying accounts for the virtual world as of December 31, 2023, were approximately 1.1 million, a decrease of about 31.3% compared to the year ended December 31, 2022[52]. - The company reported a cash reserve of RMB 464.85 million as of December 31, 2023, down from RMB 492.63 million in 2022[97]. Strategic Focus and Innovation - The company plans to continue focusing on its core segments and enhance product innovation and R&D capabilities to strengthen its market position[19]. - The company aims to integrate traditional Chinese culture into its games, expanding its international user base through localized versions of its products[20]. - The company is exploring the application of generative AI technology to improve game development efficiency and enhance its competitive edge in the market[21]. - The company will increase investment in independent game development and seek breakthroughs in the application of AIGC technology in the gaming industry for 2024[22]. - The company plans to launch multiple products in the global market, including the 3D multiplayer pet RPG mobile game "Aola Star 2" in the domestic market[51]. - The company is committed to exploring new strategies for market expansion and product development to enhance its competitive position in the gaming industry[104]. - The company aims to innovate comprehensively in gameplay, user experience, and storyline content to provide a better experience for users[198]. - The company continues to respond to the increasing market demand for high-quality content[198]. Shareholder and Governance Information - The company has a significant shareholder, Dai Jian, holding 687,944,180 shares, representing 23.95% of the total equity[133]. - Wu Lili, another major shareholder, owns 365,596,180 shares, accounting for 12.73% of the total equity[133]. - Li Chong holds 114,816,360 shares, which is 4.00% of the total equity, along with an additional 15,000,000 shares from a restricted share unit plan[133]. - TMF (Cayman) Ltd. holds 1,193,824,720 shares, representing 41.56% of the total issued share capital[163]. - DAE Holding Investments Limited and Stmoritz Investment Limited each hold 687,944,180 shares, accounting for 23.95% of the total issued share capital[163]. - Tencent Holdings Limited owns 326,063,280 shares, which is 11.35% of the total issued share capital[177]. - The board of directors has confirmed the independence of all independent non-executive directors as of the report date[146]. - The board of directors will review the dividend policy periodically to ensure it aligns with the company's financial health[113]. - The company has not entered into any management contracts related to the management of the group’s business[155]. - There are no known changes in director information that require disclosure under the listing rules[149]. Dividend Policy and Financial Management - The board proposed a special dividend of HKD 0.012 per share, subject to shareholder approval at the annual general meeting on June 26, 2024[90]. - The company has adopted a dividend policy since December 20, 2018, allowing the board discretion in declaring dividends based on various financial factors[91]. - The company’s financial performance and cash flow status are critical factors in determining dividend declarations[92]. - The company has maintained a dividend policy that requires sufficient cash reserves to meet operational needs and future growth[112]. - The company has a comprehensive financial risk management policy outlined in its annual report[109]. Operational Highlights - The company operates a range of online virtual worlds, including multiple popular game titles, contributing to its overall business strategy[24]. - The company has engaged in cross-brand collaborations with 11 IPs and brands during the year, significantly increasing user engagement and brand influence[48]. - The company has not experienced any significant disputes with suppliers or customers during the fiscal year ending December 31, 2023[100]. - The company has no significant contingent liabilities, guarantees, or lawsuits against it as of December 31, 2023[43]. - There were no purchases, redemptions, or sales of any listed securities by the company or any member of the group during the fiscal year ending December 31, 2023[120]. - The company has not made any charitable donations during the fiscal year ending December 31, 2023[121]. - The company has not disclosed any significant transactions or arrangements involving directors or their close associates during the fiscal year ending December 31, 2023[124]. Restricted Share Unit Plans - The company has adopted various restricted share unit plans to incentivize directors and employees[168]. - The effective period of the pre-IPO restricted share unit plan was until September 30, 2023, and it was terminated on March 3, 2023[169]. - The post-IPO restricted share unit plan allows for a maximum of 2% of the company's issued share capital to be awarded to any participant[187]. - The post-IPO restricted share unit plan was terminated on June 27, 2023, and replaced by the 2023 restricted share unit plan[185]. - The company has granted 10,000,000 restricted share units to Dai Jian, which are now fully vested[159]. - Li Chong has been granted 15,000,000 restricted share units, with 47.5% of them having vested as of December 31, 2023[160]. - The total number of restricted share units that can be granted under the pre-IPO plan is capped at 188,733,600 shares[169]. - As of December 31, 2023, the company held 75,015,620 shares under the pre-IPO restricted share unit plan and 22,802,000 shares under the new restricted share unit plan[184]. - The company has appointed Huiju Trust Co., Ltd. as the trustee for managing the restricted share unit plans[187]. - The board of directors has the authority to adjust and redefine the vesting schedule and criteria for the restricted share units[187].

2024 年 04 月 10 日 公司发布 2023 年业绩公告。2023 年公司实现收入 7.83 亿元 （yoy-16.6%）；归母净亏损 0.31 亿元，去年同期为盈利 0.10 亿元；经 调整净亏损 0.10 亿元，去年同期为盈利 0.62 亿元。 ]yrtsudnI_elbaT[ [Table_ 【事项Summary 】 ] 2023 年无新游上线，财务表现短期承压。公司 2023 年收入下滑主系 1）2023 年无新游上线；2）老游随生命周期流水自然下滑。成本来看， 2023 年公司销售成本为 4.65 亿元（yoy-19.6%），主系第三方收入分 成下滑，公司毛利率升至 40.6%。费用来看，公司销售、行政费用率 基本持稳；研发持续投入，研发费用率升至 29.5%。运营数据来看， 2023 年公司平均季度活跃用户 730 万（yoy-27.7%），平均季度付费用 户 110 万（yoy-31.3%），主系老游生命周期影响自然下滑；平均季度 付费用户收入为 176.1 元（yoy+15.9%），公司对产品实现精细化运营， 用户付费意愿提升。 在研产品稳步推进。现阶段公司共有 7 款自主研发及外部投 ...

Financial Performance - Revenue for the year ended December 31, 2023, was RMB 782,764 thousand, a decrease of 16.6% compared to RMB 938,759 thousand in 2022[10] - Gross profit for the same period was RMB 318,054 thousand, down 11.8% from RMB 360,628 thousand in the previous year[10] - Operating loss (non-IFRS measure) increased to RMB 55,126 thousand from RMB 37,082 thousand, representing a 48.7% increase in losses[10] - Adjusted net loss for the year was RMB 10,081 thousand, a significant decline of 116.3% compared to a profit of RMB 61,744 thousand in 2022[10] - Adjusted EBITDA for the year was RMB (12,279) thousand, down 132.8% from RMB 37,485 thousand in the previous year[10] - The company reported a loss of RMB 31.4 million for the year ended December 31, 2023, compared to a profit of RMB 10.3 million for the year ended December 31, 2022[60] - Basic and diluted loss per share for 2023 was RMB 0.0117, compared to earnings of RMB 0.0039 in 2022[82] - The net loss attributable to shareholders was RMB 31,478,000, compared to a profit of RMB 10,167,000 in the previous year[82] Assets and Equity - Total assets as of December 31, 2023, were RMB 1,920,099 thousand, a decrease from RMB 2,056,267 thousand in 2022[13] - Total equity decreased to RMB 1,651,035 thousand from RMB 1,698,084 thousand year-over-year[13] - Cash and cash equivalents (excluding bank overdrafts) were RMB 966,042,000, down from RMB 1,303,711,000 in 2022[85] - The company’s short-term deposits increased to RMB 261.8 million as of December 31, 2023, from RMB 110.0 million as of December 31, 2022[63] Revenue Sources and Market Performance - The online entertainment business revenue was RMB 782.5 million, down 16.6% from RMB 937.8 million, primarily due to the natural decline of older games and no new game launches during the year[36] - The contribution of major virtual worlds to total revenue was 82.6% in 2023, compared to 76.5% in 2022, indicating an increase in reliance on key products[113] - The top revenue-generating game, "Aobi Island Mobile," accounted for 35.9% of total revenue in 2023, down from 40.3% in 2022[114] - The average quarterly active accounts for the online virtual world decreased to approximately 7.3 million, a decline of about 27.7% compared to the previous year[23] - The average quarterly paying accounts were approximately 1.1 million, down about 31.3% year-over-year[29] - The average revenue per paying account increased to RMB 176.1, reflecting a growth of approximately 15.9% year-over-year[24] Expenses and Cost Management - The cost of sales for the year ended December 31, 2023, was RMB 464.7 million, a decrease of 19.6% from RMB 578.1 million for the previous year[37] - Employee costs for the year ended December 31, 2023, were approximately RMB 359.4 million, accounting for 45.9% of the revenue, compared to RMB 392.6 million and 41.8% of revenue for the year ended December 31, 2022[76] - Total administrative and R&D expenses amounted to RMB 835,762,000 in 2023, compared to RMB 979,876,000 in 2022, showing a reduction of approximately 14.7%[111] - Research and development expenses increased by 0.5% to RMB 231.1 million for the year ended December 31, 2023, compared to RMB 230.0 million for the previous year[43] Taxation and Financial Position - The income tax expense for the year ended December 31, 2023, was RMB 8.0 million, compared to an income tax benefit of RMB 7.7 million for the previous year[52] - The company benefited from a 15% preferential income tax rate as a "High-tech Enterprise" for the year ended December 31, 2023[125] - The company recognized deferred tax assets related to unutilized tax losses amounting to RMB 368,842 thousand as of December 31, 2023, up from RMB 161,433 thousand in 2022[122] Dividends and Shareholder Information - The company declared a special dividend of HKD 0.015 per share for the year ending December 31, 2022, which was paid on July 20, 2023[79] - The board proposed a special dividend of HKD 0.012 per share for the year ending December 31, 2023, pending shareholder approval on June 26, 2024[79] - Dividends paid for the year 2023 were RMB 36,968,000, compared to RMB 45,087,000 in 2022, a decrease of about 18.1%[148] Future Outlook and Strategic Initiatives - The company plans to enhance its game development capabilities by exploring AIGC technology to meet diverse user needs more efficiently[21] - The company aims to continue enriching its product matrix by integrating Chinese cultural elements into its games for a global audience[22] - The company has no significant future plans for major investments or acquisitions as of December 31, 2023, but will continue to seek new business development opportunities[74]

Financial Performance - Revenue for the first half of 2023 reached RMB 450,609 thousand, representing a 55.6% increase compared to RMB 289,641 thousand in the same period of 2022[50]. - Gross profit for the same period was RMB 169,229 thousand, up 43.7% from RMB 117,738 thousand year-over-year[50]. - The adjusted net loss decreased to RMB 3,153 thousand, a 59.8% improvement from RMB 7,834 thousand in the previous year[50]. - The company reported an adjusted EBITDA loss of RMB 10,485 thousand, which is 41.8% better than the loss of RMB 18,002 thousand in the prior year[50]. - The net loss for the six months ended June 30, 2023, was RMB 19.9 million, a significant improvement from a net loss of RMB 39.9 million in the same period of 2022[1]. - The total comprehensive loss for the six months ended June 30, 2023, was RMB 19.91 million, compared to RMB 39.85 million for the same period in 2022[66]. - The company's revenue for the six months ended June 30, 2023, was RMB 450.6 million, an increase of 55.6% compared to RMB 289.6 million for the same period in 2022[85]. - The adjusted net loss for the six months ended June 30, 2023, was RMB 3.15 million, an improvement from RMB 7.83 million for the same period in 2022[66]. Assets and Liabilities - The company reported a total asset of RMB 2,002,313 thousand as of June 30, 2023, a decrease of 2.6% from RMB 2,056,267 thousand as of December 31, 2022[35]. - The total liability amounted to RMB 344,349 thousand, a decrease of 3.9% from RMB 358,183 thousand in the previous period[35]. - Non-current assets were reported at RMB 463,364 thousand, a slight decrease from RMB 476,709 thousand in the previous period[35]. - Current assets totaled RMB 1,538,949 thousand, down from RMB 1,579,558 thousand as of December 31, 2022[35]. - Total liabilities as of June 30, 2023, were RMB 344.3 million, down from RMB 358.2 million as of December 31, 2022[98]. - The company's cash and cash equivalents (excluding bank overdrafts) were RMB 1,244,089 thousand as of June 30, 2023, down from RMB 1,303,711 thousand at the end of 2022, a decrease of approximately 4.5%[169]. Research and Development - As of June 30, 2023, the company employed 777 R&D personnel, accounting for approximately 81.4% of its workforce, focusing on high-quality game development[53]. - Research and development expenses for the six months ended June 30, 2023, were RMB 126.4 million, an increase of 20.4% from RMB 104.9 million in the same period of 2022[90]. - The company plans to enhance its game development capabilities and explore better applications of AIGC technology in game development[38]. - Future strategies include continuous investment in R&D and the application of AIGC technology to improve game quality and development efficiency[53]. Market Strategy - The company maintained a focus on three key gaming segments: female-oriented games, pet collection and nurturing games, and ACG (Anime, Comic, and Games) games, aiming to strengthen its market position[36]. - The company aims to expand both domestic and overseas markets while continuously investing in independent game development[38]. - The company emphasized its commitment to developing high-quality IP games to enhance user experience and engagement[36]. - The company aims to enhance its IP influence and provide unique user experiences through cultural and creative integrations[55]. Employee and Corporate Governance - The management expressed gratitude to employees, partners, and investors for their ongoing support and trust[55]. - The total employee costs amounted to RMB 206.4 million, representing 45.8% of the revenue, compared to RMB 201.0 million and 69.4% in the same period of 2022[25]. - The total contributions to the employee social insurance plan in the first half of 2023 were approximately RMB 37.3 million, an increase from RMB 30.8 million in the first half of 2022[25]. - The company has not been involved in any significant litigation or arbitration matters as of June 30, 2023[80]. Financial Risks and Management - The group faces multiple financial risks, including market risk (primarily currency risk), credit risk, and liquidity risk[199]. - The financial risk management section indicates that the interim consolidated financial information does not include all financial risk management data required for annual financial statements[183]. - There have been no changes to the risk management department or any risk management policies since December 31, 2022[200]. Corporate Social Responsibility - The company is committed to corporate social responsibility and promoting traditional Chinese culture through innovative gaming experiences[55].

[Financial Summary](index=1&type=section&id=Financial%20Summary) [Income Statement Summary](index=1&type=section&id=Income%20Statement%20Summary) The company's H1 2023 revenue significantly increased by 55.6% year-over-year, with gross profit up 43.7%, while operating and net losses narrowed considerably, and adjusted net loss decreased by nearly 60% Income Statement Summary (RMB thousands) | Indicator | H1 2023 (RMB thousands) | H1 2022 (RMB thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 450,609 | 289,641 | +55.6% | | Gross Profit | 169,229 | 117,738 | +43.7% | | Operating Loss | (38,905) | (61,884) | -37.1% (Loss narrowed) | | Adjusted Net Loss | (3,153) | (7,834) | -59.8% (Loss narrowed) | | Adjusted EBITDA | (10,485) | (18,002) | -41.8% (Loss narrowed) | [Balance Sheet Summary](index=2&type=section&id=Balance%20Sheet%20Summary) As of June 30, 2023, the company's total assets were RMB 2.002 billion, slightly down from the end of 2022, with total liabilities at RMB 344 million and total equity at RMB 1.658 billion, maintaining a stable financial structure Balance Sheet Summary (RMB thousands) | Indicator | June 30, 2023 (RMB thousands) | December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | **Assets** | | | | Non-current assets | 463,364 | 476,709 | | Current assets | 1,538,949 | 1,579,558 | | **Total Assets** | **2,002,313** | **2,056,267** | | **Equity and Liabilities** | | | | Total Equity | 1,657,964 | 1,698,084 | | Total Liabilities | 344,349 | 358,183 | | **Total Equity and Liabilities** | **2,002,313** | **2,056,267** | [Management Discussion and Analysis](index=3&type=section&id=Management%20Discussion%20and%20Analysis) [Business Overview](index=3&type=section&id=Business%20Overview) In H1 2023, Baio continued to deepen its focus on female-oriented, pet collection, and ACG game genres, enhancing brand reputation through IP collaborations and cultural integration, while actively expanding overseas markets and applying AIGC technology for efficiency and cost reduction - The company's core value proposition focuses on IP companionship, immersive experience, and casual social interaction, targeting female-oriented, pet collection and nurturing, and ACG game segments[32](index=32&type=chunk) - Cross-industry collaborations with Fangsuo Bookstore, Guangdong Lion Dance, and CCTV Animation integrated traditional culture with games, enhancing IP brand reputation and market popularity[32](index=32&type=chunk) - Actively expanding overseas markets, *Food Fantasy* has launched multi-language versions and achieved good rankings in several countries, while the company also uses AIGC technology to assist product development and distribution for efficiency and cost reduction[43](index=43&type=chunk) [Industry Trends](index=4&type=section&id=Industry%20Trends) In H1 2023, China's game market showed signs of recovery, with user scale reaching a new high, but domestic sales revenue slightly decreased year-over-year, while overseas market self-developed game revenue declined due to economic downturn and increased competition - China's game user base reached **668 million**, a **0.35% YoY increase**, setting a new historical high[27](index=27&type=chunk) - In H1 2023, China's domestic game market sales revenue was **RMB 144.26 billion**, a **2.39% YoY decrease**[44](index=44&type=chunk) - Self-developed game overseas market sales revenue was **USD 8.21 billion**, an **8.72% YoY decrease**, mainly due to decreased overseas user consumption willingness and increased marketing costs[44](index=44&type=chunk) [Outlook for H2 2023](index=4&type=section&id=Outlook%20for%20H2%202023) For H2, Baio will continue to focus on core game genres, increase R&D investment, explore AIGC applications, and plan to launch a rich product pipeline globally, including *Aola Star 2*, while preparing for the overseas release of *Aobi Island: Dreamland* - The company plans to successively launch a rich product pipeline to the global market in the future[34](index=34&type=chunk) - New game *Aola Star 2* was released and opened for pre-registration in H1[34](index=34&type=chunk) - Actively preparing to launch the overseas version of *Aobi Island: Dreamland*[34](index=34&type=chunk) [Operating Data](index=5&type=section&id=Operating%20Data) In H1 2023, the company's core operating metrics showed strong performance, with quarterly active accounts and quarterly paying accounts both increasing by approximately 20% year-over-year, and average revenue per paying user (ARPU) also growing by 26.6% Operating Data | Operating Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Average Quarterly Active Accounts (Millions) | 7.5 | 6.3 | +19.0% | | Average Quarterly Paying Accounts (Millions) | 1.2 | 1.0 | +20.0% | | Average Revenue Per Quarterly Paying Account (RMB) | 188.7 | 149.1 | +26.6% | - Operating data growth is primarily attributed to the excellent performance of the new mobile game *Aobi Island Mobile*, launched in H2 2022, which maintained high popularity in H1 2023[47](index=47&type=chunk) [Overall Business and Financial Performance](index=6&type=section&id=Overall%20Business%20and%20Financial%20Performance) In H1 2023, total revenue increased by 55.6% year-over-year to RMB 451 million, mainly contributed by the new game *Aobi Island Mobile*, and despite a slight decrease in gross margin to 37.6% due to higher revenue sharing, effective expense control significantly narrowed both operating and net losses - Online entertainment business revenue was **RMB 451 million**, a **55.6% YoY increase**, primarily due to the outstanding performance of the new game *Aobi Island Mobile*[40](index=40&type=chunk) - Gross margin decreased from **40.6%** in the prior period to **37.6%**, mainly due to a higher proportion of revenue generated from mobile games distributed by third parties, which have higher revenue sharing ratios[56](index=56&type=chunk) - Research and development expenses increased by **20.4% YoY** to **RMB 126 million**, reflecting the company's continuous investment in enhancing internal game development capabilities[59](index=59&type=chunk) - Loss for the period narrowed from **RMB 39.9 million** in the prior period to **RMB 20 million**[70](index=70&type=chunk) - Adjusted net loss significantly narrowed from **RMB 7.8 million** in the prior period to **RMB 3.2 million**[84](index=84&type=chunk) [Liquidity and Capital Resources](index=10&type=section&id=Liquidity%20and%20Capital%20Resources) The company primarily relies on cash flow from operating activities to meet working capital needs, maintaining a stable financial position with approximately RMB 1.453 billion in cash, cash equivalents, and time deposits as of June 30, 2023, no bank loans, and a healthy debt-to-asset ratio of 17% Cash, Cash Equivalents, and Deposits (RMB millions) | Indicator | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and Cash Equivalents (RMB millions) | 1,244.1 | 1,303.7 | | Short-term Deposits (RMB millions) | 163.7 | 110.0 | | Long-term Deposits (RMB millions) | 45.0 | 95.0 | | **Total (RMB millions)** | **1,452.8** | **1,508.7** | - As of June 30, 2023, the Group had no bank loans or other borrowings[16](index=16&type=chunk) - The debt-to-asset ratio (total liabilities/total assets) remained at **17%**, consistent with the end of 2022[22](index=22&type=chunk) [Capital Expenditures and Investments](index=12&type=section&id=Capital%20Expenditures%20and%20Investments) In H1 2023, total capital expenditures were RMB 52.6 million, a significant increase from RMB 5 million in the prior period, primarily for construction in progress and other long-term assets, with no other major investment or acquisition plans currently, but a continuous search for new business opportunities Capital Expenditures (RMB thousands) | Capital Expenditure Item | H1 2023 (RMB thousands) | H1 2022 (RMB thousands) | | :--- | :--- | :--- | | Payments for construction in progress and other long-term assets | 50,300 | 2,949 | | Purchase of intangible assets | 1,253 | 1,085 | | Purchase of property and equipment | 1,067 | 930 | | **Total** | **52,620** | **4,964** | - The Group currently has no specific plans regarding other significant investments or acquisitions of major capital assets or other businesses[6](index=6&type=chunk) [Employees and Staff Costs](index=13&type=section&id=Employees%20and%20Staff%20Costs) As of June 30, 2023, the company had 955 full-time employees, with R&D personnel accounting for the largest proportion at 58.4%, and total staff costs in H1 were approximately RMB 206 million, representing 45.8% of total revenue, a significant decrease from 69.4% in the prior period, demonstrating operating leverage from revenue growth Employee Distribution by Function | Function | Number of Employees | Percentage of Total | | :--- | :--- | :--- | | R&D | 557 | 58.4% | | R&D Business | 220 | 23.0% | | Sales and Marketing | 92 | 9.6% | | General and Administrative | 61 | 6.4% | | Business | 25 | 2.6% | | **Total** | **955** | **100%** | - For the six months ended June 30, 2023 and 2022, staff costs were approximately **RMB 206.4 million** and **RMB 201.0 million**, respectively, accounting for **45.8%** and **69.4%** of our revenue for those periods[77](index=77&type=chunk) [Dividends](index=13&type=section&id=Dividends) The Board does not recommend an interim dividend for the six months ended June 30, 2023, however, the company paid a special dividend for the year ended December 31, 2022, approved at the AGM, on July 20, 2023 - The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2023[79](index=79&type=chunk) - The company paid a special dividend of **HKD 0.015 per share** for the year ended December 31, 2022, on July 20, 2023[91](index=91&type=chunk) [Interim Condensed Consolidated Financial Statements](index=15&type=section&id=Interim%20Condensed%20Consolidated%20Financial%20Statements) [Interim Condensed Consolidated Income Statement](index=15&type=section&id=Interim%20Condensed%20Consolidated%20Income%20Statement) This section details the consolidated income statement for the six months ended June 30, 2023, consistent with the management discussion, showing revenue of RMB 451 million, loss for the period of RMB 19.91 million, and basic and diluted loss per share of RMB 0.0075 Interim Condensed Consolidated Income Statement (RMB thousands) | Item (RMB thousands) | H1 2023 (Unaudited) | H1 2022 (Unaudited) | | :--- | :--- | :--- | | Revenue | 450,609 | 289,641 | | Gross Profit | 169,229 | 117,738 | | Operating Loss | (38,905) | (61,884) | | Loss before income tax | (17,845) | (41,893) | | Loss for the period | (19,913) | (39,851) | | Basic and diluted loss per share (RMB) | (0.0075) | (0.0152) | [Interim Condensed Consolidated Statement of Comprehensive Income](index=16&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) This section presents the comprehensive income, where, due to the absence of other comprehensive income items during the reporting period, the total comprehensive loss for the period was consistent with the loss for the period, both amounting to RMB 19.91 million - For the six months ended June 30, 2023, the company had no other comprehensive income items, thus the total comprehensive loss for the period was equal to the loss for the period, amounting to **RMB 19,913 thousand**[94](index=94&type=chunk)[95](index=95&type=chunk) [Interim Condensed Consolidated Balance Sheet](index=17&type=section&id=Interim%20Condensed%20Consolidated%20Balance%20Sheet) This section details the assets, liabilities, and equity as of June 30, 2023, with total assets at RMB 2.002 billion, current assets at RMB 1.539 billion, total liabilities at RMB 344 million, and total equity at RMB 1.658 billion Interim Condensed Consolidated Balance Sheet (RMB thousands) | Item (RMB thousands) | June 30, 2023 (Unaudited) | December 31, 2022 (Audited) | | :--- | :--- | :--- | | **Assets** | | | | Non-current assets | 463,364 | 476,709 | | Current assets | 1,538,949 | 1,579,558 | | **Total Assets** | **2,002,313** | **2,056,267** | | **Equity** | | | | **Total Equity** | **1,657,964** | **1,698,084** | | **Liabilities** | | | | Non-current liabilities | 42,564 | 52,574 | | Current liabilities | 301,785 | 305,609 | | **Total Liabilities** | **344,349** | **358,183** | [Notes to the Financial Statements](index=19&type=section&id=Notes%20to%20the%20Financial%20Statements) This section provides detailed notes on the basis of preparation, significant accounting policies, risk management, segment information, taxation, loss per share, and dividends, supplementing and explaining the consolidated financial statements [Accounting Policies](index=19&type=section&id=Accounting%20Policies) The accounting policies for this interim financial information are consistent with prior years, with new and revised standards mandatorily adopted this period having no significant impact, and future effective standards not expected to have a significant impact - The interim condensed consolidated financial information is prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting"[115](index=115&type=chunk) - The Group has assessed and confirmed that new and revised standards effective for the first time in this interim period have had no significant impact on the Group[125](index=125&type=chunk) [Financial Risk Management and Financial Instruments](index=20&type=section&id=Financial%20Risk%20Management%20and%20Financial%20Instruments) The Group faces market risk (primarily currency risk), credit risk, and liquidity risk, with no changes in risk management policies since the end of 2022, and manages liquidity risk by maintaining sufficient cash reserves while disclosing the fair value estimation hierarchy for financial instruments - The Group's business activities expose it to various financial risks: market risk (primarily currency risk), credit risk, and liquidity risk[129](index=129&type=chunk) - There have been no changes in the risk management department or any risk management policies since December 31, 2022[130](index=130&type=chunk) [Segment Information](index=23&type=section&id=Segment%20Information) The Group has two operating segments: online entertainment business and other businesses, with online entertainment being the core and contributing almost all revenue, primarily from mainland China, and *Aobi Island Mobile* being the largest single game contributor during the reporting period Revenue by Segment (RMB thousands) | Segment | H1 2023 Revenue (RMB thousands) | | :--- | :--- | | Online Entertainment Business | 450,527 | | Other Businesses | 82 | | **Total** | **450,609** | Revenue by Region (RMB thousands) | Region | H1 2023 Revenue (RMB thousands) | | :--- | :--- | | Mainland China | 425,220 | | Outside Mainland China | 25,389 | | **Total** | **450,609** | - *Aobi Island Mobile* was the largest revenue-contributing game, accounting for **38.8%** of total revenue[162](index=162&type=chunk) [Income Tax (Expense) / Credit](index=25&type=section&id=Income%20Tax%20%28Expense%29%20%2F%20Credit) Some key subsidiaries qualify as "High-tech Enterprises" enjoying a 15% preferential income tax rate, and qualified subsidiaries engaged in R&D activities are entitled to a 200% super deduction for R&D expenses under national policies - Key subsidiaries Guangzhou Baitian and Guangzhou Tianti qualify as "High-tech Enterprises" and enjoy a **15%** preferential income tax rate[170](index=170&type=chunk) - Starting from 2023, enterprises engaged in R&D activities can deduct **200%** of their R&D expenses as deductible tax expenses (super deduction)[172](index=172&type=chunk) [Loss Per Share](index=28&type=section&id=Loss%20Per%20Share) For the six months ended June 30, 2023, basic loss per share was RMB 0.0075, a significant narrowing from RMB 0.0152 in the prior period, with diluted loss per share being the same as basic loss per share due to the anti-dilutive effect of potential ordinary shares Loss Per Share | Indicator | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Loss attributable to shareholders of the Company (RMB thousands) | (19,998) | (39,928) | | Weighted average number of ordinary shares outstanding | 2,665,958,981 | 2,626,702,445 | | Basic loss per share (RMB) | (0.0075) | (0.0152) | - No adjustment was made to basic loss per share when calculating diluted loss per share as potential ordinary shares had an anti-dilutive effect[179](index=179&type=chunk) [Other Disclosures](index=31&type=section&id=Other%20Disclosures) [Audit Committee and Review of Financial Statements](index=31&type=section&id=Audit%20Committee%20and%20Review%20of%20Financial%20Statements) The company's Audit Committee reviewed the adopted accounting principles and practices and the unaudited interim condensed consolidated financial information for the six months ended June 30, 2023, which was also reviewed by the company's auditor in accordance with relevant standards - The Audit Committee has reviewed the Group's unaudited interim condensed consolidated financial information for the six months ended June 30, 2023, and is satisfied that it was prepared in accordance with International Accounting Standard 34[189](index=189&type=chunk) [Compliance with Corporate Governance Code](index=31&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) During the reporting period, the company complied with all applicable code provisions of the Corporate Governance Code in Appendix 14 of the Listing Rules, with the only deviation being the roles of Chairman and CEO held by the same person, an arrangement the Board believes ensures consistent leadership and does not impair the balance of power - Except for a deviation from code provision C.2.1, the company has complied with all applicable corporate governance code provisions[191](index=191&type=chunk) - The roles of Chairman and Chief Executive Officer are currently held by Mr. Dai Jian, an arrangement the Board believes ensures consistent leadership for the Group, and the existing Board structure ensures a balance of power[191](index=191&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=32&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) For the six months ended June 30, 2023, the Group did not purchase, sell, or redeem any of the company's listed securities - For the six months ended June 30, 2023, the Group did not purchase, sell, or redeem any of the Company's listed securities[148](index=148&type=chunk)

Financial Performance - Revenue for the year ended December 31, 2022, was RMB 938.76 million, representing a 6.2% increase from RMB 883.91 million in 2021[10] - Gross profit decreased by 10.0% to RMB 360.63 million in 2022, down from RMB 400.56 million in 2021[10] - The company reported an operating loss of RMB 37.08 million for 2022, compared to an operating profit of RMB 29.71 million in 2021, marking a 224.8% decline[10] - Adjusted net profit for 2022 was RMB 61.74 million, a decrease of 22.0% from RMB 79.18 million in 2021[10] - Adjusted EBITDA fell by 64.6% to RMB 37.49 million in 2022, down from RMB 105.83 million in 2021[10] - The financial performance reflects challenges in operational efficiency and profitability, necessitating strategic adjustments moving forward[10] User Engagement and Market Presence - The total registered users for the company's major titles have exceeded 100 million, indicating strong user engagement[8] - The company maintained a stable operational performance despite a challenging environment, focusing on enhancing its IP recognition and leadership in the gaming sector[16] - The company reported a significant increase in user engagement, with a year-over-year growth of 25% in active users[109] - The average quarterly active accounts reached approximately 10.1 million, a 1% increase from the previous year, primarily driven by the successful launch of the new mobile game "Aobi Island" in Q3 2022[49] Strategic Focus and Product Development - The company aims to continue focusing on three game segments: female-oriented, pet collection and nurturing, and ACG (Anime, Comic, and Games) games, leveraging its IP development strategy[8] - The company plans to enhance its product offerings to provide unique IP upgrade experiences for younger users[8] - The company plans to deepen its focus on three core value propositions: "IP companionship, immersive experience, and easy social interaction" in 2023[21] - The company aims to increase investment in R&D to enhance its game development capabilities and launch more high-quality games to meet global user demands[21] - The company continues to explore innovative and diverse game content through cross-industry collaborations, targeting younger audiences[17] International Strategy and Cultural Integration - The company has established a strong presence in both domestic and international markets, including regions like Hong Kong, Taiwan, Japan, South Korea, and Europe[8] - The international strategy has yielded results, with mobile games launched in multiple overseas markets, enhancing brand recognition and cultural exchange[18] - The company is committed to integrating traditional Chinese culture into its game content, aiming to enrich user experience and promote cultural values globally[21] - The company emphasizes integrating Chinese cultural elements into its games, aiming to provide innovative and beneficial entertainment content to users globally[46] Financial Position and Assets - Total assets as of December 31, 2022, reached RMB 2,056,267 thousand, an increase from RMB 1,994,342 thousand in 2021, reflecting a growth of approximately 3.1%[14] - Non-current assets increased to RMB 476,709 thousand in 2022 from RMB 442,420 thousand in 2021, marking a growth of about 7.1%[14] - Total equity amounted to RMB 1,698,084 thousand in 2022, slightly down from RMB 1,682,640 thousand in 2021, indicating a decrease of approximately 0.9%[14] - The total liabilities as of December 31, 2022, were RMB 358,183 thousand, up from RMB 311,702 thousand in 2021, representing an increase of approximately 14.9%[14] Research and Development - Research and development expenses rose by 32.7% to RMB 230.0 million from RMB 173.3 million, reflecting the company's strategy to enhance internal game development capabilities[61] - The R&D budget has been increased by 10% to support the development of new technologies and products[121] Shareholder and Employee Information - The company plans to continue granting restricted share units to incentivize employees[93] - As of December 31, 2022, the company had a total of 1,050 full-time employees, with R&D accounting for 55.3% of the workforce[92] - Total employee costs for the year ended December 31, 2022, were approximately RMB 392.6 million, representing 41.8% of the company's revenue[92] Dividends and Shareholder Returns - A special dividend of HKD 0.015 per share (approximately RMB 0.013) has been proposed for the year ended December 31, 2022, pending shareholder approval[97] - The company reported a special dividend of HKD 0.015 per share for the fiscal year ending December 31, 2022, subject to shareholder approval[133] Acquisitions and Future Plans - A strategic acquisition of a tech startup is anticipated to enhance the company's product offerings and is expected to close by Q3 2024[119] - The company has no significant contingent liabilities or guarantees as of December 31, 2022[88] - There are currently no specific plans for major investments or acquisitions, but the company will continue to seek new business development opportunities[90]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性或完整性亦不發表 任何聲明，並明確表示，概不對因本公告全部或任何部份內容而產生或因倚賴該等內容而引致的任何損失承擔任 何責任。 動 （於開曼群島註冊成立的有限公司） （股份代號：2100） 截 至 二 零 二 二 年 十 二 月 三 十 一 日 止 年 度 全 年 業 績 公 告 百奧家庭互動有限公司（「百奧」或「本公司」或「我們」）董事（「董事」）會（「董事會」）欣然 公佈以下本公司、其附屬公司及其於中華人民共和國（「中國」）的控制實體（「本集團」） 截至二零二二年十二月三十一日止年度的經審計綜合業績連同去年之比較數字： 財務摘要 利潤表概要 截至十二月三十一日止年度 二零二二年 二零二一年 同比變化 人民幣千元 人民幣千元 % 收入 938,759 883,908 6.2% 毛利 360,628 400,559 (10.0%) 經營（虧損）╱利潤 (37,082) 29,706 (224.8%) 非國際財務報告準則 ...

Financial Performance - Revenue for the six months ended June 30, 2022, was RMB 289,641 thousand, a decrease of 44% compared to RMB 519,887 thousand in 2021[26]. - Gross profit for the same period was RMB 117,738 thousand, down 51% from RMB 240,221 thousand in 2021[26]. - The company reported an operating loss of RMB 61,884 thousand, compared to a profit of RMB 56,995 thousand in the previous year, marking a 209% decline[26]. - Adjusted net loss for the period was RMB 7,834 thousand, a significant decrease from a profit of RMB 69,295 thousand in 2021, representing a 111% decline[26]. - Adjusted EBITDA for the first half of 2022 was a loss of RMB 18,002 thousand, down 120% from RMB 90,914 thousand in the same period last year[26]. - The net loss attributable to shareholders for the period was RMB 39,928 thousand, compared to a profit of RMB 46,289 thousand in the same period of 2021[141]. - The company did not declare any interim dividend for the six months ended June 30, 2022, consistent with the previous year[128]. - The company recorded an operating loss of RMB 61.9 million for the six months ended June 30, 2022, compared to an operating profit of RMB 57.0 million in the prior year[96]. - Adjusted net loss for the six months ended June 30, 2022, was RMB 7.8 million, a decrease of 111.3% compared to a net profit of RMB 69.3 million for the same period in 2021[102]. Assets and Liabilities - Total assets as of June 30, 2022, were RMB 1,946,988 thousand, a slight decrease from RMB 1,994,342 thousand as of December 31, 2021[31]. - Total liabilities as of June 30, 2022, were RMB 317.3 million, while total assets were RMB 1,946.99 million, resulting in a debt-to-asset ratio of 16%[106]. - Cash and cash equivalents amounted to RMB 1,174.6 million as of June 30, 2022, down from RMB 1,429.2 million at the end of 2021[107]. - Total liabilities increased from RMB 311,702 thousand to RMB 317,269 thousand, an increase of about 1.8%[148]. - The company’s share premium decreased from RMB 1,106,699 thousand to RMB 1,076,454 thousand, a decrease of about 2.7%[155]. - The company reported a decrease in lease liabilities from RMB 79,352,000 as of December 31, 2021, to RMB 70,147,000 as of June 30, 2022[181]. Market and Business Strategy - The company continues to focus on three major gaming segments: female-oriented games, pet battle games, and ACG (Anime, Comic, and Games) games[23]. - The gaming market in China has shown signs of slowing down, with a slight decline in market size, while mobile gaming remains dominant[34]. - The company aims to enhance its IP development strategy to create innovative gaming products that provide upgraded experiences for users[35]. - The company has expanded its gaming business beyond mainland China, successfully launching games in regions such as Hong Kong, Macau, Taiwan, Japan, South Korea, Singapore, Malaysia, and Europe and the United States[39]. - The company plans to focus on three gaming segments: female-oriented games, pet collection and nurturing, and "2D" games in the second half of 2022[43]. - The company aims to integrate more traditional Chinese culture into its game content, providing innovative and beneficial gaming experiences to users globally[43]. Research and Development - Research and development expenses increased to RMB 105.0 million, representing 36% of revenue, compared to 16% of revenue last year[76]. - The company has invested in product R&D and talent acquisition to optimize game graphics, gameplay, and operations, laying a solid foundation for continued development in the gaming sector[40]. - The company continues to enhance its game content and R&D capabilities, focusing on the Z generation users and maintaining stable operational performance and user reputation[36]. - The company emphasizes user-centric content creation, integrating traditional Chinese culture into games to showcase Chinese characteristics and wisdom[61]. User Engagement and Market Response - The average quarterly active accounts decreased to 6.3 million, a decline of 48.4% compared to 12.2 million in the same period last year[72]. - The average quarterly paying accounts fell to 1.0 million, down 52.4% from 2.1 million year-on-year[73]. - The average revenue per paying account for the quarter reflects the company's ability to monetize its user base effectively[57]. - The core mobile and web games operations remain stable, with successful titles like "Food Fantasy," "Aola Star," and "Aoqi Legend" receiving positive user and market feedback[59]. - The mobile game "Aobi Island: Dream Kingdom," derived from the classic IP "Aobi Island," was officially launched in mainland China on July 12, 2022, with over 300 million registered users accumulated over 13 years[43]. Awards and Recognition - The company received the "Best Small and Medium Market Capitalization Company" award at the 6th Golden Hong Kong Stock Awards in January 2022[40]. - The company received recognition at the 7th Blackstone Awards, winning three awards including "Outstanding Cooperative Company of the Year" and "Most Anticipated Game" for "Aola Star"[65]. Financial Risks and Management - The company continues to face multiple financial risks, including market risk, credit risk, and liquidity risk[175]. - The company aims to maintain sufficient cash and cash equivalents for daily operations, reflecting its strategy to ensure financial flexibility[177]. - The company has not experienced any significant changes in risk management policies since December 31, 2021[176].