Financial Performance - Revenue for the first half of 2021 was RMB 1,378,707, a decrease of 4.3% compared to RMB 1,440,481 in the same period of 2020[9]. - Gross profit for the first half of 2021 was RMB 676,699, down 18.1% from RMB 825,800 in the previous year[9]. - The company reported a loss attributable to equity holders of RMB 322,351 for the first half of 2021, compared to a profit of RMB 259,912 in the same period of 2020, representing a decline of 224.0%[9]. - Game revenue decreased by 12.2% year-on-year to RMB 1,043.0 million, primarily due to a 15.4% decline in online game revenue to RMB 940.0 million[22]. - The company reported a net loss attributable to equity holders of RMB 325,147 thousand for the six months ended June 30, 2021, compared to a profit of RMB 206,546 thousand in the same period of 2020, representing a significant decline[132]. - The company reported a total comprehensive loss of RMB 350,599 thousand for the period, compared to a total comprehensive income of RMB 272,182 thousand in 2020[79]. User Engagement - Average monthly active users (MAU) for online games decreased by 48.5% to 15,690 thousand from 30,474 thousand year-on-year[10]. - Average monthly paying users for online games decreased by 17.4% to 811 thousand from 982 thousand year-on-year[10]. - The international version of the TapTap app saw a significant increase in average monthly active users, rising by 484.4% to 13,183 thousand from 2,256 thousand year-on-year[10]. - TapTap's average monthly active users for the Chinese version reached 28.7 million, a year-on-year increase of 15.6%, with game downloads totaling 248.1 million, up 12.8%[18]. - The international version of TapTap saw a significant increase in average monthly active users, reaching 13.2 million, a year-on-year growth of 484.4%[18]. Cash and Investments - The company has over RMB 4.3 billion in cash and cash equivalents and short-term investments as of June 30, 2021, providing sufficient resources for business development[12]. - As of June 30, 2021, cash and cash equivalents were RMB 1,905.2 million, down from RMB 2,319.5 million at the end of 2020[37]. - The company issued convertible bonds with a total principal amount of USD 280 million at an interest rate of 1.25%, maturing on April 12, 2026[37]. - The net proceeds from the convertible bond issuance were approximately USD 275.6 million[44]. - The company completed a placement of 26,318,000 new shares at a price of HKD 42.38 per share, raising approximately HKD 1,113.0 million in net proceeds[48]. Expenses and Costs - The cost of revenue increased by 14.2% year-on-year to RMB 702.0 million, with game costs accounting for 61.0% of total revenue costs[27]. - Sales and marketing expenses increased by 23.8% year-on-year to RMB 344.5 million, driven by higher marketing expenditures for TapTap and the gaming segment[32]. - Research and development expenses surged by 164.0% year-on-year to RMB 575.9 million, attributed to an increase in the number of R&D personnel from 1,065 to 1,565[33]. - The company's gaming business revenue cost increased by 10.1% year-on-year to RMB 636.1 million, primarily due to hiring professionals for local operations in Southeast Asia and increased employee benefits for gaming operations[30]. Corporate Governance and Compliance - The company has complied with all applicable corporate governance code provisions, except for the separation of the roles of Chairman and CEO, which are held by the same individual[60]. - The audit committee has been established in accordance with Listing Rules and consists of three members, with Mr. Xin Quandong as the chairman[63]. - The company has not adopted any new accounting standards that would have a significant impact on the interim financial statements for the period ending June 30, 2021[96]. Future Plans and Developments - The company is focusing on the development of 13 existing game projects and restructuring the technology architecture of TapTap for future growth[12]. - The company plans to continue launching major updates for existing games, including a Disney collaboration version for "Ragnarok M" in overseas markets[14]. - The company plans to launch several highly anticipated titles, including "Terraria mobile" and "Eastward," across multiple platforms in the second half of 2021[16]. - The company has opened TapTap Developer Services (TDS) to third-party developers, with nearly 100 games integrated into TapSDK, enhancing user engagement and monetization opportunities[18]. Shareholder Information - As of June 30, 2021, Mr. Huang Yimeng holds 157,605,000 shares, representing 32.80% of the company's total shares[67]. - Credit Suisse Trust Limited holds 229,484,865 shares, representing 47.77% of the company's total shares[71]. - The total number of shares held under the Restricted Share Unit Plan is 8,437,540, accounting for approximately 1.76% of the company's issued share capital[73]. - The company did not declare any interim dividends for the six months ended June 30, 2021[50]. Assets and Liabilities - Total assets as of June 30, 2021, amounted to RMB 5,529,806 thousand, an increase from RMB 3,344,742 thousand as of December 31, 2020[82]. - Total liabilities as of June 30, 2021, were RMB 2,492,470 thousand, compared to RMB 764,616 thousand as of December 31, 2020[83]. - The company’s total equity attributable to owners of the company increased to RMB 43,832 million as of June 30, 2021, from RMB 21,609 million at the beginning of the year, representing a growth of approximately 103%[152]. Market and Economic Factors - The company benefited from a reduced corporate income tax rate of 15% for certain subsidiaries classified as "high-tech enterprises" in China[12]. - The expected return rate for financial products issued by commercial banks ranged from 2.90% to 4.27%[108]. - The company’s management has made significant judgments and estimates in preparing the interim financial information, consistent with the 2020 financial statements[109].

C M Y CM MY CY CMY K XD AR2020_Cover 19.7mm output.pdf 1 20/4/2021 上午11:30 心动有限公司 2020 年報 目錄 $\boxed{\frac{1}{1}\frac{\sqrt{15}}{\sqrt{15}}}$ | 01 | P 02 公司資料 | 10 | P 76 合併財務狀況表 | | --- | --- | --- | --- | | | P 04 | | P 79 | | 02 | 董事會主席的信 | 11 | 合併權益變動表 | | 03 | P 11 管理層討論與分析 | 12 | P 82 合併現金流量表 | | | P 19 | | P 84 | | 04 | 董事及高級管理層履歷 | 13 | 合併財務報表附註 | | 05 | P 23 企業管治報告 | 14 | P 158 財務摘要 | | 06 | P 36 環境、社會及管治報告 | 15 | P 160 釋義及技術詞 | | 07 | P 52 董事會報告 | | | | 08 | P 68 獨立核數師報告 | | | | 09 | 合併綜合收益表 | | | ...

Game Development and Publishing Strategy - The company established a vision of "Gathering Craftsmen's Hearts, Moving Players' Emotions" to enhance game development and publishing strategies[9]. - The introduction of the TapTap platform significantly improved the return on investment (ROI) for each game, allowing for increased investment in development and exploration of new game types[10]. - The company aims to provide high-quality exclusive content for TapTap, which is expected to drive user growth and generate revenue[9]. - The company reported a commitment to continuous support for high-potential games on the TapTap platform, regardless of immediate revenue considerations[12]. - The strategic focus on game development and publishing is expected to create a sustainable ecosystem that benefits both creators and players[10]. - The company recognizes the importance of user expectations and market potential in developing new game types, particularly those with lower initial ROI but high long-term potential[10]. - The company emphasizes the need for a robust business model to avoid the pitfalls of traditional game development cycles[10]. - The company is committed to fostering a culture of respect and reward for game creators, enhancing their ability to innovate and succeed[9]. - The company has eight self-developed game projects in various stages of development, with three expected to enter mass production this year[19]. - The company is focusing on exclusive content as a primary growth driver, emphasizing the importance of self-developed games[13]. - TapTap's major game "RO: Guardians of Eternal Love" has been released in over 50 countries and regions, achieving significant success[18]. - The company aims to leverage TapTap's strategic advantages to support game developers in global publishing efforts[21]. - The company expressed confidence in the global competitiveness of Chinese game developers and aims to assist them in reaching international markets[21]. User Engagement and Growth - TapTap's user growth is driven by exclusive content, which in turn supports the company's game development and enhances long-term revenue potential[12]. - TapTap's cumulative registered users exceeded 33 million, with an average of over 5 million monthly active users as of December 31, 2019[18]. - The average monthly active users increased by 123.5% to 19,579.4 thousand in 2019 from 8,760.8 thousand in 2018[26]. - The average monthly paying users rose by 74.8% to 720.5 thousand in 2019 from 412.2 thousand in 2018[26]. - The average monthly active users of the TapTap mobile app reached 17.9 million, a year-on-year increase of 19.6%[28]. - TapTap games were downloaded 352.0 million times, reflecting a 36.8% increase year-on-year[28]. - The company reported a significant increase in user engagement, with a year-over-year growth of 25% in active users[61]. Financial Performance - The company's total revenue for the year ended December 31, 2019, was RMB 2,838.1 million, representing a 50.4% increase from RMB 1,887.1 million in 2018[33]. - Revenue from online games increased by 50.2% to RMB 2,319.6 million, driven by the strong performance of existing and newly launched games such as "Ragnarok M" and "Idle Uprising"[34]. - Game operation revenue for 2019 reached RMB 2,375.3 million, a significant increase from RMB 1,588.1 million in 2018, representing a growth of 49.7%[35]. - Gross profit for 2019 was RMB 1,771.8 million, up 59.5% from the previous year, with a gross margin improvement from 58.9% in 2018 to 62.4% in 2019[42]. - Net profit for the year increased by 45.6% to RMB 513.4 million, with adjusted net profit rising by 61.1% to RMB 572.0 million[47]. - The adjusted profit for the year ended December 31, 2019, was RMB 572,048,000, compared to RMB 355,136,000 in 2018, representing a 61.3% increase[51]. - The profit attributable to equity holders of the company for 2019 was RMB 346,563,000, up from RMB 285,028,000 in 2018, reflecting a growth of 21.6%[52]. Research and Development - The company plans to invest more in research and development to improve product competitiveness and foster team capabilities[10]. - The focus for the company in 2019 was on enhancing R&D capabilities rather than immediate revenue growth, indicating a long-term strategic vision[21]. - Investment in research and development increased by 30%, focusing on innovative gaming technologies[66]. - Research and development expenses rose by 60.6% to RMB 317.6 million, attributed to an increase in R&D personnel from 550 to 806 and enhanced employee benefits[44]. Corporate Governance - The board of directors consists of four executive directors and four independent non-executive directors, ensuring strong governance[67]. - The company has adopted a high standard of corporate governance to protect shareholder interests[68]. - The company has established four committees to oversee various aspects of governance and strategy[66]. - The board has established four committees: Audit Committee, Remuneration and Assessment Committee, Strategic Development Committee, and Nomination Committee, each with specific written terms of reference[74]. - The company has adopted a board diversity policy, aiming to enhance gender diversity by recommending at least one female candidate for board appointment within three years from the listing date[72]. Environmental, Social, and Governance (ESG) Initiatives - The company has established a clear ESG management system, with the board of directors overseeing ESG matters and responsible for the company's ESG strategy and reporting[104]. - The company has committed to continuous improvement in its ESG performance, with plans to maintain consistency in reporting methods and key performance indicators in future years[103]. - The company actively communicates with stakeholders, including government, shareholders, players, employees, and the community, to understand their expectations and suggestions for sustainable development[106]. - The company has implemented a real-name registration system for users, limiting gaming time for minors to 1 hour in visitor mode every 15 days, and restricting access during specific hours[109]. - The company has developed a comprehensive information security policy, including data backup management and user privacy protection measures, to mitigate risks of information leakage[111]. Employee Management and Development - The company has a comprehensive human resources management system that includes recruitment, performance evaluation, and promotion pathways for employees[121][122]. - The group has established a competitive compensation system, including basic salary, monthly allowances, performance bonuses, and year-end bonuses, ensuring fair remuneration for employees[122]. - The company conducted 46 training sessions in 2019, totaling 114.5 hours of training for employees[117]. - The company has implemented tailored internal training programs to enhance employee productivity and performance[143]. Risk Management - The company has established a risk management and internal control management system covering procurement, sales, human resources, game development, marketing, taxation, funding, information security, and financial reporting[85]. - The company has established a risk library and conducts regular risk assessments to ensure effective risk management and internal control operations[85]. - The board regularly reviews the investment and expansion strategies, business plans, financial performance, and key performance indicators to manage business risks[86]. Compliance and Regulatory Matters - The company has adopted internal control and risk management policies to monitor compliance with relevant laws and regulations[171]. - The independent auditor confirmed that the transactions under the contractual arrangements were approved by the board and complied with relevant provisions[171]. - The company has engaged in various contractual arrangements to navigate foreign investment restrictions in China, ensuring compliance with local laws[169].