Financial Performance - Revenue for the six months ended June 30, 2023, was RMB 1,626,139 thousand, a decrease of 34.5% compared to RMB 2,479,823 thousand for the same period in 2022[1] - Gross profit for the same period was RMB 453,648 thousand, down 29.5% from RMB 642,664 thousand in 2022[1] - The company reported a net loss of RMB 688,672 thousand for the six months ended June 30, 2023, compared to a profit of RMB 203,267 thousand in the same period of 2022[1] - Basic and diluted loss per share for the period was RMB (0.69), compared to earnings of RMB 0.21 per share in 2022[1] - Adjusted net profit, measured on a non-IFRS basis, was approximately RMB 56.3 million, a decline of about 74.9% from approximately RMB 224.3 million in the previous year[44] - The company incurred a pre-tax loss of RMB 678.5 million for the six months ended June 30, 2023, compared to a pre-tax profit of RMB 243.4 million for the same period in 2022[32] - Total comprehensive loss for the period amounted to RMB 764,651,000, a significant increase from RMB 203,549,000 in the previous year[46] - The group reported an operating loss of approximately RMB 677.4 million, compared to an operating profit of about RMB 244.8 million in the same period last year[166] Expenses and Costs - Research and development expenses increased to RMB 143,772 thousand from RMB 114,914 thousand, reflecting a rise of 25.2% year-over-year[1] - The company’s financial costs increased to RMB 8.9 million for the six months ended June 30, 2023, compared to RMB 1.3 million in the previous year[32] - The company’s employee costs, excluding sales and marketing expenses, were RMB 139.2 million for the six months ended June 30, 2023[37] - The company’s share-based payment expenses amounted to RMB 681.8 million for the six months ended June 30, 2023, compared to RMB 18.4 million in the previous year[32] - General and administrative expenses increased by 158.6% from approximately RMB 55.6 million in the same period last year to approximately RMB 143.8 million, primarily due to an increase in share-based compensation expenses[189] - Sales and marketing expenses decreased by 16.0% from approximately RMB 261.1 million to about RMB 219.2 million, primarily due to reduced marketing and promotion costs[188] Assets and Liabilities - The company's total assets decreased to RMB 2,162,490,000 from RMB 2,869,617,000 as of December 31, 2022[47] - The net asset value of the company was RMB 2,116,852,000, down from RMB 2,818,350,000 at the end of 2022[47] - The company's total assets as of June 30, 2023, were RMB 345,764 thousand, compared to RMB 291,104 thousand as of December 31, 2022, reflecting a growth of approximately 18.7%[140] - Total liabilities as of June 30, 2023, were approximately RMB 450.1 million, a decrease from approximately RMB 565.3 million as of December 31, 2022[197] - The company's liabilities, including accrued expenses and other payables, are expected to be settled within one year, with total accrued expenses amounting to RMB 12,974 thousand as of June 30, 2023[144] Revenue Sources - Revenue from social networking services reached RMB 1,486,440,000, a substantial increase from RMB 81,307,000 in the same period last year[54] - Revenue from overseas customers was RMB 1,499,078,000, compared to RMB 81,454,000 in the previous year, indicating a strong growth in international markets[58] - Revenue from overseas social networking services increased by 55.1% year-on-year, reaching approximately RMB 126.1 million, driven by the company's market expansion efforts[158] - The group's revenue from live streaming and audio social networks decreased by 38.0% from approximately RMB 2.4 billion to about RMB 1.5 billion due to a challenging external environment and a more cautious business strategy implemented throughout the year[185] - Other service revenue, including advertising services and website technology services, amounted to approximately RMB 13.6 million, compared to about RMB 0.3 million in the same period last year[186] Impairments and Goodwill - The company incurred goodwill impairment losses of RMB 116,111 thousand during the reporting period[1] - The group has recognized an impairment loss of approximately RMB 681,763,000 for the cash-generating unit of Six Rooms as of June 30, 2023, due to a recoverable amount lower than its carrying value[99] - The goodwill arising from the acquisition of the HOLLA Group is approximately RMB 17,394,000[97] - The company has recognized a goodwill impairment for the Holla Group as of December 31, 2022, due to significant market changes and uncertainties regarding profitability[72] Future Outlook and Strategy - The company plans to continue expanding its online social entertainment and networking services in both domestic and international markets[49] - The company aims to drive innovation in the AI sector as a new growth curve[128] - The group is focusing on solidifying its core live entertainment business and embracing new market changes[126] - The group is enhancing content and operational management in overseas markets to meet diverse user preferences[124] - The group is exploring traditional business model innovations while applying technologies like AI and virtual avatars in content creation and operational efficiency[123] - The annual revenue growth rate forecast for the next five years is projected to decline between 44% to 6%, with a terminal growth rate of 3% and a discount rate of 13.3%[75] - The group expects a future annual revenue growth rate of 8% to 21% over the next five years, with a terminal growth rate of 3%[101] Taxation - The company recognized income tax expenses of RMB 9,571 thousand for the six months ended June 30, 2023, compared to RMB 15,760 thousand in 2022[11] - As of June 30, 2023, the company has not recognized any significant tax liabilities in the United States due to the absence of taxable profits[63] - The group has not recognized any Hong Kong profits tax for the six months ended June 30, 2023, as there were no taxable profits[90] - The income tax expense decreased by 74.6% from approximately RMB 40.2 million to about RMB 10.2 million[168] Shareholder Information - The weighted average number of ordinary shares for the six months ended June 30, 2023, was 1,044,345 thousand, an increase from 954,000 thousand in 2022[12] - The company did not declare or recommend any interim dividend for the six months ended June 30, 2023[64] - The group has not issued any potential ordinary shares during the reporting period, resulting in diluted earnings per share being the same as basic earnings per share[94]

Financial Performance - For the year ended December 31, 2022, revenue was approximately RMB 5.10 billion, an increase of 10.8% compared to approximately RMB 4.60 billion in 2021[2] - Gross profit for the same period was approximately RMB 1.30 billion, up 6.2% from approximately RMB 1.22 billion in 2021[2] - Profit attributable to equity shareholders was approximately RMB 390 million, representing a growth of 19.0% from approximately RMB 330 million in 2021[2] - Basic and diluted earnings per share for 2022 were both RMB 0.40, an increase of 17.6% compared to RMB 0.34 in 2021[2] - Operating profit for the year was RMB 450 million, compared to RMB 393 million in 2021, reflecting a growth of 14.5%[4] - The total comprehensive income for the year was RMB 387.75 million, compared to RMB 326.20 million in 2021, indicating a growth of 18.9%[11] - The net income attributable to equity shareholders for 2022 was RMB 386,683,000, up from RMB 325,023,000 in 2021, representing a growth of 18.9%[35] - Basic earnings per share for 2022 were RMB 0.404, compared to RMB 0.341 in 2021, indicating an increase of 18.5%[35] - Net profit increased by 19.0% from approximately RMB 330 million in 2021 to approximately RMB 390 million in 2022[90] Revenue Breakdown - Revenue from live and audio social networking services was RMB 4,912,118,000 in 2022, compared to RMB 4,477,093,000 in 2021, reflecting a growth of 9.7%[23] - The overseas social networking revenue increased to RMB 184,291,000 in 2022 from RMB 118,243,000 in 2021, marking a growth of 55.8%[23] - Revenue from the two flagship entertainment live streaming platforms, Huajiao and Liuliu Room, was approximately RMB 3.5 billion, with a year-on-year growth of 2.9%[49] - The overseas social networking business achieved revenue of approximately RMB 180 million, marking a significant year-on-year increase of 55.9%[50] - The voice social networking business generated revenue of approximately RMB 1.4 billion, reflecting a year-on-year growth of 30.6%[57] Expenses and Costs - Research and development expenses for the year were RMB 152.53 million, compared to RMB 207.85 million in 2021, showing a decrease of 26.6%[4] - Sales and marketing expenses decreased by 1.4% from approximately RMB 544.8 million in 2021 to approximately RMB 537.2 million in 2022[82] - General and administrative expenses rose by 4.5% from approximately RMB 146 million in 2021 to approximately RMB 152.5 million in 2022[83] - Financial costs increased by 375.8% from approximately RMB 5 million in 2021 to approximately RMB 23 million in 2022, primarily due to business expansion and increased demand for office space[88] - Income tax expenses decreased by 8.9% from approximately RMB 672 million in 2021 to approximately RMB 613 million in 2022[89] Assets and Liabilities - As of December 31, 2022, total assets were RMB 2.51 billion, while total liabilities were RMB 1.63 billion, resulting in a net asset value of RMB 2.99 billion[6] - Total assets grew from approximately RMB 2.8 billion as of December 31, 2021, to approximately RMB 3.4 billion as of December 31, 2022[96] - Total liabilities increased from approximately RMB 396.5 million as of December 31, 2021, to approximately RMB 410.4 million as of December 31, 2022[96] - The group had no short-term or long-term bank borrowings as of December 31, 2022[98] Market and User Engagement - The average monthly active users in 2022 were approximately 61.08 million, with an average of 1.55 million paying users[55] - The average revenue per paying user exceeded RMB 270 in 2022[55] - The average monthly active users for the overseas social networking business exceeded 6 million, with a year-on-year growth of about 27%[50] Strategic Initiatives and Future Plans - The company plans to continue expanding its market presence and investing in new technologies to drive future growth[3] - The company aims to enhance user experience and loyalty by continuously capturing user needs and providing social and companionship values[67] - The company will increase investment in R&D for AR and VR technologies, integrating AI-generated content into existing business operations[67] - The company intends to expand its business through selective investments and acquisitions of quality projects in the market[68] - The company has established a strategic brand project "Huafang Lab" to encourage innovation and attract outstanding entrepreneurial teams[58] Corporate Governance and Compliance - The company has adopted the corporate governance code as per the Hong Kong Stock Exchange regulations, ensuring compliance with governance standards[122] - The audit committee has reviewed the unaudited financial results for the fiscal year ending December 31, 2022, ensuring oversight of financial reporting[126] - The board of directors confirmed compliance with the standard code for securities transactions from the listing date to December 31, 2022, reflecting adherence to ethical trading practices[119] Social Responsibility and Sustainability - The company emphasizes sustainable development as a key to overcoming macroeconomic challenges, focusing on reducing pollution emissions and promoting equal rights[61] - The company will further incorporate ESG factors into its core strategy to create greater value for stakeholders and society[65] - The company has donated RMB 100,000 to the "Hope Dream House" project to improve the learning and living environment for children from low-income families[63]