Financial Performance - The company reported a 22.0% increase in revenue, a 16.1% increase in gross profit, and a 12.7% increase in adjusted net profit for the six months ending June 30, 2023, compared to the previous year[17]. - The company's revenue for the reporting period reached RMB 953.5 million, representing a year-on-year increase of 22.0%[21]. - Gross profit for the same period was RMB 640.8 million, reflecting a growth of 16.1% compared to the previous year[21]. - Profit before tax increased by approximately 54.2% from RMB 291.6 million to RMB 449.5 million, with the profit margin rising from 37.3% to 47.1%[33]. - Adjusted net profit attributable to the company's owners increased by approximately 12.7% from RMB 395.5 million to RMB 445.6 million for the six months ended June 30, 2023[37]. - The company reported a profit of RMB 395,293,000 for the six months ended June 30, 2023, compared to RMB 380,299,000 for the same period in 2022, indicating a year-on-year increase[90]. User Engagement and Growth - Daily Active Users (DAUs), Monthly Active Users (MAUs), and paying players grew by 41.5%, 21.9%, and 2.8% year-over-year, respectively[17]. - Daily Active Users (DAUs) increased to 14,247,326, a year-on-year growth of 41.5%[21]. - Monthly Active Users (MAUs) rose to 67,949,141, marking a 21.9% increase year-on-year[21]. - The number of paying users reached 9,230,631, up 2.8% year-on-year[21]. - Over 2.5 million players registered to become Mahjong players through the company's platform by June 30, 2023, following the launch of a certification platform[18]. - The company organized over ten national and regional Mahjong tournaments with more than 6,000 participants during the reporting period[18]. Cost and Expenses - Sales costs increased by 36.1%, with payment channel costs and platform share rising to RMB 267.4 million, a 42.0% increase year-on-year[22]. - Marketing expenses decreased by approximately 40.1% to RMB 129.7 million due to better-than-expected player recharge conditions[22]. - Administrative and other expenses rose by approximately 61.7% from RMB 90.5 million to RMB 146.4 million, driven by increases in employee costs and subcontracted technical fees related to new game development[32]. - Selling and marketing expenses decreased by approximately 40.1% from RMB 216.6 million to RMB 129.7 million due to better-than-expected player recharge conditions[31]. Strategic Initiatives - The company signed a popular streamer, Feng Timo, on July 6, 2023, and conducted her first Douyin live stream on August 12, 2023, enhancing user engagement[17]. - The introduction and application of AIGC technology are aimed at improving game development efficiency and enhancing operational management[19]. - The company continues to explore innovative development opportunities to create long-term value for shareholders[19]. - The company plans to expand its game portfolio and enhance market penetration in over 30 cities in provinces like Zhejiang and Fujian in the second half of 2023[23]. - The company aims to explore potential business opportunities through strategic partnerships and acquisitions to enhance its game offerings[24]. Cash Flow and Financial Position - As of June 30, 2023, the company had cash and cash equivalents of approximately RMB 1,156.0 million, a slight decrease from RMB 1,163.3 million as of December 31, 2022[39]. - The company reported capital expenditures of approximately RMB 71.2 million for the six months ended June 30, 2023, compared to RMB 17.6 million for the same period in 2022, primarily due to increased spending on office furniture and equipment[42]. - The company had no short-term or long-term bank borrowings as of June 30, 2023, and total lease liabilities amounted to RMB 9.3 million[40]. - The company's debt-to-asset ratio was zero as there were no liabilities reported as of June 30, 2023[41]. - The company reported a significant increase in cash flow from operating activities, reflecting improved operational efficiency and revenue generation[58]. Investments and Acquisitions - The company plans to sell a 40% stake in Jilin Xinyue for RMB 99.90 million and a 40% stake in Jilin Anrui for RMB 35.10 million as part of its future investment strategy[43]. - The company is actively exploring potential mergers and acquisitions to enhance its market position and drive growth[56]. - The company has invested in several joint ventures, including Chengdu Cangmo Information Technology Co., Ltd. and Shenzhen Jinyunshan Technology Co., Ltd., both with a 40% ownership stake[96]. Shareholder and Equity Information - The company’s major shareholder, Mr. Wu Chengze, holds a 33.80% equity interest, amounting to 433,842,000 shares[140]. - The company has a significant concentration of ownership, with major shareholders holding substantial percentages of equity[146][147]. - The company has established a series of contractual arrangements to exercise actual control over its subsidiaries, ensuring significant economic benefits from their operations[161]. Corporate Governance - The company has complied with the corporate governance code, except for the separation of the roles of Chairman and CEO, which are held by the same individual, Wu Chengze[162]. - The audit committee, composed of three independent non-executive directors, has reviewed the unaudited interim results and confirmed compliance with applicable accounting principles[164]. - There were significant changes in the board of directors, including the resignation of Wu Chengze as CEO on September 5, 2023, and the appointment of Ding Chunlong and Tang Yinghao as executive directors on March 30, 2023[165].

[Performance Summary](index=1&type=section&id=Performance%20Summary) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) In H1 2023, revenue from continuing operations grew 22.0% to RMB 953 million, with adjusted net profit increasing 12.7% to RMB 446 million, demonstrating robust core business growth H1 2023 Key Financial Indicators (Continuing Operations) | Indicator | For the Six Months Ended June 30 (RMB '000) | YoY Change (%) | | :--- | :--- | :--- | | **Revenue from Continuing Operations** | 953,477 | 22.0% | | **Gross Profit from Continuing Operations** | 640,840 | 16.1% | | **Profit Attributable to Owners (from Continuing Operations)** | 395,293 | 49.6% | | **Non-IFRS Adjusted Net Profit** | 445,611 | 12.7% | | **Basic Earnings Per Share (RMB)** | 0.3098 | 1.4% | - The company sold and ceased its private game room card business in 2022, and related financial data has been excluded and restated from continuing operations to better reflect core business performance[2](index=2&type=chunk) Revenue by Virtual Product Type (RMB '000) | Revenue Source | H1 2023 | H1 2022 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Self-developed Mobile Games | 818,662 | 639,418 | 28.0% | | Third-party Mobile Games | 94,635 | 82,623 | 14.5% | | Advertising Revenue | 40,180 | 59,722 | (32.7)% | | **Total** | **953,477** | **781,763** | **22.0%** | [Operational Highlights](index=3&type=section&id=Operational%20Highlights) As of June 30, 2023, core operational metrics showed strong growth, with DAUs increasing 41.5% to 14.25 million and MAUs up 21.9% to 67.95 million, indicating significant user base and activity enhancement Core Operational Data | Indicator | As of June 30, 2023 | As of June 30, 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Daily Active Users (DAUs) | 14,247,326 | 10,068,889 | +41.5% | | Average Monthly Active Users (MAUs) | 67,949,141 | 55,757,653 | +21.9% | | Paying Users | 9,230,631 | 8,975,481 | +2.8% | [Business Overview and Outlook](index=4&type=section&id=Business%20Overview%20and%20Outlook) [Business Review](index=4&type=section&id=Business%20Review) The company, a developer and operator of localized mahjong, poker, and casual games, stabilized its player base and boosted paying intent through new gameplay and payment models, while optimizing marketing strategies to reduce selling and marketing expenses by 40.1%, and enhancing brand influence with Weile Mahjong becoming the sole official online mahjong grading platform - The company is positioned as a leading local chess and card game operator in China, committed to growing into a global casual competitive game platform[5](index=5&type=chunk) - By introducing new gameplay and new payment models such as top-up monthly cards, the company stabilized its player base while increasing user willingness to pay[5](index=5&type=chunk) - Marketing strategy shifted from large-scale campaigns to precise marketing, with **16** event accounts deployed on platforms like Douyin, enhancing brand exposure and user acquisition, leading to a significant decrease in marketing expenses[6](index=6&type=chunk) - Weile Mahjong was designated as the sole online mahjong athlete grading cooperation platform, with over **2.5 million** players registered as mahjong athletes by the end of the reporting period[6](index=6&type=chunk) - Launched the tower defense casual game 'Meet Meowkes' in May 2023, and plans to launch products like 'Weile 3D Dou Dizhu' to upgrade the gaming experience[6](index=6&type=chunk) [Business Outlook](index=6&type=section&id=Business%20Outlook) In H2 2023, the company plans to consolidate its competitive advantage through five strategies: enriching game portfolio with localized innovations, increasing new media marketing to lower acquisition costs, expanding coverage to over 30 prefecture-level cities in China, boosting R&D for hardcore and competitive games and overseas markets, and seeking external cooperation through incubation, investment, and M&A - Plans to expand its game portfolio, launching localized chess and card game variants to attract users in prefecture-level cities[7](index=7&type=chunk) - Aims to increase market share in over **30** prefecture-level cities across multiple provinces including Zhejiang, Fujian, Anhui, and Jiangsu[7](index=7&type=chunk) - Will continue to invest R&D resources to launch new game types such as hardcore and competitive games, and expand into overseas markets to generate international revenue[8](index=8&type=chunk) - Will explore cooperation opportunities with promising R&D teams through various forms including incubation, investment, and acquisitions[9](index=9&type=chunk) [Management Discussion and Analysis](index=7&type=section&id=Management%20Discussion%20and%20Analysis) [Financial Review — Continuing Operations](index=7&type=section&id=Financial%20Review%20%E2%80%94%20Continuing%20Operations) During the reporting period, the company demonstrated robust financial performance with revenue growing 22.0% driven by game innovation and new media partnerships, while cost of sales increased 36.1% leading to a gross margin decline from 70.6% to 67.2%, selling and marketing expenses significantly decreased by 40.1%, administrative expenses rose 61.7% due to R&D and staff costs, and profit before tax ultimately increased by 54.2% [Revenue](index=7&type=section&id=Revenue) H1 2023 revenue increased 22.0% to RMB 953.5 million, primarily driven by continuous innovation in mahjong and poker games and deep collaboration with new media channels, which effectively boosted DAU and player stickiness, with virtual token sales increasing their revenue contribution from 81.8% to 85.9% - Revenue increased by **22.0%** year-on-year to **RMB 953.5 million**, primarily benefiting from game innovation and cooperation with new media channels[10](index=10&type=chunk) Revenue Structure Proportion Change | Revenue Source | H1 2023 Proportion | H1 2022 Proportion | | :--- | :--- | :--- | | Sales of Virtual Tokens | 85.9% | 81.8% | | Distribution of Third-party Mobile Games | 9.9% | 10.6% | | Advertising | 4.2% | 7.6% | [Cost of Sales](index=7&type=section&id=Cost%20of%20Sales) Cost of sales increased 36.1% year-on-year to RMB 312.6 million, primarily due to a RMB 79.1 million increase in commissions and fees paid to third-party distribution channels and payment providers, in line with revenue growth - Cost of sales increased by **36.1%** year-on-year, primarily driven by an increase of **RMB 79.1 million** in commissions and fees paid to third-party distribution channels and payment providers[11](index=11&type=chunk) [Gross Profit and Gross Margin](index=8&type=section&id=Gross%20Profit%20and%20Gross%20Margin) Gross profit increased 16.1% year-on-year to RMB 640.8 million, but gross margin decreased from 70.6% to 67.2% due to a higher growth rate in cost of sales compared to revenue - Gross profit increased by **16.1%** year-on-year, but gross margin decreased from **70.6%** to **67.2%**[12](index=12&type=chunk) [Other Income, Gains and Losses](index=8&type=section&id=Other%20Income%2C%20Gains%20and%20Losses) Other income increased 40.6% year-on-year to RMB 30.4 million, primarily from higher interest income, while other gains and losses recorded a gain of RMB 27.0 million, compared to a loss of RMB 1.6 million in the prior period, mainly due to a RMB 30.6 million gain from the disposal of investments in associates - Other income increased by **40.6%** year-on-year, primarily due to a **RMB 6.6 million** increase in interest income[13](index=13&type=chunk) - Other gains and losses recorded a net gain of **RMB 27.0 million**, primarily from a **RMB 30.6 million** gain on disposal of investments in associates[14](index=14&type=chunk) [Selling and Marketing Expenses](index=8&type=section&id=Selling%20and%20Marketing%20Expenses) Selling and marketing expenses significantly decreased by 40.1% year-on-year to RMB 129.7 million, primarily because player top-up performance exceeded expectations in H1, leading the company to reduce marketing and advertising spending by RMB 90.7 million - Selling and marketing expenses significantly decreased by **40.1%** year-on-year, mainly due to a **RMB 90.7 million** reduction in advertising and marketing expenses[16](index=16&type=chunk) [Administrative and Other Expenses](index=9&type=section&id=Administrative%20and%20Other%20Expenses) Administrative and other expenses increased 61.7% year-on-year to RMB 146.4 million, primarily due to a RMB 11.6 million increase in staff costs, a RMB 10.9 million increase in share-based payments, and a RMB 27.1 million increase in subcontracted technical fees related to new game R&D - Administrative and other expenses increased by **61.7%** year-on-year, primarily due to increased staff costs, share-based payments, and R&D subcontracting fees[17](index=17&type=chunk) [Profit Before Income Tax](index=9&type=section&id=Profit%20Before%20Income%20Tax) Profit before tax increased 54.2% year-on-year to RMB 449.5 million, with the pre-tax profit margin rising from 37.3% to 47.1%, driven by higher other gains and significantly reduced selling expenses, while income tax expense increased 69.7% due to higher withholding tax provisions, raising the effective tax rate from 9.5% to 10.4% - Profit before tax increased by **54.2%** year-on-year to **RMB 449.5 million**, with the pre-tax profit margin improving from **37.3%** to **47.1%**[18](index=18&type=chunk) - Income tax expense increased by **69.7%** year-on-year, with the effective tax rate rising from **9.5%** to **10.4%**, primarily due to provisions for withholding tax on undistributed profits[19](index=19&type=chunk) [Profit Attributable to Owners of the Company](index=9&type=section&id=Profit%20Attributable%20to%20Owners%20of%20the%20Company) During the reporting period, profit attributable to owners of the company (including continuing and discontinued operations) was RMB 395.3 million, an increase of 3.9% from RMB 380.3 million in the prior year - Profit attributable to owners of the company increased by **3.9%** year-on-year to **RMB 395.3 million**[20](index=20&type=chunk) [Non-IFRS Measures — Adjusted Net Profit](index=10&type=section&id=Non-IFRS%20Measures%20%E2%80%94%20Adjusted%20Net%20Profit) To better assess core business performance, the company disclosed adjusted net profit, which, after excluding share-based payment expenses (RMB 27.8 million) and withholding tax on undistributed profits (RMB 22.5 million), amounted to RMB 445.6 million in H1 2023, representing a 12.7% year-on-year increase Adjusted Net Profit Reconciliation (RMB '000) | Item | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Profit Attributable to Owners of the Company for the Period | 395,293 | 380,299 | | Add: Share-based Payment Expenses | 27,818 | 15,180 | | Add: Withholding Tax on Undistributed Profits | 22,500 | — | | **Adjusted Net Profit Attributable to Owners of the Company** | **445,611** | **395,479** | [Liquidity and Capital Resources](index=11&type=section&id=Liquidity%20and%20Capital%20Resources) The Group primarily funds its operations with cash generated from operating activities and adopts a prudent financial management approach, holding approximately RMB 1.156 billion in cash and cash equivalents, predominantly in RMB, with no bank borrowings and a zero gearing ratio, indicating a healthy financial position [Cash and Cash Equivalents](index=11&type=section&id=Cash%20and%20Cash%20Equivalents) As of June 30, 2023, the Group held approximately RMB 1.156 billion in cash and cash equivalents, a slight decrease from RMB 1.163 billion at the end of 2022, with approximately RMB 1.028 billion denominated in RMB, and no foreign currency risk hedging currently in place - As of June 30, 2023, cash and cash equivalents amounted to approximately **RMB 1.156 billion**, with about **89%** (**RMB 1.028 billion**) denominated in RMB[24](index=24&type=chunk) [Debt](index=11&type=section&id=Debt) As of June 30, 2023, the Group had no short-term or long-term bank borrowings or other debts, apart from RMB 9.3 million in lease liabilities, maintaining a zero gearing ratio and no pledged assets - The Group has no bank borrowings and a **zero** gearing ratio[25](index=25&type=chunk)[26](index=26&type=chunk) [Capital Expenditure](index=12&type=section&id=Capital%20Expenditure) During the reporting period, capital expenditure significantly increased to approximately RMB 71.2 million from RMB 17.6 million in the prior period, primarily for the purchase of office furniture and equipment - Capital expenditure significantly increased year-on-year from **RMB 17.6 million** to **RMB 71.2 million**, primarily for the purchase of office furniture and equipment[26](index=26&type=chunk) [Significant Acquisitions, Disposals and Future Plans for Major Investments](index=12&type=section&id=Significant%20Acquisitions%2C%20Disposals%20and%20Future%20Plans%20for%20Major%20Investments) During the reporting period, the Group undertook a significant asset disposal, agreeing in May 2023 to sell its 40% equity interests in associates Jilin Xinyue and Jilin Anrui for a total consideration of RMB 135 million, with no other major acquisitions or disposals during the period - In May 2023, the Group agreed to dispose of its **40%** equity interest in Jilin Xinyue (for **RMB 99.9 million**) and **40%** equity interest in Jilin Anrui (for **RMB 35.1 million**) to third parties[27](index=27&type=chunk) [Employees and Staff Costs](index=13&type=section&id=Employees%20and%20Staff%20Costs) As of June 30, 2023, the Group had 601 full-time employees, with over half (324) engaged in game development, and total staff costs for H1 amounted to approximately RMB 101.2 million, a 16.6% year-on-year increase, primarily due to higher salaries, benefits, and share-based compensation - As of the end of the reporting period, the Group had **601** full-time employees, with game developers constituting the largest proportion (**324** employees)[29](index=29&type=chunk) - Total staff costs for H1 amounted to **RMB 101.2 million**, a **16.6%** year-on-year increase, primarily due to increased salaries and share-based incentives[29](index=29&type=chunk) [Condensed Consolidated Financial Statements](index=14&type=section&id=Condensed%20Consolidated%20Financial%20Statements) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=14&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) The financial report shows H1 2023 revenue from continuing operations at RMB 953 million and gross profit at RMB 641 million, with profit for the period from continuing operations at RMB 403 million after accounting for other gains and controlled selling expenses, resulting in a total profit for the period of RMB 403 million, compared to RMB 380 million in the prior year, including discontinued operations Consolidated Statement of Profit or Loss Summary (RMB '000) | Item | H1 2023 | H1 2022 | | :--- | :--- | :--- | | **Revenue (Continuing Operations)** | 953,477 | 781,763 | | **Gross Profit (Continuing Operations)** | 640,840 | 552,090 | | **Profit Before Income Tax (Continuing Operations)** | 449,484 | 291,581 | | **Profit for the Period from Continuing Operations** | 402,557 | 263,923 | | **Profit for the Period from Discontinued Operations** | — | 116,032 | | **Total Profit for the Period** | 402,557 | 379,955 | | **Profit Attributable to Owners of the Company for the Period** | 395,293 | 380,299 | [Condensed Consolidated Statement of Financial Position](index=16&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2023, the company's total assets were RMB 2.237 billion, total liabilities RMB 187 million, and net assets reached RMB 2.051 billion, a 14.3% increase from RMB 1.794 billion at the end of 2022, with net current assets of RMB 1.601 billion, indicating strong liquidity and solvency Consolidated Statement of Financial Position Summary (RMB '000) | Item | As of June 30, 2023 | As of December 31, 2022 | | :--- | :--- | :--- | | **Non-current Assets** | 475,054 | 495,509 | | **Current Assets** | 1,762,104 | 1,609,796 | | **Total Assets** | 2,237,158 | 2,105,305 | | **Current Liabilities** | 161,181 | 274,678 | | **Non-current Liabilities** | 25,402 | 36,614 | | **Total Liabilities** | 186,583 | 311,292 | | **Net Assets** | 2,050,575 | 1,794,013 | | **Equity Attributable to Owners of the Company** | 2,043,717 | 1,794,419 | [Condensed Consolidated Statement of Changes in Equity](index=18&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) As of June 30, 2023, equity attributable to owners of the company increased from RMB 1.794 billion at the beginning of the year to RMB 2.044 billion, primarily driven by profit for the period of RMB 395 million, partially offset by dividends paid of RMB 163 million and share repurchases of RMB 7.66 million - Equity attributable to owners of the company increased from **RMB 1.794 billion** at the beginning of the year to **RMB 2.044 billion**[40](index=40&type=chunk) - The primary contribution to the increase in equity was profit for the period of **RMB 395 million**, with the main reduction being dividends paid of **RMB 163 million**[40](index=40&type=chunk) [Condensed Consolidated Cash Flow Statement](index=21&type=section&id=Condensed%20Consolidated%20Cash%20Flow%20Statement) In H1 2023, net cash inflow from operating activities significantly increased to RMB 183 million, while net cash outflow from investing activities was RMB 21.58 million, mainly for financial assets and property equipment, and net cash outflow from financing activities was RMB 176 million, primarily for dividend payments and share repurchases, with cash and cash equivalents at period-end totaling RMB 1.156 billion Consolidated Cash Flow Statement Summary (RMB '000) | Item | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 182,951 | 79,652 | | Net Cash (Used in)/Generated from Investing Activities | (21,580) | 6,858 | | Net Cash Used in Financing Activities | (176,128) | (20,068) | | **Net (Decrease)/Increase in Cash and Cash Equivalents** | **(14,757)** | **66,442** | | **Cash and Cash Equivalents at End of Period** | **1,155,952** | **1,193,791** | [Notes to the Condensed Consolidated Financial Information](index=23&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Information) [1. General Information](index=23&type=section&id=1.%20General%20Information) The Group primarily engages in mobile game development, publishing, and operation in China, with financial statements prepared under International Accounting Standards, and a significant event during the reporting period was the disposal of 40% equity interests in associates Jilin Xinyue and Jilin Anrui - Significant event during the reporting period: Disposal of **40%** equity interest in Jilin Xinyue (for **RMB 99 million**) and **40%** equity interest in Jilin Anrui (for **RMB 35.1 million**) to third parties[47](index=47&type=chunk) [3. Revenue and Segment Information](index=25&type=section&id=3.%20Revenue%20and%20Segment%20Information) The Group's revenue primarily derives from sales of virtual tokens for self-developed mobile games, distribution of third-party mobile games, and advertising, with all operating activities managed and reported as a single segment (mobile game development and operation in China), and all revenue generated within China - All of the Group's revenue is generated from China and managed and reported as a single operating segment[50](index=50&type=chunk)[52](index=52&type=chunk) [7. Disposal of Subsidiaries / Discontinued Operations](index=29&type=section&id=7.%20Disposal%20of%20Subsidiaries%20%E2%88%95%20Discontinued%20Operations) To streamline operations, the Group disposed of its 100% equity interest in Jilin Yuker, which engaged in the private game room card business, and ceased related operations in H1 2022; this business generated RMB 116 million in profit (including disposal gain) in H1 2022 and is now classified as discontinued operations, with no such business in H1 2023 - The Group disposed of and ceased its private game room card business in H1 2022, with Jilin Yuker being the entity for this business[59](index=59&type=chunk) - Discontinued operations contributed **RMB 116 million** in profit in H1 2022, which included a gain of **RMB 97.8 million** from the disposal of Jilin Yuker[60](index=60&type=chunk) [8. Dividends](index=32&type=section&id=8.%20Dividends) During the reporting period, the company paid a final dividend of HKD 0.14 per share for 2022, totaling approximately RMB 163 million, with basic earnings per share from continuing operations at RMB 0.3098 and diluted earnings per share at RMB 0.3073 - Paid a final dividend of **HKD 0.14** per share for 2022, totaling **RMB 163 million**[66](index=66&type=chunk) Earnings Per Share (RMB) | Item | H1 2023 | H1 2022 | | :--- | :--- | :--- | | **From Continuing Operations - Basic** | 0.3098 | 0.2123 | | **From Continuing Operations - Diluted** | 0.3073 | 0.2097 | | **From Continuing and Discontinued Operations - Basic** | 0.3098 | 0.3056 | [10. Investments in Associates](index=35&type=section&id=10.%20Investments%20in%20Associates) During the reporting period, the Group disposed of its entire equity interests in Jilin Xinyue and Jilin Anrui, recognizing a gain of RMB 27.88 million, while also making new investments in Shenzhen Jinyunshan and Xiamen Chuyao; as of period-end, trade receivables stood at RMB 196 million with a healthy aging profile, and prepayments and other receivables significantly increased due to higher advertising prepayments - Disposed of entire equity interests in Jilin Xinyue and Jilin Anrui for a total fair value consideration of **RMB 116 million**, recognizing a gain of **RMB 27.88 million**[77](index=77&type=chunk)[78](index=78&type=chunk) - Made new investments in Shenzhen Jinyunshan (**49%** equity interest) and Xiamen Chuyao (**40%** equity interest) for a total consideration of **RMB 10 million**[79](index=79&type=chunk) - Trade receivables amounted to **RMB 196 million**, with credit terms typically **0** to **60** days, and overdue but not impaired amounts over **90** days totaling **RMB 3.14 million**[80](index=80&type=chunk)[81](index=81&type=chunk) [Other Information](index=43&type=section&id=Other%20Information) [Interim Dividend](index=43&type=section&id=Interim%20Dividend) The Board does not recommend paying any interim dividend for H1 2023, and during the reporting period, the company repurchased 4,798,000 shares on the open market through a trustee for a total consideration of approximately RMB 7.66 million for its share award scheme - The Board does not recommend declaring an interim dividend for 2023[87](index=87&type=chunk) - During the period, **4,798,000** shares were repurchased for the share award scheme, at a total consideration of **RMB 7.66 million**[87](index=87&type=chunk) [Compliance with Corporate Governance Code](index=43&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) During the reporting period, the company largely complied with the Corporate Governance Code, with one deviation where the roles of Chairman and CEO are held by the same individual, Mr. Wu Chengze; the Board believes this arrangement benefits Group management and maintains appropriate independence, and the Audit Committee has reviewed the interim results - The company has one corporate governance deviation: the roles of Chairman and Chief Executive Officer are combined and held by Mr. Wu Chengze[88](index=88&type=chunk)[89](index=89&type=chunk) - The Audit Committee, comprising three independent non-executive directors, has reviewed these interim results[91](index=91&type=chunk) [Changes in Directors' Biographical Details under Rule 13.51B(1) of the Listing Rules](index=45&type=section&id=Changes%20in%20Directors%27%20Biographical%20Details%20under%20Rule%2013.51B(1)%20of%20the%20Listing%20Rules) During and after the reporting period, the company's Board of Directors underwent several changes, including Mr. Guo Shunshun's resignation as executive director, the election of Mr. Ding Chunlong and Mr. Tang Yinghao as executive directors, and the retirement of Mr. Jiang Mingkuan and Mr. Su Bo as executive directors Director Change Details | Name | Change Details | | :--- | :--- | | Mr. Guo Shunshun | Resigned as Executive Director on June 1, 2023 | | Mr. Ding Chunlong | Elected as Executive Director on March 30, 2023 | | Mr. Tang Yinghao | Elected as Executive Director on March 30, 2023 | | Mr. Jiang Mingkuan | Retired as Executive Director on May 22, 2023 | | Mr. Su Bo | Retired as Executive Director on May 22, 2023 |

Financial Performance - In 2022, the company achieved revenue of RMB 1,562,940 thousand, a 21.3% increase from RMB 1,287,722 thousand in 2021[7] - Gross profit for 2022 was RMB 1,020,619 thousand, up 6.4% from RMB 958,828 thousand in 2021[7] - Net profit attributable to owners for the year was RMB 465,274 thousand, a decrease of 7.5% compared to RMB 500,713 thousand in 2021[7] - The company reported revenue and gross profit of RMB 1,562.9 million and RMB 1,020.6 million for the year ended December 31, 2022, representing an increase of approximately 37.0% and 21.9% year-on-year, respectively[11] - The net profit attributable to shareholders for the year was RMB 465.3 million, a decrease of 7.1% year-on-year, while the adjusted net profit was RMB 528.6 million[11] - The gross profit increased by 21.9% to approximately RMB 1,020.6 million, while the gross profit margin decreased from 73.4% in 2021 to 65.3% in 2022[18] User Engagement - Daily active users (DAU) grew by 60% year-on-year, while monthly active users (MAU) and paying users increased by 23.6% and 8.2% respectively[9] - Daily active users increased to 13,956,188, a year-on-year growth of 60.0%, and monthly active users reached 62,437,541, up 23.7%[11] - The number of paying players grew to 16,644,819, reflecting an 8.2% year-on-year increase[11] - The company reported a significant increase in user engagement, with a year-over-year growth of 25% in active users[19] Research and Development - R&D expenses rose by 82% to RMB 175 million, focusing on enhancing game play and developing diverse game categories[9] - Research and development investment totaled RMB 175.3 million during the reporting period, focusing on new game features and aesthetics[12] - The company plans to invest in R&D to introduce new game types, including hardcore and competitive games, in 2023[16] - The company is investing $10 million in research and development for new gaming technologies[19] Marketing and Expansion - Sales and marketing expenses rose to RMB 543.7 million, an increase of approximately 80.6% compared to the previous year[12] - The company aims to enhance its product competitiveness to capture market share in a challenging environment[9] - The company plans to launch new localized casual games targeting Southeast Asia and South America, which are expected to generate overseas revenue soon[12] - The company aims to expand its market share in 50 prefecture-level cities across provinces such as Zhejiang, Fujian, Anhui, and Jiangsu in 2023[16] - Future guidance indicates an expected revenue growth of 20% for the next fiscal year, driven by new product launches and market expansion[19] Financial Position - Total non-current assets increased to RMB 465,509 thousand in 2022 from RMB 275,768 thousand in 2021[8] - Current assets reached RMB 1,609,796 thousand, compared to RMB 1,453,169 thousand in the previous year[8] - Total equity rose to RMB 1,794,013 thousand in 2022, up from RMB 1,440,304 thousand in 2021[8] - As of December 31, 2022, the company had cash and cash equivalents of approximately RMB 1,163.3 million, compared to RMB 1,125.2 million as of December 31, 2021[30] - The company's capital expenditures for the year ended December 31, 2022, were approximately RMB 104.0 million, significantly up from RMB 29.6 million for the year ended December 31, 2021[33] Dividend Policy - The board proposed a dividend of approximately HKD 179.7 million for the year 2022, bringing total dividends since IPO to approximately HKD 434.7 million[13] - The company is committed to maintaining a sustainable dividend policy while balancing shareholder interests and long-term development[13] - The company proposed a final dividend of HKD 0.14 per share for the year ended December 31, 2022, totaling approximately HKD 179.68 million (equivalent to RMB 157.18 million)[104] Employee and Management - Employee costs increased to approximately RMB 224.8 million for the year ended December 31, 2022, compared to RMB 139.1 million in 2021, primarily due to salary increases and a rise in share-based compensation[38] - The company has a total of 686 full-time employees as of December 31, 2022, with significant roles in R&D, game development, and marketing[38] - The company has established a comprehensive human resources management system covering recruitment, compensation, performance, and employee welfare[176] - The company has implemented measures to enhance water efficiency, including the installation of automatic sensor faucets[170] Compliance and Governance - The company has complied with all relevant laws and regulations in China, obtaining all necessary licenses and approvals for operations as of December 31, 2022[50] - The board consists of nine directors, including six executive directors and three independent non-executive directors as of December 31, 2022[117] - The company has established mechanisms to ensure independent opinions are brought to the board, including annual reviews of board composition[123] - The company has confirmed compliance with the relevant regulations regarding related party transactions during the reporting period[88] Environmental, Social, and Governance (ESG) - The company has identified and assessed significant ESG risks, including climate change and product quality, to manage potential impacts on operations[157] - The company is committed to reducing greenhouse gas emissions through energy efficiency improvements and the introduction of energy-saving measures, with progress ongoing[167] - The company has established environmental goals to address climate change, with good progress recorded during the reporting period[167] - The company has implemented measures to optimize energy efficiency, including promoting carpooling and encouraging the use of public transport, aiming to reduce its carbon footprint[168] Risk Management - The company faces several risks related to contractual arrangements, including potential non-compliance with Chinese laws, which could lead to severe consequences such as the annulment of agreements[84] - The company has implemented measures to mitigate risks associated with contractual arrangements, including quarterly reviews by the board and monthly compliance reports from operational units[85] - The risk management and internal control team is responsible for identifying and monitoring risks, reporting findings directly to the board[135] Customer Service and Player Protection - The company has a dedicated customer service management system to handle player inquiries and complaints, ensuring high service quality through adequate training[192] - The company implements strict measures to protect players, especially minors, including real-name registration and game time limits[193] - Players are notified if they exceed 3 hours of gameplay, with earnings halved if they continue, and accounts are suspended after 10 hours of play in a day[193] - The company has established a comprehensive anti-gambling management system, prohibiting any gambling features in its games[194]

Financial Performance - For the year ended December 31, 2022, the company reported revenue from continuing operations of RMB 1,562.9 million, a 37.0% increase compared to RMB 1,140.6 million in 2021[2]. - The gross profit from continuing operations was RMB 1,020.6 million, reflecting a 21.9% increase from RMB 837.0 million in the previous year[2]. - The net profit attributable to the company's owners from continuing operations was RMB 465.3 million, a decrease of 7.1% compared to RMB 500.7 million in 2021[2]. - Sales revenue increased to RMB 1,562.9 million, up 37.0% from RMB 1,140.6 million in the previous year[12]. - Gross profit increased by 21.9% to RMB 1,020.6 million, with a gross margin decrease to 65.3% from 73.4%[14]. - Profit before tax decreased by approximately 21.2% from RMB 477.4 million for the year ended December 31, 2021, to RMB 376.0 million for the year ended December 31, 2022, with the profit margin dropping from 41.9% to 24.1%[19]. - Profit attributable to owners of the company decreased by approximately 7.1% from RMB 500.7 million for the year ended December 31, 2021, to RMB 465.3 million for the year ended December 31, 2022[22]. - Total comprehensive income for 2022 was RMB 456,812 thousand, down 8% from RMB 496,702 thousand in 2021[37]. - Basic earnings per share from continuing operations for 2022 was RMB 27.94, compared to RMB 32.74 in 2021, reflecting a decline of 14%[43]. User Metrics - Daily active users (DAUs) increased to 13,956,188, representing a 60.0% year-over-year growth from 8,720,755[4]. - Monthly active users (MAUs) rose to 62,437,541, marking a 23.7% increase from 50,492,103 in the previous year[4]. - The total number of active users reached 16,644,819, representing a year-on-year increase of 8.2%[6]. Revenue Sources - Revenue from self-developed mobile games was RMB 1,264.3 million, up 29.8% from RMB 974.2 million in 2021[3]. - Revenue from third-party mobile games surged by 363.0% to RMB 183.9 million from RMB 39.7 million[3]. - Third-party game distribution revenue amounted to RMB 183.9 million, a significant year-on-year growth of 363.0%[6]. - Advertising revenue for 2022 was RMB 1,448,199,000, an increase from RMB 1,013,910,000 in 2021, leading to total revenue of RMB 1,562,940,000 for 2022 compared to RMB 1,140,563,000 in 2021[51]. Expenses and Costs - Sales costs rose to RMB 542.3 million, reflecting a year-on-year increase of 78.7%[13]. - Sales and marketing expenses increased by approximately 80.6% from RMB 301.0 million for the year ended December 31, 2021, to RMB 543.7 million for the year ended December 31, 2022, mainly due to targeted advertising in key expansion areas such as Sichuan, Jiangsu, and Guangzhou[17]. - Administrative and other expenses rose by approximately 140.3% from RMB 91.6 million for the year ended December 31, 2021, to RMB 220.1 million for the year ended December 31, 2022, primarily due to increased employee costs related to R&D and subcontracting fees for new game development[18]. - The total employee cost for the group for the year ended December 31, 2022, was approximately RMB 224.8 million, an increase from RMB 139.1 million in 2021[35]. - The increase in employee costs was primarily due to a rise in salaries and other benefits by approximately RMB 60.2 million and an increase in share-based compensation by approximately RMB 21 million[35]. Taxation and Profitability - Income tax expenses decreased by approximately 60.0% from RMB 65.7 million for the year ended December 31, 2021, to RMB 26.3 million for the year ended December 31, 2022, with the effective tax rate dropping from 13.8% to 7.0%[21]. - The company's income tax expense for 2022 was RMB 26,326,000, significantly lower than RMB 65,672,000 in 2021[56]. - The effective corporate income tax rate for the company is 25%, but it benefits from a reduced rate of 15% due to its recognition as a "High-tech Enterprise" since 2021[55]. Strategic Initiatives - The company aims to expand from a leading local card game operator in China to a global casual competitive gaming platform[5]. - The company plans to expand its game portfolio and introduce localized board and card game variants to attract users in lower-tier cities[8]. - Increased investment in new media marketing is expected to enhance customer acquisition channels and reduce costs[9]. - Ongoing R&D investment will focus on launching new game types, including hardcore and competitive games, to enrich the game lineup[10]. - The company plans to continue expanding its mobile game development and operations in China, focusing on new product launches and market penetration strategies[46]. Investments and Assets - Non-current assets increased to RMB 495,509 thousand in 2022 from RMB 275,768 thousand in 2021, representing an increase of 80%[44]. - The company reported a significant increase in investments in associates, rising to RMB 186,545 thousand in 2022 from RMB 153,498 thousand in 2021, an increase of 21%[44]. - The company’s net asset value increased to RMB 1,794,013 thousand in 2022, up from RMB 1,440,304 thousand in 2021, reflecting a growth of 25%[45]. Corporate Governance - The company has complied with the corporate governance code, except for the separation of roles between the Chairman and CEO[82]. - The audit committee has confirmed that the financial statements comply with applicable accounting principles and have been adequately disclosed[85]. - No significant events affecting the group have occurred since the end of the reporting period[82].

Financial Performance - For the six months ended June 30, 2022, the company's revenue and gross profit were RMB 781.8 million and RMB 552.1 million, representing an increase of approximately 63.8% and 57.1% compared to the same period last year[11]. - The adjusted net profit for the same period was approximately RMB 391.6 million, an increase of about 24.1% from approximately RMB 315.6 million for the six months ended June 30, 2021[11]. - The company's revenue for the six months ended June 30, 2022, was approximately RMB 781.8 million, an increase of 63.8% compared to RMB 477.4 million for the same period in 2021[15]. - Daily active users (DAUs) increased to 10,369,762, representing a growth of 30.4% year-over-year, while monthly active users reached 60,544,023, up 18.6%[12]. - The number of paying players rose to 9,039,561, marking a 44.0% increase compared to the previous year[12]. - The total comprehensive income for the period was RMB 372.3 million, compared to RMB 306.3 million in the same period of 2021, indicating an increase of approximately 21.5%[39]. - The company reported a profit attributable to owners of RMB 380,299,000 for the six months ended June 30, 2022, compared to RMB 310,699,000 for the same period in 2021, representing a year-over-year increase of 22.4%[40]. - Basic earnings per share from continuing and discontinued operations increased to RMB 30.56, up from RMB 24.92 in the previous year, reflecting a growth of 22.5%[40]. Research and Development - The company significantly increased its R&D investment to approximately RMB 72.5 million, a year-on-year increase of 149.1%[11]. - The company is focusing on R&D investments to enrich its game pipeline and expand into overseas markets[14]. - Employee costs for the first half of 2022 totaled approximately RMB 86.8 million, up from RMB 44.5 million in the same period of 2021, reflecting an increase of about 94.9%[35]. Marketing and User Engagement - The company confirmed advertising revenue of RMB 59.7 million during the reporting period, with user engagement through ads incentivized by virtual rewards in games[11]. - Daily Active Users (DAUs) and player engagement significantly improved due to strategic partnerships with new media channels such as Douyin and Kuaishou[11]. - Marketing expenses surged by approximately 221.2% to RMB 216.6 million in 2022 from RMB 67.4 million in 2021, aimed at enhancing brand exposure in key regions[12]. - The company aims to increase market share in 50 cities across Zhejiang, Fujian, Anhui, and Jiangsu provinces in the second half of 2022[14]. Game Development and Portfolio Expansion - The company successfully launched new casual games, including "Encountering Meowks," which has received official game approval and is expected to be released within 2022[11]. - The company continues to innovate and introduce new elements in its existing Mahjong and Poker games to enhance player experience[11]. - The company is focused on diversifying its game portfolio through ongoing development of various game projects[11]. - The company plans to expand its game portfolio by introducing localized board and card games to attract users in lower-tier cities[14]. Financial Position and Cash Flow - Cash and cash equivalents amounted to approximately RMB 1,193.8 million as of June 30, 2022, up from RMB 1,125.2 million as of December 31, 2021[29]. - The company had no short-term or long-term bank borrowings as of June 30, 2022, except for lease liabilities totaling RMB 22.8 million[30]. - The net cash generated from operating activities was RMB 79,652,000, a decrease of 64.7% compared to RMB 225,605,000 in the same period last year[45]. - The company reported a net cash outflow from financing activities of RMB 20,068,000, compared to a net cash outflow of RMB 1,380,000 in the previous year[45]. Shareholder and Equity Information - The company repurchased a total of 9,478,000 shares at a total cost of RMB 13,902,000 (HKD 16,960,000) during the six months ended June 30, 2022[43]. - The company has a stock option plan that allows for the issuance of up to 10% of the total shares outstanding at the time of listing, which is 125,600,000 shares[94]. - The total number of stock options granted and yet to be exercised cannot exceed 30% of the total issued shares at any time[127]. - The share reward plan allows for a maximum of 3% of the total issued shares to be allocated in any financial year, with a limit of 1% in any 12-month period[130]. Corporate Governance and Compliance - The company has complied with the corporate governance code during the reporting period, with a slight deviation regarding the roles of the chairman and CEO[134]. - The audit committee has reviewed the unaudited interim results and confirmed compliance with applicable accounting principles[137]. Future Outlook - The company aims to evolve from a leading local card game operator in China to a global casual competitive gaming platform[11]. - The company plans to continue expanding its market presence and investing in new technologies to drive future growth[40].

Financial Performance - The company achieved a revenue of RMB 1.287 billion in 2021, representing a year-on-year growth of 66.8%[5] - Adjusted net profit for the year was RMB 511.55 million, an increase of 22.3% compared to the previous year[5] - The company reported a revenue of approximately RMB 1,287.7 million and a gross profit of RMB 958.8 million for the year ended December 31, 2021, representing an increase of approximately 66.8% and 61.9% year-over-year, respectively[9] - The company's profit attributable to owners increased by approximately 28.1% to RMB 500.7 million from RMB 390.8 million in 2020[22] - The company reported a net profit of RMB 500,713,000 for the year ended December 31, 2021, compared to RMB 497,139,000 in the previous year, representing an increase of approximately 0.35%[153] - Total revenue for the year ended December 31, 2021, was RMB 1,287,722 thousand, representing a 66.5% increase from RMB 772,034 thousand in 2020[146] - Gross profit for 2021 was RMB 958,828 thousand, up from RMB 592,088 thousand in 2020, indicating a gross margin improvement[146] User Engagement and Growth - The company reported 9.06 million daily active users (DAU), a growth of 20.4% year-on-year, and 15.48 million paying users, which is a significant increase of 176.7%[7] - The number of Daily Active Users (DAUs) increased to 9,055,550, a growth of 20.4% compared to the previous year[10] - The number of paying users reached 15,475,277, marking a significant increase of 176.7% year-over-year[10] - The company reported a significant increase in user engagement, with a year-over-year growth of 25% in active users[33] - User retention rates improved to 80%, up from 70% last year, indicating stronger customer loyalty[34] Research and Development - Research and development expenses increased by 61.6% in 2021, focusing on enhancing game development and technical infrastructure[7] - The company invested approximately RMB 97 million in research and development in 2021, a 61.7% increase from RMB 60 million in 2020[10] - The company is investing $10 million in research and development for innovative gaming technologies over the next two years[37] Market Expansion and Strategy - The company plans to expand its game offerings by launching more casual games and localizing gameplay variants to cover the entire country[11] - The company plans to expand its overseas product offerings in regions such as Hong Kong, Macau, Taiwan, Europe, the United States, Southeast Asia, and the Middle East in 2022[11] - The company plans to explore opportunities for strategic acquisitions or partnerships with local small and medium-sized mobile game developers to enhance game-related resources and operational capabilities[31] - The company plans to continue implementing growth strategies to solidify its leading position in the localized mobile card game industry in China for 2022[47] Financial Position and Equity - The total equity of the company reached RMB 1.440 billion by the end of 2021, up from RMB 949.35 million in 2020[6] - As of December 31, 2021, the company had cash and cash equivalents of approximately RMB 1,125.2 million, an increase from RMB 732.7 million as of December 31, 2020[26] - The company's total assets reached RMB 1,487,074 thousand, compared to RMB 956,453 thousand in 2020, marking a substantial growth in the asset base[148] - The company reported a net asset value of RMB 1,211,306 thousand, significantly higher than RMB 728,850 thousand in the previous year[148] Expenses and Costs - Sales costs rose by approximately 82.8% to about RMB 328.9 million in 2021 from RMB 179.9 million in 2020, primarily due to increased commissions paid to third-party distribution channels[14] - Selling and marketing expenses surged by approximately 162.4% to RMB 317.3 million, driven by increased advertising efforts[18] - Administrative expenses rose by approximately 84.0% to RMB 99.3 million, primarily due to increased employee benefits and professional service fees[19] Corporate Governance - The board consists of nine directors, including five executive directors and four independent non-executive directors[108] - The company has adopted the corporate governance code and has complied with applicable provisions during the reporting period[105] - The board is collectively responsible for guiding and supervising the company's affairs, including strategy formulation and monitoring execution, as well as ensuring effective internal controls and risk management systems[112] Shareholder Information - The company has maintained a public float of over 25% of its issued share capital as of the report date[102] - The company has not purchased, sold, or redeemed any of its listed securities during the year ended December 31, 2021[101] - The company’s independent auditor confirmed that there are no annual caps required for related party transactions for the year ended December 31, 2021[79] Risks and Compliance - The company faces several risks related to contractual arrangements, including potential non-compliance with Chinese laws, which could lead to severe consequences such as the annulment of agreements[75] - The introduction of the new Foreign Investment Law creates uncertainties regarding its interpretation and impact on the company's structure and operations[75] - The group primarily depends on self-generated user traffic but also utilizes various third-party game distribution channels, including major mobile manufacturers and online app stores, to promote its games[46] Revenue Recognition - The company recognizes revenue upon the transfer of control of goods or services to customers, with performance obligations being fulfilled at a point in time or over time depending on specific criteria[166] - The group’s revenue from self-developed mobile games comes from virtual token and private game room card sales, with revenue recognized when customers use these tokens and cards[169] - Deferred revenue is recorded as a liability until customers consume the virtual tokens and private game room cards, reflecting the group's responsibility to provide services[169] Charitable Contributions - The company has committed RMB 20 million in charitable donations in response to social responsibilities during various crises, including the COVID-19 pandemic[8] - The company made charitable donations of approximately RMB 5 million during the reporting period[97]

Financial Performance - For the six months ended June 30, 2021, the company's revenue and gross profit were RMB 557.4 million and RMB 422.7 million, representing an increase of approximately 44.0% and 44.8% compared to the same period last year[7]. - The adjusted net profit for the six months was approximately RMB 315.6 million, a rise of about 45.1% compared to RMB 217.6 million for the same period in 2020[7]. - The company's revenue for the six months ended June 30, 2021, was approximately RMB 557.4 million, an increase of 44.0% compared to RMB 387.2 million for the same period in 2020[11]. - The gross profit rose by 44.8% to approximately RMB 422.7 million, with a slight increase in gross margin from 75.4% to 75.8%[13]. - The net profit attributable to the company's owners increased by approximately 54.0% to RMB 310.7 million for the six months ended June 30, 2021[20]. - The net profit for the period was RMB 310,089 thousand, up 54% from RMB 201,719 thousand in the previous year[34]. - Basic earnings per share increased to RMB 24.92 from RMB 16.23, representing a 53% growth[34]. User Engagement - The Daily Active Users (DAUs) increased to 7,950,871, a growth of 32.3% year-over-year, while the number of paying users reached 6,276,333, up 30.3% from the previous year[8]. - Daily Active Users (DAUs) significantly increased due to enhanced game development and promotional activities, contributing to higher player engagement and in-game purchases[11]. Game Development and Offerings - The company launched 11 new Mahjong game variants and 8 new Poker game variants in the first half of 2021, expanding its game offerings significantly[7]. - Continued focus on improving and upgrading existing casual games, particularly fishing games, to enhance player experience and retention[9]. - The company is committed to developing HTML5 versions of its games and other potential mini-programs to connect with various HTML5-supported social platforms and websites[9]. Marketing and Advertising - The company plans to further enhance its advertising revenue by collaborating with other platform operators and optimizing ad placements within its games[9]. - Sales and marketing expenses increased by approximately 40.8% to RMB 75.5 million, primarily due to heightened marketing efforts to attract and retain players[16]. - The company plans to invest in marketing activities and partnerships with international game distribution channels to expand its overseas market presence[10]. Research and Development - Significant investments were made in research and development, with total expenses related to technical staff benefits, server costs, and outsourced development amounting to RMB 48.5 million for the first half of 2021[9]. - The group has been utilizing a tax policy allowing for a 175% deduction on R&D expenses, which has positively impacted its taxable income calculations[50]. Financial Position - As of June 30, 2021, the group had cash and cash equivalents of approximately RMB 955.5 million, up from RMB 732.7 million as of December 31, 2020[25]. - The capital expenditure for the six months ended June 30, 2021, was approximately RMB 16.5 million, an increase from RMB 9.7 million for the same period in 2020[27]. - The group had no short-term or long-term bank borrowings as of June 30, 2021, and the debt-to-asset ratio was zero[26]. - The total employee costs for the six months ended June 30, 2021, were approximately RMB 46.8 million, a decrease from RMB 50.2 million in the same period of 2020[30]. - The group aims to utilize internal resources and sustainable growth for funding its expansion and business operations[24]. Strategic Acquisitions - The company is actively seeking acquisition opportunities, having acquired a 40% stake in Jilin Xinyue Network Technology Co., which expanded its local market presence[10]. - The group plans to explore opportunities for strategic acquisitions or collaborations with local small and medium-sized mobile game developers to enhance game-related resources[29]. Share Incentive Plan - The company issued 79,276,000 new shares under the share incentive plan, representing 6.31% of the total shares issued[73]. - The company aims to retain and incentivize employees through the share incentive plan, which is effective for 10 years from June 6, 2019[71]. - The company confirmed that 50% of the shares granted under the share incentive plan will vest on the listing date, with the remaining 50% vesting quarterly thereafter[74]. Corporate Governance - The board believes that having the same person serve as both chairman and CEO is beneficial for the company's management[110]. - The company has complied with the corporate governance code during the reporting period, with a noted exception regarding the separation of roles for chairman and CEO[110]. Future Outlook - The company will continue to leverage its game development experience in China to launch games suitable for overseas players in various regions[10]. - The company anticipates that Jilin Xinyue's forecasted profits will not fall below the guaranteed profits for the years ending December 31, 2021, and 2022[59].

Financial Performance - The company's revenue for the year ended December 31, 2020, was approximately RMB 772.0 million, an increase of about 36.6% compared to RMB 564.9 million in 2019[7]. - Gross profit for the same period was approximately RMB 592.1 million, reflecting a growth of about 33.9% from RMB 442.3 million in 2019[10]. - Adjusted net profit for 2020 was approximately RMB 417.8 million, up 36.2% from RMB 306.8 million in 2019[10]. - The company reported a revenue of approximately RMB 772.0 million and a gross profit of RMB 592.1 million for the year ended December 31, 2020, representing an increase of about 36.6% and 33.9% year-over-year, respectively[12]. - The adjusted net profit attributable to the company's owners for the year ended December 31, 2020, was approximately RMB 417.8 million, an increase of 36.2% from approximately RMB 306.8 million in 2019[29]. - The company's profit before tax increased by approximately 86.7% to about RMB 460.6 million, representing 59.7% of total revenue[24]. - Net profit attributable to the company's owners rose by approximately 89.0% to about RMB 390.8 million[26]. - The company reported a total comprehensive income of RMB 388,752 thousand for 2020, compared to RMB 206,788 thousand in 2019, showing an increase of 88.0%[195]. - The company’s net assets increased to RMB 949,352 thousand in 2020 from RMB 616,577 thousand in 2019, reflecting a growth of 54.0%[196]. User Engagement and Growth - The total number of registered players reached 259,793,180, a 59.0% increase from the previous year[10]. - Daily Active Users (DAUs) increased to 7,521,912, representing a growth of 33.3% compared to 2019[10]. - The number of paying players reached 5,592,374, an increase of 35.0% year-over-year[10]. - Significant growth in DAUs was noted in central provinces such as Shaanxi, Henan, Shandong, and Hebei[10]. - The company reported a significant increase in user engagement, with a year-over-year growth of 25% in active users[39]. Marketing and Strategic Plans - The company plans to strengthen its regional marketing efforts in 2021, particularly in local provinces to increase DAUs and market share[10]. - Focus will be on consolidating market share in Jiangsu, Zhejiang, and Shanghai in 2021[10]. - In 2021, the company plans to enhance advertising revenue by collaborating with platform operators to integrate in-game advertising slots[14]. - The company aims to expand its game portfolio and improve player retention by developing additional localized game variants and increasing its market presence in regions like Jiangsu, Zhejiang, and Shanghai[14]. - The company plans to launch three new game titles in the upcoming year, aiming to capture a larger market share[39]. Financial Management and Investments - As of December 31, 2020, the company had cash and cash equivalents of approximately RMB 732.7 million, up from RMB 502.4 million as of December 31, 2019[31]. - The company's capital expenditure for the year ended December 31, 2020, was approximately RMB 160.7 million, significantly higher than RMB 48.2 million for the year ended December 31, 2019[33]. - The company is actively seeking acquisition opportunities, including a 40% stake acquisition in Jilin Xinyue Network Technology Co., Ltd. for RMB 150 million[15]. - The company intends to fund its expansion and operations through internal resources and sustainable growth[30]. - The company has completed a strategic acquisition of a smaller gaming studio for $5 million to enhance its product offerings[39]. Corporate Governance and Compliance - The company is committed to high standards of corporate governance to protect shareholder interests and enhance corporate value[114]. - The board consists of nine directors, including five executive directors and four independent non-executive directors[119]. - Independent non-executive directors ensure that the company's regulatory reports meet high standards and maintain balance within the board through effective independent judgment[124]. - The company has maintained compliance with relevant Chinese laws and regulations, obtaining all necessary licenses and approvals for its operations[48]. - The company has established a board diversity policy to enhance the skills, knowledge, and experience of board members, ensuring no discrimination based on race, age, gender, or religion[132]. Environmental and Social Responsibility - The company reported a total greenhouse gas emissions of 123.05 tons CO2 equivalent for the year 2020, with direct emissions from vehicles at 12.59 tons and indirect emissions from electricity at 110.46 tons[155]. - The company has committed to replacing all existing electronic equipment with energy-efficient devices by the end of 2021, contributing to its sustainability goals[154]. - The company emphasizes the importance of effective communication with shareholders to enhance investor relations and understanding of business performance and strategy[144]. - The company promotes resource efficiency through measures such as automatic shutdown of electronic devices after hours and monthly monitoring of utility usage[159]. - The company has implemented measures to reduce water usage, including installing automatic faucets in restrooms[158]. Risks and Challenges - The group faces risks related to player retention and attraction, as well as the performance of its existing game portfolio[50]. - The company faces several risks related to contractual arrangements, including potential non-compliance with Chinese laws, which could lead to severe consequences such as the annulment of agreements[82]. - The implementation of the new Foreign Investment Law introduces uncertainties regarding its interpretation and impact on the company's structure and operations[82]. - The group relies on third-party payment providers, primarily WeChat Pay and Alipay, to facilitate in-game purchases, which exposes the group to risks associated with payment transmission stability[51]. Shareholder Information - The company declared a final dividend of RMB 0.1593 per ordinary share, equivalent to HKD 0.1892, subject to shareholder approval[103]. - The company has maintained a public float of over 25% as required by listing rules[110]. - The company has confirmed no related party transactions that require independent shareholder approval as of December 31, 2020[86]. - The company’s major shareholders include Beijing Chuangxin Yizhou Investment Management Co., Ltd., which also holds 72,312,000 shares, equating to 5.76% of the equity[95].

Financial Performance - For the year ended December 31, 2019, the company's revenue was approximately RMB 565.0 million, representing an increase of about 28.5% compared to the previous year[10]. - The gross profit for the same period was approximately RMB 442.3 million, reflecting a growth of approximately 31.5% year-over-year[10]. - The adjusted net profit, excluding share-based payment expenses of approximately RMB 82.2 million and listing expenses of RMB 17.8 million, was about RMB 306.8 million, an increase of approximately 32.1% from RMB 232.2 million in 2018[10]. - The company reported a revenue of approximately RMB 565.0 million and a gross profit of approximately RMB 442.3 million for the year ended December 31, 2019, representing an increase of about 28.5% and 31.5% respectively compared to the previous year[13]. - The total profit and comprehensive income for the year decreased by approximately 4.5% from RMB 216.5 million in 2018 to RMB 206.8 million in 2019[28]. - The profit margin declined from approximately 49.3% in 2018 to 36.6% in 2019, primarily due to increased costs and expenses related to share-based payments and significant business growth[28]. - The company’s net profit for the year ended December 31, 2019, was RMB 384,755 thousand, an increase from RMB 177,967 thousand in 2018, representing a growth of 116.2%[197]. - The company reported a total comprehensive income of RMB 206,788 thousand for the year 2019, compared to RMB 204,091 thousand in 2018, indicating a slight increase of 0.8%[197]. User Metrics - The total registered players reached 163,403,629 as of December 31, 2019, marking an increase of approximately 68.3% from the previous year[10]. - Daily Active Users (DAUs) increased to 5,644,751, up approximately 8.4% compared to the previous year[10]. - The number of paying players reached 4,142,772, which is an increase of approximately 28.4% year-over-year[10]. - Following the COVID-19 outbreak in December 2019, the group experienced a significant increase in DAUs and sales of virtual tokens and private game room cards in the first two months of 2020 due to more people staying at home[58]. Assets and Equity - Non-current assets amounted to RMB 79.0 million as of December 31, 2019, compared to RMB 17.3 million in 2018[8]. - Current assets increased to RMB 649.7 million in 2019 from RMB 279.5 million in 2018[8]. - The total equity of the company was RMB 616.6 million as of December 31, 2019, compared to RMB 212.7 million in 2018[8]. - Cash and cash equivalents as of December 31, 2019, amounted to approximately RMB 502.4 million, up from RMB 218.2 million in 2018[33]. - The company’s total equity increased to RMB 616,577,000 in 2019 from RMB 212,735,000 in 2018, representing a growth of 200.0%[196]. Expenses and Costs - Sales and marketing expenses increased by approximately 110.5% to about RMB 98.2 million in 2019, driven by higher advertising and in-game promotion expenditures[23]. - Administrative expenses rose by approximately 41.2% to about RMB 36.8 million in 2019, mainly due to an increase in personnel and professional service fees[24]. - The total employee cost for the year ended December 31, 2019, was approximately RMB 159.1 million, up from RMB 60.2 million in 2018, representing an increase of 164%[38]. - The increase in employee costs was mainly due to share-based payment expenses of approximately RMB 82.2 million[38]. Game Development and Offerings - The company successfully launched 38 new Mahjong variants and 14 new Poker variants in 2019, expanding its game offerings significantly[13]. - The company plans to launch nearly 100 new localized Mahjong variants, 35 new poker variants, and 13 new casual games in 2020 to expand its business coverage[18]. - The company aims to maintain its leading position in the localized mobile card game market in China, leveraging technological advancements and increasing internet connectivity[13]. Advertising and Revenue Streams - The company confirmed advertising revenue of approximately RMB 61.8 million in 2019, with promotional activities leading to a decrease of about 8.8% in revenue from private game room cards compared to the same period in 2018[13]. - Advertising revenue accounted for approximately 10.9% of total revenue in 2019, with virtual currency sales, private game room cards, and third-party mobile game distribution contributing approximately 47.0%, 34.7%, and 7.4% respectively[18]. - The company plans to further enhance advertising revenue by collaborating with other platform operators to integrate in-game advertising slots and utilizing data analytics to optimize ad placement strategies[15]. Corporate Governance - The company has adopted the corporate governance code as per the listing rules, ensuring compliance since the listing date[119]. - The board consists of eight directors, including five executive directors and three independent non-executive directors as of December 31, 2019[124]. - All independent non-executive directors have confirmed their independence according to the listing rules[125]. - The company maintains high standards of corporate governance to protect shareholder interests and enhance corporate value[119]. Environmental and Social Responsibility - The company has implemented measures to improve resource efficiency, including training on water and electricity conservation and promoting double-sided printing[162]. - The company strictly adheres to all relevant workplace health and safety laws, including the Labor Law of the People's Republic of China, ensuring a safe working environment for employees[167]. - The company promotes a paperless office and encourages employees to reduce paper usage, aligning with its waste management principles[160]. - The company has established a supplier code of conduct to ensure compliance with environmental, social, and governance standards, requiring suppliers to adhere to ethical business practices[171]. Strategic Plans and Future Outlook - The company is actively seeking potential collaborations or acquisition opportunities with small to medium-sized mobile game developers to enhance its game-related resources and operational capabilities[13]. - The company believes the impact of the COVID-19 pandemic on its business will be limited, as it has seen a significant increase in DAUs and sales of virtual tokens and private game room cards in the first two months of 2020[15]. - In 2020, the group plans to continue implementing growth strategies to solidify its leading position in the localized mobile card game industry in China[59].