朋友早上好欢迎各位参加网络网络有限公司2024年年度业绩发布会 业绩发布会将会透过路远舟 富途 万德平台同步直播业绩PPT也已经上载至网龙的投资者关系网站ir.netdragon.com 新闻及活动栏目内的网上录播一栏请各位登录下载 大家好 谢谢现在我们就把时间交给梁博士 有请OK thank youIt's that time of the year againThank you for joining our call wherever you areSo good morning, good evening, good afternoon and all thatEspecially what we're going to do todayIs that we're not only taking you through what we have done in 2024But also look forward to 2025I think there's some exciting strategies that we haveWe have our press release 通过这次会议,您会听 ...

Financial Performance - NetDragon Websoft Holdings Limited's overall revenue for 2024 decreased by 14.8% year-on-year to RMB 6 billion[4] - The gaming and application services segment generated revenue of RMB 3.94 billion in 2024, a decline of 6.0% year-on-year[5] - Revenue for 2024 was RMB 6.047 billion, a decrease of 14.8% compared to RMB 7.101 billion in 2023[14] - Gross profit for 2024 was RMB 3.942 billion, down 10.4% from RMB 4.398 billion in 2023[14] - Operating profit for 2024 was RMB 745 million, a decrease of 9.3% from RMB 821 million in 2023[14] - The Mynd.ai business generated RMB 2,106 million in revenue, indicating a significant contribution to overall performance[33] - Revenue from Mynd.ai business was RMB 2.106 billion, a decrease of 27.6% from RMB 2.910 billion in 2023[13] - The revenue from educational services amounted to RMB 526 million, reflecting the company's diversification in service offerings[29] - The revenue from prepaid game cards was RMB 3,425 million, while sales of educational equipment and related products generated RMB 2,015 million[29] - The company reported a profit before tax of RMB 756 million for the year, with a segment profit of RMB 576 million[33] Profitability and Cash Flow - The company achieved a pre-tax profit of RMB 756 million in 2024, reflecting a year-on-year growth of 19.1%[4] - Net cash increased by 13.3% year-on-year to RMB 2.1 billion, with stable operating cash flow of RMB 1.1 billion[4] - Operating cash flow decreased from RMB 1,115 million in 2023 to RMB 1,052 million in 2024, indicating a decline in cash generated from operations[19] - Cash balance at the end of 2024 was RMB 541 million, down from RMB 650 million at the end of 2023[11] - Financing activities generated a net cash inflow of RMB 130 million in 2024, compared to a net cash outflow of RMB 1,695 million in 2023[20] - The company’s investment activities resulted in a net cash outflow of RMB 875 million in 2024, slightly improved from RMB 915 million in 2023[19] Dividends and Shareholder Returns - The company plans to pay a final dividend of HKD 0.50 per ordinary share for 2024, a 25.0% increase year-on-year[4] - The company announced a final dividend of HKD 0.50 per share, up from HKD 0.40 per share in 2023, pending shareholder approval[12] - The board proposed a final dividend of HKD 0.50 per share for the year ending December 31, 2024, totaling approximately RMB 246 million, subject to shareholder approval[70] Assets and Liabilities - Total liabilities increased from RMB 4,045 million in 2023 to RMB 4,414 million in 2024, primarily due to an increase in bank loans from RMB 1,033 million to RMB 1,729 million[18] - The company’s net asset value decreased from RMB 6,174 million in 2023 to RMB 5,866 million in 2024, indicating a reduction in overall equity[18] - The company’s total assets decreased from RMB 6,337 million in 2023 to RMB 6,018 million in 2024, indicating a contraction in the asset base[18] - The asset-liability ratio rose to 0.29 in 2024 from 0.17 in 2023, indicating a significant increase in financial leverage[47] - The company’s net current assets improved to RMB 1,272 million in 2024 from RMB 945 million in 2023, suggesting better liquidity[47] Workforce and Restructuring - As of December 31, 2024, the total number of employees decreased to 4,593 from 5,984 a year earlier, representing a reduction of approximately 23.3%[48] - The company is currently undergoing a restructuring process, which has led to the reduction in workforce across various departments[48] - Research and Development (R&D) staff decreased to 2,505 from 3,021, a decline of about 17.0%[48] - Sales and Marketing personnel reduced to 669 from 817, reflecting a decrease of approximately 18.1%[48] - Production staff saw a significant drop to 563 from 1,264, indicating a reduction of around 55.5%[48] - The company reported a significant reduction in administrative staff, which decreased to 856 from 882, a decline of approximately 2.9%[48] Share Option Plans - The company adopted the 2024 Share Option Plan on June 6, 2024, which allows for a total of 53,126,253 options and reward shares to be granted, equivalent to 10% of the company's shares[56] - The 2024 Share Option Plan is set to be effective for ten years from June 6, 2024, and no options have been granted under this plan as of December 31, 2024[58] - The 2018 Share Option Plan and the 2008 Share Option Plan were terminated on June 6, 2024, and May 24, 2018, respectively, but unexercised options from these plans remain valid[58] - The company has a total of 5,300,000 options under the 2018 Share Option Plan, all of which are unexercised as of December 31, 2024[59] - The company’s share option plans are designed to incentivize employees and service providers based on their contributions to the group[58] Corporate Governance and Compliance - Best Education has complied with the corporate governance code throughout the review year[76] - The audit committee has reviewed the consolidated financial results for the year ending December 31, 2024, and confirmed compliance with applicable accounting standards and regulations[78] - The audit committee consists of three independent non-executive directors, with Li Shengzong serving as the chairman[78] - The company has adopted a code of conduct for securities transactions that meets or exceeds the standards set out in the listing rules[69] Strategic Initiatives - The company signed a term sheet with Beijing Zhongke Wenge Technology Co., Ltd. for exclusive cooperation in promoting AI services, with a potential investment of RMB 75 million[7] - The company is actively developing "AI-native" games and interactive educational games, aiming to capture new business opportunities in the AI era[8] - The newly launched ActivPanel 10 received positive feedback, enhancing the company's market competitiveness[10] - A merger agreement was established on April 18, 2023, involving the registration of eLMTree as a wholly-owned subsidiary of Best Education, transferring various educational businesses to eLMTree[65] - A special dividend of approximately HKD 71.7 million was paid to shareholders as a physical distribution of shares held indirectly through NetDragon BVI[68]

Financial Performance - Revenue for the first half of 2024 was RMB 3.3 billion, a decrease of 10.3% year-on-year[4] - Revenue from game and application services was RMB 2.12 billion, accounting for 64.3% of total revenue, a decrease of 0.8% year-on-year[4] - Revenue from Mynd.ai was RMB 1.18 billion, accounting for 35.7% of total revenue, a decrease of 23.5% year-on-year[4] - Gross profit was RMB 2.2 billion, a decrease of 3.8% year-on-year[4] - Operating profit was RMB 634 million, a decrease of 9.3% year-on-year[4] - Non-GAAP operating profit was RMB 640 million, a decrease of 7.5% year-on-year[4] - Profit attributable to owners of the company was RMB 400 million, a decrease of 20.0% year-on-year[4] - Mynd.ai reported an operating loss of RMB 111 million, an increase of 131.3% year-on-year[4] - Overall game revenue for the first half of 2024 reached RMB 1.86 billion, a decrease of 3.0% year-on-year, accounting for 87.8% of game and application service revenue[9] - The flagship IP "Magic Domain" generated revenue of RMB 1.69 billion, with a year-on-year decline of 3.8% due to external factors and preparations for a new game launch[9] - The "Honor of Kings" IP saw a revenue increase of 29.6% year-on-year, supported by significant gameplay improvements and successful esports events[10] - The "Conquer" IP experienced a 6.6% year-on-year revenue growth, attributed to major content updates and innovative gameplay[10] - The company reported a total of RMB 2,121 million from game and application services, compared to RMB 2,139 million in the previous year, showing a slight decline[89] - The company reported a profit attributable to owners of RMB 500 million for the six months ended June 30, 2024[68] - The total comprehensive income for the period was RMB 513 million, compared to RMB 388 million in the same period last year, representing a growth of 32.2%[68] Dividend and Shareholder Information - The company declared an interim dividend of HKD 0.40 per ordinary share for the six months ended June 30, 2024[4] - The company plans to distribute an interim dividend of HKD 0.4 per share for the six months ending June 30, 2024, compared to an interim special dividend and interim dividend of HKD 1.0 and HKD 0.4 per share in 2023[38] - As of June 30, 2024, the company's major shareholder DJM Holding Ltd. holds 191,078,100 shares, representing 35.97% of the issued share capital[46] - Liu Dejian, a director, holds 216,384,938 shares, which accounts for 40.73% of the company's shares[41] - The company has a total of 5,779,040 shares held by director Liang Nianjian, representing 1.09%[41] - Chen Hongzhan, another director, owns 11,197,019 shares, which is 2.11% of the total shares[42] - The company has a total of 43,733,320 shares held by International Data Group, representing 8.23%[46] - The company has a total of 41,374,375 shares held by Zhou Quan, representing 7.79%[46] - The company has a total of 34,437,519 shares held by the late Zheng Hui, representing 6.48%[46] - Liu Luoyuan holds 4.37% of the shares, with a total of 21,541,819 shares held by certain trust beneficiaries[43] Debt and Financial Position - As of June 30, 2024, total bank loans and other debts amounted to RMB 1.967 billion, an increase from RMB 1.647 billion as of December 31, 2023[17] - The debt-to-equity ratio was 0.21 as of June 30, 2024, up from 0.17 at the end of 2023[20] - Total equity was approximately RMB 6.28 billion as of June 30, 2024, compared to RMB 6.17 billion at the end of 2023[21] - The company held cash and cash equivalents of RMB 4.94 billion and established sufficient available credit lines[12] - The company’s total liabilities decreased to RMB 4,052 million from RMB 4,045 million, showing a slight reduction[67] - The company’s total liabilities as of June 30, 2024, were RMB 613 million, unchanged from the previous reporting period[83] - The company’s current liabilities decreased to RMB 1,390 million as of June 30, 2024, from RMB 1,518 million as of December 31, 2023[118] Employee and Talent Management - As of June 30, 2024, the total number of employees in the group is 6,123, an increase from 5,984 in December 2023 and 5,207 in June 2023[27] - The group successfully attracted 294 new talents in the first half of 2024, including 77 senior elite talents, enhancing team strength significantly[28] - The company has implemented a digital transformation strategy in human resources, focusing on AI-enabled management and data-driven decision-making[29] - The company is committed to continuous improvement in human resource allocation and has established internship bases to nurture potential future stars[28] - The company has introduced a certification system for employees to enhance their skills and benefits, with a focus on task-oriented management[33] Research and Development - Research and development expenses rose to RMB 696 million, compared to RMB 641 million in the previous year, indicating a focus on innovation[64] - The company plans to continue its focus on research and development projects in China, supported by government subsidies[99] Market Expansion and Product Development - The company continues to explore new strategies for market expansion and product development, although specific details were not disclosed in the report[84] - The company plans to launch four to five new games based on existing flagship IPs and new IPs within the next six to nine months[11] - The new game "Code - Alpha" is expected to launch in multiple countries in the second half of the year, contributing to revenue growth[8] Corporate Governance and Compliance - The company has complied with the corporate governance code throughout the review period, ensuring adherence to the standards set forth in the listing rules[59] - The audit committee, consisting of three independent non-executive directors, reviewed the interim financial results for the six months ended June 30, 2024, confirming compliance with applicable accounting standards[59] Financial Assets and Liabilities - The company’s financial assets and liabilities are measured at fair value, categorized into three levels based on the observability of inputs used in the valuation[139] - Financial assets measured at fair value through profit or loss totaled RMB 255 million as of June 30, 2024, compared to RMB 205 million as of January 1, 2024, indicating an increase of 24.39%[145] Related Party Transactions - The group incurred related party transactions totaling RMB 4 million for services provided to Fuzhou 851 during the period, compared to RMB 6 million for the same period last year[153] - The group has ongoing related party transactions, including a lease agreement with Fuzhou 851 for office property in China[153]

Revenue Performance - Domestic game revenue increased by 2.1% year-on-year to RMB 1.36 billion, driven by enhanced player engagement and retention[2] - Overall game revenue for the first half of 2024 reached RMB 1.86 billion, a decrease of 3.0% year-on-year, accounting for 87.8% of game and application service revenue[4] - The flagship IP "Magic Domain" generated revenue of RMB 1.69 billion, with a year-on-year decline of 3.8% due to external factors affecting the overseas version[4] - The "Honor of Kings" IP saw a 29.6% year-on-year revenue increase, attributed to gameplay enhancements and successful esports events[5] - Revenue for the first half of 2024 was RMB 3.3 billion, a decrease of 10.3% year-on-year[9] - Revenue from games and application services was RMB 2.12 billion, accounting for 64.3% of total revenue, a decrease of 0.8% year-on-year[9] - Revenue from Mynd.ai was RMB 1.18 billion, accounting for 35.7% of total revenue, a decrease of 23.5% year-on-year[9] - Total revenue for the six months was RMB 3,301 million, down from RMB 3,681 million, indicating a decline of 10.3%[14] - Revenue from prepaid game cards was RMB 1,862 million, while revenue from education services was RMB 276 million, contributing to a total revenue of RMB 3,301 million for the six months ended June 30, 2024[29] Profitability and Financial Metrics - Gross profit was RMB 2.2 billion, a decrease of 3.8% year-on-year[9] - Operating profit for the six months ended June 30, 2024, was RMB 634 million, a decrease of 9.3% compared to RMB 699 million in 2023[12] - Non-GAAP operating profit was RMB 640 million, down from RMB 692 million, reflecting a decline of 7.5% year-over-year[12] - Profit attributable to the company's owners was RMB 400 million, a decrease of 20% from RMB 500 million in the previous year[12] - Gross profit margin decreased to 66.7% from 62.1%, with gross profit at RMB 2,199 million compared to RMB 2,287 million[14] - Total comprehensive income for the period was RMB 294 million, down from RMB 513 million, reflecting a decrease of 42.7%[15] Cash Flow and Assets - Operating cash flow increased by RMB 340 million compared to the same period last year[7] - Cash and cash equivalents increased to RMB 2,382 million from RMB 2,241 million, showing a growth of 6.3%[16] - Total assets as of June 30, 2024, were RMB 11,561 million, compared to RMB 10,982 million at the end of 2023, representing a growth of 5.3%[18] - The company's net asset value increased to RMB 6,280 million from RMB 6,174 million, reflecting an increase of 1.7%[18] - Net cash generated from operating activities for the six months ended June 30, 2024, was RMB 259 million, a decrease of 43.4% compared to RMB 457 million for the same period in 2023[19] - The net cash used in investing activities was RMB 247 million, down from RMB 549 million year-over-year, indicating a reduction of 55.1%[19] - The net cash generated from financing activities increased significantly to RMB 156 million from RMB 20 million, representing a growth of 680%[19] Game Development and Future Plans - The new game "Code - Alpha" is expected to launch in multiple countries in the second half of the year, contributing to revenue growth[2] - The new Roguelike game "Star Sea Assault" received an 8.0 user rating on TapTap and is projected for global release in 2025[5] - The company plans to implement a multi-faceted growth strategy for the "Magic Domain" IP, including the launch of "Magic Domain Rebirth" in Q1 2025[4] - The company is actively developing new games targeting various genres, including MMORPG and card games, to expand its market presence[5] - The overseas market for "End of Oath" is expected to launch in the first half of 2025, following positive feedback from testing[5] - Mynd.ai plans to launch four to five new games based on existing flagship IP and new IP in the next six to nine months[6] Shareholder and Corporate Governance - The company paid a mid-term dividend of HKD 0.40 per share, amounting to RMB 194 million[37] - The company has complied with the corporate governance code throughout the review period[76] - The Audit Committee was established on October 15, 2007, to oversee the company's financial reporting and internal control systems[77] - The Audit Committee consists of three independent non-executive directors, including the chairman, Mr. Li Shengzong[77] - The interim financial results for the six months ending June 30, 2024, have been reviewed by the Audit Committee, which confirmed compliance with applicable accounting standards[77] Debt and Liabilities - The total liabilities decreased from RMB 1,555 million to RMB 1,425 million, a reduction of approximately 8.4%[43] - The company added bank loans totaling RMB 863 million during the reporting period, compared to RMB 703 million in the previous six months[45] - The total bank loans amounted to approximately RMB 1,318 million, up from RMB 1,034 million as of December 31, 2023, with fixed-rate loans increasing to RMB 1,121 million from RMB 762 million[52] - The asset-liability ratio increased to 0.21 as of June 30, 2024, from 0.17 as of December 31, 2023[52] Employee and Share Option Plans - The total number of employees increased to 6,123 as of June 30, 2024, from 5,984 as of December 31, 2023, with R&D staff rising to 3,165 from 3,021[53] - The company has adopted the 2024 Share Option Scheme and the 2024 Share Award Scheme, which collectively allow for a total of 53,126,253 share options and awards, representing 10% of the company's shares[62] - The 2024 Share Option Scheme is set to last for ten years starting from June 6, 2024, and aims to reward eligible participants for their contributions to the group[63] - The company’s share option plans are designed to incentivize employees and service providers for their contributions to the group[63]

Share Valuation - The fair value of the awarded shares on July 27, 2023, and October 27, 2023, were HKD 3,696,000 and HKD 1,668,000 respectively[1] - The closing prices of the shares prior to the awards on July 27, 2023, and October 27, 2023, were HKD 14.128 and HKD 13.74 respectively[1] Expense Recognition - The total amount to be recognized as expenses for the awarded shares is based on their fair value, considering all market performance conditions[1] - The company will adjust its estimates of the number of shares expected to vest based on non-market vesting and service conditions at each reporting period end[1] - The adjustments to the original estimates will be reflected in the consolidated income statement and will correspondingly adjust equity[1] Reporting Impact - The information provided does not affect other data disclosed in the 2023 annual report[2]

Financial Performance - In 2023, NetDragon's gaming business revenue rebounded strongly, achieving RMB 3.8 billion, a year-on-year increase of 9.6% compared to a decline of 5.8% in 2022[4]. - Total revenue for 2023 was RMB 7.101 billion, a decrease of 9.7% year-on-year[17]. - Revenue from gaming and application services was RMB 4.189 billion, accounting for 59.0% of total revenue, with a year-on-year growth of 6.6%[17]. - Revenue from Mynd.ai was RMB 2.910 billion, representing a 25.7% decrease year-on-year[17]. - Gross profit for 2023 was RMB 4.398 billion, reflecting a 1.9% increase year-on-year[17]. - Operating profit decreased by 28.6% year-on-year to RMB 821 million[17]. - Profit attributable to the company's owners was RMB 550 million, down 34.1% year-on-year[17]. - Basic earnings per share for 2023 was RMB 103.00, compared to RMB 154.15 in 2022[15]. - Cash flow from operating activities increased by 4.2% year-on-year to RMB 1.1 billion[17]. - Non-GAAP operating profit was RMB 1.1 billion, a decrease of 12.7% year-on-year[17]. Gaming Business Highlights - NetDragon's gaming revenue has increased 3.9 times over the past decade, with nine out of ten years showing revenue growth[4]. - NetDragon's core gaming IPs have shown strong performance, contributing to the overall growth of the gaming business[3]. - Domestic and overseas game revenues grew by 10.5% and 4.5% respectively, with overseas revenue accounting for 15% of total game revenue despite a 5.7% decline in overall overseas revenue for Chinese game developers[21]. - The flagship IP "Magic Domain" achieved a revenue increase of 12.4% to RMB 3.4 billion, with the flagship PC game generating RMB 2.9 billion, a 14% year-on-year growth[21]. - The mobile version of "Magic Domain" saw a 50.4% increase in monthly active users, contributing to 36.2% of PC game active users[22]. - The "Honor of Kings" IP experienced a revenue growth of 5.8% in 2023, supported by a strong player base of over 300 million[22]. - The company plans to launch a new game, "Code-Alpha," in 2024, leveraging the success of the "Conquest" game[22]. Education Business Developments - The company successfully completed the spin-off of its overseas education business, Mynd.ai, which is now listed in the United States, enhancing its competitiveness in the hardware sector[5]. - The company aims to redefine the education industry landscape through its leadership position in the classroom hardware and software market[6]. - NetDragon's education business hardware sales have returned to pre-pandemic levels, indicating recovery in the sector[5]. - Mynd.ai's revenue for 2023 was RMB 2.9 billion, down from RMB 3.9 billion in 2022, reflecting a return to normalcy post-COVID-19[24]. - The gross margin for Mynd.ai increased to 25%, up 1.3 percentage points from 2022, due to lower raw material and shipping costs[24]. Strategic Initiatives and Future Plans - The company plans to continue creating long-term value for shareholders in 2024, building on its growth strategies[7]. - The company aims to expand its market presence in Japan, the Middle East, and Indonesia in 2024, focusing on new game development projects[23]. - Mynd.ai plans to enhance its software business and develop subscription-based SaaS revenue opportunities in 2024[25]. - The company is committed to enhancing its software quality management system, led by its senior vice president, Mr. Lin, who has a strong background in software quality assurance[50]. Corporate Governance and Management - The company has a strong management team with over 30 years of experience in the IT and telecommunications industry, led by Vice Chairman Dr. Liang Nianjian[43]. - The company has received multiple awards for its contributions to the economy and youth development in Fujian Province[44]. - The board of directors includes four executive directors and four non-executive directors, with a focus on strategic oversight and performance monitoring[119]. - The company has adopted corporate governance practices in line with the listing rules, ensuring effective risk management[118]. - The company has implemented a board diversity policy since 2013 and continues to monitor and maintain it[151]. Employee and Workplace Culture - The company emphasizes a learning culture, encouraging lifelong learning and conducting comprehensive training for employees[40]. - The company provides a friendly and enjoyable work environment with comprehensive facilities, including sports courts and a swimming pool[41]. - The company has established employee inclusion groups to enhance communication and cooperation among diverse groups, focusing on gender, race, LGBTQ+, and disability[193]. - The company conducts annual health check-ups for employees and provides comfortable spaces for pregnant and breastfeeding employees[193]. Sustainability and ESG Commitment - In December 2023, NetDragon received an upgrade in its ESG rating to BBB from MSCI, reflecting its commitment to sustainable development[7]. - The company is committed to balancing economic growth, social progress, and environmental protection as part of its sustainable development governance[148]. - The company has established a comprehensive cybersecurity management framework, ensuring strict compliance with local laws and regulations related to information security[165]. - The company has implemented advanced monitoring systems to detect and respond to suspicious network activities promptly[178]. Risk Management and Compliance - The company is committed to complying with various legal and regulatory requirements to protect employee rights and ensure data security[54]. - The company acknowledges the risks associated with new technologies and games that could render current offerings less appealing, impacting profitability and growth prospects[52]. - The group may face significant adverse tax consequences if the Chinese tax authorities determine that the contractual arrangements are not established on an arm's length basis[93]. - The company has established a dedicated internal audit department to oversee employee feedback and suggestions, ensuring a transparent communication environment[198].

Financial Performance - NetDragon Websoft Holdings Limited reported a revenue of RMB 3.8 billion for the year 2023, representing a year-on-year growth of 9.6% compared to a decline of 5.8% in 2022[3]. - Total revenue for the company was RMB 7.1 billion, a decrease of 9.7% year-over-year[11]. - The company's revenue for the year ended December 31, 2023, was RMB 7,101 million, a decrease of 9.7% compared to RMB 7,866 million in 2022[15]. - Gross profit for the same period was RMB 4,398 million, reflecting a slight increase of 1.9% from RMB 4,315 million in the previous year[15]. - Operating profit decreased to RMB 821 million, down 28.6% from RMB 1,150 million in 2022[15]. - The net profit for the year was RMB 447 million, a decline of 41.5% compared to RMB 764 million in 2022[15]. - Basic earnings per share for 2023 was RMB 103.00, down from RMB 154.15 in 2022, representing a decrease of 33.2%[17]. - The company reported a total comprehensive income of RMB 468 million for the year, down from RMB 809 million in 2022, a decrease of 42.1%[17]. Gaming Business - The gaming business accounted for 89.7% of total revenue, with domestic and overseas gaming revenues growing by 10.5% and 4.5% respectively[5]. - The flagship IP "Magic Domain" achieved a revenue increase of 12.4% to RMB 3.4 billion, with the PC version growing by 14% to RMB 2.9 billion[5]. - The average gaming duration for users of the "Magic Domain" IP increased by 50.4% year-on-year, indicating higher player engagement[5]. - The mobile game "Magic Domain Interconnected Version" saw a 50.4% increase in monthly active users, contributing to a stronger player base[6]. - Revenue from gaming and application services was RMB 4.2 billion, accounting for 59% of total revenue, with a year-over-year growth of 6.6%[11]. Mynd.ai Performance - In 2023, Mynd.ai's revenue was RMB 2.9 billion, a decrease of 25.7% compared to RMB 3.9 billion in 2022[8]. - Mynd.ai's gross margin reached 25%, an increase of 1.3 percentage points from the previous year, due to lower raw material and shipping costs[8]. - The company reported a net loss of RMB 930 million from Mynd.ai, compared to a profit of RMB 300 million in 2022, primarily due to a decline in sales volume as the market normalized[11]. - Mynd.ai aims to enhance its software business and develop subscription-based SaaS revenue opportunities[9]. Dividends and Shareholder Returns - The total dividend for 2023 was announced at HKD 1.80 per share, including a final dividend of HKD 0.40 per share[4]. - The proposed final dividend for 2023 is HKD 0.40 per share, amounting to approximately RMB 193 million, consistent with the previous year's dividend[36]. - The company incurred a cash outflow of RMB 877 million in dividends paid, down from RMB 1,225 million in the previous year, indicating a reduction of 28.4%[21]. Cash Flow and Investments - Operating cash flow increased by 4.2% year-over-year to RMB 1.1 billion[11]. - The net cash generated from operating activities for the year ended December 31, 2023, was RMB 1,115 million, an increase of 4.2% from RMB 1,070 million in 2022[20]. - The net cash used in investing activities amounted to RMB 915 million, compared to RMB 106 million in the previous year, indicating a significant increase in investment outflows[20]. - New bank loans added during the year were RMB 1,150 million, up from RMB 878 million in 2022, reflecting a 31% increase in financing activities[21]. Market Presence and Expansion Plans - The company plans to expand its market presence in Japan, the Middle East, and Indonesia in 2024[7]. - The company successfully completed the spin-off of its overseas education business, Mynd.ai, which is expected to enhance competitiveness in the hardware sector[3]. Share Repurchase and Stock Options - The company repurchased a total of 9,844,500 shares at a total cost of HKD 146.7 million during the fiscal year ending December 31, 2023[77]. - The share repurchase aimed to enhance the earnings per share for the company and its shareholders[77]. - As of December 31, 2023, the total unexercised options under the 2018 Share Option Scheme amounted to 1,223,000 shares[56]. Corporate Governance and Compliance - The audit committee confirmed that the financial statements complied with applicable accounting standards and regulations[76]. - The company has adhered to the corporate governance code throughout the review year[75]. - The company confirmed compliance with the trading standards set out in the listing rules for the year ending December 31, 2023[68].

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

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

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