FRIENDTIMES(06820)2024-08-19 09:34Financial Performance - The company's revenue for the six months ended June 30, 2024, was approximately RMB 526.1 million, a decrease of 15.2% compared to RMB 620.3 million in the same period of 2023[1]. - Gross profit for the same period was RMB 360.3 million, down 12.7% from RMB 412.6 million in 2023[1]. - The net loss for the period was approximately RMB 72.3 million, which narrowed by 10.6% compared to a loss of RMB 80.9 million in 2023[1]. - The company reported an operating loss of RMB 79,254 thousand, compared to an operating loss of RMB 14,437 thousand in the previous year, indicating a significant increase in losses[16]. - The company reported a basic loss per share of RMB (0.03) for the six months ended June 30, 2024, compared to RMB (0.04) for the same period in 2023, with weighted average shares outstanding of 2,116,111 thousand shares[35]. - The company reported a financial asset fair value change of RMB 6,728 thousand, compared to a loss of RMB 1,977 thousand in the previous year[16]. - The total assets as of June 30, 2024, were RMB 909,320 thousand, a decrease from RMB 1,047,816 thousand at the end of 2023[20]. - The net asset value decreased to RMB 1,128,161 thousand as of June 30, 2024, from RMB 1,203,562 thousand at the end of 2023, representing a decline of 6.3%[22]. - The total equity decreased by 6.3% from RMB 1,203,562 thousand at the end of 2023 to RMB 1,128,161 thousand as of June 30, 2024[22]. - The company's cost of sales decreased by 20.2% to approximately RMB 165.8 million for the six months ended June 30, 2024, down from RMB 207.7 million for the same period in 2023[51]. Revenue Sources - Revenue from self-developed games was RMB 511,246 thousand, down 14.4% from RMB 597,047 thousand in the previous year[25]. - Revenue from overseas customers was RMB 129,398 thousand, a decline of 27.1% from RMB 177,582 thousand in the same period last year[27]. - Game revenue accounted for 99.91% of total revenue at RMB 525.6 million, down 15.23% from RMB 620.1 million in the previous year[49]. - Domestic market revenue was RMB 396.2 million, representing 75.4% of total game revenue, a decrease of 10.46% from RMB 442.5 million in the prior year[50]. - Overseas market revenue was RMB 129.4 million, accounting for 24.6% of total game revenue, down 27.13% from RMB 177.6 million in the previous year[50]. Game Development and Launches - The revenue growth in the reporting period was primarily driven by the launch of the simplified Chinese version of "Floating Life: Memories of Linglong" on January 2, 2024, and the revenue increase from the mini-game "Lingyun Nuo" which generated over RMB 10 million in monthly flow for several months[3]. - The company has successfully launched the male-oriented game "Mo Jian Jiang Hu" in 2024, marking a breakthrough in exploring male gaming markets[2]. - The game "Floating Life Remembering Linglong" was launched on January 2, 2024, and entered the Top 50 of the iOS game sales chart in mainland China[7]. - The game "Ink Sword Jianghu" was launched on July 19, 2024, and quickly entered the Top 50 of the iOS game sales chart in mainland China[10]. - The game "Chaotic Cute Chef" is set for a new round of testing in August 2024, focusing on cooperative gameplay and cooking simulation[12]. - The company is actively developing various small game projects, with "Dulala's Promotion" successfully entering the Top 100 of the WeChat mini-game sales chart[13]. Strategic Initiatives - The company is committed to a long-term operational strategy, continuously iterating on versions, updating content, and conducting operational activities to extend product life cycles and enhance product vitality[6]. - The company is enhancing its R&D and innovation capabilities, focusing on cutting-edge technologies like AIGC, and exploring AI+ applications in the gaming industry to improve efficiency and reduce costs[5]. - The company plans to enhance R&D and operational capabilities, focusing on the integration of new technologies like AIGC to drive long-term growth[15]. - The company aims to optimize its personnel structure and establish a multi-tiered compensation system to improve cost control and efficiency[15]. - The company is committed to maintaining compliance with Hong Kong Financial Reporting Standards in its financial reporting practices[23]. Marketing and Localization - The company aims to provide localized game content and promotional materials to better attract and retain local players in different regions[6]. - The game has partnered with the China Academy of Art to create cultural products, including Jiangnan lanterns and new-style hairpins, enhancing its cultural engagement[7]. - "Floating Life Remembering Linglong" will collaborate with the drama "Long Moon Embers" for a promotional event on July 2, 2024[7]. - The game "Floating Life for You" has been launched in multiple regions, including North America and Southeast Asia, and is part of key cultural export projects[8]. Share Incentive Plan - As of June 30, 2024, the company purchased 5,158,000 ordinary shares under the share incentive plan, compared to none for the same period in 2023[44]. - A total of 3,437,600 restricted shares have vested as of June 30, 2024, with 6,138,800 restricted shares remaining unvested[47]. - The company established a trust to manage the restricted shares awarded under the share incentive plan, with a total of 80 million shares reserved for this purpose[45]. - The fair value of restricted shares granted to employees ranged from HKD 0.96 to HKD 1.99 per share, with varying vesting periods from 1 to 49 months[46]. - The share incentive plan allows for the granting of shares to eligible participants, with a limit of 1% of the total issued shares in any 12-month period without shareholder approval[76]. Corporate Governance - The company has adopted the corporate governance code and has complied with its provisions as of June 30, 2024, except for deviation from provision C.2.1[81]. - The company has established an audit committee, which includes independent non-executive directors, to oversee financial reporting and risk management[84]. - The audit committee reviewed the unaudited consolidated interim financial statements for the six months ended June 30, 2024[84]. - The company has established sufficient checks and balances in its governance structure[81]. - The chairman and CEO roles are currently held by the same individual, which the board believes is in the best interest of the company and its shareholders[81]. Future Outlook - Future outlook includes plans to expand into new markets, targeting a 15% increase in market share over the next fiscal year[90]. - The company is investing in new product development, with a budget allocation of 50 million for R&D in the upcoming year[88]. - A strategic acquisition is planned, aiming to enhance the company's technology capabilities and expand its product offerings[89]. - The company has set a revenue guidance of 200 million for the next quarter, representing a 20% increase compared to the previous quarter[90]. - User data indicates a 30% increase in mobile game downloads, reflecting strong market demand[88]. - The company is focusing on enhancing its digital platform, with an expected 40% increase in user retention rates due to new features[89]. - The board of directors has approved a share reward plan, which is expected to incentivize key management and improve performance[90]. - The company aims to achieve a 10% reduction in operational costs through efficiency improvements in the next fiscal year[88].