7ROAD(00797)2023-04-26 09:46User Metrics and Revenue Analysis - The company's average monthly paying users (MPUs) are calculated as the average number of paying users in the relevant calendar month, with the average MPUs for a particular period being the average of the MPUs in each month during that period[3] - The company's monthly active users (MAUs) refer to the number of people logged in to specific game(s) in the relevant calendar month, with the average MAUs for a particular period being the average of the MAUs in each month during that period[8] - The company's ARPPU (average revenue per paying user) is calculated as the total revenue generated by paying users for a particular game, type of games, or all games during a certain period divided by the number of paying users during that period[3] - Monthly Paying Users (MPUs) refers to the number of paying users in the relevant calendar month[9] - Paying users are defined as registered users who charged their accounts with virtual items purchased from the company at least once in a given period, regardless of whether the items were consumed[9] - The company's web games had an average MAUs of approximately 0.6 million, MPUs of approximately 36,000, and ARPPU of approximately RMB522.1 for the year ended 31 December 2022[78] - The company's mobile games had an average MAUs of approximately 3.6 million, MPUs of approximately 482,000, and ARPPU of approximately RMB289.6 for the year ended 31 December 2022[78] - Total revenue for 2022 reached approximately RMB540.6 million, representing a 28.6% increase compared to 2021[23] - Profit attributable to owners of the company in 2022 amounted to approximately RMB282.5 million, a 199.8% increase from 2021[23][24] - Total revenue for 2022 was approximately RMB540.6 million, a 28.6% increase compared to RMB420.5 million in 2021[32][34] - Profit attributable to owners of the company in 2022 was approximately RMB282.5 million, a 199.8% increase compared to 2021[32][34] - Gross profit margin for 2022 was 48.3%, with gross profit increasing by 16.4% to RMB261.2 million from RMB224.5 million in 2021[32][34] - Online game revenue in 2022 was approximately RMB426.1 million, with mobile games accounting for 81.1% and web games for 18.9%[33][34] - Revenue from cloud computing and related services in 2022 was approximately RMB106.4 million, compared to RMB49.0 million in 2021[33][34] - Total revenue for 2022 was RMB540.6 million, a 28.6% increase compared to 2021, driven by the new game "DDTank Adventure"[84][85] - Game business revenue reached RMB426.1 million in 2022, a 68.0% increase year-over-year, primarily due to the success of "DDTank Adventure"[85] - Cloud business revenue grew to RMB106.4 million in 2022, a 117.3% increase compared to 2021, driven by the expansion of the newly launched cloud business[85] - Gross profit for 2022 was RMB261.2 million, a 16.4% increase from 2021, with a gross profit margin of 48.3%, down from 53.4% in 2021 due to higher cost of revenue[88] - R&D expenses increased by 62.0% to RMB129.5 million in 2022, reflecting higher investment in game development[88] - Selling and marketing expenses surged by 782.7% to RMB115.6 million in 2022, mainly due to marketing campaigns for new game launches[90] - Profit attributable to owners of the company rose by 199.8% to RMB282.5 million in 2022, largely due to gains from the Shouxin Disposal[92] - The company's total revenue for the year ended 31 December 2022 was RMB540.63 million, a 28.6% increase compared to the previous year[81] - The company's gross profit for the year ended 31 December 2022 was RMB261.20 million, a 16.4% increase compared to the previous year[81] - The company's research and development expenses increased by 62.0% to RMB129.48 million for the year ended 31 December 2022[81] - The company's selling and marketing expenses increased by 782.7% to RMB115.56 million for the year ended 31 December 2022[81] - The company's operating profit for the year ended 31 December 2022 was RMB307.37 million, a 714.8% increase compared to the previous year[81] - The company's profit before income tax for the year ended 31 December 2022 was RMB283.39 million, a 211.0% increase compared to the previous year[81] - The company's profit for the year ended 31 December 2022 was RMB279.61 million, a 185.3% increase compared to the previous year[81] Corporate Governance and Board Structure - The company's shares were listed on the Main Board of the Stock Exchange on 18 July 2018 (Stock Code: 797)[3] - The company's latest practicable date for ascertaining certain information in the annual report is 21 April 2023[4] - The company's consolidated affiliated entities include Shenzhen 7Road and its subsidiaries, controlled through contractual arrangements[4] - The company's annual general meeting (AGM) is proposed to be held on 23 May 2023[3] - The company's contractual arrangements were entered into on 13 April 2018[4] - The company's articles of association were conditionally adopted by the Board on 23 June 2018 and became effective on the listing date[3] - The company's financial statements are prepared in accordance with International Financial Reporting Standards (IFRS)[4] - Shenzhen 7Road Technology Co., Ltd. is a consolidated affiliated entity established under PRC law on 22 January 2008[10] - Shenzhen Qianqi Network Technology Co., Ltd. is a consolidated affiliated entity established under PRC law on 28 November 2013[12] - Shanghai Xinla Network Technology Co., Ltd. is a wholly-owned subsidiary of the company as of the latest practicable date[12] - The company's RSU Scheme was adopted on 6 March 2018[10] - The company's shares are ordinary shares of US$0.000005 each in the issued share capital[10] - The company's board includes executive directors such as Mr. Meng Shuqi (Chairman) and independent non-executive directors like Mr. Xue Jun[14] - The company's audit committee is chaired by Mr. Xue Jun[14] - The company's remuneration committee is chaired by Ms. Li Yiqing[14] - The Board consists of seven Directors, including four executive Directors and three independent non-executive Directors, with no financial or familial relationships among them[124] - The Company has complied with the Corporate Governance (CG) Code provisions for the year ended 31 December 2022[121] - Independent non-executive Directors have signed three-year appointment letters and are subject to retirement by rotation at least once every three years[126] - The Board ensures that at least one-third of its members are independent non-executive Directors, with Mr. Xue Jun possessing appropriate professional qualifications[129] - Directors have access to joint company secretaries, Mr. Li Zhengquan and Mr. Cheung Kai Cheong, who completed at least 15 hours of professional training in 2022[131] - The Company has arranged insurance coverage for Directors against legal proceedings and allows them to seek independent professional advice at the Company's expense[128] - Employee remuneration is determined based on performance, experience, competence, and market comparables, including salaries, bonuses, RSUs, and allowances[120] - The Board oversees the Group's business, strategic decisions, and performance, delegating day-to-day operations to management[122] - The Company maintains high corporate governance standards, focusing on integrity, accountability, transparency, and fairness[121] - The Board of Directors has maintained compliance with the Listing Rules by appointing at least three independent non-executive directors, constituting one-third of the Board, including Mr. Xue Jun, who possesses appropriate professional qualifications or expertise in accounting or financial management[132] - All independent non-executive directors have provided written confirmation of their independence and have offered independent opinions and recommendations during the year ended 31 December 2022, demonstrating their independence and contributing significantly to the company and shareholders[132] - The company's joint company secretaries, Mr. Li Zhengquan and Mr. Cheung Kai Cheong, have completed no less than 15 hours of relevant professional training during the year ended 31 December 2022, ensuring compliance with Listing Rules[132] - All Directors participated in various continuous professional development (CPD) trainings during the year ended 31 December 2022, including updates on Listing Rules, Directors' responsibilities, and Environmental, Social, and Governance (ESG) reporting[134] - The Board has adopted a Board diversity policy and a nomination policy to ensure a balance of skills, experience, and diversity of perspectives, enhancing the effectiveness of the Board and maintaining high standards of corporate governance[138] - The Board currently comprises six male Directors and one female Director, achieving gender diversity, with detailed gender ratio data available in the Environmental, Social, and Governance Report for the year ended 31 December 2022[139] - The company held 17 Board meetings in 2022, with all Executive Directors and Independent Non-Executive Directors attending all meetings[143][144] - The company's Board consists of 6 male directors and 1 female director, achieving gender diversity[141] - The company held 4 Board committee meetings in 2022, with Audit Committee meetings attended by all Independent Non-Executive Directors[151][153] - The company's Chairman and CEO roles are separate, with Mr. Meng Shuqi as Chairman and Mr. Peng Cheng as CEO[145][146] - The company held 2 general meetings in 2022 (1 annual general meeting and 1 extraordinary general meeting), with all Directors attending both meetings[148][149] - The upcoming Annual General Meeting is scheduled for May 23, 2023, with notices to be sent at least 21 days in advance[149][150] - Board meeting agendas and documents are distributed to Directors at least 3 days prior to meetings[140][142] - The company has three principal Board committees: Audit Committee, Remuneration Committee, and Nomination Committee[151][152] - The Audit Committee reviewed the Group's annual results announcement for the year ended 31 December 2021 and interim results for the six months ended 30 June 2022[156] - The Remuneration Committee reviewed and made recommendations on the annual remuneration packages of executive Directors and senior management for the year ended 31 December 2022[158] - Details of the annual remuneration of senior management by band for the year ended 31 December 2022 are disclosed in the Director's Report[159] - The Nomination Committee reviewed the structure, size, and composition of the Board and recommended the re-election of Directors for the year ended 31 December 2022[162] - All Directors confirmed compliance with the Model Code for Securities Transactions during the year ended 31 December 2022[164] - The Company has a policy for handling and disseminating inside information to ensure compliance with statutory disclosure requirements[165] - The company paid a total of RMB 3,730,000 for audit and non-audit related services in 2022, with RMB 3,300,000 for audit services and RMB 430,000 for non-audit services[167] - The Board conducted an annual review of the Group's risk management and internal control systems in 2022, deeming them effective and adequate, covering financial, compliance, and operational controls[175] - The company has established an internal control department to regularly review and improve its internal control system, policies, and procedures to meet Listing Rules obligations and development requirements[175] - The company ensures the confidentiality and timely disclosure of inside information through internal policies, employee training, and restricted access to sensitive data[176] - The Board reviewed and confirmed that the company's resources, staff qualifications, training programs, and budget for accounting, compliance, legal, and financial reporting functions were adequate and effective in 2022[176] - The company maintains effective communication with shareholders through various channels including financial announcements, annual general meetings, and corporate publications on its website[179] - The company's website (www.7road.com) provides up-to-date information on business developments, financial data, and corporate governance practices[179] - The Board reviewed and confirmed the effectiveness of the Shareholders' communication policy for the year ended 31 December 2022[179] - Shareholders holding at least one-tenth of the paid-up capital with voting rights can requisition an extraordinary general meeting, which must be held within two months of the requisition[183] - The company ensures separate resolutions for each major issue at general meetings, including the election of individual Directors, with voting conducted by poll[182] - Shareholders can propose candidates for Director elections, with detailed procedures published on the company's website[186] - The company does not typically handle verbal or anonymous shareholder enquiries[187] - The Group's revenue and operating profit for the year ended 31 December 2022 are analyzed by principal activities in the "Management Discussion and Analysis" section[188] - The Group has distributable reserves amounting to RMB4,026.9 million as of 31 December 2022[197] - The Board resolved not to recommend the payment of any final dividend for the year ended 31 December 2022[190] - The Group's property, plant, and equipment movements for the year ended 31 December 2022 are detailed in note 16 of the consolidated financial statements[193] - The Group's share capital movements for the year ended 31 December 2022 are detailed in note 27 of the consolidated financial statements[197] - The Group's reserves movements for the year ended 31 December 2022 are detailed in the Consolidated Statement of Changes in Equity and note 41 of the consolidated financial statements[197] - The Group has implemented environmental protection measures and encourages staff to reduce energy consumption and minimize unnecessary waste[197] - The Group's financial summary for the last five financial years is set out on pages 10 to 11 of the annual report[192] - The Group's principal activities include R&D, operation, and publication of games, as well as providing cloud computing services[188] - The Group has complied with relevant laws and regulations that have a significant impact on the Company in material respects[188] - Mr. Meng Shuqi's executive Director service contract was renewed for three more years on 18 July 2021, with an initial term starting from 18 July 2018[200] - Mr. Yang Cheng's executive Director service contract was renewed for three more years on 29 October 2021, with an initial term starting from 29 October 2018[200] - Mr. Li Zhengquan's executive Director service contract was renewed for three more years on 30 April 2022, with an initial term starting from 30 April 2019[200] - Mr. Peng Cheng's executive Director service contract commenced on 8 March 2023 for a term of three years[200] - Executive Directors' service contracts can be terminated with not less than three months' notice in writing[200] - Independent non-executive Directors have appointment letters with a three-year term, terminable with not less than three months' notice[200] - Independent non-executive Directors are entitled to a fixed Director's fee under their appointment letters[200] Business Strategy and Market Expansion - The company focused on expanding gaming IP, improving game quality, and integrating R&D and operations to achieve globalization[29] - The company continued to develop classic games, upgrade characters, and enhance game plots to improve gameplay and profit models[29] - The company leveraged extensive resources to invest in the global market through refined marketing and explored innovative promotion channels[29] - The company established a user ecosystem with a long life cycle, focusing on core capabilities and creating a multi-dimensional interaction model with users[29] - The company built three main business lines: self-developed games and licensing, partnerships with quality vendors, and operation of selected games[29] - The company collaborated with leading vendors to enhance business development and resource consolidation, strengthening its industry competitiveness[29] - The company focused on independent development of competitive leisure games, MMORPGs, and card games, while also distributing a wide range of games[35][36] - The company's gaming market strategy focuses on the domestic market, with plans to further expand its own IP in overseas markets[35][36] - The company's online game revenue was mainly derived from classic games such as the "DDTank" series, "Three Kingdoms" series, and "Wartune" series[35][36] - The new mobile game "DDTank Adventure" achieved first-day sales of nearly RMB30 million and first-week sales of RMB100 million, ranking Top 3 on the App Store's bestselling chart on its launch day[37][38] - "DDTank Classics" performed well in Vietnam and Taiwan, staying on the Taiwan iOS top 10 bestselling charts for one week after its launch in July 2022[37][38] - The "Three Kingdoms" series game maintained strong appeal and competitiveness, receiving high ratings from players and the industry[39] - The sandbox game "Concave-Convex World" remained popular on the Roblox platform, with over 1 billion views on Bilibili and other platforms[39] - The company's cloud computing business expanded steadily, providing services for rendering, AI, big data supercomputing, and blockchain technology since 2021[39] - The company invested in Shanghai Advanced Silicon Technology Co., Ltd., a leading domestic manufacturer of large-scale semiconductor silicon chips, to expand its cloud business upstream and downstream[40] - The next-generation "DDTank" product is under development, featuring card-based gameplay and significant innovations in character artwork, storyline, and core gameplay[37][38] - The company's data-driven development and refined operation activities maintained the long life cycle of games and player activity, boosting domestic revenue growth[37][38] - The company strategically prioritized major customers in its cloud computing business, signing long-term service cooperation agreements with well-known domestic companies[39] - The company plans to focus on competitive leisure games, MMORPGs, and card games, leveraging global resources and R&D capabilities to enrich its product lines[39] - The Group plans to launch "DDTank Adventure" in other overseas regions in the second half of 2023 and will introduce a mini program version and an overseas mobile game version of "Wartune H5" around mid