NEWBORNTOWN-赤子城科技(09911) - 2023 - 年度财报

Acquisition and Share Transactions - The company acquired 1,000,000 shares of Chizicheng Strategy Investment for $1.00, representing 100% of its issued share capital[10] - The company entered into a sale and purchase agreement with Spriver, a major shareholder, for the acquisition of Chizicheng Strategy Investment, constituting a connected transaction under the Listing Rules[12] - The company completed the acquisition of Chizicheng Strategy Investment, expanding its social business portfolio with products like Blued and Finka[151] - The company completed the acquisition of Chizicheng Strategy Investment in August 2023, merging BlueCity and Land of Glory's revenues to expand its diversified social business[188] Restricted Share Units (RSUs) and Incentive Plans - The restricted share units (RSUs) under the RSU incentive plan had a lock-up period of three years from the first unlocking date, which is within six months after the grant[3] - No RSUs were granted, canceled, or lapsed under the RSU incentive plan from its adoption date to December 31, 2023[7] - The company purchased shares representing approximately 1.60% of the total issued shares under the RSU incentive plan[9] Financial Performance and Metrics - The consolidated affiliated entities generated revenue of approximately RMB 707.9 million and a profit of RMB 198.2 million for the year ended December 31, 2023[22] - The total assets and liabilities of the consolidated affiliated entities were approximately RMB 2,134.2 million and RMB 504.4 million, respectively, as of December 31, 2023[22] - Total revenue reached approximately RMB 3.31 billion, a year-on-year increase of 18.1%[167] - Adjusted EBITDA reached RMB 674.6 million, a year-on-year increase of 80.0%[138][167] - Net profit attributable to the company's owners was approximately RMB 512.8 million, a year-on-year increase of 294.2%[167] - Social business revenue reached approximately RMB 3.0 billion, maintaining a leading position in markets such as the Middle East, North Africa, and Southeast Asia[167] - Innovative business revenue reached approximately RMB 336 million, a year-on-year increase of 38.6%[167] - Cash and cash equivalents at the end of the period were RMB 1.39 billion, a year-on-year increase of 132.0%[161] - Business scale in the Middle East and North Africa region grew by 30.0% year-on-year[161] - The company's total assets increased to RMB 2.79 billion, with total equity reaching RMB 1.95 billion[164] - Total revenue for the year ended December 31, 2023, was approximately RMB 3,307.8 million, an increase of 18.1% compared to RMB 2,799.7 million in 2022[188] - Social business revenue for 2023 was approximately RMB 2,971.9 million, up 16.2% from RMB 2,557.4 million in 2022, driven by growth in both pan-population and diversified social businesses[188] - Gross profit for 2023 was approximately RMB 1,722.1 million, a 62.8% increase from RMB 1,057.9 million in 2022, with social business gross profit rising to RMB 1,429.1 million from RMB 856.6 million[192] - The company's social business cost of revenue decreased by 9.3% to RMB 1,542.8 million in 2023, primarily due to improved commercialization efficiency and reduced host sharing costs[191] - Sales and marketing expenses increased by 42.2% to RMB 688.4 million in 2023, mainly due to increased promotion efforts for the social business[194] Contractual Arrangements and VIE Structure - The company's existing contractual arrangements include exclusive business cooperation agreements with Chizicheng Mobile Technology for software development, technical and market data consultation, and customer service[17] - The company's structural contracts ensure economic benefits flow from the consolidated affiliated entities to the group, with detailed diagrams illustrating the flow[16] - The company's exclusive equity call option agreement allows Shandong Chizicheng to purchase equity in Chizicheng Mobile Technology for RMB 1, subject to minimum purchase price regulations[18] - BlueCity and its affiliates have become consolidated entities of the group following the acquisition, with contractual arrangements allowing control over restricted or prohibited industries in China[44] - BlueCity Information Technology holds 100% ownership of intellectual property created under the Exclusive Consulting and Service Agreement, with further licensing negotiations planned[48] - Chinese equity holders (including Han De Hou Cheng and Chizi Network Technology) hold approximately 99.85% and 0.15% interests in the Variable Interest Entity (VIE), respectively[46] - The contractual arrangements enable the group to control and derive economic benefits from BlueCity entities without direct equity ownership[60] - Chinese equity holders are restricted from transferring or encumbering their equity in the VIE without prior written consent from BlueCity Information Technology[54] - The group's financial statements consolidate the performance of BlueCity entities as if they were wholly-owned subsidiaries[61] - The VIE structure places the group in a unique position regarding continuous connected transactions under listing rules, potentially increasing administrative costs[61] - The company operates mobile application development business in China through contractual arrangements with Chizicheng Mobile Technology and its subsidiaries, and provides internet and social networking services through BlueCity entities, but certain terms of the contractual arrangements may not be enforceable under Chinese law[66] - The company has taken measures to ensure the effective operation of contractual arrangements and compliance with them, including addressing potential conflicts of interest with Chinese equity holders[92] - The company's contractual arrangements are crucial to its legal structure and business operations, and transactions under these arrangements are conducted on fair and reasonable terms[84] Market and Business Strategy - The company's core business is global social entertainment, with its fastest-growing and most deeply developed segment being open social platforms, including MICO, YoHo, SUGO, and TopTop[102] - The company is actively exploring innovative business areas in social entertainment, including the development of premium games such as "Mergeland-Alice's Adventure"[102] - The Middle East and North Africa (MENA) media and entertainment market is projected to grow from$ 39.05 billion in 2023 to $61.23 billion by 2028, with the company being a leading player in the region[179] - The global diversified social market reached approximately$ 3.842 billion in 2023, with significant growth potential in Southeast Asia, Japan, South Korea, and欧美 regions[180] - The company plans to focus on localized operations and product innovation to expand its pan-population social product matrix and enhance its global social entertainment ecosystem[180] - The global casual gaming market is expected to grow at a CAGR of 9% from 2022 to 2027, reaching $25 billion by 2027, with the company continuing to develop high-quality games[183] - MICO's community activity and new user scale increased significantly through multiple upgrades and customized services for Middle Eastern users, leading to improved profitability[197] - YoHo enhanced content operations and localized gameplay for Middle Eastern users, improving user engagement and operational precision[197] - SUGO's monthly active users (MAU) increased by over 3 times year-over-year (YoY), with revenue and profit also growing by over 3 times YoY[197] - TopTop's product revenue grew by over 2 times YoY, and profit increased by over 6 times YoY, driven by an improved user growth system and increased community rewards[197] - The company's broad social business achieved high-quality growth, laying a solid foundation for expansion in the social entertainment sector[198] - The company plans to continue exploring global markets and user demands to launch more high-quality social products and become a leading platform in various segments[198] - HeeSay, a new online community targeting LGBTQ+ users, was officially launched in early 2024 to meet their needs for self-expression, life sharing, and entertainment[200] Intellectual Property and Trademarks - The group has applied for 28 trademarks in Hong Kong and monetized several apps through mobile advertising on Google Play and Apple App Store[59] - BlueCity Information Technology holds 100% ownership of intellectual property created under the Exclusive Consulting and Service Agreement, with further licensing negotiations planned[48] - The company has applied for 6 trademarks in Hong Kong through BlueCity Holdings Hong Kong Limited[83] - The company has registered trademarks in Hong Kong and operates app traffic monetization business there as part of its strategy to comply with regulatory restrictions on foreign ownership in China[83] Risks and Challenges - Risks include potential government penalties, less effective control compared to direct ownership, and additional tax scrutiny[63][64][65] - The group faces challenges in complying with foreign investment restrictions in China's telecommunications sector, requiring approval from regulatory authorities[57] - The company faces risks related to the interpretation and implementation of the Foreign Investment Law, which could impact its corporate structure, governance, and business operations[87] Corporate Governance and Board Structure - The company's board of directors consists of seven members, including four executive directors and three independent non-executive directors[110] Environmental and Social Responsibility - The company has implemented environmental protection measures and encouraged employees to save energy and reduce unnecessary waste[109] Customer and Supplier Concentration - The top five customers accounted for approximately 12.81% of the company's total revenue, with the largest customer contributing 8.81%[107] - The top five suppliers accounted for approximately 42.92% of the company's total procurement, with the largest supplier contributing 16.93%[107] Dividend Policy - The company did not recommend the distribution of a final dividend for the year ended December 31, 2023[105] Property, Plant, and Equipment - The company's property, plant, and equipment details for the year ended December 31, 2023, are provided in Note 16 of the consolidated financial statements[127] Game Development and Performance - The game "Alice's Dream: Merge Island" achieved significant growth in revenue and became a top product in the global Merge game category[153] Overseas Operations and Compliance - The company has accumulated overseas experience in operating value-added telecommunications services and has taken measures such as operating its own app traffic monetization business in Hong Kong through Solo X Technology[83]