HOMELAND ITL(03798)2024-04-25 08:48Financial Performance - Revenue reached RMB 1,779.7 million, a year-on-year increase of 13.9%[7] - Gross profit was RMB 1,157.5 million, a year-on-year increase of 13.4%[7] - Adjusted net profit was RMB 499.4 million, a year-on-year decrease of 5.5%[7] - Revenue from continuing operations increased by 13.9% to RMB 1,779.7 million, with gross profit rising by 13.4% to RMB 1,157.5 million[16] - Net profit attributable to owners decreased by 6.1% to RMB 436.9 million, while non-IFRS adjusted net profit dropped by 5.5% to RMB 499.4 million[16] - Gross profit increased by 13.4% from RMB 1,020.6 million in 2022 to RMB 1,157.5 million in 2023, while gross margin decreased slightly from 65.3% to 65.0%[25] - Profit before tax grew by 33.3% from RMB 376.0 million in 2022 to RMB 501.1 million in 2023, with the profit margin increasing from 24.1% to 28.2%[31] - Net profit attributable to owners of the company decreased by 6.1% from RMB 465.3 million in 2022 to RMB 436.9 million in 2023[32] - Adjusted net profit attributable to owners of the company declined by 5.5% from RMB 528.6 million in 2022 to RMB 499.4 million in 2023, after adjusting for non-cash items and withholding tax[34] - Revenue breakdown: 88.2% from virtual token sales, 8.0% from third-party game distribution, and 3.8% from advertising[23] - Sales costs increased by 14.7% to RMB 622.2 million, driven by higher commissions to third-party distribution channels and suppliers[24] - Other income rose by 6.0% from RMB 59.7 million in 2022 to RMB 63.3 million in 2023, primarily due to an increase in interest income of RMB 4.5 million[26] - Sales and marketing expenses decreased by 37.4% from RMB 543.7 million in 2022 to RMB 340.6 million in 2023, driven by reduced advertising spending on platforms like ByteDance and Tencent[29] - Administrative and other expenses increased by 76.3% from RMB 220.1 million in 2022 to RMB 387.9 million in 2023, mainly due to higher employee costs, subcontracting fees for new game development, and share-based payment expenses[30] - Cash and cash equivalents increased to RMB 1,340.9 million as of December 31, 2023, up from RMB 1,163.3 million in 2022, with the majority held in RMB-denominated accounts[36] - The company had no short-term or long-term bank borrowings as of December 31, 2023, except for lease liabilities of RMB 20.8 million[37] - The leverage ratio remained at zero as of December 31, 2023, due to the absence of borrowings[38] - Capital expenditures for the year ended December 31, 2023, amounted to approximately RMB 69.6 million, a decrease from RMB 104.0 million in the previous year, primarily due to reduced investments in financial assets and joint ventures[39] - The company incurred a loss of RMB 16.8 million from the sale of Jilin Xinyue and Jilin Anrui, with total consideration of RMB 135.0 million for the 40% equity stakes in both entities[41] - The company's distributable reserves as of December 31, 2023, amounted to approximately RMB 14.7 million, compared to zero in the previous year[134] - The company proposed a final dividend of HK128,340,350 (equivalent to RMB 118,073,122), subject to shareholder approval at the Annual General Meeting on June 6, 2024[132] User Metrics and Engagement - DAUs (Daily Active Users) were 14,389,388, a year-on-year increase of 3.1%[10] - MAUs (Monthly Active Users) were 68,289,393, a year-on-year increase of 9.4%[10] - Paying users reached 13,104,865, a year-on-year decrease of 21.3% but a 42.0% increase compared to June 30, 2023[10] - Daily active users (DAUs) grew by 3.1% to 14,389,388, and monthly active users (MAUs) increased by 9.4% to 68,289,393[16] - Paid users decreased by 21.3% to 13,104,865, while third-party game co-operation revenue reached RMB 145.2 million[16] - The company's classic board game portfolio showed strong vitality with stable active user scale and increased user willingness to recharge[10] - The company launched new 3D upgraded versions of "Weile Dou Dizhu" and "Weile Sichuan Mahjong," introducing new appearance systems and enhancing user experience[11] - The company's overseas games, "Weile Fishing International Edition" and "Weile Fishing Vietnam Edition," have shown stable operational data and are expected to contribute more to overseas user growth and revenue in 2024[11] - The company has developed a localized game portfolio for different countries, with several customized chess and card games in the optimization phase, set to be released soon[11] - The company has invested in new media operations, including live streaming and e-sports, with over 10,000 signed streamers, enhancing its marketing and distribution capabilities[12][13] - The company has established a "triple-driven" distribution model combining联运,赛事, and直播, improving user conversion and game dissemination[12] - The company has developed a self-service platform for game distribution, integrating data analysis and targeted distribution, significantly improving operational efficiency[14] - The company is actively applying AI technology in game development, focusing on AIGC talent cultivation and building a systematic AI service platform[14] - The company plans to open its digital tool platform to third parties to explore commercialization opportunities[14] - The company plans to expand its game portfolio and increase market penetration in 2024, targeting prefecture-level cities in China[18][20] - The company aims to leverage new media technologies and innovative channels to enhance customer acquisition and reduce costs[19] - The company's revenue heavily relies on two major game types: mahjong and poker variants, with performance in these areas being critical to business and operational results[56] - Only a small portion of registered players are paying players, and the company must improve player monetization to sustain growth[57] - The company depends on proprietary channels for mobile game distribution, and any disruption could significantly impact business and financial performance[56] - The company utilizes third-party payment providers like WeChat Pay and Alipay, relying on their stability for in-game purchases[57] - The company primarily generates user traffic organically but also leverages third-party distribution channels, including mobile manufacturers and app stores[57] - The company faces regulatory risks due to evolving domestic and international laws governing the mobile gaming industry[57] - The company aims to consolidate its leading position in the localized mobile chess and card game industry in China in 2024[59] - The company has successfully launched multiple casual games targeting both domestic and international players, expanding beyond its core localized mobile card and board game business[79] Corporate Governance and Compliance - The company has complied with relevant Chinese laws and regulations, including those related to value-added telecommunications services, online game testing and distribution, virtual currency, real-name registration, anti-addiction systems, data security, and privacy protection[54] - The company has obtained all necessary licenses, approvals, and permits for its operations in China and reported no significant violations or non-compliance with applicable laws and regulations during the year ended December 31, 2023[54] - The company’s board of directors has submitted the annual report and audited consolidated financial statements for the year ended December 31, 2023[50] - The company’s business review, future development discussions, and key financial and operational performance indicators are detailed in the "Management Discussion and Analysis" section on pages 13 to 18 of the annual report[52] - The company is committed to fulfilling social responsibilities, improving employee welfare, promoting development, protecting the environment, and achieving sustainable growth, with no significant health, safety, or environmental risks reported[53] - The company has obtained exemptions from the Hong Kong Stock Exchange for certain compliance requirements under the new contractual arrangements[96] - The company's independent non-executive directors confirmed that the related party transactions during the year were conducted under fair and reasonable terms, in the ordinary course of business, and in the best interests of shareholders[115] - The company's auditor, Deloitte Touche Tohmatsu, issued an unqualified opinion on the related party transactions for the year ended December 31, 2023, with no need to establish or disclose an annual cap[116] - The company has obtained exemptions from the Hong Kong Stock Exchange regarding certain disclosure and approval requirements for related party transactions under the original contractual arrangements[114] - Risks associated with the original contractual arrangements include potential non-compliance with Chinese laws, changes in regulations, and conflicts of interest with Chinese operating entities[112] - The company's Chinese operating entities may face higher income tax liabilities due to differing tax rates, which could adversely affect the group's financial performance[112] - The company's independent non-executive directors confirmed that no new transactions, contracts, or agreements were entered into with related parties during the year[115] - The company's auditor confirmed that no other related party transactions requiring disclosure under the Hong Kong Listing Rules were identified beyond those disclosed in the annual report[116] - The company's Chairman and CEO roles were separated on September 5, 2023, with Ms. Cui Wei appointed as the new CEO, ensuring compliance with the Corporate Governance Code[142] - The company has three executive directors and three independent non-executive directors as of December 31, 2023[145] - The company complies with the requirement of appointing at least three independent non-executive directors, with one having appropriate professional qualifications or accounting/financial management expertise[146] - The roles of Chairman and CEO were separated on September 5, 2023, with Ms. Cui Wei appointed as the new CEO[147] - The Board of Directors is responsible for leading and monitoring the company, including strategy formulation, operational and financial performance oversight, and ensuring robust internal control and risk management systems[149] - Independent non-executive directors ensure high standards of regulatory reporting and provide effective independent judgment on corporate actions and operations[150] - The company has established mechanisms to ensure independent opinions are introduced to the Board, including annual reviews of Board composition and independence by the Nomination Committee[151] - Directors are encouraged to engage in continuous professional development to update their knowledge and skills, with training costs borne by the company[152] - The company held a total of 9 board meetings during the reporting period, with all directors attending the 2023 Annual General Meeting[156] - The Audit Committee, composed of 3 independent non-executive directors, held 2 meetings to review financial reports, risk management, and internal control systems[158][159] - The Remuneration Committee, consisting of 3 independent non-executive directors, is responsible for reviewing and approving directors' and senior management's remuneration policies and schemes[160] - Newly appointed directors received onboarding training on relevant listing rules and legal responsibilities from external legal advisors[154] - All directors attended training sessions on their roles, responsibilities, and relevant laws and regulations during their tenure[154] - The company's board committees (Audit, Remuneration, and Nomination) are primarily composed of independent non-executive directors[157] - The Audit Committee confirmed that the company's audited consolidated results complied with applicable accounting principles and standards[159] - The Remuneration Committee is responsible for overseeing the training and continuous professional development of directors and senior management[160] - The company's corporate governance policies and practices were reviewed and monitored by the Audit Committee[159] - The Audit Committee met twice with external auditors without the presence of executive directors and management[159] - The company's internal control systems, including financial, operational, and compliance controls, were effective and adequate for the year ended December 31, 2023[166] - The company's risk management and internal control systems are reviewed annually to assess and improve their effectiveness[166] - The company's investor relations website, www.jiaxianghudong.com, serves as a communication platform for shareholders and investors, providing access to financial and other relevant information[176] - The company's shareholder communication policy was effectively implemented as of December 31, 2023, with timely and accurate disclosure of information[176] - The company's external auditors were paid RMB 0.8 million for interim review services and RMB 0.1 million for other services in 2023[170] - The company's board of directors is responsible for the preparation of the financial statements for the year ended December 31, 2023[167] - The company's dividend policy ensures that dividends are not declared in excess of the amount recommended by the board of directors and are only paid from legally distributable profits and reserves[168] - The company's Hong Kong principal place of business was changed to Room 2451, Lee Garden One, 33 Hysan Avenue, Causeway Bay, Hong Kong on April 13, 2023, and the email address was updated to ir@weile.com[179] - The company's Hong Kong principal place of business was further changed to Room LM8, 5/F, Lippo Centre, 169 Electric Road, North Point, Hong Kong on January 31, 2024[179] - The company released its fifth Environmental, Social, and Governance (ESG) report, detailing policies, measures, and key performance indicators (KPIs) for 2023[181] - The ESG report covers the period from January 1, 2023, to December 31, 2023, and focuses on the company's operations in China[182] - The company adheres to the ESG reporting guidelines of the Hong Kong Stock Exchange, ensuring consistency, quantification, and balance in its disclosures[183][184] - The company's ESG report is available in both Chinese and English on the Hong Kong Stock Exchange website and the company's official website[185] - The company is committed to sustainable development, with policies covering environmental protection, employment practices, supply chain management, product responsibility, and business ethics[188] - The board is responsible for the company's ESG strategy and oversees its implementation, with senior management appointed to handle ESG matters and report annually to the board[189] - The company has identified and assessed significant ESG risks, including climate change and product quality, and has developed response measures and contingency plans to minimize these risks[191] - The company maintains close communication with stakeholders through formal and informal channels to gather feedback and improve operational performance and sustainability[192] - Key stakeholders include shareholders, regulators, customers, employees, business partners, suppliers, distributors, communities, and media, each with specific expectations and communication channels[193][194] - The company conducted a materiality assessment with the help of independent consultants, identifying 24 significant ESG issues across environmental, employee, product, and social domains[195] - The materiality assessment results are presented in a matrix, ranking issues such as waste management, employee welfare, product quality, and social contribution[196] - The company operates as an electronic entertainment platform and adheres to environmental laws and regulations, with no significant violations reported during the period[197] - The company conducted an ESG risk assessment to identify potential climate risks that could threaten its business operations[198] - The company has implemented measures to address identified climate risks and regularly reviews the effectiveness of these measures[198] - The company focuses on monitoring weather forecasts and requires employees to take shelter during natural disasters or extreme weather events[199] - The company has developed a business continuity plan to guide disaster recovery procedures[200] Employee and Compensation - As of December 31, 2023, the company had 652 full-time employees, with total employee costs of RMB 278.9 million, an increase from RMB 224.8 million in 2022, driven by higher salaries and stock-based compensation[42] - The company provides competitive salaries and benefits based on market standards in the regions where it operates[64] - The company has adopted a share option plan and a share award plan to align the interests of employees and senior management with those of the company[64] - The company offers performance-based bonuses and has an annual appraisal system to determine salary increases, bonuses, and promotions[64] - The company's share incentive plan allows for the issuance of up to 125,600,000 shares, representing approximately 9.79% of the issued share capital as of the annual report date[66] - The maximum number of shares that can be issued under the share option plan and any other plan shall not exceed 30% of the total issued shares at any time[66] - The share option plan has a remaining validity period of approximately 5.5 years as of December 31, 2023[66] - As of December 31, 2023, no share options were granted under the share option plan[67] - The number of share options available for grant under the share option plan was 63,240,000 as of both January 1, 2023, and December 31, 2023[67] - The share award plan allows for the issuance of up to 38,502,105 shares, representing 3% of the issued shares as of the report date[68] - The share award plan is valid for ten years from the adoption date[68] - The maximum number of new shares that can be issued under the Share Award Plan in any fiscal year is 3% of the total issued shares at that time, and the maximum number of new shares that can be issued to selected participants in any 12-month period is 1% of the total issued shares at that time[69] - The Share Award Plan will be effective for a period of 10 years from June 6, 2019, and as of December 31, 2023, the remaining term of the plan is approximately 5.5 years[69] - In 2021, the company appointed Futu Trust Limited as another trustee for the Share Award Plan, in addition to Convergent Trust Limited[70] - No new shares were issued under the Share Award Plan in 2023, as no awards requiring the issuance of new shares were granted during the year[70] - As of December 31, 2022, the total number of shares granted under the Share Award Plan was 49,345,449, with 27,403,500 shares unvested at the beginning of the year and 13,038,