[Management Discussion and Analysis](index=3&type=section&id=Management%20Discussion%20and%20Analysis) [Business Review](index=3&type=section&id=BUSINESS%20REVIEW) The company maintained stable operations in H1 2024 through core business optimization, strategic transformation, and innovation, while actively recovering non-performing assets - Core card and board game business achieved "stable growth and optimized efficiency" targets, with stable user activity, steadily increasing stickiness, payment conversion rates, and ARPU values[6](index=6&type=chunk)[9](index=9&type=chunk) - Strategic cooperation with China Mobile Migu Company to jointly develop the "Guandan" game, expected to launch in H2 2025, aiming to be a new growth engine[7](index=7&type=chunk)[10](index=10&type=chunk) - Professional card and board game PGC content influence expanded, with significant growth in live broadcast exposure, viewership, and topic popularity on platforms like Douyin, Kuaishou, and Huya, and collaboration with Queyou to promote competitive mahjong as a sport[11](index=11&type=chunk)[15](index=15&type=chunk) - H2 and future strategic priorities include optimizing core product experience, diversifying platform ecosystem through external partnerships, exploring new domestic and international markets, integrating AI/metaverse technologies and local card and board game culture, and seeking strategic cooperation or M&A opportunities[12](index=12&type=chunk)[15](index=15&type=chunk) - Continuously pursuing recovery of non-performing assets, including overdue receivables and historical investments left by former management (including Mr. Wu Guoliang), with substantial assets already recovered and legal liabilities to be further pursued[14](index=14&type=chunk)[16](index=16&type=chunk) [Financial Review](index=5&type=section&id=Financial%20Review) H1 2024 saw significant financial improvement with reduced losses, increased revenue, and higher gross margin, despite rising debt-to-asset ratio and ongoing litigation Key Financial Indicators H1 2024 | Indicator | H1 2024 (RMB million) | H1 2023 (RMB million) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | **Revenue** | 50.2 | 47.5 | +5.6% | | **Cost of Revenue** | 23.2 | 23.8 | -2.6% | | **Gross Profit Margin** | 53.8% | 50.0% | +3.8 percentage points | | **Other Income** | 2.8 | 4.9 | -42.9% | | **Other Gains and Losses** | -0.2 (Loss) | 3.8 (Gain) | -4.0 (million) | | **Selling and Marketing Expenses** | 6.0 | 7.0 | -14.7% | | **Administrative Expenses** | 15.3 | 16.2 | -5.3% | | **Research and Development Expenses** | 3.7 | 10.4 | -64.2% | | **Fair Value Change in Financial Assets at FVTPL** | -10.2 (Loss) | -10.8 (Loss) | -5.6% | | **Loss Attributable to Equity Holders of the Company** | -19.8 | -66.4 | -70.18% | | **Income Tax Expense** | 0 | 0.2 | -100% | | **Total Bank Balances and Cash** | 40.2 | 35.5 (Dec 31, 2023) | +13.3% | | **Current Ratio** | 2.13 | 2.21 (Dec 31, 2023) | -0.08 | | **Debt-to-Asset Ratio** | 7.6% | 0% (Dec 31, 2023) | +7.6 percentage points | - Financial assets at fair value through profit or loss decreased from **RMB 26.5 million** as of December 31, 2023, to **RMB 14.2 million** as of June 30, 2024, primarily due to unlisted equity investments[45](index=45&type=chunk)[47](index=47&type=chunk) - As of June 30, 2024, the Group had **67 employees**, with total staff costs of **RMB 13.1 million**, a year-on-year increase of **12.0%**[58](index=58&type=chunk)[64](index=64&type=chunk) - As of June 30, 2024, the Group had no pledged assets or significant contingent liabilities[55](index=55&type=chunk)[56](index=56&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) [Other Information](index=11&type=section&id=Other%20Information) [Interim Dividend](index=11&type=section&id=INTERIM%20DIVIDEND) The Board decided not to declare any interim dividend for the six months ended June 30, 2024 - No interim dividend was declared for the six months ended June 30, 2024 (H1 2023: nil)[67](index=67&type=chunk)[69](index=69&type=chunk) [Directors' and Chief Executives' Interests and Short Positions in the Shares, Underlying Shares and Debentures of the Company](index=11&type=section&id=DIRECTORS'%20AND%20CHIEF%20EXECUTIVES'%20INTERESTS%20AND%20SHORT%20POSITIONS%20IN%20THE%20SHARES%2C%20UNDERLYING%20SHARES%20AND%20DEBENTURES%20OF%20THE%20COMPANY) As of June 30, 2024, Mr. Lu Jingsheng beneficially held 2.04% of the company's shares, with no other directors or chief executives holding disclosable material interests or short positions Directors' Shareholdings (As of June 30, 2024) | Director's Name | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage of the Company's Interest | | :--- | :--- | :--- | :--- | | Mr. Lu Jingsheng | Beneficial Owner | 22,000,000 (L) | 2.04% | - As of June 30, 2024, save for Mr. Lu Jingsheng, no other directors or chief executives held any interests or short positions in the shares, underlying shares, or debentures of the Company required to be disclosed under the Securities and Futures Ordinance[72](index=72&type=chunk)[74](index=74&type=chunk) [Substantial Shareholders' Interests and Short Positions in the Shares, Underlying Shares and Debentures of the Company](index=12&type=section&id=SUBSTANTIAL%20SHAREHOLDERS'%20INTERESTS%20AND%20SHORT%20POSITIONS%20IN%20THE%20SHARES%2C%20UNDERLYING%20SHARES%20AND%20DEBENTURES%20OF%20THE%20COMPANY) As of June 30, 2024, the company's substantial shareholders, including Caixin Investment Co., Ltd., Mr. Li Yangyang, Sports Window Culture Co., Ltd., Glassy Mind Holdings Limited, Mr. Yang Qing, Mr. Wu Guoliang, Mr. Zhang Peng, Jianying Ourgame High Growth Investment Fund, and two receivers, each held over 5% of the company's shares Substantial Shareholders' Shareholdings (As of June 30, 2024) | Shareholder's Name/Name | Capacity/Nature of Interest | Number of Shares Held | Approximate Percentage of the Company's Interest | | :--- | :--- | :--- | :--- | | Caixin Investment Co., Ltd. | Beneficial Owner | 186,088,706 (L) | 17.27% | | | Other | 36,235,351 (L) | 3.36% | | Mr. Li Yangyang | Beneficial Owner | 21,290,000 (L) | 1.98% | | | Interest of Controlled Corporation | 222,324,057 (L) | 20.63% | | | Other | 75,688,536 (L) | 7.02% | | Irena Group Co., Ltd. (Sports Window Culture Co., Ltd.) | Interest of Controlled Corporation | 291,919,848 (L) | 27.08% | | Yi Jia Investment Limited | Interest of Controlled Corporation | 291,919,848 (L) | 27.08% | | Great Sports Group Ltd. | Interest of Controlled Corporation | 291,919,848 (L) | 27.08% | | Glassy Mind Holdings Limited | Beneficial Owner | 291,919,848 (L) | 27.08% | | Mr. Yang Qing | Beneficial Owner | 36,531,064 (L) | 3.39% | | | Interest of Controlled Corporation | 221,653,555 (L) | 20.57% | | Mr. Wu Guoliang | Beneficial Owner | 36,531,064 (L) | 3.39% | | | Interest of Controlled Corporation | 221,653,555 (L) | 20.57% | | Mr. Zhang Peng | Beneficial Owner | 12,884,425 (L) | 1.20% | | | Interest of Controlled Corporation | 221,653,555 (L) | 20.57% | | Total Victory Global Limited | Interest of Controlled Corporation | 221,653,555 (L) | 20.57% | | Jianying Ourgame High Growth Investment Fund | Beneficial Owner | 200,502,555 (L) | 18.60% | | Lynch Barry Patrick | Interest of Receiver | 132,464,366 (L) | 12.29% | | Middleton Edward Simon | Interest of Receiver | 132,464,366 (L) | 12.29% | [Share Option Schemes](index=15&type=section&id=SHARE%20OPTION%20SCHEMES) The company has three share option schemes: Employee Pre-IPO, Management Pre-IPO, and 2014 Share Option Schemes. Employee and Management Pre-IPO options have all been exercised or expired, while the 2014 scheme saw no changes during the period, with a significant number of options remaining unexercised - The Employee Pre-IPO Share Option Scheme was fully exercised in 2019, with **zero** share options available for grant as of June 30, 2024[85](index=85&type=chunk)[87](index=87&type=chunk) - All **46,219,930** share options under the Management Pre-IPO Share Option Scheme expired in H1 2024, resulting in **zero** share options available for grant as of June 30, 2024[90](index=90&type=chunk)[91](index=91&type=chunk) Overview of 2014 Share Option Scheme (As of June 30, 2024) | Grantee | Outstanding as of Jan 1, 2024 | Changes during the Period | Outstanding as of June 30, 2024 | Exercise Price per Share (HKD) | | :--- | :--- | :--- | :--- | :--- | | Directors | 31,360,000 | — | 31,360,000 | 2.67 / 5.506 | | Employees | 38,853,839 | — | 38,853,839 | 2.67 / 4.402 / 3.684 / 3.95 / 2.866 | | **Total** | **62,113,839** | **—** | **62,113,839** | | - As of June 30, 2024, the total number of share options available for grant under the 2014 Share Option Scheme was **72,279,037**[97](index=97&type=chunk) [Share Award Scheme](index=19&type=section&id=Share%20Award%20Scheme) The company adopted a Share Award Scheme in 2017 to incentivize and retain eligible individuals. As of June 30, 2024, **1,450,000** awarded shares remained unexercised, with **750,000** vesting during the reporting period, and **17,071,153** awards still available for grant under the scheme mandate - The Share Award Scheme aims to align the interests of eligible individuals with the Group through share ownership, dividends, and increased share value, thereby encouraging and retaining them to contribute to the Group's long-term development and profitability[98](index=98&type=chunk)[101](index=101&type=chunk) Share Award Scheme Movements (As of June 30, 2024) | Indicator | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Outstanding as of Jan 1 | 2,200,000 | 2,200,000 | | Granted during the Period | — | — | | Vested during the Period | 750,000 | 750,000 | | Outstanding as of June 30 | 1,450,000 | 1,450,000 | - As of June 30, 2024, the number of awards available for grant under the Share Award Scheme's plan mandate was **17,071,153**[100](index=100&type=chunk)[101](index=101&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=21&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) For the six months ended June 30, 2024, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities, nor did they hold any treasury shares - For the six months ended June 30, 2024, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[105](index=105&type=chunk)[109](index=109&type=chunk) - As of June 30, 2024, the Company held no treasury shares[106](index=106&type=chunk)[109](index=109&type=chunk) [Corporate Governance](index=21&type=section&id=Corporate%20Governance) The company is committed to strict corporate governance. During the reporting period, it complied with the Corporate Governance Code, though the roles of Chairman and CEO were combined, constituting a deviation. Effective March 1, 2025, Ms. Xu Jin will be appointed CEO, and Mr. Lu Jingsheng will transition to CFO, separating the Chairman and CEO roles - The Company complied with the Corporate Governance Code, with a deviation from Code Provision C.2.1 (roles of Chairman and Chief Executive should be separate and not performed by the same individual)[108](index=108&type=chunk)[110](index=110&type=chunk) - Effective May 7, 2024, Mr. Lu Jingsheng concurrently served as Chairman and Chief Executive Officer. Effective March 1, 2025, Ms. Xu Jin will be appointed Executive Director and Chief Executive Officer, and Mr. Lu Jingsheng will be re-designated as Chief Financial Officer, separating the roles of Chairman and Chief Executive Officer[112](index=112&type=chunk)[117](index=117&type=chunk) [Model Code](index=22&type=section&id=Model%20Code) The company adopted the Model Code in Appendix C3 of the Listing Rules to regulate directors' securities transactions, with all directors confirming strict compliance for the six months ended June 30, 2024 - All Directors confirmed strict compliance with the Model Code for Securities Transactions by Directors of Listed Issuers for the six months ended June 30, 2024[114](index=114&type=chunk)[119](index=119&type=chunk) [Audit Committee](index=22&type=section&id=Audit%20Committee) The Audit Committee, comprising three independent non-executive directors, reviews and oversees the company's internal controls and financial reporting, and has reviewed the Group's unaudited condensed consolidated interim results and interim report for the six months ended June 30, 2024 - The Audit Committee comprises Mr. Zhang Li (Chairman), Mr. Ma Shaohua, and Mr. Dai Bing (all independent non-executive Directors)[115](index=115&type=chunk)[120](index=120&type=chunk) - The Audit Committee has reviewed the Group's unaudited condensed consolidated interim results and interim report for the six months ended June 30, 2024, and discussed accounting policies and internal control matters[122](index=122&type=chunk)[124](index=124&type=chunk) [Material Litigation](index=23&type=section&id=Material%20Litigation) The company is involved in two material litigations: loan default arbitration and civil lawsuit against Merit Horizon and Ms. Fu Qiang, and convertible bond arbitration against Spoville. The Fast Express loan arbitration and lawsuit are ongoing, while the Spoville arbitration award has been recognized and enforced by a Korean court, with asset investigation and enforcement underway - The Company initiated arbitration against Merit Horizon for breach of a loan agreement before the Hong Kong Arbitration Tribunal, claiming no less than **HKD 97,948,090.47**, with arbitration proceedings ongoing[126](index=126&type=chunk)[128](index=128&type=chunk) - The Company filed a civil lawsuit in the Hong Kong High Court against Glassy Mind Holdings Limited, Ms. Fu Qiang, and Mr. Gao Hong, seeking repayment of loan principal and interest, and claiming damages for former directors' breach of fiduciary duties, with litigation proceedings ongoing[127](index=127&type=chunk)[129](index=129&type=chunk) - The ICC International Court of Arbitration issued a final award in the Spoville convertible bond case, ordering Spoville and its major shareholder to pay principal, interest, legal fees, translation fees, and arbitration costs, totaling **KRW 2,184,541,667** and **USD 85,000**[135](index=135&type=chunk) - A Korean court ruled in May 2024 to recognize and enforce the arbitration award against Spoville, and the Company is currently conducting asset investigations and will apply for compulsory enforcement[137](index=137&type=chunk)[143](index=143&type=chunk) [Qualification Requirement](index=26&type=section&id=Qualification%20Requirement) As of June 30, 2024, the company had no updated disclosure information regarding qualification requirements - As of June 30, 2024, the Company had no updated disclosure information regarding qualification requirements[140](index=140&type=chunk)[144](index=144&type=chunk) [Continuing Disclosure Pursuant to Rules 13.18 and 13.21 of the Listing Rules](index=26&type=section&id=Continuing%20Disclosure%20Pursuant%20to%20Rules%2013.18%20and%2013.21%20of%20the%20Listing%20Rules) The company has no other disclosure obligations under Rules 13.18 and 13.21 of the Listing Rules - The Company had no other disclosure obligations under Rules 13.18 and 13.21 of the Listing Rules[141](index=141&type=chunk)[145](index=145&type=chunk) [Appreciation](index=26&type=section&id=Appreciation) The Board expresses its gratitude to the management team and employees for their tireless efforts, dedication, and support during the reporting period - The Board expressed its appreciation to the management team and employees for their tireless efforts, dedication, and support during the period[142](index=142&type=chunk)[146](index=146&type=chunk) [Report on Review of Condensed Consolidated Financial Statements](index=27&type=section&id=Report%20on%20Review%20of%20Condensed%20Consolidated%20Financial%20Statements) [Introduction](index=27&type=section&id=Introduction) UHY Mac & Co. has reviewed Ourgame International Holdings Limited's condensed consolidated financial statements for the six months ended June 30, 2024, prepared under IAS 34. The review report is solely for the Board and assumes no responsibility to other parties - The review report was conducted by UHY Mac & Co. in accordance with International Standard on Review Engagements 2410 and reports conclusions solely to the Board of Directors[149](index=149&type=chunk)[150](index=150&type=chunk) - The condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[149](index=149&type=chunk)[150](index=150&type=chunk) [Scope of Review](index=28&type=section&id=Scope%20of%20Review) The scope of review is significantly narrower than an audit conducted under International Standards on Auditing, thus it cannot guarantee detection of all material matters, and no audit opinion is expressed - The scope of a review is substantially less than that of an audit conducted in accordance with International Standards on Auditing, and consequently, no audit opinion is expressed[151](index=151&type=chunk)[154](index=154&type=chunk) [Conclusion](index=28&type=section&id=Conclusion) Based on the review, no matters were identified that caused the reviewer to believe the condensed consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 - Nothing has come to the reviewer's attention that causes them to believe the condensed consolidated financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34[152](index=152&type=chunk)[155](index=155&type=chunk) [Other Matter](index=28&type=section&id=Other%20Matter) The comparative condensed consolidated statement of profit or loss and other comprehensive income, statement of changes in equity, and statement of cash flows for the six months ended June 30, 2023, and related explanatory notes, were not reviewed in accordance with ISRE 2410 - The comparative financial statements and notes for the six months ended June 30, 2023, were not reviewed in accordance with International Standard on Review Engagements 2410[153](index=153&type=chunk)[156](index=156&type=chunk) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=29&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) [Loss for the period attributable to owners of the Company](index=30&type=section&id=Loss%20for%20the%20period%20attributable%20to%20owners%20of%20the%20Company) For the six months ended June 30, 2024, the loss attributable to owners of the Company significantly narrowed to **RMB 19,770 thousand** from **RMB 66,436 thousand** in the prior year period Loss for the Period Attributable to Owners of the Company | Item | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :--- | :--- | :--- | | From continuing operations | (19,770) | (21,010) | | From discontinued operations | — | (45,426) | | **Total** | **(19,770)** | **(66,436)** | [Total comprehensive loss for the period](index=30&type=section&id=Total%20comprehensive%20loss%20for%20the%20period) For the six months ended June 30, 2024, the total comprehensive loss attributable to owners of the Company significantly decreased to **RMB 18,675 thousand** from **RMB 111,711 thousand** in the prior year period Total Comprehensive Loss Attributable to Owners of the Company | Item | H1 2024 (RMB thousand) | H1 2023 (RMB thousand) | | :--- | :--- | :--- | | From continuing operations | (18,675) | (66,285) | | From discontinued operations | — | (45,426) | | **Total** | **(18,675)** | **(111,711)** | [Loss per share](index=30&type=section&id=Loss%20per%20share) For the six months ended June 30, 2024, basic loss per share from continuing and discontinued operations significantly narrowed to **RMB 1.84 cents** from **RMB 6.20 cents** in the prior year period Loss per Share (RMB cents) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | From continuing and discontinued operations: | | | | Basic loss per share | (1.84) | (6.20) | | Diluted loss per share | (1.84) | (6.20) | | From continuing operations: | | | | Basic loss per share | (1.84) | (1.96) | | Diluted loss per share | (1.84) | (1.96) | [Condensed Consolidated Statement of Financial Position](index=31&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) [Assets and Liabilities](index=31&type=section&id=ASSETS%20AND%20LIABILITIES) As of June 30, 2024, the Group's non-current assets and total net assets decreased, while net current assets increased. Cash and cash equivalents rose, alongside new bank loans Key Balance Sheet Data (RMB thousand) | Indicator | June 30, 2024 | Dec 31, 2023 | Change | | :--- | :--- | :--- | :--- | | **Non-current assets** | 93,761 | 114,047 | -20,286 | | Property, plant and equipment | 272 | — | +272 | | Right-of-use assets | 4,948 | — | +4,948 | | Investment properties | 1,310 | 1,540 | -230 | | Interests in associates | 73,006 | 86,028 | -13,022 | | Financial assets at fair value through profit or loss | 14,215 | 26,469 | -12,254 | | **Current assets** | 82,651 | 73,408 | +9,243 | | Trade and other receivables | 41,995 | 37,468 | +4,527 | | Cash and cash equivalents | 40,176 | 35,462 | +4,714 | | **Current liabilities** | 38,859 | 33,170 | +5,689 | | Trade and other payables | 22,431 | 27,502 | -5,071 | | Bank loan | 10,000 | — | +10,000 | | **Net current assets** | 43,792 | 40,238 | +3,554 | | **Net assets** | 131,168 | 150,889 | -19,721 | | **Total equity** | 131,168 | 150,889 | -19,721 | [Condensed Consolidated Statement of Changes in Equity](index=33&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) [Equity attributable to equity holders of the Company](index=34&type=section&id=Equity%20attributable%20to%20equity%20holders%20of%20the%20Company) As of June 30, 2024, equity attributable to equity holders of the Company decreased to **RMB 143,235 thousand** from **RMB 161,832 thousand** on January 1, 2024, primarily due to loss for the period and transfer upon expiry of share options Movements in Equity Attributable to Equity Holders of the Company (RMB thousand) | Item | Jan 1, 2024 | Loss for the period | Other comprehensive income | Share-based compensation | Vested share awards | Transfer upon expiry of share options | Dividends paid to non-controlling interests | June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Equity attributable to equity holders of the Company** | 161,832 | (19,770) | 1,095 | 78 | — | — | — | 143,235 | | **Non-controlling interests** | (10,943) | (1,012) | — | — | — | — | (112) | (12,067) | | **Total equity** | **150,889** | **(20,782)** | **1,095** | **78** | **—** | **—** | **(112)** | **131,168** | - Upon expiry of share options, **RMB 59,949 thousand** from the share option reserve was transferred to accumulated losses[165](index=165&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=35&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) [Net cash from operating activities](index=35&type=section&id=Net%20cash%20from%20operating%20activities) For the six months ended June 30, 2024, net cash outflow from operating activities was **RMB 4,580 thousand**, compared to a net cash inflow of **RMB 12,740 thousand** in the prior year period, primarily impacted by working capital changes Cash Flow from Operating Activities (RMB thousand) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Loss before income tax (continuing operations) | (20,782) | (18,505) | | Loss before income tax (discontinued operations) | — | (43,957) | | Adjustments for non-cash items | 25,486 | 54,538 | | Operating profit/(loss) before working capital changes | 4,704 | (7,924) | | Net changes in working capital | (9,602) | 20,598 | | Cash (used in)/generated from operations | (4,898) | 42,894 | | Interest received | 318 | 9 | | Income tax paid | — | (163) | | **Net cash (used in)/from operating activities** | **(4,580)** | **12,740** | [Net cash from/(used in) investing activities](index=35&type=section&id=Net%20cash%20from%2F%28used%20in%29%20investing%20activities) For the six months ended June 30, 2024, investing activities generated a net cash inflow of **RMB 1,359 thousand**, compared to a net cash outflow of **RMB 77,867 thousand** in the prior year period, primarily due to proceeds from disposal of financial assets and cash outflow from disposal of subsidiaries in 2023 Cash Flow from Investing Activities (RMB thousand) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Proceeds from disposal of financial assets at fair value through profit or loss | 2,044 | 756 | | Acquisition of associates | (400) | (926) | | Purchase of property, plant and equipment | (285) | (860) | | Net cash outflow on disposal of subsidiaries | — | (77,311) | | **Net cash from/(used in) investing activities** | **1,359** | **(77,867)** | [Net cash from/(used in) financing activities](index=36&type=section&id=Net%20cash%20from%2F%28used%20in%29%20financing%20activities) For the six months ended June 30, 2024, financing activities generated a net cash inflow of **RMB 7,935 thousand**, primarily from new bank loans, compared to a net cash outflow of **RMB 1,600 thousand** in the prior year period Cash Flow from Financing Activities (RMB thousand) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Proceeds from bank loan | 10,000 | — | | Payment of lease liabilities | (1,821) | (1,379) | | Dividends paid to non-controlling interests | (112) | — | | Interest paid | (132) | (221) | | **Net cash from/(used in) financing activities** | **7,935** | **(1,600)** | [Net increase/(decrease) in cash and cash equivalents](index=36&type=section&id=Net%20increase%2F%28decrease%29%20in%20cash%20and%20cash%20equivalents) For the six months ended June 30, 2024, net increase in cash and cash equivalents was **RMB 4,714 thousand**, with an ending balance of **RMB 40,176 thousand** Cash and Cash Equivalents Movements (RMB thousand) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Net increase/(decrease) in cash and cash equivalents | 4,714 | (66,727) | | Cash and cash equivalents at beginning of period | 35,462 | 87,289 | | **Cash and cash equivalents at end of period** | **40,176** | **20,562** | [Notes to the Condensed Consolidated Financial Statements](index=37&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) [1. BASIS OF PREPARATION](index=37&type=section&id=1.%20BASIS%20OF%20PREPARATION) The condensed consolidated financial statements are prepared in accordance with IAS 34 'Interim Financial Reporting' and applicable disclosure requirements of the HKEX Listing Rules - The condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[173](index=173&type=chunk)[176](index=176&type=chunk) [2. ACCOUNTING POLICIES](index=37&type=section&id=2.%20ACCOUNTING%20POLICIES) The condensed consolidated financial statements are prepared on a historical cost basis, except for certain properties and financial instruments measured at fair value. Revisions to IFRS accounting standards were applied this period, with no significant impact on financial position or performance - The condensed consolidated financial statements are prepared on the historical cost basis, except for certain properties and financial instruments which are measured at fair value[174](index=174&type=chunk)[177](index=177&type=chunk) - Revisions to IFRS accounting standards, including amendments to IFRS 16, IAS 1, IAS 7, and IFRS 7, were first applied in the current period but had no significant impact on the Group's financial position and performance[175](index=175&type=chunk)[178](index=178&type=chunk) [3. RESTATEMENTS](index=38&type=section&id=3.%20RESTATEMENTS) Due to the loss of control over AGAE Group on January 1, 2023, and the disposal of a 40% equity interest in Lianzhong Zhihe, the businesses of AGAE Group and Lianzhong Zhihe are presented separately as discontinued operations, leading to financial statement restatements - The Directors of the Company considered that the Company lost control over Allied Gaming & Entertainment Inc. (AGAE) on January 1, 2023, after a series of events, and its business has been separately presented as a discontinued operation[181](index=181&type=chunk) - The Group disposed of its 40% equity interest in Beijing Lianzhong Zhihe Technology Co., Ltd. (Lianzhong Zhihe), a non-wholly owned subsidiary, to AGAE Group, and its operating results and financial position have been separately presented as a discontinued operation in the condensed consolidated statement of profit or loss and other comprehensive income[181](index=181&type=chunk) [4. REVENUE AND SEGMENT INFORMATION](index=39&type=section&id=4.%20REVENUE%20AND%20SEGMENT%20INFORMATION) For the six months ended June 30, 2024, the company's continuing operations revenue was **RMB 50,155 thousand**, primarily from online game and advertising services, all sourced from mainland China, with no single customer contributing over 10% of revenue Revenue from Continuing Operations Breakdown (RMB thousand) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Online game revenue | 44,302 | 40,002 | | Online advertising service revenue | 5,853 | 7,513 | | **Total** | **50,155** | **47,515** | - All revenue from continuing operations was generated from mainland China[189](index=189&type=chunk) - For the six months ended June 30, 2024 and 2023, no revenue from any individual game player or customer accounted for 10% or more of the Group's revenue[190](index=190&type=chunk)[191](index=191&type=chunk) [5. OTHER INCOME](index=41&type=section&id=5.%20OTHER%20INCOME) For the six months ended June 30, 2024, other income decreased to **RMB 2,842 thousand** from **RMB 4,869 thousand** in the prior year period, mainly due to reduced royalty income and software sales from discontinued operations Other Income Breakdown (RMB thousand) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Royalty income from discontinued operations | 127 | 1,264 | | Sale of software to discontinued operations | — | 1,981 | | Loan interest income | 165 | 220 | | Bank interest income | 318 | 9 | | Government grants | 6 | 139 | | Income from providing card and board game venues | 2,212 | 1,256 | | Miscellaneous income | 14 | — | | **Total** | **2,842** | **4,869** | [6. OTHER GAINS AND LOSSES](index=41&type=section&id=6.%20OTHER%20GAINS%20AND%20LOSSES) For the six months ended June 30, 2024, other losses were **RMB 192 thousand**, compared to gains of **RMB 3,772 thousand** in the prior year period, primarily due to gains from deemed acquisition of interests in associates in 2023, which did not occur this period Other Gains and Losses Breakdown (RMB thousand) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Net foreign exchange gain | 110 | 10 | | Impairment loss on prepayments | (302) | — | | Gain on deemed acquisition of interests in associates | — | 3,762 | | **Total** | **(192)** | **3,772** | [7. INCOME TAX EXPENSE](index=42&type=section&id=7.%20INCOME%20TAX%20EXPENSE) For the six months ended June 30, 2024, the Group incurred no income tax expense, compared to **RMB 163 thousand** in the prior year period Income Tax Expense (RMB thousand) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | PRC corporate income tax | — | (163) | [8. DISCONTINUED OPERATIONS](index=42&type=section&id=8.%20DISCONTINUED%20OPERATIONS) The Group lost control over AGAE Group on January 1, 2023, and completed the disposal of a 40% equity interest in Lianzhong Zhihe on October 31, 2023. The deemed disposal of AGAE Group resulted in a loss of **RMB 46,895 thousand**, while Lianzhong Zhihe's business generated a profit of **RMB 2,938 thousand** in H1 2023 - The Directors of the Company considered that the Group lost control over AGAE on January 1, 2023, after a series of events, and its business has been separately presented as a discontinued operation[198](index=198&type=chunk)[200](index=200&type=chunk) Loss on Disposal of AGAE Group (RMB thousand) | Item | H1 2023 | | :--- | :--- | | Loss on disposal of AGAE | (46,895) | - The Group entered into a sale agreement on August 16, 2023, to dispose of its **40%** equity interest in Lianzhong Zhihe to AGAE Group for **USD 7,000,000**, with the disposal completed on October 31, 2023[203](index=203&type=chunk)[206](index=206&type=chunk) Profit for the Period from Lianzhong Zhihe Business (RMB thousand) | Item | H1 2023 | | :--- | :--- | | Profit for the period from Lianzhong Zhihe business | 2,938 | [9. LOSS FOR THE PERIOD](index=45&type=section&id=9.%20LOSS%20FOR%20THE%20PERIOD) For the six months ended June 30, 2024, loss for the period from continuing operations was reached after deducting items such as depreciation and staff costs. Total staff costs amounted to **RMB 13,109 thousand**, an increase from the prior year period Loss for the Period from Continuing Operations after Charging/(Crediting) Items (RMB thousand) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Lease expenses relating to short-term leases | 124 | 176 | | Total depreciation | 474 | 2,616 | | Total staff costs | 13,109 | 11,712 | | Amortisation of intangible assets | — | 624 | [10. DIVIDENDS](index=45&type=section&id=10.%20DIVIDENDS) The Directors do not recommend the payment of an interim dividend for the six months ended June 30, 2024 - The Directors do not recommend the payment of an interim dividend for the six months ended June 30, 2024 (H1 2023: nil)[213](index=213&type=chunk)[214](index=214&type=chunk) [11. LOSS PER SHARE](index=46&type=section&id=11.%20LOSS%20PER%20SHARE) For the six months ended June 30, 2024, basic loss per share from continuing operations was **RMB 1.84 cents**, and from continuing and discontinued operations was also **RMB 1.84 cents**, both showing improvement from the prior year period Basic Loss Per Share Calculation Data (RMB thousand) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Loss for the period attributable to owners of the Company for basic loss per share calculation | (19,770) | (66,436) | | Less: Loss for the period from discontinued operations | — | 45,426 | | Loss for basic loss per share calculation from continuing operations | (19,770) | (21,010) | Weighted Average Number of Ordinary Shares (thousand shares) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Weighted average number of ordinary shares for basic loss per share calculation | 1,072,197 | 1,071,447 | - For the six months ended June 30, 2024 and 2023, the exercise of the Company's share options/warrants was not assumed in calculating diluted earnings/loss per share because their exercise prices were higher than the average market price of the shares during both periods[224](index=224&type=chunk)[226](index=226&type=chunk) [12. PROPERTY, PLANT AND EQUIPMENT AND RIGHT-OF-USE ASSETS](index=48&type=section&id=12.%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT%20AND%20RIGHT-OF-USE%20ASSETS) For the six months ended June 30, 2024, the Group acquired property, plant, and equipment at a cost of **RMB 285 thousand**. During the period, new and renewed lease agreements resulted in the recognition of right-of-use assets and lease liabilities, both amounting to **RMB 5,409 thousand** - For the six months ended June 30, 2024, the cost of property, plant and equipment acquired by the Group was **RMB 285 thousand** (H1 2023: **RMB 860 thousand**)[227](index=227&type=chunk)[232](index=232&type=chunk) - During the interim period, the Group renewed certain lease agreements and entered into new ones with lease terms ranging from 2 to 3 years, recognizing right-of-use assets of **RMB 5,409 thousand** and lease liabilities of **RMB 5,409 thousand**[228](index=228&type=chunk)[232](index=232&type=chunk) [13. INTANGIBLE ASSETS](index=48&type=section&id=13.%20INTANGIBLE%20ASSETS) For the six months ended June 30, 2024, there were no additions to intangible assets - For the six months ended June 30, 2024, there were no additions to intangible assets (H1 2023: **RMB 28 thousand**)[229](index=229&type=chunk)[233](index=233&type=chunk) [14. INTEREST IN ASSOCIATES](index=48&type=section&id=14.%20INTEREST%20IN%20ASSOCIATES) As of June 30, 2024, interests in associates primarily comprised a **32.6%** ownership interest in AGAE, amounting to **RMB 69,847 thousand**, a decrease from December 31, 2023, mainly due to the share of AGAE's losses accounted for using the equity method; however, AGAE's fair value increased - As of June 30, 2024, interests in associates primarily referred to a **32.6%** ownership interest in AGAE, amounting to **RMB 69,847 thousand** (December 31, 2023: **RMB 82,153 thousand**)[230](index=230&type=chunk)[234](index=234&type=chunk) - The decrease in interest in AGAE during the interim period was due to the share of AGAE's losses accounted for using the equity method[230](index=230&type=chunk)[234](index=234&type=chunk) - The fair value of AGAE as of June 30, 2024, was approximately **RMB 110,596 thousand** (December 31, 2023: **RMB 89,827 thousand**)[231](index=231&type=chunk)[234](index=234&type=chunk) [15. TRADE AND OTHER RECEIVABLES](index=49&type=section&id=15.%20TRADE%20AND%20OTHER%20RECEIVABLES) As of June 30, 2024, total trade and other receivables increased to **RMB 41,995 thousand** from December 31, 2023, with loans and interest receivables constituting a significant portion, and expected credit loss provisions recognized Trade and Other Receivables Breakdown (RMB thousand) | Item | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Trade receivables (net) | 1,636 | 763 | | Prepayments (net) | 10,336 | 9,107 | | Other receivables and deposits (net) | 12,170 | 9,745 | | Loans and interest receivables (net) | 17,853 | 17,853 | | **Total** | **41,995** | **37,468** | Trade Receivables Ageing Analysis (RMB thousand) | Ageing | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | 0–30 days | 1,601 | 578 | | 31–60 days | 5 | 99 | | 61–90 days | — | 20 | | 91–180 days | — | 18 | | 181–365 days | — | 43 | | Over 1 year | 747 | 728 | | **Total** | **2,353** | **1,486** | Expected Credit Loss Provision Movements (RMB thousand) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Trade receivables | (6) | 181 | | Other receivables and deposits | 83 | (228) | | Loans and interest receivables | 165 | 220 | | **Total** | **242** | **173** | [16. TRADE AND OTHER PAYABLES](index=51&type=section&id=16.%20TRADE%20AND%20OTHER%20PAYABLES) As of June 30, 2024, total trade and other payables decreased to **RMB 22,431 thousand** from December 31, 2023, with trade payables to third parties constituting the largest portion Trade and Other Payables Breakdown (RMB thousand) | Item | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Trade payables to third parties | 3,259 | 4,137 | | Other payables and accrued expenses | 10,692 | 7,067 | | Staff costs and welfare accruals | 3,058 | 4,654 | | Amounts due to associates | 2,853 | 4,328 | | Accrued legal and professional fees | 3,390 | 2,064 | | **Total** | **22,431** | **27,502** | Trade Payables to Third Parties Ageing Analysis (RMB thousand) | Ageing | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | 0–30 days | 3,057 | 961 | | Over 1 year | 2 | 3,072 | | **Total** | **3,259** | **4,137** | [17. BANK LOAN](index=52&type=section&id=17.%20BANK%20LOAN) As of June 30, 2024, the Group obtained new bank loans of **RMB 10,000 thousand**, which are unsecured, unguaranteed, bear a fixed annual interest rate of **3.0%**, and are repayable within one year Bank Loan (RMB thousand) | Item | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Current portion of bank loan | 10,000 | — | - The bank loan is unsecured, unguaranteed, bears a fixed annual interest rate of **3.0%**, is repayable within one year, and is denominated in RMB[252](index=252&type=chunk) [18. SHARE-BASED COMPENSATION TRANSACTIONS](index=53&type=section&id=18.%20SHARE-BASED%20COMPENSATION%20TRANSACTIONS) The Group has a Management Pre-IPO Share Option Scheme, a 2014 Share Option Scheme, and a Share Award Scheme. All Management Pre-IPO options expired in H1 2024. The 2014 Share Option Scheme saw no changes during the period. **750,000** awarded shares vested under the Share Award Scheme. Total share-based compensation expense recognized this period was **RMB 78 thousand** Management Pre-IPO Share Option Scheme Movements (USD) | Grantee | Outstanding as of Jan 1, 2024 | Expired during the year | Outstanding as of June 30, 2024 | Exercise Price per Share | | :--- | :--- | :--- | :--- | :--- | | Former Directors | 41,702,128 | (41,702,128) | — | 0.16714303 | | Former Employees | 4,517,802 | (4,517,802) | — | 0.16714303 | | **Total** | **46,219,930** | **(46,219,930)** | **—** | | 2014 Share Option Scheme Movements (HKD) | Grantee | Outstanding as of Jan 1, 2024 | Changes during the Period | Outstanding as of June 30, 2024 | Exercise Price per Share | | :--- | :--- | :--- | :--- | :--- | | Directors | 31,360,000 | — | 31,360,000 | 2.67 / 5.506 | | Employees | 38,853,839 | — | 38,853,839 | 2.67 / 4.402 / 3.684 / 3.95 / 2.866 | | **Total** | **62,113,839** | **—** | **62,113,839** | | - For the six months ended June 30, 2024, **737,500** shares vested, and as of that date, **36,550,983** shares had vested[272](index=272&type=chunk)[273](index=273&type=chunk) - For the six months ended June 30, 2024, the total expense recognized by the Group for the aforementioned share awards and share options was **RMB 78 thousand** (H1 2023: **RMB 774 thousand**)[272](index=272&type=chunk)[273](index=273&type=chunk) [19. SIGNIFICANT RELATED PARTY TRANSACTIONS](index=57&type=section&id=19.%20SIGNIFICANT%20RELATED%20PARTY%20TRANSACTIONS) During the period, the Group engaged in transactions with related parties, including staff welfare expenses. Total remuneration for key management personnel was **RMB 4,537 thousand**, comprising directors' fees, basic salaries and allowances, retirement benefit scheme contributions, and share-based compensation Significant Related Party Transactions (RMB thousand) | Related Party Name | Relationship | Nature of Transaction | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Former Acting Chief Executive Officer | Substantial shareholder of the Company | Staff welfare expenses | 500 | 600 | Key Management Personnel Remuneration (RMB thousand) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Directors' fees | 492 | 657 | | Basic salaries and allowances | 3,519 | 3,659 | | Retirement benefit scheme contributions | 448 | 305 | | Share-based compensation | 78 | 616 | | **Total** | **4,537** | **4,222** | [20. FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS](index=58&type=section&id=20.%20FAIR%20VALUE%20MEASUREMENTS%20OF%20FINANCIAL%20INSTRUMENTS) Certain financial instruments of the Group are measured at fair value, primarily unlisted equity investments classified as Level 3. As of June 30, 2024, the fair value of unlisted equity investments was **RMB 14,215 thousand**, a decrease from December 31, 2023 Financial Assets at Fair Value Through Profit or Loss (RMB thousand) | Item | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | **June 30, 2024** | | | | | | Unlisted equity investments | — | — | 14,215 | 14,215 | | **Dec 31, 2023** | | | | | | Unlisted equity investments | — | — | 26,469 | 26,469 | - The fair value of unlisted equity investments is determined using the asset approach, with key unobservable inputs including marketability discount (**15.6%**) and minority interest discount (**0% to 11.8%**)[284](index=284&type=chunk)[285](index=285&type=chunk) Reconciliation of Level 3 Financial Instruments Carrying Amount (RMB thousand) | Item | 2024 | 2023 | | :--- | :--- | :--- | | As of Jan 1 (audited) | 26,469 | 45,846 | | Disposal | (2,044) | (756) | | Fair value changes recognized in profit or loss | (10,210) | (10,820) | | **As of June 30 (unaudited)** | **14,215** | **34,330** | [21. DISPOSAL OF SUBSIDIARIES](index=61&type=section&id=21.%20DISPOSAL%20OF%20SUBSIDIARIES) The Group's deemed disposal of AGAE Group on January 1, 2023, resulted in a loss of **RMB 46,895 thousand**. AGAE Group's net assets at the deemed disposal date were **RMB 571,234 thousand** - The Directors of the Company considered that the Group lost control over AGAE and deemed to have disposed of AGAE on January 1, 2023[289](index=289&type=chunk)[290](index=290&type=chunk) Analysis of AGAE Group's Net Assets at Deemed Disposal Date (RMB thousand) | Item | Amount | | :--- | :--- | | Property, plant and equipment | 15,004 | | Right-of-use assets | 10,912 | | Digital assets | 344 | | Intangible assets | 158 | | Trade and other receivables | 11,342 | | Certificates of deposit | 484,602 | | Restricted bank balances | 34,614 | | Cash and cash equivalents | 77,311 | | Trade and other payables | (13,589) | | Contract liabilities | (751) | | Lease liabilities | (48,713) | | **Net assets disposed of** | **571,234** | Loss on Disposal of AGAE Group (RMB thousand) | Item | Amount | | :--- | :--- | | Fair value of retained investment (interest in associates) | 78,150 | | Less: Net assets disposed of | (571,234) | | Non-controlling interests | 393,580 | | Reclassification of accumulated translation reserve | 25,676 | | Reclassification of accumulated other reserves | 26,933 | | **Loss on disposal** | **(46,895)** | [22. OTHER LITIGATIONS/ARBITRATIONS](index=62&type=section&id=22.%20OTHER%20LITIGATIONS%2FARBITRATIONS) The Group is involved in two major litigations/arbitrations: former Executive Director Mr. Wu Guoliang's arbitration against AGAE, involving fraud allegations, currently in the discovery phase; and AGAE's second largest shareholder Knighted's lawsuit against AGAE directors and related parties for breach of fiduciary duties, with one lawsuit dismissed, but Knighted has filed a second lawsuit, which is currently pending - Mr. Wu Guoliang (former Executive Director) initiated arbitration against AGAE, claiming **USD 1,000,000** in outstanding debt and alleging fraud in settlement-related documents. The arbitration is currently in the discovery phase, with a hearing scheduled for early November 2025[297](index=297&type=chunk)[299](index=299&type=chunk) - Knighted Pastures, LLC filed a lawsuit against AGAE directors and related parties, alleging breach of fiduciary duties. The court dismissed certain motions and ordered AGAE to pay Knighted **USD 3 million** in legal fees[301](index=301&type=chunk)[303](index=303&type=chunk)[304](index=304&type=chunk)[305](index=305&type=chunk) - Knighted filed a second lawsuit, alleging AGAE directors breached fiduciary duties in approving the strategic investment and securities purchase agreement with Yellow River Capital Group. AGAE believes the claims lack merit and will vigorously defend itself[306](index=306&type=chunk)[308](index=308&type=chunk) - As AGAE cannot reasonably estimate the amount or range of loss for the second Knighted lawsuit, neither the Company's condensed consolidated financial statements nor AGAE's consolidated financial statements have made provisions for this contingency[311](index=311&type=chunk)[314](index=314&type=chunk) [23. COMPARATIVE FIGURES](index=65&type=section&id=23.%20COMPARATIVE%20FIGURES) Except for restatements disclosed in Note 3, certain comparative figures in the condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows have been reclassified to conform to the current year's presentation, but without significant impact on the Group's condensed consolidated financial statements' comparative figures - Except for the restatements disclosed in Note 3, certain comparative figures have been reclassified to conform to the current year's presentation, but without significant impact on the comparative figures of the Group's condensed consolidated financial statements[312](index=312&type=chunk)[315](index=315&type=chunk)

年度報告 Annual Report 2023 Annual Report 年度報告 2023 Contents 目錄 | 02 | Financial Highlights | | --- | --- | | | 財務摘要 | 03 Five Years Financial Summary 五年財務摘要 04 Chairman's Statement 主席報告 07 Management Discussion and Analysis 管理層討論及分析 18 Directors' Report 董事會報告 90 Corporate Governance Report 企業管治報告 114 Independent Auditor's Report 獨立核數師報告 123 Consolidated Statement of Profit or Loss and Other Comprehensive Income 綜合損益及其他全面收益表 125 Consolidated Statement of Financial Position 綜合財務狀況表 127 Consolidated Statement of ...

[Interim Results Overview](index=1&type=section&id=Interim%20Results%20Overview) The company reported a **13.8%** decrease in revenue to **RMB 43,236 thousand** and a **93.0%** increase in loss attributable to owners to **RMB 38,161 thousand** for the six months ended June 30, 2025 Financial Highlights for the Six Months Ended June 30, 2025 | Metric | Six Months Ended June 30, 2025 (thousand RMB) | Six Months Ended June 30, 2024 (thousand RMB) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 43,236 | 50,155 | (13.8 %) | | Loss for the Period Attributable to Owners of the Company | (38,161) | (19,770) | 93.0 % | | Basic Loss Per Share (RMB cents) | (3.56) | (1.84) | 93.5 % | | Diluted Loss Per Share (RMB cents) | (3.56) | (1.84) | 93.5 % | [Business Review](index=2&type=section&id=Business%20Review) The Group advanced its global intellectual sports strategy, stabilizing PC operations, optimizing mobile games, integrating AI and cloud tech, and expanding through strategic partnerships and offline sports park development [Core Business Development](index=2&type=section&id=Core%20Business%20Development) Lianzong International deepened its global intellectual sports and entertainment strategy in H1 2025, stabilizing PC-based "Lianzong Hall" operations and optimizing mobile games - Traditional PC business "Lianzong Hall" maintained stable development, enhancing user engagement and game fairness through community building, new category introduction, and AI/anti-cheat system upgrades[5](index=5&type=chunk) - Mobile card and casual games (e.g., Dou Dizhu, Mahjong, Fishing, Chess) performed well, improving user social experience and retention through optimized interfaces, gameplay, and enhanced in-game community features[5](index=5&type=chunk) [Cutting-Edge Technology and Innovative Business](index=2&type=section&id=Cutting-Edge%20Technology%20and%20Innovative%20Business) The Group deeply integrated AI, upgraded to cloud architecture for stability, and introduced advanced AI models like Deep Seek and ChatGPT for efficiency, while its subsidiary Huayang developed successful intellectual sports event IPs - Fully implemented cloud architecture upgrade, significantly improving system response speed and stability in high-concurrency scenarios, enabling elastic resource scheduling and automated operations, and effectively reducing IT operating costs[6](index=6&type=chunk) - Successfully introduced cutting-edge AI large models like Deep Seek and ChatGPT, building a localized AI model system that significantly enhances efficiency in art development and operations, and explores AI empowerment for traditional strong projects like Chinese Chess and Four-Nation Chess[6](index=6&type=chunk) - Subsidiary Huayang, focusing on intellectual sports events and content production, saw its 'Mahjong Competition King' series, including 'Mahjong Super Cup' and 'Competitive Mahjong Masters,' consistently rank among top online video platforms in viewership, with 'Sichuan Mahjong Star League' setting a new industry record of over **110,000 concurrent online users**[6](index=6&type=chunk)[7](index=7&type=chunk) [Diversified Strategy and International Expansion](index=3&type=section&id=Diversified%20Strategy%20and%20International%20Expansion) The Group expanded content distribution through a Youku partnership, launched the "Intellectual Masters Tournament" with the Danzhou government, developed Lianzong Sports Park, and introduced the "AGAE Overseas Esports League" to Youku - Signed a cooperation agreement with Youku to feature event content on its platform; partnered with the Danzhou Municipal Government in Hainan Province to host the 'Intellectual Masters Tournament' in the Xin'ying Bay area, leveraging a 'tournament + industry + culture & tourism' model to stimulate regional development[7](index=7&type=chunk) - Through its wholly-owned subsidiary Lianzong Sports (Beijing) Co., Ltd., the Group is advancing the construction and operation of Lianzong Sports Park, creating a comprehensive sports platform integrating venues, event hosting, youth training, and sports social activities to diversify revenue streams[8](index=8&type=chunk) - Introduced the 'AGAE Overseas Esports League' (including 'Mario Kart,' 'Valorant,' 'Fortnite') to the Youku platform, achieving precise alignment of global resources with local demand, balancing international vision with localized operations[8](index=8&type=chunk) [Future Outlook](index=3&type=section&id=Future%20Outlook) Lianzong International will continue to leverage its core strengths in card and board games, accelerate innovative business development, and aim to be a unique leader in China's intellectual sports ecosystem - The Group will continue to deepen its core strengths in card and board games, accelerate innovative business development, and actively seize new industry trends[9](index=9&type=chunk) - Committed to becoming a unique 'intellectual sports ecosystem leader' in China's sports industry, contributing Chinese solutions to the innovative development of the global sports and entertainment industry[9](index=9&type=chunk) [Management Discussion and Analysis](index=4&type=section&id=Management%20Discussion%20and%20Analysis) The Group's loss significantly increased due to higher operating expenses and associate losses, while revenue declined, impacting gross margin and liquidity, though future expansion is planned primarily through internal resources [Financial Review](index=4&type=section&id=Financial%20Review) Loss attributable to owners increased to **RMB 38.2 million** in H1 2025 due to higher selling, R&D, resumption, and associate litigation expenses, with revenue down **13.8%** to **RMB 43.2 million** and gross margin declining to **51.7%** - Loss for the period attributable to owners of the Company increased by **93.0%** from **RMB 19.8 million** in the same period of 2024 to **RMB 38.2 million** in the same period of 2025[3](index=3&type=chunk)[10](index=10&type=chunk)[20](index=20&type=chunk) - The increase in loss was primarily due to higher selling and new product R&D expenses, a significant increase in professional fees for resumption, and a substantial increase in litigation expenses for associate AGAE, leading to a higher share of net loss from associates[10](index=10&type=chunk) Changes in Revenue, Cost of Revenue, and Gross Margin | Metric | H1 2025 (thousand RMB) | H1 2024 (thousand RMB) | Change (%) | Change (thousand RMB) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 43,236 | 50,155 | (13.8 %) | (7,000) | | Cost of Revenue | 20,878 | 23,158 | (9.8 %) | (2,280) | | Gross Margin | 51.7 % | 53.8 % | (2.1 pp) | - | - The decrease in revenue was mainly due to stable mobile game business, but a lower average revenue per user (ARPU) for Lianzong Game Hall, resulting in reduced overall Lianzong Game Hall revenue, and MCN business activity not yet fully reflected in revenue[11](index=11&type=chunk) - The decline in gross margin was primarily due to the decrease in revenue from Lianzong Game Hall, which has a higher gross margin[12](index=12&type=chunk) [Expense and Expenditure Analysis](index=5&type=section&id=Expense%20and%20Expenditure%20Analysis) Selling and marketing expenses surged **108.3%** to **RMB 12.5 million**, administrative expenses rose **13.7%** to **RMB 17.4 million** (due to resumption costs), R&D expenses increased **49.0%** to **RMB 5.5 million**, and share of net loss from associates grew **62.1%** to **RMB 23.5 million** (due to AGAE litigation) Changes in Key Expense Categories | Expense Category | H1 2025 (thousand RMB) | H1 2024 (thousand RMB) | Change (%) | Change (thousand RMB) | | :--- | :--- | :--- | :--- | :--- | | Selling and Marketing Expenses | 12,535 | 5,952 | 108.3 % | 6,583 | | Administrative Expenses | 17,392 | 15,349 | 13.7 % | 2,043 | | Research and Development Expenses | 5,543 | 3,719 | 49.0 % | 1,824 | | Share of Net Loss from Associates | 23,471 | 14,517 | 62.1 % | 8,954 | - The increase in administrative expenses was mainly due to higher resumption-related expenses incurred since July 2024[16](index=16&type=chunk) - The increase in R&D expenses was due to the Group's intensified efforts in updating existing versions and developing new versions of online games during the period[17](index=17&type=chunk) - The increase in share of net loss from associates was primarily due to higher litigation expenses incurred by the Company's associate, AGAE, during the period[18](index=18&type=chunk) [Liquidity and Capital Resources](index=6&type=section&id=Liquidity%20and%20Capital%20Resources) Total bank balances and cash decreased **6.7%** to **RMB 12.7 million** as of June 30, 2025; the current ratio fell from **1.68** to **1**, and the debt-to-equity ratio rose from **0%** to **21.2%** Changes in Liquidity Ratios | Metric | June 30, 2025 (thousand RMB) | December 31, 2024 (thousand RMB) | Change (%) | | :--- | :--- | :--- | :--- | | Total Bank Balances and Cash | 12,727 | 13,640 | (6.7 %) | | Current Assets | 30,368 | 47,701 | (36.4 %) | | Current Liabilities | 30,395 | 28,333 | 7.3 % | | Current Ratio | 1 | 1.68 | (0.68 pp) | | Debt-to-Equity Ratio | 21.2 % | 0 % | 21.2 pp | - The Group currently intends to primarily fund future expansion, investments, and business operations through internal resources, but may explore other financing sources when appropriate[22](index=22&type=chunk) [Investments and Assets](index=6&type=section&id=Investments%20and%20Assets) The Group acquired Chinese property with a fair value of **RMB 5.63 million** as collateral for outstanding loans and interest, while financial assets at fair value through profit or loss remained at **RMB 14.2 million**, primarily in game/intellectual sports tech startups and private equity funds - The Group acquired Chinese property with a fair value of **RMB 5,630,000** pledged for outstanding loans and accrued interest[23](index=23&type=chunk)[66](index=66&type=chunk) Financial Assets at Fair Value Through Profit or Loss | Metric | June 30, 2025 (thousand RMB) | December 31, 2024 (thousand RMB) | | :--- | :--- | :--- | | Financial Assets at Fair Value Through Profit or Loss | 14,215 | 14,215 | - The Group invests in financial assets at fair value through profit or loss to complement its game portfolio, explore new business opportunities in ecosystem-related areas, generate strategic operational synergies, and leverage external financial resources for expertise and scale[25](index=25&type=chunk) - These investments primarily include direct equity investments in selected startups (mainly engaged in technology R&D related to games or intellectual sports) and direct subscriptions to private equity funds focused on providing early-stage financing to companies operating in the intellectual sports sector[26](index=26&type=chunk) [Other Financial Information](index=6&type=section&id=Other%20Financial%20Information) No significant acquisitions, disposals, asset pledges, or material contingent liabilities occurred; foreign exchange risk is not significant; and the Group had **76** employees with total staff costs decreasing **27.5%** to **RMB 9.5 million** - For the six months ended June 30, 2025, the Group had no significant acquisitions or disposals, no asset pledges, and no material contingent liabilities[24](index=24&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - The Group primarily operates in China, with most transactions settled in RMB, and as of June 30, 2025, its operations had no significant foreign exchange risk[32](index=32&type=chunk) Employee Remuneration and Policy | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Number of Employees | 76 | - | | Total Staff Costs (million RMB) | 9.5 | 13.1 | [Corporate Governance and Other Information](index=10&type=section&id=Corporate%20Governance%20and%20Other%20Information) The company maintains strong corporate governance, addressing past deviations, and is involved in significant ongoing litigations, while the Board has decided against an interim dividend [Corporate Governance](index=10&type=section&id=Corporate%20Governance) The company maintains strict corporate governance, complying with the Listing Rules' Corporate Governance Code, having rectified the separation of Chairman and CEO roles, with all directors adhering to securities dealing standards, and an audit committee overseeing internal controls and financial reporting - The Company complied with applicable code provisions of the Corporate Governance Code, with a previous deviation from Code Provision C.2.1 (requiring separation of Chairman and CEO roles) now rectified after Ms. Xu Jin's appointment as Executive Director and CEO, and Mr. Lu Jingsheng's reassignment as CFO[37](index=37&type=chunk) - All Directors confirmed strict compliance with the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Listing Rules for the six months ended June 30, 2025[39](index=39&type=chunk) - The Audit Committee comprises three independent non-executive directors (Mr. Zhang Li, Mr. Ma Shaohua, and Mr. Dai Bing), with Mr. Zhang Li as Chairman, primarily responsible for reviewing and overseeing the Company's internal controls and financial reporting procedures[40](index=40&type=chunk) [Significant Litigation Matters](index=11&type=section&id=Significant%20Litigation%20Matters) The company is involved in two major litigations: an arbitration and lawsuit against Merit Horizon and Ms. Fu Qiang for loan default, with arbitration hearings concluded but no award yet, and a civil suit ongoing; and an arbitration against Spoville and its major shareholder, where a favorable award was obtained and enforcement is being pursued in South Korea - The Company initiated arbitration against Merit Horizon Limited and Ms. Fu Qiang for loan default, claiming no less than **HKD 97,948,090.47**, with significant hearings recently concluded but no award yet[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) - The Company filed civil lawsuits in the Hong Kong High Court against Bright Wisdom Holdings Limited, Ms. Fu Qiang, and Mr. Gao Hong, seeking repayment of loan principal and interest, and claiming against Ms. Fu and Mr. Gao for breach of their fiduciary duties as former directors of the Company, with proceedings ongoing and no judgment yet rendered[46](index=46&type=chunk)[47](index=47&type=chunk) - The ICC International Court of Arbitration issued a final award against Spoville and its major shareholder Mr. Seung-Hwan Oh for breach of the Convertible Bond Subscription Agreement and Supplemental Agreement, ordering them to jointly pay the convertible bond principal and interest, legal fees, and arbitration costs[48](index=48&type=chunk) - A South Korean court issued a ruling agreeing to recognize and enforce the ICC arbitration award, and made an asset disclosure order based on the Company's application; further asset inquiries are underway, and the Company will apply for compulsory enforcement based on the results[48](index=48&type=chunk)[49](index=49&type=chunk) [Dividend Policy](index=14&type=section&id=Dividend%20Policy) The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2025 - The Board does not declare any interim dividend for the six months ended June 30, 2025 (six months ended June 30, 2024: nil)[50](index=50&type=chunk)[64](index=64&type=chunk) [Condensed Consolidated Financial Statements](index=15&type=section&id=Condensed%20Consolidated%20Financial%20Statements) The financial statements for H1 2025 show a loss for the period of **RMB 35,086 thousand**, with net current liabilities of **RMB 27 thousand** and equity attributable to owners at **RMB 35,454 thousand** [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=15&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended June 30, 2025, the company reported revenue of **RMB 43,236 thousand**, gross profit of **RMB 22,358 thousand**, a loss for the period of **RMB 35,086 thousand**, and a loss attributable to owners of **RMB 38,161 thousand**, with basic and diluted loss per share at **RMB 3.56 cents** Key Data from Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | H1 2025 (thousand RMB) | H1 2024 (thousand RMB) | | :--- | :--- | :--- | | Revenue | 43,236 | 50,155 | | Cost of Revenue | (20,878) | (23,158) | | Gross Profit | 22,358 | 26,997 | | Other Income | 2,111 | 2,842 | | Selling and Marketing Expenses | (12,535) | (5,952) | | Administrative Expenses | (17,392) | (15,349) | | Research and Development Expenses | (5,543) | (3,719) | | Share of Net Loss from Associates | (23,471) | (14,517) | | Loss Before Income Tax | (35,086) | (20,782) | | Loss for the Period | (35,086) | (20,782) | | Loss for the Period Attributable to Owners of the Company | (38,161) | (19,770) | | Basic Loss Per Share (RMB cents) | (3.56) | (1.84) | [Condensed Consolidated Statement of Financial Position](index=17&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2025, total non-current assets were **RMB 36,101 thousand**, current assets **RMB 30,368 thousand**, current liabilities **RMB 30,395 thousand**, resulting in net current liabilities of **RMB 27 thousand**, net assets of **RMB 32,164 thousand**, and equity attributable to owners of **RMB 35,454 thousand** Key Data from Condensed Consolidated Statement of Financial Position | Metric | June 30, 2025 (thousand RMB) | December 31, 2024 (thousand RMB) | | :--- | :--- | :--- | | Non-current Assets | 36,101 | 52,778 | | Current Assets | 30,368 | 47,701 | | Current Liabilities | 30,395 | 28,333 | | Net Current (Liabilities) / Assets | (27) | 19,368 | | Total Assets Less Current Liabilities | 36,074 | 72,146 | | Net Assets | 32,164 | 66,893 | | Equity Attributable to Owners of the Company | 35,454 | 73,258 | [Notes to the Condensed Consolidated Financial Statements](index=19&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the basis of preparation, accounting policies, revenue breakdown by product and region, other income and expense items, changes in associate interests, and specifics on receivables, payables, and ongoing litigations [Basis of Preparation and Accounting Policies](index=19&type=section&id=Basis%20of%20Preparation%20and%20Accounting%20Policies) The condensed consolidated financial statements are prepared in accordance with IAS 34 "Interim Financial Reporting" and applicable Listing Rules, with no significant impact from new IFRS amendments - The condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' issued by the IASB and the applicable disclosure requirements of the Listing Rules of The Stock Exchange of Hong Kong Limited[55](index=55&type=chunk) - The application of amendments to International Financial Reporting Standards during this interim period had no significant impact on the Group's financial position and performance for the current and prior periods and/or the disclosures contained in these condensed consolidated financial statements[56](index=56&type=chunk) [Revenue and Segment Information](index=19&type=section&id=Revenue%20and%20Segment%20Information) For the six months ended June 30, 2025, online game revenue was **RMB 36,843 thousand** and online advertising service revenue was **RMB 6,393 thousand**, all from China, with no single customer accounting for over **10%** of total revenue Revenue from Contracts with Customers by Major Product or Service Line | Revenue Source | H1 2025 (thousand RMB) | H1 2024 (thousand RMB) | | :--- | :--- | :--- | | Online Game Revenue | 36,843 | 44,302 | | Online Advertising Service Revenue | 6,393 | 5,853 | | **Total Revenue** | **43,236** | **50,155** | - All of the Group's revenue from external customers was derived from mainland China[60](index=60&type=chunk) - For the six months ended June 30, 2025 and 2024, no revenue from any individual game player or customer accounted for **10%** or more of the Group's total revenue[61](index=61&type=chunk) [Details of Other Income and Expenses](index=20&type=section&id=Details%20of%20Other%20Income%20and%20Expenses) Total other income was **RMB 2,111 thousand**, mainly from intellectual sports venue services, with a significant decrease in bank interest income; net other losses were **RMB 132 thousand** due to foreign exchange losses; and total staff costs decreased to **RMB 9,546 thousand** Details of Other Income | Other Income Item | H1 2025 (thousand RMB) | H1 2024 (thousand RMB) | | :--- | :--- | :--- | | Royalty Income | 74 | 127 | | Loan Interest Income | 207 | 165 | | Bank Interest Income | 12 | 318 | | Government Grants | 6 | 6 | | Income from Providing Card and Board Game Venues | 1,789 | 2,212 | | Miscellaneous Income | 23 | 14 | | **Total Other Income** | **2,111** | **2,842** | Details of Other Income and Losses | Other Income and Loss Item | H1 2025 (thousand RMB) | H1 2024 (thousand RMB) | | :--- | :--- | :--- | | Net Foreign Exchange (Loss) / Gain | (132) | 110 | | Impairment Loss on Prepayments | — | (302) | | **Total** | **(132)** | **(192)** | Details of Staff Costs | Staff Cost Item | H1 2025 (thousand RMB) | H1 2024 (thousand RMB) | | :--- | :--- | :--- | | Salaries, Allowances and Other Benefits | 7,096 | 10,363 | | Retirement Benefits | 1,891 | 2,595 | | Severance Payments | 525 | 73 | | Equity-settled, Share-based Payments | 34 | 78 | | **Total Staff Costs** | **9,546** | **13,109** | [Interests in Associates and Receivables/Payables](index=22&type=section&id=Interests%20in%20Associates%20and%20Receivables%2FPayables) Interest in associate AGAE decreased to **RMB 7,035 thousand** due to its losses; total trade and other receivables were **RMB 17,157 thousand** (including **RMB 7,838 thousand** net loans and interest); total trade and other payables were **RMB 17,690 thousand** (including **RMB 4,192 thousand** accrued legal fees); and bank loans increased to **RMB 7,500 thousand** - Interest in associate Allied Gaming & Entertainment Inc. (AGAE) decreased to **RMB 7,035 thousand** (December 31, 2024: RMB 29,723 thousand), primarily due to the share of AGAE's losses accounted for using the equity method[67](index=67&type=chunk) Details of Trade and Other Receivables | Receivable Category | June 30, 2025 (thousand RMB) | December 31, 2024 (thousand RMB) | | :--- | :--- | :--- | | Trade Receivables (net) | 827 | 1,597 | | Prepayments (net) | 1,149 | 6,171 | | Other Receivables and Deposits (net) | 7,343 | 6,542 | | Loans and Interest Receivable (net) | 7,838 | 19,271 | | **Total Trade and Other Receivables** | **17,157** | **33,581** | Details of Trade and Other Payables | Payable Category | June 30, 2025 (thousand RMB) | December 31, 2024 (thousand RMB) | | :--- | :--- | :--- | | Trade Payables | 3,682 | 4,313 | | Other Payables and Accrued Expenses | 5,345 | 5,047 | | Staff Costs and Accrued Benefits | 3,240 | 4,027 | | Accrued R&D Expenses | 410 | 3,256 | | Accrued Legal and Professional Fees | 4,192 | 3,038 | | Accrued Consulting Service Fees | 706 | 738 | | VAT and Other Taxes Payable | 115 | 1,347 | | **Total Trade and Other Payables** | **17,690** | **21,766** | Bank Loans | Bank Loans | June 30, 2025 (thousand RMB) | December 31, 2024 (thousand RMB) | | :--- | :--- | :--- | | Current Portion | 7,500 | 2,600 | [Other Litigation/Arbitration Details](index=25&type=section&id=Other%20Litigation%2FArbitration%20Details) Arbitration by Mr. Wu Guoliang against AGAE for **USD 1 million** is in discovery, with hearings set for November 2025; the second Knighted lawsuit against AGAE for breach of fiduciary duty is paused pending AGAE's AGM results; and AGAE has sued Knighted for violating Section 13(d) of the Securities Exchange Act - Arbitration by Mr. Wu Guoliang against AGAE for **USD 1,000,000** in outstanding debt is in the discovery phase, with hearings scheduled for early November 2025[74](index=74&type=chunk)[75](index=75&type=chunk) - Knighted Pastures, LLC's second lawsuit against AGAE, alleging breach of fiduciary duties by AGAE directors, has been stayed by the court pending the results of AGAE's 2024/2025 joint shareholders' meeting[79](index=79&type=chunk)[80](index=80&type=chunk) - AGAE filed a lawsuit in the U.S. District Court for the Central District of California, alleging that Knighted and its managing partner Roy Choi, among others, acted as an undisclosed 'group' in violation of Section 13(d) of the Securities Exchange Act of 1934[81](index=81&type=chunk) [Other Information](index=28&type=section&id=Other%20Information) The company's shares remain suspended from trading since March 28, 2024, pending fulfillment of resumption guidance, and the Board composition includes executive, non-executive, and independent non-executive directors [Suspension of Trading in Shares](index=28&type=section&id=Suspension%20of%20Trading%20in%20Shares) Trading in the company's shares has been suspended on the Stock Exchange since 9:07 a.m. on March 28, 2024, and will remain suspended until all resumption guidance is met and Listing Rules are fully complied with - At the Company's request, trading in its shares on the Stock Exchange has been suspended since 9:07 a.m. on Thursday, March 28, 2024[83](index=83&type=chunk) - Trading in the shares will remain suspended until the Company fulfills all resumption guidance, rectifies the issues leading to its suspension, and fully complies with the Listing Rules to the satisfaction of the Stock Exchange[83](index=83&type=chunk) [Board Composition](index=28&type=section&id=Board%20Composition) As of the announcement date, the Board includes Executive Directors Mr. Lu Jingsheng and Ms. Xu Jin; Non-executive Directors Ms. Gao Liping and Ms. Yu Bing; and Independent Non-executive Directors Mr. Ma Shaohua, Mr. Zhang Li, and Mr. Dai Bing - As of the date of this announcement, the Board comprises Executive Directors Mr. Lu Jingsheng and Ms. Xu Jin; Non-executive Directors Ms. Gao Liping and Ms. Yu Bing; and Independent Non-executive Directors Mr. Ma Shaohua, Mr. Zhang Li, and Mr. Dai Bing[84](index=84&type=chunk)

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告之內容概不負責，對其準確性或完整性亦不 發表任何聲明，並明確表示，概不對因本公告全部或任何部份內容而產生或因倚賴該等內容而引致的任何損 失承擔任何責任。 OURGAME INTERNATIONAL HOLDINGS LIMITED 聯 眾 國 際 控 股 有 限 公 司* （ 根據開曼群島法律註冊成立之有限公司） （股份代號：6899） 截至二零二四年十二月三十一日止年度 年度業績公告 | 財務摘要 | | | | | | --- | --- | --- | --- | --- | | | 截至十二月三十一日止年度 | | | | | | 二零二四年 | 二零二三年 | 變動 | | | | 人民幣千元 | 人民幣千元 | | | | | 經審核 | 經審核 | | | | 收入 | 92,188 | 88,996 | 3.6% | | | 本公司權益持有人應佔年內虧損 | (89,191) | (62,765) | 42.1 | % | | 本公司權益持有人應佔年內每股虧損 | | | | | | 以每股人民幣分列示） | | | | | | （ | ...

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) The company released its unaudited interim results for the six months ended June 30, 2024, showing a 5.6% year-on-year increase in revenue and a significant 70.2% reduction in loss attributable to equity holders Financial Highlights for the Six Months Ended June 30 | Indicator | 2024 (RMB thousands) | 2023 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 50,155 | 47,515 | 5.6% | | Loss for the period attributable to owners of the company | (19,770) | (66,436) | (70.2%) | | Basic loss per share (continuing and discontinued operations) | (1.84) | (6.20) | (70.3%) | | Basic loss per share (continuing operations) | (1.84) | (1.96) | (6.1%) | [Business Review](index=2&type=section&id=Business%20Review) Despite intense market competition, the company achieved stable business development in the first half by optimizing core card and board game operations, advancing strategic cooperation with China Mobile Migu, expanding event content influence, and actively recovering non-performing assets, laying a foundation for future growth [Core Business Development](index=2&type=section&id=Core%20Business%20Development) The company's core card and board game platform (Lianzhong Lobby) successfully enhanced user activity, stickiness, payment conversion rates, and ARPU through micro-innovations, optimized event planning, and user recall strategies, achieving the goal of 'stable growth with optimized efficiency' - The core card and board game business (Lianzhong Lobby) achieved stable user activity, continuously optimized stickiness, and steadily increased payment conversion rates and ARPU through micro-innovations in gameplay, optimized event planning, user recall, and payment guidance strategies[5](index=5&type=chunk) [Strategic Cooperation and New Market Exploration](index=2&type=section&id=Strategic%20Cooperation%20and%20New%20Market%20Exploration) The company formed a strategic partnership with China Mobile Migu to co-develop the Guandan game, expected to launch in H2 2025, while expanding the influence of professional card and board game PGC content and actively exploring 'Card & Board Game+' new models - A strategic partnership was formed with China Mobile Migu to co-develop the Guandan game, anticipated to launch in **H2 2025** as a new growth engine[6](index=6&type=chunk) - The influence of professional card and board game PGC content on live streaming platforms like Douyin, Kuaishou, and Huya continues to expand, with significant growth in key metrics such as event live broadcast exposure, viewership, and topic popularity[7](index=7&type=chunk) - Actively exploring new domestic and international market opportunities and 'Card & Board Game+' possibilities, including integrating AI technology, metaverse concepts, and promoting local distinctive card and board game culture, while seeking strategic cooperation or investment and M&A opportunities[8](index=8&type=chunk) [Asset Recovery Progress](index=3&type=section&id=Asset%20Recovery%20Progress) The current board and management continue to pursue overdue receivables and non-performing assets left by the former management, having recovered substantial assets and will continue to take legal action to protect company and shareholder interests - The current board and management are actively pursuing overdue receivables and non-performing assets, including historical investments, left by former management (including Mr. Wu Guoliang), having recovered a significant amount of assets[8](index=8&type=chunk) [Management Discussion and Analysis](index=4&type=section&id=Management%20Discussion%20and%20Analysis) This section provides a detailed analysis of the Group's financial performance for the six months ended June 30, 2024, covering revenue, costs, expenses, liquidity, significant investments, and employee policies, explaining the changes in various financial indicators [Financial Review](index=4&type=section&id=Financial%20Review) The Group's loss for the period significantly narrowed, revenue increased, and gross profit margin improved, while other income decreased, reflecting efforts in cost reduction and efficiency improvement - Loss attributable to equity holders of the company was **RMB 19.8 million**, a significant **70.2% reduction** from **RMB 66.4 million** in the prior year period[9](index=9&type=chunk) Key Financial Indicators Changes | Indicator | 2024 (RMB millions) | 2023 (RMB millions) | Change (RMB millions) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 50.2 | 47.5 | 2.7 | 5.6% | | Cost of revenue | 23.2 | 23.8 | (0.6) | (2.6%) | | Gross Profit Margin | 53.8% | 50.0% | 3.8% | - | | Other Income | 2.8 | 4.9 | (2.1) | (42.9%) | | Other Gains and Losses | (0.2) | 3.8 | (4.0) | - | | Selling and Marketing Expenses | 6.0 | 7.0 | (1.0) | (14.7%) | | Administrative Expenses | 15.3 | 16.2 | (0.9) | (5.3%) | | Research and Development Expenses | 3.7 | 10.4 | (6.7) | (64.2%) | | Fair Value Change Loss on Financial Assets at FVTPL | 10.2 | 10.8 | (0.6) | (5.6%) | | Income Tax Expense | 0 | 0.2 | (0.2) | (100%) | [Liquidity and Sources of Funds and Borrowings](index=6&type=section&id=Liquidity%20and%20Sources%20of%20Funds%20and%20Borrowings) The Group's total bank balances and cash increased, primarily due to new bank borrowings, maintaining a healthy current ratio, while the gearing ratio rose from zero due to new borrowings - Total bank balances and cash increased by **13.3%** to **RMB 40.2 million**, primarily due to new bank borrowings[20](index=20&type=chunk) Liquidity Ratios | Indicator | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Current Assets (RMB millions) | 82.7 | 73.4 | | Current Liabilities (RMB millions) | 38.9 | 33.2 | | Current Ratio | 2.13 | 2.21 | | Gearing Ratio | 7.6% | 0% | [Significant Investments and Acquisitions/Disposals](index=6&type=section&id=Significant%20Investments%20and%20Acquisitions%2FDisposals) The Group had no significant acquisitions or disposals during the period, with financial assets at fair value through profit or loss decreasing, primarily invested in startups and private equity funds related to gaming or intellectual sports technology R&D for strategic synergy - There were no significant investments, acquisitions, or disposals during the period[21](index=21&type=chunk)[22](index=22&type=chunk)[27](index=27&type=chunk) - Financial assets at fair value through profit or loss amounted to **RMB 14.2 million** (December 31, 2023: **RMB 26.5 million**), primarily invested in selected startups (gaming or intellectual sports-related technology R&D) and private equity funds[23](index=23&type=chunk)[24](index=24&type=chunk) Changes in Financial Assets at Fair Value Through Profit or Loss | Item | RMB (thousands) | | :--- | :--- | | Balance as at January 1, 2024 | 26,469 | | Disposals | (2,044) | | Fair value changes recognized in profit or loss | (10,210) | | Fair value as at June 30, 2024 | 14,215 | [Pledge of Assets and Contingent Liabilities](index=8&type=section&id=Pledge%20of%20Assets%20and%20Contingent%20Liabilities) As of June 30, 2024, the Group had no pledged assets or significant contingent liabilities - As of June 30, 2024, the Group had no pledged assets[28](index=28&type=chunk) - As of June 30, 2024, the Group had no significant contingent liabilities[29](index=29&type=chunk) [Foreign Exchange Risk](index=8&type=section&id=Foreign%20Exchange%20Risk) The Group primarily operates in China with most transactions settled in RMB, thus incurring no significant foreign exchange risk during the period - The Group primarily operates in China, with most transactions settled in RMB, and thus had no significant foreign exchange risk during the period[30](index=30&type=chunk) [Employee Remuneration and Policies](index=8&type=section&id=Employee%20Remuneration%20and%20Policies) As of June 30, 2024, the Group had 67 employees, with total remuneration expenses increasing by 12.0% year-on-year - The Group had **67 employees**, with total remuneration expenses (including share-based payment expenses) of **RMB 13.1 million**, representing a **12.0% year-on-year increase**[31](index=31&type=chunk) [Post-Reporting Period Events and Future Plans](index=9&type=section&id=Post-Reporting%20Period%20Events%20and%20Future%20Plans) No significant events have occurred since the end of the reporting period, and there are no other future plans regarding major investments and capital assets - No significant events have occurred since the end of the six months ended June 30, 2024[32](index=32&type=chunk) - Except as disclosed, the Group has no other future plans regarding significant investments and capital assets[33](index=33&type=chunk) [Corporate Governance and Other Information](index=10&type=section&id=Corporate%20Governance%20and%20Other%20Information) The company is committed to maintaining strict corporate governance policies, disclosing compliance with the Corporate Governance Code and the Model Code for Securities Transactions by Directors, the audit committee's operations, and updates on several significant litigation matters [Compliance with Corporate Governance Code](index=10&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The company has complied with the applicable provisions of the Corporate Governance Code, with a previous deviation regarding the separation of Chairman and CEO roles now rectified after Ms. Xu Jin's appointment as CEO - The company has complied with the Corporate Governance Code set out in Appendix C1 to the Listing Rules, except for a previous deviation from Code Provision C.2.1 (the roles of chairman and chief executive should be separate)[35](index=35&type=chunk) - Ms. Xu Jin was appointed as Executive Director and Chief Executive Officer, and Mr. Lu Jingsheng was re-designated as Chief Financial Officer and continues as Chairman, thereby separating the roles of Chairman and Chief Executive Officer[35](index=35&type=chunk) [Compliance with Model Code for Securities Transactions by Directors](index=10&type=section&id=Compliance%20with%20Model%20Code%20for%20Securities%20Transactions%20by%20Directors) All directors confirmed strict compliance with the Model Code for Securities Transactions by Directors, as set out in Appendix C3 to the Listing Rules, during the reporting period - All Directors confirmed strict compliance with the required standards set out in the Model Code during the six months ended June 30, 2024[37](index=37&type=chunk) [Audit Committee](index=11&type=section&id=Audit%20Committee) The Audit Committee, comprising three independent non-executive directors, is responsible for reviewing and overseeing internal controls and financial reporting, and has reviewed the Group's unaudited interim results - The Audit Committee comprises three independent non-executive Directors (Mr. Zhang Li, Mr. Ma Shaohua, and Mr. Dai Bing), with Mr. Zhang Li serving as Chairman[38](index=38&type=chunk) - The Audit Committee has reviewed the Group's unaudited interim results and interim report for the six months ended June 30, 2024[38](index=38&type=chunk) [Dealings in Listed Securities](index=11&type=section&id=Dealings%20in%20Listed%20Securities) Neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities during the reporting period, and the company held no treasury shares - Neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[39](index=39&type=chunk) - The company held no treasury shares as of June 30, 2024[40](index=40&type=chunk) [Significant Litigation Matters](index=11&type=section&id=Significant%20Litigation%20Matters) The company is involved in several significant legal proceedings, including arbitration and litigation against Fast Through Trading Co., Ltd. for loans, and arbitration enforcement procedures against Spoville Co., Ltd. for convertible bonds, all of which are ongoing [Fast Through Trading Co., Ltd. Loan and Related Litigation](index=11&type=section&id=Fast%20Through%20Trading%20Co.%2C%20Ltd.%20Loan%20and%20Related%20Litigation) The company initiated arbitration and civil litigation against Merit Horizon and former non-executive director Ms. Fu Qiang regarding the Fast Through Trading Co., Ltd. loan and Merit Horizon Limited's guarantee agreement, claiming no less than HK$97,948,090.47, with arbitration hearings concluded and litigation ongoing - The company initiated arbitration against Merit Horizon before the Hong Kong arbitral tribunal for breach of the Merit Horizon loan agreement, claiming a total of no less than **HK$97,948,090.47** from Merit Horizon[43](index=43&type=chunk) - The arbitration recently concluded significant hearings, but no award has been rendered yet[43](index=43&type=chunk) - The company filed civil lawsuits in the High Court of Hong Kong against Bright Wisdom, Ms. Fu (former director), and Mr. Gao Hong (former director), seeking repayment of loan principal and interest, and claiming damages for breach of fiduciary duties by Ms. Fu and Mr. Gao[44](index=44&type=chunk)[45](index=45&type=chunk) [Arbitration Proceedings Against Spoville Co., Ltd.](index=13&type=section&id=Arbitration%20Proceedings%20Against%20Spoville%20Co.%2C%20Ltd.) The ICC International Court of Arbitration ruled that Spoville and Mr. Seung-Hwan Oh are jointly and severally liable to pay the company KRW 2,184,541,667 for convertible bond principal and interest, plus legal and arbitration fees; a Korean court has approved the recognition and enforcement of the award, with asset tracing underway for compulsory enforcement - The ICC International Court of Arbitration ruled that Spoville and Mr. Seung-Hwan Oh are jointly and severally liable to pay the company a total of **KRW 2,184,541,667** for convertible bond principal and interest, plus legal fees of **RMB 727,468** and arbitration costs of **US$85,000**[46](index=46&type=chunk) - A Korean court has issued a ruling agreeing to the recognition and enforcement of the arbitration award, and asset tracing is underway to apply for compulsory enforcement[47](index=47&type=chunk) [Interim Dividend](index=14&type=section&id=Interim%20Dividend) The Board of Directors does not recommend the declaration of any interim dividend for the six months ended June 30, 2024 - The Board of Directors does not recommend the declaration of any interim dividend for the six months ended June 30, 2024[48](index=48&type=chunk) [Condensed Consolidated Financial Statements](index=15&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the Group's unaudited condensed consolidated statement of profit or loss and other comprehensive income and condensed consolidated statement of financial position for the six months ended June 30, 2024, showcasing the company's financial performance and period-end financial position [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=15&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) The Group's loss for the period from continuing operations was RMB 20,782 thousand, with a total comprehensive loss for the period of RMB 19,687 thousand, significantly narrowed compared to the prior year period Summary of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--- | :--- | :--- | | Loss for the period from continuing operations | (20,782) | (18,668) | | Loss for the period from discontinued operations | — | (43,957) | | Loss for the period | (20,782) | (62,625) | | Total comprehensive loss for the period | (19,687) | (107,900) | | Loss for the period attributable to owners of the company | (19,770) | (66,436) | | Basic loss per share (continuing and discontinued operations) | (1.84) | (6.2) | | Basic loss per share (continuing operations) | (1.84) | (1.96) | [Condensed Consolidated Statement of Financial Position](index=17&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2024, the Group's total assets were RMB 176,412 thousand, and net assets were RMB 131,168 thousand, a decrease compared to December 31, 2023 Summary of Condensed Consolidated Statement of Financial Position | Indicator | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Non-current assets | 93,761 | 114,047 | | Current assets | 82,651 | 73,408 | | Current liabilities | 38,859 | 33,170 | | Net current assets | 43,792 | 40,238 | | Total assets less current liabilities | 137,553 | 154,285 | | Non-current liabilities | 6,385 | 3,396 | | Net assets | 131,168 | 150,889 | | Total equity | 131,168 | 150,889 | [Notes to the Condensed Consolidated Financial Statements](index=19&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the condensed consolidated financial statements, explaining the basis of preparation, restatement matters, revenue and segment information, composition of various income and expenses, impact of discontinued operations, earnings per share calculation, interests in associates, receivables and payables, and updates on other litigation and arbitration [Basis of Preparation](index=19&type=section&id=Basis%20of%20Preparation) The condensed consolidated financial statements are prepared in accordance with IAS 34 'Interim Financial Reporting' and applicable disclosure requirements of the HKEX Listing Rules, with no significant impact from IFRS amendments during the period - The condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34 and the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[53](index=53&type=chunk) - The application of amendments to International Financial Reporting Standards during the period had no significant impact on the Group's financial position and performance[54](index=54&type=chunk) [Restatement](index=19&type=section&id=Restatement) The Group lost control over Allied Gaming & Entertainment Inc. (AGAE) on January 1, 2023, and sold a 40% equity interest in Lianzhong Zhihe, thus related businesses are presented as discontinued operations, and prior period financial statements have been restated - The company lost control over Allied Gaming & Entertainment Inc. (AGAE) on **January 1, 2023**, and its e-sports business has been separately presented as a discontinued operation[56](index=56&type=chunk) - The Group sold a **40% equity interest** in its non-wholly owned subsidiary, Beijing Lianzhong Zhihe Technology Co., Ltd., and its casual mobile game business has also been separately presented as a discontinued operation[56](index=56&type=chunk) [Revenue and Segment Information](index=20&type=section&id=Revenue%20and%20Segment%20Information) The Group's revenue from continuing operations primarily derived from online games, with a decrease in online advertising service revenue; all revenue originated from China, and no single customer accounted for over 10% of total revenue Revenue Breakdown from Continuing Operations | Revenue Source | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--- | :--- | :--- | | Online game revenue | 44,302 | 40,002 | | Online advertising service revenue | 5,853 | 7,513 | | **Total revenue** | **50,155** | **47,515** | - All revenue was derived from China[60](index=60&type=chunk) - No revenue from any individual game player or customer accounted for **10% or more** of the Group's revenue[61](index=61&type=chunk) [Other Income](index=21&type=section&id=Other%20Income) The Group's total other income decreased to RMB 2,842 thousand from RMB 4,869 thousand in the prior year period, mainly due to reduced royalty income from discontinued operations and software sales Other Income Breakdown | Item | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--- | :--- | :--- | | Royalty income from discontinued operations | 127 | 1,264 | | Sale of software to discontinued operations | — | 1,981 | | Income from providing card and board game venues | 2,212 | 1,256 | | **Total** | **2,842** | **4,869** | [Other Gains and Losses](index=21&type=section&id=Other%20Gains%20and%20Losses) The Group recorded other losses of RMB 192 thousand, compared to gains of RMB 3,772 thousand in the prior year period, primarily due to the absence of deemed gain on acquisition of interests in an associate this period Other Gains and Losses Breakdown | Item | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--- | :--- | :--- | | Net foreign exchange gains | 110 | 10 | | Impairment loss on prepayments | (302) | — | | Deemed gain on acquisition of interests in an associate | — | 3,762 | | **Total** | **(192)** | **3,772** | [Income Tax Expense](index=22&type=section&id=Income%20Tax%20Expense) The Group incurred no income tax expense for the six months ended June 30, 2024, compared to RMB 163 thousand in the prior year period - The Group incurred no income tax expense for the six months ended June 30, 2024[64](index=64&type=chunk) [Discontinued Operations](index=22&type=section&id=Discontinued%20Operations) This section details the financial impact of discontinued operations, including a loss of RMB 46,895 thousand from the deemed disposal of AGAE Group and a profit of RMB 2,938 thousand from Lianzhong Zhihe's business before its 40% equity sale - The deemed disposal of AGAE Group resulted in a loss of **RMB 46,895 thousand** in the first half of 2023[66](index=66&type=chunk) - Lianzhong Zhihe's business generated a profit of **RMB 2,938 thousand** in the first half of 2023, after which the Group sold a **40% equity interest**[67](index=67&type=chunk) [Loss for the Period](index=24&type=section&id=Loss%20for%20the%20Period) This section lists various expenses deducted from or included in the loss for the period from continuing operations, including lease expenses, depreciation, and employee costs, with employee costs showing an increase Loss for the Period Adjustment Items | Item | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--- | :--- | :--- | | Lease expenses related to short-term leases | 124 | 176 | | Total depreciation | 474 | 2,616 | | Employee costs (including share-based payment expenses) | 13,109 | 11,712 | | Amortization of intangible assets | — | 624 | [Dividends](index=24&type=section&id=Dividends) The Directors do not recommend the payment of an interim dividend for the six months ended June 30, 2024 - The Directors do not recommend the payment of an interim dividend for the six months ended June 30, 2024[69](index=69&type=chunk) [Loss Per Share](index=25&type=section&id=Loss%20Per%20Share) Basic loss per share from continuing operations improved to RMB 1.84 cents from RMB 1.96 cents in the prior year period, with no assumed exercise of share options/warrants for diluted EPS calculation Loss Per Share Calculation Data | Indicator | 2024 (RMB thousands) | 2023 (RMB thousands) | | :--- | :--- | :--- | | Loss used in calculating basic loss per share from continuing operations | (19,770) | (21,010) | | Weighted average number of ordinary shares for basic loss per share (thousands) | 1,072,197 | 1,071,447 | | Basic loss per share (continuing operations) (RMB cents) | (1.84) | (1.96) | | Basic loss per share (continuing and discontinued operations) (RMB cents) | (1.84) | (6.2) | - No exercise of the company's share options/warrants was assumed in calculating diluted earnings/loss per share, as their exercise prices were higher than the average market price of the shares[71](index=71&type=chunk) [Interests in Associates](index=26&type=section&id=Interests%20in%20Associates) The Group's interests in associates primarily refer to its 32.6% ownership interest in AGAE, which decreased due to its share of AGAE's losses, though AGAE's fair value increased - Interests in associates amounted to **RMB 73,006 thousand** (December 31, 2023: **RMB 86,028 thousand**), primarily representing the **32.6% ownership interest** in AGAE[72](index=72&type=chunk) - The decrease in interests in AGAE was due to the share of AGAE's losses accounted for using the equity method[72](index=72&type=chunk) - The fair value of AGAE as of June 30, 2024, was approximately **RMB 110,596 thousand** (December 31, 2023: **RMB 89,827 thousand**)[72](index=72&type=chunk) [Trade and Other Receivables](index=27&type=section&id=Trade%20and%20Other%20Receivables) The Group's total trade and other receivables increased to RMB 41,995 thousand from RMB 37,468 thousand as of December 31, 2023, comprising trade receivables, prepayments, other receivables, and loans and interest receivable, with expected credit loss provisions made Trade and Other Receivables Breakdown | Item | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Trade receivables (net) | 1,636 | 763 | | Prepayments (net) | 10,336 | 9,107 | | Other receivables and deposits (net) | 12,170 | 9,745 | | Loans and interest receivable (net) | 17,853 | 17,853 | | **Total** | **41,995** | **37,468** | - The credit period for trade receivables is typically **30 to 90 days**[75](index=75&type=chunk) [Trade and Other Payables](index=28&type=section&id=Trade%20and%20Other%20Payables) The Group's total trade and other payables decreased to RMB 22,431 thousand from RMB 27,502 thousand as of December 31, 2023, primarily including trade payables to third parties, other payables, and accrued expenses Trade and Other Payables Breakdown | Item | June 30, 2024 (RMB thousands) | December 31, 2023 (RMB thousands) | | :--- | :--- | :--- | | Trade payables (due to third parties) | 3,259 | 4,137 | | Other payables and accrued expenses | 10,692 | 7,067 | | Employee costs and accrued benefits | 3,058 | 4,654 | | Amounts due to associates | 2,853 | 4,328 | | Accrued legal and professional fees | 3,390 | 2,064 | | **Total** | **22,431** | **27,502** | [Bank Borrowings](index=29&type=section&id=Bank%20Borrowings) As of June 30, 2024, the Group had new bank borrowings of RMB 10,000 thousand, unsecured, unguaranteed, bearing a fixed annual interest rate of 3.0%, and repayable within one year - New bank borrowings of **RMB 10,000 thousand** were unsecured, unguaranteed, bore a fixed annual interest rate of **3.0%**, and were repayable within one year[76](index=76&type=chunk) [Other Litigation/Arbitration](index=29&type=section&id=Other%20Litigation%2FArbitration) The Group is involved in two major litigation/arbitration cases: Mr. Wu Guoliang's arbitration against AGAE, and two lawsuits by Knighted Pastures, LLC against AGAE and its directors, all ongoing with financial impacts not yet reasonably estimable [Mr. Wu Guoliang's Arbitration Against AGAE](index=29&type=section&id=Mr.%20Wu%20Guoliang's%20Arbitration%20Against%20AGAE) Former executive director Mr. Wu Guoliang filed an arbitration case with the American Arbitration Association against AGAE for a US$1,000,000 debt, alleging a fraudulent settlement agreement; approximately US$645,000 previously collected has been transferred to an escrow account, with arbitration in the discovery phase and a hearing scheduled for early November 2025 - Mr. Wu Guoliang filed an arbitration case with the American Arbitration Association against AGAE for a **US$1,000,000** debt, alleging the settlement agreement was fraudulent[78](index=78&type=chunk) - Approximately **US$645,000** previously collected and recovered by the company has been transferred to an escrow account pending the conclusion of the arbitration[79](index=79&type=chunk) - The arbitration is currently in the discovery phase, with a hearing scheduled for early **November 2025**[78](index=78&type=chunk) [Knighted Pastures, LLC Litigation](index=30&type=section&id=Knighted%20Pastures%2C%20LLC%20Litigation) Knighted Pastures, LLC filed two lawsuits against AGAE and its directors for alleged breach of fiduciary duties; the first was dismissed by the court, but AGAE paid US$3 million in legal fees; the second, concerning a strategic investment with Yellow River Capital, has been stayed by the court, and AGAE also sued Knighted for undisclosed 'group' actions - Knighted Pastures, LLC filed a lawsuit against AGAE directors, alleging breach of fiduciary duties, and the court accepted the motion to dismiss the lawsuit as moot[80](index=80&type=chunk)[81](index=81&type=chunk) - The court accepted Knighted's claim for **US$3 million** in legal fees, which was paid by AGAE on **September 11, 2024**[82](index=82&type=chunk) - Knighted filed a second lawsuit, alleging AGAE directors breached fiduciary duties regarding a strategic investment with the Yellow River Capital group, and the court has stayed proceedings pending the outcome of AGAE's shareholders' meeting[82](index=82&type=chunk)[83](index=83&type=chunk) - AGAE filed a lawsuit in the U.S. District Court for the Central District of California, alleging Knighted and its managing partners acted as an undisclosed 'group' in violation of Section 13(d) of the Securities Exchange Act of 1934[84](index=84&type=chunk) [Other Information](index=32&type=section&id=Other%20Information) This section provides information on the publication of the interim results announcement and reiterates the continued suspension of trading in the company's shares, advising shareholders and potential investors to exercise caution [Publication of Announcement](index=32&type=section&id=Publication%20of%20Announcement) This interim results announcement has been published on the websites of The Stock Exchange of Hong Kong Limited and the company, with the interim report to be published and dispatched to shareholders in due course - This interim results announcement has been published on the website of The Stock Exchange of Hong Kong Limited at www.hkexnews.hk and the company's website at www.lianzhong.com[85](index=85&type=chunk) [Continued Suspension of Trading](index=32&type=section&id=Continued%20Suspension%20of%20Trading) Trading in the company's shares has been suspended on the Stock Exchange since March 28, 2024, and will remain suspended until the company meets all resumption guidance and fully complies with the Listing Rules - Trading in the shares has been suspended on the Stock Exchange since **9:07 a.m. on Thursday, March 28, 2024**[86](index=86&type=chunk) - Trading in the shares will remain suspended until the company meets all resumption guidance, remedies the issues that led to its suspension, and fully complies with the Listing Rules[86](index=86&type=chunk)

[Annual Performance Announcement](index=1&type=section&id=Annual%20Performance%20Announcement) This section serves as the introductory announcement for the company's annual performance [Financial Highlights](index=1&type=section&id=Financial%20Highlights) The company's revenue decreased by 12.4% to RMB 88,996 thousand in FY2023, with loss attributable to owners widening by 76.5% to RMB (62,765) thousand | Metric | 2023 (RMB thousands) | 2022 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 88,996 | 101,559 | (12.4 %) | | Loss for the year attributable to owners of the Company | (62,765) | (35,560) | 76.5 % | | Basic loss per share (continuing and discontinued operations) | (5.90) | (3.31) | 78.2 % | | Diluted loss per share (continuing and discontinued operations) | (5.90) | (3.31) | 78.2 % | | Basic loss per share (continuing operations) | (7.27) | (1.30) | 459.2 % | | Diluted loss per share (continuing operations) | (7.27) | (1.30) | 459.2 % | [Business Review](index=2&type=section&id=Business%20Review) In 2023, the Company continued to cultivate existing businesses and actively expand into new areas amidst a complex environment, achieving growth in PC and mobile games and successfully venturing into MCN live streaming - Domestic business in China developed **steadily and healthily**, with "Our Lobby" and mobile game businesses maintaining continuous growth[5](index=5&type=chunk) - Progress was made in new segments like MCN live streaming, building a **high-quality in-house streamer lineup** with millions of user followers and establishing partnerships with platforms like Kuaishou and Douyin[5](index=5&type=chunk)[6](index=6&type=chunk)[7](index=7&type=chunk) - The Company continued to pursue overdue accounts receivable and historical investments, recovering a **significant amount of assets** left by former management[8](index=8&type=chunk) [Financial Performance Analysis](index=4&type=section&id=Financial%20Performance%20Analysis) The Group's loss significantly widened in FY2023, primarily due to increased fair value losses on financial assets, impairment losses under the expected credit loss model, and decreased revenue [Overview](index=4&type=section&id=1.%20Overview) In 2023, the loss attributable to owners of the Company increased by 76.5% to RMB 62.8 million, compared to RMB 35.6 million in 2022 - Loss attributable to owners of the Company increased by **76.5% to RMB 62.8 million**[9](index=9&type=chunk) - The increase in loss was primarily due to fair value changes in financial assets at FVTPL and impairment losses under the expected credit loss model, net of reversals and expenses incurred from recovering historical accounts receivable[9](index=9&type=chunk) [Revenue](index=4&type=section&id=2.%20Revenue) In 2023, the Group's revenue was RMB 89.0 million, a decrease of RMB 12.6 million from RMB 101.6 million in 2022 | Metric | 2023 (RMB millions) | 2022 (RMB millions) | Change (RMB millions) | | :--- | :--- | :--- | :--- | | Revenue | 89.0 | 101.6 | (12.6) | - The decrease in revenue was mainly due to the recognition of a **significant amount of deferred revenue** in 2022[10](index=10&type=chunk) [Cost of Revenue and Gross Margin](index=4&type=section&id=3.%20Cost%20of%20Revenue%20and%20Gross%20Margin) In 2023, cost of revenue increased to RMB 44.1 million, leading to a slight decrease in gross margin from 59.4% in 2022 to 50.4% | Metric | 2023 (RMB millions) | 2022 (RMB millions) | Change (RMB millions) | | :--- | :--- | :--- | :--- | | Cost of revenue | 44.1 | 41.2 | 2.9 | | Gross margin | 50.4% | 59.4% | (9.0) percentage points | - The decrease in gross margin was primarily due to the **recognition of a significant amount of deferred revenue** in 2022[11](index=11&type=chunk) [Other Income](index=4&type=section&id=4a.%20Other%20Income) In 2023, other income increased to RMB 7.2 million, a rise of RMB 4.7 million from RMB 2.5 million in 2022, mainly driven by increased franchise fee income and income from providing chess and card game venues | Metric | 2023 (RMB millions) | 2022 (RMB millions) | Change (RMB millions) | | :--- | :--- | :--- | :--- | | Other income | 7.2 | 2.5 | 4.7 | - The increase in other income was mainly due to increased **franchise fee income** and income from providing **chess and card game venues**[12](index=12&type=chunk) [Other Gains and Losses](index=4&type=section&id=4b.%20Other%20Gains%20and%20Losses) In 2023, the Group recorded other losses of RMB 3.5 million, a decrease of RMB 10.5 million from other gains of RMB 7.0 million in 2022, primarily due to impairment losses on property, plant and equipment and right-of-use assets | Metric | 2023 (RMB millions) | 2022 (RMB millions) | Change (RMB millions) | | :--- | :--- | :--- | :--- | | Other gains and losses | (3.5) | 7.0 | (10.5) | - Other losses were primarily due to **impairment losses on property, plant and equipment and right-of-use assets**[13](index=13&type=chunk) [Selling and Marketing Expenses](index=4&type=section&id=5.%20Selling%20and%20Marketing%20Expenses) In 2023, selling and marketing expenses were RMB 14.0 million, a year-on-year decrease of 29.6%, mainly due to reduced promotional and marketing activities during the year | Metric | 2023 (RMB millions) | 2022 (RMB millions) | Change (%) | | :--- | :--- | :--- | :--- | | Selling and marketing expenses | 14.0 | 19.9 | (29.6 %) | - The decrease in expenses was mainly due to **reduced promotional and marketing activities** during the year[14](index=14&type=chunk) [Administrative Expenses](index=5&type=section&id=6.%20Administrative%20Expenses) In 2023, administrative expenses were RMB 44.0 million, a slight decrease of RMB 2.0 million from RMB 46.0 million in 2022 | Metric | 2023 (RMB millions) | 2022 (RMB millions) | Change (RMB millions) | | :--- | :--- | :--- | :--- | | Administrative expenses | 44.0 | 46.0 | (2.0) | [Research and Development Expenses](index=5&type=section&id=7.%20Research%20and%20Development%20Expenses) In 2023, research and development expenses were RMB 15.8 million, an increase of 5.3% from RMB 15.0 million in 2022 | Metric | 2023 (RMB millions) | 2022 (RMB millions) | Change (%) | | :--- | :--- | :--- | :--- | | Research and development expenses | 15.8 | 15.0 | 5.3 % | [Fair Value Changes in Financial Assets at FVTPL](index=5&type=section&id=8.%20Fair%20Value%20Changes%20in%20Financial%20Assets%20at%20FVTPL) In 2023, fair value change losses on financial assets at FVTPL significantly increased to RMB 31.4 million, compared to RMB 1.3 million in 2022, primarily due to unforeseen market changes and losses recorded by historical investee companies | Metric | 2023 (RMB millions) | 2022 (RMB millions) | Change (RMB millions) | | :--- | :--- | :--- | :--- | | Fair value change loss | (31.4) | (1.3) | (30.1) | - The increase in loss was mainly due to **unforeseen changes in market conditions** and **losses recorded by historical investee companies** from prior years[17](index=17&type=chunk) [Impairment Losses under Expected Credit Loss Model](index=5&type=section&id=9.%20Impairment%20Losses%20under%20Expected%20Credit%20Loss%20Model) In 2023, the Group recorded impairment losses of RMB 11.1 million under the expected credit loss model, compared to a reversal of impairment losses of RMB 7.5 million in 2022, reflecting management's expectation that future cash flows are insufficient to recover the carrying amount | Metric | 2023 (RMB millions) | 2022 (RMB millions) | Change (RMB millions) | | :--- | :--- | :--- | :--- | | Impairment losses/(reversal) | (11.1) | 7.5 | (18.6) | - The increase in impairment losses is due to management's expectation that **future cash flows are insufficient to recover the carrying amount**[18](index=18&type=chunk) [Loss Attributable to Owners of the Company](index=5&type=section&id=10.%20Loss%20Attributable%20to%20Owners%20of%20the%20Company) In 2023, the loss attributable to owners of the Company was RMB 62.8 million, a significant increase from RMB 35.6 million in 2022, mainly due to decreased revenue and other income, increased fair value losses on financial assets, and impairment losses under the expected credit loss model | Metric | 2023 (RMB millions) | 2022 (RMB millions) | Change (RMB millions) | | :--- | :--- | :--- | :--- | | Loss attributable to owners of the Company | (62.8) | (35.6) | (27.2) | - The increase in loss was primarily due to **decreased revenue and other income**, increased fair value change losses on financial assets at FVTPL, and impairment losses under the expected credit loss model[19](index=19&type=chunk) [Income Tax Expense](index=5&type=section&id=11.%20Income%20Tax%20Expense) In 2023, the Group's income tax expense was RMB 42 thousand, compared to no income tax expense in 2022 | Metric | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Income tax expense | 42 | 0 | [Liquidity and Sources of Funding and Borrowings](index=5&type=section&id=12.%20Liquidity%20and%20Sources%20of%20Funding%20and%20Borrowings) The Group's total bank balances and cash significantly decreased, and the current ratio dropped from 9.64 in 2022 to 2.21 in 2023, indicating a notable tightening of liquidity | Metric | December 31, 2023 (RMB millions) | December 31, 2022 (RMB millions) | Change (RMB millions) | | :--- | :--- | :--- | :--- | | Total bank balances and cash | 35.5 | 87.3 | (51.8) | | Current assets | 73.4 | 681.8 | (608.4) | | Current liabilities | 33.2 | 70.7 | (37.5) | | Current ratio | 2.21 | 9.64 | (7.43) | | Debt-to-equity ratio | 0 | 0 | 0 | - The Group intends to primarily fund its future expansion, investments, and business operations through **internal resources**[22](index=22&type=chunk) [Investments and Asset Changes](index=6&type=section&id=Investments%20and%20Asset%20Changes) The Group made no significant investments or acquisitions in 2023, but financial assets at FVTPL decreased, and deemed disposal of AGAE Group and disposal of Leyou Zhihe occurred, altering the asset structure [Significant Investments](index=6&type=section&id=13.%20Significant%20Investments) For the year ended December 31, 2023, the Group had no significant investments - No significant investments were made in 2023[23](index=23&type=chunk) [Significant Acquisitions](index=6&type=section&id=14.%20Significant%20Acquisitions) For the year ended December 31, 2023, the Group had no significant acquisitions - No significant acquisitions were made in 2023[24](index=24&type=chunk) [Financial Assets at Fair Value Through Profit or Loss (FVTPL)](index=6&type=section&id=15.%20Financial%20Assets%20at%20Fair%20Value%20Through%20Profit%20or%20Loss%20(FVTPL)) As of December 31, 2023, the Group's financial assets at FVTPL were RMB 26.5 million, a decrease from RMB 45.8 million in 2022, primarily invested in unlisted equity to supplement its game portfolio, explore new business opportunities, and expand its scale | Metric | December 31, 2023 (RMB millions) | December 31, 2022 (RMB millions) | | :--- | :--- | :--- | | Financial assets at FVTPL | 26.5 | 45.8 | - Investment objectives include supplementing the game portfolio, exploring business ecosystem-related new business opportunities, and gaining expertise and scale through external financial sources[25](index=25&type=chunk) - Investments are primarily in **selected start-ups** (engaged in game or intellectual sports related technology R&D) and **private equity funds**[25](index=25&type=chunk) [Changes in Financial Assets at FVTPL](index=7&type=section&id=Changes%20in%20Financial%20Assets%20at%20FVTPL) The balance of financial assets at FVTPL was RMB 26,469 thousand in 2023, mainly affected by fair value change losses of RMB 31,442 thousand and transfers in due to disposal of a subsidiary of RMB 12,821 thousand | Change Item | RMB thousands | | :--- | :--- | | Balance as at January 1, 2023 | 45,846 | | Transferred in due to disposal of a subsidiary | 12,821 | | Disposal | (756) | | Fair value changes recognized in profit or loss | (31,442) | | Fair value as at December 31, 2023 | 26,469 | [Significant Disposals](index=7&type=section&id=16.%20Significant%20Disposals) The Group lost control over Allied Gaming & Entertainment Inc. (AGAE) on January 1, 2023, and completed the disposal of a 40% equity interest in Leyou Zhihe to AGAE Group on October 31, 2023, retaining a 10% interest - The Group lost control over AGAE on **January 1, 2023**, and a deemed disposal of AGAE occurred[27](index=27&type=chunk) - The disposal of a **40% equity interest in Leyou Zhihe** to AGAE Group was completed on October 31, 2023, for a consideration of **USD 7.0 million**, with a **10% equity interest retained** post-disposal[28](index=28&type=chunk) [Pledge of Assets](index=8&type=section&id=17.%20Pledge%20of%20Assets) As of December 31, 2023 and 2022, the Group had no pledged assets - The Group had **no pledged assets** as of December 31, 2023 and 2022[29](index=29&type=chunk) [Contingent Liabilities](index=8&type=section&id=18.%20Contingent%20Liabilities) As of December 31, 2023, the Group had no significant contingent liabilities - The Group had **no significant contingent liabilities** as of December 31, 2023[30](index=30&type=chunk) [Operations and Risks](index=8&type=section&id=Operations%20and%20Risks) The Group primarily operates in China, with most transactions settled in RMB, resulting in no significant foreign exchange risk; total employee remuneration expenses decreased by 19.4% in 2023, and the company continued to recover historical accounts receivable [Foreign Exchange Risk](index=8&type=section&id=19.%20Foreign%20Exchange%20Risk) The Group primarily operates in China, with most transactions settled in RMB, thus posing no significant foreign exchange risk in 2023 - The Group primarily operates in China, with most transactions settled in RMB, resulting in **no significant foreign exchange risk**[31](index=31&type=chunk) [Employee Remuneration and Policies](index=8&type=section&id=20.%20Employee%20Remuneration%20and%20Policies) As of December 31, 2023, the Group had 67 employees, with total remuneration expenses of RMB 33.7 million, a 19.4% decrease from 2022 | Metric | 2023 (RMB millions) | 2022 (RMB millions) | Change (%) | | :--- | :--- | :--- | :--- | | Total employee remuneration expenses | 33.7 | 41.8 | (19.4 %) | - As of December 31, 2023, the Group had **67 employees**[32](index=32&type=chunk) [Recovery of Historical Accounts Receivable/Assets](index=8&type=section&id=21.%20Recovery%20of%20Historical%20Accounts%20Receivable/Assets) In 2023, the Company's current board and management continued to pursue non-performing assets left by former management, recovering RMB 1.1 million in related amounts | Metric | 2023 (RMB millions) | 2022 (RMB millions) | | :--- | :--- | :--- | | Historical accounts receivable/asset recovery amount | 1.1 | 11.4 | - The Company will continue to exert its utmost efforts to recover relevant historical accounts receivable and investments, and **pursue legal liabilities** of relevant parties[33](index=33&type=chunk) [Subsequent Events and Future Plans](index=8&type=section&id=Subsequent%20Events%20and%20Future%20Plans) No significant events occurred after the year ended December 31, 2023, and there are no other future plans for significant investments or capital assets [Events After the Reporting Period Ended December 31, 2023](index=8&type=section&id=22.%20Events%20After%20the%20Reporting%20Period%20Ended%20December%2031,%202023) Other than those disclosed in this announcement, no significant events occurred after the year ended December 31, 2023 - No significant events occurred after the reporting period end[34](index=34&type=chunk) [Future Plans for Significant Investments or Capital Assets](index=9&type=section&id=23.%20Future%20Plans%20for%20Significant%20Investments%20or%20Capital%20Assets) Other than those disclosed in this announcement, the Group has no other plans for significant investments or capital assets - The Group has **no other future plans for significant investments or capital assets**[35](index=35&type=chunk) [Audit Opinion and Management Response](index=9&type=section&id=Audit%20Opinion%20and%20Management%20Response) The independent auditor issued a qualified opinion on the Group's 2023 consolidated financial statements, primarily concerning the timing of recognition for USD 430,000 (approximately RMB 3,087,000) in collection service fees; both management and the Audit Committee respect the auditor's professional judgment and have formulated a remediation plan to strengthen internal controls [Details of Qualified Opinion](index=9&type=section&id=24.%20Details%20of%20Qualified%20Opinion) The auditor issued a qualified opinion on the Group's 2023 consolidated financial statements, solely related to the timing of recognition for approximately USD 430,000 (approximately RMB 3,087,000) in collection service fees paid to a debt collection company and its consulting partners, due to a lack of sufficient and appropriate audit evidence to determine the proper period for expense recognition - The auditor issued a **qualified opinion** on the 2023 consolidated financial statements, concerning the timing of recognition for approximately **USD 430,000 (RMB 3,087,000) in collection service fees**[36](index=36&type=chunk) - The qualified opinion is due to a **lack of sufficient and appropriate audit evidence** to determine the proper period for expense recognition[36](index=36&type=chunk) [Management's View on Qualified Opinion](index=9&type=section&id=25.%20Management's%20View%20on%20Qualified%20Opinion) Management acknowledges the audit scope limitation due to the lack of verifiable evidence to allocate services to respective reporting periods and agrees with the auditor's professional judgment, having strengthened communication with the Audit Committee and reviewed accounting and internal control procedures to prevent similar occurrences in future reporting periods - Management acknowledges the **lack of verifiable evidence** to allocate services to respective reporting periods, leading to an **audit scope limitation**[37](index=37&type=chunk) - Management has strengthened communication procedures with the Audit Committee and rigorously reviewed accounting and internal control procedures to **prevent similar occurrences** in future reporting periods[38](index=38&type=chunk) [Audit Committee's View on Qualified Opinion](index=10&type=section&id=26.%20Audit%20Committee's%20View%20on%20Qualified%20Opinion) The Audit Committee has reviewed and concurred with the auditor's qualified opinion, deeming it necessary and limited to a potential impact on 2024 comparative financial information, with no carry-forward impact on consolidated financial statements for 2024 and subsequent years - The Audit Committee confirms and concurs with the independent auditor's opinion based on their **professional and independent assessment**[39](index=39&type=chunk) - The qualified opinion is limited to the **potential impact on the comparative financial information for 2024**, with **no carry-forward impact** on the consolidated financial statements for 2024 and subsequent years[39](index=39&type=chunk) [Group's Action Plan to Address Qualified Opinion](index=10&type=section&id=27.%20Group's%20Action%20Plan%20to%20Address%20Qualified%20Opinion) The Group has developed and implemented a systematic remediation plan, with the assistance of an independent internal control consultant, to address the control deficiencies that led to the audit issue, ensuring no recurrence in future reporting periods and enhancing financial reporting reliability - The Group has developed and implemented a **systematic remediation plan** to address the control deficiencies that led to the audit issue[40](index=40&type=chunk) - The Group is confident that, apart from the impact on 2024 comparative figures, the matter leading to the qualified opinion will **not have any subsequent impact** on the financial position, financial performance, and related disclosures for 2024 and subsequent years[41](index=41&type=chunk) [Corporate Governance and Other Information](index=11&type=section&id=Corporate%20Governance%20and%20Other%20Information) The Company is committed to maintaining stringent corporate governance policies, has complied with the Listing Rules' Corporate Governance Code and Model Code for Securities Transactions by Directors, and the Audit Committee has reviewed the annual results; no listed securities were purchased, sold, or redeemed by the Company or its subsidiaries in 2023 [Compliance with Corporate Governance Code](index=11&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) For the year ended December 31, 2023, the Company complied with the applicable code provisions of the Corporate Governance Code as set out in Appendix C1 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited - The Company has complied with the **applicable provisions of the Corporate Governance Code** as set out in Appendix C1 to the Listing Rules[43](index=43&type=chunk) [Compliance with Model Code for Securities Transactions by Directors](index=11&type=section&id=Compliance%20with%20Model%20Code%20for%20Securities%20Transactions%20by%20Directors) The Company has adopted the Model Code as set out in Appendix C3 to the Listing Rules, and all directors confirmed strict compliance with the code for the year ended December 31, 2023 - All directors confirmed strict compliance with the **Model Code** as stipulated in Appendix C3 to the Listing Rules[44](index=44&type=chunk) [Audit Committee](index=11&type=section&id=Audit%20Committee) The Audit Committee comprises three independent non-executive directors, with Mr. Zhang Li as chairman, and is primarily responsible for reviewing and overseeing the financial reporting process and internal control systems, having reviewed the Group's audited consolidated results for 2023 - The Audit Committee comprises **three independent non-executive directors**, with **Mr. Zhang Li as chairman**[45](index=45&type=chunk) - The Audit Committee has reviewed the Group's **audited consolidated results** for the year ended December 31, 2023[46](index=46&type=chunk) [Scope of Work by Dahua](index=12&type=section&id=Scope%20of%20Work%20by%20Dahua) The Group's auditor, Dahua CPA Limited, has agreed that the figures in the preliminary announcement's consolidated financial statements are consistent with the audited consolidated financial statements, but their work does not constitute an assurance engagement, thus no opinion or assurance conclusion was made on the preliminary announcement - The auditor, Dahua CPA Limited, has agreed that the financial figures in the preliminary announcement are **consistent with the audited consolidated financial statements**[47](index=47&type=chunk) - Dahua CPA Limited's work does not constitute an assurance engagement, therefore **no opinion or assurance conclusion** was made on the preliminary announcement[47](index=47&type=chunk) [Summary of Independent Auditor's Report](index=12&type=section&id=Summary%20of%20Independent%20Auditor's%20Report) The independent auditor issued a qualified opinion on the Group's 2023 consolidated financial statements, primarily concerning the timing of recognition for USD 430,000 (approximately RMB 3,087,000) in collection service fees, due to insufficient and appropriate audit evidence - The independent auditor issued a **qualified opinion** on the Group's consolidated financial statements[48](index=48&type=chunk) - The qualified opinion primarily concerns the timing of recognition for approximately **USD 430,000 (RMB 3,087,000) in collection service fees**, due to a lack of sufficient and appropriate audit evidence[49](index=49&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=13&type=section&id=Purchase,%20Sale%20or%20Redemption%20of%20the%20Company's%20Listed%20Securities) For the year ended December 31, 2023, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities, and the Company held no treasury shares as of that date - During 2023, neither the Company nor its subsidiaries purchased, sold, or redeemed **any of the Company's listed securities**[51](index=51&type=chunk) - As of December 31, 2023, the Company held **no treasury shares**[52](index=52&type=chunk) [Significant Litigation Matters](index=14&type=section&id=Significant%20Litigation%20Matters) The Group is involved in two significant litigations: an arbitration and lawsuit against Kuaishun Trading Limited and its guarantor Ms. Fu for loan default, and a convertible bond arbitration against Spoville Co., Ltd.; the Kuaishun loan case is ongoing, while the Spoville case has received recognition and enforcement from a Korean court, with asset inquiries underway [Kuaishun Trading Limited Loan](index=14&type=section&id=Kuaishun%20Trading%20Limited%20Loan) The Company initiated arbitration proceedings with the Hong Kong Arbitration Tribunal against Kuaishun Trading Limited and its guarantors, Merit Horizon Limited and Ms. Fu Qiang, for loan default, claiming no less than HKD 97,948,090.47, and also filed a civil lawsuit with the High Court; the arbitration is ongoing, with no final award yet - The Company provided loans totaling **HKD 62,484,799** to Kuaishun Trading Limited, with Merit Horizon Limited subsequently assuming repayment responsibility and Ms. Fu Qiang providing a guarantee[53](index=53&type=chunk) - The Company initiated arbitration with the Hong Kong Arbitration Tribunal for default on the Merit Horizon loan agreement, claiming no less than **HKD 97,948,090.47**[54](index=54&type=chunk) - The Company filed a civil lawsuit in the Hong Kong High Court against Liangzhi, Ms. Fu, and Mr. Gao, alleging **breach of fiduciary duties**[55](index=55&type=chunk) [Arbitration Proceedings Against Spoville Co., Ltd.](index=15&type=section&id=Arbitration%20Proceedings%20Against%20Spoville%20Co.,%20Ltd.) The Company initiated arbitration with the International Court of Arbitration of the International Chamber of Commerce against Spoville Co., Ltd. and its major shareholder Mr. Seung-Hwan Oh for convertible bond default, obtaining a final award on March 20, 2023, requiring Spoville and Mr. Seung-Hwan Oh to jointly pay principal, interest, and legal fees; a Korean court has ruled for recognition and enforcement, and asset inquiries are ongoing - The International Court of Arbitration of the International Chamber of Commerce ruled that Spoville and Mr. Seung-Hwan Oh shall jointly pay the Company **KRW 2,184,541,667** in convertible bond principal and interest, along with legal and arbitration costs[57](index=57&type=chunk)[60](index=60&type=chunk) - The Company applied to the Korean court for **enforcement of the ICC arbitration award**, which was accepted and a ruling issued, agreeing to the recognition and enforcement of the arbitration award[58](index=58&type=chunk) - The Korean court has issued an **asset disclosure order** based on the Company's application, and further asset inquiries are underway[58](index=58&type=chunk) [Final Dividend](index=16&type=section&id=Final%20Dividend) The Board of Directors does not recommend the payment of any final dividend for the year ended December 31, 2023 - The Board of Directors does not recommend the payment of a **final dividend for 2023**[59](index=59&type=chunk) [Consolidated Financial Statements](index=17&type=section&id=Consolidated%20Financial%20Statements) This section contains the Group's Consolidated Statement of Profit or Loss and Other Comprehensive Income, Consolidated Statement of Financial Position for the year ended December 31, 2023, and detailed notes to the financial statements, covering key financial information such as accounting policies, prior period adjustments, revenue, segment reporting, discontinued operations, loss per share, receivables and payables, bank loans, share capital, disposal of subsidiaries, and other litigation and arbitration [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=17&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This statement presents the Group's revenue, costs, expenses, losses, and other comprehensive income for continuing and discontinued operations for 2023 and 2022, reflecting the loss and total comprehensive loss attributable to owners of the Company | Metric | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | **Continuing Operations** | | | | Revenue | 88,996 | 101,559 | | Cost of revenue | (44,111) | (41,221) | | Gross profit | 44,885 | 60,338 | | Other income | 7,186 | 2,489 | | Other gains and losses | (3,457) | 7,041 | | Selling and marketing expenses | (13,978) | (19,941) | | Administrative expenses | (43,963) | (46,037) | | Share-based payment expenses | (1,548) | (6,660) | | Research and development expenses | (15,753) | (15,040) | | Finance costs | (335) | (335) | | Share of loss of associates | (5,394) | (260) | | Fair value changes in financial assets at FVTPL | (31,442) | (1,329) | | Fair value changes in investment properties | (1,360) | — | | Impairment losses/(reversal) under expected credit loss model, net | (11,108) | 7,504 | | Loss before income tax | (76,267) | (12,230) | | Income tax expense | (42) | — | | Loss for the year from continuing operations | (76,309) | (12,230) | | **Discontinued Operations** | | | | Profit/(loss) for the year from discontinued operations | 15,825 | (71,135) | | **Loss for the year** | (60,484) | (83,365) | | **Other comprehensive (loss)/income for the year** | | | | Exchange differences on translation of overseas operations | — | 51,292 | | Exchange differences on translation of overseas operations of associates | 3,771 | — | | Reclassification of cumulative other reserves on cessation of discontinued operations | (26,933) | — | | Reclassification of cumulative translation reserve on cessation of overseas discontinued operations | (25,676) | — | | **Total comprehensive loss for the year** | (109,322) | (32,073) | | **Loss for the year attributable to owners of the Company** | (62,765) | (35,560) | | **Total comprehensive loss attributable to owners of the Company** | (111,603) | (7,264) | | **Basic loss per share (RMB cents)** | | | | Continuing and discontinued operations | (5.90) | (3.31) | | Continuing operations | (7.27) | (1.30) | [Consolidated Statement of Financial Position](index=19&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) This statement presents the Group's assets, liabilities, and equity as of December 31, 2023, December 31, 2022, and January 1, 2022, reflecting the composition and changes in non-current assets, current assets, current liabilities, and non-current liabilities | Metric | December 31, 2023 (RMB thousands) | December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | **Non-current Assets** | | | | Property, plant and equipment | — | 18,429 | | Right-of-use assets | — | 21,207 | | Investment properties | 1,540 | 2,900 | | Interests in associates | 86,028 | 1,240 | | Digital assets | — | 344 | | Intangible assets | — | 1,879 | | Financial assets at FVTPL | 26,469 | 45,846 | | Deferred tax assets | 10 | — | | **Total non-current assets** | 114,047 | 91,845 | | **Current Assets** | | | | Inventories | 478 | 549 | | Trade and other receivables | 37,468 | 74,701 | | Financial assets at FVTPL | — | — | | Certificates of deposit | — | 484,602 | | Restricted bank balances | — | 34,614 | | Cash and cash equivalents | 35,462 | 87,289 | | **Total current assets** | 73,408 | 681,755 | | **Current Liabilities** | | | | Trade and other payables | 27,502 | 57,326 | | Contract liabilities | 3,696 | 1,289 | | Lease liabilities | 1,922 | 11,128 | | Bank loans | — | 1,000 | | Income tax liabilities | 50 | — | | **Total current liabilities** | 33,170 | 70,743 | | **Net current assets** | 40,238 | 611,012 | | **Total assets less current liabilities** | 154,285 | 702,857 | | **Non-current Liabilities** | | | | Lease liabilities | 3,377 | 47,599 | | Deferred tax liabilities | 2 | — | | Other payables | 17 | — | | **Total non-current liabilities** | 3,396 | 47,599 | | **Net assets** | 150,889 | 655,258 | | **Equity** | | | | Share capital | 335 | 335 | | Reserves | 161,497 | 272,192 | | Equity attributable to owners of the Company | 161,832 | 272,527 | | Non-controlling interests | (10,943) | 382,731 | | **Total equity** | 150,889 | 655,258 | [Notes to the Consolidated Financial Statements](index=21&type=section&id=Consolidated%20Financial%20Statements%20Notes) This section provides detailed notes to the consolidated financial statements, explaining the basis of preparation, accounting policies, prior period adjustments, revenue composition, segment information, discontinued operations, loss per share calculation, receivables and payables, bank loans, share capital changes, disposal of subsidiaries, and other litigation and arbitration [General Information and Basis of Preparation](index=21&type=section&id=1.%20General%20Information%20and%20Basis%20of%20Preparation) The Company is an investment holding company primarily engaged in developing and operating online chess and card games, and organizing intellectual sports and program production; on January 1, 2023, the Company lost control over AGAE, whose e-sports business and Leyou Zhihe's casual mobile game business are presented as discontinued operations - The Company primarily engages in developing and operating **online chess and card games**, and organizing and broadcasting online and offline intellectual sports, competitions, and TV programs and content[65](index=65&type=chunk) - The Company lost control over AGAE on **January 1, 2023**, and its e-sports business is presented as a discontinued operation[67](index=67&type=chunk) - The Group disposed of a **40% equity interest in Leyou Zhihe** to AGAE Group, and Leyou Zhihe's business is also presented as a discontinued operation[67](index=67&type=chunk) [Adoption of New and Revised International Financial Reporting Standards](index=22&type=section&id=2.%20Adoption%20of%20New%20and%20Revised%20International%20Financial%20Reporting%20Standards) This year, several new and revised International Financial Reporting Standards were first applied, with amendments to "Disclosure of Accounting Policies" impacting financial statement disclosures but not significantly affecting financial position or performance; IFRS 18 "Presentation and Disclosure in Financial Statements" will be effective in 2027 and is expected to affect the presentation of the statement of profit or loss and future financial statement disclosures - This year, new and revised standards such as **IFRS 17 Insurance Contracts** and **Amendments to IAS 1 and IFRS Practice Statement 2 Disclosure of Accounting Policies** were first applied[68](index=68&type=chunk) - Amendments to "Disclosure of Accounting Policies" impacted the accounting policy disclosures in the Group's consolidated financial statements but had **no significant impact on financial position or performance**[70](index=70&type=chunk) - **IFRS 18 Presentation and Disclosure in Financial Statements** will be effective for annual periods beginning on or after January 1, 2027, and is expected to affect the presentation of the statement of profit or loss and future financial statement disclosures[73](index=73&type=chunk) [Prior Period Adjustments](index=24&type=section&id=3.%20Prior%20Period%20Adjustments) The Company discovered that certain expenses from prior periods were not properly recorded, leading to the restatement of consolidated financial statements for 2021 and 2022, primarily involving the recognition of legal advisory expenses, AGAE directors' severance payments, debt collection service fees, and consulting service fees - The Company discovered that certain expenses from prior periods were not properly recorded, and has **restated the consolidated financial statements for 2021 and 2022**[75](index=75&type=chunk) - Key adjustments include the recognition of **legal fees of RMB 5,007,000 for 2021** and **severance payments of RMB 2,800,000 for 2022**[81](index=81&type=chunk)[82](index=82&type=chunk) - Adjustments also include the recognition of **accrued debt collection service fees of RMB 4,250,000** and a reversal of impairment losses of RMB 2,000,000 for 2022, as well as **consulting service fees of RMB 901,000**[82](index=82&type=chunk)[83](index=83&type=chunk) [Revenue](index=28&type=section&id=4.%20Revenue) Continuing operations revenue in 2023 was RMB 88,996 thousand, with online game revenue accounting for RMB 76,286 thousand and online advertising service revenue for RMB 12,710 thousand; most revenue is recognized at a point in time | Revenue Source | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Online game revenue | 76,286 | 84,556 | | Online advertising service revenue | 12,710 | 17,003 | | **Total Revenue** | **88,996** | **101,559** | | **Timing of Revenue Recognition** | | | | At a point in time | 80,169 | 93,343 | | Over time | 8,827 | 8,216 | [Segment Reporting](index=28&type=section&id=5.%20Segment%20Reporting) The primary operating decision-maker initially designated Leyou Group's online chess and card business and AGAE Group's e-sports business as operating and reportable segments; with AGAE Group's business now classified as discontinued operations, only entity-wide disclosures, major customer, and geographical information are presented - The primary operating decision-maker initially designated **Leyou Group's online chess and card business** and **AGAE Group's e-sports business** as operating and reportable segments[87](index=87&type=chunk) - As AGAE Group's business has been classified as a discontinued operation, only **entity-wide disclosures, major customer, and geographical information** are currently presented[88](index=88&type=chunk) | Region | 2023 Revenue (RMB thousands) | 2022 Revenue (RMB thousands) | 2023 Non-current Assets (RMB thousands) | 2022 Non-current Assets (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | China | 88,996 | 101,559 | 5,415 | 19,582 | | United States | — | — | 82,153 | 25,593 | | Other | — | — | — | 824 | | **Total** | **88,996** | **101,559** | **87,568** | **45,999** | [Other Income](index=29&type=section&id=6a.%20Other%20Income) Other income from continuing operations in 2023 was RMB 7,186 thousand, a significant increase from RMB 2,489 thousand in 2022, primarily due to growth in franchise fee income from discontinued operations, software sales income, and income from providing chess and card game venues | Income Source | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Franchise fee income from discontinued operations | 1,484 | 1,074 | | Software sales to discontinued operations | 1,981 | — | | Loan interest income | 440 | 525 | | Bank interest income | 93 | 134 | | Government grants | 144 | 714 | | Income from providing chess and card game venues | 3,011 | — | | Miscellaneous income | 33 | 19 | | **Total** | **7,186** | **2,489** | [Other Gains and Losses](index=30&type=section&id=6b.%20Other%20Gains%20and%20Losses) Continuing operations recorded other losses of RMB 3,457 thousand in 2023, compared to gains of RMB 7,041 thousand in 2022, mainly due to impairment losses on property, plant and equipment and right-of-use assets, partially offset by gains from write-off of other payables | Item | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Net foreign exchange gains | 166 | 56 | | Write-off of other payables | 7,774 | 13 | | Impairment loss on property, plant and equipment | (2,074) | — | | Impairment loss on right-of-use assets | (5,610) | — | | Impairment loss on intangible assets | (589) | — | | Reversal of impairment loss on prepayments/(impairment loss) | 547 | (795) | | Gain on lease modification | 205 | 6 | | Gain on deregistration of a subsidiary | 136 | — | | Gain on deemed acquisition of interest in an associate | — | 3,762 | | **Total** | **(3,457)** | **7,041** | [Discontinued Operations](index=31&type=section&id=8.%20Discontinued%20Operations) The Group recognized a deemed disposal of AGAE Group on January 1, 2023, resulting in a loss of RMB 46,895 thousand; concurrently, the disposal of a 40% equity interest in Leyou Zhihe generated a gain of RMB 60,191 thousand, with its business also classified as discontinued operations - The Group lost control over AGAE on **January 1, 2023**, and its business has been separately presented as a discontinued operation and deemed disposal[94](index=94&type=chunk) | Item | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Loss for the year from discontinued AGAE Group operations | — | (71,837) | | Loss on disposal of AGAE | (46,895) | — | | **Total AGAE Group Loss** | **(46,895)** | **(71,837)** | | Profit for the period/year from Leyou Zhihe operations | 2,529 | 702 | | Gain on disposal of Leyou Zhihe | 60,191 | — | | **Total Leyou Zhihe Gain** | **62,720** | **702** | [Loss for the Year](index=32&type=section&id=9.%20Loss%20for%20the%20Year) The loss for the year from continuing operations in 2023 was primarily influenced by factors such as staff costs, depreciation, amortization, and auditor's remuneration; total staff costs were RMB 33,694 thousand, and auditor's remuneration was RMB 2,538 thousand | Item | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Lease expenses related to short-term leases | 274 | 566 | | Auditor's remuneration (audit services) | 2,538 | 2,356 | | Total depreciation | 4,839 | 5,117 | | Total staff costs | 33,694 | 41,824 | | Amortization of intangible assets | 1,160 | 1,392 | | Net foreign exchange gains | (166) | (56) | [Dividends](index=32&type=section&id=10.%20Dividends) The directors do not recommend the payment of a final dividend for the year ended December 31, 2023 - The directors do not recommend the payment of a **final dividend for 2023**[99](index=99&type=chunk) [Loss Per Share](index=33&type=section&id=11.%20Loss%20Per%20Share) In 2023, basic loss per share from continuing operations was RMB (7.27) cents, and basic loss per share from continuing and discontinued operations was RMB (5.90) cents; basic earnings per share from discontinued operations was RMB 1.37 cents, with no assumption of share option/warrant exercise for diluted earnings/loss per share calculation | Metric | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Loss for the year attributable to owners of the Company used for basic loss per share calculation | (62,765) | (35,560) | | Less: Profit/(loss) for the year from discontinued operations | (14,561) | 21,561 | | Loss used for basic loss per share calculation from continuing operations | (77,326) | (13,999) | | **Basic loss per share (RMB cents)** | | | | Continuing operations | (7.27) | (1.30) | | Continuing and discontinued operations | (5.90) | (3.31) | | Discontinued operations | 1.37 | (2.01) | [Trade and Other Receivables](index=34&type=section&id=12.%20Trade%20and%20Other%20Receivables) As of December 31, 2023, total trade and other receivables were RMB 37,468 thousand, a significant decrease from RMB 74,701 thousand in 2022; the ageing analysis of trade receivables shows RMB 728 thousand overdue for more than 1 year; prepaid advertising expenses were settled via a set-off agreement due to an unlaunched game, and a significant impairment provision was made for loans and interest receivables | Item | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Trade receivables (net) | 763 | 12,185 | | Prepayments (net) | 9,107 | 17,577 | | Other receivables and deposits (net) | 9,745 | 18,329 | | Loans and interest receivables (net) | 17,853 | 26,610 | | **Total** | **37,468** | **74,701** | | Trade Receivables Ageing | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | 0 to 30 days | 578 | 3,164 | | 31 to 60 days | 99 | 8,232 | | 61 to 90 days | 20 | 132 | | 91 to 180 days | 18 | 744 | | 181 to 365 days | 43 | 148 | | Over 1 year | 728 | 854 | | **Total** | **1,486** | **13,274** | - Prepaid advertising expenses of **RMB 8,000,000** were offset against amounts due to a former acting chief executive officer via a set-off agreement due to the game not being launched[108](index=108&type=chunk)[109](index=109&type=chunk) - A **significant impairment provision of RMB 52,520 thousand** was made for loans and interest receivables in 2023[104](index=104&type=chunk) [Trade and Other Payables](index=36&type=section&id=13.%20Trade%20and%20Other%20Payables) As of December 31, 2023, total trade and other payables were RMB 27,502 thousand, a significant decrease from RMB 57,326 thousand in 2022; the credit period for trade payables is typically 30 to 90 days, with RMB 3,072 thousand overdue for more than 1 year | Item | December 31, 2023 (RMB thousands) | December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | Trade payables | 4,137 | 13,679 | | Other payables and accrued expenses | 9,593 | 15,083 | | Staff costs and accrued benefits | 4,654 | 15,218 | | Amounts due to former acting chief executive officer | — | 7,807 | | Amounts due to an associate | 4,328 | — | | Accrued collection service fees | 2,250 | 2,250 | | Accrued consulting service fees | 656 | 901 | | VAT and other taxes payable | 1,884 | 2,388 | | **Total** | **27,502** | **57,326** | | Trade Payables Ageing | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | 0 to 30 days | 961 | 7,804 | | 31 to 60 days | 36 | 2,360 | | 61 to 90 days | 30 | 222 | | 91 to 180 days | 23 | 237 | | 181 to 365 days | 15 | 501 | | Over 1 year | 3,072 | 2,555 | | **Total** | **4,137** | **13,679** | [Bank Loans](index=37&type=section&id=14.%20Bank%20Loans) As of December 31, 2023, the Group had no bank loans, compared to RMB 1,000 thousand in 2022, which was unsecured and bore a fixed annual interest rate of 3.65% | Item | 2023 (RMB thousands) | 2022 (RMB thousands) | | :--- | :--- | :--- | | Bank loans | — | 1,000 | - The 2022 bank loan was **unsecured**, bore a **fixed annual interest rate of 3.65%**, and was guaranteed by an independent third party[115](index=115&type=chunk) [Share Capital](index=38&type=section&id=15.%20Share%20Capital) The Company's authorized share capital consists of 10,000,000,000 ordinary shares, with 1,077,799,887 issued and fully paid shares, equivalent to RMB 335 thousand in par value; as of December 31, 2023, the Company held 2,200,000 shares through a trustee | Item | Number of Shares | Par Value (USD thousands) | Equivalent Par Value (RMB thousands) | | :--- | :--- | :--- | :--- | | Authorized ordinary shares | 10,000,000,000 | 500 | — | | Issued and fully paid ordinary shares | 1,077,799,887 | 55 | 335 | - As of December 31, 2023, the Company held **2,200,000 shares** of its own through a trustee[116](index=116&type=chunk) [Disposal of Subsidiaries](index=39&type=section&id=16.%20Disposal%20of%20Subsidiaries) The Group recognized a deemed disposal of AGAE Group on January 1, 2023, resulting in a disposal loss of RMB 46,895 thousand; concurrently, the disposal of a 40% equity interest in Leyou Zhihe to AGAE Group generated a disposal gain of RMB 60,191 thousand - The Group recognized a **deemed disposal of AGAE Group** on January 1, 2023, resulting in a disposal loss of **RMB 46,895 thousand**[117](index=117&type=chunk)[118](index=118&type=chunk) - The disposal of a **40% equity interest in Leyou Zhihe** to AGAE Group for a consideration of **USD 7,000,000 (approximately RMB 50,245 thousand)** generated a disposal gain of **RMB 60,191 thousand**[119](index=119&type=chunk) [Other Litigation/Arbitration](index=41&type=section&id=17.%20Other%20Litigation/Arbitration) The Group is involved in an arbitration by Mr. Wu Guoliang against AGAE and a lawsuit by Knighted Pastures, LLC against AGAE and its directors; Mr. Wu's arbitration is in the discovery phase, involving approximately USD 645,000 transferred to an escrow account; the Knighted lawsuit was dismissed by the court, but Knighted filed a second lawsuit alleging breach of fiduciary duties, which AGAE will actively defend - Mr. Wu Guoliang filed an arbitration case with the American Arbitration Association regarding **USD 1,000,000 owed by AGAE**, which is currently in the discovery phase, with a hearing scheduled for early November 2025[120](index=120&type=chunk)[121](index=121&type=chunk) - Approximately **USD 645,000** has been transferred to an escrow account pending the conclusion of Mr. Wu's arbitration against AGAE[121](index=121&type=chunk) - Knighted Pastures, LLC filed a second lawsuit against AGAE and its directors, alleging **breach of fiduciary duties**, which AGAE will actively defend[124](index=124&type=chunk) [Publication of Annual Results Announcement and Annual Report](index=43&type=section&id=Publication%20of%20Annual%20Results%20Announcement%20and%20Annual%20Report) This annual results announcement has been published on the website of The Stock Exchange of Hong Kong Limited and the Company's website, and the annual report will be published on the aforementioned websites in due course - The annual results announcement has been published on the **website of The Stock Exchange of Hong Kong Limited** and the **Company's website**[127](index=127&type=chunk) - The Group's annual report for the year ended December 31, 2023, will be published on the aforementioned websites **in due course**[127](index=127&type=chunk) [Continued Suspension of Trading](index=43&type=section&id=Continued%20Suspension%20of%20Trading) The Company's shares have been suspended from trading on the Stock Exchange since March 28, 2024, and will remain suspended until the Company fulfills all resumption guidance, rectifies the issues leading to the suspension, and fully complies with the Listing Rules - Trading in shares has been suspended on the Stock Exchange since **9:07 a.m. on Thursday, March 28, 2024**[128](index=128&type=chunk) - Trading will remain suspended until the Company fulfills all **resumption guidance**, rectifies the issues leading to its suspension, and **fully complies with the Listing Rules**[128](index=128&type=chunk) [Board Information](index=43&type=section&id=Board%20Information) This announcement is issued by Mr. Lu Jingsheng, Chairman and Executive Director, on behalf of the Board; as of the announcement date, the Board comprises Executive Directors Mr. Lu Jingsheng and Ms. Xu Jin; Non-executive Directors Ms. Gao Liping and Ms. Yu Bing; and Independent Non-executive Directors Mr. Ma Shaohua, Mr. Zhang Li, and Mr. Dai Bing - This announcement is issued by **Mr. Lu Jingsheng, Chairman and Executive Director**, on behalf of the Board[129](index=129&type=chunk) - The Board members include Executive Directors **Mr. Lu Jingsheng, Ms. Xu Jin**; Non-executive Directors **Ms. Gao Liping, Ms. Yu Bing**; and Independent Non-executive Directors **Mr. Ma Shaohua, Mr. Zhang Li, Mr. Dai Bing**[129](index=129&type=chunk)

Financial Performance - In the first half of 2025, the Company recorded total revenue of approximately RMB1,961.3 million, representing a significant increase of 34.1% compared to the first half of 2024[16]. - Net profit attributable to shareholders was approximately RMB105.9 million, representing an increase of 15.9% compared to the first half of 2024[16]. - The company's revenue for the first half of 2025 was approximately RMB1,961.3 million, representing a 34.1% increase compared to RMB1,462.1 million in the same period last year[41]. - Gross profit for the same period was approximately RMB1,474.0 million, reflecting a 36.4% increase from RMB1,080.9 million year-over-year[41]. - Profit attributable to shareholders was approximately RMB105.9 million, an increase of 15.9% compared to RMB91.4 million in the previous year[41]. - Revenue from third-party e-commerce platforms was approximately RMB1,918.3 million, a 33.1% increase from RMB1,440.8 million year-over-year[45]. - Revenue from North America was approximately RMB1,926.6 million, reflecting a growth of approximately 37.9% compared to RMB1,396.9 million in the same period last year[51]. - The Group's gross profit amounted to approximately RMB1,474.0 million, an increase of approximately RMB 393.1 million, with a gross profit margin of approximately 75.2%, up 1.3 percentage points from the previous year[58]. - Profit before income tax increased by approximately 15.4% to approximately RMB107.7 million from RMB93.3 million in the same period last year, with the profit margin decreasing to approximately 5.5% from 6.4%[79]. - The Group recorded a profit attributable to shareholders of approximately RMB105.9 million, representing an increase of approximately 15.9% compared to RMB91.4 million in the same period last year[84]. Operational Efficiency and Strategy - The Company has established a flexible supply chain system integrating product research and development, design, and sales, which helps to launch new products efficiently and shorten the delivery cycle[15]. - In 2024, the Company successfully implemented a series of reform measures to streamline internal mechanisms and build a portfolio of ten core brands[15]. - The Company completed a brand-oriented departmental restructuring, implementing vertical specialization in brand management to enhance organizational efficiency[20]. - The design department integrated fashion elements into original designs, significantly improving product development efficiency[20]. - The Company established a brand book to define user profiles and conducted content marketing on overseas social media platforms[20]. - Collaborations with top overseas KOLs for brand promotion were initiated, boosting brand exposure and driving sales conversions[20]. - The company achieved a breakthrough in overseas production capacity, focusing on establishing a supply chain in Vietnam and expanding production in Southeast Asia[37]. - The company implemented a centralized procurement strategy, effectively reducing procurement costs and shortening production cycles[37]. - The increase in revenue was primarily driven by the Group's efforts in brand building and expansion into non-Amazon channels[46]. - The company plans to strengthen brand building by optimizing ten core brands and establishing a brand matrix covering high-, medium-, and low-end markets[122]. Employee and Corporate Governance - The group adopted a 4.5-day work week starting from February 2025 to improve employee well-being and work efficiency[115]. - The group has implemented share award schemes to incentivize employees, with existing shares awarded on September 15, 2023, and new shares on December 1, 2023[116]. - The Audit Committee consists of four independent non-executive Directors, ensuring compliance with accounting standards and practices[159][160]. - The Company has fully complied with the Corporate Governance Code during the Reporting Period[151][156]. - The ESG committee was established on March 27, 2025, to improve governance structure and ESG management[149][155]. - The Company has committed to maintaining high standards of corporate governance to enhance corporate value and transparency[150][152]. Financial Position and Capital Management - As of June 30, 2025, the Group had cash and cash equivalents of approximately RMB347.0 million, down from approximately RMB446.8 million as of December 31, 2024[94]. - The Group's gearing ratio increased from approximately 44.4% as of December 31, 2024, to approximately 48.7% as of June 30, 2025, primarily due to an increase in trade payables and the declaration of cash dividends[97]. - The group's debt-to-asset ratio increased from approximately 44.4% as of December 31, 2024, to about 48.7% as of June 30, 2025, primarily due to increased trade payables and declared cash dividends[99]. - Total staff cost incurred by the group was approximately RMB121.6 million for the reporting period, representing an 18.9% increase compared to approximately RMB102.3 million in the same period last year[110]. - The company plans to establish its own smart logistics and warehousing system, with HK$47.2 million allocated for this purpose[166]. - The total unutilized amount of net proceeds as of June 30, 2025, was HK$ 20.7 million, with a total of HK$ 216.4 million allocated for various strategic initiatives[176]. Shareholding and Dividends - Mr. Hua Bingru holds a long position of 236,056,036 shares, representing approximately 47.21% of the total shares[125]. - Mr. Wang Weiping holds a long position of 22,608,772 shares, representing approximately 4.52% of the total shares[125]. - The total number of shares in issue as of the end of the reporting period is 500,000,000[129]. - No interim dividend was recommended for the reporting period, consistent with the previous period[145]. - The beneficial interest of Ms. Yu Feng and Wiloru Holdings is 25,088,421 shares, representing 5.02% of the total shareholding[132]. - The Company did not recommend the payment of an interim dividend for the six months ending June 30, 2024[148]. Future Outlook and Initiatives - The group plans to implement measures to enhance operational efficiency and expand market share in the second half of 2025[121]. - The company aims to accelerate sales growth on non-Amazon channels and expand the proportion of off-site revenue while ensuring the sustainability of the profitability model[122]. - The global high-end supply chain layout will be strengthened, focusing on promoting the construction of the Southeast Asian supply chain and increasing the proportion of international production capacity[122]. - The company will broaden the talent structure and build an international talent team to enhance organizational strength[122]. - The development opportunities presented by AI will be seized to promote digital transformation and empower all business processes with AI[122].

[Connected Transaction: Supplementary Arable Land Quota Adjustment Agreement](index=1&type=section&id=Connected%20Transaction%3A%20Supplementary%20Arable%20Land%20Quota%20Adjustment%20Agreement) The company's subsidiary entered a connected transaction to acquire supplementary arable land quotas from a related party for a project, ensuring land balance requirements are met at a negotiated price [1.1 Agreement Overview](index=1&type=section&id=1.1%20Agreement%20Overview) The company's non-wholly owned subsidiary ZhaJiaSu Company signed a supplementary arable land quota adjustment agreement with related party ShenHai Company, involving the transfer of surplus arable land quotas for a fee, constituting a connected transaction - ZhaJiaSu Company (a non-wholly owned subsidiary of the Company) signed a supplementary arable land quota adjustment agreement with ShenHai Company (a subsidiary of Traffic Group and a connected person of the Company)[2](index=2&type=chunk)[3](index=3&type=chunk) - ShenHai Company will transfer surplus supplementary arable land quotas from the Sanmen Ma'aoling section of the YongTaiWen Expressway expansion project to ZhaJiaSu Company, with ZhaJiaSu Company paying a fee[2](index=2&type=chunk)[5](index=5&type=chunk) - The transaction constitutes a connected transaction under Chapter 14A of the Listing Rules, requiring compliance with reporting and announcement requirements but exempt from independent shareholder approval[3](index=3&type=chunk)[14](index=14&type=chunk) [1.2 Key Terms of the Agreement](index=3&type=section&id=1.2%20Key%20Terms%20of%20the%20Agreement) The agreement specifies adjusted supplementary arable land quotas including **15.7202 hectares** of cultivated land, **7.4689 hectares** of paddy fields, and **160,132.3 kilograms** of grain production capacity, with an agreement date of September 10, 2025 Adjusted Supplementary Arable Land Quotas | Quota Type | Quantity | | :--- | :--- | | Cultivated Land | 15.7202 hectares | | Paddy Fields | 7.4689 hectares | | Grain Production Capacity | 160,132.3 kilograms | - The agreement was signed on **September 10, 2025**[8](index=8&type=chunk) - The contracting parties are ZhaJiaSu Company (a non-wholly owned subsidiary of the Company) and ShenHai Company (a non-wholly owned subsidiary of Traffic Group)[8](index=8&type=chunk) [1.3 Consideration and Payment Terms](index=3&type=section&id=1.3%20Consideration%20and%20Payment%20Terms) ZhaJiaSu Company is required to pay a total consideration of **RMB 100,215,165**, approved by Zhejiang Provincial Department of Natural Resources and fairly negotiated based on national standards, payable in a lump sum after signing Unit Prices for Quota Types | Quota Type | Price per Mu (RMB) | | :--- | :--- | | Cultivated Land | 150,000 RMB | | Paddy Fields | 150,000 RMB | | Grain Production Capacity | 30,000 RMB/100 kg | Total Consideration | Item | Amount (RMB) | | :--- | :--- | | **Total Consideration** | **100,215,165 RMB** | - The consideration amount was approved by the Zhejiang Provincial Department of Natural Resources and determined through fair negotiation by both parties, referencing standards in relevant notices from the General Office of the State Council[9](index=9&type=chunk) - ZhaJiaSu Company shall pay the entire consideration to ShenHai Company in a lump sum after signing the agreement[10](index=10&type=chunk) [1.4 Reasons for and Benefits of Entering the Agreement](index=4&type=section&id=1.4%20Reasons%20for%20and%20Benefits%20of%20Entering%20the%20Agreement) To meet land balance requirements for the project, ZhaJiaSu Company must acquire supplementary arable land quotas; cross-municipal adjustment using ShenHai Company's surplus quotas was necessary due to supply constraints, offering a favorable price compared to local government purchase - The project requires occupying cultivated land, and ZhaJiaSu Company must purchase supplementary arable land quotas as required to ensure land balance[9](index=9&type=chunk) - Due to tight provincial and local quota supply, and unapproved national unified quota applications, using ShenHai Company's surplus quotas through cross-municipal adjustment is a necessary way to meet project demands[9](index=9&type=chunk)[11](index=11&type=chunk) - ShenHai Company's transfer price is consistent with unit prices for similar projects in Zhejiang Province over the past three years, and the total price is more favorable than purchasing quotas from the Jiaxing Municipal People's Government[11](index=11&type=chunk) - The Board believes the agreement was entered into on normal commercial terms, and its terms are fair and reasonable, aligning with the overall interests of the Company and its shareholders[12](index=12&type=chunk) [1.5 Implications under Listing Rules](index=2&type=section&id=1.5%20Implications%20under%20Listing%20Rules) ShenHai Company is a related party, making the agreement a connected transaction subject to reporting and announcement under Listing Rules Chapter 14A, but exempt from independent shareholder approval due to percentage ratios; certain directors abstained from voting due to conflicts of interest - ShenHai Company is a **75%** owned subsidiary of Traffic Group (the Company's controlling shareholder), thus a connected person of the Company[3](index=3&type=chunk)[14](index=14&type=chunk) - The transaction constitutes a connected transaction, with applicable percentage ratios exceeding **0.1%** but less than **5%**, requiring compliance with reporting and announcement requirements under Chapter 14A of the Listing Rules[3](index=3&type=chunk)[14](index=14&type=chunk) - The transaction is exempt from the requirement for independent shareholder approval[3](index=3&type=chunk)[14](index=14&type=chunk) - Mr. Yuan Yingjie, Mr. Fan Ye, and Mr. Huang Jianzhang, being employed by Traffic Group, are deemed to have material interests and abstained from voting on the relevant Board resolution[15](index=15&type=chunk) [1.6 Information on Contracting Parties](index=5&type=section&id=1.6%20Information%20on%20Contracting%20Parties) The company primarily invests in and operates high-grade highways; ZhaJiaSu Company, a 55% owned subsidiary, manages ZhaJiaSu Expressway; ShenHai Company, a 75% owned subsidiary of Traffic Group, manages and maintains highways - The Company (Zhejiang Expressway Co., Ltd.) primarily invests in, develops, and operates high-grade highways, and engages in expressway-related development, operations, and securities business[13](index=13&type=chunk) - ZhaJiaSu Company is a **55%** owned subsidiary of the Company, primarily engaged in the operation and management of the ZhaJiaSu Expressway[13](index=13&type=chunk) - ShenHai Company is a **75%** owned subsidiary of Traffic Group, primarily engaged in the management and maintenance of expressways[13](index=13&type=chunk) [Supplemental Announcement on Use of Proceeds from Rights Issue in 2024 Annual Report](index=2&type=section&id=Supplemental%20Announcement%20on%20Use%20of%20Proceeds%20from%20Rights%20Issue%20in%202024%20Annual%20Report) This announcement provides an updated timetable for the utilization of the remaining RMB 5.20 billion proceeds from the rights issue, expected to be fully used by December 2028 [2.1 Use of Proceeds and Timetable](index=2&type=section&id=2.1%20Use%20of%20Proceeds%20and%20Timetable) This supplemental announcement provides additional information on the expected timetable for using the remaining **RMB 5.20 billion** proceeds from the rights issue as of December 31, 2024, with full utilization anticipated by December 31, 2028, subject to project progress - This announcement aims to provide supplementary information regarding the expected timetable for the use of remaining proceeds from the rights issue[4](index=4&type=chunk)[16](index=16&type=chunk) Remaining Rights Issue Proceeds and Expected Utilization Timetable | Item | Amount (RMB) | Expected Utilization Date | | :--- | :--- | :--- | | Remaining Rights Issue Proceeds (as of Dec 31, 2024) | 5.20 billion RMB | 2028年12月31日 | - The timetable for the use of proceeds will depend on the actual progress of investment projects and will be adjusted accordingly[17](index=17&type=chunk) - The above supplementary information does not affect any other information contained in the 2024 annual report, and the report content remains unchanged except for this disclosure[17](index=17&type=chunk) [Definitions and Others](index=7&type=section&id=Definitions%20and%20Others) This section defines key terms used in the announcement and lists the members of the company's Board of Directors [3.1 Definitions](index=7&type=section&id=3.1%20Definitions) This section defines key terms used in the announcement, such as 'the Group', 'Board', 'Traffic Group', 'the Company', 'Connected Person', 'Connected Transaction', 'Controlling Shareholder', 'H Shares', 'Listing Rules', 'Project', 'RMB', 'Shareholder', 'ShenHai Company', 'Stock Exchange', and 'Subsidiary' - **"The Company"** refers to Zhejiang Expressway Co., Ltd., whose main business is investing in, developing, and operating high-grade highways[19](index=19&type=chunk) - **"Traffic Group"** refers to Zhejiang Provincial Communications Investment Group Co., Ltd., the controlling shareholder of the Company[19](index=19&type=chunk) - **"Supplementary Arable Land Quota Adjustment Agreement"** refers to the agreement entered into by ZhaJiaSu Company and ShenHai Company on **September 10, 2025**, concerning the provision of supplementary arable land quota adjustment services for the Project[19](index=19&type=chunk) - **"The Project"** refers to the ZhaJiaSu Expressway (Nanhu Interchange to Zhejiang-Jiangsu Border Section) expansion project operated by ZhaJiaSu Company[22](index=22&type=chunk) [3.2 Board Members](index=8&type=section&id=3.2%20Board%20Members) The announcement lists the company's Board of Directors, including Chairman Mr. Yuan Yingjie, Executive Directors Mr. Wu Wei and Mr. Li Wei, Non-executive Directors Mr. Yang Xudong, Mr. Fan Ye, and Mr. Huang Jianzhang, and Independent Non-executive Directors Mr. Baker, Ms. Li Weizheng, and Mr. Yu Mingyuan - The Chairman is Mr. Yuan Yingjie[21](index=21&type=chunk) - Executive Directors include Mr. Wu Wei and Mr. Li Wei[21](index=21&type=chunk) - Independent Non-executive Directors include Mr. Baker, Ms. Li Weizheng, and Mr. Yu Mingyuan[21](index=21&type=chunk)

[Announcement Overview](index=1&type=section&id=2024%E5%B9%B4%E5%BA%A6%E5%A0%B1%E5%91%8A%E4%B9%8B%E8%A3%9C%E5%85%85%E5%85%AC%E5%91%8A) This announcement serves as a supplementary disclosure to Huiju Technology Co., Ltd.'s 2024 annual report, detailing the use of net proceeds from the global offering and an extended utilization timetable - This announcement serves as a supplementary disclosure to Huiju Technology Co., Ltd.'s 2024 annual report, detailing the use of net proceeds from the global offering and an extended utilization timetable[2](index=2&type=chunk)[3](index=3&type=chunk) [Use of Net Proceeds from Global Offering](index=1&type=section&id=%E5%85%A8%E7%90%83%E7%99%BC%E5%94%AE%E6%89%80%E5%BE%97%E6%AC%BE%E9%A0%8D%E6%B7%A8%E7%94%A8%E9%80%94) This section details the allocation, utilization, and future management plan for the net proceeds obtained from the global offering [Background and Total Amount](index=1&type=section&id=%E5%85%A8%E7%90%83%E7%99%BC%E5%94%AE%E6%89%80%E5%BE%97%E6%AC%BE%E9%A0%8D%E6%B7%A8%E7%94%A8%E9%80%94%20-%20%E8%83%8C%E6%99%AF) The net proceeds from the global offering amounted to approximately HK$187.5 million, with this announcement providing supplementary disclosure on the carried-forward amount as of January 1, 2024 - The net proceeds from the global offering totaled approximately **HK$187.5 million**[4](index=4&type=chunk) - This announcement provides supplementary disclosure on the carried-forward amount of proceeds as of January 1, 2024, in compliance with Listing Rule Appendix D2 paragraph 11A[4](index=4&type=chunk) [Fund Allocation and Utilization](index=2&type=section&id=%E5%85%A8%E7%90%83%E7%99%BC%E5%94%AE%E6%89%80%E5%BE%97%E6%AC%BE%E9%A0%8D%E6%B7%A8%E7%94%A8%E9%80%94%20-%20%E8%B5%84%E9%87%91%E5%88%86%E9%85%8D) As of December 31, 2024, out of the total RMB170.6 million net proceeds, RMB63.0 million has been utilized, with RMB107.6 million remaining unutilized, primarily for specific projects and working capital Allocation and Utilization of Net Proceeds from Global Offering (As of December 31, 2024) | Main Purpose | Percentage of Net Proceeds | Planned Allocated Net Proceeds (HK$ million) | Planned Allocated Net Proceeds (RMB million) | Amount Utilized (as of Dec 31, 2023) (RMB million) | Carried-forward Proceeds (as of Jan 1, 2024) (RMB million) | Amount Utilized (as of Dec 31, 2024) (RMB million) | Unutilized Amount (as of Dec 31, 2024) (RMB million) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Lanzhou Peak-Shaving Boiler Construction | 50.0% | 93.7 | 85.3 | 24.7 | 60.6 | 34.3 | 51.0 | | Xinmi Heating Preparation and Expansion Project | 40.0% | 75.0 | 68.2 | 0 | 68.2 | 18.7 | 49.5 | | Working Capital and Other General Corporate Purposes of the Group | 10.0% | 18.8 | 17.1 | 10.0 | 7.1 | 10.0 | 7.1 | | **Total** | **100.0%** | **187.5** | **170.6** | **34.7** | **135.9** | **63.0** | **107.6** | [Expected Timetable and Management of Unutilized Funds](index=2&type=section&id=%E5%85%A8%E7%90%83%E7%99%BC%E5%94%AE%E6%89%80%E5%BE%97%E6%AC%BE%E9%A0%8D%E6%B7%A8%E7%94%A8%E9%80%94%20-%20%E6%97%B6%E9%97%B4%E8%A1%A8) The remaining RMB107.6 million unutilized net proceeds are expected to be deployed by December 31, 2025, or December 31, 2026, and will be held in short-term interest-bearing accounts - Total unutilized net proceeds from the global offering amount to **RMB107.6 million**[5](index=5&type=chunk) - The expected timetable for unutilized funds is based on the Group's best estimate of market conditions, with the Lanzhou project and working capital expected to be utilized by **December 31, 2025**, and the Xinmi project by **December 31, 2026**[5](index=5&type=chunk)[6](index=6&type=chunk) - Unutilized net proceeds will be deposited into short-term interest-bearing accounts with licensed commercial banks or other recognized financial institutions[6](index=6&type=chunk) [Board of Directors Information](index=2&type=section&id=%E6%89%BF%E8%91%A3%E4%BA%8B%E6%9C%83%E5%91%BD) This section provides details on the signing authority for the announcement and the composition of the Board of Directors - The announcement is signed by Mr. Li Baoshan, Chairman and Executive Director of the Board[6](index=6&type=chunk) - The Board of Directors comprises three executive directors (Li Baoshan, Liu Zhigang, Luo Wei), three non-executive directors (Miao Wenbin, Ma Fulin, Xu Lijie), and three independent non-executive directors (Zhang Haogang, Xie Xiaodong, Zhu Qing)[6](index=6&type=chunk)

China Shuifa Singyes New Materials Holdings Limited 中國水發興業新材料控股有限公司 (Incorporated in the Bermuda with limited liability) （於百慕達註冊成立的有限公司） Stock Code 股份代碼：8073 INTERIM REPORT 中期報告 www.syeamt.com 2025 China Shuifa Singyes New Materials Holdings Limited 中國水發興業新材料控股有限公司 CHARACTERISTICS OF GEM OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE") GEM has been positioned as a market designed to accommodate small and mid-sized companies to which a higher investment risk may be attached than other compan ...