万咖壹联(01762) - 2023 - 年度财报

Corporate Information This section provides an overview of the company's fundamental details and structure 2023 Annual Milestones This section highlights the company's significant achievements and events throughout 2023 Summary of 2023 Annual Milestones In 2023, the company achieved significant business collaborations with Apple and iQiyi, becoming the exclusive service provider for Honor mobile gaming, while enhancing its industry influence through active participation in AI and gaming events - Collaborated with Apple on mobile advertising business[12][13] - Became a core service provider for iQiyi's direct sales business[14][15] - Became the exclusive service provider for Honor's mobile gaming industry[25][26] - The company's subsidiary, Wanka Huanju, received the '2022 AI Golden Goose Award for AI Industry Influence', and Chairman Gao Dinan was honored with the 'Outstanding Elite Award'[16] Chairman's Statement This section presents the Chairman's review of the company's performance in 2023, strategic partnerships, and future growth initiatives Summary of Chairman's Statement Chairman Gao Dinan reviewed 2023 performance, noting a full-year revenue decline due to slow H1 market recovery but a strong Q4 rebound, with the company now covering Android, HarmonyOS, and iOS ecosystems and planning global iOS expansion, HarmonyOS opportunities, and new ventures like connected vehicles 2023 Financial Performance Overview | Metric | 2023 | 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | RMB 2.098 billion | RMB 2.301 billion | -8.8% | | Gross Profit | RMB 223 million | RMB 234 million | -4.8% | | Profit After Tax | RMB 22 million | - | - | - Business fully covers Android, Huawei HarmonyOS, and Apple iOS ecosystems, with deep cooperation with top smartphone manufacturers including Huawei, Xiaomi, OPPO, vivo, Honor, and Apple[28][33] - Achieved global strategic cooperation with Apple for iOS ecosystem mobile distribution services both domestically and internationally; secured exclusive game distribution partnership with Honor[33][35] - Future plans include strengthening global expansion in the Apple iOS ecosystem, seizing Huawei HarmonyOS development opportunities, and deepening comprehensive cooperation with Huawei[39][41] - In connected vehicle business, the Group's associate company, Wanxin Chelian, has deeply partnered with renowned car manufacturers like Changan, Great Wall, and Leapmotor, signing 3 million intelligent connected vehicles[38][40] Financial Highlights This section provides a concise overview of the company's key financial performance indicators and position for the reporting period Financial Highlights The company's 2023 revenue was RMB 2.098 billion, an 8.8% decrease year-on-year, with gross profit at RMB 223 million, down 4.8%, while achieving a profit of RMB 22 million compared to a RMB 129 million loss in 2022, and adjusted net profit decreased by 32.9% to RMB 32.51 million, with total assets growing to RMB 1.974 billion Consolidated Statement of Profit or Loss Summary (RMB Thousand) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Revenue | 2,098,220 | 2,300,875 | 2,098,198 | | Gross Profit | 223,268 | 234,475 | 263,316 | | Profit/(Loss) Before Tax | 34,612 | (111,453) | 84,073 | | Profit/(Loss) for the Year | 21,996 | (128,558) | 62,297 | | Adjusted EBITDA | 65,626 | 87,132 | 121,838 | | Adjusted Net Profit | 32,506 | 48,420 | 80,905 | Consolidated Statement of Financial Position Summary (RMB Thousand) | Metric | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Non-current Assets | 178,181 | 125,474 | 272,485 | | Current Assets | 1,795,549 | 1,785,626 | 1,572,878 | | Total Assets | 1,973,730 | 1,911,100 | 1,845,363 | | Current Liabilities | 563,893 | 531,021 | 434,628 | | Non-current Liabilities | 4,861 | 7,255 | 19,822 | | Total Liabilities | 568,754 | 538,276 | 454,450 | | Total Equity | 1,404,976 | 1,372,824 | 1,390,913 | Management Discussion and Analysis This section provides management's perspective on the company's operational performance, financial condition, and future outlook Revenue Analysis Total revenue for 2023 was RMB 2.098 billion, an 8.8% year-on-year decrease, with mobile advertising services remaining the core revenue source at 95.2% of total revenue, despite a 9.1% decline to RMB 1.998 billion due to fewer promoted games, while online video product distribution and game co-publishing services also saw declines 2023 vs 2022 Revenue Composition (RMB Thousand) | Business Segment | 2023 Revenue | % of Total Revenue | 2022 Revenue | % of Total Revenue | | :--- | :--- | :--- | :--- | :--- | | Mobile Advertising | 1,997,751 | 95.2% | 2,196,736 | 95.5% | | Online Video Product Distribution | 56,583 | 2.7% | 84,525 | 3.7% | | Game Co-publishing | 4,314 | 0.2% | 5,512 | 0.2% | | Others | 39,572 | 1.9% | 14,102 | 0.6% | | Total | 2,098,220 | 100% | 2,300,875 | 100% | Mobile Advertising Services Mobile advertising service revenue decreased by 9.1% year-on-year, primarily due to an 8.9% reduction in mobile game distribution revenue to RMB 1.977 billion as advertisers cut spending, alongside a 20.6% decline in mobile application distribution revenue due to fewer promotions Mobile Advertising Services Revenue Breakdown (RMB Thousand) | Ad Type | 2023 Revenue | % of Total Revenue | 2022 Revenue | % of Total Revenue | | :--- | :--- | :--- | :--- | :--- | | Mobile Game Distribution | 1,976,573 | 98.9% | 2,169,988 | 98.8% | | Mobile Application Distribution | 21,178 | 1.1% | 26,748 | 1.2% | | Total | 1,997,751 | 100% | 2,196,736 | 100% | Online Video Product Distribution Services Revenue from online video product distribution services was RMB 56.6 million, a 33.0% year-on-year decrease, primarily focusing on finance, entertainment, and film sectors - Online video distribution business revenue in 2023 was RMB 56.6 million, a 33.0% decrease compared to 2022[66][69] Game Co-publishing Services Game co-publishing service revenue was RMB 4.3 million, a 21.8% year-on-year decrease, with the company co-publishing 55 mobile games in China by the end of 2023 - Game co-publishing service revenue in 2023 was RMB 4.3 million, a 21.8% decrease year-on-year[68][70] Cost, Profit, and Expense Analysis In 2023, cost of sales decreased by 9.3% to RMB 1.875 billion in line with revenue decline, gross profit decreased by 4.8% to RMB 223 million, but gross margin slightly increased from 10.2% to 10.6%, leading to a turnaround with a profit of RMB 22 million compared to a RMB 129 million loss in 2022, mainly due to a significant reduction in goodwill impairment loss - Cost of sales decreased by 9.3% to RMB 1.875 billion, consistent with the revenue decline trend[72][77] - Gross profit decreased by 4.8% to RMB 223 million, but gross margin improved from 10.2% to 10.6%, primarily due to reduced intangible asset amortization and higher gross margin from software maintenance services[73][74][78] - Selling and distribution expenses increased by 33.0% year-on-year to RMB 25.8 million due to increased marketing and advertising expenses[76][80] - Goodwill impairment loss significantly decreased from RMB 155 million in 2022 to RMB 2.4 million in 2023[84][90] - Achieved a full-year profit of RMB 22 million, turning around from a RMB 129 million loss in 2022[98][103] Non-HKFRS Measures Under Non-HKFRS measures, the company's adjusted EBITDA for 2023 was RMB 65.63 million, a 24.7% year-on-year decrease, and adjusted net profit was RMB 32.51 million, down 32.9%, with these metrics excluding the impact of non-operating items like share-based payment expenses and goodwill impairment Non-HKFRS Measures Reconciliation Table (RMB Thousand) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Profit/(Loss) for the Year | 21,996 | (128,558) | | Add: Depreciation | 7,942 | 6,682 | | Add: Amortization of intangible assets | 2,553 | 7,229 | | Add: Finance costs | 10,009 | 7,696 | | Add: Income tax expense | 12,616 | 17,105 | | Add: Share-based payment expenses | 8,149 | 22,192 | | Add: Goodwill impairment loss | 2,361 | 154,786 | | Adjusted EBITDA | 65,626 | 87,132 | | Adjusted Net Profit | 32,506 | 48,420 | Financial Position and Key Ratios As of the end of 2023, the company's total assets were RMB 1.974 billion, total equity was RMB 1.405 billion, cash and bank balances decreased to RMB 534.9 million, bank borrowings increased to RMB 303.5 million, while the current ratio slightly decreased from 3.4 to 3.2 and the debt-to-asset ratio slightly increased from 28.2% to 28.8%, maintaining a sound financial position, though adjusted net profit margin decreased from 2.1% to 1.5% Key Financial Position Indicators (RMB Thousand) | Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 534,899 | 612,551 | -12.7% | | Bank Borrowings | 303,500 | 260,000 | 16.7% | | Net Current Assets | 1,231,656 | 1,254,605 | -1.8% | | Total Equity | 1,404,976 | 1,372,824 | 2.3% | Key Financial Ratios | Ratio | 2023 | 2022 | | :--- | :--- | :--- | | Current Ratio (times) | 3.2 | 3.4 | | Debt-to-Asset Ratio (%) | 28.8% | 28.2% | | Adjusted Net Profit Margin (%) | 1.5% | 2.1% | Directors and Senior Management This section provides information on the composition and roles of the company's board of directors and senior management team Report of the Directors This section details the board's review of the company's business operations, financial performance, and corporate governance for the year Business and Financial Summary The company's main business involves Android-based mobile advertising, online video distribution, game co-publishing, and software maintenance services, with the top five customers contributing 37.8% of revenue and the top five suppliers accounting for 80.1% of total cost of sales in 2023, while the board resolved not to declare a final dividend for the year, with distributable reserves of approximately RMB 1.02 billion - The company primarily engages in Android content distribution services, including mobile advertising, online video product distribution, game co-publishing, and software maintenance services[190][196] - The Board of Directors resolved not to recommend a final dividend for the year ended December 31, 2023[192][198] - In 2023, the top five customers accounted for 37.8% of total revenue, and the top five suppliers accounted for 80.1% of total cost of sales[217][218][223] Use of Proceeds As of December 31, 2023, the net proceeds of approximately RMB 171.2 million from the company's 2018 IPO and approximately RMB 157.8 million from the 2021 placing have both been fully utilized as planned, primarily for developing existing business lines and strengthening digital infrastructure - As of the end of 2023, the net proceeds of approximately RMB 171.2 million from the 2018 IPO have been fully utilized for the purposes disclosed in the prospectus[208][209][210] - As of the end of 2023, the net proceeds of approximately RMB 157.8 million from the 2021 placing have been fully utilized as planned[213][214][215] Share Incentive Schemes The company adopted two share incentive schemes in 2016 and 2019, with 62.5 million shares granted under the 2016 plan and approximately 8.1 million unexercised as of year-end 2023, and 91.74 million shares granted under the 2019 plan with approximately 28.14 million unexercised, while no new awards were granted in 2023, and the unused post-IPO share option scheme was terminated in April 2023 - The 2016 Share Incentive Scheme has granted 62.5 million shares, with 8,096,235 shares vested but unexercised as of the end of 2023[311][314] - The 2019 Share Incentive Scheme has granted 91.738 million shares, with 28,137,000 shares unexercised as of the end of 2023[330][333] - The company terminated its "Post-IPO Share Option Scheme" on April 20, 2023, which had not granted any options since its adoption[292] Connected Transactions and Contractual Arrangements (VIE Structure) Due to Chinese legal restrictions on foreign investment in specific internet businesses, the company controls its main operating entities in China (Huanju Shidai and Shanghai Chile) through a series of contractual arrangements (VIE structure), enabling it to obtain most economic benefits and exercise effective control, with these entities contributing 94.3% of the Group's total revenue in 2023, and independent non-executive directors and auditors have reviewed and confirmed the compliance and effectiveness of these arrangements - To circumvent Chinese restrictions on foreign investment in specific internet businesses, the Group controls its consolidated affiliated entities, "Huanju Shidai" and "Shanghai Chile," through contractual arrangements (VIE structure)[345][348][383] - For the year ended December 31, 2023, the consolidated affiliated entities (Huanju Shidai and Shanghai Chile and their subsidiaries) generated revenue of RMB 1.979 billion, accounting for approximately 94.3% of the Group's total revenue[379][381] - Independent non-executive directors have reviewed the contractual arrangements, confirming that transactions were conducted as stipulated and are in the overall interest of the Group and its shareholders[399] - The company's auditor has issued a letter regarding the contractual arrangements, confirming no matters were found to suggest transactions were not approved by the Board or did not comply with relevant agreements[403][406] Corporate Governance Report This section outlines the company's corporate governance practices and compliance with relevant codes and regulations Independent Auditor's Report This section presents the independent auditor's opinion on the fairness and accuracy of the company's consolidated financial statements Auditor's Opinion and Key Audit Matters Auditor Elite Partners CPA Limited issued an unmodified opinion on the company's 2023 consolidated financial statements, affirming they present a true and fair view of the Group's financial position and performance, with key audit matters including goodwill impairment assessment and expected credit loss provisions for accounts receivable, where the auditor reviewed management's methodologies, key assumptions, and disclosure adequacy - The auditor believes the consolidated financial statements present a true and fair view of the Group's consolidated financial position as of December 31, 2023, and its financial performance and cash flows for the year then ended, in accordance with Hong Kong Financial Reporting Standards[565][567] - Key Audit Matter One: Goodwill impairment assessment. As of the end of 2023, the carrying amount of goodwill before impairment was approximately RMB 34.8 million, with an impairment of RMB 2.361 million recognized this year. The auditor assessed the reasonableness of management's valuation methods and key assumptions (e.g., future cash flows, growth rates, discount rates)[572][573] - Key Audit Matter Two: Provision for expected credit losses on accounts receivable. Accounts receivable constitute a significant portion of total assets, and measuring their expected credit losses (ECL) involves significant judgment. The auditor assessed management's processes, controls, and the judgments and estimates used to determine the provision[579][580] Consolidated Financial Statements This section presents the company's complete set of consolidated financial statements, including the statement of profit or loss, financial position, and cash flows Consolidated Statement of Profit or Loss In 2023, the Group's total revenue was RMB 2.098 billion, down 8.8% year-on-year, with gross profit at RMB 223 million, down 4.8%, but due to a significant reduction in goodwill impairment loss, the company achieved a turnaround with a profit for the year of RMB 22 million, compared to a RMB 129 million loss in 2022, and basic earnings per share of RMB 0.01 Consolidated Statement of Profit or Loss Key Data (RMB Thousand) | Item | 2023 | 2022 | | :--- | :--- | :--- | | Revenue | 2,098,220 | 2,300,875 | | Gross Profit | 223,268 | 234,475 | | Goodwill Impairment Loss | (2,361) | (154,786) | | Profit/(Loss) Before Tax | 34,612 | (111,453) | | Profit/(Loss) for the Year | 21,996 | (128,558) | | Profit/(Loss) Attributable to Owners of the Company | 15,488 | (129,537) | | Basic Earnings/(Loss) Per Share | RMB 0.01 | (RMB 0.09) | Consolidated Statement of Financial Position As of December 31, 2023, the Group's total assets were RMB 1.974 billion, a slight increase from RMB 1.911 billion in the previous year, with total liabilities at RMB 569 million and total equity at RMB 1.405 billion, maintaining a sound financial structure with net current assets of RMB 1.232 billion Consolidated Statement of Financial Position Key Data (RMB Thousand) | Item | 2023 | 2022 | | :--- | :--- | :--- | | Non-current Assets | 178,181 | 125,474 | | Current Assets | 1,795,549 | 1,785,626 | | Total Assets | 1,973,730 | 1,911,100 | | Current Liabilities | 563,893 | 531,021 | | Non-current Liabilities | 4,861 | 7,255 | | Total Liabilities | 568,754 | 538,276 | | Total Equity | 1,404,976 | 1,372,824 | Consolidated Statement of Cash Flows In 2023, the Group experienced a net cash outflow from operating activities of RMB 65.31 million, compared to a net inflow of RMB 9.37 million in the previous year, with net cash outflow from investing activities of RMB 29.85 million and net cash inflow from financing activities of RMB 76.67 million, resulting in cash and cash equivalents at year-end of RMB 521.87 million, a decrease from RMB 538.22 million at the beginning of the year Consolidated Statement of Cash Flows Key Data (RMB Thousand) | Item | 2023 | 2022 | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | (65,314) | 9,368 | | Net Cash Flow Used in Investing Activities | (29,854) | (19,394) | | Net Cash Flow from Financing Activities | 76,670 | 137,271 | | Net (Decrease)/Increase in Cash and Cash Equivalents | (18,498) | 127,245 | | Cash and Cash Equivalents at Beginning of Year | 538,224 | 401,102 | | Cash and Cash Equivalents at End of Year | 521,874 | 538,224 | Notes to the Financial Statements This section provides detailed explanations and breakdowns of the figures presented in the consolidated financial statements Note 6: Segment Information The Group operates in four reportable segments: mobile advertising services, online video product distribution services, game co-publishing services, and software maintenance services, with mobile advertising services being the largest revenue and profit contributor in 2023, generating RMB 1.998 billion in revenue and RMB 193 million in segment results, while online video distribution services contributed RMB 17.56 million, and the vast majority of the Group's revenue and non-current assets are located in mainland China 2023 Segment Results (RMB Thousand) | Segment | Revenue | Cost of Sales | Segment Results | | :--- | :--- | :--- | :--- | | Mobile Advertising Services | 1,997,751 | (1,804,741) | 193,010 | | Online Video Product Distribution Services | 56,583 | (39,024) | 17,559 | | Game Co-publishing Services | 4,314 | – | 4,314 | | Software Maintenance Services | 39,572 | (31,187) | 8,385 | | Total | 2,098,220 | (1,874,952) | 223,268 | Note 18: Goodwill As of the end of 2023, the Group's goodwill carrying amount was RMB 32.44 million, with an impairment of RMB 2.361 million recognized for the online video product distribution CGU this year, a significant reduction from RMB 155 million in 2022, and no impairment was found for the software maintenance services CGU, with impairment tests based on value-in-use method using independent professional valuations - As of the end of 2023, the carrying amount of goodwill was RMB 32.44 million, down from RMB 34.8 million at the beginning of the year[931] - An impairment of RMB 2.361 million was recognized for the online video product distribution CGU this year, primarily due to delayed collections and decreased revenue in this business[934][941] Note 22: Accounts Receivable As of the end of 2023, total accounts receivable increased to RMB 681 million from RMB 601 million in the previous year, with a loss allowance of RMB 56.87 million, and the aging analysis shows that accounts receivable within 3 months constitute the largest portion at RMB 493 million, while management believes the credit quality of overdue but not impaired accounts receivable has not significantly changed, posing minimal risk Accounts Receivable Aging Analysis (Net of Loss Allowance, RMB Thousand) | Aging | 2023 | 2022 | | :--- | :--- | :--- | | Within 3 months | 492,772 | 344,049 | | 3 to 12 months | 180,783 | 245,806 | | 1 to 2 years | 7,209 | 11,404 | | Total | 680,764 | 601,259 | - The loss allowance for accounts receivable increased from RMB 49.72 million at the beginning of the year to RMB 56.87 million at year-end, with an impairment loss of RMB 18.97 million recognized this year[992] Note 30: Share-based Payment Expenses The company implemented 2016 and 2019 Share Incentive Schemes (RSU plans), with a total of 36.23 million unexercised RSUs under both plans as of the end of 2023, and 36.39 million vested RSUs transferred to employees during 2023, resulting in a total share-based payment expense of RMB 8.15 million for the year Restricted Share Units (RSU) Movement | Item | 2023 (Number of Units) | 2022 (Number of Units) | | :--- | :--- | :--- | | Unexercised at Beginning of Year | 72,622,275 | 57,968,233 | | Granted During the Year | – | 40,080,000 | | Vested RSUs Transferred to Employees | (36,389,040) | (25,425,958) | | Unexercised at End of Year | 36,233,235 | 72,622,275 | | Exercisable at End of Year | 36,233,235 | 26,547,678 |