7ROAD(HK:00797)2021-09-14 08:58Financial Performance - For the six months ended June 30, 2021, the company reported total revenue of approximately RMB 109.5 million, a decrease of about 44.8% compared to RMB 198.3 million for the same period in 2020[8]. - The net profit attributable to the company's owners for the six months ended June 30, 2021, was approximately RMB 30.5 million, representing a decrease of about 5.8% from RMB 32.4 million in the same period of 2020[9]. - The company's gross profit for the first half of 2021 was RMB 47.1 million, with a gross margin of 43.0%[12]. - Gross profit for the six months ended June 30, 2021, was approximately RMB 47.1 million, a decrease of about 69.6% from RMB 154.6 million in the same period of 2020[26]. - The gross profit margin for the six months ended June 30, 2021, was approximately 43.0%, down from 78.0% in the same period of 2020[26]. - The company reported a net loss of RMB 13,822,000 from financial assets measured at fair value through profit or loss for the six months ended June 30, 2021[110]. - The company reported a total comprehensive income of RMB 34,897 thousand for the period, compared to RMB 20,446 thousand in 2020, an increase of 70.9%[79]. - The basic and diluted earnings per share for the period were RMB 0.012, down from RMB 0.013 in 2020[77]. - The company reported a net financial cost of RMB (1,153,000) for the six months ended June 30, 2021, compared to RMB (1,316,000) in the previous year[113]. Market Trends and Strategy - The global online gaming market is expected to generate $175.8 billion in revenue in 2021, with the mobile gaming market projected to reach $90.7 billion, a year-on-year growth of 4.4%[11]. - The Asia-Pacific region accounted for 50.2% of global gaming revenue in 2021, with China contributing $45.6 billion, making it the largest market in the region[11]. - The number of gaming users in China reached 670 million in the first half of 2021, reflecting a year-on-year growth of 1.4%[11]. - The company's strategic focus has shifted towards developing and operating mobile games, responding to the growing demand in the internet market for cloud-related services[11]. - The company plans to expand its business activities to include cloud computing and cloud storage services as part of its new business initiatives[11]. - The company aims to enhance its user experience by providing various game versions and maintaining a strong presence in over 100 countries and regions[11]. - The company will continue to focus on high-quality game products and leverage existing IP value, with plans to develop new titles such as "弹弹堂复古版" and "花开易梦阁" expected to launch in Q4 2021 or early 2022[13]. - The company aims to diversify its revenue sources by entering the cloud computing and cloud storage sectors, with the global cloud storage market projected to grow from $50.1 billion in 2020 to $137.3 billion by 2025, at a CAGR of 22.3%[16]. - The company plans to explore and expand into other potential areas, including cloud computing and related services, to enhance long-term sustainability and profitability[16]. - The company is exploring potential acquisitions to enhance its technology capabilities and broaden its game portfolio[169]. Operational Insights - The actual sales revenue of China's gaming market in the first half of 2021 was RMB 150.49 billion, representing a year-on-year growth of 7.9%[11]. - The company's online game revenue in the first half of 2021 was primarily driven by popular titles such as "弹弹堂" and "神曲" series[18]. - The average monthly active users for web games were approximately 0.8 million, while for mobile games, it was about 1.5 million[19]. - The average revenue per paying user for web games was approximately RMB 454, and for mobile games, it was RMB 227[19]. - The company has implemented cost control measures to strengthen its risk resistance amid the ongoing impact of the COVID-19 pandemic[17]. - The company will continue to strengthen its core product development and expand overseas market operations, enhancing its global presence in the gaming industry[16]. - The company is committed to IP licensing as a long-term strategy and will seek partnerships with quality developers to enhance its IP development capabilities[14]. - The company will continue to recruit and retain talent with attractive compensation policies to bolster its IP development capabilities[14]. - The company is actively seeking appropriate investment and collaboration opportunities to solidify and enhance its industry position[16]. Financial Position and Investments - Cash and cash equivalents, including restricted cash, totaled approximately RMB 371.7 million as of June 30, 2021, a slight decrease of 2.0% from RMB 379.3 million as of December 31, 2020[33]. - The debt-to-asset ratio as of June 30, 2021, was approximately 23.1%, down from 28.5% on December 31, 2020, primarily due to the repayment of bank loans[34]. - Capital expenditures for the six months ended June 30, 2021, totaled approximately RMB 222.1 million, a significant increase of 6,542.5% compared to RMB 3.3 million in the same period of 2020[35]. - The capital expenditures included RMB 182.7 million for cloud computing and RMB 37.2 million for cloud storage services[35]. - The company acquired a 49% stake in Wuxi Shouxin Network Technology Co., Ltd. for an initial investment of RMB 73.5 million, with an attributable performance of approximately RMB 37.2 million as of June 30, 2021[38]. - The company sold its investment in Shanghai Longrui Information Technology Co., Ltd. for approximately RMB 207.4 million, equivalent to its fair value as of December 31, 2020[40]. - The company reported a significant decrease in the value of non-listed investments, dropping from RMB 207,993,000 to RMB 20,573,000, a decline of approximately 90.1%[140]. - The company recognized an impairment provision of RMB 20,299,000 related to an investment in Shenzhen Longyou Tianxia Network Technology Co., Ltd., due to financial difficulties faced by the company[137]. - The company recorded a loss of RMB 1,435,000 from joint ventures as of June 30, 2021, compared to a loss of RMB 1,781,000 for the same period in 2020[132]. Corporate Governance and Compliance - The company has complied with all applicable provisions of the corporate governance code during the six months ended June 30, 2021[68]. - The company has established an audit committee consisting of three independent non-executive directors[74]. - The previous auditor, Deloitte Touche Tohmatsu, resigned on May 12, 2021, and a new auditor, KPMG, was appointed on May 13, 2021[71]. - The company has maintained the required public float as per the listing rules[70]. - The company has adhered to relevant laws and regulations with no significant compliance issues reported as of June 30, 2021[72]. - The company is committed to maintaining compliance with the latest corporate governance codes as outlined in the listing rules[168]. Employee and Shareholder Information - Total employee compensation for the six months ended June 30, 2021, was approximately RMB 55 million, covering salaries, bonuses, and other benefits[42]. - As of June 30, 2021, the company had 321 full-time employees, with 47.98% in R&D, 33.33% in operations, and 18.69% in administration[42]. - The company’s employee housing loans amounted to RMB 1,510,000 as of June 30, 2021, compared to RMB 2,235,000 as of December 31, 2020, indicating a decrease of approximately 32.4%[136]. - The company issued 133,700,000 new shares to DianDian Interactive at a subscription price of HKD 2.59 per share, totaling HKD 346,283,000, which is about 5.10% of the existing issued share capital[66]. - The company did not declare any interim dividends for the six months ended June 30, 2021, consistent with the previous year[122]. - Major shareholders include Baohu Holdings Limited and Shanghai Baohu Investment Management Center, each holding 352,714,000 shares, accounting for 12.81%[56]. - Other significant shareholders include Shanghai Baopu Investment Management Co., Ltd. and Ningbo Haochu Investment Management Co., Ltd., each holding 353,586,000 shares, representing 12.84%[56].