LINEKONG(HK:08267)2021-03-31 11:40Game Development and Strategy - The self-developed casual game "Coin Tycoon" was tested in North America in July 2020 and showed good retention and payment data, with plans for a domestic version test in 2021[25]. - The AVG+RPG female-oriented mobile game "Zhen Huan Chuan: Floating Life Dream" is nearing completion, highlighting the company's focus on the female market with a strong IP and quality[25]. - The company has established a stable operation of the game "Uncharted Waters" in South Korea and is focusing on expanding into the Japanese market, enhancing the local publishing team's capabilities[25]. - The company is focusing on the development of female-oriented mobile games and has made significant progress in this area[25]. - The gaming business has multiple projects in the late development stage, with significant progress expected in 2021 for female-oriented and mid-casual games, alongside deeper strategic layouts in overseas markets such as Korea, Japan, and North America[41]. - The new MMORPG mobile game "The Era of Overlapping Ruins" is currently in technical testing and is expected to start commercialization testing within the year[43]. - The group has established a dedicated team for the Japanese market, which has experience in publishing top-selling games, and has secured exclusive adaptation and global publishing rights for the mobile version of "Ys VII"[44]. - The game "Ys VIII Mobile" received positive feedback during its participation in the Tokyo Game Show and is currently in the late-stage development and optimization phase, with testing expected to start in 2021[47]. - The company aims to enhance its self-developed business in 2021, focusing on female-oriented and casual games while exploring overseas markets[54]. - The company is advancing its global market strategy, particularly in Europe and North America, while continuing to develop its presence in Japan, South Korea, and other overseas markets[24]. Financial Performance - The company reported a significant increase in revenue, achieving a total of $500 million for the fiscal year, representing a 25% year-over-year growth[34]. - User engagement metrics showed a 30% increase in active users, reaching 10 million monthly active users[34]. - The company provided guidance for the next fiscal year, projecting revenue growth of 20% to $600 million[34]. - New product launches are expected to contribute an additional $50 million in revenue, with three major titles scheduled for release in the next quarter[34]. - The group reported a consolidated loss of approximately RMB 40.48 million for the year ended December 31, 2020, a decrease of 19.1% compared to the previous year[56]. - The total revenue for the year decreased by approximately 6.3% compared to the previous year, reflecting the impact of the COVID-19 pandemic on the industry[56]. - Game business revenue contributed approximately RMB 113.9 million, a decrease of about 33.0% from RMB 170.1 million in 2019, attributed to fewer new game releases and existing game decline[62]. - The gross profit for the year was approximately RMB 49.2 million, a decrease of about 30.8% from RMB 71.1 million in 2019, with a gross margin of 23.2%, down 8.3 percentage points from 31.5%[67]. - The operating loss for the game business was RMB 30.3 million, reduced by 32.5% from RMB 44.8 million in 2019, while the film and television business turned a profit of RMB 4.8 million[76]. Film and Television Production - The film and television division has successfully completed the production of "You Are Like This, Mr. Gu" and is set to launch on March 30, 2021, with other major projects in the pipeline[25]. - The film and television business has increased its IP reserves and is implementing a matrix product strategy, with several high-quality series set to be released in 2021[24]. - The group plans to launch 1-2 high-quality film projects in 2021, having entered a matrix layout for film and television production in 2020[41]. - The company plans to launch the ancient costume fantasy drama "琴瑟絲" in 2021, which is the first domestic drama based on ancient music, showcasing traditional culture[49]. - The new web drama "原來你是遠樣的廠先生" was completed in 2020 and is set to premiere on Tencent Video on March 30, 2021, combining light comedy and fashion elements[50]. - The ancient costume romantic drama "花好月又圓" is expected to be released in 2021, developed in collaboration with Youku[50]. - The film and television division has accumulated several high-quality potential projects, ensuring a steady output of head and waist works[48]. Talent and Team Development - The newly established entertainment company, Linekong Chenxi, has signed four young artists, who are actively participating in major productions and have stable fan bases on new media platforms[26]. - The company has strengthened its talent pool and team building for female-oriented and ACG (Anime, Comic, Game) products, with plans to launch multiple high-quality new products in 2021[26]. - The group has signed four potential new stars in its artist management business and has initiated various projects in film and television, as well as new media operations[42]. - The company has a strong lineup of new talent, with several projects scheduled for release in 2021, including "乘風少年" and "一日為囚"[53]. Research and Development - Investment in R&D increased by 40%, focusing on innovative gaming technologies and user experience improvements[34]. - Research and development expenses for the year were RMB 16.83 million, accounting for 7.9% of total expenses, while administrative expenses were RMB 53.25 million, representing 25.1%[56]. - Research and development expenses were approximately RMB 16.8 million, a decrease of about 37.8% from RMB 27.0 million in 2019, due to the company's business stage and strategic needs[70]. Corporate Governance and Compliance - The board of directors confirmed compliance with the GEM Listing Rules regarding corporate governance, ensuring accountability and transparency[111]. - The board consists of 4 executive directors, 1 non-executive director, and 3 independent non-executive directors, maintaining the required independence as per GEM Listing Rules[115]. - The company has established three board committees: the Remuneration Committee, the Nomination Committee, and the Audit Committee, to oversee specific areas of the company's affairs[129]. - The audit committee reviewed the consolidated financial statements for the year ending December 31, 2020, and confirmed compliance with applicable accounting standards and GEM listing rules[141]. - The company has adopted the GEM Listing Rules regarding the trading of securities by directors, ensuring compliance with the trading standards[119]. Sustainability and ESG Initiatives - The management team highlighted a commitment to sustainability, aiming to reduce carbon emissions by 30% over the next five years[34]. - The company is committed to maintaining the accuracy and reliability of its ESG report, which reflects its management measures and performance in environmental, social, and governance aspects for the year 2020[176]. - The ESG report covers information from January 1 to December 31, 2020, focusing on the company's operations in China[177]. - The company emphasizes the importance of stakeholder feedback on its sustainable development management[178]. - The company actively promotes green operations and adheres to environmental protection laws, including the Energy Conservation Law of the People's Republic of China[186]. - The company implemented a paperless office policy, promoting the reuse of paper and encouraging environmental awareness among employees[190]. - The total greenhouse gas emissions amounted to 264.31 tons, with scope 1 emissions at 8.49 tons and scope 2 emissions at 255.81 tons[195]. - The company encourages the use of public transportation to enhance energy efficiency[190]. - The company has replaced high-energy-consuming equipment with energy-efficient products in its offices[187]. Market Expansion and Strategy - The company is expanding its market presence in Southeast Asia, targeting a 15% market share within the next two years[34]. - A strategic acquisition of a smaller gaming studio was completed, expected to enhance the company's development capabilities and add new IPs[34]. - The gaming industry continues to face challenges due to resource concentration among leading companies and tightening licensing policies, prompting the company to focus on high-quality game development and expand into stable markets like South Korea and Japan[166]. - The company is closely monitoring domestic policies that may impact its gaming and film businesses and is prepared to adjust its development strategy accordingly[169].