联众(06899) - 2025 - 中期财报

Management Discussion and Analysis Business Review 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][9] - 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][10] - 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][15] - 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][15] - 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][16] Financial Review 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][47] - 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][64] - As of June 30, 2024, the Group had no pledged assets or significant contingent liabilities[55][56][61][62] Other Information Interim Dividend 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][69] Directors' and Chief Executives' Interests and Short Positions in the Shares, Underlying Shares and Debentures of the Company 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][74] Substantial Shareholders' Interests and Short Positions in the Shares, Underlying Shares and Debentures of the Company 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 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][87] - 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][91] 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] Share Award Scheme 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][101] 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][101] Purchase, Sale or Redemption of the Company's Listed Securities 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][109] - As of June 30, 2024, the Company held no treasury shares[106][109] Corporate Governance 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][110] - 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][117] Model Code 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][119] Audit Committee 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][120] - 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][124] Material Litigation 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][128] - 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][129] - 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] - 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][143] Qualification Requirement 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][144] Continuing Disclosure Pursuant to Rules 13.18 and 13.21 of the Listing Rules 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][145] 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][146] Report on Review of Condensed Consolidated Financial Statements 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][150] - 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][150] Scope of Review 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][154] 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][155] Other Matter 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][156] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Loss for the period attributable to owners of the Company 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 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 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 Assets and Liabilities 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 Equity attributable to equity holders of the Company 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] Condensed Consolidated Statement of Cash Flows Net cash from operating activities 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 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 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 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 1. BASIS OF PREPARATION 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][176] 2. ACCOUNTING POLICIES 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][177] - 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][178] 3. RESTATEMENTS 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] - 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] 4. REVENUE AND SEGMENT INFORMATION 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] - 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][191] 5. OTHER INCOME 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 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 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 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][200] 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][206] 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 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 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][214] 11. LOSS PER SHARE 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][226] 12. PROPERTY, PLANT AND EQUIPMENT AND RIGHT-OF-USE ASSETS 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][232] - 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][232] 13. INTANGIBLE ASSETS 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][233] 14. INTEREST IN ASSOCIATES 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][234] - 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][234] - The fair value of AGAE as of June 30, 2024, was approximately RMB 110,596 thousand (December 31, 2023: RMB 89,827 thousand)[231][234] 15. TRADE AND OTHER RECEIVABLES 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 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 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] 18. SHARE-BASED COMPENSATION TRANSACTIONS 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][273] - 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][273] 19. SIGNIFICANT RELATED PARTY TRANSACTIONS 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 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][285] 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 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][290] 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 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][299] - 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][303][304][305] - 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][308] - 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][314] 23. COMPARATIVE FIGURES 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][315]