家乡互动(03798) - 2025 - 中期财报

Company Information Company Profile This section provides fundamental corporate information for Hometown Interactive Technology Co., Ltd., including board members, committee structures, and key contact details - The Board of Directors comprises three executive directors (Mr. Wu Chengze, Mr. Su Bo, Mr. Ding Chunlong) and three independent non-executive directors (Mr. Zhang Yuguo, Mr. Hu Yangyang, Ms. Guo Ying)[6] - The Audit Committee, Remuneration Committee, and Nomination Committee have been established, with Mr. Hu Yangyang chairing the Audit and Remuneration Committees, and Mr. Wu Chengze chairing the Nomination Committee[6] - The company's auditor is Deloitte Touche Tohmatsu, and its stock code is 3798[7] Business Overview and Outlook Business Review Despite commercial adjustments impacting self-developed mobile game revenue, third-party mobile game revenue surged by 123.4% to RMB 196 million, while DAUs and MAUs remained stable, and profit increased by 58.8% due to reduced marketing expenses - The Group's flagship products, including Weile Fishing, Weile Dou Dizhu, and Weile Sichuan Mahjong, launched new seasonal mechanisms and themed visual versions, successfully expanding user and brand reach on Douyin[11] Key Performance Indicators (Six Months Ended June 30) | Indicator | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Daily Active Users (DAUs) | 12.31 million | Stable | | Monthly Average Users (MAUs) | 59.78 million | Stable | | Third-Party Mobile Game Revenue | RMB 196 million | N/A (Increased by 123.4%) | | Total Revenue | RMB 726.0 million | RMB 835.7 million | | Sales and Marketing Expenses | RMB 128.6 million | RMB 261.1 million | | Profit for the Period | RMB 53.47 million | RMB 33.67 million | - The Group's Daily Active Users (DAUs) reached 12.31 million and Monthly Average Users (MAUs) reached 59.78 million, remaining stable year-on-year and quarter-on-quarter[12] - The Group's previously deployed multimodal AI agents have entered comprehensive internal testing and multi-business adaptation, enabling automated user profiling, intelligent customer service, and video content distribution[14] Business Outlook The Group plans to deepen advanced technology integration with AI, expand user base in regional markets, strengthen product reserves for overseas expansion, and explore new growth opportunities through strategic alliances in H2 2025 - Deepen cutting-edge technology and empower processes: Develop proprietary multimodal AI agents to integrate across business segments, accelerating AI transformation in R&D and operations[15] - Penetrate regional markets and expand user scale: Focus on advantageous niche segments, precisely meeting localized entertainment demands in domestic second and third-tier markets and areas with lower user penetration through "rule calibration" and "product optimization"[15] - Strengthen product reserves and expand overseas revenue streams: Accelerate testing and launch of multiple pipeline projects, expedite overseas product launches, and build diversified revenue growth engines[15] - Expand strategic alliances and discover new growth drivers: Leverage industry experience and Weile brand influence to expand strategic partnership networks, actively exploring new business opportunities through incubation, investment, and acquisitions[15] Management Discussion and Analysis Financial Review The Group's revenue decreased by 13.1% to RMB 726.0 million, primarily due to a 30.6% decline in self-developed mobile game revenue, while profit for the period increased by 58.8% driven by a 50.8% reduction in sales and marketing expenses Revenue Composition and Changes (Six Months Ended June 30) | Revenue Source | 2025 (RMB thousands) | 2024 (RMB thousands) | 2025 Share | 2024 Share | Year-on-Year Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Self-developed Mobile Games | 505,256 | 727,599 | 69.6% | 87.1% | -30.6% | | Third-party Mobile Games | 196,141 | 87,799 | 27.0% | 10.5% | +123.4% | | Advertising Revenue | 24,647 | 20,261 | 3.4% | 2.4% | +21.6% | | Total Revenue | 726,044 | 835,659 | 100% | 100% | -13.1% | Changes in Key Financial Indicators (Six Months Ended June 30) | Indicator | 2025 (RMB millions) | 2024 (RMB millions) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Cost of Sales | (407.7) | (422.7) | -3.5% | | Gross Profit | 318.4 | 413.0 | -22.9% | | Gross Profit Margin | 43.8% | 49.4% | -5.6 pp | | Other Income | 13.8 | 20.2 | -31.5% | | Other Gains and Losses | (3.3) (Loss) | 15.7 (Gain) | N/A | | Sales and Marketing Expenses | (128.6) | (261.1) | -50.8% | | Administrative and Other Expenses | (60.4) | (66.6) | -9.4% | | Research and Development Expenses | (35.2) | (57.3) | -38.5% | | Profit Before Income Tax | 62.8 | 40.3 | +55.6% | | Profit Attributable to Owners of the Company | 37.4 | 28.0 | +33.5% | - The decrease in gross profit margin was primarily due to increased new media costs and amortization of intangible assets[19] - Sales and marketing expenses sharply decreased by 50.8% to RMB 128.6 million, mainly due to reduced promotion and advertising expenses[23] Non-IFRS Measure — Adjusted Net Profit The company uses non-IFRS adjusted net profit as an additional financial measure, excluding non-recurring and non-cash items, with adjusted net profit attributable to owners of the company significantly increasing to RMB 74.9 million Adjusted Net Profit Attributable to Owners of the Company (Six Months Ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Profit for the Period Attributable to Owners of the Company | 37,395 | 28,009 | | Add: Share-based Payment Expenses | 3,646 | 13,993 | | Add: Share of Loss of Associates and Joint Ventures | 5,027 | — | | Add: Impairment Loss Recognized on Loans Receivable under ECL Model (Net of Income Tax) | 28,834 | — | | Adjusted Net Profit Attributable to Owners of the Company | 74,902 | 42,002 | - Adjusted net profit excludes the impact of non-cash and non-recurring items such as share-based payment expenses, share of losses from associates and joint ventures, and impairment losses on loans receivable[30] Liquidity and Capital Resources The Group primarily funds operations through cash generated from operating activities, maintaining a prudent financial approach with RMB 827.7 million in cash and cash equivalents and zero gearing ratio - The Group primarily funds its operations with cash generated from operating activities and intends to finance expansion and business operations through internal resources and sustainable organic growth[31] Cash and Cash Equivalents (Period End) | Indicator | June 30, 2025 (RMB millions) | December 31, 2024 (RMB millions) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 827.7 | 755.0 | - As of June 30, 2025, the Group had no short-term or long-term bank borrowings, resulting in a zero gearing ratio[33][34] - For the six months ended June 30, 2025, the Group's capital expenditure was approximately RMB 58.3 million, a significant decrease from RMB 216 million in the prior period, mainly due to reduced expenditures on property, plant, and equipment acquisitions and investments in associates[36] Employees and Staff Costs As of June 30, 2025, the Group had 612 full-time employees, with total staff costs decreasing to RMB 67.3 million due to reduced remuneration and share-based payments, following the termination of the old share option scheme and adoption of a new one - As of June 30, 2025, the Group had 612 full-time employees, with 287 in R&D, 104 in technical support, 117 in marketing, and 104 in operations and general administration[39] Total Staff Costs (Six Months Ended June 30) | Indicator | 2025 (RMB millions) | 2024 (RMB millions) | | :--- | :--- | :--- | | Total Staff Costs | 67.3 | 99.8 | | Year-on-Year Change | -32.6% | N/A | - The company resolved to terminate the share option scheme on April 2, 2025, and adopted the 2025 Share Scheme at the Annual General Meeting on June 17, 2025[40] Review Report on Condensed Consolidated Financial Statements Review Conclusion Deloitte Touche Tohmatsu reviewed the condensed consolidated financial statements for the six months ended June 30, 2025, finding no material non-compliance with IAS 34 - Auditor Deloitte Touche Tohmatsu has reviewed the condensed consolidated financial statements[42] - The scope of review is substantially less than an audit conducted in accordance with International Standards on Auditing, thus no audit opinion is expressed[43] - Based on the review, the auditor found no matters that cause them to believe the condensed consolidated financial statements are not prepared in all material respects in accordance with International Accounting Standard 34[44] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Profit or Loss Performance The Group's revenue decreased by 13.1% to RMB 726.0 million, while gross profit declined by 22.9% to RMB 318.4 million, but profit for the period and total comprehensive income increased by 58.8% to RMB 53.5 million Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (Six Months Ended June 30) | Indicator | Six Months Ended June 30, 2025 (RMB thousands) | Six Months Ended June 30, 2024 (RMB thousands) | Year-on-Year Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 726,044 | 835,659 | -13.1% | | Cost of Sales | (407,692) | (422,691) | -3.5% | | Gross Profit | 318,352 | 412,968 | -22.9% | | Other Income | 13,837 | 20,203 | -31.5% | | Other Gains and Losses | (3,263) | 15,667 | N/A (from gain to loss) | | Sales and Marketing Expenses | (128,556) | (261,129) | -50.8% | | Administrative and Other Expenses | (60,424) | (66,637) | -9.4% | | Research and Development Expenses | (35,224) | (57,253) | -38.5% | | Profit Before Income Tax | 62,778 | 40,334 | +55.6% | | Income Tax Expense | (9,309) | (6,664) | +39.7% | | Profit and Total Comprehensive Income for the Period | 53,469 | 33,670 | +58.8% | | Profit for the Period Attributable to Owners of the Company | 37,395 | 28,009 | +33.5% | | Basic Earnings Per Share (RMB cents) | 3.05 | 2.23 | +36.8% | | Diluted Earnings Per Share (RMB cents) | 3.05 | 2.23 | +36.8% | Condensed Consolidated Statement of Financial Position Assets, Liabilities and Equity As of June 30, 2025, total assets increased to RMB 2,225.7 million, with non-current assets at RMB 450.9 million and current assets at RMB 1,774.8 million, while total equity rose to RMB 1,976.0 million Condensed Consolidated Statement of Financial Position (As of June 30, 2025) | Indicator | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Non-current Assets | | | | | Property, Plant and Equipment | 54,979 | 64,813 | -15.2% | | Intangible Assets | 18,265 | 33,807 | -46.0% | | Investments in Associates | 52,015 | 54,920 | -5.4% | | Deferred Tax Assets | 75,675 | 65,933 | +14.8% | | Loans Receivable | 70,102 | 44,000 | +59.3% | | Current Assets | | | | | Trade Receivables | 88,353 | 94,413 | -6.5% | | Financial Assets at FVTPL | 446,057 | 393,726 | +13.3% | | Prepayments, Other Receivables and Deposits | 86,790 | 182,882 | -52.6% | | Cash and Cash Equivalents | 827,676 | 755,032 | +9.6% | | Current Liabilities | | | | | Trade and Other Payables | 89,344 | 55,114 | +62.1% | | Deferred Revenue | 111,809 | 147,105 | -24.0% | | Non-current Liabilities | | | | | Deferred Tax Liabilities | 1,721 | 3,786 | -54.5% | | Total Equity | 1,976,023 | 1,916,152 | +3.1% | - Intangible assets and property, plant, and equipment within non-current assets decreased, while loans receivable and deferred tax assets increased[48] - Prepayments, other receivables, and deposits within current assets significantly decreased, while financial assets at fair value through profit or loss and cash and cash equivalents increased[48] Condensed Consolidated Statement of Changes in Equity Analysis of Changes in Equity Equity attributable to owners of the company increased to RMB 1,921.1 million, driven by profit for the period and share-based payment expenses, partially offset by share repurchases, while non-controlling interests also significantly increased Changes in Equity Attributable to Owners of the Company (Six Months Ended June 30) | Item | January 1, 2025 (RMB thousands) | June 30, 2025 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Equity Attributable to Owners of the Company | 1,882,060 | 1,921,057 | +38,997 | | Non-controlling Interests | 34,092 | 54,966 | +20,874 | | Total Equity | 1,916,152 | 1,976,023 | +59,871 | - Profit and total comprehensive income for the period amounted to RMB 53,469 thousand, with RMB 37,395 thousand attributable to owners of the company and RMB 16,074 thousand to non-controlling interests[51] - Share-based payment expenses of RMB 3,646 thousand were recognized under the 2025 Share Award Scheme[51] - The company paid RMB 2,044 thousand for share repurchases, acquiring a total of 1,786,000 shares[51][54] Condensed Consolidated Statement of Cash Flows Cash Flow Analysis Net cash from operating activities significantly increased to RMB 210.8 million, while net cash used in investing activities decreased to RMB 132.2 million, leading to an increase in period-end cash and cash equivalents to RMB 827.7 million Condensed Consolidated Statement of Cash Flows (Six Months Ended June 30) | Indicator | 2025 (RMB thousands) | 2024 (RMB thousands) | Change (RMB thousands) | | :--- | :--- | :--- | :--- | | Net Cash From Operating Activities | 210,779 | 12,162 | +198,617 | | Net Cash Used In Investing Activities | (132,175) | (309,147) | +176,972 | | Net Cash Used In Financing Activities | (6,111) | (16,926) | +10,815 | | Net Increase (Decrease) In Cash and Cash Equivalents | 72,493 | (313,911) | +386,404 | | Cash and Cash Equivalents at End of Period | 827,676 | 1,028,691 | -201,015 | - Net cash from operating activities significantly increased, primarily due to a decrease of RMB 6,057 thousand in trade receivables and a decrease of RMB 77,555 thousand in other deposits, prepayments, and other receivables[56] - Net cash used in investing activities decreased, mainly due to reduced investments in financial assets at fair value through profit or loss and increased proceeds from the disposal of financial assets at fair value through other comprehensive income[56] Notes to the Condensed Consolidated Financial Statements General Information and Basis of Preparation Hometown Interactive Technology Co., Ltd. is an investment holding company incorporated in the Cayman Islands, primarily engaged in mobile game development, publishing, and operation in China, with financial statements presented in RMB and prepared under IAS 34 - The company is an investment holding company primarily engaged in the development, publishing, and operation of mobile games in China[59] - The condensed consolidated financial statements are presented in RMB and prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and the applicable disclosure requirements of the Listing Rules of the Stock Exchange[60][61] Accounting Policies The condensed consolidated financial statements are prepared on a historical cost basis, with accounting policies consistent with the prior year, and the adoption of revised IFRS had no material impact on the Group's financial position or performance - The condensed consolidated financial statements are prepared on a historical cost basis, with accounting policies consistent with the prior year's financial statements[62] - The revised IFRS accounting standards were first adopted in this interim period but had no material impact on the financial position and performance[64] Revenue and Segment Information The Group's revenue is primarily derived from self-developed mobile games (69.6%), third-party mobile games (27.0%), and advertising (3.4%), all managed under a single operating segment focused on mobile game development and operation - Revenue primarily stems from the sale of virtual tokens in self-developed mobile games, third-party mobile game publishing, and online advertising arrangements[16][65] - The Group's operating activities are conducted by a single operating segment focused on mobile game development and operation[65] Revenue Composition (Six Months Ended June 30) | Revenue Source | 2025 (RMB thousands) | 2024 (RMB thousands) | 2025 Share | 2024 Share | | :--- | :--- | :--- | :--- | :--- | | Self-developed Mobile Games | 505,256 | 727,599 | 69.6% | 87.1% | | Third-party Mobile Games | 196,141 | 87,799 | 27.0% | 10.5% | | Advertising Revenue | 24,647 | 20,261 | 3.4% | 2.4% | | Total | 726,044 | 835,659 | 100% | 100% | Other Income Other income decreased by 46.0% to RMB 13.8 million, primarily due to a reduction in interest income Other Income Composition (Six Months Ended June 30) | Income Source | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Interest Income | 10,581 | 16,661 | | Government Grants | 2,026 | 2,065 | | Others | 1,230 | 1,477 | | Total | 13,837 | 20,203 | - The decrease in interest income was the primary reason for the decline in other income[20][68] - Government grants primarily refer to various industry-specific subsidies compensating for R&D costs and incentivizing technological innovation, with no unfulfilled conditions[68] Other Gains and Losses Other gains and losses shifted from a gain of RMB 15.7 million to a loss of RMB 3.3 million, primarily due to a RMB 10.4 million loss from derecognizing receivables upon disposal of an associate Other Gains and Losses (Six Months Ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Fair Value Change in Financial Assets at FVTPL | 5,682 | 4,458 | | Gain on Disposal of Subsidiaries and Associates | 1,502 | 315 | | Loss on Derecognition of Receivables from Disposal of an Associate | (10,351) | — | | Gain on Asset Disposal Transactions | — | 8,632 | | Total | (3,263) | 15,667 | - A loss of RMB 10,351 thousand from derecognizing receivables upon the disposal of an associate was the primary reason for the shift from other gains to losses[21][69] Dividends No dividends were declared or paid during the current interim period, while a final dividend of HK$0.10 per share (RMB 0.09) totaling RMB 117.2 million was paid in the prior interim period - No dividends were declared or paid for the six months ended June 30, 2025[70] - In the prior interim period, a final dividend totaling approximately RMB 117,226 thousand was paid[70] Income Tax Expense Income tax expense increased by 39.7% to RMB 9.3 million due to higher profit before tax, while the effective tax rate decreased to 14.8%, with certain Chinese subsidiaries benefiting from tax exemptions, reduced rates, or R&D super deductions Income Tax Expense Analysis (Six Months Ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Current Tax — PRC Enterprise Income Tax | 19,542 | 21,835 | | Under (Over) Provision in Prior Years | 1,574 | (3,580) | | Deferred Tax | (11,807) | (11,591) | | Total | 9,309 | 6,664 | - The Group's effective tax rate decreased from 16.5% in the prior period to 14.8% in the current period[27] - Certain PRC subsidiaries (e.g., Yaoshitang Xiamen, Jilin Haiqi, Yaoshitang Shenzhen) enjoy enterprise income tax exemptions, reduced tax rates, or preferential high-tech enterprise tax rates of 15%[73] - Enterprises engaged in R&D activities are entitled to claim 200% of their R&D expenses incurred during the year as deductible expenses (super deduction)[74] Profit for the Period Profit for the period is calculated after deducting various expenses, with total staff costs decreasing by 32.6% to RMB 67.3 million due to reduced remuneration and share-based payments Key Expense Items for the Period (Six Months Ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Commissions and Fees Charged by Distribution Channels and Payment Providers | 203,693 | 288,031 | | Depreciation of Property, Plant and Equipment | 12,611 | 8,007 | | Amortization of Intangible Assets | 16,133 | 470 | | Impairment Loss under Expected Credit Loss Model | 34,275 | 6,285 | | Total Staff Costs | 67,310 | 99,847 | - Total staff costs decreased by 32.6%, primarily due to year-on-year reductions in salaries and other in-kind benefits, retirement benefit costs, and share-based payment expenses[75] - Impairment losses under the expected credit loss model significantly increased, mainly reflected in other receivables and loans receivable[75] Earnings Per Share Basic and diluted earnings per share attributable to owners of the company increased to RMB 3.05 cents, up from RMB 2.23 cents in the prior period, despite a slight decrease in the weighted average number of ordinary shares Earnings Per Share (Six Months Ended June 30) | Indicator | 2025 (RMB cents) | 2024 (RMB cents) | | :--- | :--- | :--- | | Basic Earnings Per Share | 3.05 | 2.23 | | Diluted Earnings Per Share | 3.05 | 2.23 | | Weighted Average Number of Ordinary Shares | 1,226,335,488 | 1,254,914,473 | - Share awards in the current and prior interim periods had no impact on diluted earnings per share[76] Property, Plant and Equipment, Intangible Assets and Right-of-Use Assets Capital expenditure for the interim period significantly decreased to RMB 58.3 million, primarily due to reduced acquisitions of property, plant, and equipment, and investments in associates - Expenditure on purchasing game publishing copyrights for the interim period was RMB 591 thousand, a significant decrease from RMB 5,298 thousand in the prior period[77] - Expenditure on purchasing furniture and equipment, vehicles, and renovations for leased properties was RMB 3,708 thousand, a decrease from RMB 9,861 thousand in the prior period[77] - The Group incurred a loss of RMB 868 thousand from the disposal of certain equipment[77] Investments in Associates Investments in associates totaled RMB 52.0 million, with new investments and disposals occurring, and a RMB 10.4 million loss from derecognizing receivables due to revised repayment terms with a related entity Investments in Associates (Period End) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Cost of Investments in Associates | 58,538 | 61,100 | | Share of Post-acquisition Results (Net of Dividends Received) | (6,523) | (6,180) | | Total | 52,015 | 54,920 | - During the interim period, the Group invested in two new associates primarily engaged in game development, with a total consideration of RMB 850 thousand[79] - Interests in Chongqing Huangjiu and Guangzhou Yaoshiyang were disposed of for considerations of RMB 6,000 thousand and RMB 212 thousand, respectively[80] - A supplementary agreement was signed with an entity controlled by Mr. Luo Wei, revising the repayment date for outstanding consideration, resulting in a loss of RMB 10,351 thousand from derecognizing receivables from the disposal of an associate[82] Financial Assets at Fair Value Through Profit or Loss Financial assets at FVTPL totaled RMB 472.8 million, comprising non-current unlisted securities and current listed securities, with a significant decrease in structured deposits offset by increased investments in private equity funds and money market funds Financial Assets at Fair Value Through Profit or Loss (Period End) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Non-current Unlisted Securities (Partnership Investments) | 26,766 | 31,243 | | Current Listed Securities Held for Trading (SSE Equity Securities) | — | 25,696 | | Current Unlisted Securities Held for Trading (Private Equity Funds) | 276,879 | 129,269 | | Current Unlisted Securities Held for Trading (Money Market Funds) | 148,752 | 106,461 | | Current Unlisted Securities Held for Trading (Structured Deposits) | 20,426 | 132,300 | | Total | 472,823 | 424,969 | - Structured deposits significantly decreased, while investments in private equity funds and money market funds increased[84] - The fair value of investments is based on the partnership management team's estimated fair value of equity and equity-related investments, market quotations, fund management company's estimated net asset value, or recent transaction prices[86] Trade Receivables Trade receivables decreased to RMB 88.4 million, with a credit period of 0 to 90 days, and overdue receivables of RMB 3.9 million are not considered in default due to debtor history Aging Analysis of Trade Receivables (Period End) | Aging | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | 0 to 30 days | 71,402 | 77,594 | | 31 to 60 days | 9,594 | 11,494 | | 61 to 90 days | 1,573 | 2,469 | | 91 to 180 days | 1,876 | 284 | | Over 180 days | 3,911 | 2,572 | | Total | 88,356 | 94,413 | - Trade receivables consist of amounts due from distribution channels, payment providers, and advertising agencies[87] - As of June 30, 2025, the carrying amount of receivables totaling RMB 5,787 thousand included in the Group's trade receivables balance was overdue[87] Prepayments, Other Receivables and Deposits Prepayments, other receivables, and deposits significantly decreased to RMB 94.9 million, mainly due to reductions in joint venture commission prepayments and advertising prepayments, while credit loss provisions substantially increased to RMB 13.0 million Prepayments, Other Receivables and Deposits (Period End) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Joint Venture Commission Prepayments | 12,349 | 71,356 | | R&D Expense Prepayments | 14,365 | 15,040 | | Advertising and Promotion Expense Prepayments | 11,886 | 43,793 | | Loans to Employees | 14,270 | 21,139 | | Total (Net of Credit Loss Provision) | 94,876 | 192,455 | - Credit loss provision significantly increased to RMB 12,998 thousand, primarily for other receivables related to joint venture commissions paid to Chengdu Weiying, which faces significant financial difficulties[88] Loans Receivable Loans receivable increased to RMB 177.6 million, including loans to third parties and associates/joint ventures, with credit loss provisions rising to RMB 81.3 million due to additional impairment losses on loans to Chengdu Weiying Loans Receivable (Period End) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Fixed-rate Loans Receivable — Loans to Third Parties | 152,933 | 135,312 | | Fixed-rate Loans Receivable — Loans to Associates and Joint Ventures | 106,012 | 73,102 | | Less: Credit Loss Provision | (81,311) | (60,011) | | Total | 177,634 | 148,403 | - An additional credit loss provision of RMB 21,300 thousand was recognized for loans to Chengdu Weiying due to its significant financial difficulties[89] - Short-term loans to a listed game operator had their payment terms revised, with a portion settled before August 1, 2025[89] Deferred Tax Assets/Liabilities Net deferred tax assets increased to RMB 74.0 million, primarily due to higher deferred tax assets recognized for tax losses, deductible excess expenditures, and impairment losses, with RMB 69.3 million of unused tax losses recognized Deferred Tax Assets/Liabilities (Period End) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Deferred Tax Assets | 75,675 | 65,933 | | Deferred Tax Liabilities | (1,721) | (3,786) | | Net | 73,954 | 62,147 | - As of the end of the interim period, the Group had RMB 97,827 thousand in unused tax losses available to offset future profits, of which approximately RMB 69,303 thousand was recognized as deferred tax assets[92] - As of the end of the interim period, the Group had RMB 465,288 thousand in remaining deductible temporary differences related to advertising expenses, of which approximately RMB 308,896 thousand was recognized as deferred tax assets[93] Trade and Other Payables Trade and other payables significantly increased to RMB 89.3 million, primarily due to the emergence of trade payables of RMB 37.0 million, while other payables slightly decreased Trade and Other Payables (Period End) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Trade Payables | 36,986 | — | | Other Payables | 52,358 | 55,114 | | Total | 89,344 | 55,114 | - The aging analysis of trade payables shows that amounts overdue by more than 90 days totaled RMB 21,799 thousand[95] Deferred Revenue Deferred revenue, representing unearned service fees from prepaid virtual tokens for self-developed mobile games, decreased to RMB 111.8 million from RMB 147.1 million at the beginning of the period Deferred Revenue (Period End) | Item | January 1, 2025 (RMB thousands) | June 30, 2025 (RMB thousands) | | :--- | :--- | :--- | | Virtual Tokens | 147,105 | 111,809 | - Proceeds from sales during the period amounted to RMB 469,960 thousand, with revenue recognized during the period totaling RMB 505,256 thousand[97] Share Capital The company's authorized share capital is 10 billion ordinary shares of US$0.000005 each, with issued and fully paid share capital remaining unchanged at 1,283,403,500 shares, totaling RMB 42 thousand in par value - The authorized share capital consists of 10,000,000,000 ordinary shares with a par value of US$0.000005 each[98] - The issued and fully paid share capital comprises 1,283,403,500 shares, with a total par value of RMB 42 thousand[98] Share-based Payment Transactions The Group implemented share option and award schemes to incentivize employees, with the share option scheme terminated on April 2, 2025, and a new 2025 Share Scheme adopted on June 17, 2025 - The share option scheme was terminated on April 2, 2025, with no outstanding share options under the scheme as of June 30, 2025[104][135] - As compensation for the cancellation of unexercised share options, the company granted a total of 26,803,500 compensatory share awards, vesting in tranches with performance conditions[105][106] - Under the 2025 Share Award Scheme, a total of 3,624,487 share awards were granted to 6 grantees on April 2, 2025, vesting on the grant date, with share-based payment expenses of RMB 3,646 thousand recognized[111] Fair Value Measurement of Financial Instruments The Group measures financial instruments at fair value using market observable data and valuation techniques across three levels, with a RMB 1,145 thousand loss recorded from fair value changes in private equity funds and a 10% interest in a partnership - Fair value measurement inputs are categorized into three levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[112] - Financial assets at fair value through profit or loss include unlisted securities (partnership investments), private equity funds, money market funds, and structured deposits[114][115] - As of June 30, 2025, a loss of RMB 1,145 thousand was recorded from fair value changes related to private equity funds and a 10% interest in a partnership[115] Related Party Transactions The Group engaged in various related party transactions with associates and joint ventures, including receiving and providing R&D, advertising, and operational services, asset disposals, and significant amounts of receivables and payables, in addition to key management personnel compensation Services Received from Associates and Joint Ventures (Six Months Ended June 30) | Service Type | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | R&D Services | 33,379 | 11,794 | | Advertising and Promotion Services | 55,814 | 62,748 | | New Media Costs | 20,819 | 31,013 | | Total | 110,592 | 134,340 | Amounts Due from Associates and Joint Ventures (Period End) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Loans to Associates and Joint Ventures | 106,012 | 73,102 | | Advertising and Promotion Expense Prepayments | 10,294 | 17,109 | | R&D Expense Prepayments | 9,929 | 14,816 | | Total | 126,435 | 115,887 | Key Management Personnel Remuneration (Six Months Ended June 30) | Item | 2025 (RMB thousands) | 2024 (RMB thousands) | | :--- | :--- | :--- | | Salaries, Bonuses, Allowances and Benefits in Kind | 5,514 | 3,275 | | Share-based Payments | 3,646 | 5,052 | | Total | 9,160 | 8,327 | Capital Commitments The Group's capital commitments totaled RMB 70.0 million, primarily for committed capital contributions to financial assets at fair value through profit or loss, a slight decrease from the prior period Capital Commitments (Period End) | Item | June 30, 2025 (RMB thousands) | December 31, 2024 (RMB thousands) | | :--- | :--- | :--- | | Committed Capital Contributions — Financial Assets at FVTPL | 70,000 | 70,000 | | Committed Capital Contributions — Investments in Associates | — | 2,800 | | Total | 70,000 | 72,800 | Other Information Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures As of June 30, 2025, several directors and the chief executive held interests in the company's shares, with Mr. Wu Chengze holding approximately 33.80% through controlled corporations and a discretionary trust Directors' and Chief Executive's Shareholdings (June 30, 2025) | Name | Nature of Interest | Number of Shares | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Mr. Wu Chengze | Interest in controlled corporation and founder of discretionary trust | 433,842,000 | 33.80% | | Mr. Su Bo | Interest in controlled corporation, beneficial owner and spouse's interest | 68,112,838 | 5.31% | | Mr. Ding Chunlong | Interest in controlled corporation and beneficial owner | 80,018,138 | 6.23% | | Ms. Cui Wei | Beneficial owner | 4,513,462 | 0.35% | - Mr. Wu Chengze, Mr. Su Bo, and Mr. Ding Chunlong hold shares in the company through controlled corporations[125] - Mr. Wu Chengze also holds shares through a discretionary trust, and Mr. Su Bo's spouse's interests are included[125] Substantial Shareholders' Interests and Short Positions in Shares and Underlying Shares As of June 30, 2025, key shareholders, excluding directors, held significant interests in the company's shares, including Futu Trust Company Limited, Co-challengers Growth Limited, and Evergreen Homeland Holdings Limited Substantial Shareholders' Shareholdings (June 30, 2025) | Name/Entity | Nature of Interest | Number of Shares | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | | Futu Trust Company Limited | Trustee/Custodian | 67,146,853 | 5.23% | | Co-challengers Growth Limited | Beneficial owner | 70,840,000 | 5.52% | | Xiamen Challenger Venture Capital Partnership | Interest in controlled corporation | 70,840,000 | 5.52% | | Mr. Jiang Mingkuan | Interest in controlled corporation | 96,671,201 | 7.53% | | Evergreen Homeland Holdings Limited | Beneficial owner | 383,736,000 | 29.90% | | Men Geng Network Limited | Beneficial owner | 67,895,424 | 5.29% | - Co-challengers Growth Limited is wholly owned by Xiamen Challenger, which is ultimately controlled by Mr. Li Bo[131] - Evergreen Homeland Holdings Limited is 99% owned by Lumiere Vision Holdings Limited, which is wholly owned by Trident Trust Company (Cayman) Limited[131] Share Incentive Schemes The company's share option scheme was terminated on April 2, 2025, while the 2019 Share Award Scheme involves existing shares for employee incentives, and the 2025 Share Scheme, adopted on June 17, 2025, authorizes up to 128,340,350 shares for further incentives - The share option scheme, aimed at incentivizing eligible persons, was terminated on April 2, 2025, with an authorized limit of 10% of the total issued shares on the listing date[135][132] - The 2019 Share Award Scheme aims to encourage selected participants to hold shares, retain personnel within the Group, and provide additional incentives to achieve performance targets, involving only existing company shares without issuing new ones[137][138] - The 2025 Share Scheme, adopted on June 17, 2025, authorizes the issuance of up to 128,340,350 shares (10% of total issued shares on adoption date), with a sub-limit for service providers (approximately 1%)[150][151] - For the six months ended June 30, 2025, no share awards or share options were granted, vested, exercised, cancelled, or lapsed under the 2025 Share Scheme[154] Interim Dividend The Board of Directors does not declare any interim dividend for the six months ended June 30, 2025 - The Board of Directors does not declare any interim dividend for the six months ended June 30, 2025[155] Purchase, Sale and Redemption of the Company's Listed Securities The independent trustee of the Share Award Scheme repurchased 1,786,000 shares for RMB 2,044 thousand for future awards, while the company held no treasury shares and made no other purchases, sales, or redemptions of its listed securities - Futu Securities International (Hong Kong) Limited, the independent trustee of the Share Award Scheme, repurchased 1,786,000 shares for a total consideration of approximately RMB 2,044 thousand for future use under the scheme[156] - The company held no treasury shares as of June 30, 2025[157] Contractual Arrangements The Group entered into new contractual arrangements through Yutai Shenzhen to establish a new structure for non-card game businesses operating in foreign ownership-restricted sectors, ensuring economic benefits and effective control over Hometown Future's operations - The Group entered into new contractual arrangements to establish a new contractual structure for companies engaged in businesses with foreign ownership restrictions within the non-card game segment[158] - This framework enables the Group to recognize and receive economic benefits from Hometown Future's business and operations, and allows the company to effectively control and, within the limits of PRC law, acquire Jilin Yutai's equity interest in Hometown Future or Hometown Future's assets[158] Compliance with Corporate Governance Code The company consistently complied with the Corporate Governance Code provisions in Appendix C1 of the Listing Rules for the six months ended June 30, 2025, maintaining high standards of corporate governance - The company consistently complied with the applicable code provisions of the Corporate Governance Code set out in Appendix C1 of the Listing Rules for the six months ended June 30, 2025[159] Compliance with Standard Code for Securities Transactions by Directors The company adopted the Standard Code for Securities Transactions by Directors of Listed Issuers, and all directors confirmed compliance throughout the reporting period - The company adopted the "Standard Code for Securities Transactions by Directors of Listed Issuers" as its code of conduct for directors' securities transactions, as set out in Appendix C3 of the Listing Rules[161] - All directors confirmed compliance with the Standard Code throughout the reporting period[161] Audit Committee The Audit Committee, composed of three independent non-executive directors chaired by Mr. Hu Yangyang, reviewed the unaudited consolidated interim results and confirmed compliance with accounting principles and adequate disclosure - The Audit Committee reviewed the company's unaudited consolidated interim results for the reporting period, confirming compliance with applicable accounting principles, standards, and requirements, and adequate disclosure[162] - The Audit Committee comprises three independent non-executive directors: Mr. Hu Yangyang (Chairman), Mr. Zhang Yuguo, and Ms. Guo Ying[162] Events After Reporting Period No significant events impacting the Group occurred between the end of the reporting period (June 30, 2025) and the date of this interim report - No events with significant impact on the Group occurred from the end of the reporting period (June 30, 2025) to the date of this interim report[164]