NETDRAGON(HK:00777)2023-04-25 08:31Financial Performance - The company achieved a revenue growth of 11.8% year-on-year, surpassing RMB 7.9 billion in 2022[12]. - The gross profit for 2022 was RMB 4.315 billion, with a gross margin of approximately 54.8%[9]. - Operating profit for 2022 was RMB 1.15 billion, reflecting a decrease of 17% compared to the previous year[9]. - The net profit attributable to the company's owners for 2022 was RMB 834 million, down from RMB 1.062 billion in 2021[10]. - The company reported a basic earnings per share of RMB 154.15 for 2022, compared to RMB 191.67 in 2021[10]. - Total revenue for the year was RMB 7.9 billion, representing an 11.8% year-on-year increase[16]. - Operating profit decreased by 17.0% year-on-year to RMB 1.2 billion, with a significant drop in profit from the gaming segment by 14.1% to RMB 1.8 billion[16]. - Cash flow from operating activities increased by 4.2% year-on-year to RMB 1.1 billion, indicating a stable cash generation capability[16]. Revenue Breakdown - Game revenue decreased by 5.8% year-on-year to RMB 3.4 billion, while mobile game revenue slightly declined by 0.2%, outperforming the domestic mobile game market's decline of 14.4%[13]. - The flagship mobile game "Magic Domain Pocket Edition" achieved a revenue growth of 6.2% year-on-year, supported by a ROI-focused user acquisition strategy and continuous content updates[13]. - Overseas business revenue grew by 6.5% year-on-year to RMB 540 million, accounting for 15.7% of total game revenue, with significant contributions from the "Conquest" IP[13]. - Education business revenue increased by 34.2% year-on-year to RMB 4.3 billion, marking a historical high and reflecting a growing market share despite increased competition[14]. - Total revenue for the education business reached RMB 4.3 billion, a year-on-year increase of 34.2%, accounting for 55.1% of total revenue[19]. Strategic Initiatives - The company emphasized strengthening strategic partnerships and enhancing market strategies as key growth drivers[12]. - The company is positioned for long-term sustainable development through its efforts in 2022[12]. - The company plans to expand its market presence through strategic partnerships and acquisitions, including the acquisition of Explain Everything, a leading digital whiteboard platform[20]. - The company announced a strategic partnership with AI education technology leader Merlyn Mind to develop an AI-supported interactive panel, expected to launch with the next product update[19]. Research and Development - Research and development expenses increased to RMB 1.224 billion in 2022, representing a 5.5% increase from the previous year[9]. - The company added over 300 R&D personnel during the year to enhance its game development capabilities[19]. - Research and development expenses for gaming increased by 16.7% year-on-year to RMB 768 million, accounting for 22.4% of gaming revenue[25]. Corporate Governance - The company is committed to maintaining high standards of corporate governance and compliance through its audit and remuneration committees[47]. - The company’s board of directors includes both executive and independent non-executive members, ensuring governance and oversight[62]. - The company has established an audit committee responsible for reviewing financial reporting procedures and risk management[105]. - The company has adopted a new share option scheme effective from May 24, 2018, replacing the previous scheme[114]. Shareholder Information - The company announced a final dividend of HKD 0.40 per ordinary share, maintaining the same level as the previous year, with total dividends accounting for 73.0% of the annual profit attributable to owners[15]. - The company proposed a final dividend of HKD 0.4 per share, with an expected payout of approximately RMB 193 million, scheduled for July 7, 2023[58]. - The top five customers accounted for approximately 22.7% of total revenue, while the largest customer contributed about 12.0%[61]. Employee Engagement and Development - The total number of employees as of December 31, 2022, is 5,135, reflecting the company's commitment to talent acquisition and development[37]. - The company has received multiple employer brand awards in 2022, including the "2022 Most Loved Employer Award" and "2023 Outstanding Employer Award" for its innovative employment practices[37]. - The company is actively promoting a "metaverse organization" model, focusing on open communication and innovation to enhance employee engagement and value creation[38]. Risk Management - The company has taken measures to mitigate risks associated with its structural contracts, including annual reviews and disclosures in reports[99]. - The company is committed to hiring external legal advisors to ensure compliance with existing contracts and regulations[99]. - The company has established a comprehensive cybersecurity management framework to ensure robust governance and operational continuity[181]. Compliance and Ethics - The company emphasizes strict compliance with data protection laws and regulations to safeguard employee and customer privacy[57]. - The company provides multiple reporting channels for employees to report unethical behavior, including an internal OA system[172]. - The company has updated its business ethics rules and code of conduct 15 times over the past 20 years, currently at version 7.3[171]. Market Challenges - The company operates in the competitive online and mobile gaming industry, facing challenges from major players like Electronic Arts and Tencent[55]. - The company relies on consumer spending for revenue, which may be affected by economic uncertainties and inflation[56]. - The company faces risks related to new technologies that could render its game designs outdated[56].