INFINITIES TECH(HK:01961)2022-04-29 11:39Financial Performance - The company reported revenue of RMB 114.914 million for the year ended December 31, 2021, a decrease of 32.5% from RMB 170.179 million in 2020[9]. - Gross profit for the same period was RMB 14.391 million, down 74.1% from RMB 55.638 million in 2020[9]. - The company recorded a net loss of RMB 86.822 million for 2021, compared to a profit of RMB 1.023 million in 2020[9]. - The group's revenue decreased by approximately RMB 55.3 million or 32.5% from about RMB 170.2 million in the fiscal year ending December 31, 2020, to about RMB 114.9 million in the fiscal year ending December 31, 2021[19]. - Gross profit fell by approximately RMB 41.2 million or 74.1%, from about RMB 55.6 million in the fiscal year ending December 31, 2020, to about RMB 14.4 million in the fiscal year ending December 31, 2021[19]. - Revenue from mobile game development and operation decreased by approximately RMB 51.2 million, while revenue from digital media content distribution decreased by approximately RMB 5.4 million[19]. - The company incurred a net loss of RMB 30.902 million during the same period[124]. - The company reported a net loss of approximately RMB 86.8 million for the fiscal year 2021, compared to a profit of RMB 1.0 million in fiscal year 2020[178]. Assets and Equity - Total assets decreased to RMB 173.922 million in 2021 from RMB 255.169 million in 2020, representing a decline of 31.8%[13]. - The company's total equity also fell to RMB 138.513 million in 2021, down 38.8% from RMB 226.262 million in 2020[13]. - Non-current assets decreased to RMB 57.113 million in 2021 from RMB 74.162 million in 2020, a drop of 22.9%[13]. - As of December 31, 2021, the company had distributable reserves of approximately RMB 762 million[40]. Market and Regulatory Environment - The ongoing impact of the COVID-19 pandemic has significantly affected the company's profitability and customer preferences[18]. - In 2021, only 755 game licenses were issued by the National Press and Publication Administration, a significant drop from 1,405 in 2020, indicating a tightening regulatory environment[22]. - The company plans to shift focus from single-player mobile game development to multiplayer mobile game development due to changing player preferences since the second quarter of 2020[23]. - The company faces risks related to foreign ownership restrictions in the mobile gaming sector under current Chinese laws[127]. - The board closely monitors developments in applicable Chinese laws and regulations to ensure compliance and control by Chinese investors[129]. - The company may face significant consequences if the contractual arrangements are deemed invalid under Chinese law[127]. Research and Development - The company invested in research and development to launch various new games, particularly focusing on multiplayer mobile games[18]. - Research and development expenses increased by approximately RMB 23.3 million, while sales and distribution expenses rose by RMB 19.1 million[178]. Shareholder Structure and Governance - The total number of shares issued by the company is at least 25% held by the public as of the report date[46]. - The company confirmed that all independent non-executive directors have maintained their independence as per the listing rules[52]. - The company’s board of directors includes a mix of executive and non-executive members, ensuring diverse governance[49]. - The ownership structure indicates significant control by a few key individuals, with Mr. Liang, Mr. Lu, and Ms. Su being recognized as acting in concert[64]. - The equity stakes of the major shareholders reflect a concentrated ownership structure, which may impact corporate governance and strategic decisions[68]. - The company has adopted the corporate governance code as per the Hong Kong Stock Exchange and complied with all applicable provisions during the fiscal year 2021[168]. Business Strategy - The company aims to diversify its product offerings, especially in the multiplayer mobile gaming sector[18]. - The company completed the acquisition of 392,560,053 shares, representing approximately 71.90% of the total issued share capital, with no intention to expand or divest existing operations[23]. - The company remains optimistic about future growth opportunities, anticipating a rapid recovery once game licenses are resumed[23]. Revenue Sources and Customer Base - The company generated most of its revenue from the sale of virtual items in multiplayer mobile games during the fiscal year 2021[176]. - The company has not relied on any single customer, with transactions from any single customer not exceeding 10% of total revenue in fiscal year 2021[162]. - The largest supplier accounted for approximately 20.2% of the company's cost of revenue, while the top five suppliers accounted for 67.8%[164]. Compliance and Legal Matters - The company has complied with all disclosure requirements under the Listing Rules regarding connected transactions[84]. - The company has not entered into any management or administrative contracts concerning the majority of its business during the fiscal year 2021[151]. - The company has not established any equity-related agreements during the fiscal year 2021[171]. - The group has received exemptions from the Stock Exchange regarding strict compliance with announcement and independent shareholder approval requirements for transactions under the contractual arrangements[142].