百奥家庭互动(02100) - 2023 - 中期业绩

Financial Summary Income Statement Summary The company's H1 2023 revenue significantly increased by 55.6% year-over-year, with gross profit up 43.7%, while operating and net losses narrowed considerably, and adjusted net loss decreased by nearly 60% Income Statement Summary (RMB thousands) | Indicator | H1 2023 (RMB thousands) | H1 2022 (RMB thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 450,609 | 289,641 | +55.6% | | Gross Profit | 169,229 | 117,738 | +43.7% | | Operating Loss | (38,905) | (61,884) | -37.1% (Loss narrowed) | | Adjusted Net Loss | (3,153) | (7,834) | -59.8% (Loss narrowed) | | Adjusted EBITDA | (10,485) | (18,002) | -41.8% (Loss narrowed) | Balance Sheet Summary As of June 30, 2023, the company's total assets were RMB 2.002 billion, slightly down from the end of 2022, with total liabilities at RMB 344 million and total equity at RMB 1.658 billion, maintaining a stable financial structure Balance Sheet Summary (RMB thousands) | Indicator | June 30, 2023 (RMB thousands) | December 31, 2022 (RMB thousands) | | :--- | :--- | :--- | | Assets | | | | Non-current assets | 463,364 | 476,709 | | Current assets | 1,538,949 | 1,579,558 | | Total Assets | 2,002,313 | 2,056,267 | | Equity and Liabilities | | | | Total Equity | 1,657,964 | 1,698,084 | | Total Liabilities | 344,349 | 358,183 | | Total Equity and Liabilities | 2,002,313 | 2,056,267 | Management Discussion and Analysis Business Overview In H1 2023, Baio continued to deepen its focus on female-oriented, pet collection, and ACG game genres, enhancing brand reputation through IP collaborations and cultural integration, while actively expanding overseas markets and applying AIGC technology for efficiency and cost reduction - The company's core value proposition focuses on IP companionship, immersive experience, and casual social interaction, targeting female-oriented, pet collection and nurturing, and ACG game segments[32] - Cross-industry collaborations with Fangsuo Bookstore, Guangdong Lion Dance, and CCTV Animation integrated traditional culture with games, enhancing IP brand reputation and market popularity[32] - Actively expanding overseas markets, Food Fantasy has launched multi-language versions and achieved good rankings in several countries, while the company also uses AIGC technology to assist product development and distribution for efficiency and cost reduction[43] Industry Trends In H1 2023, China's game market showed signs of recovery, with user scale reaching a new high, but domestic sales revenue slightly decreased year-over-year, while overseas market self-developed game revenue declined due to economic downturn and increased competition - China's game user base reached 668 million, a 0.35% YoY increase, setting a new historical high[27] - In H1 2023, China's domestic game market sales revenue was RMB 144.26 billion, a 2.39% YoY decrease[44] - Self-developed game overseas market sales revenue was USD 8.21 billion, an 8.72% YoY decrease, mainly due to decreased overseas user consumption willingness and increased marketing costs[44] Outlook for H2 2023 For H2, Baio will continue to focus on core game genres, increase R&D investment, explore AIGC applications, and plan to launch a rich product pipeline globally, including Aola Star 2, while preparing for the overseas release of Aobi Island: Dreamland - The company plans to successively launch a rich product pipeline to the global market in the future[34] - New game Aola Star 2 was released and opened for pre-registration in H1[34] - Actively preparing to launch the overseas version of Aobi Island: Dreamland[34] Operating Data In H1 2023, the company's core operating metrics showed strong performance, with quarterly active accounts and quarterly paying accounts both increasing by approximately 20% year-over-year, and average revenue per paying user (ARPU) also growing by 26.6% Operating Data | Operating Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Average Quarterly Active Accounts (Millions) | 7.5 | 6.3 | +19.0% | | Average Quarterly Paying Accounts (Millions) | 1.2 | 1.0 | +20.0% | | Average Revenue Per Quarterly Paying Account (RMB) | 188.7 | 149.1 | +26.6% | - Operating data growth is primarily attributed to the excellent performance of the new mobile game Aobi Island Mobile, launched in H2 2022, which maintained high popularity in H1 2023[47] Overall Business and Financial Performance In H1 2023, total revenue increased by 55.6% year-over-year to RMB 451 million, mainly contributed by the new game Aobi Island Mobile, and despite a slight decrease in gross margin to 37.6% due to higher revenue sharing, effective expense control significantly narrowed both operating and net losses - Online entertainment business revenue was RMB 451 million, a 55.6% YoY increase, primarily due to the outstanding performance of the new game Aobi Island Mobile[40] - Gross margin decreased from 40.6% in the prior period to 37.6%, mainly due to a higher proportion of revenue generated from mobile games distributed by third parties, which have higher revenue sharing ratios[56] - Research and development expenses increased by 20.4% YoY to RMB 126 million, reflecting the company's continuous investment in enhancing internal game development capabilities[59] - Loss for the period narrowed from RMB 39.9 million in the prior period to RMB 20 million[70] - Adjusted net loss significantly narrowed from RMB 7.8 million in the prior period to RMB 3.2 million[84] Liquidity and Capital Resources The company primarily relies on cash flow from operating activities to meet working capital needs, maintaining a stable financial position with approximately RMB 1.453 billion in cash, cash equivalents, and time deposits as of June 30, 2023, no bank loans, and a healthy debt-to-asset ratio of 17% Cash, Cash Equivalents, and Deposits (RMB millions) | Indicator | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and Cash Equivalents (RMB millions) | 1,244.1 | 1,303.7 | | Short-term Deposits (RMB millions) | 163.7 | 110.0 | | Long-term Deposits (RMB millions) | 45.0 | 95.0 | | Total (RMB millions) | 1,452.8 | 1,508.7 | - As of June 30, 2023, the Group had no bank loans or other borrowings[16] - The debt-to-asset ratio (total liabilities/total assets) remained at 17%, consistent with the end of 2022[22] Capital Expenditures and Investments In H1 2023, total capital expenditures were RMB 52.6 million, a significant increase from RMB 5 million in the prior period, primarily for construction in progress and other long-term assets, with no other major investment or acquisition plans currently, but a continuous search for new business opportunities Capital Expenditures (RMB thousands) | Capital Expenditure Item | H1 2023 (RMB thousands) | H1 2022 (RMB thousands) | | :--- | :--- | :--- | | Payments for construction in progress and other long-term assets | 50,300 | 2,949 | | Purchase of intangible assets | 1,253 | 1,085 | | Purchase of property and equipment | 1,067 | 930 | | Total | 52,620 | 4,964 | - The Group currently has no specific plans regarding other significant investments or acquisitions of major capital assets or other businesses[6] Employees and Staff Costs As of June 30, 2023, the company had 955 full-time employees, with R&D personnel accounting for the largest proportion at 58.4%, and total staff costs in H1 were approximately RMB 206 million, representing 45.8% of total revenue, a significant decrease from 69.4% in the prior period, demonstrating operating leverage from revenue growth Employee Distribution by Function | Function | Number of Employees | Percentage of Total | | :--- | :--- | :--- | | R&D | 557 | 58.4% | | R&D Business | 220 | 23.0% | | Sales and Marketing | 92 | 9.6% | | General and Administrative | 61 | 6.4% | | Business | 25 | 2.6% | | Total | 955 | 100% | - For the six months ended June 30, 2023 and 2022, staff costs were approximately RMB 206.4 million and RMB 201.0 million, respectively, accounting for 45.8% and 69.4% of our revenue for those periods[77] Dividends The Board does not recommend an interim dividend for the six months ended June 30, 2023, however, the company paid a special dividend for the year ended December 31, 2022, approved at the AGM, on July 20, 2023 - The Board does not recommend the payment of any interim dividend for the six months ended June 30, 2023[79] - The company paid a special dividend of HKD 0.015 per share for the year ended December 31, 2022, on July 20, 2023[91] Interim Condensed Consolidated Financial Statements Interim Condensed Consolidated Income Statement This section details the consolidated income statement for the six months ended June 30, 2023, consistent with the management discussion, showing revenue of RMB 451 million, loss for the period of RMB 19.91 million, and basic and diluted loss per share of RMB 0.0075 Interim Condensed Consolidated Income Statement (RMB thousands) | Item (RMB thousands) | H1 2023 (Unaudited) | H1 2022 (Unaudited) | | :--- | :--- | :--- | | Revenue | 450,609 | 289,641 | | Gross Profit | 169,229 | 117,738 | | Operating Loss | (38,905) | (61,884) | | Loss before income tax | (17,845) | (41,893) | | Loss for the period | (19,913) | (39,851) | | Basic and diluted loss per share (RMB) | (0.0075) | (0.0152) | Interim Condensed Consolidated Statement of Comprehensive Income This section presents the comprehensive income, where, due to the absence of other comprehensive income items during the reporting period, the total comprehensive loss for the period was consistent with the loss for the period, both amounting to RMB 19.91 million - For the six months ended June 30, 2023, the company had no other comprehensive income items, thus the total comprehensive loss for the period was equal to the loss for the period, amounting to RMB 19,913 thousand[94][95] Interim Condensed Consolidated Balance Sheet This section details the assets, liabilities, and equity as of June 30, 2023, with total assets at RMB 2.002 billion, current assets at RMB 1.539 billion, total liabilities at RMB 344 million, and total equity at RMB 1.658 billion Interim Condensed Consolidated Balance Sheet (RMB thousands) | Item (RMB thousands) | June 30, 2023 (Unaudited) | December 31, 2022 (Audited) | | :--- | :--- | :--- | | Assets | | | | Non-current assets | 463,364 | 476,709 | | Current assets | 1,538,949 | 1,579,558 | | Total Assets | 2,002,313 | 2,056,267 | | Equity | | | | Total Equity | 1,657,964 | 1,698,084 | | Liabilities | | | | Non-current liabilities | 42,564 | 52,574 | | Current liabilities | 301,785 | 305,609 | | Total Liabilities | 344,349 | 358,183 | Notes to the Financial Statements This section provides detailed notes on the basis of preparation, significant accounting policies, risk management, segment information, taxation, loss per share, and dividends, supplementing and explaining the consolidated financial statements Accounting Policies The accounting policies for this interim financial information are consistent with prior years, with new and revised standards mandatorily adopted this period having no significant impact, and future effective standards not expected to have a significant impact - The interim condensed consolidated financial information is prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting"[115] - The Group has assessed and confirmed that new and revised standards effective for the first time in this interim period have had no significant impact on the Group[125] Financial Risk Management and Financial Instruments The Group faces market risk (primarily currency risk), credit risk, and liquidity risk, with no changes in risk management policies since the end of 2022, and manages liquidity risk by maintaining sufficient cash reserves while disclosing the fair value estimation hierarchy for financial instruments - The Group's business activities expose it to various financial risks: market risk (primarily currency risk), credit risk, and liquidity risk[129] - There have been no changes in the risk management department or any risk management policies since December 31, 2022[130] Segment Information The Group has two operating segments: online entertainment business and other businesses, with online entertainment being the core and contributing almost all revenue, primarily from mainland China, and Aobi Island Mobile being the largest single game contributor during the reporting period Revenue by Segment (RMB thousands) | Segment | H1 2023 Revenue (RMB thousands) | | :--- | :--- | | Online Entertainment Business | 450,527 | | Other Businesses | 82 | | Total | 450,609 | Revenue by Region (RMB thousands) | Region | H1 2023 Revenue (RMB thousands) | | :--- | :--- | | Mainland China | 425,220 | | Outside Mainland China | 25,389 | | Total | 450,609 | - Aobi Island Mobile was the largest revenue-contributing game, accounting for 38.8% of total revenue[162] Income Tax (Expense) / Credit Some key subsidiaries qualify as "High-tech Enterprises" enjoying a 15% preferential income tax rate, and qualified subsidiaries engaged in R&D activities are entitled to a 200% super deduction for R&D expenses under national policies - Key subsidiaries Guangzhou Baitian and Guangzhou Tianti qualify as "High-tech Enterprises" and enjoy a 15% preferential income tax rate[170] - Starting from 2023, enterprises engaged in R&D activities can deduct 200% of their R&D expenses as deductible tax expenses (super deduction)[172] Loss Per Share For the six months ended June 30, 2023, basic loss per share was RMB 0.0075, a significant narrowing from RMB 0.0152 in the prior period, with diluted loss per share being the same as basic loss per share due to the anti-dilutive effect of potential ordinary shares Loss Per Share | Indicator | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Loss attributable to shareholders of the Company (RMB thousands) | (19,998) | (39,928) | | Weighted average number of ordinary shares outstanding | 2,665,958,981 | 2,626,702,445 | | Basic loss per share (RMB) | (0.0075) | (0.0152) | - No adjustment was made to basic loss per share when calculating diluted loss per share as potential ordinary shares had an anti-dilutive effect[179] Other Disclosures Audit Committee and Review of Financial Statements The company's Audit Committee reviewed the adopted accounting principles and practices and the unaudited interim condensed consolidated financial information for the six months ended June 30, 2023, which was also reviewed by the company's auditor in accordance with relevant standards - The Audit Committee has reviewed the Group's unaudited interim condensed consolidated financial information for the six months ended June 30, 2023, and is satisfied that it was prepared in accordance with International Accounting Standard 34[189] Compliance with Corporate Governance Code During the reporting period, the company complied with all applicable code provisions of the Corporate Governance Code in Appendix 14 of the Listing Rules, with the only deviation being the roles of Chairman and CEO held by the same person, an arrangement the Board believes ensures consistent leadership and does not impair the balance of power - Except for a deviation from code provision C.2.1, the company has complied with all applicable corporate governance code provisions[191] - The roles of Chairman and Chief Executive Officer are currently held by Mr. Dai Jian, an arrangement the Board believes ensures consistent leadership for the Group, and the existing Board structure ensures a balance of power[191] Purchase, Sale or Redemption of the Company's Listed Securities For the six months ended June 30, 2023, the Group did not purchase, sell, or redeem any of the company's listed securities - For the six months ended June 30, 2023, the Group did not purchase, sell, or redeem any of the Company's listed securities[148]