CMGE(HK:00302)2024-03-27 14:53Financial Performance - Total revenue for the year ended December 31, 2023, was RMB 2,605.884 million, a decrease of 4.0% compared to RMB 2,713.892 million in 2022[2] - Gross profit for the same period was RMB 943.102 million, down 15.2% from RMB 1,111.695 million in 2022[2] - The adjusted net profit for 2023 was RMB 5.379 million, a significant improvement from a loss of RMB 196.134 million in 2022[2] - Operating profit for 2023, after excluding non-operating income and expenses, was RMB 107.4 million[4] - The company's total revenue for the fiscal year 2023 was RMB 2,605.9 million, representing a year-on-year decline of 4%[7] - The group's gross profit decreased by 15.2% from RMB 1,111.7 million for the year ended December 31, 2022, to RMB 943.1 million for the year ended December 31, 2023, with a gross margin decline from 41.0% to 36.2%[35] - The adjusted net profit for the year was RMB 5.4 million, a significant improvement from a loss of RMB 196.1 million in 2022[30] - The company's annual loss decreased from RMB 216.9 million for the year ended December 31, 2022, to a loss of RMB 38.0 million for the year ended December 31, 2023[49] User Growth and Engagement - The company reported a total of over 92.9 million new registered users in 2023, representing a growth of 9.8% year-on-year[4] - The average monthly active users increased to 17.1 million in 2023 from 15.5 million in 2022, while the total registered users reached 704.4 million[26] Game Development and Releases - The small games segment generated over RMB 600 million in revenue in 2023, becoming a new growth driver for the company[4] - The game "New Legend of Sword and Fairy" achieved strong performance, ranking first in the free charts and fourteenth in the sales charts on the Apple Store in its first month[5] - The company plans to launch multiple new games in 2024, including "Sword World" and "全民街籃," which are currently in testing phases[3][4] - The game "All-Star Battle" achieved first place in the free charts and fifth in the sales charts across five regions in its first month, but failed to maintain high overseas revenue[6] - The game "Douro Continent: Slak Academy" was delayed to January 2024 for launch due to late approval, impacting expected revenue contributions[7] - The game "Lord of the City" is set to launch in November 2023, marking the company's entry into the Three Kingdoms strategy game genre[8] - The game "Xianjian World" has surpassed 4 million pre-registrations and is set to officially launch in 2024 after two testing phases in 2023[13] - The mobile game "Douluo Dalu: Shrek Academy" generated over RMB 100 million in revenue within its first month of launch on January 31, 2024, showcasing strong user demand[17] - The upcoming game "Douluo Dalu: Reverse Time and Space" is set to launch in the first half of 2024, following successful pre-registration activities[17] - The newly launched game "城主天下" has been released in November 2023, marking the company's first strategy game based on the Three Kingdoms theme, with plans to develop a second similar game in 2024[19] Research and Development - Research and development investment reached RMB 370 million in 2023, focusing on enhancing game development efficiency through AIGC technology[3] - R&D investment for 2023 reached RMB 370.3 million, a decrease of 29.7% compared to the previous year, due to the application of AIGC technology[8] - The introduction of AIGC technology in the game "仙劍世界" has reduced art production costs by approximately 50%, significantly improving development efficiency[20] - The company aims to leverage AI and other technologies to improve operational efficiency and reduce costs in its game development processes[16] Intellectual Property and Licensing - The IP licensing revenue for 2023 was RMB 257.0 million, showing a significant increase of 74.7% year-on-year[10] - The company aims to leverage its unique IP resources to enhance collaboration across different sectors, increasing the monetization value of its IPs[4] - The company has a substantial IP reserve, including 60 licensed IPs and 68 proprietary IPs, totaling 128 IPs as of December 31, 2023[24] - Revenue from IP games reached RMB 1,631.3 million for the year ending December 31, 2023, compared to RMB 1,388.1 million in 2022, reflecting a growth in IP game revenue[25] - The company has partnered with top collaborators to develop a comprehensive "Xianjian" IP ecosystem, covering games, films, and merchandise[10] Financial Position and Assets - As of December 31, 2023, the company had cash and cash equivalents of RMB 210.6 million, down from RMB 237.0 million as of December 31, 2022[50] - The company obtained bank loans totaling RMB 609.0 million and repaid RMB 557.6 million in bank and other loans during the year ended December 31, 2023[51] - The company's prepaid expenses as of December 31, 2023, were approximately RMB 1,429.3 million, a decrease of 6.6% compared to December 31, 2022[53] - The current ratio increased to 1.71 as of December 31, 2023, compared to 1.6 as of December 31, 2022[55] - The debt-to-equity ratio rose to 8.7% as of December 31, 2023, from 7.8% as of December 31, 2022[55] - Non-current assets totaled RMB 4,873,581 thousand, a slight decrease from RMB 4,922,728 thousand in the previous year[67] Expenses and Cost Management - The cost of sales increased by 3.8% from RMB 1,602.2 million in 2022 to RMB 1,662.8 million in 2023[34] - Sales and distribution expenses rose by 28.8% from RMB 238.0 million in 2022 to RMB 306.5 million in 2023, driven by significant promotional expenses for new game launches[40] - Administrative expenses decreased by 28.0% from RMB 730.7 million in 2022 to RMB 526.0 million in 2023, mainly due to reduced R&D costs and tighter control over management salaries[42] - The impairment loss on financial and contract assets decreased by 34.4% from RMB 137.0 million in 2022 to RMB 89.9 million in 2023[43] - Other expenses decreased by 23.6% from RMB 193.4 million in 2022 to RMB 147.8 million in 2023, attributed to investment impairment provisions for underperforming subsidiaries[44] - Financing costs decreased by 44.3% from RMB 35.3 million in 2022 to RMB 19.6 million in 2023, primarily due to reduced interest expenses on bank loans[45] Taxation and Compliance - The company's income tax expense for 2023 was RMB 20,116,000, a decrease of 48.6% from RMB 39,140,000 in 2022[95] - The group’s income tax rate in Hong Kong remains at 16.5% for both 2023 and 2022, with a reduced rate of 8.25% applicable to the first RMB 2,000,000 of taxable profits for qualifying entities[92] - The company has requested a super deduction of 200% for R&D expenses for the year ending December 31, 2023, following a new announcement from the State Taxation Administration[94] Awards and Recognition - The company received multiple awards, including the 2023 Social Responsibility Award and the 2023 Most Influential Game Company Award[28] - The company has received multiple awards for "Xianjian World," including recognition as one of the "Most Anticipated Games of 2024" at various gaming events[14] Corporate Governance - The company established a remuneration committee to assist the board in setting and executing a formal and transparent remuneration policy for directors and senior management[61] - The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards, using historical cost accounting, except for certain financial assets measured at fair value[70]