7ROAD(HK:00797)2019-09-15 10:09Financial Performance - For the six months ended June 30, 2019, total revenue was approximately RMB 103.5 million, a decrease of about 55.7% compared to the same period in 2018[9]. - The company recorded a loss attributable to shareholders of approximately RMB 25.6 million for the six months ended June 30, 2019, compared to a profit of RMB 104.5 million in the same period of 2018, representing a decline of 124.5%[8]. - Adjusted net loss for the same period was approximately RMB 1.2 million, a decrease of 100.9% compared to a net profit of RMB 142.9 million in 2018[9]. - The company's gross profit for the six months ended June 30, 2019, was approximately RMB 85.2 million, with a gross margin of 82.3%[11]. - Revenue from online games was approximately RMB 102.3 million, a decrease of 25.8% year-on-year, primarily due to a decline in revenue from existing games and delays in the launch of new games[19]. - The company reported a total comprehensive loss of RMB 25,521 thousand for the six months ended June 30, 2019, compared to a profit in the previous period[71]. - The company reported a net loss of RMB 33,001,000 for other income, reflecting a significant decrease from the previous year's net income of RMB 7,097,000[98]. - The company incurred an operating loss of RMB 31.17 million for the six months ended June 30, 2019, compared to an operating profit of RMB 121.59 million in the same period of 2018[16]. Market Overview - The mobile gaming market in China generated actual revenue of approximately RMB 77.07 billion in the first half of 2019, representing a year-on-year growth of 21.5%[10]. - The number of gaming users in China exceeded 640 million as of June 30, 2019, with a year-on-year growth of 5.9%[10]. - The global gaming market is projected to generate $152.1 billion in revenue in 2019, with mobile gaming accounting for $68.5 billion, representing 45% of the total market[10]. - The Asia-Pacific gaming market is expected to grow by 7.6% year-on-year, exceeding $72 billion, accounting for 47% of the global gaming market[10]. Strategic Focus - The company plans to focus on mobile game development as its main business direction due to the decline in revenue from existing games and the postponement of new game launches[11]. - The company plans to explore diversified revenue models beyond in-game virtual item consumption to increase overall revenue[12]. - The company aims to enhance its game product portfolio by leveraging existing intellectual property and development experience[12]. - The company is focusing on integrating resources from a potential acquisition to enhance its competitive position and operational capabilities[12]. Research and Development - Research and development expenses for the six months ended June 30, 2019, were RMB 44.96 million, a decrease of 20.5% compared to the same period in 2018[16]. - The company is focused on research and development to enhance its gaming offerings, which is essential for maintaining competitive advantage[139]. Cash Flow and Assets - The company's cash and cash equivalents as of June 30, 2019, were RMB 246.8 million, an increase of 196.3% from RMB 83.3 million on June 30, 2018[30]. - The net cash generated from operating activities for the six months ended June 30, 2019, was RMB 27,822,000, a significant increase from RMB 4,083,000 in the same period of 2018[73]. - The net cash used in investing activities was RMB 61,018,000, compared to a net cash inflow of RMB 33,094,000 in the previous year[73]. - The total assets amounted to RMB 1,333,905 thousand, slightly down from RMB 1,335,590 thousand as of December 31, 2018[68]. Shareholder Information - The company announced a share buyback plan to repurchase up to 80,000,400 shares, representing about 3.00% of the total issued shares as of June 30, 2019[38]. - As of June 30, 2019, Mr. Meng Shuqing holds 528,854,000 shares, representing approximately 19.83% of the issued share capital[41][42]. - The total number of shares outstanding as of June 30, 2019, is 2,666,680,000[48]. - The company has a significant concentration of ownership, with several entities holding over 16% of the equity[49]. Corporate Governance - The company has established an audit committee consisting of three independent non-executive directors to enhance corporate governance[61]. - The group has complied with all relevant laws and regulations that have a significant impact on the company as of the reporting date[60]. Employee Information - As of June 30, 2019, the total number of employees is 248, with 70.2% (174 employees) in R&D, primarily in game development[35][36]. - Total employee compensation for the first half of 2019 is approximately RMB 61.2 million, including salaries, bonuses, and other benefits[36]. Financial Liabilities - The company's debt-to-asset ratio as of June 30, 2019, was 14.0%, compared to 11.9% as of December 31, 2018[31]. - The company's borrowings decreased slightly from RMB 41,435 thousand to RMB 38,365 thousand, indicating a reduction in debt obligations[69]. Acquisitions and Subsidiaries - The company has entered into an agreement to acquire a target business for RMB 1.0 billion, which is expected to enhance its game development capabilities and expand its game portfolio[32]. - The company established three new subsidiaries in Jiangsu Province with registered capital of RMB 34.85 million and RMB 1.0 million each[38]. - The company plans to acquire Osmanthus Vale Holdings Limited's online business for RMB 1 billion, pending shareholder approval and other conditions[136]. Financial Reporting Standards - The company is committed to adhering to international financial reporting standards, ensuring transparency and accuracy in financial reporting[139]. - The company adopted IFRS 16 on January 1, 2019, which resulted in the recognition of lease liabilities measured at the present value of future lease payments[78].