XD INC(02400)2020-04-28 08:32Game Development and Publishing Strategy - The company established a vision of "Gathering Craftsmen's Hearts, Moving Players' Emotions" to enhance game development and publishing strategies[9]. - The introduction of the TapTap platform significantly improved the return on investment (ROI) for each game, allowing for increased investment in development and exploration of new game types[10]. - The company aims to provide high-quality exclusive content for TapTap, which is expected to drive user growth and generate revenue[9]. - The company reported a commitment to continuous support for high-potential games on the TapTap platform, regardless of immediate revenue considerations[12]. - The strategic focus on game development and publishing is expected to create a sustainable ecosystem that benefits both creators and players[10]. - The company recognizes the importance of user expectations and market potential in developing new game types, particularly those with lower initial ROI but high long-term potential[10]. - The company emphasizes the need for a robust business model to avoid the pitfalls of traditional game development cycles[10]. - The company is committed to fostering a culture of respect and reward for game creators, enhancing their ability to innovate and succeed[9]. - The company has eight self-developed game projects in various stages of development, with three expected to enter mass production this year[19]. - The company is focusing on exclusive content as a primary growth driver, emphasizing the importance of self-developed games[13]. - TapTap's major game "RO: Guardians of Eternal Love" has been released in over 50 countries and regions, achieving significant success[18]. - The company aims to leverage TapTap's strategic advantages to support game developers in global publishing efforts[21]. - The company expressed confidence in the global competitiveness of Chinese game developers and aims to assist them in reaching international markets[21]. User Engagement and Growth - TapTap's user growth is driven by exclusive content, which in turn supports the company's game development and enhances long-term revenue potential[12]. - TapTap's cumulative registered users exceeded 33 million, with an average of over 5 million monthly active users as of December 31, 2019[18]. - The average monthly active users increased by 123.5% to 19,579.4 thousand in 2019 from 8,760.8 thousand in 2018[26]. - The average monthly paying users rose by 74.8% to 720.5 thousand in 2019 from 412.2 thousand in 2018[26]. - The average monthly active users of the TapTap mobile app reached 17.9 million, a year-on-year increase of 19.6%[28]. - TapTap games were downloaded 352.0 million times, reflecting a 36.8% increase year-on-year[28]. - The company reported a significant increase in user engagement, with a year-over-year growth of 25% in active users[61]. Financial Performance - The company's total revenue for the year ended December 31, 2019, was RMB 2,838.1 million, representing a 50.4% increase from RMB 1,887.1 million in 2018[33]. - Revenue from online games increased by 50.2% to RMB 2,319.6 million, driven by the strong performance of existing and newly launched games such as "Ragnarok M" and "Idle Uprising"[34]. - Game operation revenue for 2019 reached RMB 2,375.3 million, a significant increase from RMB 1,588.1 million in 2018, representing a growth of 49.7%[35]. - Gross profit for 2019 was RMB 1,771.8 million, up 59.5% from the previous year, with a gross margin improvement from 58.9% in 2018 to 62.4% in 2019[42]. - Net profit for the year increased by 45.6% to RMB 513.4 million, with adjusted net profit rising by 61.1% to RMB 572.0 million[47]. - The adjusted profit for the year ended December 31, 2019, was RMB 572,048,000, compared to RMB 355,136,000 in 2018, representing a 61.3% increase[51]. - The profit attributable to equity holders of the company for 2019 was RMB 346,563,000, up from RMB 285,028,000 in 2018, reflecting a growth of 21.6%[52]. Research and Development - The company plans to invest more in research and development to improve product competitiveness and foster team capabilities[10]. - The focus for the company in 2019 was on enhancing R&D capabilities rather than immediate revenue growth, indicating a long-term strategic vision[21]. - Investment in research and development increased by 30%, focusing on innovative gaming technologies[66]. - Research and development expenses rose by 60.6% to RMB 317.6 million, attributed to an increase in R&D personnel from 550 to 806 and enhanced employee benefits[44]. Corporate Governance - The board of directors consists of four executive directors and four independent non-executive directors, ensuring strong governance[67]. - The company has adopted a high standard of corporate governance to protect shareholder interests[68]. - The company has established four committees to oversee various aspects of governance and strategy[66]. - The board has established four committees: Audit Committee, Remuneration and Assessment Committee, Strategic Development Committee, and Nomination Committee, each with specific written terms of reference[74]. - The company has adopted a board diversity policy, aiming to enhance gender diversity by recommending at least one female candidate for board appointment within three years from the listing date[72]. Environmental, Social, and Governance (ESG) Initiatives - The company has established a clear ESG management system, with the board of directors overseeing ESG matters and responsible for the company's ESG strategy and reporting[104]. - The company has committed to continuous improvement in its ESG performance, with plans to maintain consistency in reporting methods and key performance indicators in future years[103]. - The company actively communicates with stakeholders, including government, shareholders, players, employees, and the community, to understand their expectations and suggestions for sustainable development[106]. - The company has implemented a real-name registration system for users, limiting gaming time for minors to 1 hour in visitor mode every 15 days, and restricting access during specific hours[109]. - The company has developed a comprehensive information security policy, including data backup management and user privacy protection measures, to mitigate risks of information leakage[111]. Employee Management and Development - The company has a comprehensive human resources management system that includes recruitment, performance evaluation, and promotion pathways for employees[121][122]. - The group has established a competitive compensation system, including basic salary, monthly allowances, performance bonuses, and year-end bonuses, ensuring fair remuneration for employees[122]. - The company conducted 46 training sessions in 2019, totaling 114.5 hours of training for employees[117]. - The company has implemented tailored internal training programs to enhance employee productivity and performance[143]. Risk Management - The company has established a risk management and internal control management system covering procurement, sales, human resources, game development, marketing, taxation, funding, information security, and financial reporting[85]. - The company has established a risk library and conducts regular risk assessments to ensure effective risk management and internal control operations[85]. - The board regularly reviews the investment and expansion strategies, business plans, financial performance, and key performance indicators to manage business risks[86]. Compliance and Regulatory Matters - The company has adopted internal control and risk management policies to monitor compliance with relevant laws and regulations[171]. - The independent auditor confirmed that the transactions under the contractual arrangements were approved by the board and complied with relevant provisions[171]. - The company has engaged in various contractual arrangements to navigate foreign investment restrictions in China, ensuring compliance with local laws[169].