ARCHOSAUR GAMES(09990)2024-04-22 08:30Corporate Governance - The company has established four main board committees: Audit Committee, Nomination Committee, Remuneration Committee, and Risk Management Committee, each operating according to its terms of reference[17] - The Audit Committee consists of three members, with Mr. Zhu Lin serving as the chairman, responsible for reviewing financial statements and overseeing internal controls and risk management systems[17] - The Nomination Committee evaluates candidates for board appointments based on diversity factors such as gender, age, cultural background, and professional expertise[18] - As of December 31, 2023, the board comprises six male members and one female member, with no quantifiable diversity targets set[21] - The company ensures the independence of the board by establishing mechanisms to convey independent opinions and recommendations for objective decision-making[12] - The chairman holds annual meetings with independent non-executive directors without the presence of executive and non-executive directors[14] - The company has obtained an exemption from strict compliance with Listing Rules 3.28 and 8.17 for its co-company secretary, Ms. Hao Lili[25] - The board reviews and oversees compliance with the company's whistleblowing policy as part of its corporate governance responsibilities[9] - The company has adopted a shareholder communication policy to ensure timely and equal access to relevant information, encouraging shareholder participation in annual general meetings[36][37] Financial Performance and Risk Management - The company has adopted a financial risk management policy to control risks such as tax, currency, and financial reporting risks[28] - The board monitors financial performance and key operational statistics monthly with the assistance of the internal financial reporting department[28] - The company has implemented strict internal procedures to ensure compliance with relevant laws and regulations, continuously reviewing risk management policies and measures[32] - The company's risk management and internal control systems are designed to ensure effective and adequate policy implementation[32] - Revenue for 2023 increased to RMB 908,489 thousand, up 55.5% from RMB 584,121 thousand in 2022[58] - Gross profit for 2023 was RMB 650,407 thousand, a 53.5% increase from RMB 423,620 thousand in 2022[58] - Operating loss for 2023 decreased to RMB 357,029 thousand, a 53.7% improvement from RMB 771,437 thousand in 2022[58] - Net loss for 2023 was RMB 315,561 thousand, a 58.9% improvement from RMB 768,547 thousand in 2022[58] - R&D expenses for 2023 decreased to RMB 582,208 thousand, down 22.0% from RMB 746,364 thousand in 2022[58] - Cash and cash equivalents at the end of 2023 were RMB 555,033 thousand, a 55.0% decrease from RMB 1,232,999 thousand at the end of 2022[71] - The company received RMB 35,800 thousand from borrowings and repaid the same amount in 2023[71] - The company's financial income for 2023 was RMB 51,561 thousand, a 119.2% increase from RMB 23,524 thousand in 2022[58] - The company's financial costs for 2023 decreased to RMB 4,271 thousand, down 33.7% from RMB 6,438 thousand in 2022[58] - The company's net financial income for 2023 was RMB 47,290 thousand, a 176.8% increase from RMB 17,086 thousand in 2022[58] - Adjusted net loss for 2023 was RMB 282.9 million, an improvement from RMB 731.9 million in 2022[107] Revenue and Game Operations - The company's consolidated game publishing and operating revenue for the year ended December 31, 2023, was approximately RMB 709 million, primarily from the sale of in-game virtual items[47] - Revenue from consumable in-game virtual items is recognized upon consumption or expiration, while revenue from durable in-game virtual items is recognized proportionally over the expected player relationship period[47] - The company's independent auditor identified the determination of the expected player relationship period as a key audit matter due to significant judgment and estimation involved[48] - The auditor assessed the accuracy and completeness of key input data used to determine the expected player relationship period, including historical player behavior and churn rates[48] Subsidiaries and Investments - The company holds 100% equity in multiple subsidiaries, including Finger Games Pte. Ltd. (Singapore), Dream Cube Games Limited (Dubai), and Archosaur Games Japan Ltd. (Japan), all established in 2021[75] - The registered capital of Shanghai Huanzhimeng Technology Co., Ltd. is RMB 10,000,000, and it is fully owned by the company, focusing on mobile game development in China[75] - The company's financial products investment increased significantly from RMB 151,115 thousand in 2022 to RMB 433,293 thousand in 2023, with an expected return rate ranging from 2.14% to 6.00%[83] - Preferred stock investments decreased from RMB 14,349 thousand in 2022 to RMB 2,868 thousand in 2023, with expected volatility ranging from 35.80% to 38.89%[83] - Other common stock investments remained stable at around RMB 3,526 thousand in 2022 and RMB 3,528 thousand in 2023, with expected volatility between 51.77% and 54.88%[83] - Private equity and venture capital fund investments decreased from RMB 163,435 thousand in 2022 to RMB 135,935 thousand in 2023[83] - Other fund investments increased slightly from RMB 157,664 thousand in 2022 to RMB 165,176 thousand in 2023[83] - Structural investments decreased from RMB 239,406 thousand in 2022 to RMB 199,617 thousand in 2023[83] - The company controls subsidiaries through contractual arrangements, allowing it to influence variable returns and consolidate financial statements[91] - The company uses the acquisition method to account for business combinations, measuring identifiable assets and liabilities at fair value at the acquisition date[92] - The company has a subsidiary, Tianjin Zulong Technology Co., Ltd., which is consolidated under contractual arrangements[94] Financial Reporting and Accounting Standards - The company's financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and the Hong Kong Companies Ordinance[78] - New accounting standards, including IFRS 17 Insurance Contracts and amendments to IAS 1 and IAS 8, became effective from January 1, 2023[80] - The company will adopt new accounting standards and interpretations, including amendments to IAS 1, IFRS 16, and IAS 21, effective from January 1, 2024, and January 1, 2025[87] - The company's financial statements are audited by PricewaterhouseCoopers, a registered public interest entity auditor[102] - The company's financial assets are classified into categories measured at fair value, with changes recognized in other comprehensive income or profit or loss[144] Financial Assets and Valuation - Financial assets measured at fair value totaled RMB 940.4 million as of December 31, 2023[116] - The company had no financial liabilities measured at fair value as of December 31, 2023[115] - Total fair value of financial assets categorized as Level 3 instruments amounted to RMB 729,495 thousand as of December 31, 2022[118] - The company's financial assets include investments in wealth management products (RMB 151,115 thousand), other fund investments (RMB 149,439 thousand), and structured investments (RMB 140,107 thousand) under Level 3 instruments[118] - Non-current financial assets under Level 3 instruments include private equity and venture capital fund investments (RMB 163,435 thousand), structured investments (RMB 99,299 thousand), and preferred stock investments (RMB 14,349 thousand)[118] - The company uses specific valuation techniques such as market quotes, net asset value of investments, and discounted cash flow analysis to determine the fair value of financial instruments[119] Shareholder Information and Company Details - The company's headquarters are located in Beijing, China, with a principal place of business in Hong Kong[105] - The company's shares are traded under the stock code 9990[105] - The company's website is www.zulong.com[105] - Tencent held a 17.23% stake in the company as of December 31, 2023[132] Intangible Assets and Amortization - The company capitalizes costs related to purchased computer software and amortizes them over an estimated useful life of 3 to 15 years[139] - Trademarks and domain names are amortized over an estimated useful life of 5 to 10 years[143] Dividend Policy - The company's dividend payments are determined by the board of directors, considering factors such as actual and expected operating performance, cash flow, financial condition, and future expansion plans[33] Financial Position - Total assets decreased to RMB 2,743.6 million in 2023 from RMB 2,953.3 million in 2022[110] - Total liabilities increased to RMB 409.7 million in 2023 from RMB 363.1 million in 2022[110] - Total equity decreased to RMB 2,333.9 million in 2023 from RMB 2,590.2 million in 2022[110] Revenue and Profit Details - Revenue for 2023 was RMB 908.5 million, a 55.5% increase from RMB 584.1 million in 2022[107] - Gross profit for 2023 was RMB 650.4 million, up 53.5% from RMB 423.6 million in 2022[107] - R&D expenses decreased to RMB 582.2 million in 2023 from RMB 746.3 million in 2022, a 22% reduction[107] - Operating loss improved to RMB 357.0 million in 2023 from RMB 771.4 million in 2022[107]