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Tanwan Inc. Earnings Release 2024
51158_rns_2025-03-31_7c42a3a3-81af-4095-9931-b36abf2cce07.pdf
Earnings Release
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Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
ZX Inc.
中旭未来
(Incorporated in the Cayman Islands with limited liability)
(Stock Code: 9890)
ANNOUNCEMENT OF ANNUAL RESULTS FOR THE YEAR ENDED DECEMBER 31, 2024
The Board (the "Board") of Directors (the "Directors") of ZX Inc. (the "Company", together with its subsidiaries and the PRC Operating Entities¹, the "Group") is pleased to announce the consolidated results of the Company for the year ended December 31, 2024 (the "Reporting Period"), together with comparative figures for the same period of 2023.
MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS OVERVIEW AND OUTLOOK
1. INDUSTRY
1.1 Industry Overview
According to the 2024 China Gaming Industry Global Expansion Research Report (《2024中國遊戲出海研究報告》) released by Gamma Data in January 2025, the global gaming market size reached RMB1,216.34 billion in 2024, representing a year-on-year increase of 3.31%. Among it, the global mobile gaming market size in 2024 was RMB635.57 billion, representing a year-on-year increase of 4.83%. The trend of slowing growth of the global mobile gaming market was becoming increasingly prominent.
¹ The PRC Operating Entities refer to the entities controlled by the Group through the Contractual Arrangements, the details of which are set out in the Company's prospectus dated September 18, 2023 ("Prospectus").
According to the 2024 China Gaming Industry Report (《2024年中國遊戲產業報告》) jointly released by the Game Publishing Committee of China Audiovideo and Digital Publishing Association (中國音數協遊戲工委) and the Expert Committee on Game Industry Research (遊戲產業研究專家委員會), in 2024, the actual sales revenue of Chinese domestic gaming market was RMB325.78 billion, representing a year-on-year increase of 7.53%. In 2024, the number of game users in China reached RMB674 million, representing a year-on-year increase of 0.94% and reaching a historical high.
1.2 Regulatory Overview
In August 2024, the State Council issued the Opinions on Promoting High Quality Development of Service Consumption (《關於促進服務消費高質量發展的意見》）(the “Opinions”), which outlined key tasks in improving consumption vitality, including stimulating cultural and entertainment sectors, and further proposed new requirements to encourage the development of new formats such as “improving the quality of online literature, online performances, online games, radio and television, and online audio-visual content.” The release of the Opinions is conducive to stimulate the endogenous driving force of service consumption through innovation, providing favorable support for the high-quality development of the gaming industry, and better meeting the personalized, diversified, and high-quality service consumption needs of consumers.
On January 1, 2024, the Regulations on the Online Protection of Minors (《未成年人網絡保護條例》) officially came into effect, focusing on improving the system and mechanism for the online protection of minors, promoting minors' internet literacy, strengthening the construction of online content, protecting minors' personal information, and preventing minors from becoming addicted to the internet. In May 2024, the Internet Society of China further issued the group standards (draft for comments) of the Management Requirements for Online Game Services for Minors (《未成年人網絡遊戲服務管理要求》團體標注(徵求意見稿)) (the "Management Requirements"), proposed detailed refund standards and suggestions for the first time, and clearly divided the proportion of responsibility among online game service providers, guardians and other responsible parties based on their respective degrees of fault. Our Company has developed corresponding mechanisms for managing underage consumption in accordance with the standards of the Management Requirements, including process management mechanisms, amount management mechanisms, notification management mechanisms, complaint and refund management mechanisms, to create a clear and healthy online space for minors.
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In March 2024, the State Council issued the Implementation Regulations of the Consumer Rights and Interests Protection Law of the People's Republic of China (《中華人民共和國消費者權益保護法實施條例》), which clarified that the state will increase efforts to protect the legitimate rights and interests of consumers, establish and enhance a comprehensive governance system for consumer rights protection that combines business operators' legal compliance, industry self-discipline, consumer participation, government supervision, and social supervision. The Company attaches great importance to compliance management in game operation and promotion, and continuously improves internal governance and risk control systems to safeguard consumer rights.
2. MAIN STRATEGIES AND BUSINESS OVERVIEW OF THE COMPANY
We are a leading online game publisher committed to providing high-quality games to players around the world. We distribute and operate online games (especially mobile games) developed by our clients through the "Tan Wan" (貪玩遊戲) brand.
During the Reporting Period, the Group achieved a revenue of RMB5,580.1 million (2023: RMB6,514.6 million). The net profit of the Group for the year was RMB44.0 million (2023: RMB273.3 million), and the Group recorded net loss of RMB385.0 million for the six months ended June 30, 2024. The overseas business revenue was RMB623.4 million in 2024, representing a year-on-year increase of 44.9% compared to RMB430.3 million in 2023, accounting for 11.2% of total revenue in 2024, representing an increase by 4.6 percentage points from 6.6% in 2023.
Our Group's core strategy focuses on product matrix innovation (diversified and refined product matrix strategy), technology-driven development ("AI+" strategy), and overseas expansion (globalization strategy).
2.1 Diversified and refined product matrix strategy
Our Company follows a "diversification + refinement" core strategy to build a game product matrix covering all categories and user groups, forming a differentiated competitive advantage. Our Company's game product matrix is mainly divided into four categories: classic IP games, boutique new IP games, multi-track innovative games, and multi-platform mini program games.
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(1) Long-term operation of classic IP, continuous iteration to stimulate new vitality
Relying on the continuous iteration and content renewal of classic IPs, the core game products operated by our Company, such as flagship IP games like “Legend” (傳奇), “MU” (奇蹟)” and “Yulgang” (熱血江湖) have maintained stable user activity, demonstrating our continuous enhancement in game lifecycle management capabilities.
During the Reporting Period, the “Legend” IP games operated by our Company mainly included “Legend of Origin” (《原始傳奇》), “Legend of Guyun” (《古雲傳奇》), and “City of Dragontrail” (《龍跡之城》). In addition, “Legend of Longteng” (《龍騰傳奇》) was released on January 14, 2025. The “Legend” game series are mainly MMORPGs (massively multiplayer online role-playing games). Such game category has a high degree of freedom in gameplay, with core gameplay including killing monsters to level up, equipment collection, character development and PK competition. It also provides rich PVE (player versus environment) gameplay (such as dungeons, missions, etc.) and exciting PVP (player versus player) gameplay (such as arenas, guild sieges, etc.). In addition, the “Legend” game series consistently maintain innovative concepts, continuously launching new versions and gameplay, which has enabled the “Legend” game series to maintain strong vitality for 20 years. At the same time, “Legend of Origin” has been released across multiple platforms, including mobile App, mini program and PC, providing more choices for players with different needs. According to relevant reports, the “Legend” game series market size was of RMB20 to 30 billion in recent years¹. Among the total China’s gaming industry of RMB325.783 billion in 2024, the “Legend” game series accounted for approximately 6.1% to 9.2%.
“MU” and “Yulgang” are both classic IPs. In keeping classic games evergreen, we consistently provide front-line promotion services. Our team constantly iterates product versions, introduces new content, and activates the vitality of classic IPs. We not only cultivate classic IPs domestically, but also deeply explore the maximum value of these IPs and expand the overseas development potential of classic IPs.
¹ Source: DataEye, March 4, 2021, Issue 106, “The ‘Legend’ Game Series — Special Research Report”; iResearch, “The white paper on the ‘Legend’ Game Market in China in 2024”.
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(2) New IP boutique development, exploring unlimited potential
We cooperate with numerous well-known IP holders, use the two-pronged approach of “investment + cooperation” to vigorously release high-quality IP games, deeply understand the essence of IPs, and explore the unlimited potential of IPs.
In January 2024, we jointly released “Soul Land: Shrek Academy” (《鬥羅大陸：史萊克學院》) with CMGE Technology Group Limited (中手遊科技集團有限公司), a company listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) (stock code: 00302). As the first large open world team battle massive multiplayer online mobile game operated by our Group, this game topped the App Store iOS Free List and TapTap’s Hot Game List on its first day of release.
Currently, we are also conducting game testing for “Soul Land: Legend of Evil Slayer” (《鬥羅大陸：誅邪傳說》). “Soul Land: Legend of Evil Slayer” is a domestic online game developed by Kingnet Network Co., Ltd. (愷英網絡股份有限公司), a company listed on Shenzhen Stock Exchange (stock code: 002517), which integrates a large open world, multiplayer online experience, rich storyline, and diverse gameplay. On the TapTap platform, the game reached the top position on the Android (“安卓”) Game Reservation List, with a high reservation volume of 160,000 times.
(3) Using innovation as a pivot, laying out new game tracks
We have been trying to innovate and break through in multi-track games, releasing various types of games such as simulation games (“SLG”), simulation management, cards, tower defense, role playing games (“RPG”), casual fusion RPG, etc.
In June 2024, we launched the blockbuster online mobile SLG “Beast Lord: The New Land” (《野獸領主：新世界》), which topped multiple charts including the iOS Free List upon its launch. This game is also the first online mobile exploration SLG featured with real animals themes in Chinese Mainland, which is a new breakthrough for us to layout multi-category game tracks and create a diversified game product matrix.
(4) Customer first, exploring core player needs through multi-platform distribution
We actively seek multi-platform layout, expanding to the mini-game market include heavy and light leisure game. The game products that we operate
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include “Tiny Troopers” (小兵大作戰), “Legend of Origin” (原始傳奇), and “The Dragon Slashes in A Vages” (狂龍怒斬). Among them, “Tiny Troopers” is a multi-player fast-paced casual competitive mobile game released by us. On its first day of launch, it topped the App Store iOS Free List. It was also released on the mini-program platform, reaching the top 4 of the WeChat (“微信”) Mini-Game Best-Selling List.
2.2 “AI+” strategic system
We take data-driven as the core and build a full chain digital intelligence system covering research and development, operation, and user services. Based on our independently-developed platforms — the independently-developed intelligent end-user engagement platform Luoshu (洛書) and the business intelligence analysis system Hetu (河圖), we launched the “X” intelligent marketing platform in 2024. Since their launch, these platforms have accumulated hundred billions times of machine learning training sets. In addition, we have established a wholly-owned subsidiary, Hong Kong Yuanda Future Limited (香港遠達未來有限公司) in Hong Kong, mainly engaged in the application and development of AI technology in the gaming industry, and is dedicated to integrating AI technology into in-game art production, creative copywriting, video generation, intelligent assistance, collaborative work and other areas of operations, and further applying AI algorithms and AI-generated content technology to optimize game operation and promotion, creating new gameplay and experiences for players.
2.3 Deepening the layout of globalization
After years of accumulation, we have achieved breakthrough growth in our overseas business during the Reporting Period by deepening the dual engine of “global distribution + local cultural adaptation” and collaborating deeply with overseas KOLs and communities. As of December 31, 2024, we had successfully released and operated over 30 multilingual games in 11 different language versions in multiple international markets including Southeast Asia, Hong Kong, Macao and Taiwan regions of China, Japan, South Korea, Europe and the United States. Several of our game products have achieved outstanding rankings on top charts. In addition, we have 17 game reserve products ready for release.
“MU: Dragon Harvoc” (《奇蹟MU：無限金蛋》), a classic IP game within the “MU” series, gained 800 thousand new users in its first month of release in Vietnam. It ranked first on both Google Play and App Store iOS Free List and Best-Selling List in Taiwan region and Vietnam, and continued to dominate the lists for over three months.
The classic IP “Yulgang” martial arts fighting mobile game “Yulgang: Return” (《熱血江湖：歸來》) was downloaded 100 thousand times on its first day of release in Taiwan region, ranking first on the Google Play and App Store iOS
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Free Lists, first on App Store iOS Best-Selling List, and top 5 on Google Play Best-Selling List. The Thai version of “Yulgang”, “Yulgang: จุดิยุทธภัพเล็อดใหม่”, topped both the Thai App Store iOS and Google Play Lists, with a total of 800 thousand pre-registered and pre-booked users on channels including Meta, Google Play, and Tiktok.
3. OUTLOOK
We always prioritize player experience, deepen strategic collaboration with research and development partners, continuously explore the value of game IPs, and promote the upgrading of the global gaming industry through high-quality content output.
Product matrix layout: We still adhere to a high-quality and diversified product matrix, laying out new game categories and introducing more high-quality IPs. We have multiple IP reserves including “Legend”, “MU”, “Yulgang”, and “The Smiling Proud Wanderer”, covering different tracks such as open-world, Chinese style martial arts, and action adventure. Corresponding game products are also being developed in an orderly manner.
Upgrade of intelligent operation system: We will maintain closer cooperation with game developers, jointly exploring the core needs of players, creating comprehensive integrated promotion, and bringing players a novel gaming experience.
AI technology integration: The application of AI technology has enabled a deeper level of intelligence in the user acquisition process of game publishing, helping us efficiently and accurately reach end users, and improving the return of investment (ROI) ratio of traffic acquisition. We will continue to explore the important applications of AI in NPC dialogue and scene generation, and further integrate AI technology with existing businesses to promote our move towards digitization and high-quality development.
Deepen the promotion of globalization strategy: We will promote diversified layout towards globalization, bringing high-quality game products from China to Southeast Asia, Europe and America, and then to the Middle East market.
Obtaining game publication numbers: We have successfully obtained game publication numbers for multiple high-quality games that we distribute as a publisher, including “Free Jianghu” (《自在江湖》), “Kingdom Crisis” (《王國危機》), “The Smiling Proud Wanderer: The Legend of Heroes” (《笑傲江湖：群俠傳》), and “Yulgang: Awakening” (《熱血江湖：覺醒》). Our rich game reserves have laid a solid foundation for our development.
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FINANCIAL DISCUSSION AND ANALYSIS
Revenue
Our revenue is generated primarily from (i) marketing and operating online games developed by game developers and marketing online literature products and video clips developed by content creators; and (ii) our consumer product business, primarily including sales of our private-label and local-flavor rice noodle products and other fast consumer foods under the brand “Zha Zha Hui” (渣渣灰).
The following table sets forth a breakdown of our revenue both in absolute amount and as a percentage of our total revenue for the years indicated:
| For the Year Ended December 31, | ||||
|---|---|---|---|---|
| 2024 | 2023 | |||
| (RMB'000) | % | (RMB'000) | % | |
| Online Game Publishing Business and Other Marketing Business | ||||
| Game products operated under the self-run model | 4,118,801 | 73.9% | 4,264,462 | 65.4% |
| — Collaboration with game developers | 3,844,380 | 69.0% | 3,747,693 | 57.5% |
| — Collaboration with game publishers | 11,438 | 0.2% | 58,818 | 0.9% |
| — Self-owned game | 262,983 | 4.7% | 457,951 | 7.0% |
| Game products operated under the joint-run model | 1,329,845 | 23.8% | 1,944,848 | 29.9% |
| — Collaboration with game developers | 1,168,932 | 20.9% | 1,548,414 | 23.8% |
| — Self-owned game | 160,913 | 2.9% | 396,434 | 6.1% |
| Others | 29,265 | 0.5% | 91,618 | 1.5% |
| Subtotal | 5,477,911 | 98.2% | 6,300,928 | 96.7% |
| Consumer Product Business | 102,201 | 1.8% | 213,657 | 3.3% |
| Total | 5,580,112 | 100.0% | 6,514,585 | 100.0% |
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Our Group’s revenue for the year ended December 31, 2024 was RMB5,580.1 million, representing a decrease of 14.3% from RMB6,514.6 million in 2023. The decrease was mainly due to (i) a decrease in revenue generated from the game products we marketed and operated under the joint-run model as certain existing game products entered into a later stage of their lifecycle; (ii) new games launched for the layout of the new game category tracks being in the early stages of their payback period, which had not yet fully realized revenue contribution potential; and (iii) a decrease in revenue generated from consumer product business and other non-game business, mainly due to our Group’s strategical focus on our core business of marketing and operating game products.
Online Game Publishing Business and Other Marketing Business
For the year ended December 31, 2024, revenue generated from the game products we market and operate under the self-run model was RMB4,118.8 million, representing a decrease of 3.4% from RMB4,264.5 million in 2023. The decrease was mainly due to (i) new games launched for the layout of the new game category tracks being in the early stages of their payback period, which had not yet fully realized revenue contribution potential; and (ii) a decrease in revenue as certain existing game products entered into a later stage of their lifecycle. In 2024, revenue generated from the game products we market and operate under the joint-run model was RMB1,329.8 million, representing a decrease of 31.6% from RMB1,944.8 million in 2023. The decrease was mainly because certain existing game products entered a later stage of their lifecycle.
Revenue generated from other marketing business, primarily revenue from marketing online literature products and video clips, decreased by 68.0% from RMB91.6 million for the year ended December 31, 2023 to RMB29.3 million for the year ended December 31, 2024, which was mainly due to our Group’s strategical focus on our core business of marketing and operating game products.
Consumer Product Business
Revenue generated from consumer product business, primarily including sales of our private-label and local-flavor rice noodle products and other fast consumer foods under the brand “Zha Zha Hui”, decreased by 52.2% from RMB213.7 million for the year ended December 31, 2023 to RMB102.2 million for the year ended December 31, 2024. The decrease was mainly due to (i) our Group’s strategical focus on our core business of marketing and operating game products; and (ii) the intense market competition in the consumer product sector.
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Cost of Sales
In 2024, the Group’s cost of sales was RMB1,555.8 million, representing a decrease of 19.9% from RMB1,941.3 million in 2023, mainly due to a decrease in gross billings generated by game products under the joint-run model, leading to a reduction in commissions to third-party distribution channels.
Gross Profit and Gross Profit Margin
In 2024, the Group’s total gross profit was RMB4,024.3 million, representing a decrease of 12.0% from RMB4,573.3 million in 2023, primarily due to greater decrease in revenue than decrease in cost of sales.
The Group’s gross profit margin remained relatively stable at 70.2% and 72.1% in 2023 and 2024, respectively.
Other Income and Gains
In 2024, the Group’s other income and gains were RMB162.9 million, representing a decrease of 65.2% from RMB468.1 million in 2023, primarily due to a decrease in investment income from financial assets at fair value through profit or loss (“FVTPL”) in relation to disposal of shares of other listed company held by the Group.
Selling and Distribution Expenses
In 2024, the Group’s selling and distribution expenses were RMB3,516.7 million, representing a decrease of 9.4% from RMB3,880.2 million in 2023. This was mainly because although we enhanced promotion for our new game products in the first half of 2024, we did not launch new blockbuster games requiring significant marketing and promotional efforts in the second half of 2024.
Administrative Expenses
In 2024, the Group’s administrative expenses were RMB192.1 million, representing a decrease of 27.6% from RMB265.3 million in 2023. This was mainly because (i) no listing expenses were recorded in 2024, and (ii) the share-based compensation relevant to administrative personnel recorded in 2024 decreased.
R&D Costs
In 2024, the Group’s R&D costs were RMB127.7 million, representing a decrease of 25.4% from RMB171.2 million in 2023, mainly due to a decrease in employee benefits relevant to R&D personnel, including share-based compensation recorded in 2024.
Other Expenses
In 2024, the Group’s other expenses were RMB107.4 million, representing a decrease of 48.4% from RMB208.3 million in 2023. The change was primarily due to (i) an increase in impairment losses on assets relating to prepayments of licensing fees to game developers, which were incurred as a result of the delay in the launch schedules of certain licensed games; (ii) a decrease in fair value gains on financial assets at FVTPL in relation to shares of other listed company held by the Group; (iii) an increase in impairment losses on fixed assets; and (iv) impairment losses on goodwill relating to one of our wholly-owned subsidiaries.
Finance Costs
In 2024, the Group’s finance costs were RMB42.5 million, representing a decrease of 55.0% from RMB94.3 million in 2023. The decrease was mainly due to a decrease in the finance cost of bills payable, which was in line with a decrease in the Group’s bills payable.
Share of Profits of Joint Ventures
In 2024, the Group recorded share of profits of RMB10.9 million, representing an increase of 70.3% from RMB6.4 million in 2023. This change was mainly due to an increase in share of profits recorded from our joint venture, Zhejiang Xuwan Technology Co., Ltd. (浙江旭玩科技有限公司).
Share of Profits and Losses of Associates
In 2024, the Group recorded share of profits of RMB21.9 million, as compared to share of losses of RMB13.3 million in 2023. The change was mainly due to an increase in share of profits recorded from our associate Shanghai Dehan Technology Co., Ltd. (上海德寒科技有限公司) in 2024.
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Income Tax Expense
In 2024, the Group recorded income tax expense of RMB54.4 million, representing a decrease of 61.2% from RMB140.1 million in 2023. The decrease was mainly due to a decrease in profit before tax, resulting in a decrease in the provision for income tax for the relevant period.
Profit for the Year
As a result of the foregoing, the Group’s net profit was RMB44.0 million in 2024, representing a decrease of 83.9% from RMB273.3 million in 2023.
Goodwill
As of December 31, 2024, the Group’s goodwill was nil (December 31, 2023: RMB27.9 million). The decrease in goodwill was mainly because the goodwill of the Group’s wholly-owned subsidiary Guangzhou Chichi Network Technology Co., Ltd. (廣州吃吃網絡科技有限公司) had been written down to nil due to (i) the unsatisfactory operation of the Group’s consumer product business during the Reporting Period; and (ii) the Group’s strategical focus on its core business of marketing and operating game products.
Trade Receivables
As of December 31, 2024, the Group’s net trade receivables were RMB237.2 million, representing a decrease of 23.7% from RMB310.7 million as of December 31, 2023, which was in line with the decrease in the Group’s revenue.
Trade Payables
The Group’s trade payables remained relatively stable at RMB466.1 million and RMB475.5 million as of December 31, 2023 and 2024, respectively.
Bills Payable
As of December 31, 2024, the Group’s bills payable were RMB1,530.1 million, representing a decrease of 45.5% from RMB2,806.6 million as of December 31, 2023, mainly due to a reduction in payments to suppliers settled using bank acceptance bills during the Reporting Period.
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Liquidity and Capital Resources
As of December 31, 2024, the Group had cash and cash equivalents of RMB515.0 million (December 31, 2023: RMB486.9 million), representing cash and bank balance, net of restricted cash. Cash and cash equivalents were held in RMB, HK dollars, US dollars, Japanese yen and Euro. Going forward, the Group believes that its liquidity requirements will be satisfied by using a combination of cash generated from operating activities, funds raised from the capital markets from time to time and the net proceeds received from the Global Offering. The Group currently does not have any other plans for material additional external financing.
Bank Borrowings
As of December 31, 2024, the Group had interest-bearing bank and other borrowings of RMB199.6 million (December 31, 2023: RMB213.7 million). The Group’s interest-bearing bank and other borrowings were discounted bills and bank loans provided by commercial banks to the Group, both of which were fully secured by pledges during the ordinary course of business. The interest-bearing bank and other borrowings were denominated in RMB and bore interests at rates ranging from 1.0% to 2.8% per annum.
Gearing Ratio
The Group monitored its capital sufficiency using gearing ratio. As of December 31, 2024, the Group’s gearing ratio (debt, including interest-bearing bank borrowings and lease liabilities, as a percentage of total equity as of the end of the relevant reporting period) was 0.10 (December 31, 2023: 0.18).
Current Ratio
As of December 31, 2024, the Group’s current ratio (total current assets divided by total current liabilities as of the end of the relevant reporting period) was 1.28 (December 31, 2023: 0.84).
Significant Investments, Material Acquisitions and Disposals
As of December 31, 2024, the Group held no significant investments (including any investments in target companies with a value equal to or exceeding 5% of the Group’s total assets).
For the year ended December 31, 2024, the Group did not have any material acquisition or disposal of subsidiaries, associates and joint ventures.
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Future Plans for Material Investments and Capital Assets
As of December 31, 2024, the Group had no specific plan for material investments and acquisition or disposal of capital assets.
Capital Expenditure
For the year ended December 31, 2024, total capital expenditure amounted to approximately RMB50.7 million (2023: RMB23.0 million), which was used for the purchase of properties and equipments and other intangible assets.
Contingent Liabilities
As of December 31, 2024, the Group did not have any material contingent liabilities, guarantees of any litigations or claims of material importance, pending or threatened against any member of the Company. In March 2024, the Group settled previous civil litigation disclosed in its annual report for the year of 2023 with ChuanQi IP Co., Ltd., as the plaintiff, with respect to collaboration and other ancillary documents on and the website established for the PC version of The Legend of Mir II (熱血傳奇). ChuanQi IP Co., Ltd. withdrew the lawsuit from the High People's Court of Fujian Province in March 2024.
Foreign Exchange Risk and Hedging
The Group’s financial statements were expressed in RMB, but the Group undertook certain transactions in foreign currencies, which exposed the Group to foreign currency risk. The Group currently does not hold any financial instruments for hedging purposes. The Group manages its currency risks by closely monitoring the movement of the foreign currency rates and considers hedging significant foreign currency exposure should the need arise.
Employee, Remuneration and Option Scheme
As of December 31, 2024, the Group had 912 employees (December 31, 2023: 1,305), all of whom were based in China. The total remuneration cost incurred by the Group in 2024 was RMB366.5 million, representing a decrease of 26.9% compared to RMB501.7 million in 2023.
The Group compensates its employees with salaries, allowances and benefits in kind, equity-settled share payment expenses and pension scheme contributions. The Group determines employees’ compensation packages on the basis of work performance and the market standard of remuneration. The Group also makes sufficient provisions for the social insurance and housing provident fund contributions as required by the PRC laws and regulations.
The Group has also adopted a pre-IPO share option plan to provide incentives for eligible participants who contribute to the success of the Group’s operations, including among others, employees of the Group. Please refer to the section headed “Statutory and General Information — D. Pre-IPO Share Option Plans” in Appendix IV to the Prospectus for further details.
For the year ended December 31, 2024, the Group did not experience any material labor disputes or strikes that may have a material and adverse effect on its business, financial condition or results of operations, or any difficulty in recruiting employees.
Charge on Assets
As of December 31, 2024, the Group had pledged (i) time deposits of RMB2,176.3 million (December 31, 2023: RMB4,183.4 million) and (ii) fixed assets and investment properties with a total carrying amount of RMB56.6 million (December 31, 2023: nil), which had been acting as a security for the discounted bills, bills payable and bank loans made available to the Group.
OTHER INFORMATION
Compliance with the Model Code
The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) in the Appendix C3 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) as its code of conduct regarding directors’ dealing in the Company’s securities. Specific enquiries have been made to all the Directors and the Directors have confirmed that they have complied with the Model Code for the year ended December 31, 2024. The Company’s relevant employees, who are likely to be in possession of inside information of the Company, are also subject to the Model Code for securities transactions. No incident of non-compliance of the Model Code by the Company’s relevant employees was noted by the Company for the year ended December 31, 2024.
The Company has also established a policy on inside information to comply with its obligations under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and the Listing Rules. In case when the Company becomes aware of any restricted period for dealings in the Company’s securities, the Company will notify its Directors and relevant employees in advance.
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Compliance with the Corporate Governance Code
The Company is committed to maintaining high standard of corporate governance to safeguard the interest of the shareholders of the Company (the "Shareholders") and to enhance corporate value and accountability. The Company's corporate governance practices are based on the principles and code provisions set forth in the Corporate Governance Code in the Appendix C1 of the Listing Rules (the "Corporate Governance Code").
For the year ended December 31, 2024, the Company has complied with the code provisions set out in the Corporate Governance Code except for code provisions as explained below.
Pursuant to code provision C.2.1 of the Corporate Governance Code, the roles of chairman and chief executive should be separate and should not be performed by the same individual. The division of responsibilities between the chairman and chief executive should be clearly established and set out in writing. The roles of chairman of the Board and chief executive officer of the Company (the "CEO") were performed by Mr. WU Xubo ("Mr. WU") from January 1, 2024 to August 30, 2024. In view of Mr. WU's substantial contribution to the Group since its establishment and his extensive experience, the Company considered that having Mr. WU acting as both the chairman of the Board and CEO during the aforementioned period provided strong and consistent leadership to the Group and facilitate the efficient execution of the Group's business strategies.
The Board believes that such structure did not impair the balance of power and authority between the Board and the management of the Group during the Reporting Period, given that: (i) there were sufficient checks and balances in the Board, as a decision made by the Board required approval by at least a majority of the Directors, and the Board comprised three independent non-executive Directors, which was in compliance with the requirement under the Listing Rules; (ii) Mr. WU and the other Directors were aware of and undertook to fulfill their fiduciary duties as Directors, which require, among other things, that he acted for the benefit and in the best interests of the Group and made decisions for the Group accordingly; and (iii) the balance of power and authority was ensured by the operations of the Board which comprised experienced and high calibre individuals who met regularly to discuss issues affecting the operations of the Group. Moreover, the overall strategic and other key business, financial, and operational policies of the Group were made collectively after thorough discussion at both Board and senior management levels.
For the purpose of achieving better corporate governance of the Company pursuant to code provision C.2.1 of the Corporate Governance Code, the Board approved a separation of roles of the CEO and the chairman of the Board, with Ms. LIANG Wenhong ("Ms. LIANG") being appointed as the CEO to succeed Mr. WU with effect from August 30, 2024 while Mr. WU remained as an executive Director, the chairman of the Board, the chairman of the nomination committee and a member of the remuneration committee of the Company. Upon such change, the Company has complied with all code provisions as set out in Appendix
- 16 -
C1 to the Listing Rules since the roles of the CEO and the chairman of the Board are not performed by the same individual, reflecting the Company’s commitment to achieving better corporate governance practices.
Purchase, Sale or Redemption of Listed Securities
Neither the Company nor any of its subsidiaries purchased, redeemed or sold any of the Company’s listed securities (including sale of treasury shares (as defined in the Listing Rules)) for the year ended December 31, 2024. As of December 31, 2024, the Company did not hold any treasury shares (as defined in the Listing Rules).
Final Dividend
The Board did not recommend the distribution of a final dividend for the year ended December 31, 2024 (2023: nil).
Events after the End of the Reporting Period
The Directors are not aware of any significant event requiring disclosure that has taken place subsequent to December 31, 2024 and up to the date of this announcement.
Audit Committee
The Company has established the audit committee (the “Audit Committee”) under the Board with written terms of reference in compliance with Rule 3.21 of the Listing Rules as well as paragraph D.3 of part 2 of the Corporate Governance Code. The Audit Committee consists of three independent non-executive Directors, namely, Ms. ZHENG Yi, Ms. SONG Siyun and Mr. QIN Yongde. The chairlady of the Audit Committee is Ms. ZHENG Yi, who has the appropriate professional qualifications as required under Rules 3.10(2) and 3.21 of the Listing Rules.
The Audit Committee has considered and reviewed the accounting principles and practices adopted by the Company and the Group and discussed matters in relation to internal control, risk management and financial reporting with the management, including the review of the consolidated results of the Group for the year ended December 31, 2024. The Audit Committee considers that the annual financial results for the year ended December 31, 2024 are in compliance with the relevant accounting standards, rules and regulations and appropriate disclosures have been duly made.
- 17 -
- 18 -
Scope of Work of the Auditor
The figures in respect of this announcement for the Group’s consolidated statement of profit or loss and other comprehensive income and consolidated statement of financial position, and the related notes thereon for the year ended December 31, 2024 have been compared by the Company’s external auditor, Ernst & Young (“EY”), to the amounts set out in the Group’s consolidated financial statements for the year ended December 31, 2024 and the amounts were found to be in agreement. The work performed by EY in this respect did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the Hong Kong Institute of Certified Public Accountants and consequently, no assurance has been expressed by EY in this announcement.
Annual General Meeting
The forthcoming annual general meeting of the Company (the “AGM”) will be held on June 19, 2025. A circular (including notice convening the AGM) and all other relevant documents will be published and dispatched (if so requested by Shareholder(s)) to the Shareholders in the manner required by the Listing Rules in due course.
Closure of Register of Members
The registers of members of the Company will be closed from June 16 to June 19, 2025, both days inclusive, in order to determine the eligibility of the Shareholders to attend and vote at AGM to be held on June 19, 2025. During this period, no transfer of shares will be registered. In order to be eligible to attend and vote at the AGM, all properly completed transfers documents accompanied by the relevant share certificates must be lodged with the branch share registrar of the Company in Hong Kong, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong, for registration no later than 4:30 p.m. on June 13, 2025.
Publication of 2024 Annual Results and Annual Report
This announcement is published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.zx.com). The annual report for the year ended December 31, 2024 containing all applicable information required by the Listing Rules will be dispatched (if so requested by Shareholder(s)) to the Shareholders and published on the above websites in April 2025.
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CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Year ended 31 December 2024
| | Notes | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- | --- |
| REVENUE | 5 | 5,580,112 | 6,514,585 |
| Cost of sales | | (1,555,769) | (1,941,267) |
| Gross profit | | 4,024,343 | 4,573,318 |
| Other income and gains | 5 | 162,926 | 468,122 |
| Selling and distribution expenses | | (3,516,685) | (3,880,221) |
| Administrative expenses | | (192,111) | (265,343) |
| Research and development costs | | (127,733) | (171,245) |
| Impairment losses on financial assets, net | | (135,303) | (1,780) |
| Other expenses | | (107,352) | (208,271) |
| Finance costs | | (42,468) | (94,335) |
| Share of profits and losses of: | | | |
| Joint ventures | | 10,911 | 6,430 |
| Associates | | 21,887 | (13,284) |
| PROFIT BEFORE TAX | 6 | 98,415 | 413,391 |
| Income tax expense | 7 | (54,396) | (140,102) |
| PROFIT FOR THE YEAR | | 44,019 | 273,289 |
| OTHER COMPREHENSIVE LOSS | | | |
| Other comprehensive loss that will not be
reclassified to profit or loss in subsequent years: | | | |
| Share of other comprehensive loss of associate | | (1,254) | (60,950) |
| OTHER COMPREHENSIVE LOSS
FOR THE YEAR, NET OF TAX | | (1,254) | (60,950) |
| TOTAL COMPREHENSIVE INCOME
FOR THE YEAR | | 42,765 | 212,339 |
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| Notes | 2024
RMB’000 | 2023
RMB’000 |
| --- | --- | --- |
| (Loss)/Profit attributable to: | | |
| Owners of the parent | (3,624) | 235,487 |
| Non-controlling interests | 47,643 | 37,802 |
| Total comprehensive (loss)/income attributable to: | | |
| Owners of the parent | (4,878) | 174,537 |
| Non-controlling interests | 47,643 | 37,802 |
| (LOSS)/EARNINGS PER SHARE
ATTRIBUTABLE TO ORDINARY EQUITY
HOLDERS OF THE PARENT | | |
| Basic (RMB) | 9
(—) | 0.47 |
| Diluted (RMB) | 9
(—) | 0.46 |
- Less than 0.01
31 December 2024
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
| 31 December | 31 December | |
|---|---|---|
| 2024 | 2023 | |
| Notes | RMB'000 | RMB'000 |
| NON-CURRENT ASSETS | ||
| Property and equipment | 80,016 | 98,567 |
| Investment properties | 74,055 | 81,541 |
| Right-of-use assets | 221,205 | 347,846 |
| Goodwill | — | 27,917 |
| Other intangible assets | 11,119 | 15,253 |
| Investments in joint ventures | 274,247 | 273,418 |
| Investments in associates | 175,293 | 178,239 |
| Financial assets at fair value through profit or loss | 11 | 15,000 |
| Deferred tax assets | 117,523 | 109,312 |
| Prepayments, other receivables and other assets | 8,172 | 11,633 |
| Pledged deposits | 560,770 | 2,045,506 |
| Time deposits | 77,022 | — |
| Total non-current assets | 1,599,422 | 3,204,232 |
| CURRENT ASSETS | ||
| Inventories | 2,858 | 2,905 |
| Trade receivables | 10 | 310,696 |
| Prepayments, other receivables and other assets | 776,501 | 676,773 |
| Amounts due from related parties | 38,243 | 23,981 |
| Financial assets at fair value through profit or loss | 11 | 412,800 |
| Pledged deposits | 1,615,554 | 2,137,907 |
| Restricted cash | 33,983 | 4,931 |
| Time deposits | 314,422 | 7,099 |
| Cash and cash equivalents | 514,963 | 486,886 |
| Total current assets | 3,964,252 | 4,063,978 |
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- 22 -
| 31 December | 31 December | |
|---|---|---|
| 2024 | 2023 | |
| RMB’000 | RMB’000 | |
| CURRENT LIABILITIES | ||
| Trade payables | 12 | 475,530 |
| Bills payable | 13 | 1,530,095 |
| Other payables and accruals | 419,766 | |
| Interest-bearing bank borrowings | 199,568 | |
| Lease liabilities | 4,736 | |
| Tax payable | 471,448 | |
| 416,277 | ||
| Total current liabilities | 3,101,143 | |
| 4,836,197 | ||
| NET CURRENT ASSETS/(LIABILITIES) | 863,109 | |
| (772,219) | ||
| TOTAL ASSETS LESS CURRENT LIABILITIES | 2,462,531 | |
| 2,432,013 | ||
| NON-CURRENT LIABILITIES | ||
| Lease liabilities | 39,466 | |
| Provision | — | |
| 153,178 | ||
| 3,050 | ||
| Total non-current liabilities | 39,466 | |
| 156,228 | ||
| Net assets | 2,423,065 | |
| 2,275,785 | ||
| EQUITY | ||
| Equity attributable to owners of the parent | ||
| Share capital | 77 | |
| Treasury shares | (1) | |
| Reserves | 2,398,458 | |
| 2,286,450 | ||
| 2,398,534 | ||
| 24,531 | ||
| (10,739) | ||
| Non-controlling interests | ||
| 2,423,065 | ||
| 2,275,785 | ||
| Total equity | 2,423,065 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION
31 December 2024
- CORPORATE INFORMATION
The Company was incorporated in the Cayman Islands on 18 March 2021 as an exempted company with limited liability under the Companies Law, Chapter 22 of the Cayman Islands. The registered address of the office of the Company is 190 Elgin Avenue, George Town, Grand Cayman KY1-9008, Cayman Islands.
During the year, the Company and its subsidiaries (collectively, the “Group”) are principally engaged in providing product marketing and operation services to online games in the People’s Republic of China (hereafter, the “PRC”).
- BASIS OF PREPARATION
These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (“HKASs”) and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and the disclosure requirements the Hong Kong Companies Ordinance. They have been prepared under the historical cost convention, except for wealth management products and equity investments which have been measured at fair value. These financial statements are presented in Renminbi (“RMB”) and all values are rounded to the nearest thousand except when otherwise indicated.
- CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
The Group has adopted the following revised HKFRSs for the first time for the current year’s financial statements.
Amendments to HKFRS 16
Amendments to HKAS 1
Amendments to HKAS 7 and HKFRS 7
Lease Liability in a Sale and Leaseback
Classification of Liabilities as Current or Non-current
(the “2020 Amendments”)
Non-current Liabilities with Covenants
(the “2022 Amendments”)
Supplier Finance Arrangements
– 23 –
The nature and impact of the revised HKFRSs are described below:
(a) Amendments to HKFRS 16 specify the requirements that a seller-lessee uses in measuring the lease liability arising in a sale and leaseback transaction to ensure the seller-lessee does not recognise any amount of the gain or loss that relates to the right of use it retains. Since the Group has no sale and leaseback transactions with variable lease payments that do not depend on an index or a rate occurring from the date of initial application of HKFRS 16, the amendments did not have any impact on the financial position or performance of the Group.
(b) The 2020 Amendments clarify the requirements for classifying liabilities as current or non-current, including what is meant by a right to defer settlement and that a right to defer must exist at the end of the reporting period. Classification of a liability is unaffected by the likelihood that the entity will exercise its right to defer settlement. The amendments also clarify that a liability can be settled in its own equity instruments, and that only if a conversion option in a convertible liability is itself accounted for as an equity instrument would the terms of a liability not impact its classification. The 2022 Amendments further clarify that, among covenants of a liability arising from a loan arrangement, only those with which an entity must comply on or before the reporting date affect the classification of that liability as current or non-current. Additional disclosures are required for non-current liabilities that are subject to the entity complying with future covenants within 12 months after the reporting period.
The Group has reassessed the terms and conditions of its liabilities as at 1 January 2023 and 2024 and concluded that the classification of its liabilities as current or non-current remained unchanged upon initial application of the amendments. Accordingly, the amendments did not have any impact on the financial position or performance of the Group.
(c) Amendments to HKAS 7 and HKFRS 7 clarify the characteristics of supplier finance arrangements and require additional disclosure of such arrangements. The disclosure requirements in the amendments are intended to assist users of financial statements in understanding the effects of supplier finance arrangements on an entity's liabilities, cash flows and exposure to liquidity risk. As the Group does not have supplier finance arrangements, the amendments did not have any impact on the Group's financial statements.
- 24 -
- 25 -
4. OPERATING SEGMENT INFORMATION
HKFRS 8 Operating Segments requires operating segments to be identified on the basis of internal reporting about components of the Group that are regularly reviewed by the chief operating decision-maker in order to allocate resources to segments and to assess their performance. The information reported to the directors of the Company, who are the chief operating decision-makers, for the purpose of resource allocation and assessment of performance, does not contain discrete operating segment financial information and the directors reviewed the financial results of the Group as a whole. Therefore, no further information about the operating segment is presented.
Geographical information
(a) Revenue from external customers
| | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- |
| Mainland China | 4,956,685 | 6,084,255 |
| Hong Kong | 615,487 | 430,330 |
| Others | 7,940 | — |
| Total revenue | 5,580,112 | 6,514,585 |
(b) Non-current assets
As at 31 December 2023 and 2024, substantially all of the non-current assets of the Group were located in Mainland China.
Information about major customers
Revenue from customers which amounted to more than 10% of the Group’s revenue during the years ended 31 December 2024 and 2023 is set out below:
| | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- |
| Customer A | 1,517,737 | 351,885 |
| Customer B | 1,241,242 | 1,887,087 |
| Customer C | 351,917 | 751,758 |
| Customer D | 300,121 | 986,184 |
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5. REVENUE
Revenue from contracts with customers
(a) Disaggregated revenue information
| | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- |
| Type of goods or services | | |
| Game marketing and operation — Self-run model | 4,118,801 | 4,264,462 |
| Game marketing and operation — Joint-run model | 1,329,845 | 1,944,848 |
| Other marketing services | 29,265 | 91,618 |
| Sales of products | 102,201 | 213,657 |
| Total | 5,580,112 | 6,514,585 |
| Timing of revenue recognition | | |
| Services transferred over time | 423,896 | 854,385 |
| Services transferred at a point in time | 5,054,015 | 5,446,543 |
| Goods transferred at a point in time | 102,201 | 213,657 |
| Total | 5,580,112 | 6,514,585 |
| Geographical markets | | |
| Mainland China | 4,956,685 | 6,084,255 |
| Hong Kong | 615,487 | 430,330 |
| Others | 7,940 | — |
| Total | 5,580,112 | 6,514,585 |
(b) Performance obligations
Information about the Group’s performance obligations is summarised below:
Authorised game marketing and operation
The performance obligation is satisfied upon the payment for the purchase of in-game virtual items by game players as the Group has no further obligation to game developers or publishers in order to earn the service fees upon the completion of the corresponding payment. Under the self-run model, the payment is due immediately when the game players make the payment for in-game purchases. Under joint-run model, the payment is due when the statement is received and confirmed with the collaborating distribution platforms. The Group settles the payment with game developers or publishers within 180 days from the date of billing.
Self-owned game marketing and operation
The performance obligation is satisfied over the estimated Player Relation Period. Under the self-run model, the payment is due immediately when the game players make the payment for in-game purchases. Under the joint-run model, the payment is due when the statement is received and confirmed with the collaborating distribution platforms.
Other marketing services
The performance obligation is satisfied upon the subscription of pay-to-read services by online literature readers. The payment is due immediately when the readers make the subscription. The Group settles the payment with the literature content providers on a monthly basis.
Sales of products
The performance obligation is satisfied at the point in time when the products are delivered and accepted by customers. The payment is due immediately for direct sales to the end customers on online retail platforms. The payment from the distributors is generally due within 15 days from delivery.
- 27 -
The amounts of transaction prices allocated to the remaining performance obligations (unsatisfied or partially unsatisfied) as at 31 December 2024 and 2023 are as follows:
| | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- |
| Amounts expected to be recognised as revenue: | | |
| Within one year | 48,973 | 85,395 |
The amounts of transaction prices allocated to the remaining performance obligations which are expected to be recognised as revenue within one year relate to self-owned game marketing and operation. The amounts disclosed above do not include variable consideration which is constrained.
An analysis of other income and gains is as follows:
| | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- |
| Other income | | |
| Bank interest income | 115,841 | 188,567 |
| Investment income from financial assets
at fair value through profit or loss | 5,165 | 248,705 |
| VAT additional deduction and refunds | 1,584 | 21,971 |
| Government grants — related to
income* | 6,947 | 3,100 |
| Investment property rental income | 2,106 | 794 |
| Others | 574 | 936 |
| | 132,217 | 464,073 |
| Gains | | |
| Foreign exchange gains | 2,358 | — |
| Gain on lease modification | 28,351 | 4,049 |
| | 30,709 | 4,049 |
| | 162,926 | 468,122 |
- Various government grants have been received from local government authorities in Mainland China. There are no unfulfilled conditions and other contingencies relating to these grants.
- 29 -
6. PROFIT BEFORE TAX
The Group’s profit before tax is arrived at after charging/(crediting):
| | 2024
RMB’000 | 2023
RMB’000 |
| --- | --- | --- |
| Costs of services charged by the collaborating distribution platforms under the joint-run model | 1,039,657 | 1,417,200 |
| Cost of products sold | 68,819 | 142,952 |
| Promotion expenses | 3,335,096 | 3,685,013 |
| Employee benefit expense:
(including directors’ and chief executive’s remuneration) | | |
| Wages and salaries | 236,880 | 269,610 |
| Equity-settled-based payment expenses | 116,885 | 219,368 |
| Pension scheme contributions (defined contribution scheme) | 12,779 | 12,720 |
| | 366,544 | 501,698 |
| Listing expenses | — | 49,337 |
| Auditor’s remuneration | 6,500 | 6,000 |
| Depreciation of property and equipment | 15,556 | 16,880 |
| Depreciation of right-of-use assets | 43,047 | 32,932 |
| Depreciation of investment properties | 2,331 | 841 |
| Amortisation of other intangible assets | 5,154 | 35,372 |
| Lease payments not included in the measurement of lease liabilities | — | 235 |
| Gain on lease modification | (28,351) | (4,049) |
| Foreign exchange differences, net | (2,358) | 3,639 |
| Impairment of an investment in an associate | 972 | — |
| Impairment of trade receivables, net | (827) | 923 |
| Impairment of financial assets included in other receivables | 136,105 | 856 |
| Impairment of property and equipment | 32,798 | — |
| Impairment of investment property | 5,155 | — |
| Impairment of goodwill* | 27,917 | 14,582 |
| Fair value loss on financial assets at fair value through profit or loss | 13,263 | 173,120 |
| Gain on disposal of financial assets at fair value through profit or loss | (5,165) | (248,705) |
| Loss on disposal of items of property and equipment, net | 19,615 | 2,944 |
- There are no forfeited contributions that may be used by the Group as the employer to reduce the existing level of contributions.
** The amortisation of other intangible assets is included in costs of sales and administrative expenses in the consolidated statement of profit or loss and other comprehensive income.
*** The impairment of investment in an associate property and equipment, investment property and goodwill are included in other expenses in the consolidated statement of profit or loss and other comprehensive income.
- INCOME TAX
The Group is subject to income tax on an entity basis on profit arising in or derived from the jurisdictions in which members of the Group are domiciled and operate.
Pursuant to the rules and regulations of the Cayman Islands and the British Virgin Islands, the Company and its subsidiaries are not subject to any income tax in the Cayman Islands and the British Virgin Islands.
Hong Kong profits tax has been provided at the rate of 16.5% (2023: 16.5%) on the estimated assessable profits arising in Hong Kong during the year. Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the jurisdictions in which the Group operates.
Taxes on profits assessable in Chinese mainland have been calculated at the prevailing tax rates, based on existing legislation, interpretations and practices in respect thereof. Pursuant to the PRC Corporate Income Tax Law (the "PRC Tax Law") effective on 1 January 2008, the PRC corporate income tax rate of the Group's subsidiaries operating in Chinese mainland during the reporting period was 25% of their taxable profits.
Jiangxi Tanwan Information Technology Co., Ltd. ("Jiangxi Tanwan") was accredited as a high and new technology enterprise ("HNTE") in 2021, and the certificate is valid for three years. The HNTE certificate needs to be renewed every three years so as to enable Jiangxi Tanwan to enjoy the reduced tax rate of 15%. Although Jiangxi Tanwan has re-applied for and obtained the certificate of HNTE on 3 November 2021, it failed to enjoy the preferential tax rate of 15% in 2023 and 2024 because of its business indicators not meeting the stipulation of HNTE, but applied the statutory rate of 25%.
Guangzhou Zhongxu Future Technology Co., Ltd. ("ZX WFOE"), an indirect wholly-owned subsidiary of the Company, were accredited as "software enterprises" in 2021 under relevant PRC laws and regulations. Accordingly, ZX WFOE are exempt from Corporate Income Tax ("CIT") for 2021 and 2022, followed by a 50% reduction in the applicable tax rates from 2023 to 2025.
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The following table sets forth a breakdown of our income tax expense for the period indicated:
| | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- |
| Current — Mainland China | 62,607 | 201,557 |
| Deferred | (8,211) | (61,455) |
| Total | 54,396 | 140,102 |
8. DIVIDENDS
On 15 August 2023, the Company declared a special dividend in the amount of RMB50,000,000, the payment of which was fully settled in the same month by cash using internal resources.
The Board does not recommend the payment of a final dividend to the ordinary equity holders of the Company for the year ended 31 December 2024 (2023:Nil).
9. (LOSS)/EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT
The calculation of the basic earnings per share amounts is based on the profit for the period attributable to ordinary equity holders of the parent, and the weighted average number of ordinary shares of 521,434,940 (2023: 502,938,959) in issue during the period as adjusted to reflect the right issue during the year.
The calculation of the diluted earnings per share amounts is based on the profit for the period attributable to ordinary equity holders of the parent. The weighted average number of ordinary shares used in the calculation is the number of ordinary shares in issue during the period, as used in the basic earnings per share calculation, and the weighted average number of ordinary shares assumed to have been issued at no consideration on the deemed conversion of all dilutive potential ordinary shares into ordinary shares.
No adjustment has been made to the basic (loss)/earnings per share amounts presented for the year ended 31 December 2024 in respect of a dilution as the impact of the share options outstanding had an anti-dilutive effect on the basic (loss)/earnings per share amounts presented.
The calculations of basic and diluted earnings per share are based on:
| 2024 | 2023 | |
|---|---|---|
| Earnings | ||
| (Loss)/profit attributable to ordinary equity holders of the parent, used in the basic earnings per share calculation (RMB'000) | (3,624) | 235,487 |
| Shares | ||
| Weighted average number of ordinary shares in issue during the year used in the basic earnings per share calculation | 521,434,940 | 502,938,859 |
| Effect of dilution — weighted average number of ordinary shares | — | 9,725,162 |
| Weighted average number of ordinary shares for the purpose of calculating diluted earnings per share | 521,434,940 | 512,664,121 |
10. TRADE RECEIVABLES
An ageing analysis of the trade receivables as at the end of the reporting period, based on the transaction dates and net of loss allowance, is as follows:
| | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- |
| Within 1 year | 233,328 | 307,204 |
| 1 to 2 years | 3,526 | 3,218 |
| Over 2 years | 340 | 274 |
| Total | 237,194 | 310,696 |
- FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
| | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- |
| Non-current portion | | |
| Unlisted equity investments, at fair value | — | 15,000 |
| Current portion | | |
| Listed equity investments, at fair value | 430,534 | 412,800 |
| Total | 430,534 | 427,800 |
The above unlisted equity investments were classified as financial assets at fair value through profit or loss as the Group has not elected to recognise the fair value gain or loss through other comprehensive income.
The above listed equity investments were classified as financial assets at fair value through profit or loss as the Group has not elected to recognise the fair value gain or loss through other comprehensive income.
As at 31 December 2024, the Group’s listed equity investments were unpledged. As at 31 December 2023, the Group’s listed equity investments amounting to RMB412,800,000 were pledged for bills payable of the Group.
- TRADE PAYABLES
An ageing analysis of the trade payables as at the end of the reporting period, based on the transaction dates, is as follows:
| | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- |
| Within 1 year | 417,121 | 454,835 |
| 1 to 2 years | 47,759 | 9,624 |
| 2 to 3 years | 9,071 | 324 |
| Over 3 years | 1,579 | 1,286 |
| Total | 475,530 | 466,069 |
The trade payables are non-interest-bearing and are normally settled on 1-year-terms.
Included in the trade payable amounts of RMB457,931,000 (2023: RMB450,906,000) were payables to game developers as at 31 December 2024.
- 33 -
- 34 -
13. BILLS PAYABLE
| | 2024
RMB'000 | 2023
RMB'000 |
| --- | --- | --- |
| Bills payable | 1,530,095 | 2,806,551 |
| Total | 1,530,095 | 2,806,551 |
The bills payable are due for payment within 1 year and the Group bears finance costs at rates of 1.00% to 2.51% p.a. for the extended maturity date of 6 months.
Included in bills payable amounts of RMB443,714,000 and RMB727,430,000 were payables to game developers as at 31 December 2024 and 31 December 2023.
Included in bills payable amounts of RMB1,086,381,000 and RMB2,079,121,000 were payables for marketing and promotion services as at 31 December 2024 and 31 December 2023.
The time deposits, buildings and investment properties in total of RMB2,032,736,000 were pledged for bills payable as at 31 December 2024. The time deposits and financial assets at fair value through profit or loss in total of RMB4,371,004,000 were pledged for bills payable as at 31 December 2023.
APPRECIATION
The Board would like to take this opportunity to express its gratitude to the management and staffs of the Group for their commitment and contribution during the Reporting Period. The Board would also like to express its appreciation to the Shareholders.
By order of the Board
ZX Inc.
Mr. WU Xubo
Chairman of the Board and Executive Director
Guangzhou, the PRC, March 31, 2025
As of the date of this announcement, the Board comprises Mr. WU Xubo and Ms. WU Xuan as executive Directors; and Ms. SONG Siyun, Mr. QIN Yongde and Ms. ZHENG Yi as independent non-executive Directors.