James Gordon Mitchell
Overseas registration of Mainland Individuals control
PO Box 309, Ugland House,Grand Cayman KY1-1104, Cayman Islands
Head Office and Principal Place of Business
Room 1503-04, Industrial and Commercial Bank of China Building, 3 Garden Road, Central, Hong Kong
Hong Kong motherboard
China Literature Group is a company mainly engaged in the operation of network literature platform. The company's platform makes it easy for online readers to browse the company's wide range of content libraries and allows more writers to create and publish original literary content online. In addition, the company changes the company's content into other forms of entertainment through copyright operation, management and licensing, thus extending the business life cycle of the work for writers.
According to the Frost & Sullivan report, we are a pioneer in the Chinese online literature market and operate a leading online literature platform in terms of writers, readers and the scale and quality of literary content provided. As of December 31, 2016, we have 5.3 million writers, 8.4 million literary works and a total of 175.3 million monthly active users in December 2016, covering our platform products and proprietary channels in partnership distribution platforms. Since the launch of the starting point Chinese website in 2002, we have played an important role in the formation and development of the business model of Chinese online literature, promoting the development of the whole online literature industry. Today, our online literature platform connects the main components of the online literature ecosystem, including writers, readers and content adaptation partners.
Our platform provides convenience for readers, easily browsing a large number of different content libraries, and allowing more writers to create and publish original literary content online. In order to ensure the continuous participation of readers and the enthusiasm of writers, we promote the formation of a platform exclusive community between readers and authors, and promote social interaction and direct participation. In addition, we can extend the commercial life of our works by adapting our content into other forms of entertainment media through copyright operation management and licensing. As our readers, writers, content and copyright businesses are connected to each other, their respective development forms a virtuous circle, adding impetus to the malleability and advantages of our entire platform.
We operate a multi-level content distribution network to provide our content directly to the largest online audience of Chinese original online literary works. In December 2016, the number of monthly active users of the proprietary channels in our platform products and partnership distribution platform reached 175.3 million, including 159.9 million mobile users and 15.4 million computer users. Among our platform products, the flagship product "QQ Book" is a unified mobile content collection and distribution platform, while other brand products on mobile phones and computers are more focused on independent genres and their respective user groups. Through our strategic partner Tencent, we have dedicated and direct distribution channels for its leading Internet products, including "Mobile QQ", "QQ Browser", "Tencent News" and "Wechat Reader". In view of Tencent's leading position in China's Internet industry and the huge user base of Tencent's network platform, through this cooperation with Tencent, we can broaden our user reach. Our readers are also highly active. In the first quarter of 2017, users of the flagship "QQ Book" app spent an average of 60 minutes a day on the app, ranking first among online reading apps in China, according to a Frost & Sullivan report. We also license the content to third-party partners such as Baidu, Sogou, JD.com Mall, Xiaomi watch more and China Mobile to distribute our content on their respective platforms.
The literary content library is the core of our business. Our proprietary literary library includes a large and diverse collection of original content. Through long-term contracts for the vast majority of original content (usually 20 years or more), we distribute that content exclusively and directly and realize it through online paid reading and adaptation into other media forms. Our content library currently includes 8.0 million original literary works, covering more than 200 genres, and another 377 thousand works (including works from third-party online platforms and electronic versions of offline paper works). In 2016, according to Baidu ranking, nine of China's top 10 most searched online literary works came from our content library. In addition to diversity and high quality, most of our content is serialized and constantly updated. In 2016, our platform writers updated and created 22 million new chapters, adding a total of 41.4 billion words. Our content library provides us with a steady stream of high-quality copyright and lays the foundation for copyright distribution. With the feedback data from the readers of the platform, we have the unique ability to handle copyright operations for writers and find the most suitable content for adaptation. According to the Frost & Sullivan report, among the entertainment products adapted from online literature released in China in 2016, 13 of the top 20 films, 15 of the 20 highest-rated TV series, 14 of the 20 highest-rated online dramas, 15 of the 20 highest-downloaded online games and 16 of the 20 highest-rated animations were developed based on the literary works of our platform.
We have come a long way since we acquired Cloudary at the end of 2014. Our total revenue increased by 59.1% from RMB 1.6 billion in 2015 to RMB 2.6 billion in 2016, while our gross profit increased by 81.7% from RMB 580.5 million to RMB 1.1 billion over the same period. Our net profit in 2016 was 30.4 million yuan, compared with a net loss of 354.2 million yuan in 2015. Excluding share remuneration, net income from investment companies, amortization of intangible assets resulting from acquisitions, net income / (loss) from convertible bonds, provision for impairment of intangible assets and tax impact, our net adjusted profit in 2016 was 81.1 million yuan, compared with an adjusted net loss of 94.2 million yuan in 2015. Please refer to "Financial Information-Consolidated income statement" and "Financial Information-non-IFRS measurements: adjusted operating profit / (loss), adjusted EBITDA and adjusted profit / (loss) net" in this document.