Financial

Annual Report

Published by IGG

Summary

The 2022 annual report for IGG Inc. details a challenging fiscal year characterized by a significant financial downturn, marking a transition from profitability to a net loss of HK$503.6 million. This performance shift, contrasting sharply with the HK$369.6 million profit recorded in 2021, was driven by a 24% year-on-year revenue decline to HK$4.59 billion. The company attributes these results to a global economic contraction, the maturity of its flagship title *Lords Mobile*, and substantial impairment losses on strategic investments in associates and joint ventures. In response to these headwinds, the organization implemented rigorous cost-optimization measures, including a 19% reduction in total headcount and a 23% decrease in research, development, and administrative expenses. Despite these cuts, the company maintained a strategic focus on its "Globalisation and Sustainability" mandate, investing heavily in the marketing and development of new titles such as *Viking Rise* and *Doomsday: Last Survivors*. The company also continues to utilize structured contracts to navigate regulatory restrictions regarding foreign ownership in the Chinese telecommunications and internet sectors, ensuring operational continuity while maintaining compliance with local laws. The report emphasizes a commitment to long-term stability through robust corporate governance, environmental, social, and governance (ESG) frameworks, and a disciplined approach to financial risk management. While the company faces pressure on profitability due to ongoing marketing investments, it remains focused on integrating artificial intelligence into its development pipeline and fostering player engagement. As of year-end 2022, the company maintained a stable liquidity position with HK$1.58 billion in cash and cash equivalents, supported by a capital commitment of HK$402 million primarily directed toward the construction of a new office facility in Fuzhou. Auditors highlighted revenue recognition for "Premium Gaming Resources" as a key area of focus, requiring ongoing management judgment and rigorous internal IT controls.

From the report

CONTENTS CONTENTS Corporate Information 2 Corporate Information 2 Chairman's Statement 4 Chairman’s Statement 4 Management Discussion and Analysis 6 Management Discussion and Analysis 6 Biographical Details of Directors and Senior Management 19 Biographical Details of Directors and Senior Management 19 Corporate Governance Report 23 Corporate Governance Report 23 Corporate Social Responsibility Report 38 Corporate Social Responsibility Report 38 Directors' Report 71 Directors’ Report 71 Independent Auditor’s Report 114 Consolidated Statement of Profit or Loss 120 Consolidated Statement of Comprehensive (Loss)/Income 121 Consolidated Statement of Financial Position 122 Consolidated Statement of Changes in Equity 124 Consolidated Cash Flow Statement 126 Consolidated Cash Flow Statement 126 Notes to the Financial Statements 127 Notes to the Financial Statements 127 Financial Summary 214 Financial Summary 214 Definition 216 Definition 216

CORPORATE INFORMATION CORPORATE INFORMATION BOARD OF DIRECTORS JOINT COMPANY SECRETARIES Executive Directors Ms. Jessie Shen BOARD OF DIRECTORS JOINT COMPANY SECRETARIES Executive Directors Ms. Jessie Shen Mr. Zongjian Cai (Chairman Ms. Yin Ping Yvonne Kwong and chief executive officer) (FCG, HKFCG) Mr. Yuan Xu AUTHORISED REPRESENTATIVES Mr. Hong Zhang AUTHORISED REPRESENTATIVES Ms. Jessie Shen Mr. Zongjian Cai Mr. Feng Chen Ms. Jessie Shen Non-executive Director Ms. Yin Ping Yvonne Kwong Non-executive Director REGISTERED OFFICE Mr. Yuan Chi REGISTERED OFFICE Independent Non-executive Directors P.O. Box 31119, Grand Pavilion, Hibiscus Way Independent Non-executive Directors 802 West Bay Road, Grand Cayman Dr. Horn Kee Leong KY1-1205 Cayman Islands Mr. Dajian Yu Ms. Zhao Lu HEADQUARTERS AND PRINCIPAL PLACE OF BUSINESS IN SINGAPORE BOARD COMMITTEES 80 Pasir Panjang Road Audit #18-84 Mapletree Business City Dr. Committee (Chairman) Horn Kee Leong Singapore 117372 Mr. Dajian Yu Ms. Zhao Lu PRINCIPAL PLACE OF BUSINESS IN HONG KONG Committee 40th Floor, Dah Sing Financial Centre Dr. Horn Kee Leong No. 248 Queen’s Road East Mr. Zongjian Cai (Chairman) Wanchai Mr. Dajian Yu Hong Kong Ms. Zhao Lu Ms. Zhao Lu AUDITOR Nomination in accordance Committee KPMG Remuneration (Chairman) Ms. Zhao Lu Mr. Zongjian Cai (Public Accountants registered Certified Entity Financial Public Auditor Reporting Mr. Dajian Yu with Interest and the Accounting Council Mr. Dajian Yu Ordinance) Ordinance)

CORPORATE INFORMATION CORPORATE INFORMATION LEGAL ADVISER AS TO HONG KONG LAWS Jingtian & Gongcheng LLP LEGAL ADVISER AS TO HONG KONG LAWS Jingtian & Gongcheng LLP LEGAL ADVISER AS TO PRC LAWS LEGAL ADVISER AS TO PRC LAWS Jingtian & Gongcheng PRINCIPAL SHARE REGISTRAR AND PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE Suntera (Cayman) Limited Suite 3204, Unit 2A, Block 3, Building D P.O. Box 1586, Gardenia Court Camana Bay, Grand Cayman, KY1-1100 Cayman Islands COMPANY WEBSITE www.igg.com COMPANY WEBSITE www.igg.com PRINCIPAL BANKS PRINCIPAL BANKS Citibank N.A. Singapore Branch Standard Chartered Bank (Singapore) Limited The Hongkong and Shanghai Banking Corporation Limited INVESTOR RELATIONS CONSULTANTS INVESTOR RELATIONS CONSULTANTS Strategic Financial Relations Limited HONG KONG SHARE REGISTRAR Computershare Hong Kong Investor Services Limited 17M Floor, Hopewell Centre 183 Queen’s Road East Wanchai Hong Kong

CHAIRMAN'S STATEMENT CHAIRMAN’S STATEMENT 2022 was a year of many challenges. The global economy was facing steep challenges, shaped by the Russia- Ukraine War, persistent inflation pressures and the tightening monetary policy in the United States and Europe. 2022 was a year of many challenges. The global economy was facing steep challenges, shaped by the Russia- Ukraine War, persistent inflation pressures and the tightening monetary policy in the United States and Europe. Meanwhile, the Covid-19 pandemic added to the challenges of China’s economic growth. It not only brought unprecedented changes to different industries and capital markets, but also changed the way people work and live. Facing these immense challenges, we recorded a net annual loss for the first time since our IPO. CAUTIOUSLY EXAMINE EACH SITUATION TO OVERCOME CHALLENGES CAUTIOUSLY EXAMINE EACH SITUATION TO OVERCOME CHALLENGES Looking back on 2022, tech companies have seen a string of layoffs in the face of economic slowdown across Looking back on 2022, tech companies have seen a string of layoffs in the face of economic slowdown across the globe. According to Newzoo, a global gaming consulting company, the global games market was expected to generate US$184.4 billion in 2022, a 4.3% decline year-on-year, its first ever negative growth forecast for the industry¹. Amidst these operating challenges, the Group’s revenue decreased 24% year-on-year to HK4.59 billion and its core game business recorded a net loss of nearly HK180 million. During the Year, we continued to optimise resources and control costs.

s first ever negative growth forecast for the industry¹. Amidst these operating challenges, the Group’s revenue decreased 24% year-on-year to HK4.59 billion and its core game business recorded a net loss of nearly HK180 million. During the Year, we continued to optimise resources and control costs. With these efforts, the Group’s R&D and administrative expenses were reduced by 23% and 16%, respectively, in the second half of 2022 compared to the first half. In game operations, we continued to seek diversified and cost effective payment channels, and improve our marketing campaigns. IGG’s growth strategy has always been “Globalisation and Sustainability”, and we remain focused and positive in both good or tough times. Right from the beginning, as part of our long-term plan, IGG took a global approach and focused on the strategy games genre. “Castle Clash”, a tower defence and strategy game released in 2013, has accumulated nearly 300 million users over 10 years of operation. “Lords Mobile”, the Group’s flagship title, dominated worldwide rankings as the top-grossing mobile war strategy game for two consecutive years following its launch seven years ago. “Lords Mobile” has amassed 600 million users, and maintained an average monthly gross billing of HK$330 million by the end of 2022. Combining our long-term approach with the longevity of strategy games, IGG has succeeded in extending the operational life span of our games. This has served as a “stability anchor” and “ballast has succeeded in extending the operational life span of our games.

of HK$330 million by the end of 2022. Combining our long-term approach with the longevity of strategy games, IGG has succeeded in extending the operational life span of our games. This has served as a “stability anchor” and “ballast has succeeded in extending the operational life span of our games. This has served as a "stability anchor" and "ballast stone” in the face of challenges. stone" in the face of challenges. ADHERING TO OUR ORIGINAL ASPIRATIONS WITH PERSEVERANCE ADHERING TO OUR ORIGINAL ASPIRATIONS WITH PERSEVERANCE We stay curious, sensitive, and think critically in the fast-changing and increasingly competitive gaming industry. Leveraging our expertise in the strategy games genre, IGG continually strives to offer our gamers excellent products. The relentless pursuit of creativity in strategy games enabled us to develop our third most anticipated title – “Viking Rise” at the end of 2022, after “Castle Clash” and “Lords Mobile”. With its unique blend of Norse mythology, personalised territory and naval combat, “Viking Rise” is gaining popularity. On top of the pursuit of innovation in game development, we have been constantly driving progress in game operations, making continuous efforts to localise our game content, distribution, online and offline marketing initiatives. “Mythic Heroes”, an idle role-play game, ranked top 3 on both Apple’s App Store and Google’s Play Store by combining high-quality game play with localise our game content, distribution, online and offline marketing initiatives.

Pages: 221
Words: 116,782
Type: Financial

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