2016 Interim Report

The 2016 interim period marked a phase of robust financial expansion for the Group, characterized by a 21.4% year-over-year revenue increase to US$126.0 million. This growth was primarily fueled by the successful launch of Lords Mobile and the sustained performance of Castle Clash, which anchored the company’s mobile-centric strategy. With mobile games accounting for 97.3% of total revenue, the Group successfully leveraged a global player base of 340 million to maintain a stable financial position, reporting US$26.1 million in earnings attributable to equity holders and a cash balance of US$158.7 million as of June 30, 2016.

Operationally, the Group focused on scaling its international footprint while managing complex regulatory environments. To navigate foreign investment restrictions in the PRC, the company utilized structured contracts to consolidate domestic entities, though these operations represented a negligible portion of total revenue and assets. Management continues to monitor the draft Foreign Investment Law, maintaining that any potential regulatory shifts would have an immaterial impact on the company’s financial health. Strategic growth initiatives during this period included the formation of a new joint venture in Canada and a commitment to aggressive marketing and promotional spending to support new titles.

Corporate governance and human capital management remained central to the Group’s strategy. Despite a noted deviation from standard governance codes regarding the dual role of chairman and chief executive officer held by Mr. Zongjian Cai, the company maintained rigorous oversight through board reviews and external legal counsel. Equity-based compensation, including pre-IPO and post-IPO share option schemes and a share award program, served as the primary mechanism for talent retention. Furthermore, the company actively managed its capital structure through significant share repurchases, totaling HK$136.7 million, while ensuring compliance with all listing and disclosure requirements.