Financial · August 16, 2019

2019 Interim Report

Published by IGG

Summary

During the first half of 2019, IGG experienced a period of financial stabilization and strategic transition. The company generated US$354.7 million in revenue and US$70.7 million in net profit, marking year-over-year declines of 9% and 28%, respectively. These results were primarily driven by the natural maturation of flagship titles such as Lords Mobile and Castle Clash. Despite these headwinds, the company maintained a robust liquidity position with US$270.4 million in cash and no bank borrowings, while simultaneously diversifying its portfolio through the launch of new titles like Brave Conquest and increasing investments in research, development, and global marketing. The company’s operational structure underwent significant adjustments during this period, most notably the restructuring of its PRC operations. By replacing previous structured contracts with a new framework of eight agreements, the company maintained control over Fuzhou Tianmeng while mitigating regulatory risks associated with evolving foreign investment laws. These structured contracts accounted for 10.3% of total revenue and 11.1% of total assets as of June 30, 2019. Furthermore, the company actively managed its capital through the repurchase and cancellation of 5.688 million shares and the continued utilization of share option and award schemes to incentivize key personnel. Financial reporting for the period was notably impacted by the adoption of IFRS 16, which required the recognition of lease liabilities and right-of-use assets. This accounting change shifted lease-related expenses from operating rentals to depreciation and interest, resulting in a gearing ratio of 28.2%. Despite the broader market challenges, the company concluded the first half of the year with total assets of US$446.67 million and net assets of US$320.53 million. These figures reflect a disciplined approach to asset management, including the post-period acquisition of Italian property and a continued commitment to long-term growth through global expansion and portfolio diversification.

From the report

INTERIM REPORT Mobile Royale EOLARPG IGG EZT MOBILE ROYXLE IGOT GAMES LORDS MOBILE CASTILE CLASH -FEAL Lords Mobite Incorporated in the Cayman Islands with limited liability

CONTENTS <thead> <th>Corporate Information</th> <th>2</th> </thead> <tbody> <td>Highlights</td> <td>4</td> <td>Management Discussion and Analysis</td> <td>5</td> <td>Corporate Governance</td> <td>13</td> <td>Other Information</td> <td>14</td> <td>Review Report on the Interim Financial Report</td> <td>38</td> <td>Consolidated Statement of Profit or Loss</td> <td>39</td> <td>Consolidated Statement of Comprehensive Income</td> <td>40</td> <td>Consolidated Statement of Financial Position</td> <td>41</td> <td>Consolidated Statement of Changes in Equity</td> <td>43</td> <td>Condensed Consolidated Cash Flow Statement</td> <td>45</td> <td>Notes to the Unaudited Interim Financial Report</td> <td>46</td> <td>Definition</td> <td>71</td> </tbody>

CORPORATE INFORMATION BOARD OF DIRECTORS JOINT COMPANY SECRETARIES Executive Directors Ms. Jessie Shen Mr. Zongjian Cai (Chairman Ms. Yin Ping Yvonne Kwong and chief executive (a fellow of The Hong Mr. Yuan Xu officer) Institute Kong of Chartered Mr. Hong Zhang Secretaries) Ms. Jessie Shen AUTHORISED REPRESENTATIVES Mr. Feng Chen Mr. Zongjian Cai Ms. Jessie Shen Non-executive Director Ms. Yin Ping Yvonne Kwong Mr. Yuan Chi REGISTERED OFFICE Independent Non-executive Directors P.O. Box 31119, Grand Pavilion, Hibiscus Way Dr. Horn Kee Leong 802 West Bay Road, Grand Cayman Mr. Dajian Yu KY1-1205 Cayman Islands Ms. Zhao Lu HEADQUARTERS AND PRINCIPAL PLACE OF BOARD COMMITTEES BUSINESS IN SINGAPORE Audit Committee 80 Pasir Panjang Road Dr. Horn Kee Leong #18-84 Mapletree Business City Mr. Dajian Yu (Chairman) Singapore 117372 Ms. Zhao Lu PRINCIPAL PLACE OF BUSINESS IN HONG Nomination Committee KONG Dr. Horn Kee Leong 40th Floor, Sunlight Tower Mr. Zongjian Cai (Chairman) No. 248 Queen’s Road East Mr. Dajian Yu Wanchai Ms. Zhao Lu Hong Kong Remuneration Committee AUDITOR Ms. Zhao Lu KPMG Mr. (Chairman) Zongjian Cai Mr. Dajian Yu

CORPORATE INFORMATION LEGAL ADVISER AS TO HONG KONG LAWS PRINCIPAL BANKS Jingtian & Gongcheng LLP Citibank N.A. Singapore Branch Standard Chartered Bank (Singapore) Limited LEGAL ADVISER AS TO PRC LAWS The Hongkong and Shanghai Banking Corporation Limited Jingtian & Gongcheng INVESTOR RELATIONS CONSULTANT PRINCIPAL SHARE REGISTRAR AND TRANSFER Strategic Financial Relations Limited OFFICE SMP Partners (Cayman) Limited COMPANY WEBSITE Royal Bank House - 3rd Floor, 24 Shedden Road www.igg.com P.O. Box 1586, Grand Cayman, KY1-1110 Cayman Islands HONG KONG SHARE REGISTRAR Computershare Hong Kong Investor Services Limited Shops 1712-1716, 17th Floor, Hopewell Centre 183 Queen’s Road East, Wanchai Hong Kong

HIGHLIGHTS Six months ended 30 June 2019 2018 US’000 HK’000² US’ 000 HK’ 000² (Unaudited) (Unaudited) Revenue 354,666 2,782,177 388,495 3,043,586 Profit for the period 70,702 554,622 98,389 770,809 Profit for the period attributable to equity shareholders of the Company 70,714 554,716 98,613 772,564 Adjusted net income¹ 72,880 571,707 101,135 792,322 — The Group’s revenue for the Period was US354.7 million, representing a decrease of 9% compared to the revenue of US388.5 million for the corresponding period in 2018, but remained stable compared with US$360.3 million for the second half of 2018. — The Group’s profit for the Period was US70.7 million, representing a decrease of 28% compared to the profit of US98.4 million for the corresponding period in 2018 and a decrease of 22% compared to the profit of US$90.9 million for the second half of 2018. — The Group’s profit attributable to equity shareholders of the Company for the Period was US70.7 million, representing a decrease of 28% compared to US98.6 million for the corresponding period in 2018 and a decrease of 22% compared to US$90.6 million for the second half of 2018. — The Group’s adjusted net income for the Period was US$72.9 million, representing a decrease of 28% compared to US$101.1 million for the corresponding period in 2018 and a decrease of 22% compared to US$92.9 million for the second half of 2018.

red to US$90.6 million for the second half of 2018. — The Group’s adjusted net income for the Period was US$72.9 million, representing a decrease of 28% compared to US$101.1 million for the corresponding period in 2018 and a decrease of 22% compared to US$92.9 million for the second half of 2018. — The Board has resolved to declare an interim dividend of HK13.0 cents per ordinary Share (equivalent to US1.7 cents per ordinary Share), amounting to approximately US$21.2 million (for the six months ended 30 June 2018: interim dividend of HK17.7 cents per ordinary Share, equivalent to US2.3 cents per ordinary Share). 1 Adjusted net income represents profit excluding share-based compensation. It is considered a useful supplement to the consolidated statement of profit or loss indicating the Group’s profitability and operational performance for the financial periods presented. 2 Amounts denominated in U.S. dollars have been converted into Hong Kong dollars at an exchange rate of HK7.8445=US1.00 for the Period (for the six months ended 30 June 2018: HK7.8343=US1.00), for illustration purpose only. Such conversions shall not be construed as representations that such amount in U.S. dollars were or could have been or could be converted into Hong Kong dollars at such rates or any other exchange rates on such date or any other date.

Pages: 73
Words: 27,534
Type: Financial

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