Financial

IGG Inc. 2022 Interim Report

20 August 202291 pages46,708 words

Summary

IGG Inc. reported a challenging financial performance for the first half of 2022, characterized by a 23% year-on-year revenue decline to HK$2.49 billion and a shift from a HK$577 million profit in 2021 to a net loss of HK$172 million. This downturn was driven by global inflationary pressures, the Russia-Ukraine War, and the natural maturation of the company’s flagship title, *Lords Mobile*. Despite these headwinds, *Lords Mobile* remained the primary revenue driver, contributing approximately 80% of total turnover. While the group experienced a net cash outflow of HK$140 million, it maintained a stable liquidity position with HK$1.67 billion in cash and a reduced gearing ratio of 21.3%. The financial results were further impacted by high research and development costs and a HK$114 million loss from investment valuation fluctuations, including significant impairment losses on associates and joint ventures. To mitigate these losses, the company implemented cost optimization strategies that returned core gaming operations to profitability by the second quarter of 2022. Geographically, revenue remained globally diversified, with Asia and North America contributing 37% and 33%, respectively. The company also continued to invest in its future infrastructure, committing HK$515 million to the construction of a new office building in Fuzhou. Strategically, the group is focused on diversifying its portfolio with new titles such as *Mythic Heroes* and *Yeager: Hunter Legend*. To navigate Chinese regulatory restrictions on foreign ownership in the gaming sector, the company utilizes a "Structured Contracts" framework through domestic entities Fuzhou Tianmeng and Xinhan Liaokuo. While these entities represent a small fraction of total revenue (4.12%), they allow for the consolidation of Chinese operations. Corporate governance remained stable, though the company opted not to declare an interim dividend for the period, reflecting a cautious approach to capital management amidst the ongoing market volatility.

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