Financial · September 5, 2022

Interim Report 2022

Published by IGG

Summary

During the first half of 2022, IGG faced a challenging financial period characterized by a 23% year-on-year revenue decline to HK$2.49 billion. This downturn was primarily driven by the natural maturity of the company’s flagship title, *Lords Mobile*, and compounded by significant investment losses totaling HK$114 million. Consequently, the company recorded a net loss of HK$172 million, a sharp reversal from the profit of HK$577 million reported in the same period of 2021. In response to these pressures, the Board opted not to declare an interim dividend, prioritizing resource optimization and long-term strategic investments. Operational adjustments included an 11% reduction in total headcount and a strategic pivot toward increased research and development, which saw a 48% rise in spending to HK$738 million. While core game operations returned to profitability by the second quarter, the company continues to navigate a transition phase, marked by significant capital commitments such as the construction of a new office facility in Fuzhou. The company maintains a diversified investment portfolio, holding material stakes in private equity funds like MFund and Griffin Gaming Partners to support its long-term focus on the global mobile gaming sector. Corporate governance remains centered on a leadership structure where the chairman and CEO roles are unified, a deviation from standard codes that the company justifies through existing internal checks and balances. Furthermore, IGG continues to utilize structured contracts to operate within the People’s Republic of China, ensuring compliance with foreign investment restrictions. Although these entities represent a small portion of total revenue, the company acknowledges the inherent regulatory uncertainty of this model. Moving forward, the organization intends to leverage its R&D investments to launch innovative titles, aiming to stabilize performance despite expectations of continued net losses through the remainder of 2022.

From the report

CONTENTS CONTENTS Corporate Information 2 <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>17</td> <td>Other Information</td> <td>19</td> <td>Review Report on the Interim Financial Report</td> <td>51</td> <td>Consolidated Statement of Proit or Loss</td> <td>52</td> <td>Consolidated Statement of Comprehensive (Loss)/Income</td> <td>53</td> <td>Consolidated Statement of Financial Position</td> <td>54</td> <td>Consolidated Statement of Changes in Equity</td> <td>56</td> <td>Condensed Consolidated Cash Flow Statement</td> <td>58</td> <td>Notes to the Unaudited Interim Financial Report</td> <td>59</td> <td>Deinition</td> <td>86</td> </tbody> Highlights 4 Management Discussion and Analysis 5 Corporate Governance 17 Other Information 19 Review Report on the Interim Financial Report 51 Consolidated Statement of Profit or Loss 52 Consolidated Statement of Comprehensive (Loss)/Income 53 Consolidated Statement of Financial Position 54 Consolidated Statement of Changes in Equity 56 Condensed Consolidated Cash Flow Statement 58 Notes to the Unaudited Interim Financial Report 59 Definition 86

CORPORATE INFORMATION CORPORATE INFORMATION BOARD OF DIRECTORS Executive Directors BOARD OF DIRECTORS Mr. Zongjian Cai (Chairman and chief executive officer) Executive Directors Mr. Zongjian Cai (Chairman and chief executive officer) Mr. Yuan Xu Mr. Hong Zhang Ms. Jessie Shen Mr. Feng Chen Non-executive Director Non-executive Director Mr. Yuan Chi Independent Non-executive Directors Independent Non-executive Directors Dr. Horn Kee Leong Mr. Dajian Yu Ms. Zhao Lu BOARD COMMITTEES Audit Committee Dr. Horn Kee Leong Mr. Dajian Yu (Chairman) Ms. Zhao Lu Nomination Committee Dr. Horn Kee Leong Mr. Zongjian Cai (Chairman) Mr. Dajian Yu Ms. Zhao Lu Ms. Zhao Lu Remuneration Committee Ms. Zhao Lu (Chairman) Mr. Zongjian Cai Mr. Dajian Yu Mr. Dajian Yu JOINT COMPANY SECRETARIES Ms. Jessie Shen JOINT COMPANY SECRETARIES Ms. Yin Ping Yvonne Kwong (FCG, HKFCG) Ms. Jessie Shen Ms. Yin Ping Yvonne Kwong (FCG, HKFCG) AUTHORISED REPRESENTATIVES AUTHORISED REPRESENTATIVES Mr. Zongjian Cai Ms. Jessie Shen Ms. Yin Ping Yvonne Kwong REGISTERED OFFICE REGISTERED OFFICE P.O. Box 31119, Grand Pavilion, Hibiscus Way 802 West Bay Road, Grand Cayman KY1-1205 Cayman Islands HEADQUARTERS AND PRINCIPAL PLACE OF HEADQUARTERS AND PRINCIPAL PLACE OF BUSINESS IN SINGAPORE 80 Pasir Panjang Road

Cai Ms. Jessie Shen Ms. Yin Ping Yvonne Kwong REGISTERED OFFICE REGISTERED OFFICE P.O. Box 31119, Grand Pavilion, Hibiscus Way 802 West Bay Road, Grand Cayman KY1-1205 Cayman Islands HEADQUARTERS AND PRINCIPAL PLACE OF HEADQUARTERS AND PRINCIPAL PLACE OF BUSINESS IN SINGAPORE 80 Pasir Panjang Road #18-84 Mapletree Business City Singapore 117372 PRINCIPAL PLACE OF BUSINESS IN HONG KONG 40th Floor, Dah Sing Financial Centre No. 248 Queen’s Road East Wanchai Hong Kong AUDITOR KPMG (Public registered Interest Reporting in accordance Entity Council with Auditor Ordinance) the Financial with the Financial Reporting Council Ordinance)

CORPORATE INFORMATION CORPORATE INFORMATION LEGAL ADVISER AS TO HONG KONG LAWS PRINCIPAL BANKS Jingtian & Gongcheng LLP Citibank N.A. Singapore Branch LEGAL ADVISER AS TO HONG KONG LAWS PRINCIPAL BANKS Jingtian & Gongcheng LLP Standard Chartered Bank (Singapore) Limited LEGAL ADVISER AS TO PRC LAWS 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 INVESTOR RELATIONS CONSULTANT PRINCIPAL SHARE REGISTRAR AND Strategic Financial Relations Limited 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 HONG KONG SHARE REGISTRAR HONG KONG SHARE REGISTRAR Computershare Hong Kong Investor Services Limited 17M Floor, Hopewell Centre 183 Queen’s Road East, Wanchai Hong Kong COMPANY WEBSITE www.igg.com

HIGHLIGHTS HIGHLIGHTS 1H2022 2H2021 1H2021 HK' 000 HK' 000 HK$' 000 1H2022 2H2021 1H2021 ’ (Unaudited) HK 000 HK’ 000 HK$’ 000 Revenue (Unaudited) (Unaudited) (Unaudited) 2,485,739 2,813,435 3,237,459 Revenue 2,485,739 2,813,435 3,237,459 Cost of revenue (787,102) (897,784) (955,024) Other net (losses)/gains (88,167) (138,529) 107,399 Selling and distribution expenses (822,038) (1,017,865) (935,264) Administrative expenses (197,031) (194,074) (253,755) Research and development expenses (738,152) (755,991) (497,776) (Loss)/proit for the period (171,771) (207,310) 576,922 Including: Net (loss)/proit for core game business¹ (58,025) (64,457) 488,753 (Loss)/gain on investments² (113,746) (142,853) 88,169 (Loss)/proit for the period attributable to equity shareholders of the Company (171,771) (206,908) 577,346 Adjusted net (loss)/income³ (104,739) (137,941) 590,805 — During the Period, amid the challenges caused by intensifying competition, the Russia-Ukraine War and persistently high inlation globally, the Group recorded a revenue of HK2,486 million, representing a decrease of 23% compared to HK3,237 million for the corresponding period last year, and decreased by 12% compared to HK$2,813 million for the second half of 2021. “Lords Mobile”, IGG’s lagship title launched seven years ago, continued to generate stable revenue, contributing over HK$2.0 billion in the irst half of 2022.

d to HK3,237 million for the corresponding period last year, and decreased by 12% compared to HK$2,813 million for the second half of 2021. “Lords Mobile”, IGG’s lagship title launched seven years ago, continued to generate stable revenue, contributing over HK$2.0 billion in the irst half of 2022. — The Group’s loss for the Period was HK$172 million. Due to the Group’s continuous efforts in optimising resource allocation and controlling costs during the Period, the loss narrowed by 17% from HK$207 million for the second half of 2021. As for the corresponding period of the prior year, it was a proit of HK$577 million. The Group’s net loss/proit for core game business turned from a net loss of over HK80 million in the irst quarter of 2022 to a net proit of more than HK20 million in the second quarter of 2022. Regarding the investments, the Group recorded a loss on investments of HK$114 million due to the valuation luctuation and performance losses of the investee companies. losses of the investee companies. — Following years of investment in research and development, the Group has started a new chapter of growth in the second half of 2022. The Group expects a net loss in the second half of 2022 due to increased marketing budgets for new games in order to drive revenue to new heights. 1 budgets for new games in order to drive revenue to new heights. Net (loss)/proit for core game business: Net (loss)/proit excluding (loss)/gain on investments. 2 (Loss)/gain on investments including: (1) fair value change and gain/loss on disposal of other inancial assets, and dividend

Pages: 91
Words: 49,332
Type: Financial

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