Financial · September 5, 2023

Interim Report 2023

Published by IGG

Summary

IGG Inc. navigated a transitional period during the first half of 2023, characterized by a strategic pivot toward new game titles and operational efficiency. The company generated HK$2.5 billion in revenue, maintaining stability through its flagship title, Lords Mobile, while successfully scaling newer offerings such as Doomsday: Last Survivors and Viking Rise. Despite recording a net loss of HK$359.8 million for the period—largely driven by an 85% increase in marketing expenditure to support these launches—the company achieved a return to profitability by June 2023. This recovery was supported by a 30% reduction in operating expenses, facilitated by the integration of artificial intelligence into development workflows. The company’s financial health remains anchored by a cash balance of HK$1.48 billion, though the gearing ratio rose to 34.6% as of June 30, 2023. Management continues to utilize various share-based incentive programs to retain talent, despite the termination of older share option schemes and the lapsing of over 14 million performance-based shares. Governance remains centralized, with the Board maintaining a combined chairman and CEO role to ensure strategic agility. Furthermore, the company continues to utilize structured contracts to operate within the People’s Republic of China, asserting that these arrangements are compliant with current regulations and represent a negligible portion of total assets and revenue, thereby minimizing exposure to potential shifts in foreign investment laws. Looking forward, the company is focused on balancing aggressive market expansion with disciplined capital management. While impairment losses on joint ventures and unrealized losses on unquoted equity securities impacted the bottom line, the reduction in administrative and research costs suggests a leaner operational structure. By prioritizing the growth of its new game portfolio and leveraging technological efficiencies, the company aims to sustain the profitability achieved in the latter half of the reporting period while maintaining a stable, compliant corporate framework.

From the report

REP INTERIM REPORT DOOMS VLAST SURVIVORS. 2 IGG GAMERS AT HEART IGG INC STOCK CODE: 799

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>17</td> <td>Other Information</td> <td>19</td> <td>Review Report on the Interim Financial Report</td> <td>55</td> <td>Consolidated Statement of Proit or Loss</td> <td>56</td> <td>Consolidated Statement of Comprehensive Loss</td> <td>57</td> <td>Consolidated Statement of Financial Position</td> <td>58</td> <td>Consolidated Statement of Changes in Equity</td> <td>60</td> <td>Condensed Consolidated Cash Flow Statement</td> <td>62</td> <td>Notes to the Unaudited Interim Financial Report</td> <td>63</td> <td>Deinition</td> <td>94</td> </tbody> INTERIM REPORT

CORPORATE INFORMATION BOARD OF DIRECTORS Remuneration Committee Executive Directors Ms. Zhao Lu Mr. Zongjian Cai (Chairman executive Mr. Zongjian Cai Mr. (Chairman) 2023 Mr. Yuan Xu Kam Wai Man Mr. Hong Zhang effect from the conclusion Ms. Jessie Shen and chief (Appointed the conclusionof the officer) with of the 2023 Mr. Feng Chen Mr. Dajian Yu AGM) from (Resignedwith Non-executive Director AGM) effect Mr. Yuan Chi JOINT COMPANY SECRETARIES Independent Non-executive Directors Ms. Jessie Shen Dr. Horn Kee Leong Ms. Yin Ping Yvonne Kwong (FCG, Ms. Zhao Lu HKFCG) Mr. Kam Wai Man AUTHORISED REPRESENTATIVES (Appointed effect Mr. Zongjian Cai from the conclusion of the 2023 Ms. Jessie Shen Mr. Dajian Yu Ms. Yin Ping Yvonne Kwong AGM) from with of the 2023 (Resignedwith effect the AGM) conclusion REGISTERED OFFICE P.O. Box 31119, Grand Pavilion, Hibiscus Way BOARD COMMITTEES 802 West Bay Road, Grand Cayman Audit Committee KY1-1205 Cayman Islands Dr. Horn Kee Leong Ms. Zhao Lu (Chairman) HEADQUARTERS AND PRINCIPAL PLACE OF Mr. Kam Wai Man BUSINESS IN SINGAPORE (Appointed effect 80 Pasir Panjang Road from the conclusion of the 2023 #18-84 Mapletree Business City

MITTEES 802 West Bay Road, Grand Cayman Audit Committee KY1-1205 Cayman Islands Dr. Horn Kee Leong Ms. Zhao Lu (Chairman) HEADQUARTERS AND PRINCIPAL PLACE OF Mr. Kam Wai Man BUSINESS IN SINGAPORE (Appointed effect 80 Pasir Panjang Road from the conclusion of the 2023 #18-84 Mapletree Business City Mr. Dajian Yu Singapore 117372 AGM) from with of the 2023 (Resignedwith effect the AGM) conclusion PRINCIPAL PLACE OF BUSINESS IN HONG KONG Nomination Committee 40th Floor, Dah Sing Financial Centre Dr. Horn Kee Leong No. 248 Queen’s Road East Mr. Zongjian Cai (Chairman) Wanchai Ms. Zhao Lu Hong Kong Mr. Kam Wai Man AUDITOR KPMG from (Public 2023 registered Mr. Dajian Yu Certiied Public Accountants the conclusion Interest and AGM) from of the Auditor Reporting with effect of the 2023 with the Accounting (Appointed conclusion Ordinance) in accordance (Resignedwith AGM) effect the Entity Financial Council INTERIM REPORT

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 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 Computershare Hong Kong Investor Services Limited 17M Floor, Hopewell Centre 183 Queen’s Road East, Wanchai Hong Kong COMPANY WEBSITE www.igg.com INTERIM REPORT

HIGHLIGHTS Six months ended 30 June 2023 2022 HK’ 000 HK’ 000 (Unaudited) (Unaudited) Revenue 2,499,020 2,485,739 Cost of revenue (693,307) (787,102) Other net gains/(losses) 23,326 (88,167) Selling and distribution expenses (1,521,188) (822,038) Administrative expenses (158,746) (197,031) Research and development expenses (500,419) (738,152) Loss for the period (359,798) (171,771) Including: Net loss for core business¹ (360,765) (58,025) Gain/(loss) on investments² 967 (113,746) Loss for the period attributable to equity shareholders of the Company (359,798) (171,771) Adjusted net loss³ (334,015) (104,739) – For the first half of 2023, “Lords Mobile”, IGG's flagship title launched seven years ago, continued to generate stable revenue, contributing over HK$1.6 billion. Meanwhile, the Group’s two blockbuster strategy games, “Doomsday: Last Survivors” and “Viking Rise”, each exceeded HK$70 million in monthly gross billing. The gross billing of “Doomsday: Last Survivors” has been rising steadily, with monthly gross billing in July reaching a new high of more than HK$82 million. At the same time, the Group’s application and mobile advertisement mediation platform business (the “APP Business”) is experiencing rapid growth, with monthly gross billing surging from over HK12 million at the start of the Period to more than HK57 million in June, followed by a remarkable jump to HK$63 million in July. The two new games and the APP Business contributed 35% to the Group’s total revenue in the second quarter of 2023.

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Words: 35,689
Type: Financial

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