Financial · March 31, 2014

IGG Inc. Q1 2014 Quarterly Report

Published by IGG

Summary

IGG Inc. achieved a significant financial turnaround during the first quarter of 2014, transitioning from a US$3.9 million loss in the prior year to a net profit of US$13.6 million. Total revenue surged by 206.3% year-over-year to reach US$44.1 million, a transformation driven by the company’s aggressive pivot toward the mobile gaming market. By the end of March 2014, mobile games accounted for 79.3% of total revenue, a dramatic increase from just 12.3% in the first quarter of 2013. This growth was anchored by the global success of the title Castle Clash, which alone generated 84% of all mobile revenue, supported by a massive user base of 147 million registered accounts. The company’s geographic and operational scope expanded following its October 2013 listing on the Hong Kong Stock Exchange. Utilizing US$105 million in net proceeds from the IPO, the group focused on enhancing in-house development, licensing third-party titles, and pursuing strategic acquisitions across high-growth regions. While gross profit rose to US$32.2 million, the gross profit margin experienced a slight decline to 73.0% due to rising mobile operating costs and substantial advertising expenditures required to maintain global market share. The financial structure also stabilized significantly, with total equity reaching US$149.98 million, reversing a substantial deficit from the previous year. Corporate governance and equity incentives remain central to the group’s long-term strategy. Controlling shareholders, led by Chairman and CEO Zongjian Cai, maintain a 32.86% stake through a concert party agreement, while institutional investors like IDG-Accel and Temasek hold significant positions. To align employee interests with shareholder value, the group manages several equity incentive structures, including Pre-IPO and Post-IPO share option schemes and a Share Award Scheme. These programs, combined with a centralized management structure, are intended to provide the stability and motivation necessary to sustain the company’s momentum in the competitive international mobile gaming industry.

From the report

QUARTERLY REPORT CLASH TEXAS HOLD ' EM OFLORDS POKER CASTLE ICG WINGS I GOT GAMES DESTINY CLASH HEROES SLOT DNSTER Machines GODSWAR IGG INC TaO Ti

CHARACTERISTICS OF THE GEM OF THE STOCK EXCHANGE GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors. Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM. Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this report, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this report.

hange of Hong Kong Limited take no responsibility for the contents of this report, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this report. This report, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief, the information contained in this report is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this report misleading.

The preferred shares have no expiry date. However, at any time commencing on 1 December 2011 (inclusive), then subject to the applicable laws of the Cayman Islands and, if so requested by the holders of more than seventy-five percent (75%) of the Series Shares, the Company shall redeem all of the outstanding Series Shares out of funds legally available therefore. HIGHLIGHTS The Series Shares contain the financial liability and embedded derivatives and the entire instrument was designated as For the three months ended 31 March 2014 2013 US$’ 000 US$’ 000 (Unaudited) (Unaudited) fair value of Series Shares based on valuations performed by Jones Lang LaSalle. Revenue 44,055 14,421 Profit/(loss) for the period attributable to owners of the parent 13,647 (3,896) Adjusted net income* 13,821 4,677

14,421 Profit/(loss) for the period attributable to owners of the parent 13,647 (3,896) Adjusted net income* 13,821 4,677 For the three months ended 31 March * Adjusted net income represented profit excluding share-based compensation, and the fair value loss of the redeemable convertible Preferred Shares, which were converted to ordinary Shares on 31 May 2013 in accordance 2013 with the then applicable articles of association of the Company and have been transferred to equity. It is considered a useful supplement to the condensed consolidated statement of profit or loss indicating the Group’s profitability and operational performance for the financial periods presented. At 1 January 66,595 – The Group’s revenue for the Period was approximately US$44.1 million, representing an increase of approximately 206.3% over the revenue of approximately US$14.4 million for the corresponding period in 2013 and an increase of approximately 2

66,595 – The Group’s revenue for the Period was approximately US$44.1 million, representing an increase of approximately 206.3% over the revenue of approximately US$14.4 million for the corresponding period in 2013 and an increase of approximately 20.2% over US$36.7 million for the three months ended 31 December 2013. 75,039 – The Group’s profit attributable to owners of the parent for the Period was approximately US$13.6 million, comparing with the loss attributable to the owners of the parent of US$3.9 million for the corresponding period in 2013 and an increase of approximately 41.7% over US$9.6 million for the three months ended 31 December 2013. – The Group’s adjusted net income for the Period was approximately US$13.8 million, representing an increase of 193.6% over the US$4.7 million for the corresponding period in 2013, and an increase of approximately 42.3% over US$9.7 million for the three months ended 31 December 2013. – The Directors do not recommend the payment of any dividend for the three months ended 31 March 2014 (three months ended 31 March 2013: Nil). FIRST QUARTERLY RESULTS (UNAUDITED)

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Type: Financial

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