IGG(HK:00799)2020-04-02 09:40Financial Performance - In 2019, IGG's total revenue and profit declined, but net profit in the second half of the year increased by 33% compared to the first half[34]. - The group's total revenue for the year reached $667.6 million, a decrease of 11% compared to the previous year, primarily due to the natural decline in revenue from the long-standing classic game "King of Kingdoms"[38]. - Net profit for the year was $164.8 million, down 13% year-on-year, while net profit in the second half increased by 3% year-on-year and by 33% compared to the first half, reaching $94.1 million[38]. - The group's gross profit for the year was $462.8 million, a decrease of 12% from the previous year, with a gross margin of 69%, down from 70%[54]. - Other net income increased by 258% to $32.6 million, primarily due to the appreciation of investments in mobile internet gaming-related companies[55]. - The sales and distribution expenses for the year were $164.9 million, a decrease of 12% from the previous year, maintaining a ratio of 25% of total revenue[56]. - R&D expenses for the year ended December 31, 2019, were $92.5 million, an increase of 45% from $63.6 million in 2018, representing 14% of revenue compared to 8% in 2018[58]. - Income tax expenses decreased by 46% to $25.2 million for the year ended December 31, 2019, down from $47.1 million in 2018, primarily due to a decrease in profit before tax[60]. - Net cash generated from operating activities was $126.9 million for the year ended December 31, 2019, a decrease from $239.2 million in 2018, mainly due to reduced operating profit[66]. - Cash used in investing activities was $29.2 million for the year ended December 31, 2019, compared to $41.0 million in 2018, primarily for establishing a game art training base and acquiring property in Italy[67]. - Cash used in financing activities was $78.1 million for the year ended December 31, 2019, down from $131.6 million in 2018, mainly due to dividend payments and share buybacks[68]. - The board declared a second interim dividend of HKD 0.176 per share, totaling HKD 0.306 per share for the year, down from HKD 0.344 per share in 2018[72]. - The group repurchased 34,594,000 shares for $27 million, with total share buybacks and dividends amounting to $76.3 million, representing 46% of the year's profit[75]. User Engagement and Game Development - As of December 31, 2019, IGG's flagship game "King of Kingdoms" had 270 million registered users and nearly 8.2 million monthly active users, generating an average monthly revenue of approximately $50 million[34]. - IGG launched over 10 new games in 2019, expanding into genres such as sandbox and casual games, with plans to introduce more new categories in 2020, including MOBA and shooting games[35]. - The company has a total of 740 million registered users globally, with a strong presence in over 200 countries and regions[37]. - The revenue from "King of Kingdoms" accounted for 80.7% of total revenue, generating $539 million, while "Castle Clash" contributed 11.4% with $75.9 million[50]. - The company aims to enhance user gaming experience by continuously innovating and improving game quality, with frequent updates and new gameplay features[169]. - The company has localized operational teams globally to better understand local cultures and gaming preferences, improving service to local players[169]. - IGG engages players through various interactive activities, including international esports tournaments and offline meetups, enhancing community connections[176]. - The company emphasizes player feedback through multiple channels, ensuring game content updates to retain player interest[173]. Corporate Governance - The company has a board of directors consisting of nine members, including five executive directors and three independent non-executive directors, ensuring compliance with listing rules[97]. - The company has adhered to corporate governance principles, with a commitment to transparency and accountability to shareholders, except for the separation of the roles of Chairman and CEO[94]. - The independent non-executive directors bring diverse experience from various industries, enhancing the board's effectiveness[92]. - The company has implemented a board diversity policy to ensure a range of perspectives and experiences are represented[98]. - The board is responsible for overseeing the company's overall strategy, financial performance, and risk management[97]. - The company has maintained a high level of corporate governance, with independent non-executive directors making up one-third of the board[97]. - The company has a commitment to continuous improvement in corporate governance practices to maximize shareholder value[94]. - The board includes members with significant experience in finance and management, ensuring effective oversight of the company's operations[97]. - The company has appointed independent non-executive directors with appropriate professional qualifications in finance and management, meeting regulatory requirements[97]. - The board of directors has adopted a dividend policy to enhance transparency and ensure prudent and disciplined dividend payments to shareholders, while preserving liquidity for future growth opportunities[109]. Social Responsibility and Community Engagement - IGG has committed to social responsibility by donating over 1.5 million medical supplies in response to the COVID-19 pandemic[35]. - The company actively engages with stakeholders to understand and respond to their expectations and needs regarding social responsibility[153]. - The company is committed to corporate social responsibility, focusing on environmental protection, community investment, and supply chain management[163]. - The company is developing a sustainable development policy to support long-term growth in governance, business operations, social welfare, and environmental protection[165]. - The company has identified key stakeholders and tailored engagement plans to address their concerns and expectations regarding environmental, social, and governance issues[159]. Employee Development and Welfare - Employee-related costs totaled $71.4 million for the year ended December 31, 2019, an increase from $65.3 million in 2018, with total employees rising to 1,587 from 1,421[76]. - IGG's total number of employees as of December 31, 2019, was 1,587, representing a 12% increase from the previous year[191]. - 41% of IGG's employees are under the age of 30, and 29% are female, reflecting the characteristics of the gaming industry[191]. - In 2019, IGG held over 60 internal sharing sessions, with nearly 1,400 total participants and over 36,000 hours of training[193]. - The company has established a comprehensive training system, offering over 400 online courses to employees, allowing for flexible learning opportunities[193]. - The company actively encourages employment for disabled individuals, providing job opportunities and financial support[191]. - The company provides social security benefits such as pension, medical, unemployment, work injury, and maternity insurance, along with housing provident fund contributions[198]. - The company has established an employee welfare committee and a trust fund to provide medical assistance for senior management and core employees, as well as scholarships for employees' children[198]. - The company has a multi-channel internal communication mechanism to collect employee feedback, receiving over 500 feedback submissions in 2019 through its online suggestion system[200]. - The company emphasizes fairness and justice as core cultural values, allowing employees to file complaints regarding unfair treatment[200]. Risk Management and Compliance - The board reviews the risk management and internal control systems quarterly and considers them effective as of December 31, 2019[136]. - The company monitors various indicators such as game data, player feedback, and employee turnover rates to manage potential risks[136]. - The board has established internal management procedures to ensure business risks are controlled and managed effectively[136]. - The company has implemented internal policies to manage and control insider information effectively[136]. - The company has implemented measures to comply with local laws regarding gaming health, including player real-name authentication and age restrictions[172]. - The company actively protects its intellectual property with a 24/7 alert system and collaborates with global trademark databases to monitor potential infringements[182].