IGG(00799)2020-08-17 09:54Financial Performance - The company's revenue for the six months ended June 30 was $312.3 million, a decrease of 12% compared to $354.7 million in the same period last year, but showing signs of recovery compared to $313.0 million in the second half of 2019[23]. - Net profit for the period was $132.8 million, an increase of 88% from $70.7 million in the same period last year, and up 41% from $94.1 million in the second half of 2019[24]. - Adjusted net profit was $134.3 million, an increase of 84% year-on-year and up 40% from the previous half-year[24]. - The gross profit for the period was $216.7 million, a decrease of 12% from $246.2 million in the same period of 2019, maintaining a gross margin of 69%[40]. - Operating profit increased significantly to $148.560 million, compared to $85.134 million in the previous year, representing a growth of 74%[157]. - Profit before tax for the six months was $147.682 million, up from $84.050 million, marking a 75% increase year-over-year[157]. - Basic earnings per share rose to $0.1084 from $0.0562, reflecting an increase of 93%[157]. - Total comprehensive income for the period was $130.111 million, compared to $69.467 million in the same period last year, an increase of 87%[160]. User Engagement and Market Presence - The total registered user base reached 720 million, reflecting the company's strong market presence and user engagement[26]. - Monthly revenue from the flagship game "King of Kingdoms" rebounded to $54 million during the period, reaching a historical high of over $60 million in July[23]. - The monthly active users (MAU) for the game "King of Kingdoms" exceeded 13 million, with a revenue increase of 18% quarter-on-quarter in Q2 2020, reaching a historical high of over $60 million in July 2020[1]. - Revenue from Asia, North America, and Europe accounted for 40%, 30%, and 24% of total revenue, respectively[27]. Strategic Focus and Partnerships - The company has shifted its strategic focus to mobile gaming since 2013, now offering products in 23 different languages worldwide[26]. - The company has established long-term partnerships with major platforms such as Apple, Google, and Amazon, enhancing its competitive advantage in the global market[26]. - The pandemic accelerated the rise of the "stay-at-home economy," benefiting the company's gaming business during the first half of 2020[27]. Expenses and Cost Management - The sales and distribution expenses decreased by 32% to $67.5 million, with the ratio to revenue dropping from 28% in 2019 to 22% in 2020[41]. - The group’s R&D expenses decreased by 14% to $36.9 million, maintaining a ratio of 12% to revenue[42]. - Employee costs totaled $33,786,000 for the six months ended June 30, 2020, compared to $34,914,000 for the same period in 2019, reflecting a decrease of 3.2%[184]. - Channel costs for the six months ended June 30, 2020, were $87,755,000, down from $99,245,000 in 2019, indicating a reduction of 11.6%[186]. Cash Flow and Investments - The net cash generated from operating activities for the period was $86.7 million, up from $46.1 million in the same period of 2019, primarily due to reduced advertising and R&D expenses[50]. - Cash used in investing activities was $7.4 million, a decrease from $28.3 million in the same period of 2019, mainly due to investments in mobile internet gaming companies and fixed assets[51]. - Cash used in financing activities amounted to $45.5 million, compared to $35 million in the same period of 2019, primarily due to the payment of interim dividends and share buybacks[52]. - The company incurred a net cash outflow from investing activities of $(7,441) thousand for the six months ended June 30, 2020, compared to $(28,283) thousand in the same period of 2019, indicating improved cash flow management[170]. Shareholder Returns and Dividends - The company declared an interim dividend of HKD 0.251 per share, totaling approximately $79.7 million, compared to HKD 0.130 per share in the same period last year[24]. - The total dividend declared for the period was approximately $79.7 million, representing a payout of 71% of the current profit, compared to 39% in the same period of 2019[57]. - The company repurchased ordinary shares amounting to $14,060 thousand during the six months ended June 30, 2020, compared to $6,666 thousand in the same period of 2019, indicating a significant increase in share buybacks[170]. Corporate Governance and Management - The Board believes that effective corporate governance is crucial for creating more value for shareholders[67]. - The Group's Chairman and CEO roles are currently not separated, which the Board believes benefits the Group's business prospects and management[67]. - The Group has adopted a standard code regarding securities trading by directors, confirming compliance during the reporting period[67]. Structural Contracts and Compliance - The structural contracts include eight agreements, ensuring compliance with Chinese regulations regarding foreign investment in internet services[129]. - The company confirmed that there have been no challenges from Chinese authorities regarding the structural contracts as of the report date[145]. - The company has taken measures to ensure the effective implementation of structural contracts and compliance with regulations[145]. - The company aims to qualify for the acquisition of 100% equity in Fuzhou Tianmeng when restrictions on foreign ownership in value-added telecom services are relaxed[150]. Stock Options and Incentive Plans - The company has granted stock options to various executives, with a total of 6,400,000 options granted to senior management as of June 30, 2020[88]. - The stock options granted to executives are intended to align their interests with the company's success and increase their equity stake[85]. - The company adopted a share option plan on September 16, 2013, allowing eligible individuals to acquire personal equity in the company, aimed at incentivizing performance and retaining talent[91]. - A total of 1,881,000 reward shares were granted on May 6, 2020, under the share incentive plan[116].