IGG(HK:00799)2021-08-17 09:35Financial Performance - The company's revenue for the six months ended June 30 reached HKD 3.24 billion, a 33% increase from HKD 2.43 billion in the same period last year, marking a record high for mid-year revenue [9]. - The profit for the period was HKD 577 million, a decrease of 44% compared to HKD 1.03 billion in the previous year, primarily due to fluctuations in market conditions affecting investment-related income [10]. - The main business profit, excluding investment-related income, was HKD 489 million, down 20% year-on-year, attributed to increased marketing expenditures and ongoing expansion of the R&D team [10]. - The group achieved a net profit of HKD 577 million, with investment-related income exceeding HKD 88 million, leading to a core business profit of HKD 489 million [19]. - The group's total revenue for the period reached HKD 3.237 billion, a 33% increase from HKD 2.426 billion in the same period last year, marking a historical high for mid-term revenue [22]. - The group reported a profit of HKD 576,922 for the six months ended June 30, 2021 [161]. - The company anticipates that the adverse impact on operations and financial performance from potential changes in structural contracts will not be significant [147]. User Engagement and Game Performance - The total user base of the company has reached nearly 1.2 billion, with a monthly active user count exceeding 47 million [12]. - The classic game "King of Kingdoms" achieved a record mid-year revenue with an average monthly revenue of HKD 480 million [9]. - The game "Time Princess," launched in the second half of 2020, has surpassed a monthly revenue of HKD 34 million during this period [9]. - The game "King of Kingdoms" contributed HKD 2.737 billion, accounting for 84.6% of total revenue, while "Princess of Time" generated HKD 155.581 million, representing 4.8% of total revenue [24]. - Monthly average revenue for "King of Kingdoms" was HKD 480 million, while "Princess of Time" surpassed HKD 34 million during the period [22]. - The registered users for "King of Kingdoms" reached 440 million, with MAU increasing from 13.7 million at the end of 2020 to 20 million, a historical high [14]. - "Princess of Time" registered over 9.8 million users, with MAU at 1 million as of June 30, 2021 [15]. Dividends and Share Repurchase - The company declared an interim dividend of HKD 0.145 per share, totaling approximately HKD 173 million, compared to a total of HKD 502 million in interim and special dividends in the same period last year [10]. - The board declared an interim dividend of HKD 0.145 per share, totaling approximately HKD 173 million, representing 40% of the current profit [47][48]. - The group repurchased 5,621,000 shares for a total of HKD 57 million during the period, with total repurchases and dividends amounting to HKD 230 million [48]. Expenses and Costs - The sales cost for the period was HKD 955 million, a 29% increase from HKD 743 million in the same period last year, primarily due to rising channel costs [25]. - Sales and distribution expenses for the period were HKD 935 million, an increase of 78% from HKD 524 million in the same period of 2020, representing 29% of revenue, up 7% from the previous year due to increased marketing investments in core gaming products [29]. - Research and development expenses for the period were HKD 498 million, a 74% increase from HKD 287 million in the same period of 2020, accounting for 15% of revenue, up 3% from the previous year, reflecting accelerated R&D efforts and expansion of global R&D bases [31]. Investments and Strategic Partnerships - The company has established long-term partnerships with major international platforms such as Apple, Google, Amazon, and Microsoft, enhancing its competitive advantage in the global market [12]. - The group has established strategic investment agreements with numerous global gaming companies, enhancing its product matrix and competitiveness [19]. - The group plans to continue investing in game development and operations talent while expanding strategic investments globally [20]. - The group continues to focus on internet-related investments through private equity funds to strengthen its strategic direction in the industry [50]. Corporate Governance and Ownership Structure - The board of directors is committed to maintaining high standards of corporate governance to enhance shareholder value [65]. - The company has a significant shareholder, Mr. Cai Zongjian, holding 264,297,731 shares, representing 22.14% of the total shares [72]. - The ownership structure indicates potential influence over corporate decisions due to the high percentage of shares held by key executives [72]. - The concentration of ownership among a few individuals may impact the company's strategic direction and governance [72]. Structural Contracts and Compliance - The company confirmed that there were no regulatory challenges regarding the structural contracts with Chinese authorities as of the report date [141]. - The board believes retaining structural contracts is essential for maintaining the company's position in China for further development [139]. - Independent non-executive directors will review the performance and compliance of structural contracts annually, ensuring that all revenues from Fuzhou Tianmeng and Xinhan Liaokua are retained by the group after expenses [141]. - The company has engaged KPMG as auditors to ensure compliance with structural contracts and that no dividends are distributed to equity holders of Fuzhou Tianmeng and Xinhan Liaokua [143]. Cash Flow and Financial Position - The group's net cash inflow from operating activities was HKD 541 million, down from HKD 672 million in the same period of 2020, primarily due to higher growth rates in advertising and R&D expenses compared to revenue growth [40]. - The group's net cash inflow from investment activities was HKD 552 million, mainly due to the disposal of shares in Heartbeat Limited, compared to a net cash outflow of HKD 58 million in the same period of 2020 [41]. - The company's total equity as of June 30, 2021, was HKD 3,585,891,000, reflecting a decrease from HKD 3,636,674,000 at the beginning of the year [164]. - The company reported a decrease in cash generated from operations due to an increase in income tax paid, which was HKD 100,778,000 compared to HKD 2,362,000 in the previous year [166].