IGG(HK:00799)2023-04-27 09:28Financial Performance - In 2022, the company reported a revenue decline of 24% to HKD 4.59 billion, marking its first annual loss since going public[9]. - The group's total revenue for the year ended December 31, 2022, was HKD 4.591 billion, a decrease of 24% compared to HKD 6.051 billion in 2021[30]. - The group recorded a loss of approximately HKD 503.6 million for the year, with a main business loss of HKD 176.8 million[30]. - The gross profit for the year ended December 31, 2022, was HKD 3,151,000,000, a decrease of 25% from HKD 4,198,000,000 in 2021, with a gross margin of 69%[35]. - Other net losses for the year ended December 31, 2022, were HKD 264,000,000, compared to HKD 31,000,000 in 2021, primarily due to impairment provisions for certain investments[38]. - The net cash used in operating activities for the year ended December 31, 2022, was HKD 98,239,000, compared to HKD 660,263,000 generated in 2021[49]. - The company had cash and cash equivalents of HKD 1,581,832,000 as of December 31, 2022, down from HKD 1,949,971,000 at the end of 2021[48]. - The income tax expense for the year ended December 31, 2022, was HKD 18,000,000, a decrease of 77% from HKD 77,000,000 in 2021, due to the company recording a loss[43]. User Engagement and Game Performance - The total registered users for the company's games reached 600 million, with an average monthly revenue of HKD 330 million[10]. - The company’s flagship strategy game, "Castle Clash," has accumulated nearly 300 million users over its ten-year operation[10]. - The game "King of Kingdoms" had 600 million registered users and maintained 11 million monthly active users as of December 31, 2022[21]. - The total user base reached nearly 1.5 billion, with monthly active users exceeding 35 million[19]. - The company achieved top three rankings on both Apple and Google platforms for its game "Mythic Heroes" in the Japan and South Korea markets[11]. Cost Management and Operational Efficiency - The marketing and administrative expenses were reduced by 23% and 16% respectively in the second half of the year, demonstrating effective cost control measures[9]. - The group reduced R&D and administrative expenses by 23% and 16% respectively in the second half of 2022[18]. - The cost of sales for the year ended December 31, 2022, was HKD 1,440,000,000, down 22% from HKD 1,853,000,000 in 2021[34]. - The total employee-related costs for the year ended December 31, 2022, amounted to HKD 1.3 billion, an increase from HKD 1.19 billion in the previous year, despite a 19% reduction in total employees from 3,101 to 2,503[61]. Strategic Initiatives and Future Plans - The company launched a new strategy game, "Viking Rise," which has received positive feedback for its unique gameplay and themes[11]. - The company plans to leverage its global R&D and operational advantages to navigate economic uncertainties in 2023[14]. - The group plans to promote potential new games in 2023, expecting profit pressure in the short term[29]. - The company emphasized its commitment to global market expansion and long-term operational strategies despite economic challenges[14]. - The group aims to leverage advancements in AI-generated content (AIGC) technology to enhance game development efficiency[29]. Investment and Financial Position - The group invested in internet gaming companies and recognized an investment-related loss of approximately HKD 326.8 million due to industry downturns[30]. - The group's external investments as of December 31, 2022, were HKD 655 million, down from HKD 1.021 billion a year earlier, including interests in associates and joint ventures[62]. - The group recognized an impairment loss of HKD 242 million for 21 associates and joint ventures, compared to HKD 33 million for 7 associates in the previous year, indicating significant financial distress in these investments[64]. - The fair value of the investment in MFund decreased from HKD 167.8 million in 2021 to HKD 118.7 million in 2022, resulting in an unrealized loss of HKD 49.2 million for the year[68]. - The fair value of the investment in Griffin increased from HKD 110.7 million in 2021 to HKD 114.2 million in 2022, yielding a gain of HKD 1.7 million[68]. Corporate Governance and Leadership - The company has a strong leadership team with over 26 years of experience in technology and finance, including key roles in major firms like Charles Schwab and Barclays Global Investors[81][84][85]. - The Chief Financial Officer has been with the company since 2009 and has extensive experience in financial management and compliance, having previously worked at various financial institutions[84]. - The company is focused on strategic investments in external startups and internal incubation projects, indicating a commitment to innovation and market expansion[85]. - The board currently consists of nine members, including five executive directors and three independent non-executive directors, ensuring a balance of power and authority[100]. - The company has maintained a high level of corporate governance, adhering to the corporate governance code, with the exception of clause C.2.1, which states that the roles of chairman and CEO should be separated[96]. Risk Management and Compliance - The company emphasizes the importance of clear communication with shareholders and maintains a shareholder communication policy that is reviewed annually[150]. - The company has integrated "Environmental, Social, and Governance" (ESG) risks into its risk management framework[145]. - The board has established a risk management and internal control system, which is reviewed quarterly, and considers it appropriate and effective as of December 31, 2022[145]. - The company has engaged legal, accounting, and tax advisors in various jurisdictions to ensure compliance with relevant laws and regulations[147]. - The company has implemented internal policies to ensure proper handling and communication of insider information[146]. Stakeholder Engagement and ESG Initiatives - The company actively communicates with stakeholders through various channels to understand and respond to their expectations and demands[176]. - Stakeholders expect IGG to protect user privacy, ensure game quality, and promote fair play, with communication through customer service and social media[177]. - IGG has identified and prioritized ESG issues through stakeholder surveys to establish a reporting framework that meets stakeholder expectations[183]. - The company aims to integrate social responsibility into its products, services, and community initiatives, promoting sustainable development[191]. - The company has implemented a robust anti-corruption policy, including a whistleblower system that allows for anonymous reporting of misconduct[195].