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Disclaimer
This presentation and the accompanying slides (the “Presentation”) which have been prepared by IGG INC (the“Company”) do not constitute any offer or invitation to purchase or subscribe for any securities, and shall notform the basis for or be relied on in connection with any contract or binding commitment whatsoever. ThisPresentation has been prepared by the Company based on information and data which the Company considersreliable, but the Company makes no representation or warranty, express or implied, whatsoever, on the truth,accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation maynot be all-inclusive and may not contain all of the information that you may consider material. Any liability inrespect of the contents of or any omission from this Presentation is expressly excluded.
Certain matters discussed in this presentation may contain statements regarding the Company’s marketopportunity and business prospects that are individually and collectively forward-looking statements. Suchforward-looking statements are not guarantees of future performance and are subject to known and unknownrisks, uncertainties and assumptions that are difficult to predict. The Company’s actual results, levels of activity,performance or achievements could differ materially and adversely from results expressed in or implied by thisPresentation, including, amongst others: whether the Company can successfully penetrate new markets and thedegree to which the Company gains traction in these new markets; the sustainability of recent growth rates; theanticipation of the growth of certain market segments; the positioning of the Company’s products and servicesin those segments; the competitive environment; and general market conditions. The Company is notresponsible for any forward-looking statements and projections made by third parties included in thisPresentation.
• Company Overview
• 2015 Interim Financial Results
• Business Review and Prospects
Agenda
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Company Profile
3
IGG Group, a leading global mobile gaming developer and operator
• Listed on the Main Board of HKEx on July 7, stock code: 799.HK;
• To date, the Group has regional offices in 9 countries and regions;
• Revenue from mobile games accounted for 93%;
• The user community of the Group consisted of over 260m user accounts from
more than 200 countries and regions, including a total MAU of over 17m.
• Annual revenue surpassed US$200 million;
• Acquired American game developer ‘Nerd Kingdom’ at the end of the year.
• Completed two successful transitions from client-based game to browser
game and from browser game to mobile game.
• The group was founded and received VC funding from IDG, Vertex and Hearst
10-12
2013
06-08
2014
15H1
• Hit Title ‘Castle Clash’ was launched;
• IGG went public on 18 Oct., 2013. Stock code: 8002.HK.
Global Branches
4
Well-organized corporate structure and explicit functional division enables
the Group to carrying out its global strategy from a macro perspective.
Singapore
Group headquarters;Self-owned ad. platform;
Localized R&D and operation
USAMarketing and
operation
ChinaR&D;
ManagementCanada Localized R&D
Japan Localized R&D and operation
ThailandLocalized operation
Korea Localized R&D and operation
PhilippinesCustomer service
center
New
New
New
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6 6.5 7 7.5 8 8.5 9 9.5 10Dec. 2011··· June 2013 Dec. 2013 June 2014 Dec. 2014 June 2015
Hard-core
Mid-core
Casual
The Group has diversified mobile game genres, including strategy, card, RPG, casino etc., most of which are mid-core.
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Major Self-developed and Licensed Games
Agenda
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• Company Overview
• 2015 Interim Financial Results
• Business Review and Prospects
* Adjusted net income represented profit excluding share-based compensation.
2015 Interim Financial Highlights
14H1 15H1 Change 15Q1 15Q2 Change
Revenue USD million 91.9 103.8 +12.9% 53.6 50.2 -6.3%
Gross profit USD million 66.6 72.0 +8.1% 36.9 35.1 -4.9%
Gross profit margin%
72% 69% -3ppt 69% 70% +1ppt
Adjusted net income* USD million 33.7 26.3 -22.0% 14.8 11.5 -22.3%
Adjusted net incomemargin*
% 37% 25% -12ppt 28% 23% -5ppt
Profit attributed to owners of the parent
USD million 32.9 24.8 -24.6% 13.9 10.9 -21.6%
Profit Margin for the period
% 36% 24% -12ppt 26% 22% -4ppt
Weighted average number of ordinary shares
Shares million 1359 1378 - 1369 1386 -
Basic earnings per share for the year
USD cents 2.42 1.80 - 1.02 0.78 -
7
Revenue of 15H1 vs. 14H1
8
The revenue increase of 15H1 vs. 14H1 was
primarily due to：
•An increase in revenue generated from the
mobile game series “Clash of Lords”,
average monthly gross billing from this
game series (I & II) was approximately
US$3.5 million in 15H1;
•The 15Q2 gross billing of “Deck Heroes” ,
which was launched in 14H2, reached about
US$4 million, representing over 30%
increase QoQ.
(USD million)
91.9103.8
14H1 15H1
12.9%
The revenue decrease of 15Q2 vs. 15Q1
was primarily due to：
•Slightly revenue decrease of part of the
existing games;
•Most of the Group‟s new games are
scheduled for launch in the second half
of this year, hence there was less
contribution from new games in 15H1.
Revenue of 15Q2 vs. 15Q1
9
(USD million)
15Q1 15Q2
50.253.6
Self-operated games 98%
Joint operation
2%
15H1 Revenue Breakdown by Segment
In light of the rich R&D resources and operating experiences the Group has, self-operating
business will go on to contribute significantly to the Group’s revenue while collaborating
and co-operating with certain superior third-party platforms is a good supplementary.
10
Self-operated games: • refers to the games, both in-house developed and
licensed from third parties, solely operated by the Group;
• the revenue recognized from this segment is approximately equal to the game players’ payment.
Joint operation:• refers to the games we jointly operated with third-
party operators (such as Tencent);• we are responsible for providing technical support,
game update etc. and has been given access to the joint operators’ platform to monitor sales activities;
• the revenue is recognized on a net basis, namely the portion we are entitled of according to the revenue-sharing agreement.
* Others refers to the revenue from the Group’s Advertising and Marketing center.
Browser
Games
12%
Others*
1%
Mobile Games 85%
Browser
Games
5.4%
Mobile Games 93.4%
14FY 15H1
Client-based Games 2%
Client-based Games 0.9%
15H1 Revenue Breakdown by Game
• The Group’s R&D resources has been allocated to mobile games and mobile
related software;
• Strategically, the original browser and client-based game business will be maintained without expansion.
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* Others refers to the revenue from the Group‟s Advertising and Marketing center.
15H1 Revenue Breakdown by Game Title
*Including the revenue from its mobile and browser versions.
Game title % of total revenue
Game title % of total revenue
Castle Clash* 62% Castle Clash* 56%
Clash of Lords(I&II) 12% Clash of Lords(I&II) 17%
Texas Poker Deluxe* 5% Deck Heroes 6%
Galaxy Online II* 5% Texas Poker Deluxe* 4%
Wings of Destiny 4% Brave Trials (licensed) 2%
Slot Machine* 3% Slot Machine* 2%
Total 91% Total 87%
14FY 15H1
12
•Major game “Castle Clash”
maintained steady revenue;
•“Clash of Lords” series
achieved sustained growth;
•14H2 new game “Deck Heroes”
contributed 6% of total revenue.
by country% of
total revenue
Australia 2%
by country% of
total revenue
Germany 10%
Russia 8%
France 5%
Great Britain 4%
by country/region
% of total revenue
Taiwan 2%
Malaysia 2%
China 1%
Asia25%
Europe31%
Other5%
15H1 Revenue Breakdown by Region
The Group’s revenue comes from over 200 countries and regions, which dilutes
the impact from the revenue and exchange rate fluctuation of certain regions.
by country% of
total revenue
U.S. 33%
Canada 3%
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North America 39%
15H1 Expenses Breakdown
* Adjusted net income represented profit excluding share-based compensation.
✓ The increase in R&D cost was primarily due to (i) the increase in outsourcing expenses attributable to the enrichment of our portfolio, and (ii) the increase in salaries, performance-based bonus and Share-based payments expenses attributable to the game development team.
✓ The increase in admin. expense was primarily
due to (i) expenses in relation to the Transfer
of Listing, and (ii) the increase in rental fee and
staff costs as a result of business expansion.
✓ Channel cost is the major constituent of cost of sales, the channel cost of our mobile game business is approximately 30%, which is higher than that of browser and client-based games;
✓ The revenue percentage of mobile games increased to 93% in 15H1 from 85% in 2014.
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14FY 15H1
Gross profit margin 71% 69%
Selling & distribution exp./ Revenue 21% 22%
Administrativeexp./ Revenue 8% 10%
R&D costs/Revenue 8% 12%
Adjusted net income margin *
34% 25%
Cash & cash equivalents 161
Time deposit over three months 12
- Short-term borrowings 0
Net cashUSD173 m
CapexUSD0.83 m
PP&E such as servers and computer equipment
0.80
+ Intangible assets such as software and trademark
0.03
Healthy cash position and low capex business nature set the stage for potential M&As over the next few years
USD million
USD million
Net Cash and Capex
15
Tax Rate
16
•About 99% of our total revenue was recognized through IGG Singapore in 15H1, and this percentage is expected to be stable in the foreseeable future;
•From 2010-2016, IGG Singapore is entitled to a preferential tax rate of 5%, subject to meeting certain conditions.
17%5%
The Preferential corporate tax rate
The prevailingcorporate tax rate
IGG Singapore
Dividend
17
DividendType
Declaration Date
Totalamount
Sharenumbers*
Dividendper share
(USD million) (million) (HK cents)
2015interim dividend
Aug. 27, 2015 7.4 1394 4.0
•The outstanding ordinary share numbers as at the end of the corresponding report period.
✓ The total amount of 2015 interim dividend accounted for about 30% of the Group’s 15H1 net profit;
✓ The future dividend payout ratio will be formulated in consideration of the Group’s profitability, funding need for M&A and the industry benchmark.
Agenda
• Company Overview
• 2015 Interim Financial Results
• Business Review and Prospects
18
China
75%
U.S.
4%
Canada 4%
Korea 1%
Singapore7%
Philippines 9%
Human Resource
•As at June 30 2015, the Group had 803 employees, in addition, the Group hired an exclusive outsourcing R&D team of over 100 team members.
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R&D49%
by function by location
Operation &Customer service30%
IT support9%
Management 3% Finance &
admin. 9%
Operational Data Excerpts of Major Games
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CC (Castle Clash)
COL II(Clash of Lords II)
DH(Deck Heroes)
Launched in July 2013 Dec. 2013 July 2014
Numbers of language versions(as at the end of July 2015)
15 9 6
Registered users(as at the end of July 2015)
114.0 mn 39.0 mn 6.3 mn
Monthly active users(July 2015)
9.3 mn 2.7 mn 0.8 mn
Revenue split on Android, iOS, Amazon platform(July 2015)
73%-24%-3% 78%-17%-5% 83%-16%-1%
Listed in the top ten grossing list of how many countries(July 31, 2015, Google Play）
42 8 2
M&A Project
The group acquired major stake of an American game developer
Nerd Kingdom at the end of 2014 and might make additional
investment in Nerd Kingdom in the second half of 2015.
Nerd Kingdom was established in 2010 by a team comprising a data scientist, an economist, a nuclear engineer and computer scientist, a gaming industry veteran and other professionals. The company brings an interdisciplinary perspective to games and technology, and has created the Eternusengine, a game engine on which its flagship game, TUG, is being built.
"TUG" is a sandbox game, similar to the well-known game "Minecraft", that encourages social collaboration, learning, and competition within a real time virtual space. The game is currently in alpha stage. TUG and the underlying Eternus Engine, will function at current gen specifications, within the browser and seamlessly be accessed across all devices.
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Took Part in the 13th ChinaJoy
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In the end of July 2015, IGG took part in
the 13th China Digital Entertainment Expo
and Conference (ChinaJoy) and had its
own booth to showcase its products;
Compared to the mature markets in
North America and Europe, Asian market
has tremendous growth potential. The
Group is seeking business partnership
and co-operation opportunities, including
licensing, outsourcing and investments in
Asia. This will raise the Group’s brand
awareness and reputation in China,
Japan, Korea and Southeast Asia.
New Title
23
✓“Final Fable” is a self-
developed semi-realtime RPG card game adopting the themes of fairy-tale fantasies;
✓Launched in June 2015, the first month MAU of “Final Fable”has surpassed 1 million.
✓The Group will test the water in Japanese market in the coming few months with regard to this game.
New Title
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War-strategy RPG game
“Lords Online"
APAC North America
Global Mobile Gaming Market
25
•The APAC region’s 760 million mobile gamers generated US$13.6 billion, or 55% of the total market in 2014, and will grow with a CAGR of 21.3% towards 2017;
•North America’s 150 million mobile gamers generated US$5.7 billion in 2014 thanks to a high average spend per playing gamer.
•Mobile game revenue (Smartphone & Tablet) will grow to US$30 billion and account for 1/3 of the global games industry in 2015；
• In 2017, the market cap of global mobile game will increase to US$40 billion, with a CGAR of 16%, and will account for 38% of the total gaming market.
* Data derived from Newzoo report.
$30.1bn
$35.0bn
$40.4bn
2015 2016 2017
Global Mobile Game Revenue
$13.6bn
760mn
$5.7bn
150mn
Revenue Players
Prospect
✓ Looking for opportunities of setting up new offices in other market segments to fully exploit the Group's global operating ability and to improve the gaming experience of players;
✓ To improve Link's functionalities in interest group creating, information sharing and private chatting to strengthen the connections among users;
✓ To allocate more resources to the Group's self-owned advertising platform to facilitate its monetization ability.
✓ To further enhance the mobile game development ability through recruiting local talents in each regional offices and strengthening the internal competition;
✓ Encouraging face-to-face communication among staffs from each branches;
✓ To supplement the Group's existing R&D force by outsourcing certain mobile game products, in order to inspire creativity and bring in fresh design concepts;
✓ The Group has made several equity investments in North American and Asian market in 2014, and is expecting to benefit from the synergy coming from industry chain integration and R&D ability enhancement;
✓ The Group will keep an eye on potential M&A opportunities around the world in the future.
R&D
Operation
M&A
26
