Boyaa Interactive International Limited

Transcription

1 Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. Boyaa Interactive International Limited (Incorporated in the Cayman Islands with limited liability) (Stock Code: 0434) THIRD QUARTERLY RESULTS ANNOUNCEMENT FOR THE THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2015 FINANCIAL HIGHLIGHTS For the For the nine months Year-on-Year year ended 31 December Change * 2014 RMB 000 RMB 000 % RMB 000 (Unaudited) (Unaudited) (Audited) Revenue 626, ,413 (10.6) 945,319 Web-based games 258, ,129 (18.4) 409,544 Mobile games 368, ,284 (4.2) 535,775 Gross profit 328, ,537 (23.6) 567,852 Profit attributable to owners of the Company 136, ,086 (36.5) 280,065 Non-IFRS adjusted net profit *** 150, ,931 (36.3) 306,177 For the three months Year-on-Year Change * RMB 000 RMB 000 % (Unaudited) (Unaudited) Revenue 189, ,462 (22.0) Web-based games 80, ,147 (19.5) Mobile games 109, ,315 (23.7) Gross profit 106, ,686 (27.0) Profit attributable to owners of the Company 62,208 76,250 (18.4) Non-IFRS adjusted net profit *** 67,768 82,108 (17.5) 1

2 REVENUE BY GAMES For the nine months Year-on-Year Change * RMB 000 RMB 000 % (Unaudited) (Unaudited) Texas Hold em Series 440, ,818 (21.2) Fight the Landlord 113, , Others 73,733 34, Total 626, ,413 (10.6) For the three months Year-on-Year Change * RMB 000 RMB 000 % (Unaudited) (Unaudited) Texas Hold em Series 134, ,305 (26.7) Fight the Landlord 26,067 45,301 (42.5) Others 29,539 14, Total 189, ,462 (22.0) REVENUE BY LANGUAGE VERSIONS OF GAMES For the nine months Year-on-Year Change * RMB 000 RMB 000 % (Unaudited) (Unaudited) Simplified Chinese 263, ,195 (10.6) Other languages 362, ,218 (10.6) Total 626, ,413 (10.6) For the three months Year-on-Year Change * RMB 000 RMB 000 % (Unaudited) (Unaudited) Simplified Chinese 68, ,146 (42.0) Other languages 121, ,316 (3.1) Total 189, ,462 (22.0) 2

3 OPERATIONAL HIGHLIGHTS 30 September 2015 For the three months ended Year- Quarter- 30 June September 2014 on-year on-quarter Change * Change ** % % Paying Players (in thousands) 2,112 2,725 2, (22.5) Web-based games (44.1) (6.5) Mobile games 2,012 2,618 1, (23.1) Daily Active Players ( DAUs ) (in thousands) **** 6,318 6,213 5, Web-based games ,610 (38.6) 8.1 Mobile games 5,330 5,299 4, Monthly Active Players ( MAUs ) (in thousands) **** 29,384 27,929 27, Web-based games 6,691 5,329 8,106 (17.5) 25.6 Mobile games 22,693 22,600 18, Average Revenue Per Paying Player ( ARPPU ) for Texas Hold em Series (in RMB) Web-based games (31.2) 7.1 Mobile games ARPPU for Fight the Landlord (in RMB) Web-based games (36.8) (57.8) Mobile games (50.3) 27.5 ARPPU for other games (in RMB) Web-based games Mobile games * Year-on-Year Change % represents a comparison between the current reporting period and the corresponding period last year. ** Quarter-on-Quarter Change % represents a comparison between the quarter 2015 and the immediately preceding quarter. *** Non-IFRS adjusted net profit was derived from the unaudited profit for the period excluding share-based compensation expenses. **** The numbers of DAUs and MAUs shown above are calculated based on the number of active players in the last calendar month of the relevant reporting period. 3

4 The board of directors (the Board ) of Boyaa Interactive International Limited (the Company or we or our or us ) is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (the Group or we or our or us ) for the three and nine months 2015 (the Reporting Period ) (the Third Quarterly Results ). The Third Quarterly Results have been reviewed by PricewaterhouseCoopers, the auditor of the Company, in accordance with International Standard on Review Engagements 2410 Review of interim financial information performed by the independent auditor of the entity issued by the International Auditing and Assurance Standards Board, and by the audit committee of the Company (the Audit Committee ). This announcement is made pursuant to Rule of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the Listing Rules ) and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong). BUSINESS OVERVIEW AND OUTLOOK In the third quarter of 2015, the Company continued to see a decline in its revenue due to the impact on the industry led by the regulation and adjustment of SMS payment channels by domestic operators in mainland China, though the rate of decline is slowing down. While maintaining our usual operations, we optimized our advertising strategy in the third quarter, and as a result, our net profit has increased considerably when compared to the preceding quarter. In the third quarter of 2015, the number of our active players for mobile games remained fairly stable when compared with the preceding quarter, but we saw notable growth as compared to the same period in last year. The number of our daily active players for our mobile games experienced a 27.1% increase from 4.2 million in the third quarter of 2014 to 5.3 million in the same period in this year, whereas the number of monthly active players for our mobile games grew by 19.7% from 19.0 million in the third quarter of 2014 to 22.7 million in the same period in this year. Though we saw a notable quarter-on-quarter decline in our paying player base for our mobile games in the third quarter of 2015 due to the continued impact of SMS payment channels in mainland China, we experienced a growth compared with the same period in last year represented by a 9.6% increase in the number of playing players for our mobile games from 1,836 thousands in the third quarter of 2014 to 2,012 thousands in the same period in this year. The ARPPU of our key game, Texas Hold em Series, continued to sustain steady growth in its mobile games offering. The ARPPU of the mobile-based Fight the Landlord for the third quarter of 2015 continued to experience a significant decrease from the same period in last year due to the impact of SMS payment channels in mainland China, but we have seen slight improvement from the preceding quarter. 4

5 As at the end of the third quarter of 2015, the number of online games in our game portfolio which we offer and operate increased to 35 games, of which, Pokdeng, Domino QiuQiu and Hilo are the new board and card games which we have launched for the overseas market during the third quarter of 2015, and as a result further deepened the layout of our overseas market and continued to broaden our board and card games portfolio. At the same time, we continued to maintain and deepen our cooperation with large-scale social platforms such as Facebook and Google to enhance the cooperation in local offline events, which expands player base and increases player s adherence. Domestically, we increased our research and development efforts with respect to local card and board games and gradually penetrated into the Internet TV games market. We constantly seek to diversify our payment channels while we continued to maintain close cooperation relationship with the three telecom operators in order to strengthen our ability to combat policy and market changes through adopting a flexible distribution channels strategy. Meanwhile, in September 2015, we organized the 2015 Boyaa Poker Tournament ( BPT ), based on which we have accumulated more tournament experience and players and expanded our brand awareness among the player base, thereby forging ahead towards our goal in becoming a leading global brand for online card and board games. In terms of technology infrastructure investment and technology innovation, as at the end of the third quarter of 2015, we had 729 servers hosted in 12 countries and regions all over the world. We have increased our research and development efforts on our fully automated systems in order to further enhance the intelligence and security of our service facilities. At the same time, we also further stepped up our development efforts on our game development engine and technologies with an aim to creating an integrated development environment in order to further improve player experience and enhance our game development efficiency. In the fourth quarter of 2015, we will continue to strengthen and expand our card and board games portfolio and increase our efforts in promoting and holding game tournaments (such as BPT). We will further enhance our technologies and optimize the functions of our games in order to further improve player experience. We will also continue to strengthen our research and development efforts on emerging and cutting-edge technologies. 5

6 MANAGEMENT DISCUSSION AND ANALYSIS Revenue Our revenue for the three months 2015 amounted to approximately RMB189.9 million, representing year-on-year decrease of 22.0% from approximately RMB243.5 million recorded for the same period of For the three months ended 30 September 2015, revenue generated from mobile games amounted to approximately RMB109.3 million, representing year-on-year decrease of 23.7% from approximately RMB143.3 million recorded for the same period of The year-on-year decrease was mainly due to the continuing impact of the regulation of the SMS payment channels and the adjustment to the SMS pricing channels by the operators. Revenue generated from web-based games for the three months 2015 was approximately RMB80.6 million, representing year-on-year decrease of 19.5% from approximately RMB100.1 million recorded for the same period of For the three months 2015, revenue generated from our mobile games and web-based games accounted for approximately 57.6% and 42.4% of our total revenue, respectively, as compared with 58.9% and 41.1%, respectively, for the three months Cost of revenue Our cost of revenue for the three months 2015 amounted to approximately RMB83.6 million, representing year-on-year decrease of 14.5% from approximately RMB97.8 million recorded for the same period in The year-on-year decrease was mainly due to the decrease in commission fees resulting from the decrease in our revenue. Gross profit and gross profit margin As a result of the foregoing, our gross profit for the three months 2015 amounted to approximately RMB106.3 million, representing year-on-year decrease of 27.0% from approximately RMB145.7 million recorded for the same period in Our gross profit margin were approximately 56.0% and 59.8%, respectively, for the three months 2015 and the same period in

7 Selling and marketing expenses Our selling and marketing expenses for the three months 2015 amounted to approximately RMB20.5 million, representing year-on-year decrease of 54.8% from approximately RMB45.4 million recorded for the same period in The year-on-year decrease was mainly attributable to the reduction in advertising and promotion expenses due to the optimization of our advertising strategy. Administrative expenses Our administrative expenses for the three months 2015 amounted to approximately RMB33.3 million, representing year-on-year increase of 20.0% from approximately RMB27.7 million recorded for the same period in The year-on-year increase was mainly due to the increase in employee benefit expenses resulting from the increase in headcount and the upward adjustment of staff salaries. Other income and gains net For the three months 2015, we recorded other income and gains net of approximately RMB5.0 million, compared to approximately RMB14.6 million recorded for the same period in The other income and gains net primarily consisted of fair value gains on financial assets at fair value through profit or loss relating to the non-quoted investments in asset management companies, equity investment partnerships and certain wealth management products we purchased. The year-on-year decrease was primarily due to the decreased return on short-term investments. Finance income net Our net finance income for the three months 2015 was approximately RMB12.2 million, compared to the net finance income of approximately RMB0.4 million recorded for the same period of The year-on-year change was primarily due to the increase in interest income as compared to the same period of

8 Share of profit of associates We held investments in six associates, namely Shenzhen Fanhou Technology Co., Ltd., Shenzhen HuifuWorld Network Technology Co., Ltd., Shenzhen Gangyun Technology Co., Ltd., Shenzhen Easething Technology Co., Ltd., Shenzhen Jisiwei Intelligent Technology Co., Ltd. and Allin Interactive International Limited and its subsidiaries as at 30 September 2015 (31 December 2014: five), all of which were online game or Internet technology companies. We recorded a share of profit of associates of approximately RMB3.2 million for the three months 2015, compared to a share of profit of associates of approximately RMB2.7 million recorded for the same period in Income tax expense Our income tax expense for the three months 2015 was approximately RMB10.8 million, representing a decrease of 23.4% from approximately RMB14.0 million recorded for the three months The effective tax rate were 14.7% and 15.6%, respectively, for the three months 2015 and the same period in The decrease in effective tax rate for the three months 2015 compared to the corresponding period in 2014 is primarily due to the lower effective tax rate of Function Technology Co., Ltd. newly acquired during the first quarter of 2015 and Boyaa Holdings Limited. Profit for the Reporting Period As a result of the foregoing, our profit attributable to owners of the Company for the three months 2015 amounted to approximately RMB62.2 million, representing year-on-year decrease of 18.4% from approximately RMB76.3 million recorded for the same period in Non-IFRS Measure Adjusted net profit To supplement our consolidated financial statements which are presented in accordance with International Financial Reporting Standards ( IFRS ), we also use unaudited non-ifrs adjusted net profit as an additional financial measure to evaluate our financial performance by eliminating the impact of items that we do not consider indicative of the performance of our business. The term adjusted net profit is not defined under IFRS. Other companies in the industry the Group operates in may calculate such non-ifrs item differently from the Group. The use of adjusted net profit has material limitations as an analytical tool, as adjusted net profit does not include all items that impact our net profit for the Reporting Period and should not be considered in isolation or as a substitute for analysis of the Group s results as reported under IFRS. 8

9 Our unaudited non-ifrs adjusted net profit for the three months 2015 of approximately RMB67.8 million was derived from our unaudited profit of the same period excluding share-based compensation expenses of approximately RMB1.4 million, RMB1.3 million and RMB2.9 million included in cost of revenue, selling and marketing expenses and administrative expenses, respectively. Our unaudited non-ifrs adjusted net profit for the three months 2014 of approximately RMB82.1 million was derived from our unaudited profit for the same period excluding share-based compensation expenses of approximately RMB2.3 million, RMB0.9 million and RMB2.7 million included in cost of revenue, selling and marketing expenses and administrative expenses, respectively. Cash and cash equivalents As at 30 September 2015, we had cash and cash equivalents of approximately RMB1,165.0 million (31 December 2014: approximately RMB1,029.3 million), which primarily consisted of cash at bank and in hand and short-term bank deposits. Out of the RMB1,165.0 million, approximately RMB1,028.3 million is denominated in Renminbi and approximately RMB136.7 million is denominated in other currencies (primarily US dollars). We currently do not hedge transactions undertaken in foreign currencies. Due to our persistent efforts in managing our exposure to foreign currencies through constant monitoring to limit as much as possible the amount of foreign currencies held by us, fluctuations in currency exchange rates do not have any material adverse impact on our financial results. Up to 30 September 2015, a total amount of RMB249.2 million from the net proceeds from our initial public offering had been utilized for expanding our marketing and promotion activities, for equity investments and for research and development activities. The unutilized net proceeds has been deposited into short-term demand deposits in a bank account maintained by the Group. Short-term investments As at 30 September 2015, all our short-term investments had matured (31 December 2014: RMB370.0 million). The short-term investments held during the Reporting Period represent investments in certain money market instruments in the form of principal and return-guaranteed products denominated in Renminbi offered by a commercial bank in China and have a term of one year and which had all matured in April No new money market instruments have been purchased by the Group during the Reporting Period. The effective interest rate for these shortterm investments for the nine months 2015 was 6.0% (for the nine months 2014: 6.3%), and the returns on such short-term investments amounted to approximately RMB4.2 million for the nine months 2015 (for the nine months 2014: RMB34.5 million). 9

10 Financial assets at fair value through profit or loss As at 30 September 2015, we also recorded financial assets at fair value through profit or loss amounted to approximately RMB358.3 million (31 December 2014: approximately RMB22.1 million), which consisted of non-quoted investments in asset management companies, equity investment partnerships and preferred shares issued by a private company included in noncurrent assets and non-quoted investments in certain wealth management products included in current assets. As at 30 September 2015, the fair values of the investments in asset management companies were determined mainly with reference to the estimated return; the fair values of the investments in equity investment partnerships were determined mainly with reference to the Group s share of their respective net asset values; and the fair value of preferred shares issued by a private company was determined using the discounted cash flow method. These wealth management products have an initial term ranging from 19 days to 1 year. The fair values of these investments were based on the quotations or statements provided by the counterparties. The above financial assets were designated as financial assets at fair value through profit or loss upon their initial recognition as the performance of these financial assets is evaluated on a fair value basis pursuant to the Group s investment strategy. The investments in wealth management products under short-term investments and financial assets at fair value through profit or loss were made in line with our treasury and investment policies, after taking into account, among others, the level of risk, return on investment, liquidity and the term to maturity. Generally, the Company has in the past selected wealth management products that are principal guaranteed and therefore are relatively low risk products. Prior to making an investment, the Company had also ensured that there remains sufficient working capital for the Company s business needs even after the investments in wealth management products. Each of such investments does not constitute a notifiable transaction or connected transaction of the Company under the Listing Rules. As agreed with the financial institutions and/or asset management companies, the underlying investment portfolio of the short-term investments and wealth management products of the Company were primarily represented by inter-bank loan market instruments and exchange traded fixed-income financial instruments, such as inter-bank loans, government bonds, central bank bills and similar products, which were highly liquid with a relatively short term of maturity, and which were considered to akin to placing deposits with banks whilst enabling the Group to earn an attractive rate of return. 10

11 Borrowings During the nine months 2015, we did not have any short-term or long-term bank borrowings and we had no outstanding, utilized or unutilized banking facilities. Capital expenditures For the nine months 2015, our capital expenditure amounted to approximately RMB15.7 million (for the nine months 2014: approximately RMB24.9 million). The capital expenditure mainly included payment for equity investments of RMB5.6 million (for the nine months 2014: RMB18.2 million), which was funded by using the net proceeds from our initial public offering; and purchasing of additional furniture and equipment, motor vehicles, leasehold improvements and computer software of approximately RMB10.1 million (for the nine months 2014: approximately RMB6.7 million), which was funded by using our cash flow generated from our operations. 11

12 FINANCIAL INFORMATION CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER September 31 December Notes RMB 000 RMB 000 (Unaudited) (Audited) ASSETS Non-current assets Property, plant and equipment 27,650 15,176 Intangible assets 5,866 19,626 Investments in associates 3 18,579 21,839 Available-for-sale financial assets 51,159 63,975 Deferred income tax assets 8,461 1,685 Financial assets at fair value through profit or loss 5 253,776 22,085 Prepayments and other receivables 33,895 42, , ,037 Current assets Trade receivables 4 80,917 94,312 Prepayments and other receivables 29,208 33,001 Financial assets at fair value through profit or loss 5 104,475 Short-term investments 370,000 Cash and cash equivalents 1,164,961 1,029,331 1,379,561 1,526,644 Assets held for sale 3 20,564 1,400,125 1,526,644 Total assets 1,799,511 1,713,681 12

13 CONSOLIDATED BALANCE SHEET (CONTINUED) AS AT 30 SEPTEMBER September 31 December Note RMB 000 RMB 000 (Unaudited) (Audited) EQUITY AND LIABILITIES Equity Share capital Share premium 590, ,329 Shares held for RSU Scheme (14) (19) Reserves 147, ,045 Retained earnings 838, ,896 1,577,020 1,472,496 Non-controlling interests 9,130 Total equity 1,577,020 1,481,626 Liabilities Non-current liabilities Deferred income tax liabilities 8,257 14,234 Current liabilities Trade and other payables 7 89, ,169 Deferred revenue 20,589 24,238 Current income tax liabilities 104,463 78, , ,821 Total liabilities 222, ,055 Total equity and liabilities 1,799,511 1,713,681 Net current assets 1,185,891 1,308,823 Total assets less current liabilities 1,585,277 1,495,860 13

14 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2015 Three months Nine months Notes RMB 000 RMB 000 RMB 000 RMB 000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenue 2 189, , , ,413 Cost of revenue 8 (83,616) (97,776) (298,779) (271,876) Gross profit 106, , , ,537 Selling and marketing expenses 8 (20,485) (45,352) (128,429) (133,269) Administrative expenses 8 (33,268) (27,717) (102,271) (82,563) Other income and gains net 9 5,007 14,641 21,346 36,516 Operating profit 57,559 87, , ,221 Finance income 10 13, ,101 7,235 Finance costs 10 (799) (215) (6,078) (6,601) Finance income net 10 12, , Share of profit of associates 3 3,162 2,659 8,586 5,460 Profit before income tax 72,969 90, , ,315 Income tax expense 11 (10,761) (14,043) (20,557) (42,229) Profit for the period 62,208 76, , ,086 Other comprehensive income Items that may be reclassified subsequently to profit or loss: Changes in value of available-forsale financial assets, net of tax (152) 116 (10,138) 116 Less: reclassification of changes in fair value of available-forsale financial assets to profit or loss upon disposal of available-for-sale financial assets, net of tax (258) Currency translation differences 5,971 (842) 5,649 5,183 Other comprehensive income/(loss) for the period, net of tax 5,819 (726) (4,747) 5,299 Total comprehensive income for the period 68,027 75, , ,385 14

15 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (CONTINUED) FOR THE THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2015 Three months Nine months Notes RMB 000 RMB 000 RMB 000 RMB 000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Profit attributable to: Owners of the Company 62,208 76, , ,086 Non-controlling interests (1,162) 62,208 76, , ,086 Total comprehensive income attributable to: Owners of the Company 68,027 75, , ,385 Non-controlling interests (1,162) 68,027 75, , ,385 Earnings per share (expressed in RMB cents per share) Basic Diluted Dividends 13 46,838 15

16 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2015 (Unaudited) Share capital Share premium Shares held for RSU Scheme Reserves Retained earnings Total Noncontrolling interests Total equity Note RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Balance at 1 January ,329 (19) 137, ,896 1,472,496 9,130 1,481,626 Comprehensive income Profit for the period 136, ,038 (1,162) 134,876 Other comprehensive income change in value of available-for-sale financial assets, net of tax (10,138) (10,138) (10,138) reclassification of changes in fair value of availablefor-sale financial assets to profit or loss upon disposal, net of tax (258) (258) (258) currency translation differences 5,649 5,649 5,649 Total comprehensive income for the period (4,747) 136, ,291 (1,162) 130,129 Employee share option and RSU scheme value of employee services 15,456 15,456 15,456 proceeds from shares issued 3 2,896 2,899 2,899 vesting of shares under RSU scheme (5) 5 Dividends (45,122) (45,122) (45,122) Total contributions by and distributions to owners of the Company, recognized directly in equity 3 (42,231) 5 15,456 (26,767) (26,767) Disposal of subsidiaries 15 (7,968) (7,968) Total transactions with owners, recognized directly in equity 3 (42,231) 5 15,456 (26,767) (7,968) (34,735) Balance at 30 September ,098 (14) 147, ,934 1,577,020 1,577,020 16

17 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED) FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2015 (Unaudited) Share capital Share premium Shares held for RSU Scheme Reserves Retained earnings Total Noncontrolling interests Total equity RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 Balance at 1 January ,070 (33) 53, ,831 1,214,619 1,214,619 Comprehensive income Profit for the period 214, , ,086 Other comprehensive income Change in fair value of available-for-sale financial assets currency translation differences 5,183 5,183 5,183 Total comprehensive income for the period 5, , , ,385 Employee share option and RSU scheme value of employee services 21,845 21,845 21,845 proceeds from shares issued 6 6,903 6,909 6,909 vesting of shares under RSU scheme (13) 13 Buy-back of shares (587) (587) (587) Dividends (112,428) (112,428) (112,428) Total transactions with owners, recognized directly in equity 6 (106,125) 13 21,845 (84,261) (84,261) Balance at 30 September ,945 (20) 80, ,917 1,349,743 1,349,743 17

18 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2015 Nine months Notes RMB 000 RMB 000 (Unaudited) (Unaudited) Cash flows from operating activities Cash generated from operations 95, ,628 Income tax paid (1,508) (22,441) Net cash generated from operating activities 93, ,187 Cash flows from investing activities Purchase of property, plant and equipment (9,862) (5,604) Purchase of intangible assets (269) (1,065) Purchase of short-term investments (1,060,000) Purchase of financial assets at fair value through profit or loss (1,142,440) (9,985) Investments in associates (4,600) (8,200) Purchase of available-for-sale financial assets (1,000) (2,609) Prepayment for acquisition of a subsidiary (10,000) Payment of deposit for purchase of certain properties (20,000) Net proceeds from disposal of subsidiaries 15 4,666 Acquisition of subsidiaries, net of cash acquired Proceeds from disposal of associates 28 Proceeds from disposal of financial assets at fair value through profit or loss 826, ,243 Proceeds from disposal of short-term investments 370, ,000 Proceeds from disposal of available-for-sale financial assets 1,927 Proceeds from disposal of property, plant and equipment Return on short-term investments received 1,894 34,474 Interest received 33,196 7,295 Net cash generated from/(used in) investing activities 80,008 (205,140) Cash flows from financing activities Payments for buy-back of shares (587) Dividends paid to equity holders 13 (45,122) (112,428) Proceeds from issuance of ordinary shares 6 2,991 6,678 Net cash used in financing activities (42,131) (106,337) Net increase/(decrease) in cash and cash equivalents 131,627 (166,290) Cash and cash equivalents at beginning of the period 1,029, ,566 Exchange gains on cash and cash equivalents 4, Cash and cash equivalents at end of the period 1,164, ,752 18

19 1. GENERAL INFORMATION, BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING POLICIES Boyaa Interactive International Limited (the Company ) was incorporated in the Cayman Islands. The address of its registered office is PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. The Company s shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since 12 November 2013 (the Listing ). The Company is an investment holding company. The Company and its subsidiaries (together, the Group ) are principally engaged in the development and operations of online card and board game business in the People s Republic of China (the PRC ), Hong Kong and other countries and regions. The interim consolidated balance sheet as at 30 September 2015, the interim consolidated statements of comprehensive income for the three and nine months then ended, the interim consolidated statement of changes in equity and the interim consolidated statement of cash flows for the nine months then ended, and a summary of significant accounting policies and other explanatory notes (collectively defined as the Interim Financial Information ) of the Group have been approved by the Board of Directors (the Board ) on 25 November This Interim Financial Information is presented in Renminbi ( RMB ), unless otherwise stated. During the period, the Group acquired four subsidiaries from certain independent third parties. These subsidiaries are principally engaged in development and operations of online card and board game business. Details of the acquisitions are included in Note 14. During the period, the Group disposed of interests in certain subsidiaries to an independent third party. Details of the disposals are included in Note 15. The Interim Financial Information is prepared in accordance with International Accounting Standards ( IAS ) 34 Interim Financial Reporting issued by the International Accounting Standards Board. This Interim Financial Information should be read in conjunction with the annual consolidated financial statements of the Group for the year ended 31 December 2014 as set out in the 2014 annual report of the Company (the 2014 Financial Statements ). Except as described below, the accounting policies applied are consistent with those used in the 2014 Financial Statements, which have been prepared in accordance with International Financial Reporting Standards ( IFRS ) under the historical cost convention, as modified by the revaluation of financial assets at fair value through profit or loss and available-for-sale financial assets, which were carried at fair value. Taxes on income in the interim periods are accrued using the tax rates that would be applicable to expected total annual earnings. There are no new standards, amendments and interpretations to existing standards that are effective for the first time for this interim period that could be expected to have a material impact on the Group. 19

20 The following new standards and amendments to standards have been issued and are relevant to the Group, but are not effective for the financial year beginning on 1 January 2015 and have not been early adopted: Effective for the financial year beginning on or after IFRS 11 (Amendment) Accounting for acquisitions of 1 January 2016 interests in joint operations IAS 16 and IAS 38 (Amendments) Clarification of acceptable methods 1 January 2016 of depreciation and amortization IFRS 10 and IAS 28 (Amendments) Sale or contribution of assets 1 January 2016 between an investor and its associate or joint venture IAS 27 (Amendment) Equity method in separate financial 1 January 2016 statements IAS 1 (Amendment) Disclosure initiative 1 January 2016 Annual improvements 2014 Annual improvements project 1 July 2016 IFRS 15 Revenue from contracts with 1 January 2018 customers IFRS 9 Financial instruments 1 January 2018 The Group is in the process of assessing the impact of the above new standards and amendments to existing standards on the Group s consolidated financial statements. 2. REVENUE AND SEGMENT INFORMATION Three months Nine months RMB 000 RMB 000 RMB 000 RMB 000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Development and operations of online games Web-based games 80, , , ,129 Mobile games 109, , , , , , , ,413 The directors of the Company consider that the Group s operations are operated and managed as a single segment; accordingly no segment information is presented. 20

21 The Group offers their games in various language versions in order to enable game players to play the games in different regions. A breakdown of revenue derived from different language versions of the Group s games is as follows: Three months Nine months RMB 000 RMB 000 RMB 000 RMB 000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Simplified Chinese 68, , , ,195 Other languages 121, , , , , , , ,413 The Group has a large number of game players none of whom contributed 5% or more of the Group s revenue for the three and nine months 2015 and The Group s non-current assets other than deferred income tax assets, financial assets at fair value through profit or loss and available-for-sale financial assets were located as follows: 30 September 2015 RMB 000 (Unaudited) 31 December 2014 RMB 000 (Audited) Mainland China 80,390 97,128 Other locations 5,600 2,164 85,990 99,292 21

22 3. INVESTMENTS IN ASSOCIATES Nine months RMB 000 RMB 000 (Unaudited) (Unaudited) At beginning of the period 21,839 7,977 Transfer from investments in subsidiaries as a result of disposal (Note 15) 3,922 Other additions (Notes (a) and (b)) 6,600 8,200 Dilution gain (Note (c)) 49 Disposals (Note (a)) (1,853) Transfer to assets held for sale (Note (d)) (20,564) Share of profits 8,586 5,460 At end of the period 18,579 21,637 (a) (b) (c) On 22 January 2015, the Group acquired 30% equity interest in Shenzhen Easething Technology Co., Ltd. (, Easething ), which is mainly engaged in development and operation of intelligent hardware and artificial intelligence system, from an independent third party, at a cash consideration of RMB3,000,000 of which RMB1,000,000 had been paid. On 12 May 2015, the Group disposed of 20% equity interest in Easething to an independent third party at a consideration of approximately RMB2,028,000, which resulted in a gain of RMB175,000. Since the Group still has the contractual right to appoint one director to the board of directors of Easething after the disposal, the directors of the Company consider that the Group has significant influence on Easething, and accordingly it is accounted for as an associate of the Group. On 18 June 2015, the Group acquired 12% equity interest in Shenzhen Jisiwei Intelligent Technology Co., Ltd. (, Shenzhen Jisiwei ), which is mainly engaged in development and sales of electronic products and development of intelligence applications, from an independent third party at a cash consideration of RMB3,600,000, which had been paid as at 30 September Since the Group has the contractual right to appoint a director to the board of directors of Shenzhen Jisiwei, the directors of the Company consider that the Group has significant influence on Shenzhen Jisiwei, and accordingly it is accounted for as an associate of the Group. In August 2015, a third-party investor invested RMB1,000,000 and obtained 2% equity interest in Shenzhen HuifuWorld Network Technology Co., Ltd. (, HuifuWorld ). As a result, the Group s interest in HuifuWorld was diluted from 15% to 14.7% which resulted in a dilution gain of approximately RMB49,000 recognized for the nine months ended 30 September The dilution gain represents the difference between the attributable carrying value of the investment deemed to be disposed of immediately prior to the third-party investor made the investment and the Group s share of the investment made by the third-party investor. Since the Group still retains the contractual right to appoint a director to the board of directors of HuifuWorld, the directors of the Company consider that the Group has significant influence on HuifuWorld, accordingly, it is continued to be accounted for as an associate of the Group. 22

23 (d) On 23 March 2015, the Group entered into a share purchase agreement ( SPA ) with Dalian Zeus Entertainment Co., Ltd ( Zeus Entertainment ) (formerly known as Dalian Kemian Wood Industry Co., Ltd.) which is an A-share listed company, to dispose of its entire 16% equity interest in RaySns Technology Co., Ltd. ( RaySns ), an associate of the Group. The consideration for the disposal payable by Zeus Entertainment to the Group is RMB126,720,000, subject to adjustment, which shall be satisfied by the issue and allotment of the consideration shares, being 2,385,093 shares in Zeus Entertainment with par value of RMB1.00 each, to the Group. The completion of the transaction contemplated under the SPA is conditional upon: (i) the execution of the SPA; (ii) the transaction contemplated under the SPA being approved by the board of directors and shareholders meeting of Zeus Entertainment (the approval by the board of directors of Zeus Entertainment has been obtained on 23 March 2015); (iii) the changes to the registered capital of and the shareholding of foreign investors in Zeus Entertainment, as a foreign-invested enterprise, arising from the transactions contemplated under the SPA being approved by relevant commission of commerce; and (iv) the transaction contemplated under the SPA being approved by the China Securities Regulatory Commission ( CSRC ). The above disposal has not been completed as at the date of the approval of the Interim Financial Information. As the transaction contemplated under the SPA has been approved by CSRC during the period, the directors of the Company are of the view that the completion of the transaction was highly probable as at 30 September 2015 and thus the investment in RaySns was reclassified to assets held for sale as at 30 September TRADE RECEIVABLES 30 September 2015 RMB 000 (Unaudited) 31 December 2014 RMB 000 (Audited) Trade receivables 80,917 95,204 Less: impairment provision (892) 80,917 94,312 Trade receivables were arising from the development and operations of online game business. The credit terms of trade receivables granted to the platforms and third party payment vendors are usually 30 to 120 days. Ageing analysis based on recognition date of the gross trade receivables at the respective balance sheet dates is as follows: 30 September 2015 RMB 000 (Unaudited) 31 December 2014 RMB 000 (Audited) 0-60 days 50,841 67, days 13,594 14, days 13,486 10,705 Over 180 days 2,996 2,361 80,917 95,204 23

24 5. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 30 September 31 December RMB 000 RMB 000 (Unaudited) (Audited) Included in non-current assets Non-quoted investments in (Note (a)): asset management companies 161,206 equity investment partnerships 79,938 9,937 preferred shares issued by a private company 12,632 12, ,776 22,085 Included in current assets Non-quoted investments in certain wealth management products (Note (b)) 104, ,251 22,085 (a) (b) (c) As at 30 September 2015, the fair values of the investments in asset management companies were determined mainly with reference to the estimated return; the fair values of the investments in equity investment partnerships were determined mainly with reference to the Group s share of their respective net asset values; and the fair value of preferred shares issued by a private company was determined using the discounted cash flow method. These wealth management products have an initial term ranging from 19 days to 1 year. The fair values of these investments were based on the quotations or statements provided by the counterparties. The above financial assets were designated as financial assets at fair value through profit or loss upon their initial recognition as the performance of these financial assets is evaluated on a fair value basis pursuant to the Group s investment strategy. 24

25 6. SHARE-BASED PAYMENTS (a) Share options On 7 January 2011, the Board of the Company approved the establishment of a share option scheme (the Pre-IPO Share Option Scheme ) with the objective to recognize and reward the contribution of eligible directors and employees to the growth and development of the Group. The contractual life of all options under Pre-IPO Share Option Scheme is eight years from the grant date. On 23 October 2013, the Board of the Company approved the establishment of a share option scheme (the Post-IPO Share Option Scheme ) with the objective to recognize and reward the contribution of eligible directors and employees to the growth and development of the Group. The contractual life of all options under Post-IPO Share Option Scheme is ten years from the grant date. (i) Movements in the number of share options outstanding: Number of share options (Unaudited) (Unaudited) At 1 January 8,827,506 29,527,781 Granted 26,360,000 Exercised (7,052,437) (19,319,083) Lapsed (1,478,637) (150,000) At 30 September 26,656,432 10,058,698 On 7 September 2015, the Group granted 26,360,000 share options under the Post-IPO Share Option Scheme to its employees. The vesting period of the share options granted is 4 years and the vesting schedule is 25% after 12 months from the grant date, 25% after 24 months from the grant date, and 2.083% from each month of 25 to 48 months from the grant date. Exercise price of the share options granted is HKD3.108 per share. The expiry date of the above newly granted share options is 6 September The total fair value of the above newly granted share options is HKD35,932,000, as determined using the binomial model. The significant inputs used in the model were exercise price of HKD3.108 per share at the grant date, fair value of underlying stock of HKD2.95 per share at the valuation date, volatility of 49.29%, dividend yield of 2% and an expected option life of 10 years. The volatility measured at the standard deviation of continuously compounded share returns is based on statistical analysis of daily share prices of comparable companies. Share options exercised during the period resulted in 7,052,437 shares being issued, with exercise proceeds of approximately RMB2,899,000. As at 30 September 2015, an amount of RMB14,000 was due from The Core Admin Boyaa Option Limited (31 December 2014: RMB106,000), being the nominee of the Group s share option scheme. The related weighted average share price at the time of exercise was HKD6.11 per share. 25

26 (ii) Outstanding share options Details of the exercise prices and the respective numbers of share options which remained outstanding as at 30 September 2015 and 31 December 2014 are as follows: Expiry Date Price Number of share options 30 September 31 December (Unaudited) (Audited) 31 January 2019 USD ,732 6,307,675 1 March 2020 USD , , June 2020 USD , , October 2020 USD0.15 2,112,676 6 September 2025 HKD ,360,000 26,656,432 8,827,506 (b) RSUs Pursuant to a resolution passed by the Board of the Company in 2013, the Company set up a RSU Scheme with the objective to incentivize directors, senior management and employees for their contribution to the Group, to attract, motivate and retain skilled and experienced personnel to strive for the future development and expansion of the Group by providing them with the opportunity to own equity interests in the Company. RSUs held by a participant that are vested may be exercised (in whole or in part) by the participant serving an exercise notice in writing on the Core Trust Company Limited (the RSU Trustee ) and copied to the Company. The RSU Scheme will be valid and effective for a period of eight years, commencing from the date of the first grant of the RSUs. Movements in the number of RSUs outstanding: Number of RSUs (Unaudited) (Unaudited) At 1 January 74,215,932 79,654,565 Granted 4,955,000 Lapsed (13,532,309) (3,001,317) Vested and transferred (14,562,524) (607,000) At 30 September 51,076,099 76,046,248 Vested but not transferred as at 30 September 44,152,817 43,258,254 26

27 On 12 March 2015, the Group granted 4,955,000 additional RSUs to its employees. The vesting period of the RSUs granted is 4 years and the vesting schedule is 25% after 12 months from the grant date, 25% after 24 months from the grant date, 12.5% after 30 months from the grant date, 12.5% after 36 months from the grant date, and 2.083% from each month of 37 to 48 months from the grant date. The fair value of each of the above newly granted RSU equals to the closing price of the Company s ordinary shares on the grant date, which was HKD5.61 per share. The expiry date of the above newly granted RSUs is 11 March TRADE AND OTHER PAYABLES 30 September 2015 RMB 000 (Unaudited) 31 December 2014 RMB 000 (Audited) Trade payables 1, Other taxes payable 44,209 45,189 Accrued expenses 24,345 31,274 Guarantee deposit from a third party (Note (a)) 19,887 Salary and staff welfare payables 7,851 9,769 Payables for the remaining considerations for the acquisitions of subsidiaries (Note 14) 5,000 Advance received from sales of prepaid game cards 3,709 2,718 Returns on short-term investments received in advance 2,500 Others 2,930 3,162 Note: 89, ,169 (a) It represented a guarantee deposit received from a third party for its tort liability to the Group according to the private settlement agreed by the Group and the third party. The guarantee deposit had been returned in April Trade payables were mainly arising from the leasing of servers. The credit terms of trade payables granted by the vendors are usually 30 to 90 days. The ageing analysis of trade payables based on recognition date is as follows: 30 September 2015 RMB 000 (Unaudited) 31 December 2014 RMB 000 (Audited) 0-30 days days 346 Over 90 days ,

28 8. EXPENSES BY NATURE Expenses included in cost of revenue, selling and marketing expenses and administrative expenses are analyzed as follows: Three months Nine months RMB 000 RMB 000 RMB 000 RMB 000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Commission charges by platforms and third party payment vendors 66,630 82, , ,153 Advertising expenses 11,815 39,942 98, ,089 Employee benefit expenses (excluding share-based compensation expenses) 35,598 27, ,946 76,369 Share-based compensation expenses 5,560 5,858 15,456 21,845 Servers rental expenses 5,363 4,973 17,866 12,473 Travelling and entertainment expenses 807 1,550 8,503 5,726 Other professional service fees 3,227 1,571 8,666 7,074 Office rental expenses 2,669 2,030 7,695 5,500 Depreciation of property, plant and equipment 1,833 1,235 5,245 3,580 Auditor s remuneration 1,000 1,000 3,000 3,000 Amortization of intangible assets , Other expenses 2,481 3,436 11,496 13, , , , ,708 Research and development expenses during the three and nine months 2015 and 2014 are analyzed as below: Three months Nine months RMB 000 RMB 000 RMB 000 RMB 000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Employee benefit expenses 12,057 12,999 39,005 32,472 Depreciation of property, plant and equipment , Rental expenses ,609 1,988 13,404 14,066 42,881 35,244 No development expenses were capitalized for the three and nine months 2015 and

29 9. OTHER INCOME AND GAINS NET Three months Nine months RMB 000 RMB 000 RMB 000 RMB 000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Returns on short-term investments 16,039 4,197 34,547 Realized/unrealized fair value gains on financial assets at fair value through profit or loss 8, ,714 2,243 Government subsidies 1,397 1,546 Foreign exchange losses, net (3,270) (1,482) (5,198) (1,707) Gain on disposal of subsidiaries (Note 15) 1,707 Gain on disposal of available-for-sale financial assets 250 Gain on partial disposal of an associate (Note 3) 175 Losses on disposals of property, plant and equipment (12) (6) (26) (30) Dilution gains arising from deemed disposal of investment in certain associate (Note 3) Others (29) 81 (83) 5,007 14,641 21,346 36,516 29