Boyaa Interactive International : Announcements and Notices - FIRST QUARTERLY RESULTS ANNOUNCEMENT FOR THE THREE MONTHS ENDED 31 MARCH 2019

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Boyaa Interactive International Limited

博雅互動國際有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 0434)

FIRST QUARTERLY RESULTS ANNOUNCEMENT

FOR THE THREE MONTHS ENDED 31 MARCH 2019

FINANCIAL HIGHLIGHTS
				For the year
	For the three months		ended
	ended 31 March	Year-on-Year	31 December
	2019	2018	Change*	2018
	RMB'000	RMB'000	%	RMB'000
	(unaudited)	(unaudited)		(audited)
Revenue	80,204	159,870	(49.8)	453,234
- Web-based games	35,810	52,050	(31.2)	168,362
- Mobile games	44,394	107,820	(58.8)	284,872
Gross profit	55,217	105,390	(47.6)	304,970
Profit attributable to
owners of the Company	40,079	82,022	(51.1)	201,532
Non-IFRS adjusted net
profit (unaudited)***	40,364	83,230	(51.5)	204,753

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REVENUE BY GAMES
	For the three months ended
	31 March	Year-on-Year
	2019	2018	Change*
	RMB'000		RMB'000	%
	(unaudited)		(unaudited)
Texas Hold'em Series	58,903	128,585	(54.2)
Other Card and Board*****	21,301		31,285	(31.9)
Total	80,204		159,870	(49.8)
REVENUE BY LANGUAGE VERSIONS OF GAMES
	For the three months ended
	31 March	Year-on-Year
	2019	2018	Change*
	RMB'000		RMB'000	%
	(unaudited)		(unaudited)
Simplified Chinese	12,260	78,048	(84.3)
Other languages	67,944	81,822	(17.0)
Total	80,204		159,870	(49.8)

OPERATIONAL HIGHLIGHTS
	For the three months ended	Year-on-Quarter-on-
	31 March	31 December	31 March	Year	Quarter
	2019	2018	2018	Change*	Change**
	(unaudited)	(unaudited)	(unaudited)	%	%
Paying Players	484
(in thousands)	490	789	(38.7)	(1.2)
• Web-based games	17	19	26	(34.6)	(10.5)
• Mobile games	467	471	763	(38.8)	(0.8)
Daily Active
Users ("DAUs")	2,634
(in thousands)****	2,923	3,913	(32.7)	(9.9)
• Web-based games	192	180	251	(23.5)	6.7
• Mobile games	2,442	2,743	3,662	(33.3)	(11)
Monthly Active
Users ("MAUs")	8,286
(in thousands)****	10,532	16,205	(48.9)	(21.3)
• Web-based games	608	772	1,026	(40.7)	(21.2)
• Mobile games	7,678	9,760	15,179	(49.4)	(21.3)

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	For the three months ended	Year-on-Quarter-on-
	31 March	31 December	31 March	Year	Quarter
	2019	2018	2018	Change*	Change**
	(unaudited)	(unaudited)	(unaudited)	%	%
Average Revenue
Per Paying User
("ARPPU") for Texas
Hold'em Series
(in RMB)	744.8
• Web-based games	704.8	692.0	7.6	5.7
• Mobile games	124.5	122.0	255.6	(51.3)	2.0
ARPPU for Other Card
and Board (in RMB)	20.3
• Web-based games	28.8	56.3	(63.9)	(29.5)
• Mobile games	17.5	17.8	15.6	12.2	(1.7)

• Year-on-YearChange % represents a comparison between the current reporting period and the corresponding period last year.

• Quarter-on-QuarterChange % represents a comparison between the quarter ended 31 March 2019 and the immediately preceding quarter.
• Non-IFRSadjusted net profit was derived from the net 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.
• The categories of "Fight the landlord"and "Others" set out in the summary in the previous quarterly results announcement are combined and referred to as "Other Card and Board" above.

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 months ended 31 March 2019 (the "Reporting Period") (the "First Quarterly Results"). The First Quarterly Results have been reviewed by Pan-China (H.K.) CPA Limited, 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. This announcement is made pursuant to Rule 13.09 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).

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BUSINESS OVERVIEW AND OUTLOOK

In terms of financial performance, we recorded a revenue of approximately RMB80.2 million for the first quarter of 2019, representing a decrease of approximately 49.8% compared to the same period in 2018 and a decline of approximately 4.8% from the fourth quarter of 2018. The year-on-year revenue decrease in the first quarter of 2019 was primarily attributable to

1. the impact from the incident of Apple Inc. carrying out rectification and inspection of the applications launched on its system starting from the second quarter of 2017 (the "Apple Incident"); (2) the effect of policy risks regarding the market rumor of the "Administrative Measures of Online Chess and Card Games" to be implemented by the Chinese government aiming to shut down Texas Hold'em poker games and prohibiting the operation of Texas Hold'em poker games starting from 1 June 2018. Although such policies have not yet been implemented, certain platforms have removed relevant products, which affected our revenue to a certain extent (the "Policy Risk Factor"); and (3) the decrease in revenue generated from web-based games, due to the industry trend of a gradual transfer of web-based games to mobile terminals. As a result of these factors, we recorded an unaudited non-IFRS adjusted net profit of approximately RMB40.4 million in the first quarter of 2019, which represented a decline of approximately 51.5% as compared to the same period in 2018. Despite such year-on-year decline of profit which is mainly due to the effect of lower revenue, the unaudited non-IFRS adjusted net profit for the first quarter of 2019 represents an increase of approximately 188.2% from that for the fourth quarter of 2018 primarily because of the poorer performance of our unaudited non-IFRS adjusted net profit for the fourth quarter of 2018 caused by the impairment of one-offnon-operating items, such as the lower fair value of equity investment partnerships and asset management plans in the fourth quarter of 2018. Excluding the impact of such one- off non-operating items, the unaudited non-IFRS adjusted net profit for the first quarter of 2019 was roughly the same as that for the fourth quarter of 2018.

In terms of the Company's operating performance, we recorded a moderate fall in the number of paying players and users during the first quarter of 2019 compared to that of the fourth quarter of 2018. In particular, the number of paying players decreased by 1.2% from approximately

0.49 million in the fourth quarter of 2018 to approximately 0.48 million in the first quarter of 2019. The number of DAUs decreased by 9.9% from approximately 2.9 million in the fourth quarter of 2018 to 2.6 million in the first quarter of 2019. The number of MAUs decreased by 21.3% from approximately 10.5 million in the fourth quarter of 2018 to approximately 8.3 million in the first quarter of 2019, whereas the ARPPU grew in both offshore Texas Hold'em web-based games and the mobile versions.

During the first quarter of 2019, we held the offline BPT 2019 match in Hanoi successfully. The event was designed to bolster player activity and loyalty, widen its user base, allow the BPT brand to penetrate into the Vietnamese chess and card sphere, and boost the recognition of Boyaa as a brand for chess and card games.

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For the future, the Company will continue to conduct more intensive market surveys, launch innovative game rules, improve the experience of our game players, remain dedicated to product refinement and operation diversification, ramp up the quality of our games in an all- rounded manner, and spare no effort to build our brand for online and offline match series. On top of consolidating our existing market, more efforts will be made to further expand our overseas market as well as other chess and card games business, so as to offset the impact arising from the Policy Risk Factor. The Company will strictly comply with various laws and regulations of the People's Republic of China (the "PRC"), develop high-quality games and matches, and continue with its journey to forge a century-old brand for chess and card games.

MANAGEMENT DISCUSSION AND ANALYSIS

Revenue

Our revenue for the three months ended 31 March 2019 amounted to approximately RMB80.2 million, representing year-on-year decrease of 49.8% from approximately RMB159.9 million recorded for the same period of 2018. The year-on-year decrease was primarily due to the impact of the effect of Policy Risk Factor from the second quarter of 2018.

Cost of revenue

Our cost of revenue for the three months ended 31 March 2019 amounted to approximately RMB25.0 million, representing year-on-year decrease of 54.1% from approximately RMB54.5 million recorded for the same period in 2018. The year-on-year decrease was primarily due to the reduction in commission charges by platforms and third party payment vendors.

Gross profit and gross profit margin

As a result of the foregoing, our gross profit for the three months ended 31 March 2019 amounted to approximately RMB55.2 million, representing year-on-year decrease of 47.6% from approximately RMB105.4 million recorded for the same period in 2018.

Our gross profit margin were approximately 68.8% and 65.9%, respectively, for the three months ended 31 March 2019 and the same period in 2018.

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