FingerTango Inc. — Interim / Quarterly Report 2021

Sep 30, 2021

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2021
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FingerTango Inc.

(Incorporated in the Cayman Islands with limited liability)

Stock Code: 6860

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Contents

• 2 Corporate Information

• 4 Management Discussion and Analysis

• 12 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income

• 13 Condensed Consolidated Statement of Financial Position

• 15 Condensed Consolidated Statement of Changes in Equity

• 16 Condensed Consolidated Statement of Cash Flows

• 17 Notes to the Condensed Consolidated

• Financial Statements

• 34 Other Information

• 42 Glossary

Corporate Information

DIRECTORS

Executive Directors

Mr. LIU Jie (劉傑) (Chairman and Chief Executive Officer) Mr. ZHU Yanbin (朱炎彬)

Mr. LIU Zhanxi (劉展喜) (Resigned on 28 May 2021) Mr. WANG Zaicheng (王在成) (Resigned on 28 May 2021)

LEGAL ADVISERS

As to Hong Kong law: O’Melveny & Myers 31[st] Floor, AIA Central 1 Connaught Road Central Hong Kong

Independent Non-executive Directors

Dr. LIU Jianhua (柳建華) Mr. GUO Jingdou (郭靜斗) Ms. YAO Min Ru (姚敏茹) (Resigned on 13 July 2021)

AUDIT COMMITTEE

Dr. LIU Jianhua (柳建華)

As to Cayman Islands law:

Conyers Dill & Pearman (Cayman) Limited

Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Mr. GUO Jingdou (郭靜斗)

Ms. YAO Minru (姚敏茹) (Chairlady)

(Resigned on 13 July 2021)

REMUNERATION COMMITTEE

Mr. GUO Jingdou (郭靜斗) ( Chairperson ) Mr. ZHU Yanbin (朱炎彬) Ms. YAO Min Ru (姚敏茹) (Resigned on 13 July 2021)

AUDITOR

ZHONGHUI ANDA CPA Limited

Unit 701, 7/F, Citicorp Centre 18 Whitfield Road Causeway Bay Hong Kong

REGISTERED OFFICE

NOMINATION COMMITTEE

Mr. LIU Jie (劉傑) ( Chairperson )

Mr. GUO Jingdou (郭靜斗)

Ms. YAO Min Ru (姚敏茹) (Resigned on 13 July 2021)

Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

AUTHORIZED REPRESENTATIVES

Mr. LIU Jie (劉傑)

Mr. WONG Yu Kit (黃儒傑)

COMPANY SECRETARY

Mr. WONG Yu Kit (黃儒傑) Mr. WANG Zaicheng (王在成)

HEADQUARTERS

3[rd] Floor, Huixin Building 1132 Zhongshan Avenue West Tianhe District Guangzhou PRC

(Resigned as joint company secretary on 28 May 2021)

FingerTango Inc.

Corporate Information

PRINCIPAL PLACE OF BUSINESS IN HONG KONG

40[th] Floor, Dah Sing Financial Centre No. 248 Queen’s Road East Wanchai Hong Kong

PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE

PRINCIPAL BANK

China Merchants Bank Co. Ltd.

Guangzhou Gaoxin Branch 1 Huajing Road, Zhongshan Avenue Guangzhou PRC

COMPANY WEBSITE

www.fingertango.com

Conyers Trust Company (Cayman) Limited

Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

STOCK CODE

6860

LISTING DATE

12 July 2018

HONG KONG SHARE REGISTRAR

Computershare Hong Kong Investor Services limited

Shops 1712–1716 17/F, Hopewell Centre 18 Harcourt Road Hong Kong

Interim Report 2021

Management Discussion and Analysis

The Board is pleased to present the interim report of the Group for the Reporting Period, which was prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” and reviewed by the Audit Committee.

MARKET OVERVIEW

According to the China Gaming Industry Report 1H2021 jointly released by the Game Publishers Association Publications Committee (GPC) of the China Audio-video and Digital Publishing Association ( 中國音像與數字出版協會遊戲出版工作委員會 ) and Gamma Data (CNG), the Chinese gaming industry generated a total revenue of approximately RMB150.5 billion in the first half of 2021, representing an increase of 7.9%, a much smaller growth rate as compared to the same period last year.

Mobile game has retained its mainstream position in the overall online game industry cornering over three quarters of the gaming market, with its revenue reaching RMB114.7 billion or a growth of 9.7%. Growth of gamers continue to slow down, with the number of gamers reaching 666.6 million in China by June 2021, of which mobile game users are 656.3 million, representing an increase of 1.38% compared with the previous year.

Chinese gaming companies are expanding into overseas market. Revenue of independently developed games generated from overseas market significantly by 11.6% year-on-year to USD8.5 billion in the first six months of 2021, of which simulation games (“SLG”) came out top and accounted for approximately 41.5%.

In addition, it has been an industry consensus that the unit cost of game advertising and promotion activities is increasing year by year, and how to reduce the waste of resources caused by ineffective exposure and invalid clicks has become one of the market challenges that major game publishers should pay attention to.

BUSINESS REVIEW

During the Reporting Period, the Group recorded total revenue of RMB282.0 million, a decrease of approximately 34.3% as compared to the corresponding period last year. Decrease in revenue was mainly attributable to the combined effect of (i) natural drop of revenue from the classic games which have been in operation for years and are in their mature stage, (ii) significantly reduced approvals of new game publication and negative impact cast on growth momentum of the game industry by the prolonged suspension of approval of online game publication and changes in regulatory environment of the Chinese gaming market, leaving less access to quality games by the Company, (iii) certain pipeline games of the Group were not launched as scheduled during the Reporting Period as we made strategic adjustment and planning in the launch of our new games, and (iv) uncertain outcome from marketing and promotion activities across the industry.

FingerTango Inc.

Management Discussion and Analysis

In view of the market conditions, we have made strategic adjustment and planning in the launch of our new games, and have been conducting comprehensive tests for the new titles launched during the Reporting Period. Deep optimization customizing to the players’ evolving preferences was also conducted to ensure their sound performance upon official launch. On the other hand, new titles launched during the Reporting Period are still in the promotion period and the stage of incubation of player base. It is expected the growth momentum of the new games and their contribution to the revenue of the Company would be gradually unleashed in the second half of 2021 and after.

In response to the increasing unit cost and uncertain outcome of advertising and promotion activities, we adapted and re-positioned to streamline and refine our game operations, and sought out innovative promotion channels. With the lifting of the above-mentioned suspension, we have acquired seven new licensed games in the first half of 2021 and as at the date of this announcement, building substantial momentum for the Company to further publish new games and continuously create new income sources.

The total number of accumulative registered users maintained a steady growth and reached 178.0 million as at 30 June 2021, representing a 3.3% growth as compared to that of 30 June 2020. The enormous user base enables us to better understand player preferences and market changes through strong data analytics ability, so as to launch new games with higher popularity in the market, and to conduct targeted marketing with more cost-effective strategies.

The novel coronavirus (“COVID-19”) pandemic continued to bring unprecedented challenges to the global economy, changed the way people work, live and play, but also resulted in hastening changes to existing industries and the formation of new business models. To cope with the changing environment and market conditions, the Company drew on its strong operating capability as well as keen market insight and extensive industry experience of senior management team and responded rapidly. During the Reporting Period, the strategy of upholding our persistence in the SLG game segment while broadening our game category has been successful. Although we saw a natural drop in revenue from our classic games which have been in operation for years, and despite for the vastly cut back in investment for marketing and promotion activities, such classic games as My Duty (“我的使命”), Tank Frontline (“坦克前線”), both SLG games, and Romance of Stars (“星辰奇緣”), a MMORPG game, are still popular after more than 55 months’, 83 months’ and 68 months’ operation, respectively, and has achieved a monthly gross billings of up to RMB20.1 million, RMB11.5 million and RMB12.2 million, respectively during the Reporting Period. The games in the growth stage continued to power-up and maintained an upward momentum.

Interim Report 2021

Management Discussion and Analysis

OUTLOOK FOR THE SECOND HALF OF 2021

The current approval policy of online game publication and increasingly strict license censorship for games launched in China will result in a more regulated game industry. Specifically, the limitation on approval has driven game developers and operators to be more innovative and to produce more premium products. Due to the lagging effect of the new policy, it will take a certain time for the industry to adjust their strategies and operations before the growth impetus is in full play in future.

Adherence to and focus on long lifecycle products, the concept of continuous operation with longterm flow, and constant offer of new gameplay to extend product lifecycle — these are our initial intention and our advantage and development strategy. In the face of a complex and changing market environment, we will always insist on developing products with the first-class technology, optimizing game in full dimension, and extending the lifecycle of our games with the continuous enriched and enhanced player experience, thereby improving the ability to monetization and continuing to generate stable revenue for the Company.

We are conducting comprehensive tests for the new titles to be launched in the second half of 2021 while optimizing product launch strategies and plans. Over the years, we have accumulated an immense user database. We will continue to leverage our big data analytics ability with our proprietary multidimensional data analysis engine which collates and structures our data in a variety of ways for ad-hoc analysis, real-time on-line analysis. Moreover, we will enhance gameplay strategies, characters, scenes, technical depth, and other parameters and improve cross-promotion efficacy by analyzing player demographic, gameplay preference, gaming time, level-up, in-game purchase amount and user turnover rate, etc. These initiatives are being performed to ensure sound performance after the official launch.

In the past year, the Company was striving for the sustainable development of business and actively laying a foundation for healthy growth in the future despite the challenges. Looking ahead, we will continue to extend our existing game portfolio and broaden our game category while focusing on the SLG game segment. We will implement the concept of premium game and strive to create high-quality games. While adhering to the original aspirations with commitment, ambition and perseverance, we will also continue to stride forward against adversity, be so deeply versed and accumulated as to be able to present it with ease, and through which we aspire to turn to a new chapter in the Group’s development.

FingerTango Inc.

Management Discussion and Analysis

FINANCIAL PERFORMANCE

The following table sets forth our condensed consolidated statement of profit or loss for the six months ended 30 June 2021 and 2020, respectively:

	Six months ended 30 June	Six months ended 30 June	Six months ended 30 June
	2021		2020
	RMB’000		RMB’000
	(Unaudited)		(Unaudited)
Revenue	281,997		429,451
Cost of revenue	(118,485)		(157,601)
Gross Proft	163,512		271,850
Selling and marketing expenses	(57,704)		(108,901)
Administrative expenses	(34,280)		(58,025)
Research and development expenses	(38,408)		(26,666)
Other income	4,460		5,115
Other losses, net	(3,969)		(5,438)
Operating proft	33,611		77,935
Interest revenue	21,366		21,666
Finance costs	(308)		(146)
Proft before income tax	54,669		99,455
Income tax expense	(9,654)		(12,243)
Proft for the period attributable to owners of the Company	45,015		87,212
Non-IFRS Measure
Adjusted proft for the period attributable to owners of the Company	46,393		94,293

Interim Report 2021

Management Discussion and Analysis

Revenue

The Group’s revenue in the Reporting Period was approximately RMB282.0 million, representing a decrease by approximately 34.3% or RMB147.5 million as compared to the corresponding period in 2020. The decrease was mainly attributable to the combined effect of 1) natural drop of revenue from the classic games which have been in operation for years and are in their mature stage; 2) significantly reduced approvals of new game publication and negative impact posed on growth momentum of the game industry by the prolonged suspension of approval of online game publication resulting from the changes in regulatory environment of the Chinese gaming market, leaving less access to quality games by the Company; 3) certain pipeline games of the Group were not launched as scheduled due to strategic adjustment and planning in the launch of our new games; and 4) the increasing unit cost and uncertain outcome from selling and marketing activities across the industry.

With respect to revenue categorized by method of publication, self-publishing revenue was approximately RMB132.6 million, representing 47.0% of the total revenue as compared to 55.2% in the corresponding period last year. Co-publishing revenue surpassed self-publishing revenue and recorded approximately RMB149.4 million, representing 53.0% of the total revenue, as compared to 44.8% in the corresponding period last year.

Cost of Revenue

The cost of revenue in the Reporting Period was approximately RMB118.5 million and decreased by approximately 24.8% or RMB39.1 million as compared to the corresponding period last year. It was mainly due to the decrease in platform sharing charges and commissions charged by game developers which was as consequent result from the decreased total revenue.

Gross Profit and Gross Profit Margin

During the Reporting Period, gross profit was approximately RMB163.5 million, as compared to RMB271.9 million in the corresponding period last year. Gross profit margin decreased from 63.3% in the corresponding period last year to 58.0%, since the magnitude of the decrease in cost is smaller than that of the decrease in revenue.

Other Income

During the Reporting Period, other income was approximately RMB4.5 million as compared to approximately RMB5.1 million in the corresponding period last year. The decrease was mainly attributable to the combined effect of the decrease in additional deduction of value-added tax and the increase in government grant during the Reporting Period.

Other Losses, net

During the Reporting Period, net other loss was approximately RMB4.0 million, as compared to approximately RMB5.4 million in the corresponding period last year, primarily attributable to fair value changes on investments at fair value through profit or loss and foreign exchange losses during the Reporting Period.

FingerTango Inc.

Management Discussion and Analysis

Finance Income, net

During the Reporting Period, net finance income, which is calculated by interest revenue less finance costs, was approximately RMB21.1 million as compared to RMB21.5 million in the corresponding period last year. The decrease was mainly due to decrease in interest revenue from bank balances and notes receivables, which was partially offset by increase in interest revenue from loans to third parties.

Selling and Marketing Expenses

The selling and marketing expenses in the Reporting Period were approximately RMB57.7 million, decreased by approximately 47.0% or approximately RMB51.2 million as compared to the corresponding period last year. It constituted 20.5% of the total revenue, comparing to 25.4% in the corresponding period last year. The decrease was primarily due to adjustment in game launching plan in the Reporting period and less extensive advertising and promotion activities for classic games which have been in operation for years and are in their mature stage during the Reporting Period.

Administrative Expenses

The administrative expenses of the Group in the Reporting Period were approximately RMB34.3 million, as compared to approximately RMB58.0 million in the corresponding period last year. The change was primarily due to the decrease in impairment loss of assets which was partially offset by the increase in employee benefits.

Research and Development Expenses

The research and development expenses of the Group in the Reporting Period were approximately RMB38.4 million, increased by approximately 44.0% or RMB11.7 million as compared to the corresponding period last year. The change was primarily attributable to the Group’s strategy of establishing in-house research and development (“R&D”) team and continuous investments to enhance the Group’s game development capabilities.

Income Tax Expense

The income tax expense in the Reporting Period was approximately RMB9.7 million, decreased by 21.1% or approximately RMB2.6 million as compared to the corresponding period last year. It was a consequent result of a decreased taxable income.

Profit for the Reporting Period

The profit for the Reporting Period attributable to owners of the Company was RMB45.0 million, decreased by 48.4% as compared to RMB87.2 million in the corresponding period last year. The decrease in profit was primarily due to 1) a decrease in gross profit for the Reporting Period, which was mainly resulted from a decrease in gross margin, primarily due to the increase in the contribution ratio from co-publishing games to the total revenues of the Group, as co-publishing games

Interim Report 2021

Management Discussion and Analysis

generally have lower gross margin than self-publishing games; and 2) a significant increase in the Group’s investment in research and development for the Reporting Period due to the Group’s strategy of establishing in-house R&D team and continuous investments to enhance the Group’s game development capabilities.

Non-IFRS Measures — Adjusted Profit

The adjusted profit in the Reporting Period, adjusted by excluding the impact from the share-based compensation to key employees, was RMB46.4 million, decreased by 50.8% as compared to RMB94.3 million in the corresponding period last year.

The following table sets out the adjusted profit as well as the calculation process based on non-IFRS for the periods ended 30 June 2021 and 2020 respectively:

	For the six months ended 30 June	For the six months ended 30 June
	2021	2020
	RMB million	RMB million
	(Unaudited)	(Unaudited)
Proft for the period	45.0	87.2
Add:
Share-based compensation	1.4	7.1
Adjusted proft	46.4	94.3

Liquidity and source of funding and borrowing

As at 30 June 2021, current assets of the Group amounted to approximately RMB1,521.4 million, including bank and cash balances of approximately RMB520.5 million and other current assets of approximately RMB1,000.9 million. Current liabilities of the Group amounted to approximately RMB192.0 million, including trade payables and contract liabilities of approximately RMB112.5 million and other current liabilities of approximately RMB79.5 million. As at 30 June 2021, the current ratio (the current assets to current liabilities ratio) of the Group was 7.9, as compared with 7.1 as at 31 December 2020.

Gearing ratio is calculated on the basis of total borrowings (net of cash and cash equivalents) over the Group’s total equity. The Group does not have any bank borrowings and other debt financing obligations as at 30 June 2021 and the resulting gearing ratio is nil. The Group intends to finance the expansion, investments and business operations with internal resources.

FingerTango Inc.

Management Discussion and Analysis

Investments at fair value through profit or loss

As at 30 June 2021, investments at fair value through profit or loss recorded approximately RMB273.5 million. Details of investments at fair value through profit or loss for the Reporting Period are shown as below:

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||||||||
|---|---|---|---|---|---|---|
|Currency|
|Changes in|translation|
|Increases|fair value|Settlements|differences|
|for the|for the|for the|for the|
|Fair value|6 months|6 months|6 months|6 months|Fair value|
|as at|ended|ended|ended|ended|as at|
|31 December|30 June|30 June|30 June|30 June|30 June|
|2020|2021|2021|2021|2021|2021|
|RMB million|RMB million|RMB million|RMB million|RMB million|RMB million|
|(Audited)|(Unaudited)|(Unaudited)|(Unaudited)|(Unaudited)|(Unaudited)|
|Investments at fair value through|
|profit or loss|
|Listed equity securities in|
|Hong Kong|—|85.4|(5.2)|—|(0.6)|79.6|
|Wealth management product —|
|Central China Dragon|
|Growth Fund SP7|
|(中州龍騰增長七號基金)|56.3|—|1.5|—|(0.6)|57.2|
|Investments in private companies|11.0|—|—|—|—|11.0|
|Wealth management products of|
|various commercial banks|80.5|135.0|1.2|(91.0)|—|125.7|
|Total|147.8|220.4|(2.5)|(91.0)|(1.2)|273.5|

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Listed securities in Hong Kong included 16,962,000 shares of China Gas Industry Investment Holdings Co. Limited (“CGII Shares”) acquired on the open market during the period from 10 March 2021 to 15 March 2021 (both dates included) and other listed securities acquired on the open market during the Reporting Period. The highest applicable percentage ratio (as defined under Rule 14.07 of the Listing Rules) in relation to acquisitions of other listed securities is less than 5% as at the time of acquisitions. For further details of the acquisitions of CGII Shares, please refer to the announcement of the Company dated 15 March 2021.

The terms of investments in wealth management products of various commercial banks varies among different banks with maturity of less than 183 days. As at 30 June 2021, carrying amount of the investments in wealth management products of various commercial banks was approximately RMB125.7 million. The highest applicable percentage ratio (as defined under Rule 14.07 of the Listing Rules) in relation to the investments in wealth management products of each commercial bank is less than 5% as at the time of investment.

Interim Report 2021

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income FOR THE SIX MONTHS ENDED 30 JUNE 2021

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Six months ended 30 June
2021 2020
RMB’000 RMB’000
Notes (Unaudited) (Unaudited)
Revenue 5 281,997 429,451
Cost of revenue (118,485) (157,601)
Gross profit 163,512 271,850
Selling and marketing expenses (57,704) (108,901)
Administrative expenses (34,280) (58,025)
Research and development expenses (38,408) (26,666)
Other income 4,460 5,115
Other losses, net 6 (3,969) (5,438)
Operating profit 33,611 77,935
Interest revenue 7 21,366 21,666
Finance costs 7 (308) (146)
Profit before income tax 54,669 99,455
Income tax expense 8 (9,654) (12,243)
Profit for the period attributable to owners of the Company 9 45,015 87,212
Other comprehensive (expense)/income:
Item that may be reclassified to profit or loss:
Exchange differences on translating foreign operations (8,306) 15,496
Other comprehensive (expense)/income for the period, net of tax (8,306) 15,496
Total comprehensive income for the period attributable to owners
of the Company 36,709 102,708
Earnings per share (RMB) 11
— Basic 0.0237 0.0463
— Diluted 0.0237 0.0460
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12 FingerTango Inc.

Condensed Consolidated Statement of Financial Position

AT 30 JUNE 2021

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30 June 31 December
2021 2020
RMB’000 RMB’000
Notes (Unaudited) (Audited)
ASSETS
Non-current assets
Property and equipment 12 7,213 7,794
Right-of-use assets 39,573 3,874
Intangible assets 6,968 5,251
Investments at fair value through profit or loss 13 68,199 67,328
Prepayments and deposits 24,370 21,611
—
Time deposits 20,000
Deferred tax assets 20,824 23,237
Total non-current assets 167,147 149,095
Current assets
Trade receivables 14 48,524 53,036
Contract costs 31,858 32,255
Prepayments and deposits 66,519 88,398
Other receivables 15 422,546 407,732
Notes receivables 16 205,827 208,177
Investments at fair value through profit or loss 13 205,337 80,464
Restricted bank deposits 302 302
Time deposits 20,000 99,575
Bank and cash balances 520,496 521,549
Total current assets 1,521,409 1,491,488
TOTAL ASSETS 1,688,556 1,640,583
EQUITY AND LIABILITIES
Equity
Share capital 18 62 62
Reserves 1,468,724 1,430,638
Total equity 1,468,786 1,430,700
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Interim Report 2021 13

Condensed Consolidated Statement of Financial Position

AT 30 JUNE 2021

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30 June 31 December
2021 2020
RMB’000 RMB’000
Notes (Unaudited) (Audited)
LIABILITIES
Current liabilities
Trade payables 17 30,192 39,075
Contract liabilities 82,344 88,855
Accruals and other payables 41,602 47,713
Lease liabilities 11,798 3,294
Current tax liabilities 26,031 30,615
Total current liabilities 191,967 209,552
Non-current liabilities
Lease liabilities 27,803 331
Total liabilities 219,770 209,883
TOTAL EQUITY AND LIABILITIES 1,688,556 1,640,583
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14 FingerTango Inc.

Condensed Consolidated Statement of Changes in Equity

FOR THE SIX MONTHS ENDED 30 JUNE 2021

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(Unaudited)
Attributable to owners of the Company
Shares held
Share Share for RSU Retained
capital premium Scheme Reserves profits Total
Notes RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2020 62 712,720 (2) 190,341 437,467 1,340,588
Total comprehensive income for
— — —
the period 15,496 87,212 102,708
Share-based payments 20 — — — 7,081 — 7,081
Changes in equity for the period — — — 22,577 87,212 109,789
At 30 June 2020 62 712,720 (2) 212,918 524,679 1,450,377
At 1 January 2021 62 712,720 (2) 152,814 565,106 1,430,700
Total comprehensive (expense)/
— — —
income for the period (8,306) 45,015 36,709
Share-based payments 20 — — — 1,377 — 1,377
Changes in equity for the period — — — (6,929) 45,015 38,086
At 30 June 2021 62 712,720 (2) 145,885 610,121 1,468,786
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Interim Report 2021 15

Condensed Consolidated Statement of Cash Flows

FOR THE SIX MONTHS ENDED 30 JUNE 2021

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Six months ended 30 June
2021 2020
RMB’000 RMB’000
(Unaudited) (Unaudited)
Cash flows from operating activities
Cash generated from operating activities 48,507 60,788
Income tax paid (11,899) (8,056)
Interest received 11,276 15,306
Lease interests paid (308) (146)
Net cash generated from operating activities 47,576 67,892
Cash flows from investing activities
Release of restricted bank deposits — 892
—
Addition of time deposits (40,000)
—
Release of time deposits 99,575
Purchases of property and equipment (1,890) (3,023)
Purchases of intangible assets (55) (2,170)
Prepayments for purchases of intangible assets (7,179) (1,980)
Proceeds from disposals of property and equipment 20 10
Purchases of investments at fair value through profit or loss (220,454) (30,000)
Settlement of investments at fair value through profit or loss 91,042 22,895
Net cash used in investing activities (38,941) (53,376)
Cash flows from financing activities
Repayment of lease liabilities (4,860) (4,161)
Net cash used in financing activities (4,860) (4,161)
Net increase in cash and cash equivalents 3,775 10,355
Effect of foreign exchange rate changes (4,828) 10,777
Cash and cash equivalents at the beginning of the period 521,549 777,962
Cash and cash equivalents at the end of the period 520,496 799,094
Analysis of cash and cash equivalents
Bank and cash balances 520,496 799,094
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16 FingerTango Inc.

Notes to the Condensed Consolidated Financial Statements

FOR THE SIX MONTHS ENDED 30 JUNE 2021

1. General information

FingerTango Inc. (the “Company”) was incorporated in the Cayman Islands as an exempted company with limited liability on 9 January 2018. The address of its registered office is Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands. The address of its principal place of business in Hong Kong is 40/F, Dah Sing Financial Centre, 248 Queen’s Road East, Wanchai, Hong Kong. The address of the headquarters is 3/F, Huixin Building, 1132 Zhongshan Avenue West, Tianhe District, Guangzhou, the People’s Republic of China (“PRC”). The Company’s shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

The condensed consolidated financial statements are presented in Renminbi (the “RMB”), which is the Company’s presentation currency and the functional currency of the principal operating subsidiaries of the Company.

The Company is an investment holding company. The principal activities of the principal operating subsidiaries of the Company are development, operation and publishing of mobile game business in the PRC.

2. Basis of preparation

These condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” issued by the International Accounting Standards Board (“IASB”) and the applicable disclosures required by the Rules Governing the Listing of Securities on the Stock Exchange.

These condensed consolidated financial statements should be read in conjunction with the 2020 annual financial statements. The accounting policies and methods of computation used in the preparation of these condensed consolidated financial statements are consistent with those used in the annual financial statements for the year ended 31 December 2020.

3. Adoption of new and revised International Financial Reporting Standards

In the current period, the Company and its subsidiaries (collectively referred to as the “Group”) has adopted all the new and revised International Financial Reporting Standards (“IFRSs”) issued by the IASB that are relevant to its operations and effective for its accounting year beginning on 1 January 2021. IFRSs comprise International Financial Reporting Standards; International Accounting Standards; and Interpretations. The adoption of these new and revised IFRSs did not result in significant changes to the Group’s accounting policies, presentation of the Group’s consolidated financial statements and amounts reported for the current period and prior years.

The Group has not applied the new and revised IFRSs that have been issued but are not yet effective. The Group has already commenced an assessment of the impact of these new and revised IFRSs but is not yet in a position to state whether these new and revised IFRSs would have a material impact on its results of operations and financial position.

Interim Report 2021 17

Notes to the Condensed Consolidated Financial Statements FOR THE SIX MONTHS ENDED 30 JUNE 2021

4. Fair value measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following disclosures of fair value measurements use a fair value hierarchy that categorises into three levels the inputs to valuation techniques used to measure fair value:

Level 1 inputs: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.

Level 2 inputs: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 inputs: unobservable inputs for the asset or liability.

The Group’s policy is to recognise transfers into and transfers out of any of the three levels as of the date of the event or change in circumstances that caused the transfer.

• (a) Disclosures of level in fair value hierarchy

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----- Start of picture text -----

Fair value measurements at
30 June 2021 using: Total
30 June
Description Level 1 Level 2 Level 3 2021
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited) (unaudited) (unaudited) (unaudited)
Recurring fair value measurements:
Investments at fair value through profit or loss
— Listed equity securities in Hong Kong 79,649 — — 79,649
— —
— Unlisted wealth management products 182,887 182,887
— Private equity investments — — 11,000 11,000
Total recurring fair value measurements 79,649 — 193,887 273,536
----- End of picture text -----

18 FingerTango Inc.

Notes to the Condensed Consolidated Financial Statements

FOR THE SIX MONTHS ENDED 30 JUNE 2021

4. Fair value measurements (continued)

(a) Disclosures of level in fair value hierarchy (continued)

	Description	Fair value measurements at 31 December 2020 using: Level 1 Level 2 Level 3 RMB’000 RMB’000 RMB’000 (audited) (audited) (audited)	Fair value measurements at 31 December 2020 using: Level 1 Level 2 Level 3 RMB’000 RMB’000 RMB’000 (audited) (audited) (audited)	Fair value measurements at 31 December 2020 using: Level 1 Level 2 Level 3 RMB’000 RMB’000 RMB’000 (audited) (audited) (audited)	Total 31 December 2020 RMB’000 (audited)
	Recurring fair value measurements:
	Investments at fair value through profit or loss
	— Unlisted wealth management products	—	—	136,792	136,792
	— Private equityinvestments	—	—	11,000	11,000
	Total recurringfair value measurements	—	—	147,792	147,792

(b) Reconciliation of assets measured at fair value based on level 3:

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----- Start of picture text -----

Description 2021 2020
RMB’000 RMB’000
(Unaudited) (Unaudited)
Investments at fair value through profit or loss
At 1 January (audited) 147,792 103,351
Total gains or losses recognised
in profit or loss (#) 2,781 1,386
Additions 135,000 30,000
Settlements (91,042) (22,895)
Currency translation differences (644) 1,520
At 30 June 193,887 113,362
(#) Include gains or losses for assets held at end of reporting
period 2,203 1,116
----- End of picture text -----

The total gains or losses recognised in profit or loss including those for assets held at end of reporting period are presented in other losses, net in the condensed consolidated statement of profit or loss and other comprehensive income.

Interim Report 2021 19

Notes to the Condensed Consolidated Financial Statements FOR THE SIX MONTHS ENDED 30 JUNE 2021

4. Fair value measurements (continued)

• (c) Disclosure of valuation process used by the Group and valuation techniques and inputs used in fair value measurements at 30 June 2021:

The Group’s chief financial officer is responsible for the fair value measurements of assets and liabilities required for financial reporting purposes, including level 3 fair value measurements. The chief financial officer reports directly to the Board of Directors for these fair value measurements. Discussions of valuation processes and results are held between the chief financial officer and the Board of Directors at least twice a year.

For level 3 fair value measurements, the Group has a team that manages the valuation exercise of level 3 financial instruments for financial reporting purposes. The team manages the valuation exercise of the investments on a case-by-case basis. At least twice every year, the team would use valuation techniques to determine the fair value of the Group’s level 3 financial instruments. External valuation experts will be involved when necessary.

Level 3 fair value measurements

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----- Start of picture text -----

Effect on
fair value
Valuation Unobservable for increase Fair value at
Description technique inputs Range of inputs 30 June 2021
RMB’000
(unaudited)
Investments at fair value through
profit or loss
Unlisted wealth management Market Dealer quotes for up to 5% Increase 182,887
products comparable similar instruments
approach
Private equity investments Discounted Weighted average 40% Decrease 11,000
cash flow cost of capital
Long-term revenue 36.6%– Increase
growth rate 38.0%
Discount for lack of 20% Decrease
marketability
----- End of picture text -----

20 FingerTango Inc.

Notes to the Condensed Consolidated Financial Statements FOR THE SIX MONTHS ENDED 30 JUNE 2021

4. Fair value measurements (continued)

• (c) Disclosure of valuation process used by the Group and valuation techniques and inputs used in fair value measurements at 30 June 2021: (continued)

Level 3 fair value measurements (continued)

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----- Start of picture text -----

Effect on
fair value Fair value at
Valuation Unobservable for increase 31 December
Description technique inputs Range of inputs 2020
RMB’000
(audited)
----- End of picture text -----

Investments at fair value through
proft or loss
Unlisted wealth management	Market	Dealer quotes for	up to 5%	Increase	136,792
products	comparable	similar instruments
	approach
	Discounted	Estimated	3.4%–3.6%	Increase
	cash fow model	return
Private equity investments	Discounted	Weighted average	40%	Decrease	11,000
	cash fow	cost of capital
		Long-term revenue	32.8%–37.8%	Increase
		growth rate
		Discount for lack of	20%	Decrease
		marketability

There were no changes in the valuation techniques used.

Interim Report 2021 21

Notes to the Condensed Consolidated Financial Statements FOR THE SIX MONTHS ENDED 30 JUNE 2021

5. Revenue and segment information

The Group’s chief operating decision maker has been identified as its executive directors, who review the consolidated results when making decisions about allocating resources and assessing performance of the Group as a whole. Therefore, the Group has only one reportable segment. The Group does not distinguish between markets or segments for the purpose of internal reporting. The Group’s long-lived assets are substantially located in the PRC and substantially all of the Group’s revenues are derived from the PRC. Therefore, no geographical segments are presented.

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----- Start of picture text -----

Six months ended 30 June
2021 2020
RMB’000 RMB’000
(Unaudited) (Unaudited)
Self-publishing 132,557 237,115
Co-publishing 149,440 192,336
Total revenue 281,997 429,451
Disaggregation of revenue from contracts with customers:
Timing of revenue recognition
Over time 281,997 429,451
----- End of picture text -----

Revenue from major customers:

No revenue is derived from any individual game player which amounted for over 10% of the Group’s total revenue (for the six months ended 30 June 2020: nil).

The following table summarises the percentage of revenue from games licensed by single game developers exceeding individually 10% of the Group’s revenue during the six months ended 30 June 2021.

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----- Start of picture text -----

Six months ended 30 June
2021 2020
(Unaudited) (Unaudited)
Game developer a 26.1% 43.0%
Game developer b 12.1% 16.4%
Game developer c 11.2% 16.9%
----- End of picture text -----

22 FingerTango Inc.

Notes to the Condensed Consolidated Financial Statements

FOR THE SIX MONTHS ENDED 30 JUNE 2021

6. Other losses, net

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----- Start of picture text -----

Six months ended 30 June
2021 2020
RMB’000 RMB’000
(Unaudited) (Unaudited)
Donation — 3,891
Fair value changes on investments at fair value
through profit or loss 2,539 (1,386)
—
Charge deducted over deposits 4,600
Loss on disposals of property and equipment 24 34
Net foreign exchange losses/(gains) 731 (1,770)
Others 675 69
3,969 5,438
----- End of picture text -----

7. Interest revenue and finance costs

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----- Start of picture text -----

Six months ended 30 June
2021 2020
RMB’000 RMB’000
(Unaudited) (Unaudited)
Interest revenue
Interest revenue from bank balances 5,134 8,857
Interest revenue from loans to third parties 9,672 5,392
Interest revenue from notes receivables 6,560 7,417
21,366 21,666
Finance costs
Lease interests 308 146
----- End of picture text -----

Interim Report 2021 23

Notes to the Condensed Consolidated Financial Statements FOR THE SIX MONTHS ENDED 30 JUNE 2021

8. Income tax expense

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----- Start of picture text -----

Six months ended 30 June
2021 2020
RMB’000 RMB’000
(Unaudited) (Unaudited)
Current tax 7,241 11,548
Deferred tax 2,413 695
9,654 12,243
----- End of picture text -----

Hong Kong Profits Tax has been provided at the rate of 8.25% on assessable profits up to Hong Kong dollars (“HK$”) 2,000,000 and 16.5% on any part of assessable profits over HK$2,000,000 for the six months ended 30 June 2021 and 2020.

Under the Law of the PRC on Enterprise Income Tax (the “EIT Law”) and Implementation Regulation of the EIT Law, the tax rate of the Group’s PRC subsidiaries is 25% (for the six months ended 30 June 2020: 25%).

Shanghai Binyou Networks Technology Limited (“Binyou Networks”) and Shanghai Kaixi Networks Technology Limited (“Kaixi Networks”) were accredited as “software enterprise” under the relevant PRC laws and regulations. It is exempt from Enterprise Income Tax for two years, followed by 50% reduction in the applicable income tax rates for the next three years, commencing from the first year of profitable operation after offsetting tax losses generating from prior years.

Binyou Networks started to enjoy the 0% preferential tax rate for two years beginning from year 2019, followed by 50% reduction in the applicable tax rates for the next three years, since it has made profit in year 2019.

Kaixi Networks started to enjoy the 0% preferential tax rate for two years beginning from year 2021, followed by 50% reduction in the applicable tax rates for the next three years, since it has made profit in year 2021.

Guangzhou Miyuan Networks Technology Co., Limited (“Miyuan Networks”) was qualified as “High and New Technology Enterprises” under the EIT Law since year 2016. Accordingly, it was entitled to a preferential income tax rate of 15% for a 3-year period. Miyuan Networks was re-entitled as “High and New Technology Enterprises” under the EIT Law in year 2019. Accordingly, the applicable tax rate was 15% for the six months ended 30 June 2021 (for the six months ended 30 June 2020: 15%).

24 FingerTango Inc.

Notes to the Condensed Consolidated Financial Statements FOR THE SIX MONTHS ENDED 30 JUNE 2021

9. Profit for the period

The Group’s profit for the period is stated after charging/(crediting) the following:

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----- Start of picture text -----

Six months ended 30 June
2021 2020
RMB’000 RMB’000
(Unaudited) (Unaudited)
Amortisation of intangible assets 2,860 2,155
Depreciation 7,316 6,692
Loss on disposals of property and equipment 24 34
Loss allowance provision for trade receivables
(included in administrative expenses) 2,693 151
(Reversal of)/impairment loss on prepayments for purchase of licenses and
to game developers (included in administrative expenses) (85) 21,334
Provision for expected credit losses of notes and other receivables
(included in administrative expenses) 843 —
Staff costs including directors’ emoluments 58,329 54,041
----- End of picture text -----

10. Dividend

No dividends was paid or proposed for ordinary shareholders of the Company during the six months ended 30 June 2021, nor has any dividend been proposed at the end of the reporting period (for the six months ended 30 June 2020: nil).

11. Earnings per share

The calculation of the basic and diluted earnings per share is based on the following:

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----- Start of picture text -----

Six months ended 30 June
2021 2020
RMB’000 RMB'000
(Unaudited) (Unaudited)
Earnings
Earnings for the purpose of basic and diluted earnings per share 45,015 87,212
----- End of picture text -----

Interim Report 2021 25

Notes to the Condensed Consolidated Financial Statements

FOR THE SIX MONTHS ENDED 30 JUNE 2021

11. Earnings per share (continued)

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----- Start of picture text -----

Six months ended 30 June
2021 2020
’000 ’000
(Unaudited) (Unaudited)
Number of shares
Weighted average number of ordinary shares for the purpose
of basic earnings per share 1,896,103 1,885,377
Adjustments for unvested restricted share units (“RSUs”) 1,422 8,627
Weighted average number of ordinary shares for the purpose
of diluted earnings per share 1,897,525 1,894,004
----- End of picture text -----

12. Property and equipment

During the six months ended 30 June 2021, the Group acquired property and equipment of RMB1,890,000 (for the six months ended 30 June 2020: RMB3,023,000).

13. Investments at fair value through profit or loss

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----- Start of picture text -----

30 June 31 December
2021 2020
RMB’000 RMB’000
(Unaudited) (Audited)
—
Listed equity securities in Hong Kong 79,649
Unlisted wealth management products 182,887 136,792
Investments in private companies 11,000 11,000
273,536 147,792
Analysed as:
— Non-current assets 68,199 67,328
— Current assets 205,337 80,464
273,536 147,792
----- End of picture text -----

26 FingerTango Inc.

Notes to the Condensed Consolidated Financial Statements FOR THE SIX MONTHS ENDED 30 JUNE 2021

14. Trade receivables

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----- Start of picture text -----

30 June 31 December
2021 2020
RMB’000 RMB’000
(Unaudited) (Audited)
Trade receivables 52,031 53,850
Provision for loss allowance (3,507) (814)
Carrying amount 48,524 53,036
----- End of picture text -----

The ageing analysis of trade receivables, based on recognition date of trade receivables, and net of allowance, is as follows:

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----- Start of picture text -----

30 June 31 December
2021 2020
RMB’000 RMB’000
(Unaudited) (Audited)
0 to 1 month 14,472 23,291
1 month to 3 months 25,336 20,771
3 months to 6 months 5,341 8,819
6 months to 1 year 3,375 155
48,524 53,036
----- End of picture text -----

Interim Report 2021 27

Notes to the Condensed Consolidated Financial Statements

FOR THE SIX MONTHS ENDED 30 JUNE 2021

15. Other receivables

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----- Start of picture text -----

30 June 31 December
2021 2020
RMB’000 RMB’000
(Unaudited) (Audited)
Input value-added tax to be deducted 3,449 4,918
Interest receivables 21,413 10,247
Loans to third parties 395,800 381,738
Receivables from game developers 3,600 8,275
Others 12,607 13,956
436,869 419,134
Less: provision for expected credit losses (14,323) (11,402)
422,546 407,732
----- End of picture text -----

The ageing analysis of other receivables, based on recognition date of other receivables, and net of allowance, is as follows:

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----- Start of picture text -----

30 June 31 December
2021 2020
RMB’000 RMB’000
(Unaudited) (Audited)
0 to 1 month 7,161 186,084
1 month to 3 months 43,523 4,887
3 months to 6 months 115,564 116,835
6 months to 1 year 219,565 81,847
Over 1 year 36,733 18,079
422,546 407,732
----- End of picture text -----

28 FingerTango Inc.

Notes to the Condensed Consolidated Financial Statements FOR THE SIX MONTHS ENDED 30 JUNE 2021

15. Other receivables (continued)

Other receivables from major debtors:

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----- Start of picture text -----

30 June 31 December
2021 2020
RMB’000 RMB’000
(Unaudited) (Audited)
Debtor a 41,863 41,726
Debtor b 41,858 41,721
Debtor c 40,016 39,615
Debtor d 37,802 37,654
Debtor e 34,302 —
Debtor f 16,902 33,695
----- End of picture text -----

16. Notes receivables

Notes receivables is secured by way of a charge on receivables owed to a third party and trade receivables owed to a company incorporated in Hong Kong with limited liability which is ultimately controlled by the shareholder of the third party. The interest rate is 7% per annum and it was matured on 12 June 2021 (“Extended Maturity Date”). As disclosed in the announcement of the Company dated 22 June 2021, the issuer of the notes receivables, Orbitronic Global Development Co., Limited (the “Issuer”), failed to repay the principal amount of the notes receivables together with the accrued interests on the notes receivables to the Company on Extended Maturity Date and such sums remained outstanding as at the date of this report.

Pursuant to the terms and conditions of the notes receivables, it constitutes an event of default (“Event of Default”) if, among others, the Issuer fails to pay the principal when due or the Issuer fails to pay interest on the notes receivables when due unless non-payment of such interest is due solely to administrative or technical error and payment is made within seven business days of the due date thereof.

Accordingly, an Event of Default has occurred. The Company has issued a formal notice to the Issuer informing the occurrence of an Event of Default and preserving its rights under the Notes. The Company is in the course of seeking legal advice and assessing the Company’s legal position on the possible course of action, including potential enforcement actions against the Issuer, in response to the occurrence of the Event of Default.

The Board is also in the process of assessing the financial impact of the Event of Default on the Group and will use its best endeavours and take all possible actions to seek recovery from the Issuer of the principal amount of the notes receivables and interests accrued thereon.

Interim Report 2021 29

Notes to the Condensed Consolidated Financial Statements FOR THE SIX MONTHS ENDED 30 JUNE 2021

17. Trade payables

The ageing analysis of trade payables, based on recognition date of trade payables, is as follows:

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----- Start of picture text -----

30 June 31 December
2021 2020
RMB’000 RMB’000
(Unaudited) (Audited)
0 to 1 month 7,357 11,006
1 month to 3 months 14,246 18,202
3 months to 6 months 5,447 7,680
6 months to 1 year 1,791 1,579
Over 1 year 1,351 608
30,192 39,075
Share capital
Number of
ordinary shares Amount
’000 USD’000
Authorised
Ordinary shares at 30 June 2021 of United States dollar (“USD”) 0.000005
(unaudited) (31 December 2020: USD0.000005 (audited)) each
At 1 January 2020 and 31 December 2020 (audited), 1 January 2021
and 30 June 2021 (unaudited) 10,000,000 50
Number of
ordinary shares Amount
’000 RMB’000
Issued and fully paid
Ordinary shares at 30 June 2021 of USD0.000005 (unaudited)
(31 December 2020: USD0.000005 (audited)) each
At 1 January 2020 and 31 December 2020 (audited), 1 January 2021
and 30 June 2021 (unaudited) 1,931,387 62
----- End of picture text -----

18. Share capital

30 FingerTango Inc.

Notes to the Condensed Consolidated Financial Statements FOR THE SIX MONTHS ENDED 30 JUNE 2021

19. Reserves

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----- Start of picture text -----

(Unaudited)
Foreign Equity
Share-based currency investments
payments Statutory translation revaluation
reserve reserve reserve reserve Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2020 138,551 16,903 43,287 (8,400) 190,341
Currency translation difference — — 15,496 — 15,496
Share-based payments (note 20) 7,081 — — — 7,081
At 30 June 2020 145,632 16,903 58,783 (8,400) 212,918
At 1 January 2021 146,723 16,903 (2,412) (8,400) 152,814
Currency translation difference — — (8,306) — (8,306)
Share-based payments (note 20) 1,377 — — — 1,377
At 30 June 2021 148,100 16,903 (10,718) (8,400) 145,885
----- End of picture text -----

Interim Report 2021 31

Notes to the Condensed Consolidated Financial Statements

FOR THE SIX MONTHS ENDED 30 JUNE 2021

20. Share-based payments transactions

On 28 February 2018, the Company’s shareholders approved the establishment of a RSU scheme and the Company appointed The Core Trust Company Limited as the trustee to assist with the administration of the RSU scheme. Under the RSU scheme, the maximum number of shares which may be granted is 75,000,000. No RSUs were granted to employees of the Group during the six months ended 30 June 2021 and 2020.

Movements in the number of award shares during the respective periods are as follows:

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----- Start of picture text -----

Six months ended 30 June
2021 2020
’000 ’000
Number of RSUs (Unaudited)
At the beginning of the period 4,293 20,668
Forfeited — (74)
Vested (960) (9,720)
At the end of the period 3,333 10,874
----- End of picture text -----

For the six months ended 30 June 2021, the Group recognised share-based payments of RMB1,377,000 (for the six months ended 30 June 2020: RMB7,081,000), which has been charged to the condensed consolidated statement of profit or loss and other comprehensive income.

21. Contingent liabilities

As at 30 June 2021, the Group did not have any significant contingent liabilities (31 December 2020: nil).

22. Capital commitments

The Group’s capital commitments at the end of the reporting period are as follows:

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----- Start of picture text -----

30 June 31 December
2021 2020
RMB’000 RMB’000
(Unaudited) (Audited)
Intangible assets
— Contracted but not provided for 11,857 19,757
----- End of picture text -----

32 FingerTango Inc.

FOR THE SIX MONTHS ENDED 30 JUNE 2021

Notes to the Condensed Consolidated Financial Statements

23. Related party transactions

Key management personnel compensations

The compensations paid or payable to key management personnel (including directors, chief executive officer and other senior executives) for employee services are shown below:

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----- Start of picture text -----

Six months ended 30 June
2021 2020
RMB’000 RMB'000
(Unaudited) (Unaudited)
Wages, salaries and bonuses 2,571 2,815
Pension costs — defined contribution plans 35 19
Social security costs, housing benefits and other employee benefits 53 116
Share-based payments expenses 1,201 4,125
3,860 7,075
----- End of picture text -----

24. Events after the reporting period

There were no material subsequent events during the period from 1 July 2021 to the approval date of the condensed consolidated financial statements by the board of directors on 31 August 2021.

25. Approval of condensed consolidated financial statements

The condensed consolidated financial statements were approved and authorised for issue by the board of directors on 31 August 2021.

Interim Report 2021 33

Other Information

USE OF PROCEEDS FROM LISTING

The net proceeds received from the Listing has been used in a manner consistent with that disclosed in the section headed “Future Plans and Use of Proceeds” in the prospectus of the Company dated 30 June 2018. Since the Listing Date and up to 30 June 2021, the utilization of the net proceeds and remaining balance (approximately HK$618.1 million) are set out below:

				Amount	Amount
			Amount	of the Net	of the
	Percentage	Amount	of the	Proceeds	remaining
	of the Net	of the Net	remaining	utilised	Net
	Proceeds	Proceeds	Net Proceeds	during the	Proceeds
	for each	for each	as at	period ended	as at
	intended	intended	31 December	30 June	30 June
Intended use of the Net Proceeds	usage	usage	2020	2021	2021
	%	HK$’ Million	HK$’ Million	HK$’ Million	HK$’ Million
Develop game sourcing capabilities and
ensure us to acquire high quality game
content	35%	338.5	299.1	9.4	289.7
Establish in-house game development team	25%	241.8	224.7	24.2	200.5
Fund marketing and promotional activities	20%	193.4	—	—	—
Expand into overseas markets and
develop overseas operation	10%	96.7	66.4	2.4	64.0
Working capital and general corporate
purposes	10%	96.7	69.0	5.1	63.9
Total	100%	967.1	659.2	41.1	618.1

The expected timeline for fully utilizing the remaining proceeds was based on the best estimation of the future market conditions made by the Group. It would be subject to change based on the current and future development of market conditions.

INTERIM DIVIDEND

The Board does not recommend payment of any interim dividend for the six-month period ended 30 June 2021 (30 June 2020: Nil).

FingerTango Inc.

Other Information

EMPLOYEE REMUNERATION AND RELATIONS

As at 30 June 2021, the Group had a total of 350 employees, comparing to 361 employees as at 30 June 2020. The Group provides employees with competitive remuneration and benefits, and the Group’s remuneration policies are formulated according to the assessment of individual performance and are periodically reviewed. The Group provide training programs to employees, including new hire training for new employees and continuing technical training primarily for our research and development team and game operation team to enhance their skill and knowledge.

ACQUISITIONS OF LISTED SECURITIES

During the period from 10 March 2021 to 15 March 2021 (both dates inclusive), the Group acquired on the open market a total of 16,962,000 China Gas Industry Investment Holdings Co. Ltd., (the “CGII”) Shares at an aggregate consideration of approximately HK$67,876,200.00 (exclusive of transaction costs) at an average price of approximately HK$4.00 per ordinary share of CGII (the “CGII Share”). For further details, please refer to the announcement of the Company dated 15 March 2021.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

Save as disclosed above, there was no purchase, sale or redemption of the Company’s listed securities by the Company or any of its subsidiaries during the Reporting Period.

INTERESTS AND SHORT POSITIONS OF DIRECTORS AND CHIEF EXECUTIVE IN SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY

As at 30 June 2021, the interests or short positions of the Directors and chief executive of the Company in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO), which (a) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he/she was taken or deemed to have under such provisions of the SFO); or (b) were required, pursuant to section 352 of the SFO, to be recorded in the register referred to herein; or (c) were required to be notified to the Company and the Stock Exchange pursuant to the Model Code, were as follows:

			Approximate
		Number of shares	percentage of
Name	Capacity/Name of Interest	held/Interested	Interest
Mr. Liu Jie(2)	Interest in a controlled corporation	1,007,837,500(L)(1)	52.18%
Mr. Zhu Yanbin(3)	Interest in a controlled corporation	148,488,000(L)(1)	7.69%

Interim Report 2021

Other Information

Notes:

• (1) The letter “L” denotes the person’s long position in our Shares.

• (2) LJ Technology Holding Limited, a beneficial owner 1,007,837,500 shares, is wholly-owned by Mr. LIU Jie. Thus, Mr. LIU Jie is deemed to be interested in the same number of Shares in which LJ Technology Holding Limited is interested by virtue of the SFO.

• (3) ZYB Holding Limited, a beneficial owner 148,488,000 shares, is wholly-owned by Mr. ZHU Yanbin. Thus, Mr. ZHU Yanbin is deemed to be interested in the same number of Shares in which ZYB Holding Limited is interested by virtue of the SFO.

SUBSTANTIAL SHAREHOLDERS’ INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES

As at 30 June 2021, the following persons (other than the interest of the Directors or chief executives of the Company disclosed above) who had an interest or short positions in the ordinary shares and underlying shares which fall to be disclosed to the Company and Stock Exchange under the provisions of Division 2 or 3 or Part XV of the SFO which were recorded in the register required to be kept under section 336 of the SFO:

			Approximate
		Number of shares	percentage of
Name	Capacity/Name of Interest	held/Interested	Interest
LJ Technology Holding Limited(2)	Benefcial owner	1,007,837,500(L)(1)	52.18%
ZYB Holding Limited(2)	Benefcial owner	148,488,000(L)(1)	7.69%

Notes:

• (1) The letter “L” denotes the person’s long position (as defined under Part XV of the SFO) in our Shares.

• (2) LJ Technology is wholly-owned by Mr. LIU Jie. Thus, Mr. LIU Jie is deemed to be interested in the same number of Shares in which LJ Technology is interested by virtue of the SFO.

• (3) ZYB Holding Limited is wholly-owned by Mr. ZHU Yanbin. Thus, Mr. ZHU Yanbin is deemed to be interested in the same number of Shares in which ZYB Holding Limited is interested by virtue of the SFO.

Save as disclosed herein, our Directors are not aware of any person who, have interests or short positions in Shares and/or underlying Shares which would fall to be disclosed under the provisions of Divisions 2 and 3 of Part XV of the SFO or, will be, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of our Company. Our Directors are not aware of any arrangement which may at a subsequent date result in a change of control of our Company.

FingerTango Inc.

Other Information

RSU SCHEME

We have adopted the RSU Scheme (the “RSU Scheme”) with a view to formalize our grant and our proposal to grant share incentives to eligible management and employees of our Group. The RSU Scheme was approved and adopted by the Board on March 16, 2018, the principal terms of which are set out in “Statutory and General Information — D. RSU Scheme and Share Option Scheme — 1. RSU Scheme” in Appendix IV of the Company’s prospectus dated June 26, 2018.

We have appointed The Core Trust Company Limited as the trustee to assist with the administration and vesting of the RSUs granted pursuant to the RSU Scheme. A total of 75,000,000 Shares (as adjusted after share sub-division conducted on March 22, 2018) were issued to Super Fleets Limited (the “RSU Nominee”), who hold the shares for the benefit of eligible participants pursuant to the RSU Scheme. No further Shares will be allotted and issued to the RSU Nominee or the trustee for the purpose of the RSU Scheme (other than pursuant to sub-division, reduction, consolidation, reclassification or reconstruction of the share capital of the Company in accordance with the RSU Scheme). As the RSU Scheme does not involve the grant of options to subscribe for any new Shares of the Company, it is not required to be subject to the provisions under Chapter 17 of the Listing Rules.

SHARE OPTION SCHEME

The Company has adopted a Share Option Scheme on 19 June 2018. The principal terms of the Share Option Scheme are prepared in accordance with the provisions of Chapter 17 of the Listing Rules and other rules and regulations. Further details of the Share Option, Scheme are set forth in the section headed “Statutory and General Information — D. RSU Scheme and Share Option Scheme” in Appendix IV to the prospectus.

For the six months ended 30 June 2021, no share option was granted, exercised, expired or lapsed and there is no outstanding share option under the Share Option Scheme.

SIGNIFICANT INVESTMENTS HELD, MATERIAL ACQUISITIONS AND DISPOSAL OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES, AND FUTURE PLAN FOR MATERIAL INVESTMENTS AND CAPITAL ASSETS

Save as disclosed herein, the Group has no significant investment held, no material acquisition or disposal of subsidiaries, associates and joint ventures during the Reporting Period, and that there was no plan authorised by the Board for other material investments or addition of capital assets at the date of this announcement.

PLEDGE OF ASSETS

As at 30 June 2021, none of the Group’s assets was pledged.

Interim Report 2021

Other Information

CONTINGENT LIABILITIES

As at 30 June 2021, the Group did not have any material contingent liabilities.

LITIGATIONS

Writ of Summons Received by the Company

On 16 June 2021, the Company received a writ of summons issued in the High Court of the Hong Kong Special Administrative Region by Leading Global Fund SPC (the “Plaintiff”) as plaintiff and the Company as the defendant. The Company has indicated its intention to defend the proceedings. The Plaintiff filed and served its statement of claim on 23 July 2021 (the “Statement of Claim”). As set out in the Statement of Claim, the Plaintiff allegedly claims against the Company for (i) the sum of HK$250,000,000 pursuant to an alleged subscription agreement entered into between the Plaintiff and the Company on or around 16 July 2018 (the “Alleged Subscription Agreement”); (ii) damages for alleged breach of the Alleged Subscription Agreement by the Company’s failure to transfer the sum of HK$250,000,000 to the Plaintiff pursuant to the Alleged Subscription Agreement, together with (iii) interest, costs and further or other relief. The Company is currently seeking legal advice regarding the relevant proceedings. For further details, please refer to the announcement of the Company dated 17 June 2021.

EVENT OF DEFAULT OF NOTES OF THE ISSUER

The Company has subscribed the notes in the principal amount of HK$250,000,000 (the “Notes”) issued by Orbitronic Global Development Co., Limited (the “Issuer”) on 13 December 2019. As disclosed in the announcement of the Company dated 12 December 2020, the maturity date of the Notes was extended from 12 December 2020 to 12 June 2021 (the “Extended Maturity Date”). However, as disclosed in the announcement of the Company dated 22 June 2021, the Issuer failed to pay the total principal amount of the Notes together with the accrued interests on the Notes (which amounted to HK$8,750,000 to the Company on the Extended Maturity Date and such sums remained outstanding as at the date of this report.

Pursuant to the terms and conditions of the Notes, it constitutes an event of default (“Event of Default”) if, among others, the Issuer fails to pay the principal when due or the Issuer fails to pay interest on the Note when due unless non-payment of such interest is due solely to administrative or technical error and payment is made within seven business days of the due date thereof. Accordingly, an Event of Default has occurred. The Company has issued a formal notice to the Issuer informing the occurrence of an Event of Default and preserving its rights under the Notes. The Company is in the course of seeking legal advice and assessing the Company’s legal position on the possible course of action, including potential enforcement actions against the Issuer, in response to the occurrence of the Event of Default.

The Board is also in the process of assessing the financial impact of the Event of Default on the Group and will use its best endeavours and take all possible actions to seek recovery from the Issuer of the principal amount of the Notes and interests accrued thereon.

FingerTango Inc.

Other Information

MATERIAL EVENTS AFTER THE REPORTING PERIOD

As at the date of this report, there were no material events after the Reporting Period.

COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code for Securities Transactions by Directors of the Listed Issues (the “Model Code”) as set out in Appendix 10 of the Listing Rules as its code of conduct for Directors’ securities transactions. Having made specific enquiry with the Directors, all of the Directors confirmed that they have complied with the required standards as set out in the Model Code during the Reporting Period.

UPDATES ON DIRECTORS’ INFORMATION

Pursuant to Rule 13.51B(1) of the Listing Rules, the changes in the information of Directors and chief executives of the Company subsequent to the date of the 2020 annual report of the Company up to the date of the Board meeting held at 31 August 2021 approving this interim results announcement are set out below:

1. Mr. Wang Zaicheng has resigned as an executive Director and joint company secretary of the Company with effect from 28 May 2021.

2. Mr. Liu Zhanxi has resigned as an executive Director and the chief financial officer of the Company with effect from 28 May 2021.

3. Ms. Lin Yanfen has been appointed as the acting chief financial officer of the Company with effect from 28 May 2021.

4. Ms. Yao Minru (“Ms. Yao”) has resigned as an independent non-executive Director the chairlady of the audit committee and a member of the nomination committee and a member of the remuneration committee of the Company with effect from 13 July 2021.

COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE

During the Reporting Period and up to the date of this report, the Company has complied with all the code provisions set forth in the Corporate Governance Code (the “CG Code”) contained in Appendix 14 to the Listing Rules, except for the following deviation of the CG Code which is explained below:

1. According to provision A.2.1 of the CG Code, the roles of chairman and chief executive officer should be separate and should not be performed by the same individual. Mr. Liu Jie (“Mr. Liu”) is our chairman and chief executive officer with extensive experience in the mobile internet industry and mobile game publishing industry. Mr. Liu is responsible for the strategic development, overall operation and management and major decision-making of our Group and is instrumental to our growth and business expansion since our establishment in 2013.

Interim Report 2021

Other Information

Our Board considers that vesting the roles of chairman and chief executive officer in the same person is beneficial to the management of our Group. The balance of power and authority is ensured by the operation of the senior management and our Board, which comprises experienced and visionary individuals. Our Board currently comprises four executive Directors (including Mr. Liu) and three independent non-executive Directors and therefore has a fairly strong independence element in its composition. The Board shall review the structure from time to time to ensure that the structure facilitates the execution of the Group’s business strategies and maximizes effectiveness of its operation.

1. Reference is made to the announcement of the Company dated 13 July 2021.

Following the resignation of Ms. Yao on 13 July 2021:

• (i) total number of independent non-executive Directors accounts for less than one-third of Board members, and hence the Company fails to meet the requirement of Rule 3.10A of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”);

• (ii) the number of independent non-executive Directors and the number of members of the audit committee of the Company will fall below the minimum number required under Rules 3.10(1) and 3.21 of the Listing Rules respectively;

• (iii) at least one of the independent non-executive directors having appropriate professional qualifications or accounting or related financial management expertise under Rule 3.10(2) of the Listing Rules;

• (iv) the Remuneration Committee has two members one of whom (being the chairman) is an Independent Nonexecutive Director, and hence the Company does not meet all the requirements of Rule 3.25 of the Listing Rules as the Remuneration Committee does not comprise a majority of Independent Non-executive Directors as members; and

• (v) the Nomination Committee has two members one of whom (being the chairman) is an Independent Non-executive Director, and hence the Company deviates from code provision A.5.1 of the Corporate Governance Code contained in Appendix 14 to the Listing Rules as the Nomination Committee does not comprise a majority of Independent Non-executive Directors as members.

The above non-compliances arose only due to the resignation of Ms. Yao. The Board is identifying a suitable candidate with appropriate background and qualification for appointment as an independent non-executive Director and will fill the vacancies as soon as possible.

FingerTango Inc.

Other Information

AUDIT COMMITTEE

The Company established an Audit Committee with written terms of reference in compliance with Rule 3.21 of the Listing Rules and the CG Code. The Audit Committee comprises two members, namely, Mr. Guo Jingdou and Dr. LIU Jianhua, all being independent non-executive Directors of the Company.

The Audit Committee has reviewed the Company’s unaudited condensed consolidated interim results for the Reporting Period and confirms that the applicable accounting principles, standards and requirements have been complied with, and that adequate disclosures have been made.

Interim Report 2021

Glossary

“ARPPU” average revenue per monthly paying user, calculated by dividing total revenue during certain period by the number of average MPUs during the same period; average MPUs is the average of the aggregate number of paying users for our games in each month during a certain period “Auditor” ZHONGHUI ANDA CPA Limited, the auditor of the Company “Audit Committee” the audit committee of the Board “Board” the board of Directors of the Company “Binyou Networks” Shanghai Binyou Networks Technology Limited (上海繽遊網絡科技有限公 司), a limited liability company incorporated under the laws of the PRC on 16 March 2018 and a wholly-owned subsidiary of our Company “Cayman Islands” the Cayman Islands “China” or “PRC” the People’s Republic of China excluding, for the purpose of this interim report, Hong Kong, the Macau Special Administrative Region of the People’s Republic of China and Taiwan “Chairman” Chairman of the Board “Company”, “the Company”, “we” or “us” FingerTango Inc. (指尖 悅 動控股有限公司), an exempted company incorporated in the Cayman Islands with limited liability on 9 January 2018 “Contractual Arrangement(s)” the series of contractual arrangements entered into by, among others, Binyou Networks, the Registered Shareholders and Youmin Networks, details of which are set out in the section headed “Contractual Arrangements” in the Prospectus “Corporate Governance Code” the Corporate Governance Code and Corporate Governance Report as set out in Appendix 14 to the Listing Rules “Group” or “the Group” our Company, its subsidiaries and the PRC Operating Entities “Hong Kong dollar(s)”, “HK dollar(s)” or “HK$” Hong Kong dollars, the lawful currency of Hong Kong “Hong Kong Stock Exchange” or The Stock Exchange of Hong Kong Limited “Stock Exchange” “IFRS(s)” International Financial Reporting Standards, amendments and interpretations issued by the International Accounting Standards Board

average revenue per monthly paying user, calculated by dividing total revenue during certain period by the number of average MPUs during the same period; average MPUs is the average of the aggregate number of paying users for our games in each month during a certain period

FingerTango Inc.

Glossary

“Issuer” Orbitronic Global Development Co., Limited, a company incorporated in Hong Kong with limited liability and is ultimately controlled by Mr. Lai Tai Fung Timothy “Kaixi Networks” Shanghai Kaixi Networks Technology Limited (上海凱羲網絡科技有限 公司), a limited liability Company incorporated under the laws of the PRC on 12 September 2018 and one of our PRC Operating Entities “Listing” the listing of the Shares on the Main Board of the Stock Exchange “Listing Date” The date which dealings in Shares first commence on the Stock Exchange, i.e. 12 July 2018 “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange “LJ Technology” LJ Technology Holding Limited, an exempted company incorporated in the BVI on 8 January 2018 with limited liability, which was established and wholly-owned by Mr. Liu Jie “Note” or “Notes” secured notes due 12 December 2020 or such other date as agreed by the Issuer and the Company but in any event, no later than 31 December 2020 to be issued by the Issuer “Prospectus” the prospectus dated 12 July 2018 issued by the Company “Renminbi” or “RMB” Renminbi yuan, the lawful currency of the PRC “Registered Shareholders” direct shareholders of Youmin Networks, being Mr. Liu Jie, Mr. Zhu Yanbin, Mr. Wu Junjie, Zhuhai Sangu and Zhuhai Jugu “Reporting Period” The six months ended 30 June 2021 “RSU(s)” restricted share units or any one of them “RSU Scheme” The RSU scheme approved and conditionally adopted by the Shareholders on 28 February 2018, the principal terms of which are set out in “Statutory and General Information — D. RSU Scheme and Share Option Scheme — 1. RSU Scheme” in Appendix IV to the Prospectus “Securities and Future Ordinance” or “SFO” the Securities and Futures Ordinance of Hong Kong (chapter 571 of the laws of Hong Kong), as amended, supplemented or otherwise modified from time to time “Share(s)” ordinary share(s) in the share capital of our Company with a par value of US$0.000005 each

Interim Report 2021

Glossary

“Shareholder(s)” holder(s) of our Share(s)

“Share Option Scheme” the share option scheme adopted by our Company on 19 June 2018 which complies with the provisions of Chapter 17 of the Listing Rules “SLG” simulation games, which are generally designed to closely simulate aspects of a real or fictional reality

“Youmin Networks”

Shanghai Youmin Networks Technology Limited (上海遊民網絡科技有限 公司), a limited liability company incorporated under the laws of the PRC on 3 December 2013 and one of our PRC Operating Entities

“ZYB Holding”

ZYB Holding Limited, an exempted company incorporated in the BVI on 8 January 2018 with limited liability, which was established and whollyowned by Mr. Zhu Yanbin

FingerTango Inc.