Homeland Interactive Technology Ltd. — Interim / Quarterly Report 2021

Aug 24, 2021

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.

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Homeland Interactive Technology Ltd. 家鄉互動科技有限公司

(incorporated in the Cayman Islands with limited liability) (Stock Code: 3798)

INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2021

FINANCIAL HIGHLIGHTS

	For the six	months	Year-on-Year
	ended 30	June	Change*
	2021	2020	(%)
	(unaudited)	(unaudited)
		(restated)***
	(RMB in thousands, except for		percentages)
Revenue	557,427	387,174	44.0
Cost of sales	(134,764)	(95,200)	41.6
Gross profit	422,663	291,974	44.8
Profit for the period attributable to owners of
the Company	310,699	201,719	54.0
Non-IFRS adjusted net profit attributable to
owners of the Company**	315,646	217,610	45.1

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

• ** Non-IFRS adjusted net profit attributable to owners of the Company was derived from the unaudited profit and total comprehensive income for the period adjusted for share-based compensation.

• *** As disclosed in note 19 to the condensed consolidated financial statements of the Company, sharebased payment expenses of RMB15,891,000 for the six months ended 30 June 2020 have been reclassified to cost of sales of RMB7,816,000, administrative expenses of RMB 5,164,000 and selling and marketing expenses of RMB2,911,000, respectively so as to conform with the current period’s presentation. After such reclassification, all line items under the income statement are classified according to the nature of the transactions or events. Such reclassification has not resulted in any change to in the profit for the period attributable to the owners of the Company for the six months ended 30 June 2020.

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REVENUE BY TYPES OF VIRTUAL PRODUCTS

Self-developed mobile games Virtual tokens Private game room cards Third-party mobile games Advertising revenue Total**	For the six months ended 30 June Year- on-Year Change For the year ended 31 December 2021 2020 (%) 2020 (unaudited) (unaudited) (audited) (RMB in thousands, except for percentages) 399,605 209,155 91.1 419,601 80,033 107,010 (25.2) 209,573 6,282 14,307 (56.1) 21,687 485,920 330,472 47.0 650,861 71,507 56,702 26.1 121,173 557,427 387,174 44.0* 772,034

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

** Advertising revenue represents revenue generated from in-game advertisement slots the Group inserted in its mini-programs, typically measured by user clicks.

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OPERATIONAL HIGHLIGHTS

The following table sets forth the major operating data of the Group.	The following table sets forth the major operating data of the Group.	The following table sets forth the major operating data of the Group.
	As at or	for the	As at or for the
	six months ended		year ended
	30 June 2021	30 June 2020 31 December 2020
Virtual tokens
Daily active users (“DAUs”) *
(as at period end)	6,787,597	5,245,711	6,029,102
Paying players**	6,101,408	4,681,147	5,436,885
Private game room cards
DAUs* (as at period end)	1,163,274	763,911	1,492,810
Paying players**	174,925	133,876	155,489
* DAUs, in any given period, refer to the number of daily active players as at the last calendar day of
such period.

• ** Paying players, in any given period, refer to players who pay money to play any of the Company’s mobile game products or to purchase virtual tokens offered by the Company in its mobile game products at least once; a player who pays more than once in such period is counted only once.

The board of directors (the “ Board ”) of Homeland Interactive Technology Ltd. (the “ Company ”) is pleased to announce the unaudited consolidated results (the “ Interim Results ”) of the Company and its subsidiaries (together the “ Group ”) for the six months ended 30 June 2021 (the “ Reporting Period ”) together with the comparative figures for the previous corresponding period. The Interim Results have been reviewed by Deloitte Touche Tohmatsu, the auditor of the Company, and the audit committee of the Company (the “ Audit Committee ”).

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BUSINESS OVERVIEW AND OUTLOOK

Business Review

The Group is a leading localized mobile card and board game developer and operator in China with a special focus on localized Mahjong and poker games. The Group also develops and operates casual games and beginning in August 2018, leveraging its large player base, the Group commenced the distribution of third-party mobile games. In 2017, the Group recognized the increasing need for socialising functions in mobile games and introduced private game room function to some of its Mahjong and poker game products.

Most of the Group’s games, including the most popular game categories of Mahjong and Fight the Landlord (鬥地主), are the recreation of classic games. The Group has developed different Mahjong and poker game variations featured with localized and regional game rules, scoring rules and slang terms, appealing to various traditions and preferences of players from different locations. During the six months ended 30 June 2021, the Group has successfully expanded the geographic coverage of its games in China. The Group currently offers Mahjong game variations that are localized to cover at least some counties in 28 provinces and municipalities in China. In the first half of 2021, the Group has launched 11 new Mahjong game variations and, 8 new poker game variations.

In terms of financial performance, the Group continued its robust growth during the first half of 2021. The Group’s revenue and gross profit for the six months ended 30 June 2021 were RMB557.4 million and RMB422.7 million, representing an increase of approximately 44.0% and 44.8%, respectively as compared with the revenue and restated gross profit for the corresponding period of last year, primarily due to the significant increase in the Group’s DAUs during the first half of 2021 resulting from the Company’s effort in further developing the Group’s game portfolio and increase in promotion activities to enhance player stickiness and stimulate in-game purchases, increase in revenue generated from casual games due to the Company’s focus on improvements and upgrades to existing versions of its casual games, especially Fishing Strike (捕魚), in order to enhance player experience, and increase in advertising revenue. During the first half of 2021, the Group recognized advertising revenue of RMB71.5 million as it incentivized players by giving free private game room cards and virtual tokens through clicks on advertisements thereby increasing its advertising revenue. The Group’s adjusted net profit, which does not take into account share-based compensation of RMB4.9 million was approximately RMB315.6 million for the six months ended 30 June 2021, representing an increase of approximately 45.1% from approximately RMB217.6 million for the six months ended 30 June 2020.

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In terms of business development, the Group continued to expand its game portfolio, and enhance its marketing capabilities and technology infrastructure to grow its player base, increase their stickiness and stimulate their in-game purchases. As at 30 June 2021, the Group’s DAUs increased to 7,950,871, representing a growth of 32.3% as compared with 30 June 2020. The Group’s paying players reached 6,276,333 for the six months ended 30 June 2021, representing a growth of 30.3% as compared with the six months ended 30 June 2020.

Business Outlook

During the second half of 2021, the Group will continue its efforts to further solidify its leading position in the localized card and board game industry in China by continuing the following strategies:

• Further develop the Group’s advertising revenue. The Group will continue to cooperate with other platform operators to insert in-game advertisement slots. In addition, leveraging its user traffic, the Group will continue to offer advertisement slots on its integrated game platform. Utilizing its data analytical capabilities, the Group will continue to develop strategies including analysing the frequency and timing of advertisements shown to players in order to optimise advertising revenue.

• Further develop and optimize the Group’s game portfolio to boost player stickiness. The Group plans to expand its geographic coverage in China by leveraging its established brand name and developing additional localized regional game variations. The Group aims to expand the coverage of its localized game variations to the entire country. During the first half of 2021, the Group has launched 11 new Mahjong game variations and 8 new poker game variations. In the second half of 2021, the Group intends to introduce more casual games to amplify its overall game portfolio and attract players with different interests.

• Continue to strengthen research and development and technology infrastructure. During the first half of 2021, the Company has made significant investment in product research and development. The Group’s total expenses for technical employees benefit, server-related fee and outsourced research and development amounted to RMB48.5 million for the six months ended 30 June 2021. The Group will increase its investments in technologies to further strengthen its game development capability and infrastructure, with a particular focus on enhancing game features and improving player experience, which in turn helps retain players and increase player stickiness. The Group will continue to develop HTML5 versions and other potential mini-programs for its game products which are connected to various HTML5-enabled social platforms and websites. During the first half of 2021, the Company has focused on improvements and upgrades to existing versions of its casual games, especially Fishing Strike (捕魚), in order to enhance player experience. Such improvement has resulted in increase in popularity of the Company’s casual games and contributed to the Company’s increase in revenue.

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• Enhance marketing capabilities and improve brand image. The Group plans to invest in promotion activities, placing advertisements on social media platforms, third party websites, Apps and TV, as well as sponsoring various online and offline game tournaments to increase its presence and promote its brand.

• Expansion of products overseas through cooperations with internationally renowned third-party game distribution channels. In the second half of 2021, the Company will further deploy resources for research and development and promotion of products overseas. The Company will leverage its own experience in game development and operation in the PRC to launch board games and casual games suitable for overseas players. Depending on the product development, the Company plans to launch game products covering areas including Hong Kong, Macau, Taiwan, Europe, America, Southeast Asia and the Middle East. The Company will cooperate with internationally renowned third party game distribution channels to promote game products in the target areas.

• Continue to explore acquisition opportunities. In 2020, Jilin Xinze Network Technology Company Limited (吉林省鑫澤網絡技術有限公司), an operating company of the Group which is controlled by the Group through contractual arrangements, completed the acquisition of 40% equity interest in Jilin Xinyue Network Technology Limited (吉林省心悅網絡科技有限公司) (“ Jilin Xinyue* ”). Following the completion of the acquisition, the Group has begun to realize synergies with Jilin Xinyue to gain access to wider local market, expand its player base and further increase its presence in the PRC market. In the second half of 2021, the Group will continue to explore complementary partnership or acquisition opportunities of small to medium-sized mobile games developers and operators which can enhance its game-related sourcing, development and operation capabilities and complement its experience in the gaming market.

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MANAGEMENT DISCUSSION AND ANALYSIS

Financial Review

Revenue

The Group’s revenue for the six months ended 30 June 2021 amounted to approximately RMB557.4 million, representing an increase of 44.0% from approximately RMB387.2 million recorded in the corresponding period in 2020. The increase in revenue was primarily driven by the significant increase in the Group’s DAUs during the first half of 2021 resulting from the Company’s effort in further developing the Group’s game portfolio and increase in promotion activities to enhance player stickiness and stimulate in-game purchases, increase in revenue generated from casual games due to the Company’s focus on improvements and upgrades to existing versions of its casual games, especially Fishing Strike (捕魚), in order to enhance player experience, and increase in advertising revenue. Advertising revenue represents revenue generated from in-game advertisement slots the Group inserted in its mini-programs, typically measured by user clicks. For the six months ended 30 June 2021, revenue generated from the Group’s sale of virtual tokens, private game room cards, distribution of third-party mobile games and advertising revenue accounted for approximately 71.7%, 14.4%, 1.1% and 12.8% of the Group’s total revenue, respectively, as compared with approximately 54.0%, 27.6%, 3.7% and 14.7%, respectively, for the six months ended 30 June 2020.

Cost of sales

The Group’s cost of sales primarily includes (i) employee benefit expenses; (ii) commissions and fees charged by third-party game distribution channels and payment vendors; (iii) server-related and technical support fees; and (iv) depreciation and amortization. The Group’s cost of sales increased by approximately 41.6% to approximately RMB134.8 million in the six months ended 30 June 2021 from approximately RMB95.2 million (restated) in the corresponding period in 2020, primarily due to the growth in the Group’s business in line with the expansion of the Group’s game portfolio. More specifically, the increase in cost of sales was primarily due to (i) a RMB35.6 million increase in commissions and fees paid to third-party distribution channels and payment vendors in line with the Group’s rapid business growth and also due to the increased use of third-party distribution channels to distribute its games; and (ii) a RMB4.9 million increase in server-related and technical support fees.

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Gross profit and gross profit margin

As a result of the foregoing, the Group’s gross profit increased by 44.8% to approximately RMB422.7 million for the six months ended 30 June 2021 from approximately RMB292.0 million (restated) for the corresponding period in 2020. The Group’s gross profit margin increased slightly to 75.8% for the six months ended 30 June 2021 from 75.4% for the corresponding period in 2020.

Other Income

Other income decreased by approximately 44.3% from RMB37.0 million for the six months ended 30 June 2020 to RMB20.6 million for the six months ended 30 June 2021. The decrease was primarily due to a decrease in service income of RMB20.9 million during the six months ended 30 June 2021, which was partially offset by an increase in interest income of RMB3.8 million.

Foreign Exchange (Losses)/Gains, Net

Foreign exchange losses of RMB0.5 million recorded in the six months ended 30 June 2021 were mainly due to the fluctuation of exchange rate of Renminbi (RMB) against HK dollars and US dollars, and depreciation of HK dollars.

Selling and Marketing Expenses

The Group’s selling and marketing expenses increased by approximately 40.8% from RMB53.6 million (restated) for the six months ended 30 June 2020 to RMB75.5 million in the corresponding period in 2021. The increase was primarily due to a RMB25.6 million increase in advertising expenses resulting from the Group’s enhanced marketing efforts to acquire and retain players, and offset by a decrease in in-game promotion expenses of RMB1.7 million.

Administrative Expenses

The Group’s administrative expenses increased by approximately 11.9% from RMB25.1 million (restated) for the six months ended 30 June 2020 to RMB28.1 million in the corresponding period in 2021. The increase was primarily due to an increase of RMB2.1 million in other professional service fees in connection with consulting services the Group engaged for legal compliance, finance and other related matters.

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Profit Before Income Tax

The Group’s profit before income tax increased by approximately 44.3% from RMB247.4 million for the six months ended 30 June 2020 to RMB357.0 million in the corresponding period in 2021. The Group’s profit before income tax as a percentage of total revenue was 63.9% for the six months ended 30 June 2020, which was about the same as the 64.0% for the six months ended 30 June 2021.

Income Tax Expenses

Income tax expenses increased by approximately 2.7% from RMB45.7 million for the six months ended 30 June 2020 to RMB46.9 million in the corresponding period in 2021, primarily due to the increase in taxable profits generated for the six months ended 30 June 2021. The Group’s effective tax rates were 18.5% and 13.1% for the six months ended 30 June 2020 and 2021, respectively. The decrease in the Group’s effective tax rate was primarily due to (i) the decrease of non-deductible share-based payment expenses; and (ii) the increase of non-taxable share of profit of associates.

Profit attributable to owners of the Company

Profit attributable to owners of the Company increased by approximately 54.0% from approximately RMB201.7 million for the six months ended 30 June 2020 to approximately RMB310.7 million for the six months ended 30 June 2021.

Non-IFRS Measures — Adjusted Net Profit

To supplement the Group’s consolidated financial statements which are presented in accordance with International Financial Reporting Standards (“ IFRS ”), the Company also used unaudited non-IFRS adjusted net profit as an additional financial measure in order to evaluate its financial performance by eliminating the impact of non-recurring and non-cash items that it does not consider indicative of the performance of its business. The Company’s management believes that the presentation of non-IFRS measures, in conjunction with the corresponding IFRS measures, provides useful information to investors relating to the Group’s financial condition and results of operations. The term “adjusted net profit” is not defined under IFRS. Other companies in the industry which 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 the Group’s 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.

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The following table sets out the calculation of adjusted net profit attributable to owners of the Company for the periods indicated:

Profit for the period attributable to owners of the Company Add: Share-based compensation Adjusted net profit	For the six months ended 30 June 2021 2020 RMB’000 RMB’000 310,699 201,719 4,947 15,891 315,646 217,610	For the six months ended 30 June 2021 2020 RMB’000 RMB’000 310,699 201,719 4,947 15,891 315,646 217,610
		217,610

The adjusted net profit for the six months ended 30 June 2021, adjusted by excluding the non-cash item of share-based compensation to key employees, was approximately RMB315.6 million, increased by 45.1% as compared to approximately RMB217.6 million for the six months ended 30 June 2020.

Liquidity and Capital Resources

For the six months ended 30 June 2021, the Group financed its operations primarily through cash generated from the Group’s operating activities. The Group intends to finance its expansion and business operations with internal resources and through organic and sustainable growth.

The Group has adopted a prudent financial management approach towards its treasury policy. The Board closely monitors the Group’s liquidity position to ensure that the liquidity structure of the Group’s assets, liabilities, and other commitments can meet its funding requirements from time to time.

Cash and cash equivalents

The Group primarily operates its business in the PRC and its transactions and revenue were primarily denominated in Renminbi. The Group has certain cash and cash equivalents and trade receivables denominated in HK dollars and US dollars, and is exposed to foreign exchange risk arising from exchange rate fluctuation of RMB against HK dollars and US dollars. As at 30 June 2021, the Group had cash and cash equivalents of approximately RMB955.5 million (31 December 2020: approximately RMB732.7 million), which primarily consisted of cash at bank. Out of the RMB955.5 million, approximately RMB898.9 million is denominated in Renminbi, approximately RMB18.8 million is denominated in HK dollars and approximately RMB37.8 million is denominated in US dollars. The Group currently does not hedge transactions undertaken in foreign currencies.

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The Group currently does not have any hedging policy for foreign currencies in place. However, the Board will remain alert to any relevant risks and, if necessary, consider to hedge any material potential foreign exchange risk.

Borrowings

During the six months ended 30 June 2021, the Group did not have any short-term or long-term bank borrowings and had no outstanding bank and other borrowings and other indebtedness apart from lease liabilities for the relevant lease terms amounting to RMB8.7 million in aggregate.

Gearing ratio

The gearing ratio was zero since there was no debt as at 30 June 2021.

Charge on assets

As at 30 June 2021, the Group did not pledge any of its assets.

Capital expenditure

For the six months ended 30 June 2021, the Group’s capital expenditure amounted to approximately RMB16.5 million (for the six months ended 30 June 2020: approximately RMB9.7 million), which mainly comprised expenditures on the purchase of office furniture and equipment, the purchase of computer software as well as investment in an associate. The Group funded its capital expenditure by using the cash flow generated from its operations and proceeds from the global offering. The capital expenditure for the six months ended 30 June 2021 was higher primarily due to increased expenditure with respect to the investment in associates.

Contingent liabilities and guarantees

As at 30 June 2021, the Group did not have any significant unrecorded contingent liabilities, guarantees or any litigation against the Group.

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Material acquisitions and future plans for major investment

In 2020, Jilin Xinze Network Technology Company Limited (吉林省鑫澤網絡技術有 限公司), an operating company of the Group which is controlled by the Group through contractual arrangements, completed the acquisition of 40% equity interest in Jilin Xinyue. Following the completion of the acquisition, the Group has begun to realize synergies with Jilin Xinyue to gain access to wider local market, expand its player base and further increase its presence in the PRC market. Please see the announcement of the Company dated 3 November 2020 and 29 December 2020, respectively, for details.

During the six months ended 30 June 2021, the Group has not conducted any material acquisitions or disposals. However, the Group plans to explore opportunities, through potential partnership with or strategic acquisitions of local small to medium-sized mobile game developers and operators which can enhance its game-related sourcing, development and operation capabilities and complement its experience in the gaming market. The Group will utilize proceeds from the global offering for the purpose of any such acquisition.

Employees and Staff Costs

The Company has hired additional game developers, engineers and marketing personnel during the first half of 2021 in line with the Company’s business expansion. Taking into account the employees who departed during the first half of 2021, the Group had a total of 527 full time employees, mainly located in mainland China. In particular, 99 employees are responsible for the Group’s research and development, 191 for game development, 81 for technical support, 49 for customer service, 62 for marketing and 45 for operations and general administration. The total staff cost incurred by the Group for the six months ended 30 June 2021 was approximately RMB46.8 million compared to approximately RMB50.2 million for the corresponding period in 2020. The decrease was primarily due to the decrease in payment of share-based compensation to key employees of approximately RMB10.9 million.

The Group provides orientation and training to new recruits as well as ongoing in-house training for junior employees, which the Group believes can enhance the skills and productivity of its employees. The Group compensates employees with base salaries and performance-based bonuses. The Company has also adopted a share option scheme (the “ Share Option Scheme ”) and a share award scheme (the “ Share Award Scheme ”) on 5 June 2019 and 6 June 2019, respectively to incentivize employees and senior management and to align their interests with that of the Company. Further details of the Share Option Scheme and the Share Award Scheme will be set out in the interim report of the Company for the six months ended 30 June 2021.

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CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2021

NOTES Revenue 3 Cost of sales 4 Gross profit Other income 5 Selling and marketing expenses Administrative expenses Other expenses Share of profit of associates Interest on lease liabilities Foreign exchange (losses) gains, net Profit before income tax Income tax expense 7 Profit for the period 8 Other comprehensive expense Item that will not be reclassified to profit or loss: Fair value loss on investment in equity instruments at fair value through other comprehensive income (“FVTOCI”), net of income tax Other comprehensive expense for the period Total comprehensive income for the period

Six months ended 30 June 2021 2020 RMB’000 RMB’000 (unaudited) (unaudited) (restated) 557,427 387,174 (134,764) (95,200) 422,663 291,974 20,621 37,049 (75,472) (53,593) (28,092) (25,115) (708) (5,000) 18,764 — (292) (443) (464) 2,545 357,020 247,417 (46,931) (45,698) 310,089 201,719 (3,748) — (3,748) — 306,341 201,719

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NOTES Profit (loss) for the period attributable to: Owners of the Company Non-controlling interests Total comprehensive income (expense) attributable to: Owners of the Company Non-controlling interests Earnings per share_(in RMB cents) _9 — Basic — Diluted	Six months ended 30 June 2021 2020 RMB’000 RMB’000 (unaudited) (unaudited) (restated) 310,699 201,719 (610) — 310,089 201,719 306,951 201,719 (610) — 306,341 201,719 24.92 16.23 24.22 16.07	Six months ended 30 June 2021 2020 RMB’000 RMB’000 (unaudited) (unaudited) (restated) 310,699 201,719 (610) — 310,089 201,719 306,951 201,719 (610) — 306,341 201,719 24.92 16.23 24.22 16.07
		201,719
		201,719 —
		201,719
		16.23
		16.07

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CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2021

NOTES Non-current assets Property, plant and equipment 10 Right-of-use assets 10 Intangible assets Investment in associates 11 Equity instruments at FVTOCI Loan to employees 12 Rental and other deposits Deferred tax assets Current assets Trade receivables 13 Prepayments and other receivables 14 Loan to employees 12 Cash and cash equivalents Current liability Trade and other payables 15 Deferred revenue 16 Tax payable Lease liabilities Net current assets Total assets less current liabilities	As at 30 June 2021 RMB’000 (unaudited) 42,338 7,904 1,328 161,579 9,540 19,949 5,557 887 249,082 112,008 86,434 1,900 955,527 1,155,869 51,358 39,755 44,119 3,198 138,430 1,017,439 1,266,521	As at 31 December 2020 RMB’000 (audited) 43,416 9,728 1,610 149,675 13,950 6,474 2,525 225
		227,603
		88,473 53,972 1,900 732,724
		877,069
		54,806 39,888 50,056 3,469
		148,219
		728,850
		956,453

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NOTES Non-current liability Lease liabilities Net assets Capital and reserves Share capital 17 Reserves Equity attributable to owners of the Company Non-controlling interests Total equity	As at 30 June 2021 RMB’000 (unaudited) 5,481 1,261,040 41 1,261,986 1,262,027 (987) 1,261,040	As at 31 December 2020 RMB’000 (audited) 7,101 949,352 41 950,088 950,129 (777) 949,352

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2021

As at 1 January 2020 (audited) Profit and total comprehensive income for the period Recognition of share-based payment expenses under the Share Award Scheme Vesting of award shares under the Share Award Scheme Recognition of share-based payment expenses under the Share Option Scheme Dividends recognized as distribution As at 30 June 2020 (unaudited) As at 1 January 2021 (audited) Profit (loss) for the period Other comprehensive expense for the period Total comprehensive (expense) income for the period Recognition of share-based payment expenses under the Share Option Scheme Capital injection from non- controlling interests As at 30 June 2021 (unaudited)	Paid-in capital/ Share capital RMB’000 41 — — — — — 41 41 — — — — — 41			Attributable to owners of the Company	Attributable to owners of the Company	Attributable to owners of the Company			Sub-total RMB’000 616,577 201,719 2,877 — 13,014 (83,022) 751,165 950,129 310,699 (3,748) 306,951 4,947 — 1,262,027	Non- controlling interests RMB’000 — — — — — — — (777) (610) — (610) — 400 (987)	Total equity RMB’000 616,577 201,719
		Shares held for Share Award Scheme RMB’000 (2) — — 2 — — — — — — — — — —***	Share premium RMB’000 139,615 — — 56,951 — (83,022) 113,544 113,551 — — — — — 113,551	Statutory reserve RMB’000 15,027 — — — — — 15,027 15,027 — — — — — 15,027	Other reserve RMB’000 19,717 — — — — — 19,717 19,717 — — — — — 19,717	Share-based payments reserve RMB’000 57,424 — 2,877 (56,953) 13,014 — 16,362 27,509 — — — 4,947 — 32,456	FVTOCI reserve RMB’000 — — — — — — — (1,275) — (3,748) (3,748) — — (5,023)	Retained earnings RMB’000 384,755 201,719 — — — — 586,474 775,559 310,699 — 310,699 — — 1,086,258
											2,877 — 13,014 (83,022)
											751,165
											949,352 310,089 (3,748)
											306,341
											4,947 400
											1,261,040

• less than RMB1,000.

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INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2021

Net cash from operating activities Investing activities Interest received Purchase of equity instruments at FVTOCI Purchase of property, plant and equipment Purchase of intangible assets Purchase of investment in an associate Dividend received Payment of rental deposits Loan to employees Net cash used in investing activities Financing activities Dividends paid Repayment of lease liabilities Interest paid on lease liabilities Capital injection from non-controlling interests Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Effect of foreign exchange rate changes Cash and cash equivalents at the end of the period, represented by cash and cash equivalents

Six months ended 30 June 2021 2020 RMB’000 RMB’000 (unaudited) (unaudited) 225,605 190,322 10,258 6,434 — (5,450) (1,388) (3,559) (71) (726) (15,000) — 21,860 — (1,488) — (15,000) — (829) (3,301) — (83,022) (1,488) (2,759) (292) (443) 400 — (1,380) (86,224) 223,396 100,797 732,724 502,367 (593) — 955,527 603,164

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2021

1. GENERAL INFORMATION AND BASIS OF PREPARATION

General information

Homeland Interactive Technology Ltd. (the “ Company ”) is an exempted company with limited liability incorporated in the Cayman Islands on 7 May 2018 and its shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) with effect from 4 July 2019 (the “ Listing Date ”). The registered office of the Company is Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1–1104, Grand Cayman Islands. The address of principal place of business of the Company is 7A Floor, Huijin Building, 77 Tainan Road, Siming District, Xiamen, the People’s Republic of China (the “ PRC ”). The Company is controlled by Mr. Wu Chengze, Mr. Jiang Mingkuan and Mr. Su Bo (collectively referred to as the “ Founders ”).

The Company is an investment holding company. The Company and its subsidiaries (collectively referred to as the “ Group ”) are primarily engaged in the development, publication and operation of mobile games in the PRC.

The condensed consolidated financial statements are presented in Renminbi (“ RMB ”), which is the same as the functional currency of the Company and its subsidiaries.

Basis of preparation and presentation

The condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” issued by the International Accounting Standards Board (the “ IASB ”) as well as with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange (the “ Listing Rules ”).

2. PRINCIPAL ACCOUNTING POLICES

The condensed consolidated financial statements have been prepared on the historical cost basis except for financial instruments, which are measured at fair values, as appropriate.

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The accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2021 are the same as those presented in the Group’s annual financial statements for the year ended 31 December 2020.

Application of amendments to IFRSs

In the current interim period, the Group has applied the following amendments to IFRSs issued by the IASB, for the first time, which are mandatorily effective for the annual period beginning on or after 1 January 2021 for the preparation of the Group’s condensed consolidated financial statements:

Amendments to IFRS 16 Covid-19-Related Rent Concessions Amendments to IFRS 9, IAS 39, Interest Rate Benchmark Reform — IFRS 7, IFRS 4 and IFRS 16 Phase 2

The application of the amendments to IFRSs in the current interim period has had no material impact on the Group’s financial positions and performance for the current and prior periods and/or on the disclosures set out in these condensed consolidated financial statements.

3. REVENUE AND SEGMENT INFORMATION

Revenue represents (1) income from sales of virtual tokens and private game room cards on the Group’s self-developed mobile games; (2) income from third-party mobile games, and; (3) advertising income. The Group’s operating activities are attributable to a single operating segment focusing on development and operation of mobile games in the PRC. This operating segment has been identified on the basis of internal management reports, prepared in accordance with the relevant accounting principles and financial regulations applicable in the PRC which materially conform with IFRSs, that are regularly reviewed by the chief operating decision maker (“ CODM ”), Mr. Wu, the chief executive officer of the Group, for the purpose of allocating resources and assessing its performance. The CODM reviews the financial results of the Group as a whole for performance assessments. No analysis of segment assets or segment liabilities is presented as they are not regularly provided to the CODM.

– 20 –

Revenue from self-developed mobile games and third-party mobile games is recognized at a point in time when the customers obtain control of the services, being at the point the customers consume the virtual tokens and private game room cards in self-developed mobile games or the customers converted the virtual diamonds in the platform to the virtual tokens in the relevant third-party mobile games.

Advertising revenue is recognized at a point in time when the advertisements placed by third-party platforms are displayed in the game interface.

Revenue from: — Self-developed mobilegames	Six months ended 30 June 2021 2020 RMB’000 RMB’000 (unaudited) (unaudited)	Six months ended 30 June 2021 2020 RMB’000 RMB’000 (unaudited) (unaudited)
Virtual tokens Privategame room cards	399,605 80,033	209,155 107,010
— Third-party mobile games — virtual diamond Advertising revenue	6,282 485,920 71,507 557,427	14,307 330,472 56,702 387,174

The Group has a large number of customers, no revenue from any individual customer exceeded 10% or more of the Group’s revenue during both periods.

Geographical information

The Group operated within one geographical segment in both periods because all of its revenue was generated in the PRC and all of its non-current assets were located in the PRC. Accordingly, no geographical segment information is presented.

– 21 –

4. COST OF SALES

Cost of sales is analyzed as follows:

Employee benefit expenses Commissions and fees charged by distribution channels and payment vendors Server-related and technical support fees Depreciation and amortization	Six months ended 30 June 2021 2020 RMB’000 RMB’000 (unaudited) (unaudited) (restated) 31,177 31,882 84,910 49,320 16,854 11,938 1,823 2,060 134,764 95,200	Six months ended 30 June 2021 2020 RMB’000 RMB’000 (unaudited) (unaudited) (restated) 31,177 31,882 84,910 49,320 16,854 11,938 1,823 2,060 134,764 95,200
		95,200

5. OTHER INCOME

Interest income Government subsidies_(note a) Service income(note b) Others Total _Notes:	Six months ended 30 June 2021 2020 RMB’000 RMB’000 (unaudited) (unaudited) 10,258 6,434 4,934 4,832 4,337 25,263 1,092 520 20,621 37,049	Six months ended 30 June 2021 2020 RMB’000 RMB’000 (unaudited) (unaudited) 10,258 6,434 4,934 4,832 4,337 25,263 1,092 520 20,621 37,049
		37,049

• (a) Government subsidies mainly represent various industry-specific subsidies granted by the government authorities to subsidize the research and development costs already incurred by the Group during the course of its business, as well as government incentives to reward the Group’s effort for the technological innovation and support to the local economy with no future related costs to be incurred. There are no unfulfilled conditions relating to such government subsidies recognized.

• (b) Service income represents the amounts received from contracted clients for offline promotion marketing activities as well as providing technical support services and is recognized when the services are performed.

– 22 –

6. DIVIDENDS

During the current interim period, a final dividend of RMB0.1593 (equivalent to HK$0.1892) per share in respect of the year ended 31 December 2020 was rejected by the shareholders of the Group in the annual general meeting which was held on 29 June 2021 and as a result, the final dividend declared was not paid.

During 2020 interim period, a final dividend of RMB0.0661 (equivalent to HK$0.0728) per share in respect of the year ended 31 December 2019 was declared and paid to owners of the Group. The aggregate amount of the final dividend declared and paid amounted to RMB83,022,000.

7. INCOME TAX EXPENSE

The income tax provision of the subsidiaries operating in the PRC has been calculated at the tax rate of 25% on the estimated assessable profits for both interim periods, based on the existing legislation, interpretations and practices in respect thereof.

Jiaxiang Interactive (Xiamen) Network Technology Company Limited (“ Jiaxiang Interactive ”) was qualified as a “Double Soft Enterprise” (“ DSE ”) under the Enterprise Income Tax Law in 2016. Therefore, according to relevant tax regulations, Jiaxiang Interactive is exempt from Enterprise Income Tax for two years, followed by a 50% reduction in the applicable tax rates for the next three years if the criteria of DSE are met each year, commencing from 2016, the first year of profitable operation. On the other hand, Jiaxiang Interactive is also qualified as “High and New Technology Enterprises” (“ HNTE ”) under the Enterprise Income Tax Law from 2020 and the valid period is three years. Therefore, the actual income tax rate for Jiaxiang Interactive was 15% based on the “HNTE” preferential rate for current period and 12.5% based on the “DSE” preferential rate for 2020 interim period.

Jilin Xinze Network Technology Company Limited (“ Jilin Xinze ”) was qualified as HNTE under the Enterprise Income Tax Law since 2017 and such qualification has been renewed in 2020 with a valid period of another three years. According to the Enterprise Income Tax Law, Jilin Xinze is entitled to a preferential income tax rate at 15% for both periods.

Jilin Yuke Network Technology Company Limited (“ Jilin Yuke ”) was qualified as a DSE under the Enterprise Income Tax Law in 2019. Therefore, according to relevant tax regulations, Jilin Yuke is exempted from Enterprise Income Tax for two years, followed by a 50% reduction in the applicable tax rates for the next three years if the criteria of DSE are met each year, commencing from 2017, the first year of profitable operation. Therefore, the actual income tax rate for Jilin Yuke is 12.5% for both periods.

– 23 –

According to a policy promulgated by the State Tax Bureau of the PRC and effective from 2018 onwards, enterprises engage in research and development activities are entitled to claim 175% of the research and development expenses incurred in a year as tax deductible expenses in determining the taxable income for that year (“ Super Deduction ”). Jiaxiang Interactive, Jilin Xinze and Jilin Yuke have claimed such Super Deduction in ascertaining its tax assessable profits for both periods.

The income tax expense of the Group is analyzed as follows:

Current tax — PRC Enterprise Income Tax Deferred tax	Six months ended 30 June 2021 2020 RMB’000 RMB’000 (unaudited) (unaudited) 46,931 47,656 — (1,958) 46,931 45,698

8. PROFIT FOR THE PERIOD

Profit for the period has been arrived at after charging:

Lease expenses in respect of short-term leases on land and buildings Depreciation of property, plant and equipment Depreciation of right-of-use assets Amortization of intangible assets Auditors’ remuneration Donation(included in other expenses) (note)	Six months ended 30 June 2021 2020 RMB’000 RMB’000 (unaudited) (unaudited) 1,105 510 2,466 2,127 1,664 2,273 353 701 887 928 — 5,000	Six months ended 30 June 2021 2020 RMB’000 RMB’000 (unaudited) (unaudited) 1,105 510 2,466 2,127 1,664 2,273 353 701 887 928 — 5,000
Directors’ emoluments Other staff costs: Salaries and other benefits in kind Retirement benefit costs Share-basedpayments for staff	2,008 37,956 1,855 4,947	1,977 32,032 305 15,891
Total staff costs	46,766	50,205

Note: During the last interim period, the Group donated RMB5,000,000 to Wuhan Charity Federation for Covid-19.

– 24 –

9. EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share attributable to owners of the Company is based on the following data:

Earnings Earnings for the purpose of basic and diluted earnings per share: — Profit for the period attributable to owners of the Company Number of shares Weighted average number of ordinary shares for the purpose of basic earnings per share Effect of dilutive potential ordinary shares in respect of Share Award Scheme and Share Option Scheme Weighted average number of ordinary shares of the Company for the purpose of diluted earnings per share	Six months ended 30 June 2021 2020 RMB’000 RMB’000 (unaudited) (unaudited) 310,699 201,719 Number of shares 2021 2020 (unaudited) (unaudited) 1,246,580,000 1,242,564,522 36,090,667 12,595,288 1,282,670,667 1,255,159,810	Six months ended 30 June 2021 2020 RMB’000 RMB’000 (unaudited) (unaudited) 310,699 201,719 Number of shares 2021 2020 (unaudited) (unaudited) 1,246,580,000 1,242,564,522 36,090,667 12,595,288 1,282,670,667 1,255,159,810
		1,255,159,810

The calculation of the basic earnings per share is based on the profit for the period attributable to owners of the Company and the weighted average number of ordinary shares of the Company, taking into account the shares issued and outstanding during the period.

– 25 –

10. PROPERTY, PLANT AND EQUIPMENT AND RIGHT-OF-USE ASSETS

During the current interim period, the Group acquired and paid RMB1,388,000 (six months ended 30 June 2020: RMB3,559,000) for furniture and equipment.

In addition, during the current interim period, the Group entered into a lease agreement and recognized right-of-use assets of RMB417,000. On the other hand, the Group terminated a lease agreement and resulted a gain on the termination amounted to RMB243,000.

11. INVESTMENTS IN ASSOCIATES

Cost of investment in associates Share of post-acquisition profits/(losses) and other comprehensive income/(expenses), net of dividends received Total	As at 30 June 2021 RMB’000 (unaudited) 168,000 (6,421) 161,579	As at 31 December 2020 RMB’000 (audited) 153,000 (3,325) 149,675

Details of the Group’s associates at 30 June 2021 are as follows:

			Proportion	Proportion
			of ownership	of voting
	Place of	Principal place	interest held	rights held
Name of entity	establishment	of business	by the Group	**by the Group **	Principal activity
Jilin Xinyue Network Technology	China mainland	China mainland	40%	40%	Development and operation of card
Limited (“Jilin Xinyue”)					and board games
(note i)
Guangzhou Leiyun Interactive	China mainland	China mainland	40%	40%	Research and development of online
Technology Limited					games
Siwen Technology (Tianjin)	China mainland	China mainland	25.8621%	25.8621%	Research and development of online
Limited (“Siwen Technology”)					games
(note ii)

– 26 –

Note:

• (i) On 3 November 2020, Jilin Xinze (a subsidiary of the Company), Jilin Xinbao Technology Partnership (Limited Partnership) (“ Xinbao Technology ”) (40% equity shareholder of Jilin Xinyue), and Jilin Xinyue entered into the investment agreement (“ Investment Agreement ”) pursuant to which Xinbao Technology agreed to sell and Jilin Xinze agreed to acquire 40% of the equity interest in Jilin Xinyue, at cash consideration of RMB150,000,000. On 29 December 2020, Jilin Xinze, Xinbao Technology and Jilin Xinyue entered into a supplemental agreement to the Investment Agreement pursuant to which all the parties thereto agreed to supplement certain terms of the Investment Agreement as follows:

• Xinbao Technology has undertaken to ensure that the audited net profit of Jilin Xinyue for the years ending 31 December 2021 and 2022 shall be no less than RMB70,000,000 and RMB80,000,000, respectively (the “ Guaranteed Net Profit ”), and the audited net profit of Jilin Xinyue for the years ending 31 December 2021 and 2022 shall be no less than RMB150,000,000 in aggregate.

• If the actual audited net profit of Jilin Xinyue below the Guaranteed Net Profit for any of the years ending 31 December 2021 or 2022, Xinbao Technology shall pay compensation (the “ Profit Compensation ”) to Jilin Xinze in cash. The amount of Profit Compensation payable by Xinbao Technology shall be determined in accordance with the following formula:

Profit Compensation = ((A – B)/RMB150,000,000)* C * 40% (note) – D

where:

• A = the cumulative Guaranteed Net Profit determined as at the end of the period;

• B = the cumulative actual audited net profit of the Jilin Xinyue determined as at the end of the period;

• C = the agreed appraised assets value of the Jilin Xinyue, being RMB375,000,000; and

• D = the amount of any Profit Compensation which has already been paid by Xinbao Technology to Jilin Xinze.

• note: it represents the percentage of equity interest in the Jilin Xinyue owned by Jilin Xinze

– 27 –

• It is also agreed that the audited net profit of the Jilin Xinyue for the years ending 31 December 2021 and 2022 will be fully distributed to its shareholders (including Jilin Xinze) as dividends in proportion to their respective equity interest in the Jilin Xinyue (the “ Profit Sharing ”). The aggregate amount of dividends to be received by Jilin Xinze for the years ending 31 December 2021 and 2022 shall not exceed RMB60,000,000.

The equity investment in Jilin Xinyue is accounted for using equity method in accordance with IAS 28 and the derivative financial instrument arising from supplementary agreement is measured at fair value through profit and loss in accordance with IFRS 9.

For the current interim period, the profit and total comprehensive income of Jilin Xinyue is RMB46,625,000 and Jilin Xinyue distributed dividend amounted to RMB54,650,000 to its investors. The Group engaged qualified valuer to perform valuation on the fair value of the derivative financial instrument as at 30 June 2021. The fair value of the derivative financial instrument was assessed to be insignificant as at 30 June 2021 (31 December 2020: insignificant). In the opinion of the directors, the forecasted profits of Jilin Xinyue for the years ending 31 December 2021 and 2022 are expected to be not less than Guaranteed Net Profit as at 30 June 2021 and 31 December 2020.

• (ii) On 3 February 2021, Jilin Yuke acquired equity interests of 25.8621% in Siwen Technology at the consideration of RMB15,000,000.

12. LOAN TO EMPLOYEES

The loan to employees represents the housing loan advanced to employees. The loans are unsecured, interest-free and repayable after 3 years.

Non-current Current Total	As at 30 June 2021 RMB’000 (unaudited) 19,949 1,900 21,849	As at 31 December 2020 RMB’000 (audited) 6,474 1,900 8,374

The housing loan to employees is measured initially at fair value and subsequently at amortized cost, using the effective interest method. RMB1,949,000 (2020 interim period: Nil) being the difference between the principal amount and fair value at initial recognition, was recognized as staff costs during this period.

– 28 –

13. TRADE RECEIVABLES

Trade receivables Less: impairment provision Total	As at 30 June 2021 RMB’000 (unaudited) 112,008 — 112,008	As at 31 December 2020 RMB’000 (audited) 88,473 — 88,473

Trade receivables comprise receivables from distribution channels, payment vendors and advertisement agents. The credit terms of trade receivables granted to the distribution channels, payment vendors and advertisement agents are usually 0 to 60 days. Ageing analysis of trade receivables presented based on date of invoices is as follows:

0–30 days 31–60 days 61–90 days 91–180 days Over 180 days Total	As at 30 June 2021 RMB’000 (unaudited) 58,391 32,718 19,004 514 1,381 112,008	As at 31 December 2020 RMB’000 (audited) 69,264 14,797 3,851 253 308 88,473

In determining the recoverability of the trade receivables, the Group considers any change in the credit quality of the trade receivables from the date on which the credit was initially granted up to the reporting date. As at 30 June 2021, included in the Group’s trade receivables balance are debtors with aggregate carrying amount of RMB21,235,000 (2020: RMB4,870,000) which are past due. Out of the past due balances, RMB1,873,000 (2020: RMB317,000) has been past due 90 days or more and is not considered as in default due to the history of cooperation and the sound collection history of the debtors.

– 29 –

14. PREPAYMENTS AND OTHER RECEIVABLES

Prepayment for advertisement and promotion fees Advances to employees_(Note)_ Receivables for service income Prepayment for research and development fees Prepayment for server-related fees Prepayment for short term lease Others Total	As at 30 June 2021 RMB’000 (unaudited) 51,649 19,124 2,881 5,660 1,658 1,130 4,332 86,434	As at 31 December 2020 RMB’000 (audited) 36,988 1,553 — 5,383 1,597 93 8,358 53,972

Note: Advances to employees are for the purpose of potential operating and marketing activities. RMB12,720,000 of the outstanding balance as at 30 June 2021 has been subsequently repaid.

15. TRADE AND OTHER PAYABLES

Salary and staff welfare payables Selling and marketing expenses accruals Deposit for advertising and game operation Other taxes payable Payable to game developers_(Note)_ Administrative expenses accruals Others Total	As at 30 June 2021 RMB’000 (unaudited) 19,528 15,224 5,525 4,646 1,988 650 3,797 51,358	As at 31 December 2020 RMB’000 (audited) 24,088 11,509 5,125 8,246 2,119 1,520 2,199 54,806

Note: The balance represents sale proceeds received from players of games for which the Group acts as distributor to be reimbursed to game developers, after deducting the commission income entitled by the Group calculated at a pre-determined rate, and refundable deposits received from game developers.

– 30 –

16. DEFERRED REVENUE

Deferred revenue represented service fees prepaid by the customers for the Group’s self-developed mobile games and third-party games in the forms of prepaid virtual tokens/diamonds and private game room cards, for which the related services had not been rendered as at the end of each period. As the unsatisfied performance obligations will be recognized as revenue within one year, therefore, the deferred revenue is recognized as current liability.

As at 1 January 2021 (audited) Sales proceeds, net of tax Revenue recognized during the period As at 30 June 2021 (unaudited)	Virtual tokens/ diamond RMB’000 19,332 411,836 (405,887) 25,281	Private game room cards RMB’000 20,556 73,951 (80,033) 14,474	Total RMB’000 39,888 485,787 (485,920) 39,755

17. SHARE CAPITAL

Authorized At 1 January 2020, 30 June 2020, 1 January 2021 and 30 June 2021 — Ordinary shares of HK$0.000005 each Issued and fully paid As at 1 January 2020, 30 June 2020, 1 January 2021 and 30 June 2021 — Ordinary shares of HK$0.000005 each Show in the condensed consolidated financial statements as	Number of shares 10,000,000,000 1,256,000,000	US$ 50,000
		6,280
		RMB41,000

– 31 –

18. RELATED PARTY TRANSACTIONS

Save as disclosed below and in other notes, there are no other significant related party transactions.

Key management personnel compensations

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

Salaries, bonuses, allowances and benefits in kind Share-based payments Total Providing game publishing services Siwen Technology Providing technical support services Jilin Xinyue	Six months ended 30 June 2021 2020 RMB’000 RMB’000 (unaudited) (unaudited) 6,092 4,671 2,000 15,891 8,092 20,562 Six months ended 30 June 2021 2020 RMB’000 RMB’000 (unaudited) (unaudited) 652 — Six months ended 30 June 2021 2020 RMB’000 RMB’000 (unaudited) (unaudited) 3,174 —

19. COMPARATIVE FIGURES

Share-based payment expenses of RMB15,891,000 have been reclassified to cost of sales of RMB7,816,000, administrative expenses of RMB5,164,000 and selling and marketing expenses of RMB2,911,000 respectively so as to conform with the current period’s presentation.

– 32 –

OTHER INFORMATION

INTERIM DIVIDEND

The Board did not recommend the payment of any interim dividend for the six months ended 30 June 2021 (six months ended 30 June 2020: nil).

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

Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any listed securities of the Company during the Reporting Period.

USE OF PROCEEDS FROM THE GLOBAL OFFERING

The shares of the Company were listed on the Stock Exchange on 4 July 2019. The net proceeds from the global offering was approximately HK$363.8 million.

During the Reporting Period, the proceeds from the global offering were utilized in accordance with the intended purposes as set out in the Prospectus, with an unused balance of approximately HK$107.5 million as at 30 June 2021. The balance of proceeds from the global offering will continue to be utilized according to the manner and proportions as disclosed in the Prospectus. The following table shows a summary of the intended use of the net proceeds and the utilization as at 30 June 2021:

					Expected time of
		Utilization from			full utilization of
		1 January 2021 to	Utilization as at	Remaining balance	remaining balance
Intended use of the net proceeds		30 June 2021	30 June 2021	as at 30 June 2021	of net proceeds
1. Approximately HK$89.1 million for further		HK$18.8 million	HK$65.8 million	HK$23.3 million	30 June 2022
expanding and developing game portfolio, of which:
•	HK$43.4 million is intended to be used to develop	HK$8.4 million	HK$31.0 million	HK$12.4 million	30 June 2022
	additional Mahjong game variations
•	HK$20.9 million is intended to be used to develop	HK$4.1 million	HK$15.0 million	HK$5.9 million	30 June 2022
	new poker game variations
•	HK$24.8 million is intended to be used to develop	HK$6.3 million	HK$19.8 million	HK$5.0 million	30 June 2022
	new casual games

– 33 –

Intended use of the net proceeds 2. Approximately HK$105.9 million for introducing and enhancing game features or functions and for improving technology infrastructure, of which • HK$39.8 million is intended to be used to develop HTML5 versions and other potential mini-programs for most of the existing game products • HK$18.5 million is intended to be used to improve user interface • HK$19.1 million is intended to be used to improve backend system • HK$16.5 million is intended to be used to develop new features of game products • HK$12.0 million is intended to be used on cybersecurity needs 3. Approximately HK$65.5 million for enhancing marketing capabilities and improving brand image, of which: • HK$16.4 million is intended to be used on offline promotion activities in respect of new game variations and HK$14.3 million on offline promotion activities in respect of existing games • HK$30.6 million is intended to be used as advertising expenses • HK$4.2 million is intended to be used to build a PR team to strengthen overall marketing capability 4. Approximately HK$38.6 million for external growth by strategically pursuing partnership and acquisition opportunities 5. Approximately HK$28.4 million for international expansion 6. Approximately HK$36.3 million for providing funding for working capital and general corporate purposes Total	Utilization from 1 January 2021 to 30 June 2021 HK$24.5 million HK$10.3 million HK$3.5 million HK$3.8 million HK$3.4 million HK$3.5 million HK$10.9 million HK$3.0 million HK$7.9 million HK$0.08 million HK$6.0 million HK$3.9 million HK$6.7 million HK$70.8 million	Utilization as at 30 June 2021 HK$81.5 million HK$32.0 million HK$13.5 million HK$14.5 million HK$12.6 million HK$8.9 million HK$42.9 million HK$15.9 million HK$26.4 million HK$0.6 million HK$22.9 million HK$16.3 million HK$26.9 million HK$256.3 million	Remaining balance as at 30 June 2021 Expected time of full utilization of remaining balance of net proceeds HK$24.4 million 30 June 2022 HK$7.8 million 30 June 2022 HK$5.0 million 30 June 2022 HK$4.6 million 30 June 2022 HK$4.0 million 30 June 2022 HK$3.0 million 30 June 2022 HK$22.6 million 30 June 2022 HK$14.8 million 30 June 2022 HK$4.2 million 30 June 2022 HK$3.6 million 30 June 2022 HK$15.6 million 30 June 2022 HK$12.1 million 30 June 2022 HK$9.5 million 30 June 2022 HK$107.5 million

– 34 –

There was a delay in the utilization of the net proceeds relating to marketing and promotion activities during the six months ended 30 June 2021 since the Company has reduced offline promotion activities due to the continued effect of the COVID-19 virus and the development of COVID-19 variant. In addition, the Company benefited from lower cost of promotion of its games through online social media platforms as the active users for these social media platforms increased following the outbreak of the COVID-19 virus during which the general public spent more time at home. There was also a delay in the utilization of the net proceeds relating to (i) further expansion and development of game portfolio; and (ii) introduction and enhancement of game features or functions as the recruitment of game developers and engineers has slowed down due to the continued effect of the COVID-19 virus and the development of COVID-19 variant.

EVENTS AFTER THE REPORTING PERIOD

There was no important event affecting the Group which occurred after the end of the Reporting Period up to the date of this announcement.

COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE

During the Reporting Period, the Company has complied with the applicable code provisions of the Code as set forth in the Corporate Governance Code contained in Appendix 14 to the Listing Rules (the “ Corporate Governance Code ”), except for a deviation from code provision A.2.1 which requires that the roles of chairman and chief executive should be separate and should not be performed by the same individual.

Mr. Wu Chengze (“ Mr. Wu ”) is the chairman and the chief executive officer of the Company. With extensive experience in the game industry, Mr. Wu is responsible for formulating and implementing the overall development strategies and business plans of the Group and is instrumental to the Company’s growth and business expansion since its establishment in 2009. The Board considers that vesting the roles of chairman and chief executive officer in the same person is beneficial to the management of the Group. The balance of power and authority is ensured by the operation of the senior management and the Board, which comprises experienced and high-calibre individuals. The Board currently comprises five executive directors (including Mr. Wu) and four independent non-executive directors and therefore, in the Company’s view, has an appropriate level of independence element in its composition.

The Board will continue to review and monitor the practices of the Company for the purpose of complying with the Corporate Governance Code and maintaining a high standard of corporate governance practices of the Company.

– 35 –

COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the “Model Code for Securities Transactions by Directors of Listed Issuers” (the “ Model Code ”) as set out in Appendix 10 to the Listing Rules as its code of conduct regarding directors’ securities transactions. All directors have confirmed, following specific enquiry by the Company, that they have complied with the Model Code during the Reporting Period.

AUDIT COMMITTEE

The Company has established the Audit Committee with written terms of reference in compliance with Rule 3.21 of the Listing Rules and the Corporate Governance Code. As at the date of this announcement, the Audit Committee comprises three independent non-executive directors of the Company, namely, Mr. Yu Ronald Patrick Lup Man, Mr. Zhang Yuguo and Mr. Hu Yangyang. Mr. Yu Ronald Patrick Lup Man is the chairman of the Audit Committee.

The Audit Committee has reviewed the Company’s unaudited 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. The interim results for the Reporting Period is unaudited, but has been reviewed by the Auditor, 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.

CHANGE IN DIRECTORS’ BIOGRAPHICAL DETAILS UNDER RULE 13.51B(1) OF THE LISTING RULES

Mr. Yu Ronald Patrick Lup Man has tendered his resignation as an independent non-executive director, chairman of the audit committee, chairman of the nomination committee and a member of the remuneration committee of Simplicity Holding Limited (a company listed on the Main Board of the Stock Exchange, stock code: 8367), with effect from 19 August 2021. Save as disclosed above, there has been no change in the Directors’ biographical details which are required to be disclosed pursuant to rule 13.51B(1) of the Listing Rules.

– 36 –

PUBLICATION OF INTERIM RESULTS AND INTERIM REPORT

This announcement is published on the website of the Stock Exchange (http://www.hkexnews.hk) and that of the Company (http://www.jiaxianghudong.com). The interim report of the Company for the six months ended 30 June 2021 will be dispatched to the shareholders of the Company and will be available on the website of the Stock Exchange and that of the Company in due course.

By order of the Board of Directors Homeland Interactive Technology Ltd. Wu Chengze Chairman

Hong Kong, 24 August 2021

As at the date of this announcement, the executive directors are Mr. Wu Chengze, Mr. Jiang Mingkuan, Mr. Su Bo, Mr. Guo Shunshun and Mr. Men Geng; and the independent non-executive directors are Mr. Yu Ronald Patrick Lup Man, Mr. Zhang Yuguo, Mr. Hu Yangyang and Ms. Guo Ying.

– 37 –