Vobile Group Limited — Interim / Quarterly Report 2021

Sep 30, 2021

Vobile Group Limited 阜博集團有限公司

(Incorporated in the Cayman Islands with limited liability) Stock Code: 3738

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INTERIM REPORT 2021
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CONTENTS

• 2 Corporate Information

• 4 Management Discussion and Analysis

• 12 Corporate Governance Highlights

• 13 Other Information

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

• 22 Interim Condensed Consolidated Statement of Financial Position

• 23 Interim Condensed Consolidated Statement of Changes in Equity

• 24 Interim Condensed Consolidated Statement of Cash Flows

• 25 Notes to the Interim Condensed Consolidated Financial Statements

36 Definitions

CORPORATE INFORMATION

EXECUTIVE DIRECTORS

Mr. Yangbin Bernard WANG (“Mr. Wang”) (Chairman and Chief Executive Officer)

Mr. MATSUZAWA Masaaki (“Mr. Matsuzawa”) (appointed on 30 June 2021) Mr. Michael Paul WITTE (“Mr. Witte”) (retired on 30 June 2021)

NOMINATION COMMITTEE

Mr. CHAN King Man Kevin (Chairperson) Mr. Alfred Tsai CHU Mr. KWAN Ngai Kit Mr. Yangbin Bernard WANG Mr. WONG Wai Kwan

REGISTERED OFFICE

NON-EXECUTIVE DIRECTORS

Mr. J David WARGO (“Mr. Wargo”) Mr. WONG Wai Kwan (“Mr. Wong”)

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

INDEPENDENT NON-EXECUTIVE DIRECTORS

Mr. CHAN King Man Kevin (“Mr. Chan”) Mr. Alfred Tsai CHU (“Mr. Chu”) Mr. Charles Eric EESLEY (“Mr. Eesley”) Mr. KWAN Ngai Kit (“Mr. Kwan”) (appointed on 30 June 2021)

Mr. Derek CHANG (“Mr. Chang”) (retired on 30 June 2021)

HEADQUARTERS AND PRINCIPAL PLACE OF BUSINESS IN HONG KONG

Suite 3712, 37/F Tower 2, Times Square 1 Matheson Street Causeway Bay Hong Kong

COMPANY SECRETARY

Mr. HO Sai Hong Vincent (“Mr. Ho”)

AUDIT COMMITTEE

Mr. KWAN Ngai Kit (Chairperson) Mr. Alfred Tsai CHU Mr. Charles Eric EESLEY Mr. J David WARGO Mr. WONG Wai Kwan

PRINCIPAL PLACE OF BUSINESS IN THE US

2880 Lakeside Drive, Suite 360 Santa Clara, CA 95054 United States

PRINCIPAL PLACE OF BUSINESS IN THE PRC

10th Floor, Intelligent e-Valley B Building No. 482, Qianmo Road, Xixing Street Binjiang District, Hangzhou Zhejiang, PRC

REMUNERATION COMMITTEE

Mr. Charles Eric EESLEY (Chairperson) Mr. CHAN King Man Kevin Mr. Alfred Tsai CHU Mr. Yangbin Bernard WANG Mr. J David WARGO

AUTHORISED REPRESENTATIVES

Mr. HO Sai Hong Vincent Mr. WONG Wai Kwan

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CORPORATE INFORMATION

AUDITOR

Ernst & Young 27/F, One Taikoo Place 979 King’s Road Quarry Bay, Hong Kong

HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE

Tricor Investor Services Limited Level 54 Hopewell Centre 183 Queen’s Road East Hong Kong

LEGAL ADVISERS

As to Hong Kong law: Freshfields Bruckhaus Deringer 55th floor, One Island East Taikoo Place, Quarry Bay, Hong Kong

COMPANY WEBSITE

www.vobilegroup.com

STOCK CODE

As to US law: Pillsbury Winthrop Shaw Pittman LLP 2550 Hanover Street Palo Alto, CA 94304-1115 United States

3738

As to PRC law: JunHe LLP 20/F, China Resources Building 8 Jianguomenbei Avenue Beijing, PRC

PRINCIPAL BANKERS

Silicon Valley Bank The Hongkong and Shanghai Banking Corporation Limited Shanghai Pudong Development Bank Co., Ltd.

PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE

Conyers Trust Company (Cayman) Limited Cricket Square, Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

INTERIM REPORT 2021 VOBILE GROUP LIMITED 3

MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS OVERVIEW AND PROSPECTS

We are a global SaaS player in content recognition, protection and monetization, providing media companies and brands the critical ability to control and maximise the value of their IP across the world’s largest content distribution and social media platforms. Our clients span the spectrum of media companies and include movie studios, television networks, record labels, DTC service providers, subscription video on demand content aggregators and sports league.

The growth and health of the media and entertainment business is highly dependent on the protection of IP rights, which has become a larger issue for IP holders given the continued digitalisation and proliferation of content across an increasingly diverse array of distribution and social media platforms.

Our SaaS platforms currently provide the following solutions for our media and distribution clients and partners:

• Content Protection — VideoTracker

• Content Monetization — Rights ID and Channel ID

Content Protection

We provide critical content protection to ensure delivery of our client’s audiovisual content to end consumer directly or across global content distribution and social media platforms, from ultra HD movie content to premium TV, and short form digital content to live events such as sports. For example, we offer video fingerprinting services on content libraries, allowing clients to choose which digital assets to actively track and manage. Customers can also choose to watermark content assets in order to trace and block the source of infringement. These solutions provide automated content recognition and is scalable on cloud infrastructure. We currently manage over 10 million video assets, conducting millions of video fingerprinting searches per day across over 290,000 websites globally.

Content Monetization

Taking the content protection solutions to the next level, for our fingerprint or watermark managed assets, we can also identify content on online platforms, and instead of taking down the content, enable our clients to have the option to capture incremental advertising revenues which we will analyse and claim from the platforms on behalf of clients. We are uniquely positioned to do so because of our proprietary technology as well as our API integration with our long-standing partnerships with key platforms such as YouTube and Facebook. We currently manage over 765,000 pieces of active content, resulting in over 175 million videos containing customer content claimed on YouTube, enabling 42 billion monthly managed content views for our IP owner clients and for YouTube. Based on statistics, the monthly average number of active assets for the first half of 2021 reached 1.48 million. As a natural extension of our monetization solutions, we also provide a robust set of video optimisation, programming strategy, reporting and performance marketing services to IP holders, so that they can maximise value of their IP on platforms such as YouTube.

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MANAGEMENT DISCUSSION AND ANALYSIS

GROUP STRATEGY AND PROSPECTS

Our objective is to continue to play a critical role and provide a full suite of solutions for content rights holders so that they can maximise the value of their IP in a rapidly evolving consumer and technology landscape.

Our strategic growth priorities are:

1. Geographic Expansion in Mainland China

2. Solution/Product Enhancements

3. New Solutions/Product Development

Geographic Expansion in Mainland China

We have been focused on growing our customer base through expansion in priority new markets such as Mainland China. In the past six months, we have made significant strides in growing our business in Mainland China, building out the local team and capabilities, as well as drive strategic and commercial partnerships with Ant, Kauishou, Wasu Media, GIMC, MIGU, E-Surfing Media, China Sports and others.

As highlighted in our growth in revenues from our business in Mainland China, we are off to an encouraging start to our goal growing our presence and being a market leader. We also strongly believe that the enterprise solutions we are providing to our content owner and distribution clients will enable the growth of a healthy and equitable and sustainable ecosystem of domestic content creation, monetization and distribution.

The focus is to continue executing on our growth plans in Mainland China, and as we scale and drive momentum in these businesses, we will also look to other parts of Asia for continued growth opportunities.

Solution/Product Enhancements

We will continue to grow and build on our capabilities in content protection and monetization to better serve our clients. These enhancement and investment opportunities will continue to shape our business, and can span many areas of Vobile’s value proposition. Illustratively, these investments may be new software to better address key content verticals, operations capabilities to real time manage sporting events, stronger customer support functions to drive client relationships, and enhanced analytical tools and functions so that our clients can optimise advertising wallet. We are always looking to improve our solutions and products which will ultimately drive value for our clients.

New Solutions/Product Development

In the rapidly evolving media and technology landscape, as our clients adapt to new technologies and business models, we see new opportunities to develop products and solutions with our clients. Two instructive examples of opportunities we have been cultivating:

• Direct To Consumer (“DTC”) Products

• Blockchain Products

INTERIM REPORT 2021 VOBILE GROUP LIMITED 5

MANAGEMENT DISCUSSION AND ANALYSIS

With content producers going direct to consumers at an individual level, it is increasingly important for content producers to protect content while being seamlessly integrated within a user subscription access framework and experience. As a trusted, long-standing partner, we are already working with numerous clients, including leading DTC players, in providing IP protection services. Additionally, we are working to develop proprietary real time subscriber-level, session-based watermarking solutions, which are highly scalable to all subscribers globally. These solutions will be able to identify specific user accounts that leak exclusive content instantaneously.

In addition to DTC specific new products and solutions, we are currently working with, to develop IP protection and monetization services for blockchain related content and the evolving blockchain ecosystem. Research and development have been underway over the past several months, and products and solutions center around identifying and protecting audiovisual content on non-fungible tradeable tokens (“NFT”) within the blockchain framework and ecosystem. While this NFT space is still in its infancy, with growth rate assumptions difficult to estimate, we do believe that NFTs will play an important role as a new asset for IP holders to monetize, and perhaps more importantly, provides IP holders an invaluable means to engage with fans and promote the underlying content.

FINANCIAL REVIEW

Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Highlights

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Six months ended 30 June
2021 2020
HK$’000 HK$’000
(Unaudited) (Restated)
Revenue 319,481 167,459
Gross profit 163,707 84,008
Profit before tax 31,010 70,569
Profit for the period attributable to owners of the Company 23,065 73,717
Adjusted Net Profit/(Loss) 35,865 (1,727)
Non-IFRS Adjusted EBITDA 66,556 25,225
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Adjusted Net Profit

Adjusted Net Profit/(Loss) is earnings/(loss) before equity settled share option expenses and other one-off expenses. This is not a IFRSs measure. Adjusted Net Profit is presented exclusively as a supplemental disclosure because our Directors believe that it is widely used to measure the performance, and as a basis for valuation. The Group has presented this item because the Group considers it an important supplemental measure of the Group’s operational performance used by the Group’s management as well as analysts or investors.

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MANAGEMENT DISCUSSION AND ANALYSIS

The following table sets forth a quantitative reconciliation of Adjusted Net Profit to its most directly comparable IFRS measurement and profit for the period attributable to owners of the Company.

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Six months ended 30 June
2021 2020
HK$’000 HK$’000
(Unaudited) (Restated)
Profit for the period attributable to owners of the Company 23,065 73,717
Add/(less):
Equity-settled share compensation expense 12,800 155
—
Fair value change on other liabilities measured at FVTPL (75,599)
Adjusted Net Profit/(Loss) 35,865 (1,727)
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Non-IFRS Adjusted EBITDA

Adjusted EBITDA is earnings before finance costs, finance revenues, income taxes, depreciation and amortisation, equity settled share compensation expenses, and other one-off expenses. This is not a IFRSs measure. Adjusted EBITDA is presented exclusively as a supplemental disclosure because our Directors believe that it is widely used to measure the performance, and as a basis for valuation. The Group has presented this item because the Group considers it an important supplemental measure of the Group’s operational performance used by the Group’s management as well as analysts or investors.

The following table sets forth a quantitative reconciliation of Adjusted EBITDA to its most directly comparable IFRS measurement and profit before tax.

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Six months ended 30 June
2021 2020
HK$’000 HK$’000
(Unaudited) (Restated)
Profit before tax 31,010 70,569
Add:
Equity-settled share compensation expense 12,800 155
Finance costs 11,908 19,395
Depreciation and amortisation 10,517 10,643
Fair value losses on financial assets at FVTPL 877 —
Impairment of trade receivables (43) 78
Interest income (513) (16)
—
Fair value change on other liabilities measured at FVTPL (75,599)
Adjusted EBITDA 66,556 25,225
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INTERIM REPORT 2021 VOBILE GROUP LIMITED 7

MANAGEMENT DISCUSSION AND ANALYSIS

Revenue

The following table shows our revenue breakdown by product:

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Six months ended 30 June
2021 2020
HK$’000 HK$’000
(Unaudited) (Restated)
Content Monetization 233,727 112,691
Content Protection 73,791 41,078
Others 11,963 13,690
Total revenue 319,481 167,459
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Our revenue for the six months ended 30 June 2021 amounted to approximately HK$319 million, representing an increase of approximately HK$152 million, or approximately 90.8% as compared with the revenue for the six months ended 30 June 2020 of approximately HK$167 million. The increase was mainly attributed by (a) continued growth in our business in the US; and (b) the expansion of our business in the Mainland China, driven by strategic and commercial partnerships.

Gross profit and gross profit margin

Our gross profit for the six months ended 30 June 2021 amounted to approximately HK$164 million, representing an increase of approximately HK$80 million, or approximately 94.9% as compared with the six months ended 30 June 2020.

Our gross profit margin remained stable at 51.2% for the six months ended 30 June 2021 as compared to 50.2% for the six months ended 30 June 2020.

Selling and marketing expenses

Our selling and marketing expenses for the six months ended 30 June 2021 amounted to approximately HK$37 million, representing an increase of approximately HK$6 million, or approximately 19.8% as compared with the six months ended 30 June 2020. The increase was mainly due to the increase of sales and marketing initiatives during the period.

Administrative expenses

Our administrative expenses for the six months ended 30 June 2021 amounted to approximately HK$34 million, representing an increase of approximately HK$13 million, or approximately 62.2% as compared with the six months ended 30 June 2020. The increase was mainly due to the increase of equity-settled share compensation expenses during the period.

Research and development expenses

Our research and development expenses for the six months ended 30 June 2021 amounted to approximately HK$49 million, representing an increase of approximately HK$30 million, or approximately 154.3% as compared with the six months ended 30 June 2020. The increase was mainly due to the increase of research and development activities in the current period and the increase in the headcount of our research and development department from 45 for the six months ended 30 June 2020 to 81 for the six months ended 30 June 2021.

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MANAGEMENT DISCUSSION AND ANALYSIS

Other income and gains

For the six months ended 30 June 2020, other income mainly consisted of income on fair value change on other liabilities measured at FVTPL of approximately HK$76 million (six months ended 30 June 2021: Nil).

Finance costs

Finance costs mainly consisted of interest expenses on interest-bearing borrowings of approximately HK$12 million (six months ended 30 June 2020: HK$19 million) and interest expense on lease liabilities.

Income tax expense

Our income tax expense mainly comprised of deferred tax expense resulted from the utilisation of tax losses in the United States and tax expense in the Mainland China.

Profit for the period attributable to owners of the Company

The profit attributable to owners of the Company for the six months ended 30 June 2021 amounted to approximately HK$23 million, as compared to the profit attributable to owners of the Company for the six months ended 30 June 2020 of approximately HK$74 million.

Basic earnings per share for the six months ended 30 June 2021 was approximately HK4.95 cents (six month ended 30 June 2020: HK17.34 cents), and diluted earnings per share for the six months ended 30 June 2021 was approximately HK4.68 cents (six month ended 30 June 2020: HK16.96 cents). The Board does not recommend any payment of dividends for the period ended 30 June 2021 (six months ended 30 June 2020: Nil).

Adjusted EBITDA

The Adjusted EBITDA for the six months ended 30 June 2021 amounted to approximately HK$67 million, representing an increase of approximately HK$42 million, or approximately 163.8%, as compared to the Adjusted EBITDA for the six months ended 30 June 2020 of approximately HK$25 million. The substantial increase in Adjusted EBITDA was mainly attributed by the significant increase in revenue of the Group for the six months ended 30 June 2021, contributed by (a) continued growth in our business in the US; and (b) the expansion of our business in the Mainland China, driven by strategic and commercial partnerships.

Interim condensed consolidated statement of financial position highlights

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30 June 31 December
2021 2020
HK$’000 HK$’000
(Unaudited) (Restated)
Total assets 1,689,237 1,153,538
Total liabilities 226,108 364,672
Net assets 1,463,129 788,866
Total equity 1,463,129 788,866
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INTERIM REPORT 2021 VOBILE GROUP LIMITED 9

MANAGEMENT DISCUSSION AND ANALYSIS

Goodwill

Our goodwill remained stable at approximately HK$605 million as at 30 June 2021. Goodwill is tested for impairment periodically and no impairment loss is considered necessary as at 30 June 2021.

Intangible assets

Our intangible assets amounted to approximately HK$77 million as at 30 June 2021, representing a decrease of approximately HK$4 million as compared to 31 December 2020. The decrease was mainly due to the amortisation expenses on intangible assets during the six months ended 30 June 2021.

Convertible bonds

On 14 July 2020, the Company issued two series of convertible bonds in the aggregate principal amount of HK$100 million to Poly Platinum Enterprises Limited, an investment holding company incorporated in British Virgin Islands with limited liability a wholly-controlled subsidiary of Greater Bay Area Homeland Development Fund LP. The Series One Convertible Bonds with principal amount of HK$80 million and has an initial conversion price of HK$2.58 per Share. The Series Two Convertible Bonds with principal amount of HK$20 million and has an initial conversion price of HK$2.80 per Share. Both Series One Convertible Bonds and Series Two Convertible Bonds are convertible into Shares. The convertible bonds bear simple interest on their outstanding principal amount at the rate of 5% per annum, payable semi-annually in arrears, and will mature on the two years from the issue date.

LIQUIDITY AND CAPITAL RESOURCES

Working capital

As of 30 June 2021, our cash and cash equivalents amounted to approximately HK$686 million. As of 30 June 2021, our current assets amounted to approximately HK$914 million of which approximately HK$165 million was trade receivables and approximately HK$686 million was cash and cash equivalents. Our current liabilities amounted to approximately HK$105 million, of which approximately HK$49 million was trade payables. As at 30 June 2021, our current ratio, which is equivalent to the current assets divided by the current liabilities, was 8.7 as compared with 3.9 at 31 December 2020.

Significant investments, acquisitions and disposals

During the six months ended 30 June 2021, we did not have any significant investment and any material acquisition or disposal.

Capital expenditures

Our capital expenditures were primarily for expenditures for purchase of equipment. The amount of our capital expenditures for the six months ended 30 June 2021 was approximately HK$0.8 million.

Contingent liabilities, off balance sheet commitments and arrangements and pledge of assets

As of 30 June 2021 and the date of this report, we did not have (i) any material contingent liabilities or guarantees, (ii) any liabilities under acceptance trade receivables or acceptable credits, debentures, mortgages, charges, finance leases or hire purchase commitments, guarantee material covenants, or other material contingent liabilities, or (iii) any material off-balance sheet arrangements.

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MANAGEMENT DISCUSSION AND ANALYSIS

Foreign exchange exposure

Our transactions are mainly settled in United States dollars and Hong Kong dollars and therefore have minimal exposure to foreign exchange risk. We have not used any derivative financial instrument to hedge against our exposure to foreign exchange risk but will monitor such risk closely on an ongoing basis.

Unless otherwise specified, conversions of HKD into USD in this report are based on the exchange rate of US$1.00 = HK$7.76 for illustration purpose only. No representation is made that any amounts in HKD or USD can be or could have been converted at the relevant dates at the above rate or any other rates at all.

Gearing ratio

The Group monitors capital using gearing ratio, which is net external debt divided by the capital (equity attributable to owners of the Company) plus net debt. Net external debt includes interest-bearing borrowings, less cash and cash equivalents. As of 30 June 2021 and 31 December 2020, our gearing ratio, was not applicable as our balance of cash and cash equivalents exceeded the balance of net external debt.

Use of proceeds from issue of convertible bonds, subscription of shares and placing of shares

In July 2020, the Company completed the issue of two series of convertible bonds to Poly Platinum Enterprises Limited, a wholly-controlled subsidiary of Greater Bay Area Homeland Development Fund LP and raised net proceeds of approximately HK$90 million, which will be used for development and investment of content distribution related business and other business supporting short-form video platforms. As of 30 June 2021, the Company has utilised HK$67 million of the net proceeds. The Company will apply the remaining net proceeds for the purpose as disclosed in the announcement of the Company dated 29 June 2020. The Company intends to fully utilise the net proceeds from the issue of the two series of convertible bonds by 31 December 2021.

In December 2020, the Company completed the allotment and issuance of 28,901,734 Shares to Antfin (Hong Kong) Holding Limited, an indirect wholly-owned subsidiary of Ant Group Co., Ltd. and raised net proceed of approximately HK$388 million, which will be used for potential investment opportunities and general working capital of the Group. As of 30 June 2021, the Company has utilised HK$379 million of the net proceed. The Company will apply the remaining net proceeds for the purpose as disclosed in the announcement of the Company dated 20 December 2020. The Company intends to fully utilise the net proceeds from the allotment and issuance of 28,901,734 Shares by 31 December 2021.

In May 2021, the Company completed the placement of 21,500,000 Shares and raised net proceeds of approximately HK$631 million. As of 30 June 2021, the Company has not utilised any of the net proceed. The Company will apply the net proceeds for the purpose as disclosed in the announcement of the Company dated 21 May 2021. The Company intends to fully utilise the net proceeds from the placement of 21,500,000 Shares by 31 December 2022.

INTERIM REPORT 2021 VOBILE GROUP LIMITED 11

CORPORATE GOVERNANCE HIGHLIGHTS

CORPORATE GOVERNANCE PRACTICE

The Board is committed to maintaining high corporate governance standards. The Board believes that good corporate governance standards are essential in providing a framework for the Group to formulate its business strategies and policies, and to enhance its transparency and accountability.

During the six months ended 30 June 2021, the Company has applied the principles as set out in the CG Code which are applicable to the Company.

In the opinion of the Directors, during the six months ended 30 June 2021, the Company has complied with all applicable code provisions as set out in the CG Code, save and except for code provision A.2.1 which states that the roles of chairman and chief executive officer should be separate and should not be performed by the same individual. Mr. Wang is both our Chairman and Chief Executive Officer, and is responsible for the overall management of our Group and directing the strategic development and business plans of our Group. We believe Mr. Wang has been instrumental to our growth and business expansion since our establishment in 2005. Our Board considers that the roles of chairman and chief executive officer being vested in the same person is beneficial to the business prospects, management and overall strategic direction of our Group by ensuring consistent leadership within our Group and facilitating more effective and efficient overall strategic planning and decision-making for our Group. After considering all the corporate governance measures that have been taken, the Board considers that the balance of power and authority will not be impaired by the present arrangement and the current structure will enable the Company to make and implement decisions more promptly and effectively. Thus, the Company does not segregate the roles of Chairman and Chief Executive Officer.

MODEL CODE FOR SECURITIES TRANSACTIONS

The Company has adopted the Model Code as its code of conduct regarding securities transactions by the Directors. The Company has also set guidelines, at least as strict as the Model Code, on transactions of the Company’s securities for relevant employees (as defined in the Listing Rules).

The Company has made specific inquiries to all Directors about their compliance with the Model Code, and they all confirmed that they complied with the standards specified in the Model Code during the six months ended 30 June 2021. The Company has made specific inquiries of relevant employees about their compliance with the guidelines on transactions of the Company’s securities, without noticing any violation of the guidelines.

REVIEW OF INTERIM REPORT

The Audit Committee comprises three independent non-executive Directors, namely, Mr. KWAN Ngai Kit, Mr. Alfred Tsai CHU and Mr. Charles Eric EESLEY, and two non-executive Directors, namely, Mr. J David WARGO and Mr. WONG Wai Kwan. The chairman of the Audit Committee is Mr. KWAN Ngai Kit.

The Audit Committee has reviewed the unaudited interim results of the Group for the six months ended 30 June 2021 and this interim report and was of the opinion that such interim results and this report had been prepared in accordance with the relevant accounting standards and that adequate disclosures have been made in accordance with the requirements of the Listing Rules.

ENVIRONMENTAL POLICIES AND PERFORMANCE

The Group is committed to fulfilling social responsibility, promoting employee benefits and development, protecting the environment and giving back to community and achieving sustainable growth.

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OTHER INFORMATION

INTERIM DIVIDEND

The Board does not recommend the payment of an interim dividend for the six months ended 30 June 2021.

EMPLOYEE AND REMUNERATION POLICY

As at 30 June 2021, we employed a total of 202 staff (as at 31 December 2020: 132 staff). Salaries, bonuses and benefits are determined with reference to market terms and performance, qualifications and experience of each individual employee, and are subject to review from time to time.

The remuneration of the Directors is reviewed by the Remuneration Committee and approved by the Board. The relevant Director’s experience, duties and responsibilities, time commitment, the Company’s performance and the prevailing market conditions are taken into consideration in determining the emolument of the Directors.

The total remuneration cost incurred by the Group for the six months ended 30 June 2021 was approximately HK$68 million (for the six months ended 30 June 2020: HK$43 million).

The Company also adopted a Pre-IPO Share Option Scheme, a Post-IPO Share Option Scheme and a Share Award Plan.

PRE-IPO SHARE OPTION SCHEME

The following is a summary of all the principal terms of the Pre-IPO Share Option Scheme.

(a) Purpose of the Pre-IPO Share Option Scheme

The purpose of the Pre-IPO Share Option Scheme is to offer to employees, Directors (i.e. a member of the Board who is not an employee), consultants or advisers who perform bona fide services for, our Company, its parent or its subsidiary the opportunity to acquire equity in our Company through awards of Pre-IPO Share Option Scheme.

(b) Exercise Price and Purchase Price of the Pre-IPO Share Option Scheme

Minimum exercise price for Pre-IPO Share Option: The exercise price per Share of a Pre-IPO Share Option shall not be less than 100% of the fair market value of a Share on the date of grant; provided, however that the exercise price per share of a Pre-IPO Share Option granted to an individual holding more than 10% of the voting power of our Company shall not be less than 110% of the fair market value of a share on the date of grant.

(c) Lapse of Option or Right

An option may be exercised in accordance with the terms of the Pre-IPO Share Option Scheme at any time during a period as the Board may determine which shall not exceed 10 years from the date of grant subject to the provisions of early termination thereof.

INTERIM REPORT 2021 VOBILE GROUP LIMITED 13

OTHER INFORMATION

(d) Total Number of Shares Available for Issue under the Pre-IPO Share Option Scheme

The maximum number of Shares issuable upon exercise of all options to be granted under the Pre-IPO Share Option Scheme of the Company as from the adoption date of the Pre-IPO Share Option Scheme (excluding, for this purpose, Shares issuable upon exercise of options which have been granted but which have lapsed in accordance with the terms of the Pre-IPO Share Option Scheme or any other share option schemes of the Company) must not exceed 24,000,000 shares, representing 5.81% of all the Shares in issue as at 4 January 2018.

As at 30 June 2021, the outstanding share option granted under the Pre-IPO Share Option Scheme is 13,774,000 Shares, representing 3.00% of the issued share capital of the Company as at 30 June 2021.

(e) Duration of the Pre-IPO Share Option Scheme

The Pre-IPO Share Option Scheme will remain in force for a period of 10 years commencing on the adoption date of Pre-IPO Share Option Scheme.

Outstanding share options

The table below shows details of the outstanding share options granted to all grantees under the Pre-IPO Share Option Scheme as of 30 June 2021.

Grantee	Position Held	Exercise Price	Number of Shares under the Pre-IPO Share Option Scheme	Date of Grant	Approximate Percentage
Directors
Mr. Wang	Executive Director	US$0.1375	8,000,000	25 April 2017	1.65
Other 7 employees		US$0.125	1,670,000	25 April 2017	0.34
Total			9,670,000		1.99

Note: The exercise period of the existing Share Options granted under the Pre-IPO Share Option Scheme are till 25 April 2027 and the vesting period are from 25 April 2017 till 25 April 2021.

POST-IPO SHARE OPTION SCHEME

The following is a summary of all the principal terms of the Post-IPO Share Option Scheme.

(a) Purpose of the Post-IPO Share Option Scheme

The purposes of the Post-IPO Share Option Scheme are to attract and retain the best available personnel, to provide additional incentive to employees, directors, consultants and advisers of our Group and to promote the success of the business of our Group.

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OTHER INFORMATION

(b) Exercise Price and Purchase Price of the Post-IPO Share Option Scheme

The amount payable for each Share to be subscribed for under an option in the event of the option being exercised shall be determined by the Board and shall be not less than the greater of

• (i) the closing price of the Shares on the Main Board of the Stock Exchange as stated in the Stock Exchange’s daily quotations sheet on the date of grant;

• (ii) the average closing price of the Shares on the Main Board of the Stock Exchange as stated in the Stock Exchange’s daily quotations sheets for the five business days immediately preceding the date of grant; and

• (iii) the nominal value of the Shares.

(c) Lapse of Option or Right

An option shall lapse forthwith (to the extent not already exercised) on the earliest of expiry of the exercise period and under the other provisions as set out in the Post-IPO Share Option Scheme.

(d) Total Number of Shares Available for Issue under the Post-IPO Share Option Scheme

The maximum number of Shares which may be issued upon the exercise of all outstanding options granted and yet to be exercised under the Post-IPO Share Option Scheme and any other schemes of our Company shall not exceed such number of Shares as shall represent 30% of the issued share capital of our Company from time to time. The total number of Shares issued and to be issued upon the exercise of the options granted to each eligible person (including exercised, cancelled and outstanding options) under the Post-IPO Share Option Share in any 12-month period shall not exceed 1% of the relevant class of securities of our Company in issue.

As at 30 June 2021, the outstanding number of options available for issue under the Share Option Scheme is 28,067,453 Shares, representing 6.11% of the issued share capital of the Company.

(f) Duration of the Post-IPO Share Option Scheme

The Share Option Scheme will remain in force for a period of 10 years commencing on the adoption date of the PostIPO Share Option Scheme.

INTERIM REPORT 2021 VOBILE GROUP LIMITED 15

OTHER INFORMATION

Outstanding share options

The table below shows details of the outstanding share options granted to all grantees under the Post-IPO Share Option Scheme as of 30 June 2021.

Grantee	Exercise Price	Number of Shares under the Post-IPO Share Option Scheme	Date of Grant	Approximate Percentage
Director
Mr. Wang(1)	HK$20.00	28,000,000	12 January 2021	5.77
Employees and consultants
Kevin A. Mayer(2)	HK$4.08	2,000,000	9 September 2020	0.41
3 business consultants(2)	HK$3.50	1,750,000	30 July 2020	0.36
32 employees(2)	HK$3.50	9,500,000	30 July 2020	1.96
Total		41,250,000		8.50

The closing price of the Company’s Shares on 29 July 2020, 8 September 2020 and 11 January 2021, being the closing price of the Company’s Shares on the date immediately before the date on which the options were granted, are HK$3.25 and HK$4.08 and HK$19.10, respectively.

Note:

• (1) The Share Options had an exercise period of ten years and the vesting periods of ten years from the Date of Grant. all nine tranches of the 28,000,000 share options in aggregate will become fully vested when the Market Capitalization of the Company on a Determination Date reaches at least US$10 billion and the Company has achieved at least nine of the Operational Milestones in any combination.

The table below shows the Operational Milestones:

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Operational Milestone comprised of Operational Milestone comprised of
Annual Revenue of the Company Annual Adjusted EBITDA of the Company
on a Determination Date in Excess of on a Determination Date in Excess of
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US$50	Million	US$10	Million
US$75	Million	US$15	Million
US$100	Million	US$20	Million
US$125	Million	US$25	Million
US$150	Million	US$30	Million
US$175	Million	US$35	Million
US$200	Million	US$40	Million
US$225	Million	US$45	Million
US$250	Million	US$50	Million

16 VOBILE GROUP LIMITED INTERIM REPORT 2021

OTHER INFORMATION

The table below shows the vesting conditions for each Tranche of the Share Options:

Cumulative Number of Operational Milestones Required to be Achieved	Market Capitalization Milestone Vesting Condition comprised of Market Capitalization of the Company on a Determination Date in Excess of US$ HK$	Number of vested Share Options in the Tranche
One	2 billion 15.50 billion	3,111,111 Shares
Two	3 billion 23.25 billion	3,111,111 Shares
Three	4 billion 31.00 billion	3,111,111 Shares
Four	5 billion 38.75 billion	3,111,111 Shares
Five	6 billion 46.50 billion	3,111,111 Shares
Six	7 billion 54.25 billion	3,111,111 Shares
Seven	8 billion 62.00 billion	3,111,111 Shares
Eight	9 billion 69.75 billion	3,111,111 Shares
Nine	10 billion 77.50 billion	3,111,112 Shares

(2) These Share Options had an exercise period of ten years and the vesting periods of two years from the Date of Grant .

DIRECTORS’ AND CHIEF EXECUTIVES’ INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY OR ITS ASSOCIATED CORPORATIONS

As of 30 June 2021, the interests and short positions of the Directors and chief executive of the Company in the Shares, underlying Shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO which were required (a) 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 they have taken or deemed to have under such provisions of the SFO); or (b) to be recorded in the register required to be kept pursuant to Section 352 of the SFO; or (c) as otherwise to be notified to the Company and the Stock Exchange pursuant to the Model Code were as follows:

Name of Directors Mr. Wang(2)	Capacity Beneficial owner; trustee of a trust; beneficiary of a trust	Number of shares held Approximate percentage of the issued share capital (%) (note 1) (note 1) 103,640,480 (L) 21.36	Number of shares held Approximate percentage of the issued share capital (%) (note 1) (note 1) 103,640,480 (L) 21.36
Mr. Wargo	Beneficial owner	22,270,339 (L)	4.59
Mr. Wong	Beneficial owner	600,000 (L)	0.12
Mr. Witte(3)	Beneficial owner	1,600,000 (L)	0.33

INTERIM REPORT 2021 VOBILE GROUP LIMITED 17

OTHER INFORMATION

Notes:

• (1) The letter “L” denotes the person’s long position in such securities. The number of shares are the number of shares held as at the date of this report and the percentage of the issued share capital of the Company is calculated on the basis of 430,089,489 shares in issue as at the date of this report.

• (2) Mr. Wang is a settlor, a trustee and a beneficiary of the JYW Trust. Mr. Wang and the JYW Trust are the settlors and Mr. Wang is the trustee and beneficiary of the YBW Trust. Mr. Wang is interested in 7,450,000 shares beneficially owned by him, 52,190,480 shares held by him in his capacity as trustee and beneficiary of the JYW Trust, 8,000,000 shares in his capacity as trustee and beneficiary of the YBW Trust, 8,000,000 shares which may be issued pursuant to the exercise of options granted under the Pre-IPO Share Option Scheme and 28,000,000 shares which may be issued pursuant to the exercise of options granted under the Post-IPO Share Option Scheme.

• (3) Mr. Witte is interested in 1,200,000 Shares beneficially owned by him and will be interested in 400,000 Shares which may be issued pursuant to the exercise of options granted under the Pre-IPO Share Option Scheme. Mr. Witte has retired as an executive Director on 30 June 2021.

Save as disclosed above, as of 30 June 2021, so far as is known to the Directors or chief executive of the Company, none of the Directors or chief executive of the Company had interests or short positions in the Shares, underlying Shares and debentures of the Company or its associated corporations 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 they were 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 therein; or (c) were required, pursuant to the Model Code, to be notified to the Company and the Stock Exchange.

DIRECTORS’ RIGHT TO ACQUIRE SHARES

Save as disclosed in this report, at no time during the six months ended 30 June 2021 was the Company, or any of its subsidiaries or its fellow subsidiaries a party to any arrangement to enable the Directors and chief executives of the Company (including their spouses and children under 18 years of age) to hold any interest or short positions in the Shares, or underlying shares, or debentures, of the Company or its associated corporations (within the meaning of Part XV of the SFO).

18 VOBILE GROUP LIMITED INTERIM REPORT 2021

OTHER INFORMATION

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

As of 30 June 2021, so far as was known to any Director or chief executive of the Company, the following persons (other than the Directors and chief executive of the Company) had interests and/or short positions in the Shares or underlying Shares which would fall to be disclosed to the Company pursuant to Divisions 2 and 3 of Part XV of the SFO or as recorded in the register required to be kept by the Company under section 336 of the SFO:

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Approximate
percentage of
Number of the issued
Name of shareholder Capacity Shares [(1)] share capital
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Poly Platinum Enterprises Limited(2)	Beneficial owner	41,578,608 (L)	8.57
Greater Bay Area Homeland Development	Interest in a controlled corporation	41,578,608 (L)	8.57
Fund (GP) Limited(2)
Greater Bay Area Homeland Investments	Interest in a controlled corporation	41,578,608 (L)	8.57
Limited(2)
LU Jian	Beneficial owner	32,190,480 (L)	6.63
Navibell Venture Corp.(3)	Beneficial owner	27,221,000 (L)	5.61
Tricor Equity Trustee Limited(3)	Interest in a controlled corporation,	27,221,000 (L)	5.61
	Trustee of a trust
XIE Shihuang(3)	Interest in a controlled corporation	27,221,000 (L)	5.61
Antfin (Hong Kong) Holding Limited(4)	Beneficial owner	28,901,734 (L)	5.96
Hangzhou Yunqiang Enterprise Management	Interest in a controlled corporation	28,901,734 (L)	5.96
Consulting Co., Ltd(4)
Ant Group Co., Ltd.(4)	Interest in a controlled corporation	28,901,734 (L)	5.96
Ma Yun(4)	Interest in a controlled corporation	28,901,734 (L)	5.96
Eric Xiandong Jing(4)	Person acting in concert	28,901,734 (L)	5.96
Simon Xiaoming Hu(4)	Person acting in concert	28,901,734 (L)	5.96
Fang Jiang(4)	Person acting in concert	28,901,734 (L)	5.96
China International Capital Corporation	Interest in a controlled corporation	26,263,000 (L)	5.41
Limited(5)		11,923,000 (S)	2.46

Notes:

• (1) The letter “L” denotes the person’s long position in the Shares and the Letter “S” denotes the person’s short position in the Shares.

• (2) Poly Platinum Enterprise Limited is wholly owned by Greater Bay Area Homeland Development Fund LP, which is managed by Greater Bay Area Development Fund Management Limited. Greater Bay Area Homeland Development Fund (GP) Limited is the general partner of Greater Bay Area Homeland Development Fund LP. Greater Bay Area Homeland Development Fund (GP) Limited is in turn wholly owned by Greater Bay Area Homeland Investments Limited as at 30 June 2021. Under the SFO, Greater Bay Area Homeland Development Fund (GP) Limited and Greater Bay Area Homeland Investments Limited are deemed to be interested in the Shares held by Poly Platinum Enterprise Limited.

• (3) Navibell Venture Corp. is wholly owned by Tricor Equity Trustee Limited. Xie Shihuang is a trustee and a beneficiary of The XIE Family Trust which is the beneficiary of Equity Trustee Limited.

INTERIM REPORT 2021 VOBILE GROUP LIMITED 19

OTHER INFORMATION

• (4) The 28,901,734 Shares are held by Antfin (Hong Kong) Holding Limited. Antfin (Hong Kong) Holding Limited is wholly-owned by Hangzhou Yunqiang Enterprise Management Consulting Co., Ltd., which is in turn wholly-owned by Ant Group Co., Ltd. Ant Group Co., Ltd. is owned as to approximately 20.66% by Hangzhou Junao Equity Investment Partnership (Limited Partnership) and approximately 29.86% by Hangzhou Junhan Equity Investment Partnership (Limited Partnership), which are both wholly-owned by Hangzhou Yunbo Investment Consultancy Co., Ltd, which is in turn owned as to 34% by Ma Yun. Pursuant to the concert party agreement executed by Mr. Ma Yun, Mr. Eric Xiandong Jing, Mr. Simon Xiaoming Hu and Ms. Fang Jiang, each of them is a party acting in concert (having the meaning ascribed to it under the Takeovers Code). As such, each of Mr. Eric Xiandong Jing, Mr. Simon Xiaoming Hu and Ms. Fang Jiang is deemed to be interested in 28,901,734 shares held by Mr. Ma Yun under the SFO.

• (5) China International Capital Corporation Hong Kong Securities Limited, a wholly-owned subsidiaries of China International Capital Corporation Limited hold the long position of 26,263,000 Shares. CICC Financial Trading Limited holds the short position of 11,923,000 Shares.

Save as disclosed above, as of 30 June 2021, the Directors have not been notified by any person (other than the Directors or chief executive of the Company) who had interests or short positions in the Shares or underlying Shares which shall be disclosed to the Company pursuant to Division 2 and 3 of Part XV of the SFO or as recorded in the register required to be kept pursuant to Section 336 of the SFO.

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY

During the six months ended 30 June 2021, neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company’s listed securities.

20 VOBILE GROUP LIMITED INTERIM REPORT 2021

INTERIM 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
Notes HK$’000 HK$’000
(Unaudited) (Restated)
REVENUE 4 319,481 167,459
Cost of services provided (155,774) (83,451)
Gross profit 163,707 84,008
Other income and gains 4 1,840 76,422
Selling and marketing expenses (36,568) (30,515)
Administrative expenses (33,695) (20,778)
Research and development expenses (48,623) (19,118)
Finance costs 6 (11,908) (19,395)
Other expenses (3,743) (55)
PROFIT BEFORE TAX 5 31,010 70,569
Income tax (expense)/credit 7 (7,945) 3,148
PROFIT FOR THE PERIOD ATTRIBUTABLE TO OWNERS
OF THE COMPANY 23,065 73,717
OTHER COMPREHENSIVE INCOME/(LOSS)
Other comprehensive income that may be reclassified
to profit or loss in subsequent periods:
Exchange differences on translation of foreign operations 2,440 (2,222)
OTHER COMPREHENSIVE INCOME/(LOSS) FOR THE PERIOD,
NET OF TAX 2,440 (2,222)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD
ATTRIBUTABLE TO OWNERS OF THE COMPANY 25,505 71,495
EARNINGS PER SHARE
Basic, profit for the period attributable to ordinary equity holders of
the parent (HK cents) 9 4.95 17.34
Diluted, profit for the period attributable to ordinary equity holders of
the parent (HK cents) 9 4.68 16.96
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INTERIM REPORT 2021 VOBILE GROUP LIMITED 21

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

30 June 2021

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30 June 31 December 1 January
2021 2020 2020
Notes HK$’000 HK$’000 HK$’000
(Unaudited) (Restated) (Restated)
NON-CURRENT ASSETS
Property, plant and equipment 10 1,653 1,538 2,944
Right-of-use assets 27,459 22,424 7,916
Goodwill 604,795 603,820 606,526
Intangible assets 77,065 81,150 72,917
Equity investments designated at fair value through
other comprehensive income 106 — —
Financial assets at fair value through profit or loss 11 4,558 — —
Deferred tax assets 57,301 62,242 33,211
Prepayments 2,216 1,194 288
Total non-current assets 775,153 772,368 723,802
CURRENT ASSETS
Trade receivables 12 164,792 69,518 107,023
Prepayments, deposits and other receivables 62,219 47,942 31,774
Tax recoverable 1,348 1,348 2,764
Cash and cash equivalents 685,725 262,362 37,576
Total current assets 914,084 381,170 179,137
CURRENT LIABILITIES
Trade payables 13 49,181 50,961 44,298
Other payables and accruals 45,702 38,706 49,165
— —
Interest-bearing borrowings 11,681
Lease liabilities 9,871 8,117 5,867
Total current liabilities 104,754 97,784 111,011
NET CURRENT ASSETS 809,330 283,386 68,126
TOTAL ASSETS LESS CURRENT LIABILITIES 1,584,483 1,055,754 791,928
NON-CURRENT LIABILITIES
Convertible bonds 88,307 82,975 —
—
Interest-bearing borrowings 155,050 377,680
Lease liabilities 18,277 14,846 1,866
Deferred tax liabilities 14,770 14,017 —
Other liabilities — — 139,080
Total non-current liabilities 121,354 266,888 518,626
Net assets 1,463,129 788,866 273,302
EQUITY
Share capital 14 379 359 332
Treasury shares 14 (14,968) (21,984) (19,990)
—
Equity component of convertible bonds 11,590 11,590
Reserves 1,466,128 798,901 292,960
Total equity 1,463,129 788,866 273,302
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22 VOBILE GROUP LIMITED INTERIM REPORT 2021

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2021

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Attributable to owners of the Company
Equity
component of Share Exchange
Share Treasury convertible Share Merger Other compensation fluctuation Accumulated Total
capital shares bonds premium reserve reserve reserve reserve losses equity
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1 January 2021 (as restated) 359 (21,984) 11,590 610,933 2,916 199,161 28,783 (2,235) (40,657) 788,866
Profit for the period — — — — — — — — 23,065 23,065
Exchange differences related to
foreign operations — — — — — — — 2,440 — 2,440
Total comprehensive income for
the period — — — — — — — 2,440 23,065 25,505
Issue of shares 20 — — 637,545 — — (1,607) — — 635,958
Equity-settled share compensation
arrangements — 7,016 — 9,732 — — (3,948) — — 12,800
As at 30 June 2021 (Unaudited) 379 (14,968) 11,590 1,258,210 2,916 199,161 23,228 205 (17,592) 1,463,129
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Attributable to owners of the Company
Share Exchange
Share Treasury Share Merger Other compensation fluctuation Accumulated Total
capital shares premium reserve reserve reserve reserve losses equity
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1 January 2020 (restated) 332 (19,990) 212,615 2,916 199,161 4,771 (4,656) (121,847) 273,302
Profit for the period — — — — — — — 73,717 73,717
Exchange differences related to foreign operations — — — — — — (2,222) — (2,222)
Total comprehensive income for the period — — — — — — (2,222) 73,717 71,495
Shares purchased under share award plan — (1,994) — — — — — — (1,994)
Equity-settled share option arrangements — — — — — 161 — — 161
Share allotment for consideration settlement 4 — 11,156 — — — — — 11,160
At 30 June 2020 (restated) 336 (21,984) 223,771 2,916 199,161 4,932 (6,878) (48,130) 354,124
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• These reserve accounts comprise the consolidated reserves of HK$1,466,128,000 and HK$375,772,000 in the consolidated statements of financial position as at 30 June 2021 and 2020, respectively.

INTERIM REPORT 2021 VOBILE GROUP LIMITED 23

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2021

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2021 2020
HK$’000 HK$’000
(Unaudited) (Restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax 31,010 70,569
Adjustments for:
Interest Income (513) (16)
Finance costs 11,908 19,395
Depreciation of items of property, plant and equipment 700 745
Depreciation of right-of-use assets 5,125 6,537
Amortisation of intangible assets 4,692 3,361
(Reversal of impairment)/impairment of trade receivables (43) 78
Equity-settled share option expense 12,800 161
Fair value losses on financial assets at FVTPL 877 —
—
Fair value gain on other liabilities measured at FVTPL (75,599)
66,556 25,231
(Increase)/decrease in trade receivables (95,231) 29,806
Increase in prepayments, deposits and other receivables (15,299) (12,998)
(Decrease)/increase in trade payables (1,780) 3,958
Increase/(decrease) in other payables and accruals 3,452 (4,567)
Cash generated (used in)/from operations (42,302) 41,430
Interest paid (402) (598)
Interest received 513 16
Overseas taxes (paid)/refunded (254) 2,739
Net cash flows (used in)/from operating activities (42,445) 43,587
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of items of property, plant and equipment (850) (116)
Purchases of equity investments designated at fair value through
—
other comprehensive income (106)
—
Purchases of financial assets at fair value through profit or loss (5,435)
Net cash flows used in investing activities (6,391) (116)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares 635,958 —
Purchase of shares held under share award scheme — (1,994)
—
Repayment of interest-bearing borrowings (155,050)
Interest paid (6,174) (12,672)
Principle portion of lease payments (4,975) (5,952)
Net cash flows from/(used in) financing activities 469,759 (26,438)
NET INCREASE IN CASH AND CASH EQUIVALENTS 420,923 17,033
Cash and cash equivalents at beginning of period 262,362 37,576
Effect of foreign exchange rate changes, net 2,440 (2,222)
CASH AND CASH EQUIVALENTS AT END OF PERIOD 685,725 52,387
ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS
Cash and bank balances 485,542 52,387
Time deposits with original maturity of less than three months when
—
acquired 200,183
Cash and cash equivalents as stated in the statement of cash flows 685,725 52,387
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24 VOBILE GROUP LIMITED INTERIM REPORT 2021

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 June 2021

1. CORPORATE INFORMATION

The Company was incorporated as an exempted company with limited liability in the Cayman Islands on 28 July 2016 under the Companies Law, Chapter 22 of the Cayman Islands. The registered address of the office of the Company is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands.

The Company is an investment holding company. During the period, the Group was principally engaged in providing Software as a Service (“SaaS”).

2. BASIS OF PREPARATION AND CHANGES TO THE GROUP’S ACCOUNTING POLICIES

2.1 Basis of Preparation

The interim condensed consolidated financial statements for the six months ended 30 June 2021 have been prepared in accordance with IAS 34 Interim Financial Reporting and the disclosure requirement of Appendix 16 of the Listing Rules. Save for the change of presentation currency and adoption of new and revised IFRSs during the period as set out in notes 2.2 and 2.3, respectively, the accounting policies and basis of preparation adopted in the preparation of the condensed consolidated interim financial statements are the same as those used in the preparation of the annual financial statements for the year ended 31 December 2020.

2.2 Change in presentation currency

The interim condensed consolidated financial information is presented in HKD and all values are rounded to nearest thousand except when otherwise indicated.

Having considered that the shares of the Company are listed on The Stock Exchange of Hong Kong Limited, the Board believes it is more appropriate to adopt HKD as its presentation currency for the Group’s consolidated financial statements. Furthermore, the Board considers that the Change of Presentation Currency enables the shareholders and potential investors of the Company to have a more accurate picture of the Group’s financial performance.

For the purpose of presenting the interim condensed consolidated financial statements of the Group in HKD, the assets and liabilities for the interim condensed consolidated statement of financial position are translated into HKD at the closing rate at the end of the reporting period. Income and expenses for the interim condensed consolidated statement of profit or loss and other comprehensive income are translated at the average exchange rates for the financial period. The share capital, the share premium and reserves are translated at the exchange rate at the date of transaction.

INTERIM REPORT 2021 VOBILE GROUP LIMITED 25

30 June 2021

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. BASIS OF PREPARATION AND CHANGES TO THE GROUP’S ACCOUNTING POLICIES (Continued)

2.3 Changes In Accounting Policies and Disclosures

The accounting policies adopted in the preparation of the interim condensed consolidated financial information are consistent with those applied in the preparation of the Group’s annual consolidated financial statements for the year ended 31 December 2020, except for the adoption of the following revised International Financial Reporting Standards (“IFRSs”) for the first time for the current period’s financial information.

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and Interest Rate Benchmark Reform — Phase 2 IFRS 16 Amendments to IFRS 16 COVID-19-Related Rent Concessions beyond 30 June 2021 (early adopted)

The new and revised standards are not relevant to the preparation of the Group’s interim condensed consolidated financial information.

3. OPERATING SEGMENT INFORMATION

For management purposes, the Group had only one reportable operating segment, which was offering SaaS to help content owners protect their content from unauthorised use, measure the viewership of their content, and monetize their content during the period. Since this is the only reportable operating segment of the Group, no further operating segment analysis is presented.

Geographical information

(a) Revenue from external customers

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Six months ended 30 June
2021 2020
HK$’000 HK$’000
(Unaudited) (Restated)
United States 250,913 161,568
Mainland China 66,382 303
Japan 1,898 5,203
Others 288 385
319,481 167,459
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The revenue information above is based on the locations of the customers.

26 VOBILE GROUP LIMITED INTERIM REPORT 2021

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 June 2021

3. OPERATING SEGMENT INFORMATION (Continued)

Geographical information (Continued)

(b) Non-current assets

Majority of significant non-current assets of the Group are located in the United States. Accordingly, no geographical information of segment assets is presented.

Information about major customers

During the six months ended 30 June 2021 and 30 June 2020, there was no customer with whom transactions exceeded 10% of the Group’s revenue.

4. REVENUE, OTHER INCOME AND GAINS

Revenue represents the value of services rendered during the period.

An analysis of revenue and other income and gains is as follows:

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Six months ended 30 June
2021 2020
HK$’000 HK$’000
(Unaudited) (Restated)
Revenue from contracts with customers
Rendering of services 319,481 167,459
Other income and gains
Bank Interest income 513 16
Foreign exchange gains 506 527
—
Fair value gain on other liabilities measured at FVTPL 75,599
Other 821 280
1,840 76,422
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INTERIM REPORT 2021 VOBILE GROUP LIMITED 27

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 June 2021

5. PROFIT BEFORE TAX

The Group’s profit before tax is arrived at after charging/(crediting):

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Six months ended 30 June
2021 2020
HK$’000 HK$’000
(Unaudited) (Restated)
Cost of services provided 155,774 83,451
Employee benefit expense (including Directors’ and chief executive’s
remuneration)
Wages and salaries 52,885 41,006
Equity-settled share compensation expense 12,800 161
Directors’ fee 1,320 360
Other benefits 1,251 947
Pension scheme contributions 143 85
68,399 42,559
Depreciation of items of property, plant and equipment 700 745
Depreciation of right-of-use assets 5,125 6,537
Amortisation of intangible assets 4,692 3,361
Lease payments not included in the measurement of lease liabilities 586 2,763
(Reversal of impairment)/impairment of trade receivables (43) 78
Research and development expenses 48,623 19,118
Auditor’s remuneration 1,100 955
Fair value losses on financial assets at FVTPL 877 —
Bank interest income (note 4) (513) (16)
Foreign exchange differences, net 2,255 388
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6. FINANCE COSTS

An analysis of finance costs is as follows:

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Six months ended 30 June
2021 2020
HK$’000 HK$’000
(Unaudited) (Restated)
Interest on borrowings (including convertible bonds) 11,506 18,797
Nominal interest on lease liabilities 402 598
11,908 19,395
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28 VOBILE GROUP LIMITED INTERIM REPORT 2021

30 June 2021

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7. INCOME TAX EXPENSE/(CREDIT)

Income tax consists primarily of the United States, Mainland China, Hong Kong and Japan enterprise income tax charged on the Group. United States income tax applicable to the Group during the six months ended 30 June 2021 is at the federal tax rate of 21% (2020: 21%). The income tax applicable to profits arising in Mainland China was provided at a statutory tax rate of 25% during the six months ended 30 June 2021. No Hong Kong profits tax has been provided for as the Group has no assessable profits generated in Hong Kong for the period (2020: Nil). Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the jurisdictions in which the Group operates.

The major components of income tax expense/(credit) for the six months ended 30 June are as follows:

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Six months ended 30 June
2021 2020
HK$’000 HK$’000
(Unaudited) (Restated)
Current — United States
Charge for the period 12 —
Current — Mainland China
—
Charge for the period 2,164
Current — Japan
Charge for the period — 16
Deferred tax expense/(credit) 5,769 (3,164)
Total tax expense/(credit) for the period 7,945 (3,148)
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8. DIVIDENDS

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

9. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE COMPANY

The calculation of the basic earnings per share amounts is based on the profit for the period attributable to ordinary equity holders of the Company, and the weighted average number of ordinary shares of 465,624,252 (2020: 425,103,765) in issue during the period, as adjusted to reflect the share allotment for consideration settlement, issue of shares and exercise of share options during the period.

No adjustment has been made to the basic earnings per share amounts presented for the six months ended 30 June 2021 in respect of a dilution as the impact of the share option scheme and convertible bonds outstanding had an antidilutive effect on the basic earnings per share amounts presented.

INTERIM REPORT 2021 VOBILE GROUP LIMITED 29

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 June 2021

9. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE COMPANY (Continued)

The calculations of profit per share attributable to ordinary equity holders of the Company for each of the six months ended 30 June 2021 and 2020 are based on the following data:

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Six months ended 30 June
2021 2020
HK$’000 HK$’000
(Unaudited) (Restated)
Profit
Profit attributable to ordinary equity holders of the Company,
used in the basic and diluted earnings per share calculation 23,065 73,717
Interest on convertible bonds 7,699 —
Profit attributable to ordinary equity holders of the Company before
interest on convertible bond 30,764 73,717
Shares
Weighted average number of ordinary shares in issue during
the period used in the basic earnings per share calculation 465,624,252 425,103,765
Effect of dilution — Weighted average number of ordinary shares
Share options 27,258,661 9,450,859
Convertible bonds 38,150,608 —
Weighted average number of ordinary share options for the purpose of
diluted earnings per share calculation 531,033,521 434,554,624
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• Because the diluted earnings per share amount is increased when taking convertible bonds into account, the convertible bonds had an antidilutive effect on basic earnings per share for the period and were ignored in the calculation of diluted earnings per share. Therefore, the diluted earnings per share amounts are based on the profit for the period of HK$23,065,000 and the weighted average number of ordinary shares of 492,882,913 in issue during the period which is excluded from the interest on the convertible bonds of HK$7,699,000 and the weighted average number of ordinary shares of 38,150,608 from convertible bonds.

10. PROPERTY, PLANT AND EQUIPMENT

During the six months ended 30 June 2021, the Group purchased items of property, plant and equipment with a cost of HK$850,000 (30 June 2020: HK$116,000). During the six months ended 30 June 2021, depreciation for property, plant and equipment was HK$700,000 (30 June 2020: HK$745,000).

No asset was disposed by the Group during the six months ended 30 June 2021 (30 June 2020: nil).

30 VOBILE GROUP LIMITED INTERIM REPORT 2021

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 June 2021

11. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

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30 June 31 December
2021 2020
HK$’000 HK$’000
(Unaudited) (Restated)
—
Unlisted investments, at fair value 4,558
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The above equity investments were classified as financial assets at FVTPL as the Group has not elected to recognise the fair value gain or loss through other comprehensive income. The above unlisted investments were asset management schemes managed by non-bank financial institutions.

12. TRADE RECEIVABLES

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30 June 31 December
2021 2020
HK$’000 HK$’000
(Unaudited) (Restated)
Trade receivables 164,803 69,572
Impairment (11) (54)
164,792 69,518
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The Group’s trading terms with its debtors are usually 10 to 90 days. The Group always recognises lifetime ECLs for all trade receivables and measures the lifetime ECL on a specific basis according to management’s assessment of the recoverability of an individual receivable. Management considers the number of days that an individual receivable is outstanding, historical experience and forward-looking information to determine the recoverability of the trade receivable. The Group does not hold any collateral or other credit enhancements over its trade receivables balances. Trade receivables are unsecured and non-interest-bearing.

An ageing analysis of the current trade receivables as at 30 June 2021, based on the invoice date and net of loss allowance, is as follows:

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30 June 31 December
2021 2020
HK$’000 HK$’000
(Unaudited) (Restated)
Within 90 days 164,146 56,362
91 to 180 days 608 8,163
181 to 365 days 38 3,543
—
Over 365 days 1,450
164,792 69,518
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INTERIM REPORT 2021 VOBILE GROUP LIMITED 31

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 June 2021

12. TRADE RECEIVABLES (Continued)

The movements in loss allowance for impairment of trade receivables are as follows:

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30 June 31 December
2021 2020
HK$’000 HK$’000
(Unaudited) (Restated)
At beginning of period 54 294
Reversal of impairment of trade receivables, net (43) (240)
At end of the period 11 54
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An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns (i.e., by geographical region, product type, customer type and rating, and coverage by letters of credit or other forms of credit insurance). The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. Generally, trade receivables are written off if past due for more than one year and are not subject to enforcement activity:

Set out below is the information about the credit risk exposure on the Group’s trade receivables using a provision matrix:

As at 30 June 2021

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Past due
Less than 3 to Over
Current 3 months 6 months 6 months Total
Expected credit loss rate 0.005% 0.050% 0.450% 0.650% 0.007%
Gross carrying amount (HK$’000) 159,809 4,823 143 28 164,803
Expected credit losses (HK$’000) 8 2 1 — 11
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As at 31 December 2020

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Past due
Less than 3 to Over
Current 3 months 6 months 6 months Total
Expected credit loss rate 0.02% 0.04% 0.42% 0.62% 0.08%
Gross carrying amount (HK$’000) 41,484 21,234 1,861 4,993 69,572
Expected credit losses (HK$’000) 7 8 8 31 54
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32 VOBILE GROUP LIMITED INTERIM REPORT 2021

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 June 2021

13. TRADE PAYABLES

An ageing analysis of the trade payables as at 30 June 2021, based on the invoice date, is as follows:

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30 June 31 December
2021 2020
HK$’000 HK$’000
(Unaudited) (Restated)
Within 90 days 46,059 46,635
91 to 180 days 138 2,093
Over 180 days 2,984 2,233
49,181 50,961
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The trade payables are non-interest-bearing and are normally settled on 30 to 90 day terms.

14. SHARE CAPITAL

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30 June 31 December
2021 2020
HK$’000 HK$’000
(Unaudited) (Restated)
Issued and fully paid (US$0.0001 per Share):
485,201,556 ordinary shares (31 December 2020: 459,104,556) 379 359
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A summary of movements in the Company’s share capital is as follows:

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Number of Share Treasury
shares in issue Share capital premium shares
HK$’000 HK$’000 HK$’000
At 1 January 2021 459,104,556 359 610,933 (21,984)
Shares vested from Share Award Plan
—
transferred to the awardees (a) 9,732 7,016
Exercise of share options (b) 4,597,000 4 6,181 —
Issue of shares (c) 21,500,000 16 631,364 —
At 30 June 2021 485,201,556 379 1,258,210 (14,968)
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INTERIM REPORT 2021 VOBILE GROUP LIMITED 33

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 June 2021

14. SHARE CAPITAL (Continued)

Notes:

(a) On 6 May 2019, the Board adopted a 10-year share award scheme (the “Scheme”) to incentivise, recognise and reward the contributions of certain eligible persons (“Eligible Persons”) to the growth and development of the Group.

Pursuant to the Scheme, the ordinary shares of US$0.0001 each in the capital of the Company will be acquired by the trustee at the cost of the Company and will be held in trust for the Eligible Persons before vesting. The total number of shares granted under the Scheme shall be limited to 10% of the total issued share capital of the Company.

The Board has delegated the power and authority to a trustee to handle operational matters of the Scheme but all major decisions in relation to the Scheme shall be made by the Board unless expressly provided for in the Scheme rules pursuant to the Scheme or the Board resolves to delegate such power to the trustee.

Pursuant to the Scheme rules, the Board may, from time to time, at its absolute discretion and subject to such terms and conditions as it may think fit, select any participants for participation in the Scheme as Eligible Persons and determine the number of awarded shares.

Movements of shares held under the Scheme during the period are as follows:

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HK$’000 Number of shares
At 1 January 2021 21,984 8,840,000
Transferred to the Awardees during the period (7,016) (2,821,211)
At 30 June 2021 14,968 6,018,789
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(b) The subscription rights attaching to 4,597,000 share options were exercised at the subscription price of US$0.125 per share, resulting in the issue of 4,597,000 shares for a total cash consideration, before expenses, of HK$4,578,000. An amount of HK$1,607,000 was transferred from the share compensation reserve to share capital and share premium upon the exercise of the share options.

(c) On 28 May 2021, a total of 21,500,000 Shares have been allotted and issued to the placees at the subscription price of HK$30.30 per Share.

15. RELATED PARTY TRANSACTIONS

Outstanding balances with related parties:

As at 30 June 2021, there were no outstanding balances with related parties.

34 VOBILE GROUP LIMITED INTERIM REPORT 2021

30 June 2021

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

16. EVENTS AFTER THE REPORTING PERIOD

Pursuant to a shareholders’ resolution passed at an extraordinary general meeting on 13 July 2021, the authorised and issued shares of the Company were subdivided on the basis that every one issued share is subdivided into four subdivided shares (the “Share Subdivision”). The Share Subdivision became effective on 15 July 2021.

On 23 July 2021, 18,300,000 share options were granted to Mr. MATSUZAWA Masaaki, an executive Director and four other employees under the Post-IPO Share Option Scheme.

17. APPROVAL OF THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The unaudited interim condensed consolidated financial information were approved and authorised for issue by the board of Directors on 31 August 2021.

INTERIM REPORT 2021 VOBILE GROUP LIMITED 35

DEFINITIONS

In this report, unless the context otherwise requires, the following expressions shall have the following meanings:

the audit committee of the Company the board of Directors

“Audit Committee”

“Board” the board of Directors “CG Code” the corporate governance code as set out in Appendix 14 to the Listing Rules “Company” Vobile Group Limited, an exempted company incorporated with limited liability under the laws of the Cayman Islands and the shares of which are listed on the Stock Exchange

a date on which the exercisability of the Share Options is determined, which shall be a day on which the Stock Exchange is open for trading

“Determination Date”

“Directors” the directors of the Company “DTC” direct-to-consumer “EBITDA” earnings before interest, tax, depreciation and amortisation “FVTPL” fair value through profit or loss “Group” the Company and its subsidiaries “HKD” or “HK$” Hong Kong dollars, the lawful currency of Hong Kong “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China “IAS” International Accounting Standards “IFRS” International Financial Reporting Standards “IP” Intellectual property

“Listing Rules”

the Rules Governing the Listing of Securities on the Stock Exchange

“Market Capitalization of the Company the lower of the Six-Month Market Cap on the Determination Date or the Thirtyon a Determination Date” Day Market Cap on the Determination Date

”Market Capitalization Milestone” the milestones for exercisability of the Tranches of the Share Options comprising the achievement of increases in Market Capitalization of the Company on a Determination Date in nine US$1 billion increments

“Model Code”

“Operational Milestones”

“Pre-IPO Share Option Scheme” “Post-IPO Share Option Scheme”

“SaaS”

“Share(s)”

“Share Award Plan”

“Share Option(s)”

“Stock Exchange”

“USD” or “US$”

the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules

the vesting criteria for a Tranche of the Share Option relating to Annual Revenue of the Company on a Determination Date or Annual Adjusted EBITDA of the Company on a Determination Date

the share option scheme of the Company adopted on 30 December 2016

the share option scheme of the Company adopted on 8 December 2017

Software as a Service

ordinary share(s) of US$0.0001 each in the share capital of the Company

the share award plan of the Company adopted on 6 May 2019, and where appropriate, includes all amendments thereto

the options granted or to be granted under the Pre-IPO Share Option Scheme or the Post-IPO Share Option Scheme or any other schemes of the Company to subscribe for the Shares

The Stock Exchange of Hong Kong Limited

the lawful currency of the United States

36 VOBILE GROUP LIMITED INTERIM REPORT 2021