___________________
Form 6-K
___________________
UNITED
STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington D.C.
20549
REPORT
OF FOREIGN ISSUER
PURSUANT
TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF
1934
For
the month of January 2010
Commission File Number:
001-33759
GIANT
INTERACTIVE GROUP INC.
2/F
No. 29 Building, 396 Guilin Road
Shanghai
200233
People’s Republic of
China
(Address
of principal executive office)
Indicate
by check mark whether the registrant files or will file annual reports under
cover Form 20-F or Form 40-F.
Form 20-F
þ Form 40-F
o
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(1): o
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(7): o
Indicate
by check mark whether by furnishing the information contained in this Form, the
registrant is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes o No
þ
If “Yes”
is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):82- N/A
Giant Interactive Group
Inc.
Form
6-K
TABLE OF
CONTEN
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Description
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Page
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Signature
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3
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Exhibit
99.1 — Fourth
Quarter and Fiscal Year 2009 Earnings Release Dated March 4,
2010
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4
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Exhibit
99.2 — 2009
Fourth Quarter and Fiscal Year Results Presentation Dated March 4,
2010
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17
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2
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
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Giant
Interactive Group Inc.
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By:
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/s/
Eric He
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Name:
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Eric
He
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Title:
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Chief
Financial Officer
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Date:
March 4, 2010
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3
Exhibit
99.1
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FOR
IMMEDIATE RELEASE
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GIANT
INTERACTIVE ANNOUNCES
FOURTH
QUARTER AND FISCAL YEAR 2009 RESULTS
SHANGHAI, PRC — March 4, 2010
— Giant Interactive Group Inc. (NYSE: GA) (“Giant” or “the Company”), one of
China’s leading online game developers and operators, announced today its
unaudited financial results for the fourth quarter and fiscal year ended
December 31, 2009.
Fourth
Quarter 2009 Highlights:
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Ÿ
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Net
revenue was RMB276.0 million (US$40.4 million), compared to RMB290.2
million in the third quarter 2009 and RMB353.1 million in the fourth
quarter 2008.
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Ÿ
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Gross
profit was RMB231.6 million (US$33.9 million), compared to
RMB244.8 million in the third quarter 2009 and RMB296.5 million in
the fourth quarter 2008. Gross profit margin for the fourth
quarter 2009 was 83.9%.
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Ÿ
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Net
income attributable to the Company’s shareholders was
RMB197.8 million (US$29.0 million), compared to RMB197.7 million
in the third quarter 2009 and RMB290.3 million in the fourth quarter
2008. The margin of net income attributable to the Company’s
shareholders for the fourth quarter 2009 was
71.7%.
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Ÿ
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Basic
and diluted earnings per American Depositary Share (“ADS”) were
RMB0.87 (US$0.13) and RMB0.85 (US$0.12), respectively, compared
to basic and diluted earnings per ADS of RMB1.26 and RMB1.23,
respectively, for the fourth quarter 2008, and basic and diluted earnings
per ADS of RMB0.87 and RMB0.84, respectively, for the third quarter
2009. Each ADS represents one ordinary
share.
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Ÿ
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Non-GAAP
net income attributable to the Company’s shareholders excluding non-cash
share-based compensation was RMB204.5 million (US$30.0 million),
compared to RMB205.4 million in the third quarter 2009 and
RMB298.3 million in the fourth quarter 2008. The margin of
non-GAAP net income attributable to the Company’s shareholders excluding
non-cash share-based compensation was
74.1%.
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Ÿ
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Basic
and diluted non-GAAP earnings excluding non-cash share-based compensation
per ADS were RMB0.90 (US$0.13) and RMB0.87 (US$0.13),
respectively, compared to basic and diluted non-GAAP earnings per ADS of
RMB1.29 and RMB1.26, respectively, for the fourth quarter 2008, and
basic and diluted non-GAAP earnings per ADS of RMB0.91 and RMB0.88,
respectively, for the third quarter
2009.
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Ÿ
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Active Paying Accounts (“APA”)
for online games1 in the fourth quarter 2009
reached 1,138,000, an increase of 2.7% from the third quarter 2009 and
a decrease of 11.8% from the fourth quarter
2008.
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Ÿ
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Average Revenue Per User (“ARPU”)
for online games1 was RMB240.5, a decrease of 7.3% from the third quarter 2009 and
a decrease of 11.8% from the fourth quarter
2008.
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Ÿ
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Average Concurrent Users (“ACU”)
for online games1 was 485,000, an increase of 14.0% from the third quarter 2009 and
a decrease of 12.7% from the fourth quarter
2008.
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1 Online games
include nine games that are currently operated by the
Company.
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FOR
IMMEDIATE RELEASE
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Ÿ
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Peak Concurrent Users (“PCU”) for
online games1 was 1,391,000, an increase of 8.6% from the third quarter 2009 and
a decrease of 7.6% from the fourth quarter
2008.
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Fiscal Year 2009
Highlights:
Compared
to fiscal year 2008 results,
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Ÿ
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Net
revenue decreased 18.2% to RMB1,303.8 million (US$191.0
million).
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Ÿ
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Gross
profit decreased 20.1% to RMB1,099.8 million (US$161.1
million).
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Ÿ
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Net
income attributable to the Company’s shareholders decreased 22.8% to
RMB859.3 million (US$125.9
million).
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Ÿ
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Basic
and diluted net income per ADS decreased 18.3% and 18.3%, respectively, to
RMB3.80 (US$0.56) and RMB3.67 (US$0.54),
respectively.
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Ÿ
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Non-GAAP
net income attributable to the Company’s shareholders excluding non-cash
share-based compensation decreased 23.3% to RMB889.9 million (US$130.4
million).
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Ÿ
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Basic
and diluted non-GAAP net income excluding non-cash share-based
compensation per ADS decreased 18.8% and 18.8%, respectively, to RMB3.93
(US$0.58) and RMB3.80 (US$0.56),
respectively.
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Mr. Yuzhu
Shi, Giant’s Chairman and Chief Executive Officer commented, “Although our
financial results in the second half of 2009 were adversely impacted by the
cancellation of ‘Treasure Box’ monetization features within ZT Online, we are beginning
to see signs of recovery in our key performance metrics driven by our
segmentation strategy and commitment to innovative gameplay. Since
the launch of limited closed beta testing in October 2009, our ZT Online Green Edition has
quickly gained traction among China’s online gamers and has achieved robust
ACU and PCU levels. Ongoing enhancements and the addition of new
features to ZT Online
have also helped stabilize user levels and contributed to a rebound in players
within our flagship game.
“While
our strategic initiatives to reach a broader, more diverse audience will
ultimately improve the vitality and sustainability of the ZT Online family of games, we
are also actively developing new potential growth drivers through our pipeline,
partnerships and licensing opportunities. In recent months, we have
partnered with Astrum Nival to expand ZT Online’s geographic
footprint into Russia and bolstered our own game pipeline by becoming the
exclusive operator of Allods
Online in China. With a healthy ZT Online series and a number
of new products slated for release in the coming year, we believe the first
quarter of 2010 will lay the foundation for a return to sustainable growth in
2010.”
Fourth
Quarter and Fiscal Year 2009 Unaudited Financial Results
Net
Revenue. Net revenue for the fourth quarter 2009 was RMB276.0
million (US$40.4 million), representing a 4.9% decrease from RMB290.2 million in
the third quarter 2009 and a 21.8% decrease from RMB353.1 million in the fourth
quarter 2008.
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IMMEDIATE RELEASE
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Net
revenue decreased 18.2% to RMB1,303.8 million (US$191.0 million) for the fiscal
year 2009, from RMB1,594.7 million in 2008.
Revenue
from online games1 in the
fourth quarter totaled RMB273.7 million (US$40.1 million), representing a
decrease of 4.8% from RMB287.5 million in the third quarter 2009 and a 22.2%
decrease from RMB351.9 million in the fourth quarter 2008. Online
game net revenue decreased sequentially and year-over-year quarterly as ZT Online experienced
continued pressure from the cancellation of selected in-game
monetization features, such as “Treasure Box,” during the third quarter
2009.
ACU for
online games1 in the
fourth quarter 2009 was 485,000, representing a 14.0% sequential increase and a
12.7% decrease over the fourth quarter 2008. PCU for online
games1 in the
fourth quarter 2009 was 1,391,000, representing an 8.6% sequential increase and
a 7.6% decrease over the fourth quarter 2008. ACU and PCU were up on
a sequential basis due to increased interest and usage for the newly launched
games such as ZT Online Green
Edition. ARPU for online games1 in the
fourth quarter 2009 decreased 7.3% sequentially and 11.8% year-over-year
quarterly to RMB240.5. The sequential decline in ARPU in the fourth
quarter of 2009 is attributable to the launch of new games geared toward users
with lower spending habits. APA for online games1 in the
fourth quarter 2009 increased 2.7% sequentially and decreased 11.8% from the
fourth quarter 2008 to 1,138,000. The sequential increase in APA is
attributable to users subscribing for paying accounts within the Company’s newly
launched games. The year-over-year quarterly decreases in operating metrics were
primarily attributable to the cancellation of “Treasure Box” monetization
features within ZT
Online during the third quarter 2009.
Cost of
Services. Cost of services was RMB44.4 million (US$6.5
million), representing a decrease of 2.2% from the third quarter 2009 and a
21.6% decrease over the fourth quarter 2008. The sequential decrease
in cost of services was primarily due to a slight decrease in business tax and
the Company’s continuous efforts to control operating costs such as IDC
expenses.
Cost of
services decreased 6.3% to RMB204.1 million (US$29.9 million) for the fiscal
year 2009, from RMB217.9 million in 2008. This decrease was primarily
attributable to the decrease in business tax resulting from lower sales of
prepaid game cards and more stringent cost control in IDC costs and other
operating expenses.
Gross Profit and
Gross Margin. Gross profit for the fourth quarter 2009 was
RMB231.6 million (US$33.9 million), representing a 5.4% sequential decrease and
a 21.9% year-over-year quarterly decrease. Gross margin for the
fourth quarter 2009 was 83.9%, down slightly from 84.3% in the third quarter
2009 and in line with 84.0% in the fourth quarter 2008.
Gross
profit fell to RMB1,099.8 million (US$161.1 million) for the fiscal year 2009,
from RMB1,376.8 million in 2008, caused by the decrease in net
revenue. Gross margin for the fiscal year 2009 was 84.3%, compared
with 86.3% in 2008.
Operating
Expenses. Total operating expenses for the fourth quarter 2009 were
RMB55.8 million (US$8.2 million), representing an increase of 5.0% from RMB53.1
million in the third quarter 2009 and a decline of 32.7% from RMB82.9 million in
the fourth quarter 2008. The sequential increase in operating
expenses is mainly attributable to higher R&D expenditure and increased
sales and marketing expenses.
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FOR
IMMEDIATE RELEASE
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For the
fiscal year 2009, total operating expenses decreased 34.9% to RMB265.9 million
(US$39.0 million) from RMB408.8 million in 2008, as the Company raised the
effectiveness and efficiency of marketing resources and cut back its sales and
marketing spending. Also, due to stringent cost controls, G&A
expenses decreased in fiscal year 2009. These decreases more than
offset the increase in R&D spending, which was used to broaden the Company’s
game pipeline.
Research
and product development (“R&D”) expenses for the fourth quarter 2009
increased 12.2% sequentially to RMB27.5 million (US$4.0 million) from RMB24.5
million in the third quarter 2009 and 9.3% year-over-year quarterly from RMB25.2
million in the fourth quarter 2008. The sequential rise in R&D
expenses was mainly due to the increase in staff headcount as additional R&D
talents were hired for the development of new game projects. For the
fiscal year 2009, R&D expenses increased 28.0% to RMB113.4 million (US$16.6
million) from RMB88.5 million in 2008 as the R&D department expanded to
accommodate additional product development and existing game
enhancements.
Sales and
marketing (“S&M”) expenses were RMB34.8 million (US$5.1 million) in the
fourth quarter 2009, up 14.5% sequentially from RMB30.4 million in the third
quarter 2009, as the Company spent more on advertisements and marketing
campaigns for the promotion of ZT Online Green
Edition. However, S&M expenses were down 23.4%
year-over-year quarterly from RMB45.4 million in the fourth quarter 2008, as the
Company exercised tighter cost controls over S&M liaison personnel and
implemented more streamlined advertising campaigns compared to a year
ago. For fiscal year 2009, S&M expenses were RMB119.6 million
(US$17.5 million), down 50.5% from RMB241.6 million for fiscal year 2008, as the
Company enhanced the effectiveness and efficiency of its marketing expenditure
throughout the year.
General
and administrative expenses (“G&A”) for the fourth quarter 2009 were RMB33.2
million (US$4.9 million), up 23.3% sequentially from RMB26.9 million in the
third quarter 2009, but down 20.7% from RMB41.8 million in the fourth quarter
2008. The sequential rise was mainly caused by an increase in
consulting fees and year-end human resources-related
expenditures. The year-over-year quarterly decrease in G&A
expenses was mainly attributable to management’s strict control of
expenses. For fiscal year 2009, G&A expenses decreased 14.3% to
RMB121.4 million (US$17.8 million) from RMB141.8 million in fiscal year 2008,
caused by the decrease of consulting fees and option expenses due to the
implementation of the accelerated amortization method.
Financial
Incentive. The financial incentive, which mainly relates to
sales tax received from the municipal government, was RMB39.7 million (US$5.8
million) in the fourth quarter 2009. This refund mainly relates to
the sales tax accounted for in the Company’s cost of services and is treated as
a deduction in operating expenses. The total financial incentive
received for fiscal year 2009 increased to RMB88.5 million from RMB63.1 million
in 2008.
Interest
Income. Interest income for the fourth quarter 2009 was
RMB30.1 million (US$4.4 million), compared to RMB23.1 million in the third
quarter 2009 and RMB41.3 million in the fourth quarter 2008. The
sequential increase in interest income was mainly due to the Company’s efforts
to more efficiently manage short-term and held-to-maturity securities, while the
year-over-year quarterly decrease was primarily caused by a decline in the
market interest rate.
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FOR
IMMEDIATE RELEASE
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For the
fiscal year 2009, interest income decreased to RMB102.2 million (US$15.0
million) from RMB185.0 million in fiscal year 2008, which was mainly
attributable to the decrease in market interest rates.
Income
Tax. Income tax expense for the fourth quarter 2009 was
RMB15.3 million (US$2.2 million), compared to income tax expense of RMB18.1
million in the third quarter 2009 and income tax benefit of RMB34.9 million
in the fourth quarter 2008. Income tax expense for fiscal year 2009
was RMB85.1 million (US$ 12.5 million).
Net Income
Attributable to the Company’s Shareholders. Net income
attributable to the Company’s shareholders for the fourth quarter 2009 was
RMB197.8 million (US$29.0 million), in line with RMB197.7 million in the third
quarter 2009 and a year-over-year quarterly decrease of 31.9% from RMB290.3
million. Net income declined from the same period last year as the
Company remained in a transitional period following the cancellation of certain
monetization features in ZT
Online during the third quarter 2009. The margin of net income
attributable to the Company’s shareholders was 71.7% for the fourth quarter
2009, compared to 68.1% in the third quarter 2009 and 82.2% in the fourth
quarter 2008.
For
fiscal year 2009, net income attributable to the Company’s shareholders
decreased 22.9% to RMB859.3 million (US$125.9 million), from RMB1,113.6 million
in 2008. Net income margin declined to 65.9% for the fiscal year
2009, as compared to 69.8% in 2008.
Cash, Cash
Equivalents, Short-Term Investments and Held-To-Maturity
Investments. As of December 31, 2009, Giant’s cash, cash
equivalents, short-term investments and held-to-maturity securities totaled
RMB5,399.2 million (US$791.0 million), compared to RMB5,179.4 million as of
September 30, 2009. The sequential increase consists of cash
generated by the Company’s operating business.
Share Repurchase
Program. In August 2009, the Board of Directors terminated the
share repurchase plan authorized in August 2008 and approved a new share
repurchase plan, authorizing the Company to repurchase up to US$150.0 million of
its ADSs. Under this share repurchase plan, the Company may
repurchase its shares under one year, unless further extended or shortened by
the Board of Directors within one year, as under the board resolution and as
defined by SEC regulations. As of December 31, 2009, the Company had not
repurchased any shares under this new plan.
Business
Highlights and Outlook
ZT
Online—The
Company continued enhancing the original ZT Online by reducing
redundant in-game tasks, upgrading the skill system, creating a new map, and
introducing the baby-sitter system. New shards were added in ZT Online Classic Edition
that simplify certain gaming experiences, such as relieving the burden of
redundant tasks and lowering the difficulty of acquiring certain
equipment. ZT
Online Green Edition, which surpassed 200,000 PCU during limited closed
beta testing with persistent accounts and monetization features, entered into
closed beta testing and joint operation with Tencent at the end of
December. During closed beta testing, ZT Online Green Edition
surpassed 300,000 PCU. The Company plans to launch open beta testing at the end
of the first quarter 2010.
Giant
Online—During the fourth quarter 2009, various new features such as a
parenthood system and a robotic pet system were introduced. Numerous
in-game activities were added during the holiday season, and generated more
interest from gamers. The Company is now optimizing the state system
and believes this will better cater to the current needs of gamers and stabilize
the number of concurrent players.
King of Kings
III—Since the
fourth quarter 2009, King of
Kings III has been under limited closed beta testing with persistent
accounts and monetization features. During this phase, the Company unlocked
higher character ranks and enhanced other content, in order to improve
playability and user churn rates. King of Kings III is
currently scheduled to begin open beta testing near the beginning of the second
quarter 2010.
ZT Online
II—ZT Online II
will feature greatly improved 2D technology and graphics with more vibrant
colors and artwork. The game will also incorporate a revised in-game
economy, enriched task systems and new types of gameplay. In January
2010, the Company conducted limited internal testing and plans to proceed to
engineering testing at the end of the second quarter of 2010.
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Dragon
Soul—Dragon Soul
is a 3D ancient Chinese PK massively multiplayer online role playing game
(“MMORPG”) developed by the Company’s internal R&D team based in Chengdu,
Sichuan. Efforts in the fourth quarter 2009 were focused on
developing in-depth PVP gameplay for the state battle system, improving the
server capacity and other game details. In the first quarter, 2010,
Dragon Soul began
limited closed beta testing with persistent user accounts and monetization
features. Closed beta testing is expected to begin during the third
quarter 2010.
The Golden
Land—The Golden
Land officially underwent limited closed beta testing with persistent
accounts and monetization features in the fourth quarter 2009, with focus mainly
on testing and enhancement of monetization features and gameplay associated with
mid- and long-term in-game pursuits. Currently, additional features
are under development and a revised version is expected in the first quarter
2010.
Win@Giant
Program—
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XT Online—Since the
start of limited closed beta testing with persistent user accounts and
monetization features in the fourth quarter 2009, the Company has been
continuously improving the interactive gameplay features and fine-tuning
the economy system. XT Online recently
entered into the ultimate limited closed beta testing phase and is
expected to unlock the new content for level 100 characters and undergo
further beta testing to accommodate a larger scale of
gamers.
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My Sweetie—The Company
continued to update the game, including festive content and activities
during the holiday season. The Company is also developing
another version of My
Sweetie that will feature combat and an upgraded client-end engine
that supports full-screen play. Instance dungeons are currently
being added.
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Allods
Online—Allods
Online is a free-to-play MMORPG developed by Astrum Nival, LLC (“Astrum
Nival”), a studio owned by Mail.Ru Inc. (“Mail.Ru”). The Company
recently signed an exclusive agreement with Mail.Ru to operate Allods Online in mainland
China. Allods
Online is currently operated in the Russian speaking markets, and is
under closed beta testing in Europe and USA. Over the coming months,
Giant will localize and tailor the game to Chinese gamers’ preferences in
advance of expected commercial launch in late 2010.
First Quarter
2010 Guidance—Throughout the fourth
quarter 2009, the Company was encouraged by signs of increasing stability and
positive growth momentum in the performance of ZT Online as the effects from
the cancellation of “Treasure Box” diminished. Supported by a
strengthening ZT Online
and expected contributions from new games such as ZT Online Green Edition, the
Company anticipates a return to sustainable top-line growth in the first quarter
2010. However, Giant does not expect profit to move in-line with
revenues in the near term due to an expected reduction in contribution from
certain non-operating factors such as financial incentive.
Conference
Call
Giant’s
senior management will host a conference call on March 4, 2010 at 8:00 pm (US
Eastern Standard Time) / 5:00 pm (US Pacific Standard Time) / 9:00 am (Beijing
Time on March 5) to discuss its fourth quarter and fiscal year 2009 financial
results and recent business activity. The conference call may be
accessed by calling +1 866 272 9941 (for callers in the US), +86 (10) 800 852
1490 (for callers in Southern China), +86 (10) 152 1490 (for callers in Northern
China) or
+1 617
213 8895 (for callers outside of the US and China) and entering pass code
51568491.
A
recording of the conference call will be available starting 11: 00 pm (US
Eastern Standard Time) on March 4, 2010, by calling +1 (888) 286 - 8010 (for
callers in the US) or +1 (617) 801 - 6888 (for callers outside the US) and
entering pass code 43196348.
A live
webcast of the conference call and replay will be available on the investor
relations page of Giant Interactive Group’s website at http://www.ga-me.com/earningsannouncements.php.
Currency
Convenience Translation
This
release contains translations of certain Renminbi (RMB) amounts into US dollars
(US$) at the rate of US$1.00 to RMB6.8259, which was the noon buying rate as of
December 31, 2009 in the City of New York for cable transfers in Renminbi per US
dollar as certified for customs purposes by the Federal Reserve Bank of New
York. The Company makes no representation that the Renminbi or US
dollar amounts referred to in this release could have been, or could be,
converted into US dollars at such rate or at all.
Use
of Non-GAAP Financial Measures
Giant has
reported net income attributable to the Company’s shareholders for the period
indicated below on a non-GAAP basis excluding non-cash share-based
compensation. Giant believes that both management and investors
benefit from referring to these non-GAAP financial measures in assessing the
performance of Giant and when planning and forecasting future
periods. Giant computes its non-GAAP financial measures using the
same consistent method from quarter to quarter.
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Readers
are cautioned not to view non-GAAP results on a stand-alone basis or as a
substitute for results under GAAP, or as being comparable to results reported or
forecasted by other companies, and should refer to the reconciliation of GAAP
results with non-GAAP results in the attached financial
information.
The table
below sets forth the reconciliation of GAAP measures to non-GAAP measures for
the indicated periods:
Giant
Interactive Group, Inc.
Reconciliation
of GAAP to Non-GAAP (Unaudited)
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Three
months ended
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December
31,
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September
30,
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December
31,
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December
31,
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|||||||||||||
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2008
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2009
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2009
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2009
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|||||||||||||
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(RMB)
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(RMB)
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(RMB)
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(US$)
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|||||||||||||
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GAAP
net income attributable to the
Company’s
shareholders:
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290,260,391 | 197,735,865 | 197,785,813 | 28,975,785 | ||||||||||||
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Share-based
compensation
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8,009,045 | 7,640,287 | 6,710,277 | 983,061 | ||||||||||||
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Non-GAAP
net income attributable to the
Company’s
shareholders:
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298,269,436 | 205,376,152 | 204,496,090 | 29,958,846 | ||||||||||||
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Non-GAAP
earnings per share:
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||||||||||||||||
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Basic
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1.29 | 0.91 | 0.90 | 0.13 | ||||||||||||
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Diluted
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1.26 | 0.88 | 0.87 | 0.13 | ||||||||||||
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Weighted
average ordinary shares:
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||||||||||||||||
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Basic
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230,589,753 | 226,453,309 | 226,732,894 | 226,732,894 | ||||||||||||
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Diluted
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236,878,192 | 234,274,321 | 233,930,367 | 233,930,367 | ||||||||||||
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For
the year ended
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||||||||||||
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December
31,
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December
31,
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December
31,
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||||||||||
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2008
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2009
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2009
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(RMB)
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(RMB)
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(US$)
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||||||||||
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GAAP
net income attributable to the Company’s shareholders:
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1,113,588,154 | 859,313,746 | 125,890,175 | |||||||||
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Share-based
compensation
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46,131,574 | 30,575,391 | 4,479,320 | |||||||||
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Non-GAAP
net income attributable to the
Company’s
shareholders:
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1,159,719,728 | 889,889,136 | 130,369,495 | |||||||||
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Non-GAAP
earnings per share:
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||||||||||||
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Basic
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4.84 | 3.93 | 0.58 | |||||||||
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Diluted
|
4.68 | 3.80 | 0.56 | |||||||||
|
Weighted
average ordinary shares:
|
||||||||||||
|
Basic
|
239,458,633 | 226,278,227 | 226,278,227 | |||||||||
|
Diluted
|
247,895,076 | 233,960,556 | 233,960,556 | |||||||||
11
|
FOR
IMMEDIATE RELEASE
|
|
Statement
Regarding Unaudited Financial Information
The
unaudited financial information set forth above is preliminary and subject to
adjustments. Adjustments to the financial statements may be
identified when audit work is performed for the year-end audit, which could
result in significant differences from this preliminary unaudited financial
information.
About
Giant Interactive Group Inc.
Giant
Interactive Group Inc. (NYSE: GA) is a leading online game developer
and operator in China in terms of market share according to iResearch Consulting
Group, an independent Chinese research center, and focuses on massively
multiplayer online role playing games. Currently, Giant operates
multiple games, including ZT
Online, ZT Online Green
Edition, Giant Online, King of Kings III, The Golden Land, XT Online, and My Sweetie. Giant
has several additional online games that it intends to launch, including ZT Online II, Dragon Soul,
and Allods
Online. Giant has built a nationwide distribution network
to sell the prepaid game cards and game points required to play its games, which
as of December 31, 2009 consisted of over 290 distributors, and reached over
116,500 retail outlets, including internet cafes, software stores, supermarkets,
bookstores, newspaper stands, and convenience stores located throughout
China. For more information, please visit Giant Interactive Group on
the web at www.ga-me.com.
Safe
Harbor Statement
Statements
in this release contain “forward-looking” statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and as defined in the Private
Securities Litigation Reform Act of 1995. These forward-looking statements can
be identified by terminology such as “will,” “expects,” “anticipates,” “future,”
“intends,” “plans,” “believes,” “estimates” and similar statements and among
others, include our business outlook for the first quarter of 2010, the ability
of ZT Online to attract
players and extend its life cycle with the enhancement introduced in the fourth
quarter 2009, our expectations on the performances of our newly launched games,
our ability to successfully commercially launch our new games, our continued
efforts to successfully operate and adjust features of our existing games,
including introduction of expansion packs, and our ability to continue to
grow our business and build long-term shareholder value. These
forward-looking statements are not historical facts but instead represent only
our belief regarding future events, many of which, by their nature, are
inherently uncertain and outside of our control. Our actual results
and financial condition and other circumstances may differ, possibly materially,
from the anticipated results and financial condition indicated in these
forward-looking statements. Among the factors that could cause our
actual results to differ from what we currently anticipate may include failure
by ZT Online gamers to
resume in-game spending or continue in-game spending at historical levels, our
ability to develop, purchase or license additional online games that are
attractive to our players, our ability to develop and successfully launch
expansion packs for our online games, our ability to adjust and enhance our
online games to users’ preferences to generate revenues, our dependence on one
online game, which currently accounts for the majority of our historical net
revenues, our ability to respond to competition, our ability to adjust to the
current global economic crisis, our need to implement and maintain effective
internal control over financial reporting, our limited operating history
and unproven long-term potential of our online game business model, our
uncertainties with respect to the PRC legal and regulatory environments and
volatility in the markets we operate in. The financial information
contained in this release should be read in conjunction with the consolidated
financial statements and notes thereto included in our annual report on Form 20F
for the fiscal year 2008, as filed with the Securities and Exchange Commission
on June 19, 2009, and is available on the Securities and Exchange Commission’s
website at www.sec.gov. For
additional information on these and other important factors that could adversely
affect our business, financial condition, results of operations and prospects,
see “Risk Factors” beginning on page 8 of our annual report for fiscal year
2008. Our actual results of operations for the fourth quarter and
fiscal year 2009 are not necessarily indicative of our operating results for any
future periods. Any projections in this release are based on limited
information currently available to us, which is subject to
change. Although such projections and the factors influencing them
will likely change, we undertake no obligation to update or revise these
forward-looking statements, whether as a result of new information, future
events or otherwise, after the date of this press release. Such information
speaks only as of the date of this release.
12
|
FOR
IMMEDIATE RELEASE
|
|
|
Contacts:
|
|
|
Investor
Contact:
Rich
Chiang, IR Manager
Giant
Interactive Group Inc.
+86
21 6451 1258
|
Investor
Relations (US):
Mahmoud
Siddig, Director
Taylor
Rafferty
+1
(212)889-4350
|
|
Investor
Relations (HK):
Ruby
Yim, Managing Director
Taylor
Rafferty
+852
3196 3712
|
Media
Contact:
Michael
Henson, Director
Taylor
Rafferty
+1
(212)889-4350
|
13
|
FOR
IMMEDIATE RELEASE
|
|
GIANT
INTERACTIVE GROUP, INC.
CONSOLIDATED
BALANCE SHEETS
|
Audited
|
Unaudited
|
Unaudited
|
Unaudited
|
|||||||||||||
|
December
31,
|
September
30,
|
December
31,
|
December
31,
|
|||||||||||||
|
2008
|
2009
|
2009
|
2009
|
|||||||||||||
|
ASSETS
|
(RMB)
|
(RMB)
|
(RMB)
|
(US$)
|
||||||||||||
|
Current
assets:
|
||||||||||||||||
|
Cash
and cash equivalents
|
1,696,272,856 | 854,016,847 | 1,097,155,269 | 160,734,155 | ||||||||||||
|
Prepayments
and other current assets
|
48,916,555 | 83,920,471 | 125,522,286 | 18,389,119 | ||||||||||||
|
Accounts
receivable
|
- | 1,143,934 | 1,623,703 | 237,874 | ||||||||||||
|
Due
from a related party
|
- | - | 3,592 | 526 | ||||||||||||
|
Inventories
|
1,452,802 | 736,170 | 724,055 | 106,075 | ||||||||||||
|
Deferred
tax assets
|
117,590,965 | 69,577,691 | 75,893,065 | 11,118,397 | ||||||||||||
|
Short-term
investments
|
3,371,827,722 | 3,825,410,000 | 3,802,050,000 | 557,003,472 | ||||||||||||
|
Total
current assets
|
5,236,060,900 | 4,834,805,113 | 5,102,971,970 | 747,589,618 | ||||||||||||
|
Non-current
assets:
|
||||||||||||||||
|
Property
and equipment, net
|
213,905,124 | 187,574,442 | 178,669,982 | 26,175,300 | ||||||||||||
|
Intangible
assets, net
|
96,126,394 | 114,888,675 | 118,328,290 | 17,335,192 | ||||||||||||
|
Goodwill
|
- | 6,224,587 | 6,224,587 | 911,907 | ||||||||||||
|
Available-for-sale
securities
|
450,006,853 | 475,021,469 | 450,966,634 | 66,066,985 | ||||||||||||
|
Held-to-maturity
securities
|
- | 500,000,000 | 500,000,000 | 73,250,414 | ||||||||||||
|
Deferred
tax assets
|
6,324,526 | 9,257,497 | 10,840,757 | 1,588,180 | ||||||||||||
|
Other
assets
|
- | 85,239,597 | 84,659,968 | 12,402,755 | ||||||||||||
|
Total
non-current assets
|
766,362,897 | 1,378,206,267 | 1,349,690,218 | 197,730,733 | ||||||||||||
|
Total
assets
|
6,002,423,797 | 6,213,011,380 | 6,452,662,188 | 945,320,351 | ||||||||||||
|
LIABILITIES
AND SHAREHOLDERS’EQUITY
|
||||||||||||||||
|
Current
liabilities:
|
||||||||||||||||
|
Payables
and accrued expenses
|
92,304,337 | 93,434,907 | 121,037,990 | 17,732,166 | ||||||||||||
|
Advances
from distributors
|
86,619,404 | 77,997,941 | 89,564,714 | 13,121,305 | ||||||||||||
|
Deferred
revenue
|
403,130,277 | 314,761,757 | 321,291,085 | 47,069,410 | ||||||||||||
|
Unrecognized
tax benefit
|
4,812,724 | 8,821,098 | 9,955,138 | 1,458,436 | ||||||||||||
|
Tax
payable
|
16,741,580 | 1,011,813 | 5,384,702 | 788,863 | ||||||||||||
|
Deferred
tax liability
|
25,686,020 | 119,016 | 214,339 | 31,401 | ||||||||||||
|
Total
current liabilities
|
629,294,342 | 496,146,532 | 547,447,968 | 80,201,581 | ||||||||||||
|
Non-current
liabilities:
|
||||||||||||||||
|
Deferred
tax liability
|
- | - | 420,947 | 61,669 | ||||||||||||
|
Total
non-current liabilities
|
- | - | 420,947 | 61,669 | ||||||||||||
|
Total
liabilities
|
629,294,342 | 496,146,532 | 547,868,915 | 80,263,250 | ||||||||||||
|
Shareholders’
equity
|
||||||||||||||||
|
Ordinary
shares
(par
value US$0.0000002 per share;
500,000,000
shares authorized as at December 31, 2008, September 30, 2009 and December
31,2009 respectively; 263,110,626 shares issued and 227,018,426
shares outstanding at December 31,2008, 263,110,626 shares issued and
226,441,541 shares outstanding at September
30,2009, 263,110,626 shares issued and 226,819,007 shares
outstanding at December 31, 2009)
|
417 | 417 | 417 | 61 | ||||||||||||
|
Additional
paid-in capital
|
5,985,416,631 | 6,024,441,066 | 6,036,189,677 | 884,306,784 | ||||||||||||
|
Statutory
reserves
|
43,890,273 | 43,890,273 | 43,890,273 | 6,429,961 | ||||||||||||
|
Accumulated
other comprehensive loss
|
(167,236,828 | ) | (188,444,945 | ) | (212,770,129 | ) | (31,171,000 | ) | ||||||||
|
Retained
earnings (accumulated losses)
|
1,625,004,920 | 2,008,880,649 | 2,206,666,461 | 323,278,463 | ||||||||||||
|
Treasury
stock
|
(2,113,945,958 | ) | (2,176,792,033 | ) | (2,176,792,033 | ) | (318,901,835 | ) | ||||||||
|
Total
shareholders’ equity
|
5,373,129,455 | 5,711,975,427 | 5,897,184,666 | 863,942,434 | ||||||||||||
|
Non
controlling interest
|
- | 4,889,421 | 7,608,607 | 1,114,667 | ||||||||||||
|
Total equity
|
5,373,129,455 | 5,716,864,848 | 5,904,793,273 | 865,057,101 | ||||||||||||
|
Total
liability and shareholders’ equity
|
6,002,423,797 | 6,213,011,380 | 6,452,662,188 | 945,320,351 | ||||||||||||
14
|
FOR
IMMEDIATE RELEASE
|
|
GIANT
INTERACTIVE GROUP, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
|
For
the year ended
|
||||||||||||
|
December
31
|
December
31
|
December
31
|
||||||||||
|
2008
|
2009
|
2009
|
||||||||||
|
(RMB)
|
(RMB)
|
(US$)
|
||||||||||
|
Audited
|
Unaudited
|
Unaudited
|
||||||||||
|
Net
revenue:
|
||||||||||||
|
Online
game
|
1,589,675,915 | 1,293,018,121 | 189,428,225 | |||||||||
|
Overseas
licensing revenue
|
4,391,427 | 10,687,252 | 1,565,691 | |||||||||
|
Other
revenue, net
|
612,444 | 130,074 | 19,056 | |||||||||
|
Total
net revenue
|
1,594,679,786 | 1,303,835,447 | 191,012,972 | |||||||||
|
Cost
of services
|
(217,899,466 | ) | (204,069,659 | ) | (29,896,374 | ) | ||||||
|
Gross
profit
|
1,376,780,320 | 1,099,765,788 | 161,116,598 | |||||||||
|
Operating (expenses)
income:
|
||||||||||||
|
Research
and product development expenses
|
(88,539,393 | ) | (113,354,460 | ) | (16,606,522 | ) | ||||||
|
Sales
and marketing expenses
|
(241,575,189 | ) | (119,600,377 | ) | (17,521,554 | ) | ||||||
|
General
and administrative expenses
|
(141,785,677 | ) | (121,446,102 | ) | (17,791,954 | ) | ||||||
|
Government
financial incentives
|
63,084,300 | 88,460,000 | 12,959,463 | |||||||||
|
Total
operating expenses
|
(408,815,959 | ) | (265,940,939 | ) | (38,960,567 | ) | ||||||
|
Income
from operations
|
967,964,361 | 833,824,849 | 122,156,031 | |||||||||
|
Interest
income
|
184,963,678 | 102,200,467 | 14,972,453 | |||||||||
|
Other (expense)
income, net
|
(842,825 | ) | 14,024,846 | 2,054,652 | ||||||||
|
Investment
income (loss)
|
1,171,241 | (5,970,899 | ) | (874,742 | ) | |||||||
|
Unrealized
loss on investment held-for-trading
|
(300,493 | ) | - | - | ||||||||
|
Income
before income tax expenses
|
1,152,955,962 | 944,079,263 | 138,308,394 | |||||||||
|
Income
tax expense
|
(39,367,808 | ) | (85,060,010 | ) | (12,461,362 | ) | ||||||
|
Net
income
|
1,113,588,154 | 859,019,253 | 125,847,032 | |||||||||
|
Net
loss attributable to non controlling interest
|
- | 294,493 | 43,143 | |||||||||
|
Net
income attributable to the Company’s shareholders
|
1,113,588,154 | 859,313,746 | 125,890,175 | |||||||||
|
Other
comprehensive loss, net of tax
|
||||||||||||
|
Foreign
currency translation
|
(192,424,438 | ) | (12,768,786 | ) | (1,870,638 | ) | ||||||
|
Reclassification
adjustment
|
- | (1,813,513 | ) | (265,681 | ) | |||||||
|
Unrealized
holding gain (loss)
|
76,969,037 | (30,951,003 | ) | (4,534,348 | ) | |||||||
|
Total
other comprehensive loss, net of tax
|
(115,455,401 | ) | (45,533,302 | ) | (6,670,667 | ) | ||||||
|
Comprehensive
income
|
998,132,753 | 813,780,444 | 119,219,508 | |||||||||
|
Earnings
per share:
|
||||||||||||
|
Basic
|
4.65 | 3.80 | 0.56 | |||||||||
|
Diluted
|
4.49 | 3.67 | 0.54 | |||||||||
|
Weighted
average ordinary shares:
|
||||||||||||
|
Basic
|
239,458,633 | 226,278,227 | 226,278,227 | |||||||||
|
Diluted
|
247,895,076 | 233,960,556 | 233,960,556 | |||||||||
15
|
FOR
IMMEDIATE RELEASE
|
|
GIANT
INTERACTIVE GROUP, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
|
Three
months ended
|
||||||||||||||||
|
December
31
|
September
30
|
December
31
|
December
31
|
|||||||||||||
|
2008
|
2009
|
2009
|
2009
|
|||||||||||||
|
(RMB)
|
(RMB)
|
(RMB)
|
(US$)
|
|||||||||||||
|
Unaudited
|
Unaudited
|
Unaudited
|
Unaudited
|
|||||||||||||
|
Net
revenue:
|
||||||||||||||||
|
Online
game
|
351,851,278 | 287,546,644 | 273,743,227 | 40,103,609 | ||||||||||||
|
Overseas
licensing revenue
|
1,221,708 | 2,640,216 | 2,269,980 | 332,554 | ||||||||||||
|
Other
revenue, net
|
52,654 | 14,031 | 11,225 | 1,644 | ||||||||||||
|
Total
net revenue
|
353,125,640 | 290,200,891 | 276,024,432 | 40,437,807 | ||||||||||||
|
Cost
of services
|
(56,662,035 | ) | (45,436,528 | ) | (44,440,785 | ) | (6,510,612 | ) | ||||||||
|
Gross
profit
|
296,463,605 | 244,764,363 | 231,583,647 | 33,927,195 | ||||||||||||
|
Operating (expenses)
income:
|
||||||||||||||||
|
Research
and product development expenses
|
(25,185,542 | ) | (24,538,213 | ) | (27,538,052 | ) | (4,034,347 | ) | ||||||||
|
Sales
and marketing expenses
|
(45,405,004 | ) | (30,394,878 | ) | (34,802,464 | ) | (5,098,590 | ) | ||||||||
|
General
and administrative expenses
|
(41,824,995 | ) | (26,915,756 | ) | (33,174,412 | ) | (4,860,079 | ) | ||||||||
|
Government
financial incentives
|
29,516,000 | 28,730,000 | 39,730,000 | 5,820,478 | ||||||||||||
|
Total
operating expenses
|
(82,899,541 | ) | (53,118,847 | ) | (55,784,928 | ) | (8,172,538 | ) | ||||||||
|
Income
from operations
|
213,564,064 | 191,645,516 | 175,798,719 | 25,754,657 | ||||||||||||
|
Interest
income
|
41,258,109 | 23,102,435 | 30,069,886 | 4,405,263 | ||||||||||||
|
Other income
(expense), net
|
791,245 | 748,786 | 7,200,020 | 1,054,809 | ||||||||||||
|
Unrealized
loss on investment held-for-trading
|
(300,493 | ) | - | - | - | |||||||||||
|
Income
before income tax expenses
|
255,312,926 | 215,496,738 | 213,068,625 | 31,214,730 | ||||||||||||
|
Income
tax benefit/(expense)
|
34,947,465 | (18,051,287 | ) | (15,258,628 | ) | (2,235,402 | ) | |||||||||
|
Net
Income
|
290,260,391 | 197,445,451 | 197,809,997 | 28,979,328 | ||||||||||||
|
Net
loss(income) attributable to non controlling interest
|
- | 290,415 | (24,185 | ) | (3,543 | ) | ||||||||||
|
Net
income attributable to the Company’s shareholders
|
290,260,391 | 197,735,865 | 197,785,812 | 28,975,785 | ||||||||||||
|
Other
comprehensive loss, net of tax
|
||||||||||||||||
|
Foreign
currency translation
|
62,158,879 | (3,107,122 | ) | (328,105 | ) | (48,068 | ) | |||||||||
|
Reclassification
adjustment
|
- | (1,813,513 | ) | - | - | |||||||||||
|
Unrealized
holding gain (loss)
|
5,124,455 | (1,116,473 | ) | (23,997,079 | ) | (3,515,592 | ) | |||||||||
|
Total
other comprehensive loss, net of tax
|
67,283,334 | (6,037,108 | ) | (24,325,184 | ) | (3,563,660 | ) | |||||||||
|
Comprehensive
income
|
357,543,725 | 191,698,757 | 173,460,628 | 25,412,125 | ||||||||||||
|
Earnings
per share:
|
||||||||||||||||
|
Basic
|
1.26 | 0.87 | 0.87 | 0.13 | ||||||||||||
|
Diluted
|
1.23 | 0.84 | 0.85 | 0.12 | ||||||||||||
|
Weighted
average ordinary shares:
|
||||||||||||||||
|
Basic
|
230,589,753 | 226,453,309 | 226,732,894 | 226,732,894 | ||||||||||||
|
Diluted
|
236,878,192 | 234,274,321 | 233,930,367 | 233,930,367 | ||||||||||||
16
Exhibit
99.2
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35