Sky Pigeon Interactive publishes 2017 interim results report and responds to allegations of short selling

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Sky Pigeon Interactive strongly denies the allegations in the EmersonAnalytics report, believing that the relevant contents are untrue and highly misleading, and its board of directors stated in the clarification announcement that: 1) Tianyi Interactive has accumulated many years of experience in operating various many-to-many video communities to establish the current distributor business model, which is real and recognized by the market. Fu Zhengjun, CEO of Sky Pigeon Interactive, said that Sky Pigeon Interactive, with Mobile + PC Live as its core business, will cooperate with social mobile game business and.

nearly a week after the temporary suspension of short selling, Sky Pigeon Interactive released the 2017 interim results report and a clarification report: the business achieved steady growth in the first half of 2017, and the gross profit margin remained high. At the same time, in the clarification announcement, the Emerson Analytics refuted the previous charges against them for six reasons.

nearly a week after being temporarily suspended for short selling, Sky Pigeon Interactive released its 2017 interim results report and a clarification report on August 27th: business achieved steady growth in the first half of 2017, and gross profit margin remained high. Sky Pigeon Interactive also refuted the previous charges against them by EmersonAnalytics for six reasons in the clarification announcement.

Sky Pigeon interaction maintained an overall upward trend in the first half of 2017, with growth in all financial and operational data. During the period, the group's revenue of 500 million yuan) increased by 42.6% compared with the same period last year, of which the revenue from online interactive entertainment reached 420 million yuan, an increase of 36.0% over the same period last year. The group's gross profit margin remained at a high level of 85.6%, an increase of 13.4 percentage points over the same period last year. The adjusted net profit was 210 million yuan, an increase of 118.4% over the same period last year; the adjusted EBITDA increased by 102.9% to 260 million yuan over the same period last year.

as of June 30, 2017, Sky Pigeon held cash and equivalents, time deposits and capital preservation structural deposits with an original expiration date of more than three months, totaling 1.55 billion yuan, operating in good condition and zero liabilities, with adjusted diluted earnings per share of 0.156 yuan, an increase of 108 percent over the same period last year.

Sky Pigeon Interactive registered users steadily increased to 352 million. In the three months ended June 30, the group had 26.577 million monthly active users, an increase of 42.8% over the same period last year, and the number of mobile monthly active users significantly increased to 62.3% from 37.7% in the same period last year. Mainly due to the success of mobile live broadcast products such as "Meow broadcast", the number of group anchors increased by 44.2% year-on-year to 116000, and the number of live rooms increased by 24.4% to about 70, 000.

Sky Pigeon interaction, with" Mobile + PC "live broadcast as its core business, will collaborate with social mobile games and related advertising systems, as well as financial technology services such as big data and intelligent risk control systems to bring expected performance contributions to the group's performance in the future. Expand the group's basic income and build a "live broadcast +" ecosystem with the characteristics of Sky Pigeon. In view of the Group's successful penetration into Southeast Asia and even the international market, it will also provide a strong driving force for the future growth of Sky Pigeon interaction.

attachment: the clarification announcement of Sky Pigeon Interactive is as follows:

Sky Pigeon Interactive strongly denies the allegations in the EmersonAnalytics report, believing that the relevant contents are untrue and extremely misleading. In the clarification announcement, its board of directors stated the following matters:

1) Tianyu Interactive accumulated many years of experience in operating many-to-many video communities to establish the current distributor business model, which really exists and is recognized by the market. The Group currently operates a total of 10 platforms, including 5 Mobile Live APP and 5 real-time social video communities on PC, confirming the company's effective model of using the broad channels of distributors to maintain user experience and market share. The Board is of the view that the account of the distributor model mentioned in the report is by no means consistent with the facts.

2) as disclosed in the Group's prospectus of June 25, 2014 (the "prospectus"), China is vast and the public has relatively little understanding of the social live video community. At the same time, the company mainly operates in smaller second-to fourth-tier cities in China, where there is a relative lack of trust in online payment systems in the region, coupled with the group's large number of video communities. For all the above reasons, the company manages and develops the business ecosystem with the help of distributors and sales agents. Since its listing, the Group's distributors and sales agents have continued to play an important role in the Group's business.

3) the business development of the group is recognized by the market. The Group has been operating the first real-time video social platform "9158 Video Community" since November 2008. the real-time video social platform business has been developing continuously for many years. Long before the listing, the Group cooperated with Sina Hong Kong Limited and its affiliated companies in the "Sina Show" platform business. The Group has developed a mobile online live broadcast platform since last year and has achieved sustained growth. at the same time, the Group has invested in and signed a strategic cooperation with Beijing Secret Horizon and Wind Technology Co., Ltd., which is "Huajiao TV" this year. The Board of Directors of the Group is of the view that it is wrong and seriously misleading for the Company to rely on fraudulent information to whitewash its financial results as stated in the report.

4) since the release of the report, the Group's business operations have not been affected in any way. Mr. Fu Zhengjun, the Group's controlling shareholder, Chairman and Chief Executive Officer, will continue to support the company's operational development.

taking into account the interests of the majority of shareholders and potential investors, the Board considers it necessary to provide a necessary and brief response to the absurdity and apparent serious errors of the main allegations in the report. The board of directors believes that Emerson:

1) unfounded use of false information. The distribution model of the group is formed in many years of operation and accumulation, which really exists and is recognized by the market. Currently, Sky Pigeon operates as many as 10 video communities, including 5 mobile APP and 5 PC terminals. The report claims that the revenue of distributors does not support the group's announcement of 2016 results, but three of the six distributors it refers to include the so-called largest distributor, walrus, not the group's distributors.

2) unprofessional use of 6.cn services for comparison. It has been confirmed in writing by iRui that 6.cn in 2013 is mainly web-side, while 9158 and Sina Show are mainly its client software. As the client software needs to be downloaded and installed independently, while the web-end products do not need to be registered and easy to access, it is easier to obtain a surge in the number of browsing users. Therefore, the direct comparison of web-side and client-side software user penetration can not reflect the real needs of users, especially paying users, and the direct comparison of the above two modes is not reasonable.

3) misleading allegations are obtained from inappropriate comparisons. Although the iResearch data are cited, the user penetration mentioned in the two reports is not directly comparable to the concept of market share, involves different operating indicators, and does not have a direct linear relationship. The comparison of the total user expenditure between Sky Pigeon and 6.cn and the comparison of user penetration between the two are directly compared.

4) misunderstand the payment model disclosed in the prospectus. Since the listing of the Group, the payment method is in accordance with the disclosure of the prospectus, that is, (I) the payment of the virtual currency directly purchased by the user is collected by the third-party payment platform and paid to the Tianyi after deducting the commission, and after deducting the commission, the virtual currency of the sales agent (ii) will pay through the third-party payment platform, the platform will pay the balance to the distributor after deducting the commission, and the distributor account will automatically pay to Tianyi. The allegation in the report that users pay directly to the Tianyu account is the group's method (I) disclosed in its prospectus.

5) not familiar with the development trend of pigeon business. The mobile live streaming service started at the beginning of 2016, and at the end of the fourth quarter of 2016, mobile phone monthly active users accounted for 47% of the total monthly active users. The number of simultaneous online users mentioned in the report does not include the number of simultaneous online users of the group's mobile online live streaming application platform. Without fully understanding the development trend of the group's business, the accusation of excessive monthly active users was made.

6) the bandwidth cost is calculated unreasonably on the basis of false assumptions. As disclosed in the prospectus, the group relies on its technical advantages to provide clear audio and video transmission while minimizing the bandwidth occupied by the transmitted content. The wrong assumption is that there is a linear relationship between the peak value of online users and monthly active users, and does not take into account the reduction of network data center costs in recent years and the group's technical advantages in video and audio compression. In addition, according to the public data and the corresponding ratio of broadband costs and monthly active users of comparable companies in the same industry, the results show that the ratio of the group is not unreasonable.

Sky Pigeon Interactive also indicated that Emerson did not contact or visit the board of directors and senior management of the Group to verify any information referred to. All consolidated financial statements for the six financial years ended 31 December 2016 have been audited by PricewaterhouseCoopers, the group auditor, and have not been withdrawn or revised.

in order to safeguard the legitimate rights and interests of Sky Pigeon and its shareholders, the Group is taking all necessary measures and actions against such serious, unfounded, false or misleading allegations, including, but not limited to, legal proceedings by the relevant entities and individuals responsible for the report, while reporting to law enforcement agencies for investigation.

Sky Pigeon Interactive has applied to the Stock Exchange to resume trading with effect from 09:00 on Monday, August 28, 2017.

Edit: xiongwei