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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 February 2008
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 ¨
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): ¨
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): ¨
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 ¨ 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
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Form 6-K
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| Page | ||
| Signature | 3 | |
| Exhibit 99.1 — 2007 Fourth Quarter and Fiscal Year Results Presentation dated February 21, 2008 | 4 | |
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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.
| Giant Interactive Group Inc. | ||
| By: | /s/ Eric He | |
| Name: | Eric He | |
| Title: | Chief Financial Officer | |
Date: FEBRUARY 26, 2008
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 HK000NN7 2007 Fourth Quarter and Fiscal Year Results Presentation February 21, 2008 |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved 2 Safe Harbor Statement and Currency Convenience Translation Safe Harbor Statement Statements in this slide presentation 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 continued efforts to successfully develop and launch our new games and expand our distribution and marketing network. 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. The financial information contained in this slide presentation
should be read in conjunction with the consolidated financial statements and notes
thereto included in our prospectus filed with the Securities and Exchange Commission on
November 1, 2007, 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 12 of our prospectus. Our actual results of
operations for the fourth quarter of 2007 are not necessarily indicative of our operating results for any future periods. Any projections in this slide presentation 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 slide presentation. Such
information speaks only as of the date of this slide presentation. Currency Convenience
Translation This slide presentation contains translations of certain Renminbi (RMB) amounts into US dollars (US$) at the rate of US$1.00 to RMB7.2946, which was the noon buying rate as of December 31, 2007 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. We make no representation that the Renminbi or US dollar amounts referred to in this slide presentation could have been, or could be, converted
into US dollars at such rate or at all. |
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 Giant Interactive
Group A Leading Online Game Developer & Operator © 2008 Giant Interactive Group, Inc. All Rights Reserved |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved 4 Giant: NYSE Listed Giant: NYSE Listed • NYSE IPO on November 1, 2007 • Ticker: GA • Market Cap: US$2.7B • Post IPO Shares/ADRs Outstanding: 241.27M • About Giant: • Headquarters: Shanghai, China • Employees: Approximately 3500, including 2,500 liaison personnel • Investor Information at: www.giantig.com |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved 5 A Leading Developer and Operator of MMORPGs in China A Leading Developer and Operator of MMORPGs in China A leading online game developer and operator in China – 151.8% net revenues increase over the fourth quarter 2006; 76.8% net income margin (1) Uncompromising focus on game play Strong product development and technology capabilities Leverage deep understanding of the Chinese mass market and extensive marketing and distribution network Strong combination of experienced game development talent and consumer market expertise (1) For the quarter ended December 31, 2007 Experienced management team |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved Operational Metrics & Business Updates Operational Metrics & Business Updates © 2008 Giant Interactive Group, Inc. All Rights Reserved |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved 7 Rollout of New ZT Online Expansion Pack “Neighboring Friends” Commenced Closed Beta Testing of Giant Online King of Kings III Undergoing Engineering Testing 1 1 3 3 4 4 Entered Open Beta Testing of ZT PTP 2 2 Recent Business Highlights Recent Business Highlights Acquired Exclusive Licensing Rights to Empire of Sports 5 5 6 6 Announced and Completed Share Repurchase Program |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved 8 Average Revenue per User (ARPU) Active Paying Accounts (APA) Peak Concurrent Users (PCU) Average Concurrent Users (ACU) 395 481 512 51 515 450 271 163 0 100 200 300 400 500 600 700 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 320 558 755 874 1,073 888 983 120 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 Q407 figures include ZT Online, ZT Online PTP and Giant Online Key Quarterly Operating Metrics Key Quarterly Operating Metrics 305 309 295 320 220 220 117 84 0 50 100 150 200 250 300 350 400 450 500 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q2007 787 986 1,248 1,318 1,405 143 602 698 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q2007 |
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                                                 © 2008 Giant Interactive Group, Inc. All Rights Reserved 9 Expanded Marketing Penetration in Q4 Over 500 liaison offices Over 2500 dedicated liaison personnel Over 200 distributors 116,500 retail outlets Penetration of all large cities and almost all provinces in China Focus on penetrating medium / small cities with continued internet and on-site promotional events Expanded advertising initiatives Marketing and Distribution Network Maximize Player Awareness and Game Recognition to Improve Penetration |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved Key Financial Highlights Key Financial Highlights © 2008 Giant Interactive Group, Inc. All Rights Reserved |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved 11 22.7 59.6 54.1 9.2 20.1 41.7 48.6 1.6 0 10 20 30 40 50 60 70 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q2007 Profitable Growth and High Margins Profitable Growth and High Margins Net Revenue Net Income 45.8 11.3 38.7 -0.1 34.7 32.6 15.1 5.8 -10 0 10 20 30 40 50 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q2007 Gross Profit Margin Net Income Margin 92.4% 92.8% 85.3% 91.2% 89.6% 88.8% 85.7% 71.3% 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q2007 62.6% 74.9% 49.9% 78.2% 71.4% 71.6% 76.8% -4.3% 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q2007 |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved 12 2007 Key Financial Highlights 2007 Key Financial Highlights US$ US$ RMB RMB 330.3% 0.72 5.25 - 3.6% 0.18 1.33 Diluted EPS 343.3% 148.0 1,079.8 - 3.7% 38.2 278.9 Income from Operations 272.4% 208.6 1,521.4 7.3% 59.4 433.6 Online Game N.A. 0.8 6.1 4.5% 0.2 1.3 Overseas Licensing 1,136.3 273.7 1,353.5 174.1 1,527.5 For The Year Ended December 31, 2007 333.8 93.9 372.8 62.0 434.8 For The Three Month Period Ended December 31, 2007 45.8 12.9 51.1 8.5 59.6 155.8 37.5 185.5 23.9 209.4 364.5% 15.0% Net Income 128.6% 33.9% Operating Expenses 272.5% 3.6% Gross Profit 285.2% 36.5% Cost of Services 273.9% 7.3% Total Net Revenue Change From Previous Year Change From Previous Quarter (In millions, except EPS data) |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved 13 Solid Balance Sheet Solid Balance Sheet 1,040.2 864.4 175.8 175.8 1,040.2 1,010.8 1,000.1 December 31, 2007 US$ 7,587.7 6,305.5 1,282.2 1,282.2 7,587.7 7,373.5 7,295.5 December 31, 2007 RMB 249.9 Shareholders’ Equity 504.8 Total Liability and Shareholders’ Equity 254.9 Total Liabilities 238.9 Current Liabilities 504.8 Total Assets 466.7 Current Assets 451.4 Cash December 31, 2006 RMB (In millions) |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved Business Outlook © 2008 Giant Interactive Group, Inc. All Rights Reserved |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved 15 Expand and Enhance Our Product Offerings Expand Our Player Base in China and Internationally Strengthen Our Technology and Operational Platforms Continue to Attract and Retain Quality Development Talent Pursue Opportunities for Acquisitions, Strategic Joint Ventures and Opportunistic Investments 1 1 3 3 5 5 6 6 4 4 Growth Strategies To Become the Largest Online Game Developer and Operator in Asia Enhance Interactive Community Features to Attract New Players and Increase Player Loyalty 2 2 |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved Appendices © 2008 Giant Interactive Group, Inc. All Rights Reserved |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved 17 History and Key Milestones Commenced operation through Shanghai Zhengtu Network Commercially launched the first MMO game, ZT Online Established Offshore Company, Giant Interactive Group Inc. Commenced engineering testing for the second MMO game, Giant Online Peak Concurrent User of ZT Online reached one million Acquired the intellectual property rights of King of Kings III Commercially launch Giant Online Secured Exclusive License to Operate Empire of Sports 2004 2004 January January 2006 2006 September September 2006 2006 May May 2007 2007 May May 2007 2007 3Q 3Q 2007 2007 4Q 4Q 2007 2007 1Q 1Q 2008 2008 NYSE IPO on November 1, 2007 2008 2008 Commercially launch King of Kings III Commenced official closed beta testing for Giant Online on Dec. 29, 2007 |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved 18 Further enhanced interactivity based on physical locations of players Encourages users to form local bonds, and face foreign friends or foes together Social networking features with new in- game virtual products and services Full 3D MMORPG with multiple sports Train your character in football, basketball, tennis, skiing, and track & field Compete with other players in tournaments or play together as a team and start a club Free-to-play 3D MMORPG with medieval magical theme Third edition in the popular King of Kings series Developed by Lager Networks in Taiwan Free-to-play 2.5D MMORPG with modern- era military theme Target to position as the most affordable free-to-play game in China Advanced server technology intended to enable up to 1 million concurrent players in a single shard ZT Online ZT Online Neighboring Friends Neighboring Friends (Expansion Pack) (Expansion Pack) Giant Online Giant Online Empire of Sports Empire of Sports King of Kings III King of Kings III 2008 2008 2008 2008 Focused Product Pipeline |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved 19 Giant Online Giant Online is one of the first modern-era military-themed MMO games developed in
China. Giant Online is a free-to-play game, which enables players, and groups of players, to
purchase a wide range of virtual products and services. Giant Online is a “2.5 dimensional” game, meaning that all the characters, items and the background in the game are depicted three dimensionally, while the camera angle is fixed. Giant Online players may assume one of 14 different roles, such as detectives and spies. Players can equip their characters with a range of modern weaponry. Apart from waging war, characters can also engage in various forms of in-game social interaction,
such as friendship and even romance. Giant Online is divided into numerous regions. Each player must guide his or her character to develop skills and cooperate with other players to fight against players from other regions. Giant Online will feature multiple shards, and will also enable players to travel between different shards. It will enable up to 1,000,000 players to concurrently play in the same shard. We commenced our official closed beta testing for Giant Online in December 2007, and expect to commercially launch Giant Online in the first quarter of 2008. |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved 20 Empire of Sports Empire of Sports is a 3D MMORPG with multiple sports. Empire of Sports will allow players to customize their characters’ physical talents by undergoing different training regiments. Players will be able to compete against or form teams with other players in a wide variety of sports, such as basketball, football, tennis, skiing, track & field, and bobsleigh. We obtained the license for Empire of Sports from Switzerland-based Empire of Sports Ltd. Empire of Sports Ltd., a joint venture between Infront Sports and Media and F4. Adding to the realism and authenticity Adding to the realism and authenticity of the games, real referees and sports of the games, real referees and sports experts were consulted during the experts were consulted during the design design of of the the game game to to incorporate incorporate real- world sports regulations. sports regulations. We expect We expect to launch Empire of Sports in 2008. |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved 21 King of Kings III King of Kings III King of Kings III is a three-dimensional online role-playing experience set in a
European-style magical world. Players assume the roles of King of Kings III heroes as they explore across a virtual world of forests and medieval cities and castles. King of Kings III is the third installment of the King of Kings series of MMO games, which was launched in Taiwan in 1999, and which we believe was the first MMO game series to be operated in greater China. We acquired the intellectual property rights to King of Kings III from Lager Network in the third quarter of 2007. • Our product development team is presently in the process of working with Lager Network to further develop the game and tailor it to the Chinese market. • We currently expect to commercially launch the game in the second half of 2008. |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved 22 Deepen Penetration into Medium to Smaller Cities Deepen Penetration into Medium to Smaller Cities Unique Unique and and Effective Effective Grassroots Grassroots Strategy Strategy Leads Leads to to Expansion Expansion of of Distribution Distribution Points Points 480.6 502.1 523.8 542.8 562.1 577.1 37.7% 39.1% 40.5% 41.8% 43.0% 43.9% 0 100 200 300 400 500 600 700 2001 2002 2003 2004 2005 2006 30% 40% 50% Urban population % of total population Increasing Urbanization Rate Increasing Urbanization Rate Medium/ Smaller Cities Countryside Area Metropolitan Cities (1) Large Cities (2) Medium / smaller cities and countryside area accounted for 59.2% of national GDP in 2006 2001 – 2006 CAGR of 12.0% Robust Economic Growth in Medium / Small Cities and Countryside Area Source: China Statistics Yearbook 2007 1 Include Beijing, Shanghai and Guangzhou 2 Include Chongqing, Tianjin, Shenzhen, Qingdao, Xiamen, Ningbo, Dalian and capital cities
of all provinces and autonomous regions |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved 23 Regulations Online game operators in China are required to hold a variety of permits and licenses: ICP license Internet Culture Operating license Internet Publishing license Online Bulletin Board Service approval Regulation of Internet content Specifically prohibit obscenity, gambling, violence, crimes, undermining public moral or the
cultural traditions of China, etc. Regulation of information security Subject to criminal punishment in China if engaged in: Improper entry into a computer or system of strategic importance Disseminate politically disruptive information Leak state secrets Spread false commercial information Infringe intellectual property rights |
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 © 2008 Giant Interactive Group, Inc. All Rights Reserved 24 Regulations (continued) Import regulation Required registration with MOFCOM when importing/exporting online game software into/out of
China Ministry of Culture requires content review and approval of any imported online game State Copyright Bureau requires registration of copyright agreements for imported software
Ministry of Information Industry requires registration of imported online games into
China Internet Cafe regulation Require Internet Culture Operation license from MOC Require registration with SAIC Fatigue System adopted by all Chinese game operators to curb addictive behavior by minors 3 hours or less of continuous play by minors is considered “healthy” 3 to 5 hours of continuous play by minors is considered “fatiguing” 5 hours or more of continuous play by minors is considered “unhealthy”
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