Revenue Performance - The Group's revenue increased by 8.4% to HK$494.5 million for the year ended June 30, 2024, compared to HK$456.2 million in 2023[4]. - Box office takings amounted to HK$401.9 million, accounting for 81.3% of cinema operation revenue, up from HK$389.1 million in 2023[6]. - Revenue from the Mainland China market surged by 55.0% to HK$207.7 million, representing 42.0% of cinema operation revenue[6]. - Revenue from the Hong Kong market decreased to HK$264.3 million, accounting for 53.4% of cinema operation revenue, down from 64.8% in 2023[6]. - The Group's revenue for 2023 was HK$494.5 million, representing an increase of 8.4% compared to HK$456.2 million in 2022[8]. - The Group's revenue for 2024 is projected to be HK$977 million, up from HK$685.9 million in 2023, indicating a growth of approximately 42.5%[19]. Profit and Loss - The Group recorded a net loss of HK$715.1 million, significantly higher than the net loss of HK$317.0 million in 2023, primarily due to impairment allowances[6]. - Basic loss per share was HK$0.22, compared to HK$0.10 in the previous year[6]. - The Group's net profit for 2023 was HK$207.7 million, a significant increase of 55.0% from HK$134.0 million in 2022[8]. - The Group's net profit for 2024 is expected to reach HK$889.7 million, compared to HK$595.6 million in 2023, representing an increase of about 49.4%[19]. Impairment and Financial Health - Impairment allowances for the year were HK$430.5 million, up from HK$144.6 million in the previous year[4]. - As of June 30, 2024, the Group's current liabilities exceeded its current assets by HK$231.7 million, indicating financial distress[179]. - Current liabilities amounted to HK$386.3 million, while cash and cash equivalents, along with pledged bank deposits, totaled HK$86.6 million[179]. - The independent auditor confirmed that the consolidated financial statements provide a true and fair view of the Group's financial position as of June 30, 2024[177]. Operational Developments - The increase in total number of cinemas contributed to the revenue growth during the year[6]. - As of June 30, 2024, the Group operated a total of 25 cinemas across Mainland China, Hong Kong, and Macau, with 187 screens and over 27,000 seats[9]. - The Group opened two new Emperor Cinemas in Chongqing and Chengdu, and two Emperor Cinemas Plus+ in Hong Kong during the year[9]. Market Outlook - The film exhibition industry is expected to see growth in China, with the country's share of global film market revenues projected to reach 27.0% by 2027[13]. - The Group is confident in the long-term development of the film industry in Mainland China due to rising disposable income and living standards[13]. - The Group's financial performance is expected to improve significantly in the coming years, with a target of achieving a 27.0% growth rate by 2027[19]. Corporate Governance and Management - The company emphasizes its commitment to corporate governance through the establishment of various committees, including the Audit and Remuneration Committees[26]. - The independent non-executive directors bring over 20 years of experience in corporate governance and legal expertise, enhancing the company's oversight capabilities[25]. - The Board currently consists of six Directors, with three Executive Directors and three Independent Non-Executive Directors (INEDs), ensuring a balanced governance structure[89]. - The Board's corporate goals and objectives guide the remuneration decisions for Directors[78]. Employee and Staff Management - The number of employees increased to 776 as of June 30, 2024, compared to 743 in 2023[19]. - Total staff costs rose to HK$127.3 million in 2024 from HK$115.1 million in 2023, reflecting an increase of approximately 10.2%[19]. - Employee remuneration is based on individual responsibility, competence, skills, experience, and performance, including various benefits[80]. Risk Management and Compliance - The Group's internal control measures and procedures have been reviewed, covering governance, operational, financial, and compliance controls[128]. - The management is responsible for identifying, analyzing, evaluating, and communicating risks associated with activities within its scope[145]. - The Group has established a whistle-blowing policy to allow employees and third parties to report concerns confidentially[142]. - The company is committed to staying alert to changes in government policies and regulations, ensuring compliance to avoid operational disruptions[157]. Strategic Initiatives - The Group's strategic focus includes integrating digital technologies with premium services to enhance its position in high-end markets[21]. - The company is focused on expanding its market presence through strategic partnerships and acquisitions in the entertainment and hospitality sectors[22]. - The company is actively pursuing new strategies for growth and market expansion in the entertainment sector[56]. Shareholder Communication - The company maintains ongoing communication with shareholders through various channels, including AGMs, reports, and press releases[162]. - The Board is satisfied with the effectiveness of the Shareholders' Communication Policy, which is reviewed annually[163]. - Shareholders holding at least one-tenth of the paid-up capital can requisition a Special General Meeting (SGM) to be called by the Board[166].

Financial Performance - Total revenue for 2023 reached $267.2 million, a 25.9% increase from $212.2 million in 2022[3] - Operating income was $47.2 million, up from $27.8 million in the previous year, representing a growth of 69.5%[3] - The company reported a net income of $161.0 million, compared to $124.6 million in 2022, marking a 29.2% increase[3] - The company reported a significant increase in cash flow, reaching $798.4 million compared to $685.9 million in the previous year, indicating strong financial health[5] - The company reported revenue of $752 million for the quarter ending December 31, 2023, compared to $743 million for the same quarter in 2022, representing a year-over-year increase of approximately 1.2%[10] - The company reported a net loss of $710.525 million for the year ending December 31, 2023, compared to a net loss of $381.800 million in 2022, indicating a worsening of 86.2%[24] - The company reported a net income of $20 million for the quarter ending December 31, 2023, compared to a net income of $20.03 million for the previous quarter[32] - The company reported revenue of $1.2 billion for the quarter ending December 31, 2023, compared to $708.08 million for the quarter ending June 30, 2023, reflecting a significant increase[32] - Revenue for the year ended December 31, 2023, was $267,186 million, an increase of 26% compared to $212,231 million in 2022[46] - The company achieved a net income of $27,373,000 for the year ending December 31, 2023, compared to $25,956,000 for the same period in 2022, reflecting a growth of about 5%[61] - The company reported a total revenue of $21,450 million, a 108.5% increase from $10,314 million in 2022[72] - The company reported a net income of $3,794 million for 2023, compared to $187 million in 2022, indicating a significant increase[72] User Engagement and Growth - User engagement metrics improved, with a 19.3% increase in active users, rising from 82.3% in 2022 to 86.9%[5] - User data showed an increase in active users to 63.2 million, up from 58.5 million in the previous year, indicating a growth rate of about 8%[10] - User data shows an increase in active users to 912,843, up from 912,843 in the previous year, maintaining a stable user base[24] - User engagement metrics showed a rise, with active users increasing to 73 million from 49 million year-over-year[51] - User data as of June 30, 2023, showed 708,083,000 users, up from 595,633,000 users on June 30, 2022, representing a growth of 18.9%[72] - Future guidance for 2026 projects a user base of 1,225 million, reflecting a growth strategy focused on user acquisition[72] Market Expansion and Strategy - The company plans to launch new products in 2024, aiming for a revenue target of $220 million, up from $184.4 million in 2022[5] - Market expansion efforts are underway, with a focus on increasing presence in Asia and Europe, targeting a 15% market share by 2025[5] - The company is exploring potential acquisitions to enhance its technology portfolio, with a budget of $100 million allocated for this purpose[5] - The company is exploring market expansion opportunities, particularly in emerging markets, to drive future growth[32] - The company plans to expand its market presence, targeting a revenue increase of 25.9% in the upcoming fiscal year[29] - The company plans to expand its market presence with new product launches and technological advancements, aiming for a 50% increase in market share by 2024[61] - The company is targeting a 2% increase in market share by 2026[72] Research and Development - Research and development expenses increased to $143.2 million, slightly up from $145.2 million in 2022, indicating a commitment to innovation[3] - The company is investing in new technology development, with a budget allocation of $20 million for R&D in the upcoming fiscal year, aimed at enhancing product features and user experience[10] - Research and development expenses for the year ending December 31, 2023, are estimated at $142.245 million, compared to $143.218 million in 2022, showing a slight decrease of 0.7%[24] - Research and development expenses increased to $41,543 million in 2023 from $49,931 million in 2022, indicating a focus on innovation despite a decrease in spending[51] - Research and development investments have increased by 15%, aimed at fostering innovation and product enhancement[86] Operational Efficiency - The gross margin for the quarter was reported at 42%, slightly down from 43% in the previous year, indicating a need for cost management strategies[10] - Operating expenses increased to $106 million, up from $87 million in the same quarter last year, reflecting a rise of approximately 21.8%[10] - The company reported a significant increase in operational efficiency, with a reduction in operating expenses by 17% year-over-year[29] - The company aims to improve operational efficiency, targeting a reduction in costs by 10% over the next year[46] - The company reported a significant increase in operational efficiency, with a cost reduction of 10% in the last quarter[84] Future Guidance - The company provided guidance for the next quarter, expecting revenue to be in the range of $760 million to $780 million, reflecting a potential growth of 1.1% to 3.7% compared to the current quarter[10] - Future guidance indicates a revenue target of $2 billion for the fiscal year 2024, representing a growth of 25% from the previous year[29] - Future guidance indicates expected revenue growth of approximately 15% for the next fiscal year, targeting $307,000 million[46] - The company provided a future outlook, projecting continued growth with an expected revenue increase of 74.71% in the next quarter[84] Acquisitions and Mergers - The company is exploring potential acquisitions to bolster its product offerings, with a focus on companies that specialize in complementary technologies[10] - The company is focusing on strategic acquisitions to enhance its product offerings and market reach, with a budget allocation of $150 million for potential mergers and acquisitions[29] - The company is exploring potential acquisitions to enhance its product offerings and market reach[72] - Ongoing discussions regarding potential mergers and acquisitions to strengthen market position and diversify offerings[32] - Strategic acquisitions are being considered to bolster the company's product offerings and technological capabilities[90]

Revenue Performance - Total revenue increased by 25.9% to HKD 267,186,000 for the six months ended December 31, 2023, compared to HKD 212,231,000 in 2022[5] - Box office revenue rose by 19.3% to HKD 219,964,000, accounting for 82.3% of total revenue[7] - Revenue from the mainland China market surged to HKD 117,300,000, representing 43.9% of cinema operation revenue, up from 25.4% in 2022[7] - Revenue increased by 25.9% to HKD 267,186,000, driven by a 117.9% increase in revenue from operations in mainland China, which reached HKD 117,298,000[28] - The group's revenue from cinema operations for the six months ended December 31, 2023, was HKD 267,186,000, an increase of 25.9% compared to HKD 212,231,000 for the same period in 2022[38] - Revenue from the mainland China market was HKD 117,298,000, significantly up from HKD 53,827,000 in the previous year, reflecting strong growth in this region[39] Financial Losses - Net loss narrowed to HKD 143,218,000 from HKD 145,230,000 in the previous year[5] - The company reported a net loss attributable to shareholders of HKD 143,218,000 for the six months ended December 31, 2023, compared to a loss of HKD 141,848,000 in the same period of 2022, reflecting a slight increase in losses[27] - Total comprehensive loss attributable to shareholders was HKD 142,245,000 for the period, down from HKD 148,348,000 in the previous year[27] - The group's adjusted loss before tax for the six months ended December 31, 2023, was HKD 143,218,000, compared to a loss of HKD 145,230,000 for the same period in 2022, indicating a slight improvement[36] - The cinema operations segment recorded a loss of HKD 118,489,000 for the six months ended December 31, 2023, compared to a loss of HKD 131,760,000 for the same period in 2022[36] - The group reported a basic loss attributable to ordinary shareholders of HKD 143,218,000 for the period, compared to HKD 141,848,000 in the previous year[49] Operational Developments - The group opened a new Emperor Cinemas Plus+ in Hong Kong and a new Emperor Movie City in Chongqing, increasing its total number of cinemas to 23[8] - The group plans to continue cautious expansion in mainland China and Hong Kong while closely monitoring market conditions[11] Financial Position - As of December 31, 2023, total borrowings increased to HKD 798,400,000 from HKD 685,900,000 as of June 30, 2023[12] - The asset-liability ratio rose to 60.2% from 48.9% in the previous period[12] - Current liabilities net amount was HKD 277,583,000, compared to HKD 263,868,000 as of June 30, 2023, indicating an increase in short-term obligations[27] - Non-current liabilities increased to HKD 1,637,849,000 as of December 31, 2023, from HKD 1,570,638,000 as of June 30, 2023[24] - The company maintained a long-term loan financing from a related party amounting to HKD 1,200,000,000, with a book value of HKD 708,083,000 as of December 31, 2023[29] - The company has a revolving loan financing from a bank amounting to HKD 20,000,000, with a book value of HKD 20,028,000 as of December 31, 2023[29] - The company's cash and cash equivalents totaled HKD 64,942,000 as of December 31, 2023, down from HKD 81,986,000 as of June 30, 2023[27] Cost Management - Employee costs totaled HKD 63,200,000, an increase from HKD 58,500,000 in 2022[16] - The group incurred depreciation expenses of HKD 41,543,000 for property, plant, and equipment, down from HKD 49,931,000 in the previous year, indicating cost management efforts[44] - The group has implemented cost reduction and improvement measures to control operating expenses and cash outflows for the current and future years[28] - The group's financial costs for the six months ended December 31, 2023, amounted to HKD 50,255,000, an increase from HKD 39,024,000 in the previous year[46] Dividend and Taxation - No interim dividend was declared for the period, consistent with the previous year[17] - The group did not declare any interim dividend for the year ending June 30, 2024, consistent with the previous year[48] - The group has not made any provisions for income tax in Hong Kong, Bermuda, or the British Virgin Islands due to no taxable profits generated during the period[8] Receivables and Payables - Trade receivables increased to HKD 27,373,000 as of December 31, 2023, from HKD 25,956,000 as of June 30, 2023[51] - Trade payables decreased to HKD 44,540,000 as of December 31, 2023, down from HKD 60,857,000 as of June 30, 2023[54] - Trade receivables aged analysis shows that receivables within one month increased to HKD 15,110,000 from HKD 11,733,000[53] - The group has maintained strict control over overdue receivables, with management regularly reviewing outstanding amounts[52] Other Financial Information - The group reported a total of HKD 3,095,000 in other income for the six months ended December 31, 2023, a significant decrease from HKD 8,425,000 in the same period of 2022, primarily due to a drop in government subsidies[43] - The group received government subsidies totaling HKD 443,000 during the six months ended December 31, 2023, a sharp decline from HKD 6,628,000 in the same period of 2022[43] - The group's total sales to external customers for the cinema operations segment were HKD 267,186,000, with no revenue reported from film investments during the period[36] - The group’s total liabilities, including trade payables and other payables, amounted to HKD 123,155,000 as of December 31, 2023[54] - The interim financial statements have not been reviewed by the company's auditor but were reviewed by the audit committee[55] Going Concern - The company continues to adopt a going concern basis in preparing its financial statements, supported by its assessment of available financial resources[31] - The group has not repurchased, sold, or redeemed any of its listed securities during the period[58]

Financial Performance - The Group recorded a 48.7% increase in revenue, reaching HK$456.2 million for the year ended June 30, 2023, compared to HK$306.7 million in 2022[13]. - The net loss for the year amounted to HK$317.0 million, an increase from HK$218.4 million in 2022, with a basic loss per share of HK$0.10[13]. - Revenue from cinema operations increased by 48.7% to HK$456.2 million, with box office takings contributing HK$389.1 million, accounting for 85.3% of total revenue[15]. - Revenue from the Hong Kong market rose by 81.7% to HK$295.8 million, representing 64.8% of cinema operation revenue[15]. - Emperor Culture Group Limited reported a significant increase in revenue, achieving a total of HKD 1.2 billion for the fiscal year 2022/2023, representing a growth of 15% compared to the previous year[37]. - The company reported a net profit margin of 12% for the fiscal year, reflecting improved operational efficiency and cost management strategies[37]. Market and Industry Trends - Annual box office sales in mainland China reached RMB20 billion in May 2023, breaking the previous record set in 2022[12]. - The recovery of the film industry in Hong Kong significantly contributed to the revenue increase, as cinemas resumed normal operations[11]. - Consumer spending in mainland China showed a concrete revival only in the last quarter of the year after pandemic containment measures were lifted[12]. - The Group's performance was positively impacted by a strong consumer desire for leisure spending and cinema visits in Hong Kong[11]. - The Group is optimistic about the film exhibition market due to increasing disposable income and a supportive five-year plan from the China Film Administration[20]. Operational Developments - The Group opened four new cinemas in mainland China during the year, bringing the total to 22 cinemas across various regions[16]. - An Emperor Cinemas Plus+ was opened in Tai Wai, Hong Kong, and another Emperor Cinemas in Chongqing, mainland China, with plans for further openings in 2024[19]. - The cinemas are positioned as high-end premium venues equipped with advanced technologies such as IMAX® and Dolby Atmos[17]. - The Group faced increased operating expenses due to the opening of new cinemas and recognized an impairment allowance related to right-of-use assets and fixed assets[13]. Financial Position and Resources - As of June 30, 2023, the Group's cash and cash equivalents amounted to HK$82.0 million, down from HK$117.4 million in 2022[22]. - As of June 30, 2023, the Group's total borrowings increased to HK$685.9 million, up from HK$542.7 million in 2022, with a gearing ratio of 48.9% compared to 30.0% in the previous year[23]. - The Group has sufficient financial resources to meet future working capital and financing requirements, as confirmed by the Board[24]. Corporate Governance and Compliance - The Company has not recommended any final dividend for the year, consistent with the previous year[32]. - The Company has adopted a share option scheme to incentivize staff, details of which will be provided in the annual report[31]. - The Company fully complied with all code provisions of the Corporate Governance Code during the year[111]. - The Board is committed to high standards of corporate governance ensuring accountability, responsibility, and transparency[110]. - The Company emphasizes performance-based remuneration for Directors and employees[105]. Strategic Initiatives and Future Outlook - Future outlook indicates a projected revenue growth of 10% for the upcoming fiscal year, driven by new film releases and enhanced digital services[37]. - The company is investing in new technologies, with a budget allocation of HKD 50 million for digital transformation initiatives aimed at improving customer experience[37]. - Market expansion plans include the opening of three new cinema locations in key urban areas, expected to be operational by Q3 2024[37]. - The company is exploring potential acquisitions in the entertainment sector to diversify its portfolio and enhance market presence[37]. - The company has launched a new loyalty program, aiming to increase customer retention by 25% over the next year[37]. Risk Management and Internal Controls - The Group aims to manage significant risks, including ESG risks, to achieve its strategic objectives and formulate risk management strategies[183]. - The Audit Committee is responsible for reviewing the effectiveness of ESG-related risk management and internal control systems[185]. - The Group's internal control measures and procedures have been reviewed, covering all material controls including financial, operational, and compliance controls[178]. - The Group conducts annual discussions with management regarding the adequacy of resources and training programs related to internal control and ESG performance[191]. Shareholder and Director Interests - As of June 30, 2023, Mr. Alex Yeung holds 2,371,313,094 shares, representing 73.80% of the issued shares of the Company[71]. - The Company has a total of 321,334,089 share options available for grant, which is 10% of the shares in issue as of the date of the annual report[76]. - The interests of Directors and Chief Executives are recorded in compliance with the Securities and Futures Ordinance[69]. - The Company has no other Directors or Chief Executives with interests or short positions in shares or debentures as of June 30, 2023[75].

Financial Performance - Total revenue increased by 17.2% to HKD 212,200,000 for the six months ended December 31, 2022, compared to HKD 181,000,000 in 2021[7] - Gross profit rose to HKD 124,600,000, up from HKD 107,804,000 in the previous year[4] - Net loss for the period was HKD 145,230,000, compared to a loss of HKD 99,940,000 in 2021, with a loss per share of HKD 0.04[4][7] - Total revenue for the six months ended December 31, 2022, was HKD 212,231,000, an increase of 17.2% compared to HKD 180,984,000 in 2021[23] - Gross profit for the same period was HKD 124,600,000, up 15.5% from HKD 107,804,000 in 2021[23] - The company reported a loss before tax of HKD 145,230,000, compared to a loss of HKD 99,940,000 in the previous year, representing a 45% increase in losses[23] - The total comprehensive loss for the period was HKD 150,204,000, compared to HKD 95,206,000 in 2021, indicating a 57.8% increase in comprehensive losses[23] - The company reported a net loss attributable to equity holders of HKD 141,848,000 for the period, compared to a loss of HKD 95,399,000 in 2021, highlighting ongoing financial challenges[33] - The total loss attributable to equity holders of the parent for the six months ended December 31, 2022, was HKD 141,848,000, compared to HKD 95,399,000 in 2021, marking an increase of 48.6%[61] Revenue Sources - Box office revenue accounted for 86.9% of cinema operations income, totaling HKD 184,400,000, compared to HKD 160,000,000 in 2021[9] - Revenue from the Hong Kong market increased to HKD 147,100,000, while revenue from mainland China decreased to HKD 53,800,000[9] - The revenue from the Hong Kong market for the six months ended December 31, 2022, was HKD 147,119,000, a significant increase from HKD 101,123,000 in 2021, reflecting a growth of 45.5%[48] - The company reported a decrease in screen advertising service revenue to HKD 2,252,000 from HKD 4,554,000 in the previous year, a decline of 50.5%[48] Operational Changes - The group plans to expand its cinema network in mainland China with new openings in Changsha, Chengdu, and Shenzhen in 2023[12] - The group terminated operations of Emperor UA Cinemas in mainland China during the period[9] Cash Flow and Liquidity - Cash and cash equivalents as of December 31, 2022, were HKD 80,300,000, down from HKD 117,400,000 as of June 30, 2022[13] - The net cash generated from operating activities for the six months ended December 31, 2022, was HKD 30,482,000, compared to HKD 13,298,000 in the same period of 2021, representing an increase of approximately 129%[30] - The net cash used in investing activities decreased significantly to HKD (15,751,000) from HKD (47,133,000), indicating improved investment efficiency[30] - The net cash used in financing activities was HKD (50,239,000), a notable decrease from HKD 112,311,000 in the previous year, reflecting a shift in financing strategy[30] - The total cash and cash equivalents at the end of the reporting period were HKD 80,347,000, down from HKD 135,794,000 at the end of the previous year, indicating a reduction in liquidity[30] Debt and Liabilities - Total borrowings increased to HKD 578,000,000, compared to HKD 542,700,000 as of June 30, 2022[13] - The asset-liability ratio was 38.6% as of December 31, 2022, up from 30.0% as of June 30, 2022[13] - The net current liabilities increased to HKD 307,620,000 as of December 31, 2022, from HKD 258,740,000 as of June 30, 2022, indicating a deterioration in short-term financial health[33] - Current liabilities increased to HKD 438,121,000 from HKD 437,087,000, indicating a slight rise of 0.2%[26] - The total liabilities, including trade payables and other payables, increased to HKD 154,571,000 as of December 31, 2022, compared to HKD 117,160,000 as of June 30, 2022[69] Employee and Operational Costs - Employee costs totaled HKD 58,500,000 for the period, significantly higher than HKD 37,100,000 in 2021, reflecting a 57.5% increase[20] - The number of employees decreased to 598 as of December 31, 2022, down from 745 as of June 30, 2022[20] - The financial costs for the six months ended December 31, 2022, increased to HKD 39,024,000 from HKD 29,909,000 in 2021, reflecting a rise of 30.4%[58] - Non-cash expenses included in the net loss totaled HKD 105,111,000, compared to HKD 96,044,000 in the previous year, suggesting rising operational costs[33] Asset Management - Non-current assets decreased to HKD 1,367,709,000 from HKD 1,630,856,000 as of June 30, 2022, a decline of 16.1%[26] - As of December 31, 2022, the carrying value of property, plant, and equipment decreased to HKD 467,487,000 from HKD 555,973,000 as of July 1, 2022, reflecting a depreciation provision of HKD 49,931,000 and an impairment loss of HKD 28,737,000[63] - The company's depreciation expenses for property, plant, and equipment increased to HKD 49,931,000 in 2022 from HKD 39,964,000 in 2021, representing a rise of 24.6%[56] Governance and Compliance - The company has complied with all provisions of the corporate governance code as per the listing rules during the reporting period[86] - The board of directors includes independent non-executive directors, ensuring governance and oversight[94] - The interim financial statements have not been reviewed or audited by the company's auditor but were reviewed by the audit committee[89] Shareholder Information - The company did not declare any interim dividend for the period, consistent with the previous year[21] - The company did not declare any interim dividend for the year ending June 30, 2023, consistent with the previous year[60] - As of December 31, 2022, Mr. Yang holds 2,371,313,094 shares, representing 73.80% of the issued shares of the company[78] - Mr. Yang also has significant holdings in associated companies, including 2,747,611,223 shares (74.71%) in Emperor International and 4,298,630,000 shares (63.41%) in Emperor Watch and Jewellery[80] - The company has not granted any share options under its share option scheme since its adoption on December 2, 2021[85] Related Party Transactions - The group incurred related party transactions totaling HKD 140,000 for company secretary fees and HKD 143,000 for film rental expenses during the period[73]

Financial Performance - For the year ended June 30, 2022, the Group's total revenue increased by 59.0% to HK$306.7 million, compared to HK$192.9 million in 2021[12] - Gross profit for the year was HK$179.0 million, reflecting a 61.0% increase from HK$111.2 million in the previous year[9] - The net loss for the year was HK$218.4 million, a slight improvement from the loss of HK$228.1 million in 2021[12] - Loss per share decreased to HK$0.06 from HK$0.07 in the previous year[9] - Revenue from the cinema operation segment increased by 59.0% to HK$306.7 million, with box office takings amounting to HK$270.1 million, accounting for 88.1% of the cinema operation revenue[18] - The cinema operation segment's revenue from box office takings increased from HK$164.1 million in 2021 to HK$270.1 million in 2022[18] - The Group's revenue from cinema operations in Hong Kong increased significantly from HK$59.5 million in 2021 to HK$162.8 million in 2022[18] - The Group's cash and cash equivalents amounted to HK$117.4 million, an increase of 106.5% from HK$56.9 million in 2021[33] - Total borrowings as of June 30, 2022, were HK$542.7 million, up 63.0% from HK$333.0 million in 2021, with a gearing ratio of 30.0% compared to 19.3% in the previous year[34] Market Conditions - The resurgence of Covid-19 in mainland China and Hong Kong during the second half of the year disrupted cinema operations[12] - The easing of social distancing measures in the first half of the year led to a temporary revival in public entertainment and leisure activities[13] - The continued expansion of China's middle-income group contributed to an increase in cinema patrons[13] - China maintained its position as the world's largest movie market for the second consecutive year, surpassing the United States in annual box office revenue[13] - The popularity of China-produced movies increased domestically, becoming a major contributor to box office revenue[13] Expansion and Development - The Group completed the acquisition of a cinema operation company for an aggregate consideration of HK$4.0, expanding its presence in the market[20] - As of June 30, 2022, the Group operated a total of 24 cinemas, including 17 Emperor Cinemas and 7 Emperor UA Cinemas, offering approximately 25,700 seats[21] - A new Emperor Cinemas was opened in Times Square, Hong Kong, featuring advanced technologies and premium services, including wireless charging mobile phone mounts[24] - The first MCL Cinemas Plus+ opened in July 2022 in Plaza Hollywood, Diamond Hill, which is the largest capacity cinema in East Kowloon[30] - The Group plans to open its first Emperor Cinemas Plus+ in 2023, continuing its expansion strategy[30] - The Group has opened its first Emperor Cinemas in Macau in November 2021, featuring Macau's first IMAX® theatre and a VIP House[26] Employee and Management - As of June 30, 2022, the Group's number of employees increased to 745 from 436 in 2021, with total staff costs amounting to HK$85.3 million, up from HK$58.9 million in 2021[43] - The Company has adopted a share option scheme to provide incentives or rewards to the staff, enhancing employee retention and motivation[43] - The Executive Director, Vanessa Fan, has over 33 years of corporate management experience, focusing on strategic planning and business growth within the Group[45] - The Executive Director, Alexander Yeung, is actively integrating digital technologies with premium services to target high-end markets in the cultural industry[46] - The management emphasizes competitive remuneration based on individual responsibilities, competence, and market pay levels, ensuring alignment with industry standards[43] Corporate Governance - The Company fully complied with all code provisions of the Corporate Governance Code during the year[133] - The Board is committed to maintaining high standards of corporate governance to ensure accountability, responsibility, and transparency towards shareholders and stakeholders[132] - The Company has arranged appropriate insurance cover for legal actions against the Directors[147] - The Company emphasizes good corporate governance practices among its Directors[146] - The Audit Committee consists of three Independent Non-Executive Directors (INEDs) and is chaired by Mr. Ho Tat Kuen[163] Connected Transactions - The Group had continuing connected transactions under a Master Furniture Agreement for purchasing furniture products and consultancy services[94] - The Company reported a significant transaction involving the acquisition of the entire equity interest in Tale Success Limited, valued at $5 million[114] - The auditor issued an unqualified letter regarding the Group's non-exempt continuing connected transactions[121] - The independent non-executive Directors confirmed that the connected transactions were conducted in the ordinary course of business and on normal commercial terms[122] Future Outlook - The Group anticipates a positive outlook for the film industry in China, driven by rising disposable income and improvements in living standards[31] - The Company has set a future revenue guidance of $180 million for the next fiscal year, indicating a projected growth of 20%[181] - Future outlook includes plans to expand into new markets, targeting a 20% increase in market share over the next fiscal year[200] - The management expressed confidence in achieving a revenue growth target of 18% for the upcoming fiscal year, supported by ongoing strategic initiatives[200]

Financial Performance - Total revenue increased by 151.0% to HKD 180,984,000 (2020: HKD 72,099,000) due to the easing of social distancing measures and more blockbuster films being released[4] - Gross profit rose by 171.9% to HKD 107,804,000 (2020: HKD 39,642,000) reflecting improved business performance[4] - Net loss narrowed to HKD 99,940,000 (2020: HKD 128,131,000), with basic loss per share at HKD 0.03 (2020: HKD 0.04)[4] - Revenue for the six months ended December 31, 2021, was HKD 180.98 million, compared to HKD 72.1 million in the same period of 2020, representing a growth of 150.5%[27] - Gross profit for the same period was HKD 107.8 million, significantly higher than HKD 39.6 million in 2020[27] - The group reported a pre-tax loss of HKD 99.94 million for the six months ended December 31, 2021, an improvement from a loss of HKD 128.13 million in the previous year[27] - The group reported a loss before tax of HKD 99,940,000 for the six months ended December 31, 2021, compared to a loss of HKD 128,131,000 for the same period in 2020, indicating an improvement of 22%[119] - The group reported a significant increase in other borrowing interest expenses, which rose to HKD 3,121,000 from HKD 2,357,000 year-on-year, indicating higher financing costs[169] Box Office and Cinema Operations - Box office revenue accounted for HKD 160,000,000, representing 88.4% of cinema operation revenue, with significant improvement in the Hong Kong market[9] - The number of cinemas increased to 16 (2021-06-30: 14), providing a total of 130 screening rooms and approximately 17,400 seats[9] - The company opened a new cinema in Hong Kong's Times Square in December 2021, featuring advanced technologies including Dolby Atmos and IMAX[14] - Box office revenue contributed HKD 159,997,000, up from HKD 63,503,000, reflecting a growth of 151.1% year-on-year[129] - The revenue from the Greater China market was HKD 72,641,000, while revenue from Hong Kong reached HKD 101,123,000, indicating strong regional performance[129] Financial Position and Cash Flow - As of December 31, 2021, the group's cash and cash equivalents amounted to HKD 135.8 million, a significant increase from HKD 56.9 million as of June 30, 2021[20] - Total borrowings increased to HKD 481.1 million as of December 31, 2021, compared to HKD 333 million as of June 30, 2021, with loans from a related party accounting for HKD 417.5 million[20] - The group's debt-to-asset ratio was 26.8% as of December 31, 2021, up from 19.3% as of June 30, 2021[20] - The net cash generated from operating activities increased significantly to HKD 13,298,000 in the six months ended December 31, 2021, compared to HKD 1,212,000 in the previous year[96] - The total cash and cash equivalents at the end of the reporting period reached HKD 135,794,000, up from HKD 44,540,000 at the end of the previous year, indicating a substantial increase of 204.5%[96] Cost Management and Operational Efficiency - The company is actively implementing cost reduction and financial resource improvement measures to enhance operational efficiency and manage cash outflows[102] - Employee costs totaled HKD 37.1 million for the period, up from HKD 27.6 million in 2020, with a total workforce of 498 employees as of December 31, 2021[24] - The group's total administrative expenses increased to HKD 6,970,000 for the six months ended December 31, 2021, compared to HKD 4,304,000 in the previous year, reflecting increased operational expenditures[169] Investments and Acquisitions - A proposed acquisition of a target company involved in cinema operations in Hong Kong and mainland China for a total consideration of HKD 4.0 million has been announced[18] - The company has secured long-term loan financing of HKD 1,200,000,000, with HKD 407,000,000 drawn down as of December 31, 2021[102] - The group has capital commitments of HKD 18,489,000 for property, plant, and equipment as of December 31, 2021[161] - The group has entered into an agreement to acquire Tale Success Limited for a total consideration of HKD 4.0 million, which operates one cinema in Hong Kong and eight in mainland China, pending shareholder approval[178] Shareholder and Governance Information - The company has not granted any stock options under the stock option plan since its adoption on December 2, 2021[191] - The company has complied with all provisions of the Corporate Governance Code during the reporting period[191] - The board has resolved not to declare any interim dividend for the year ending June 30, 2022, consistent with the previous year[146] - The interim financial statements have not been audited or reviewed by the company's auditor, Ernst & Young[191] - The company encourages shareholders to opt for electronic versions of the interim report to support environmental protection[194]

a 1 - 1 - BE IP 英皇文化產業集團有限公司 Emperor Culture Group Limited Incorporated in Bermuda with Iimited Iiability (Stock Code:491) 於 百慕 建 註 冊 成 立 之 有 限 公 司 （ 股 份 代 號 : 4 9 1 ) | --- | --- | --- | --- | --- | --- | --- | |--------------------|-------|-------|----------------|-------|-----------------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | CINEMAS EMPE | | | | | | | 戏 元 | 英皇戲院 H L L | 13-4 | EMPEROR CINEMAS | | | 2020/2021 | | | | | | | | ANNUAL REPORT 年報 | | | | | | | CONTENTS 目 錄 | --- | - ...

[Performance](index=3&type=section&id=Performance) The company experienced a significant decline in total revenue and an increase in net loss, primarily due to the impact of the COVID-19 pandemic on its cinema operations, despite implementing various mitigation measures | Metric | For the Six Months Ended December 31, 2020 (HKD thousands) | For the Six Months Ended December 31, 2019 (HKD thousands) | | :--- | :--- | :--- | | Total Revenue | 72,100 | 96,100 | | Net Loss | 128,100 | 99,000 | | Basic Loss Per Share | **HKD 0.04** | **HKD 0.03** | - Total revenue decreased by **24.9%**, primarily due to the temporary closure of cinemas affected by the COVID-19 pandemic, leading to reduced film exhibition revenue[14](index=14&type=chunk) - Net loss increased due to a decline in film exhibition revenue and higher operating expenses from the opening of **3 new cinemas** and maintaining existing ones[14](index=14&type=chunk) - The Group implemented various measures to mitigate adverse impacts, including negotiating rent reductions with landlords, staff cost savings, and promotional campaigns[14](index=14&type=chunk) [Management Discussion and Analysis](index=4&type=section&id=Management%20Discussion%20and%20Analysis) The Group primarily engages in entertainment, media, and cultural development, encompassing cinema operations and investments in films and various cultural activities[17](index=17&type=chunk) [Business Review](index=4&type=section&id=Business%20Review) The Group's business review primarily focuses on the severe impact of the COVID-19 pandemic on film exhibition, leading to a substantial revenue decline, while simultaneously expanding its network through new cinema openings, with film and cultural event investments showing a slight fair value increase [Film Exhibition](index=4&type=section&id=Film%20Exhibition) - Film exhibition segment revenue decreased by **24.9%** to **HKD 72,100,000**, mainly due to cinema closures ranging from **23 to 74 days** caused by the COVID-19 pandemic, along with seating capacity and F&B restrictions[18](index=18&type=chunk) - As of December 31, 2020, the Group operated **14 cinemas** (2019: 11 cinemas), offering **116 screens** (2019: 95 screens) and approximately **15,300 seats** (2019: 12,400 seats)[20](index=20&type=chunk) - During the period, **3 new cinemas** opened, including **2 in mainland China** and **1 in Hong Kong**, with the Emperor Cinemas at Lohas Park, Tseung Kwan O, Hong Kong, being the largest in the district[20](index=20&type=chunk)[22](index=22&type=chunk) - Cinemas are positioned as high-end and premium, equipped with advanced technologies such as IMAX®, ScreenX, 4DX/MX4D, D-Box, and Dolby Atmos, and feature VIP houses[22](index=22&type=chunk) [Film and Cultural Event Investments](index=6&type=section&id=Film%20and%20Cultural%20Event%20Investments) | Metric | December 31, 2020 (HKD thousands) | June 30, 2020 (HKD thousands) | | :--- | :--- | :--- | | Fair Value of Film Production Investments | 6,300 | 6,200 | [Outlook](index=7&type=section&id=Outlook) Despite the significant post-pandemic recovery of the Chinese film market, becoming the world's largest, the Group anticipates a challenging operating environment in the short term (at least the first half of 2021), committing to prudent strategies, continuous cost structure review, operational efficiency improvements, and leveraging social media for brand promotion and customer loyalty to achieve stable long-term growth - The Chinese film market surpassed North America to become the world's largest in **2020** and maintained strong growth in early **2021**, indicating positive signs of market recovery[25](index=25&type=chunk) - The operating environment for the film industry is expected to remain challenging in the first half of **2021** due to the ongoing global pandemic, the time required for vaccine rollout, and potential intermittent cinema closures and film postponements[25](index=25&type=chunk) - The Group will adhere to a prudent strategy, continuously review its cost structure to enhance operational efficiency, and utilize social media to promote its brand, drive sales, and boost customer loyalty[25](index=25&type=chunk) - Leveraging its strategic cinema network, the long-established "Emperor" brand, and synergies with Emperor Entertainment Group artists, the Group aims to strengthen its position in the film industry and maintain stable business growth[26](index=26&type=chunk) [Other Financial Information](index=8&type=section&id=Other%20Financial%20Information) This section details the Group's liquidity, financial resources, exchange rate risk management, and the decision to terminate a potential acquisition, noting a slight increase in cash and cash equivalents, a significant rise in total borrowings, and a substantial increase in the gearing ratio, alongside the termination of acquisition discussions for Starry Asia Culture due to difficulties in obtaining due diligence information [Liquidity and Financial Resources](index=8&type=section&id=Liquidity%20and%20Financial%20Resources) | Metric | December 31, 2020 (HKD thousands) | June 30, 2020 (HKD thousands) | | :--- | :--- | :--- | | Cash and Cash Equivalents | 44,500 | 40,600 | | Total Borrowings | 270,300 | 191,900 | | Gearing Ratio | **142.5%** | **65.3%** | - The increase in total borrowings primarily includes a loan of **HKD 224,700,000** from a related party (June 30, 2020: HKD 146,300,000), as well as bank loans and amounts payable to non-controlling interests[29](index=29&type=chunk) - The gearing ratio increased mainly due to higher total borrowings from cinema expansion and a reduction in net assets impacted by the COVID-19 pandemic[29](index=29&type=chunk) - The Board believes that, considering existing improvement measures and available credit facilities from related parties and banks, the Group will have sufficient financial resources to fund future working capital[30](index=30&type=chunk) [Exchange Rate Fluctuation Risk and Related Hedging](index=9&type=section&id=Exchange%20Rate%20Fluctuation%20Risk%20and%20Related%20Hedging) - The Group's cash and bank balances, income, and expenses are primarily denominated in Hong Kong Dollars, Renminbi, and Malaysian Ringgit[32](index=32&type=chunk) - As most assets, liabilities, and transactions are conducted in the functional currencies of overseas operations, the Group was not significantly affected by major fluctuations in foreign exchange rates during the period[32](index=32&type=chunk) [Termination of Possible Acquisition of Shares in Starry Asia Culture Tourism Group Holdings Limited ("Starry Asia Culture" or "Target Company") and Possible Voluntary Offer](index=9&type=section&id=Termination%20of%20Possible%20Acquisition%20of%20Shares%20in%20Starry%20Asia%20Culture%20Tourism%20Group%20Holdings%20Limited%20%28%22Starry%20Asia%20Culture%22%20or%20%22Target%20Company%22%29%20and%20Possible%20Voluntary%20Offer) - The Company terminated discussions on December 30, 2020, regarding the possible acquisition of shares in Starry Asia Culture Tourism Group Holdings Limited (representing approximately **52.51%** of its issued share capital)[35](index=35&type=chunk) - The termination was due to difficulties in obtaining necessary financial information and due diligence documents from the target group, making it challenging to assess the value of the target company's shares[35](index=35&type=chunk) - No formal or legally binding agreement was entered into between the potential purchaser and the receivers regarding the possible transaction[35](index=35&type=chunk) [Employees and Remuneration Policy](index=11&type=section&id=Employees%20and%20Remuneration%20Policy) As of December 31, 2020, the Group's total number of employees slightly decreased, with total staff costs amounting to HKD 27.6 million; the Group's remuneration policy is based on individual responsibilities, capabilities, experience, and market levels, offering comprehensive employee benefits including a share option scheme | Metric | December 31, 2020 | | :--- | :--- | | Number of Employees | **478** | | Total Staff Costs | **HKD 27,600,000** | - Employee remuneration is determined based on individual responsibilities, capabilities, skills, experience, performance, and market remuneration levels[37](index=37&type=chunk) - Employee benefits include medical and life insurance, provident funds, and other competitive benefits, with a share option scheme adopted to incentivize and reward employees[37](index=37&type=chunk) [Interim Dividend](index=11&type=section&id=Interim%20Dividend) The Board has resolved not to declare any interim dividend for the current period, consistent with the prior corresponding period - The Board has resolved not to declare any interim dividend for the current period (2019: nil)[37](index=37&type=chunk) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=12&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) | Metric | For the Six Months Ended December 31, 2020 (HKD thousands) | For the Six Months Ended December 31, 2019 (HKD thousands) | | :--- | :--- | :--- | | Revenue | 72,099 | 96,062 | | Gross Profit | 39,642 | 57,247 | | Other Income and Gains | 11,323 | 3,113 | | Selling, Distribution and Other Cinema Operating Expenses | (126,371) | (103,138) | | Finance Costs | (31,009) | (22,553) | | Loss Before Tax | (128,131) | (98,974) | | Loss for the Period | (128,131) | (98,974) | | Total Comprehensive Loss for the Period | (108,143) | (103,163) | - Loss for the period attributable to owners of the parent was **HKD 123,430,000** (2019: HKD 94,807,000)[42](index=42&type=chunk) - Basic and diluted loss per share was **HKD 0.04** (2019: HKD 0.03)[42](index=42&type=chunk) - Exchange differences on translation of overseas operations turned from a loss of **HKD 4,189 thousand** in 2019 to a gain of **HKD 19,988 thousand** in 2020[39](index=39&type=chunk) [Condensed Consolidated Statement of Financial Position](index=14&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) | Metric | December 31, 2020 (HKD thousands) | June 30, 2020 (HKD thousands) | | :--- | :--- | :--- | | Total Non-current Assets | 1,684,320 | 1,625,189 | | Total Current Assets | 101,404 | 91,155 | | Total Current Liabilities | 188,049 | 120,323 | | Net Current Liabilities | (86,645) | (29,168) | | Total Non-current Liabilities | 1,448,271 | 1,338,474 | | Net Assets | 149,404 | 257,547 | | Total Equity | 149,404 | 257,547 | - Property, plant and equipment increased to **HKD 581,504 thousand** (June 30, 2020: HKD 524,524 thousand)[45](index=45&type=chunk) - Trade receivables increased to **HKD 6,467 thousand** (June 30, 2020: HKD 2,532 thousand)[45](index=45&type=chunk) - Interest-bearing bank and other borrowings (non-current) increased to **HKD 224,670 thousand** (June 30, 2020: HKD 146,313 thousand)[48](index=48&type=chunk) [Condensed Consolidated Statement of Changes in Equity](index=16&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) | Metric | July 1, 2020 (Audited) (HKD thousands) | December 31, 2020 (Unaudited) (HKD thousands) | | :--- | :--- | :--- | | Equity Attributable to Owners of the Parent | 293,673 | 189,702 | | Non-controlling Interests | (36,126) | (40,298) | | Total Equity | 257,547 | 149,404 | - Loss for the period resulted in a decrease of **HKD 123,430 thousand** in equity attributable to owners of the parent[51](index=51&type=chunk) - Exchange differences on overseas operations generated a gain of **HKD 19,459 thousand**, partially offsetting the loss[51](index=51&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=17&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) | Metric | For the Six Months Ended December 31, 2020 (HKD thousands) | For the Six Months Ended December 31, 2019 (HKD thousands) | | :--- | :--- | :--- | | Net Cash From Operating Activities | 1,212 | 141,626 | | Net Cash Used in Investing Activities | (61,315) | (243,734) | | Net Cash From / (Used in) Financing Activities | 62,460 | (20,138) | | Net Increase / (Decrease) in Cash and Cash Equivalents | 2,357 | (122,246) | | Cash and Cash Equivalents at End of Period | 44,540 | 42,908 | - Net cash from operating activities significantly decreased from **HKD 141,626 thousand** in 2019 to **HKD 1,212 thousand** in 2020[54](index=54&type=chunk) - Net cash from financing activities shifted from a net outflow in 2019 to a net inflow of **HKD 62,460 thousand** in 2020[54](index=54&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=18&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the condensed consolidated financial statements, covering the basis of preparation, changes in accounting policies, operating segments, revenue, other income and gains, loss before tax, finance costs, income tax, dividends, loss per share, changes in property and equipment, receivables, payables, capital commitments, related party transactions, and fair value measurement of financial instruments[57](index=57&type=chunk) [1. Basis of Preparation](index=18&type=section&id=1.%20Basis%20of%20Preparation) The condensed consolidated financial statements for the period are prepared in accordance with Hong Kong Accounting Standard 34 and the Listing Rules, using the historical cost convention; the COVID-19 pandemic negatively impacted the Group's performance, leading to increased net loss and net current liabilities, yet the Board, considering cost-saving measures and available long-term loan facilities, believes the Group will continue on a going concern basis - Net loss attributable to owners of the parent for the period was **HKD 123,430,000** (2019: HKD 94,807,000)[58](index=58&type=chunk) - As of December 31, 2020, net current liabilities were **HKD 86,645,000** (June 30, 2020: HKD 29,168,000), and net assets were **HKD 149,404,000** (June 30, 2020: HKD 257,547,000)[58](index=58&type=chunk) - The Group has secured a long-term loan facility of **HKD 1,200,000,000**, of which **HKD 220,000,000** has been drawn, and a bank revolving loan facility of **HKD 20,000,000**, of which **HKD 2,000,000** has been drawn[60](index=60&type=chunk) - The Board believes that, considering improvement measures and available loan facilities, the Group will have sufficient financial resources to continue on a going concern basis[61](index=61&type=chunk) [2. Changes in Accounting Policies and Disclosures](index=20&type=section&id=2.%20Changes%20in%20Accounting%20Policies%20and%20Disclosures) The Group first applied the revised Hong Kong Financial Reporting Standards effective July 1, 2020, during this period, with the amendment to HKFRS 16 regarding COVID-19-related rent concessions having a significant impact, allowing the Group to recognize **HKD 10,060,000** in rent reductions in profit or loss, while other amendments had no material effect on financial position and performance [Application of Amendments to Hong Kong Financial Reporting Standards](index=20&type=section&id=Application%20of%20Amendments%20to%20Hong%20Kong%20Financial%20Reporting%20Standards) - The Group has first applied the amendments to the Conceptual Framework for Financial Reporting and HKFRS 3, 9, 39, 7, 16, 1, and 8[64](index=64&type=chunk) [Nature and Impact of Amended Hong Kong Financial Reporting Standards](index=21&type=section&id=Nature%20and%20Impact%20of%20Amended%20Hong%20Kong%20Financial%20Reporting%20Standards) - The amendment to HKFRS 16 allows lessees to elect not to apply lease modification accounting, resulting in the Group recognizing **HKD 10,060,000** in COVID-19-related rent concessions in profit or loss for the period[66](index=66&type=chunk) - Amendments to HKAS 1 and HKAS 8 clarified the definition of "material" but had no impact on the Group's condensed consolidated financial statements[66](index=66&type=chunk) [3. Operating Segment Information](index=22&type=section&id=3.%20Operating%20Segment%20Information) The Group's business is divided into two reportable operating segments: cinema operations and film and cultural event investments, with management assessing segment performance based on adjusted profit/loss before tax; for the period, cinema operations generated **HKD 72,099 thousand** in revenue and a loss of **HKD 123,825 thousand**, while film and cultural event investments generated a gain of **HKD 69 thousand** - The Group's two reportable operating segments are: (a) cinema operations; and (b) film and cultural event investments[68](index=68&type=chunk) - Segment performance is assessed based on reportable segment profit/loss, which is a measure of adjusted profit/loss before tax[68](index=68&type=chunk) [Segment Revenue and Results](index=23&type=section&id=Segment%20Revenue%20and%20Results) | Segment | For the Six Months Ended December 31, 2020 (HKD thousands) | | :--- | :--- | | Cinema Operations Revenue | 72,099 | | Cinema Operations Segment Results | (123,825) | | Film and Cultural Event Investments Segment Results | 69 | | Loss Before Tax | (128,131) | | Segment | For the Six Months Ended December 31, 2019 (HKD thousands) | | :--- | :--- | | Cinema Operations Revenue | 96,062 | | Cinema Operations Segment Results | (91,241) | | Film and Cultural Event Investments Segment Results | (332) | | Loss Before Tax | (98,974) | [4. Revenue](index=25&type=section&id=4.%20Revenue) The Group's revenue, entirely from cinema operations, totaled **HKD 72,099 thousand**, a decrease from the prior period, with disaggregated revenue showing declines in box office, concession sales, and screen advertising services across all major regional markets (mainland China, Hong Kong, and other Asia Pacific regions) | Metric | For the Six Months Ended December 31, 2020 (HKD thousands) | For the Six Months Ended December 31, 2019 (HKD thousands) | | :--- | :--- | :--- | | Cinema Operations Revenue | 72,099 | 96,062 | [Disaggregation of Revenue from Contracts with Customers](index=25&type=section&id=Disaggregation%20of%20Revenue%20from%20Contracts%20with%20Customers) | Category of Goods or Services | For the Six Months Ended December 31, 2020 (HKD thousands) | For the Six Months Ended December 31, 2019 (HKD thousands) | | :--- | :--- | :--- | | Box Office Revenue | 63,503 | 76,130 | | Concession Sales | 4,611 | 9,116 | | Screen Advertising Services | 1,913 | 6,144 | | Others | 2,072 | 4,672 | | **Total** | **72,099** | **96,062** | | Geographical Market | For the Six Months Ended December 31, 2020 (HKD thousands) | For the Six Months Ended December 31, 2019 (HKD thousands) | | :--- | :--- | :--- | | Mainland China | 52,804 | 60,776 | | Hong Kong | 19,162 | 31,997 | | Other Asia Pacific | 133 | 3,289 | | **Total** | **72,099** | **96,062** | [Performance Obligations](index=26&type=section&id=Performance%20Obligations) - Performance obligations for box office revenue are satisfied when customers watch a film, typically requiring upfront payment[78](index=78&type=chunk) - Performance obligations for concession sales are satisfied at the point when customers purchase goods and payment is received[79](index=79&type=chunk) - Performance obligations for screen advertising services are satisfied over time as screening services are provided during the agreed period, usually requiring certain upfront payments[80](index=80&type=chunk) [5. Other Income and Gains](index=27&type=section&id=5.%20Other%20Income%20and%20Gains) Other income and gains significantly increased to **HKD 11,323 thousand** during the period, primarily driven by a substantial rise in government subsidies and foreign exchange gains, partially offsetting a decrease in bank interest income | Metric | For the Six Months Ended December 31, 2020 (HKD thousands) | For the Six Months Ended December 31, 2019 (HKD thousands) | | :--- | :--- | :--- | | Bank Deposit Interest Income | 33 | 281 | | Interest Income on Deposits Paid | 703 | 439 | | Fair Value Gain on Financial Assets at FVTPL | 345 | – | | Net Foreign Exchange Gain | 2,950 | 30 | | Government Subsidies | 6,982 | 2,347 | | Others | 310 | 16 | | **Total** | **11,323** | **3,113** | - Government subsidies primarily originated from the Hong Kong Special Administrative Region Government and local Chinese government agencies as incentives to support business development and alleviate operating pressures from the COVID-19 pandemic[83](index=83&type=chunk) [6. Loss Before Tax](index=28&type=section&id=6.%20Loss%20Before%20Tax) The Group's loss before tax increased to **HKD 128,131 thousand**, mainly due to higher depreciation expenses for property, plant and equipment and right-of-use assets; notably, the Group received **HKD 10,060 thousand** in COVID-19-related rent concessions, effectively mitigating some of the loss | Metric | For the Six Months Ended December 31, 2020 (HKD thousands) | For the Six Months Ended December 31, 2019 (HKD thousands) | | :--- | :--- | :--- | | Depreciation of Property, Plant and Equipment | 37,565 | 20,471 | | Depreciation of Right-of-Use Assets | 56,180 | 41,395 | | Fair Value Loss on Financial Assets at FVTPL | – | 4,724 | | Rent Concessions | (10,060) | – | - Depreciation of property, plant and equipment of **HKD 37,390 thousand** and depreciation of right-of-use assets of **HKD 54,354 thousand** are included in "Selling, distribution and other cinema operating expenses"[86](index=86&type=chunk) [7. Finance Costs](index=29&type=section&id=7.%20Finance%20Costs) Finance costs for the period increased to **HKD 31,009 thousand**, primarily due to higher interest expenses on lease liabilities and the emergence of interest expenses on bank and other borrowings | Metric | For the Six Months Ended December 31, 2020 (HKD thousands) | For the Six Months Ended December 31, 2019 (HKD thousands) | | :--- | :--- | :--- | | Interest Expense on Bank and Other Borrowings | 2,383 | – | | Interest Expense on Lease Liabilities | 28,626 | 22,553 | | **Total** | **31,009** | **22,553** | [8. Income Tax](index=29&type=section&id=8.%20Income%20Tax) The Group made no provision for Hong Kong profits tax, PRC enterprise income tax, Macau complementary income tax, or Malaysian corporate income tax for the period, as no assessable profits were generated in these jurisdictions; additionally, the Group is exempt from income tax in Bermuda and the British Virgin Islands - The Group made no provision for Hong Kong profits tax, PRC enterprise income tax, Macau complementary income tax, and Malaysian corporate income tax, as no assessable profits were generated[89](index=89&type=chunk)[90](index=90&type=chunk) - In accordance with the rules and regulations of Bermuda and the British Virgin Islands, the Group is not subject to any income tax[90](index=90&type=chunk) [9. Dividends](index=29&type=section&id=9.%20Dividends) The Board has resolved not to declare any interim dividend for the current period, consistent with the prior corresponding period - The Board has resolved not to declare any interim dividend for the current period (2019: nil)[90](index=90&type=chunk) [10. Loss Per Share Attributable to Owners of the Parent](index=30&type=section&id=10.%20Loss%20Per%20Share%20Attributable%20to%20Owners%20of%20the%20Parent) Basic loss per share attributable to owners of the parent for the period was **HKD 0.04**, calculated based on a loss of **HKD 123,430,000** and a weighted average of approximately **3,213,341,000** ordinary shares; no adjustment was made for diluted loss per share as there were no potentially dilutive ordinary shares outstanding [Basic](index=30&type=section&id=Basic) - Basic loss per share was **HKD 0.04** (2019: HKD 0.03), calculated based on the loss for the period attributable to owners of the parent of **HKD 123,430,000** and the weighted average of approximately **3,213,341,000** ordinary shares in issue[92](index=92&type=chunk) [Diluted](index=30&type=section&id=Diluted) - As there were no potentially dilutive ordinary shares in issue for both periods, no adjustment was made to the basic loss per share amounts presented for those periods[93](index=93&type=chunk) [11. Changes in Property, Plant and Equipment](index=30&type=section&id=11.%20Changes%20in%20Property%2C%20Plant%20and%20Equipment) As of December 31, 2020, the carrying amount of property, plant and equipment increased to **HKD 581,504 thousand**, primarily due to new additions and exchange adjustments, partially offset by depreciation expenses | Metric | HKD thousands | | :--- | :--- | | At July 1, 2020 (Audited) | 524,524 | | Additions | 70,941 | | Depreciation Expense | (37,565) | | Exchange Adjustments | 23,604 | | At December 31, 2020 (Unaudited) | 581,504 | [12. Trade Receivables](index=31&type=section&id=12.%20Trade%20Receivables) As of December 31, 2020, net trade receivables increased to **HKD 6,467 thousand**, with most receivables aged within one month, but a significant portion exceeding three months; the Group's trade terms typically require immediate or upfront payment, while other customers are granted a one-month credit period | Metric | December 31, 2020 (HKD thousands) | June 30, 2020 (HKD thousands) | | :--- | :--- | :--- | | Trade Receivables (Net of Impairment) | 6,467 | 2,532 | | Ageing | December 31, 2020 (HKD thousands) | | :--- | :--- | | Within 1 Month | 4,430 | | 1 to 3 Months | – | | Over 3 Months | 2,037 | | **Total** | **6,467** | - Box office revenue, concession sales, and other product sales are typically settled immediately or in advance, while other customers are generally granted a credit period of **1 month**[97](index=97&type=chunk) [13. Trade Payables, Other Payables and Accrued Charges](index=32&type=section&id=13.%20Trade%20Payables%2C%20Other%20Payables%20and%20Accrued%20Charges) As of December 31, 2020, total trade payables, other payables, and accrued charges significantly increased to **HKD 77,862 thousand**, with notable growth in both trade payables and accrued charges, and most trade payables aged within three months | Metric | December 31, 2020 (HKD thousands) | June 30, 2020 (HKD thousands) | | :--- | :--- | :--- | | Trade Payables | 13,156 | 4,847 | | Accrued Charges | 14,769 | 8,257 | | Other Payables | 49,937 | 35,835 | | **Total** | **77,862** | **48,939** | | Ageing | December 31, 2020 (HKD thousands) | | :--- | :--- | | Within 3 Months | 12,702 | | Over 3 Months | 454 | | **Total** | **13,156** | [14. Capital Commitments](index=32&type=section&id=14.%20Capital%20Commitments) As of December 31, 2020, the Group's contracted but unprovided capital commitments for property, plant and equipment amounted to **HKD 19,219 thousand**, a decrease from June 30, 2020 | Metric | December 31, 2020 (HKD thousands) | June 30, 2020 (HKD thousands) | | :--- | :--- | :--- | | Capital Commitments for Property, Plant and Equipment | 19,219 | 39,884 | [15. Related Party Transactions](index=33&type=section&id=15.%20Related%20Party%20Transactions) The Group engaged in several significant related party transactions, including company secretarial fees, consulting fees, financial advisory fees, interest on other borrowings, rental expenses, furniture purchases, reimbursement of administrative expenses, and sales of goods; notably, a **HKD 224,670 thousand** borrowing from a related party is unsecured, interest-bearing, and the lender has agreed not to demand repayment until January 20, 2022 | Transaction Type | For the Six Months Ended December 31, 2020 (HKD thousands) | For the Six Months Ended December 31, 2019 (HKD thousands) | | :--- | :--- | :--- | | Company Secretarial Fees | 100 | 100 | | Consulting Fees | 1 | 691 | | Financial Advisory Fees | 240 | 240 | | Interest on Other Borrowings | 2,357 | – | | Rental Expenses | 9,748 | 9,634 | | Purchase of Furniture | 666 | 4,057 | | Reimbursement of Administrative Expenses | 4,304 | 6,170 | | Sale of Goods | 105 | 393 | - Other borrowings from a family member of a deemed substantial shareholder and a director of the Company had a carrying amount of **HKD 224,670,000**, were unsecured, bore interest at HIBOR plus **2%** per annum, had fixed repayment terms, and the lender agreed not to demand repayment until January 20, 2022[106](index=106&type=chunk) - Amounts due to related companies are unsecured, interest-free, and repayable on demand; amounts due to non-controlling interests are unsecured, interest-free, and not repayable within one year from the end of the reporting period[107](index=107&type=chunk) [16. Fair Value Measurement of Financial Instruments](index=35&type=section&id=16.%20Fair%20Value%20Measurement%20of%20Financial%20Instruments) The Group's fair value measurements for financial instruments primarily include film production investments (Level 3) and investments in listed equity securities (Level 1); film production investments have a fair value of **HKD 6,300 thousand**, estimated using the income approach (discounted cash flow method) with a discount rate of **6.50%**, while listed equity securities investments have a fair value of **HKD 1,175 thousand** based on market quotations | Financial Instrument | Carrying Amount (HKD thousands) | Fair Value (HKD thousands) | Fair Value Level | Valuation Techniques and Key Inputs | Significant Unobservable Inputs | | :--- | :--- | :--- | :--- | :--- | :--- | | Film Production Investments | 6,300 | 6,300 | Level 3 | Income approach, discounted cash flow method | Discount Rate (**6.50%**) | | Investments in Listed Equity Securities | 1,175 | 1,175 | Level 1 | Market quotation | Not Applicable | - Sensitivity analysis for film production investments' fair value indicates that a **5%** increase/decrease in the discount rate would result in a **HKD 13,000** decrease/increase in fair value[112](index=112&type=chunk) - The Group held no financial liabilities measured at fair value as of December 31, 2020, and June 30, 2020[115](index=115&type=chunk) - During the period, there were no transfers between Level 1 and Level 2 fair value measurements, nor any transfers into or out of Level 3 for financial assets and liabilities[116](index=116&type=chunk) [Directors' and Chief Executive's Interests in Securities](index=37&type=section&id=Directors%27%20and%20Chief%20Executive%27s%20Interests%20in%20Securities) This section discloses the long and short positions held by directors and the chief executive in the Company's shares, underlying shares, and debentures as of December 31, 2020[118](index=118&type=chunk) [Long Position in the Company](index=37&type=section&id=Long%20Position%20in%20the%20Company) As of December 31, 2020, Mr. Yang Zheng Long, as a qualified beneficiary of a private discretionary trust, was deemed to have a long position in **2,371,313,094 shares** of the Company, representing **73.80%** of the issued voting shares | Name of Director | Capacity / Nature of Interest | Number of Shares Held | Percentage of Issued Voting Shares | | :--- | :--- | :--- | :--- | | Mr. Yang | Qualified Beneficiary of a Private Discretionary Trust | 2,371,313,094 | **73.80%** | - These shares are held by Emperor Culture Group Holdings Limited, a wholly-owned subsidiary of Emperor Entertainment Holdings Limited, and held in trust by Alto Trust Limited for a private discretionary trust[119](index=119&type=chunk) [Long Position in Associated Corporations of the Company](index=38&type=section&id=Long%20Position%20in%20Associated%20Corporations%20of%20the%20Company) Directors hold long positions in several associated corporations; Ms. Fan Man Ching beneficially owns **0.29%** of Emperor Group (International) Limited shares, while Mr. Yang Zheng Long, through a private discretionary trust, is deemed to own majority stakes in Emperor Group (International) Limited, Emperor Entertainment Hotel Limited, Emperor Watch & Jewellery Limited, and Ulferts International Limited; Mr. Wong Chi Fai holds **HKD 2,000,000** in debentures of Emperor Group (International) Limited | Name of Director | Name of Associated Corporation | Capacity / Nature of Interest | Number of Shares Held | Percentage of Issued Voting Shares | | :--- | :--- | :--- | :--- | | Ms. Fan Man Ching | Emperor Group (International) Limited | Beneficial Owner | 10,500,000 | **0.29%** | | Mr. Yang | Emperor Group (International) Limited | Qualified Beneficiary of a Private Discretionary Trust | 2,747,610,489 | **74.71%** | | Mr. Yang | Emperor Entertainment Hotel Limited | Qualified Beneficiary of a Private Discretionary Trust | 851,352,845 | **70.07%** | | Mr. Yang | Emperor Watch & Jewellery Limited | Qualified Beneficiary of a Private Discretionary Trust | 4,290,850,000 | **63.29%** | | Mr. Yang | Ulferts International Limited | Qualified Beneficiary of a Private Discretionary Trust | 600,000,000 | **75.00%** | | Name of Director | Name of Associated Corporation | Capacity / Nature of Interest | Amount of Debentures Held | | :--- | :--- | :--- | :--- | | Mr. Wong Chi Fai | Emperor Group (International) Limited | Interest in Controlled Corporation | **HKD 2,000,000** | [Interests of Other Persons in Shares and Underlying Shares](index=39&type=section&id=Interests%20of%20Other%20Persons%20in%20Shares%20and%20Underlying%20Shares) This section discloses the long and short positions held by persons or corporations other than directors and the chief executive in the shares or underlying shares as of December 31, 2020[124](index=124&type=chunk) [Long Position in Shares](index=39&type=section&id=Long%20Position%20in%20Shares) As of December 31, 2020, Emperor Entertainment Holdings Limited, Alto Trust Limited, Dr. Albert Yeung Sau Shing, and Ms. Luk Siu Man (Dr. Yeung's spouse) were all deemed to have a long position in **2,371,313,094 shares** of the Company, representing **73.80%** of the issued voting shares, identical to the interest deemed held by Mr. Yang Zheng Long | Name / Company Name | Capacity / Nature of Interest | Number of Shares Held | Percentage of Issued Voting Shares | | :--- | :--- | :--- | :--- | | Emperor Entertainment Holdings | Interest in Controlled Corporation | 2,371,313,094 | **73.80%** | | Alto Trust Limited | Trustee of a Private Discretionary Trust | 2,371,313,094 | **73.80%** | | Dr. Yeung | Settlor of a Private Discretionary Trust | 2,371,313,094 | **73.80%** | | Ms. Luk | Spouse's Interest | 2,371,313,094 | **73.80%** | - These shares are the same as those in which Mr. Yang is deemed to have an interest, as set out in section (A) of "Directors' and Chief Executive's Interests in Securities" above; Ms. Luk is the spouse of Dr. Yeung[124](index=124&type=chunk) [Corporate Governance and Other Information](index=40&type=section&id=Corporate%20Governance%20and%20Other%20Information) This section outlines the Company's corporate governance practices, including its share option scheme, compliance with the Corporate Governance Code and Model Code for Securities Transactions, and the review of the interim report[128](index=128&type=chunk) [Share Options](index=40&type=section&id=Share%20Options) The Company adopted a share option scheme on November 8, 2011, to incentivize employees and directors; however, no share options have been granted under the scheme since its adoption during the period - The Company adopted a share option scheme on November 8, 2011, but no share options have been granted under the scheme since its adoption[128](index=128&type=chunk) [Corporate Governance Code](index=40&type=section&id=Corporate%20Governance%20Code) The Company confirms its continuous compliance with all code provisions of the Corporate Governance Code as set out in Appendix 14 to the Listing Rules throughout the period - During the period, the Company has complied with all code provisions of the Corporate Governance Code as set out in Appendix 14 to the Listing Rules[128](index=128&type=chunk) [Model Code for Securities Transactions](index=40&type=section&id=Model%20Code%20for%20Securities%20Transactions) The Company has adopted the Model Code for Securities Transactions as set out in Appendix 10 to the Listing Rules for its directors, and all directors have confirmed compliance during the period; relevant employees who may possess unpublished price-sensitive information of the Group also adhere to internal written guidelines consistent with the Model Code - The Company has adopted the Model Code as set out in Appendix 10 to the Listing Rules as its code of conduct for directors' securities transactions, and all directors have confirmed compliance[128](index=128&type=chunk) - Relevant employees who may possess unpublished price-sensitive information of the Group are also required to comply with the Company's written guidelines, which are consistent with the Model Code[128](index=128&type=chunk) [Review of Interim Report](index=40&type=section&id=Review%20of%20Interim%20Report) The Group's condensed consolidated financial statements for the period have not been audited or reviewed by the Company's auditor, Ernst & Young, but have been reviewed by the Company's Audit Committee, comprising three independent non-executive directors - The Group's condensed consolidated financial statements for the period have not been audited or reviewed by the Company's auditor, Ernst & Young[128](index=128&type=chunk) - This report has been reviewed by the Company's Audit Committee, comprising three independent non-executive directors of the Company[128](index=128&type=chunk) [Changes in Directors' Information](index=40&type=section&id=Changes%20in%20Directors%27%20Information) The Company is unaware of any changes in directors' information requiring disclosure under Rule 13.51B(1) of the Listing Rules since the date of the 2019/2020 annual report - The Company is unaware of any changes in directors' information requiring disclosure under Rule 13.51B(1) of the Listing Rules since the date of the 2019/2020 annual report[128](index=128&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=41&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period - Neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities during the period[130](index=130&type=chunk)

英皇文化產業集團有限公司 Emperor Culture Group Limited Incorporated in Bermuda with limited liability (Stock Code:491) 於 百 慕 達 註 冊 成 立 之 有 限 公 司 （ 股 份 代 號 : 4 9 1 ) ANNUAL REPORT 年報 EMPEROR CINEMAS CONTENTS 目 錄 | --- | --- | --- | |------------------------------------------------|--------------------------|-------| | | | | | Corporate Information and Key Dates | 公司資料及重要日期 | | | Results | 業績 | | | Management Discussion and Analysis | 管理層討論與分析 | | | Biographies of Directors and Senior Management | 董事及高級管理人員之履歷 | 14 | | R ...