Financial Performance - Revenue for the six months ended December 31, 2020, was HK$160,779,000, a decrease of 47.5% compared to HK$306,633,000 for the same period in 2019[11]. - Gross profit for the same period was HK$93,149,000, down 42% from HK$160,568,000 in 2019[11]. - Loss for the period attributable to owners of the Company was HK$79,715,000, compared to a loss of HK$19,586,000 in the previous year, representing a significant increase in losses[13]. - Total comprehensive expense for the period was HK$48,309,000, compared to HK$22,508,000 in 2019, indicating a worsening financial position[11]. - Basic loss per share for the period was HK$3.07, compared to HK$0.75 in the same period last year, reflecting increased losses per share[16]. - The total comprehensive expense for the period was HK$22,508,000, compared to a loss of HK$19,586,000 in the previous period[25]. - The total loss before tax for the period was HK$67,283,000, reflecting the overall financial challenges faced by the company[55]. Operational Costs - Administrative expenses increased to HK$48,688,000, up from HK$30,472,000 in 2019, indicating rising operational costs[11]. - Total staff costs increased to HK$32,412,000, up 29.5% from HK$25,017,000 in the previous year[93]. - The cost of services provided decreased significantly to HK$9,797,000, down 73.1% from HK$36,437,000 in the prior period[93]. Assets and Liabilities - As of December 31, 2020, total assets less current liabilities amounted to HK$1,060,194, a decrease from HK$1,182,623 as of June 30, 2020[21]. - Current liabilities increased significantly to HK$837,921 from HK$475,322, indicating a rise in short-term financial obligations[19]. - The net current liabilities stood at (HK$202,619), worsening from (HK$126,304) in the previous period[19]. - Non-current assets totaled HK$1,262,813, down from HK$1,308,927, reflecting a decline in long-term asset values[19]. - The company reported a net asset value of HK$157,296, a decrease from HK$205,605, indicating a reduction in overall equity[21]. - Total equity decreased by 23.4% from HK$205,605 to HK$157,296, reflecting challenges in maintaining shareholder value[21]. Revenue Streams - Film and TV series production and distribution income was HK$35,968,000, down 81.2% from HK$191,565,000 year-on-year[48]. - Film exhibition income decreased by 73.4% to HK$26,585,000 from HK$99,995,000 in the previous year[48]. - Pan entertainment income significantly increased to HK$98,226,000, compared to HK$11,629,000 in the same period last year, marking a growth of 743.5%[48]. - Revenue from Hong Kong and Macau was HK$28,317,000, down 74.2% from HK$110,085,000 in 2019[68]. - Revenue from the People's Republic of China (PRC) was HK$127,238,000, a decline of 33.7% from HK$191,965,000 in 2019[68]. Cash Flow - For the six months ended December 31, 2020, the net cash from operating activities was HK$100,533,000, an increase from HK$97,450,000 in the same period of 2019[28]. - The net cash used in investing activities amounted to HK$63,124,000, slightly decreased from HK$64,710,000 in the prior year[28]. - The net cash from financing activities was a negative HK$20,965,000, contrasting with a positive inflow of HK$12,913,000 in the same period last year[28]. - The cash and cash equivalents at December 31, 2020, were HK$137,519,000, down from HK$167,223,000 at the end of 2019[28]. Impairment and Losses - Impairment losses on trade receivables under the expected credit loss model amounted to HK$25,684,000, compared to HK$7,473,000 in the previous year[11]. - The company recognized an impairment loss of approximately HK$11,075,000 for right-of-use assets due to the impact of the COVID-19 pandemic[98]. - The accumulated losses as of December 31, 2020, were HK$645,675,000, reflecting an increase from HK$565,960,000 at the beginning of the period[25]. Strategic Focus - The Company is focusing on restructuring and cost management strategies to improve financial performance in the upcoming periods[11]. - The company is focusing on expanding its market presence and enhancing its product offerings in response to the challenging market conditions[70]. - The Group's strategic focus on the "Stay-at-Home Economy" helped broaden its revenue base during challenging market conditions[197]. Government Support - The company received government subsidies of HK$4,971,000 under the Employment Support Scheme during the current interim period[73]. Market Trends - The Group's focus on innovative business models includes web series, online movies, and short videos to adapt to changing entertainment tastes[191]. - The Group's brand diversification strategy is aligned with the "Stay-at-Home Economy" trend[189].

Business Strategy and Development - The Group aims to develop a self-owned full industry chain model, enhancing its soft power through integrated resources in scriptwriting, direction, and celebrity management [3]. - The Group is actively exploring business opportunities in the stay-at-home economy, targeting young consumers through online streaming, short videos, and celebrity cultivation [4]. - The Group emphasizes collaboration with partners to expand its business dimensions and establish a more sophisticated upstream and downstream industry chain [4]. - The Group's strategy includes nurturing talented artistes and creating popular film and television copyrights to drive growth [3]. - The Group is focused on enriching its industry layout with physical products to seize new opportunities in the pan-entertainment business [4]. - The Group's strategy focuses on the stay-at-home economy and brand diversity, adapting to the digital transformation of the traditional film and television production industry [45]. - The Group is actively expanding its pan-entertainment businesses, including establishing companies with leading film and television platforms and launching retail brands targeting young consumers [39]. - The Group plans to launch multiple self-owned retail brands targeting young consumers, including a teen trend lifestyle brand and a high-class stylish unisex cosmetic brand, to diversify its revenue base [152]. - The Group aims to create a sustainable synergy with existing resources in film and television, leveraging the rapid growth of domestic online entertainment consumption [146]. - The Group is committed to fulfilling the consumption needs of young female consumers by targeting beauty and lifestyle segments through precise marketing strategies [146]. Financial Performance - The Group's revenue for the year was approximately HK$465.5 million, a decrease of approximately HK$202.6 million or 30.3% compared to the previous year, primarily due to the lack of new film releases and reduced cinema attendance [69][72]. - Gross profit decreased to approximately HK$173.7 million, down approximately HK$88.6 million or 33.8%, with a gross profit margin of approximately 37.3%, slightly down from 39.3% the previous year [70][72]. - Revenue from film, TV series, and variety show production and distribution was approximately HK$307.1 million, a decrease of 26.0% compared to the previous year due to no new movie releases [46]. - Revenue from film exhibition decreased by approximately 42.6% to approximately HK$139.9 million, accounting for approximately 30.0% of total revenue [56]. - Advertising, marketing, and pan-entertainment businesses recorded total revenue of approximately HK$18.5 million, representing an increase of approximately 97.5% compared to approximately HK$9.4 million last year [60]. - The Group's pan-entertainment segment recorded a loss of approximately HK$24.4 million during the year under review [60]. - The Group's loss attributable to owners for the year was approximately HK$126.6 million, compared to a loss of approximately HK$35.5 million the previous year [84][87]. - Other gains and losses and other income increased to approximately HK$41.8 million, representing an increase of HK$9.4 million or approximately 28.9%, mainly due to rent concessions for cinemas [74][76]. Market Trends and Consumer Behavior - Global consumer spending on mobile applications exceeded US$50.0 billion in H1 2020, a 10% increase compared to H2 2019, with a record monthly expenditure of US$6.8 billion in May 2020 [34]. - In August 2020, total retail sales of consumer goods in China reached RMB3,357.1 billion, marking a year-on-year increase of 0.5%, the first positive growth for the year [35]. - The proportion of revenue from mainland China increased by 7.3 percentage points year-on-year, rising to approximately 64.6% from 57.3% [45]. - The Group's initiatives include the cultivation of new artistes and the establishment of a self-owned retail brand targeting young consumers [4]. - The management is conservatively assessing the future recovery of cinema attendance post-pandemic [57]. Challenges and Risks - The Group's film exhibition segment faced unprecedented challenges due to the COVID-19 pandemic and local social movements, leading to a substantial decline in cinemagoers [56]. - The decline in revenue was attributed to delays in TV series and variety show productions due to COVID-19, sluggish film exhibition business, and the impact of HKFRS 16 on expenses [85][87]. - The management assessed that the box office revenue is expected to decline in the forthcoming year due to changes in the movie industry atmosphere in Hong Kong and a slowdown in the production of international blockbuster movies [95]. - The adverse impact of social movements since the second half of 2019 has resulted in fewer cinemagoers, further contributing to the impairment [95]. - The outbreak of COVID-19 since the first quarter of 2020 has also led to a significant reduction in the number of cinemagoers [95]. Corporate Governance and Management - The company is focused on expanding its presence in the entertainment industry while ensuring financial stability and growth [167]. - The management team is committed to maintaining high standards of corporate governance and transparency in operations [168]. - The company aims to leverage the expertise of its directors to explore new market opportunities and strategies for growth [167]. - The independent non-executive directors bring a wealth of knowledge from their previous roles in listed companies, enhancing corporate governance [168]. - The company has a diverse board with members having extensive experience in various industries including finance, insurance, and media [167][168]. Employee and Operational Insights - As of June 30, 2020, the Group employed 308 permanent employees, an increase from 260 employees as of June 30, 2019, with total salaries and wages amounting to approximately HK$50.5 million, up from HK$46.2 million in the previous year [127][129]. - The Group's remuneration packages for employees are based on performance and experience, with regular reviews of policies and packages [128]. - The company has not authorized any significant investments or capital asset additions for the fiscal year ending June 30, 2020 [123]. Acquisitions and Investments - The Group completed the acquisition of 60% equity interests in Wenlan Culture, enhancing its business value and brand influence in the idol group industry [61]. - The acquisition of the Target Company was completed on March 12, 2020, and was accounted for using the acquisition method [117]. - The Group acquired the entire equity of Huhehaote Houhai Cultural Media Co., Ltd. for a total consideration of RMB 450 million, payable in three installments from 2018 to 2020, with profit guarantees of at least RMB 40 million and RMB 60 million for the fiscal years ending December 31, 2018, and 2019, respectively [122]. Financial Position and Risk Management - As of June 30, 2020, the Group's bank balances and cash amounted to approximately HK$112.3 million, a decrease from approximately HK$122.0 million as of June 30, 2019 [107]. - The Group's total debts as of June 30, 2020, were approximately HK$67.0 million, HK$51.5 million, and HK$147.5 million, compared to HK$65.2 million, HK$22.0 million, and HK$226.0 million as of June 30, 2019, respectively [107]. - The gearing ratio as of June 30, 2020, was approximately 14.9%, down from approximately 31.6% as of June 30, 2019 [107]. - The current ratio as of June 30, 2020, was approximately 0.8, unchanged from June 30, 2019 [110]. - The Group's capital risk management and financial risk management objectives and policies are detailed in Notes 44 and 45(b) of the consolidated financial statements [193].

TRANSMIT ENTERTAINMENT TRANSMIT ENTERTAINMENT LIMITED 傳遞娛樂有限公司 (Incorporated in the Cayman Islands with limited liability) (於開曼群島註冊成立的有限公司) Stock Code 股份代號：1326 INTERIM REPORT 中期報告 2019/20 CONTENTS 目錄 02 Corporate Information 公司資料 04 Report on Review of Condensed Consolidated Financial Statements 簡明綜合財務報表審閱報告 06 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 簡明綜合損益及其他全面收益表 08 Condensed Consolidated Statement of Financial Position 簡明綜合財務狀況表 10 Condensed Consolidated Stateme ...

Financial Performance - Transmit Entertainment reported a year-on-year increase of 17.9% in income from sizable internet enterprises in the PRC, amounting to RMB540.9 billion for the first half of 2019[16]. - The income from information services, including online music and videos, online games, news, and online reading, recorded a year-on-year increase of 23%, totaling RMB370.3 billion in the first half of 2019[16]. - The revenue from internet services in China for the first half of 2019 reached RMB 540.9 billion, a year-on-year increase of 17.9%[18]. - The information services revenue, including online music, video, and games, grew by 23% to RMB 370.3 billion in the first half of 2019[18]. - The film and TV series production and distribution business reported revenue of approximately HK$415.2 million, a significant increase of approximately 900.6% compared to the previous year[28]. - The Group's revenue for the year ended June 30, 2019, amounted to approximately HK$668.1 million, representing a significant increase of approximately HK$393.5 million or 143.3% compared to the previous year[52]. - Revenue from film exhibition increased by approximately 8.8% to approximately HK$243.6 million, accounting for approximately 36.5% of total revenue[38]. - The Hong Kong box office receipts increased by approximately 6.4% in the first half of 2019 to approximately HK$1.05 billion[38]. - The Group's loss attributable to owners for the year was approximately HK$35.5 million, a significant decrease from a loss of approximately HK$189.8 million in the previous year[69]. - Gross profit was approximately HK$262.3 million, representing an increase of approximately HK$123.8 million or 89.5% year-on-year[55]. Strategic Initiatives - The Group aims to expand its pan-entertainment business by entering into contracts with various artiste agencies and managers, enhancing its talent pool and competitive edge in the Greater China region[4]. - In June 2019, the Group signed contracts with renowned scriptwriter Li Xiaoming and popular film director Wu Qiang to strengthen its content creation capabilities[4]. - The acquisition of Khorgas Houhai Culture Media Company Limited in August 2018 has bolstered the Group's film and television production capabilities, focusing on variety shows and TV series[3]. - The Group has established close cooperation with tier-one broadcast networks and online streaming platforms, enhancing its distribution and marketing efforts[3]. - The Group's strategic focus on content production and talent acquisition is expected to enhance its market position in the film and television industry[4]. - The Group's comprehensive approach aims to build a robust film and television entertainment and culture empire across the Greater China region[4]. - The Group formed collaborative relationships with various artists and scriptwriters to enhance content creation capabilities[44]. - The Group will not enter into further contract negotiations with certain agencies but will maintain long-term strategic relationships[46]. Market Trends - The overall performance of the internet services industry in the PRC remains strong despite global economic challenges, indicating a positive outlook for the Group's operations[16]. - Continued investment in research and development within the industry is anticipated to drive further growth in audio-video services[16]. - The internet communication services sector in China has seen a significant tariff reduction and speed upgrade, leading to increased online consumption potential in lower-tier cities[17]. - Online shopping users in China grew from 332 million in June 2014 to 639 million in June 2019, representing a compound annual growth rate of 13.99%[17]. - The proportion of online shopping users among national internet users increased from 52.5% in June 2014 to 74.8% in June 2019[17]. Operational Challenges - Despite the increase in revenue, the film exhibition segment recorded a loss of approximately HK$11.1 million, although this was an improvement from a loss of approximately HK$97.9 million the previous year[38]. - The gross profit margin decreased to approximately 39.3% from approximately 50.4% in the previous year, primarily due to the absence of additional revenue from "S Storm" and the lower gross profit margin from the newly acquired Houhai Culture operation, which accounted for approximately 28.5% of the Group's revenue[55]. - Selling and distribution expenses rose by approximately HK$6.6 million or 3.3% to approximately HK$207.3 million, attributed to increased advertising and promotion expenses due to larger production scales of films released during the year[58]. - Administrative expenses increased by approximately HK$16.3 million or 32.0% to approximately HK$67.3 million, driven by higher legal fees, salary expenses, and ordinary administrative expenses from the newly acquired Houhai Culture[59]. Management and Governance - The company has a diverse management team with extensive experience in various aspects of media production and marketing[156]. - The management team includes professionals with educational backgrounds from prestigious institutions such as Zhejiang University and Fudan University[152][153][157][158]. - The company aims to leverage its experienced team to explore new strategies for market expansion and product development[156]. - The diverse expertise within the management team positions the company well for future growth in the competitive media landscape[156]. Financial Position - As of June 30, 2019, the Group's bank balances and cash amounted to approximately HK$122.0 million, an increase from approximately HK$76.3 million as of June 30, 2018[87]. - The Group's total debts as of June 30, 2019, were approximately HK$313.2 million, compared to approximately HK$8.2 million as of June 30, 2018, resulting in a gearing ratio of approximately 31.6%[87]. - The Group's total non-current assets increased to approximately HK$544.9 million as of June 30, 2019, from approximately HK$165.2 million as of June 30, 2018[90]. - The net current liabilities as of June 30, 2019, were approximately HK$95.8 million, up from approximately HK$47.8 million as of June 30, 2018[90]. - The Group's current ratio as of June 30, 2019, was approximately 0.8, down from approximately 0.9 as of June 30, 2018[90]. Customer and Supplier Relations - Key customers include co-producers, distributors, and cinemagoers, with a commitment to enhancing customer loyalty through social media interaction[182]. - The Group maintains solid relationships with suppliers to ensure quality supply for high-quality films and services[182]. - Income from the top five customers accounted for approximately 48.8% of the Group's revenue for the year ended June 30, 2019, compared to 12.6% for the same period in 2018[187]. - The single largest customer contributed approximately 11.7% of the Group's revenue for the year ended June 30, 2019, up from 10.1% in 2018[187]. - Fees paid to the top five suppliers constituted approximately 18.8% of the Group's total fees paid to suppliers, a decrease from 37.0% in 2018[187]. Future Outlook - The Group plans to create a sustainable synergy between new businesses and existing entertainment resources, aiming for significant growth in the entertainment consumption sector[129]. - The Group is committed to diversifying its operations to enhance profitability and generate satisfactory returns for shareholders[135]. - The Group is currently preparing multiple copyright projects, including the suspense drama "Redemption on the Blade" and the web variety show "I Am the Sales Officer" among others[130]. - The collaboration with well-known influencers is expected to help the Group develop its self-owned beauty brand and expand its e-commerce business[135].

Financial Statements Overview - The Group's consolidated financial statements include a profit or loss statement for the six-month period ending December 31, 2018[12]. - The financial position as of December 31, 2018, is detailed in the condensed consolidated statement of financial position[12]. - The report includes a comprehensive income statement reflecting the Group's performance over the reporting period[12]. - The Group's cash flow statement for the six-month period is also presented, indicating liquidity management[12]. - The report outlines the responsibilities of the directors in preparing the financial statements in accordance with HKAS 34[12]. - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410, ensuring compliance with auditing standards[12]. - The Group's financial statements are subject to independent auditor review, which is less comprehensive than a full audit[12]. - The report emphasizes that no audit opinion is expressed due to the nature of the review conducted[12]. - The interim report is prepared to comply with the relevant provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[12]. Financial Performance - Revenue for the six months ended December 31, 2018, was HK$395,277,000, an increase from HK$126,766,000 in the same period of 2017, representing a growth of 212%[33]. - Gross profit for the same period was HK$174,564,000, compared to HK$77,347,000 in 2017, indicating a growth of 126%[33]. - Profit before tax for the period was HK$54,672,000, a significant recovery from a loss of HK$31,509,000 in the previous year[33]. - Profit for the period attributable to owners of the company was HK$46,509,000, compared to a loss of HK$28,898,000 in the same period of 2017[37]. - Total comprehensive income for the period was HK$52,233,000, recovering from a loss of HK$30,367,000 in the previous year[37]. - Basic earnings per share for the period was 1.79 HK cents, compared to a loss of 1.11 HK cents in the same period of 2017[37]. Expenses and Losses - Selling and distribution expenses increased to HK$97,136,000 from HK$92,298,000, reflecting a rise of 5%[33]. - Administrative expenses rose to HK$27,492,000 from HK$22,180,000, an increase of 24%[33]. - Other gains and losses amounted to HK$17,713,000, compared to no gains in the previous year[33]. - The company reported a net foreign exchange loss of HK$4,302,000, contrasting with a gain of HK$1,742,000 in the same period of 2017[33]. Financial Position - Total assets less current liabilities amounted to HK$511,070,000[40]. - The company reported net current liabilities of HK$87,072,000[40]. - Total equity attributable to owners of the company increased to HK$172,494,000 from HK$120,080,000, reflecting a growth of approximately 43.5%[42]. - The company recorded a loss for the period of HK$30,367,000, compared to a loss of HK$29,053,000 in the previous period[80]. - Non-current liabilities, including loans from related companies, totaled HK$342,536,000[42]. - The company’s cash and cash equivalents stood at HK$449,394,000[40]. Cash Flow - For the six months ended December 31, 2018, the Group reported a net cash outflow from operating activities of HK$1,906,000, compared to an inflow of HK$65,729,000 in the previous period[104]. - The net cash used in investing activities was HK$123,445,000, significantly higher than the previous period's outflow of HK$47,677,000[104]. - The Group had net current liabilities of approximately HK$87,072,000 as of December 31, 2018, an increase from HK$47,811,000 as of June 30, 2018[110]. - The net cash from financing activities was HK$158,924,000, compared to an inflow of HK$9,272,000 in the previous period[104]. - Cash and cash equivalents at December 31, 2018, totaled HK$112,709,000, up from HK$76,336,000 at the beginning of the period[104]. Accounting Standards and Policies - The Group applied new accounting standards, including HKFRS 15, which affects revenue recognition from contracts with customers[119]. - The Group has applied HKFRS 15 retrospectively, with initial application effects recognized on July 1, 2018[132]. - HKFRS 15 introduces a 5-step approach for revenue recognition, focusing on performance obligations and control transfer[132]. - The Group's accounting policy changes may impact future revenue recognition and financial reporting[132]. - The Group has applied HKFRS 9, impacting the classification and measurement of financial assets and liabilities, as well as expected credit losses[156]. - The Group's accounting policies have been updated to comply with HKFRS 15, affecting financial reporting[142]. - The adjustments made due to HKFRS 15 reflect the Group's commitment to accurate financial reporting and compliance with accounting standards[152]. Expected Credit Loss (ECL) Assessment - The Group recognizes a loss allowance for Expected Credit Loss (ECL) on financial assets, which includes trade and other receivables, with the ECL updated at each reporting date to reflect changes in credit risk[169]. - The Group assesses ECL based on historical credit loss experience, adjusted for specific factors related to debtors and general economic conditions[170]. - The Group typically recognizes lifetime ECL for trade receivables, assessing these assets individually for significant balances and collectively using a provision matrix for others[169]. - The Group presumes that credit risk has increased significantly since initial recognition when contractual payments are more than 30 days past due[173]. - The Group's approach to measuring ECL reflects current conditions and forward-looking information[191]. Assets and Liabilities - Non-current assets include property, plant, and equipment valued at HK$99,005,000 and intangible assets valued at HK$5,600,000[196]. - Current assets total HK$262,947,000, with film production in progress valued at HK$140,058,000[196]. - Assets classified as held for sale amount to HK$28,275,000, contributing to total assets of HK$291,222,000[196]. - The financial position reflects interests in associates valued at HK$28,114,000 and a joint venture interest of HK$205,000[196]. - The total amount due from related companies is HK$143,000, with tax recoverable at HK$716,000[196]. - Bank balances and cash are reported at HK$76,336,000, indicating liquidity position[196].