Revenue Performance - Revenue for the six months ended June 30, 2023, was HKD 57,093 million, compared to HKD 91,737 million for the same period in 2022, indicating a decline [8]. - The group's revenue from licensing business decreased by approximately 39.6% from HKD 48.7 million in the first half of 2022 to HKD 29.4 million in the first half of 2023 [75]. - Revenue from e-commerce and other businesses fell by about 35.6% from HKD 43.0 million in the first half of 2022 to HKD 27.7 million in the first half of 2023, primarily due to reduced sales through e-commerce platforms [56]. - Revenue from the B.Duck product line, which accounts for 79.8% of the group's licensing revenue, decreased by approximately 37.3% from HKD 37.5 million in the first half of 2022 to HKD 23.5 million in the first half of 2023 [78]. Business Expansion and Strategy - The number of authorized merchants increased from 406 at the end of December 2022 to 430 by June 30, 2023, reflecting a growth of approximately 5.9% [15]. - The amount of outstanding contracts for experiential entertainment licensing increased significantly to HKD 11.3 million, up 214% from HKD 3.6 million a year earlier [15]. - The company has established a joint venture in Thailand to operate e-commerce and licensing businesses, aiming to replicate its successful business model from mainland China in Southeast Asia [18]. - The group is focusing on expanding its e-commerce sales platforms in overseas markets, including Thailand, Indonesia, Vietnam, the Philippines, Malaysia, and Singapore [56]. - The company is actively seeking to expand its licensing business in international markets, including partnerships with agents in Mexico, Brazil, South Korea, and South Africa [18]. - The three-year development plan aims to achieve strong growth through horizontal and vertical strategies, focusing on resource integration and synergy with industry peers [17]. Financial Performance - The company recorded a loss attributable to shareholders of approximately HKD 15.8 million for the first six months of 2023, compared to a loss of HKD 18.5 million for the same period in 2022, reflecting a decrease of about 14.6% [99]. - The company's operating loss increased by approximately 1.2% to HKD 16.7 million for the first six months of 2023, compared to HKD 16.5 million in the same period of 2022 [124]. - The financial income for the first six months of 2023 was approximately HKD 0.1 million, a decrease from HKD 0.5 million in the same period of 2022 [126]. - Employee benefit expenses for the first six months of 2023 were approximately HKD 27.8 million, accounting for about 35.3% of total operating expenses, down from 37.2% in the same period of 2022 [117]. Assets and Liabilities - As of June 30, 2023, the total trade receivables and contract assets amounted to approximately HKD 81.3 million, an increase from HKD 72.3 million as of December 31, 2022 [101]. - The total overdue receivables exceeding 180 days reached HKD 1,963 million, with a significant increase in the overdue rate to 59.8% [83]. - The expected credit loss provision for trade receivables was approximately HKD 22.7 million as of June 30, 2023, up from HKD 20.6 million at the end of 2022 [101]. - The company’s total liabilities included trade payables of HKD 5,276 million and other payables of HKD 13,286 million [89][90]. - The company’s net assets accounted for approximately 19.0% of total assets as of June 30, 2023, down from 21.2% at the end of 2022 [101]. - The asset-liability ratio as of June 30, 2023, was 16.5%, attributed to new borrowings during the first half of 2023; there were no interest-bearing borrowings as of December 31, 2022 [134]. Inventory and Cash Flow - Inventory decreased from approximately HKD 35.1 million as of December 31, 2022, to about HKD 30.8 million as of June 30, 2023, due to ongoing inventory utilization and a conservative procurement policy in response to market fluctuations [130]. - Cash and cash equivalents decreased from approximately HKD 141.7 million as of December 31, 2022, to about HKD 116.1 million as of June 30, 2023, primarily due to cash outflows from operations and investments, as well as dividend payments and share buybacks [130]. - Current assets net value decreased from approximately HKD 265.6 million as of December 31, 2022, to about HKD 190.3 million as of June 30, 2023, mainly due to a reduction in cash and cash equivalents [149]. Legal and Compliance - The group is in a legal dispute involving a claim for approximately HKD 64.35 million related to unfair competition and trademark infringement [79]. - The company confirmed a tax credit of approximately HKD 0.8 million for the first half of 2023, mainly due to the recognition of deferred tax assets based on temporary pre-tax loss conditions [146]. Future Plans and Investments - The company plans to allocate 25.8% of the net proceeds (approximately HKD 53.4 million) to establish a "fan platform" by June 2024 [194]. - The company intends to enhance its internal design capabilities with 17.5% of the net proceeds (approximately HKD 36.2 million) by December 2024 [195]. - The company has successfully obtained domestic agency rights for "Shew Sheep," expanding its IP matrix [179]. - The company aims to accelerate retail channel integration through acquisitions, enhancing sales and distribution capabilities [180]. - The company plans to focus on digital cultural IP, new consumption, and new media investments in collaboration with local governments and fund management institutions [181]. Market Overview - The global licensing market size was approximately HKD 26 trillion in 2022, with 61.8% of retail sales coming from North America [178]. - The company ranked 21st in the "2023 Global Top Licensing Agents" report, with an annual brand retail sales of approximately USD 500 million [16].

Revenue Performance - Total revenue for the six months ended June 30, 2023, was HKD 57,093,000, a decrease of 37.8% from HKD 91,737,000 in the same period of 2022[23]. - Revenue for the six months ended June 30, 2023, was HKD 57,093,000, a decrease of 37.7% compared to HKD 91,737,000 for the same period in 2022[27]. - Total revenue for the six months ended June 30, 2023, was HKD 57,966,000, a decrease from HKD 93,112,000 for the same period in 2022[76]. - Revenue from B.Duck products accounted for 79.8% of total licensing revenue, decreasing approximately 37.3% to HKD 23,500,000 from HKD 37,500,000 in the prior year[6]. - Revenue from authorized services was HKD 22,473,000, down 43.9% from HKD 40,052,000 in the previous year[50]. - Revenue from character licensing business decreased by 39.6% to HKD 29,394 thousand for the first half of 2023, down from HKD 48,690 thousand in the same period of 2022[113]. - Revenue from e-commerce and other businesses fell by 35.6% to HKD 27,699 thousand for the first half of 2023, compared to HKD 43,047 thousand in the first half of 2022[113]. - Revenue from self-created intellectual property characters accounted for 79.8% of total revenue in the first half of 2023, totaling HKD 23,453 thousand[116]. - Revenue from mainland China represented 97.3% of total revenue for the first half of 2023, amounting to HKD 55,559 thousand, compared to 95.6% in the same period of 2022[118]. Financial Performance - The company reported a net loss of HKD 15,834,000 for the six months ended June 30, 2023, compared to a net loss of HKD 18,523,000 in the same period of 2022[23]. - Operating loss for the period was HKD 16,725,000, slightly increased from HKD 16,452,000 in the previous year[27]. - Net loss for the period was HKD 15,834,000, compared to a net loss of HKD 18,523,000 in the same period last year, representing a 14.5% improvement[28]. - The overall gross profit margin decreased, with a net profit margin of -27.7% for the current period compared to -20.2% in the previous year[23]. - The company reported a loss after tax of HKD 15,834,000 for the six months ended June 30, 2023, compared to a loss of HKD 18,523,000 for the same period in 2022[76]. - The company recorded a net impairment loss on financial assets and contract assets of approximately HKD 2.9 million for the first six months of 2023, compared to HKD 2.8 million in the same period of 2022[123]. - The company reported a financial income of HKD 1,021,000, up from HKD 269,000 in the previous year[27]. - Financial income for the first half of 2023 was HKD 124 thousand, a recovery from a loss of HKD 501 thousand in the same period of 2022[105]. - The company’s cash and cash equivalents decreased to HKD 116,129,000 from HKD 141,677,000, indicating a reduction in liquidity[30]. - The group recorded a loss attributable to owners of approximately HKD 15.8 million for the first half of 2023, compared to a loss of approximately HKD 18.5 million for the same period in 2022[179]. Assets and Liabilities - Total assets as of June 30, 2023, were HKD 374,884,000, down from HKD 412,948,000 as of December 31, 2022[30]. - Total liabilities increased to HKD 102,603,000 as of June 30, 2023, compared to HKD 61,641,000 as of December 31, 2022[53]. - The company’s total liabilities were not specified, but the asset-liability ratio was reported at 16.5%[27]. - The company’s equity attributable to owners was HKD 272,281,000 as of June 30, 2023, down from HKD 351,307,000 at the end of 2022[53]. - The total liabilities as of June 30, 2023, were HKD 23,554,000, compared to HKD 18,812,000 as of December 31, 2022, indicating an increase of approximately 25.1%[151]. - Trade receivables increased from HKD 72,287,000 as of December 31, 2022, to HKD 81,274,000 as of June 30, 2023, an increase of approximately 12.5%[163]. - The company’s net cash position as cash and cash equivalents exceeded total borrowings as of June 30, 2023[48]. - The company experienced a currency translation loss of HKD 7,076,000, compared to HKD 4,892,000 in the previous year[29]. Operational Insights - The company has expanded its e-commerce operations to multiple platforms, including Tmall, JD.com, and Douyin, since opening its flagship store in 2015[4]. - The management discussed ongoing development in character licensing and e-commerce as key growth areas for future revenue[3]. - The company has not changed its risk management policies since December 31, 2022[38]. - The company believes that credit risk related to its main trade receivables counterparties is limited due to their reputable status[39]. - The company reduced its employee headcount, particularly in the e-commerce sales team in China, to offset investments in design capabilities for new product development[122]. - The group maintained a cautious liquidity ratio and ensured sufficient cash flow to meet any unexpected cash needs during normal business operations[92]. Contractual Obligations and Provisions - The total amount of unfulfilled contracts as of June 30, 2023, was 76,434 thousand HKD, down from 88,804 thousand HKD at the end of 2022[88]. - Contract assets as of June 30, 2023, amounted to HKD 12,898 thousand, a decrease of 64.2% from HKD 36,046 thousand as of December 31, 2022[102]. - Contract liabilities increased to HKD 14,247 thousand as of June 30, 2023, compared to HKD 13,322 thousand as of December 31, 2022, reflecting a growth of 6.9%[102]. - The expected credit loss provision for trade receivables and contract assets as of June 30, 2023, was HKD 5,325,000, with an overall expected loss rate of 19.3%[65]. - The individual assessment of trade receivables showed a total of HKD 64,120,000 with a credit loss provision of HKD 16,355,000, resulting in an expected loss rate of 25.51%[65]. - The collective assessment for trade receivables showed overdue amounts of HKD 3,608,000 with a credit loss provision of HKD 2,438,000, resulting in an expected loss rate of 67.6%[65]. Employee and Operational Costs - Employee benefits expenses for the first six months of 2023 were approximately HKD 27.8 million, accounting for about 35.3% of total operating expenses, compared to HKD 35.6 million and 37.2% in the same period of 2022[122]. - The group reported a significant increase in legal and professional fees, which rose to 9,220 thousand HKD for the six months ended June 30, 2023, compared to 4,708 thousand HKD in the same period of 2022[83]. - The company recognized a tax credit of approximately HKD 0.8 million for the first half of 2023, primarily due to the recognition of deferred tax assets based on temporary pre-tax losses[178]. - The company’s promotional costs decreased from approximately HKD 8,100,000 in the first half of 2022 to HKD 6,900,000 in the first half of 2023[158]. Investments and Acquisitions - The group acquired a 20% stake in a non-listed entity registered in China for RMB 7,000,000 (approximately HKD 7,592,000), with RMB 4,000,000 paid as of June 30, 2023[167]. - The company has agreed to invest RMB 7,000,000 for a 20% equity stake in the target company, which will be used for the development and sales costs of its IP series blind boxes and trendy toys[196].

Management Team - The company appointed Mr. Guo as an executive director on April 28, 2021, bringing over 18 years of experience in sales, marketing, and licensing[1]. - Mr. Guo previously worked in the banking industry for over four years before joining the group in August 2003 as the Sales and Marketing Director[2]. - The management team includes Mr. Chen, who has over 14 years of experience in licensing and has been with the group since February 2012[9]. - Mr. Xie, appointed as Chief Financial Officer in January 2020, has over 15 years of experience in audit, accounting, and finance[20]. - The company has a strong focus on brand management and product design, led by Ms. Tan, who has over 19 years of experience in product design and development[13]. - The board includes non-executive director Mr. Chen, who oversees management and strategic planning, with a background in investment management[21]. - The management team has a diverse educational background, with degrees from institutions such as the University of Hong Kong and Stanford University[18][8]. - The company has independent non-executive directors providing independent judgment and oversight[25]. - The company has a diverse board with members experienced in law, education, and e-commerce[27]. Corporate Strategy - The company emphasizes internal control systems and investor relations as part of its corporate governance strategy[20]. - The group has a structured approach to its business operations, with a focus on strategic planning and market expansion initiatives[21]. - The company aims to expand its intellectual property portfolio and recruit new designers to enhance product lines, focusing on fashion brands and trendy toys[36]. - The company plans to explore the metaverse community and build online and offline private traffic pools to deepen brand positioning and enhance fan loyalty[36]. - The company is committed to developing cross-border e-commerce in Southeast Asia to replicate its success in the Chinese market overseas[36]. - The company intends to acquire new ownership rights with a solid design and brand foundation, focusing on traditional Chinese cultural intellectual property and high-potential participants in the design and licensing value chain[36]. - A three-year development plan has been established to enhance brand diversification and overall market penetration, focusing on resource integration and synergy with industry peers[69]. - The company aims to expand its quality intellectual property matrix through self-development, acquisitions, and partnerships with licensing agents, targeting a strategic goal of becoming a "quality comprehensive intellectual property company" over the next three years[93]. Financial Performance - The company's revenue for the fiscal year 2022 was HKD 192.6 million, a decrease from HKD 290.0 million in 2021, representing a decline of approximately 33.6%[44]. - The net profit for the fiscal year 2022 was HKD 75.6 million, an increase from HKD 62.9 million in 2021, reflecting a growth of about 20.0%[44]. - The adjusted net profit margin based on non-Hong Kong Financial Reporting Standards for 2022 was 45.4%, up from 26.6% in 2021, indicating a significant improvement in profitability[44]. - The adjusted net profit for the fiscal year 2022 was HKD 87.4 million, compared to HKD 77.3 million in 2021, showing an increase of approximately 13.8%[44]. - The company achieved a net profit margin of 39.2% in 2022, up from 21.7% in 2021[61]. - The current ratio improved significantly from 2.3 in 2021 to 6.1 in 2022, indicating better liquidity[61]. - The total revenue for the group in FY2022 was HKD 192.6 million, down from HKD 290.0 million in FY2021, reflecting a significant decline in the licensing business[147]. - The group reported a total licensing income of HKD 74.8 million in FY2022, down from HKD 132.7 million in FY2021, reflecting challenges in the licensing market[148]. - The net tax expense decreased by approximately 82.3% from HKD 19.8 million in fiscal year 2021 to HKD 3.5 million in fiscal year 2022, mainly due to a reduction in profit before tax[161]. Licensing and Market Position - The company primarily engages in character licensing and e-commerce, focusing on the B.Duck brand[32]. - B.Duck maintained its position as the largest domestic character intellectual property in China, increasing the number of licensees from 385 to 406 in 2022[50]. - The total contract value increased from HKD 78.2 million as of December 31, 2021, to HKD 88.8 million as of December 31, 2022[50]. - The number of style guides created for licensed products grew from 950 to over 1,200, while the number of SKUs developed increased from 25,000 to over 36,000[50]. - The fan database for B.Duck grew by over 80%, with direct interactions across various e-commerce and social platforms reaching over 19 million subscribers and fans[50]. - The group ranked as the largest domestic licensor in the character licensing market in mainland China and Hong Kong in 2022[123]. E-commerce and Product Development - The company has a strong e-commerce operation led by a vice president with over nine years of experience in the industry[28]. - The group's e-commerce and other businesses have expanded to multiple platforms, including Tmall, JD.com, and HKTVmall, enhancing product accessibility for customers[143]. - The revenue from the design consulting service increased significantly from HKD 20.5 million in FY2021 to HKD 36.6 million in FY2022, representing 29.5% of total revenue in FY2022[148]. - The group is exploring the potential of designing its own products for e-commerce platforms, aiming to leverage synergies from its licensing business[143]. - The company launched a new business line targeting Generation Z, B.Studio, to enhance brand positioning and establish a digital marketing system[54]. - The company aims to transform its intellectual property brand into a trendy brand appealing to younger consumers through collaborations with popular mobile games and new-generation artists[68]. Joint Ventures and International Expansion - The company has established a joint venture in Thailand to promote product sales, signed on January 13, 2023[34]. - The company has established a joint venture in Thailand to operate e-commerce and licensing businesses, with Thailand being one of the largest overseas licensing regions for the company[71]. - Thailand's online retail penetration rate is relatively low, accounting for less than 2% of the Asia-Pacific region's licensed product retail sales in 2022, indicating significant growth potential in the licensing industry[71]. - The company plans to export its own e-commerce products and those developed by licensed manufacturers in mainland China to Thailand, expecting higher profitability in Thailand compared to the country of origin[71]. - The joint venture will collaborate with local institutions for comprehensive partnerships, including co-branded products and outdoor advertising[71]. Operational Challenges and Changes - The company completed a group restructuring on March 26, 2021, becoming the holding company of its subsidiaries[31]. - Employee benefits expenses for the fiscal year 2022 were approximately HKD 65.9 million, representing 36.5% of total operating expenses, compared to HKD 61.6 million and 30.8% in fiscal year 2021[151]. - The net impairment loss on financial and contract assets increased from approximately HKD 4.8 million in fiscal year 2021 to approximately HKD 15.1 million in fiscal year 2022, primarily due to an increase in trade receivables and contract assets[152]. - Operating profit decreased by approximately 5.3% from HKD 84.4 million in fiscal year 2021 to HKD 79.9 million in fiscal year 2022[159]. - Revenue from character licensing business decreased by approximately 25.8% from HKD 166.6 million in fiscal year 2021 to HKD 123.7 million in fiscal year 2022, attributed to COVID-19 related store closures[165]. - Revenue from e-commerce and other businesses fell by approximately 44.2% from HKD 123.4 million in fiscal year 2021 to HKD 68.9 million in fiscal year 2022, due to logistics delays and reduced consumer spending during the pandemic[166].

Financial Performance - The group's revenue for the fiscal year 2022 was HKD 192.6 million, a decrease from HKD 290.0 million in 2021, representing a decline of approximately 33.6%[78]. - The net profit for the fiscal year 2022 increased by approximately 20.2% to about HKD 75.6 million from approximately HKD 62.9 million in 2021[20]. - The adjusted profit attributable to the company's owners for the fiscal year 2022 was approximately HKD 87.4 million, an increase of about 13.7% from HKD 77.3 million in 2021[19]. - The operating profit decreased by approximately 5.3% to HKD 79.9 million in fiscal year 2022, down from HKD 84.4 million in fiscal year 2021[12]. - The gross profit margin for the group was 36.1% for the fiscal year 2022, down from 54.0% in 2021, indicating a decline in profitability[75]. - The return on equity for the year was 21.5%, a decrease from 41.9% in the previous year, reflecting a reduction in shareholder returns[75]. - The adjusted net profit margin based on non-Hong Kong Financial Reporting Standards was 45.4%, compared to 26.6% in the previous year, showing a significant improvement[78]. Expenses and Costs - Employee benefits expenses for fiscal year 2022 were approximately HKD 65.9 million, accounting for 36.5% of total operating expenses, compared to HKD 61.6 million and 30.8% in fiscal year 2021[5]. - The cost of goods sold was approximately HKD 44.0 million in fiscal year 2022, representing 24.3% of total operating expenses, down from HKD 56.8 million and 28.5% in fiscal year 2021[4]. - Promotional costs were approximately HKD 15.8 million in fiscal year 2022, down from HKD 19.4 million in fiscal year 2021[10]. - Listing expenses were approximately HKD 11.8 million in fiscal year 2022, compared to HKD 14.3 million in fiscal year 2021[9]. - Total expenses for the year were HKD 32,937,000, a decrease from HKD 35,184,000 in 2021[113]. Assets and Liabilities - The company's current assets increased significantly from approximately HKD 126.7 million on December 31, 2021, to approximately HKD 265.6 million on December 31, 2022, primarily due to an increase in cash and cash equivalents by about HKD 65.7 million[23]. - The company's cash and cash equivalents increased from approximately HKD 76.0 million on December 31, 2021, to approximately HKD 141.7 million on December 31, 2022, mainly due to operating cash inflows and funds raised from the listing[34]. - The company's bank borrowings decreased from approximately HKD 38.7 million on December 31, 2021, to zero on December 31, 2022, due to repayment of borrowings during the fiscal year[31]. - Total assets as of December 31, 2022, amounted to HKD 412,948,000, up from HKD 265,760,000 in 2021, representing a growth of 55.4%[87]. - Total equity rose to HKD 351,307,000 from HKD 150,276,000, indicating an increase of 133.5%[87]. Revenue Breakdown - Revenue from licensing services was HKD 87,130,000, down 40.3% from HKD 146,060,000 in the previous year[102]. - Revenue from design consulting services increased to HKD 36,615,000, up 78.2% from HKD 20,534,000 in 2021[102]. - The company's revenue from character licensing decreased from approximately HKD 166.6 million in the 2021 fiscal year to approximately HKD 123.7 million in the 2022 fiscal year, a decline of about 25.8%[147]. - Revenue from merchandise licensing reached HKD 74,814,000 in FY2022, accounting for 60.5% of total licensing revenue, compared to 79.6% in FY2021[154]. - Revenue from e-commerce and other businesses fell from approximately HKD 123.4 million in the 2021 fiscal year to approximately HKD 68.9 million in the 2022 fiscal year, a decrease of about 44.2%[148]. Legal and Compliance - The group was ordered to pay a total of RMB 6,000,000 and RMB 1,000,000 in damages due to unfair competition claims, equivalent to approximately HKD 6,731,060 and HKD 1,122,000 respectively[37]. - The group has made a provision of RMB 1,000,000 (approximately HKD 1,122,000) for potential damages and costs related to the legal case[38]. - The company has initiated an appeal against a court ruling requiring it to pay damages totaling approximately RMB 6 million and RMB 1 million, equivalent to about HKD 6.73 million and HKD 1.12 million respectively[135]. Future Plans and Strategies - The group plans to expand its intellectual property portfolio and recruit new designers to enhance product lines, focusing on fashion brands and trendy toys[47]. - The company aims to develop cross-border e-commerce in Southeast Asia and integrate online and offline operations to increase brand presence overseas[47]. - The group is exploring opportunities in the metaverse to deepen brand positioning and enhance consumer loyalty[47]. - The company aims to leverage potential synergies from its character licensing business to enhance its e-commerce operations[138]. - Overall, the company is focusing on enhancing its design consulting services and exploring new licensing opportunities to drive future growth[154].

Financial Performance - Revenue for the six months ended June 30, 2022, was HKD 91.737 million, a decrease of 26.0% compared to HKD 123.773 million in the same period of 2021[15]. - The company reported a net loss of HKD 18.523 million for the period, compared to a profit of HKD 17.461 million in the previous year[15]. - Adjusted net loss under non-HKFRS financial measures was HKD 6.709 million, down from a profit of HKD 25.606 million in the same period last year[15]. - The adjusted net profit margin was -7.3%, significantly lower than the 20.7% reported in the previous year[15]. - The gross profit margin for the business segments was 48.0%, down from 57.3% in the previous year[20]. - Return on equity was -6.1%, compared to 21.9% in the same period of 2021[20]. - Total asset return rate was -5.2%, a decline from 10.1% in the previous year[20]. - Operating loss for the first half of 2022 was approximately HKD 16.5 million, a decrease of about 160% from an operating profit of HKD 27.4 million in the first half of 2021[65]. - The company recorded a loss attributable to owners of approximately HKD 18.5 million in the first half of 2022, compared to a profit of approximately HKD 17.5 million in the same period of 2021[77]. - The basic and diluted loss per share for the period was HKD (1.87), compared to earnings per share of HKD 2.06 in the previous year[148]. Revenue Breakdown - The company's revenue from character licensing decreased by approximately 17.4% from HKD 59.0 million in the first half of 2021 to HKD 48.7 million in the first half of 2022, primarily due to the impact of COVID-19 on authorized merchants[39]. - Revenue from e-commerce and other businesses fell by approximately 33.6%, from HKD 64.8 million in the first half of 2021 to HKD 43.0 million in the first half of 2022, attributed to reduced sales through e-commerce platforms and logistical challenges[40]. - The B.Duck brand accounted for 77.1% of the total revenue from character licensing in the first half of 2022, generating HKD 37.5 million, a decrease of approximately 13.5% from HKD 43.4 million in the same period of 2021[43]. - Revenue from merchandise licensing reached HKD 35.186 million, accounting for 72.3% of total licensing revenue for the first half of 2022, compared to HKD 39.632 million and 67.2% in the same period of 2021[53]. Impact of COVID-19 - The company faced significant impacts from COVID-19, leading to temporary closures of physical stores and reduced consumer spending[29]. - The logistics efficiency was affected by the pandemic, impacting e-commerce and other business revenues[29]. Cost and Expenses - Cost of goods sold for the first half of 2022 was approximately HKD 22.4 million, representing 23.4% of total operating expenses, down from 29.1% in the first half of 2021[57]. - Employee benefits expenses increased to approximately HKD 35.6 million in the first half of 2022, accounting for 37.2% of total operating expenses, compared to HKD 29.9 million and 31.4% in the same period of 2021[58]. - Listing expenses increased from approximately HKD 8.1 million in the first half of 2021 to HKD 11.8 million in the first half of 2022[61]. - Promotion costs remained stable at approximately HKD 8.1 million for both the first half of 2021 and 2022[62]. - Travel and transportation expenses decreased by 19.3% from HKD 5,514,000 in June 2021 to HKD 4,451,000 in June 2022, representing 25.5% of total expenses[67]. - Legal, audit, and professional fees accounted for 32.1% of total expenses, totaling HKD 5,608,000 in June 2022, down from HKD 6,043,000 in June 2021[67]. - The net financial cost decreased by approximately 36.8% from HKD 0.8 million in the first half of 2021 to HKD 0.5 million in the first half of 2022 due to ongoing repayment of bank loans[69]. - Income tax expenses significantly reduced by 82.8% from HKD 9.1 million in the first half of 2021 to HKD 1.6 million in the first half of 2022, primarily due to a shift from profit to loss before tax[70]. Assets and Liabilities - Total assets increased to HKD 359,380,000 as of June 30, 2022, compared to HKD 265,760,000 as of December 31, 2021, representing a growth of 35.2%[154]. - Current assets increased significantly from approximately HKD 126.7 million on December 31, 2021, to approximately HKD 275.3 million on June 30, 2022, mainly due to an increase in cash and cash equivalents[79]. - Cash and cash equivalents increased from approximately HKD 76.0 million on December 31, 2021, to approximately HKD 183.6 million on June 30, 2022, primarily due to proceeds from the global offering[84]. - Trade receivables and contract assets totaled approximately HKD 72.5 million and HKD 16.8 million, respectively, as of June 30, 2022, with a loss allowance of approximately HKD 14.2 million[80]. - Inventory decreased from approximately HKD 44.4 million on December 31, 2021, to approximately HKD 36.7 million on June 30, 2022, due to ongoing utilization of inventory[83]. - The company had no bank borrowings or overdrafts, having repaid all borrowings in the first half of 2022[89]. - The debt-to-equity ratio was 25.8% as of December 31, 2021, but was not applicable as of June 30, 2022, due to the repayment of borrowings[91]. Future Plans and Strategies - The company aims to expand its digital creative capabilities and invest in potential brands within the value chain, focusing on Southeast Asian markets for cross-border e-commerce[32]. - The company plans to explore the metaverse community based on web 3.0 and build online and offline private traffic pools for its brands[32]. - The overall consumer goods market recovery is expected to enhance the company's profitability as it benefits from a broad licensing network and strong sales performance in previous years[32]. - The company has not engaged in any foreign exchange risk management instruments, relying on regular monitoring of its foreign exchange risks[93]. - The company believes there is substantial growth potential in the licensed character business and the overall Chinese licensing market, which is in its early growth phase[111]. - The company aims to expand its intellectual property portfolio and recruit new designers to enhance product lines, including fashion brands and trendy toys[111]. - The strategy includes exploring the metaverse community and building an online-offline private traffic pool to deepen brand positioning and enhance fan loyalty[111]. - The company plans to develop cross-border e-commerce in Southeast Asia to replicate its success in the Chinese market[112]. Shareholder Information - The company’s major shareholder, Xu Xiaolin, holds 66.32% of the issued share capital through controlled entities[120]. - As of June 30, 2022, 德盈環球投資有限公司 holds 663,200,000 shares, representing approximately 66.32% of the issued share capital[121]. - 林銀珊 holds 670,200,000 shares, accounting for approximately 67.02% of the issued share capital[123]. - The company has not granted any options under the share option scheme since its adoption on December 20, 2021[129]. - No purchases, redemptions, or sales of the company's listed securities have occurred from the listing date until June 30, 2022[130]. - The company confirms it has maintained the required public float since its listing date up to June 30, 2022[131]. Corporate Governance - The company is committed to maintaining high standards of corporate governance to protect shareholder interests and enhance corporate value[113]. - The audit committee has reviewed the unaudited condensed consolidated interim financial information for the six months ended June 30, 2022, and found it compliant with applicable accounting standards[133].

Financial Performance - Total revenue for 2021 was approximately HKD 290.0 million, representing a year-on-year growth of 24.2%[33] - Adjusted net profit for 2021 reached approximately HKD 77.3 million[33] - The adjusted net profit margin for 2021 was 26.6%[25] - The company achieved a gross profit margin of 54.0% in 2021[28] - The return on equity for 2021 was 41.9%[28] - The company's licensing business revenue increased from approximately HKD 98.0 million in the fiscal year 2020 to approximately HKD 166.6 million in the fiscal year 2021, representing a growth of about 69.9%[86] - Total revenue for the company rose from approximately HKD 233.5 million in the fiscal year 2020 to approximately HKD 290.0 million in the fiscal year 2021, marking an increase of about 23.9%[81] - Revenue from the B.Duck character, which is the company's main product category, increased by approximately 48.4% from HKD 75.0 million in the fiscal year 2020 to HKD 111.3 million in the fiscal year 2021[89] - The company's net profit attributable to shareholders increased by approximately 15.4% from about HKD 54.5 million in the fiscal year 2020 to about HKD 62.9 million in the fiscal year 2021[112] - The adjusted net profit under non-Hong Kong Financial Reporting Standards rose from approximately HKD 59.8 million in the fiscal year 2020 to approximately HKD 77.3 million in the fiscal year 2021, reflecting a growth of about 29.1%[111] Liquidity and Financial Position - The current ratio improved to 2.3 in 2021, indicating better liquidity[28] - The company maintained a net cash position, with cash and cash equivalents exceeding total interest-bearing borrowings[31] - The debt-to-equity ratio improved significantly from 53.1% on December 31, 2020, to 25.8% on December 31, 2021, indicating a stronger financial position[122] - The company's bank borrowings decreased from approximately HKD 46.8 million as of December 31, 2020, to approximately HKD 38.7 million as of December 31, 2021, due to loan repayments during the fiscal year 2021[120] - The company's cash and cash equivalents increased to approximately HKD 76.0 million as of December 31, 2021, primarily due to operating cash inflows and investments[115] Business Operations and Strategy - The company made significant progress in online business operations and digital integration of the B.Duck community[33] - The company emphasized product flexibility and online/offline integration as key areas of advancement[33] - Future strategies include building strong partnerships with licensees through high-quality design and collaborative marketing efforts to achieve robust growth[38] - The company plans to accelerate the development of its character licensing business and e-commerce, capitalizing on the growing potential of the Chinese licensing market[135] - The company aims to expand its licensing development into real-life entertainment projects and digital assets, such as NFTs[135] - The company is focused on replicating its successful experience in the Chinese market to overseas markets[135] Market Presence and Community Engagement - B.Duck is the largest domestic character intellectual property company in China by licensing revenue, with a market share of approximately 3.2%[35] - The B.Duck community has attracted over 10.5 million registered members, with content related to the brand generating over 740 million views[35] - The global licensing market is dominated by the US and Japan, with North America accounting for over 60% of global retail sales, while China represented less than 4% in 2021, indicating significant growth potential[36] - The company aims to expand its business internationally, leveraging its unique intellectual property and cultural strengths to enhance its global presence[36] Human Resources and Management - The total employee cost for the fiscal year ending December 31, 2021, was approximately HKD 61.6 million, with a total of 235 employees[128] - The company emphasizes the importance of human resources in maintaining its design capabilities and offers attractive compensation and training opportunities to employees[172] - The management team has a strong background in financial reporting and investor relations, enhancing corporate governance[139] - The board of directors includes members with diverse backgrounds in finance, marketing, and business development, supporting comprehensive strategic oversight[139][141] Risks and Challenges - The company has faced risks related to consumer preference changes and market trends, which could impact its revenue generation capabilities[163] - The company has highlighted potential risks from third-party infringement claims that could adversely affect its business and reputation[163] - The company has a history of generating most of its revenue from the Chinese market, which poses geographical concentration risks[163] Corporate Governance and Compliance - The board of directors is responsible for recommending dividends based on the group's operational and financial conditions, with any proposed final dividends subject to shareholder approval[167] - The company has complied with all applicable laws and regulations in its operations as of the report date[170] - The company has arranged appropriate liability insurance for its directors and senior management against legal actions arising from corporate activities[193] Future Outlook - The company provided a positive outlook for the next quarter, projecting a revenue increase of 20%[137] - New product launches are expected to contribute an additional $5 million in revenue over the next fiscal year[137] - The company is investing in new technology development, allocating $2 million for R&D in the upcoming year[137] - Market expansion plans include entering two new international markets by Q3 2024[137] - The company is considering strategic acquisitions to enhance its market position, with a budget of $10 million for potential deals[137]