文化传信(00343) - 2024 - 年度业绩

Financial Performance Overview This section presents a high-level overview of the Group's financial results, encompassing its income statement and financial position Consolidated Statement of Profit or Loss and Other Comprehensive Income The Group's net consolidated loss significantly narrowed by 44.2% to HKD 20,782 thousand for the year ended March 31, 2024, primarily due to revenue structure adjustments and cost control, despite a 34.1% decrease in total revenue and a slight improvement in gross margin Consolidated Statement of Profit or Loss and Other Comprehensive Income Summary | Metric | 2024 (HKD thousands) | 2023 (HKD thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 20,158 | 30,600 | -34.1% | | Cost of Sales | (10,307) | (16,084) | -35.9% | | Gross Profit | 9,851 | 14,516 | -32.1% | | Other Income | 5,349 | 1,213 | +340.9% | | Other Gains or Losses | 3,328 | (1,957) | N/A | | Loss for the Year | (20,929) | (38,655) | -45.8% | | Loss for the Year Attributable to Owners of the Company | (20,782) | (37,223) | -44.2% | | Basic and Diluted Loss Per Share (HK cents) | (1.2) | (2.2) | -45.5% | - Gross margin increased from 47.4% in 2023 to 48.9% in 2024, primarily due to the restructuring of the digital marketing segment, which significantly reduced production costs[73][212] Consolidated Statement of Financial Position As of March 31, 2024, the Group's total net assets and net current assets both decreased, but the current ratio remained healthy, with non-controlling interests shifting from positive to negative, reflecting losses in some subsidiaries Consolidated Statement of Financial Position Summary | Metric | 2024 (HKD thousands) | 2023 (HKD thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Non-current Assets | 7,268 | 14,282 | -49.1% | | Current Assets | 119,014 | 148,224 | -19.7% | | Current Liabilities | 17,603 | 14,749 | +19.3% | | Net Current Assets | 101,411 | 133,475 | -24.0% | | Net Assets | 108,679 | 147,400 | -26.3% | | Equity Attributable to Owners of the Company | 113,787 | 138,550 | -17.9% | | Non-controlling Interests | (5,108) | 8,850 | N/A | - Current ratio decreased from 10.0 in 2023 to 6.8 in 2024[84] - Debt-to-equity ratio (attributable to owners of the Company) increased from 10.9% in 2023 to 15.5% in 2024[84] Notes to the Consolidated Financial Statements This section details the accounting policies, significant judgments, and other explanatory information supporting the consolidated financial statements 1. Basis of Preparation The consolidated financial statements are prepared in accordance with Hong Kong Financial Reporting Standards and presented in Hong Kong dollars, despite the company's functional currency being Renminbi, with some financial instruments measured at fair value - Consolidated financial statements are prepared in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants[11] - The Company's functional currency is Renminbi, but for user convenience, the consolidated financial statements are presented in Hong Kong dollars[24] - The statements are prepared on a historical cost basis, except for certain financial instruments measured at fair value at the end of the reporting period[11] 2. Application of New and Revised Hong Kong Financial Reporting Standards This year, the Group first applied new and revised Hong Kong Financial Reporting Standards mandatory for annual periods beginning on or after April 1, 2023, which had no significant impact on the financial position or performance for the current and prior years - The Group first applied new and revised Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants, which are mandatory for annual periods beginning on or after April 1, 2023[1][25] - The application of new standards had no significant impact on the Group's financial position and performance for the current and prior years[28] 3. Revenue The Group's total revenue for FY2024 was HKD 20,158 thousand, a 34.1% decrease from HKD 30,600 thousand in FY2023, primarily due to a significant reduction in digital marketing services revenue, partially offset by growth in publishing and intellectual property licensing revenue Revenue by Source | Revenue Source | 2024 (HKD thousands) | 2023 (HKD thousands) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Sales of Comic Books | 12,419 | 8,336 | +49.0% | | Copyright Income from IP Licensing | 2,685 | 3,647 | -26.4% | | New Media Advertising Income | 2,484 | 15,328 | -83.8% | | Sales of Alcoholic Beverages | 2,457 | 3,289 | -25.3% | | Social Media Marketing | 113 | – | N/A | | Total | 20,158 | 30,600 | -34.1% | - Digital marketing business revenue significantly decreased from HKD 15,328 thousand in 2023 to HKD 2,597 thousand in 2024, mainly due to scaled-down operations[72] - Publishing and intellectual property licensing business revenue increased from HKD 11,983 thousand in 2023 to HKD 15,104 thousand in 2024, a 26.0% growth[72][210] 4. Segment Information The Group's operating segments include publishing and IP licensing, digital marketing, retail and wholesale, and natural language processing, with publishing and IP licensing performing well in FY2024, while digital marketing and retail and wholesale revenues declined, and natural language processing remained in an investment phase - The Group's operating and reportable segments include: publishing and intellectual property licensing, digital marketing, retail and wholesale, and natural language processing[124][130][131][143] - The natural language processing business commenced operations in FY2023 through a newly incorporated subsidiary[129] Segment Revenue and Results In FY2024, the publishing and IP licensing segment saw growth in both revenue and results, the digital marketing segment experienced a significant revenue decline and recorded a loss, the retail and wholesale segment's revenue decreased and turned to a loss, and the natural language processing segment remained in an investment loss state Segment Revenue and Results Summary | Segment | 2024 Revenue (HKD thousands) | 2023 Revenue (HKD thousands) | 2024 Segment Results (HKD thousands) | 2023 Segment Results (HKD thousands) | | :--- | :--- | :--- | :--- | :--- | | Publishing and IP Licensing | 15,104 | 11,983 | 1,384 | 1,261 | | Digital Marketing | 2,597 | 15,328 | 2,236 | (8,654) | | Retail and Wholesale | 2,457 | 3,289 | (887) | (721) | | Natural Language Processing | – | – | (2,873) | (1,191) | | Consolidated Total | 20,158 | 30,600 | (140) | (9,305) | - In FY2024, the digital marketing segment's results turned from a loss to a profit, despite a significant decrease in revenue[133][146] - The natural language processing segment recorded a loss of HKD 2,873 thousand in 2024, indicating it is still in its early development stage[133] Geographical Information The Group's operations are primarily located in China (including Hong Kong), with revenue and non-current assets from Hong Kong being higher than mainland China in FY2024 Geographical Information Summary | Region | 2024 External Customer Revenue (HKD thousands) | 2023 External Customer Revenue (HKD thousands) | 2024 Non-current Assets (HKD thousands) | 2023 Non-current Assets (HKD thousands) | | :--- | :--- | :--- | :--- | :--- | | Hong Kong (Place of Operation) | 17,561 | 15,272 | 6,080 | 7,484 | | China | 2,597 | 15,328 | 21 | – | | Total | 20,158 | 30,600 | 6,101 | 7,484 | - Non-current assets exclude deferred tax assets and financial instruments[152] Major Customer Information In FY2024, four customers contributed over 10% of the Group's total sales, with Customer A and Customer D being new major customers, and Customer E no longer a major customer Major Customer Information Summary | Customer | 2024 Revenue (HKD thousands) | 2023 Revenue (HKD thousands) | Segment | | :--- | :--- | :--- | :--- | | Customer A | 5,648 | Not Applicable | Publishing and IP Licensing | | Customer B | 5,133 | 5,590 | Publishing and IP Licensing | | Customer C | 2,457 | 3,289 | Retail and Wholesale | | Customer D | 2,362 | Not Applicable | Publishing and IP Licensing | | Customer E | Not Applicable | 6,251 | Digital Marketing | - Customer A and Customer D became major customers, contributing over 10% of total sales in 2024[142] - Customer E was a major customer in the digital marketing segment in 2023 but is no longer applicable in 2024[142] 5. Other Income The Group's other income significantly increased to HKD 5,349 thousand in FY2024, primarily due to the reversal of impairment losses on previously recognized trade receivables and prepayments Other Income Summary | Income Item | 2024 (HKD thousands) | 2023 (HKD thousands) | | :--- | :--- | :--- | | Bank Interest Income | 177 | 215 | | Consulting Income | 41 | – | | Dividend Income from Financial Assets at FVTPL | 85 | 28 | | Imputed Interest Income on Loans Receivable | 183 | – | | Investment Income from Financial Assets at FVOCI | 46 | – | | Reversal of Impairment Loss on Trade Receivables Previously Recognized | 1,491 | – | | Reversal of Impairment Loss on Prepayments Previously Recognized | 2,453 | – | | Subsidies | 19 | 827 | | Miscellaneous Income | 143 | 104 | | Write-off of Other Payables | 658 | 39 | | Write-off of Trade Receivables | 53 | – | | Total | 5,349 | 1,213 | - In FY2024, impairment losses on previously recognized trade receivables and prepayments were reversed due to civil litigation initiated against suspicious misconduct by digital marketing business customers and suppliers[156] - Subsidies significantly decreased in FY2024, mainly because 2023 included subsidies from the Hong Kong Government's Employment Support Scheme[157] 6. Other Gains or Losses The Group's other gains or losses shifted from a loss of HKD 1,957 thousand in 2023 to a gain of HKD 3,328 thousand in 2024, mainly driven by gains from the derecognition and disposal of subsidiaries, offsetting fair value changes in financial assets and exchange losses Other Gains or Losses Summary | Item | 2024 (HKD thousands) | 2023 (HKD thousands) | | :--- | :--- | :--- | | Gains (Losses) from Fair Value Changes of Financial Assets at FVTPL | (5,936) | (1,377) | | Gain on Derecognition of a Subsidiary | 10,942 | 42 | | Gain on Disposal of a Subsidiary | 823 | – | | Gains (Losses) on Disposal of Property and Equipment | 3 | (14) | | Loss on Write-off of Property and Equipment | (5) | – | | Net Exchange Loss | (2,499) | (608) | | Total | 3,328 | (1,957) | - Derecognition of a subsidiary resulted in a gain of HKD 10,942 thousand, and disposal of a subsidiary resulted in a gain of HKD 823 thousand[167] - Financial assets at fair value through profit or loss recorded a fair value change loss of HKD 5,936 thousand[167] 7. Finance Costs The Group's finance costs for FY2024 were HKD 69 thousand, a decrease from HKD 125 thousand in FY2023, primarily consisting of interest expenses on lease liabilities Finance Costs Summary | Item | 2024 (HKD thousands) | 2023 (HKD thousands) | | :--- | :--- | :--- | | Interest on Lease Liabilities | 69 | 125 | | Total | 69 | 125 | 8. Other Impairment Losses The Group recognized other impairment losses of HKD 971 thousand in FY2024, a decrease from HKD 2,023 thousand in FY2023, primarily including impairments on an associate, prepayments, and right-of-use assets Other Impairment Losses Summary | Impairment Item | 2024 (HKD thousands) | 2023 (HKD thousands) | | :--- | :--- | :--- | | Associate | 157 | – | | Intangible Assets | – | 245 | | Prepayments | 560 | – | | Right-of-use Assets | 254 | 1,778 | | Total | 971 | 2,023 | - In FY2024, an impairment loss of HKD 157 thousand was recognized due to the associate's continuous losses[221] - In FY2024, an impairment loss of HKD 560 thousand was made for prepayments for unpublished comics[168] 9. Loss Before Tax The Group's loss before tax for FY2024 was calculated after deducting (or including) staff costs, auditor's remuneration, cost of inventories, costs to fulfill customer contracts, depreciation and amortization, legal and consulting fees, severance costs, and research costs Loss Before Tax Adjustments | Item | 2024 (HKD thousands) | 2023 (HKD thousands) | | :--- | :--- | :--- | | Staff Costs | 19,777 | 24,556 | | Auditor's Remuneration | 1,600 | 1,800 | | Cost of Inventories Recognized as Expense | 8,860 | 7,505 | | Costs to Fulfill Customer Contracts | 1,447 | 8,579 | | Depreciation of Property and Equipment | 54 | 117 | | Depreciation of Right-of-use Assets | 342 | 2,085 | | Amortization of Intangible Assets | 488 | 631 | | Legal, Consulting and Other Professional Fees | 5,437 | 7,126 | | Severance Costs | 1,560 | – | | Research Costs | 2,423 | 5,939 | | Gain on Derecognition of a Subsidiary | (10,942) | (42) | | Gain on Disposal of a Subsidiary | (823) | – | - Staff costs for FY2024 were HKD 19,777 thousand, a decrease from 2023[37] - Legal, consulting, and other professional fees amounted to HKD 5,437 thousand, primarily paid to lawyers and consultants for legal services and professional advice[36][37] 10. Income Tax Expense The Group's income tax expense for FY2024 was HKD 121 thousand, a decrease from HKD 152 thousand in FY2023, with Hong Kong profits tax calculated under a two-tiered system and Chinese subsidiaries taxed at 25% Income Tax Expense Summary | Item | 2024 (HKD thousands) | 2023 (HKD thousands) | | :--- | :--- | :--- | | Current Tax – Hong Kong Profits Tax | 154 | 195 | | Deferred Tax – Over-provision in Prior Years | (9) | (43) | | Deferred Tax – Hong Kong Profits Tax | (24) | – | | Income Tax Expense | 121 | 152 | - Hong Kong profits tax is calculated at 8.25% on the first HKD 2 million of estimated assessable profits and 16.5% on the remaining portion[45] - Chinese subsidiaries were taxed at a rate of 25% for both years[38] 11. Dividends The Company neither paid nor proposed any dividends for the years ended 2024 and 2023 - Basic and diluted loss per share attributable to owners of the Company is calculated based on relevant data[39] - No dividends were paid or proposed for the year ended March 31, 2024, and no dividends have been proposed since the end of the reporting period[160] 12. Loss Per Share The Group's basic and diluted loss per share for FY2024 was 1.2 HK cents, an improvement from 2.2 HK cents in FY2023, with no assumed exercise of outstanding share options for diluted loss per share calculation as it would reduce the loss Loss Per Share Calculation | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Weighted Average Number of Shares for Basic and Diluted Loss Per Share (thousands) | 1,668,657 | 1,668,657 | | Loss for the Year Attributable to Owners of the Company for Basic and Diluted Loss Per Share (HKD thousands) | (20,782) | (37,223) | | Basic and Diluted Loss Per Share (HK cents) | (1.2) | (2.2) | - The exercise of outstanding share options was not assumed for the calculation of diluted loss per share, as it would result in a reduction in loss per share[48] 13. Goodwill and Impairment Assessment The Group's goodwill was fully impaired in prior years and fully derecognized in FY2024 due to the disposal and derecognition of subsidiaries, with goodwill primarily allocated to two cash-generating units within the digital marketing segment - Goodwill was fully impaired in prior years[74][187][188] - For the year ended March 31, 2024, goodwill was fully derecognized upon disposal[52] - Goodwill was allocated to two separate cash-generating units within the digital marketing segment: Beijing Yiqimen Technology Co., Ltd. and Beijing Huichuan Network Information Technology Co., Ltd[186] 14. Intangible Assets The Group's intangible assets include club memberships, customer contracts and related customer relationships, software, and intellectual property, with the carrying amount decreasing to HKD 5,525 thousand in FY2024, mainly due to the elimination of related assets from the disposal/derecognition of subsidiaries Intangible Assets Carrying Amounts | Intangible Asset Category | 2024 Carrying Amount (HKD thousands) | 2023 Carrying Amount (HKD thousands) | | :--- | :--- | :--- | | Club Memberships | 1,385 | 1,385 | | Customer Contracts and Related Customer Relationships | – | – | | Software | – | – | | Intellectual Property | 4,140 | 4,628 | | Total | 5,525 | 6,013 | - Club memberships are considered by the directors to have an indefinite useful life and are not amortized[53] - Intellectual property is amortized on a straight-line basis over its estimated useful life of 10 years, based on its expected contribution to future cash flows[54] - Due to reduced revenue and continuous losses in the digital marketing segment, the recoverable amount of software was determined to be zero, resulting in an impairment of approximately HKD zero in FY2024 (2023: HKD 245 thousand) for intangible assets[43] 15. Trade Receivables The Group's net trade receivables for FY2024 significantly decreased to HKD 3,465 thousand from HKD 8,674 thousand in FY2023, with approximately HKD 942 thousand of receivables overdue for more than 90 days considered credit-impaired and provided for Trade Receivables Aging Analysis | Aging | 2024 (HKD thousands) | 2023 (HKD thousands) | | :--- | :--- | :--- | | 0 – 60 Days | 1,439 | 6,980 | | 61 – 90 Days | 442 | 381 | | 91 – 180 Days | 1,264 | 1,281 | | Over 180 Days | 320 | 32 | | Total | 3,465 | 8,674 | - As of March 31, 2024, gross trade receivables of approximately HKD 1,837 thousand were overdue for more than 90 days, of which approximately HKD 942 thousand were considered credit-impaired and provided for[44] - Trade receivables include approximately HKD 38 thousand due from Culturecom Holdings Limited, an associate[55] 16. Other Receivables, Deposits and Prepayments The Group's total other receivables, deposits, and prepayments amounted to HKD 35,813 thousand in FY2024, primarily comprising deposits for intangible assets paid to independent third parties for the natural language processing business Other Receivables, Deposits and Prepayments Summary | Item | 2024 (HKD thousands) | 2023 (HKD thousands) | | :--- | :--- | :--- | | Other Receivables (Net) | 80 | 2,718 | | Deposits and Prepayments (Net) | 35,733 | 39,122 | | Total | 35,813 | 41,840 | | Less: Amounts to be Settled or Utilized within One Year | (35,325) | (41,374) | | Amounts to be Utilized After One Year | 488 | 466 | - Deposits and prepayments primarily include approximately HKD 33,269 thousand paid to independent third parties for intangible assets related to the natural language processing business[65] - Deposits and prepayments include approximately HKD 220 thousand paid to CMEL, an associate[192] 17. Loans Receivable The Group recognized new loans receivable from independent third parties of HKD 7,956 thousand in FY2024, which are unsecured, interest-free, and repayable within one year Loans Receivable Summary | Item | 2024 (HKD thousands) | 2023 (HKD thousands) | | :--- | :--- | :--- | | Loans Receivable from Independent Third Parties | 8,068 | – | | Less: Provision for Credit Losses | (112) | – | | Total | 7,956 | – | - The loans receivable are unsecured, interest-free, and repayable within one year[201] - The difference between the principal amount of the loan and its initial fair value recognition is approximately HKD 384 thousand, determined using an annual effective interest rate of 3.50% to 3.71%[201] 18. Trade Payables, Other Payables and Accruals The Group's net trade payables for FY2024 decreased to HKD 946 thousand from HKD 1,419 thousand in FY2023, with other payables and accruals mainly comprising accrued operating expenses and salaries Trade Payables Aging Analysis | Aging | 2024 (HKD thousands) | 2023 (HKD thousands) | | :--- | :--- | :--- | | 0 – 60 Days | 717 | 1,031 | | 61 – 90 Days | 216 | 308 | | Over 90 Days | 13 | 80 | | Total | 946 | 1,419 | - The average credit period for goods purchased ranges from 15 to 90 days[57] - Other payables and accruals include deposits received, accrued operating expenses, accrued salaries, and accrued severance costs[202] 19. Disposal/Derecognition of Subsidiaries The Group disposed of its entire equity interest in Huichuan Network and derecognized Yiqimen in FY2024, recognizing a gain on disposal of HKD 823 thousand and a gain on derecognition of HKD 10,942 thousand - On April 13, 2023, the Group disposed of its entire equity interest in Huichuan Network for a total cash consideration of RMB 50,000 (approximately HKD 57,075), recognizing a gain on disposal of HKD 823 thousand[58][195][196] - On March 20, 2024, the Group derecognized Yiqimen (55% owned), recognizing a gain on derecognition of approximately HKD 10,942 thousand[69] - The disposal of Huichuan Network resulted in a net cash outflow of HKD 47 thousand[197][198] 20. Events After the Reporting Period As of the date of this announcement, no significant post-reporting period events occurred after March 31, 2024, although the Company had previously entered into an agreement for the acquisition of an AI hardware and software company, which had not been completed by the financial statement date - Except as disclosed elsewhere in this announcement, no significant post-reporting period events occurred after March 31, 2024, and up to the date of this announcement[61][205] - The Company had entered into an agreement for the possible acquisition of 100% equity interest in a Chinese company engaged in the development and sale of AI hardware and software for a total consideration of approximately HKD 63,000,000, but this transaction had not been completed as of the financial statement date[199] Business Review and Outlook This section provides an overview of the Group's operational performance, financial results analysis, liquidity, and future strategic direction Overall Business Review In FY2024, the Group faced a challenging business and economic environment, with total revenue decreasing by 34.1%, and focused on resource conservation, business restructuring, and cost control to protect resources and address market challenges - After the COVID-19 pandemic, the overall economy required time to recover, and the Group continued to face a considerably challenging year[116] - The Group focused on conserving resources, restructuring businesses, and taking action to control and reduce costs and expenses[116] - For the year ended March 31, 2024, total revenue decreased by 34.1% from HKD 30,600,000 in 2023 to HKD 20,158,000 in 2024[116] Financial Performance Analysis The Group's consolidated net loss significantly narrowed in FY2024, primarily due to the restructuring of the digital marketing business and cost control, despite a decrease in total revenue - The Group's consolidated net loss decreased by approximately 44.2% to HKD 20,782,000, with a loss per share of 1.2 HK cents[210] Revenue The Group's overall revenue significantly decreased by 34.1% to HKD 20,158 thousand in FY2024, mainly impacted by a substantial reduction in digital marketing business revenue - Overall revenue significantly decreased by approximately 34.1% from HKD 30,600,000 to HKD 20,158,000[72] - Digital marketing business revenue significantly decreased from HKD 15,328,000 to HKD 2,597,000, primarily due to scaled-down operations[72] - Publishing and intellectual property licensing business revenue surged by approximately 26.0%, mainly due to increased publishing sales from acquiring more Japanese manga licenses[210] Gross Profit and Gross Margin The Group's gross profit for FY2024 was HKD 9,851 thousand, with a gross margin of 48.9%, an improvement from the prior year, primarily due to the restructuring of the digital marketing segment - The Group recorded a gross profit of approximately HKD 9,851,000 and a gross margin of 48.9%, compared to a gross profit of HKD 14,516,000 and a gross margin of 47.4% in the same period of 2023[73] - The increase in gross margin was due to the restructuring of the digital marketing segment, which significantly reduced production costs[212] Selling Expenses The Group's selling expenses significantly decreased to HKD 1,949 thousand in FY2024, primarily due to reduced revenue and scaled-down operations following the restructuring of the digital marketing segment - Selling expenses decreased from approximately HKD 4,891,000 in FY2023 to approximately HKD 1,949,000 in FY2024[208] - The reduction in selling expenses was primarily due to decreased revenue and scaled-down operations resulting from the restructuring of the digital marketing segment[208] Administrative Expenses The Group's total administrative expenses for FY2024 were HKD 28,909 thousand, a decrease from 2023, mainly attributed to reduced digital marketing business activities and ongoing cost control - Total administrative expenses were approximately HKD 28,909,000 (2023: HKD 31,078,000)[209] - Key expenses included staff costs of HKD 14,498,000, depreciation of right-of-use assets of HKD 342,000, audit fees of HKD 1,350,000, and directors' emoluments of HKD 4,204,000[209] - The decrease in administrative expenses was mainly due to reduced business activities in the digital marketing segment and streamlined operations through continuous cost control[209] Other Impairment Losses In FY2024, the Group recognized an impairment loss of HKD 254 thousand on right-of-use assets, a HKD 560 thousand impairment loss on prepayments for unpublished comics, and a HKD 157 thousand impairment loss due to the continued losses of an associate - An impairment loss of approximately HKD 254,000 was recognized on right-of-use assets (2023: HKD 1,778,000)[221] - As of March 31, 2024, no impairment loss on intangible assets was recognized (2023: HKD 245,000)[221] - An impairment loss of approximately HKD 560,000 was made for prepayments to suppliers for unpublished comics[221] - Due to the continuous losses of an associate, an impairment loss of approximately HKD 157,000 was recognized during the year[221] Other Expenses The Group's other operating expenses in FY2024 included research and development costs of HKD 2,423 thousand and legal, consulting, and other professional fees of HKD 5,437 thousand - Other operating expenses included research and development costs of approximately HKD 2,423,000 (2023: HKD 5,939,000), used for developing online platforms for the digital marketing business and the natural language processing business[222] - Legal, consulting, and other professional fees totaled approximately HKD 5,437,000 (2023: HKD 7,126,000)[222] - In FY2024, the Company did not recognize any expense for share options granted to a consultant (2023: HKD 1,566,000)[222] Loss for the Year The Group recorded a loss from operations of approximately HKD 20,929 thousand for FY2024, a reduction from 2023, primarily due to the continued decrease in sales from the digital marketing segment - The Group recorded a loss from operations of approximately HKD 20,929,000 for the year ended March 31, 2024 (2023: HKD 38,655,000)[223] - The narrowing of the loss was primarily due to the continuous decrease in sales from the digital marketing segment[223] Liquidity and Financial Resources As of March 31, 2024, the Group held cash and bank balances totaling HKD 38,228 thousand, with net current assets and current ratio decreasing but remaining healthy, and the Group maintaining prudent financial management with no significant foreign exchange risks - As of March 31, 2024, the Group's cash and bank balances at financial institutions totaled approximately HKD 38,228,000[225] - Net current assets were approximately HKD 101,411,000 (2023: HKD 133,475,000), and the current ratio was approximately 6.8 (2023: 10.0)[84] - The Group does not face significant foreign exchange rate fluctuation risks, except for those related to Renminbi[90] Deposits Paid for Intangible Assets As of March 31, 2024, the Group had paid deposits totaling approximately HKD 33,269 thousand for the development of natural language processing technology and the production of software and chipsets - The Group has paid deposits totaling approximately HKD 33,269,000 for the development of natural language processing technology and the production of software and chipsets[91] - These intangible assets are used to design and implement software and embedded chipsets, and to produce various offline Chinese speech recognition chips widely used in various electronic devices or application environments[91] Change in Use of Proceeds from Subscription of New Shares under General Mandate On June 12, 2023, the Company resolved to change the use of the unutilized net proceeds of approximately HKD 17,420 thousand from a subscription to be used as general working capital for the Group - The Company completed a subscription of new shares to an investor under a general mandate in 2021, raising net proceeds of approximately HKD 41,575,000[121] - Due to the scaled-down operations of the digital marketing segment, the Company decided to change the use of the remaining unutilized net proceeds of approximately HKD 17,420,000 from the subscription[121][218] - The revised use of proceeds is for the Group's general working capital, including salaries and benefits, rent and utilities, and other general and administrative expenses[93][121] Proposed Acquisition The Company had planned to acquire the entire equity interest in Brain-like Technology (Shenzhen) Co., Ltd. for a total consideration of HKD 63,000,000, to be paid by issuing new shares, but this transaction had not been completed as of the financial statement date - The Company had entered into an agreement with four vendors to acquire the entire equity interest in Brain-like Technology (Shenzhen) Co., Ltd. for a total consideration of HKD 63,000,000[219] - The total consideration was to be satisfied by the Company issuing and allotting 191,000,000 shares[199][219] - This proposed acquisition was subject to approval by the Company's shareholders at an extraordinary general meeting, but the transaction had not been completed as of the financial statement date[94][199] Placement of Convertible Bonds under General Mandate The Company had planned to place convertible bonds to raise net cash of HKD 98,500,000, primarily for natural language processing technology development and IP activation, but the placement was terminated in July 2023 due to weak market sentiment - The Company had entered into a placing agreement with a placing agent to procure not less than six placees to subscribe for convertible bonds with an aggregate principal amount of up to HKD 100,000,000 on a best-effort basis[95] - The net proceeds from the placing would be approximately HKD 98,500,000, of which approximately HKD 68,950,000 would be used for natural language processing technology development[95][108] - Due to weak overall market sentiment and insufficient market liquidity, the placement of convertible bonds was terminated in July 2023[108][112] Segment Business Performance The Group's business segments showed mixed performance in FY2024: publishing and IP licensing grew, digital marketing significantly scaled down, retail and wholesale sales decreased, while natural language processing continued R&D investments and achieved initial results Publishing and Intellectual Property Licensing Business The publishing and intellectual property licensing business improved, with revenue of HKD 15,104 thousand in FY2024, primarily due to more Japanese manga licenses and increased publishing sales, and the Group plans to continue expanding this business - The publishing and intellectual property licensing business performance improved, with revenue of HKD 15,104,000 in 2024 and HKD 11,983,000 in 2023[118] - The Company is dedicating more effort to the sales of self-owned or licensed copyrighted publications and expanding its licensing business scope[118] - Recent short dramas and films adapted from Hong Kong comics have driven a wave of Hong Kong cultural sentiment, increasing demand for Hong Kong comic IPs in mainland China, and the Group is collaborating with partners to revitalize these IPs[123] Digital Marketing The digital marketing segment is in the final stages of voluntary liquidation, with significantly scaled-down operations and a reduction in total employees from 9 to 3, leading to a substantial decrease in revenue, and the Group expects to recover cash for general working capital upon liquidation completion - The digital marketing segment is at a crossroads, in the final stages of voluntary liquidation, with the remaining operations in Beijing and Guangzhou significantly scaled down[103] - The total number of employees was reduced from 9 to 3, resulting in significant cost savings, but also a substantial decrease in revenue[103] - The Group has streamlined its organizational structure and initiated voluntary liquidation and disposal of its indirect non-wholly owned subsidiaries[72][113][117] Retail and Wholesale Business The Group's revenue from premium wine sales was HKD 2,457 thousand in FY2024, a decrease from the previous year, but the Group anticipates sales to gradually recover with economic recovery and is focusing on bulk wine sales to generate positive cash flow and reduce inventory - The Company sold certain wine inventory, generating revenue of HKD 2,457,000, compared to HKD 3,289,000 in the previous year[105] - The Group expects sales of premium wines to gradually recover with the economic recovery[105] - The Group is also focusing on selling wine in bulk to generate positive cash flow and reduce inventory[105] Natural Language Processing The Group continues to invest in R&D for Chinese AI recognition, collaborating with iFlytek and Brain-like Technology to develop real-time human-machine interaction AI voice technology, which has entered the product application stage, and its independently developed "Flying Dragon Code" Chinese AI Computer Code is mature and launching new products - The Group has formed a strategic partnership with iFlytek and Brain-like Technology to develop real-time human-machine interaction AI voice technology, focusing on Chinese speech recognition[120] - The AI voice real-time human-machine interaction technology has entered the product application stage, with the first generation of Flying Dragon Master human-machine interaction mobile phones soon to be launched[109] - The Group's independently developed Flying Dragon Code – Chinese AI Computer Code strategically addresses the security, autonomy, and independence issues of underlying AI operating system technology and has been integrated with major AI manufacturers[126] Outlook The Group will focus on its natural language processing business, while maintaining sustainable development levels for other business segments, committed to new financing to support Chinese AI software development, and expects significant revenue contributions from Hong Kong comic IP activation - The Group notes critical changes in its business and will focus on the natural language processing business while maintaining sustainable development levels for other business segments[125] - The Group continues to seek new financing to provide more working capital, especially for investing in Chinese AI software development[108] - The Group is further revitalizing its Hong Kong comic IPs with partners, expecting significant revenue contributions[123] Corporate Governance and Other Information This section covers the Company's corporate governance practices, compliance with listing rules, and other relevant administrative and employment information Suspension of Share Transfer Registration To be eligible to attend the 2024 Annual General Meeting, the Company will suspend share transfer registration from August 15 to August 20, 2024 - The principal share registrar and branch share registrar will suspend share transfer registration from August 15, 2024, to August 20, 2024 (both dates inclusive)[30][127] - All transfer documents, along with the relevant share certificates, must be submitted to the Company's branch share registrar in Hong Kong by 4:30 p.m. on August 14, 2024[30] Repurchase, Sale or Redemption of Listed Securities Neither the Company nor its subsidiaries repurchased, sold, or redeemed any of the Company's listed securities for the year ended March 31, 2024 - Neither the Company nor its subsidiaries repurchased, sold, or redeemed any of the Company's listed securities for the year ended March 31, 2024[31][87] Audit Committee The Company's Audit Committee, comprising two independent non-executive directors and one non-executive director, has reviewed the Group's accounting principles, internal controls, risk management, and financial reporting matters, including the audited financial statements - The Company's Audit Committee currently comprises two independent non-executive directors and one non-executive director[88] - The Audit Committee has reviewed the accounting principles and practices adopted by the Group with management and discussed matters such as internal controls, risk management, and financial reporting[88] Compliance with Corporate Governance Code The Company complied with all code provisions of the Corporate Governance Code from April 1, 2023, to March 31, 2024, except for a deviation in the rotation of independent non-executive directors' terms, but the Company believes sufficient measures have been taken to ensure corporate governance practices are no less stringent than the code - The Company has complied with all code provisions set out in the Corporate Governance Code, except for a deviation regarding the rotation of terms for independent non-executive directors[33][89] - All directors of the Company (including executive and non-executive directors) are subject to retirement by rotation at the annual general meeting in accordance with Article 110(A) of the Company's Articles of Association[89] Minimum Number of Independent Non-Executive Directors Following Mr. Fan Chun Wah's resignation, the number of the Company's independent non-executive directors fell below the minimum required by the Listing Rules, and the Board is identifying suitable candidates for appointment within three months - Following Mr. Fan Chun Wah's resignation on May 6, 2024, the Company has two independent non-executive directors, which is below the minimum number required by Rule 3.10(1) of the Listing Rules[77] - The Board is identifying suitable candidates to fill the vacancy of independent non-executive director and will make its best efforts to appoint a suitable candidate within three months from Mr. Fan's resignation date[79] Minimum Number of Members for Corporate Governance Committee The Company's Corporate Governance Committee currently has three members, which is less than the four members stipulated in its written terms of reference, and the Board is identifying candidates to fill the vacancies - The Corporate Governance Committee (the "Corporate Governance Committee") comprises four members, but currently consists of three members[80] - The Board will initiate procedures to identify candidates to fill these vacancies to comply with the Corporate Governance Committee's written terms of reference[80] Compliance with Model Code for Securities Transactions by Directors of Listed Issuers The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as its code of conduct for directors' securities transactions and confirmed that all directors complied with the code's standards for the year ended March 31, 2024 - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as its code of conduct for directors' securities transactions[81] - Following specific inquiries with the directors, they have confirmed compliance with the required standards set out in the Model Code for the year ended March 31, 2024[81] Publication of Results Announcement This results announcement has been published on the HKEX and the Company's websites, and the annual report will be dispatched to shareholders and published on the aforementioned websites in due course - This results announcement is published on the website of the Stock Exchange (www.hkexnews.hk) and the Company's website (www.culturecom.com.hk)[82](index=82&type=chunk) - The annual report will be dispatched to the Company's shareholders in due course and will be published on the aforementioned websites[82] Employment and Remuneration Policies As of March 31, 2024, the Group employed a total of 47 employees, with staff costs amounting to approximately HKD 21,061 thousand, and management regularly reviews remuneration to ensure competitiveness, offering discretionary bonuses and share options based on performance - As of March 31, 2024, the Group employed a total of 47 employees, with 31 in Hong Kong and 16 in China[216] - For the year ended March 31, 2024, staff costs from operations totaled approximately HKD 21,061,000[216] - Management regularly reviews remuneration to ensure its competitiveness, and certain directors and employees may receive discretionary bonuses and share options based on the Group's performance and their individual performance and achievements[216]