万华媒体(00426) - 2024 - 年度财报

Chairman's Report Business Summary and Transformation The Group faced a 4% revenue decline and a loss after tax due to a slow Hong Kong economy and weak advertising, prompting a strategic transformation into an integrated media company focused on digital content, e-commerce, and AI application - Due to slow economic recovery in Hong Kong and weak advertiser spending, turnover for the current fiscal year decreased by 4%, resulting in a loss after tax[6] - The Group is transforming from a traditional magazine publisher into an integrated media company, expanding its business into digital experiences, podcasts, short video content, e-commerce platforms, and artist management[9] - The Group's digital content production capabilities have been recognized, with its original short video program "Movie Boulevard" winning two golds and two silvers at The Spark Awards for Media Excellence 2023[6] Future Outlook and Strategy For FY2024/2025, the Group anticipates a brighter outlook, planning to integrate AI more broadly into content and digital platforms, enhance content creation and advertising solutions through talent development, and explore new technologies for revenue diversification - The Group plans to more broadly integrate Artificial Intelligence (AI) into its content and digital platforms to meet the evolving demands of advertisers and readers[10] - The Group will continue to invest in talent development, including upskilling programs and strategic recruitment, to enhance its capabilities in producing engaging content and innovative advertising solutions[10] Management Discussion and Analysis Performance Summary For the year ended March 31, 2024, the Group's turnover decreased by 4% to HK$39.51 million, with loss after tax expanding by 14% to HK$21.01 million, primarily due to increased finance costs and no government grants Financial Performance Summary (HKD) | Indicator | Year Ended March 31, 2024 | Year Ended March 31, 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Turnover | 39,506,000 | 41,166,000 | -4% | | Loss After Tax | 21,011,000 | 18,507,000 | +14% | | Finance Costs | 3,084,000 | 1,293,000 | +138% | | Government Grants | 0 | 2,461,000 | -100% | Business Review The Group's business segments showed mixed performance, with Entertainment and Lifestyle revenue declining and losses expanding, while Watches and Automotive saw slight growth and profit, alongside progress in digital transformation and virtual artist management Segment Performance (HKD) | Business Segment | Turnover (FY2024) (HKD) | Turnover (FY2023) (HKD) | (Loss)/Profit (FY2024) (HKD) | (Loss)/Profit (FY2023) (HKD) | | :--- | :--- | :--- | :--- | :--- | | Entertainment and Lifestyle | 28,594,000 | 30,452,000 | (16,752,000) | (13,995,000) | | Watches and Automotive | 10,912,000 | 10,714,000 | 431,000 | 589,000 | - The Group's "Ming Pao Weekly" short video program "Movie Boulevard" and digital platforms received multiple industry awards, demonstrating recognition for its media transformation efforts[17] - In artist management, the Group collaborates with technology companies to manage virtual AI artist "MonoC" in addition to human artists[18] Liquidity and Capital Structure As of March 31, 2024, the Group's net current assets decreased to HK$25.61 million, while its capital gearing ratio sharply rose from 141.7% to 222.6%, indicating significantly increased financial leverage Liquidity and Capital Gearing Ratio (HKD) | Indicator | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | Net Current Assets | 25,607,000 | 33,421,000 | | Cash and Cash Equivalents | 29,580,000 | 36,480,000 | | Loans from Fellow Subsidiaries | 78,000,000 | 65,000,000 | | Capital Gearing Ratio | 222.6% | 141.7% | Significant Investments The Group's 4.4% equity stake in Mao G.K. Kwai Chung Limited saw its fair value drop significantly to HK$4.50 million as of March 31, 2024, representing 11.2% of total assets, with no dividends received Investment in Mao G.K. Kwai Chung Limited | Indicator | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | Equity Interest | 4.4% | 4.4% | | Fair Value (HKD) | 4,500,000 | 9,960,000 | | Percentage of Total Assets | 11.2% | 18.3% | Directors' Report Results and Dividend Distribution Due to a loss for the year, the Board does not recommend a dividend for the year ended March 31, 2024, as the Company's distributable reserves are zero under Cayman Islands law - The Directors do not recommend the payment of a dividend for the year ended March 31, 2024[42] - As of March 31, 2024, the Company's distributable reserves were zero[44] Directors' and Major Shareholders' Interests The report details directors' and major shareholders' interests, with Tan Sri Datuk Tiong Hiew King and Dato' Sri Tiong Ik King indirectly holding 73.01% of shares via Comwell Investment Limited, and Executive Director Mr. Lam Pak Cheung holding 0.75% - Major shareholders Tan Sri Datuk Tiong Hiew King and Dato' Sri Tiong Ik King, through Comwell Investment Limited (an indirect wholly-owned subsidiary of Media Chinese International Limited), are deemed to jointly hold 292,700,000 shares, representing 73.01% of the Company's issued share capital[70] - Executive Director Mr. Lam Pak Cheung holds 3,000,000 shares, representing 0.75% of the Company's issued share capital, through his wholly-owned Venture Logic Investments Limited[65][66] Compliance Statement The Board confirms the Company maintained a public float of at least 25% as per Listing Rules and had no material breaches or non-compliance with applicable laws and regulations during the year - As of the date of this report, the Company has maintained a sufficient public float of not less than 25% as required by the Listing Rules[77] - During the year, the Group had no material breaches or non-compliance with applicable laws and regulations[82] Corporate Governance Report Board and Committees The Board comprises six directors, including three independent non-executive directors, ensuring checks and balances, with four committees (Executive, Remuneration, Nomination, Audit) fulfilling their respective duties during the reporting period - The Board comprises 6 directors, including 1 non-executive director (Chairman), 2 executive directors, and 3 independent non-executive directors, a composition the Board believes ensures effective checks and balances[89] - The Board has an Executive Committee, Remuneration Committee, Nomination Committee, and Audit Committee, with the chairpersons of the Remuneration, Nomination, and Audit Committees all being independent non-executive directors[97][100][102][108] Annual Meeting Attendance | Director Name | AGM | Board Meetings | Audit Committee Meetings | Remuneration Committee Meetings | Nomination Committee Meetings | | :--- | :--- | :--- | :--- | :--- | :--- | | Ms. Tiong Choo | 1/1 | 4/4 | Not Applicable | Not Applicable | Not Applicable | | Mr. Tiong Kiu Chiong | 1/1 | 4/4 | Not Applicable | 1/1 | 1/1 | | Mr. Lam Pak Cheung | 1/1 | 4/4 | Not Applicable | Not Applicable | Not Applicable | | Mr. Yu Hon To, David | 1/1 | 4/4 | 4/4 | 1/1 | 1/1 | | Mr. Lau Chi Wah, Alex | 1/1 | 4/4 | 4/4 | 1/1 | 1/1 | | Ms. Wong Hung Wai Yee | 1/1 | 4/4 | 4/4 | 1/1 | 1/1 | Risk Management and Internal Control The Board ensures robust risk management and internal control, with the Executive Committee leading systematic risk identification and management, supported by internal audit and policies on whistleblowing and anti-bribery, all deemed adequate and effective - The Board is responsible for ensuring the establishment and maintenance of robust and effective risk management and internal control systems, reviewing their effectiveness at least annually[125][136] - The Executive Committee, acting as the Risk Management Committee, oversees the implementation of the risk management framework and reports to the Board, with risk management processes implemented hierarchically and recorded in a risk register[127][128] - The Group has adopted whistleblowing and anti-bribery and corruption policies to encourage employees to report misconduct and maintain a zero-tolerance stance on bribery and corruption[130][133] Shareholders' Rights The Company prioritizes shareholder communication through various channels and has established procedures for shareholders, holding at least 10% of voting share capital, to convene extraordinary general meetings and propose resolutions - One or more shareholders holding not less than one-tenth of the paid-up capital of the Company (carrying the right to vote) may request the Directors to convene an extraordinary general meeting by written requisition[141] - Shareholders can access information on the Company's key business matters through various communication channels, including general meetings, quarterly/interim/annual reports, announcements, and circulars, and can direct inquiries to the Company's head office or designated email address[138] Independent Auditor's Report Audit Opinion PricewaterhouseCoopers issued an unmodified audit opinion, affirming the consolidated financial statements fairly present the Group's financial position, performance, and cash flows in accordance with IFRS and Hong Kong Companies Ordinance - The auditor believes that the consolidated financial statements truly and fairly reflect the Group's financial position, performance, and cash flows, and have been properly prepared in compliance with relevant accounting standards and regulations[146] Key Audit Matters "Revenue Recognition" was a key audit matter due to its significant amount, and the auditor's procedures, including policy assessment and transaction testing, confirmed that the Group's revenue recognition was supported by evidence - The key audit matter for this period's audit was "Revenue Recognition," primarily due to its significant amount, with revenue mainly comprising advertising income and sales revenue from journal distribution and subscriptions[152][154] - The auditor's procedures included evaluating policies, testing internal controls, and sampling contracts and supporting documents, concluding that the Group's revenue recognition was supported by evidence[155] Consolidated Financial Statements Consolidated Statement of Profit or Loss For the year ended March 31, 2024, the Group's turnover decreased by 4% to HK$39.51 million, resulting in a gross profit of HK$5.08 million, an operating loss of HK$17.73 million, and a total loss for the year of HK$21.01 million Consolidated Statement of Profit or Loss Summary (HK$ '000) | Indicator | FY2024 | FY2023 | | :--- | :--- | :--- | | Turnover | 39,506 | 41,166 | | Gross Profit | 5,081 | 7,242 | | Operating Loss | (17,733) | (17,190) | | Loss for the Year | (21,011) | (18,507) | | Basic and Diluted Loss Per Share (HK cents) | (5.2) | (4.6) | Consolidated Statement of Financial Position As of March 31, 2024, the Group's total assets decreased to HK$40.09 million, while total liabilities increased to HK$89.25 million, primarily due to intercompany loans, expanding the total deficit to HK$49.16 million Consolidated Statement of Financial Position Summary (HK$ '000) | Indicator | March 31, 2024 | March 31, 2023 | | :--- | :--- | :--- | | Total Assets | 40,091 | 54,479 | | Total Liabilities | 89,251 | 77,210 | | - Of which: Loans from Fellow Subsidiaries | 78,000 | 65,000 | | Total Deficit | (49,160) | (22,731) | Consolidated Statement of Cash Flows The Group used HK$19.65 million in operating activities, had minor investing outflows, and received HK$12.94 million from financing, primarily intercompany loans, resulting in a net decrease of HK$6.88 million in cash and equivalents, ending at HK$29.58 million Consolidated Statement of Cash Flows Summary (HK$ '000) | Indicator | FY2024 | FY2023 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (19,654) | (18,300) | | Net Cash Used in Investing Activities | (161) | (354) | | Net Cash From/(Used in) Financing Activities | 12,935 | (35,073) | | Net Decrease in Cash and Cash Equivalents | (6,880) | (53,727) | | Cash and Cash Equivalents at Year End | 29,580 | 36,480 | Notes to the Consolidated Financial Statements The notes detail accounting policies and financial items, highlighting the Group's media business, revenue sources, significant related party transactions including a HK$78 million loan, and unrecognised deferred tax assets due to tax losses - The Group has multiple related party transactions with its ultimate parent company, Media Chinese International Limited, and its fellow subsidiaries, including support services, leases, and interest expenses[359][360][361] - The Group obtained a HK$100 million loan facility from a fellow subsidiary, with HK$78 million utilized as of March 31, 2024, at an annual interest rate of HIBOR plus 1.4%[349] - Due to uncertainty regarding future taxable profits, the Group has not recognized a deferred income tax asset of HK$26.01 million for deductible tax losses of HK$158 million[345] Five-Year Financial Summary Five-Year Financial Data Over the past five years, the Group's turnover consistently declined from HK$70.13 million in 2020 to HK$39.51 million in 2024, consistently incurring losses attributable to owners, and its equity shifted from a positive HK$13.05 million to a HK$49.16 million deficit Five-Year Performance Summary (HK$ '000) | Year Ended March 31 | 2024 | 2023 | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | Turnover | 39,506 | 41,166 | 45,039 | 45,943 | 70,129 | | Loss Attributable to Owners of the Company | (21,011) | (18,507) | (12,332) | (17,255) | (26,848) | Five-Year Assets and Liabilities Summary (HK$ '000) | As of March 31 | 2024 | 2023 | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 40,091 | 54,479 | 97,633 | 126,622 | 29,828 | | Total Liabilities | 89,251 | 77,210 | 106,670 | 121,109 | 16,774 | | Capital and Reserves Attributable to Owners of the Company | (49,160) | (22,731) | (9,037) | 5,513 | 13,054 |