文化传信(00343) - 2024 - 年度财报

CORPORATE INFORMATION Corporate Structure and Key Personnel The company's board comprises executive, non-executive, and independent non-executive directors, with Mr. Kwan Kin Chung as Managing Director and Mr. Wong Kon Man as Chairman - Executive Director: Mr. Kwan Kin Chung (Managing Director)[6] - Non-Executive Directors: Mr. Wong Kon Man (Chairman), Dr. Liu Ka Ying (Vice Chairman)[6] - Independent Non-Executive Directors: Mr. Wong Kwan Kit, Mr. Mong Yat Lik. Mr. Fan Chun Wah resigned on May 6, 2024[6] - Mr. Yuen Kin resigned as Executive Director on May 6, 2024[6] Committees and Professional Advisors The company has established Corporate Governance, Audit, Remuneration, and Nomination Committees, with key advisors including HSBC and Kadolier CPA Limited - Audit Committee members include Mr. Wong Kwan Kit, Mr. Mong Yat Lik, and Mr. Wong Kon Man, who was appointed on May 6, 2024[7][8] - Remuneration Committee members include Mr. Wong Kwan Kit, Mr. Mong Yat Lik (appointed May 6, 2024), and Mr. Kwan Kin Chung[7][8] - Nomination Committee members include Mr. Kwan Kin Chung, Mr. Wong Kwan Kit, and Mr. Mong Yat Lik (appointed May 6, 2024)[10][11] - The company's auditor is Kadolier CPA Limited[10][11] Company Details The company's registered office is in Bermuda, with its principal place of business in Hong Kong, and its stock code is 343 - The company's registered office is located at Victoria Place, 5th Floor, 31 Victoria Street, Hamilton HM 10, Bermuda[10][11] - The company's principal place of business is located at Unit 1502, 15th Floor, Far East Finance Centre, 16 Harcourt Road, Admiralty, Hong Kong[10][11] - The company's stock code is 343[13] CHAIRMAN'S STATEMENT Results For the year ended March 31, 2024, the company's consolidated turnover decreased by 34.1% to HKD 20,158 thousands, with a narrowed loss attributable to equity holders 2024 Fiscal Year Key Financial Data (Chairman's Statement) | Indicator | 2024 (HKD thousands) | 2023 (HKD thousands) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Consolidated Turnover | 20,158 | 30,600 | -34.1% | | Loss Attributable to Equity Holders | 20,782 | 37,223 | -44.2% (loss narrowed) | | Loss Per Share | 1.2 HK cents | 2.2 HK cents | -45.5% (loss narrowed) | - The Board has resolved not to declare a final dividend for the year ended March 31, 2024 (2023: nil)[16][19] Business Review The group's total revenue declined due to slow post-pandemic economic recovery and changing consumption patterns, leading to resource conservation and business restructuring - Overall slow economic recovery, changing consumption patterns, and weak business activities led to a 34.1% year-on-year decrease in the Group's total revenue[17][20] Revenue by Business Segment (Chairman's Statement) | Business Segment | 2024 (HKD thousands) | 2023 (HKD thousands) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Publishing and IP Licensing | 15,104 | 11,983 | +26.0% | | Digital Marketing | 2,597 | 15,328 | -83.1% | | Retail and Wholesale | 2,457 | 3,289 | -25.3% | - Digital marketing business significantly scaled down, with Beijing Yiqimen Technology Co., Ltd. in the final stage of voluntary liquidation and Beijing Xinghe Engine Information Technology Co., Ltd. commencing voluntary liquidation, reducing total staff from 9 to 3 to save costs[22][23][24] - Publishing and IP licensing business revenue increased, primarily due to increased publishing sales from more Japanese manga licensing[27][30] - Retail and wholesale business revenue decreased but is expected to gradually recover with economic revival, as the Group focuses on high-volume sales for positive cash flow and inventory clearance[28][31] - The Group continues to invest in natural language processing technology, focusing on Chinese speech recognition software and chipset development, and has established strategic partnerships with iFlytek and Brain Robotics[29][32][34][36] - Net operating expenses for the natural language processing business were approximately HKD 2,873 thousands, mainly for personnel and business promotion, with 13 employees in this segment[35][37] Prospect The Group is shifting its focus to natural language processing while maintaining the sustainability of other businesses, seeking new financing for AI software development - The Group will shift its focus to natural language processing business while maintaining the sustainable development and profitability of other business segments[45][48] - Approximately HKD 17,420 thousands of unutilized net proceeds from the subscription have been reallocated as general working capital[40][42] - The convertible bond placement, originally planned for natural language processing technology development and IP activation, was terminated in July 2023 due to weak market conditions and insufficient liquidity, but the Group will continue to seek new financing[41][43] - AI voice real-time human-computer interaction technology has entered the product application stage, with the first generation Feilong Master human-computer interaction mobile phone soon to be launched[46][48] - The Group's independently developed Feilong Code Chinese AI Computer Code is mature, fully adaptable to various operating systems and mainstream chip architectures, and has partnered with major AI manufacturers to launch new products[47][48] - Short dramas and films adapted from Hong Kong comics have driven demand for Hong Kong comic IP, and the Group will further activate IP with partners, expecting significant revenue contributions[51][53] MANAGEMENT DISCUSSION AND ANALYSIS Financial Results For the year ended March 31, 2024, the Group's consolidated net loss significantly decreased by 44.2% to HKD 20,782 thousands, primarily due to reduced digital marketing operations 2024 Fiscal Year Key Financial Data (Management Discussion and Analysis) | Indicator | 2024 (HKD thousands) | 2023 (HKD thousands) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Consolidated Net Loss | 20,782 | 37,223 | -44.2% (loss narrowed) | | Loss Per Share | 1.2 HK cents | 2.2 HK cents | -45.5% (loss narrowed) | | Total Revenue | 20,158 | 30,600 | -34.1% | | Gross Profit | 9,851 | 14,516 | -32.1% | | Gross Profit Margin | 48.9% | 47.4% | +1.5 percentage points | | Selling Expenses | 1,949 | 4,891 | -60.1% | | Administrative Expenses | 28,909 | 31,078 | -7.0% | | Other Impairment Losses | 971 | 2,023 | -52.0% | | Other Expenses | 7,860 | 14,631 | -46.3% | | Loss for the Year | 20,929 | 38,655 | -45.8% (loss narrowed) | - Digital marketing business revenue significantly decreased from HKD 15,328 thousands to HKD 2,597 thousands, mainly due to reduced operating scale[57][59] - Publishing and IP licensing business revenue increased by approximately 26.0%, benefiting from increased publishing sales due to more Japanese manga licensing[61][64] - Gross profit margin increased to 48.9%, primarily due to significant reduction in production costs from the restructuring of the digital marketing business[63][65][66] - Administrative expenses decreased mainly due to reduced digital marketing business activities and ongoing cost control[69][71] - Other impairment losses include HKD 254 thousands for right-of-use assets, HKD 560 thousands for prepayments for unpublished comics, and HKD 157 thousands for an associate[73][74][76] - As of March 31, 2024, the Group's net assets were HKD 108,679 thousands, with net assets per share of HKD 0.07[80] Liquidity and Financial Resources As of March 31, 2024, the Group maintained sufficient liquidity with HKD 38,228 thousands in cash and bank balances and a current ratio of 6.8 2024 Fiscal Year Liquidity and Financial Resources | Indicator | 2024 (HKD thousands) | 2023 (HKD thousands) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 38,228 | 61,497 | -37.9% | | Financial Assets at FVTPL | 1,940 | 8,621 | -77.5% | | Net Current Assets | 101,411 | 133,475 | -24.0% | | Current Ratio | 6.8 | 10.0 | -32.0% | | Total Liabilities | 17,603 | 15,106 | +16.5% | | Gearing Ratio | 15.5% | 10.9% | +4.6 percentage points | - The Group is primarily exposed to exchange rate fluctuations of USD, AUD, JPY, and HKD against RMB, but has no significant foreign exchange hedging policy[83][86] - The Board believes the Group has sufficient liquidity to support daily operations and maintains a prudent and conservative financial management strategy[85][86] Deposits Paid for Intangible Assets As of March 31, 2024, the Group paid approximately HKD 33,269 thousands in deposits for natural language processing technology development and software chipset production - As of March 31, 2024, the Group had paid approximately HKD 33,269 thousands in deposits for natural language processing technology development and software chipset production[88][90] - These intangible asset deposits are primarily for the design and implementation of Chinese speech recognition chips, expected to be widely applied in various electronic devices or application environments[88][90] Employment and Remuneration Policies As of March 31, 2024, the Group had 47 employees with total staff costs of approximately HKD 21,061 thousands, and management regularly reviews remuneration to maintain competitiveness 2024 Fiscal Year Employment and Remuneration Data | Indicator | 2024 | 2023 | | :--- | :--- | :--- | | Total Employees | 47 | 52 | | Hong Kong Employees | 31 | - | | China Employees | 16 | - | | Total Staff Costs | 21,061,000 HKD | 24,238,000 HKD | | Employee Severance Provision | 1,560,000 HKD | 0 HKD | - Management regularly reviews remuneration packages and provides discretionary bonuses and incentive share options based on Group and individual performance[89][91] Change in Use of Proceeds from the Subscription of New Shares Under Specific Mandate Due to reduced digital marketing operations, the company reallocated approximately HKD 17,420 thousands of unutilized proceeds from the 2021 share subscription to general working capital - The 2021 subscription of new shares raised approximately HKD 41,575 thousands net, originally planned for marketing, KOL management services, potential acquisitions, and general working capital[40][42][96] - As of March 31, 2023, approximately HKD 17,420 thousands of the net proceeds from the subscription remained unutilized[97][99] - The company resolved on June 12, 2023, to reallocate the unutilized net proceeds of approximately HKD 17,420 thousands to the Group's general working capital[98][100] Proposed Acquisition The company plans to acquire all equity in Brain Robotics (Shenzhen) Co., Ltd. for HKD 63,000 thousands, payable by issuing 191,000,000 new shares, pending shareholder approval - The company plans to acquire all equity in Brain Robotics (Shenzhen) Co., Ltd. for a total consideration of HKD 63,000 thousands[102][104] - The acquisition consideration will be paid by issuing 191,000,000 new shares at an issue price of approximately HKD 0.33 per share[102][104] - The acquisition is subject to shareholder approval and has not been completed as of the reporting date, requiring additional time to fulfill agreement conditions[103][105][1387][1389] Placing of Convertible Bonds Under General Mandate The company's planned placement of convertible bonds for up to HKD 100,000 thousands, intended for natural language processing development, was terminated in July 2023 due to market conditions - The company had planned to place convertible bonds with a principal amount of up to HKD 100,000 thousands, with an initial conversion price of HKD 0.50 per share[106][110] - The net proceeds from the placement, approximately HKD 98,500 thousands, were intended for natural language processing technology development (HKD 68,950 thousands) and IP activation and promotion (HKD 19,700 thousands)[41][43][106][110] - This convertible bond placement was terminated on July 24, 2023, due to weak overall market sentiment and insufficient market liquidity[41][43][107][111] Disposal of a Non-Wholly Owned Subsidiary and Voluntary Liquidation of Two Non-Wholly Owned Subsidiaries The Group streamlined its digital marketing business by disposing of one subsidiary and initiating voluntary liquidation for two others, aiming to reduce losses and reallocate resources - The Group disposed of all equity in Beijing Huichuan Network Information Technology Co., Ltd., an indirect non-wholly owned subsidiary, to an independent third party for a total cash consideration of RMB 50,000[109][112] - The voluntary liquidation of Beijing Yiqimen Technology Co., Ltd. was completed in March 2024, while the voluntary liquidation of Beijing Xinghe Engine Information Technology Co., Ltd. was not completed as of the reporting date[115][117] - The Group believes voluntary liquidation helps reduce losses and reallocate resources to other existing businesses and new opportunities[116][118] - The Group disposed of a 7% equity interest in Feilongxin Brain-like Intelligent Technology (Zhuhai) Co., Ltd. for zero consideration, reducing its effective interest from 100% to 93%[114][117] Capital Commitments and Contingent Liabilities As of March 31, 2024, the Group had no significant capital commitments or contingent liabilities - As of March 31, 2024, the Group had no significant capital commitments or contingent liabilities (2023: nil)[120][121] DIRECTORS' REPORT Principal Activities The company operates as an investment holding company, with details of its principal associates and subsidiaries provided in the consolidated financial statements - The company is an investment holding company[125][130] - Details of the principal associates and subsidiaries are set out in notes 19 and 40 to the consolidated financial statements[125][126][130][131] Results and Appropriations The Group's results and financial position for the year ended March 31, 2024, are disclosed in the financial statements, with no dividends paid or proposed - The Group's results and financial position for the year ended March 31, 2024, are disclosed on pages 82 to 298 of the financial statements[127][132] - No dividends were paid or proposed for 2024, and no dividends have been proposed since the end of the reporting period (2023: nil)[138][142] Major Customers and Suppliers The Group's top five customers accounted for 85.3% of total turnover from continuing operations, and its top five suppliers accounted for 84.1% of total purchases - During the year, the Group's top five customers accounted for 85.3% of total turnover from continuing operations, with the largest customer accounting for 28.0%[128][133] - During the year, the Group's top five suppliers accounted for 84.1% of total purchases from continuing operations, with the largest supplier accounting for 34.6%[134] - No directors, their associates, or shareholders holding more than 5% of the company's share capital had any interest in any of the Group's top five customers or suppliers during the year[136][140] Business Review The Group's business review, including a fair review of operations, key risks, uncertainties, and future developments, is detailed in various sections of the annual report - The Group's business review is detailed in the "Chairman's Statement," "Management Discussion and Analysis," and "Financial Summary" sections of the annual report[137][141] - No significant events affecting the Group have occurred since the financial year-end of March 31, 2024, other than those disclosed in company announcements[137][141] Property and Equipment During the year, the Group spent approximately HKD 36 thousands on property and equipment acquisitions, with details of changes provided in note 16 to the consolidated financial statements - During the year, the Group acquired property and equipment totaling approximately HKD 36 thousands[139][143] - Details of changes in property and equipment are set out in note 16 to the consolidated financial statements[139][144] Share Capital and Share Options Details of changes in the company's share capital and share option schemes during the year are provided in notes 33 and 34 to the consolidated financial statements - Details of changes in the company's share capital and share option schemes during the year are set out in notes 33 and 34 to the consolidated financial statements, respectively[147][148] Reserves Changes in the Group's and company's reserves during the year are detailed in the consolidated statement of changes in equity and note 43, with no distributable reserves as of March 31, 2024 - Changes in the Group's and company's reserves during the year are set out in the consolidated statement of changes in equity and note 43 to the consolidated financial statements, respectively[149][152] - As of March 31, 2024, the company had no reserves available for distribution to shareholders[150][153] Financial Summary A summary of the Group's results, assets, and liabilities for the past five fiscal years is presented on pages 299 and 300 of the annual report - A summary of the Group's results, assets, and liabilities for the past five fiscal years is set out on pages 299 and 300 of the annual report[151][154] Directors As of the reporting date, the company's directors include Mr. Kwan Kin Chung (Executive Director), Mr. Wong Kon Man (Chairman), Dr. Liu Ka Ying (Vice Chairman), Mr. Wong Kwan Kit, and Mr. Mong Yat Lik (Independent Non-Executive Directors) - As of the reporting date, the Executive Director is Mr. Kwan Kin Chung (Managing Director)[155] - The Non-Executive Directors are Mr. Wong Kon Man (Chairman) and Dr. Liu Ka Ying (Vice Chairman)[155] - The Independent Non-Executive Directors are Mr. Wong Kwan Kit and Mr. Mong Yat Lik. Mr. Yuen Kin and Mr. Fan Chun Wah have resigned[155] - All directors, including executive and non-executive directors, are subject to retirement by rotation and re-election at the annual general meeting[156][159] - The company has received annual confirmations of independence from each independent non-executive director and considers all independent non-executive directors to be independent[158][160] Biographical Details of Directors and Senior Management This section provides detailed backgrounds, professional qualifications, and experience of the company's executive, non-executive, independent non-executive directors, and senior management - Mr. Kwan Kin Chung (Executive Director and Managing Director) holds a Bachelor of Arts in Economics from Sun Yat-sen University and has extensive experience in business restructuring and corporate investment[163][165] - Mr. Wong Kon Man (Non-Executive Director and Chairman) holds a Bachelor of Business Administration from the University of Hawaii at Manoa, with over 26 years of experience in fund management and capital market investment, known as the "Godfather of Asian SPACs"[169][171][174][175] - Dr. Liu Ka Ying (Non-Executive Director and Vice Chairman) holds a dual Bachelor's degree in Business Management Studies from the University of York and a Doctor of Business Administration from Victoria University, Switzerland, with extensive experience in fund management, financing, and investment[184][186] - Dr. Liu Yan Hung (Chief Executive Officer) has over 26 years of work experience, with over 11 years focused on the information technology and artificial intelligence industries in China and Southeast Asia[210][212] Share Option Scheme The company adopted share option schemes in 2013 and 2023 to incentivize employees and attract talent, with 14,000,000 options outstanding under the 2013 scheme - The company adopted the 2013 Share Option Scheme on August 12, 2013, and the 2023 Share Option Scheme on August 29, 2023[219][222][251][1183] - The 2013 scheme expired on August 11, 2023, but options already granted remain valid[224][228][247][1163] Share Option Scheme Overview | Indicator | 2013 Scheme | 2023 Scheme | | :--- | :--- | :--- | | Number of Shares Available for Issue as of March 31, 2024 | 14,000,000 | 0 | | Number of Options Available for Grant as of March 31, 2024 | 0 | 166,865,681 | | Percentage of Weighted Average Issued Shares | 0.84% | 10% | | Sub-limit for Service Providers | Not applicable | 50,059,704 | | Granted/Exercised/Cancelled/Lapsed in FY2024 | None | None | - Under the 2013 scheme, Non-Executive Director Mr. Wong Kon Man and an advisor were granted a total of 14,000,000 share options on April 27, 2022, with an exercise price of HKD 0.72 per share and an exercise period until April 26, 2025[234][247][1161][1165] Arrangements to Purchase Shares or Debentures During the year, neither the company nor its subsidiaries entered into any arrangements enabling directors to acquire benefits by purchasing shares or debentures of the company or any other corporation - During the year, neither the company nor its subsidiaries entered into any arrangements enabling directors to acquire benefits by purchasing shares or debentures of the company or any other corporation[235][236] Disclosure of Interests As of March 31, 2024, Non-Executive Director Mr. Wong Kon Man held 8,000,000 share options, and major shareholders held significant interests in the company's shares Directors' Interests in Company Share Options (as of March 31, 2024) | Director Name | Capacity | Nature of Interest | Number of Share Options | Exercise Price Per Share (HKD) | Exercise Period | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Mr. Wong Kon Man | Beneficial Owner | Personal Interest | 8,000,000 | 0.72 | April 27, 2022 to April 26, 2025 | 0.48% | Major Shareholders' Interests in Company Shares and Related Shares (as of March 31, 2024) | Name | Capacity | Number of Shares Held | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | L&W Holding Limited | Beneficial Owner | 178,767,312 | 10.71% | | Mr. Li Pak Sze | Beneficial Owner, Interest in Controlled Corporation and Spouse's Interest | 276,975,112 | 16.6% | | Ms. Chow Lai Wah | Beneficial Owner, Interest in Controlled Corporation and Spouse's Interest | 276,975,112 | 16.6% | - Mr. Li Pak Sze is deemed to have an interest in a total of 276,975,112 shares of the company through L&W Holding Limited (65% owned) and his spouse Ms. Chow Lai Wah's interest[255] Directors' Interests in Contracts Except as disclosed in note 30 to the consolidated financial statements, no director had a material direct or indirect interest in any significant contract entered into by the company or its subsidiaries during the year or at year-end - Except as disclosed in note 30 to the consolidated financial statements, no director had a material direct or indirect interest in any significant contract entered into by the company or its subsidiaries during the year or at year-end[257][261] Directors' Interests in Competing Business During the year or at year-end, no director or their respective associates had any business that competes or might compete directly or indirectly with the Group's business - During the year or at year-end, no director or their respective associates had any business that competes or might compete directly or indirectly with the Group's business[258][262] Pre-emptive Rights There are no provisions for pre-emptive rights in the company's bye-laws or Bermuda law that would require the company to offer new shares proportionally to existing shareholders - There are no provisions for pre-emptive rights in the company's bye-laws or Bermuda law that would require the company to offer new shares proportionally to existing shareholders[259][263] Permitted Indemnity Each director and officer is entitled to indemnification from the company's assets for losses incurred in the performance of their duties, and the company has arranged appropriate liability insurance - Each director and other officer of the company is entitled to indemnification from the company's assets for losses or damages incurred or arising from the performance of their duties[260][264] - The company has arranged appropriate directors' and officers' liability insurance for its directors and senior officers[260][265] Repurchase, Sale or Redemption of 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, neither the company nor its subsidiaries repurchased, sold, or redeemed any of the company's listed securities[267][269] Audit Committee The 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 - The Audit Committee comprises Mr. Wong Kwan Kit, Mr. Mong Yat Lik (Independent Non-Executive Directors), and Mr. Wong Kon Man (Non-Executive Director)[268][270] - The Committee has reviewed the Group's accounting principles and practices with management and discussed internal controls, risk management, and financial reporting matters, including the audited financial statements for the year ended March 31, 2024[268][270] Compliance with Laws and Regulations During the year, the Group complied with all material laws and regulations significantly affecting its business, with no major breaches or non-compliance incidents - During the year, the Group complied in all material respects with relevant laws and regulations that have a significant impact on its business[273][276] - No material breaches or non-compliance with applicable laws and regulations occurred[273][276] Environmental Policies and Performance The Group is committed to environmental sustainability, complying with regulations, and implementing measures for resource efficiency, waste reduction, and energy saving - The Group is committed to achieving environmental sustainability, complying with relevant environmental laws and regulations, and implementing effective measures for efficient resource utilization, waste reduction, and energy saving[274][277] - The Group's internal production facilities operate in accordance with relevant environmental rules and regulations, and its environmental policies are regularly reviewed[274][277] - The company's Environmental, Social and Governance Report will be published on its website in due course[275][278] Corporate Governance The report on the company's principal corporate governance practices is included on pages 52 to 72 of the annual report - The report on the company's principal corporate governance practices is included on pages 52 to 72 of the annual report[280][283] Compliance with the 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, and all directors confirmed compliance during 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' dealings in the company's securities[281][284] - Following specific enquiries, the company confirmed that all directors complied with the required standards set out in the Model Code for the year ended March 31, 2024[281][284] Sufficiency of Public Float Based on publicly available information and the directors' knowledge, the company maintained a sufficient public float as required by the Listing Rules as of the reporting date - As of the reporting date, the company maintained a sufficient public float as required by the Listing Rules[282][285] Auditor The company's financial statements for the year ended March 31, 2024, were audited by Kadolier CPA Limited, which is due to retire and will be proposed for re-appointment at the upcoming AGM - The company's financial statements for the year ended March 31, 2024, were audited by Kadolier CPA Limited[288][289] - Kadolier CPA Limited is due to retire and a resolution for its re-appointment will be proposed at the forthcoming annual general meeting[288][289] CORPORATE GOVERNANCE REPORT Introduction The Group is committed to maintaining high standards of corporate governance through effective internal controls and board transparency to be accountable to all shareholders - The Group is committed to maintaining high standards of corporate governance, with effective internal control measures and enhanced board transparency, to be accountable to all shareholders[292][295] Corporate Governance Practices The company complied with all code provisions of the Corporate Governance Code during the period from April 1, 2023, to March 31, 2024, except for code provision B.2.2 regarding independent non-executive directors' tenure - The company complied with all code provisions of the Corporate Governance Code during the period from April 1, 2023, to March 31, 2024, except for code provision B.2.2[293][295] - Code provision B.2.2 requires each director to retire by rotation at least once every three years, while the company's independent non-executive directors are not appointed for a specific term, but all directors are subject to retirement by rotation[294][295] Minimum Numbers of Independent Non-Executive Directors Following Mr. Fan Chun Wah's resignation on May 6, 2024, the number of independent non-executive directors fell below the Listing Rules' minimum, and the Board is seeking a replacement - Following Mr. Fan Chun Wah's resignation on May 6, 2024, the number of independent non-executive directors fell below the minimum required by Listing Rule 3.10(1)[297][300] - The Board is identifying suitable candidates to fill the vacancy and will make an appointment within three months from Mr. Fan's resignation date[298][300] Minimum Numbers of Corporate Governance Committee The Corporate Governance Committee currently has three members, which is below the four members stipulated in its written terms of reference, and the Board is seeking to fill the vacancy - The Corporate Governance Committee currently comprises three members: Mr. Kwan Kin Chung, Mr. Wong Kon Man, and Mr. Yu Chi Wing[299][301] - The number of committee members is below the four members stipulated in its written terms of reference, and the Board has begun identifying candidates to fill the vacancy[299][301] Directors' Securities Transactions The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers, and all directors confirmed compliance during the year ended March 31, 2024 - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as the code of conduct for directors' securities transactions[303][305] - All directors confirmed compliance with the required standards of the Model Code for the year ended March 31, 2024[303][305] Board of Directors As of March 31, 2024, the Board comprised a Chairman, Vice Chairman, Managing Director, one Executive Director, and three Independent Non-Executive Directors, responsible for leadership and governance - As of March 31, 2024, the Board comprised a Chairman, Vice Chairman, Managing Director, one Executive Director, and three Independent Non-Executive Directors[304][306] - The Board regularly convenes meetings to formulate overall strategies and oversee business development and financial performance[308][309] Board Meeting and Annual General Meeting Attendance (FY2024) | Director | Board Meeting Attendance (attended/total) | AGM Attendance (attended/total) | | :--- | :--- | :--- | | Mr. Kwan Kin Chung | 4/4 | 1/1 | | Mr. Yuen Kin | 4/4 | 1/1 | | Mr. Wong Kon Man | 4/4 | 1/1 | | Dr. Liu Ka Ying | 4/4 | 1/1 | | Mr. Wong Kwan Kit | 4/4 | 1/1 | | Mr. Mong Yat Lik | 4/4 | 1/1 | | Mr. Fan Chun Wah | 4/4 | 1/1 | - The company has received annual confirmations of independence from each independent non-executive director and considers all independent non-executive directors to be independent[311][314] Roles and Responsibilities of Chairman and Chief Executive Officer The roles of Chairman and Chief Executive Officer are segregated, with the Chairman responsible for board meetings and strategy, and the CEO for daily operations - The roles of Chairman and Chief Executive Officer are segregated, with the Chairman responsible for convening Board meetings and formulating business strategies[312][315] - Dr. Liu Yan Hung was appointed Chief Executive Officer on March 5, 2023, primarily responsible for the Group's daily operations[312][315] - The Board believes the company has established a robust corporate governance structure to ensure effective oversight of management[313][316] Terms of Non-Executive Directors Independent non-executive directors are not appointed for specific terms, but all directors are subject to retirement by rotation at annual general meetings, ensuring adequate corporate governance - The company's independent non-executive directors are not appointed for specific terms[318][321] - All directors, including executive and independent non-executive directors, are subject to retirement by rotation at annual general meetings in accordance with Bye-law 110(A) of the company's Bye-laws[318][321] Directors' Continuous Training and Professional Development All directors engage in continuous professional development to update their knowledge and skills, ensuring informed and relevant contributions to the Board - All directors engage in continuous professional development to update their knowledge and skills, ensuring informed and relevant contributions to the Board[319][322] - Continuous professional development is conducted through reading materials on legal or regulatory updates and/or attending training courses provided by legal advisors[320][323] Audit Committee The Audit Committee meets at least twice annually to review financial results, internal controls, risk management, and financial reporting, chaired by Mr. Wong Kwan Kit - The Audit Committee meets at least twice annually to review annual and interim results, internal controls, risk management, and financial reporting matters[325][327] - The Committee comprises two independent non-executive directors and one non-executive director, with Mr. Wong Kwan Kit serving as Chairman[328] Audit Committee Meeting Attendance (FY2024) | Director | Attendance (attended/total meetings) | | :--- | :--- | | Mr. Wong Kwan Kit | 3/3 | | Mr. Fan Chun Wah | 3/3 | | Mr. Mong Yat Lik | 3/3 | | Mr. Wong Kon Man | 0/0 | Remuneration Committee The Remuneration Committee advises the Board on the Group's remuneration policies and structure, and reviews and determines the remuneration of executive directors and senior management - The Remuneration Committee is responsible for considering and recommending to the Board the Group's remuneration policies and structure, and for reviewing and determining the remuneration of executive directors and senior management[333][334] - Directors' remuneration is determined based on their respective duties and responsibilities within the company, company performance, and current market conditions[333][334] - The Remuneration Committee comprises two independent non-executive directors and one executive director, with Mr. Wong Kwan Kit serving as Chairman[335] Nomination Committee The Nomination Committee is responsible for developing and implementing director nomination policies, ensuring a diverse board with appropriate skills and experience - The Nomination Committee is responsible for developing nomination policies for Board consideration and implementing Board-approved nomination policies[338][341] - The Nomination Committee comprises one executive director, Mr. Kwan Kin Chung, and two independent non-executive directors, Mr. Mong Yat Lik and Mr. Wong Kwan Kit[339][342] - The director nomination policy aims to ensure the Board possesses appropriate skills, experience, and diversity, and to ensure Board continuity[340][343] - The Board Diversity Policy aims to achieve Board diversity by considering factors such as gender, age, cultural and educational background, and professional experience[351][352] Board Gender Ratio (as of March 31, 2024) | Category | Female | Male | | :--- | :--- | :--- | | Board | 14.3% | 85.7% | Corporate Governance Committee The Corporate Governance Committee advises the Board on proposed corporate transactions, but its current three-member composition is below the four members stipulated in its terms of reference - The Corporate Governance Committee is responsible for advising the Board on any proposed corporate transactions and providing a joint opinion on their appropriateness, feasibility, and prudence[356][358] - The Committee currently comprises three members, with Mr. Kwan Kin Chung serving as Chairman, but this is below the four members stipulated in its written terms of reference[357][358] Accountability and Audit The Board is responsible for ensuring sound and effective risk management and internal control systems, which are reviewed annually to manage and mitigate risks - The Board is responsible for ensuring sound and effective risk management and internal control systems, and reviews their effectiveness at least annually[367][370] - The Group's risk management and internal control systems are designed to manage and mitigate risks, not eliminate them, providing reasonable rather than absolute assurance[368][371] - The Group employs a risk matrix approach to identify, assess, and manage significant risks, and continuously updates risk response measures[373][376][380][383] - The Group engaged independent consultants to review its risk management and internal control systems, and the Board considers the systems adequate and effective, with no material deficiencies found[381][384][382][385] - The Group has established policies for handling and disseminating inside information, requiring all employees to comply to ensure information security and compliance[387][389] Company Secretary Ms. Li Yuk Ping, the company secretary and a full-time employee, complied with relevant professional training requirements under Listing Rule 3.29 during the year - Ms. Li Yuk Ping, the company secretary, is a full-time employee of the company[388][390] - During the year, the company secretary complied with the relevant professional training requirements under Listing Rule 3.29[388][390] Shareholders' Rights The company values shareholder interests, allowing shareholders to requisition extraordinary general meetings and ensuring all resolutions are voted by poll, with results published online - Shareholders may requisition an extraordinary general meeting in accordance with Bye-law 70 of the company's Bye-laws and Section 74 of the Companies Act of Bermuda[392][394] - All resolutions at general meetings will be voted by poll, and the results will be published on the HKEX and company websites[397][400] - Shareholders can submit enquiries to the Board through various channels, including telephone, fax, postal address, and the company website[398][400] Dividend Policy The Board has adopted a dividend policy without a predetermined payout ratio, considering operating results, working capital, financial position, future prospects, and capital needs for dividend payments - The Board has adopted a dividend policy, but there is no predetermined dividend payout ratio[399][401] - When considering dividend payments, the Board will comprehensively consider factors such as operating results, working capital, financial position, future prospects, and capital needs[399][401] - The dividend policy does not constitute any commitment or obligation for the company to declare dividends[399][401] Investors Relations The Board prioritizes balanced, clear, and transparent communication to help shareholders and investors understand the Group's prospects and market environment - The Board highly values balanced, clear, and transparent communication to enable shareholders and investors to understand the Group's prospects and market operating environment[403][405] - The company maintains contact with shareholders and other investors through various communication channels to ensure their opinions and concerns are understood and addressed constructively[403][405] Significant Changes in the Constitutional Documents There were no significant changes to the company's constitutional documents during the reporting period or up to the reporting date, with the amended bye-laws available online - There were no significant changes to the company's constitutional documents during the reporting period or up to the reporting date[404][406] - The amended and restated company bye-laws are available for inspection on the HKEX and company websites[404][406] INDEPENDENT AUDITOR'S REPORT Opinion The auditor believes the consolidated financial statements for the year ended March 31, 2024, fairly present the Group's financial position, performance, and cash flows in accordance with HKFRSs and the Hong Kong Companies Ordinance - The auditor believes the consolidated financial statements fairly present the Group's consolidated financial position, financial performance, and cash flows in accordance with Hong Kong Financial Reporting Standards[410][413] - The consolidated financial statements have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance[410][413] Basis for Opinion The audit was conducted in accordance with Hong Kong Standards on Auditing, with the auditor maintaining independence and professional ethics, and finding sufficient and appropriate audit evidence - The audit was conducted in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants[411][414] - The auditor is independent of the Group and has fulfilled professional ethical responsibilities in accordance with the Code of Ethics for Professional Accountants[411][414] - The auditor believes that the audit evidence obtained is sufficient and appropriate to provide a basis for the audit opinion[411][414] Key Audit Matters A key audit matter is the net realizable value assessment of inventories (premium wines), which is material to the consolidated statement of financial position and involves significant judgment and estimation - The net realizable value assessment of inventories (premium wines) was identified as a key audit matter due to its materiality to the consolidated statement of financial position and the significant judgment and estimation involved[417][418] - The auditor's procedures included discussing the management's assessment process, challenging judgments on inventory provisions, evaluating the reasonableness of valuation methods and key assumptions, and conducting independent market research[419][424] - As of March 31, 2024, the carrying amount of premium wines was approximately HKD 31,289 thousands[422][423] Other Information The company's directors are responsible for other information in the annual report, which the auditor has read and found no material misstatements - The company's directors are responsible for other information in the annual report, and the auditor's opinion does not cover this information[426][428][429] - The auditor has read the other information and has not identified any material misstatements[427][429] Responsibilities of Directors and Those Charged With Governance for the Consolidated Financial Statements The company's directors are responsible for preparing fair consolidated financial statements in accordance with HKFRSs and the Hong Kong Companies Ordinance, ensuring effective internal controls, and assessing the Group's going concern ability - The company's directors are responsible for preparing consolidated financial statements that give a true and fair view in accordance with Hong Kong Financial Reporting Standards and the Hong Kong Companies Ordinance[432][434] - Directors are responsible for ensuring effective internal controls to prevent material misstatements in the consolidated financial statements[432][434] - Directors are responsible for assessing the Group's ability to continue as a going concern and using the going concern basis of accounting[433][435] - Those charged with governance are responsible for overseeing the Group's financial reporting process[433][436] Auditor's Responsibilities for the Audit of the Consolidated Financial Statements The auditor aims to obtain reasonable assurance that the consolidated financial statements are free from material misstatement, applying professional judgment and skepticism to assess risks and evaluate accounting policies - The auditor's objective is to obtain reasonable assurance that the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error[438][440] - The audit process involves applying professional judgment and skepticism to identify and assess risks of material misstatement, and designing and performing audit procedures[439][441] - The auditor understands internal controls relevant to the audit, evaluates the appropriateness of accounting policies used by directors, and the reasonableness of accounting estimates and related disclosures[445] - The auditor concludes on the appropriateness of the directors' use of the going concern basis of accounting and communicates with those charged with governance regarding the planned scope, timing, and significant audit findings[445][447][449] CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended March 31, 2024, the Group reported revenue of HKD 20,158 thousands, a loss for the year of HKD 20,929 thousands, and total comprehensive expenses of HKD 23,712 thousands Summary of Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | 2024 (HKD thousands) | 2023 (HKD thousands) | | :--- | :--- | :--- | | Revenue | 20,158 | 30,600 | | Cost of Sales | (10,307) | (16,084) | | Gross Profit | 9,851 | 14,516 | | Other Income | 5,349 | 1,213 | | Other Gains or Losses | 3,328 | (1,957) | | Selling Expenses | (1,949) | (4,891) | | Administrative Expenses | (28,909) | (31,078) | | Other Expenses | (7,860) | (14,631) | | Loss Before Tax | (20,808) | (38,503) | | Loss for the Year | (20,929) | (38,655) | | Loss for the Year Attributable to Owners of the Company | (20,782) | (37,223) | | Loss for the Year Attributable to Non-controlling Interests | (147) | (1,432) | | Other Comprehensive Expenses for the Year | (2,783) | (3,752) | | Total Comprehensive Expenses for the Year | (23,712) | (42,407) | | Basic and Diluted Loss Per Share (HK cents) | (1.2) | (2.2) | Consolidated Statement of Financial Position As of March 31, 2024, the Group's total assets less current liabilities were HKD 108,679 thousands, with net current assets of HKD 101,411 thousands Summary of Consolidated Statement of Financial Position | Indicator | 2024 (HKD thousands) | 2023 (HKD thousands) | | :--- | :--- | :--- | | Non-current Assets | 7,268 | 14,282 | | Current Assets | 119,014 | 148,224 | | Current Liabilities | 17,603 | 14,749 | | Net Current Assets | 101,411 | 133,475 | | Total Liabilities | 17,603 | 15,106 | | Net Assets | 108,679 | 147,400 | | Equity Attributable to Owners of the Company | 113,787 | 138,550 | | Non-controlling Interests | (5,108) | 8,850 | | Total Equity | 108,679 | 147,400 | Consolidated Statement of Changes in Equity For the year ended March 31, 2024, equity attributable to owners of the company decreased to HKD 113,787 thousands, primarily due to the annual loss and exchange differences, while non-controlling interests became negative Summary of Consolidated Statement of Changes in Equity | Indicator | 2024 (HKD thousands) | 2023 (HKD thousands) | | :--- | :--- | :--- | | Equity Attributable to Owners of the Company at Beginning of Year | 138,550 | 182,840 | | Loss for the Year | (20,782) | (37,223) | | Exchange Differences | (3,296) | (3,373) | | Disposal of Subsidiaries | 0 | (7,447) | | Release of Non-controlling Interests upon Deregistration of Subsidiaries | (11,705) | (40) | | Equity Attributable to Owners of the Company at End of Year | 113,787 | 138,550 | | Non-controlling Interests at Beginning of Year | 8,850 | 8,054 | | Loss for the Year | (147) | (1,432) | | Exchange Differences | 364 | (1,811) | | Disposal of Subsidiaries | 38 | 2,647 | | Release of Non-controlling Interests upon Deregistration of Subsidiaries | (11,705) | (40) | | Non-controlling Interests at End of Year | (5,108) | 8,850 | - The change in non-controlling interests this year was primarily affected by the disposal of a subsidiary (Huichuan Network) and the deregistration of a subsidiary (Yiqimen)[475][478] Consolidated Statement of Cash Flows For the year ended March 31, 2024, the Group reported net cash outflow from operating activities of HKD 19,745 thousands, a net decrease in cash and cash equivalents of HKD 17,798 thousands, and year-end cash of HKD 38,228 thousands Summary of Consolidated Statement of Cash Flows | Indicator | 2024 (HKD thousands) | 2023 (HKD thousands) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (19,745) | (59,438) | | Net Cash (Used in) From Investing Activities | (3,530) | 271 | | Net Cash From (Used in) Financing Activities | 5,477 | (6,460) | | Net Decrease in Cash and Cash Equivalents | (17,798) | (65,627) | | Cash and Cash Equivalents at End of Year | 38,228 | 61,497 | - Cash outflow from operating activities was primarily due to the loss for the year, but it narrowed compared to the previous year[480][481][484] - Cash inflow from financing activities primarily resulted from advances from shareholders and directors' loans[486] NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS General Information Culturecom Holdings Limited, incorporated in Bermuda and listed in Hong Kong, operates as an investment holding company with primary businesses in Hong Kong and China, presenting its financial statements in HKD - Culturecom Holdings Limited is incorporated in Bermuda, and its shares are listed on the Main Board of The Stock Exchange of Hong Kong[488][491] - The company is an investment holding company, with its principal businesses located in Hong Kong and China[489][492] - The company's functional currency is RMB, but the consolidated financial statements are presented in HKD for user convenience[490][493] Application of New and Amendments to Hong Kong Financial Reporting Standards ("HKFRSs") The Group adopted several new and amended HKFRSs during the year, which had no material impact on its financial position or performance but affected accounting policy disclosures - The Group adopted several new and amended Hong Kong Financial Reporting Standards, including HKFRS 17, HKAS 8, HKAS 12, and HKAS 1, for the first time this year[495][496] - Amendments to HKAS 8 clarified the distinction between accounting estimates and changes in accounting policies and error corrections, with no material impact on the consolidated financial statements[498][500][499][501] - Amendments to HKAS 1 and HKFRS Practice Statement 2 replaced "material accounting policies" with "material accounting policy information" and clarified disclosure requirements, with no material impact on financial position or performance but affecting accounting policy disclosures[503][505][504][506][508][510][509][511] - Amendments to HKAS 12 narrowed the scope of the deferred tax liability and asset recognition exemption, with no material impact on the Group's financial position or performance but affecting accounting policy disclosures[513][514](index=5