数字王国(00547) - 2023 - 中期财报

Financial Statements Condensed Consolidated Statement of Profit or Loss In H1 2023, revenue decreased by 14.1% to HKD 415 million from HKD 483 million, while gross profit remained stable at HKD 71.83 million; however, increased administrative and operating expenses led to a widened loss for the period from HKD 126 million to HKD 272 million, with loss attributable to owners expanding from HKD 118 million to HKD 198 million Key Profit or Loss Data for H1 2023 | Metric | For the Six Months Ended June 30 (HKD thousand) | | | :--- | :--- | :--- | | | 2023 | 2022 | | Revenue | 414,577 | 482,726 | | Gross Profit | 71,831 | 70,601 | | Loss Before Tax | (268,574) | (127,264) | | Loss for the Period | (271,683) | (126,453) | | Loss Attributable to Owners of the Company | (197,557) | (118,458) | | Basic and Diluted Loss Per Share (HK cents) | (4.032) | (2.667) | Condensed Consolidated Statement of Comprehensive Income During the period, other comprehensive income from currency translation differences amounted to HKD 5.12 million, but after consolidating the loss for the period, total comprehensive loss widened significantly to HKD 267 million from HKD 144 million in the prior year Total Comprehensive Income | Metric | For the Six Months Ended June 30 (HKD thousand) | | | :--- | :--- | :--- | | | 2023 | 2022 | | Loss for the Period | (271,683) | (126,453) | | Other Comprehensive Income for the Period | 5,124 | (17,606) | | Total Comprehensive Income for the Period | (266,559) | (144,059) | | Total Comprehensive Income Attributable to Owners of the Company | (191,828) | (136,169) | Condensed Consolidated Statement of Financial Position As of June 30, 2023, total assets increased to HKD 1.261 billion and net assets to HKD 472 million, primarily due to new share issuance, significantly improving liquidity with net current assets turning from a HKD 158 million liability to a HKD 198 million asset Key Balance Sheet Data | Metric | June 30, 2023 (HKD thousand) | December 31, 2022 (HKD thousand) | | :--- | :--- | :--- | | Non-current Assets | 649,637 | 763,285 | | Current Assets | 611,545 | 266,418 | | Total Assets | 1,261,182 | 1,029,703 | | Current Liabilities | 413,671 | 424,880 | | Non-current Liabilities | 375,057 | 311,804 | | Total Liabilities | 788,728 | 736,684 | | Net Assets | 472,454 | 293,019 | | Net Current Assets | 197,874 | (158,462) | Condensed Consolidated Statement of Changes in Equity Total shareholders' equity increased from HKD 293 million at the beginning of the period to HKD 472 million at period-end, primarily driven by HKD 446 million raised from share issuance, partially offset by a HKD 198 million loss for the period - Share capital and share premium collectively increased by approximately HKD 446 million due to new share issuance from subscriptions during the period[45] - Total equity increased by approximately 61% from HKD 293 million at the beginning of the period to HKD 472 million at period-end[45] Condensed Consolidated Statement of Cash Flows In H1 2023, net cash outflow from operating activities was HKD 29.35 million, and from investing activities was HKD 47.99 million, while financing activities generated a net inflow of HKD 408 million, primarily from new share issuance, leading to a significant increase in period-end cash and cash equivalents to HKD 367 million Cash Flow Summary | Activity Type | For the Six Months Ended June 30 (HKD thousand) | | | :--- | :--- | :--- | | | 2023 | 2022 | | Net Cash Used in Operating Activities | (29,349) | (31,148) | | Net Cash Used in Investing Activities | (47,991) | (25,887) | | Net Cash From/(Used in) Financing Activities | 408,411 | (27,930) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 331,071 | (84,965) | | Cash and Cash Equivalents at June 30 | 366,883 | 42,560 | Notes to the Financial Statements Basis of Preparation and Accounting Policies These interim financial statements are prepared in accordance with HKAS 34, 'Interim Financial Reporting,' using consistent accounting policies as the 2022 annual consolidated financial statements, with no significant impact from new or revised HKFRSs adopted during the period - The interim financial statements are prepared in compliance with Hong Kong Accounting Standard 34[55] - The adoption of new or revised Hong Kong Financial Reporting Standards effective from January 1, 2023, had no significant impact on the Group's accounting policies[22][30] Revenue and Segment Reporting The Group operates solely within the 'Media Entertainment' segment, generating HKD 415 million in H1 2023, predominantly from visual effects production and post-production services (HKD 412 million), with Canada and the United States as primary revenue sources at HKD 225 million and HKD 145 million respectively - The Group has only one operating and reportable segment: Media Entertainment, primarily providing visual effects production, virtual human services, and licensing of virtual reality content[172][32] Revenue by Service Type | Service Type | For the Six Months Ended June 30 (HKD thousand) | | | :--- | :--- | :--- | | | 2023 | 2022 | | Visual Effects Production and Post-Production Services | 411,629 | 464,197 | | Virtual Human Services | 2,948 | 17,527 | | Licensing of Virtual Reality Content | – | 1,002 | | Total | 414,577 | 482,726 | Revenue by Geographical Market | Geographical Market | For the Six Months Ended June 30 (HKD thousand) | | | :--- | :--- | :--- | | | 2023 | 2022 | | Canada | 225,375 | 298,628 | | United States of America | 144,836 | 129,619 | | People's Republic of China | 39,855 | 45,917 | | United Kingdom | 1,840 | 4,218 | | Hong Kong | – | 975 | | Other Countries/Regions | 2,671 | 3,369 | | Total | 414,577 | 482,726 | Key Profit & Loss Items Finance costs rose to HKD 18.21 million due to increased loan interest, while basic loss per share widened to 4.032 HK cents as losses expanded, and tax expense was HKD 3.11 million compared to a tax credit in the prior period Finance Costs Total finance costs for H1 2023 increased to HKD 18.21 million from HKD 12.20 million in the prior year, primarily due to a rise in interest on bank and other borrowings from HKD 7.43 million to HKD 12.25 million Finance Costs Details | Item | For the Six Months Ended June 30 (HKD thousand) | | | :--- | :--- | :--- | | | 2023 | 2022 | | Interest Accrued on Lease Liabilities | 5,954 | 4,770 | | Interest on Bank and Other Borrowings | 12,252 | 7,426 | | Total | 18,206 | 12,196 | Loss Per Share Basic loss per share increased to 4.032 HK cents from 2.667 HK cents in the prior period due to a widened loss attributable to owners, with diluted loss per share remaining identical to basic loss due to the anti-dilutive effect of share options Loss Per Share Calculation | Metric | For the Six Months Ended June 30 | | | :--- | :--- | :--- | | | 2023 | 2022 | | Loss for the Period Attributable to Owners of the Company (HKD thousand) | (197,557) | (118,458) | | Weighted Average Number of Ordinary Shares (shares) | 4,900,187,464 | 4,441,582,343 | | Basic and Diluted Loss Per Share (HK cents) | (4.032) | (2.667) | - Unexercised share options were not considered in the diluted loss per share calculation due to their anti-dilutive effect[233] Key Balance Sheet Items Period-end key assets included goodwill and intangible assets of HKD 391 million, trade receivables of HKD 61.06 million, and cash of HKD 484 million, with intangible assets significantly reduced by film rights amortization and financial assets recording fair value losses due to market price declines, while trade receivables increased Goodwill and Intangible Assets As of period-end, the net book value of goodwill and intangible assets significantly decreased to HKD 391 million from HKD 522 million at the beginning of the year, primarily due to HKD 130 million amortization of film rights after related movies were released Intangible Asset Movements | Item | As of December 31, 2022 (HKD thousand) | Amortization for the Period (HKD thousand) | As of June 30, 2023 (HKD thousand) | | :--- | :--- | :--- | :--- | | Goodwill | 294,341 | – | 294,230 | | Film Rights | 128,499 | (129,790) | 906 | | Other Intangible Assets | 99,371 | (20,033) | 96,292 | | Total | 522,211 | (149,823) | 391,428 | - Amortization expense for film rights amounted to HKD 130 million as related films were released during the period[258][40] Financial Assets Fair value of listed equity investments (FVTPL) decreased from HKD 41.35 million to HKD 30.15 million, with a HKD 12.07 million fair value loss recognized, while an unlisted equity investment (FVOCI) accumulated HKD 196 million downward adjustment since 2019, resulting in a zero carrying amount - Listed equity investments measured at fair value through profit or loss (primarily HLEE shares) had a period-end fair value of HKD 30.15 million, with a HKD 12.07 million fair value loss recognized during the period[240][2][263] - An unlisted equity instrument acquired in 2018 with a cost of HKD 196 million has accumulated an equivalent fair value downward adjustment recognized in other comprehensive income, resulting in a zero carrying amount[215][259] Trade Receivables/Payables Total trade receivables increased from HKD 45.14 million at year-end to HKD 61.06 million, primarily aged within 30 days, while total trade payables slightly increased from HKD 39.99 million to HKD 41.94 million Trade Receivables Aging Analysis (HKD thousand) | Aging | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | 0 to 30 days | 46,324 | 34,758 | | 31 to 60 days | 4,809 | 813 | | 61 to 90 days | 5,029 | 2,110 | | 91 to 365 days | 2,947 | 2,408 | | Over 365 days | 1,954 | 5,051 | | Total | 61,063 | 45,140 | Share Capital and Related Transactions During the period, issued share capital increased from 4.33 billion to 6.23 billion shares through three subscriptions, raising approximately HKD 446 million in net proceeds, with no share option expenses or significant related party transactions in H1 - During the period, 1,904,771,000 new shares were issued through three subscriptions, increasing share capital from HKD 43.29 million to HKD 62.34 million[244] - For the six months ended June 30, 2023, the Group incurred no share option expenses, compared to HKD 48 thousand in the prior period[37] - The only related party transaction during the period was HKD 701 thousand in interest income received from a joint venture[205] Financial and Business Review Overall Performance Review In H1 2023, Group revenue decreased by 14.1% to HKD 415 million, with gross profit slightly up by 1.7%, while loss attributable to owners expanded to HKD 198 million, mainly due to HKD 130 million non-cash film rights amortization and other administrative expenses, and Media Entertainment segment EBITDA shifted from a HKD 21.48 million profit to a HKD 6.38 million loss Performance Summary | Metric | For the Six Months Ended June 30 (HKD thousand) | | | :--- | :--- | :--- | | | 2023 | 2022 | | Revenue | 414,577 | 482,726 | | Gross Profit | 71,831 | 70,601 | | Loss Attributable to Owners of the Company | (197,557) | (118,458) | | Media Entertainment Segment EBITDA | (6,382) | 21,480 | - Key reasons for the widened loss include HKD 130 million in film rights amortization expense (zero last year) and HKD 12.07 million fair value loss on financial assets measured at fair value through profit or loss[40][226][89] Media Entertainment Segment As the Group's sole business segment, Media Entertainment generated HKD 415 million in H1 revenue and recorded a HKD 196 million loss, with its core VFX production and virtual human technologies continuing to serve top global film and TV projects, while virtual human business achieved new advancements in technology application and commercialization, particularly in the Greater China market Media Entertainment Segment Performance | Metric | For the Six Months Ended June 30 (HKD thousand) | | | :--- | :--- | :--- | | | 2023 | 2022 | | Segment Revenue | 414,577 | 482,726 | | Segment Loss | (195,872) | (78,805) | Visual Effects Production and Post-Production Business The Group continues to provide top-tier visual effects services for global film production companies, streaming platforms, and advertisers, completing notable projects like Marvel's 'Ant-Man and the Wasp: Quantumania' and 'Secret Invasion,' and Netflix's 'Extraction 2,' while China and India teams made significant local market progress, serving renowned brands and film projects - Provided visual effects services for several Hollywood blockbusters and popular series, including 'Ant-Man and the Wasp: Quantumania,' 'Blue Beetle,' 'Extraction 2,' 'Secret Invasion,' and 'Ahsoka'[275][251][92] - Digital Domain China provided post-production services for top brands like BYD, Huawei, and Estée Lauder, and completed film and television projects such as 'Ride On' and 'Lost You Forever'[104][287] - Digital Domain India played a crucial role in the Group's global strategy, participating in the production of Netflix's 'Black Mirror' Season 6 and will provide production services for three significant local Indian films[78][96][105] New Media and Virtual Human Business The Group actively develops virtual human technology, with proprietary tools like Samson (character creation) and Charlatan (facial effects) successfully applied in projects such as 'Secret Invasion' and 'Blue Beetle'; in Greater China, the company expands AI virtual human applications, showcasing AI tour guides, fortune tellers, and smart assistants at various exhibitions, and partnering with enterprises to launch virtual HR consultants - Proprietary technology Samson has been utilized in multiple film and television projects, including 'Secret Invasion,' 'Ahsoka,' and 'Blue Beetle'[81] - In Greater China, the company showcased various AI interactive virtual humans, such as a poetic literary girl, spiritual mentor, and coffee shop attendant, at events like the 'AI Taiwan Future Business Exhibition'[84] - Partnered with MetaAge Group to launch a virtual human resources consultant, introducing company regulations to new employees to streamline training processes and enhance efficiency[83] Interests in Associates and Co-productions The Group continues to expand its virtual human business through associates, with the virtual Teresa Teng project remaining active in various galas and commercial events; associate Beijing Xugu focuses on lightweight operation and commercial expansion of virtual IPs, launching virtual idol LUCY and winning multiple industry awards, while the co-produced film 'Children of the Corn' was released during the period - Virtual human Teresa Teng appeared in multiple events, including Beijing TV Spring Festival Gala, Kugou Live Concert, and UOB Malaysia client events, showcasing the Group's virtual human technology capabilities[297][142][114] - Associate Beijing Xugu continues to innovate, launching hyper-realistic virtual idol LUCY and being listed among the 'Top 10 Metaverse Enterprises of 2022'[115][116][144] - The Group's co-produced film 'Children of the Corn,' partnered with a renowned producer, was released globally in March 2023[295] Potential Indemnification The Group's US subsidiary faces potential indemnification claims from a client due to the use of disputed intellectual property, with ongoing litigation and a scheduled but not final court hearing date; the company submitted the claim to its insurer, but coverage remains under discussion - The US subsidiary faces client lawsuits and indemnification claims for using disputed intellectual property in certain visual effects projects[282][71][73] - The court has scheduled other litigation to commence on December 4, 2023, though this date is not final, and both parties are currently engaged in pre-trial discovery[99] - The US subsidiary submitted the indemnification claim to its insurer, but the insurer believes coverage is outside the policy, and discussions regarding defense costs are ongoing[73][102] Capital Structure and Liquidity Share Capital Movements and Financing To support business development, the company completed three share subscriptions in H1 2023, successfully raising approximately HKD 446 million in gross proceeds, with net proceeds allocated to media entertainment segment development and general working capital - Three subscription events were completed during the period, involving the allotment and issuance of new shares to ADATA Technology, Mr. Cai Zhaohui, Yiyin Investment, Link Global, and Le An Group[149][150][151] H1 2023 Financing Overview | Subscription Event | Gross Proceeds (HKD) | Net Proceeds (HKD) | | :--- | :--- | :--- | | First Subscription | 70,200,000 | 約 69,760,000 | | Second Subscription | 約 143,500,000 | 約 143,100,000 | | Third Subscription | 232,700,000 | 約 232,500,000 | | Total | 約 446,400,000 | 約 445,360,000 | Liquidity and Financial Resources As of June 30, 2023, the Group's financial position significantly improved, with total cash and bank balances of approximately HKD 484 million; the current ratio substantially increased from 0.6 to 1.5, and the gearing ratio (financial liabilities/shareholders' equity) significantly decreased from 118% to 71%, indicating reduced financial risk - As of June 30, 2023, the Group's current ratio was 1.5, a significant improvement from 0.6 as of December 31, 2022[182] - As of June 30, 2023, the Group's gearing ratio was 71%, a substantial decrease from 118% as of December 31, 2022[162] - Total cash and bank balances as of June 30, 2023, amounted to approximately HKD 484 million[131] Risk Management The Group faces exchange rate fluctuation risk as its revenue, expenses, assets, and liabilities are primarily denominated in HKD, USD, CAD, RMB, INR, and EUR; currently, no hedging is planned, but the policy is under continuous review, and there are no significant contingent liabilities at period-end, apart from the disclosed potential indemnification - The Group's operations involve multiple currencies (HKD, USD, CAD, RMB, INR, EUR), posing foreign exchange risk, but no hedging is currently planned[163][133] - Aside from the 'Potential Indemnification' disclosed under the 'Media Entertainment Segment' above, the Group had no significant contingent liabilities as of June 30, 2023[164] Outlook and Other Information Company Outlook Looking ahead, global economic uncertainties and Hollywood strikes pose challenges, potentially causing VFX project delays and reduced revenue recognition; the Group will adopt prudent business strategies, including cost control and business redirection, while continuing to focus on core VFX and virtual human businesses and increasing R&D investment in new technologies like AIGC to enhance long-term competitiveness - Strikes by Hollywood writers and actors' unions have caused production delays, expected to negatively impact the progress and revenue recognition of visual effects projects[186] - The Group will continue to focus on visual effects and virtual human businesses and evaluate the cost structures of various studios to enhance efficiency[186] - The company will continue to invest resources in new technology R&D, such as Artificial Intelligence Generated Content (AIGC), to enhance visual effects and post-production capabilities[187] - For the virtual human business, the Group plans to expand its product portfolio, explore new offerings like multi-language functions and Software-as-a-Service (SaaS), and enhance virtual human interaction across social media, entertainment, finance, customer service, and education sectors[167] Share Option Scheme The company's 2012 Share Option Scheme expired in April 2022, with a new 2022 scheme adopted in June of the same year; no share options were granted, exercised, canceled, or lapsed under any scheme during the reporting period, and approximately 224 million unexercised options remained under the 2012 scheme at period-end - The 2012 Share Option Scheme has expired, and the company adopted a new 2022 Share Option Scheme on June 16, 2022[153][189] - During the review period, no share options were granted, exercised, canceled, or lapsed under either the 2012 or 2022 Share Option Schemes[123][127][331] - As of June 30, 2023, 224,465,324 share options remained unexercised under the 2012 scheme[192] Disclosure of Shareholders' Interests The report details shareholdings of directors, chief executives, and substantial shareholders; as of June 30, 2023, key shareholders with over 5% stake include Mr. Ng Clive Cheang Neng (13.46%), Yiyin Investment Co., Ltd. (10.37%), Poly Culture Group (8.54%), Link Global Limited (8.49%), Le An Group Limited (8.18%), and Jetlink Holdings Limited (8.08%) Substantial Shareholders' Shareholdings (As of June 30, 2023) | Shareholder Name | Capacity | Percentage of Shareholding | | :--- | :--- | :--- | | Ng Clive Cheang Neng | Interest in Controlled Corporation | 13.46% | | Yiyin Investment Co., Ltd. | Beneficial Owner | 10.37% | | Poly Culture Group Co., Ltd. | Beneficiary of Trust | 8.54% | | Link Global Limited | Beneficial Owner | 8.49% | | Le An Group Limited | Beneficial Owner | 8.18% | | Jetlink Holdings Limited | Beneficial Owner | 8.08% | - Executive Director and CEO Mr. Xie An collectively holds 3.38% long position and 0.81% short position interests[306][316] Corporate Governance During the reporting period, the company complied with most provisions of the Listing Rules' Corporate Governance Code, with the main deviation being the combined roles of Chairman and CEO held by Mr. Xie An, which the Board deems beneficial for Group operations; the company's Audit Committee has reviewed this interim report - The roles of Chairman and Chief Executive Officer are not segregated, both held by Executive Director Mr. Xie An, an arrangement the Board believes benefits Group operations and management[326] - The company's Audit Committee has reviewed the interim report for the period under review[329][345] - All Directors have confirmed compliance with the Standard Securities Dealing Code for Directors throughout the review period[328][344]