Business Strategy and Innovation - Modern Media has established partnerships with influential international media agencies, including Bloomberg Media Group and Time Inc., enhancing its global presence[6]. - The company has acquired controlling equity interest in Nowness, a leading online platform for creative and cultural video broadcasting, expanding its market reach[6]. - Modern Media has founded over ten magazines in mainland China and Hong Kong, contributing to its extensive digital and social media development history[6]. - Modern Media's mission is to be a global trendsetter and cultivator of Chinese elites, focusing on modernization and internationalization[10]. - The company aims to continuously evolve and modernize, striving to become a leading high-profile media group in China[11]. - The company plans to continue expanding its innovative business model in 2019, transitioning from print media to digital media and then to platform media[35]. - The development strategy has undergone three phases: from PaperZine print media to Mobile Zine digital media to Space Zine platform media[35]. - The company aims to create a lifestyle that integrates photography and visual art into everyday life, enhancing aesthetic perception and inspiration[23]. - The company seeks to maintain youthfulness and vitality through the courage and ability to create new business ventures[36]. - The company aims to expand its innovative business model and improve the transformation from print media to digital media and finally to platform media[46]. - The company plans to establish four major media platforms, including fashion, culture, art, and business, to drive innovation and growth[40]. - The management believes that the development of physical space magazine-style experience will bring new opportunities and growth momentum[40]. - The company aims to create a one-stop leisure space for consumers that integrates online and offline experiences[40]. - The company is focused on creating a new media model that integrates online and offline platforms, enhancing user experience and engagement[48]. - The group plans to establish four major media platforms focusing on fashion, culture, art, and business in 2019, aiming for new growth opportunities[75]. - The strategy will continue to extend to the "4Ms" approach: Modern Publishing, Modern Digital, Modern Space, and Modern Art, with expectations of a rebound in print magazine advertising[76]. Financial Performance - The group's business revenue grew by 3.1% in 2018, with EBITDA turning profitable, attributed to the success of new platform operating strategies and innovative plans[60]. - The reported segment revenue for print media and arts was RMB 303.1 million, a decrease of 4.2% from 2017, while digital media segment revenue increased by 26.6% to RMB 154.5 million[60]. - The digital media segment achieved a profit of RMB 9.4 million in 2018, a significant increase of 195.2% compared to the previous year[60]. - The flagship magazine "Weekend Weekly" maintained its position as the top revenue-generating weekly magazine despite a decline in overall print media revenue[62]. - The magazine "InStyle" successfully hosted multiple events, enhancing its market recognition among brand advertisers, with only a slight decrease in advertising revenue compared to 2017[63]. - The advertising revenue from the flagship business magazine "Bloomberg Businessweek" (Chinese Simplified version) increased by 11.7% in 2018, unaffected by the overall decline in the magazine advertising industry[63]. - The print magazine segment contributed approximately RMB 272.7 million in advertising revenue, down 8.0% from RMB 296.5 million in 2017, aligning with the downward trend in the magazine advertising market[62]. - The group's digital media revenue increased by 26.6% year-on-year in 2018, outperforming the overall market growth of 7.3% in the internet advertising sector[67]. - The "iWeekly" app achieved approximately 14.8 million downloads, enhancing its global content and expanding its readership[69]. - "INSTYLE iLady" accumulated over 7.2 million users by the end of 2018, with advertising revenue soaring by approximately 50.9% compared to 2017[69]. - "Bloomberg Businessweek Chinese Edition" expanded its user base to about 10.9 million, a 25.3% increase from the previous year, with subscription revenue rising from RMB 5 million to RMB 6.5 million[70]. - The "Nowness" video platform generated advertising and production revenue of RMB 23.1 million in 2018, with an app download count of 2.9 million[71]. - The art business contributed RMB 10.2 million in revenue, with plans to develop membership services in 2019 for additional profits[65]. - The company aims to achieve after-tax earnings of at least HKD 140 million, HKD 162 million, and HKD 186 million for the fiscal years ending December 31, 2017, 2018, and 2019 respectively, as per the investment agreement with Seven Wolves Investment[186]. - The after-tax earnings for the fiscal year 2018 were approximately RMB 153.7 million, equivalent to about HKD 182.1 million, exceeding the expected performance of HKD 162 million[186]. Corporate Governance - The board of directors consists of nine members, with five executive directors and four independent non-executive directors, ensuring independent oversight[98]. - The company has adopted the corporate governance code as per the Hong Kong Stock Exchange, ensuring compliance with best practices[96]. - The board will review the division of responsibilities with management to ensure alignment with the company's needs[101]. - The board of directors has received regular updates on the group's business, operations, risk management, and corporate governance matters[111]. - The independent non-executive directors have confirmed their independence according to the guidelines set out in the listing rules[113]. - The audit committee, established in 2009, consists of four independent non-executive directors and is responsible for overseeing the financial reporting process and internal controls[121]. - The audit committee reviews the group's financial statements before submission to the board, focusing on accounting policies, major estimates, and compliance with accounting standards[121]. - The company has a clear separation of roles between the chairman and the CEO, with the founder serving as both to enhance business strategy execution[118]. - The independent non-executive directors have extensive experience in their respective fields, contributing to the board's diversity and decision-making[114]. - The company has established various committees under the board to handle specific governance matters, ensuring thorough oversight[120]. - The independent non-executive directors will seek re-election at the upcoming annual general meeting, having served for over nine years[116]. - The Audit Committee held two meetings in 2018, with all members present at least once[124]. - The Compensation Committee reviewed and discussed the group's compensation policy and determined the compensation for executive directors in 2018[130]. - The Nomination Committee did not appoint any new directors during the year ending December 31, 2018[135]. - The Audit Committee reported no disagreements with the selection and appointment of external auditors for the year[128]. - The Compensation Committee approved share awards under the company's share incentive plan, as per the board's approval[130]. - The Nomination Committee evaluated the independence of independent non-executive directors during the year[136]. - The Audit Committee reviewed the financial reporting, internal controls, and risk management processes of the group[125]. - The Compensation Committee held three meetings in 2018, with two members attending all meetings[129]. - The Nomination Committee assessed the board's structure and composition, considering factors such as skills and experience[134]. - The company established an Environmental, Social, and Governance (ESG) Committee in 2016, consisting of three executive directors and one subsidiary director, to implement and monitor ESG policies and strategies[137]. - The internal control system covers all significant areas of the business, including financial, operational, compliance, and risk management, ensuring shareholder investment protection[143]. - The company’s audit services for the year ending December 31, 2018, amounted to RMB 1,423,000, an increase from RMB 1,318,000 in 2017, while other non-audit services totaled RMB 236,000, up from RMB 218,000[153]. - The board has reviewed the effectiveness of the internal control system and found it satisfactory, ensuring adequate resources and training for accounting and financial reporting functions[144]. - The company secretary received no less than 15 hours of relevant professional training during the year to assist the board in governance matters[151]. - The board will periodically review measurable goals related to diversity, including professional skills, gender, age, and cultural and ethnic backgrounds[140]. - The company has a commitment to maintaining a diverse board, recognizing it as key to sustainable development[138]. - The audit committee conducts preliminary reviews of the financial control, internal control, and risk management systems before the board's formal discussions[144]. Market Challenges and Future Outlook - The company has faced challenges in business and profitability growth due to fluctuations in the macroeconomic conditions in China and Hong Kong, impacting advertising budgets from brand advertisers[182]. - The company is focused on sustainable business expansion and market penetration, aiming to diversify revenue sources and improve cost efficiency to seek profitability growth[184]. - The company plans to continue integrating the vertical supply chain and enhancing its e-commerce features while expanding integrated marketing brand consulting services[184]. - The company is committed to prudent capital management and liquidity risk management to maintain sufficient buffers against future challenges[184]. - The management is optimistic about the future, expecting to provide shareholders with new development prospects and returns as it approaches its 10th anniversary on the Hong Kong main board[40]. - The company will not declare a final dividend for the year to retain more financial resources to address market challenges[80]. - The board aims to provide sustainable returns to shareholders through a stable dividend policy, with mid-term and final dividends proposed for each fiscal year[191]. - The board considers various factors, including liquidity and financial performance, when deciding on dividend declarations[192]. - The company will not declare dividends if it believes it may become unable to meet its debt obligations post-dividend payment[195]. - The group reported a loss for the year, with details on financial performance and reserves available in the consolidated financial statements[190]. - The company's return on equity improved from -8.3% to -7.6% due to better advertising performance and reduced losses[167]. - The company's debt-to-equity ratio increased slightly from 14.7% in 2017 to 15.8% in the review year[167]. - The total outstanding borrowings were approximately RMB 101,100,000, an increase from RMB 96,100,000 in 2017[84]. - The cash outflow for investment activities was RMB 51,600,000, significantly higher than RMB 10,900,000 in the previous year, primarily due to investments in properties and equipment[82]. - The operating cash inflow for the year was approximately RMB 3,900,000, maintaining a similar level compared to RMB 4,500,000 in the previous year[82]. - The company recognizes employees as its most valuable asset and aims to attract and retain skilled personnel through competitive compensation packages and performance evaluation systems[175]. - The company maintains strong relationships with key stakeholders, including employees, customers, service providers, regulatory bodies, and shareholders, to support its business success[173]. - The company entered into an investment agreement with Xiamen Feibo Technology Co., Ltd. to acquire shares in its wholly-owned subsidiary, Shanghai Xinxuefen Cultural Communication Co., Ltd., enhancing liquidity and optimizing sales networks[187]. - The company encourages ongoing professional development for its directors and senior management to keep their knowledge and skills updated[175]. - The company has established a compliance and risk management policy to ensure adherence to significant legal and regulatory requirements affecting its operations[172].
超媒体控股(00072) - 2018 - 年度财报