豆盟科技(01917) - 2020 - 中期财报

Definitions This section provides definitions of key terms used throughout the report Corporate Information This section details the company's governance structure, key personnel, advisors, and essential corporate registration information Board of Directors and Committees The company's board comprises executive, non-executive, and independent non-executive directors, supported by audit, remuneration, and nomination committees to ensure robust corporate governance - The Board of Directors includes Mr. Yang Bin (Chairman and Co-CEO), Mr. Huang Kewang (Co-CEO), Ms. Luo Yanhong (CFO) as executive directors, Mr. Liu Ailun as a non-executive director, and Mr. Chen Yaoguang, Mr. Liu Binghai, and Mr. Wang Yingzhe as independent non-executive directors[17] - Mr. Chen Yaoguang chairs the Audit Committee, Mr. Liu Binghai chairs the Remuneration Committee, and Mr. Yang Bin chairs the Nomination Committee[17][18][19] Key Personnel and Advisors This section identifies the company secretary, authorized representatives, external auditor, compliance advisor, and legal counsels - Ms. Su Shuyi serves as the Company Secretary, with Mr. Yang Bin and Ms. Su Shuyi as authorized representatives[19] - The external auditor is BDO Limited, Hong Kong, and the compliance advisor is Gallant Capital Limited[21] - Legal counsels include J.S. Kwok & Co. (Hong Kong law) and Jingtian & Gongcheng (PRC law)[21] Company Details This section outlines the company's registered office, headquarters, principal place of business in Hong Kong, share registrars, principal bank, website, and stock code - The company's registered office is in the Cayman Islands, headquarters in Beijing, China, and principal place of business in Hong Kong is at Sunshine Centre, Wan Chai[22][24] - The principal share registrar and transfer office is in the Cayman Islands, and the Hong Kong share registrar is Computershare Hong Kong Investor Services Limited[24][25] - The principal banker is China Construction Bank Dongsi Branch, the company website is www.doumob.com, and the stock code is 1917[25] Financial Performance Highlights This section provides a summary of the company's key financial results for the reporting period Key Financial Metrics For the six months ended June 30, 2020, the company experienced a significant revenue decline and a shift from profit to loss 2020 H1 vs. 2019 H1 Financial Performance Comparison | Indicator | 2020 H1 (RMB thousand) | 2019 H1 (RMB thousand) | Change Percentage | | :--- | :--- | :--- | :--- | | Revenue | 34,727 | 132,807 | (73.9)% | | (Loss)/Profit for the period | (28,797) | 23,800 | (221.0)% | | (Loss)/Profit for the period attributable to owners of the Company | (28,606) | 23,781 | (220.3)% | | Adjusted net (loss)/profit (1) | (28,797) | 32,052 | (189.8)% | - Adjusted net (loss)/profit refers to the (loss)/profit for the period excluding listing expenses[27] Management Discussion and Analysis This section provides management's perspective on the company's operations, financial condition, and future outlook Business Overview and Strategy The company operates in programmatic mobile advertising, leveraging its platform to monetize media traffic and enhance advertiser effectiveness, while adapting to market challenges with new strategies - The company operates in the programmatic mobile advertising industry, utilizing its proprietary advertising platform and technology to help media publishers monetize traffic and advertisers improve advertising effectiveness[29] - The company is committed to building an "empowerment-oriented" business model with both social and economic value, offering an H5 short video cloud platform and "Empowerment Program" to help content creators, media, and advertisers build private domain traffic and enhance commercial value[30][32] - In the first half of 2020, technical service revenue accounted for 93.7% of total revenue, with intermediary services accounting for 6.3%[31][33] - The company plans to continue developing interactive advertising technical services in the second half of 2020, leveraging 5G technology advantages to pursue a diversified development pattern of "culture + technology, content + channels, data + technology," and launch an interactive advertising management platform (SaaS) to address security issues for App media publishers[40][42][43][44] Financial Review In the first half of 2020, the company's total revenue significantly decreased, leading to a net loss, primarily due to external economic factors and increased administrative expenses 2020 H1 Revenue Breakdown | Revenue Category | 2020 H1 (RMB thousand) | Percentage of Total Revenue | 2019 H1 (RMB thousand) | Percentage of Total Revenue | | :--- | :--- | :--- | :--- | :--- | | Interactive advertising — Technical services | 32,551 | 93.7% | 100,975 | 76.0% | | Interactive advertising — Intermediary services | — | — | 6,623 | 5.0% | | Non-interactive advertising — Intermediary services | 2,176 | 6.3% | 24,163 | 18.2% | | Online sales services | — | — | 1,046 | 0.8% | | Total | 34,727 | 100% | 132,807 | 100.0% | - Total revenue decreased by 73.9%, mainly due to the US-China trade tensions and the COVID-19 pandemic, which reduced client advertising investments, and lower-than-expected returns from the short video cloud platform and interactive video advertising business[35][49] Gross Profit and Gross Margin Comparison | Indicator | 2020 H1 | 2019 H1 | | :--- | :--- | :--- | | Gross Profit (RMB million) | 2.6 | 41.8 | | Gross Margin | 7.5% | 31.5% | - Administrative expenses were RMB 30.3 million, an increase of 68.6% compared to the same period in 2019, primarily due to increased impairment provisions for trade receivables and contract assets, and higher amortization of intangible assets[55][58] Reconciliation of Adjusted Net (Loss)/Profit | Indicator | 2020 H1 (RMB thousand) | 2019 H1 (RMB thousand) | | :--- | :--- | :--- | | (Loss)/Profit for the period | (28,797) | 23,800 | | Adjustment item: Listing expenses related to global offering | — | 8,252 | | Adjusted net (loss)/profit | (28,797) | 32,052 | Financial Position and Liquidity As of June 30, 2020, the company's total equity and net current assets decreased due to operating losses, while cash and cash equivalents also declined - As of June 30, 2020, total equity was approximately RMB 271.5 million, a decrease from approximately RMB 300.3 million as of December 31, 2019, primarily due to losses from operating activities[70][72] - Net current assets were approximately RMB 204.1 million, a decrease from approximately RMB 233.2 million at the end of 2019, mainly due to reductions in bank and cash on hand, and trade receivables and contract assets[71][72] Liquidity and Financial Resources Comparison | Indicator | June 30, 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | Change Percentage | | :--- | :--- | :--- | :--- | | Bank and cash on hand | 145,386 | 165,932 | (12.4)% | | Restricted funds | — | — | — | | Bank credit facilities | — | — | — | | Total | 145,386 | 165,932 | (12.4)% | - As of June 30, 2020, the gearing ratio was 8.9%, a slight increase from 8.5% as of December 31, 2019[77][81] - In the first half of 2020, the Group had no capital expenditures, significant investments, or asset pledges, nor any significant contingent liabilities or guarantees[78][79][80][82][83][84][85] Employees and Remuneration Policies The company's total employee remuneration increased in the first half of 2020, with compensation policies designed to attract and retain talent through performance-based rewards and share incentive schemes Total Employee Remuneration Comparison | Indicator | June 30, 2020 (RMB million) | June 30, 2019 (RMB million) | | :--- | :--- | :--- | | Total employee remuneration | 13.3 | 11.4 | - The company determines remuneration based on employee performance, experience, capabilities, and market benchmarks, with compensation packages including salaries, bonuses, allowances, and state-managed retirement benefit schemes[87] - The company adopted the 2018 Restricted Share Unit Scheme on August 14, 2018, and the 2020 Restricted Share Award Scheme on May 7, 2020, to recognize, incentivize, and retain employees, and attract suitable talent for the Group's development[87] Use of Net Proceeds from Global Offering The company utilized approximately HKD 14.1 million of the HKD 27 million net proceeds from its global offering by June 30, 2020, with the remainder expected to be deployed over the next two years - The net proceeds from the global offering amounted to HKD 27 million[99] Use of Net Proceeds from Global Offering Details (as of June 30, 2020) | Use | Percentage | Net Proceeds (HKD thousand) | Amount Used (HKD thousand) | Total Unused Amount (HKD thousand) | | :--- | :--- | :--- | :--- | :--- | | Enhance algorithm and data mining capabilities and invest in other big data and AI technologies | 20% | 5,400 | 3,468 | 1,932 | | Expand advertiser and media publisher base | 20% | 5,400 | 2,190 | 3,210 | | Traffic acquisition costs for proprietary media publishers | 20% | 5,400 | 3,375 | 2,025 | | Strategic cooperation, investments, and acquisitions | 10% | 2,700 | — | 2,700 | | Improvement of proprietary advertising platform functions and architecture | 10% | 2,700 | 1,729 | 971 | | Development of new products | 5% | 1,350 | 804 | 546 | | Team expansion and training | 5% | 1,350 | 374 | 976 | | Working capital and general corporate purposes | 10% | 2,700 | 2,141 | 559 | | Total | 100% | 27,000 | 14,081 | 12,919 | - As of June 30, 2020, the company had utilized approximately HKD 14.1 million, with the remaining approximately HKD 12.9 million expected to be utilized within the next 2 years[101] Other Information This section covers various disclosures including directors' and substantial shareholders' interests, share incentive schemes, and corporate governance matters Directors' and Chief Executive's Interests in Securities As of June 30, 2020, the company's directors and chief executive held interests in the company's shares and related shares Directors' and Chief Executive's Interests in Securities (as of June 30, 2020) | Director Name | Nature of Interest | Number of Ordinary Shares Held | Number of Underlying Shares Held under 2018 Restricted Share Unit Scheme | Approximate Percentage of Company's Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | | Mr. Yang Bin | Controlled Corporation Interest | 737,771,914 | — | 32.08% | | Mr. Yang Bin | Trustee | — | 206,566,614 | 8.98% | | Mr. Huang Kewang | Beneficial Owner | — | 16,214,269 | 0.70% | - Mr. Yang Bin holds shares through Evan Global, which is wholly owned by Mr. Yang. The entire issued share capital of ESOP Holdings is owned by Evan Global, and Mr. Yang is the trustee of ESOP Holdings[108] - Mr. Huang Kewang holds interests in 172,526 restricted share units (equivalent to 16,214,269 underlying shares) granted under the 2018 Restricted Share Unit Scheme, of which 4,864,280 underlying shares have vested[109] Substantial Shareholders' Interests As of June 30, 2020, several entities and individuals held substantial interests in the company's shares and related shares Substantial Shareholders' Interests in Securities (as of June 30, 2020) | Name/Entity | Nature of Interest | Number of Ordinary Shares Held | Number of Underlying Shares Held under 2018 Restricted Share Unit Scheme | Approximate Percentage of Company's Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | | Evan Global | Beneficial Owner | 737,771,914 | — | 32.08% | | ESOP Holdings | Beneficial Owner | — | 206,566,614 | 8.98% | | Mr. Yang Bin | Controlled Corporation Interest | 737,771,914 | — | 32.08% | | Mr. Yang Bin | Trustee | — | 206,566,614 | 8.98% | | BLUEFOCUS INTERNATIONAL | Beneficial Owner | 328,629,450 | — | 14.29% | | BlueFocus | Controlled Corporation Interest | 328,629,450 | — | 14.29% | | Chengdu Hongdao | Beneficial Owner | 207,618,771 | — | 9.03% | | Mr. Yang Zhenghong | Controlled Corporation Interest; Party to an agreement relating to interests in the Company | 207,618,771 | — | 9.03% | | Hongdao Investment | Party to an agreement relating to interests in the Company | 207,618,771 | — | 9.03% | | Beijing Dongfang Hongdao Asset Management Co., Ltd. | Party to an agreement relating to interests in the Company | 207,618,771 | — | 9.03% | | Summer Holdings | Beneficial Owner | 151,797,422 | — | 6.60% | | Ms. Chen Xiaona | Controlled Corporation Interest | 151,797,422 | — | 6.60% | | Ms. Chen Xiaona | Beneficial Owner | — | 40,189,334 | 1.75% | - Mr. Yang Bin directly owns the entire issued share capital of Evan Global and is deemed to have an interest in the shares held by Evan Global and ESOP Holdings[117] - BlueFocus directly owns the entire issued share capital of BLUEFOCUS INTERNATIONAL and is deemed to have an interest in the shares held by BLUEFOCUS INTERNATIONAL[118] - Mr. Yang Zhenghong directly owns the entire issued share capital of Chengdu Hongdao and, through entrustment arrangements with Hongdao Investment and Beijing Dongfang Hongdao Asset Management Co., Ltd., is deemed to have an interest in the shares held by Chengdu Hongdao[119][122] - Ms. Chen Xiaona directly owns the entire issued share capital of Summer Holdings and is deemed to have an interest in the shares held by Summer Holdings, while also beneficially owning a portion of restricted share units[120][123] Share Incentive Schemes The company operates the 2018 Restricted Share Unit Scheme and the 2020 Restricted Share Award Scheme to incentivize and retain management and employees - The 2018 Restricted Share Unit Scheme aims to recognize the contributions of the management team and employees, and incentivize them to drive the company's development, with 133,887,855 underlying shares granted to 16 employees[125] 2018 RSU Scheme Vesting Schedule | Vesting Ratio | Vesting Date | | :--- | :--- | | 20% | Six months from the Listing Date | | 10% | March 10, 2020 | | 30% | March 10, 2021 | | 20% | March 10, 2022 | | 20% | March 10, 2023 | - The 2020 Restricted Share Award Scheme was adopted on May 7, 2020, to provide employees with opportunities to acquire proprietary interests in the company, encourage and retain talent, with a maximum of 230,000,000 shares available for award[132][134] 2020 RSAS Share Award and Vesting Details (During Reporting Period) | Grant Date | Number of Shares Granted | Number of Shares Vested | Number of Shares Lapsed | Balance as of June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | May 9, 2020 | 11,017,396 | 1,652,609 | — | 9,364,787 | | May 11, 2020 | 568,187 | 568,187 | — | — | | Total | 11,585,583 | 2,220,796 | — | 9,364,787 | Corporate Governance and Compliance The company maintained its capital structure, complied with corporate governance codes (with one exception), and had no significant legal proceedings during the reporting period - During the reporting period, there were no changes in the company's share capital, nor any repurchases, sales, or redemptions of listed securities[139] - The Board of Directors resolved not to declare an interim dividend for the six months ended June 30, 2020[141][144] - The company complied with the Corporate Governance Code, except for code provision A.2.1 where the roles of Chairman and Chief Executive are combined in Mr. Yang Bin, an arrangement the Board believes benefits the Group's management[142][143][145] - All directors confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers[148][153] - The company maintained sufficient public float during the reporting period, complied with relevant laws and regulations materially affecting the company, and was not involved in any significant legal proceedings[149][151][154][156] - The Audit Committee, composed of three independent non-executive directors, reviewed the unaudited condensed consolidated interim financial information for the six months ended June 30, 2020, and confirmed its compliance with applicable accounting standards[158][159][160][161] Report On Review of Condensed Consolidated Interim Financial Statements This section presents the independent auditor's review report on the company's interim financial statements Review Conclusion BDO Limited, Hong Kong, reviewed Doumob Technology Co., Ltd.'s condensed consolidated interim financial statements for the six months ended June 30, 2020, finding no material non-compliance with HKAS 34 - The review was conducted by BDO Limited, Hong Kong, in accordance with Hong Kong Standard on Review Engagements 2410[163][166] - The review concluded that nothing has come to the reviewer's attention that causes them to believe the condensed consolidated interim financial statements are not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34[168][169] Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income This section provides a summary of the company's financial performance, including revenue, expenses, and net profit or loss Profit or Loss Summary For the six months ended June 30, 2020, the company reported revenue of RMB 34,727 thousand and a gross profit of RMB 2,618 thousand, resulting in a net loss of RMB 28,797 thousand Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (for the six months ended June 30) | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 34,727 | 132,807 | | Cost of sales | (32,109) | (90,964) | | Gross profit | 2,618 | 41,843 | | Other income and other gains | 2,771 | 4,443 | | Fair value changes of financial assets at fair value through profit or loss | 349 | — | | Selling and distribution expenses | (4,585) | (4,840) | | Administrative expenses | (30,284) | (17,967) | | Finance costs | — | (34) | | (Loss)/Profit before income tax | (29,131) | 23,445 | | Income tax credit | 334 | 355 | | (Loss)/Profit for the period | (28,797) | 23,800 | | (Loss)/Profit for the period attributable to owners of the Company | (28,606) | 23,781 | | (Loss)/Profit for the period attributable to non-controlling interests | (191) | 19 | | (Loss)/Earnings per share (basic and diluted) | RMB (0.012) | RMB 0.011 | Condensed Consolidated Statement of Financial Position This section provides a snapshot of the company's assets, liabilities, and equity at a specific point in time Financial Position Summary As of June 30, 2020, the company's total assets were RMB 298,170 thousand, with total liabilities of RMB 26,623 thousand and total equity of RMB 271,547 thousand, reflecting decreases in cash and receivables compared to year-end 2019 Condensed Consolidated Statement of Financial Position (as of June 30) | Indicator | June 30, 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--- | :--- | :--- | | Non-current assets | | | | Property, plant and equipment | 268 | 612 | | Intangible assets | 50,388 | 57,175 | | Non-current prepayments | 1,950 | — | | Financial assets at fair value through profit or loss | 13,441 | 8,500 | | Deferred tax assets | 1,373 | 842 | | Total non-current assets | 67,420 | 67,129 | | Current assets | | | | Trade receivables | 9,060 | 12,774 | | Contract assets | 49,321 | 60,237 | | Deposits, prepayments and other receivables | 25,799 | 20,848 | | Amounts due from shareholders | 204 | 200 | | Amounts due from non-controlling interests | 980 | 980 | | Time deposits with original maturity over 3 months | 108,945 | 47,017 | | Cash and cash equivalents | 36,441 | 118,915 | | Total current assets | 230,750 | 260,971 | | Current liabilities | | | | Trade payables | 11,447 | 11,743 | | Contract liabilities | 3,428 | 4,943 | | Accruals and other payables | 10,724 | 10,076 | | Income tax payable | 1,024 | 993 | | Total current liabilities | 26,623 | 27,755 | | Net current assets | 204,127 | 233,216 | | Net assets | 271,547 | 300,345 | | Total equity | 271,547 | 300,345 | Condensed Consolidated Statement of Changes in Equity This section details the changes in the company's equity components over the reporting period Equity Movements As of June 30, 2020, total equity attributable to owners was RMB 270,505 thousand, with non-controlling interests of RMB 1,042 thousand, primarily impacted by the period's loss and share-based payment activities Condensed Consolidated Statement of Changes in Equity (for the six months ended June 30) | Item | Capital (RMB thousand) | Share Premium (RMB thousand) | Capital Reserve (RMB thousand) | Statutory Reserve (RMB thousand) | Employee Share Trust (RMB thousand) | Share-based Payment Reserve (RMB thousand) | Retained Profits (RMB thousand) | Sub-total (RMB thousand) | Non-controlling Interests (RMB thousand) | Total Equity (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Balance at December 31, 2019 and January 1, 2020 | 1,967 | 47,550 | 135,330 | 7,394 | — | — | 106,871 | 299,112 | 1,233 | 300,345 | | Loss and total comprehensive income for the period | — | — | — | — | — | — | (28,606) | (28,606) | (191) | (28,797) | | Contribution to employee share trust | — | — | — | — | (479) | — | — | (479) | — | (479) | | Restricted share units granted to employees | — | — | — | — | — | 478 | — | 478 | — | 478 | | Shares vested under share award scheme | — | — | — | — | 290 | (290) | — | — | — | — | | Balance at June 30, 2020 | 1,967 | 47,550 | 135,330 | 7,394 | (189) | 188 | 78,265 | 270,505 | 1,042 | 271,547 | - The share premium account represents the amount received in excess of the par value of the company's issued shares[204] - Statutory reserve refers to amounts transferred from the net profit of PRC-incorporated subsidiaries in accordance with relevant PRC laws, until the statutory reserve reaches 50% of the registered capital of such subsidiaries[205][207] - Employee share trust refers to shares held by the trustee for the implementation of the 2020 Restricted Share Award Scheme, which the company has entrusted the trustee to purchase from the open market[206][208] - Share-based payment reserve represents the equity-settled transaction costs under the share award schemes adopted by the company[209] Condensed Consolidated Statement of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary For the six months ended June 30, 2020, the company reported net cash used in operating activities of RMB 10,376 thousand, net cash used in investing activities of RMB 71,619 thousand, and net cash used in financing activities of RMB 479 thousand, leading to a decrease in cash and cash equivalents to RMB 36,441 thousand at period-end Condensed Consolidated Statement of Cash Flows (for the six months ended June 30) | Cash Flow Category | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Net cash (used in)/generated from operating activities | (10,376) | 14,893 | | Net cash used in investing activities | (71,619) | (157,225) | | Net cash (used in)/generated from financing activities | (479) | 48,790 | | Net decrease in cash and cash equivalents | (82,474) | (93,542) | | Cash and cash equivalents at beginning of period | 118,915 | 132,912 | | Cash and cash equivalents at end of period | 36,441 | 39,370 | Notes to the Condensed Consolidated Interim Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated interim financial statements General Information and Basis of Preparation The company, incorporated in the Cayman Islands, primarily engages in investment holding, with subsidiaries providing online advertising and sales services, and its interim financial statements are prepared under HKAS 34, involving significant judgments and estimates, particularly amidst the COVID-19 pandemic - The company was incorporated in the Cayman Islands on March 26, 2018, and listed on The Stock Exchange of Hong Kong Limited on March 14, 2019[216] - The company's principal business is investment holding, with its subsidiaries primarily providing online advertising services and online sales services[217][220] - The condensed consolidated interim financial statements are prepared in accordance with Hong Kong Accounting Standard 34 and have been reviewed by BDO Limited, Hong Kong[218][221][226] - The preparation of financial statements involves significant judgments, estimates, and assumptions, particularly influenced by the COVID-19 pandemic, including impairment testing and expected credit loss estimations[223][225][232][234] Significant Events and Accounting Policy Changes The COVID-19 pandemic severely impacted the company's operations, necessitating re-estimation of recoverable amounts for cash-generating units and expected credit losses, while recent accounting standard amendments had no material financial impact - The COVID-19 pandemic severely impacted the company's operations, leading to significant reductions in sales and cash flows[226][227][228] - The company considered the sales decline and reduced projected revenue as impairment indicators, performing probability-weighted forecasts for the recoverable amount of online advertising service cash-generating units based on positive, baseline, and negative scenarios[228] - The economic downturn and uncertainty caused by COVID-19 made the estimation of expected credit losses for trade receivables and contract assets more judgmental[230] - The company adopted amendments to HKFRS 3 (Definition of a Business) and early adopted amendments to HKFRS 16 (COVID-19-Related Rent Concessions), with no material impact on the interim consolidated financial statements[229][230][231][232] Revenue and Segment Information The company's revenue for the six months ended June 30, 2020, was entirely from online advertising services in China, with a reported segment loss and reduced contract liabilities - The company primarily engages in providing online advertising services and online sales services in China, with all revenue derived from China[237] Revenue Information Breakdown (for the six months ended June 30) | Revenue Category | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Online advertising services | 34,727 | 131,761 | | Online sales services | — | 1,046 | | Total | 34,727 | 132,807 | Reconciliation of Reportable Segment Profit or Loss (for the six months ended June 30) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Reportable segment (loss)/profit | (5,050) | 40,632 | | Other income and other gains, net | 3,120 | 4,443 | | Central administrative costs | (27,201) | (21,596) | | Finance costs | — | (34) | | Consolidated (loss)/profit before income tax | (29,131) | 23,445 | - Contract liabilities primarily arose from customer prepayments, with an ending balance of RMB 3,428 thousand, a decrease from RMB 4,943 thousand at the end of 2019[251][254] Expenses and Income Tax For the six months ended June 30, 2020, net other income and gains were RMB 2,771 thousand, with a pre-tax loss of RMB 29,131 thousand driven by increased amortization and impairment provisions, and an income tax credit of RMB 334 thousand Net Other Income and Other Gains (for the six months ended June 30) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Net exchange gains | 307 | 1,472 | | Interest income | 2,086 | 2,760 | | Others | 378 | 211 | | Total | 2,771 | 4,443 | - There were no finance costs in the first half of 2020, compared to RMB 34 thousand in the first half of 2019[257] (Loss)/Profit Before Income Tax Items (for the six months ended June 30) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Amortization of intangible assets | 12,117 | 6,167 | | Depreciation of property, plant and equipment | 344 | 831 | | Impairment loss provision for trade receivables | 2,879 | 345 | | Impairment loss provision for contract assets | 9,557 | 1,923 | | Research and development expenses | 578 | 334 | | Short-term lease expenses | 545 | 294 | | Listing expenses | — | 8,252 | | Staff costs (including directors' emoluments) | 13,256 | 11,409 | | — Salaries, wages and other benefits | 12,710 | 9,215 | | — Retirement scheme contributions | 546 | 2,194 | - Income tax credit was RMB 334 thousand, a 5.9% decrease from the same period in 2019, primarily due to deferred tax impacts from temporary differences in impairment provisions for trade receivables and contract assets[56][59][267] - The nominal income tax rate for major operating entities in mainland China is approximately 25%, with some subsidiaries enjoying a 15% preferential tax rate as high-tech enterprises, and some benefiting from a five-year tax exemption starting from 2017[56][267] Earnings Per Share and Dividends For the six months ended June 30, 2020, the company reported a basic loss per share of RMB 0.012, with no dilutive effect, and the board resolved not to declare an interim dividend Earnings Per Share (for the six months ended June 30) | Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Basic (loss)/earnings per share | RMB (0.012) | RMB 0.011 | | Diluted (loss)/earnings per share | RMB (0.012) | RMB 0.011 | - Basic loss per share is calculated based on the loss attributable to ordinary equity holders of the company of RMB 28,606,000 and the weighted average of 2,299,618,000 ordinary shares outstanding[274] - Diluted (loss)/earnings per share is consistent with basic (loss)/earnings per share as there were no potentially dilutive ordinary shares during the period[276][280] - The Board of Directors resolved not to recommend or declare an interim dividend for the six months ended June 30, 2020[268] Assets and Liabilities Details As of June 30, 2020, the company's assets included RMB 9,060 thousand in net trade receivables and RMB 49,321 thousand in net contract assets, with total cash and cash equivalents of RMB 145.4 million, and trade payables of RMB 11,447 thousand - In the first half of 2020, the company had no additions or disposals of property, plant, and equipment[282][285] - Additions to intangible assets, primarily subscription accounts and software, totaled approximately RMB 5.3 million[283][286] Trade Receivables and Impairment Provision (as of June 30) | Item | June 30, 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--- | :--- | :--- | | Trade receivables | 13,475 | 14,310 | | Less: Loss allowance for trade receivables | (4,415) | (1,536) | | Net | 9,060 | 12,774 | Contract Assets and Impairment Provision (as of June 30) | Item | June 30, 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--- | :--- | :--- | | Contract assets | 74,743 | 76,102 | | Less: Loss allowance for contract assets | (25,422) | (15,865) | | Net | 49,321 | 60,237 | Deposits, Prepayments and Other Receivables (as of June 30) | Item | June 30, 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--- | :--- | :--- | | Deposits | 1,442 | 1,441 | | Prepayments | 14,960 | 12,150 | | Other receivables | 9,397 | 7,257 | | Total | 25,799 | 20,848 | - As of June 30, 2020, total bank and cash on hand amounted to RMB 145.4 million, including time deposits with original maturity over 3 months of RMB 108,945 thousand[75][307] Ageing Analysis of Trade Payables (as of June 30) | Ageing | June 30, 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--- | :--- | :--- | | 0 – 30 days | 3,493 | 4,685 | | 31 – 90 days | 2,563 | 1,820 | | 91 – 180 days | 726 | 902 | | 181 – 365 days | 505 | 1,568 | | Over 365 days | 4,160 | 2,768 | | Total | 11,447 | 11,743 | Accruals and Other Payables (as of June 30) | Item | June 30, 2020 (RMB thousand) | December 31, 2019 (RMB thousand) | | :--- | :--- | :--- | | Salaries payable | 2,222 | 2,167 | | Accrued expenses | 1,648 | 1,870 | | Other taxes payable | 6,049 | 5,663 | | Other payables | 805 | 376 | | Total | 10,724 | 10,076 | Capital and Related Party Transactions As of June 30, 2020, the company's issued and fully paid share capital remained unchanged, with details on key management personnel compensation and equity instrument acquisition commitments Share Capital Details (as of June 30) | Item | Number of Shares | Par Value (RMB thousand) | | :--- | :--- | :--- | | Issued and fully paid at January 1 | 2,300,000,000 | 1,967 | | At June 30/December 31 | 2,300,000,000 | 1,967 | Key Management Personnel Remuneration (for the six months ended June 30) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Short-term employee benefits | 1,643 | 846 | | Retirement scheme contributions | 33 | 226 | | Total | 1,676 | 1,072 | - The company has commitments for equity instrument acquisitions totaling RMB 2,050 thousand[324] Financial Instruments and Fair Value Measurement The company measures financial assets and liabilities at fair value using observable market inputs where possible, with film and drama investments classified as Level 3, and sensitivity analysis indicating impacts from changes in discount rates or gross margins Carrying Amounts and Fair Values of Financial Assets and Liabilities (as of June 30) | Item | June 30, 2020 (RMB thousand) Carrying Amount | June 30, 2020 (RMB thousand) Fair Value | December 31, 2019 (RMB thousand) Carrying Amount | December 31, 2019 (RMB thousand) Fair Value | | :--- | :--- | :--- | :--- | :--- | | Financial assets measured at amortized cost | | | | | | Trade receivables, deposits and other receivables | 15,097 | 15,097 | 21,472 | 21,472 | | Contract assets | 49,321 | 49,321 | 60,237 | 60,237 | | Amounts due from shareholders | 204 | 204 | 200 | 200 | | Amounts due from non-controlling interests | 980 | 980 | 980 | 980 | | Time deposits with original maturity over 3 months | 108,945 | 108,945 | 47,017 | 47,017 | | Cash and cash equivalents | 36,441 | 36,441 | 118,915 | 118,915 | | Financial assets at fair value through profit or loss | | | | | | Film and drama investments/Film investments | 13,441 | 13,441 | 8,500 | 8,500 | | Financial liabilities measured at amortized cost | | | | | | Trade payables, accruals and other payables | 15,517 | 15,517 | 16,156 | 16,156 | - The fair value of film and drama investments is determined using the income approach and classified as Level 3[337] - Sensitivity analysis shows that a 1% increase/decrease in the discount rate would decrease/increase the carrying amount by RMB 110,000; a 0.5% increase/decrease in the Group's share of gross profit would increase/decrease the carrying amount by RMB 86,000[346] Level 3 Fair Value Measurement Changes (During the Period) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | At January 1 | 8,500 | — | | Purchases | 4,592 | 7,800 | | Recognized in profit or loss and included in total other income and other gains | 349 | 700 | | At June 30/December 31 | 13,441 | 8,500 | Events After the End of Reporting Period The COVID-19 pandemic continues to adversely affect the global economy and the company's operations, with its full impact remaining highly uncertain, prompting close monitoring and proactive responses from the Board - The COVID-19 pandemic has adversely affected the global economy and the company's business operations, and the Board expects the pandemic to continue to have negative impacts[350] - Due to the dynamic nature of the pandemic, the extent of its impact on the company's business and financial position remains highly uncertain[350] - The Board is closely monitoring the development of the pandemic and will assess its impact on the company's operations and financial performance, taking proactive measures as appropriate[350]