GEM Characteristics of HKEX This section outlines the GEM market's role as a listing platform for small and medium-sized companies, emphasizing the associated higher investment risks and potential market volatility GEM Market Positioning and Risk Disclosure The HKEX GEM market aims to accommodate small and medium-sized companies, but investing in such companies carries higher risks, potential market volatility, and no guarantee of high market liquidity - The GEM market is positioned as a listing platform for small and medium-sized companies with higher investment risks14 - Investors should understand the potential risks and make investment decisions only after careful and thorough consideration14 - Securities traded on GEM may be subject to greater market volatility risks than Main Board securities, with no guarantee of high liquidity25 Corporate Information This section provides key corporate details including the board composition, contact information, and professional advisors Board of Directors and Committee Composition Million Stars Holdings Limited's Board of Directors comprises executive and independent non-executive directors, supported by audit, remuneration, nomination, and corporate governance committees - Executive Directors include Mr. Zhu Yongjun (Chairman) and Ms. Tian Yuan78 - Independent Non-Executive Directors include Mr. Chan Chak, Ms. Ji Fang, and Mr. Gao Shuo78 - The company has an Audit Committee (Chairman: Mr. Chan Chak), Remuneration Committee (Chairman: Ms. Ji Fang), Nomination Committee (Chairman: Mr. Gao Shuo), and Corporate Governance Committee (Chairman: Mr. Chan Chak)78 Company Details and Contact Information This section lists the company's authorized representatives, company secretary, compliance officer, registered office, principal place of business, share registrar, principal bankers, auditor, legal advisor, and stock code - The Company Secretary is Ms. Fu Manyi, and the Compliance Officer is Ms. Tian Yuan8 - The company website is www.millionstars.hk, and the stock code is 809312 - The auditor is Grant Thornton Hong Kong Limited1112 Chairman's Statement The Chairman's statement provides an overview of the company's performance and strategic outlook, highlighting key achievements and future plans FY2020 Performance Overview Despite intense competition and strict regulations due to the COVID-19 pandemic and slower game license approvals, the Group achieved a 60.4% year-on-year revenue growth in FY2020 through promotional strategies, yet recorded a loss after tax FY2020 Key Financial Data | Metric | FY2020 (HK$ thousand) | FY2019 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 434,314 | 270,729 | | Loss after tax | 44,039 | - | - The Group's sales volume increased by 60.4% compared to the same period last year1416 - The internet advertising industry faces fierce competition, with information flow advertising emerging as a new growth point1416 - National regulations on internet advertising media and operators are becoming stricter, leading to increased operating costs1517 Future Outlook The Group plans to capitalize on internet advertising opportunities, increase investment, and expand client base and revenue streams while closely monitoring the pandemic's impact - The Group will increase investment in internet advertising to expand new clients, businesses, and revenue sources3440 - The Group will closely monitor the development of the COVID-19 pandemic and its impact on business3540 Management Discussion and Analysis This section reviews the Group's business and financial performance, liquidity, and future outlook, including key operational and financial metrics Business Review The Group primarily provides internet advertising agency services, achieving a 60.4% sales growth despite macroeconomic and game license slowdowns, with domestic and overseas operations managed by subsidiaries - The Group primarily provides internet advertising agency services2529 - Sales volume increased by approximately 60.4% year-on-year2630 - Dongrun Network is the exclusive advertising agent for Dongqiudi games and a core agent for Cheetah Mobile, Yidian Zixun, WiFi Master Key, and Toutiao, with operating revenue of approximately HK$329.8 million during the year2730 - Million Stars Internet Media Limited (MSIM) expanded into overseas internet advertising markets via Facebook, with operating revenue of approximately HK$103.1 million during the year2831 Financial Review The Group's FY2020 revenue grew by 60.4% to HK$434.3 million, but loss after tax widened to HK$44 million due to lower gross profit margin, impairment losses on intangible assets and associate interests, and increased finance costs FY2020 Key Financial Indicators | Metric | FY2020 (HK$ thousand) | FY2019 (HK$ thousand) | Change Rate | | :--- | :--- | :--- | :--- | | Revenue | 434,300 | 270,700 | +60.4% | | Loss after tax | 44,000 | 36,600 | +20.2% | | Gross profit margin | 2.0% | 15.0% | -13.0% | | Selling and distribution expenses | 2,200 | 3,300 | -33.3% | | Administrative expenses | 36,600 | 40,000 | -8.4% | | Finance costs | 4,400 | 600 | +633.3% | - The increase in loss after tax was primarily attributable to a net reversal of impairment loss on trade and other receivables of approximately HK$27.9 million, and impairment losses recognized on intangible assets and interests in an associate of approximately HK$16.1 million and HK$23.9 million, respectively3741 - The increase in finance costs was mainly due to interest expenses arising from interest-bearing bank borrowings and third-party loans4651 Financial Position, Liquidity and Financial Resources The Group maintains prudent cash and financial management, with increased bank and cash balances, a higher debt-to-equity ratio, and sufficient internal resources for future development, while disclosing asset pledges and risk management policies FY2020 Liquidity and Debt Indicators | Metric | June 30, 2020 (HK$ thousand) | June 30, 2019 (HK$ thousand) | | :--- | :--- | :--- | | Bank and cash balances (including pledged bank deposits) | 55,800 | 23,500 | | Total debt to equity ratio | 18.7% | 6.25% | | Bank borrowings | 28,300 | 8,100 | | Third-party interest-bearing loans | 2,500 | 5,000 | - The increase in bank and cash balances was mainly due to the recovery of receivables from debtors5663 - Bank borrowing interest rates ranged from 2.8% to 4.8% (2019: 5.6% to 11.3%)5763 - The Group's bank facilities are secured by pledged bank deposits of approximately HK$5.9 million (2019: HK$3.9 million)6065 - The Group is exposed to foreign currency risk (primarily RMB) and interest rate risk, but the foreign exchange impact is minimal, and no interest rate hedging contracts have been entered into616668697475 Material Acquisitions and Disposals On August 30, 2019, the Group's wholly-owned subsidiary, Beijing Dongrun, subscribed for a 35% equity interest in Shenzhen Yidao Network Co., Ltd. for RMB50 million (approximately HK$55.72 million), completed on October 28, 2019 - On August 30, 2019, Beijing Dongrun subscribed for a 35% equity interest in Shenzhen Yidao Network Co., Ltd. for RMB50 million (approximately HK$55.72 million)7278 - The subscription was completed on October 28, 20197278 - Apart from the above, the Group had no other material acquisitions or disposals in FY20207379 Employees and Remuneration Policy As of June 30, 2020, the Group's employee count decreased to 60, with a significant reduction in total staff costs, and remuneration policies are set by the Remuneration Committee based on duties, experience, and capabilities Employee and Staff Cost Changes | Metric | June 30, 2020 | June 30, 2019 | | :--- | :--- | :--- | | Number of employees | 60 | 109 | | Total staff costs (HK$ thousand) | 13,600 | 33,900 | - Employee remuneration policy is determined by the Remuneration Committee with reference to employees' responsibilities, duties, experience, and capabilities8389 - The Group provides training to employees on technical skills, quality control, and work safety standards8589 Biographical Details of Directors This section provides detailed biographies of the executive and independent non-executive directors, highlighting their professional backgrounds and expertise Executive Directors This section presents the detailed biographies of Executive Directors Mr. Zhu Yongjun and Ms. Tian Yuan, including their age, appointment dates, educational backgrounds, and extensive experience in investment management and financial enterprises - Mr. Zhu Yongjun (40 years old) was appointed as an Executive Director on February 24, 2017, and as Chairman of the Board on March 17, 20179194 - Mr. Zhu Yongjun has extensive experience in investment management, having founded Shanghai Xuntou Financial Information Service Co., Ltd. and Taizhou Sifang Network Co., Ltd9294 - Ms. Tian Yuan (46 years old) was appointed as an Executive Director on July 28, 2017, holding a Bachelor's degree in Economics from UCLA and a Master of Science degree in Financial Engineering from the University of Michigan, Ann Arbor98102 - Ms. Tian Yuan has extensive experience in financial product investment, establishment and operation of investment funds, private equity, capital market investment, and financing99102 Independent Non-Executive Directors This section introduces the biographies of Independent Non-Executive Directors Mr. Chan Chak, Ms. Ji Fang, and Mr. Gao Shuo, who possess extensive professional knowledge and experience in investment management, accounting, corporate management, and capital operations - Mr. Chan Chak (35 years old) was appointed as an Independent Non-Executive Director on January 1, 2018, currently serving as Chairman of the Audit Committee and Corporate Governance Committee, and is a Certified Public Accountant and Chartered Financial Analyst105107108 - Ms. Ji Fang (46 years old) was appointed as an Independent Non-Executive Director on January 1, 2019, possessing over twenty years of experience in senior corporate management, industrial investment, and capital operations111112114 - Mr. Gao Shuo (37 years old) was appointed as an Independent Non-Executive Director on November 6, 2017, with 12 years of experience in investment management, currently serving as a partner at Hanfu (Beijing) Capital Management Co., Ltd116117118 Report of the Directors The Directors' Report presents the Group's audited consolidated financial statements for FY2020, outlining business activities, financial performance, and corporate governance matters Business and Financial Performance The Directors present the Group's audited consolidated financial statements for FY2020, with the company primarily engaged in investment holding, and no dividends are recommended for the year - The Company's principal business is investment holding121128 - The Board does not recommend the payment of any dividend for FY2020 (2019: nil)122130 - The Group's environmental policies, relationships with key stakeholders, and compliance with laws and regulations will be disclosed in the Environmental, Social and Governance Report125131 Key Operational and Financial Details This section discloses the Group's distributable reserves, changes in property, plant and equipment, and concentration of major customers and suppliers, confirming no significant interests of directors or major shareholders in the top five clients and suppliers - According to the Companies Law of the Cayman Islands, contributed surplus and share premium account may be distributed to shareholders, provided the company can pay its debts as they fall due in the ordinary course of business134140 FY2020 Major Customer and Supplier Concentration | Category | % of Total Sales/Purchases | Max Customer/Supplier % | | :--- | :--- | :--- | | Top five customers | 64.0% | 26.8% | | Top five suppliers | 84.3% | 47.4% | - Save as disclosed, none of the Directors or their close associates or any shareholder (holding more than 5% of the issued share capital) had any interest in the Group's five largest customers and suppliers138143 Directors and Corporate Governance This section lists current directors and changes, confirms compliance of service contracts, notes no significant director interests in major transactions, and states no share repurchases during FY2020 - Ms. Wang Fei resigned as Executive Director, Chief Executive Officer, and Chairman and member of the Corporate Governance Committee on September 5, 2020151 - Mr. Chan Chak has been appointed as Chairman of the Company's Corporate Governance Committee, effective September 5, 2020151 - None of the Directors proposed for re-election at the forthcoming annual general meeting has entered into a service contract with the Company which is not determinable by the Company within one year without payment of compensation (other than statutory compensation)152157 - The Company and any of its subsidiaries did not purchase, sell, or redeem any of the Company's listed securities during FY2020154159 Share Issuance and Use of Proceeds On December 9, 2019, the company issued 20,000,000 ordinary shares to Ms. Zhong Baomei for HK$0.25 per share, raising HK$5 million, with net proceeds allocated to general working capital and future business development - The issuance of 20,000,000 ordinary shares to Ms. Zhong Baomei was completed on December 9, 2019164168 - The subscription price was HK$0.25 per share, representing a discount of approximately 18.03% to the closing price on the date of the subscription agreement164169171 - The gross and net proceeds were approximately HK$5 million and HK$4.99 million, respectively172173 - The net proceeds are intended to be used as general working capital for the Group and for future business development, as well as to strengthen the capital base and broaden the shareholder base166170172173 Share Option Scheme and Emolument Policy The company adopted a share option scheme on January 28, 2015, to incentivize contributors, with a total of 40,000,000 shares available for grant, representing approximately 9.52% of issued shares, and no options were granted as of the reporting date - The share option scheme was adopted on January 28, 2015, with a validity period of 10 years182185199206 - The total number of shares that may be granted under the scheme is 40,000,000 shares, representing approximately 9.52% of the total issued shares as of the date of this annual report187190 - As of the reporting date, no share options were granted, expired, lapsed, exercised, or cancelled200207 - Directors' emoluments are recommended and approved by the Remuneration Committee with reference to the company's operating performance, individual performance, and comparable market data202208 Shareholders' Interests and Public Float This section discloses the interests and short positions of directors, chief executives, and substantial shareholders in the company's shares, confirming compliance with GEM Listing Rules for public float and no competing interests from directors or controlling shareholders Directors' Interests in Company Shares (as of June 30, 2020) | Director Name | Capacity | Interest in Shares | Approximate % of Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Zhu Yongjun | Beneficial owner | 38,398,786 (L) | 9.14% | | Ms. Wang Fei (resigned on September 5, 2020) | Beneficial owner | 40,000,000 (L) | 9.52% | Major Shareholders' Interests in Company Shares (as of June 30, 2020) | Shareholder Name | Capacity | Interest in Shares | Approximate % of Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Jiang Peijie | Beneficial owner | 29,150,000 (L) | 6.94% | | Seventh Avenue Holdings Limited | Beneficial owner | 54,000,000 (L) | 12.86% | | United Conquer Limited | Interest in controlled corporation | 69,597,169 (L) | 16.57% | | Shanghai Hutong Investment Center (Limited Partnership) | Beneficial owner/Interest in controlled corporation | 50,000,000 (L) / 69,597,169 (L) | 11.91% / 16.57% | | Shanghai Angju Asset Management Co., Ltd. | Interest in controlled corporation | 119,597,169 (L) | 28.48% | | Jilin Province Investment Group | Interest in controlled corporation | 119,597,169 (L) | 28.48% | | Yao Ligang | Interest in controlled corporation | 119,597,169 (L) | 28.48% | - As of the date of this annual report, the company's public float is sufficient, no less than the 25% required by the GEM Listing Rules214217 - In FY2020, none of the Directors, controlling shareholders, or their respective associates had any business or interest that competed or might compete with the Group's business226228 Auditors This section details the change in the company's auditors, with RSM Hong Kong resigning on July 6, 2020, and Grant Thornton Hong Kong Limited appointed as the new auditor on July 7, 2020, for re-appointment at the upcoming AGM - RSM Hong Kong resigned as the Company's auditor on July 6, 2020231233 - Grant Thornton Hong Kong Limited was appointed as the new auditor by the Directors on July 7, 2020231233 - The Board confirms that there were no disagreements with the former auditors, BDO and RSM233234235 Corporate Governance Report This report outlines the Group's commitment to high corporate governance standards, adherence to the GEM Listing Rules, and addresses deviations with explanations and improvement measures Corporate Governance Practices The Group is committed to high corporate governance standards, adopting the GEM Listing Rules' Corporate Governance Code, and has disclosed deviations regarding the Chairman's temporary dual role, untimely board meeting documents, and monthly financial updates, along with corrective actions - The Group has adopted the Corporate Governance Code set out in Appendix 15 of the GEM Listing Rules241242 - There is a deviation where the Chairman temporarily also serves as the Chief Executive Officer, and the Board will endeavor to identify a suitable candidate243 - Some Board meeting documents were not dispatched at least three days before the meeting, but Board members still had sufficient information to discuss matters243 - Management failed to provide updated financial information to the Board monthly but will inform them of the latest information from time to time244 - The Board has identified deficiencies in the internal control system regarding compliance matters and will engage external consultants to review and improve them244 Board of Directors The Board emphasizes independence, objectivity, and accountability, comprising two executive and three independent non-executive directors, with regular meetings, high attendance, and a diversity policy in place - The Board comprises two Executive Directors and three Independent Non-Executive Directors, emphasizing independence and objectivity248249261265 - Board meetings have high attendance, and Directors actively participate252253254255256258259260 - A Board Diversity Policy has been implemented, achieving measurable objectives of at least one-third independent non-executive directors, at least one female director, and at least one director with accounting or other professional qualifications269270271272273274 - The roles of Chairman and Chief Executive Officer are separated, but the CEO position is vacant after Ms. Wang Fei's resignation, and the Board is seeking a suitable candidate279280281282 - Each newly appointed Director will receive comprehensive, formal, and tailored induction training, along with market information and updates on regulatory requirements305308 Board Committees The Board has established Audit, Remuneration, Nomination, and Corporate Governance Committees, each with clear written terms of reference and a majority or all independent non-executive directors, fulfilling their responsibilities through regular meetings - The Board has an Audit Committee, Remuneration Committee, Nomination Committee, and Corporate Governance Committee, all with written terms of reference310315 - All members of the Audit Committee, Remuneration Committee, and Nomination Committee are Independent Non-Executive Directors311316 - The Audit Committee is responsible for overseeing the financial reporting system, risk management, and internal control procedures, and reviewing financial information313317 - The Nomination Committee has adopted a Board Diversity Policy and Nomination Policy, and provides recommendations on director nominations, rotation, and re-election324325328 - The Corporate Governance Committee is responsible for formulating and reviewing corporate governance policies and management, and monitoring the training of Directors and senior management340345 Directors' and Auditors' Responsibilities and Remuneration Directors affirm their responsibility for preparing consolidated financial statements in compliance with statutory and accounting standards, while auditor remuneration is primarily for audit services, and the company had no senior management during the year - Directors confirm their responsibility for preparing consolidated financial statements and ensuring compliance with statutory requirements and applicable accounting standards343349 Auditor Remuneration (HK$ thousand) | Service Type | FY2020 | FY2019 | | :--- | :--- | :--- | | Audit services | 850 | 1,250 | | Non-audit services (tax services) | – | – | - During the year, the Company did not have any senior management356359 Dividend Policy The company established a dividend policy on February 13, 2019, to allow shareholders to share in profits while retaining sufficient reserves for future development, with the Board considering various factors for dividend recommendations - The company formulated a dividend policy on February 13, 2019, aiming to allow shareholders to share in profits while retaining sufficient reserves357360 - Factors considered for dividend distribution include the Group's profits, economic and financial conditions, changes in capital structure, acquisitions and disposals, credit arrangements, cash flow, and past dividend trends358360 Risk Management and Internal Control The Board is responsible for assessing and determining the nature and extent of risks the Group is willing to undertake, and establishing and maintaining effective risk management and internal control systems. The Group has formulated various risk management procedures and guidelines, and engaged external consultants for internal control review. The Board annually assesses the system's effectiveness and confirms compliance with relevant code provisions - The Board assumes overall responsibility for assessing and determining the nature and extent of risks the Company is willing to undertake in achieving its strategic objectives362365 - The Group has formulated various risk management procedures and guidelines, covering project management, financial reporting, human resources, etc363365 - The Group engaged Shinewing Risk Management Limited to conduct an internal control review of its principal businesses and will take measures to improve identified deficiencies380384 - The Board annually assesses the effectiveness of the risk management and internal control systems and confirms that the Group has complied with the relevant provisions of the Corporate Governance Code383386 Shareholders' Rights and Communication Shareholders can requisition extraordinary general meetings and submit inquiries to the Board or company secretary, with the company committed to high transparency through regular reports and various communication channels - Shareholders holding not less than one-tenth of the paid-up capital have the right to request the Directors to convene an extraordinary general meeting389393 - Shareholders may submit written inquiries and suggestions to the Board or the Company Secretary391393 - The company provides shareholders with updated business developments and financial performance information through annual, interim, and quarterly reports, and provides contact information on its website396399 - The Annual General Meeting serves as a platform for shareholders to exchange views with the Board, and all Directors and external auditors endeavor to attend397399 Independent Auditor's Report This section presents the independent auditor's report, including a disclaimer of opinion due to significant limitations in audit scope regarding intangible assets and associate investments Disclaimer of Opinion The independent auditor disclaims an opinion on Million Stars Holdings Limited's consolidated financial statements due to the significance of matters described in the "Basis for Disclaimer of Opinion" section, preventing the formation of an audit opinion - The auditor disclaims an opinion on the Group's consolidated financial statements404406 - The inability to form an audit opinion is due to the significance of the matters described in the "Basis for Disclaimer of Opinion" section404406 Basis for Disclaimer of Opinion The auditor's disclaimer is primarily due to insufficient audit evidence for the acquisition and impairment assessment of intangible assets and the purchase price allocation, share of results, net assets, and impairment assessment of the associate, Yidao Network - Acquisition and impairment assessment of intangible assets: Limited supporting documentation and evidence, making it impossible to determine the reasonableness of management's assumptions and the feasibility of business plans405407410412 - Interests in associate Yidao Network: Insufficient supporting documentation and evidence for purchase price allocation, share of results, share of net assets, and impairment assessment, making it impossible to ascertain if all assets and liabilities were identified and the reasonableness of management's assumptions415418420422425 - The aforementioned scope limitations prevent determining whether adjustments to the relevant amounts are necessary, which would have a significant impact on the Group's financial position and performance423425428433 Other Matter The Group's consolidated financial statements for the year ended June 30, 2019, were audited by another auditor who issued an unmodified opinion - The Group's FY2019 consolidated financial statements were audited by another auditor who issued an unmodified opinion429434 Responsibilities of Directors and Auditor Directors are responsible for preparing true and fair consolidated financial statements and maintaining effective internal controls, while the auditor's responsibility is to conduct an audit in accordance with Hong Kong Standards on Auditing and report to shareholders - Directors are responsible for preparing true and fair consolidated financial statements and for internal controls430435 - The auditor's responsibility is to conduct an audit in accordance with Hong Kong Standards on Auditing and to report to shareholders438440 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended June 30, 2020, the Group's revenue from continuing operations significantly increased to HK$434,314 thousand, but a loss of HK$44,039 thousand and total comprehensive expense of HK$50,031 thousand were recorded due to higher service costs and impairment losses Financial Performance Summary For the year ended June 30, 2020, the Group's revenue from continuing operations was HK$434,314 thousand, a significant increase from the prior year, but a loss of HK$44,039 thousand and total comprehensive expense of HK$50,031 thousand were recorded due to increased service costs and various impairment losses Consolidated Statement of Profit or Loss and Other Comprehensive Income (Summary) | Metric | FY2020 (HK$ thousand) | FY2019 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 434,314 | 270,729 | | Cost of services | (425,780) | (230,119) | | Gross profit | 8,534 | 40,610 | | Other income, gains and losses, net | 3,254 | 3,092 | | Selling and distribution expenses | (2,150) | (3,266) | | Administrative expenses | (36,558) | (39,887) | | Net reversal of impairment loss on trade and other receivables | 27,947 | (34,934) | | Impairment loss on intangible assets | (16,129) | – | | Impairment loss on interests in an associate | (23,856) | – | | Finance costs | (4,449) | (626) | | Loss before tax | (44,039) | (35,011) | | Loss for the year | (44,039) | (36,606) | | Total comprehensive expense for the year | (50,031) | (45,672) | | Loss per share (basic and diluted) | (10.71) HK cents | (9.15) HK cents | - Revenue increased by 60.4% year-on-year, but gross profit significantly decreased444 - Loss for the year was primarily affected by impairment losses on intangible assets and interests in an associate444 Consolidated Statement of Financial Position As of June 30, 2020, the Group's total assets were HK$268,442 thousand, total liabilities HK$103,608 thousand, and total equity HK$164,834 thousand. Non-current assets saw new right-of-use assets and intangible assets, trade and other receivables significantly decreased, while bank and cash balances increased Assets, Liabilities and Equity Overview As of June 30, 2020, the Group's total assets were HK$268,442 thousand, total liabilities HK$103,608 thousand, and total equity HK$164,834 thousand, with new right-of-use assets and intangible assets, a significant decrease in trade and other receivables, and an increase in bank and cash balances Consolidated Statement of Financial Position (Summary) | Metric | June 30, 2020 (HK$ thousand) | June 30, 2019 (HK$ thousand) | | :--- | :--- | :--- | | Non-current assets | 85,311 | 6,209 | | Current assets | 183,131 | 282,442 | | Current liabilities | 100,076 | 78,616 | | Non-current liabilities | 3,532 | 170 | | Net assets | 164,834 | 209,865 | | Total equity | 164,834 | 209,865 | - Non-current assets significantly increased, mainly due to new right-of-use assets of HK$8,147 thousand and intangible assets of HK$32,993 thousand449 - Trade receivables decreased from HK$113,508 thousand in FY2019 to HK$38,069 thousand in FY2020449 - Bank and cash balances increased from HK$19,564 thousand in FY2019 to HK$49,895 thousand in FY2020449 Consolidated Statement of Changes in Equity For the year ended June 30, 2020, the Group's total equity decreased from HK$209,865 thousand to HK$164,834 thousand, primarily due to a total comprehensive expense of HK$50,031 thousand, partially offset by a HK$5,000 thousand increase from ordinary share issuance Equity Movement Analysis For the year ended June 30, 2020, the Group's total equity decreased from HK$209,865 thousand on July 1, 2019, to HK$164,834 thousand, primarily due to a total comprehensive expense of HK$50,031 thousand, partially offset by a HK$5,000 thousand increase from ordinary share issuance Consolidated Statement of Changes in Equity (Summary) | Item | June 30, 2020 (HK$ thousand) | June 30, 2019 (HK$ thousand) | | :--- | :--- | :--- | | Share capital | 4,200 | 4,000 | | Share premium | 44,582 | 39,782 | | Statutory reserve | 1,806 | 1,806 | | Exchange reserve | (17,297) | (11,305) | | Retained profits | 131,543 | 175,582 | | Total equity | 164,834 | 209,865 | - Total comprehensive expense for the year was HK$50,031 thousand, leading to a decrease in equity453 - Issuance of ordinary shares resulted in an equity increase of HK$5,000 thousand, comprising HK$200 thousand in share capital and HK$4,800 thousand in share premium453 Consolidated Statement of Cash Flows For the year ended June 30, 2020, the Group generated HK$144,408 thousand net cash from operating activities, used HK$119,323 thousand in investing activities, and generated HK$10,730 thousand from financing activities, resulting in a net increase of HK$35,815 thousand in cash and cash equivalents Cash Flow Activities Summary For the year ended June 30, 2020, the Group generated HK$144,408 thousand net cash from operating activities, used HK$119,323 thousand in investing activities, and generated HK$10,730 thousand from financing activities, resulting in a net increase of HK$35,815 thousand in cash and cash equivalents Consolidated Statement of Cash Flows (Summary) | Activity Type | FY2020 (HK$ thousand) | FY2019 (HK$ thousand) | | :--- | :--- | :--- | | Net cash generated from (used in) operating activities | 144,408 | (31,072) | | Net cash used in investing activities | (119,323) | (10,094) | | Net cash generated from (used in) financing activities | 10,730 | (44,592) | | Net increase (decrease) in cash and cash equivalents | 35,815 | (85,758) | - In investing activities, expenditure for acquisition of an associate was HK$63,324 thousand, and for purchase of intangible assets was HK$46,091 thousand463 - In financing activities, proceeds from issuance of ordinary shares were HK$5,000 thousand, borrowings raised were HK$381,620 thousand, and borrowings repaid were HK$365,503 thousand463 Notes to the Consolidated Financial Statements This section provides detailed notes to the consolidated financial statements, explaining the Group's accounting policies, significant judgments, and disclosures for various financial statement line items General Information This section outlines Million Stars Holdings Limited's registration, principal place of business, listing venue, primary business (investment holding), and its subsidiaries' main activities, with financial statements presented in Hong Kong Dollars - The Company is incorporated in the Cayman Islands, and its shares are listed on GEM of The Stock Exchange of Hong Kong464 - The Company is an investment holding company, and the consolidated financial statements are presented in Hong Kong Dollars465468469 Application of New and Amendments to HKFRSs The Group first applied several new and amended HKFRSs in the current fiscal year, notably HKFRS 16 Leases, which was applied retrospectively, leading to the recognition of additional lease liabilities and right-of-use assets, with other standards yet to be effective - The Group first applied HKFRS 16 Leases in the current year, with retrospective application471475 - As of July 1, 2019, the Group recognized additional lease liabilities and right-of-use assets of HK$20,080 thousand each474477483488 - Standards issued but not yet effective include HKFRS 17 Insurance Contracts, amendments to HKFRS 3 Definition of a Business, etc74495 Significant Accounting Policies This section details the Group's significant accounting policies for preparing consolidated financial statements, covering consolidation, goodwill, associate investments, revenue recognition, contract liabilities, leases, foreign currency translation, borrowings, employee benefits, share-based payments, taxation, property, plant and equipment, intangible assets, impairment, provisions, and financial instruments - Revenue is recognized when performance obligations are satisfied, with internet advertising agency service revenue recognized over time, and performance-based advertising recognized by clicks or impressions543550551554 - Financial asset impairment is assessed using the Expected Credit Loss (ECL) model, with trade receivables always recognizing lifetime ECL662666669 - Goodwill is stated at acquisition cost less accumulated impairment losses and is tested for impairment annually518522 - Investments in associates are accounted for using the equity method, with the excess of investment cost over the fair value of identifiable assets and liabilities recognized as goodwill533536 Critical Accounting Judgements and Key Sources of Estimation Uncertainty This section explains the Group's critical judgments and estimation uncertainties in applying accounting policies, primarily concerning the assessment of significant credit risk increases, useful lives and impairment of property, plant and equipment and intangible assets, goodwill impairment, associate impairment, trade receivables' expected credit loss provisions, and income and deferred taxes - The assessment of a significant increase in credit risk considers quantitative and qualitative information, including deterioration in external or internal credit ratings, changes in economic conditions, etc726730674675 - The estimation of asset impairment (including property, plant and equipment, right-of-use assets, and intangible assets) relies on judgments of recoverable amounts (fair value less costs of disposal or value in use), involving estimates of future cash flows and discount rates738740 - Goodwill and associate impairment assessments require estimating future cash flows of cash-generating units and appropriate discount rates745746748 - Provisions for expected credit losses on trade receivables are estimated based on historical default rates combined with forward-looking information755 Revenue This section discloses the Group's revenue breakdown from customer contracts, primarily from internet advertising agency services, categorized by geographical region and revenue recognition timing Revenue by Major Product or Service | Service Category | FY2020 (HK$ thousand) | FY2019 (HK$ thousand) | | :--- | :--- | :--- | | Internet advertising agency services | 434,314 | 270,629 | | Mobile payment technical support services | – | 100 | Revenue by Geographical Market | Geographical Market | FY2020 (HK$ thousand) | FY2019 (HK$ thousand) | | :--- | :--- | :--- | | China | 331,222 | 218,810 | | Hong Kong | 103,092 | 51,919 | - All revenue represents services transferred over time767 Other Income, Gains and Losses, Net This section presents the Group's net other income, gains, and losses for FY2020 and FY2019, primarily comprising interest income, exchange differences, additional input VAT granted, and miscellaneous income Other Income, Gains and Losses, Net (HK$ thousand) | Item | FY2020 | FY2019 | | :--- | :--- | :--- | | Interest income from bank deposits | 54 | 141 | | Interest income from loans receivable | 435 | 1,673 | | Net exchange (loss) gain | (83) | 581 | | Additional input VAT granted | 1,702 | – | | Miscellaneous income | 1,146 | 175 | | Total | 3,254 | 3,092 | - Net other income, gains, and losses for FY2020 was HK$3,254 thousand, a slight increase from FY2019769 Operating Segments In accordance with HKFRS 8, this section discloses the Group's operating segment information, primarily internet advertising agency services and mobile payment technical support services, providing analysis of revenue, results, assets, liabilities, and geographical information for each segment - The Group's reportable segments are internet advertising agency services and mobile payment technical support services772773 Segment Results (HK$ thousand) | Segment | FY2020 Results | FY2019 Results | | :--- | :--- | :--- | | Internet advertising agency services | (57,146) | (2,131) | | Mobile payment technical support services | 25,313 | (25,474) | - In FY2020, revenue from external customers: Customer B contributed HK$116,567 thousand, Customer C HK$68,316 thousand, and Customer D HK$44,195 thousand801 Non-current Assets by Location (HK$ thousand) | Region | FY2020 | FY2019 | | :--- | :--- | :--- | | China | 83,728 | 5,937 | | Hong Kong | 1,573 | 239 | | United States | 10 | 33 | Finance Costs This section discloses the Group's finance costs for FY2020 and FY2019, primarily comprising interest on lease liabilities and bank and other borrowings, which significantly increased Finance Costs (HK$ thousand) | Item | FY2020 | FY2019 | | :--- | :--- | :--- | | Finance lease expenses | – | 33 | | Interest on lease liabilities | 1,136 | – | | Interest on bank and other borrowings | 3,313 | 593 | | Total | 4,449 | 626 | - FY2020 finance costs significantly increased, mainly due to higher interest on lease liabilities and bank and other borrowings805 Income Tax Expenses This section discloses the Group's income tax expenses for FY2020 and FY2019, explaining applicable tax rates for Hong Kong profits tax and PRC corporate income tax, as well as tax incentives, with no income tax expense in FY2020 Income Tax Expenses (HK$ thousand) | Item | FY2020 | FY2019 | | :--- | :--- | :--- | | Current income tax | – | 1,879 | | Over-provision in prior years | – | (89) | | Income tax expenses | – | 1,790 | - Hong Kong profits tax rate is 16.5%, with the first HK$2 million of assessable profits taxed at 8.25%811812 - The PRC corporate income tax rate is 25%814816 - Subsidiaries in Horgos Economic Development Zone enjoy a 5-year corporate income tax exemption until the end of 2020818820 Loss for the Year from Continuing Operations This section lists the Group's loss for the year from continuing operations, detailing the various expenses and impairment losses contributing to the loss, including auditor's remuneration, intangible asset amortization, depreciation, exchange losses, lease termination losses, and the recognition and reversal of various impairment losses Components of Loss for the Year from Continuing Operations (HK$ thousand) | Item | FY2020 | FY2019 | | :--- | :--- | :--- | | Auditor's remuneration | 850 | 1,250 | | Amortisation of intangible assets | 3,028 | – | | Depreciation of right-of-use assets | 6,433 | – | | Loss on termination of lease contracts | 1,967 | – | | Reversal of impairment loss on trade receivables | (27,200) | (1,847) | | Impairment loss recognised on intangible assets | 16,129 | – | | Impairment loss recognised on interests in an associate | 23,856 | – | - The loss for the year from continuing operations in FY2020 was HK$44,039 thousand827 Employee Benefits Expenses This section discloses the Group's employee benefits expenses for FY2020 and FY2019, including salaries, bonuses, allowances, and retirement benefit scheme contributions, and details the remuneration breakdown for the five highest-paid individuals Employee Benefits Expenses (HK$ thousand) | Item | FY2020 | FY2019 | | :--- | :--- | :--- | | Salaries, bonuses and allowances | 11,718 | 29,099 | | Retirement benefit scheme contributions | 1,868 | 4,811 | | Total staff costs | 13,586 | 33,910 | Remuneration of Five Highest Paid Individuals (HK$ thousand) | Item | FY2020 | FY2019 | | :--- | :--- | :--- | | Salaries, allowances and benefits in kind | 3,133 | 925 | | Discretionary bonuses | – | 7,616 | | Retirement benefit scheme contributions | 96 | 28 | | Total | 3,229 | 8,569 | - In FY2020, none of the five highest-paid employees were directors, with 4 individuals earning between zero and HK$1 million, and 1 individual earning between HK$1 million and HK$1.5 million833 Benefits and Interests of Directors This section discloses the remuneration breakdown for the Group's directors (executive and independent non-executive) for FY2020 and FY2019, confirming no additional compensation for joining or leaving, nor any director waiving remuneration during the year Directors' Remuneration (HK$ thousand) | Director Name | Directors' Fees | Salaries and Allowances | Employer's Retirement Benefit Scheme Contributions | Discretionary Bonuses and Performance-Related Incentive Payments | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | FY2020 | | | | | | | Mr. Zhu Yongjun | – | 50 | – | – | 50 | | Ms. Wang Fei (CEO) | – | 100 | 2 | – | 102 | | Ms. Tian Yuan | – | – | – | – | – | | Ms. Ji Fang | 180 | – | – | – | 180 | | Mr. Gao Shuo | 180 | – | – | – | 180 | | Mr. Chan Chak | 180 | – | – | – | 180 | | Total | 540 | 150 | 2 | – | 692 | - Total directors' remuneration in FY2020 was HK$692 thousand, a significant decrease from HK$4,983 thousand in FY2019838841 - During the year, no directors or chief executive were paid remuneration as an inducement to join or upon joining or as compensation for loss of office, nor did any directors waive remuneration846849 Discontinued Operation This section explains that the Group disposed of its leather business, Odella International Limited and its subsidiaries, on February 18, 2019, and presents the financial information for the discontinued operation for FY2019 - The Group disposed of its leather business, Odella International Limited and its subsidiaries, on February 18, 2019, for a consideration of HK$10,000 thousand852853 FY2019 Profit from Discontinued Operation (HK$ thousand) | Item | FY2019 | | :--- | :--- | | Revenue | 37,219 | | Loss before tax | (2,119) | | Gain on disposal of subsidiaries | 2,324 | | Profit for the year attributable to owners of the Company | 195 | - The disposal resulted in a net cash outflow of HK$6,274 thousand854 Dividends This section states that the Group neither paid nor proposed any dividends to ordinary shareholders during FY2020 and FY2019 - No dividends were paid or proposed to the Company's ordinary shareholders during the year or since the end of the reporting period856857 Loss Per Share This section discloses the Group's basic and diluted loss per share from continuing and discontinued operations, as well as from continuing operations, for FY2020 and FY2019 Loss Per Share (HK cents) | Item | FY2020 | FY2019 | | :--- | :--- | :--- | | From continuing and discontinued operations | (10.71) | (9.15) | | From continuing operations | (10.71) | (9.20) | - The weighted average number of ordinary shares used to calculate basic and diluted loss per share was 411,202 thousand in FY2020 and 400,000 thousand in FY2019859 Property, Plant and Equipment This section provides details on the changes in cost, accumulated depreciation, and impairment losses for the Group's property, plant and equipment, including depreciation rates and impairment assessment results. HK$5 thousand impairment loss was recognized in FY2020 Carrying Amount of Property, Plant and Equipment (HK$ thousand) | Item | June 30, 2020 | June 30, 2019 | | :--- | :--- | :--- | | Motor vehicles | 706 | 2,639 | | Furniture, fixtures and office equipment | 471 | 643 | | Leasehold improvements | 1,108 | 349 | | Total | 2,285 | 3,631 | - Depreciation expense for FY2020 was HK$1,484 thousand868 - An impairment loss of HK$5 thousand was recognized in FY2020, allocated to property, plant and equipment of the Aiwan Yue cash-generating unit868872 Leases This section discloses detailed information on the Group's right-of-use assets and lease liabilities, including adjustments after HKFRS 16 application, asset additions, depreciation, lease terminations, and maturity analysis and currency denomination of lease liabilities Carrying Amount of Right-of-Use Assets (HK$ thousand) | Item | June 30, 2020 | July 1, 2019 | | :--- | :--- | :--- | | Leased properties | 8,108 | 20,022 | | Office equipment | 39 | 58 | | Total | 8,147 | 20,080 | Lease Liabilities (HK$ thousand) | Item | June 30, 2020 | July 1, 2019 | | :--- | :--- | :--- | | Non-current | 3,532 | 5,692 | | Current | 5,128 | 14,388 | | Total | 8,660 | 20,080 | - The termination of lease contracts for China offices and staff dormitories in FY2020 resulted in a loss of HK$1,967 thousand880881 - Total cash outflow for leases in FY2020 was HK$7,179 thousand892 Intangible Assets This section provides details on the changes in cost, accumulated amortization, and impairment losses for the Group's intangible assets, including mobile applications, licensed mobile game application concessions, and software. In FY2020, the Group acquired significant intangible assets and recognized substantial impairment losses Carrying Amount of Intangible Assets (HK$ thousand) | Item | June 30, 2020 | | :--- | :--- | | Mobile applications | 11,847 | | Licensed mobile game applications | 7,814 | | Software | 13,332 | | Total | 32,993 | - The total consideration for intangible assets acquired in FY2020 was approximately HK$52,668 thousand, of which HK$8,862 thousand was from Yidao Network896898 - An impairment loss of HK$16,129 thousand on intangible assets was recognized in FY2020896907908 - The economic useful lives of intangible assets are: mobile applications 8 years, licensed mobile game application concessions 8 to 10 years, and software 5 to 10 years900 Interests in Associates This section details the Group's interests in Yidao Network and Baitui Network, including investment costs, share of results, impairment losses, and exchange differences. The report explains the background, purchase price allocation, and impairment assessment results for both acquisitions Carrying Amount of Interests in Associates (HK$ thousand) | Item | June 30, 2020 | | :--- | :--- | | Investment cost in associates | 63,324 | | Share of post-acquisition results and other comprehensive income, net | 937 | | Impairment loss recognized during the year | (23,856) | | Exchange differences | (855) | | Total | 39,550 | - Yidao Network: Acquired a 35% equity interest on October 28, 2019, for a cash consideration of HK$55,720 thousand, with an impairment loss of HK$23,856 thousand recognized in FY2020919925942945 - Baitui Network: Acquired a 25.54% equity interest on May 21, 2020, for a cash consideration of HK$7,604 thousand, with no impairment loss recognized in FY2020948951969 - Amount due from Baitui Network was HK$4,939 thousand, with an impairment loss of HK$1,415 thousand recognized911 Goodwill This section discloses the carrying amount and impairment assessment results of the Group's goodwill, primarily arising from the acquisitions of Aiwan Yue and Dongrun Interactive. In FY2020, an impairment loss was recognized for Aiwan Yue's goodwill, while Dongrun Interactive's goodwill was not impaired Carrying Amount of Goodwill (HK$ thousand) | Item | June 30, 2020 | June 30, 2019 | | :--- | :--- | :--- | | Aiwan Yue | – | 154 | | Dongrun Interactive | 2,336 | 2,424 | | Total | 2,336 | 2,578 | - An impairment loss of HK$149 thousand was recognized in FY2020, allocated to the goodwill of the Aiwan Yue cash-generating unit99510081011 - The recoverable amount of the Dongrun Interactive cash-generating unit exceeded its carrying amount, thus no impairment loss was recognized in FY202010091011 Investments in Subsidiaries This section lists detailed information for the company's principal subsidiaries, including their place of incorporation, business structure, issued share capital, ownership interest, and principal activities. All major subsidiaries are directly or indirectly wholly-owned by the company - Principal subsidiaries include United Mutual Holdings Limited (investment holding), Million Stars Internet Media Limited (internet advertising agency services), Dongrun Interactive (investment holding), etc101910211022 - All principal subsidiaries are directly or indirectly wholly-owned (100%) by the Company101910211022 Trade Receivables This section discloses the Group's trade receivables' carrying amount, provisions, aging analysis, and currency denomination, along with client credit terms and concentration of credit risk Net Carrying Amount of Trade Receivables (HK$ thousand) | Item | June 30, 2020 | June 30, 2019 | | :--- | :--- | :--- | | Trade receivables | 48,577 | 141,481 | | Less: Provision | (10,508) | (27,973) | | Net amount | 38,069 | 113,508 | Aging Analysis of Trade Receivables (HK$ thousand) | Aging | June 30, 2020 | June 30, 2019 | | :--- | :--- | :--- | | Within 30 days | 17,197 | 14,131 | | 31 to 60 days | 691 | 7,974 | | 61 to 90 days | 4,979 | 5,166 | | 91 to 180 days | 15,004 | 12,831 | | 181 to 365 days | 198 | 14,648 | | Over 365 days | – | 58,758 | - The Group has concentrated credit risk, with the largest customer accounting for 36.8% of total trade receivables, and the top five customers accounting for 87.1%1128 Deposits, Prepayments and Other Receivables This section discloses the Group's deposits, prepayments, and other receivables' carrying amount, provisions, and composition, including prepaid service costs, loans receivable, and consideration receivable Deposits, Prepayments and Other Receivables (HK$ thousand) | Item | June 30, 2020 | June 30, 2019 | | :--- | :--- | :--- | | Deposits | 1,966 | 4,605 | | Prepayments | 78,833 | 96,354 | | Loans receivable | 6,004 | 49,684 | | Consideration receivable | – | 5,000 | | Others | 2,776 | 6,328 | | Less: Provision | (5,208) | (16,506) | | Net amount | 84,371 | 145,465 | - Approximately HK$78,249 thousand (2019: HK$91,271 thousand) of prepayments were for service costs related to internet adve
瓦普思瑞元宇宙(08093) - 2020 - 年度财报