环球数码创意(08271) - 2020 - 中期财报

Corporate Information Provides details on the company's board, committees, and essential operational information including auditors and stock listing Board of Directors and Committees The report details the composition and changes of the company's board of directors and its committees, including key appointments and resignations - Executive Directors include Ms. Cheng Xiaoyu (Chairperson), Mr. Wang Hongpeng (Managing Director), Mr. Xu Liang, and Mr. Xiao Yong[9] - Mr. Kuang Zhiqiang resigned as an independent non-executive director and chairman of the audit committee on May 22, 2020[9][11] - Mr. Lam Yiu Kin was appointed Chairman of the Audit Committee on May 22, 2020, with Mr. Zheng Xiaodong appointed as a member of the Audit, Nomination, and Remuneration Committees on the same day[9][11] Other Corporate Information This section provides key operational details including authorized representatives, compliance officers, auditors, and the company's listing information - The company's auditor is PricewaterhouseCoopers[11] - The company is listed on the GEM board of The Stock Exchange of Hong Kong Limited under stock code 8271[13] Report on Review of Interim Financial Information Presents the auditor's conclusion on the interim financial information, noting the scope of review is less extensive than an audit Auditor's Conclusion PricewaterhouseCoopers reviewed the interim financial information for the six months ended June 30, 2020, finding no material non-compliance with HKAS 34 - The auditor found no matters suggesting the interim financial information was not prepared in all material respects in accordance with HKAS 34 "Interim Financial Reporting"[19][22] - The review was conducted in accordance with Hong Kong Standard on Review Engagements 2410, which is less extensive than an audit, thus no audit opinion is expressed[18][21] Interim Results Provides a comprehensive overview of the company's financial performance, position, equity changes, and cash flows for the interim period Condensed Consolidated Interim Statement of Comprehensive Income For the six months ended June 30, 2020, revenue from continuing operations decreased by 11.5%, but the group achieved an overall profit of HKD 8.28 million due to a profit from discontinued operations Key Financial Performance (Continuing Operations) for H1 2020 | Indicator (HKD thousands) | H1 2020 | H1 2019 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 40,405 | 45,633 | -11.5% | | Gross Profit | 17,928 | 17,936 | -0.04% | | Operating Profit | 3,027 | 8,159 | -62.9% | | Profit for the Period | 2,332 | 5,520 | -57.8% | Overall Financial Performance (Including Discontinued Operations) for H1 2020 | Indicator (HKD thousands) | H1 2020 | H1 2019 | | :--- | :--- | :--- | | Profit/(Loss) from Discontinued Operations | 5,945 | (8,984) | | Total Profit/(Loss) for the Period | 8,277 | (3,464) | | Profit/(Loss) attributable to Company Owners | 6,375 | (504) | - Basic earnings per share attributable to company owners was 0.42 HK cents, compared to a loss of 0.03 HK cents per share in the prior period[62] Condensed Consolidated Interim Statement of Financial Position As of June 30, 2020, the group's total assets were HKD 588.37 million, with total liabilities of HKD 275.69 million and total equity of HKD 312.68 million Summary of Financial Position | Indicator (HKD thousands) | June 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Non-current Assets | 264,991 | 252,114 | | Current Assets | 323,380 | 321,447 | | Total Assets | 588,371 | 573,561 | | Total Liabilities | 275,693 | 264,830 | | Total Equity | 312,678 | 308,731 | | Cash and Cash Equivalents | 252,679 | 270,251 | Condensed Consolidated Interim Statement of Changes in Equity As of June 30, 2020, total equity increased from HKD 309 million to HKD 313 million, primarily due to profit for the period, partially offset by foreign currency translation losses and share repurchases - Total comprehensive income for the period was HKD 4.20 million, comprising a profit of HKD 8.28 million and other comprehensive loss of HKD 4.07 million from exchange differences[79] - The company repurchased and cancelled treasury shares, resulting in a HKD 0.26 million reduction in equity[79] Condensed Consolidated Interim Statement of Cash Flows In H1 2020, the group experienced a net cash outflow from operating activities of HKD 10.12 million, with total cash and cash equivalents decreasing by HKD 13.47 million to HKD 252.68 million Summary of Cash Flows (Six Months Ended June 30) | Indicator (HKD thousands) | 2020 | 2019 | | :--- | :--- | :--- | | Net Cash from Operating Activities | (10,119) | 18,554 | | Net Cash from Investing Activities | (2,254) | (34,880) | | Net Cash from Financing Activities | (1,094) | (919) | | Net Decrease in Cash and Cash Equivalents | (13,467) | (17,245) | | Cash and Cash Equivalents at End of Period | 252,679 | 255,723 | Notes to the Condensed Consolidated Interim Financial Information The notes detail accounting policies, financial risks, segment information, discontinued operations, and post-balance sheet events, highlighting revenue declines, a profit from discontinued operations due to litigation provision adjustments, and COVID-19 impacts - The company primarily engages in computer graphics (CG) creation and production, alongside property leasing and building management services[95] - The discontinued cultural industrial park business stems from a dispute with Pearl River Film Studio Co., Ltd., with ongoing litigation and significant provisions made[268][459] - The ongoing COVID-19 pandemic is expected to challenge the company's CG and property management businesses, with specific financial impacts not yet reliably estimable[500][501][502] Management Discussion and Analysis Provides management's insights into the company's financial performance, business operations, and significant legal matters during the period Financial Review Management attributes the decline in continuing operations revenue to decreases in both CG creation and property leasing, while overall profitability improved due to a provision adjustment for discontinued operations - Revenue from continuing operations decreased by HKD 5.23 million, with the CG creation segment down by HKD 2.86 million and property leasing by HKD 2.36 million[505] - The group's overall turnaround to profit was primarily due to a HKD 5.95 million profit from discontinued operations, resulting from a HKD 13.64 million adjustment to provisions for rent and settlement payables related to the cultural industrial park litigation[515] - As of June 30, 2020, the group held HKD 253 million in cash and cash equivalents, with no borrowings or overdrafts, and a current ratio of 1.26[520][521] Business Review and Outlook This section reviews the performance and outlook of the company's core CG creation and property leasing businesses, both impacted by COVID-19, outlining strategic shifts towards digital entertainment and enhanced property management CG Creation and Production In H1 2020, the CG business was severely impacted by COVID-19, affecting film box office, but the company continued production, pursued new IP collaborations, and plans to expand into digital entertainment and cultural industrial parks - The animated film "Soldier Shuntong: King of Soldiers" released in January 2020, but its box office was severely impacted due to cinema closures caused by the COVID-19 pandemic[543] - The company signed a tripartite agreement with Jiangxi Cultural Performance Group to jointly develop local cultural IPs and explore a "travel with animation" model[543] - Future business will focus on transformation, upgrading from animation production to cultural and creative construction driven by core digital entertainment technologies, with plans to collaborate with local governments on cultural industrial parks[554] Property Leasing and Building Management Services The property management team enhanced COVID-19 prevention measures, maintaining operations and mitigating significant revenue impact despite tenant requests for lease adjustments, with future focus on service enhancement and smart systems - In response to the pandemic, the property management team actively implemented epidemic prevention measures and assisted client enterprises in resuming work and production[557] - Despite some tenants requesting rent adjustments, segment revenue was not significantly impacted, and the focus for the second half will be on stabilizing existing tenants amidst potentially higher turnover[560] Litigations This section details ongoing litigation between the company's subsidiary and Pearl River Film Studio regarding the "Pearl River Cultural Industrial Park," involving disputes over a terminated agreement and property occupation fees, with HKD 166 million in provisions and HKD 46.28 million in frozen bank deposits - The core litigation revolves around a cooperation framework agreement with Pearl River Film Studio Co., Ltd. concerning the "Pearl River Cultural Industrial Park," which a court ruled terminated on March 22, 2016[564] - Pearl River Film Studio filed multiple lawsuits against the company, demanding the return of the industrial park and claiming high property occupation fees, while the company also filed counter-claims[571][581] - As of June 30, 2020, the group has made provisions for rent and settlement payables related to the litigation totaling HKD 166 million[589][591] - Approximately HKD 46.28 million of the group's bank deposits were frozen by court order due to the litigation[584] Other Disclosures Covers interim dividend policy, share repurchase activities, interests of directors and major shareholders, and adherence to corporate governance standards Interim Dividend The Board does not recommend an interim dividend for the six months ended June 30, 2020, consistent with the prior period - The Board does not recommend the payment of an interim dividend for 2020[593] Purchase, Sale or Redemption of the Company's Listed Securities During the six months ended June 30, 2020, the company repurchased and cancelled 1,392,000 ordinary shares on the Stock Exchange for approximately HKD 0.186 million Share Repurchase Details | Month of Repurchase | Total Ordinary Shares Repurchased | Highest Price Per Share (HKD) | Lowest Price Per Share (HKD) | Total Consideration Paid (HKD) | | :--- | :--- | :--- | :--- | :--- | | May 2020 | 1,170,000 | 0.142 | 0.120 | 159,296 | | June 2020 | 222,000 | 0.134 | 0.100 | 27,012 | Interests of Directors and Shareholders The report discloses director and major shareholder interests, noting no directors held shares as of June 30, 2020, while Shougang Group held 40.85% through subsidiaries, and no share options have been granted since 2013 - As of June 30, 2020, Shougang Group Co., Ltd. held 619,168,023 shares, representing 40.85% of the total issued share capital, through its controlled corporations[609] - The company adopted a share option scheme on June 18, 2013, but no share options have been granted since its adoption[612] Corporate Governance and Other Information The company complied with all Corporate Governance Code provisions during the reporting period, with the Audit Committee reviewing the unaudited interim results with the auditor's assistance - The company complied with all code provisions of the Corporate Governance Code for the six months ended June 30, 2020[614] - The Audit Committee, with the assistance of the auditor PricewaterhouseCoopers, reviewed the group's 2020 interim results[631]