I. Financial Summary and Company Overview Financial Highlights For the six months ended June 30, 2024, revenue significantly decreased by 86.9% to RMB 10.1 million, and loss attributable to equity holders increased by 53.3% to RMB 10.5 million Financial Highlights for the Six Months Ended June 30, 2024 | Indicator | 2024 (RMB million) | 2023 (RMB million) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 10.1 | 77.1 | -86.9% | | Gross Profit | 3.7 | 9.8 | -62.2% | | Loss Attributable to Equity Holders of the Company | 10.5 | 6.8 | +53.3% | | Basic and Diluted Loss Per Share | 0.03 | 0.02 | +50.0% | - The Board resolved not to declare an interim dividend for the six months ended June 30, 20241 Company Information and Business Scope Litian Pictures Holdings Limited, incorporated in 2019 and listed in 2020, primarily engages in TV series production, distribution, and broadcasting rights licensing - The company was incorporated in the Cayman Islands on June 17, 2019, and listed on the Main Board of the Hong Kong Stock Exchange on June 22, 20204 - The Group primarily engages in TV series production, distribution, and broadcasting rights licensing business4 Going Concern and Liquidity Risk The Group faces significant liquidity pressure due to a net loss, limited cash, and slow industry recovery, but has implemented mitigation measures and maintains a going concern basis for financial reporting - As of June 30, 2024, the Group incurred a net loss of RMB 10,499,000, with financial liabilities due within one year totaling RMB 534,974,000, while bank balances and cash were only RMB 2,435,0006 - The Group faces liquidity pressure primarily due to slow recovery in the entertainment industry, intensified competition in the TV series market, and tightened procurement budgets from broadcasting platforms, leading to delays in TV series production, licensing, and broadcasting6 - The company has adopted various measures to mitigate liquidity pressure, including accelerating the broadcast and sale of self-produced and acquired TV series, strengthening receivables collection, negotiating restructuring with creditors, and securing a commitment for continuous financial support from the controlling shareholder7 - The Board believes that, assuming the success of these measures, the Group will have sufficient funds to meet its liabilities falling due in the next twelve months, thus making the preparation of consolidated financial statements on a going concern basis appropriate8 II. Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2024, the Group reported a significant decline in revenue and gross profit, with operating loss expanding and loss attributable to equity holders reaching RMB 10,499 thousand Key Data from Consolidated Statement of Profit or Loss and Other Comprehensive Income | Indicator | For the Six Months Ended June 30, 2024 (RMB thousand) | For the Six Months Ended June 30, 2023 (RMB thousand) | | :--- | :--- | :--- | | Revenue | 10,058 | 77,064 | | Gross Profit | 3,705 | 9,810 | | Operating Loss | (4,995) | (4) | | Loss Before Tax | (10,487) | (6,849) | | Loss Attributable to Equity Holders of the Company for the Period | (10,499) | (6,849) | | Basic and Diluted Loss Per Share (RMB) | (0.03) | (0.02) | Consolidated Statement of Financial Position As of June 30, 2024, the Group reported total non-current assets of RMB 8,620 thousand, total current assets of RMB 699,457 thousand (including RMB 556,182 thousand in TV series copyrights), and net current assets of RMB 15,484 thousand Key Data from Consolidated Statement of Financial Position | Indicator | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Non-current Assets | 8,620 | 10,517 | | Current Assets | 699,457 | 710,892 | | Current Liabilities | 683,973 | 685,561 | | Net Current Assets | 15,484 | 25,331 | | Net Assets | 22,364 | 32,876 | | Total Equity Attributable to Equity Holders of the Company | 22,364 | 32,876 | - As of June 30, 2024, TV series copyrights were the Group's largest current asset, with a carrying value of RMB 556,182 thousand3 III. Notes to the Financial Statements Basis of Preparation and Changes in Accounting Policies This interim financial report, authorized on August 26, 2024, is prepared under IAS 34 and Listing Rules, using consistent accounting policies with the 2023 annual statements, with no significant impact from new standards - This interim financial report has been prepared in accordance with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and International Accounting Standard 34 Interim Financial Reporting5 - This interim financial report was authorized for issue on August 26, 2024, and has been prepared in accordance with the same accounting policies adopted in the 2023 annual financial statements, except for changes in accounting policies expected to be reflected in the 2024 annual financial statements5 - Certain amendments to International Financial Reporting Standards issued by the International Accounting Standards Board became effective for the first time in the current accounting period, but none had a significant impact on the Group's results and financial position9 Revenue and Segment Reporting The Group, engaged in TV series production and licensing, reports revenue at a point in time across three segments (self-produced, acquired, other), with total revenue of RMB 10,058 thousand and gross profit of RMB 3,705 thousand for the period - The Group primarily engages in the production, distribution, and licensing of broadcasting rights for TV series, with all revenue recognized at a point in time10 - The Group has three reportable segments: self-produced TV series, acquired TV series, and others, with gross profit used as the measure for assessing segment performance1213 Segment Revenue and Gross Profit for the Six Months Ended June 30, 2024 | Segment | Revenue (RMB thousand) | Gross Profit (RMB thousand) | | :--- | :--- | :--- | | Self-produced TV series | 3,911 | 1,700 | | Acquired TV series | 3,906 | 1,865 | | Other | 2,241 | 140 | | Total | 10,058 | 3,705 | Revenue Classification For the six months ended June 30, 2024, revenue was RMB 3,911 thousand from self-produced TV series, RMB 3,906 thousand from acquired TV series, and RMB 2,241 thousand from co-financing and other arrangements Revenue from Contracts with Customers by Major Product or Service Line | Revenue Source | For the Six Months Ended June 30, 2024 (RMB thousand) | For the Six Months Ended June 30, 2023 (RMB thousand) | | :--- | :--- | :--- | | Revenue from distribution and broadcasting rights licensing of self-produced TV series | 3,911 | 61,313 | | Revenue from distribution and broadcasting rights licensing of acquired TV series | 3,906 | 15,717 | | Revenue from distribution and broadcasting rights licensing under co-financing arrangements and others | 2,241 | 34 | | Total | 10,058 | 77,064 | Segment Results For the six months ended June 30, 2024, self-produced TV series revenue was RMB 3,911 thousand, acquired TV series revenue was RMB 3,906 thousand, and other segment revenue was RMB 2,241 thousand, with all customers and most non-current assets in China Reportable Segment Revenue and Gross Profit | Segment | 2024 Revenue (RMB thousand) | 2024 Gross Profit (RMB thousand) | 2023 Revenue (RMB thousand) | 2023 Gross Profit (RMB thousand) | | :--- | :--- | :--- | :--- | :--- | | Self-produced TV series | 3,911 | 1,700 | 61,313 | 6,838 | | Acquired TV series | 3,906 | 1,865 | 15,717 | 2,972 | | Other | 2,241 | 140 | 34 | – | | Total | 10,058 | 3,705 | 77,064 | 9,810 | - All of the Group's customers are located in China, and substantially all non-current assets are located in China, thus no geographical information analysis is presented16 Components of Loss Before Tax For the six months ended June 30, 2024, the Group's loss before tax was mainly driven by finance costs of RMB 5,492 thousand, depreciation of RMB 1,897 thousand, and TV series copyright costs of RMB 6,353 thousand - For the six months ended June 30, 2024, the loss before tax was RMB 10,487 thousand2 Finance Costs For the six months ended June 30, 2024, finance costs decreased to RMB 5,492 thousand, mainly due to lower interest expenses on bank and other borrowings Breakdown of Finance Costs | Source | For the Six Months Ended June 30, 2024 (RMB thousand) | For the Six Months Ended June 30, 2023 (RMB thousand) | | :--- | :--- | :--- | | Interest expense on bank and other borrowings | 5,456 | 8,712 | | Interest expense on lease liabilities | 36 | 82 | | Less: Interest expenses capitalized into TV series copyrights | – | (1,949) | | Total | 5,492 | 6,845 | Other Items (Depreciation, Copyright Costs) For the six months ended June 30, 2024, depreciation expenses totaled RMB 1,897 thousand, and TV series copyright costs significantly decreased to RMB 6,353 thousand Breakdown of Other Expense Items | Item | For the Six Months Ended June 30, 2024 (RMB thousand) | For the Six Months Ended June 30, 2023 (RMB thousand) | | :--- | :--- | :--- | | Depreciation expense | 1,897 | 2,061 | | TV series copyright costs | 6,353 | 64,047 | Income Tax For the six months ended June 30, 2024, income tax expense was RMB 12 thousand, mainly from Chinese subsidiaries, with certain entities enjoying tax exemptions or no assessable profits Income Tax Expense | Item | For the Six Months Ended June 30, 2024 (RMB thousand) | For the Six Months Ended June 30, 2023 (RMB thousand) | | :--- | :--- | :--- | | Current tax provision for the period | 12 | – | - The Company and its British Virgin Islands subsidiaries are not subject to income tax, and its Hong Kong subsidiaries are not subject to Hong Kong profits tax as they had no assessable profits20 - The Group's subsidiaries established in the PRC (excluding Hong Kong) are subject to PRC corporate income tax at a rate of 25%, with some subsidiaries established in the Kashi/Horgos Special Economic Development Zone in Xinjiang enjoying a five-year full exemption from corporate income tax20 Loss Per Share For the six months ended June 30, 2024, basic loss per share increased to RMB 0.03, calculated based on a loss of RMB 10,499 thousand and 300,000,000 weighted average ordinary shares, with no dilutive potential shares Loss Per Share | Indicator | For the Six Months Ended June 30, 2024 (RMB) | For the Six Months Ended June 30, 2023 (RMB) | | :--- | :--- | :--- | | Basic and Diluted Loss Per Share | (0.03) | (0.02) | - The calculation of basic loss per share is based on the loss attributable to ordinary equity holders of the Company of RMB 10,499 thousand and the weighted average number of 300,000,000 ordinary shares in issue during the interim period21 - There were no dilutive potential ordinary shares in issue for the six months ended June 30, 2024 and 202322 Details of Balance Sheet Items This section provides detailed disclosures on the Group's assets and liabilities as of June 30, 2024, covering property, TV series copyrights, receivables, payables, contract liabilities, and borrowings Property and Equipment For the six months ended June 30, 2024, the Group had no new equipment acquisitions, a decrease from RMB 63 thousand in the prior period - For the six months ended June 30, 2024, the Group acquired equipment at a cost of RMB nil, compared to RMB 63,000 in the corresponding period of 202323 TV Series Copyrights As of June 30, 2024, total TV series copyrights increased slightly to RMB 556,182 thousand, with RMB 12,313 thousand in new additions and RMB 6,353 thousand recognized as cost of sales Composition of TV Series Copyrights | Copyright Type | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Self-produced TV series completed | 590,387 | 583,702 | | Acquired TV series | 24,505 | 24,505 | | Co-financed TV series completed | 71,077 | 73,178 | | Script copyrights | 182,525 | 182,339 | | Less: Impairment loss | (312,312) | (313,502) | | Total | 556,182 | 550,222 | Changes in TV Series Copyrights | Change Item | For the Six Months Ended June 30, 2024 (RMB thousand) | For the Six Months Ended June 30, 2023 (RMB thousand) | | :--- | :--- | :--- | | At January 1 | 550,222 | 545,630 | | Additions | 12,313 | 142,066 | | Recognized in cost of sales | (6,353) | (64,047) | | At June 30 | 556,182 | 623,649 | Trade and Bills Receivables As of June 30, 2024, trade and bills receivables decreased to RMB 104,697 thousand, with the largest portion over three years old, and the Group faces significant credit risk from discounted bills Trade and Bills Receivables | Item | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Trade receivables | 247,547 | 261,032 | | Less: Provision for loss | (143,850) | (142,434) | | Bills receivables | 1,000 | 8,225 | | Total | 104,697 | 126,823 | Aging Analysis of Trade and Bills Receivables | Aging | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Within 6 months | 8,573 | 22,942 | | 6 to 12 months | 9,652 | 36,019 | | 1 to 2 years | 29,497 | 18,700 | | 2 to 3 years | 18,021 | 34,886 | | Over 3 years | 38,954 | 14,276 | | Total | 104,697 | 126,823 | - The Group has discounted certain bills received from customers with banks but remains exposed to significant credit risk on these bills receivables26 Bank Balances and Cash As of June 30, 2024, total bank balances and cash were RMB 2,435 thousand, with RMB 1,446 thousand restricted, and most operations are in RMB subject to Chinese foreign exchange controls Bank Balances and Cash | Item | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Bank balances | 2,417 | 4,469 | | Cash on hand | 18 | 34 | | Less: Restricted cash | (1,446) | (189) | | Cash and cash equivalents in consolidated cash flow statement | 989 | 4,314 | - Restricted cash refers to bank balances frozen by creditors and lenders as collateral under agreed settlement arrangements28 Trade Payables As of June 30, 2024, trade payables totaled RMB 220,227 thousand, with RMB 195,069 thousand over two years old, and RMB 66,121 thousand has resulted in lawsuits against the Group's subsidiaries Aging Analysis of Trade Payables | Aging | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Within 6 months | 3,878 | 25,969 | | 6 to 12 months | 21,191 | – | | 1 to 2 years | 89 | 5,693 | | Over 2 years | 195,069 | 189,645 | | Total | 220,227 | 221,307 | - As of June 30, 2024, creditors for RMB 66,121,000 of the Group's trade payables balance have filed lawsuits against the Group's subsidiaries, demanding repayment of outstanding balances29 Other Payables and Accrued Expenses As of June 30, 2024, other payables and accrued expenses totaled RMB 148,152 thousand, mainly consisting of amounts due to TV series co-investors and interest payable Other Payables and Accrued Expenses | Item | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Amounts payable to co-investors of TV series under co-financing arrangements | 114,908 | 114,929 | | Interest payable | 30,644 | 28,598 | | Employee-related costs payable | 94 | 1,510 | | Other taxes payable | 411 | 223 | | Other | 2,095 | 2,155 | | Financial liabilities measured at amortized cost | 148,152 | 147,415 | Contract Liabilities As of June 30, 2024, contract liabilities (advances from customers) slightly increased to RMB 155,003 thousand Contract Liabilities | Item | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Advances from customers | 155,003 | 149,980 | Bank and Other Borrowings As of June 30, 2024, total short-term bank and other borrowings were RMB 151,382 thousand, with RMB 113,151 thousand overdue and RMB 10,000 thousand subject to litigation, alongside RMB 1,740 thousand in long-term bank borrowings Short-term Bank and Other Borrowings | Loan Type | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Bank loans (pledged by bills receivables) | 991 | 8,167 | | Other third-party loans (guaranteed by controlling shareholder) | 92,000 | 92,000 | | Other third-party loans (unsecured and unguaranteed) | 57,868 | 58,608 | | Other related party loans (guaranteed by controlling shareholder) | 523 | – | | Total | 151,382 | 158,775 | - As of June 30, 2024, RMB 113,151,000 of the Group's short-term other borrowings were overdue, and the company is negotiating with lenders to restructure repayment periods and schedules33 - As of June 30, 2024, RMB 10,000,000 of short-term other borrowings have led to lawsuits filed by creditors against one of the Group's subsidiaries33 Long-term Bank and Other Borrowings | Loan Type | June 30, 2024 (RMB thousand) | December 31, 2023 (RMB thousand) | | :--- | :--- | :--- | | Bank loans (guaranteed by controlling shareholder) | 1,740 | 1,740 | Capital, Reserves and Dividends For the six months ended June 30, 2024, the company's directors did not recommend the payment of an interim dividend - The directors of the Company do not recommend the payment of an interim dividend for the six months ended June 30, 202434 Contingent Liabilities As of June 30, 2024, the Group faced contingent liabilities of RMB 93,689 thousand, with RMB 81,344 thousand recognized, and directors denying responsibility for the remainder based on legal advice - Certain subsidiaries of the Group have been sued by creditors and lenders, with total claims (including principal, interest, and surcharges) amounting to RMB 93,689,00035 - Of the above claim amount, accrued principal and interest of RMB 81,344,000 has been recognized in the Group's interim financial report as of June 30, 202435 - Based on legal advice, the company's directors deny responsibility for the remaining claim amount and do not believe that the court will rule against the relevant subsidiaries, thus no provision has been made for the remaining claim amount35 Significant Related Party Transactions During the period, the Group engaged in related party transactions with the controlling shareholder and key management, including loans and repayments, with the controlling shareholder providing RMB 93,740 thousand in loan guarantees Transactions and Balances with Controlling Shareholder and Key Management | Transaction Item | For the Six Months Ended June 30, 2024 (RMB thousand) | For the Six Months Ended June 30, 2023 (RMB thousand) | | :--- | :--- | :--- | | Loans received from controlling shareholder | – | 8,000 | | Repayment of loans to controlling shareholder | – | 28,000 | | Loans received from key management | 1,307 | 6,650 | | Repayment of loans to key management | 1,150 | 17,150 | | Loans from controlling shareholder at end of reporting period | 366 | – | | Guarantees received from controlling shareholder for bank and other borrowings at end of reporting period | 93,740 | 106,000 | IV. Management Discussion and Analysis Business Review and Prospects The Group, a Chinese TV series distributor, successfully licensed several TV series in H1 2024, plans to acquire more copyrights and commence new productions in H2, and remains confident in its business strategy amidst industry competition - The Group was established in 2013, with its principal business being the licensing of broadcasting rights for self-produced and acquired TV series37 - In the first half of 2024, the Group successfully licensed the first-round broadcasting rights for acquired TV series “Shanghai Bund: A Life-and-Death Struggle” and “Jingmen Changying,” and multi-round broadcasting rights for self-produced TV series “Unparalleled Beauty”37 - For the second half of 2024, the Group plans to acquire more acquired TV series copyrights of different genres and strive to commence filming of anticipated self-produced TV series37 - Management is confident in the future development of the business and will continue to implement business strategies to address the competitive industry and overall business environment37 Financial Review This section reviews the Group's financial performance for the six months ended June 30, 2024, analyzing changes in revenue, costs, gross profit, expenses, income tax, loss, and key balance sheet items Revenue Analysis For the six months ended June 30, 2024, total revenue significantly decreased by 86.9% to RMB 10.1 million, driven by declines in self-produced and acquired TV series, partially offset by a substantial increase in co-financing and other revenue Revenue Breakdown by Business Segment | Revenue Source | For the Six Months Ended June 30, 2024 (RMB thousand) | For the Six Months Ended June 30, 2023 (RMB thousand) | | :--- | :--- | :--- | | Self-produced TV series distribution and broadcasting rights licensing | 3,911 | 61,313 | | Acquired TV series distribution and broadcasting rights licensing | 3,906 | 15,717 | | Distribution and broadcasting rights licensing under co-financing arrangements and others | 2,241 | 34 | | Total | 10,058 | 77,064 | - Total revenue decreased by approximately 86.9% from approximately RMB 77.1 million in the corresponding period of 2023 to approximately RMB 10.1 million in the corresponding period of 2024, primarily due to decreased revenue from self-produced and acquired TV series distribution and broadcasting rights licensing39 - Revenue from distribution and broadcasting rights licensing under co-financing arrangements and others significantly increased by approximately 6,491.2% to approximately RMB 2.2 million, attributable to the broadcast of the movie “Flying Fortune” during the reporting period43 Cost of Sales Analysis For the six months ended June 30, 2024, cost of sales significantly decreased by 90.6% to RMB 6.4 million, mainly due to lower costs for self-produced TV series, while co-financing and other costs increased by 6,079.4% Cost of Sales Breakdown by Business Segment | Cost Source | For the Six Months Ended June 30, 2024 (RMB thousand) | For the Six Months Ended June 30, 2023 (RMB thousand) | | :--- | :--- | :--- | | Cost of self-produced TV series distribution and broadcasting rights licensing | 2,211 | 54,475 | | Cost of acquired TV series distribution and broadcasting rights licensing | 2,041 | 12,745 | | Cost of distribution and broadcasting rights licensing under co-financing arrangements and others | 2,101 | 34 | | Total | 6,353 | 67,254 | - Cost of sales decreased by approximately 90.6% from approximately RMB 67.3 million in the corresponding period of 2023 to approximately RMB 6.4 million in the corresponding period of 2024, primarily due to decreased costs for self-produced TV series distribution and broadcasting rights licensing45 - Cost of sales for distribution and broadcasting rights licensing under co-financing arrangements and others increased by approximately 6,079.4% from approximately RMB 34,000 to approximately RMB 2.1 million, consistent with the increase in revenue for this segment47 Gross Profit and Gross Margin Analysis For the six months ended June 30, 2024, gross profit decreased by 62.2% to RMB 3.7 million, while gross margin significantly improved from 12.7% to 36.8%, driven by higher margins in self-produced and acquired TV series Gross Profit and Gross Margin by Business Segment | Segment | 2024 Gross Profit (RMB thousand) | 2024 Gross Margin (%) | 2023 Gross Profit (RMB thousand) | 2023 Gross Margin (%) | | :--- | :--- | :--- | :--- | :--- | | Self-produced TV series distribution and broadcasting rights licensing | 1,700 | 43.5 | 6,838 | 11.2 | | Acquired TV series distribution and broadcasting rights licensing | 1,865 | 47.7 | 2,972 | 18.9 | | Distribution and broadcasting rights licensing under co-financing arrangements and others | 140 | 6.2 | – | – | | Total | 3,705 | 36.8 | 9,810 | 12.7 | - Gross profit decreased by approximately 62.2% from approximately RMB 9.8 million in the corresponding period of 2023 to approximately RMB 3.7 million in the corresponding period of 2024, primarily due to decreased gross profit from self-produced TV series distribution and broadcasting rights licensing49 - Gross margin increased from approximately 12.7% in the corresponding period of 2023 to approximately 36.8% in the corresponding period of 2024, primarily due to higher gross margins for self-produced and acquired TV series broadcasting rights licensing50 Selling and Marketing Expenses For the six months ended June 30, 2024, selling and marketing expenses decreased by 29.9% to RMB 178 thousand, mainly due to reduced marketing and promotion expenses, aligning with lower revenue Breakdown of Selling and Marketing Expenses | Item | For the Six Months Ended June 30, 2024 (RMB thousand) | For the Six Months Ended June 30, 2023 (RMB thousand) | | :--- | :--- | :--- | | Marketing and promotion expenses | 39 | 104 | | Staff costs | 86 | 87 | | Travel and transportation expenses | 4 | 2 | | Other | 49 | 61 | | Total | 178 | 254 | - Selling and marketing expenses decreased by approximately 29.9% from approximately RMB 254,000 in the corresponding period of 2023 to approximately RMB 178,000 in the corresponding period of 2024, primarily due to decreased marketing and promotion expenses, consistent with the decrease in revenue51 Administrative Expenses For the six months ended June 30, 2024, administrative expenses decreased by 15.4% to RMB 7.8 million, mainly due to lower staff costs, partially offset by increased travel and entertainment expenses Breakdown of Administrative Expenses | Item | For the Six Months Ended June 30, 2024 (RMB thousand) | For the Six Months Ended June 30, 2023 (RMB thousand) | | :--- | :--- | :--- | | Staff costs | 3,415 | 4,748 | | Rent | 66 | 51 | | Depreciation and amortization | 1,897 | 2,061 | | Office expenses | 60 | 124 | | Consultancy fees | 782 | 800 | | Transportation expenses | 159 | 118 | | Travel expenses | 587 | 296 | | Entertainment expenses | 398 | 315 | | Taxes and surcharges | 2 | 157 | | Bank charges | 39 | 27 | | Other | 418 | 545 | | Total | 7,823 | 9,242 | - Administrative expenses decreased by approximately 15.4% from approximately RMB 9.2 million in the corresponding period of 2023 to approximately RMB 7.8 million in the corresponding period of 2024, primarily due to decreased staff costs related to the administrative department, partially offset by increased travel and entertainment expenses52 Finance Costs For the six months ended June 30, 2024, finance costs decreased by 19.8% to RMB 5.5 million, mainly due to lower interest rates on borrowings, partially offset by reduced capitalized interest for TV series copyrights Breakdown of Finance Costs | Item | For the Six Months Ended June 30, 2024 (RMB thousand) | For the Six Months Ended June 30, 2023 (RMB thousand) | | :--- | :--- | :--- | | Interest expense on bank and other borrowings | 5,456 | 8,712 | | Interest expense on lease liabilities | 36 | 82 | | Less: Interest expenses capitalized into TV series copyrights | – | (1,949) | | Total | 5,492 | 6,845 | - Finance costs decreased by 19.8% from RMB 6.8 million in the corresponding period of 2023 to RMB 5.5 million in the corresponding period of 2024, primarily due to decreased interest expenses on bank and other borrowings resulting from a lower effective annual interest rate53 Income Tax For the six months ended June 30, 2024, income tax expense was RMB 12 thousand, mainly from Chinese assessable profits, with some entities enjoying exemptions or no tax liability Income Tax Expense | Item | For the Six Months Ended June 30, 2024 (RMB thousand) | For the Six Months Ended June 30, 2023 (RMB thousand) | | :--- | :--- | :--- | | Current tax provision for the period | 12 | – | - The Group's operating income is subject to corporate income tax at a rate of 25% on assessable income, but the Company and certain subsidiaries enjoy tax exemptions or are not subject to tax due to no assessable profits5455 Loss Attributable to Equity Holders of the Company for the Period For the six months ended June 30, 2024, loss attributable to equity holders of the company increased by 53.3% to RMB 10.5 million, influenced by various financial factors - Loss attributable to equity holders of the Company increased by 53.3% from approximately RMB 6.8 million in the corresponding period of 2023 to approximately RMB 10.5 million in the corresponding period of 202455 Trade and Bills Receivables As of June 30, 2024, trade and bills receivables decreased by 17.4% to RMB 104.7 million, mainly due to a reduction in trade receivables - As of June 30, 2024, trade and bills receivables amounted to RMB 104.7 million, a decrease of RMB 22.1 million or 17.4% from RMB 126.8 million as of December 31, 2023, primarily due to a decrease in trade receivables55 Trade Payables As of June 30, 2024, creditors for RMB 66.1 million of trade payables have initiated lawsuits against the Group's subsidiaries - As of June 30, 2024, creditors for RMB 66.1 million of the Group's trade payables balance have filed lawsuits against the Group's subsidiaries, demanding repayment of outstanding balances56 Other Payables and Accrued Expenses As of June 30, 2024, other payables and accrued expenses slightly increased to RMB 148.2 million - Other payables and accrued expenses slightly increased from RMB 147.4 million as of December 31, 2023, to RMB 148.2 million as of June 30, 202456 Cash Flows For the six months ended June 30, 2024, net cash from operating activities significantly decreased by 92.9% to RMB 738 thousand, with net cash from investing activities at RMB 2 thousand and net cash used in financing activities at RMB 4.1 million - For the six months ended June 30, 2024, net cash generated from operating activities was RMB 738,000, a decrease of 92.9% from RMB 10.4 million in the corresponding period of last year, primarily due to a decrease in trade receivables57 - Net cash generated from investing activities was RMB 2,000, mainly contributed by interest income from bank deposits57 - Net cash used in financing activities was RMB 4.1 million57 Liquidity and Financial Resources The Group's capital expenditure and operations are funded by operating cash, bank loans, and global offering proceeds; as of June 30, 2024, bank balances and cash were RMB 2.4 million, net current assets RMB 15.5 million, and total borrowings RMB 153.1 million - The Group's capital expenditure, daily operations, and investments are primarily funded by cash generated from its operations, bank borrowings, and proceeds from the global offering58 - As of June 30, 2024, bank balances and cash were approximately RMB 2.4 million, and net current assets were approximately RMB 15.5 million58 - As of June 30, 2024, total bank and other borrowings were approximately RMB 153.1 million, of which approximately RMB 149.9 million were loans from third-party non-executive producers (at an annual interest rate of 15%)58 Key Financial Ratios As of June 30, 2024, the Group's return on equity and total assets deteriorated to negative values, current ratio decreased to 1.0x, and debt-to-asset ratio significantly increased to 684.7%, indicating higher financial leverage Return on Equity For the six months ended June 30, 2024, return on equity deteriorated from negative 0.8% to negative 38.0%, reflecting worsening profitability - Return on equity increased from approximately negative 0.8% in the corresponding period of 2023 to approximately negative 38.0% in the corresponding period of 202459 Return on Total Assets For the six months ended June 30, 2024, return on total assets deteriorated from negative 0.8% to negative 1.5%, indicating decreased asset utilization efficiency - Return on total assets increased from approximately negative 0.8% in the corresponding period of 2023 to approximately negative 1.5% in the corresponding period of 202460 Current Ratio As of June 30, 2024, the current ratio decreased from 1.2x to 1.0x, indicating a weakening of short-term solvency - The Group's current ratio decreased from approximately 1.2x as of June 30, 2023, to approximately 1.0x as of June 30, 202461 Debt-to-Asset Ratio As of June 30, 2024, the debt-to-asset ratio significantly increased from 112.7% to 684.7%, indicating a substantial rise in financial leverage and heavy debt burden - The Group's debt-to-asset ratio increased from approximately 112.7% as of June 30, 2023, to approximately 684.7% as of June 30, 202462 Treasury Policy The Group maintains a prudent treasury policy, closely monitoring liquidity to meet funding requirements as they arise - The Group adopts a treasury policy based on prudent financial management, with the Board closely monitoring liquidity levels to ensure that funding requirements can be met as they arise63 Capital Expenditure For the six months ended June 30, 2024, the Group's capital expenditure was not significant and was primarily funded by operating cash flows - For the six months ended June 30, 2024, the Group's capital expenditure was not significant and was primarily funded by cash flows from operating activities64 Foreign Exchange Risk The Group primarily operates in RMB, with most transactions in RMB and limited HKD balances; it currently has no foreign currency hedging policy but monitors foreign exchange risk - The Group operates in the PRC, and its functional currency is RMB, with most income and expenses denominated in RMB65 - As of June 30, 2024, only certain bank balances were denominated in HKD65 - The Group currently does not have any foreign currency hedging policy, and management will continue to monitor foreign exchange risk and consider taking prudent measures when appropriate65 Contingent Liabilities As of June 30, 2024, the Group faced contingent liabilities of RMB 93,689 thousand, with RMB 81,344 thousand recognized, and directors denying responsibility for the remainder based on legal advice - Certain subsidiaries of the Group have been sued by creditors and lenders, with total claims (including principal, interest, and surcharges) amounting to RMB 93,689,00066 - Of the above claim amount, accrued principal and interest of RMB 81,344,000 has been recognized in the Group's interim financial report as of June 30, 202466 - Based on legal advice, the company's directors deny responsibility for the remaining claim amount and do not believe that the court will rule against the relevant subsidiaries, thus no provision has been made for the remaining claim amount66 Human Resources and Remuneration Policy As of June 30, 2024, the Group maintained 48 employees, providing social security and benefits, with remuneration based on market levels and performance, and no significant labor disputes occurred - As of June 30, 2024, the Group had 48 employees, consistent with December 31, 202367 - The Group participates in various employee social security schemes managed by local governments for its employees and provides year-end bonuses, discretionary bonuses, share options, provident funds, social security funds, and medical benefits67 - The Group's remuneration policy is determined by prevailing market levels and the performance of the Group and individual employees, and is reviewed regularly67 Material Investments, Acquisitions and Disposals For the six months ended June 30, 2024, the Group had no material investments, significant acquisitions, or disposals of subsidiaries, associates, or joint ventures - For the six months ended June 30, 2024, the Group had no material investments, nor any significant acquisitions or disposals of subsidiaries, associates, and joint ventures68 Public Float For the six months ended June 30, 2024, and up to this announcement, the company maintained an adequate public float of 25% of its issued share capital as per Listing Rules - For the six months ended June 30, 2024, and up to the date of this announcement, the Company has maintained an adequate public float of 25% of its total issued share capital as required by the Listing Rules69 Changes in Directors' Information On August 13, 2024, three directors resigned, and three new directors (Ms. Hu Na, Mr. Xie Guoxing, and Mr. Xie Taoquan) were appointed to the Board and relevant committees - On August 13, 2024, Ms. Fu Jieyun resigned as an executive director and a member of the nomination committee; Mr. Liu Hanlin resigned as an independent non-executive director, chairman of the audit committee, and a member of the remuneration and nomination committees; Mr. Gan Weimin resigned as an independent non-executive director, chairman of the remuneration committee, and a member of the audit committee70 - Ms. Hu Na was appointed as an executive director and a member of the nomination committee; Mr. Xie Guoxing was appointed as an independent non-executive director, chairman of the audit committee, and a member of the remuneration and nomination committees; Mr. Xie Taoquan was appointed as an independent non-executive director, chairman of the remuneration committee, and a member of the audit committee70 Future Plans for Material Investments As of the date of this announcement, the company has no material plans for significant investments - As of the date of this announcement, the Company has no material plans for any significant investments71 Compliance with Corporate Governance Code The company is committed to high corporate governance standards, having adopted and complied with all applicable code provisions of the Corporate Governance Code in Appendix C1 of the Listing Rules - The Company is committed to maintaining a high level of corporate governance practices and procedures and has adopted and complied with all applicable code provisions as set out in the Corporate Governance Code in Appendix C1 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited72 Standard Securities Dealing Code for Directors The company adopted the Standard Securities Dealing Code for Directors (Appendix C3 of Listing Rules), with all directors confirming compliance for the six months ended June 30, 2024 - The Company has adopted the Standard Securities Dealing Code for Directors of Listed Issuers as set out in Appendix C3 to the Listing Rules73 - Following specific enquiry made to all Directors, all Directors confirmed that they had complied with the required standard set out in the Standard Code for the six months ended June 30, 202473 V. Other Information Events After Reporting Period The directors are not aware of any material events requiring disclosure that occurred after June 30, 2024, up to the date of this announcement - The directors are not aware of any material events requiring disclosure that have occurred after June 30, 2024, and up to the date of this announcement74 Audit Committee The Audit Committee, chaired by Mr. Xie Guoxing, reviewed the Group's interim results for the six months ended June 30, 2024, confirming compliance with applicable accounting standards - The Audit Committee comprises three independent non-executive directors, namely Mr. Xie Guoxing (Chairman), Mr. Teng Binsheng, and Mr. Xie Taoquan75 - The Audit Committee has reviewed the Group's interim results for the six months ended June 30, 2024, and is of the opinion that the preparation of the relevant financial statements has complied with applicable accounting standards and requirements, and that adequate disclosures have been made75 Purchase, Sale or Redemption of Listed Securities For the six months ended June 30, 2024, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities - For the six months ended June 30, 2024, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities76 Interim Dividend The Board has resolved not to recommend the payment of any interim dividend for the six months ended June 30, 2024 - The Board has resolved not to recommend the payment of any interim dividend for the six months ended June 30, 202477 Publication of Interim Results and Interim Report This interim results announcement is published on the Stock Exchange and company website, with the interim report to be dispatched to shareholders and published online in due course - This interim results announcement is published on the website of the Stock Exchange (www.hkexnews.hk) and the Company's website (www.litian.tv)[78](index=78&type=chunk) - The Company's interim report for the six months ended June 30, 2024, will be dispatched to shareholders and published on the websites of the Stock Exchange and the Company, respectively, in due course78
力天影业(09958) - 2024 - 中期业绩