CHAIRMAN'S STATEMENT Results Overview For FY2025, the company's consolidated turnover decreased by 14.0% to HKD 17.33 million, with loss attributable to equity holders expanding to HKD 27.96 million and 1.7 HK cents loss per share Key Performance Indicators for FY2025 | Indicator | FY2025 (HKD thousands) | FY2024 (HKD thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Consolidated Turnover | 17,328 | 20,158 | -14.0% | | Loss attributable to equity holders | 27,963 | 20,782 | +34.6% | | Loss per share | 1.7 HK cents | 1.2 HK cents | +41.7% | | Final Dividend | Nil | Nil | - | Business Review The Group focused on cost control amidst an incomplete macroeconomic recovery, with publishing and IP licensing stable, digital marketing contracting by 95.7%, and the new Natural Language Processing business in R&D with no significant short-term revenue Revenue Performance by Business Segment (HKD thousands) | Business Segment | FY2025 | FY2024 | YoY Change | | :--- | :--- | :--- | :--- | | Publishing and Intellectual Property Licensing | 15,990 | 15,104 | +5.9% | | Digital Marketing | 111 | 2,597 | -95.7% | | Retail and Wholesale | 1,227 | 2,457 | -50.1% | - The Natural Language Processing business focuses on developing software and chipsets for Chinese speech recognition, having secured several invention patents; due to intense market competition, the Group adopts a cautious strategy, primarily entering the market through partnerships or licensing, which may not generate significant revenue in the short term; net operating expenses for this business in the current fiscal year were approximately HKD 2.58 million262728 Prospects The Group aims to commercialize its Natural Language Processing business for smart home, cockpit, and smartphone applications, while also revitalizing existing IP and exploring AI-generated film and television content to capitalize on Hong Kong's cultural nostalgia and original IP trends - The Group plans to apply Natural Language Processing technology to smart home, smart cockpit, and smartphone sectors through technology licensing partnerships2931 - To align with market trends, the Group will revitalize its proprietary IP with partners, launching branded products and AI-generated film and television content, while maintaining traditional comic publishing and licensing businesses2931 MANAGEMENT DISCUSSION AND ANALYSIS Financial Results The consolidated net loss attributable to owners of the Company expanded by 34.6% to HKD 27.96 million this fiscal year, driven by a 14.0% decline in total revenue primarily from digital marketing and retail/wholesale, despite a slight increase in publishing and IP licensing revenue, and an increase in impairment losses on right-of-use assets and intangible assets, leading to an expanded operating loss of HKD 28.40 million Financial Results Summary for FY2025 (HKD thousands) | Item | FY2025 | FY2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | 17,328 | 20,158 | -14.0% | | Gross Profit | 7,627 | 9,851 | -22.6% | | Gross Profit Margin | 44.0% | 48.9% | -4.9pp | | Administrative Expenses | 26,391 | 28,909 | -8.7% | | Operating Loss | 28,400 | 20,929 | +35.7% | | Loss for the Year | 27,963 | 20,782 | +34.6% | | Loss per share | 1.7 HK cents | 1.2 HK cents | +41.7% | | Net Assets | 80,119 | 108,679 | -26.3% | - Revenue decline was primarily due to the digital marketing business (-95.7%) and retail and wholesale business (-50.1%), with the former due to scaled-down operations and the latter due to a lack of bulk sales opportunities, while publishing and IP licensing revenue grew by 5.9%353639 - Administrative expenses decreased mainly due to reductions in staff costs, audit fees, and directors' emoluments, reflecting the company's cost control efforts4648 - Other impairment losses significantly increased, primarily including HKD 1.69 million for right-of-use assets and HKD 0.55 million for intangible assets4953 Liquidity and Financial Resources As of March 31, 2025, the Group held cash and bank balances of HKD 18.43 million, with net current assets of HKD 43.85 million and a current ratio decreasing from 6.8 to 3.5, while the gearing ratio increased from 15.5% to 20.8%; to supplement working capital, the Group secured a HKD 2 million short-term loan in May 2025, and the directors believe the Group's liquidity is sufficient for daily operations Liquidity and Financial Position Indicators (HKD thousands) | Indicator | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Cash and bank balances | 18,430 | - | | Net current assets | 43,850 | 101,410 | | Current ratio | 3.5 | 6.8 | | Total liabilities | 17,740 | 17,600 | | Gearing ratio | 20.8% | 15.5% | - In May 2025, the Group obtained an unsecured short-term loan of HKD 2 million from an independent third party at an annual interest rate of 24% to supplement working capital6265 Employment and Remuneration Policies As of March 31, 2025, the Group had 45 employees, a decrease of 2 from the previous year, with total staff costs for the year amounting to approximately HKD 17.77 million, a 15.6% year-on-year decrease Employment Situation (HKD thousands) | Indicator | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Total number of employees | 45 | 47 | | - Hong Kong | 30 | - | | - China | 15 | - | | Total staff costs | 17,770 | 21,060 | Proposed Acquisition The Group's plan to acquire the entire equity of Brain-like Technology (Shenzhen) Co., Ltd. for a total consideration of HKD 63 million, proposed to be settled by issuing consideration shares, was jointly terminated by the vendor and the company on November 29, 2024 - The original plan to acquire Brain-like Technology (IBT) for HKD 63 million was terminated on November 29, 2024717274 Proposed Placing of Non-Listed Warrants On April 16, 2025, the company agreed to use its best efforts to place up to 200 million non-listed warrants at HKD 0.031 per warrant, expecting net proceeds of approximately HKD 5.45 million if fully placed, with potential additional proceeds of up to HKD 60 million if warrants are fully exercised at an initial exercise price of HKD 0.3 per share, totaling approximately HKD 65.45 million in net proceeds primarily for IP revitalization (67%) and general working capital (33%), pending EGM approval Proposed Placing of Non-Listed Warrants Details | Item | Details | | :--- | :--- | | Number of Warrants to be Placed | Up to 200,000,000 | | Placing Price | HKD 0.031 per warrant | | Initial Exercise Price | HKD 0.3 per share | | Gross/Net Proceeds from Placing | Approx. HKD 6,200 thousand / HKD 5,450 thousand | | Additional Proceeds upon Full Exercise | Up to approx. HKD 60,000 thousand | | Use of Total Net Proceeds | - Revitalization and promotion of IP: approx. HKD 43,630 thousand (67%)
- General working capital: approx. HKD 21,820 thousand (33%) | Voluntary Liquidation of Two Non-Wholly Owned Subsidiaries To reduce losses and reallocate resources, the Group initiated voluntary liquidation for two non-wholly owned subsidiaries engaged in digital marketing, with Beijing Eqmen Technology Co., Ltd. (Eqmen) liquidation completed in March 2024, Beijing Star Engine Information Technology Co., Ltd. (Beijing Star Engine) liquidation ongoing, and wholly-owned subsidiary Guangzhou Honghao Technology Co., Ltd. deregistration completed on July 4, 2024 - The voluntary liquidation of Beijing Eqmen (Eqmen) was completed in March 20248892 - The voluntary liquidation process for Beijing Star Engine (Beijing Star Engine) is still ongoing8892 - Wholly-owned subsidiary Guangzhou Honghao Technology Co., Ltd. completed its deregistration on July 4, 20249094 DIRECTORS' REPORT Principal Activities and Major Customers and Suppliers As an investment holding company, the company's principal subsidiaries engage in publishing, IP licensing, digital marketing, retail and wholesale, and natural language processing businesses; this year, the Group exhibited high reliance on major customers and suppliers, with the top five customers accounting for 86.5% of turnover from continuing operations and the largest customer for 28.7%, while the top five suppliers accounted for 74.9% of total purchases and the largest supplier for 28.2% - The Group's top five customers accounted for 86.5% of turnover from continuing operations, with the largest customer contributing 28.7%100105 - The Group's top five suppliers accounted for 74.9% of total purchases from continuing operations, with the largest supplier contributing 28.2%100106 Share Capital and Share Option Schemes The company's 2013 Share Option Scheme expired in August 2023, and a new 2023 scheme was adopted in the same year; as of March 31, 2025, 14 million unexercised share options remained under the 2013 scheme, which lapsed after April 26, 2025, and no share options were granted, exercised, cancelled, or lapsed under either scheme during the current year Outstanding Share Options under 2013 Scheme (as of March 31, 2025) | Holder Category | Name | Number of Outstanding Options | Exercise Price per Share (HKD) | Exercise Period | | :--- | :--- | :--- | :--- | :--- | | Director | Wong Kon Man Jason | 8,000,000 | 0.72 | April 27, 2022 to April 26, 2025 | | Others (Consultant) | - | 6,000,000 | 0.72 | April 27, 2022 to April 26, 2025 | | Total | | 14,000,000 | | | - The 2013 Share Option Scheme expired on August 11, 2023, with no further options granted thereafter; a new 2023 Share Option Scheme was adopted on August 29, 2023184189 - As of the report date, all 14,000,000 share options granted under the 2013 scheme lapsed on April 26, 2025, leaving no outstanding share options under that scheme1016 Disclosure of Interests As of March 31, 2025, Non-Executive Director Mr. Wong Kon Man held 8 million share options, while major shareholders L&W Holding Limited, Mr. Dizon Basilio, and Ms. Chow Lai Wah Livia were deemed to jointly hold 276,975,112 shares, representing 16.6% of the issued share capital Directors' Interests (Share Options) | Director Name | Capacity | Nature of Interest | Number of Share Options | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | | Mr. Wong Kon Man | Beneficial Owner | Personal Interest | 8,000,000 | 0.48% | Major Shareholders' Interests (Shares) | Shareholder Name/Name | Capacity | Number of Shares Held | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | L&W Holding Limited | Beneficial Owner | 178,767,312 | 10.71% | | Mr. Dizon Basilio | Interest in controlled corporation and spouse's interest, etc. | 276,975,112 | 16.6% | | Ms. Chow Lai Wah Livia | Interest in controlled corporation and spouse's interest, etc. | 276,975,112 | 16.6% | CORPORATE GOVERNANCE REPORT Corporate Governance Practices and Compliance The company is committed to maintaining high corporate governance standards and has adopted the Corporate Governance Code under the Listing Rules, complying with most code provisions during the year, with deviations including independent non-executive directors not being appointed for specific terms (but subject to retirement by rotation), a temporary shortfall in the minimum number of independent non-executive directors from May 6 to July 31, 2024, and the Corporate Governance Committee having fewer members than stipulated in its written terms of reference - The company deviates from code provision B.2.2, where independent non-executive directors are not appointed for specific terms, but the company believes the arrangement for all directors to retire by rotation achieves an equally stringent governance effect249250 - Due to Mr. Fan Chun Wah's resignation, the number of independent non-executive directors temporarily fell to two between May 6 and July 31, 2024, below the minimum of three required by the Listing Rules251252 - The Corporate Governance Committee currently has three members, fewer than the four stipulated in its written terms of reference, and the Board will identify candidates to fill the vacancy253255 Board of Directors The Board of Directors is primarily responsible for leading and controlling the Group, formulating overall strategies, and overseeing financial performance; the roles of Chairman and Chief Executive Officer are segregated, held by Mr. Wong Kon Man and Dr. Liu Yin Hung respectively, though the CEO has been on leave for personal reasons since June 2024, with his duties temporarily assumed by Managing Director Mr. Kwan Kin Chung; the Board held 5 meetings during the year, with generally high director attendance Board Meeting Attendance (FY2025) | Director Name | Position | Attendance/Meetings Held | | :--- | :--- | :--- | | Mr. Kwan Kin Chung | Executive Director | 5/5 | | Mr. Wong Kon Man | Non-Executive Director (Chairman) | 5/5 | | Dr. Liu Ka Ying | Non-Executive Director (Vice Chairman) | 5/5 | | Mr. Wong Kwan Kit | Independent Non-Executive Director | 5/5 | | Mr. Mong Yat Lik | Independent Non-Executive Director | 5/5 | | Mr. Fung Ting Ho | Independent Non-Executive Director | 3/3 | - The roles of Chairman and Chief Executive Officer are segregated, but since June 2024, Chief Executive Officer Dr. Liu Yin Hung has been on leave for personal reasons, with his duties temporarily assumed by Managing Director Mr. Kwan Kin Chung266267 Board Committees The company has an Audit Committee, Remuneration Committee, Nomination Committee, and Corporate Governance Committee; the Audit Committee, comprising three independent non-executive directors, held 4 meetings this year to review financial statements and internal controls; the Remuneration Committee, comprising two independent non-executive directors and one executive director, held 1 meeting; the Nomination Committee, comprising three independent non-executive directors, held 2 meetings and has adopted a Board Diversity Policy - The Audit Committee comprises three independent non-executive directors, chaired by Mr. Wong Kwan Kit, and held 4 meetings this year279283 - The Remuneration Committee comprises two independent non-executive directors and one executive director, chaired by Mr. Wong Kwan Kit, and held 1 meeting this year285288 - The Nomination Committee comprises three independent non-executive directors, chaired by Mr. Fung Ting Ho, and held 2 meetings this year290298 - As of March 31, 2025, the Board's gender ratio was 16.6% female and 83.4% male304 Accountability and Audit Directors are responsible for preparing true and fair financial statements; this year, audit and non-audit service fees paid to the auditor were HKD 1 million and HKD 0.23 million respectively; the Group conducts annual reviews of its risk management and internal control systems through the Audit Committee and Corporate Governance Committee; due to scale and cost-effectiveness considerations, the Group has not established an internal audit department but engages independent consultants for reviews, and the Board considers the existing systems to be adequate and effective - This year, audit service fees paid to the auditor amounted to HKD 1 million, and non-audit service fees amounted to HKD 0.23 million309312 - The Group has not established an internal audit function but engages independent consultants to review its risk management and internal control systems; the Board considers these systems to be adequate and effective, with no significant control failures or deficiencies identified326327 INDEPENDENT AUDITOR'S REPORT Auditor's Opinion Addison & Co. CPA Limited issued an unmodified opinion on the company's consolidated financial statements for the year ended March 31, 2025, affirming that the statements present a true and fair view of the Group's consolidated financial position, performance, and cash flows in accordance with Hong Kong Financial Reporting Standards and are properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance - The auditor issued an unmodified opinion, stating that the consolidated financial statements present a true and fair view of the Group's financial position and performance350353 Key Audit Matters This year's key audit matter is the Net Realizable Value (NRV) assessment of fine wines inventory, deemed critical due to its materiality to the overall statement of financial position (carrying amount approximately HKD 30.05 million) and the significant judgment involved in its NRV estimation; the auditor addressed this by discussing the assessment process with management, evaluating the reasonableness of estimates (including obtaining external valuation reports and conducting independent market research), among other procedures - The key audit matter is the Net Realizable Value (NRV) assessment of fine wines inventory, due to its material carrying amount (approximately HKD 30.05 million) and the significant judgment involved in its estimation358361 - The auditor's procedures included discussing management's assessment process, evaluating the reasonableness of NRV estimates, obtaining external valuation reports, assessing valuation methodologies and key assumptions, and conducting independent market research360363 CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statement of Profit or Loss and Other Comprehensive Income For FY2025, the Group's revenue decreased by 14.0% year-on-year to HKD 17.33 million, and gross profit decreased by 22.6% to HKD 7.63 million; due to a significant reduction in other income and an increase in other losses, the loss for the year expanded from HKD 20.93 million to HKD 28.40 million, with loss attributable to owners of the Company at HKD 27.96 million and basic loss per share at 1.7 HK cents Consolidated Income Statement Summary (HKD thousands) | Item | FY2025 | FY2024 | | :--- | :--- | :--- | | Revenue | 17,328 | 20,158 | | Gross Profit | 7,627 | 9,851 | | Loss before tax | (28,728) | (20,808) | | Loss for the Year | (28,400) | (20,929) | | Loss attributable to owners of the Company | (27,963) | (20,782) | | Total Comprehensive Expenses | (28,560) | (23,712) | Consolidated Statement of Financial Position As of March 31, 2025, the Group's total assets were HKD 97.86 million, total liabilities were HKD 17.74 million, and net assets were HKD 80.12 million, a 26.3% decrease from HKD 108.68 million in the prior year; non-current assets significantly increased due to a substantial rise in intangible assets, while current assets sharply declined due to reduced other receivables and cash, and current liabilities remained largely stable Consolidated Statement of Financial Position Summary (HKD thousands) | Item | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Non-current assets | 36,635 | 7,268 | | Current assets | 61,226 | 119,014 | | Total Assets | 97,861 | 126,282 | | Liabilities and Equity | | | | Current liabilities | 17,379 | 17,603 | | Non-current liabilities | 363 | – | | Total Liabilities | 17,742 | 17,603 | | Net Assets | 80,119 | 108,679 | | Equity attributable to owners of the Company | 85,484 | 113,787 | | Non-controlling interests | (5,365) | (5,108) | | Total Equity | 80,119 | 108,679 | Consolidated Statement of Cash Flows For FY2025, the Group experienced a net cash outflow from operating activities of HKD 12.43 million, a net cash outflow from investing activities of HKD 0.55 million, and a net cash outflow from financing activities of HKD 7.06 million, resulting in a net decrease in cash and cash equivalents of HKD 20.04 million, with the period-end balance of cash and cash equivalents at HKD 18.43 million Consolidated Cash Flow Statement Summary (HKD thousands) | Item | FY2025 | FY2024 | | :--- | :--- | :--- | | Net cash used in operating activities | (12,425) | (19,745) | | Net cash used in investing activities | (553) | (3,530) | | Net cash (used in) generated from financing activities | (7,063) | 5,477 | | Net decrease in cash and cash equivalents | (20,041) | (17,798) | | Cash and cash equivalents at beginning of year | 38,228 | 61,497 | | Cash and cash equivalents at end of year | 18,429 | 38,228 | Notes to the Consolidated Financial Statements This section elaborates on the Group's significant accounting policies, key accounting estimates, and sources of uncertainty, providing detailed breakdowns and explanations for various items in the financial statements, with key content including segment information (Note 10), intangible assets (Note 20), financial instruments and risk management (Note 38), and related party transactions (Note 39) - Segment information (Note 10) indicates the Group's operations are divided into four segments: Publishing and IP Licensing, Digital Marketing, Retail and Wholesale, and Natural Language Processing; this year, Publishing and IP Licensing was the primary source of revenue and profit, while the Natural Language Processing segment incurred the largest segment loss816820 - Intangible assets (Note 20) carrying value significantly increased from HKD 5.53 million to HKD 29.76 million, primarily due to the addition of HKD 28.34 million in patented technology; concurrently, an impairment loss of HKD 0.55 million was recognized on intellectual property913921 - Financial Instruments and Risk Management (Note 38) details the Group's exposure to market risks (currency, interest rate, price), credit risk, and liquidity risk, along with their management policies; notably, credit risk concentration is high, with the top two customers accounting for 58% of trade receivables10521087 FINANCIAL SUMMARY Five-Year Financial Summary Over the past five years, the Group's revenue has shown a continuous downward trend, decreasing from HKD 207 million in FY2021 to HKD 17.33 million in FY2025; although the annual loss narrowed in the last two years, the loss for FY2025 expanded compared to FY2024, and the Group's total assets and net assets have also decreased year by year, reflecting a contraction in business scale and ongoing operational challenges Five-Year Performance Summary (HKD thousands) | As of March 31 | 2021 | 2022 | 2023 | 2024 | 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 206,605 | 62,365 | 30,600 | 20,158 | 17,328 | | Loss before tax | (71,042) | (39,574) | (38,503) | (20,808) | (28,728) | | Loss attributable to owners of the Company | (57,191) | (28,943) | (37,223) | (20,782) | (27,963) | Five-Year Assets and Liabilities Summary (HKD thousands) | As of March 31 | 2021 | 2022 | 2023 | 2024 | 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets (Current + Non-current) | 174,202 | 190,906 | 147,757 | 108,679 | 80,482 | | Total Liabilities (Current + Non-current) | (1,628) | (12) | (357) | - | (363) | | Net Assets | 172,574 | 190,894 | 147,400 | 108,679 | 80,119 |
文化传信(00343) - 2025 - 年度财报