律齐文化(00550) - 2025 - 年度业绩

Performance Summary Financial Summary The company experienced a significant decline in performance for FY2023, with revenue decreasing by 32.9% to approximately HKD 36.3 million and the annual loss widening by 317.9% to approximately HKD 36.2 million | Indicator | 2023 | 2022 | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | Approx. HKD 36.3 million | Approx. HKD 54.2 million | -32.9% | | Gross Profit | Approx. HKD 20.3 million | Approx. HKD 31.1 million | -34.5% | | Gross Margin | Approx. 56.0% | Approx. 57.4% | -1.4pp | | Loss for the Year | Approx. HKD 36.2 million | Approx. HKD 8.7 million | +317.9% | | Loss Attributable to Equity Holders | Approx. HKD 35.9 million | Approx. HKD 8.9 million | +306.0% | - The Board of Directors resolved not to recommend any dividend for the year ended December 31, 2023[3] Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income For FY2023, the company's revenue decreased by 32.9% to HKD 36.33 million, with the annual loss significantly expanding to HKD 36.24 million due to reduced income, increased impairment losses, and a loss from de-consolidation of a subsidiary | Item | 2023 (HKD '000) | 2022 (HKD '000) | | :--- | :--- | :--- | | Revenue | 36,332 | 54,154 | | Gross Profit | 20,341 | 31,058 | | Impairment of Trade and Other Receivables | (6,162) | (30) | | Loss on De-consolidation of a Subsidiary | (3,777) | – | | Loss Before Income Tax | (36,238) | (8,672) | | Loss for the Year | (36,238) | (8,672) | | Item | 2023 | 2022 | | :--- | :--- | :--- | | Basic and Diluted Loss Per Share | (7.90 HK cents) | (1.98 HK cents) | Consolidated Statement of Financial Position As of the end of 2023, the company's total assets decreased from HKD 210 million to HKD 124 million, and net assets declined from HKD 196 million to HKD 114 million, primarily due to a significant reduction in cash and cash equivalents and a decrease in the fair value of equity instruments | Item | December 31, 2023 (HKD '000) | December 31, 2022 (HKD '000) | | :--- | :--- | :--- | | Total Assets | 124,298 | 209,528 | | Non-current Assets | 84,927 | 124,528 | | Current Assets | 39,371 | 85,000 | | Total Liabilities | 9,993 | 13,400 | | Current Liabilities | 8,694 | 12,867 | | Non-current Liabilities | 1,299 | 533 | | Net Assets | 114,305 | 196,128 | | Total Equity | 114,305 | 196,128 | Notes to the Financial Statements Company Information and Significant Accounting Policies The Group primarily engages in advertising services, healthcare product sales, e-commerce, and IP development design services, with a significant accounting event being the de-consolidation of subsidiary Kingkey Tianzi due to loss of control, resulting in a loss of approximately HKD 3.78 million - The Group's principal activities include: (i) provision of advertising services; (ii) sales of medical and healthcare products; (iii) e-commerce; and (iv) provision of intellectual property (IP) development and design services[10] - The Board decided to de-consolidate Kingkey Tianzi from July 1, 2023, due to the inability to obtain its books and records and the loss of effective control[12][15] - The de-consolidation resulted in a net loss of approximately HKD 3.78 million and an impairment loss of approximately HKD 3.59 million on receivables from Kingkey Tianzi[16] Segment Information In 2023, advertising services remained the primary revenue source at HKD 32.48 million, while sales of medical and healthcare products plummeted to HKD 0.37 million and e-commerce revenue decreased to HKD 2.90 million, with all segments reporting operating losses | Segment | 2023 Revenue (HKD '000) | 2022 Revenue (HKD '000) | 2023 Results (HKD '000) | 2022 Results (HKD '000) | | :--- | :--- | :--- | :--- | :--- | | Provision of Advertising Services | 32,483 | 33,143 | (595) | 556 | | Sales of Medical and Healthcare Products | 373 | 13,475 | (619) | 363 | | E-commerce | 2,900 | 7,536 | (2,004) | (944) | | Provision of IP Development Design Services | 576 | – | (6,859) | – | | Total | 36,332 | 54,154 | (10,077) | (25) | - Geographically, almost all revenue in 2023 (HKD 36.33 million) was derived from Hong Kong, compared to HKD 7.54 million from Mainland China in 2022[25] - No single customer contributed more than 10% of the Group's total revenue in 2023[28] Extracts from Independent Auditor's Report Disclaimer of Opinion The independent auditor issued a "Disclaimer of Opinion" on the company's 2023 consolidated financial statements due to significant audit scope limitations, including issues with subsidiary de-consolidation, investment in an associate, and the validity of certain transactions - The auditor explicitly stated that due to the significance of the matters described in the "Basis for Disclaimer of Opinion" section, sufficient and appropriate audit evidence could not be obtained to form an audit opinion on the consolidated financial statements[45] - De-consolidation of a subsidiary: The auditor could not obtain the books and records of Kingkey Tianzi, preventing assessment of the appropriateness of the de-consolidation accounting treatment and the date of loss of control[46][50] - Scope limitation on interest in an associate: The auditor could not obtain audited financial statements for the associate, Olori, making it impossible to determine the share of results or impairment, and raising doubts about its classification as an associate[53][54] - Scope limitation on revenue, costs, and impairment of receivables: For certain significant transactions in the e-commerce and IP development design services segments, incomplete records prevented the auditor from obtaining sufficient evidence to confirm their authenticity, validity, and recoverability[56][59][61] - Opening balances and related party transactions: Due to the aforementioned limitations, the auditor could not confirm the accuracy of opening balances or ascertain whether all related party transactions were properly identified and disclosed[63][65] Management Discussion and Analysis Financial Review In 2023, the Group's total revenue decreased by 32.9% to HKD 36.3 million, primarily due to a sharp decline in medical and healthcare product sales and e-commerce revenue, leading to a 317.9% increase in loss before income tax despite stable gross margin | Business Segment | 2023 (HKD million) | 2022 (HKD million) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Provision of Advertising Services | 32.5 | 33.1 | -2.0% | | Sales of Medical and Healthcare Products | 0.37 | 13.5 | -97.2% | | E-commerce | 2.9 | 7.5 | -61.5% | | IP Development Design Services | 0.58 | 0 | N/A | | Total | 36.3 | 54.2 | -32.9% | - Gross profit decreased by 34.5% from HKD 31.1 million to HKD 20.3 million, with gross margin slightly declining from 57.4% to 56.0%, remaining relatively stable[73][74] - Key drivers of the increased loss include: - Administrative expenses: Increased by 15.4% to HKD 34.8 million, mainly due to higher legal and professional fees[77] - Impairment losses: Surged from HKD 0.03 million to HKD 6.2 million[78] - Loss on de-consolidation: A loss of HKD 3.8 million was recorded[79] Business Review and Outlook In 2023, the Group's core advertising business remained stable, but other segments faced severe disruption due to incomplete document handover from a former executive director, leading the Group to focus on consolidating its core advertising business and exploring expansion into Mainland China - Advertising business: As the core business, it remained largely unaffected by internal issues and continues to be the cornerstone of the Group's operations[85][88] - Disruption of other businesses: The medical and healthcare products, e-commerce, and IP development design services segments were all disrupted due to the former director's failure to hand over complete document records, leading the Group to cease further development in these segments[86][87][88] - Future outlook: The Group will strengthen its core advertising business and actively explore strategic expansion opportunities in Mainland China, including leveraging digital platforms like Douyin and establishing its own factories to support promotional services and event management[89][90][91][93] Liquidity and Capital Management As of the end of 2023, the Group's financial position weakened, with net current assets significantly decreasing to HKD 30.7 million and cash and bank balances falling to HKD 30 million, while all proceeds from the 2018 share placement have been fully utilized | Indicator | December 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Net Current Assets | HKD 30.7 million | HKD 72.1 million | | Cash and Bank Balances | HKD 30 million | HKD 69.9 million | | Current Ratio | 4.5 | 6.6 | - As of December 31, 2023, the Group had no bank loans or other borrowings[95] - The net proceeds of approximately HKD 103 million from the 2018 share placement were fully utilized as of December 31, 2023[98][99] Post-Reporting Period Events and Significant Events Subsequent to the reporting period, the company undertook restructuring and remedial actions, including the disposal of problematic subsidiaries and an associate, initiating litigation against a former director, and addressing a trading suspension by appointing a new auditor and commencing forensic and internal control reviews - Asset disposal: Subsequent to the reporting period, the company disposed of its entire interests in Beyond Noble (the holding company of Kingkey Tianzi), Smart Path (the holding company of Haotuo), and the associate Olori[103][104] - Significant litigation: The company initiated legal proceedings against a former director for breach of fiduciary duties, while also facing a defamation lawsuit filed by the same former director[106][109] - Suspension of trading and resumption guidance: The company's shares were suspended from trading effective April 2, 2024, and the Stock Exchange issued resumption guidance requiring a forensic investigation, demonstration of management integrity, internal control review, and publication of all financial results[116][121] - Remedial actions: To meet the resumption guidance, the company appointed Tianjian International Certified Public Accountants as the new auditor and engaged independent third-party institutions to conduct a forensic investigation and an internal control review[119][120][122]