环球数码创意(08271) - 2025 - 中期财报

CORPORATE INFORMATION This section details the company's corporate governance structure, including its board of directors, committees, key personnel, and registered offices Board of Directors The company's Board of Directors comprises executive, non-executive, and independent non-executive directors, with Mr. He Peng appointed as Deputy Managing Director and Mr. Wang Hongpeng resigning during the reporting period - Mr. He Peng was appointed as Executive Director and Deputy Managing Director on April 15, 2025[10][12] - Mr. Wang Hongpeng resigned as Executive Director on March 16, 2025[10][12] Committees The company has an Executive Committee, Audit Committee, Nomination Committee, and Remuneration Committee, each with designated chairpersons and members - The Audit Committee is chaired by Mr. Lam Yiu Kin[11][12] - The Nomination Committee is chaired by Mr. Xu Liang[11][12] - The Remuneration Committee is chaired by Ms. Wu Chun Hua[11][12] Company Secretary and Auditor Mr. Shang Yu Hung serves as Company Secretary, with RSM Hong Kong appointed as the new auditor on May 23, 2025, succeeding PricewaterhouseCoopers on the same date - The Company Secretary is Mr. Shang Yu Hung, a member of the Hong Kong Institute of Certified Public Accountants[13][14] - RSM Hong Kong was appointed as auditor on May 23, 2025[13][14] - PricewaterhouseCoopers retired as auditor on May 23, 2025[13][14] Registered and Principal Offices The company's registered office is in Bermuda, with its principal place of business in Hong Kong located at Harbour Centre, Wanchai - The company's stock code is 8271[15] - The company's website is **www.gdc-world.com**[15](index=15&type=chunk) INDEPENDENT REVIEW REPORT This section presents the independent auditor's review report on the interim financial information, outlining the scope and conclusion of their limited assurance engagement Introduction and Scope of Review The auditor reviewed the interim financial information for the six months ended June 30, 2025, in accordance with Hong Kong Standard on Review Engagements 2410, which is less extensive than an audit, thus no audit opinion is expressed - The scope of review complies with Hong Kong Standard on Review Engagements 2410 issued by the Hong Kong Institute of Certified Public Accountants[17][19] - The scope of review is substantially less than an audit, therefore no audit opinion is expressed[17][19] Conclusion Based on the review, the auditor found no material modifications needed for the interim financial information to be prepared in accordance with Hong Kong Accounting Standard 34 - The auditor found no matters indicating the interim financial information is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34[20][21] - The report date is August 20, 2025[22] INTERIM RESULTS This section presents the condensed consolidated financial statements, including the statement of profit or loss, financial position, changes in equity, and cash flows for the interim period CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the six months ended June 30, 2025, the Group reported revenue from continuing operations of HKD 30,019 thousand and an operating loss of HKD 5,165 thousand, with profit from discontinued operations of HKD 28,816 thousand resulting in a total profit of HKD 24,033 thousand for the period Summary of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Metric | 2025 (thousand HKD) | 2024 (thousand HKD) | Change (thousand HKD) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Continuing Operations | | | | | | Revenue | 30,019 | 37,173 | (7,154) | -19.25% | | Cost of sales | (24,357) | (34,984) | 10,627 | -30.38% | | Gross profit | 5,662 | 2,189 | 3,473 | 158.66% | | Other income | 6,777 | 5,221 | 1,556 | 29.80% | | Distribution and selling expenses | (3,011) | (12,839) | 9,828 | -76.55% | | Administrative expenses | (12,960) | (16,090) | 3,130 | -19.45% | | Operating loss | (5,165) | (22,668) | 17,503 | -77.21% | | Loss before income tax | (5,254) | (22,833) | 17,579 | -76.90% | | Loss for the period from continuing operations | (4,783) | (22,220) | 17,437 | -78.47% | | Discontinued Operations | | | | | | Profit/(loss) for the period from discontinued operations | 28,816 | (472) | 29,288 | -6205.08% | | Total | | | | | | Profit/(loss) for the period | 24,033 | (22,692) | 46,725 | -205.07% | | Profit/(loss) for the period attributable to owners of the Company | 25,150 | (22,541) | 47,691 | -211.58% | | Basic and diluted earnings/(loss) per share (HK cents) | 1.67 | (1.50) | 3.17 | -211.33% | CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As of June 30, 2025, the Group's total assets were HKD 482,648 thousand, a slight increase from December 31, 2024, with total equity attributable to owners of the Company rising to HKD 386,408 thousand and non-controlling interests turning positive Summary of Condensed Consolidated Statement of Financial Position | Metric | June 30, 2025 (thousand HKD) | December 31, 2024 (thousand HKD) | Change (thousand HKD) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Assets | | | | | | Total non-current assets | 267,780 | 237,635 | 30,145 | 12.69% | | Total current assets | 214,868 | 236,689 | (21,821) | -9.22% | | Total assets | 482,648 | 474,324 | 8,324 | 1.75% | | Equity | | | | | | Total equity attributable to owners of the Company | 386,408 | 358,266 | 28,142 | 7.85% | | Non-controlling interests | 332 | (122,316) | 122,648 | -100.28% | | Total equity | 386,740 | 235,950 | 150,790 | 63.91% | | Liabilities | | | | | | Total non-current liabilities | 20,720 | 13,753 | 6,967 | 50.66% | | Total current liabilities | 75,188 | 224,621 | (149,433) | -66.53% | | Total liabilities | 95,908 | 238,374 | (142,466) | -59.77% | | Total equity and liabilities | 482,648 | 474,324 | 8,324 | 1.75% | CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended June 30, 2025, total equity attributable to owners of the Company increased, primarily due to profit for the period and currency translation differences, while the deconsolidation of discontinued operations significantly impacted non-controlling interests Summary of Condensed Consolidated Statement of Changes in Equity (For the six months ended June 30) | Metric | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Attributable to owners of the Company | | | | Balance at January 1 | 358,266 | 432,883 | | Profit/(loss) for the period | 25,150 | (22,541) | | Other comprehensive income | 2,992 | (9,348) | | Deconsolidation | – | – | | Transfer to statutory reserve | – | – | | Balance at June 30 | 386,408 | 400,994 | | Non-controlling interests | | | | Balance at January 1 | (122,316) | (124,695) | | Profit/(loss) for the period | (1,117) | (151) | | Other comprehensive income | (4,444) | 2,928 | | Deconsolidation | 128,209 | – | | Balance at June 30 | 332 | (121,918) | | Total | | | | Balance at June 30 | 386,740 | 279,076 | - The deconsolidation of discontinued operations resulted in an increase of HKD 128,209 thousand in non-controlling interests[41] CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the six months ended June 30, 2025, net cash generated from operating activities was HKD 1,150 thousand, net cash used in investing activities was HKD 26,996 thousand, and net cash used in financing activities was HKD 374 thousand, leading to a net decrease of HKD 26,220 thousand in cash and cash equivalents Summary of Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Metric | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Net cash generated from/(used in) operating activities | 1,150 | (6,658) | | Net cash used in investing activities | (26,996) | (2,472) | | Net cash used in financing activities | (374) | (9) | | Net decrease in cash and cash equivalents | (26,220) | (9,139) | | Cash and cash equivalents at end of period | 203,076 | 233,846 | - Net cash outflow from investing activities significantly increased, primarily due to the purchase of time deposits totaling HKD 24,138 thousand[44] NOTES TO THE CONDENSED FINANCIAL STATEMENTS This section provides detailed notes to the condensed financial statements, covering general information, basis of preparation, accounting standards, estimates, and financial risk management 1. GENERAL INFORMATION The Company is incorporated in Bermuda and primarily engages in computer graphics creation and production, IP-based digital visual business, property asset management, and property leasing services in China - The Group's principal activities include computer graphics (CG) creation and production services, IP-based digital visual business, property asset management, and property leasing and management services[47][53] 2. BASIS OF PREPARATION The condensed financial statements are prepared in accordance with Hong Kong Accounting Standard 34 and the GEM Listing Rules, on a going concern basis - The condensed financial statements are prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" and the GEM Listing Rules[50][56] - The Group continues to prepare its financial statements on a going concern basis[52][57] 3. ADOPTION OF NEW AND AMENDED HKFRS ACCOUNTING STANDARDS The Group first adopted the amended Hong Kong Accounting Standard 21 "Lack of Exchangeability" on January 1, 2025, without resulting in changes to accounting policies or retrospective adjustments - The Group first adopted the amended Hong Kong Accounting Standard 21 "Lack of Exchangeability" on January 1, 2025[58][64] - The adoption of new standards did not result in changes to accounting policies or retrospective adjustments[58][64] 4. ESTIMATES The preparation of condensed financial statements involves management's judgments, estimates, and assumptions, with significant judgments made in this period consistent with the consolidated financial statements for the year ended December 31, 2024 - The preparation of condensed financial statements requires management to make judgments, estimates, and assumptions[59][65] - Significant judgments made in this period are consistent with those in the consolidated financial statements for the year ended December 31, 2024[60][65] 5. FINANCIAL RISK MANAGEMENT The Group is exposed to market risks (foreign exchange, interest rate), credit risk, and liquidity risk, with investment property fair value estimated using the income approach based on yield rates and market rents - The Group is exposed to market risks (including foreign exchange risk, interest rate risk), credit risk, and liquidity risk[61][66] - There were no significant changes in the contractual undiscounted cash outflows for financial liabilities compared to the year-end[68][71] Investment Property Fair Value Estimation (Level 3) | Description | Valuation Technique | Unobservable Inputs | Range (June 30, 2025) | Range (December 31, 2024) | | :--- | :--- | :--- | :--- | :--- | | Office building | Income approach | Yield rate | 7.5% | 7.5% | | | | Market rent | RMB 90 per sq.m. per month | RMB 91 per sq.m. per month | - The fair value of investment properties is valued every six months by Roma Appraisals Limited, an external independent valuer[86][90] 6. SEGMENT INFORMATION The Group is segmented into Interactive Entertainment and Digital Assets and Property Asset Management, with total revenue of HKD 30,019 thousand for the six months ended June 30, 2025, primarily from Mainland China - Management has renamed "Cultural and Sports New Space" to "Property Asset Management"[96] - The Group has two reportable segments: Interactive Entertainment and Digital Assets, and Property Asset Management[97] Segment Revenue and Results (For the six months ended June 30) | Segment | 2025 Revenue (thousand HKD) | 2024 Revenue (thousand HKD) | 2025 Segment Results (thousand HKD) | 2024 Segment Results (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | | Interactive Entertainment and Digital Assets | 11,595 | 14,575 | (4,650) | (25,061) | | Property Asset Management | 18,424 | 22,598 | 3,545 | 9,556 | | Total | 30,019 | 37,173 | (1,105) | (15,505) | Revenue by Geographical Location (For the six months ended June 30) | Region | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Mainland China | 29,584 | 37,095 | | Hong Kong | 435 | 78 | | Total | 30,019 | 37,173 | 7. OTHER INCOME For the six months ended June 30, 2025, other income primarily comprised government grants and interest income, totaling HKD 6,777 thousand, an increase from the prior period Details of Other Income (For the six months ended June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Government grants | 4,608 | 2,468 | | Interest income | 2,058 | 2,327 | | Others | 111 | 426 | | Total | 6,777 | 5,221 | - Government grants primarily serve as incentives for the Group's industry development[112] 8. OTHER LOSSES, NET For the six months ended June 30, 2025, net other losses amounted to HKD 1,633 thousand, primarily due to increased losses from changes in the fair value of investment properties Details of Other Losses, Net (For the six months ended June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Changes in fair value of investment properties | (1,645) | (867) | | Gain on disposal of property, plant and equipment | 26 | 5 | | Exchange losses, net | (14) | (212) | | Total | (1,633) | (1,074) | 9. LOSS BEFORE INCOME TAX For the six months ended June 30, 2025, loss before income tax was reached after deducting key expenses such as employee benefit expenses, amortization of movie and television program rights, and depreciation of property, plant and equipment Key Deductions for Loss Before Income Tax (For the six months ended June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Employee benefit expenses | 14,244 | 20,136 | | Amortisation of movies and television programmes rights | 9,782 | 14,410 | | Depreciation of property, plant and equipment | 876 | 1,055 | | Depreciation of right-of-use assets | 630 | 1,471 | 10. FINANCE COST For the six months ended June 30, 2025, finance costs amounted to HKD 89 thousand, primarily attributable to the interest component of lease liabilities Details of Finance Cost (For the six months ended June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Finance costs on lease liabilities | 89 | 165 | 11. INCOME TAX CREDIT For the six months ended June 30, 2025, the Group received an income tax credit of HKD 471 thousand, primarily from PRC corporate income tax at a 25% rate for Chinese subsidiaries, with some enjoying tax benefits - For the six months ended June 30, 2025, the income tax credit was HKD 471 thousand (2024: HKD 613 thousand)[120][121] - PRC subsidiaries are subject to PRC corporate income tax at a rate of 25%, with some enjoying tax concessions[119][121] 12. EARNINGS/(LOSS) PER SHARE For the six months ended June 30, 2025, basic and diluted earnings per share attributable to owners of the Company were 1.67 HK cents, primarily influenced by profit contributions from discontinued operations Details of Earnings/(Loss) Per Share (For the six months ended June 30) | Item | 2025 (HK cents) | 2024 (HK cents) | | :--- | :--- | :--- | | Continuing operations | (0.32) | (1.48) | | Discontinued operations | 1.99 | (0.02) | | Total basic and diluted earnings/(loss) per share | 1.67 | (1.50) | - Diluted earnings/(loss) per share is the same as basic earnings/(loss) per share as there were no potential dilutive ordinary shares during the period[125] 13. DIVIDEND The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 (2024: nil)[126] 14. DISCONTINUED OPERATION Guangdong Global Digital Creative Industries Co., Ltd.'s insolvency-based bankruptcy liquidation application was accepted by Guangzhou Intermediate People's Court, leading to its deconsolidation on June 11, 2025, and a gain of HKD 33,953 thousand attributable to owners of the Company - Guangdong Global Digital Creative Industries Co., Ltd. (a non-wholly owned subsidiary) had its bankruptcy liquidation application accepted due to insolvency[128][131] - The Group ceased to have control over Guangdong Global Digital on June 11, 2025, and its financial results are no longer consolidated[129][131] Financial Information of Discontinued Operation (For the six months ended June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Loss for the period | (5,137) | (472) | | Gain attributable to owners of the Company upon deconsolidation | 33,953 | – | | Total | 28,816 | (472) | | Net cash outflow from operating activities | (784) | (543) | - Upon deconsolidation, the gain attributable to owners of the Company was HKD 33,953 thousand[136][137] 15. PROPERTY, PLANT AND EQUIPMENT As of June 30, 2025, the net book value of property, plant and equipment was HKD 10,999 thousand, with additions and depreciation recorded during the period Changes in Property, Plant and Equipment (For the six months ended June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Net book value at January 1 | 11,384 | 12,336 | | Additions | 377 | 376 | | Depreciation | (876) | (1,062) | | Disposals | (201) | – | | Exchange adjustments | 315 | (283) | | Net book value at June 30 | 10,999 | 11,367 | 16. INVESTMENT PROPERTY As of June 30, 2025, investment property measured at fair value was HKD 216,667 thousand, with a decrease in fair value during the period Changes in Investment Property (For the six months ended June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Balance at January 1 | 211,809 | 231,388 | | Changes in fair value | (1,645) | (867) | | Exchange adjustments | 6,503 | (5,467) | | Balance at June 30 | 216,667 | 225,054 | - The investment property is located in Shenzhen, Mainland China[144] 17. INTEREST IN AN ASSOCIATE The Group holds a 49% interest in Global Digital Media Technology (Macau) Co., Ltd., an associate primarily providing computer graphics animation creation and production services, whose financial information was immaterial during the period - The Group holds a 49% interest in Global Digital Media Technology (Macau) Co., Ltd[149] - The associate's principal activity is providing computer graphics animation creation and production services[149] - The financial information of Global Digital Macau was immaterial during the period, thus no summary of financial information is presented[150] 18. MOVIES AND TELEVISION PROGRAMMES RIGHTS AND PRODUCTIONS WORK IN PROGRESS As of June 30, 2025, the net book value of movie and television program rights was HKD 862 thousand, work in progress was transferred to zero, and amortization for the period was HKD 9,782 thousand Changes in Movies and Television Programmes Rights and Productions Work in Progress (For the six months ended June 30) | Item | Movies and television programmes rights (thousand HKD) | Productions work in progress (thousand HKD) | Total (thousand HKD) | | :--- | :--- | :--- | :--- | | Net book value at January 1 | 648 | 5,425 | 6,073 | | Additions | – | 4,478 | 4,478 | | Amortisation | (9,782) | – | (9,782) | | Transfers | 9,973 | (9,973) | – | | Exchange adjustments | 23 | 70 | 93 | | Net book value at June 30 | 862 | – | 862 | - For the six months ended June 30, 2025, amortization of HKD 9,782 thousand was included in "cost of sales"[152] 19. TRADE RECEIVABLES As of June 30, 2025, total trade receivables were HKD 4,460 thousand, mostly current to 90 days, with an impairment provision of HKD 191 thousand Details of Trade Receivables (As of June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Trade receivables from contracts with customers | 2,540 | 1,738 | | Rental receivables | 1,920 | 1,736 | | Total | 4,460 | 3,474 | | Less: Impairment allowance | (191) | (185) | | Net | 4,269 | 3,289 | Ageing Analysis of Trade Receivables (As of June 30) | Ageing | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Current to 90 days | 4,132 | 3,236 | | 91 to 180 days | 68 | – | | Over 180 days | 260 | 238 | | Total | 4,460 | 3,474 | - The carrying amounts of trade receivables are primarily denominated in RMB[160] 20. SHARE CAPITAL As of June 30, 2025, the Company's authorized share capital was HKD 24,000 thousand, with issued and fully paid share capital of HKD 15,033 thousand, and no changes in share capital during the period Share Capital Structure (As of June 30) | Item | Number of Shares | Nominal Value (thousand HKD) | | :--- | :--- | :--- | | Authorised share capital (HKD 0.01 per share) | 2,400,000,000 | 24,000 | | Issued and fully paid share capital (HKD 0.01 per share) | 1,503,309,540 | 15,033 | - For the six months ended June 30, 2024, the remaining 260,000 treasury shares were cancelled[164] 21. OTHER RESERVES As of June 30, 2025, total other reserves amounted to HKD 345,805 thousand, primarily influenced by currency translation differences and transfers to statutory reserves Changes in Other Reserves (For the six months ended June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Balance at January 1 | 342,796 | 355,579 | | Currency translation differences | 10,770 | (9,348) | | Exchange reserve gain related to discontinued operation | (7,778) | – | | Transfer to statutory reserve | 17 | (109) | | Cancellation of treasury shares | – | 3 | | Balance at June 30 | 345,805 | 346,125 | - According to PRC laws and regulations, at least 10% of net profit after tax must be allocated to the statutory reserve until it reaches 50% of the registered capital[175] 22. TRADE PAYABLES, ACCRUALS AND OTHER PAYABLES As of June 30, 2025, total trade payables, accruals, and other payables amounted to HKD 54,989 thousand, a decrease from December 31, 2024, primarily denominated in RMB Details of Trade Payables, Accruals and Other Payables (As of June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Trade payables | 24 | 47 | | Advances from non-controlling interests | 21,930 | 21,277 | | Accruals | 2,285 | 6,442 | | Salaries payable | 10,138 | 9,326 | | Deposits | 6,245 | 10,946 | | Construction costs payable | 350 | 1,913 | | Other taxes payable | 1,350 | 333 | | Rental income received in advance | 385 | 1,504 | | Others | 12,282 | 11,878 | | Total | 54,989 | 63,666 | - The carrying amounts of trade payables, accruals, and other payables approximate their fair values[179] - The transaction with Sunye International Limited is not yet completed as Foshan Global Digital Media has not yet completed the transfer of its 5% equity interest to it[185][188] 23. PROVISION FOR RENTAL AND SETTLEMENT PAYABLES As of June 30, 2025, the provision for rental and settlement payables was zero, primarily due to the deconsolidation of Guangdong Global Digital following bankruptcy liquidation, which previously involved legal disputes with Pearl River Film Studio Co., Ltd Provision for Rental and Settlement Payables (As of June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Accrued rental and settlement payables and late payment charges | – | 138,225 | - Guangdong Global Digital's bankruptcy liquidation application was accepted by the Guangzhou Intermediate People's Court on May 26, 2025, and a bankruptcy administrator was officially appointed on June 11, 2025[193][195] - Guangdong Global Digital's application for retrial regarding property occupation fees and capital contributions for the Cultural Industrial Park property was rejected by the Supreme People's Court[196][197][199] - Guangdong Global Digital filed a protest application with the Supreme People's Procuratorate of the PRC on November 27, 2024, and is currently awaiting a ruling[200][202] 24. RELATED PARTY TRANSACTIONS The Group engaged in various related party transactions with its major shareholder, Shougang Holding (Hong Kong) Company Limited, and its subsidiaries, including consultancy fees, rental expenses, management fees, interest income, and CG production income - The Company's major shareholder is Shougang Holding (Hong Kong) Company Limited, a wholly-owned subsidiary of Shougang Group Co., Ltd[205][207] Related Party Transactions (For the six months ended June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Consultancy fees received by Shougang HK | – | 1,440 | | Rental expenses paid to a subsidiary of Shougang HK | 294 | – | | Management fees received from Shougang HK | 240 | – | | Disposal of property, plant and equipment to Shougang HK | 201 | – | | Interest income from Shougang Group Finance Co., Ltd. | 66 | 69 | | CG production income received from Shougang Group Co., Ltd. | 14 | – | Amounts Due from Related Parties at Period End (As of June 30) | Item | 2025 (thousand HKD) | 2024 (thousand HKD) | | :--- | :--- | :--- | | Amounts due from an associate (net) | – | – | | Amounts due from Shougang Group Finance Co., Ltd. | 8,978 | 8,646 | | Amounts due from Shougang HK | 441 | 34 | - Amounts due from related parties are unsecured, interest-free, and repayable on demand[215] MANAGEMENT DISCUSSION AND ANALYSIS This section provides management's review and analysis of the Group's financial performance, business operations, and future outlook for the interim period FINANCIAL REVIEW For the six months ended June 30, 2025, the Group's revenue from continuing operations decreased, but cost of sales, distribution and selling expenses, and administrative expenses all reduced, coupled with a one-off net gain from discontinued operations, leading to a significant increase in total profit for the period, robust liquidity, and improved capital structure - Revenue from continuing operations was HKD 30,019 thousand, a year-on-year decrease of HKD 7,154 thousand, primarily due to reduced animated film distribution, lower rental and management service income, partially offset by increased production income[216][222] - Cost of sales decreased by HKD 10,627 thousand, mainly due to reduced original film production costs and staff costs[217][222] - Distribution and selling expenses decreased by HKD 9,828 thousand, and administrative expenses decreased by HKD 3,130 thousand[219][220][223] - Discontinued operations generated a profit of HKD 28,816 thousand, primarily from a one-off net gain of HKD 33,953 thousand from the deconsolidation of Guangdong Global Digital[226][232] - Total profit for the period was HKD 24,033 thousand, a year-on-year increase of HKD 46,725 thousand[227][232] - As of June 30, 2025, cash and cash equivalents were HKD 203,076 thousand, with a current ratio of 2.86 (December 31, 2024: 1.05)[228][229][233] - Equity attributable to owners of the Company increased to HKD 386,408 thousand, primarily influenced by profit for the period and exchange differences[230][234] BUSINESS REVIEW AND OUTLOOK In the first half, the Group pursued a dual strategy of innovation-driven and quality-efficiency enhancement, with the Interactive Entertainment and Digital Assets segment achieving significant results in R&D and IP operations, while Property Asset Management focused on cost control; the second half will prioritize "deep technology, asset activation, and ecosystem synergy" strategies - The Group adhered to a dual core strategy of innovation-driven development and quality and efficiency enhancement in the first half of the year[241][246] - The Interactive Entertainment and Digital Assets segment successfully released the original movie Ocean Series 11, advanced IP operations for "Ocean Series" and "Journey to the West," and collaborated with Tencent and CCTV Animation[249][252] - This segment made progress in AIGC technology application and expanding international orders for virtual humans, with its self-developed "AI Cloud Mirror Journey" generating revenue[249][252] - The Property Asset Management segment's Global Digital Building maintained a high occupancy rate and significantly reduced operating costs through personnel optimization and energy consumption control[251][253] - The Group received 13 government grants and awards, including subsidies for the original Ocean animated film series and an award for the digital virtual human A.I. large model driven platform[255][258] - Technology R&D focuses on AIGC, achieving a strategic upgrade from traditional production processes to a technology solutions provider, with achievements in VR360 panoramic rendering, AI facial animation, DynamicRig plugin, AI large language model localization, and digital avatar platforms[257][259][260] - For the second half, the Group will focus on "deep technology, asset activation, and ecosystem synergy" as its core strategy, promoting key IP project commercialization, strengthening collaborations with clients like Huawei and Qualcomm, and expanding "VR+cultural tourism" applications[261][264] LITIGATIONS The Group faces two major litigations: the Chengdu Wuhou Sports Park project, where IDMT Shenzhen seeks agreement termination and compensation, and the Guangzhou Zhuying Cultural Industrial Park project, where Guangdong Global Digital has filed a protest with the Supreme People's Procuratorate, with no judgments yet - IDMT Shenzhen filed a civil lawsuit against Wuhou Investment regarding the Chengdu Wuhou Sports Park project, seeking termination of the operation and management agreement and claiming RMB 11,064,144.74 in compensation[263][266] - All litigation cases between Guangdong Global Digital and Pearl River Film Studio Co., Ltd. concerning the Zhuying Cultural Industrial Park project have been concluded and enforced, with Guangdong Global Digital having filed a protest with the Supreme People's Procuratorate of the People's Republic of China, and no judgment yet rendered[269][274] - As Guangdong Global Digital has been taken over by a bankruptcy administrator, subsequent protest procedures will be followed up by the bankruptcy administrator[270][275] DECONSOLIDATION OF GUANGDONG GDC Guangdong Global Digital's bankruptcy liquidation application was accepted by the court, and a bankruptcy administrator was officially appointed on June 11, 2025, from which date the Company ceased to control it, and its financial performance is no longer consolidated into the Group's results - Guangdong Global Digital's bankruptcy liquidation application was accepted by the court, and a bankruptcy administrator was officially appointed on June 11, 2025[271][276] - The Company ceased to have control over Guangdong Global Digital from June 11, 2025, and its financial performance is no longer consolidated into the Group's financial results[271][276] INTERIM DIVIDEND This section addresses the Board's recommendation regarding the payment of an interim dividend for the reporting period Interim Dividend Recommendation The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2025 (2024: nil)[278][281] PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES This section confirms that there were no transactions involving the purchase, sale, or redemption of the company's listed securities during the reporting period Listed Securities Transactions For the six months ended June 30, 2025, neither the Company nor its subsidiaries purchased, sold, or redeemed any listed securities - For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities (including treasury shares)[279][282] DIRECTORS' AND CHIEF EXECUTIVES' INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES This section discloses the long and short positions held by directors and chief executives in the company's shares, underlying shares, and debentures Long Positions in Shares As of June 30, 2025, Mr. Chen Zheng and Mr. He Peng held long positions in the Company's shares Directors' Long Positions in Shares and Underlying Shares of the Company (As of June 30, 2025) | Name of Director | Capacity in which interests are held | Interests in Shares (shares) | Approximate percentage of the Company's total issued share capital | | :--- | :--- | :--- | :--- | | Mr. Chen Zheng | Beneficial owner | 185,988,200 | 12.37% | | Mr. He Peng | Beneficial owner | 2,142,000 | 0.14% | DIRECTORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES This section confirms that no arrangements existed for directors or their families to acquire shares or debentures of the company or any other body corporate No Rights to Acquire Shares For the six months ended June 30, 2025, neither the Company nor its subsidiaries participated in any arrangements enabling directors or their families to acquire benefits by purchasing shares or debentures of the Company or any other body corporate - For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries participated in any arrangements enabling directors or their families to acquire benefits by purchasing shares or debentures of the Company or any other body corporate[287][288] SUBSTANTIAL SHAREHOLDERS' INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES This section details the long and short positions held by substantial shareholders in the company's shares, underlying shares, and debentures Long Positions of Substantial Shareholders As of June 30, 2025, Shougang Group Co., Ltd., Shougang Holding (Hong Kong) Company Limited, and Upper Nice Assets Ltd. each held a 41.18% long position in the Company's shares Substantial Shareholders' Long Positions in Shares of the Company (As of June 30, 2025) | Name of Shareholder | Capacity in which interests are held | Number of Shares held in the Company (shares) | Approximate percentage of the Company's total issued share capital | | :--- | :--- | :--- | :--- | | Shougang Group Co., Ltd. | Interest in controlled corporation | 619,168,023 | 41.18% | | Shougang Holding (Hong Kong) Company Limited | Interest in controlled corporation | 619,168,023 | 41.18% | | Upper Nice Assets Ltd. | Beneficial owner | 619,168,023 | 41.18% | - Upper Nice is a wholly-owned subsidiary of Shougang HK, which is wholly owned by Shougang Group, thus these companies are deemed to hold the same interests under the Securities and Futures Ordinance[291][292] SHARE OPTION SCHEME This section confirms that the company currently does not have any share option scheme in place No Share Option Scheme The Company currently does not have any share option scheme - The Company currently has no share option scheme[294][299] DIRECTORS' INTERESTS IN COMPETING BUSINESSES This section confirms that no directors held interests in businesses that directly or indirectly compete with the Group's operations No Competing Business Interests For the six months ended June 30, 2025, no directors held interests in businesses considered to directly or indirectly compete with the Group's operations - For the six months ended June 30, 2025, no directors held interests in businesses considered to directly or indirectly compete with the Group's operations[295][300] COMPLIANCE WITH CORPORATE GOVERNANCE CODE This section confirms the company's adherence to the Corporate Governance Code provisions outlined in Appendix C1 of the GEM Listing Rules Compliance Status For the six months ended June 30, 2025, the Company consistently complied with the code provisions of the Corporate Governance Code in Appendix C1 of the GEM Listing Rules - The Company has complied with the code provisions of the Corporate Governance Code as set out in Appendix C1 of the GEM Listing Rules for the six months ended June 30, 2025[296][301] COMPLIANCE WITH CODE OF CONDUCT REGARDING SECURITIES TRANSACTIONS BY DIRECTORS This section confirms that all directors complied with the adopted code of conduct for securities transactions and the required standards under the GEM Listing Rules Compliance Status All directors confirmed compliance with the Company's adopted code of conduct for securities transactions and the required standards under the GEM Listing Rules for the six months ended June 30, 2025 - All Directors confirmed compliance with the code of conduct regarding securities transactions by Directors adopted by the Company and the required standards under the GEM Listing Rules for the six months ended June 30, 2025[297][302] CHANGES IN DIRECTORS' INFORMATION This section reports changes in directors' information, specifically Mr. He Peng's resignation from a previous role after his appointment to the Company Mr. He Peng's Resignation Mr. He Peng resigned as General Manager of the New Industry Department of Shougang Holding (Hong Kong) Company Limited after his appointment as Executive Director and Deputy Managing Director of the Company - Mr. He Peng resigned as General Manager of the New Industry Department of Shougang Holding (Hong Kong) Company Limited after his appointment as Executive Director and Deputy Managing Director of the Company[303][306] AUDIT COMMITTEE This section details the Audit Committee's review of the Group's unaudited interim results with the auditor and management Review of Interim Results The Audit Committee, together with RSM Hong Kong and the Company's management, reviewed the Group's unaudited interim results for the six months ended June 30, 2025 - The Audit Committee has reviewed the Group's unaudited interim results for the six months ended June 30, 2025, with RSM Hong Kong and the Company's management[304][307] APPRECIATION This section conveys the Chairman's sincere gratitude on behalf of the Board to all stakeholders Chairman's Appreciation The Chairman, on behalf of the Board, extends sincere gratitude to shareholders, business partners, clients, management, and all staff - The Chairman, on behalf of the Board, extends sincere gratitude to shareholders, business partners, clients, management, and all staff[305][308]