Economic Performance - In the first half of 2022, China's GDP was RMB 56.3 trillion, with a total growth of only 2.5% year-on-year[9] - The second quarter GDP was RMB 29.2 trillion, showing a slight increase of 0.4% year-on-year, down from 4.8% growth in the first quarter[9] - The service industry experienced a contraction, falling from a 4% growth in the first quarter to a decline of 0.4% year-on-year in the second quarter[9] - The resurgence of the epidemic and external factors like the Ukraine crisis have complicated the economic environment, leading to significant fluctuations in major economic indicators[9] - The consumer price index in China rose by 1.7% year-on-year in the first half of 2022, significantly lower than inflation rates in European countries and the United States[100] - The surveyed urban unemployment rate in China fell to 5.5% in June 2022, marking a decline for the second consecutive month[100] - The real growth of per capita disposable income of national residents was 3% year-on-year in the first half of 2022, outpacing the overall economic growth rate[100] - 71% of economists surveyed in June 2022 believe that the current economic situation in China is lackluster, but they anticipate a recovery in the next six months[100] Advertising and Market Trends - The advertising market in the first half of 2022 decreased by 11.8% year-on-year, with a significant 17% decrease in the number of brands placing advertisements in the IT product and service industry[12] - The advertising placements in the IT product and service industry decreased by 55% year-on-year due to stricter regulations and market conditions[12] - The overall market environment faced challenges such as epidemic resurgence and supply chain disruptions, impacting consumer confidence and market performance[23] Film and Entertainment Industry - The total box office in Mainland China reached RMB 17.19 billion in the first half of 2022, representing a year-on-year decrease of 37.7%[15] - The number of movie-goers in Mainland China fell to 397 million, comparable to levels seen in 2014[15] - The operating rate of domestic cinemas recovered to over 80% since June 2022, following the adjustment of epidemic prevention policies[15] - In June 2022, the national box office totaled RMB 1.92 billion, recovering 90% compared to the same period in 2021[15] - The State Film Administration issued RMB 100 million in movie-watching consumption coupons to stimulate public film spending, indicating proactive measures to support the film market[106] Company Financial Performance - For the six months ended June 30, 2022, the Group recorded revenue of RMB 88.5 million, a 3.4% increase from RMB 85.6 million in the same period of 2021[18] - Revenue from sales of agricultural products increased significantly to RMB 48.6 million, up from RMB 28.0 million in the first half of 2021, representing a growth of 73.6%[24] - The gross profit margin for the Group decreased to 0.9% in the first half of 2022, down from 6.3% in the same period of 2021[18] - The net loss after taxation decreased to approximately RMB 28.1 million, compared to a net loss of RMB 158.0 million in the first half of 2021[18] - Revenue from marketing and consulting services fell by 34.5% to RMB 32.5 million, down from RMB 49.6 million in the first half of 2021[23] - The Group recorded a gross profit of RMB0.8 million for the six months ended 30 June 2022, down from RMB5.4 million for the same period in 2021, resulting in a gross profit margin decrease from 6.3% to 0.9%[37][40] - Total revenue increased by 3.4% from RMB85.6 million for the six months ended 30 June 2021 to RMB88.5 million for the same period in 2022, driven by increased sales of agricultural products[39] - The Group reported a net loss of RMB28.1 million for the six months ended 30 June 2022, primarily due to impairment provisions on goodwill and other intangible assets totaling RMB7.2 million[52][54] Cash Flow and Financial Position - Net cash used in operating activities amounted to RMB9.2 million, mainly due to the net loss for the period[58][59] - Net cash generated from investing activities was RMB4.8 million, resulting from down payment received for assets classified as held for sale[60][62] - Net cash used in financing activities was RMB1.4 million, primarily due to the repayment of bank borrowings of RMB2.2 million[61][63] - The Group's trade receivables decreased by 52.5% from RMB7.0 million as at 31 December 2021 to RMB3.3 million as at 30 June 2022[69] - The Group's trade payables decreased by 13.5% from RMB12.8 million as at 31 December 2021 to RMB11.1 million as at 30 June 2022[76] - The gearing ratio increased by 10.7% to 92.3% as at 30 June 2022, compared to 81.6% as at 31 December 2021[82] - The Group's capital expenditure for the six months ended 30 June 2022 was RMB47,000, while it was RMB1.5 million for the same period in 2021[68] - The overdue bank borrowings amounted to RMB3.785 million in principal and RMB60,000 in interest as of 30 June 2022[81] Corporate Governance and Shareholder Information - The Company has adopted high standards of corporate governance practices to maintain and promote shareholder value and investor confidence[125] - The roles of chairman and CEO are currently held by the same individual, which deviates from corporate governance code provisions, but the Board believes sufficient measures are in place to maintain balance[127] - The Audit Committee has reviewed the Group's condensed consolidated interim financial information for the six months ended 30 June 2022[131] - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2022[122] - The Remuneration Committee evaluates and makes recommendations regarding the remuneration packages of Directors and senior management based on performance and market trends[135] - The Nomination Committee is responsible for recommending candidates for directorship based on professional knowledge and experience[136] Strategic Developments - The Group plans to continue developing its existing businesses in advertising, marketing, consulting, and agricultural products, leveraging positive market factors[109] - The restructuring of the publishing and advertising businesses will focus on consolidating with cultural and film media businesses in China to broaden long-term income sources[109] - The Group aims to develop integrated projects themed around film or media, emphasizing industry positioning, cultural heritage, and eco-agriculture[109] - The COVID-19 outbreak has temporarily disrupted operations, particularly in tourism and integrated development, but management expects proactive economic policies from the Chinese government to stimulate recovery[112] Acquisitions and Investments - On July 30, 2022, the Company agreed to issue 383,636,331 convertible preference shares at HK$0.57 each to settle a loan of HK$218,672,709 from a major shareholder[113] - The Company conditionally agreed to acquire a 49.95% equity interest in Baiming (Beijing) Information Technology Co., Ltd for HK$92,407,500, based on guaranteed profits for the year ending December 31, 2022[117] - The acquisition consideration will be satisfied through the issuance of a convertible bond with a principal amount of HK$92,407,500, convertible at HK$0.70 per share[120] Financial Position and Assets - The total assets of the company as of June 30, 2022, amounted to RMB 219,351,000, a decrease of 8.63% from RMB 240,045,000 as of December 31, 2021[200] - Non-current assets decreased from RMB 100,806,000 to RMB 89,893,000, representing a decline of 10.93%[200] - Current assets also saw a decrease from RMB 112,558,000 to RMB 102,777,000, a reduction of 8.25%[200] - Cash and cash equivalents dropped significantly from RMB 8,851,000 to RMB 3,052,000, a decline of 65.5%[200] - Trade receivables decreased from RMB 7,004,000 to RMB 3,327,000, a reduction of 52.6%[200] - Contract assets decreased from RMB 2,419,000 to RMB 525,000, a decline of 78.3%[200]
十方控股(01831) - 2022 - 中期财报