Financial Performance - The unaudited condensed consolidated financial results for the three months ended March 31, 2022, were reported, with comparative figures for the same period in 2021[21]. - The report includes a comprehensive income statement detailing the financial performance of the Group[22]. - Revenue from continuing operations for the three months ended March 31, 2022, was HK$16,050,000, a decrease of 7.9% from HK$17,436,000 in the same period of 2021[35]. - Gross profit for the period was HK$7,278,000, down 24.2% from HK$9,611,000 year-on-year[27]. - Operating profit decreased significantly to HK$717,000, compared to HK$2,484,000 in the previous year, reflecting a decline of 71.1%[27]. - Profit for the period from continuing operations was HK$110,000, a sharp decline from HK$1,740,000 in the same quarter of 2021[27]. - Total comprehensive income for the period was HK$133,000, a significant improvement from a loss of HK$6,527,000 in the same period last year[27]. - Interest income increased to HK$2,357,000 from HK$1,781,000, representing a growth of 32.3%[36]. - Management service fees generated HK$3,039,000, slightly down from HK$3,196,000 in the previous year[35]. - Rental income decreased to HK$10,960,000 from HK$12,269,000, reflecting a decline of 10.7%[35]. - The company reported an exchange gain of HK$2,520,000, compared to an exchange loss of HK$748,000 in the previous year[27]. - The Group's total loss for the Review Period was HK$2,387,000, narrowing by HK$3,392,000 from HK$5,779,000 in the corresponding period of 2021[58]. Investment Risks - The company is listed on the GEM of the Stock Exchange of Hong Kong, which is designed for small and mid-sized companies, indicating a higher investment risk[2]. - The report emphasizes the potential risks associated with investing in GEM-listed companies due to their susceptibility to market volatility[3]. Corporate Governance - The board of directors confirmed that the information contained in the report is accurate and complete in all material respects[5]. - The company has made all reasonable inquiries to ensure the accuracy of the report's contents[5]. - The report is structured to comply with the GEM Listing Rules, providing necessary information about the company[5]. - The Company has complied with all provisions of the Corporate Governance Code throughout the three months ended March 31, 2022[107]. - The Company has adopted a code of conduct regarding securities transactions by Directors, confirming compliance throughout the reporting period[107]. - No Directors had interests in any competing businesses during the three months ended March 31, 2022[105]. Taxation - The PRC Corporate Income Tax (CIT) for the period included current tax of HK$1,015 and deferred income tax of HK$(1,615), resulting in an overall income tax expense of HK$(600) for the three months ended March 31, 2022[6]. - The applicable CIT rate for subsidiaries in Mainland China is 25%, with two subsidiaries benefiting from a reduced rate of 15% due to their status as High and New Technology Enterprises[40]. - No Hong Kong profits tax has been provided as there were no assessable profits arising in Hong Kong for the three months ended March 31, 2022, and 2021[39]. Shareholder Information - As of March 31, 2022, Mr. Chen Zheng holds 185,988,200 shares, representing approximately 12.33% of the total issued share capital[91]. - As of March 31, 2022, Shougang Group Co., Ltd. holds 619,168,023 shares, representing approximately 41.05% of the total issued share capital of the Company[98]. - The Company has not granted any share options under the Share Option Scheme since its adoption on June 18, 2013[105]. - The Company reported no interests or short positions in shares, underlying shares, or debentures by directors or chief executives as of March 31, 2022, except for those disclosed[91]. - The Company has not been notified of any other persons or corporations with interests or short positions in the shares as of March 31, 2022, apart from the disclosed substantial shareholders[103]. Legal Proceedings - The company initiated legal proceedings against Pearl River Film Production in April 2021, claiming approximately RMB240,000,000 for capital contribution and RMB20,000,000 for losses due to breach of contract[84]. - The Guangzhou Intermediate People's Court accepted the filing of the civil action against Pearl River Film Production, with no judgment handed down as of the report date[84]. - The company is awaiting a judgment on the re-trial initiated by Pearl River Film Production as of the report date[84]. - The final judgment regarding the property occupation fee of RMB3,854,363 was upheld by the Guangzhou Intermediate People's Court on September 27, 2020[84]. - The company’s indirect non-wholly owned subsidiary was required to pay property occupation fees and related interest amounting to RMB26,457,900 and RMB2,520,062, respectively, for a previous period[82]. Business Operations and Projects - The CG creation and production division's revenue is driven by production services for animated films, television series, games, and licensing income from animated IPs[60]. - Two animation films are in production: "Finless Porpoise: Dance in the Wind," currently in post-production, and "Around the Earth in 80 Days," in preliminary development[60]. - The Group successfully completed a virtual character online live broadcast program for Kiehl's, enhancing interactive experiences between real people and virtual characters[64]. - A new game production center has been established to undertake high-end game art production, collaborating with "Mini World" to create the virtual game "Ice and Snow Jumping Platform"[65]. - The Group's Shenzhen GDC Building continues to attract high-quality enterprises, enhancing its digital technology management system and services[70]. - The Chengdu Sports Park project is underway, focusing on the integration of cultural IP, technology, and sports[70]. - The Group has a first-mover advantage in Metaverse application technology, with solutions including automatic control systems and highly accurate full-body motion capture[73]. - The research and development team has completed the development of a computer animated character and AI engine driver interface, continuously optimizing production processes[73]. - The Group plans to produce one to two animated films annually, focusing on themes such as ocean exploration and Chinese mythology[75]. - The Group aims to expand market shares by customizing digital virtual characters and forming a platform business model[77]. - The Chengdu Sports Park project will integrate "Cultural IP + Technology + Sports" as a core strategy, creating an innovative ecological sports park[76]. - The Group has received multiple government awards for its animated works, including the "Copyright Golden Award" for "Journey to the Center of the Deep Ocean"[73]. - The Group's automated management system, CG Aline cloud platform, is undergoing continuous product marketization[73]. - The Group's animated film production will adopt both self-production and co-production modes to ensure high-quality services[75]. - The Group is enhancing its capabilities in new technologies such as the Unreal game engine and real-time lighting rendering[73]. - The Group is focused on expanding new projects while enhancing replication capabilities within its product matrix[76]. Dividend Policy - The company does not recommend the payment of an interim dividend for the three months ended March 31, 2022, consistent with the same period in 2021 where no dividend was paid[87].
环球数码创意(08271) - 2022 Q1 - 季度财报