Media advertising and marketing business
In view of the uncertain market and increasingly challenging operating
environment, the Company has been strategically streamlining and
optimizing the businesses of the Group while exploring new business
opportunities to diversify the businesses of the Group. Since 2024, the
Company has been strategically planning to expand into the media
advertisement and marketing business in the PRC. In May 2024, the Group
started to engage in the new media advertising and marketing business in
the PRC.
On 30 April 2024, Guangxi Zaiguang Technology Co., Ltd (“Zaigaung”) (a
wholly-owned subsidiary of the Company) entered into the advertising
resources sales contract (the “Advertising Rights Contract”) with Beijing
Yingshiguang Electronics Commercial Co., Ltd（. 北京影時光電子商務有
限公司）(“BJ Yingshiguang”), a wholly-owned subsidiary of Wanda Film
Holding Co. Ltd.（萬達電影股份有限公司）(“Wanda Film”). Pursuant to
the Advertising Rights Contract, BJ Yingshiguang granted to Zaiguang (i)
an exclusive right to solicit advertising customers and sell the commercial
time for 9 minutes out of the 10-minute pre-show advertising time of
each showing at the Wanda Film Cinemas (the “Pre-Show Advertising
Right”); and (ii) a right to solicit advertising customers and sell the 3-minute
commercial time across three screens (i.e. the LCD electronic poster screen,
the LCD splicing screen and the movie ticket kiosk machine) (the “Three-
Screen Advertising Right”) (collectively, the “Advertising Rights”). During
the pandemic, the film industry was in a slump. As the pandemic restrictions
eased, the film industry showed signs of recovery. Although the Company
initially anticipated a strong rebound in the film industry post-pandemic, the
actual performance exhibited a substantial and persistent shortfall relative to
expectations.
The performance in the media advertising and marketing business of the
Group improved significantly in early 2025, with revenue of not less than
RMB90.0 million in the first two months of 2025. The improvement was
primarily driven by strong box office performance of several blockbuster films
released during the Chinese New Year holiday, including Nezha 2（《哪吒2》）,Detective Chinatown 1900（《唐探1900》）and The Legend of the CondorHeroes（《射雕英雄傳》）, which stimulated increased advertising spendingfrom clients.
However, the rebound was not sustained and box office receipts declined
materially following the 2025 Chinese New Year holiday, leading to a
corresponding decrease in advertising demand. As a result, the performance
of the Group fell significantly and persistently short of expectations, resulting
in a substantial operational loss in 2025. The Advertising Rights Contract was
terminated with effect from 1 October 2025.
During the period from 1 January 2025 to 30 September 2025, the Group
recorded a revenue of approximately HK$153,878,000 and a segment
loss of approximately HK$142,799,000, which included an impairment
loss of the Advertising Right of approximately HK$256,958,000. During
the Corresponding Year, the Group recorded a revenue of approximately
HK$88,501,000 and a segment loss in the amount of approximately
HK$79,408,000.
As at 30 September 2025, the carrying amount of the Advertising Right
was approximately HK$256,958,000. Management accounted for such
Advertising Rights as an intangible asset in accordance with HKAS 38
“Intangible assets”, major assumptions and inputs being adopted include the
accounting treatment of such right and discount rate. An intangible asset
of approximately HK$439,441,000 was recognised upon acquisition, while
all the fixed portion of the consideration were recorded at their discounted
value. The Advertising Right was amortized over a period of 3 years. As
of 31 December 2024, the carrying value of the Advertising Right was
approximately HK$353,994,000.
Notwithstanding the termination of the Advertising Rights Contract, the
Company has continued its media advertising and marketing business.
The Company is going to enter into strategic partnerships with key players
across various sectors to strengthen and enhance the Company’s advertising
capabilities.