Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

(Incorporated in Bermuda with limited liability)

(Stock code: 391)

INTERIM RESULTS ANNOUNCEMENT

FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2019

The directors present the condensed consolidated financial information of the Company and its subsidiaries (the "Group") for the six months ended 30th September 2019. The consolidated income statement, consolidated statement of comprehensive income, consolidated cash flow statement and consolidated statement of changes in equity of the Group for the six months ended 30th September 2019, and the consolidated balance sheet of the Group as at 30th September 2019, all of which are unaudited and condensed, along with selected explanatory notes, are set out as follows:

CONDENSED CONSOLIDATED INCOME STATEMENT

For the six months ended 30th September 2019

Unaudited

Six months ended

30th September

Note

2019

2018

HK$'000

HK$'000

Revenue

5

57,478

57,012

Cost of sales

(30,802)

(42,158)

Gross profit

26,676

14,854

Other income

6

6,290

7,022

Other losses - net

7

(15,531)

(2,313)

Selling, distribution and marketing expenses

(1,893)

(1,925)

Administrative expenses

(48,746)

(44,493)

Operating loss

8

(33,204)

(26,855)

Finance income

934

650

Finance costs

(5,657)

(809)

Finance costs - net

9

(4,723)

(159)

Share of net profits/(losses) of associates

238

(5,737)

Loss before income tax

(37,689)

(32,751)

Income tax credit/(expense)

10

2,164

(235)

Loss for the period

(35,525)

(32,986)

Loss attributable to:

(35,055)

(29,742)

Owners of the Company

Non-controlling interests

(470)

(3,244)

(35,525)

(32,986)

Loss per share attributable to owners of the Company

11

(0.59 HK cents)

(0.50 HK cents)

Basic and diluted loss per share

- 1 -

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30th September 2019

Unaudited

Six months ended

30th September

2019

2018

HK$'000

HK$'000

Loss for the period

(35,525)

(32,986)

Other comprehensive income/(loss), net of tax

Items that will not be reclassified subsequently to profit or loss

Surplus on revaluation of buildings

530

2,616

Deferred taxation arising from revaluation surplus of buildings

(97)

(389)

Items that may be reclassified to profit or loss

Currency translation differences

(3,272)

(8,270)

Other comprehensive loss for the period, net of tax

(2,839)

(6,043)

Total comprehensive loss for the period

(38,364)

(39,029)

Total comprehensive loss attributable to:

- Owners of the Company

(37,894)

(35,785)

- Non-controlling interests

(470)

(3,244)

Total comprehensive loss for the period

(38,364)

(39,029)

- 2 -

CONDENSED CONSOLIDATED BALANCE SHEET

As at 30th September 2019 and 31st March 2019

Unaudited

Audited

30th

31st

September

March

2019

2019

Note

HK$'000

HK$'000

ASSETS

Non-current assets

Property, plant and equipment

227,364

238,093

Investment properties

229,255

243,156

Right-of-use assets

140,429

-

Leasehold land and land use rights

-

24,932

Film rights, films in progress and film royalty deposits

180,582

163,126

Interests in associates

10,099

9,861

Interests in joint ventures

4

4

Other receivables and deposits

13

6,072

2,668

793,805

681,840

Current assets

Inventories

185

454

Trade and other receivables

13

13,777

12,408

Contract assets

17,638

24,019

Deferred fulfilment costs

4,080

3,511

Financial assets at fair value through profit or loss

10,453

40,345

Pledged bank deposits

23,500

23,500

Short-term bank deposits

2,198

3,793

Cash and cash equivalents

43,070

9,117

114,901

117,147

Total assets

908,706

798,987

- 3 -

Unaudited

Audited

30th

31st

September

March

2019

2019

Note

HK$'000

HK$'000

EQUITY

Equity attributable to owners of the Company

Share capital

16

118,475

118,475

Share premium

407,428

407,428

Reserves

(27,402)

10,492

Shareholders' funds

498,501

536,395

Non-controlling interests

2,264

3,078

Total equity

500,765

539,473

LIABILITIES

Non-current liabilities

Bank and other borrowings

15

39,042

40,637

Lease liabilities

123,054

-

Deferred income tax liabilities

27,635

29,759

189,731

70,396

Current liabilities

Trade and other payables

14

88,658

97,818

Contract liabilities

20,324

13,448

Amounts due to associates

33,602

11,638

Bank borrowings

15

54,732

54,481

Lease liabilities

9,726

-

Obligations under finance leases

-

144

Current income tax liabilities

11,168

11,589

218,210

189,118

Total liabilities

407,941

259,514

Total equity and liabilities

908,706

798,987

- 4 -

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30th September 2019

Attributable to shareholders

Share

Buildings

Non-

Share

Share

redemption

Contributed

Exchange

revaluation

Other

Accumulated

controlling

Total

capital

premium

reserve

surplus

difference

reserve

reserve

losses

interests

equity

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

The Group

At 1st April 2019

118,475

407,428

12

189,009

(8,215)

81,586

1,061

(252,961)

3,078

539,473

Comprehensive loss

Loss for the period

-

-

-

-

-

-

-

(35,055)

(470)

(35,525)

Other comprehensive income/(loss)

Surplus on revaluation of buildings

-

-

-

-

-

530

-

-

-

530

Deferred tax arising from revaluation

surplus of buildings

-

-

-

-

-

(97)

-

-

-

(97)

Translation of foreign subsidiaries

-

-

-

-

(3,272)

-

-

-

-

(3,272)

Total other comprehensive income/(loss)

-

-

-

-

(3,272)

433

-

-

-

(2,839)

Total comprehensive income/(loss) for the

period

-

-

-

-

(3,272)

433

-

(35,055)

(470)

(38,364)

Transactions with owners, recognised

directly in equity

Dividend relating to 2019

-

-

-

-

-

-

-

-

(344)

(344)

At 30th September 2019

118,475

407,428

12

189,009

(11,487)

82,019

1,061

(288,016)

2,264

500,765

- 5 -

Attributable to shareholders

Available-

for-sale

financial

Share

Buildings

assets

Non-

Share

Share

redemption

Contributed

Exchange

revaluation

revaluation

Accumulated

controlling

Total

capital

premium

reserve

surplus

difference

reserve

reserve

losses

interests

equity

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

The Group

At 1st April 2018, as previously reported

118,475

407,428

12

189,009

(1,889)

78,135

2,481

(170,014)

4,691

628,328

Reclassification on adoption of HKFRS9

(note 3)

-

-

-

-

-

-

(2,481)

2,481

-

-

At 1st April 2018, as restated

118,475

407,428

12

189,009

(1,889)

78,135

-

(167,533)

4,691

628,328

Comprehensive loss

Loss for the period

-

-

-

-

-

-

-

(29,742)

(3,244)

(32,986)

Other comprehensive income/(loss)

Surplus on revaluation of buildings

-

-

-

-

-

2,616

-

-

-

2,616

Deferred tax arising from revaluation

surplus of buildings

-

-

-

-

-

(389)

-

-

-

(389)

Translation of foreign subsidiaries

-

-

-

-

(8,270)

-

-

-

-

(8,270)

Total other comprehensive income/(loss)

-

-

-

-

(8,270)

2,227

-

-

-

(6,043)

Total comprehensive income/(loss) for the

period

-

-

-

-

(8,270)

2,227

-

(29,742)

(3,244)

(39,029)

At 30th September 2018

118,475

407,428

12

189,009

(10,159)

80,362

-

(197,275)

1,447

589,299

- 6 -

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 30th September 2019

Unaudited

Six months ended

30th September

2019

2018

HK$'000

HK$'000

Cash flows from operating activities

39,039

Cash generated from operations

6,919

Income tax paid

(421)

(164)

Net cash generated from operating activities

38,618

6,755

Cash flows from investing activities

(441)

Purchase of property, plant and equipment

(724)

Purchase of film rights, films in progress and film royalty deposits

(28,678)

(22,584)

Proceeds from disposal of financial assets at fair value through

27,351

profit or loss

-

Interest received

564

650

Investment in an associate

-

(7,553)

Change in short-term deposits

1,595

(1,163)

Net cash generated from/(used in) investing activities

391

(31,374)

Cash flows from financing activities

(522)

(Repayments of bank loans)/proceeds from bank loans

6,487

Interest paid on loans and overdrafts

(1,014)

(804)

Interest paid on lease liabilities

(2)

-

Interest element of finance leases

-

(5)

Repayments of principal elements of lease liabilities

(86)

-

Repayments of capital element of finance leases

-

(83)

Dividend paid to non-controlling interests

(344)

-

Net cash generated from/(used in) financing activities

(1,968)

5,595

Net increase/(decrease) in cash and cash equivalents

37,041

(19,024)

Cash and cash equivalents at beginning of period

(13,846)

37,023

Exchange differences

(3,361)

(5,512)

Cash and cash equivalents at end of period

19,834

12,487

Analysis of balances of cash and cash equivalents

43,070

Cash and cash equivalents

34,030

Bank overdrafts

(23,236)

(21,543)

19,834

12,487

- 7 -

SELECTED NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

  1. General information
    Mei Ah Entertainment Group Limited (the "Company") and its subsidiaries (together the "Group") are principally engaged in television operations, film exhibition, film rights licensing and sub-licensing, theatre operations, concert performances and events organisation, mobile games applications and video online, artiste management and property investment.
    The Company is a limited liability company incorporated in Bermuda and listed on the Stock Exchange of Hong Kong Limited.
    This condensed consolidated interim financial information was approved for issue on 28th November 2019.
  2. Basis of preparation
    This condensed consolidated interim financial information for the six months ended 30th September 2019 has been prepared in accordance with HKAS 34, "Interim financial reporting". The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31st March 2019, which have been prepared in accordance with HKFRSs.
    During the period ended 30th September 2019, the Group incurred a loss before income tax of HK$37,689,000 and as at 30th September 2019, the Group had net current liabilities of approximately HK$103,309,000.
    The directors are of the opinion that, having taken into account the anticipated cash inflows generated from the Group's operations, as well as the possible changes in its operating performance and the availability of bank facilities, the Group will have sufficient financial resources to meet its liabilities as and when they fall due in the coming twelve months from the balance sheet date. Accordingly, the directors believe that the Group will be able to continue as a going concern; and thus have prepared the consolidated financial statements on a going concern basis.

- 8 -

3. Accounting policies

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31st March 2019, as described in those annual financial statements, except for the accounting policy changes that are expected to be reflected in the annual financial statements for the year ending 31st March 2020. Details of the changes in accounting polices are set out below:-

  1. New and amended standards and interpretations adopted by the Group
    A number of new or amended standards became applicable for the current reporting period and the Group had to change its accounting policies and make retrospective adjustments, if applicable, as a result of adopting the following standards:

Amendments to Annual

Annual improvements 2015-2017 cycle

Improvements Project

HKFRS 9 (Amendment)

Prepayment features with negative compensation

HKFRS 16

Leases

HKAS 19 (Amendment)

Plan amendment, curtailment or settlement

HKAS 28 (Amendment)

Long-term interests in associates or joint ventures

HK(IFRIC)-Int 23

Uncertainty over income tax treatments

Except for the impact of adoption of HKFRS16 set out in Note 3(ii) below, other new and amended standards and interpretations are either not relevant to the Group or did not have any material impact on the Group's accounting policies.

  1. HKFRS 16 "Leases" - Impact of adoption
    The Group has adopted HKFRS 16 from its mandatory adoption date of 1st April 2019. The Group has applied the modified retrospective approach and has not restated comparative amounts for the last reporting period. The reclassifications and the adjustments arising from the new standard are therefore recognised in the opening balance sheet on 1st April 2019.
    1. Adjustments recognised on adoption of HKFRS 16
      On adoption of HKFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as "operating leases" under the principles of HKAS 17 "Leases". These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1st April 2019. The weighted average lessee's incremental borrowing rate applied to the lease liabilities on 1st April 2019 was approximately 5%.

- 9 -

Operating lease commitments disclosed as at 31st March 2019 Add: finance lease liabilities recognised as at 31st March 2019

Less: discounted using the lessee's incremental borrowing rate of the date of initial application

Less: short-term leases and low-value leases recognised on a straight-line basis as expense

Lease liabilities recognised as at 1st April 2019

Of which are:

Current lease liabilities

Non-current lease liabilities

HK$'000

162,093

144

(21,189)

(206)

140,842

7,041

133,801

140,842

Under the modified retrospective approach, the right-of-use assets were measured at the amount of the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the balance sheet as at 1st April 2019.

Leasehold land and land use rights previously presented as a separate item on the balance sheet are grouped as part of right-of-use assets with effect from 1st April 2019.

The recognised right-of-use assets relate to the following types of assets:

30th

1st

September

April

2019

2019

HK$'000

HK$'000

Leasehold land and land use rights

24,536

24,932

Properties

115,893

140,698

140,429

165,630

- 10 -

The change in accounting policy affected the following items in the balance sheet on 1st April 2019:

At 31st March

Effects of the

2019 as

originally

adoption of

At 1st April

presented

HKFRS 16

2019 restated

HK$'000

HK$'000

HK$'000

Condensed consolidated balances sheet

(extract)

Non-current assets

Leasehold land and land use rights

24,932

(24,932)

-

Right-of-use assets

-

165,630

165,630

Current liabilities

Lease liabilities

-

(7,041)

(7,041)

Obligations under finance leases

(144)

144

-

Non-current liabilities

Lease liabilities

-

(133,801)

(113,801)

The impact on the Group's net profit after tax for the six months ended 30th September 2019 as a result of adoption of HKFRS 16 is not significant.

In applying HKFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:

  • reliance on previous assessments on whether leases are onerous;
  • the accounting for operating leases with a remaining lease term of less than 12 months as at 1st April 2019 as short-term leases;
  • the exclusion of initial direct costs for the measurement of the right-of-use assets at the date of initial application; and
  • the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

The Group has also elected not to reassess whether a contract is, or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date the Group relied on its assessment made applying HKAS 17 and HK(IFRIC)-Int 4 "Determining Whether an Arrangement Contains a Lease".

- 11 -

  1. The Group's leasing activities and how these are accounted for
    The Group leases various premises for its theatre operations. Rental contracts are typically made for periods of 15 to 20 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants and leased assets have not been used as security for borrowing purposes.
    The Group also leases certain land use rights in Hong Kong and the People's Republic of China. These land use rights are leased for a period of between 50 to 70 years on which buildings of the Group are situated on.
    Until the financial years ended 31st March 2019, leases of properties were classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-line basis over the period of the lease.
    From 1st April 2019, leases are recognised as right-of-use assets and corresponding liabilities at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use assets is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.
    Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
    • fixed payments (including in-substance fixed payments), less any lease incentives receivable;
    • variable lease payments that are based on an index or a rate;
    • amounts expected to be payable by the lessee under residual value guarantees;
    • the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
    • payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee's incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

Right-of-use assets are measured at cost comprising the following:

  • the amount of the initial measurement of lease liability;
  • any lease payments made at or before the commencement date less any lease incentives received;
  • any initial direct costs; and
  • restoration costs.

- 12 -

  1. As a lessor
    The Group leases out various premises under non-cancellable operating lease arrangements. The lease terms are between 1 to 3 years. The Group has classified these leases as operating leases.
    The accounting policies applicable to the Group as a lessor in the comparative period are not different from HKFRS 16. The Group is not required to make any adjustments on transition to HKFRS 16 for leases in which it acts as a lessor.
  1. Estimates
    The preparation of interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
    In preparing this condensed consolidated interim financial information, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31st March 2019.
  2. Segment information
    An analysis of the Group's revenues and results for the period by business segments, being the primary reporting format, is as follows:

Unaudited

Six months ended 30th September 2019

Film

exhibition

and film

Concert

Mobile games

rights

licensing

performance

applications

Television

and

Theatre

and events

and

Artiste

Property

operations

sub-licensing

operations

organisation

video online

management

investment

Group

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

(note (a))

Segment revenue

26,223

3,250

22,004

4,142

1,090

769

-

57,478

Reportable segment profit/(loss)

(1,709)

(9,388)

(7,494)

389

(2,943)

(40)

(9,730)

(30,915)

Depreciation of property, plant and equipment

(191)

(72)

(4,382)

(45)

(44)

-

-

(4,734)

Depreciation of right-of-use assets

-

-

(4,715)

-

-

-

-

(4,715)

Fair value deficit on revaluation of investment properties

-

-

-

-

-

-

(12,816)

(12,816)

Amortisation for film rights

(8,652)

(855)

-

-

-

-

-

(9,507)

Finance costs

-

-

(4,641)

-

-

-

-

(4,641)

Additions to property, plant and equipment

37

26

364

-

10

-

-

437

Additions to film rights, films in progress

6,064

22,614

-

-

-

-

-

28,678

and film royalty deposits

As at 30th September 2019

34,413

211,146

179,224

4,523

1,385

519

235,208

666,418

Reportable segment assets

Reportable segment liabilities

(22,583)

(132,303)

(150,284)

(2,413)

(508)

(394)

(25,172)

(333,657)

- 13 -

Unaudited

Six months ended 30th September 2018

Sale and

Film

distribution

exhibition

of films and

and film

programs

rights

Concert

Mobile games

in audio

licensing

performance

applications

visual

Television

and

Theatre

and events

and

Artiste

product

Property

operations

sub-licensing

operations

organisation

video online

management

format

investment

Elimination

Group

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

HK$'000

(note (a))

Segment revenue

21,953

9,839

10,962

10,908

2,703

617

30

-

-

57,012

Reportable segment profit/(loss)

(3,847)

(6,682)

(2,953)

(4,888)

(9,017)

(136)

(3,017)

5,988

123

(24,429)

Depreciation and amortisation for property,

plant and equipment and leasehold land

and land use rights

(307)

(81)

(761)

(252)

(47)

-

(162)

-

-

(1,610)

Fair value gain on revaluation of investment

properties

-

-

-

-

-

-

-

2,430

-

2,430

Amortisation for film rights

(7,269)

(7,553)

-

-

-

-

-

-

123

(14,699)

Share of losses of an associate

-

-

-

-

(5,983)

-

-

-

-

(5,983)

Additions to property, plant and equipment

41

-

654

1

-

-

14

-

-

710

Additions to film rights, films in progress

and film royalty deposits

6,546

16,038

-

-

-

-

-

-

-

22,584

As at 31st March 2019

Reportable segment assets

36,877

159,707

65,298

4,419

1,356

1,598

29,275

248,444

-

546,974

Reportable segment liabilities

(18,657)

(61,809)

(71,668)

(2,716)

(834)

(1,800)

(1,711)

(26,562)

-

(185,757)

- 14 -

Profit or loss

Reportable segment loss Unallocated amounts: Unallocated other income Unallocated other losses Unallocated finance costs - net

Unallocated depreciation and amortisation of property, plant and equipment and leasehold land and land use rights

Unallocated depreciation of right-of-use assets Unallocated share of profits of associates Unallocated corporate expenses

Loss before income tax

Assets

Reportable segment assets Unallocated assets:

Unallocated property, plant and equipment and leasehold land and land use rights

Unallocated right-of-use assets

Unallocated financial assets at fair value through profit or loss Unallocated cash and cash equivalents

Unallocated interests in and amounts due from associates Unallocated corporate assets

Total assets

Liabilities

Reportable segment liabilities

Unallocated liabilities:

Unallocated bank borrowings

Unallocated amounts due to associates

Unallocated corporate liabilities

Total liabilities

Unaudited

Six months ended

30th September

20192018

HK$'000 HK$'000

(30,915) (24,429)

1,062 1,759

(2,715) (4,743)

  1. (450)

(3,200) (3,393)

(396)-

238246

(1,681) (1,741)

(37,689) (32,751)

Unaudited Audited

30th31st

September March

20192019

HK$'000 HK$'000

666,418 546,974

173,155 199,925

24,536-

10,453 40,345

23,85655

10,080 9,865

208 1,823

908,706 798,987

333,657 185,757

58,669 59,191

12,045 11,638

3,570 2,928

407,941 259,514

- 15 -

Secondary reporting format - geographical segment

The Group's is domiciled in Hong Kong. The results of its revenue from external customers and non- current assets other than financial assets located in Hong Kong and other countries are summarized below:

Revenues from

external customers

Unaudited

Six months ended

30th September

20192018

HK$'000 HK$'000

Hong Kong

14,985

19,236

People's Republic of China

23,703

14,049

Taiwan

3,832

4,471

Other countries

14,958

19,256

57,478

57,012

Non-current assets

(other than financial assets)

Unaudited Audited

30th31st

September March

20192019

HK$'000 HK$'000

Hong Kong

468,149

456,233

People's Republic of China

276,137

174,792

Taiwan

25,398

25,960

Other countries

18,049

22,187

787,733

679,172

Note (a)

  1. The revenue attributable to the segment "property investment" has been included in other income.

- 16 -

6. Other income

Unaudited

Six months ended

30th September

20192018

HK$'000 HK$'000

Dividend income from available-for-sale financial assets

1,062

1,759

Rental income

3,919

4,375

Management fee and other income

1,309

888

6,290

7,022

7.

Other losses - net

Unaudited

Six months ended

30th September

2019

2018

HK$'000

HK$'000

(Deficit)/surplus on revaluation of investment properties

(12,816)

2,430

Fair value losses on financial assets at fair value

through profit or loss

(2,715)

(4,743)

(15,531)

(2,313)

8. Expenses by nature

Expenses included in cost of sales, selling and marketing expenses, administrative expenses are analysed as follows:

Unaudited

Six months ended

30th September

20192018

HK$'000 HK$'000

Amortisation of film rights

9,507

14,699

Amortisation of leasehold land and land use rights

-

395

Cost of goods sold

452

267

Depreciation of property, plant and equipment

7,934

4,608

Depreciation of right-of-use assets

5,111

-

Employee benefit expenses

24,715

22,155

- 17 -

9.

Finance costs - net

Unaudited

Six months ended

30th September

2019

2018

HK$'000

HK$'000

Finance income

331

- Interest income on short-term bank deposits

417

- Interest income on loans to an associate

233

233

- Interest income from the financing components of contracts with

customers

370

-

934

650

Finance costs

(2,281)

- Interest on bank and other borrowings

(804)

- Interest on lease liabilities

(3,376)

-

- Interest element of finance leases

-

(5)

(5,657)

(809)

Finance costs - net

(4,723)

(159)

10. Taxation

Hong Kong profits tax has been provided at the rate of 16.5% (2018: 16.5%) on the estimated assessable profit for the period. Taxation on overseas profits has been calculated on the estimated assessable profit for the period.

Unaudited

Six months ended

30th September

2019

2018

HK$'000

HK$'000

Current income tax

-

(332)

Deferred income tax

2,164

97

Income tax credit/(expense)

2,164

(235)

- 18 -

  1. Loss per share
    1. Basic
      The calculation of basic loss per share is based on the Group's loss attributable to equity holders of the Company of HK$35,055,000 (2018: HK$29,742,000) and on the weighted average of 5,923,739,000 (2018: 5,923,739,000) ordinary shares in issue during the period.
    2. Diluted
      For the six months ended 30th September 2019 and 2018, the diluted loss per share was the same as the basic loss per share as there were no outstanding potential ordinary shares during the period.
  3. Dividends
    The board does not recommend the payment of an interim dividend for the six months ended 30th September 2019 (2018: Nil).
  4. Trade and other receivables

Unaudited

Audited

30th

31st

September

March

2019

2019

HK$'000

HK$'000

Trade receivables

25,011

25,394

Less: provision for impairment of receivables

(20,868)

(20,868)

Trade receivables - net

4,143

4,526

Prepayments

6,094

2,371

Other receivables and deposits

9,612

8,179

19,849

15,076

Less: Other receivables and deposits - non current portion

(6,072)

(2,668)

Current portion

13,777

12,408

- 19 -

The ageing analysis of trade receivables based on invoice date is as follows:

Unaudited

30th

September

2019

HK$'000

Current to 3 months

4,143

4 to 6 months

-

Over 6 months

20,868

25,011

The Group's credit terms to trade receivables generally ranges from 7 to 90 days.

14. Trade and other payables

Unaudited

30th

September

2019

HK$'000

Trade payables

5,676

Other payables and accruals

82,982

88,658

The ageing analysis of trade payables is as follows:

Unaudited

30th

September

2019

HK$'000

Current to 3 months

2,556

4 to 6 months

-

Over 6 months

3,120

5,676

Audited 31st March 2019 HK$'000

4,351

175

20,868

25,394

Audited 31st March 2019 HK$'000

10,259

87,559

97,818

Audited 31st March 2019 HK$'000

6,858

-

3,401

10,259

- 20 -

15. Bank and other borrowings

Unaudited

Audited

30th

31st

September

March

2019

2019

HK$'000

HK$'000

Bank overdrafts - secured

23,236

22,963

Secured bank loans - current portion

31,496

31,518

Bank borrowings - current portion

54,732

54,481

Secured bank loans - non-current portion

3,937

4,710

Total bank borrowings

58,669

59,191

Other borrowing - non-current portion

35,105

35,927

Total borrowings

93,774

95,118

  1. The bank borrowings are repayable in the following periods:

Unaudited

Audited

30th

31st

September

March

2019

2019

HK$'000

HK$'000

Within 1 year

54,732

54,481

Between 1

to 2

years

1,528

1,542

Between 2

to 5

years

2,409

3,168

58,669

59,191

  1. Other borrowing
    As at 30th September 2019, other borrowing amounting to outstanding principal of RMB30,000,000 (approximately HK$32,964,000) (31st March 2019: RMB30,000,000, approximately HK$35,022,000) and accumulated interest of RMB1,900,000 (approximately HK$2,141,000) (31st March 2019: RMB775,000, approximately HK$905,000). The borrowing is interest-bearing at a fixed rate of 7.5% per annum, unsecured and not repayable within 3 years from drawdown date.

- 21 -

16. Share capital

Number of ordinary shares

Ordinary shares

Unaudited

Audited

Unaudited

Audited

30th

31st

30th

31st

September

March

September

March

2019

2019

2019

2019

'000

'000

HK$'000

HK$'000

Authorised

15,000,000

15,000,000

300,000

300,000

Issued and fully paid

5,923,739

5,923,739

118,475

118,475

17. Capital commitments

As at 30th September 2019, the Group had contracted commitments but not provided for in the financial information as follows:

Unaudited

Audited

30th

31st

September

March

2019

2019

HK$'000

HK$'000

Film rights, films in progress and film royalty deposits

4,178

9,310

Licenses

-

2,900

4,178

12,210

18. Operating lease commitments - Group company as lessor

The Group leases its investment properties to certain customers under non-cancellable operating leases. The lease terms are between 1 to 3 years. The future aggregate minimum lease payments under non- cancellable operating leases are as follows:

Unaudited

Audited

30th

31st

September

March

2019

2019

HK$'000

HK$'000

Within 1 year

3,395

2,292

Later than 1 year and no later than 5 years

561

431

3,956

2,723

- 22 -

19. Related party transactions

Save as disclosed elsewhere in the condensed consolidated interim financial information, significant related party transactions, which were carried out in the ordinary course of the Group's business, are as follows:

Unaudited

Six months ended

30th September

2019

2018

HK$'000

HK$'000

Playout, post-production and origination services payable to

an associated company

6,192

4,663

Rental income receivable from associated companies

655

727

Management fee income receivable from an associated company

138

122

Interest income receivable from an associated company

233

233

Other administrative costs payable to an associated company

368

368

INTERIM DIVIDEND

The board does not recommend the payment of an interim dividend for the six months ended 30th September 2019 (2018: Nil).

BUSINESS REVIEW AND MANAGEMENT DISCUSSION AND ANALYSIS

During the six months ended 30th September 2019, the Group recorded a consolidated revenue of HK$57,478,000 (2018: HK$57,042,000), gross profit of HK$26,676,000 (2018: HK$14,854,000) and a loss attributable to owners of the Company of HK$35,055,000 (2018: HK$29,742,000). Improvement in gross profit was mainly due to the increased revenues generated from television and theatre operations with higher gross margin during the period.

The contribution of revenues from the Group's television segment for the period increased from approximately HK$21.9 million to HK$26.2 million. As at 30th September 2019, the Group provided channels through various operators, including "RED by HBO" channel through the platform of HBO in certain Asian territories, HD movie channel through Chunghwa Telecom MOD platform and a movie channel through the TVB pay vision in Hong Kong.

Since 2009, the Group has co-operated with world-class media HBO to jointly launch a dedicated Asian channel "RED by HBO" distributing in various markets in Southeast Asia. In 2018, the Group concluded two additional agreements with HBO Asia to expand and deepen the cooperation. The additional agreements essentially expand the cooperation from traditional TV channel service to new media on-line businesses, extend the scope of service to Singapore and also extend the cooperation term for 5 years to 2022.

- 23 -

Through the expansion of the cooperation with HBO Asia and the existing cooperations with other major media groups in the region, the Group has well positioned itself as one of the most important content providers to provide contents to both the traditional and new media platforms in Greater China and Asia. We believe the media industry is in the process of transforming from traditional TV channel business to new media business and creates a golden chance for the Group to expand its media businesses rapidly.

In Hong Kong, the Group cooperates with TVB, the largest media group in Hong Kong, broadcasting the Mei Ah Movie Channel and providing quality movie content to TVB's new media business.

In Taiwan, the Group cooperates with Chunghwa Telecom, one of the largest telecommunication companies in Taiwan, in providing TV channels, VOD and OTT contents for audience in Taiwan.

Looking forward, the Group will continue to explore opportunities to develop channels with other operators.

The contribution of revenues from the Group's film exhibition and film rights licensing and sub- licensing segment decreased from approximately HK$9.8 million to HK$3.2 million. Fewer releases and licensing were concluded and completed during the period. A number of new titles, casted by popular artistes, are pending for release in the second half of the financial year, including titles namely "Theory of Ambitions" and "Guilt by Design". Certain other titles are in the progress of shooting and expected to be released in the year 2020. These titles received encouraging responses from the market during their pre-sale.

The Group also cooperates with iQIYI, the new media platform with the largest internet traffic in the PRC. In 2018, the Group authorised iQIYI to broadcast contents from the high content library of the Group on a non-exclusive basis. In addition to the guaranteed program fee, the Group is also able to share the subscriber's monthly fee of iQIYI's services. The cooperation with iQIYI further confirms the Group's important expansion strategy, as a content provider, of entering into the new media market in the PRC. The Group will continue to seek cooperations with other major new media platforms in order to further cultivate the vast media market in the PRC.

Besides self producing and investing, the Group also makes use of its wide distribution network developed for years for its business of film distribution agency. Equipped by the Group's film library and through the Group's experience and network in program sourcing, the Group is confident that it will continue to provide high quality and customized programs to its audiences.

The Group has started to penetrate into the China theatrical market and established its first theatre in Tianjin since 2011. The Group's another theatre in Shanghai has also commenced operations since 2013. In 2019, the Group's new theatre in Guangzhou commenced operations. The Group's theatres are all digital and equipped with 3-D movie broadcasting functions. The theatres operations contributed revenues of approximately HK$22.0 million (2018: HK$10.9 million) in aggregate during the period. The Group's another 20% equity investment in Beijing theatre also commenced operations during the period.

- 24 -

During the period, the Group's operating segment of concert performance contributed revenues of approximately HK$4.1 million (2018: HK$10.9 million) as less events were held during the period. More events will be held in the second half of the financial year. The Group is of the view that this segment will continue to bring contribution to the Group.

In respect of the mobile games applications and video online segment, the Group has launched its video website and mobile apps, which include contents of films, drama and entertainment news. Looking forward, the Group considers the new media investment will ignite a revolution to the industry and fit the expected market demand.

The Group has signed up to manage the jobs of a number of artistes and has developed its artiste management business. The artiste management of the Group contributed revenue of approximately HK$769,000 (2018: HK$617,000) during the period. It becomes a base to build our talent management business and the Group will explore to seek other potential artistes and performers in order to build up its talent pool.

The Group's channel management operations are conducted through its associated company, namely IST Company Limited and its subsidiaries ("IST"). Other than providing channel management services to the Group, IST also provides the same playout service plus post-production,HD-film restoration and internetworking solution to a number of other media operators. IST has planned to provide its services under the developing platform which enables clients to distribute contents in different formats to different ends, which is expected to contribute future favorable returns to IST and the Group.

During the period, following the changes in the investment market conditions, the Group's financial assets at fair value through profit and loss turned to record an fair value loss of approximately HK$2.7 million (2018: HK$4.7 million). The investment properties portfolio of the Group contributed a deficit on revaluation of approximately HK$12.8 million (2018: surplus of HK$2.4 million). Such unrealised gains/losses have no effect on the Group's cash flow.

On 13th April 2011, the Company received a writ of summons and statement of claim which was amended on 12th October 2012. Pursuant to the directions from the Court, all of the relevant claims were further consolidated in the consolidated statement of claims (the "Consolidated Statement of Claims") filed on 30th March 2017.

The claims as in the Consolidated Statement of Claims did not specify the amount of damages being claimed. The Consolidated Statement of Claims alleged that the Company was a shadow director of one of its associated companies (the "Associated Company") which went into liquidation in 2003, and in its capacity as an alleged shadow director owed fiduciary duties to the Associated Company and were trustees of the assets of the Associated Company, and also alleged that the Company fraudulently breached such fiduciary duties.

- 25 -

Court hearing is tentatively to be held in February 2020. The directors of the Company, after taking advice from its legal advisors which have considered the information so far available, consider that the prospects of success of such claims depends on the findings of the Court in respect of the legal and factual issues involved in the case, and that the Company has a good chance to defend its position.

Looking forward, the Group will explore other opportunities to generate greatest returns for its shareholders and reward their long-term support.

Liquidity and financial resources

At 30th September 2019, the Group has available banking facilities of approximately HK$63.9 million, of which approximately HK$58.7 million were utilised. Corporate guarantees executed by the Company and certain of the Group's deposits and properties with aggregate net book values of HK$94 million were pledged to banks to secure banking facilities. The Group's gearing ratio of 45.4% as at 30th September 2019 was based on the total of bank and other borrowings and lease liabilities of HK$226,554,000 (of which HK$64,458,000, HK$8,874,000, HK$63,139,000 and HK$90,083,000 are repayable within one year, in the second year, in the third to fifth year and after the fifth year respectively) and the shareholders' funds of approximately HK$498,501,000. The Group's bank balances and borrowings are primarily denominated in HK dollars, RMB and NTD. The Group will monitor its foreign currency exposure closely. During the period ended 30th September 2019, the Group did not engage in any derivatives activities and did not commit to any financial instruments to hedge its exposure to foreign currency.

At 30th September 2019, the Group had commitments in respect of film production, film and program licensing agreements amounting to approximately HK$4 million. The commitments will be financed by the Group's internal resources and banking and other available facilities.

Employees

At 30th September 2019, the Group employed 160 staff. Remuneration is reviewed periodically based on market trend and individual staff's performance. In addition to the basic salaries, staff benefits include discretionary bonus, medical insurance scheme and contributory provident fund. The Group also has a share option scheme whereby qualified participants may be granted options to acquire shares of the Company. Employee benefit expenses of HK$24.7 million were charged to the profit and loss during the period.

- 26 -

COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE PRACTICES

During the six months ended 30th September 2019, the Group has complied with the code provisions set out in the Code of Corporate Governance Practices under Appendix 14 of the Listing Rules, with the exception of the deviation in respect of the appointment term of non-executive directors.

Under code provision A4.1, non-executive directors should be appointed for specific term. There is no specific term of appointment of the non-executive directors of the Company, however, they are subject to rotation in accordance with the Bye-laws of the Company. Accordingly the Company considers that sufficient measures have been taken to deal with the requirement in respect of the appointment terms of non-executive directors as required under the code provision.

COMPLIANCE WITH THE MODEL CODE

During the six months ended 30th September 2019, the Group has adopted the code of conduct regarding the directors' securities transactions on terms no less exacting than the required standard set out in the Model Code under Appendix 10 of the Listing Rules and having made specific enquiry of all directors, the directors of the Company have complied with the required standard set out in the Model Code and its code of conduct regarding directors' securities transactions.

PURCHASE, SALE OR REDEMPTION OF SHARES

The Company has not redeemed any of its shares during the period. Neither the Company nor any of its subsidiaries has purchased or sold any of the Company's shares during the six months ended 30th September 2019.

AUDIT COMMITTEE

The Company has established an audit committee (the "Audit Committee") comprising the three independent non-executive directors of the Company. The Audit Committee has reviewed the interim results of the Group for the six months ended 30th September 2019.

On behalf of the Board

Li Kuo Hsing

Chairman

28th November 2019

As at the date of this announcement, the executive directors of the Company are Mr. Li Kuo Hsing, Mr. Tong Hing Chi, Mr. Li Tang Yuk and Dr. Dong Ming, the non-executive directors are Mr. Hugo Shong and Mr. Alan Cole-Ford and the independent non-executive directors are Dr. Lam Lee G., Mr. Guo Yan Jun and Mr. Leung Tak Sing, Dominic.

- 27 -

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Mei Ah Entertainment Group Limited published this content on 28 November 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 November 2019 10:17:03 UTC