Interim Report 2002/2003 CHARACTERISTICS of the GROWTH ENTERPRISE MARKET (“GEM”) of the STOCK EXCHANGE of HONG KONG LIMITED (THE “STOCK EXCHANGE”)
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Interim Report 2002/2003 CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET (“GEM”) OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE “STOCK EXCHANGE”) GEM has been established as a market designed to accommodate companies to which a high investment risk may be attached. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability. Furthermore, there may be risks arising out of the emerging nature of companies listed on GEM and the business sectors or countries in which the companies operate. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors. Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM. The principal means of information dissemination on GEM is publication on the internet website operated by the Stock Exchange. Listed companies are not generally required to issue paid announcements in gazetted newspapers. Accordingly, prospective investors should note that they need to have access to the GEM website in order to obtain up-to-date information on GEM-listed issuers. The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this report, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this report. This report, for which the directors of Rojam Entertainment Holdings Limited collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to Rojam Entertainment Holdings Limited. The directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief: (1) the information contained in this report is accurate and complete in all material respects and not misleading; (2) there are no other matters the omission of which would make any statement in this report misleading; and (3) all opinions expressed in this report have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable. INTERIM RESULTS The board of directors (the “Board”) of Rojam Entertainment Holdings Limited (the “Company”, together with its subsidiaries, the “Group”) is pleased to present the consolidated results of the Group for the three months and six months ended 30th September 2002, consolidated cash flow statement and consolidated statement of changes in equity for the Group for the six months ended 30th September 2002, and the consolidated balance sheet as at 30th September 2002 of the Group, all of which are unaudited and condensed, along with selected explanatory notes. CONDENSED CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE THREE MONTHS AND SIX MONTHS ENDED 30TH SEPTEMBER 2002 Unaudited Unaudited Three months ended Six months ended 30th September 30th September 2002 2001 2002 2001 Note HK$’000 HK$’000 HK$’000 HK$’000 Turnover 2 4,724 9,183 15,507 18,830 Other revenue 2 212 1,058 469 1,834 Total revenues 4,936 10,241 15,976 20,664 Less: overseas withholding taxation 3 (394) (665) (1,509) (750 ) 4,542 9,576 14,467 19,914 Cost of sales (5,998) (10,100) (13,384) (15,682 ) Selling and distribution expenses (19) (6,034) (21) (15,083 ) Other operating expenses (10,945) (15,721) (12,806) (30,681 ) Loss before taxation (12,420) (22,279) (11,744) (41,532 ) Taxation 3 – – – – Loss after taxation (12,420) (22,279) (11,744) (41,532 ) Minority interests – – – 1 Loss attributable to shareholders (12,420) (22,279) (11,744) (41,531 ) Loss per share – Basic 5 (1.1 cents) (2.0 cents) (1.1 cents) (3.8 cents ) ROJAM ENTERTAINMENT HOLDINGS LIMITED INTERIM REPORT 2002/2003 1 CONDENSED CONSOLIDATED BALANCE SHEET AS AT 30TH SEPTEMBER 2002 Unaudited Audited 30th September 31st March 2002 2002 Note HK$’000 HK$’000 Intangible asset 6 24,179 – Fixed assets 6 38,050 41,418 Deposit for investment in subsidiaries – 31,500 Current assets Inventories 3,908 4,749 Amount due from a shareholder – 5,373 Amounts due from related companies – 1,637 Trade receivables 7 6,445 17,957 Other receivables and prepayments 10,843 14,406 Cash and bank balances 90,256 70,343 111,452 114,465 -------------- -------------- Current liabilities Trade payables 8 69 2,851 Accruals and other payables 6,399 6,430 6,468 9,281 -------------- -------------- Net current assets 104,984 105,184 -------------- -------------- Total assets less current liabilities 167,213 178,102 Financed by: Share capital 9 110,468 110,468 Reserves 55,932 67,634 Shareholders’ funds 166,400 178,102 Minority interests 813 – 167,213 178,102 ROJAM ENTERTAINMENT HOLDINGS LIMITED 2 INTERIM REPORT 2002/2003 CONDENSED CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2002 Unaudited Six months ended 30th September 2002 2001 HK$’000 HK$’000 Net cash inflow/(outflow) from operating activities 20,821 (25,566 ) Net cash from/(used in) investing activities 2,475 (16,725 ) Net cash from financing activities – 41,704 Increase/(decrease) in cash and cash equivalents 23,296 (587 ) Exchange difference (3,383) 1,780 Cash and cash equivalents at 1st April 70,343 132,412 Cash and cash equivalents at 30th September 90,256 133,605 ROJAM ENTERTAINMENT HOLDINGS LIMITED INTERIM REPORT 2002/2003 3 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30TH SEPTEMBER 2002 Unaudited (Accumul- ated losses)/ Share Share Exchange retained Capital Premium reserve earnings Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 At 1st April 2002 110,468 148,329 (4,924) (75,771) 178,102 Loss for the six months ended 30th September 2002 –––(11,744) (11,744) Net losses not recognised in the profit and loss account ––42 – 42 At 30th September 2002 110,468 148,329 (4,882) (87,515) 166,400 At 1st April 2001 110,468 103,279 (3,118) 7,158 217,787 Loss for the six months ended 30th September 2001 – – – (41,531) (41,531 ) Premium on issue of shares – 63,000 – – 63,000 Share issue expenses – (17,950) – – (17,950 ) Net losses not recognised in the profit and loss account – – 3,182 – 3,182 At 30th September 2001 110,468 148,329 64 (34,373) 224,488 ROJAM ENTERTAINMENT HOLDINGS LIMITED 4 INTERIM REPORT 2002/2003 NOTES TO THE CONDENSED CONSOLIDATED ACCOUNTS 1. Basis of preparation and accounting policies The Company was incorporated in the Cayman Islands on 29th February 2000 as an exempted company with limited liability under the Companies Law (Revised) of the Cayman Islands. The Company’s shares were listed on GEM on 31st May 2001. The unaudited condensed consolidated accounts have been prepared under the historical cost convention and in accordance with Hong Kong Statement of Standard Accounting Practice (“SSAP”) 25, Interim Financial Reporting, issued by the Hong Kong Society of Accountants, and Chapter 18 of the Rules Governing the Listing of Securities on GEM (the “GEM Listing Rules”). These condensed accounts should be read in conjunction with the 2001/2002 Annual Report. The accounting policies and methods of computation used in the preparation of these condensed consolidated accounts are consistent with those used in the annual accounts for the year ended 31st March 2002 except that the Group has adopted the new and revised SSAPs which are effective for accounting periods commencing on or after 1st January 2002. 2. Turnover, revenue and segment information The amounts of each significant category of revenue recognised during the three months and six months ended 30th September 2002 are as follows: Three months ended Six months ended 30th September 30th September 2002 2001 2002 2001 HK$’000 HK$’000 HK$’000 HK$’000 Turnover Music production income – Production service fees 2,370 2,053 6,951 5,968 – Royalty income 1,533 2,841 6,901 2,841 Music publishing fee – Royalty income 51 17 83 20 Record distribution income 58 1,298 131 1,676 Artiste management fees 16 898 16 898 Event management income 10 113 24 3,673 Trademark licensing income 437 484 845 911 Merchandise sales 14 1,250 101 2,188 Banner advertising income 235 229 455 655 4,724 9,183 15,507 18,830 Other revenue Interest income 212 1,058 409 1,834 Interest income arising from amount due from a shareholder – – 60 – 212 1,058 469 1,834 Total revenues 4,936 10,241 15,976 20,664 ROJAM ENTERTAINMENT HOLDINGS LIMITED INTERIM REPORT 2002/2003 5 An analysis of the Group’s turnover and results for the period by business segments is as follows: Six months ended 30th September 2002 Music Music Record Event Merchandise production publishing distribution management sales Others Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Turnover 13,852 83 131 24 101 1,316 15,507 Segment results (340 ) 83 110 24 13 724 614 Unallocated cost (12,358 ) Loss before taxation (11,744 ) Taxation – Loss after taxation (11,744 ) Minority interests – Loss attributable to shareholders (11,744 ) Six months ended 30th September 2001 Music Music Record Event Merchandise production publishing distribution management sales Others Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 Turnover 8,809 20 1,676 3,673 2,188 2,464 18,830 Segment results (869 ) 20 1,200 1,031 872 1,522 3,776 Unallocated cost (45,308 ) Loss before taxation (41,532 ) Taxation – Loss after taxation (41,532 ) Minority interests 1 Loss attributable to shareholders (41,531 ) No geographical segment information is presented as during the six months ended 30th September 2002, less than 10% of the Group’s segment revenue and segment results were derived from activities conducted outside Japan.